Can I Borrow Your Appraisal, Mortgage Broker, Real Estate, Title Agent License?

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary

Coupled with the obvious improper relationship between lawyers and Wall Street, is the prior history of having done essentially the same thing in the creation of the loans. People who had licenses to practice their profession threw caution to the winds in exchange for large profits and fees. Keep in mind, lawyers, as you read this, that most of these people have errors and omissions policies. Also keep in mind, as Beth Findsen as pointed out in her excellent analysis, that the final issues of the battle may well be defined by the laws governing principal and agent. If these companies end up defined (by their own pleading, or by the proof) as agents for the securitization parties, you have some deep pockets leading straight to the doors of the mega-banks.

  • Appraisers received copies of the contract and were given the target value that was required for the deal to be approved. Failure to comply meant they never would see another deal. Compliance meant higher fees. This writer has personally seen the fee schedule from Chevy Chase Bank in which the schedule of payments is increased with the value of the house.

  • Mortgage Brokers received higher fees and undisclosed yield spread premiums for steering borrowers into bad loans. These evolved into mortgage brokerage mills that were morphed into “loan originators.” They had no money to lend of course, but that didn’t matter. The money was wired in from a remote source. Thus the originator named on the note signed by borrower was not the party that advanced any money. The mortgagee or beneficiary under the mortgage or deed of trust was not the party who advanced any money. The whole thing was a lie to keep the borrower from knowing the identity of his creditor. The borrowers literally did not know who they were dealing with nor the extra terms that were being added as the receivable was “sold” to unsuspecting investors who didn’t know what was going on at ground level.

  • Real Estate Brokers, knowing that the appraisals were at least suspect and that the loan deals were problematic, as well as knowing that the loans were not being funded by the party at the closing table, looked the other way to receive a much high volume of fees than anything they ever saw in their lives.

  • Title Agents, knowing that the parties were not properly disclosed in the closing documents, nevertheless issued policies and acted as closing agents. As title agents, they knew that the act of non-disclosure and misleading statements on the closing paper would create an immediate title cloud and might cause a fatal defect in the title chain. Many probably knew that the homeowner would not realize all these things and that when it came time for the obvious foreclosure on a loan that any 10 year old understood could never be repaid, borrowers would most likely walk away.

It all amounts to renting the license of local people so that a third party, who is neither registered to do business in the state nor licensed to perform these functions could control the transaction and call the shots as to how the deal was done and documented.

9 Responses

  1. Needed to keep home price UP – to keep the game going. At one point, there were publications that home appraisers were “Blacklisted” – IF they did not come in with a (fraudulent) high appraisal.

    What happened to those reports?? Why did the media just forget this???

    Hmmm – Paulson, Geithner, Bernanke – and President Obama – SAID – not the way to go to “handle” this mess.

  2. dear mr. garfield,

    you are correct in your assesment, the only issue is that most of the people at the street level had no real grasp or ideaa of what happened behind doors.

    still today the only page tge real estate agent is concerned is the top lines on the second page, the loan officers on their 800 and 900 lines for their broker and warehouse lender junk fees

  3. the title agents were generally third rate attorneys or as it is in VA you pass a test mostly about title insurance regulations and you are ok to do business, sign up with a title insurance underwriter like Chicago Title and it was done.

    mosr title agents outsourced their title search, abstract, etc. they just acted as striclty closers and escrow pass throughs

    everything was done in strict compliance of lenders instructions.

    i was told today by a title agent that they are there to protect the interest of the lenders and as escrow manag

  4. Neil,

    I visit this site quite often, and find many of your legal theories both well-founded and thought-provoking. However, your inclusion of the “title agents” (in some states, those would be attorneys) as being complicit in the whole process wreaks of the “let’s sue everyone near the scene of the accident” mentality. Our firm/title company has closed probably 10,000 loans this decade, and I have been responsible for many of those closings. However, only after the meltdown, and reading your posts, did I have any idea what actually went on behind the scenes. Our job was not to investigate into where the money was actually coming from, but rather to make sure that the title was clear and marketable at closing, and that the documents were properly explained to the Borrower (to whom we generally owed no duty, as we represented the lender – This is made clear on the documents they signed). I am proud to say that the vast majority of loans we closed were not sub-prime, but actual A paper, and we did discontinue relationships with brokers that we found to be scum (and that determination was typically made when it was clear they were more interested in kickbacks than quality service). Obviously, there were some agents/attorneys that engaged in fraud, but I think it is irresponsible to shoot all the dogs because a small minority have fleas. There should be some evidence of malfeasance before you advise your readers to start indiscriminately suing title agents, in general, for something they likely knew nothing about.

  5. We never received a copy of our appraisal. I remember our mortgage broker saying we needed the house to appraise at a certain amount and there would be no problem in getting that number.

  6. @usedcarguy,
    maybe that’s an angle we could go down. Subpeona the escrow closing docs to get a documentation on where the funds were provided by. I wonder……

  7. If the title agency is supposed to follow the closing instructions, and on the closing instructions there is a requirement for “proof” of an asset (funds drawn on Citibank account#____), and those instructions are disregarded by the title agent and the lenders’ agent on site (or over the phone), and there is no proof of the asset (since it never existed), is there liability on the part of the closing agency and owner/attorney? It seems to me that if they did THEIR job, we never would have closed and there would have never been a loan? Anyone? Anyone? Buehler?

  8. I don’t agree with this article at all. Maybe some parties of the little guys knew…..but I am telling you, I have been stopping at open houses on Sunday talking to Realtors about this situation…..they are clueless.

  9. Appraisers often rent their electronic signatures to trainees or anybody who can get clients for half the fee of the appraisal.

    I personally know of numerous unlicensed appraisers using a senior appraiser’s signature and the senior making 600k a year without even leaving the house.

    Read “The Truth About Real Estate Appraisal” on Smashwords.com

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