In a speech to the US Chamber of Commerce, Jamie Dimon, CEO of JP Morgan Chase made a statement that caused my jaw to drop.  From Bloomberg:

"My biggest mistake, probably of my whole career, was not closing down our mortgage broker business sooner." 

He says that mortgage broker business had a loss rate two to three times higher than loans originated directly by the bank.

Here is what you need to know:

• Mortgage brokers originate mortgages.
• Banks, like Chase, underwrite and fund these mortgages.  They also create many of mortgage programs that are not performing today.   In fact one program that Chase had "back in the day" allowed 103% loan to value for credit scores above 700.  Chase was also big into second mortgages up to 100% loan to value.  Banks also employ(ed) heavily incentized wholesale reps to call on mortgage brokers–begging for loans to be sent to them. 

So if a mortgage broker takes a loan application and submits the loan to Chase, it is Chase who makes the decision on whether or not the loan is acceptable to approve and fund.   If JPMorgan Chase suffered double or triple the losses on loans provided to them by mortgage brokers, it was Chase's wholesale division (for mortgage brokers) that was the real issue with exception to cases of pure fraud.

Locally we had a classic example that made the front page of the Seattle Times.  The report claims that six immigrants (one is a hot dog vendor) were prequalified to purchase Bellevue high-end condominium units with the developer's preferred lender, JP Morgan Chase Bank.  There's a lawsuit pending over the lost earnest monies of $174,050.

"In one case, the lawsuit says, a Chase broker listed a prospective buyer's income not at the actual $2,147 a month, but at $12,500. Chase's underwriter "red flagged" the document as suspicious, the suit alleges, but the applicant still was prequalified for a $724,000 condo…."

Note: I contacted writer of the Seattle Time's article to ask she correct the term "broker"…the correct term in the above paragraph would be "loan originator" or they often like to call themselves banker/broker or bankers. 

And…

"Other plaintiffs are…Diana Shakhnazaryan…and her mother, Svetlana Kocharyan, both of whom fled Azerbaijan and gained political asylum here about 10 years ago. In 2006, Kocharyan worked on an assembly line and her daughter had a part-time job washing hair in a Kirkland beauty salon. Together, they made $3,659 a month, court documents say.

Chase prequalified them for a 95 percent mortgage for the purchase of a $922,600 condominium, giving them a $7,198 monthly payment, including condo dues."

In the same article, luxurious Bellevue Towers preferred lender, JP Morgan Chase, approved a student with an income of $3,600 a year and says he was told he prequalified for a $634,000 condominium.

Back to Jamie's presentation yesterday…in one breath, Jamie Dimon says:

"When I hear of constant vilification of corporate America, I personally don't understand it…I would ask a lot of our folks in government to stop doing it because I think it's hurting our country."

And then he turns around and vilifies mortgage brokers just a few moments later. 

Fact is, now that Chase has purchased WaMU, they don't need mortgage brokers anymore.  They have plenty of exposure with Washington Mutual's existing locations.  Banks, like Chase, have used mortgage brokers as their sales force and now with their massive market-share, they just don't need them anymore.  But why wrongly tar an industry…I thought we were beyond that…at least I believed Jamie Dimon was. 

I'll wrap this post up with another quote from Jamie yesterday:

"If we act like a dysfunctional family and we don't finish these things and we're forever debating them, I think this will go on for several years."

Well that's one point I can agree with, Mr. Dimon.  Why can't we all just get along?   

I just received two emails from "the IRS" that appears official with an IRS logo stating:

After the last annual calculations of your fiscal activity we have determined that you are eligible to receive a tax refund of $134.80.

Please submit the tax refund request and allow us 6-9 days in order to process it.

This is a scam.  With tax time approaching, scummy people are hoping that you and others will fall for their nasty trap.  The IRS will not contact you via email.  If you receive this email, please forward it to phishing@irs.gov.

I also receive phishy emails appearing to be ebay, various banks…you get it.  Always verify directly with your bank and not to the email that is being sent to you.  Be sure to forward these messages to the appropriate company’s internet security department so these criminals can be tracked down and stopped.

The IRS has more information about phishing scams here.

I had my first experience of someone re-publishing the articles that I write here on Mortgage Porter as their own on their mortgage blog.   I was incensed to say the least.   I dedicate a significant amount of time and care to my writings on my blogs. 

After I sent a short email to this person he replied:

"Tell me which posts are yours and ill take them down. I didn’t realize blog posts were copyright protected."

Even if posts were not copyright protected, does that make it okay to take someone else’s work and present it as your own without asking?  I think not…in fact, I know not!

From DevTopics.com (notice how I give DevTopics credit and a link for their work.  I also did not copy the entire article and would not do so without their permission):

Copyrights Protect Your Blog

Copyright is an intellectual property law that protects original works of authorship including literary works.  Your blog is protected by copyright the moment you produce it in tangible form on your computer and then publish it on the Web.  In other words, post a blog article, and it’s automatically and immediately copyrighted.

The Digital Millennium Copyright Act (DMCA) extends copyright law to other countries that sign up, makes it illegal to circumvent anti-piracy measures, and increases penalties for copyright infringement on the Web.

Fair Use

The "fair use" rule of copyright law states that an author may make limited use of another author’s work without permission.  The fair use privilege is the most significant limitation on a copyright owner’s exclusive rights.

The following factors affect whether publishing content without permission is considered fair use or infringement:

• Whether the original work was copied exactly or transformed into a new work
• Whether the motive to publish was for profit
• Whether the original author was cited and linked to
• Quantity of the original work published, both in terms of total words and as a percentage of the original work
• Quality of the original work published, in other words, whether the most important aspects were published

If you have or want to have a mortgage blog and do not have the time, confidence or skill to write your own articles; there are other options besides copying someone else’s efforts.   Mortgage originators can use tools such as Bring the Blog or Mortgages Undressed.   They pay a fee and the content is provided for them automatically.  It’s actually quite good.   They can also subscribe to services like Loan Tool Box or Strategic Equity where articles are available that you can post as your own.   These items are not for free…and the information you find here at Mortgage Porter is not yours for republishing.   If you really like a post someone has written, you can always link to it and give the author proper credit.   

The only defense (a weak one at that) is that this person appears to have just started blogging in October of this year.   Even still, how can someone take someone else’s work and post it as their own?  He has posted an apology on his blog; however, as of right now, my 5 posts are still there.

I’m watching his blog and will let you know when and if he stays true to his word and removes MY works from his blog.   I hope to be updating this post soon confirming this to be true.   

This is an eye-opener for me and I will be taking further steps to protect my content.  I enjoy writing for Mortgage Porter and Rain City Guide.  I don’t need nor want to spend a chunk of time going after blog-theives.   If you find someone has used your content as their own, you should take action too.

UPDATE 11:45 AM 12/11/2007:  My post have been removed from the blog site.  Hopefully this was simply a huge lesson for both of us.

My husband and I went to the Seattle International Auto Show with our three teens  late last month to look for an economy car for us to use for commuting.  We decided we liked the Honda Fit.   I doubt anyone relishes the idea of buying a car.   Probably much like getting a mortgage.   We did our homework and decided we were willing to pay a certain amount for the car and no more than that.

We first met with the sales person who spent some time with us at the Auto Show and followed up with us via mail.  He’s very polite.  However, it was almost comical to go through the drill of buying a car.  This salesman had us sign a statement that “We will drive a Fit home at $X”.  Well, we offered “x” and the sticker is “y”.   When he came back from his manager, their price was pretty much smack dab between x and y.   We explained we’re only willing to pay “x” for this car.   And he explained that the car is selling for more than it was presented at the car show due to high demand.  We said “good bye”.

We decided to try calling a dealer and to try buying a Fit over the internet.   Ya’d think I’d know better than calling around for the best deal considering my preaching about doing this with mortgages.  Boy I got some doozie one liners.  In the car biz, it’s all about getting the consumer into the dealership and having them waste invest a significant amount of time on their turf.  At this stage, over the phone no one was willing to commit to our price of buying at “x”.   Their efforts to lure us into the dealership was unrequented.

Meanwhile, my husband was working with the internet sales team at Klein Honda in Everett.  He received this response from their “internet sales manager” regarding his offer of paying “x”:

We have ourselves a deal!  I will do $X plus tax and license for the Black Fit Sport with an automatic transmission.  We need to move quick on this deal before they sell it to someone else for more (I am serious).  When can you come in and wrap this up?  The sooner the better.  We open at 11am on Sunday.  I would recommend coming in and finishing up the deal earlier than later.  That way, we can avoid any back-ups getting into the business office.  If I hear back from you before the end of business today, via e-mail or phone I will place a sold sign in your new Fit and pull it off the lot!  I look forward to hearing from you and thank you for considering Klein Honda!

We made the one hour trek to the dealership this morning to purchase this car at $X as agreed at 11am.  The Internet Sales Manager (ISM) seemed friendly and straight forward enough.  We completed a mini application after reviewing the car and picked out a couple of accessories to go with the car.  ISM lets us know that this is a steal and ask that we refer our friends and family.  While I went to our car to fetch our insurance info, my husband mentions to the Internet Sales Manager that I’m blogger and will probably write about how pleased we were with this experience.

Well well well…sure enough, while the ISM was away with our mini application, the Big Sales Manager (BSM) showed up…aka The Closer.   This guy looked really ticked off and informed my husband and I that ISM did not have the authority to cut us this deal and that it the agreed to price needs to be a couple hundred over $X.   We angrily walked out.   The ISM never showed his face and has yet to call or email us.

Where is the honor to stick with what was quoted?   Stuff like this fries me.  If I quote a rate as being locked in as x and I make a mistake, I eat it.  Sometimes I’ll tell the client; sometimes they’ll never know.   It doesn’t happen often…but hey, we’re all human!   I honor my word.   Their reputation and integrity wasn’t worth a couple hundred bucks to them.  It was pretty despicable.

We were so disgusted with the experience over our hour ride back home, we decided that we didn’t want or need a Fit.  Then Renton Honda calls us from my checking out the Costco auto discount the previous day (at the time, they said the Fit was not in the Costco program).

I explained to the Internet Sales Manger at Renton Honda (I believe his name is Randy) that we just wasted our entire morning trekking up to Everett for a promised price on a Fit and he apologized for our experience.  He wanted to know what color, model, etc. we were interested in and I told him but warned we were pretty worn out from our dealings with Klein.   Randy tells us that we can have a Fit for $X and we told him we wanted his manager to call us to confirm so that we can avoid repeating what happened the last time we ventured into a Honda dealership.   Within minutes Randy’s manager called us and committed to our price.

We journey south to Renton and Randy sets us up with Shain Patrick, Senior Sales Consultant who was very decent to deal with.  Renton Honda did honor their word and we drove home a Honda Fit tonight (my husband was so thrilled that the gas gage didn’t budge the whole trip).

No one wants to feel like a chump or like they’re being toyed with.  We all just want a fair deal and to work with people who honor their words.   Life is too short to deal with those who don’t.

My husband told the ISM at Klein Honda that I would blog about how our experience was (this was when we thought they were selling us the car for the agreed price; before they brought in “The Closer”); I guess he’s right!