Jeff Manning, staff writer for The Oregonian newspaper, released a story Thursday, March 27, 2008, that claims the paper has come into possession of a copy of an internal memo from JP Morgan Chase (NYSE: JPM). According to The Oregonian article, which hints at unsavory or even fraudulent mortgage processing practices, the memo indicates that loan processors can (not should) use creative data entry to alter automated underwriting system results. The Oregonian writer entertains the "dark side" scenario in the tone of his article.That's a real convenient, time-tested ploy for selling newspapers. Kudos for his attempt.
However, representatives for Chase mortgage operations have dismissed the memo as nothing more than a strategic angle on automated process. While no one has actually come out to say they created the memo or why, the company allegedly admits that the document is genuine. I get no sense that anyone from the company who commented on the situation has anything to hide. In fact, company reps appear to be quite forthcoming on the matter.
Let's get one thing straight here, banks have a right, or even an obligation, to review every lending situation from a multitude of angles and perspectives. Automated underwriting programs assist in that process. If in fact, loan screening associates at Chase were instructed in the ways to "tweak" their system to produce differing results, it can safely be assumed that it was for the benefit of borrowers who are continually seeking personally convenient options to make mortgage contracts on homes of insanely inflated value. Nowhere have I seen an accusation that Chase forwarded mortgage papers based on fraudulently manipulated data. If someone has documentation of fraudulent practices that they can substantiate, I'd really like to see them.
In the meantime, I think The Oregonian should stick to reporting on flower shows and high school choir productions, areas at which I believe it is particularly adept. For it to publicize sensationalist speculation based on a memo of "Zippy Cheats and Tricks" is simply fifth-page fodder for the grist mill, nothing more. The entire situation comes right back to one particularly stinging realization, and I'll remind you of that reality in case you don't get it yet:
People who take adjustable rate mortgages in the face of mortgage rate low ebb and unsupportable home values are just plain dumb. When interest rates subsequently increase and they then get burned, the only hand they should be slapping is the one that signed the contract. I am oh so tired of listening to whiners trying to blame their thoughtless choices on those who were willing to underwrite their risk-taking ventures. If they made a bad gamble and now they're on the rocks, they can just cry me a big blue river and get a second job.
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Reader Comments (Page 1 of 1)
3-30-2008 @ 2:20PM
arthur lee davis said...
Interesting, thought provoking, especially after having just purchased THE BEAR at a very fair market price, without any coercing on a lowball first tendered offer.
3-29-2008 @ 8:14PM
bob said...
You seem to be of one mind. Damn the borrower, and praise the lender. No reason the lender should be more ethical, after all, It's deny, or approve and look good. Then of course, if the loan goes south, blame the "stupid" borrower. I've always known "who not" to deal with, and i would know you in a new york minute.
3-29-2008 @ 10:27PM
Ray said...
Mr. Sattler. Just because the borrower is "dumb" or "dishonest" does not make the lender "smart" or "honest". You ask if there is evidence of fraud on the part of JPM Chase; well yes there is. They intentionally lowered the quality of their loans and sold them to Wall Street (who also dumbly or dishonestly passed them off as being of lesser risk than they were).
The whole sub-prime crime is just that - a fraud perpetrated on credit-worthy borrowers who the Fed has selected to shore up banks that should go out of business due to incompetence and criminal fraud. The fact that they used "stupid" people to assist them is irrelevant (and I don't want to bail out the "stupid" either).
The banks and Wall Street violated all of their own risk standards and the "free market" should punish them appropriately and hardhly; if they were criminal on top of stupid, then they should go to jail. This whole situation is just a repeat of the S&L crisis and the dot com bust.
Ray
3-30-2008 @ 1:42AM
ddsheeran said...
What do you mean that taking ajustable rates is dumb? I have a 15 year ajustable at 5 3/4 % which is now going to less than 4%. Now who is dumb!!!
3-30-2008 @ 12:06PM
Boats said...
Sattler is obviously a tool.
3-30-2008 @ 1:08PM
lumley said...
AMEN! THE OREGONIAN IS A PROVINCIAL PAPER. ROSES AND AND OTHER NON EVENTS ARE IT'S FORTE. POLITICALLY IT SHOULD BE NAMED PRAVDA
3-31-2008 @ 5:13PM
Azhot1 said...
Hey,,,no joke. The mexican couple cleared out of their house + 2acres right out back where I live. They moved in a little over two yrs. ago when things were still "pretty hot" here in Az. He was like from Mexico City, Mx. (did not know a word of english) she spoke some and got a teaching job down near the border. They never even got a mail box put up where they moved into. Probably got a P.O. Box down in this little town near the border. The little house is a dump, now. He remodified it. I went down there and I swear on astack of bibles...crazier than hell.....reminds me of a place way down in mexico, somewhere. I have another neighbor swears they were helping illigals come across, he saw something one night in the middle of the night. Crazy! Now, here sits this little house & land, trashed. A sign has been posted on the front door. Way to go mortgage lenders! Stupid!