The Home Loan Application, by Jason Hillard , Homeloanninjas.com


Applying for a home loan is quite a process. A good place to get familiar with the process is the home loan application. I made a video awhile back showing the different sections of the loan application:

Some things to know when you apply for a home loan:

  • Detailed residence history for the last 2 years
  • Detailed employment history for the last 2 years
  • Knowledge of your various bank accounts, retirement accounts, and other liquid assets
  • Social Security number
  • A good idea of your credit history – dates of bankruptcy discharge, etc

Obviously, there’s more to it than that. But those items might be things you wouldn’t usually think about. It helps to have the following put together when you fill out the loan application:

  • Most recent 30 days of paystubs for all borrowers
  • Most recent bank statements; all pages, all accounts
  • Most recent retirement or 401k statements
  • Last 2 years Federal tax returns; all pages, with w2s
  • Business tax returns if applicable
  • Divorce decree/child support paperwork if applicable
  • Award letters for Social Security/VA/Disability if applicable
  • Pension letters/Annuity statements if applicable
  • Bankruptcy Discharge paperwork if applicable

That sounds like a lot of stuff to put together, but the truth is it will help your Mortgage Professional put your application together, and the underwriter will need to document and verify all of those items anyway.

You might as well begin prepared.

For more information about the home loan application, and a copy you can download and get familiar with, check out my website. I try to provide valuable information about home loans in Oregon and Washington, rather than empty sales pitches. Thanks!

Picture: Jason Hillard

Jason Hillard – homeloanninjas.com

Mortgage Advisor in Oregon and Washington MLO#119032

Pinnacle Mortgage Bankers

a div of Pinnacle Capital Mortgage Corp

503.799.4112

jason@mypmb.us

1706 D St Vancouver, WA 98663

NMLS 81395 WA CL-81395

Equal Housing Lender

Battle Brews Over Responsibility For Defaulted West Coast Bank Home Loans in Oregon, By Jeff Manning, The Oregonian The Oregonian


Did former Bend banker Jeff Sprague go rogue during the housing boom and make a series of dishonest loans egregious enough to get him charged with bank fraud?

 
Or was he a low-level flunky just following orders from his bank-executive bosses who knew and approved of what he was doing?
 
Those are the questions at the heart of a legal battle between Sprague and his former employer, West Coast Bank. Sprague, facing criminal fraud charges stemming from a series of 2007 loans he handled to employees of Desert Sun Development, has subpoenaed the Lake Oswego bank attempting to force it to hand over internal documents, including the findings of its own investigation into loans that Sprague handled.
 
Federal prosecutors have asked for many of the same documents.
 
The bank has handed over some of the requested material. But it has refused to give up about 100 documents claiming they are protected by attorney-client privilege.
 
The material could shine a new light on the behavior and lending standards of the Lake Oswego bank during the crazy days of the real estate boom. Banks all over the country dispensed with their characteristic caution during much of the last decade and made billions of dollars worth of residential loans with little if any due diligence.
 
The industry came to regret its recklessness after borrowers defaulted in enormous number. The industry’s slipshod lending helped send the American economy into a tailspin from which it has yet to recover.
 
Robert Sznewajs, West Coast Bank CEO, declined comment, as did the bank’s Portland attorney David Angeli.
 
Sprague’s fight over the documents may be a long-shot. Attorney-client privilege is a well-accepted legal doctrine that ensures the confidentiality of communications between a client and attorney.
 
But the bank’s refusal also begs the question: What is it hiding?
 
CRIMES AND INVESTIGATIONS

The stakes are high for Sprague. He and his former assistant, Barbara Hotchkiss, were among 13 indicted on fraud or related charges in November 2009 in the Desert Sun case. Prosecutors allege that the Central Oregon real estate developer convinced West Coast and several other banks to loan the company or its employees $41 million through falsified and forged loan applications.
 
 
The West Coast loans handled by Sprague went to Desert Sun employees, who were participating in the company’s home ownership program. Designed to capitalize on Central Oregon’s red-hot housing market, the company offered to build homes for employees and associates and then split the sales proceeds. But Desert Sun allegedly pocketed the loan proceeds, sometimes completing little if any work on the home for which the employee now owed hundreds of thousands of dollars.
 
 
Several of the defendants have agreed to plead guilty, including Shannon Egeland and Jeremy Kendall, two former senior executives of the company. Desert Sun CEO Tyler Fitzsimons maintains his innocence.
 
 
Scott Bradford, the Eugene-based prosecutor leading the case for the government, declined to comment.
 
 
Desert Sun remains the biggest criminal case in Oregon to emerge from the housing boom and bust. It is also one of the few cases nationally in which bankers were charged with crimes. Senior executives from the financial industry have gone virtually untouched in the subsequent wave of investigations and prosecutions.
 
 
No West Coast executives have been accused of wrongdoing, either in criminal or civil jurisdictions.
 
 
Federal prosecutors allege that Sprague and Hotchkiss knowingly helped originate and process phony loans. The loan applications contained forged signatures and inflated claims of the borrowers’ financial wherewithal.
 
 
Attorneys for Sprague and Hotchkiss say their clients were simply following the West Coast Bank playbook.
 
 
Sprague helped originate so-called stated-income loans, a widely use during the boom in which the lender made no effort to verify an applicant’s earnings. Sprague routinely offered general guidelines to loan applicants as to the income or assets they would have to list in order to qualify.
 
 
“I think the bank is hiding that they knew that this loan process was in place and that they approved of it,” said Marc Friedman, a Eugene attorney representing Sprague.
 
 
John Kolego, attorney for Hotchkiss, agreed. “I think these lending practices originated pretty high up in the organization,” he said. “There’s a pretty good chance there’s a smoking gun here, if we could just get the documents.”
 
 
Hotchkiss was Sprague’s assistant who did the routine work of processing loans. “She worked for the bank for less than two years,” Kolego said. “She was making $28,000 a year.”
 
 
Sprague did decidedly better, earning both a salary and commissions on loans he originated. Reports that Sprague was bringing home a six-figure salary during the boom is an exaggeration, Friedman said, adding that he didn’t know exactly how much his client made.
 
 
In any case, the material withheld by the bank is necessary to support Sprague’s defense and “may, in fact, show that he initiated the investigation after discovering hints of fraudulent activity,” according to his court filings.
 
 
Court filings make clear the bank did hand over to the government material it did not feel was privileged. Following the typical rules of discovery, the U.S. attorney’s office then shared those documents with Friedman and other attorneys for the defendants.
 
 
Court filings also include a list of about 100 other documents the bank refused to hand over. It filed a motion to quash Sprague’s subpoena arguing that the materials are shielded from discovery under attorney-client privilege.
 
 
Federal Magistrate Thomas Coffin is expected to rule shortly on the bank’s motion.
 
 

FAILURE DOESN’T EQUAL FRAUD

 
 
The scrap over the documents is another reminder of West Coast Bank’s ill-fated “two-step” loan program.
 
 
Though not historically a big home mortgage lender, the bank pushed aggressively into some of the hotter housing markets around the Northwest with its “two-step” program, a short-term construction loan. By most accounts, the program was the brainchild of David Simons, a bank senior vice president and manager of residential lending.
 
 
West Coast linked up with U.S. Funding, a Vancouver mortgage brokerage, for more client referrals. Two-step was geared for flippers, investors who had every intention of immediately selling the new home rather than living in it. Bank officials agreed to 100 percent financing even for borrowers they never met.
 
 
By the end of 2007, West Coast had grown its two-step portfolio from next to nothing to $341 million, more than 16 percent of its total loans.
 
 
Then, the boom ended.
 
 
The bank’s loan portfolio suffered on all fronts, but its two-step loans went bad in enormous numbers. In Lebanon, where West Coast loaned home flippers nearly $16 million for about 45 homes in a new, relatively high-end subdivision, it eventually repossessed more than 40 of them. In all, the bank repossessed 422 properties from failed two-step loans, according to SEC filings.
 
 
West Coast reported in its 2009 10-k annual report that its non-performing two-step loans peaked at $127.7 million in the third quarter of 2008, nearly a third of the total.
 
 
Sprague and Simons left the bank after its Desert Sun investigation.
 
 
Criminal investigators from the FBI and other federal agencies continue to probe West Coast’s two-step lending in Lebanon, Happy Valley and elsewhere.
 
 
Ken Roberts, a Portland attorney noted for his work with local banks, said its unfair to equate the failure of West Coast’s two-step program with fraud or other wrongdoing. Thousands of banks jumped on the housing bandwagon last decade and few of them anticipated the boom ending, let alone a painful crash leading, millions of foreclosures and 30 percent declines in home values, Roberts said.
 
 
Federal and state bank regulators did single out West Coast in October 2009, issuing a cease and desist order requiring the bank to raise new capital and clean up its act. The FDIC and the Oregon Department of Finance and Corporate Securities did so after they had determined the bank “had engaged in unsafe and unsound practices.” The agencies ordered the bank to, among other things, cut all ties with employees, borrowers or anyone else suspected of fraudulent activity.
 
 
That same month, West Coast raised $155 million by essentially selling an 80 percent equity stake in the bank to outside investors. The transaction and the new capital probably saved the bank. It also vastly diluted the value of the stock held by existing investors.
 
 
The West Coast board of directors in 2010 awarded CEO Sznewajs $870,89, a hefty raise from the $407,545 he got paid the year before.
 
 
Sprague, meanwhile has left banking and is working as a carpenter. His marriage ended. “He’s taken some really big hits,” Friedman said.

Use Caution When Selling REO Properties, by Phil Querin, PMAR Legal Counsel, Querin Law, LLC Q-Law.com


Foreclosure Sign, Mortgage Crisis

Image via Wikipedia

By now, most Realtors® have heard the rumblings about defective bank foreclosures in Oregon and elsewhere. What you may not have heard is that these flawed foreclosures can result in potential title problems down the road. 

Here’s the “Readers Digest” version of the issue: Several recent federal court cases in Oregon  have chastised lenders for failing to follow the trust deed foreclosure law. This law, found inORS 86.735(1), essentially says that before a lender may foreclose, it must record all assignments of the underlying trust deed. This requirement assures that the lender purporting to currently hold the note and trust deed can show the trail of assignments back to the original  bank that first made the loan.

Due to poor record keeping, many banks cannot easily locate the several assignments that  occurred over the life of the trust deed. Since Oregon’s law only requires assignment as a condition to foreclosing, the reality of the requirement didn’t hit home until the foreclosure crisis was in full swing, i.e. 2008 and after.

Being unable to now comply with the successive recording requirement, the statute was frequently ignored. The result was that most foreclosures in Oregon were potentially based upon a flawed process. One recent federal case held that the failure to record intervening assignments resulted in the foreclosure being “void.” In short, a complete nullity – as if it never occurred.

Aware of this law, the Oregon title industry is considering inserting a limitation on the scope of its policy coverage in certain REO sales. The limitation would apply where the underlying foreclosure did not comply with the assignment recording requirement of ORS 86.735(1). This means that the purchaser of certain bank-owned homes may not get complete coverage under their owner’s title policy. Since many banks have not generally given any warranties in their

REO deeds, there is a risk that a buyer will have no recourse (i.e. under their deed or their title insurance policy) should someone later attack the legality of the underlying foreclosure.

Realtors® representing buyers of REO properties should keep this issue in mind. While this is  not to suggest that brokers become “title sleuths,” it is to suggest that they be generally aware of the issue, and mention it to their clients, when appropriate. If necessary, clients should be told to consult their own attorney. This is the “value proposition” that a well-informed Realtor®  brings to the table in all REO transactions.

©2011 Phillip C. Querin, QUERIN LAW, LLC

Visit Phil Querin’s web site for more information about Oregon Real Estate Law http://www.q-law.com