The Mortgage Bankers Association has been holding their fraud conference over the last four days, with 660 industry professionals in attendance.
I was on the speaker panel today for the “Stories from the Street” portion of the event, along with the Chief Compliance and Ethics Officer for Fannie Mae, and the president of a local 100-person mortgage-banking company.
My takeaways:
1. With all the new regulation of the mortgage industry, it is hard to fudge on your loan application, and get away with it.
2. The regulations have added considerable cost to running a mortgage operation, and the threat of buying back loans has run many out of the business.
3. In other words, the mortgage business has cleaned up nicely, and full-doc is good-doc.
4. Fannie Mae believes that effective short sales are generally a good thing, providing a gracious solution for people in their time of need.
5. Realtors are under-regulated, and are having their run of the joint. Guided only by the flimsy Code of Ethics without any enforcement whatsoever, realtors see other realtors committing fraudulent acts that cause big paydays, and figure they should do it too.
One of the best parts of these speaker panels is getting to meet attendees at the end.
I met one of BofA’s main fraud prevention guys, who told me to report any and all fraudulent behavior to him regarding BofA-related short-sales, and he has the ability to take corrective action.
Then a H.U.D. representative said that anyone can report mortgage fraud here:
http://www.hudoig.gov/hotline/hotlinereportform.php
If you know of any fraudulent behavior on an active BofA short-sale, forward it to me and I will get it in the right hands.
If the banks were truly concerned about short sale fraud they could virtually eliminate it with minor tweaks to their own requirements / procedures.
They should quit relying on $75 opinions of value from crappy realtors and obtain appraisals from competent licensed appraisers – and bill the seller.
Require full mls exposure and accept offers from all punters.
“realtors see other realtors committing fraudulent acts that cause big paydays, and figure they should do it too.”
I have been watching Ken Burns’ series on prohibition on PBS, and the similarities are striking. Last week’s episode was, “A Nation of Scofflaws” and touched on how widespread disregard of the law was fueled at least in part by the same psychology. Lots of money involved, lax enforcement, rampant corruption. For anyone interested, the entire series is available for viewing on the PBS site.
Not your area, but an interesting one. Buys from bank, lives in it for two years and makes 500K.
http://www.redfin.com/CA/Manhattan-Beach/660-33rd-St-90266/home/6708965
Hmmmm.
Thanks, Jim. I’ll send anything BofA related your way. There was one priced at least $150k too low that went into escrow asap but I don’t think it was fraud. BofA REO in Western Sonoma County seems to be priced by throwing darts. It’s a difficult market to price due to the heterogeneous nature of the housing stock among other factors. I suspect they are using a Zestimate from zillow, it’s that bad. They really need to find someone who knows the peculiarities of the area to avoid leaving money on the table. And no, I am not volunteering.
@Daniel(theotherone)
That listing agency is(was?) sometimes referred to locally in MB as “whorewood” for inside deals (but note that the buyers agent was not Shorewood in THIS case). Although there are some very good, ethical agents with this agency, the SouthBay MLS is very small and plays by its own small-town rules. For more info on this deal check out the local MB RE blog’s:
http://www.mbconfidential.com/2012/04/buy-low-sell-high-on-33rd.html For info about the intial listing click on the link within the post.