WaMu paid agents referral fees
Report: office had $1 billion in loans in 2004
By Inman News, Tuesday, December 30, 2008.A Washington Mutual retail mortgage office in Southern California turned real estate agents into "a pipeline for loan applications" by paying them referral fees, according to a New York Times story detailing the lender's rapid expansion during the housing boom.
Fearing they could be construed as illegal kickbacks, WaMu banned referral fees in 2006 but allowed a team of 20 loan agents at the company's Downey branch to continue offering them, the Times reported.
The fees attracted real estate agents from all over Southern California, an anonymous former WaMu loan agent told the Times. JPMorgan Chase, which bought WaMu in September for $1.9 billion, would not comment on the company's operations before the acquisition.
The Times said the story was based on interviews with two dozen former WaMu employees, mortgage brokers, real estate agents and appraisers in California, Florida, Illinois and Texas.
WaMu expanded its home lending with the purchase of subprime lender Long Beach Financial in 1999, and grew the number of WaMu retail branches by 70 percent between 2000 and 2003, the story said. Adjustable-rate mortgage (ARM) loans grew from about 25 percent of new home loans in 2003 to 70 percent by 2006.
WaMu's Downey office, which specialized in selling option ARMs to Latinos who spoke little English and relied on advice from real estate brokers, originated nearly $1 billion worth of loans in 2004, the story said. The manager of the office acknowledged that referral fees were paid to real estate agents but said they were fully disclosed to borrowers.
Commenting on the story on Huffington Post, real estate investor and attorney Jim Randel said the referral fees "seem to be a clear violation of the Real Estate Settlement and Practices Act (RESPA)" and brought "shame on the real estate agents who took the money."
***
What's your opinion? Leave your comments below or send a letter to the editor.
All rights reserved. This content may not be used or reproduced in any manner whatsoever, in part or in whole, without written permission of Inman News. Use of this content without permission is a violation of federal copyright law.
You must login or register to post a comment.
Submitted by Bill Fooks on December 30, 2008 - 5:23am.
Bill Fooks
TFT realty Marketing Service
Warwick, RI http://www.fooksteam.com
This is one sure way of getting a bad reputation. Kick Backs are always bad.
But we feel that a real eatate broker should know all the programs available, and inform our clients of the options available. Most lender reps don't know all programs just their own. These are the reasons the lender gives kick backs. They don't want you to look at other options available. The good agent should know all the programs. This we believe is part of the job of a good agent. They should not receive a Kick Back for this knowledge, but a well desevered fee for our services of helping them get a home.
Submitted by Jose Lopez on December 30, 2008 - 2:04pm.
Wow!! I bet this is the tip of the iceberg. We will see more stories like this come out now that people are losing their jobs. Banks were doing anything and everything to do loans, so it does not surprise me. The agents involved should have their licenses suspended if they did not disclose the fees to their clients.
Jose Lopez
www.Sellsarasota.com/sarasota-foreclosures.html
Submitted by Gary Crabtree on December 30, 2008 - 2:51pm.
This is just the tip of the iceberg. I have evidence that a WAMU loan agent was soliciting mortgages through mortgage brokers by hold personal training on how to falsify loan documents to avoid detection and expedite the funding of loans in the Bakersfield area. One loan agent and his wife (a notary) funded 42 loans that were placed under "straw" buyers but they retained the properties and rented them out until foreclosure took place. Is law enforcement interested - no.
Submitted by Tim Cornelison on December 30, 2008 - 8:37pm.
Both the Agents and the Mortgage loan officers should have their licenses revoked. A Company the size of WAMU fully understood that this was illegal. Agents know it or they would not have a license to begin with.
Disclosing an illegal act to your client does not make it legal. It just makes you stupid.
Submitted by Jeffrey Nunn on December 31, 2008 - 9:57am.
Once the FINE for breaking RESPA EXCEEDS THE PROFITS these companies make from their illegal activities AND those in charge lose their jobs and their compensation they received from said activities then this practice will stop. Until then, it is just the cost of doing business in a corrupt financial world. Quit writing about it unless you plan on doing something about it. Happy Freaking New Year!