How To Identify A Mortgage Criminal
Word on the street is that fraud in this business is getting worse. The FBI reports that
indictments and convictions are at an all-time high. In its "2005 Financial Crimes Report to
the Public," the FBI reported, "80 percent of all fraud losses involve collaboration or
collusion of industry insiders." Headlines and news articles across the country tell us about
the dozens of bad guys rounded up on each big bust. It would seem that this business is
infested with criminals.
Well, it's not infested, but there are obviously problems. Do you ever wonder who these
bad guys are? Many assume they're all bottom feeders. And if they hadn't secretly plotted
their mortgage fraud scheme one day in a cold, dark basement, they'd surely be out there
bilking someone else out of money.
Yes, many of the indicted fit the description of the aforementioned slime. They are greedy,
lazy and a bit stupid. They know all about the headlines and reports of fraud, but the
headlines don't deter them - they want the easy money. Often, you can see them coming a
mile away.
But others don't fit the description. They, for the most part, seem to be good guys. They
blend into the crowds with their families and smiles. They're good workers and make
plenty of money. They've never been in a secret, dark basement to plot anything with
anybody. They read the headlines and say, "Honey, did you see this? They got the bad
guys again."
So how and why do these others get involved and go to prison? They commit crimes. You
can have a great family, a big smile and be the best worker in the world, but if you cross
the line, you've committed a crime and you'll do the time (and continue to rhyme). You do
not have to be the organizer or the king pin in order to get indicted.
For example, you could be charged with conspiracy to commit fraud. In layman's terms,
this means that you can be found guilty for being involved in a scam or with a group of
people who actually set out to commit those crimes, even though you didn't plan the crime
and were only involved in one or two parts of it. One can never turn a blind eye or "do it just
once" for one customer. This customer could be involved in 20 other closings, all
fraudulent. Then one day, the feds catch up to this customer. He is charged with
committing fraud on, let's say, 20 transactions. You were instrumental in only one of them.
The loan never would have closed except for your looking the other way.
I received an e-mail recently from a loan officer who had an encounter somewhat similar to
mine. I think this letter will help you to identify those who are not mortgage criminals.
Mr. Mayne,
I am 37 years old. I have been employed within our industry for 19 years. This business
is all I have ever known. I started in the business examining property taxes for a large
local title company. That position, while birthing my career, also introduced me to my
wife of 15 years, and for that I am forever thankful.
I left the title company and worked for a large mortgage bank, beginning as a closer. I
learned voraciously; I was passionate and loved my job. I then became a processor and
eventually an underwriter. I became the go-to guy. I was proud of myself. I had become
adept and well versed in all facets of our business. I was married and my wife and I had
our first child.
As my experience increased, I was approached by sales managers within the company.
"Quit the inside, become a loan officer ... With your knowledge base and your skills,
you'll be great; there is a lot of money to be made out here." In 1997 or so, the business
was changing rapidly. We were entering the refinance era. The mortgage market was
booming; automated underwriting and the advent of new products and processing styles
were reinventing the business on a daily basis. I was hesitant, however, to begin a
position that was 100 percent commission with a wife, an 18-month-old son and a
second child on the way. We were managing on my $36,000 salary and 12-hour days,
but I knew what the loan officers I was pumping paper for were earning and I wanted
better for my family.
I made the leap to the refinance market, and in the first month of my new career, I closed
$2.5 million. For my efforts, I was provided a paycheck in excess of $17,000. I had sales
directors contacting me, I had division managers contacting me - I had become a star. I
was being offered branch management positions and territory manager positions;
headhunters were calling me. I had arrived. I continued within that current capacity and
closed $25 million my first year. My wife and I had money coming in that we had never
dreamed of. My job was flexible, I had the ability to make my own hours and life was
grand.
I couldn't see an end. We now had two beautiful children and a third on the way.
Business was humming along. We were spending money and not saving a dime. The
economy, thanks to Mr. Greenspan, was blessing the masses with never-before-seen
interest rates. I was in my mid-thirties, had a great family and was a successful loan
officer for the largest mortgage company on the planet.
Then, the bottom dropped out. Rates went up; the market changed. We were in the
throes of a depression, and I became very quickly a pretty common commodity - a
struggling loan officer. It destroyed my self-esteem; I was no longer the star - no more
headhunters, no more five-figure paychecks. Life became days of worry and struggle. I
lost my self-worth; I felt empty - a complete letdown to my family. My role was the
provider; no one had to worry about anything ... I always handled it - the go-to guy.
Overnight, it was stripped away. This career choice led to a bankruptcy, as well as a
series of other horrendous personal decisions.
I slowly, with a tremendous amount of support from my wife and parents, began to crawl
out. I began to work for a lifelong friend at a small broker's office who offered a pretty
generous commission split, and I was beginning to get back on track. Business was
steady, albeit slower.
In May 2005, I was approached by an individual who owned a mortgage company
across the street from our office. He asked if I could help him refinance two borrowers
and provided me with complete copies of all documentation used when he originated
the loans six months prior. I took the files home and over that weekend began to look at
them. The two transactions totaled over $5.5 million. The borrowers had excellent credit,
huge deposit accounts and LTVs within reason. I was contacted the following Monday by
an individual representing both borrowers indicating that I was being tested with these
two loans and when they closed, there would be many more.
Later in the week, I was provided, by this same individual, eight purchase contracts for
multi million dollar properties within exclusive areas of the city. I was holding in my hand
over $20 million in loan production. I was provided phone numbers and credit reports for
all borrowers, and was instructed to charge fees and points at my discretion and utilize
stated income or no-documentation programs for each. The properties being purchased
had very sketchy listing histories. I wasn't stupid or naive, and knew exactly what I was
working with.
Jerome, I began the same justification process you mention in your talks. I started
saying to myself, "Everyone else is doing it. This will just give my family a little kick start
and then I will get out." I then began a three-month odyssey that I had only seen on film
before. Countless phone calls at all hours of the day and night, shady individual after
shady individual, and the growing pit in my stomach becoming bigger by the day.
Finally, one day, I got my wits about me. I realized I had uncovered a scheme that
involved something similar to this: purchase property for $1.2 million, appraise it for
$3.5 million, sell it the same day to a "borrower" for $3.5 million and pay the original
seller his $1.2 million from the "borrower's" 80 percent mortgage on the $3.5 million
purchase price. This "business venture" left $1.6 million on the table to be split up
amongst the involved parties - per deal! They would escrow 18-24 months of payments,
keep the properties insured and no one was the wiser. In addition, they were creating
their own market. Each deal would become easier to appraise because of the
comparable sale created by the transaction that has just closed. It was brilliant.
But Jerome, this is where our stories differ. I just couldn't do it. I never closed a loan. I
never even submitted a loan. I would always make up a problem that would justify
having to take the transaction to another lender. I'd lay awake at night. I became irritable.
I was a nervous wreck.
And then one day (Black Monday as we have come to call it), I came into my office a
little after 8:00 a.m. At approximately 8:30 a.m., the office across the street was raided by
the U.S. Secret Service and the FBI. I watched them carry out box after box of files,
CPUs and people in handcuffs literally 150 yards from my office door. I watched it
happen and I cried. I was witnessing the destruction of countless families, a business
and a reputation in the 40 minutes it took the agents to complete their tasks.
I have spoken to the local office of the FBI on a number of occasions (on my own
accord) as recently as yesterday. I poke around on the Internet occasionally, looking for
mortgage fraud-related topics since this happened. I saw your Web site today. I listened
to your depiction of telling your children that because you were sentenced to 21 months
in federal prison, you would be gone "for two Santa Clauses," and again I began to cry
because I was almost there. I thank God everyday for giving me the fortitude to say no.
Jerome, my best wishes to you. Please keep spreading your message.
So, how do you identify a mortgage criminal? I don't think you can. But the good mortgage
professionals, the honest ones, rise to the top with good leadership, ethics and education.
Jerome Mayne is a keynote speaker and author. He has worked with dozens of companies and associations
around the country helping their people make the right decisions, when the right decisions aren’t easy. He is a
member of the National Speakers Association as well as the Real Estate Educators Association. He’s the author
of the book, Life Saving Lessons – The Diary of a White Collar Criminal and co-author of Mortgage Fraud and
Predatory Lending – what every agent should know (Kaplan Publishing). .
© Copyright, Jerome Mayne 2008
Word on the street is that fraud in this business is getting worse. The FBI reports that
indictments and convictions are at an all-time high. In its "2005 Financial Crimes Report to
the Public," the FBI reported, "80 percent of all fraud losses involve collaboration or
collusion of industry insiders." Headlines and news articles across the country tell us about
the dozens of bad guys rounded up on each big bust. It would seem that this business is
infested with criminals.
Well, it's not infested, but there are obviously problems. Do you ever wonder who these
bad guys are? Many assume they're all bottom feeders. And if they hadn't secretly plotted
their mortgage fraud scheme one day in a cold, dark basement, they'd surely be out there
bilking someone else out of money.
Yes, many of the indicted fit the description of the aforementioned slime. They are greedy,
lazy and a bit stupid. They know all about the headlines and reports of fraud, but the
headlines don't deter them - they want the easy money. Often, you can see them coming a
mile away.
But others don't fit the description. They, for the most part, seem to be good guys. They
blend into the crowds with their families and smiles. They're good workers and make
plenty of money. They've never been in a secret, dark basement to plot anything with
anybody. They read the headlines and say, "Honey, did you see this? They got the bad
guys again."
So how and why do these others get involved and go to prison? They commit crimes. You
can have a great family, a big smile and be the best worker in the world, but if you cross
the line, you've committed a crime and you'll do the time (and continue to rhyme). You do
not have to be the organizer or the king pin in order to get indicted.
For example, you could be charged with conspiracy to commit fraud. In layman's terms,
this means that you can be found guilty for being involved in a scam or with a group of
people who actually set out to commit those crimes, even though you didn't plan the crime
and were only involved in one or two parts of it. One can never turn a blind eye or "do it just
once" for one customer. This customer could be involved in 20 other closings, all
fraudulent. Then one day, the feds catch up to this customer. He is charged with
committing fraud on, let's say, 20 transactions. You were instrumental in only one of them.
The loan never would have closed except for your looking the other way.
I received an e-mail recently from a loan officer who had an encounter somewhat similar to
mine. I think this letter will help you to identify those who are not mortgage criminals.
Mr. Mayne,
I am 37 years old. I have been employed within our industry for 19 years. This business
is all I have ever known. I started in the business examining property taxes for a large
local title company. That position, while birthing my career, also introduced me to my
wife of 15 years, and for that I am forever thankful.
I left the title company and worked for a large mortgage bank, beginning as a closer. I
learned voraciously; I was passionate and loved my job. I then became a processor and
eventually an underwriter. I became the go-to guy. I was proud of myself. I had become
adept and well versed in all facets of our business. I was married and my wife and I had
our first child.
As my experience increased, I was approached by sales managers within the company.
"Quit the inside, become a loan officer ... With your knowledge base and your skills,
you'll be great; there is a lot of money to be made out here." In 1997 or so, the business
was changing rapidly. We were entering the refinance era. The mortgage market was
booming; automated underwriting and the advent of new products and processing styles
were reinventing the business on a daily basis. I was hesitant, however, to begin a
position that was 100 percent commission with a wife, an 18-month-old son and a
second child on the way. We were managing on my $36,000 salary and 12-hour days,
but I knew what the loan officers I was pumping paper for were earning and I wanted
better for my family.
I made the leap to the refinance market, and in the first month of my new career, I closed
$2.5 million. For my efforts, I was provided a paycheck in excess of $17,000. I had sales
directors contacting me, I had division managers contacting me - I had become a star. I
was being offered branch management positions and territory manager positions;
headhunters were calling me. I had arrived. I continued within that current capacity and
closed $25 million my first year. My wife and I had money coming in that we had never
dreamed of. My job was flexible, I had the ability to make my own hours and life was
grand.
I couldn't see an end. We now had two beautiful children and a third on the way.
Business was humming along. We were spending money and not saving a dime. The
economy, thanks to Mr. Greenspan, was blessing the masses with never-before-seen
interest rates. I was in my mid-thirties, had a great family and was a successful loan
officer for the largest mortgage company on the planet.
Then, the bottom dropped out. Rates went up; the market changed. We were in the
throes of a depression, and I became very quickly a pretty common commodity - a
struggling loan officer. It destroyed my self-esteem; I was no longer the star - no more
headhunters, no more five-figure paychecks. Life became days of worry and struggle. I
lost my self-worth; I felt empty - a complete letdown to my family. My role was the
provider; no one had to worry about anything ... I always handled it - the go-to guy.
Overnight, it was stripped away. This career choice led to a bankruptcy, as well as a
series of other horrendous personal decisions.
I slowly, with a tremendous amount of support from my wife and parents, began to crawl
out. I began to work for a lifelong friend at a small broker's office who offered a pretty
generous commission split, and I was beginning to get back on track. Business was
steady, albeit slower.
In May 2005, I was approached by an individual who owned a mortgage company
across the street from our office. He asked if I could help him refinance two borrowers
and provided me with complete copies of all documentation used when he originated
the loans six months prior. I took the files home and over that weekend began to look at
them. The two transactions totaled over $5.5 million. The borrowers had excellent credit,
huge deposit accounts and LTVs within reason. I was contacted the following Monday by
an individual representing both borrowers indicating that I was being tested with these
two loans and when they closed, there would be many more.
Later in the week, I was provided, by this same individual, eight purchase contracts for
multi million dollar properties within exclusive areas of the city. I was holding in my hand
over $20 million in loan production. I was provided phone numbers and credit reports for
all borrowers, and was instructed to charge fees and points at my discretion and utilize
stated income or no-documentation programs for each. The properties being purchased
had very sketchy listing histories. I wasn't stupid or naive, and knew exactly what I was
working with.
Jerome, I began the same justification process you mention in your talks. I started
saying to myself, "Everyone else is doing it. This will just give my family a little kick start
and then I will get out." I then began a three-month odyssey that I had only seen on film
before. Countless phone calls at all hours of the day and night, shady individual after
shady individual, and the growing pit in my stomach becoming bigger by the day.
Finally, one day, I got my wits about me. I realized I had uncovered a scheme that
involved something similar to this: purchase property for $1.2 million, appraise it for
$3.5 million, sell it the same day to a "borrower" for $3.5 million and pay the original
seller his $1.2 million from the "borrower's" 80 percent mortgage on the $3.5 million
purchase price. This "business venture" left $1.6 million on the table to be split up
amongst the involved parties - per deal! They would escrow 18-24 months of payments,
keep the properties insured and no one was the wiser. In addition, they were creating
their own market. Each deal would become easier to appraise because of the
comparable sale created by the transaction that has just closed. It was brilliant.
But Jerome, this is where our stories differ. I just couldn't do it. I never closed a loan. I
never even submitted a loan. I would always make up a problem that would justify
having to take the transaction to another lender. I'd lay awake at night. I became irritable.
I was a nervous wreck.
And then one day (Black Monday as we have come to call it), I came into my office a
little after 8:00 a.m. At approximately 8:30 a.m., the office across the street was raided by
the U.S. Secret Service and the FBI. I watched them carry out box after box of files,
CPUs and people in handcuffs literally 150 yards from my office door. I watched it
happen and I cried. I was witnessing the destruction of countless families, a business
and a reputation in the 40 minutes it took the agents to complete their tasks.
I have spoken to the local office of the FBI on a number of occasions (on my own
accord) as recently as yesterday. I poke around on the Internet occasionally, looking for
mortgage fraud-related topics since this happened. I saw your Web site today. I listened
to your depiction of telling your children that because you were sentenced to 21 months
in federal prison, you would be gone "for two Santa Clauses," and again I began to cry
because I was almost there. I thank God everyday for giving me the fortitude to say no.
Jerome, my best wishes to you. Please keep spreading your message.
So, how do you identify a mortgage criminal? I don't think you can. But the good mortgage
professionals, the honest ones, rise to the top with good leadership, ethics and education.
Jerome Mayne is a keynote speaker and author. He has worked with dozens of companies and associations
around the country helping their people make the right decisions, when the right decisions aren’t easy. He is a
member of the National Speakers Association as well as the Real Estate Educators Association. He’s the author
of the book, Life Saving Lessons – The Diary of a White Collar Criminal and co-author of Mortgage Fraud and
Predatory Lending – what every agent should know (Kaplan Publishing). .
© Copyright, Jerome Mayne 2008
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| Jerome Mayne |
Contact:
612-919-3007
E-mail
9185 Cedar Forest Rd.
Eden Prairie, MN 55347
612-919-3007
9185 Cedar Forest Rd.
Eden Prairie, MN 55347
All of Fraudcon and Jerome Mayne Services:
Jerome Mayne is a Public Speaker for Fraud Conferences and Fraud Conventions, including
Mortgage Fraud Conferences and Mortgage Fraud Conventions. In addition to being a Fraud,
Mortgage Fraud and White Collar Crime and White Collar Mortgage Fraud Public Speaking
Expert, he also consults for Public Speakers who speak in the areas of Fraud, Mortgage Fraud,
White Collar Crime and White Collar Mortgage Fraud Public Speaking.
A customized public speaking engagement can include fraud statistics, federal fraud statistics,
mortgage fraud statistics and the effects of fraud on a company.
Has been an Expert and a Keynote Fraud Public Speaker at Fraud, Mortgage Fraud, White Collar
Crime and White Collar Mortgage Fraud Public Speaking events, including conferences and
conventions. For specific engagements, see client list.
Primary Areas of Expertise:
Mortgage Fraud Public Speaker
White Collar Crime Public Speaker
Fraud Public Speaker Trainer
Fraud Public Speaker Consultant
Fraud Convention Public Speaker
Fraud Conference Public Speaker
Fraud Expert Public Speaker
Mortgage Fraud Expert Public Speaker
Mortgage Fraud Consultant Public Speaker
Jerome has developed a talk on ethics that evokes thought and discussion. He explores the
definition of ethics as described on www.dictionary.com, the differences between general business
ethics and the set of principals of right conduct, or ethics, as set forth by an employer or a trade
association. His talk on ethics was designed for presentation to the MBA program at Hamline
University in Minneapolis, Minnesota.
Jerome Mayne is a Public Speaker for Fraud Conferences and Fraud Conventions, including
Mortgage Fraud Conferences and Mortgage Fraud Conventions. In addition to being a Fraud,
Mortgage Fraud and White Collar Crime and White Collar Mortgage Fraud Public Speaking
Expert, he also consults for Public Speakers who speak in the areas of Fraud, Mortgage Fraud,
White Collar Crime and White Collar Mortgage Fraud Public Speaking.
A customized public speaking engagement can include fraud statistics, federal fraud statistics,
mortgage fraud statistics and the effects of fraud on a company.
Has been an Expert and a Keynote Fraud Public Speaker at Fraud, Mortgage Fraud, White Collar
Crime and White Collar Mortgage Fraud Public Speaking events, including conferences and
conventions. For specific engagements, see client list.
Primary Areas of Expertise:
Mortgage Fraud Public Speaker
White Collar Crime Public Speaker
Fraud Public Speaker Trainer
Fraud Public Speaker Consultant
Fraud Convention Public Speaker
Fraud Conference Public Speaker
Fraud Expert Public Speaker
Mortgage Fraud Expert Public Speaker
Mortgage Fraud Consultant Public Speaker
Jerome has developed a talk on ethics that evokes thought and discussion. He explores the
definition of ethics as described on www.dictionary.com, the differences between general business
ethics and the set of principals of right conduct, or ethics, as set forth by an employer or a trade
association. His talk on ethics was designed for presentation to the MBA program at Hamline
University in Minneapolis, Minnesota.
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