Over and over again, this is how loans were “funded”. It was not the borrower that knew what “numbers” to plug into the loan application to get them to go through. It was the “loan officers” who “massaged the numbers to make it work.
Check out the documents below. They represent a borrower who showed concern for how the “loan officer” filled out the loan application and his response. I have pulled out the key parts due to the fact that it is somewhat difficult to read.
From the exchange…
Concerns from the borrower…
I have the following concerns with the documents you sent me:
(1) I do not make $34,000 per month nor anything close to this figure. I am not
comfortable signing a document with a number I cannot document in some form.
(2) There are repeated mentions that this is an adjustable rate mortgage. I could find
no mention of the frequency and amount of the adjustment. I need this.
(3) I do not wish to escrow insurance or taxes. I will pay these.
(4) Apparently this is a $417,000 first and a $70,000 second. Where are the
documents for the second? What is the rate, how adjustable, what are the costs,
what IS the term’? Why are we doing it this way?
I will need the information and answers requested before I can execute and return the
Response from the “Loan Officer”
My comments in italics…
I hope all is going well. This email is in response to the fax you had sent me. I’ll’ address each numbered concern:
1. This is a stated income deal. We had to state an amount that will be consistent through each deal. There are certain ratios that have to be met for income to debt… This is the figure that made the ratio fit. Since you have ample equity (from an inflated appraisal) and assets (that are now gone), along with great credit, (not anymore) this is where the luxury of a stated program comes in. It will not need to be documented. There is a form 4506 (request for tax transcript) in the package that needs to be signed, it is only to verify that you FILE your taxes (this is why so many thought they were submitting documented income).
2. Talks about the adjustable rate, see document below…
3. Talks about the escrows, again see document below…
4. The route we took to get the best absolute rate, (biggest commission) was keeping the first mortgage at a “conforming” or “conventional” amount. $417,000 is that maximum amount. Once it went to a “JUMBO” or “Non-Conforming loan amount, the rate jumps .25%. The second mortgage of $70,125 is to avoid mortgage insurance and allow you to put less down. The idea goal would be to pay that one down as use it for future purchases.
I appreciate all of your business (sucker) and want you to be as comfortable with me as possible. I know we’ve had some delays (manipulating the numbers) that seem a bit silly, but I guarantee that I’m laying the foundations fore these deals and several more. Once we get these first few initial closed, it’s smooth sailing from there on out. If you’d prefer a sit down sometime this week please let me know. I know you gentlemen are busy, but I want you to be confident AND comfortable with me.
Marc S. Bristol
Senior Loan Officer
JP Morgan Chase Home Mortgage
Well, as you can imagine, the home is now in foreclosure…
Moral to the story is the Loan Officers were the Liars in the Liar Loans. How else could of the game worked?