Mortgage Fraud Part 3: Recent Developments
Yes, I was an underwriter back in the mid 1980s, and I was the youngest underwriter on staff. I was recruited from processing because I use to submit my files already underwritten along with the conditions for loan approval. What was apparent to me even as a 23 year old was that if my boss had to report to the same person that was in charge of sales and production, every file would have been approved. But she reported to someone else. It was that person’s job to make sure we were making good credit decisions. The goals of production and risk are in harmony, if you take a long-term look at the possible consequences of making credit decisions that are too far out of balance either way. Each part of a mortgage company needs the other part to maximize good consequences for all.
Recent Mortgage Fraud Developments
The outlook for mortgage fraud across the United States is grim. I started this series at the end of October with background research conducted by the FBI that concluded that the most damaging mortgage fraud consisted of many people in the industry working together; fraud for profit.
As of today, I am no longer convinced that fraud for profit is the most damaging kind of mortgage fraud.
Today I believe if we put all the out-of-work underwriters back to work and opened up all the loan files in the defaulting tranches of subprime, Alt-A, and prime loans, we would find the same kind of problems that Fitch, the ratings agency, found when they re-undewrote a small sample of 45 early default loans from the 2006 vintage. Now granted, this is a small sample. However, after working within corporations most of my adult life, I also know that the public really never hears how bad things are. The name of the report is “The Impact of Poor Underwriting Practices and Fraud in Subprime Residential Mortgage Backed Securities” dated Nov 28, 2007. Anyone can read the report by going to fitchratings.com You have to provide them with an email address, but there is no charge. Here are the bullet points:
45 loans with early defaults, originated during 2006, subprime, with an average FICO score of 686. Each loan had one or more of the following characteristics:
66% Occupancy fraud (stated owner occupied but never occupied)
51% Property value was materially different from the original appraisal
48% First time homebuyer yet credit report showed other mortgage information
44% Payment shock greater than 100% and some instances of 200% payment shock
44% Questionable stated income or employment in conflict with info on the credit report
22% Hawk Alert (Fraud) noted on the credit report
18% Social security numbers on the credit report do not match the SS# on the application
17% Seller concessions outside the allowable parameters
16% Credit report indicated their score was artificially inflated via an authorized user
16% Straw buyer
16% Identity theft indicated
10% Signature fraud indicated
6% Not an arms-length transaction
Fitch explained that when a lender used a high FICO score or a high property value/lower LTV to offset other risk factors, when just one of the above areas of fraud were present, the risk of default overshadowed the high FICO and property value.
On December 31, 2007 Fitch downgraded 5.3 billion in RMBS, and this is just ONE ratings agency.
Future Outlook
Old-fashioned human underwriting is making its way back to banks and lenders. This is good news to everyone but the people who answered sales job ads that said “make six figures your first year with no experience” who got into the industry for no other reason than to make money, who don’t care about homeowners, and who really don’t care much about mortgage lending at all. Those that care, that will complain about the amount of time it will take to hand-underwrite your files, to that I say, let the invisible hand of the free market help re-build competent, competitive, service-oriented underwriting departments without the god-like attitude.
The future begins now. We should all expect massive re-assessment of risk management processes within those companies that originate loans such as bankers and lenders. Mortgage brokers should prepare for their banks and lenders to probe deeper into the mortgage broker’s business practices, including systems, education, and training on risk reduction, fraud “no tolerance” policies, and anonymous whistleblower fraud reporting systems.
This also holds true for investment bankers issuing Residential Mortgage Backed Securities. Fitch is putting everyone on notice that it was not able to and cannot, today properly rate RMBS if they’re left to rely on fraudulent loan files. Since risk assessment is only now beginning, I predict the vintage 2007 subprime loans will fare no better than 2006.
However, when we look back 20 years from now perhaps the biggest mortgage fraud case of them all will be the corporate CEOs that left taxpayers and shareholders holding the bag while they scooted out the door holding their golden parachute.
Report mortgage fraud tips to the FBI by following this link.
Part 1: Mortgage Fraud
Part 2: Case Studies
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Comment by Michael Belisle on 3 November 2008:
I agree that there was a lot of mortgage fraud and I am very happy that new rules are being put into place. The new fiduciary requirement for the mortgage brokers is a very important step. They are the ones that have the power over the consumer and can steer them to accept what is written on the application. The mortgage loan company represenatives are also to blame because they would come into the office and tell the loan officers what was needed on the application to satisfy the underwriters conditions. Everyone needs to take a step back and think about what is right and what is wrong again.
Comment by Kevin Haynes on 4 November 2008:
What has happened in the marketplace has resonated from brokers, LO’s to real estate agents, to consumers. I think everybody now knows that getting a mortgage loan will require truthful, documented paperwork presented to the lender who will underwrite that loan to the standards that were present 15-20 years ago.
Comment by John Mayfield on 15 November 2008:
Why did our industry gradually lose its lack of consistant standards. . . all due to the unchecked greed in the market. It is about time we go back 15-20 years as Kevin said. We had a great economy then and we can have it again. In order to do this we all must work together to help build and restore trust to the consumers by promoting financial literacy and consumer awareness. LO’s can do this by taking the time and going over every line item on the 1003, GFE & the TIL.
Comment by Kelly Molenda on 20 November 2008:
I agree that we need to go backwards to the old days. Every transaction needs to be scrutinized. Everything needs to be backed up (i.e. income, assets, credit, ID). There should be PROOF of everything documented in the loan. I’m a firm believer of NOT going outside the box when lending money, whether it be mine or a lenders. I believe the consumers will be more understanding when documenting every little detail and I believe the LO’s should disclose and re-disclose every time there is the slightest change. Never leave your client in the dark. Explain every little detail to them so they are aware of every situation.
Comment by Cheryl Nopson on 23 November 2008:
I think mortgage fraud was due to alot of easy requirements especially the sub prime deals, Today everything should be required just like back when I started in the industry 9 years ago. Everything had to be documented. income, assets, appraisal 2nd review. etc
Comment by Jeff Hilt on 24 November 2008:
We went away from a concept that worked (good underwriting) to a free and easy time, and we only have ourselves collectively as an industry to blame for the mess. This can and will be fixed by the current tide of re-regulation of mortgage practices. I welcome the swing of the pendulum.
Comment by Gail Burgess on 25 November 2008:
I agree with most of the the comments above, however
if you have been in the mortgage industry for a very
long time, as I have, some common sense needs to be
brought back into the underwriting process. We have
gone from one end of the spectrum to the other. I for
one, would like to see some middle ground again.
Comment by Jillayne Schlicke on 25 November 2008:
Hi Gail,
I’m not so sure we’re finished with the tightening of underwriting guidelines.
We tend to over-correct in a down market before the lending standards will relax once again.
Comment by Gail Burgess on 25 November 2008:
A correction was certainly needed, and I think you are right.
Although I think we will loose many good people in our industry
as well as bad.
Comment by richard martin on 2 December 2008:
No doubt about it the so called old way was a method where experienced underwriters with years of underwriting and business experience combined with sound personal judgement and accumen was the real and true way to get accurate results.
Underwriting based on scores and autogenerated criteria does not match the honest experienced sevicers of the past, sure it may not be as slick or fast or expedient but they could spot fraud early on and produce quality mortgage loan files.
Comment by Bridgette Verna on 6 December 2008:
Who set the requirements? Come on people…As I have stated before it starts at the top. There you will find the biggest crooks and scammers of all. If the example is fraud then that is what we will attract. Its greed at the top. This problem is way deeper then most will see. Doing things the way it was done 20 years ago will help. But will it help our economy? My answer is no. And if it doesn’t help our economy then the (top) can’t get rich. Its up to us as individuals to do the right thing. Its important to me to sleep at night how about you?
Comment by David Bietz on 7 December 2008:
Fraud has been a long standing problem in the lending industry. My view is that the media would have the public believe that the brokers & CEO’s caused this sequence of events. Our defunked state of the mortgage industry is caused from several sources. Brokers did not design the loan programs that were sold to borrowers. Some brokers and LO’s did take advantage by stating incomes far too high or selling neg. am. arm’s to borrowers that should have bought the $250,000 house instead of the $400,000 house. The banks also took advantage of the situation. I’m not saying this was right. It wasn’t. Look at Ameriquest and God knows there are other lenders out there with little to no scruples. They were making so much money that no one was to look too hard at a file. They could have, but they chose not to. Again, it’s the greed factor. Now that lenders have been caught with their hand in the cookie jar they are looking to blame someone.
One thing that still puzzles me. If we are to make sure that every thing should be a arms length transaction, then why do we have banks
that have retail wholesale operations that also own title companies, appraisal companies, escrow copmanies etc. Explain to me how this is an arms length transaction. This is a melting pot for fraud. I do believe we should regulate ALL LO’s whether they
work for banks or brokers. We need a tracking system for LO’s and lenders that are predators. We need to track the bad guy but I’m not sure how. At least make sure they don’t go back to work in another state doing the same thing to our borrowers. We as brokers
need to make sure we police what we do so hopefully we can get our good name back “BROKER”.
Comment by James A. Nelson on 9 December 2008:
I have been in the Reverse Mortgage Industry (and ONLY the reverse mortgage) for for a little less than two years. I am a 70 year old Senior who understands the financial, health and social pressures which daily effect my fellow Seniors. It appalls me the ignorance of young loan officers and mortgage brokers who are in the reverse mortgage business just for the “hot” commissions. The terrible financial condition our Country is in because of the greed, dishonesty and outright fraud of the Bank-Investment Bank-Real Estate-Mortgage Industries is a travesty on which our children and grandchildren will be paying for indefinitely, unfortunately. FHA’s rules for the reverse mortgage Industry (w2 employee status for loan officers, set fees for origination and insurance, all fees full disclosed up front, and required borrower counseling by an FHA trained third party prior to a loan application or an FHA appraisal) is a sound step in the right direction of preventing mortgage fraud. Similar steps should be taken in the forward mortgage industry. Mortgage Officer Licensing and Continuing Education is a Godsend for the Industry and the Public it serves.
Comment by jeremy hickling on 9 December 2008:
Certainly I believe the greatest mortgage frauds will be at the corporate level. If this was Russia those guys would be walked out to the back courtyard and shot twice in the head. Thankfully I am not so severe. - Even with the nicotine laced glare and scrutiny of the finest UW’s, LO’s and others will always look for new and creative ways to de-fraud an institution.
Interestingly I notice I don’t offer much in terms of solutions. In fact I am faced with working with rules that prohibit my conducting FHA lending practices while being a member of the NAR. My clients love what I do – for the most part- and here I am with my hands tied as we move more and more into the govy lending world. And I love FHA! – its tough at times to walk a straight path.
Comment by Teresa Gallaher on 10 December 2008:
I believe the greatest mortgage fraud occurred at the corporate level. CEO’s took huge profits and left the consumer holding the bag. If mortgage back securities had been properly rated investors would not have been begging for more. If that demand was not there lenders would not have offered the program to consumers and LO’s would not have sold 100% financing to borrowers with 580 scores. It started at the top and unfortunately those at the bottom will be paying the bill.
Comment by Laura Shields on 10 December 2008:
I too have been in the mortgage industry for 18 years and have seen several types of underwriting and guidelines.
It was unbeleivable to me how some of those loans were being closed and funded. I personally always asked the borrower what they could afford in a home with a payment before I would even go any further.
I believe that education training if very very important for a Loan Officer and borrower. Educate the borrower is also very important.
I believe that building a client base referal system is the most important and you then can make a large annual figure for many years to come and not have to do anything unethical.
Those who cheat never win.
I CAN believe the early default figures are what they are. There was alot of competition and it was too easy to qualify for a home which made the multi offers on homes which increased the values of homes (when in reality they really were not worth the appraised value) but the comps said they were ??
The whole industry does need to recover and inflation needed to be put back into reality!
CEO’s lived in the means of their income, I think they should loose their jobs..homes..boats planes etc like the little guys who lost their home for having such programs.
Comment by Marty Boswell on 14 December 2008:
I have to get an on-line lender approval or DU approval to send a loan in for Underwriting. The guideline and conditions are there in black and white. I agree that the sub-prime lenders had some pretty loose guildines. stated income to 100%, low credit scores, etc. I couldn’t beleive some approvals I would see or hear from an AE the types of loans they had available. They always made it appealing with up to 2 points back in rebate. I didn’t have a sub prime pipeline and it disturbs me greatly on the outcome. Many have lost homes and now look at the mess we are in.
Comment by Vance Won on 15 December 2008:
Let’s not forget the sub-prime companies that created the “easy money” standards in the 1st place. Yes lots of unethical people took advantage of the loop-holes but it wouldn’t been possible if these companies were not blinded by what seemed like a safe high yield investment in these mortgages with properties values that only seemed to go up.
Comment by Branda Luke on 18 December 2008:
How interesting that human history tends to repeat itself. It seems like the cycle is bringing us back to a point in time we’ve already experienced with some over correction as Jillayne pointed out in a post earlier. Also interesting is how our future begins with looking at our past. I’m all for human underwriting. I always hated trying to reason with automated decisions only to have to talk to a human in the end anyways. There’s no replacing human judgment when it comes to something as important as buying a house.
Comment by Pedro Riojas on 18 December 2008:
This article compares the old way of doing business where the underwriter did things by good learned habits and personal knowldge aquired though years of experience when ethical standards were of upmost importance !
Acorrding to the article every body was a watch dog for every body else .The taugth was thar this would maximize a good quality produt.They were concern of the consequences for them selves as well as their co workers .
Now how ever things have changed and some of those good qaulities are absent . The taught now is more towards working together in fraud for profit . How sad !
What has happened in the marketplace has resonated from brokers, LO’s to real estate agents, to consumers. I think everybody now knows that getting a mortgage loan will require truthful, documented paperwork presented to the lender who will underwrite that loan to the standards that were present 15-20 years ago.
I agree with kevin Haynes as to what needs to happen he says–
What has happened in the marketplace has resonated from brokers, LO’s to real estate agents, to consumers. I think everybody now knows that getting a mortgage loan will require truthful, documented paperwork presented to the lender who will underwrite that loan to the standards that were present 15-20 years ago.
Comment by Susan Lohse on 19 December 2008:
I honestly didn’t think I would be laughing through any of these articles, but this one got me rolling. I was a processor back in the early 90’s and much of the stereotyping you did is right on. I’m still laughing. When the market got really slow there for a while, we use to put our phones on hold and go down stairs to the bar and have a few drinks (we were a small branch of a major corporation). But back to the fraud…I think that the automated underwriting was a great concept, but obviously there were some loopholes that were unforseen. It seems as though hands-on underwriting is just the best answer.
Comment by Luis Diaz on 19 December 2008:
I am glad that authorities like FBI and Homeland security are in place creating an inherent security environment for consumers and remainding all professionals not to be tempted into fraudulent activites. Yet, that anonimus reporting FBI’s web will help to the extent that we the professionals will use it for the good of our profession and the wellbeing status of our customers.
I agree that going back to the old human procedures will help minimizing the curent rate of fraud in the real estate arena.
It’s a boomer! that having such great tools like computers and programs we are back to “cave” procedures due to those rats non-profesional rats!. If there is a way that we can maximize the current tools of computers and programs and the human underwriting with guide lines established with “no exemptions”, we will directly put down the fraud statistics and creating a better place for consumers and profesionals.
Comment by Sterling Ward on 19 December 2008:
I am from a banking background more than a broker background. I ahve been in the banking world now for over 18 years. I have been and still am accustomed to human underwriting of the loan files. Sure we use the automated systems (LP, DO or DU) as a guide, (We have to use them to sell our loans to our investors in most cases) but we still have a human underwriter review all files. This has helped our company flourish in these slow times as we had almost no foreclosures or fraud in our loans over the last few years.
Our underwriters are our last level prior to a loan funding to assure a quality loan is being made and policed! We have underwriters that have been with us for many years and the newest of underwriters was a processor for years before making it to the underwriting level. It is a learned process and one of grooming people in the industry to protect not only the consumer but also the institution in that you work for. These are career professionals….. that I believe the industry needs to hold to the standards again that they once were.
As for the originators, it is long overdue for regulations of testing, continued education and finally accountability for wrong doing. DFI audits will go after the originators now, both in fines as well as their license for even smaller items, no longer is it just the broker or bank in which they work(ed) for that are on the hook.
For those who commented above on wanting a middle ground for underwriting guidelines to be loose again somewhere in the middle point of the last few years to now where they have tightened. I have one question for you…. Are you willing to lend your personal funds to those borrowers that need the loose guidelines to ontain a mortgage? I know I am not! We still have a ways to go in underwriting guildelines tightening up. Be glad that the 20% down payment has not returned and that FHA, VA and PMI companies are still allowing anything above 80% to be financed. We are no where near what used to be….. again, things are still too loose.
Comment by Toby on 20 December 2008:
Thank God for human beings!!! I for one am happy to hear a trend back towards human underwriters actually looking at the files rather than just processing the computer generated blaa. I miss having lender reps actually coming to the office and pouring over files too. Yes, there are bad apples in the bunch, but “make sense” underwriting makes sense. Employ more people, have checks and balances…get it done and get it done right.
Given the high number of occupancy fraud, I’m surprised lenders don’t have surprise occupancy checks in the months following a loans closing….
Comment by Alice Yu Uy on 21 December 2008:
Automated Underwriting is good. But needs some upgrades with their
standard. Manual review is needed from time to time.
Comment by Sean Clift on 22 December 2008:
What happend to the “good old days” of let your yes be yes and your no be no? I believe it takes a tremendous deal more effort, stress, pain, and anguish to do this business wrong than it does to do this business right. The fact that many were allowed to treat this profession as a “reality TV” game for a decade makes me sick. The fact that so many people are destitute and hurting out there as a result of theifs all over this industry doing business with no consience makes me lament for our nation.
It seems to me at this point we have and will go through a very strong but necessary cleansing. The tree has been and will be shaken to the roots; all the bad fruit falls and us left standing will likely be in great shape. More important than “us” being in good shape however is the strong realization that I believe we all need to have. We must regulate ourselves, put our clients first, lend with a heart, and lend by the “golden Rule” not the false idoligy of the golden checkbook. If our profession simply did this across the board, there would be no dark places for these scumbags to hide as we would be able to contrast their character or lack there of with the loud trumpet of conducting ourselves as professionals and human beings who act from a basis of love and not greed.
Comment by Carmen Ziranda on 24 December 2008:
I’m glad we are going back to the times when we had a human being underwriting the files. This will not only benefit our clients but also the lenders, and LO’s as well. We can’t solely depend on automated decisions when thousands of dollars are at stake. I realized that thechology is progressing but there are still areas where we need common sense and wisdom of human beings.
Comment by Mark Middlebrooks on 24 December 2008:
I am all for the movement of files going back to old fashioned human underwriting. Although human error has been an issue on some of my more recent files being ‘hand’ underwritten, I think it is a good business practice. I really like being able to talk to an underwriter and explain files to them and listen to exactly what they need to offset the possible risk of files with compensating factors.
On a different note, I loved the last thing you wrote…..”However, when we look back 20 years from now perhaps the biggest mortgage fraud case of them all will be the corporate CEOs that left taxpayers and shareholders holding the bag while they scooted out the door holding their golden parachute.”
Comment by R Scott Tollefsen on 28 December 2008:
I think automated underwriting is great in many respects but it needs some overhauling. I do feel that each and every loan should be underwritten by a person and that the use of automated approvals should be more for convienence. Automated underwriting only sees percentages and not the true picture. I’m sorry but a couple who makes $1500 per month and has 2 children should not be ok with a 45-50% debt ratio when they have all the other monthly bills that do not factor into it such as phone, heat, insurance, medical cost, etc. Yet when it comes to automated underwriting it seems as this is the case.
Comment by Bartholomew Henning on 29 December 2008:
Another good article. I like the final comment. You can’t blame the CEO’s, you have to blame the board of directors who were stupid enough to allow this. Any back scratching there?
Comment by Angela on 29 December 2008:
I personally like dealing with my underwriters rather than everything being automated. I do like using automated underwriting for my pre-approvals but I think it needs to be more detailed. There are SO many variables with every loan and DU just doesn’t cover all of them.
Comment by William Schornack on 29 December 2008:
I find it amazing…66% owner occupied were not?
I think we need to take action against those who defraud us, the borrower! All of the legislation that is being introduced is for us professionals who originate loans to protect the consumer, where is our protection? Court costs? Attorney’s fees? Ruined reputations, and loss of License is what we can expect. When is the borrower going to be held accountable? I’ve had to defend broker’s who offered a loan to the borrower that clearly benefited the borrower. When the borrower figured out he could sue his broker and lender to get out of making payments every one got the screws except the one who signed the loan documents.
Comment by Jim LaLone on 30 December 2008:
Let’s remember that many of the so called fraudulent loans were enhanced and done because fannie and freddie invented these products to make home ownership as easy as possible. Bundling, re-inventing credit ratings in their new ‘lifeform’ and selling them on Wall Street as A+ ? It wasn’t just us dumb originators, it started at the top of the food chain. Now, after the heads of fannie and freddie got their multi-million$ bonuses, they want to blame us for selling their bad ideas. How about they give the money back? Oh, I forgot, it’s all gone, we need to print some more…..and put these same people in charge of the printer.
Comment by Jim Haechler on 30 December 2008:
Underwriting guidelines changed because of the volumme of loans. Because of the volumme they needed automated underwritting. The ease of getting a loan. The use of sub prime and stated loans. I agree there needs to be some changes. But it seems we go from one extreme to another.
Comment by Dennis Tyler on 30 December 2008:
While mortgage fraud is a definate problem, it appears that we are doing largely what the media does to sell newspapers. Yes, we see examples of fraud and deceit regularly. Yes, we each have a responsibility to make this industry better. And yes, we each should also be looking for the good, and getting the word out there that for the most part, we are an honest industry (at least I hope that to be the case). Let’s not tolerate consumers, realtors or other lenders that would have us compromise our standards. Let’s not be afraid to report purpetrators that ruin our reputations and our livelihood. Rather than go back to strictly manual underwriters, how about going back to the days that a handshake was better than a written contract. I love automated underwriting. It does not need to replace integrity though. Let’s make sure we also realize that the glass is at least half-full, and re-create trust!
Comment by shelley safronek on 30 December 2008:
I was also trained as a new loan officer back in 1990. We attended a two week, 8 hours a day training course. Learning how to thoroughly complete the 1003, review the bank statements, paystubs, W2’s and yes…..properly calculate complicated tax returns. This training allowed me to set myself apart from your typical loan officer that hasn’t a clue how to accurately determine income, repayment ability etc. I have been submitting files to Astoria Federal (awesome super jumbo pricing) and it was very fun! It was back to the days of full paper copies, no automated underwriting and include a copy package. It’s amazing when you learn how to really process a file, the file comes together like a puzzle. When one puzzle piece is out of order….the file should be denied! I’m very happy to see the traditional procedures comes back in to this industry. We can get back to loan officers that really know this business and care about the future of this industry for both the consumer and the company.
Comment by Brian Paine on 30 December 2008:
It’s much too easy to say we need to time warp back 20 years when there are so many left spoiled or to fend for themselves and are suffering needlessly. Yes, many shouldn’t have been in their homes in the first place; however, it is what it is…and those people need help, now!!
Now, you’ve shut the doors on an enormous amount of home owners. You can’t create a world then yank out the carpet beneath the people you’ve unintentionally put in harm’s way…there needs to be compromise as we’re fixing and healing the “system”…if “we’re” still in the customer service industry.
Comment by Brian Paine on 30 December 2008:
I completely believe we’re seeing the change in underwriting; however, once again, those that suffer are the consumers…instead of locking for 30 days you have to lock for 45 or even 60 days depending on the loan. I know…it takes time to heal all wounds and we simply have to make the best of things for a time. Take a hit to our own compensation, make it up in referrals by providing clear communication of the changed times or even in some of the education we’ve learned here and pass that along to our email lists…
Comment by Joe Hrebik on 31 December 2008:
I agree that more human underwriting to better scrutinized transactions would be beneficial, but that can also be augmented by improved automated underwriting systems. There is a happy medium, we don’t need to go back in time to the 1980s, but we do need to correct faults in current underwriting processes.
The CEO comment is right on, driven by the need to ever increase earnings, cost cutting ended up getting rid of valuable people (underwriters) in the name of automation. These were bad business decisions that reflected a lack of understanding, at the corporate level, of the underwriting profession.
Comment by John Sarausad on 31 December 2008:
I feel that an underwriter must try their best to find a reason to deny your loan because if they weren’t so picky, they would not be needed because our DU/LP findings tell us everything we need to close our loan. I have been fortunate to pre-underwrite my files and include cover letters that lead a pathway to the underwriter which allows my files to close faster and to be able to build relationships with underwriters that know I am legit and do loans the right way.
Comment by Cheryl J Barr, 510-LO-38949 on 31 December 2008:
A careful well documented loan package has always wormed it way in to an underwriters heart. I do believe we will see make sense underwriting come back and flurish in the industry. Threw document verification and a person actually looking at the information we will be able to weed out alot of “misrepresented facts” and also to a better service for the borrower. Locks will need to be longer and patience will need to handed out all the way around. I also think there will be as many or maybe more fraud loans in 2007 as there was in 2006.