Origination News
Where the Shame Lies

To the editor: (Letter to the Editor November, 2004),
written by Rommie Bailey, Owner of Inter-Lake Mortgage Company

Shame, shame, shame. I am referring to Origination News the article Lew Sichelman wrote (in the October 2004 issue of Origination News Magazine). Is he just writing about a convicted loan officer, Jackie Free, or describing what everyone else does in the industry?

There are always gray areas when it comes to the law and business ethics, and some of the facts Mr. Sichelman stated were simply wrong. It was Jackie’s office and its business philosophies that were bad, not the individuals or the entire industry. I’m sure Mr. Sichelman could find a few active loan officers that do this type of activity to get loans done, but it is not an industry-wide epidemic. There is a fine line. I bet if you looked at a few of the loans Jackie Free did, she may have cut a few junk fees and maybe reduced some points she had charged. But I’m sure the commission she made on these loans were better than average.

As to the FBI nailing 20 people and being about to charge everyone in the office for something, this is evidence that these transgressions were not guided by the judgment of individuals, but by the philosophy of the company as a whole. Creating fake documents to get a loan done is not what everyone does. And please, give me a break, a stated loan is what it is, “stated” income fair and reasonable for the type of work the borrower is doing. The lender knows there are some gray areas, which increases risk, and that’s why the rates are higher.

Additionally, verification of employment is not about forgetting to check the box in the employment section of an application, or 1003. Let me give you a little education on what a VOE (verification of employment) is. It is simply a form to be filled out by an employer and/or ex-employer(s) stating the terms of employment, probability of continuance, etc. This form is filled out by the employer, and submitted to the lender to supplement income documentation.

As to verifying the income of someone who is self-employed or DBA, typically tax returns do not show a true income, because they write everything off they can in order to save on taxes, which is not a crime. When it income, one can be creative by showing bank statements deposits, or whatever, but most of these loans have to go stated in order to obtain financing from a lender. It’s the way business is done, and once again, higher rates reflect the risk.

Jackie shows no remorse. She needs a simple lesson in what is right and wrong. She felt she was helping people, but this was just self-justification. We know that the rules are meant to protect borrowers, in the long run, from over extending themselves on a loan and possibly resulting in default, Jackie was helping people, all right. She was helping herself and her office to more cookies from the lender’s jar.

An employee should be loyal to the company and have a certain amount of basic business ethics. A company is like a family, it needs to have honor, trust, values, integrity, and discipline so it may both prosper and create goodwill for the company, the people it serves and the community.

RD Bailey
A Michigan Lending Company
Grand Rapids, MI