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It’s been a while since I’ve had a “Why I hate my industry” but here’s one that may become my #1, all-time “WIHMI” king. Let me recount the story for you all.
Recently, driving home from work on the 5 freeway in South Orange County I was passed by a large blue pick up truck, with big wheels, a lift kit, custom exhaust, etc., and as they blazed by me I noticed their personalized California license plate: “MAX FEES”. Seeing as one of the favorite refrains of “top producing” loan officers echoing around the bars of Orange County over the last few years has been the term “MAX FEES”; I’m going to guess that this person is in the mortgage industry. Even if they are not they are an embarrassment to any industry. To flaunt arrogance (or is it stupidity) with a personalized license plate that champions taking advantage of people borders on the absurd.
But, I’m going to bet that this person is in the industry; and if they are, they are a terrible human being. They have reached a level of depravity that is nearly unthinkable. To the owner of that truck - are you proud of the fact that you rip people off for a living? Are you so proud of your ability to lie and to pressure a family in to signing for a toxic loan while wiping out their home equity that you go and order a CUSTOM LICENSE PLATE COMMEMORATING YOUR ACHIEVEMENT? I mean, seriously - what is wrong upstairs? What made you think that getting a license plate that says MAX FEES on it was a good idea?
It’s not a mark of pride - it’s a mark of shame. It’s a scarlet letter - that license plate is the physical manifestation of the wrong that has been perpetrated on the American public by people in the mortgage industry. It is the definition of all that I hate in the mortgage industry. Whoever is driving around with that license plate, MAX FEES, can’t call themselves a professional; unless they consider themselves a professional rip-off artist. What a joke.
Seeing that car on the freeway made me furious that there is someone in the mortgage industry that can so brazenly show-off their thievery; it made me sick to my stomach.
If there is one reason why I started Blown Mortgage it is to diffuse the power of those who choose to use their position for harm instead of for benefit. MAX FEES if you are still working in the mortgage industry your time is coming; if you’re not good riddance - I hope karma kicks your ass.
Hi Morgan,
I meet people like Max Fees every day.
They’re loan originators who have be surrounded by a culture that promotes, encourages, and rewards the behavior he or she is flaunting. (I can’t imagine that truck being driven by a woman, but I suppose all things are possible.)
In the mortgage ethics class I teach, Max Fees says something like this:
“It’s the consumer’s responsibility to figure out for himself if he’s being ripped off. I gave him all the disclosure statements. If he chooses not to read them, what am I suppose to do? He’s an adult.”
The current relationship between an LO and a consumer is a retail relationship. Max Fees is the result of his environment. He’s been raised to value money.
I’m not saying that LOs who place a high value on “consumer respect” don’t make any money. I do believe that both can co-exist.
I do believe that LOs like Max Fees are capable of growing morally. But like Aristotle taught us, first MF neeeds a good environment.
I had the misfortune of meeting one of these mortgage hustlers at a bar during the height of the boom. This loud mouth was just a kid, probably just 21 years old, was clearly an uneducated cocky moron bragging about how he had the “gift of the gab” and could make up to $100K a month in his business. I have no doubt he was in the business of fleecing lower class latinos into taking on subprime mortgages.
I could imagine a person like this personalizing their license plate with “MAX FEES” without fully comprehending how reprehensible their actions were. I mean this guy was a real dumbass. With America’s corrupt financial system and government there are plenty of opportunities available for weasels like this guy and George W Bush to prosper.
I do hope that by the end of this crash these losers will be back where they belong. Flipping burgers in the Denny’s kitchen.
Morgan:
This is not intended for posting in the comments section but because I couldn’t find a way to e-mail you on this site, I decided to write this in a comment instead. You can choose to post it in the comment section or not. It’s up to you.
Ever wonder why lawyers, mechanics, salesmen and dentists are such shysters? Do ya ever wonder if it’s some genetic defect that is common to people who gravitate to these professions? Well the real common thread is that they are in professions where they know a lot about their field and their clients are often in the dark. Their clients are often at the complete mercy of these professionals and rely on them for help (and too often get the opposite of help).
In any field where this kind of relationship exists, the evil that is present in our species is given a chance to rear its ugly head. Throw in the gasoline of large financial incentives and you have yourself a recipe for disaster. Lawyers and dentists are no different than the guy who washes your car. Lawyers and dentists are just in a very powerful position over their clients. Loan brokers find themselves in the same position.
I don’t know if you are a religious person but what you are witnessing is an expression of the sinful nature of mankind. Your story just reinforces the desperate need for people to be “born again” if you will. Just being a spiritual person isn’t going to do it. Being generally honest isn’t going to do it. Having a Buddha statue at home isn’t going to do it. People need an encounter with the real creator of the universe.
I very much admire what you are doing. I love the fact that you run a first-rate, honest business. The world needs more men like you. However, I hope what you are doing is an expression of a deep and abiding relationship with your creator Jesus Christ. If it isn’t and you are interested in knowing more, just e-mail me. If my comments offend you, I deeply apologize and pray that you will some day come to the same saving faith that I have been blessed with (through no merit of my own).
In either case, I will continue to read and enjoy your blog and support you in your efforts to get the truth out.
Thanks,
Hezekiah
I think we need to realize that this “Max Fee” mentality is still going strong especially on many of the broker blogs…How? Well they are all giddy with the fact that on FHA loans they can make 7 POINTS!! Yes 7 POINTS on a homeowner who chances are in a crunch from the first “rip off” of a mortgage..They are calling FHA the new “subprime”..so folks who are in trouble get ready to get ripped of once again…
Hezekiah,
I have personally met people in this industry who hold themselves out to be good Christians and, at the same time, blatantly violate state and federal law, and in some cases commit mortgage fraud.
I suppose all they have to do is pray for forgiveness and then they get to be absolved of their wrongdoing, just like the pedophile Catholic priests.
Kindly spare Blown Mortgage readers the salvation of your faith. Religion is a private, personal matter.
Readers no more want to read about religious convictions than reading about what went on in a commentor’s bedroom this past weekend, or a commentor’s stance on abortion. Some things are better left off a blog.
Thank you for respecting Blown Mortgage readers.
As I have stated before on this site:
PERSONAL RESPONSIBILITY is what matters.
Borrowers/consumers/human beings in general are complacent, lazy, and unwilling to do research. People do not want to take the time to get 5-10 quotes…whether it be for a mortgage, auto repair, dentist, lawyer, and so on… Yeah, a good, thorough mortgage application takes about 30 minutes to get filled out, you have to talk about your income, if you are doing a refi…and why?…there is a lot of personal info divulged, some people do not like that. Plus whatever time it takes the LO to generate a quote/GFE…you are looking at probably 1 to 2 hrs to get a single quote.
In addition to this site, there are countless others that a borrower can contrast and compare with their GFE and see if they are truly getting a “good deal.”
When I was an LO, there were plenty of times that I attempted to explain the GFE, fee breakdown, how much I was getting paid, and so on…and 9 times out of 10, the borrowers were unwilling to go to the websites that I suggested they go to.
Yes, there are shiesty LO/Broker folks out there…but they are not the norm.
I do agree with Morgan that displaying the fact that you openly rip off people is offensive to most folks…however…when the notary is sitting at your house…was a gun put to your head to sign the docs? NO!!!
On the topic of the mortgage companies them selfs…I worked for Home123 (New Century)(and several others). We got paid a $12,000 base salary plus our commissions. They had a VERY bizarre commission structure that was difficult at best to make a decent living off of. U/W would ALWAYS cut the LO’s commission if the loan was “high cost”…never the companies fees…no no no, make your employees happy…never! So the consensus was put as many points on the loan as possible for the borrower to say yes to the toss it up to U/W and see what stuck. So to a degree I fault the corporate culture/big wigs for creating the NEED for the LO to have to put such massive fees on a loan.
“Everyone has to pay the mortgage right???”
Your thoughts…
Hi Ann,
I would LOVE to read one of those broker blogs you’re referring to. Sometimes the conversations at Broker Universe Grapevine can be rather interesting….Do you have a link for us?
Thanks!
I can say from my experience that The boiler room mentality is alive in are industry because of the freedom we have to charge points and fee’s. There are many in our industry who promote this type of behavior. I ran a branch for Accredited’s retail channel Home funds direct and I left the company before everything went bad because of high fee’s and the pushing of the arm products. I didn’t feel that we were putting the client’s best interest a first. I am a company man but at the end of the day you have to love the person you see in the mirror. I have always been a top producer have a outstanding reputation in my community. My first observation when I got into this business was that the people who needed the help the most paid the most in fee’s and paid higher interest rates. Now should a person the lowers scores pay a higher rate? Yes, but the temptation to get 7% in points and fee’s in states like Florida was too much to handle for most brokers and retail shops. Things will change and having a blog like this to share our thoughts is a great was to voice our concerns Thanks Morgan…………..
One of the blogs was on the broker universe..if you scroll down to an archive one…it was about 2 weeks ago..the discussion was on the 7 points for the FHA and which companies are doing it…
First off, I’m a loan guy. Got in the business in 1998 here in SoCal. I drive a modest car, own a modest 1400 square foot home and probably didn’t/don’t live as extravagant as a life stile as ole MAX FEES types. However I sleep really good at night.
Here are the things that borrowers failed to do and they need to own up to it.
Borrowers failed to use common sense when gaging the character of the individual originating the loan. Is the person licensed to do loans here in CA? Is this person a homeowner themselves? How could you possibly take the advice of someone who isn’t a homeowner? They don’t know what it is like to sit accross the table from a notary and sign a 3 inch thick stack of papers. Have they been doing this business for a few years? Consumers just accepted advice of a person who was selling shoes at Nordstrom’s 6 months ago and is now a Mortgage Professional…Give me a break people, it takes a few years to learn this business and get good at it. Do they have the most basic of professional tools? cashoutrefi@yahoo.com isn’t a very professional email address, I would never trust my stock account to a guy who’s email was bullmarkettrader@hotmail.com or something stupid like that. Do they have a website, a nice website with real people giving testimonials on it? I spent a couple grand on a website design that lists my history/experience, my philosophy some personal stuff and has pictures and scans of handwritten thank you’s from past clients. It costs me a couple hundred a year to keep it going so the overall cost is very low. If a LO is saying he/she is good and experienced and all that crap they should have made plenty of money to pay and host a decent little website and have a proper email address. Anything less is a complete amateur who doesn’t take this very seriously.
If you find a LO who has been around a few years, is a homeowner themselves, has the basic stuff like websites/referrals/licensing etc. odds are you will be in good hands. That person has taken the time to put their best foot forward, go through the effort to take this career seriously, has real testimonials from past clients and has spent a little money to show their dedication to their career.
You pick an unlicensed, non-home owning, @yahoo.com emailing buffoon you get what you deserve.
Sorry, I’m going long here.
The other major problem, in my opinion, was the conduct of all the wholesale mortgage banks and their account executives. In CA a brokerage shop (licensed by the dept. of real estate) is supposed to only have DRE licensed sales persons originating loans. Well, because there was absolutely zero accountability by all these hack mortgage banks big and small (majors included such as Wachovia, Wells, WAMU, BofA, Netbank etc) they allowed and fostered a culture of mortgage broker shops hiring army’s of unlicensed folks originating loans. There would be one or two licensed individuals, 25 hacks originating and 100+ loans per month getting brokered out to these banks under the name of one or two individuals. The AE didn’t do anything, compliance officers didn’t do anything and the DRE didn’t do anything. I personally “beefed” any broker shops that I came across in my daily work who were employing unlicensed LO’s if the client could provide some form of proof. Nothing ever came of any of my complaints. A client would show me an email from a guy who quoted rates/fees and had a digital signature where his title was loan officer yet he wasn’t licensed and the DRE never shut one of these companies down.
This industry is a F’ing mess and needs a major flushing. All these negative articles/blogs about brokers screwing good, hard working honest home owners is a pile of steaming dung. Greedy owners who didn’t bother to investigate the LO, AE’s who aided brokers in breaking the rules and the DRE who had no problem handing out sales licenses to anyone with a pulse but couldn’t enforce their own rules are the major contributors to this mess.
When I got in the business a person would ask what I did for a living and they would say things like oh cool. By 2004 I would say what I did and the most common answer was oh, so is my brother, uncle, nephew, neighbor, girlfriend……
Sorry, I love my job and get really fired up over how diluted our perception has become in the last few years due to MAX FEES and ilk.
Hezekiah,
I am never offended by people sharing their beliefs and I thank you for sharing your thoughts here on my blog. I do believe that there is inherent in all humans the ability to do amazing harm and amazing good; and that people who are sucked in to the miasma that is the mortgage industry are put in an environment where ripping people off is championed and rewarded, leading good people to do bad things.
As far as religion goes in the loan process I have to tend to agree with Jillayne. I have met too many originators at church on Sunday who are some of the worst cons during the week. I don’t know where the disconnect is but either they have decided to practice the principles of their faith in their home but not in their business; which doesn’t work.
Thanks for the thoughtful comment. Morgan
Jillayne, Do you think MF can grow morally or do they need to be supervised so they don’t act on immoral instincts? I agree that those new to the industry need good role models (heck, good business models) to reward them not for max fees, but for making good loans.
I always thought that an ideal way to reward originators would be on the quality of their loan files based on strict standards or fees, compliance and other quality measures instead of on a fee total basis.
Then again the fee total is what made the whole industry go so it is hard to reposition the compensation against something that isn’t driving the success of the business.
HK, I wasn’t offended by your comment. Jillayne, people hold themselves out to be many things and make mistakes on accident or on purpose everyday. I know several people like the ones you described yet I don’t call Christians hypocrites. As I understand it, being a born-again Christian is nothing more than having a personal relationship with Jesus, their Creator. If that’s the case, if they want to tell me about Jesus, I’ll listen. Don’t be so easily offended… If HK didn’t genuinely care about Morgan, you, me and everyone else, he’d simply keep his mouth shut and allow us to find our way to the hell they talk about, whether it exists or not.
Regards,
Jack Reacher
Brian - well said. There was blind eye after blind eye turned on the requirements of actual mortgage originating. While it is not the bank’s job to manage the business of an independent 3rd party you would think that some care would be exercised in such a business relationship.
The bottom line is banks didn’t care, brokers didn’t care, home buyers and investors didn’t care - it was all gravy. Now its turning and the consumers are starting to care, brokers and banks are going out of business and the legal and regulatory environment is about to become very dangerous for the remaining players still standing.
You make a good point about consumer responsibility in choosing a provider and their responsibility in the transaction, which cannot be understated; however, confused homeowners are little match for con-men who choose this line of work such as the type of person who would put MAXFEES on their license plate. I wonder if he has it as a tattoo too?
I know people like Max Fees. They make me sick. There was a team of LO’s where I used to work. The team leader was known and celebrated for doing things like Max Fees. He would encourage his team members to charge as much as they could. They were propped up in sales meetings, given numerous awards and bragged on constantly. Their favorite saying was, “I’m not doing charity work.” I can’t stand people like that. Everyone in that damn organization was corrupt. They’ve changed names three times in a year. Nice… very nice.
“Jillayne, Do you think MF can grow morally or do they need to be supervised so they don’t act on immoral instincts?”
Hi Morgan,
I believe everyone (with some very minor exceptions such as a person born brain damaged or a sociopath) is capable of moral growth.
External motivation is like motivation by fear, which teaches employees to just figure out clever ways of not getting caught. Trying to get people to be ethical by teaching them to follow a bunch of rules (laws, compliance) is keeping them low on the moral development scale, at about the age of a 12 to 16 year old.
(source: L. Kohlberg 1981, The Philosophy of Moral Development)
Likewise, teaching people how to be ethical by following rules based on religion also keeps adults at the same moral development level, which is why, when we enter the workforce and attempt to call ourselves professionals, we simply must leave the realm of rule following (laws, religious rules) and move into a new domain.
Surely following state/federal law and falling back on a religious upbringing could help a loan originator, but we simply would not want to stop there.
Internal motivation is what I believe we are all capable of learning, even Max Fees.
When a person is interally motivated, they need little if no supervision.
When a person is externally motivated (ex: fear of the law, fear of a religious god watching over your behavior) he or she is setting himself or herself up for needing constant supervision, like a child.
Hi Jack,
Hezekia is making assertions that lawyers, salesmen, mechanics, and dentists are all shysters and that a lawyer is the same as the person who washes your car.
The business world is much more complex than trying to reduce everything down to a simple heuristic that says “we are all evil and need god’s guidance.”
People, and specifically, people who hold professional status such as lawyers and dentists hold a radically different position in relation to their client, than a retail salesmen such as a loan originator.
If Hezekia wants to have a rational dialogue, great. If everything is going to be simplified to kindergarden sunday school fare, why bother contributing? Save it for….the little kids at sunday school.
Wow! We got a good one going here. I would like to leave a few brief statements of my opinion in reply to e few of these comments
Jillayne - I am going to assume that you are in management, and based merely on the few lines I have heard, I bet you are a good leader. You hit the nail on the head that many lo’s have allowed themselves to become products of the environment. This is the only job they know, and if you don’t take it to the house each time on fees, you might get canned! In this lower volume environemt, even with all of the new law we face, I would bet my last donut that we see instances of fraud increase! Desperate times, right?
Hezekiah - Amen to you, and I will leave it at that.
Nick - I agree that borrowers are often uneducated, but that does not mean that we simply turn it into a contest. I will take your fees right up to section 32, and if you catch me then I guess you win? The fact that they allow it does not make it right. It goes back to Jillayne’s statement of being internally motivated and ethical. Just because the fish is in the barrell doesn’t make it right for you to shoot it!
Brian - your buyer beware sentiments seem to be more in line with how I feel (not saying you and I are right and all others are wrong, I’m just saying I agree). Some of the crap I saw as an AE here in Columbus, OH was just mind numbing and I could not believe that anyone with a pulse would trust them. I actually heard a loan officer tell a borrower that they needed to close so he could get paid and keep from getting evicted, AND HE WAS NOT KIDDING! I saw the 50+ person shops with 5 licensed lo’s on staff and the rest were “processors” or “underwriting consultants”. As fast as lending laws are developed, people figure out ways to get around them!
Jack - when I was an AE I had an account that was, at the time, the largest fee volume lender in OH and had the highest revenue (now out of business - go figure!). There was a loan officer that had no education and was selling suits before he was a lo, and he had one of the big pimped out hummers with a license plat that said “Big Rips”, which is a rip off from the movie Bioler Room, which should again be a red flag. And like Ann said, we would see these guys out and about and all they could talk about was getting 65% on maxed out loans!
Well congrats, dirtbag!
I have learned a lot from all of these comments!
Max Fee’s, I think I met a client of his last week, I was reffered by a friend of Max to go and help this 82 year old with his money, I was grateful for the refferal as always, but once I sat down with this very nice man I soon realized that Max was up to his old tricks again, this gentleman was hoodwinked into a 8.2% full rate neg with WS with a new loan balance of 480k. He started the refi process at 300k. I was astonished to calculate the CC’s, rebate and Origination to be 5% of the new loan amount. “WOW”, what a hose job, I felt terrible for the man, and also for my friend. I was in a bind as I didn’t want to trash Max since he gave the client to me, so I just helped him and reccomended meeting every year until the PPP was over so I could fix it then.
Just an add on for why I hate my industry.
ricflairfinance.com
I kid you not. This is terrifying.
The morons in this business are what keeps me busy and keeps my clients loyal. A new scam is tough to spot. I believe the scam was the advent of loan programs that were intentionally disconnected from economic fundamentals, for the purpose of resale. Period. I believe the mortgage scammers knew what they were doing and that it would not last, but they wanted to make as much money as possible. I do not believe for one second that scheisters (sp) like Daniel Sadek are broke. They are now seeking the next industry to use for their personal gain, with no regard for anyone or anything else. Consumers see it now and they want fair, honest and ethical treatment. I know for a fact I will have a job until I die.