Contributors to the Junk Mortgage Market

In James Doran’s article in this morning’s National he makes reference to the "worse than junk" [mortgage] loans that were taken out by people who couldn't repay them. This portion of the article is worth expanding upon.

Some would have us believe that these loans existed because lenders' loan programs allowed for practically anyone with a heart beat to get a loan. This, however, is only part of the truth.

Fraud Story

It's still happening! Even after all the news about fraud, loan originators are still willing to "bend" the guidelines.

I won't say who, but I am helping a couple of friends understand the process of obtaining a loan - as they go through it. We'll call the first one Jack. Jack owns his home free and clear. He has no provable income so he needed a co-borrower/co-signer. A friend of ours, we'll call her Paula (she does not live at Jack's house) agreed to co-sign on a home equity loan.

Let's get a bit of history first.

Ethics Lesson From A Stand-up Comedian

“All the world’s a stage, and all the men and women are merely players…”

Shakespeare.

I have been a performer all my life—a musician, an actor, an improv-comedy performer, and a stand-up comedian. On the other end of the spectrum, I have participated successfully in business for most of my adult life. I founded three separate corporations—a real estate investment company, a mortgage brokerage firm and now a public speaking and training company.

I am proud that I have been able to find success with both the left and the right brain—until a few years ago when I realized that, believe it or not, the qualities of a successful businessman are the same as a successful performer.

Acting is all about honesty. If you can fake that, you’ve got it made.

George Burns

A successful performer is genuine, truthful and passionate. He is confident and trustworthy. You can’t succeed in business without these qualities either.

Well, you can’t fake honesty.

Top 10 Reasons To Commit Fraud

10. You wanted some time to mull over a career change.

9. You always thought you'd look great in an orange jump-suit.

8. You wanted to see just how bad Martha Stewart really had it.

7. You won’t have to worry about buying Christmas presents for your pesky kids.

6. You wanted to sharpen up your fighting skills.

Mortgage Fraud Arrests Being Made All Over The World

Fraud in the mortgage industry, for the US is at an all time high. We all know that. I subscribe to a service on Google that sends me any news story, published anywhere in the headline, the words "mortgage fraud." It's amazing how there are just as many feeds from non-US news sources ans there are from the US. See link I have provided as an example. There are gangs of organized criminals perpetrating fraud as if this were the latest mafia scam. There are plenty of news sources saying that it in fact is the new mafia money source.

Mislead or Misunderstood

If you take my money without me knowing you did, as in stealing my identity and using my credit, you are defrauding me. That's obvious. If you make me an offer and I think I am getting X but as the buying process moves along (or is completed) I wind up with Y, I have been mislead - perhaps you have defrauded me.

I am able to keep my cool in many situations. This is a story of the fact that it sometimes pays to just take is easy, relax and don't assume the worst, first.

I recently received an unsolicited email from a teleconferencing company. The subject line read, Call for Speakers. The email said,

What's An Ethic?

We all have an inner voice that tells us right from wrong. All of us, except sociopaths, are guided daily by this inner voice. We get ourselves into trouble when we hear the voice and choose to ignore it. We must trust the inner voice without questioning it.

My experience of being on the wrong side of the law did not make me an expert on fraudulent behavior, ethics, business or sales. It was my experiences after I suffered the consequences and the humility I gained that helped me discover what works and what doesn’t in business.

Ethics is a set of principals of right conduct. Who decides what right conduct is? Usually, a company or a professional association gets to determine what they consider appropriate behavior. In the past, I had some trouble with ethics. It was something I had never thought about. I have now had time to ponder, and I believe I now understand the issue.

5 Steps to Prison

“How many times do we have to hear yet another felon talk about how he committed a crime, went to prison and how it just wasn’t worth it?” It would be great if the answer to that question was: Not much longer.

But that doesn’t appear to be the case since arrests for white collar crimes are still on the rise. We keep feeding the felon pool. So you’re probably going to hear more and more and more from us.

Some of us felons care about the rise of white collar crime, the image of our (former) industries and the damage it does and has done to unsuspecting victims. As it turns out, I also care that you don’t have to walk down the same shameful destructive path I did – post crime. And to address the white elephant, some of us also make a living now at risk mitigation, fraud consulting and public speaking.

Many of us have a perception of what fraud is. Fraud is Enron or Bernard Madoff where hundreds of millions of dollars are skimmed, stolen or embezzled. We are lulled into the belief that dollar amounts and publicity define fraud. To our co-workers and colleagues we regurgitate the CNN reports, with our own commentary added in, on how “those despicable So-n-Sos” are disgracing corporate America.

Well, your reiteration of the news and its despicableness (wow, spell check didn’t catch me on that one – big surprise, I’m excited that I got away with something) do fall into the fraud category. But it doesn’t end there.

Guilty Until Proven Innocent

Perception is reality. There are examples of it every day. Stocks are bought or sold because someone with credibility (or perceived credibility) says they do or don't like this, that or some other thing about a company. If this person is important enough or in a position where they are perceived to be an authority, their opinion will be taken as fact - a truth.

Here's another example:

A reporter with The Salt Lake Tribune (Pretty important title, wouldn't you say?) writes a story that starts with the headline, "Three Utah Men Charged in Mortgage Fraud Scheme." So far that's not bad. Three Utah men were in fact charged in a mortgage fraud scheme. I will however assert that this would not be an odd exchange over the breakfast table this morning.