Magazine article Mortgage Banking

Forward or Reverse, Mortgage Lending Is a People Business

Magazine article Mortgage Banking

Forward or Reverse, Mortgage Lending Is a People Business

Article excerpt

David McLaughlin, senior assistant attorney general for the state of Georgia, warns that foreclosure rescue--the growing practice of appearing to acquire property from the owner who is about to lose it to back debt--is being infiltrated by fraud perpetrators. Speaking in San Diego at the Mortgage Bankers Association's (MBA's) National Fraud Issues Conference in March, McLaughlin said such burdened homeowners are easy prey to scam, because "they believe the worst thing that could happen to them is to have their property foreclosed on. What they don't know is that it would be the best thing to happen because of what fraudsters [end up] doing to them."

McLaughlin explained that criminals are "getting powers of attorney from these [homeowners] and lead purchase assignments," which enable them to "do whatever the heck they want to do with those houses"--such as selling them to investment buyers out of Florida, California and New York, and individual lenders. The lender and troubled homeowner are "satisfied because the loan is brought current, but the [delinquency] problem is going to be dumped on the next person," McLaughlin said.

According to McLaughlin, fraud has seeped into the building industry to an alarming extent. "We've created an environment where [some] builders now build for no other purpose than to sell to investor-buyer-fraudsters. They build a cheaper home, [and] they could care less about the home because they know that they can unload it on someone who doesn't care about it," he said. Outraged, McLaughlin said: "Think of it--a builder who spends a lifetime building something that should be a permanent reminder of their skill is now building a piece of trash, just to sell it to a bunch of fraudsters. We've created that environment."

Speaking at MBA's National Technology in Mortgage Banking Conference & Expo in Tampa, Florida, in late March, Steve Kropper, president of Bank On Real Estate, Lexington, Massachusetts, laid out some parameters for what kind of business operations should be outsourced to countries like India. "It should be labor-intensive work that is stable and well-documented, and requires more than 50 full-time workers to perform," said Kropper, an oft-selected participant in MBA panels. He recalled one instance where offshoring did not work. "We purchased [sales] leads in the U.S. and tried to offshore business development" from them.

A co-participant on the offshoring panel at MBA's technology conference, Steven Jo, senior vice president-business process management, in the Cerritos, California, office of Novato, California-based GreenPoint Mortgage Funding Inc., said his company has "challenges" offshoring with "anything that requires judgment. Folks 10,000 miles away who don't understand the U.S. mortgage market" cannot be expected to properly perform "once we start asking them to use data and come up with an assessment of that data. Things get tough," Jo admitted, adding: "We cut that off early on when we realize something is not working, so it doesn't impact overall [project] performance."

"Reverse mortgages someday may be as prevalent as other types of home financing," predicted Charles Gardner, director of the Atlanta Homeownership Center and the Department of Housing and Urban Development's (HUD's) regional office there. Speaking at the 2007 Eastern Regional Meeting of the Washington, D.C.-based National Reverse Mortgage Lenders Association (NRMLA) in Atlanta in April, Gardner said his office gets calls every day about HECMs (Home Equity Conversion Mortgages), asking: "'How can I get into the business? …

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