In doing some research on the Code of Ethics, I found the following information listed on the RE/MAX International website: "The REALTOR you hire adheres to a strict Code of Ethics and professionalism while protecting ownership of property." "In the U.S., all of our agents are members of their local REALTOR board and uphold the associated strict Code of Ethics."
As stated earlier, REALTOR Magazine provided the following information in their article regarding mortgage fees: "People should ask their broker how much they're making, including yield spread premiums and direct fees, and if it's over $2,000 they should question why." Please keep this information in mind when reviewing Scott Veerkamp's "switching" technique.
Likewise, I am forwarding information from CNN Money.com regarding junk fees. The article is entitled: "The bunk behind junk closing fees." "Mortgage brokers and their many "fees"--sometimes not related to any actual service performed by a broker."
The article has a list of names that brokers use for various junk fees. Please review this statement contained in the article: "The long list of names that fees go by ( in addition to processing and administration charges, Aquila residents were hit with application, commitment, courier, document prep, origination and underwriting fees) suggests that specific things were done to earn them."
"Actually, says University of Minnesota law professor Prentiss Cox, a former head of the Minnesota attorney general's consumer division, most all of these fees end up in lender or broker coffers regardless of what a HUD-1 says: They should just call them "Pluto research fees." "They're just making this stuff up."
The quote above was taken from the CNN Money.com article. Obviously, Mr. Cox is very specific about his statement on junk fees. I agree with him when he says: "They're just making this stuff up." In fact, "Pluto research fees" is a perfect description for excessive and unnecessary junk fees. Clearly, these fees are not in the best interest of the client.
Please note: "Going In and Going Out" is a term I use to describe the mortgage transaction I had with Scott Veerkamp. This term is synonymous with "Bait and Switch." Please take a moment to review the following explanation...
The "Going In" phase typically represents a statement from Scott's website or his affiliation with NAR. As I mentioned earlier, this statement is often used as "BAIT."
The "Going Out" phase shows the financial result for his client. As you might expect, this is where the "SWITCH" takes place. Please review the following "Going In and Going Out" examples... ( * indicates junk fee / "Pluto fee" )
Group A: 1. "Serving Others First" going in---and a $500 "processing fee" going out.* 2. "Keeping the interest of my clients above all else" going in---and a $960 "application fee" going out.* 3. "Dedicated to providing the finest service possible" going in---and a $150 "underwriting fee" from the lender going out.* 4. Scott describes himself as a "Super Servant" going in---and Scott "blindsides" his client with a $4,799 "Yield Spread Premium" going out. 5. "Protecting and promoting the interest of his client" going in---and a $409 "administration fee" from the lender going out.* 6. Following the "Golden Rule" going in--and $1,920 in "discount points" going out.* 7. "Someone You Can Trust" (public awareness campaign) going in---and thirteen examples of "deception" and "financial harm" going out.
Group B: 8. "Be truthful in all communications with the public" going in---and Scott collects $6,239 in "secret bonus payments" going out. 9. "Fairness and high integrity" going in---and a $35 "electronic filing fee" going out.* 10. "We go the extra mile to help you achieve your goals" going in---and a $425 "administration fee" from the lender going out.* 11. "We'll make your home buying or selling experience a pleasant one" going in---and a $250 "document preparation" fee going out.* 12. "You can trust our REALTORS to always put your interest first and foremost" going in---and a $1,440 "Yield Spread Premium" going out. 13. "You need a professional team that understands the industry and is positioned to stay ahead of the game" going in---and a $50 "courier fee" going out.* 14. "We will do our very best to help you get the lowest interest rates possible at the lowest possible price" going in---and a whopping $10,938 in "Pluto fees" and kickbacks going out.
Hopefully, this information will give you a better understanding of Scott's "switching" technique. He consistently does the opposite of what he says he is going to do. As you can see, he often receives a large financial sum for "steering" people into high cost loans. Unfortunately, these large financial gains are coming at the expense of the public.
In summary: The examples above total $10,938 in junk fees and kickbacks, or $5,469 per loan. Scott collected $6,239 in Yield Spread Premium from the lender. As discussed earlier, Senator Merkley says Yield Spread Premium has turned the home mortgage industry into a SCAM. Nonetheless, Scott describes this scenario as: "Keeping the interest of his clients above all else."
Tuesday, August 24, 2010
Scott Veerkamp: NAR / Predatory Broker
Please review this information from U.S. Senator Jeff Merkley regarding deceptive lending practices. Senator Merkley makes the following statement in his letter to the President:
"Steering payments were made to brokers who enticed unsuspecting homeowners into deceptive and expensive mortgages. These secret bonus payments, often called yield spread premiums, turned home mortgages into a SCAM."
In addition, Senator Merkley references an article in the New York Times entitled "Predatory Brokers." The article makes two important statements regarding predatory lending: 1. "The first step must be to outlaw the kickbacks that lenders pay brokers for steering clients into costlier loans." 2. "The most clearly unethical form of payment is the so-called yield spread premium."
NAR members are supposed to help their clients avoid predatory lending tactics. The code of ethics requires them to follow the "Golden Rule" in the representation of their clients.
If Scott Veerkamp was applying for a loan, would he select a mortgage that is loaded with yield spread premium and junk fees? The answer to this question is obvious. Unfortunately, Scott refuses to comply with the "do unto others" philosophy in the code of ethics. He uses NAR as a selling tool to build trust with his clients. After gaining trust, he "blindsides" his clients with YSP so he can receive a kickback on their loan.
This concept is called "steering" and it can be very costly for consumers. No one would agree to a higher interest rate if they understood the financial impact it was having on their loan. This is why Senator Merkley refers to yield spread premium as a "secret bonus payment."
Please take a moment to review two examples of predatory lending using YSP and junk fees:
Loan 1: (Property value $150,000) A. $4,799 yield spread premium B. $500 processing fee C. $250 document preparation fee D. $50 courier fee E. $35 electronic filing fee F. $425 administration fee (lender fee)
Loan 2: (Property value $120,000) A. $1,440 yield spread premium B. $960 application fee C. $1,920 in "discount points" (paid to Scott Veerkamp) D. $409 administration fee (lender fee) E. $150 underwriting fee (lender fee)
I have provided documentation Scott collected nearly $10,000 on two separate mortgages using YSP and junk fees. This is an average of $5,000 per loan. This type of lending represents the extreme opposite of "protecting the interest of the client."
As I mentioned earlier, predatory lending can cause serious financial harm to the unsuspecting public. Therefore, I agree with Senator Merkley when he says yield spread premium has turned the home mortgage industry into a "SCAM."
http://merkley.senate.gov/newsroom/press/release/?id=A09C6A80-537A-4EB1-83C5-31925F046B6F
"Steering payments were made to brokers who enticed unsuspecting homeowners into deceptive and expensive mortgages. These secret bonus payments, often called yield spread premiums, turned home mortgages into a SCAM."
In addition, Senator Merkley references an article in the New York Times entitled "Predatory Brokers." The article makes two important statements regarding predatory lending: 1. "The first step must be to outlaw the kickbacks that lenders pay brokers for steering clients into costlier loans." 2. "The most clearly unethical form of payment is the so-called yield spread premium."
NAR members are supposed to help their clients avoid predatory lending tactics. The code of ethics requires them to follow the "Golden Rule" in the representation of their clients.
If Scott Veerkamp was applying for a loan, would he select a mortgage that is loaded with yield spread premium and junk fees? The answer to this question is obvious. Unfortunately, Scott refuses to comply with the "do unto others" philosophy in the code of ethics. He uses NAR as a selling tool to build trust with his clients. After gaining trust, he "blindsides" his clients with YSP so he can receive a kickback on their loan.
This concept is called "steering" and it can be very costly for consumers. No one would agree to a higher interest rate if they understood the financial impact it was having on their loan. This is why Senator Merkley refers to yield spread premium as a "secret bonus payment."
Please take a moment to review two examples of predatory lending using YSP and junk fees:
Loan 1: (Property value $150,000) A. $4,799 yield spread premium B. $500 processing fee C. $250 document preparation fee D. $50 courier fee E. $35 electronic filing fee F. $425 administration fee (lender fee)
Loan 2: (Property value $120,000) A. $1,440 yield spread premium B. $960 application fee C. $1,920 in "discount points" (paid to Scott Veerkamp) D. $409 administration fee (lender fee) E. $150 underwriting fee (lender fee)
I have provided documentation Scott collected nearly $10,000 on two separate mortgages using YSP and junk fees. This is an average of $5,000 per loan. This type of lending represents the extreme opposite of "protecting the interest of the client."
As I mentioned earlier, predatory lending can cause serious financial harm to the unsuspecting public. Therefore, I agree with Senator Merkley when he says yield spread premium has turned the home mortgage industry into a "SCAM."
http://merkley.senate.gov/newsroom/press/release/?id=A09C6A80-537A-4EB1-83C5-31925F046B6F
Realtor / Predatory Lending Example
The National Association of Realtors and the Center For Responsible Lending produced a brochure entitled: "How to Avoid Predatory Lending." Please take a moment to review this information from the NAR website...
http://www.realtor.org/home_buyers_and_sellers/how_to_avoid_predatory_lending
NAR says: "Here are some common problems with predatory loans." (I have included examples from my personal experience with Scott Veerkamp.)
1. High interest rates and fees:
Example A: $960 application fee. Example B: $500 processing fee. As discussed earlier, the National Association of Mortgage Brokers says it is not necessary to pay "application" fees and "processing" fees. Therefore, the cost of these items should be ZERO as opposed to $1,460.
2. Loan "Steering":
Example A: $4,799 Yield Spread Premium. Example B: $1,440 Yield Spread Premium. The Center for Responsible Lending states the following with regard to Yield Spread Premium: YSP is "a bonus a lender pays to reward a mortgage broker for placing or "steering" a borrower into a higher-cost loan than the borrower qualifies for." "Yield Spread Premiums are a destructive feature of the subprime market because they give brokers an incentive to act contrary to a borrowers best interest." "The effect of YSP is to steal equity from struggling families."
3. Broken promises, "Bait and Switch.":
Example A: "As qualified professionals, we'll guide you through the entire home buying experience and assist you in being an educated buyer." Example B: "We will do our very best to help you get the lowest interest rates possible at the lowest possible price." Example C: "You can trust our REALTORS to always keep your interest first and foremost." Example D: "Keeping the interest of my clients above all else." Example E: "Serving Others First." Example F: REALTORS are required to "protect and promote the interest of the client" at all times. Example G: REALTORS are required to follow the "Golden Rule" at all times. Example H: "The term REALTOR has come to connote competency, fairness, and high integrity." (Statements were taken from various websites and advertising provided by Scott Veerkamp and his organization.)
In addition, NAR says you should ask the following question: "Does the lender belong to a trade association with ethics requirements for members"? In my case, the answer is yes. Scott Veerkamp is a member of MIBOR and the National Association of Realtors.
The article also encourages people to do the following: "Share predatory lending "horror" stories with regulators, other consumers, REALTORS, counseling groups, housing professionals, and the media." As everyone knows, I have taken their advice on this issue. I believe it is important for consumers to be aware of Predatory Lending tactics in their community.
In closing, please review the articles below from the Center for Responsible Lending. This will give you a better understanding of the "Bait and Switch" tactics some brokers use when misrepresenting their clients.
http://www.responsiblelending.org/mortgage-lending/research-analysis/ib-ysp-110507-final.pdf
http://www.responsiblelending.org/mortgage-lending/tools-resources/ib011-YSP_Equity_Theft-0604.pdf
http://www.realtor.org/home_buyers_and_sellers/how_to_avoid_predatory_lending
NAR says: "Here are some common problems with predatory loans." (I have included examples from my personal experience with Scott Veerkamp.)
1. High interest rates and fees:
Example A: $960 application fee. Example B: $500 processing fee. As discussed earlier, the National Association of Mortgage Brokers says it is not necessary to pay "application" fees and "processing" fees. Therefore, the cost of these items should be ZERO as opposed to $1,460.
2. Loan "Steering":
Example A: $4,799 Yield Spread Premium. Example B: $1,440 Yield Spread Premium. The Center for Responsible Lending states the following with regard to Yield Spread Premium: YSP is "a bonus a lender pays to reward a mortgage broker for placing or "steering" a borrower into a higher-cost loan than the borrower qualifies for." "Yield Spread Premiums are a destructive feature of the subprime market because they give brokers an incentive to act contrary to a borrowers best interest." "The effect of YSP is to steal equity from struggling families."
3. Broken promises, "Bait and Switch.":
Example A: "As qualified professionals, we'll guide you through the entire home buying experience and assist you in being an educated buyer." Example B: "We will do our very best to help you get the lowest interest rates possible at the lowest possible price." Example C: "You can trust our REALTORS to always keep your interest first and foremost." Example D: "Keeping the interest of my clients above all else." Example E: "Serving Others First." Example F: REALTORS are required to "protect and promote the interest of the client" at all times. Example G: REALTORS are required to follow the "Golden Rule" at all times. Example H: "The term REALTOR has come to connote competency, fairness, and high integrity." (Statements were taken from various websites and advertising provided by Scott Veerkamp and his organization.)
In addition, NAR says you should ask the following question: "Does the lender belong to a trade association with ethics requirements for members"? In my case, the answer is yes. Scott Veerkamp is a member of MIBOR and the National Association of Realtors.
The article also encourages people to do the following: "Share predatory lending "horror" stories with regulators, other consumers, REALTORS, counseling groups, housing professionals, and the media." As everyone knows, I have taken their advice on this issue. I believe it is important for consumers to be aware of Predatory Lending tactics in their community.
In closing, please review the articles below from the Center for Responsible Lending. This will give you a better understanding of the "Bait and Switch" tactics some brokers use when misrepresenting their clients.
http://www.responsiblelending.org/mortgage-lending/research-analysis/ib-ysp-110507-final.pdf
http://www.responsiblelending.org/mortgage-lending/tools-resources/ib011-YSP_Equity_Theft-0604.pdf
Predatory Lending and the National Association of Realtors.
Please be advised that I am providing evidence of "Bait and Switch" advertising on behalf of Scott Veerkamp and his organization. Scott and his company ran the following advertisement in Christian Phone Book: "We will do our very best to help you get the lowest interest rates possible at the lowest possible price."
Upon review, you will see two examples of "Bait and Switch" advertising in this message. Please take time to review the following examples...
Example #1: A $4,799 Yield Spread Premium does NOT represent "the lowest possible interest rate." Again, I refer you to the Center for Responsible Lending and their definition of Yield Spread Premium: "A YSP is a cash bonus that a broker receives from a lender for placing borrowers in a loan with a HIGHER interest rate than the lender would accept. The higher the interest rate, the higher the premium received by the broker." "The effect of YSP is to steal equity from struggling families."
Example #2: A $960 application fee does NOT represent the "lowest possible price." As discussed earlier, the National Association of Mortgage Brokers says it is not necessary to pay an application fee. Therefore, "the lowest possible price" for an application fee is ZERO.
With regard to advertising, the Better Business Bureau defines "Bait and Switch" in the following manner: "A "bait" offer is an alluring but insincere offer to sell a product or service which the advertiser does not intend to sell. Its purpose is to SWITCH consumers from buying the advertised merchandise or service, in order to sell something else, usually at a HIGHER price or on a basis more advantageous to the advertiser."
After reading this description, it is evident Scott Veerkamp meets all of the requirements for "Bait and Switch" advertising. Here are 4 key points to review: 1. Obviously, Scott was not sincere about offering "the lowest possible interest rate" or "the lowest possible price" to his clients. 2. He simply used these statements as "bait." 3. In the next step, Scott "switches" his clients to Yield Spread Premium and junk fees. 4. Clearly, these HIGHER fees are more advantageous to the advertiser.
In doing some additional research on the Code of Ethics, I found the following information listed on the Metropolitan Indianapolis Board of Realtors website: 1. "REALTORS shall be careful at all times to present a true picture in their advertising and their representations to the public." 2. "The Code of Ethics is a promise to the public that when dealing with a real estate agent who is a REALTOR, they can expect honest and ethical treatment in all transaction- related matters." 3. "Only REALTORS pledge to abide by the Code of Ethics, and only REALTORS are held accountable for their ethical behavior."
Previously, Scott Veerkamp deliberately misled the public when he presented the following statement on one of his websites: "As a Christian business owner, it truly is the desire of my heart to not be a "Superstar," but rather a "Super Servant" with the hope of achieving excellence by keeping the interest of my clients above all else."
Please note: Yield Spread Premium and junk fees represent the extreme opposite of the statement listed above. In fact, Predatory Lending puts the public at risk for serious financial harm. Unfortunately, this is the same public Scott Veerkamp claims to be "Serving."
Upon review, you will see two examples of "Bait and Switch" advertising in this message. Please take time to review the following examples...
Example #1: A $4,799 Yield Spread Premium does NOT represent "the lowest possible interest rate." Again, I refer you to the Center for Responsible Lending and their definition of Yield Spread Premium: "A YSP is a cash bonus that a broker receives from a lender for placing borrowers in a loan with a HIGHER interest rate than the lender would accept. The higher the interest rate, the higher the premium received by the broker." "The effect of YSP is to steal equity from struggling families."
Example #2: A $960 application fee does NOT represent the "lowest possible price." As discussed earlier, the National Association of Mortgage Brokers says it is not necessary to pay an application fee. Therefore, "the lowest possible price" for an application fee is ZERO.
With regard to advertising, the Better Business Bureau defines "Bait and Switch" in the following manner: "A "bait" offer is an alluring but insincere offer to sell a product or service which the advertiser does not intend to sell. Its purpose is to SWITCH consumers from buying the advertised merchandise or service, in order to sell something else, usually at a HIGHER price or on a basis more advantageous to the advertiser."
After reading this description, it is evident Scott Veerkamp meets all of the requirements for "Bait and Switch" advertising. Here are 4 key points to review: 1. Obviously, Scott was not sincere about offering "the lowest possible interest rate" or "the lowest possible price" to his clients. 2. He simply used these statements as "bait." 3. In the next step, Scott "switches" his clients to Yield Spread Premium and junk fees. 4. Clearly, these HIGHER fees are more advantageous to the advertiser.
In doing some additional research on the Code of Ethics, I found the following information listed on the Metropolitan Indianapolis Board of Realtors website: 1. "REALTORS shall be careful at all times to present a true picture in their advertising and their representations to the public." 2. "The Code of Ethics is a promise to the public that when dealing with a real estate agent who is a REALTOR, they can expect honest and ethical treatment in all transaction- related matters." 3. "Only REALTORS pledge to abide by the Code of Ethics, and only REALTORS are held accountable for their ethical behavior."
Previously, Scott Veerkamp deliberately misled the public when he presented the following statement on one of his websites: "As a Christian business owner, it truly is the desire of my heart to not be a "Superstar," but rather a "Super Servant" with the hope of achieving excellence by keeping the interest of my clients above all else."
Please note: Yield Spread Premium and junk fees represent the extreme opposite of the statement listed above. In fact, Predatory Lending puts the public at risk for serious financial harm. Unfortunately, this is the same public Scott Veerkamp claims to be "Serving."
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