Inflated Income.....Again??!

[6wolverines]

Brian...you addressed this issue in a previous post but I wanted to bring it up again. Upon review of our loan documents I find that broker inflated my husband's income by $1500.00 a month despite the fact that we provided pay stubs and W2 info at the time of application. Broker also failed to include my income which, at the time, was minimal but I did provide income verification for myself too. On the day we closed on this refinance our babysitter cancelled at the last minute so we took our 2 year old twins with us to closing. Naturally, we were preoccupied as the 2 inch thick pile of documents were being shoved our way for signatures and we did not notice the income disparity at the time or we certainly would have said something.

Should this be brought to someone's attention? Do we need to inform FIRST FRANKLIN of this income disparity? I almost feel like we were of diminished capacity at the time of closing but, of course, we could have rescheduled the closing for another day so I suppose that's to our detriment!! (I bet the scuzzy broker just loved the fact that we were preoccupied!) I just don't want this income thing to come back to bite us in the a$$.....we're already 2 months behind and the clock is ticking.

Your advice is priceless and appreciated. Thank you for standing with those of us who are struggling!

Char

[Moe Bedard]

Bump for Brian.

[Brian K.]

Well as I posted earlier, the real question is that of your participating in the fraud. In this case your participation was zero. This willful fraud by the broker may provide you another defense in a foreclosure case. The prior discussion was here:

Overstated Income!

As for telling FF, I would not rock the boat just yet. There agent, the broker, has all the documents in his/her possession, and if they wanted them they could have them. As a person who attended hundreds of closings (I also own a title company) I have become accustomed to borrowers not really reviewing the documents. I can’t understand why people will spend weeks researching which TV to buy, but want to rush through a closing on a house.

Being distracted at the closing is just life, but the broker and title agent should have stopped you on the really important points.

Just the other night, I was closing a short sale where the seller was a 29 year old gentlemen who had not paid the mortgage for almost 11 months. He blew into the closing 30 minutes late and asked if this was going to take very long. He read nothing, signed without looking and walked out the door without waiting for copies of this documents (just mail them to me he said). People never learn.

[6wolverines]

So, we should just let things ride for a while....is that your recommendation? On the other inflated income thread Professor Shays suggested writing a letter regarding a different issue and "covertly" inform FF of the income disparity somewhere later in the letter. We are in the midst of a modification application (waiting....and waiting....and waiting...) so would it be a good idea to write a letter asking about the status of the modification and in paragraph 3 or 4 make mention of the income? I just fear this will bite us in the a$$ down the road even though we did the right thing by providing income documentation that in no way indicated my husband's income was $6800.00 a month.

Again, your insight is so valuable.....I wouldn't know where to turn without this forum!!!!

Thanks again!

Oh, and it would appear that the "brain cell" at the closing the other night who showed up late and wanted to scoot early doesn't have a house full of children he's trying to keep from ending up on the street!!! What an a$$!!!

Char

[jefftobias]

Originally Posted by 6wolverines

Brian...you addressed this issue in a previous post but I wanted to bring it up again. Upon review of our loan documents I find that broker inflated my husband's income by $1500.00 a month despite the fact that we provided pay stubs and W2 info at the time of application. Broker also failed to include my income which, at the time, was minimal but I did provide income verification for myself too. On the day we closed on this refinance our babysitter cancelled at the last minute so we took our 2 year old twins with us to closing. Naturally, we were preoccupied as the 2 inch thick pile of documents were being shoved our way for signatures and we did not notice the income disparity at the time or we certainly would have said something.

Should this be brought to someone's attention? Do we need to inform FIRST FRANKLIN of this income disparity? I almost feel like we were of diminished capacity at the time of closing but, of course, we could have rescheduled the closing for another day so I suppose that's to our detriment!! (I bet the scuzzy broker just loved the fact that we were preoccupied!) I just don't want this income thing to come back to bite us in the a$$.....we're already 2 months behind and the clock is ticking.

Your advice is priceless and appreciated. Thank you for standing with those of us who are struggling!

Char

It's my understanding that First Franklin did full doc loans only. Their underwriters looked at the W-2 and pay-stubs to determine monthly income. They did offer bank statement loans in which one needed to provide 12 months of bank statements for First Franklin to extrapolate income. I personally used a First Franklin Loan 10 years ago to purchase my current home.

[6wolverines]

In a full doc loan shouldn't the income I see on our loan documents be exactly what it was at the time.......in line with the W-2, 1099 and paystub info I provided the broker? If it should be then it wouldn't be inflated at over $1500 for my husband and it wouldn't show me with NO income. Do you have a suggestion? We never provided bank statements at the time of our application but FF is asking for them now as I am an independent contractor. We are requesting a modification and I've been directed to send in 6 months of bank statements at this time.

I'm just a little leary that this income discrepancy will come back to haunt us. It is NOT with information we provided at the time of application.

Char

[Moe Bedard]

Char,

This is a very common occurrence. Poppy and I were speaking about this yesterday. Many borrowers gave their income to their lender or loan officer and even though they had your income, they took you into a stated loan product and artificially pumped up you income for you to qualify. Which is illegal. The problem that we are having is that the borrowers inadvertently signs this bogus income statement and no they have acknowledges they do make that money.

I have seen this countless times and it is predatory lending.

[jefftobias]

Originally Posted by 6wolverines

In a full doc loan shouldn't the income I see on our loan documents be exactly what it was at the time.......in line with the W-2, 1099 and pay-stub info I provided the broker? If it should be then it wouldn't be inflated at over $1500 for my husband and it wouldn't show me with NO income. Do you have a suggestion? We never provided bank statements at the time of our application but FF is asking for them now as I am an independent contractor. We are requesting a modification and I've been directed to send in 6 months of bank statements at this time.

I'm just a little leary that this income discrepancy will come back to haunt us. It is NOT with information we provided at the time of application.

Char

How often is your husband paid? Weekly? Every 2 weeks? 1st & 15th? Monthly? If your husband was paid every 2 weeks, he gets an extra paycheck twice a year. They may have inserted your self-employment income off the tax return into your husband's column by accident. Lenders used Gross income on W-2 wage earners, while using net income for self employed / independent contractors. Lenders were, and are, allowed to gross up non taxable income.

I'm just sorry that your lender stuck you with a 2 year loan. When FF first entered the market in 1993-1994 They were a great deal because it allowed people with bad credit to buy as long as their housing payment would not exceed 125% of their before housing payment. I used them because my previous house had been damaged in the Northridge earthquake and my mortgage company called me and offered 90 days of no payments so I could make earthquake repairs. 90 days later they wanted all 3 months of payments. After a 1 year battle of asking them only to extend the maturity date 3 months, I let them have the house and they lost $150,000 over 3 month of payments. I bought a house 12 months later with FF as the lender. Yes, paid 9% and had a prepay. One year later I paid the prepayment penalty to drop my rate from 9% down to 6.5% and now to 4.5%.

I had stopped sending my subprime clients to FF about 5 or 6 years ago, because there were better loans from other lenders available for my clients.

[jefftobias]

I misspoke myself. FF began using 100% of 1099 income.

[6wolverines]

My husband is paid every 2 weeks. Even if my income was combined with his it still wouldn't come close to the amount on the loan documents. It states his gross monthly income was $6802.92 but it was more like $5308.00 at the time and I was grossing in the area of $600.00 a month. So, even to combine our incomes it would still be nearly a thousand dollars MORE THAN our actual income at the time. At this stage of the game I believe that constitutes a serious discrepancy.......just not sure if I need to do something about this.

Char

[Marshall Rosenbach Esq.]

Have you contacted the broker and confronted him/her about the misstated income? Have you asked for a copy of your file with a qualified written request?

[6wolverines]

You know....I have, in fact, attempted to make contact with the broker. I tried to contact him about another issue right after we closed and he was "no longer with us".....and wouldn't you know it, the entire office has gone out of business since then. Well, I tracked him down at another mortgage brokerage and sent him 2 emails outlining my concerns about this inflated income issue. He has not responded. So, I called his extension at the office and he has failed to return my call. I do believe the creepo knows what he did was not on the "up and up" and he is avoiding me like the plague.

Char

[elpjohnson]

This same thing happened to us....the broker said that my husband made $9000 per month! WOW! BUT I didn't notice it and signed the application (dumb). Believe me I kick myself everyday for it.

[Moe Bedard]

You should track the broker of record down. They are required to keep your file I believe for 3-5 years. You can also use the "QWR" to force your lender to make them get the brokers files and all original paperwork. Good luck with that and when they realize they are going to have to jump through hoops that you create, they will cave to your demands.

I am finding that this "QWR" is the secret weapon. Look at JacMac, Andrew, BOB aka pbkonobi they all did that and then sent it to multiple executives and wala, loan mods for everyone. You ladies agree?

[elpjohnson]

You know what???? I think I'll start on that QWR tomorrow.....I'll post what I write and you guys can critique it. Might take me a few days to get it done but I'll post it in another thread when I finish. Thanks, that's a great idea!

[6wolverines]

Erika......I'm going to hold off on doing the QWR thing until you post yours so I can see what it should look like. Should it be sent to the person reviewing our application for a modification? Who should it be directed to and exactly what should it say? Should it go to everyone at First Franklin and Merrill Lynch?

As for the broker.....I'd like to keep "popping" up in his email box at work, kinda like that itch that just won't go away. He made out like a bandit and we're facing the very real possibility of losing our home......so I think I'll keep "tapping him on the shoulder" just to say..."Surprise!! Guess who again!!??"

I do know where he works......it's another scum-bagger mortgage brokerage set up in a store front!! I would really love the opportunity to look him in the face and ask..."Why"?

Char

[Moe Bedard]

Hi Char,
You could put his name and new company on Ripoff Report.........that might make you feel just a little better..
I know it doesn't undo or makeup for any of this mess that we are all in............but this forum sure does give me hope.....
I wish you all the best in your modification!
***

[elpjohnson]

Char...I haven't started on my QWR yet but I think I'm gonna use JacMac's version on her in person loan modification thread. I think I'm gonna address it to Option One, their CEO's and I'm going to send a copy to the broker. Who knows it may help. I too am a little confused about exactly what to put in it but I am going to post it so that Moe can take a look at it.

Just go for it Char!

Herein lays the problem if the Broker is out of business, the file is legally proprietary only to that Broker's organization, i.e. XYZ Mortgage Brokerage. The LO can not take the file with him, it must be preserved in a safe secure manner for reasons of Privacy, that is the law. Now just where is that SAFE place, with all of the Brokers going out of business and their prior shoddy business practices, that would be anyone's guess. They certainly did not pay for that prerequisite archival service with all of their ill gotten gains (at least not the fly by night get the money and run fellows/gals).

Is it in the dumpster, the box in the attic/cellar, the kitchen shelf, living room floor, left in the office for the next tenants, shredded (I know they are supposed to save it for the commensurate period of time), sold to the nearest Identity Thief, Timbuktoo, etc....you get the idea.

This issue has not been addressed as of yet, but dearly needs to be. Where did those pesky Mis-Rep ridden files disappear to? They contain people's lives, everything about the borrower's credit information, their Social Security Numbers, their Addresses, Employment, Tax Returns....... Not only that they contain the evidence of the "crime" - Fraud in copious amounts, who wants to archive that data.

The fellow who took your loan application that was replete with Mis-Rep most likely does not have your file any longer. So, where the heck is it? Who has gotten that information? What are they going to do with that information? How badly can that hurt you?

This should cause great amounts of concern - great concern.

[elpjohnson]

Char....hey girl, I posted my QWR in the thread called Help!!!I'm writing a QWR and need clarification. I used a combination of JacMac, Cuasims, Momof3boys, Andrew, and Bob's letters to come up with my final document. I hope this helps you.

Oh, and I sent it to Option One's CEO, Customer Service, Broker, Title Company, and VP Dick Cheney......can't hurt I suppose

[6wolverines]

Oh, Poppy!!!!! You just made me want to barf!!!!! I never considered the fact that our personal info might possibly be ripe for the taking. The potential consequences.........My husband has already been a victim of identity theft and what fun it was trying to clean up that mess!!!! And, I certainly can't imagine the broker (read: bottom feeder) paying for an archival service "just to make sure the personal information of the folks I've robbed blind is stored safely"!!!!!

What the hell does one do about that?????? If there is a period of time that the documentation must be preserved/available for my review, what type of violation does it constitute if the information has disappeared like a "fart in the wind"???!!!


Char

Oh recently there has been some really toothy Federal Regs issued on that subject - so much so I can not take loans home to underwrite at some shops for fear the Dogs will try to breach privacy. Let me do some digging around in the Fed Register for that one in the next few days for you all.

Lenders are real paranoid about that one these days, have to lock up your files at night, no files on the desk except the one you are working on.....excessively paranoid if you get my drift. Hummmmm maybe this privacy thing has some real teeth.

We may, might just want to take a real hard long look at that.........

Been out of the management loop for a while, so will have to research it.

[6wolverines]

Poppy.....your insight is priceless and I really appreciate all you have to offer us here. I'm really stuck on this income thing because I KNOW I provided all the right stuff at the time of application. Like I said previously, if we had the extra $1500.00 a month the broker said we had....we wouldn't be in this mess!!!

I'm looking forward to seeing what you "dig up" on this problem.

Thanks again!
Char

[ManicMangaManiac]

Char,

If it makes you feel any better, I too had my income inflated on my loan by more than $2300 and what's more, the broker NEVER asked me to provide proof of income whatsoever. I recall making out a short application in which I stated my take home income and that was it. Imagine my shock after the fact when I discovered that my income was '$3655' a month! If I actually made that much, I wouldn't be in this mess and neither would you or Erika or so many others.

My loan (with Option One) has other hallmarks of being a predatory loan: excessive broker fees, huge balloon payment ($94k) and it was structured so that it was unaffordable (I was only able to make the payments and stay current because I got $14k cash out. But all that money is now gone and OOne raised my payments by $182/mo. ).

If these loans are illegal, WHY should we be held to the contract?? I don't think any of us should have to honor them. Just my two cents' worth.

Sally