The mortgage loan application process can be daunting, and Linda Weekes knows all too well that there are always applicants and brokers looking to skirt the rules to get the deal they want.
As a former senior mortgage underwriter and early whistleblower at the Lehman Brothers subsidiary BNC in 2005, Weekes tried to bring attention to the behaviors that partly contributed to the collapse of the housing market.
“I’ve been in the mortgage and banking industry for 48 years. I worked for BNC, which was a subsidiary of Lehman Brothers, and through the process of working for them and discovering fraud, I was retaliated against,” Weekes tells Yahoo Finance.
Weekes finally has the chance to tell her side of the story through Jennifer Deschamps’ new documentary “Inside Lehman Brothers,” which premiered at the DOC NYC film festival this month. “Lehman Brothers were all about money, and they didn’t care how it came and at whose price and sacrifice. It did not matter to them, and I just wasn’t on board with that.”
“As a mortgage loan underwriter, it’s our job to make sure that, No. 1, we’re protecting the company and No. 2, we’re protecting the prospective homeowner,” she explains. “It’s important to me that the homeowner is able to sustain that home for the term that they have signed up for.”
Weekes’ work involves a studied attention to detail and an almost cynical approach to human behavior, assuming every mortgage loan application is full of lies until it can be proven otherwise. “I have a sense. I can tell when things are not adding up, and I know what to look for,” she says. “It’s my job to make sure that it all matches up, and it’s my job to make sure that my company is making good loans, not fraudulent loans.”
That level of detective work is necessary because dishonesty in the mortgage loan application process is still very common. For prospective homeowners looking to navigate the mortgage loan application process smoothly, Weekes offers some sound advice.
Don’t lie… and watch out for brokers who do
“You should tell the truth and provide all accurate documentation without it being doctored,” Weekes says. “Fill out the mortgage loan application accurately, and provide the supporting documentation.”
While being honest may seem like pretty straightforward advice, applicants might run into mortgage brokers looking to persuade them into bending the truth. For that reason, Weekes recommends standing your ground.
“You should not falsify anything, nor should you allow a loan officer or anyone to talk you into doing something that you know is not accurate,” she says. “It’s a federal document, the mortgage loan application. You are supposed to complete that mortgage loan application with all accurate, factual information. If somebody is telling you, ‘Don’t put that, put this,’ and you know that that’s not correct because you know your own history, then you shouldn’t follow that direction.”
Of course, dishonest mortgage brokers might not be so easy to spot since they may not be that direct with customers. “A lot of times, it happens after the mortgage loan application is taken. Then they pump up whatever they need to get it through the underwriters,” Weekes says. “You end up all tangled up in a mess, and you lose your home and your down payment.”
Go with an institution you already know
While you can shop around for better rates before filing your mortgage loan application, there’s also peace of mind to consider. For that reason, Weekes suggests sticking with what you know.
“If you bank somewhere, go to that bank. Why go to a mortgage broker if you have a relationship with a bank?” she says. “They do mortgages as well, and I think that they’re safer. I guess it just depends on who you bank with and who you trust.”
Know your mortgage products
“I would suggest that prospective homeowners read up on products — what fits them best, what they can afford, what instrument they can use to sustain that mortgage, whether it’s an adjustable rate or a fixed rate,” Weekes says. “But always make sure that your interest rate isn’t too high, because the broker is getting a kickback that you never see or know about. The higher the rate, the bigger the kickback. If you have a good credit score, you should not have that kickback.”
Get an appraiser you can trust
“The other issue is the appraisal, which is the collateral for the loan,” Weekes says. Underwriters have to confirm the value of the home based off the comparable sales figures they’re given. Consequently, who the appraiser is — and what kind of relationship they have with the broker — can be a factor.
“We have to make sure that all of the information from the appraisal matches throughout the file,” Weekes says. “You have your credit, and then you have your collateral, and if both of those are falsified, you have no loan. You just have a mess.”
Finally, Weekes can’t stress the importance of honesty enough in the mortgage loan application process. “I would suggest that everybody tell the truth. The truth will set you free,” she says. “We have to use our own conscience. If we don’t, then we’re following someone else’s lead. And at that point it could be very dangerous, which we saw with the collapse of Lehman Brothers.”
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This story was originally published on November 21, 2018 as Confessions of a mortgage underwriter.