Looking For Someone To Blame For The Mortgage Crisis

Michelle Singletary investigates a mortgage company flagrantly breaking the law and making false promises.

The Treasury Secretary Henry M. Paulson has put out the government’s plan for changing the nation’s financial regulatory structure.

Paulson wants to give more regulation of the people who arrange loans — the mortgage brokers.

He wants to protect consumers from phony promises, hidden fees and what is called "predatory lending."

Paulson offers the creation of a federal Mortgage Origination Commission that would establish minimum standards for loan officers. It would also evaluate, rate and report on each state’s efforts to license and regulate these mortgage salespeople.

From the Washington Post:

This case highlights how state- and nationally regulated financial institutions can fail to verify that borrowers are working with licensed loan officers.

Lee has been banned from arranging loans in Maryland and Georgia because neither he nor his companies were licensed for such activity. And yet, in violation of those orders, people working for Lee have continued to arrange mortgage loans that for many borrowers are inappropriate, according to sources and company documents. Several Maryland homeowners acknowledged that they gave personal information to people working for CashFlow in order to get their loan applications processed. Candice Thompson, whose business card says she’s a CashFlow marketing representative, assured one Maryland loan applicant that she was licensed and that the company was free of any legal troubles.

Thompson is not licensed as a loan officer in Maryland, according to state officials. The company is under investigation.

Lee denies that Financial Independence ever arranged mortgage loans. Last year, Wachovia, the fourth-largest U.S. bank, funded 196 loans totaling about $54.2 million that Lee brought to the financial institution, according to an e-mail sent to Lee by Scott Davenport, a former national account executive with Wachovia.

Soon after I inquired about Wachovia’s business transactions with Lee, Davenport was fired. Wachovia spokesman Don Vecchiarello said in a statement: "In its wholesale channel, Wachovia deals directly with numerous mortgage broker companies. Key Financial Corp., based in Clearwater, Fla., was listed as the customer contact on a Maryland loan application taken by Thompson of CashFlow and processed by Wachovia. The mortgage sales process is broken.

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (Alexander90210.com), he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Alexander90210.com. Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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