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Greg Cowart - Mortgage Broker or Lender at The Securus Group
Greg Cowart - Roseville Loan Guy

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Will it ever end??? (mortgage fraud)

Just reading the news these days is dangerous. When I thought that everyone that could have been caught for this type of behaviour already has, TWO new stories pop up in the same week, right here in Roseville!

8 Indicted On Roseville Mortgage Scam Allegations

Roseville Man’s guilty plea in $2.9 Million real estate Ponzi scheme

I don’t know what these people were thinking when they were doing this things (and maybe some of them are not guilty) but we can now see that A LOT of people were thinking the same thing in the easy money period of 2000-2007 (this kind of thing would be pretty much impossible to pull off today, well, at least most of it).

Protect yourself from the hype and promotion of fear!

Another great article from Ric Edleman. This time Ric explains why we’re continually bombarded with FEAR at every turn, and why it would be crazy to continue listening to these people…

Aftershock: Protecting Yourself from Books That Promote Fear

Claims at odds with reality at Quicken Loans

You can’t always believe what you read (or what BS you are being sold by some people/companies). Quicken Loans, one of the nation’s largest mortgage lenders that boasts to have “survived and thrived” in today’s difficult market by avoiding subprime mortgages and predatory practices, claims the top spot in surveys for customer satisfaction and has been rated as “one of America’s best places to work.” However, the Center for Public Integrity (CPI) is not buying it.

Quicken Loans Arena

According to a report by the CPI, Quicken Loans has continuously mislead homeowners about the details of their loans, duped them into paying excessive fees, used fraudulent appraisals, and even forced their employees to falsify borrowers’ qualifications on loan applications and through altered/fake documents. “Unconscionable” is the word used by a West Virginia judge who ruled in favor of one homeowner bringing suit against Quicken.

Recently a group of former employees decided to join the fray with allegations that they were urged to boost commissions by locking customers into higher rates even when they qualified for better ones and, as it’s been described in the suit, “rolling hidden fees into the loan.” Michael Pikora, a former Quicken employee, declared in a sworn affidavit that “The worse the client’s situation was, and the lower their credit, the easier it was to charge excessively high rates.” Furthermore, the former employees claim that they were compelled to work unpaid overtime.

Of course Quicken Loans have denied that it mistreats, or mistreated, workers or customers, and they emphasize their lending practices meet industry standards. Furthermore, the company has described the former employees’ lawsuit as “the product of parasitic plaintiffs’ attorneys who specialize in filing meritless claims in an effort to coerce settlements from job-producing companies.”

I’ve followed Quicken’s advertizing over the years and, not ever working there cannot confirm or deny any of this, but their advertising always seemed misleading and rubbed me the wrong way. That is certainly not to say they are the ONLY ones but they seem to be the only ones still doing it while at the same time boasting about how much they aren’t and how happy their clients are.


If anyone has any comments about previous experiences with Quicken Loans, good or bad, please let us know in comments!


Is the “loan mod” business dead? Is that a bad thing?

As of January 31, 2011; the FTC has banned consulting firms from charging up-front fees for negotiating modifications of residential mortgage loans. In Nevada, the Mortgage Lending Commissioner said the constraints of the federal rule “will have substantial impact” on the number of licensed consultants for mortgage loan modifications. His office counts 39 licensed loan modification firms with 185 licensed associates in Nevada (I would guess there was that many in the Sacramento area alone a year ago).

Critics say that the ruling favors large banks, which don’t want advocates representing homeowners. However while there might be a small grain of truth to that, the ruling really favors consumers in my opinion. As one would suspect, unethical mortgage modification firms often fail to do any work after collecting fees, and the FTC rule will prohibit mortgage modification firms from being paid in advance so this can not (legally) happen ever again. What some may not expect is the vast majority of these companies should be considered unethical. Most of them have little to no experience in the business and if they so it’s usually that they were mortgage originators for the predatory lenders than put so many people into very bad situations during the real estate boom of 2004-07, but couldn’t get the proper licensing required to originate mortgage loans in today’s regulatory environment. Taking advantage of people on their way in (giving them the predatory loan) and again on the way out (charging thousands up front to try and modify their mortgage)…


Short Sale Fraud is a big problem, getting bigger…

According to the commissioner of the State Of California Department Of Real Estate (DRE), Short Sale fraud is on the rise. In a recently issued letter the DRE reached out to local mortgage lenders to advise them of the problem, as well as for help. Even though there are many ways short sale’s can be used for fraud they specifically outlined the most common ploys. Namely “short sale flipping” where real estate agents and other, non-licensed individuals, defraud lenders as to the value of a listed short sale property, withholding higher offers that came in from prospective buyers and then selling the property to a straw buyer working with the Realtor, only to sell the property at a profit the day after buying the property. Not only are these agents making a killing doing this (they make a profit on the sale as well as a LARGE commission on BOTH transactions) it is hurting well intentioned buyer in the process.

There are a number of other methods being used for this fraud but that is the most prominent. This is not only bad for the lenders – something the public is probably apathetic to – but to you and me every day. As it usually does, greed always has a victim, even if it’s not easily noticed. If you’ve been out there trying to get into your first home for months with no luck, only to see a home you made an offer on for sale again a month or two later, there’s a good chance you are victim to this fraud, albeit indirectly. I’m sure you can see the problem this can cause.

What can we do about this? The DRE asks that we (Realtors, mortgage professionals, and you) report possible fraud directly to them. Especially unlicensed induviduals perpetrating this fraud, something that is extreemely damaging to the consumer and the industry alike. Is it worth the time? I say yes. In a time that ethics is SOOOO imporant in real estate and lending we need to do all we can to stop fraud. It’s important to all of us, even if we don’t think about it every day.

~ Greg

Sacramento Ca, leads the way in battling Loan Mod scammers in “Operation Loan Lies”

I don’t have too much for today’s post (there’s a lot coming this week) but look at this press release from the Federal Trade Commission on “Operation Loan Lies”; the new project to reign in on the loan modification industry. An industry that, if you read my blog often you know, I don’t think highly of…

FTC Leads “Operation Loan Lies” to Stop Fraud and Help Distressed Homeowners

~ Greg Cowart :: Roseville Loan Expert

MBA Press Release on Loan Mod scams…

The Mortgage Banker’s Association weighed in on the huge problem of loan modification scammers…

Take a look and you’ll see a couple of ways that this has been happening and what to avoid. You’ll notice that, just like my last post on the subject, they mentioned that these new loan mod companies popping up every day are (or aren’t) doing things that you can do yourself. I have some reference tools that can help you if you simply can not refi and are considering one of these loan mod companies. Before paying someone thousands of dollars to possibly get some sort of modification done, consider the less expensive option of doing it yourself.

Let me know if I can help you in any way…

~Greg :: The Roseville Home and Loan Expert

Making Home Affordable

The Making Home Affordable program recently released by the government may or may not be a great thing. The two part plan is supposed to help Roseville homeowners refinance into a lower rate and payment even if they don’t have the equity to qualify for a conventional loan. The second part is a modification program designed to help those that can no longer afford thier payment (for a qualified reason) modify into better terms. The loan mod scam artists I wrote about last week are now reportedly trying to use this new program to convince homeowners into thinking that they are legitimate. To help Roseville mortgage holders identify possible loan mod scams here is a brief rundown of the programs….

Refinance Plan

This plan is targeted at homeowners who have seen their home value decrease and they would like to refinance their loan to take advantage of today’s historically low interest rates. .

To be eligible you must…

  • Have a Fannie Mae or Freddie Mac held mortgage (I can help you find out)
  • Be current on your mortgage payments
  • Otherwise be able to income and credit qualify for a conventional refinance, however there are some exceptions that make qualifying easier in some instances

With this program your Loan-To-Value ratio can be as high as 105% and there will be no mortgage insurance required on the new loan if your current loan does not require mortgage insurance.

 Modifications Plan

To be eligible you must…

  • Have a loan that was obtained on or before January 1, 2009.
  • The loan amount must be within conforming limits (I can look them up by county for you)
  • Have a qualified financial hardship (I can help you with this information as well)
  • Be able to prove that you can no longer afford your payment  

If approved, the modified loan will reduce your interest rate so that the payment will be 31% of your household income.

 We have come across instances where loan mod scammers are trying to convince desperate homeowners that their service is part of the government’s new Home Affordable Modifications program. This is simply not true.

 They may not like it but you do not have to pay for this program. The loan mod companies are using Making Home Affordable Modification to their advantage, to make an extra thousand or so dollars off of homeowners that don’t realize they don’t have to pay anyone for this. As always, let me know if you have any questions. I have much more information on these two wonderful programs. There is no shortage of new modification companies popping up here in Roseville and in Sacramento. Before paying them anything, make sure it’s something you need to do…


~Greg : The Roseville Home & Loan Expert

This stuff still happens…

Lender Sues Sacramento Fraud Fugitives for $8 Million

Roseville Loan Expert ~ Greg

Loan Mods / Modification of loans

If you’re like everyone else you can’t get away from the incessant talk and advertising about loan modifications. The onslaught of offers to modify mortgage loans is not just limited to Sacramento or Roseville either, this is everywhere. And much of what we hear sounds too good to be true, but is it?

Modifying loans is not something new. Lenders have been able to, and occasionally even would approve, a loan modification for as long as I can remember. Years ago I worked in the mortgage division of a Sacramento-based Credit Union where we would modify loans somewhat frequently if it made enough sense for our client and the company as well. These modifications were few and far between. Both within my company and even more so for the mortgage and banking industry as a whole. So, even though most of us had never heard of them, loan mods are nothing new.

What is new is a new, independent, loan mod industry. This is what we hear and see about every day. Offers from someone to modify your loans, masquerading as a public service. However this is very much a for profit industry. The average loan modification client creates more income than a mortgage company or broker will make on a closed loan. And the loan mod company makes that money whether they achieve any sort of modification or not! Pretty sweet deal for them, huh?

Although most brokers in Roseville (and Sacramento) are modifying loans now we do not at Comstock. Now I can’t speak for the entire industry but only from the experience and research we’ve done here on our own. What we’ve found is astonishing! Based on what we have seen the majority of the new loan modification companies that have sprung up in the last year or two are failed mortgage brokers. The very same mortgage brokers responsible for the predatory lending that put their borrowers (and our country) in their current situation on the first place. They took their clients for as much as they could from 2003-2007 buy putting them into subprime, neg-am, and interest only Adjustable Rate Mortgages they knew would blow up, and after not being able to survive in the current environment where those types of loans aren’t available anymore they moved on to loan mods after a short hiatus out of the business. Those very same brokers that gave us all a bad name over the last decade are now loan modification specialists. Well at least they are not originating loans anymore.

Does it sound like I am down on the loan modification industry? Haha…. We it’s not just me. The California Department of Real Estate has been investigating these companies and, based on what I’ve been told by a friend inside the DRE, the vast majority of them in California are working outside of state law. The DRE also just released this Consumer Alertregarding the payment of advance fees to a company contacting you about a loan mod if you are in default. Unless they are an attorney and offer loan modification services as part of their regular practice the company is not allowed to collect anything from you up front.

What is the one thing they won’t tell you? They are not doing anything you can not do yourself. Before talking to any of them pick up the phone and call your current servicer. You have the ability to do anything they can. And now with the Home Affordable Refinance if you are current on your mortgage (which I can help you with) or the Home Affordable Modification if you are behind (which you can do on your own without having to pay anyone thousands of dollars) that are results of recent federal government stimulus you have no need for them. If you have any questions about these options please let me know or come to our Roseville branch and see me.

In the end if you have been contacted out of the blue by a loan mod company or are considering calling one of the ones advertising on radio or TV do your homework. Make sure to find out what their primary business is, how long they have been doing it, what they charge, what their success rate is, and get some references as well. Try to work with someone locally if possible and shop around. I would look for the one with the best guaranty if you are going to go this route.  

“The Roseville Loan Expert” ~ Greg