Posted by Yowheelz on 9/18/08 10:52am
Msg #264584

slick loan officer and under-educated borrower

Signing last night where borrower was upset that by combining his two mortgages into one loan he was paying xxx more than before. Loan officer convinced him that he could remove the homeowners insurance thereby lowering his monthly payment to what he was previously paying for the two loans. Now mind you the insurance was in the old loan. Not only is he not saving anything, he is paying closing costs of over $10,000.

I know it's not my business, I'm a closer not a loan officer but these are the things that drive me crazy. Loan officer knew he had a sucker and took advantage of it. Same kind of loan officer that talked people into sub-prime interest only loans they knew they couldn't afford. It's all about the commission and not about the homeowner.

Reply by SOCAL/CA on 9/18/08 10:57am
Msg #264585

You said it right "I know it's not your business". What can you do about it? Just do your job.

Reply by notaryinmo on 9/18/08 10:57am
Msg #264586

Sounds like the one I did a few nights ago. This time though, the BO was saying he may cancel the loan because he didn't think he was really saving anything - if nothing else, it was costing him almost $100 more per month on the new loan. BO asked me if I worked for the LO and then asked if I got paid if he cancelled. I told him - I'm supposed to.

Reply by Les_CO on 9/18/08 11:36am
Msg #264588

In Colorado the Loan Officer must give to the borrower a Colorado Net Tangible Benefit Disclosure form, and have it signed. It is ILLEGAL for a LO to put a borrower into a loan that they do not benefit from. If your case was here, and it were me I’d report the LO to the proper Licensing authority. I know the law, he should. IMO If you know someone is doing something illegal, and don’t report it, you ‘could’ be held culpable.

Reply by Yowheelz on 9/18/08 12:03pm
Msg #264598

Question is - is it illegal or just immoral? Loan probably wasn't "illegal" it just wasn't in the borrower's best interest. I've seen far worse over last few years.

Reply by Les_CO on 9/18/08 12:14pm
Msg #264601

I don't know MD law. Here in CO what you describe would be illegal. I have seen cases where a borrower was increasing his loan amount by $20,000.00 taking less than $300 cash out, and decreasing his payment by less than $10 per month. I ask him why he was getting the loan, he said to lower his payment. I said yes your payment is lower by less than $10, and "SOMEONE" is getting $20K out of this loan, and it is NOT you. He said WHAAAAT?

Reply by sue_pa on 9/18/08 1:02pm
Msg #264611

...I’d report the LO to the proper Licensing authority. I know the law, he should. IMO If you know someone is doing something illegal, and don’t report it, you ‘could’ be held culpable....

We don't "know" anything really so I don't know how we could be culpable with the very limited bit of info we have in front of us for an hour or so. We can make assumptions and judgments from what we see and what borrowers tell us but that's not always reality.

Example - not on a loan but on what borrowers 'know'. I did a loan last evening and father and son owned the house jointly. Father wasn't present - LO nor title company informed them he was to be there - he was several states away camping. Son insisted his dad has never signed anything previously. I said either he did sign or if he didn't someone did sloppy work but no matter, his dad needed to sign paperwork this time. We work it out with the title company how to handle dad. Son's girlfriend has disappeared - she comes back with packets of paper from 2 previous refinances and starts to angrily flip through - oops, seems that dad did sign mortgage, rtc, til and affidavits on both and the settlement sheet on the other. Soooo, borrowers always don't 'know' what is going on. This guy also was POSITIVE, every time he refinanced that he was handed the checks immediately. I didn't argue or disagree with him - told him in this instance that wasn't going to happen.

Shifty (to be charitable) loan officers are still around ... our job is not to protect borrowers from themselves and their poor/misinformed/naive choices in their lives.

Reply by Linda_H/FL on 9/18/08 2:59pm
Msg #264640

" I did a loan last evening and father and son owned the house jointly. Father wasn't present - LO nor title company informed them he was to be there - he was several states away camping. "

Are we sure he wasn't "camping" in the "eternal" sense of the word???...<G> - that would probably be my first thought...

Reply by Les_CO on 9/18/08 9:15pm
Msg #264716

I agree that the borrowers are often confused, and not terribly savvy about any respect of financing, let alone the current laws on the books regarding, consumer finance, real estate, or many of the things involved in a loan closing. We as Notary Signing Agents should be aware of our States laws regarding such, and in CO, LO’s must be licensed, and are REQUIRED to know the laws governing their actions. I was not directing my comments toward the borrower, his financial acumen, or if he got a good deal or not. My comment was directed toward the LO that was conducting business in what would be an illegal fashion here in CO. All this is second-hand hearsay, but if what Josephine said was true, and I don't know MD law, but his actions would violate the law here. She as a LTP in MD as well as a Notary; I think would be held to a higher standard than the general public, as per knowledge on the current MD laws regarding closings. If she see's, or knows of some illegal activity occurring during a closing, I would think she would do well to report it. If I believe that a LO is conducting business in an illegal way, I would report them.

Reply by WDMD on 9/19/08 5:46am
Msg #264727

"In Colorado the Loan Officer must give to the borrower a Colorado Net Tangible Benefit Disclosure form, and have it signed. It is ILLEGAL for a LO to put a borrower into a loan that they do not benefit from. If your case was here, and it were me I’d report the LO to the proper Licensing authority. I know the law, he should. IMO If you know someone is doing something illegal, and don’t report it, you ‘could’ be held culpable."

"If she see's, or knows of some illegal activity occurring during a closing, I would think she would do well to report it. If I believe that a LO is conducting business in an illegal way, I would report them."





*I do not know anything about CO law but reading this brought a question to my mind. Out of curiosity is there some kind of regulation in CO that says you must report any suspected illegal activity or face certain consequences?

You state that the broker is required to provide the borrower with a CO Net Tangible Benefit Disclosure Form. How would you know for sure whether the broker did or didn't? Say you reported the broker as not providing it and reported the broker, and say someone was on their toes at wherever you report this activity and stopped the transaction while it was being investigated.

And say the broker had actually provided the document at an earlier time, so the broker was actually in compliance. Could you be held liable by any injured party by your actions? *

Reply by Les_CO on 9/19/08 10:57am
Msg #264739

Re: slick loan officer /WDMD

Many of the Colorado laws governing loans are recent, (2007) some not. There are, this year, three additional forms than must be given to the borrower. I mention the forms because of their content. If the forms were given to the borrower at another time and place, and the borrower forgot, really doesn't matter. The "forms" don't make a bad loan into a good loan. I’m not going to go into all the details of CO Law, as only those here need to know. As far as I know there is no stipulation that someone “report” illegal or fraudulent activity to anyone. However I have been to court, and testified several times as a witness {I’ve not been sued personally, yet.} The scenario is a disgruntled borrower goes to his sharp lawyer, and sues EVERYBODY; the Title Company, the Loan Broker, the Lender, and the Notary Signing Agent. Here in CO LO’s MUST be licensed, and bonded ($25,000) and carry E&O insurance in the amount of $100,000/$300,000. In my case I’m also a CO Real Estate Broker, although I don’t wear that hat as a Notary SA, I still am supposed to be aware of the laws governing RE transactions in this state. I would be deemed a ‘professional’ by the court, not a layman. In one of my posts I used the term “culpable”. Picture this : The judge asks you (under oath) “You saw these loan documents, and knew or suspected, under CO law that there were violations, and perhaps illegal, or fraudulent activity involved, but you said nothing?” How do you respond? You can’t plead ignorance of the law. What do you say? “Not my job”? The buyer’s lawyer says “These guys, ( the Mortgage Broker, the Title Company, and the Notary Signing Agent ) are all in it together, preying on unsuspecting borrowers, to line their pockets.” I think you can guess how this turns out.
I say judgment is the key. It is also the law in CO that the borrower receive the HUD1, Deed of Trust, and other closing documents 24 hours before closing. This almost NEVER happens. Do I call the CO Division of Real Estate, or Insurance Commission, and report this on virtually every closing I attend? No…but I always mention it to the borrower.
In CO and in MD, because of the bonding, and E&O insurance requirements, I can see some of these types of law suits on the horizon. Just be sure you know your States laws, and cover yourself for your hard earned $100 (or less).

Reply by BrendaTx on 9/19/08 12:46pm
Msg #264750

Re: slick loan officer /WDMD

**I say judgment is the key. It is also the law in CO that the borrower receive the HUD1, Deed of Trust, and other closing documents 24 hours before closing. This almost NEVER happens. Do I call the CO Division of Real Estate, or Insurance Commission, and report this on virtually every closing I attend? No…but I always mention it to the borrower. **

How exactly do you mention that to them? I guess I am curious about the words you use.

Reply by Les_CO on 9/19/08 5:46pm
Msg #264772

Re: slick loan officer/Brenda

I say: “You guys applied for this loan online or on the phone with your loan broker?”
They say” Yes”
I say..Well… they are trying to create a ‘paper trail’ of all the loan documents that you ‘should’ have signed, received, or perhaps ‘did’ sign previously, from the inception of this loan. I apologize for the inconvenience, but it is really necessary for us to go through, and for you to sign ALL of these docs’s even if you may have done it before. This is mostly for the lender, just in case a bank examiner pulls your file. But it is also for your protection. The primary reason for me to be here is to establish your identity and witness your signature’s. They need your “legal, sworn to, witnessed”, signature on some of these documents, primarily to dissuade any future conflict that could arise...By the way.... have you seen, or received a copy of these docs from your LO? No?… well they probably just got them from Title today…they are supposed to send you a copy so you or your attorney can go over the figures before you sign anything…but if you have any questions I’ll be happy to answer them, if I can, and remember you have three days to really peruse this stuff, and if anything is not of your liking, call your LO and have him change it, or tell him you will resend. Or I say some words to that effect. I think we pretty much all say the same thing? The 24 hour thing is a CO law, and has been for some time (if the borrower ‘requests’ the docs) but easy ( for us) to get around. Now on a second home, or rental, or income, or other property I make SURE the borrower is okay with the deal.

Reply by sue_pa on 9/19/08 6:55pm
Msg #264776

Re: slick loan officer/Brenda

... I think we pretty much all say the same thing?...

I sure don't.

Reply by Les_CO on 9/19/08 8:40pm
Msg #264787

Re: slick loan officer/Brenda

Vive La Difference!

Reply by CaliNotary on 9/19/08 9:34pm
Msg #264789

Neither do I

Talk about overstepping your bounds as a signing agent. Telling a borrower to call his LO and have them change what they don't like or they'll rescind? That sounds like something a dumb newbie would do.

Reply by MikeC/NY on 9/19/08 10:01pm
Msg #264794

Re: slick loan officer/Brenda

"I think we pretty much all say the same thing?"

I'm with Sue on this one - not me either.

I agree that if you're aware of a CLEAR violation of your state laws (as opposed to something that doesn't seem right, but you don't have all the facts so you can't know for sure), you should report it.

But the dialog you presented could plant a seed in the borrower's mind about whether or not the LO was being honest with him - do you really want to take on that responsibility?

Reply by Les_CO on 9/20/08 11:57am
Msg #264834

Re: slick loan officer/Brenda

Okay…To clarify… Firstly I was speaking to Colorado Law. Not PA, CA, or NY law.
Brenda asked me how I handle the borrower not getting the doc’s 24 hours before closing as per CO Law. I answered trying to explain what I usually say….. IN GENERAL, not…. EXACTLY… what I do or say in every case.
“call your LO and have him change it or tell him you will resend”
Perhaps I should have said… “Have him change it, and if he does not, and you are dissatisfied, you still have the option to resend.” This is more like what I usually say. This is a chat board, and my answers should be taken as “in general” not word-for-word. However in this scenario we established the LO is already in violation of CO Law, and hasn’t been very forthcoming with his clients. I could say this deal is illegal, and walk out. Or say… your LO is in violation of CO Law, so call him and ask him what to do, and while you’re at it, ask if he’s licensed to do business here in CO. (this would kill a large percent of these signings…IMO.) There are many ways to deal with this problem; I tried to explain what I ‘usually’ do.
“I think we pretty much all say the same thing.”……STRIKE THAT!!
I was speaking about Colorado Notaries…not ALL of them, but some of them that I have discussed this problem with. BUT yes, I take that back. I misspoke! I speak ONLY for me!
Why would any of you, not in CO, discuss the Colorado 24 hour law with your clients?

Reply by MW/VA on 9/18/08 4:44pm
Msg #264667

I do wish we were all under that kind of law. This "it's not our business" approach doesn't sit well at times. It burns us in light of the mortgage meltdown to see really bad loans being passed off.

Reply by CaliNotary on 9/18/08 12:28pm
Msg #264604

It's basic math

I don't feel sorry for this borrower at all. He knows what his old mortgage payments and insurance cost him, he knows what the new mortgage payment and insurance will cost him. He's an adult, if he wants to do something that stupid he has nobody to blame but himself.