Consumerist has posted the memo on its site, and the details are indicative of serious problems at the company. Among the tips:
- Include all compensation under "base income." Lump in tips, bonuses etc. with base income, as that amount is favored by the software.
- Do not mention gift funds -- include them as though they were earned income.
- If all else fails, lie and add $500 to the applicant's income "to see if you can get the findings you want."
This memo essentially encourage employees to engage in fraud: knowingly falsifying a loan application is fraud.
Of course JPMorgan Chase says it was not aware of the memo and didn't condone or endorse it, and fired the employee who was circulating it.
It's not yet known how widespread the memo's circulation was, but this is great evidence of just how loose lending standards got at the height of the bubble. Now we are all paying the price.
Of course JPMorgan Chase says it was not aware of the memo and didn't condone or endorse it, and fired the employee who was circulating it.
It's not yet known how widespread the memo's circulation was, but this is great evidence of just how loose lending standards got at the height of the bubble. Now we are all paying the price.
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Reader Comments (Page 1 of 1)
4-01-2008 @ 7:17PM
Craig Buck said...
Tip of the iceberg. It is even worse when the real estate agent, title company and/or builder are all tied together with an affiliated business arrangement. Then no one is looking out for the consumer or telling the truth.
4-03-2008 @ 3:37PM
Oscar said...
This is all bull, they dont know who to point there finger at! Some people just have selective memory loss and the simply cannot remember that they to had a say so when they got there home loans! Lets not just blame it on the realtor or the mortage broker!
4-02-2008 @ 3:37AM
Glenn J Hebnet said...
We have to take responsibly for our actions or we have no right to buy a house
4-04-2008 @ 1:34PM
COURTNEY said...
I had no idea when I went to refinance on a home I inherited through the tragic death of my mother.I was young,and unaware that the loan officer was himself being sued,had a history of moving from state to state,being evicted,passing bad checks,but at the same time,being educated,charming,and most of ALL believable!!..This guy told me most folks do it this way.And the figure of $40,500 he made up,wouldnt even have to be reported to the IRS..It was just so the mortgage co. would see you could pay this loan,just borrow more more money from your equity to off set the monthly payments..Then in a few months refinance to a lower rate,,by then you will have graduated,and you'll more than likely be making this!! I had to refinance to pay bills,,I didn't graduated on time,I got pregnant,,needless to say I've lost not only my mother,but the home I inherited!!..This same man was just sentenced to the House of Corrections.His name is Julian Phil Heggie..
4-23-2008 @ 10:30AM
sbwf said...
I am interested in comments from Wells Fargo Home Mortgage employees (current or past) who are familiar with the "we don't care where the money comes from" policy. It was implemented about 5 years ago (banished now) and went something like this:
The asset section of the 1003 is to be completed with the name of the bank the closing funds will be drawn from and a dollar amount sufficient to cover closing. And, oh by the way, be sure to pad that dollar amount to cover any payoffs the underwriter may require. Now, we are not going to verify this information because we don't care where the money comes from as long as it's drawn on the bank listed. Not following this procedure will result in loans 'falling out' and too many 'fall outs' will result in termination.
I would also like to know about the response you received from your manager if you ever questioned the legality of this policy.