Comments on: HUD Audits A Plus

By: Jillayne Schlicke

Jillayne Schlicke — Wed, 21 Apr 2010 01:24:02 +0000

For anyone following this story, WA State DFI has issued a final consent order on A+ Mortgage. Gregory Nick will have to pay a $125K fine and pay restitution to borrowers, may not hold a mortgage broker or consumer loan licensE FOR 5 YEARS BUT CAN APPLY FOR A LOAN ORIGINATOR LICENSE.

http://www.dfi.wa.gov/CS%20Orders/C-08-165-10-CO01.pdf

By: Steve Harkness

Steve Harkness — Sat, 20 Feb 2010 17:02:12 +0000

I could write a book about the misdoings at A+ Mortgage having had the awful experience of working there. The only reason I did not quit instantly was because I worked under the “protection” of a women named Judy Grote who is a credit to the industry and currently working at Prime Lending.

As far as compliance goes, this was supposedly done by Greg Nicks ex-wife Tami Green who cant spell the word compliance. The reason there was so many Loan Officer’s is because of a flawed business model dreamed up by Ryan Powell. He was paid a piece of every Loan Officers production he recruited. He didn’t care about quality, he cared about quantity.

Anybody that was worth their salt as a Loan officer has long ago left this disaster of a company. It has hurt my business tremendously by being associated with this company. A year later working for a very highly regarded company called Washington Financial Group I still not been able to undo the damage to my career that was caused by working for A+.

By: Kelly Fiscus

Kelly Fiscus — Wed, 30 Dec 2009 22:06:54 +0000

I think I would find a differnet field to work in! If I was crazy enough to take this punishment, oops I mean job.

I would begin with immediately stop any non W2 employee from doing FHA loans. In fact I would look at stop using non W2 employees.

Put in a compliance department, set up a review process for any loan PRIOR to being submitted for loan approval.

Put together a training manual as well as impose manditory training for each LO.

Also I put in strict guildlines for loan origination fees, YSP and discount points, GFE, etc. Again the loan packet would be review prior to being sent for loan approval and again before documents are drawn, and reviewed again before the documents are signed.

By: Terry Birkland

Terry Birkland — Fri, 03 Apr 2009 17:54:30 +0000

I hope my employment contract gave me the authority to: clean house, establish a strong compliance department and retrain all my LOs. My background is in the secutities business giving investment advice and as a insurance broker providing insurance advice. I’m used to rigorous compliance, frequent audits and every trade needing to be approved by a principle before it is executed.

By: Chris Madden

Chris Madden — Sat, 28 Feb 2009 07:48:13 +0000

Im glad they had to pay the money back. It seems as though escrows were just as crooked.
This first thing I’d do-
1. Review the loans that were sited in the audit. Those employees would be terminated first.

2. Verify employees have a valid LO license in WA. Convert employees processing FHA loans over to W2 employees.

3. All employees would need to be re-trained,and required to take ethics and FHA classes. Sign contracts that they agree to abide by the guidelines or be subject to termination on the spot, and have a clear understanding of the values the company lives by.

4. Create an internal audit team, to audit all files for compliance.

Unfortunately in most cases, upper mgmt is fully aware of these practices, so that team must be replaced as well.

By: LINDA COFFMAN

LINDA COFFMAN — Fri, 27 Feb 2009 18:32:26 +0000

I am a W-2 employee of Washington Financial Group. They adhere to the highest standards of meeting the guidelines for FHA and VA loans. I enjoy working with a Broker that has high standards and wants to continue doing business under new guidelines and regulations. Change is eminent in any business and we become better business people if we embrace the change and make it work for not only the consumer but for ourselves. Should I be the manager of A+, I would encourage through training every LO and office to adhere to the new guidelines and teach them that overtime you can still have a decent income while practicing under new regulations.

By: William Platts

William Platts — Fri, 27 Feb 2009 04:45:22 +0000

For myself this issue hits home real hard.After being hired by Carteret as a W-2 employee(my first LO job) I had other LO’s offer me a percentage of their gross revenues if I would allow them to run their FHA’s through my W-2 status. I put them off until I had a complete understanding of why they were asking and then refused the request. In reality the W-2 requirement has not increased broker supervision of LO’s, just my observation where I have worked. If I had to take over A+, which wouldn’t happen in reality, I would design a new employer/employee contract for the company which would clearly state the rules and ethics they agree to exhibit while working at A+. Included would be training and a basic test to assure they understood all of the HUD regs and guildlines. Any violations of any lending regs would result in either 30 day suspension from originating loans or severence from the company depending on whether the violation was due to lack of knowledge or premeditated out of greed. A+ had “some” reasonable responses to the audit, however their fee structure speaks the truth to their preditory practices.

By: jason brock

jason brock — Sun, 22 Feb 2009 22:35:18 +0000

HUD’s audit of A+ is a necessary evil. Here we come down to having to regulate supposed professionals who are taking advantage of the process and their clients. Two problems here: crooked Loan Officers and uneducated “sucker” clients. It is so frustrating for me because I know I deserve every penny of my commission because I work so hard for it. I am not a banker, I am a broker. It is my job to represent my client in the best light possible to the bank. I am very good at what I do and can and will beat anyone in fee, service and rate. I am paid well for my hard work but I have never charged more then I deserve. I am the only Broker I know of that has re roofed a family of 7’s home so that their roof can certify and they can keep their home by refinancing out of an adjusted arm and into a FHA 30 yr…

By: Jillayne Schlicke

Jillayne Schlicke — Thu, 19 Feb 2009 20:55:14 +0000

Hi Laurie,

“most of the comments in the blog seem to incicate that every LO with in A+ was acting out of compliance and commiting fruaud. This was not the case. Honest hard working people made up what most of A+.”

In a way, A+ makes a great case study and mirrors what was going on in the entire mortgage lending industry during the bubble run-up.

People tend to judge and industry (or a company) based on the lowest common denominator, not on all the great people at it’s company (or within an industry.)

A rising tide lifts all boats as my colleague Roger Ingalls is fond of saying. This means we need to raise minimum standards of competency and ethics throughout the entire industry, and then each company can do the same within its own culture.

By: Beth Damery

Beth Damery — Thu, 19 Feb 2009 20:36:33 +0000

My plan of action would be to manage only enough people that I could over see with confindence knowing all files were in compliance and that the LO’s were acting in compliance and with the best interest of the clients in mind.

Any loan officers not in compliance or commiting fraud would be terminated. I would not want to be liable for any fraud committed. I would also offer weekly meetings to ensure that all were following the state and federal compliance.

By: Laurie Morgan

Laurie Morgan — Thu, 19 Feb 2009 20:29:42 +0000

A+ Mortgage as it was created had many managers who manged their own team of Loan Officers. It would be difficult at best for one manager to oversee all the branches and LOs. However if managing my own team of LOs who I recruited, I would review each file to ensure they were all in compliance, and provide guidence and education. The article it’s self is a little missleading as most of the comments in the blog seem to incicate that every LO with in A+ was acting out of compliance and commiting fruaud. This was not the case. Honest hard working people made up what most of A+.

By: Jillayne Schlicke

Jillayne Schlicke — Thu, 19 Feb 2009 20:07:11 +0000

Hi Laurie,

Do you think that having just one person manage 800 LOs meant that those folks really weren’t being “managed” at all?

After reading the entire HUD audit, it appears as though the problems were widespread at A+ and not limited to a few bad apples. If it were a few bad apples, perhaps the company wouldn’t have been forced to close.

How would you have managed all 800 folks in order to make sure this doesn’t happen again?

By: Laurie Morgan

Laurie Morgan — Thu, 19 Feb 2009 17:23:43 +0000

With upwards of 800 loan officers and 50 branches it would be difficult for one person to manage that many LO’s. Lumping a few bad apples in with the rest of the honest hard working loan originators is like saying that everyone who is given a pain pill will end up like Rush Limbaugh.

By: Sharon Eva

Sharon Eva — Mon, 09 Feb 2009 19:17:09 +0000

I find it interesting that on pg. 19, the wrong acronym was used for Yield Spread Premium. I worked for A+ Mortgage a short period of time when I first got into the mortgage industry. I didn’t realize how unorganized they were until I switched employers. I believe the company leaders intended compliance and good ethics but the lack of unorginization resulted with many not learning this message. If I understand the HUD findings correctly, the origination should be going to the banks while the YSP and broker fee goes to A+ Mortgage. The way A+ is set up, typically the loan originator gets a 50% commission after the broker fee is subtracted. The other 50% goes to the branch manager (Splits vary with each loan originator but that is standard if you’re new). I think that is part of the reason why loan fees become so high because by the time the loan originator gets his/her commission, everybody has taken a huge chunk of the fee. I say we limit branch manager splits, every file should be reviewed by a compliance department (Axia Financial does this), and mandatory classes since laws and regulations change daily.

By: Robert Paterson

Robert Paterson — Sat, 07 Feb 2009 23:26:43 +0000

Trying to justify those fees is impossible to do. As Roger Ingalls noted you can not charge a discount fee and earn YSP.What happened to the original GFE. Where are the controls when the final docs are being prepared. The lending institutions should have been able to uncover these excessive fees. This company was corrupt from the top down.The only way to save a company like this is fire all the top management and install a compliance department. Then let the compliance department run the company.

By: Chrissie Durrin-wheatman

Chrissie Durrin-wheatman — Wed, 04 Feb 2009 21:41:34 +0000

This is exactly why we have so many regulations now!!!Its for dishonesty.First things as a new manager I would change the name to F+ and then quite!!! heehee..No really I would check every LO and review every loan and look at every charge. I’d also make a cap on what can be made. But there is a reason why the old manager was fired and it because they didn’t care what the Lo’s where making on the loans ethier because they knew they would be getting a peace of the pie too.As well as everyone down the line.

By: Vladislav Baydovskiy

Vladislav Baydovskiy — Sat, 31 Jan 2009 21:47:26 +0000

First off, i think the problem is not in paying a W-2 to LO. I think it has the same effect as 1099. Just keep the company more liable, but i think the solution to this whole thing, is HUD needs to offer licensing for induvidual LO’s. I think the more educated people are the less they do what is wrong. My plan would be to get a compliance officer to work closly with LO’s who are closing FHA loans, and if it is out of the compliance the LO does not get a broker check, and all the commisions are being returned to the consumer.

By: Mila Usher

Mila Usher — Sun, 04 Jan 2009 16:39:27 +0000

It’s amazing to me how many bloodsucking companies remain trying to tke advantage of the consumer. Even after all the crap the industry has been through and how hard most of us are trying to pull through in a positive manner.
My plan of action would be to fire all upper manangement, establish a new code of conduct, and start weeding out any other bad seeds.

By: Rand Wood

Rand Wood — Sat, 03 Jan 2009 20:57:21 +0000

1. check company solvency before accepting the job
2. take care of obvious housecleaning
3. briefing of remaining employees
4. office checks and balances and review of all new files by single accountable and knowledgable person
5. establish office policy each new loan entered
6. manage to best of my ability

By: Kelly

Kelly — Wed, 31 Dec 2008 22:30:16 +0000

I would never want to manage any of those LO’s. My first question is why not have all LO’s w-2d. Why would a broker want their LO’s (that are 1099) to be able to do loans elsewhere? I am a processor and it is partially my responsibility to make sure that the loan is in compliance at the submission level and at the closing level. I hold all my LO’s accountable from the beginning at keeping in compliance. We never have a Broker fee and an origination fee at the same time, Especially since FHA loans can only have an origination fee. No Broker fee allowed! How do they get away with charging a discount fee and getting YSP!

By: John Sarausad

John Sarausad — Wed, 31 Dec 2008 06:27:47 +0000

This audit demonstrates the importance of clean business. Our clients should be treated like our friends and not someone we can take advantage of. Doing good and ethical business equals more and more referrals.

By: Kent Kiser

Kent Kiser — Tue, 30 Dec 2008 16:37:16 +0000

What a task to take on. But as Dennis said above you would first do a complete overview of the staff and systems in place. Then you would have to integrate procedures and rules that would make certain the client was treated in a fair manner.
As the manager I would make sure that a compliance system was created to insure that clients were treated in a fair manner.
As far as A+, the industry as a whole gets a bad rap because of companies like this.

By: Dennis Tyler

Dennis Tyler — Tue, 30 Dec 2008 03:58:26 +0000

Before being hired, I would want to know what kind of company this is, as well as the challenges it is facing. Obviously, one of the challenges is compliance and accountability.
Upon taking over the management, I would do the following:
1. Interview each originator and staff member. I would want to know what kind of people are working for me, and what challenges they see.
2. I would do a complete of audit of their systems and ensure that proper safe-guards and accountablity are in place.
3. I would review the FHA guidelines and past FHA audits to see what issues had arisen in the past, and to ensure that those issues had been corrected.
4. I would have each loan officer change their employment status to W-2, in compliance with FHA guidelines.
5. Each originator would also be required to sign an acknowledgement indicating that they are not working for or at any other firm.
6. I would make sure I had a capable compliance officer and processors who would help keep me out of trouble as well.

By: Brian Paine

Brian Paine — Mon, 29 Dec 2008 22:04:20 +0000

Be more concerned with your character than your reputation. Your character is what you really are while your reputation is merely what others think you are. -John Wooden

I wouldn’t work for a leader without character as those who serve him will undoubtedly have less.

Furthermore, I too disagree with the W-2 stipulation for originating FHA loans as it is a greater disservice to those consumers who do, can, and will benefit from an FHA loan. Other guidelines are in place and/or can be added to protect FHA consumers.

By: Roger Ingalls

Roger Ingalls — Mon, 29 Dec 2008 21:42:16 +0000

That is a pretty sorry litany of charges:

As the HUD investigation showed, there was a company wide disregard for educating their LO’s in proper compliance, and making sure that completed files were compliant.

That function is the most important thing a “broker” provides, along with maintaining lender/bank relations.

Remember, you CANNOT charge a discount fee and earn a YSP!

Only one person is banned from originating loans, the owner, Gregory Nick.

However, the rest of A+ organization was absorbed into Sound Mortgage, where presumably, the uneducated and non-compliant LO’s can continue to originate loans.

Maybe they had them pass some kind of test. Like fogging a mirror….