[ Pobierz całość w formacie PDF ]
.Since Jeff ordered the ap-praisal, he s the only person who could have planned this fraud.When a broker is caught red-handed, the follow-up calls are usuallymemorable.Watching brokers attempt to lie their way out of a situa-tion makes for an interesting study in human behavior.In this case,Jeff didn t know that Ken s wife had seen the property, so we tried totrap him, hoping for a confession.Even though he was backed into acorner and fumbled his way through the call, he tried to turn itaround by blaming the borrower.He wanted us to believe that sheconspired with the appraiser, but his argument made no sense.Brokersdrive this process and it was clear who was running the scam. ccc_bitner_039_072_c03.qxd:ccc_bitner_c03_039_072.qxd 5/29/08 1:41 PM Page 6464 The Underbelly: Mortgage BrokersJeff is the worst kind of manipulator.He spent a year gaining ourconfidence, making us believe he was trustworthy.Faced with achance to make a $15,000 commission check, he finally showed ushis true colors.Whether it was the borrowers, brokers, or a combination of thetwo that contributed to the trend toward manipulation, it s easy tounderstand why this business could turn anyone into a cynic.Corrupt BrokersWhile any broker who manipulates a file can be classified as cor-rupt, I reserve this category for the worst offenders.There is alsoone significant difference between a manipulative broker and a cor-rupt one.A manipulative broker will determine what actions needto be taken for a lender to approve a loan.Even though the deal isfraudulent, the borrower has the intention of making payments.The corrupt broker is crafting a plan to generate income by inflict-ing financial harm on a lender.It s unlikely a payment will ever bemade.Fortunately, the tactics these brokers used accounted foronly about 5 percent of all subprime loans.These brokers have no redeeming qualities they re immoraland malicious.The best way to illustrate their actions is to list someof the losses they caused our company." Tim Booker purchased a home in south Dallas.The only prob-lem was that Mr.Booker was deployed on a naval ship in theMiddle East when his closing documents were signed.His un-cle, the mortgage broker who originated the loan, used him asa straw buyer, which meant he never intended to occupy ormake payments on the property.He arranged to have someoneelse sign all the closing documents.Cost to Kellner MortgageInvestments: $13,000." In 2001, we wrote a mortgage for Thomas Arnold, also a strawbuyer.This loan was completely fabricated.The appraisal wereceived was for a completely different property.His income ccc_bitner_039_072_c03.qxd:ccc_bitner_c03_039_072.qxd 5/29/08 1:41 PM Page 65Broker Tactics 65documentation and bank statements had been altered.Thebroker, buyer, appraiser, and realtor all conspired to perpetratethis fraud.The loan closed six months after we opened, whenour QC procedures were lax.It was a very expensive lesson.Cost to Kellner Mortgage Investments: $100,000." In 2003, our company sold a property we owned in a deal puttogether by Kurt Davis, a local broker.The couple that boughtthe house claimed they never signed the loan documents andthat someone forged their signatures.We suspected Mr.Daviswas the guilty party, but he died shortly before the trial started.When he structured the deal, it required us to carry a secondmortgage.When Washington Mutual foreclosed on the prop-erty, we lost our lien.Cost to Kellner Mortgage Investments:$90,000.These brokers didn t care about the wreckage left in their wake.They would use whatever tactics were necessary to plan theirschemes.While some were linked to organized crime, many weresmall operations that moved from lender to lender, looking fortheir next target.Since these brokers were in the business of fabricating deals, mostof them kept their distance from lenders.On one occasion, how-ever, I did have a chance to interact with one of these operations.Having just opened our company, I connected with one of thelargest mortgage brokers in Cleveland, Ohio, a branch office forCountry Home Mortgage.After building a relationship with Luther,a person who portrayed himself as the branch manager, I flew toCleveland hoping to further the relationship.The trip still ranks asthe strangest and most bizarre event during my mortgage career.What Did I Get Myself Into?Stepping off the plane in the Cleveland, I m greeted by Jeff, who in-troduces himself as the VP of Sales.Since he doesn t look old enoughto drink, I m surprised a guy so young is running the sales team. ccc_bitner_039_072_c03.qxd:ccc_bitner_c03_039_072.qxd 5/29/08 1:41 PM Page 6666 The Underbelly: Mortgage BrokersOn the drive to the office, I find out this is his first job in themortgage business.He tells me, This is actually my first job insales.Before that I worked in my uncle s service station. Yesterdayhe s pumping gas and today he s running a sales team.Maybe he s aquick learner.Who am I to judge?We get to the office and join everyone for lunch at the restaurantnext door.Being 62 43 and 230 pounds, I m rarely intimidated bysomeone else s size, but this is one of those moments.As Lutherstands up to greet me, he s my height but at least 40 to 50 poundsheavier.With his big bushy beard and flannel shirt, I can t help butthink he looks like Grizzly Adams on steroids.I take the seat across from their title rep, Suzanne.After a fewminutes of conversation, I can t help but notice her wedding ringsince it s the largest single diamond I ve ever seen.Being a curiousguy, I ask her, So, Suzanne what does your husband do for a liv-ing? As though it were staged, all five people within earshot of ourconversation burst into laughter.Suzanne says, Really sweetheart,it s healthier for you to not ask that question. Hold the mortgagetrain a minute.Did she just say healthier? When it becomes clearshe isn t kidding, my head starts to fill with images of cement-filledshoes and me sinking to the bottom of the Cuyahoga.Maybechanging the subject is a good idea.After we leave the restaurant and go back into his building,Luther leads me toward his office in the back of the suite.As we ap-proach the last office, I m struck by the enormous size of his door.This massive steel contraption looks like it belongs on the front ofa vault, not in an office.Luther sees me eyeing it and says, Oh, youlike the door? I got it out of an old bank that closed down.Thegreat thing about this is, short of a rocket launcher, nobody s get-ting in. Rocket launcher? Why does a mortgage broker need a door thatcould protect Fort Knox? Sure, we re in the money business, but it snot like we print the stuff or keep any lying around.Lookingaround inside the office, I don t see anything of value outside of abizarre collection of knives hanging on the wall. ccc_bitner_039_072_c03.qxd:ccc_bitner_c03_039_072.qxd 5/29/08 1:41 PM Page 67Broker Tactics 67 Cool knife collection, Luther.Where did you pick these up? I ask. Oh you like them? This one s my favorite.I like to use it for tar-get practice. I turn around in time to see him pull this knife out of its wallmount and hurl it toward the corner of his office.With a loud thud,it smacks into the middle of a wooden board. Holy shit! I yell.Luther practically pees his pants he s laughing so loud.Once hecalms down he says, Sorry about that, Rich, I just couldn t helpmyself. After my heart starts beating again, it occurs to me he sprobably done the knife routine before.Watching the office in operation, it seems to me the ads they runmust be paying off [ Pobierz całość w formacie PDF ]
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.Since Jeff ordered the ap-praisal, he s the only person who could have planned this fraud.When a broker is caught red-handed, the follow-up calls are usuallymemorable.Watching brokers attempt to lie their way out of a situa-tion makes for an interesting study in human behavior.In this case,Jeff didn t know that Ken s wife had seen the property, so we tried totrap him, hoping for a confession.Even though he was backed into acorner and fumbled his way through the call, he tried to turn itaround by blaming the borrower.He wanted us to believe that sheconspired with the appraiser, but his argument made no sense.Brokersdrive this process and it was clear who was running the scam. ccc_bitner_039_072_c03.qxd:ccc_bitner_c03_039_072.qxd 5/29/08 1:41 PM Page 6464 The Underbelly: Mortgage BrokersJeff is the worst kind of manipulator.He spent a year gaining ourconfidence, making us believe he was trustworthy.Faced with achance to make a $15,000 commission check, he finally showed ushis true colors.Whether it was the borrowers, brokers, or a combination of thetwo that contributed to the trend toward manipulation, it s easy tounderstand why this business could turn anyone into a cynic.Corrupt BrokersWhile any broker who manipulates a file can be classified as cor-rupt, I reserve this category for the worst offenders.There is alsoone significant difference between a manipulative broker and a cor-rupt one.A manipulative broker will determine what actions needto be taken for a lender to approve a loan.Even though the deal isfraudulent, the borrower has the intention of making payments.The corrupt broker is crafting a plan to generate income by inflict-ing financial harm on a lender.It s unlikely a payment will ever bemade.Fortunately, the tactics these brokers used accounted foronly about 5 percent of all subprime loans.These brokers have no redeeming qualities they re immoraland malicious.The best way to illustrate their actions is to list someof the losses they caused our company." Tim Booker purchased a home in south Dallas.The only prob-lem was that Mr.Booker was deployed on a naval ship in theMiddle East when his closing documents were signed.His un-cle, the mortgage broker who originated the loan, used him asa straw buyer, which meant he never intended to occupy ormake payments on the property.He arranged to have someoneelse sign all the closing documents.Cost to Kellner MortgageInvestments: $13,000." In 2001, we wrote a mortgage for Thomas Arnold, also a strawbuyer.This loan was completely fabricated.The appraisal wereceived was for a completely different property.His income ccc_bitner_039_072_c03.qxd:ccc_bitner_c03_039_072.qxd 5/29/08 1:41 PM Page 65Broker Tactics 65documentation and bank statements had been altered.Thebroker, buyer, appraiser, and realtor all conspired to perpetratethis fraud.The loan closed six months after we opened, whenour QC procedures were lax.It was a very expensive lesson.Cost to Kellner Mortgage Investments: $100,000." In 2003, our company sold a property we owned in a deal puttogether by Kurt Davis, a local broker.The couple that boughtthe house claimed they never signed the loan documents andthat someone forged their signatures.We suspected Mr.Daviswas the guilty party, but he died shortly before the trial started.When he structured the deal, it required us to carry a secondmortgage.When Washington Mutual foreclosed on the prop-erty, we lost our lien.Cost to Kellner Mortgage Investments:$90,000.These brokers didn t care about the wreckage left in their wake.They would use whatever tactics were necessary to plan theirschemes.While some were linked to organized crime, many weresmall operations that moved from lender to lender, looking fortheir next target.Since these brokers were in the business of fabricating deals, mostof them kept their distance from lenders.On one occasion, how-ever, I did have a chance to interact with one of these operations.Having just opened our company, I connected with one of thelargest mortgage brokers in Cleveland, Ohio, a branch office forCountry Home Mortgage.After building a relationship with Luther,a person who portrayed himself as the branch manager, I flew toCleveland hoping to further the relationship.The trip still ranks asthe strangest and most bizarre event during my mortgage career.What Did I Get Myself Into?Stepping off the plane in the Cleveland, I m greeted by Jeff, who in-troduces himself as the VP of Sales.Since he doesn t look old enoughto drink, I m surprised a guy so young is running the sales team. ccc_bitner_039_072_c03.qxd:ccc_bitner_c03_039_072.qxd 5/29/08 1:41 PM Page 6666 The Underbelly: Mortgage BrokersOn the drive to the office, I find out this is his first job in themortgage business.He tells me, This is actually my first job insales.Before that I worked in my uncle s service station. Yesterdayhe s pumping gas and today he s running a sales team.Maybe he s aquick learner.Who am I to judge?We get to the office and join everyone for lunch at the restaurantnext door.Being 62 43 and 230 pounds, I m rarely intimidated bysomeone else s size, but this is one of those moments.As Lutherstands up to greet me, he s my height but at least 40 to 50 poundsheavier.With his big bushy beard and flannel shirt, I can t help butthink he looks like Grizzly Adams on steroids.I take the seat across from their title rep, Suzanne.After a fewminutes of conversation, I can t help but notice her wedding ringsince it s the largest single diamond I ve ever seen.Being a curiousguy, I ask her, So, Suzanne what does your husband do for a liv-ing? As though it were staged, all five people within earshot of ourconversation burst into laughter.Suzanne says, Really sweetheart,it s healthier for you to not ask that question. Hold the mortgagetrain a minute.Did she just say healthier? When it becomes clearshe isn t kidding, my head starts to fill with images of cement-filledshoes and me sinking to the bottom of the Cuyahoga.Maybechanging the subject is a good idea.After we leave the restaurant and go back into his building,Luther leads me toward his office in the back of the suite.As we ap-proach the last office, I m struck by the enormous size of his door.This massive steel contraption looks like it belongs on the front ofa vault, not in an office.Luther sees me eyeing it and says, Oh, youlike the door? I got it out of an old bank that closed down.Thegreat thing about this is, short of a rocket launcher, nobody s get-ting in. Rocket launcher? Why does a mortgage broker need a door thatcould protect Fort Knox? Sure, we re in the money business, but it snot like we print the stuff or keep any lying around.Lookingaround inside the office, I don t see anything of value outside of abizarre collection of knives hanging on the wall. ccc_bitner_039_072_c03.qxd:ccc_bitner_c03_039_072.qxd 5/29/08 1:41 PM Page 67Broker Tactics 67 Cool knife collection, Luther.Where did you pick these up? I ask. Oh you like them? This one s my favorite.I like to use it for tar-get practice. I turn around in time to see him pull this knife out of its wallmount and hurl it toward the corner of his office.With a loud thud,it smacks into the middle of a wooden board. Holy shit! I yell.Luther practically pees his pants he s laughing so loud.Once hecalms down he says, Sorry about that, Rich, I just couldn t helpmyself. After my heart starts beating again, it occurs to me he sprobably done the knife routine before.Watching the office in operation, it seems to me the ads they runmust be paying off [ Pobierz całość w formacie PDF ]