Fraud In The Mortgage World, Where Is It? Is The Option Arm A Fraud Product?

Posted on March 11, 2008
Filed Under Business |

The more I chat with folks the more I realize something. Where is the fraud in our business? I talk with LO’s, I get emails from Brokers and AE’s, network with title reps, but no one claims they purposely commit fraud. I wonder why that is?

When you stop chuckling, you can understand the humor in that opening line, right? What I’m saying is that I’ve never heard anyone say they don’t do things right. Oh sure, people cut corners all the time, but purposely commit something that could be viewed as fraud? No way!

Everyone I talk to in this business says they do everything above board, they run a squeaky clean shop, all their employees do things by the book or they get fired, period. You know, I like when someone tells me that, but the more I hear it, the more I tend to not believe it.

Lately in our industry, people bad mouth the Pay Option Arm, why is that? Don’t tell me it’s because the payment can go up, that’s never been a secret. Don’t tell me the balance can go up because that’s all over the disclosures. I will accept the exuse that people don’t read the disclosures because I’ve never seen anyone ever do so, including me when I closed on my house.

So, if everything is disclosed in writing to the borrower, what’s left? Can we blame the Broker or Loan Officer? Nah, that can’t happen because, as I discussed, everyone claims to work with honestly and integrity in the mortgage business. (If you couldn’t tell, I said this sarcastically)

I know I’ve harped on this before, but I’ll do it again. The Pay Option Arm is NOT a bad mortgage product. It’s a different kind of product, but it isn’t bad. There could be some versions of the Option Arm that some can say are bad, but a blanket shouldn’t be cast over the whole program because of some bad versions.

The same can be true about the mortgage world. No one claims to be “bad”, but we all know it exists somewhere out there. Our job is not to find the bad Mortgage Brokers, the Law does a good job with that, our job is to be honest and ethical.

Don’t claim you run a fraudless business, do it. Actions speak louder than words.

I would like to invite you to get “mortgage info with an attitude“. Free weekly answers about the mortgage business called the Mortgage Mailbag. The first installment is, are you ready for this…. “The 5 Biggest Myths about the Pay Option Arm and the Real Truth About Them”. You can access this free service at http://www.MortgageMailbag.com .

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