Consumers

Lending Tree Adds Bricks and Mortar

Tuesday, November 16, 2010
LendingTree LLC has agreed to buy SurePoint Lending, a traditional mortgage originator based in Louisville, Ky., giving the online-focused company a branch network for the first time in its 12-year history.
LendingTree, whose core business is generating leads for sale to lenders, has had a direct lending operation since 2004, when it bought HomeLoanCenter.com, in Irvine, Calif., and renamed it LendingTree Loans. But it has always operated exclusively online.
SurePoint has four branches, one each in Louisville, Nashville, Tampa, and Indianapolis, and nearly 500 employees, including more than 300 loan officers. The outfit has purchased leads from LendingTree for 11 years and has originated more than $10 billion of loans since it was founded in 1995.
“This acquisition is a key component of our aggressive growth strategy for LendingTree Loans, which also includes expanding our team of loan officers headquartered in Irvine, Calif., increasing our marketing spend, and continuing to invest in process and technology to meet both regulatory requirements and our customers’ needs,” Doug Lebda, the chairman and chief executive of Tree.com Inc., LendingTree’s parent company in Charlotte, said in a press release issued Tuesday.
LendingTree Loans paid $6 million in cash for SurePoint, and may pay up to $17 million more depending on earnings over the next three years. The deal is expected to close in the first quarter of 2011.
©2010 National Mortgage News and Source Media, Inc. SourceMedia is an Investcorp company. All rights reserved.

Investigation alleges that Mortgage Lenders are compensating Real Estate Brokers for Steering Business…

September 24, 2010 Bolingbrook, Illinois –
The investigation alleges that mortgage lenders such as Bank of America, Wells Fargo, PHH, Prospect Mortgage, Guaranteed Rate, Home State Bank, Key Financial Services, Platinum Mortgage, Integra Mortgage Inc. and various regional home builders have specific programs in place to compensate real estate brokers for steering business to their mortgage units. Madigan’s investigators are looking into consistent, widespread and obvious patterns of consumer fraud and manipulation. 

Month after month, these mortgage lenders get a substantial share of the mortgage market due to aggressive and defined kickback programs. It is not uncommon to see materials marketed to real estate agents with clear inducements of steep kickbacks or a split of the mortgage revenues that grossly inflate what consumers should pay for the mortgage or home they are purchasing. 

The Attorney’s office commenced the investigation when they looked into marketing material and a web site created by Integra Mortgage: www.af-usa.com. The promotional material claims that real estate agents can earn a commission by logging onto the web site and registering home loan consumers for mortgages. The mortgage company claims that once the registered loan transaction funds, the real estate broker or other interested taker would be given a portion of the mortgage revenue. When reviewed for accuracy the af-usa.com site noted rates two to three percentage points above fair market rates. 

Other types of lenders rely on weak State regulatory oversight and legal loopholes to obfuscate revenue kickback schemes. Bank of America, Prospect Mortgage and Wells Fargo appear to be the most egregious at this form of pay-to-play. Common regional examples of tie-in schemes are: First Freedom Financial (Bank of America), a joint venture with Prudential Realty and Personal Mortgage Group/PMG (Wells Fargo), a joint venture with Remax Real Estate. It’s estimated that Bank of America and Wells Fargo by themselves utilize several hundred joint ventures across the U.S. 

Joint ventures between real estate brokerage firms and banks are structured in many ways and usually work quietly behind the scenes. These ventures are typically negotiated at the upper levels of management between the banks and realty brokerage owners. The mortgage banks often funnel money to joint bank accounts of which the real estate brokerage owners draw off of as desired. 

Companies such as Guaranteed Rate have developed micro revenue kickback schemes for real estate agents specifically wherein the real estate agent can actually own a “share” of the company and is therefore entitled to mortgage company “profits”. Fraud is established from the first transaction because the kickback is not an even proration of Guaranteed Rate’s company revenue but rather based on the scope of the real estate agents referrals. 

These mortgage bankers clearly understand that kickbacks are against Federal laws yet they continue to cook up elaborate go-arounds to Federal and State statutes. Their hopes are that the regulatory bodies are so ineffective that these kickback schemes will never be discovered. The Attorney General’s office is making an effort to change that perception. 

Illinois and Federal laws prohibit non-mortgage licenses to earn a fee on the origination of residential mortgages. If you have information that may help the Attorney General’s Investigation or you feel that you’ve been taken advantage of please contact the States Attorney’s Office or the IDFPR at the offices below.

Attorney Genrals Chicago Main Office

100 West Randolph Street

Chicago, IL 60601 (312) 814-3000

IDFPR: Professional Regulation

320 W. Washington

Springfield, IL 62786

Phone: (217) 785-0800

Mortgage brokers are becoming a vanishing breed

HYPERLINK “http://www.usatoday.com/money/economy/housing/2010-08-28-mortgage-brokers_N.htm” \t “_blank”

By Jeff Swiatek, The Indianapolis Star

2010-08-29 INDIANAPOLIS — Most of the mortgage brokers that seemed to populate every office building and commercial street in cities nationwide just five years ago have vanished.
Ken Blaudow, owner of Indy Mortgage had 85 employees originating home loans in 2003. Now he has three and is about to give up his leased office in Castleton, Ind., and move his company into two bedrooms of his house.
“It’s drastically down,” he said of his industry. “And there are a lot of funky new rules.”
Much of the decline has come from the implosion of the housing sector since 2007. Prices and sales plunged during the recession. Foreclosures hit record highs almost everywhere.
HOUSING CRISIS:  HYPERLINK “http://www.usatoday.com/money/economy/housing/2010-08-26-mortgages-foreclosure_N.htm” One in 10 with a mortgage face foreclosure
MODIFICATIONS:  HYPERLINK “http://www.usatoday.com/money/economy/housing/2010-08-24-foreclosure-prevention_N.htm” Defaults on modified mortgage loans falling
As government rushed in to respond to the crisis, caused in part by overselling of risky mortgages by brokers who got rich on exorbitant fees, regulations on the industry multiplied.
States in the past two years began requiring brokers to pass licensing exams and undergo background checks. A criminal record, even a past bankruptcy, can now prevent someone from writing a mortgage. If states don’t already do it, a federal law coming in January will require licensing exams and criminal background checks nationally.
Brokers and loan originators find lenders for people seeking a mortgage on a new home purchase and charge a fee for that service.
Many of the sometimes-exotic products that independent brokers used to push — jumbo loans, subprime mortgages — also have been restricted or banned.
The new industry that’s emerging is much more conservative, regulated and, some would say, less consumer-friendly.
“I don’t think (the changes) will be better for the industry. It costs more to do business. And the consumer has fewer choices. But those are the cards we have been dealt,” said Al Thorup, executive director of the Indiana Mortgage Bankers Association.
A study by Bankrate, a financial information supplier, found that mortgage fees are on the rise, jumping 23% in the past year alone. Nationally, the average fees that a homeowner paid for a $200,000 loan are $3,741, compared with $2,739 last year. This does not include fees for real estate agents typically paid by the seller.

Bankrate says the jump in mortgage fees is due in large part to the increased scrutiny lenders must give every loan, under tougher guidelines from federal regulators and two quasi-government companies that guarantee loans,  HYPERLINK “http://content.usatoday.com/topics/topic/Organizations/Companies/Banking,+Financial,+Insurance,+Law/Freddie+Mac” \o “More news, photos about Freddie Mac” Freddie Mac and  HYPERLINK “http://content.usatoday.com/topics/topic/Organizations/Companies/Banking,+Financial,+Insurance,+Law/Fannie+Mae” \o “More news, photos about Fannie Mae” Fannie Mae.
“It takes five to six times the work to get a loan to close than it did two years ago,” Blaudow said.
Credit histories must be dutifully compiled for all borrowers. And any number of new criteria can lead to a refusal to lend. One new practice closes the door on loans to anyone who’s done a short sale — a way of selling a house when the sale proceeds fall below the balance on the mortgage — in the past three years.
Banks have actually fared well in the restructuring of the mortgage industry.
That’s because many banks didn’t engage in the riskier lending practices, such as granting adjustable loans at subprime rates to people with less-than-stellar credit, that some independent brokers and their companies did.
Banks also will be better able to bear a coming federal regulation that will require any company handling federal  HYPERLINK “http://content.usatoday.com/topics/topic/Federal+Housing+Administration” \o “More news, photos about FHA” FHA or VA loans to have $2.5 million in assets.
Ron McGuire, president of F.C. Tucker Mortgage in Indianapolis, said the changes in the mortgage industry mean “we’re back to the way underwriting was 20 years ago when you had to have a down payment, you had to have a job. And that’s a good thing.”
But McGuire said he worries that the decline of independent brokers now gives a handful of large national banks more of a chance to dominate the mortgage industry.
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.