What exactly does being different and adapting to the new mortgage buying environment look like for the loan officer in the future?
After posting this article: Real talk: The mortgage industry is changing, and some of you won’t make it, written by Jason Frazier: https://www.housingwire.com/blogs/1-rewired/post/43272-real-talk-the-industry-is-changing-and-some-of-you-wont-make-it?eid=311686869&bid=2090489 on Social Media, I was recently ask the following question: “What exactly does being different and adapting to the new mortgage buying environment look like for the loan officer in the future to you Chuck Cowan?”
A very complex question with a lot of variables and influencers (A very complex process with a lot of different players involved (Real Estate, Mortgage, Title, Appraisal, Insurance etc.), an ever shifting regulatory environment, constant changing compliance landscape, rapidly advancing technology, increasing manufacturing cost base, the constant moving perception of the real value ($$) of the cost of services provided (fees, commissions etc.), potential new entrants(Amazon, Facebook, Zillow etc.). And this response is written with an attempt at an extremely over simplistic explanation that provides an overview with a slant to the purchase transaction not the refinance transaction (as we are entering a prolong period of declining refinance volume- refinances are estimated to only be 20-22% of the 1.6 trillion overall total loan volumes in 2018 and declining further in 2019). Of Quicken Loans industry leading first quarter 2018 volume of $20.5 billion, only 25% was purchase transactions. So, they have not demonstrated that their technology has given them the ability to win the customer in a purchase transaction at the same conversion rate of a winning a refinance customer.
But what I hear, see and read about, it is a change in consumer shopping and buying behavior regarding the whole home buying process. These fall into three basic categories: 1. 100 % Self-Serve (smallest segment Est at under 20%), 2. Partial Self-Serve (largest segment Est at over 55%) 3. Desired Professional Representation (middle segment Est at over 25%). Those are today’s estimates and they are changing with growing regularity, with the first two segments growing by far the quickest. Consumers are going online over 98% of the time to start the process from day one, but it is how they are finishing that process, that is what is in play or up for grabs. The latest numbers say that over 70% still do and have the desire to speak with a local professional. A supposed accountability partner per say to help guide the consumer through all the moving pieces. Now when (not if) will that number change, and to what degree up or down is the million-dollar question. Who will have the influence and become the advocate for the consumer is what every player in the whole home buying process is trying to win. Centralizing and/or bundling as many of those different pieces for a simpler process will have an ongoing edge in that battle. The main disrupter is the consumer’s shopping and buying behavior regarding the home buying process, not just the companies that provide all the home buying services. Machine Learning, AI and Blockchain will all play a major role in the customer experience and the reduction of manufacturing cost of a loan. But they all are in early stages of integration. In the end, technology is supposed to make it a more efficient transaction, provide a quicker loan process, a better customer experience and save money for all involved. And this should mean that there will be less overall number of loan officers doing more transaction per loan officer as they are more efficient, involved in a shorter process on a different compensation model providing a better customer experience. That is a big ask but not impossible, and it is the direction the home buying process is headed.
A simplistic overview, historically you use to contact a realtor based on a referral from friends and/or family and start looking at homes they selected based on the information you provided. Then you would select a home and then start the mortgage shopping process, identify a lender and apply. And the realtor would have a huge influence on who you initially contacted. The truth is, that sequence of events was always backwards as your realtor would give you a guesstimate of how much home you could afford or best-case scenario you would do a pre-qualification with a lender based on the realtor’s recommendation. Then they “the realtor” would select the homes you looked at, based on an educated guesstimate and/or pre-qualification- but it is still a pre-qualification or guesstimate not a preapproval with a guaranteed commitment. That part has changed drastically with the amount of quality information available today online.
Today, most consumers start researching homes online through the Zillow, Home.com, Realtor.com or some similar type of site. Then they start to want to know “how much can I afford” and start the mortgage investigation process with or without selecting “that one home” and they do this with or without a realtor and/or a mortgage professional. Who has influence with this consumer? And who will lead them through the home buying process and become their advocate? All of this is now up for grabs, those professionals that have this influence will be the survivors and the future stewards of the of the home buying process. One example of this change in behavior, it is bringing into questions the cost of the real estate commission. Is a 6% or 7% a fair commission for the realtor? Previous they had control over almost all the information, but now they do not have control over all that information. As it relates to mortgages, using online rate quotes and calculators are useful but not binding. When does the need of professional advice become relevant?
Technology is a game changer, but it is all going to be driven by the consumer shopping and buying behavior, the consumer dictates the rules going forward. This is as it should have always been. In the USA, we use to have a manufacturing driven economy but now we have a consumer consumption driven economy. Consumers want Mercedes, Apple like quality coupled with Amazon, Uber like pricing. That just will never work financially for the companies (Real Estate, Mortgage, Appraisers, Title, Etc.) providing all these different fragmented services, so at some point the consumer will follow basically one of two paths: One is where you get a concierge level service with high quality creating superior customer experience or they chose the second path which is the lowest price point and the do it yourself experience. I am sure there will be many other options that attempt to blend this divergent, and they will come and go (some will stick) but they will basically be influence by either of these overarching themes. Quality experience or price point will be the influencers. Yet, no company has been able to provide the absolute best quality at the lowest price point in any consumer consumption driven industry.
As for the different platforms and business models, there will be a lot of options as there has always been. Some will excel, and others will falter but at the end of the day, companies and loan officers will need to constantly re-invent and redefine their value and justify their contributed cost of the home buying process as will other players involved in the overall process.
I do know the consumer today, are more fickle and demanding than ever and this is due to the information available they can access. Whether they truly understand and can apply that information to insure the best possible transaction based on their desired preference has not been proven. Especially in a transaction as complex as the home buying process. This is the good news, there is still the need for local professional advice and guidance. Depending on the consumer’s desired level of service, will dictate which path they choose to follow as a home buyer and having a clearly defined value will be of the utmost importance to the loan officer to win that consumer’s trust and hard-earned money in the form of fees and commissions. Interesting times we are in and as in all major industry shifts, huge opportunities lie ahead for those that are prepare and have a willingness to adapt.
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Are you with the right Employer in Mortgage Banking moving forward in 2014?
Have you as Mortgage Banking Professionals seen or heard these types of proposals or pitches from Company’s Internal Recruiters and/or Business Development Managers?
“We are Leading Mortgage Company that is hiring Entrupernial Branch Managers and Loan Originators that desire to be with an Organization that has a leading Competitive Compensation Model that pays 100 basis points or higher and that is coupled with Operational Excellence that has best in class turn times, Competitive Pricing and we are Loan Officer Centric, if so please contact us @______.”
Please Beware of these Pitches, as the housing market has unfolded in 2014 it has become impossible to lead in all the areas that the above pitch describes. Everyone has the same 3% compensation cap imposed by the CFPB. Yes there are many companies that have models that are trying to circumvent that truth, yes you can increase your basis point commission but then it has to be built into the price of the mortgage offered to the end customer. So sacrifice price or basis point commission, it is one or the other. Another grey area is “Pick a Pay” models that pay various compensation to their loan officers but more importantly to you individually will be how does your company manages the “Pick a Pay” model without committing possible customer steering without creating a violation according to the CFPB. Now there is even more news about having personal liability when your company is found guilty of such a violation. The following is from “Inside Mortgage Finance” just this past week-
“The Consumer Financial Protection Bureau’s supervision and enforcement jurisdiction is huge. In addition to large depositories, it also has authority over many nonbanks that were not previously under federal regulation–including all that offer, originate, broker or service mortgages.
But even for institutions accustomed to U.S. government oversight, the bureau’s exam approach is a new wrinkle. Unlike the prudential regulators, which have typically conducted far-reaching, cyclical exams using a team of examiners well-known to the institution, the CFPB is focusing on testing narrower slices of an institution’s business at more irregular intervals, choosing those most likely to cause consumer harm. The CFPB’s strategy also differs from state exams: Instead of just looking at loan-level results, the bureau also wants to test systems to make sure they don’t allow or encourage undesirable outcomes.
The bureau’s approach to enforcement is also novel. It has the authority to go after individuals as well as entities. It can require that penalties include monies for harmed consumers. And it can use its subpoena-like Civil Investigative Demands powers to dig up evidence of potential violations by individuals and companies outside its supervisory authority.”
Looking at the last 8 quarters of the “Net Cost to Produce a Loan”, it has nearly doubled. Here is the most recent rolling 8 quarters:
- 2nd quarter 2012- $3,224
- 3rd quarter 2012- $3,353
- 4th quarter 2012- $3,813
- 1rst quarter 2013- $4,182,
- 2nd quarter 2013- $4,207
- 3rdquarter 2013-$4,573,
- 4th quarter 2013- $5,171
- 1rst quarter 2014- $6,253
The “net cost to originate” includes all production operating expenses and commissions, minus all fee income, but excluding secondary marketing gains, capitalized servicing, servicing released premiums, and warehouse interest spread. (Per the MBA)
So having the ability to sustain 150, 125 or 100 basis point commission plans over the long term is neither feasible nor realistic for any company that wants to make money making mortgages. The following is from the Mortgage Bankers Association:
“ WASHINGTON, D.C. (June 10, 2014) – Independent mortgage banks and mortgage subsidiaries of chartered banks reported a net loss of $194 on each loan they originated in the first quarter of 2014, down from a reported $150 in profit per loan in the fourth quarter of 2013, the Mortgage Bankers Association (MBA) reported today in its Quarterly Mortgage Bankers Performance Report.”
“ Total loan production expenses – commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations – increased to $8,025 per loan in the first quarter, up from $6,959 in the fourth quarter of 2013. First quarter 2014 production expenses were the highest recorded in any quarter since the Performance Report was created in the third quarter of 2008.”
Fee income from secondary market income came in at 277 basis points in the 1rst quarter 2014 compared to 268 basis points in the 4th quarter 2013. That is only a 29 basis point increase. I do not think your employer is in the Mortgage Banking business to lose money and I hope you do not think so either
Interesting part of these costs is that historically the Loan Officer Commission and expenses accounted for 60 % of the personnel cost and operations accounted for 40% of that cost. Today those numbers have flipped and now it is operational support that accounts for 60% of personnel expenses. Compliance has had an effect on that and will continue to do so. As CFPB and other regulator exercise their regulatory powers those cost could continue to increase. And that is not counting the fines that will be levied against those that want to try to work around the regulations with practices that are not clearly within the limits of what the regulators want. And yes, there will be some of those players as there has been historically due to revenue and cost concerns. How and in what manner the CFPB will conduct its investigations and levy its fines is still to be determined, especially for non-depositories companies as they have no historical reference to determine that pattern.
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As to operational support and performance, has your employer gone through the audit process with CFPB? The more scrutiny the CFPB applies to the loan process and as they discover violators due to misinterpreted regulations, all companies are operationally at risk to change. Having the proper controls in place to be and remain compliant will only add additional operational review staff, processes and cost. The present process is broken and has been for years. The customer experience is not a measurable priority in the mortgage industry and no that does not mean loan officer centric. A process that serves the loan officer serves the loan officer, as they say ‘You can only serve one God at a time”.
Until there is industry and regulatory reform relating to the type and/or amount of documentation that is required to get a loan and/or that documentation is simplified through technology for a better customer experience, the process is still hinder by two major issues that the customer has felt for the last 25 years. Those two customer issues are: The time it takes to get the loan approved and close and the amount of documentation required getting a mortgage. It is a lot easier to buy an $80,000 car than an $80,000 condo. Technology and having the financial ability to continually invest in technology moving forward will be paramount to survival for Retail Mortgage Lenders. Technology has changed every industry at such a rapid pace once it is accepted mainstream into that industry. Having a vision of how to make the mortgage process more Customer Centric instead of Sales, Process and Task centric will be a game changer and having to pay top dollar to your sales force will not compete for that investment dollars long term. This is a low margin business where profits and losses are measured in basis points
So there is increase pressure on mortgage companies to right size expenses, processes and personnel or they are faced with options like mergers, being for or closing their doors. The economy is not helping with low wages for millenniums and student debt keeping first time buyers out of the market. The aging boomers preferences have changed and the buy up market is not nearly as robust as in previous downturns. There is no premium being offered nor paid for Retail Mortgage Platforms in today’s market and the belief that it will work out as it has in the past just might not hold true this time around. It is a buyer’s market for those platforms and those that have the cash and financial ability will be the winners. Consolidation upwards of 35-40% is what I am continually seeing, and let’s face it there are just too many loan officers in the business today for the amount of loans that are to be financed. The mortgage market is undergoing seismic change, so if a company that offers the pitch, you might just want to run away as fast as you can. “Being too good to be true” is a very accurate statement for today’s mortgage market. If you are looking to change employers, I suggest you look for a Financially Stable Company that is Customer Centric that offers Broad Product Capabilities and is fairly and competitively priced and is a Compliant Operational Lender with a Sound Legal Department that pays a Fair Compensation. Looking for too much can be very costly over the long run. The rest is just noise!
Retail Mortgage Banking- Future Disruption
From 1992 till 2006, Mortgage Lending experience a consolidation that was un-presentenced as the top 5 lenders’ market share increased to 60%. Since 2010 we have seen a de-consolidation to the point that only 5 of the top 20 single-family mortgage originators in 2006 have remained active in the market today. There has been this rush to fill that vacuum by the independent mortgage originator that are back by Venture Capitalist, REIT’s and private money and now the top 5 only controlled 40% of the originations. Now that is a seismic shift in 8 years, but is that model going to be able sustain itself? The answer is playing itself out in 2014, as we move forward into a totally purchase dominated market, that with the latest estimates of being a 1.0 Trillion Market.
The larger lenders enjoy a cost of funds advantage and then they are able to spread their future costs (e.g., new technology, customer acquisition, market share acquisition etc.) and spread those cost across a higher volume of mortgage transactions, therefore reducing their average operational costs relative to smaller competitors. On the servicing side, direct servicing expenses for servicers of fewer than 2,500 mortgage loans have been 13 percent higher per loan than direct servicing expenses for servicers of more than 50,000 loans. Servicing is the one asset that has a tangible value and companies have historically sold the servicing to offset originations expense in a downward trending market. And yes a few of these independent mortgage companies have ventured to build their servicing portfolios since the financial crash of 2008, but now they face the daunting task of selling off those assets to fund their origination operations. According to the latest data available for these independent mortgage companies, is that their operating expense for cost to produce a loan are at best at the breakeven point or even worse that they losing money on their loan originations business. The MBA latest data reflected that the independent mortgage banker cost to manufacture a loan in the 4th quarter 2013 was above $5,100.00 per loan, and with a shrinking mortgage market, companies that have that high of cost to produce a loan will no longer be able to compete moving forward. Look at this way, if it cost $5,100.00 to manufacture a loan and they have relied on compensation models that requires 100 to 125 basis points to attract their loan originators, how does the accounting in that model work? There are only so many basis points in each loan It does not, is the simplest answer.
What is the newest trend; it is mergers and acquisitions talks among these players. The consolidations of these companies will accelerate over the balance of 2014 into 2015. There will be a divide among those that are financially strong and those that are financially weak and over the next 12 months it will change the landscape for these independent mortgage companies in the mortgage industry.
Also concerning to the mortgage industry is the aging of its own workforce nationally. The continued aging of the mortgage sales professional will not be well suited to attract the newest consumer power group with the largest buying capacity, the X’s, Y’s and millenniums. The X’s, Y’s and Millenniums are more comfortable with technology and are more willing than any group ever before, to independently conduct their own research of financial services products than we have seen in the last 40 years. With the average age of 53 years old for the Loan Officer and 57 years of age for the Real Estate Agent there is huge disconnect with the future customer. Sadly, I am not seeing a lot of training nor mentoring programs to attract this age group into the industry.
Quicken Loans has established its place as the lender that can technologically manufacture your loan and provide a positive customer experience and Wells Fargo has built a distributed retail customer base, have trusted national brand and have established a cross sell model that is centered around the mortgage to last through this disruption, but who else is in that category? The large depositories like B of A, Chase and Citi, are only here to serve their bank customer base and have demonstrated distaste for the mortgage industry. There are also hybrid sales models that have been coming to market over the last couple of years utilizing the efficiencies and lower cost of a call center model combined with a distributed sales force model. These models are hybrid between a consumer direct and a retail model. The consumer direct channel has demonstrated to be very cost efficient model but has been historically reliant on re-financing mortgages not pursuing purchase mortgages. Will there be a dominate player that takes these channels and successfully combined them into a future sales model that works? I would have to say that is still to be determined.
Therefore the independent financial service company must re-think their sales process and their service model or they face a huge threat to be replaced by technologist that will figure out a better customer experience and loan delivery process that will work for the consumer of the future. If the big data that companies like Zillow, Trulia and others are gathering today does not alarm you that they can build a first to the consumer model and influence the sale process and you do not think that they are looking at ways to further disrupt the home buying and financing process, then you do not understand their original intend. Just ask Realtor.Com and the National MLS’s. That is why they were created, funded and have experienced the growth they have had in such a short time.
The Trusted Advisor has a role in the future mortgage and financial services models but not at the compensation levels that have historically been in place. The Mortgage Banker, the Real Estate Agent, the Insurance Broker and the Personal Banker have seen their best paydays and the acceptance of that needs to happen or they risk further role reduction moving forward.
As for Community Banks, there has not been in recent memory the opportunity they have had to further their penetration into mortgage than they have enjoyed since the crash of 2008. But with the regulatory outlook moving forward and the compression of earning they too will be undergoing a sea of mergers. If the banking crisis of the 1980s and early 1990s is our guide, the industry should expect merger activity to spike to 20-year highs between 2014 and 2018 — further diminishing the number of community banks left standing to compete in the mortgage lending model.
Among numerous problems the industry faces, that one that lies at the forefront is the fact the financial services industries lost the trust of the American public with the onset of the Financial Crisis in 2008 and even today have not regained that trust. Companies’ that are creating different customer experience and a simpler loan delivery process that builds trust in the process with clear disclosure will be the model that works in the future.
In 29 years of my working in the mortgage banking industry, there have never been so many different pressure points on this industry to change as there are today and how companies choose to respond in 2014 and moving forward will define those that are left standing to provide their valuable service to their customer.
Loan Officer Recruiting now demands More of the Art than the Science
This market demands companies to adapt their recruiting efforts to the present environment. Hiring is now becoming more of the Art than a Science. Historically this has shifted between which side of the Ying and the Yang the hiring needs of Mortgage Lenders are at any time. This is largely influenced by factors such as the market and the talent pool and more so today than ever in the history of mortgage lending by government regulations among other influences. This is not a normal shift of going from refinance market to purchase market; it is a whole lot bigger than that. We are looking at a different set of models that are developing. Yes Branch Managers need to have a strategy, a process and maintain accountability and consistency (the science), but now more than ever in the last 15 years they need to know exactly how to Identify, underwrite, qualify and close (the art) the best candidates that they engage with. Even the most experienced Branch Managers have developed ineffective recruiting and hiring practices over the last 15 years for this new market and need guidance back to the art of recruiting and how to position themselves as the buyer throughout the recruitment cycle. With all the newly placed regulations and the disruption of the mortgage lending landscape there will be a lot of under or unqualified candidates seeking new positions within the Mortgage Banker Driven Model as suppose to the Mortgage Broker Driven Model. Just as there will be High Volume Producers that may be such a disruptive hire that it will be the undoing of that Branch. Understanding what Recruiter’s Fool’s Gold looks like, will just as important as disseminating who they need to let go of with their current loan officer staff. Retention starts at recruiting and the art of recruiting will end at future retention. Over 65% of Branch Manager’s have never had formal recruitment training with a Qualified Recruiting Coach and therefore lack the advance recruiting skills to be more than an average recruiter no matter how many goals and systems you put in front of them. And yes technology has its advantages, but the art of Recruiting Loan Officers is a voice to voice interaction transitioning to a face to face experience and finalizing in a person to person process. People work for people and that adage has not changed and until Artificial Intelligence is fully developed, that will not change. How to fully engage your candidate and truly underwrite their ability to fit within your company’s culture and to succeed with the products, pricing model, operational support, technology, the tools provide and local leadership will be crucial to any individual branch’s long-term growth and success. If you want to learn more please contact me @ chuckcowan@ccowan.com or 321-363-4384.
Will Retail Mortgage Platforms Weather the Perfect Storm in 2014?
With the compression of originations and closing in the mortgage industry as demonstrated by February 2014 being the slowest month of closing in the industry in 14 years, it begs the questions how are all the privately held independent mortgage companies prepared to survive the upcoming 6-9 months of brutal business conditions? According to the MBA, the average cost to manufacture a loan for this group in the 4th quarter of 2013 was over $5100.00 not including employee expense, the average profit was $150.00 per loan and those numbers are due to significantly change in the 1rst quarter of 2014 and not to the positive side. With that being said, can companies continue to lead their recruiting efforts by paying 80 to 125 basis points to their loan officers? CFPB has just start the in-depth regulating these non-depositories and small community depositories and their business practices. And if the last year has proven anything, is that these companies could be looking at an additional 30 to 40 basis points cost per loan in compliance expense on top of their present cost to produce. So let us look at what could be a very realistic scenario in the 2nd and 3rd quarters of this year, if company spends say over $5600.00 or higher to produce a loan and you lose money on a per loan basis, how do you continue to pay 80 to 125 basis points in commission? I do hear a lot of companies have been to market and have started selling off their loan portfolios to generate revenue to offset these expenses, but how long can that last? Makes no sense, to sale off your portfolio assets to run your sales business and operate at a loss. This 1.1 billion dollar market is not going to grow by any sizable amount according to every report that I have seen over the last 45 to 60 days. What about those organizations that are owned by a hedge fund or REIT, I wonder how secure they really feel? Hedge Funds and REITs are not keen on not making a return. The business is due some major disruption and as LOs how do you feel about that? What are your risks? As recruiters and Managers recruiting LOs how do you feel about that? Can you really tell a candidate that there is a long term future with the company you represent? All I know, after 30 years of recruiting in this business the numbers that I see and hear just will not work moving forward and something will change in these business models. I am trying to create an argument for one player verse another, as I do not know who will and who will not be the fittest and strongest to survive, but I am more interested in future thought moving forward.
Loan Officer Recruiting now demands More of the Art than the Science
This market demands companies to adapt their recruiting efforts to the present environment. Hiring is now becoming more of the Art than a Science. Historically this has shifted between which side of the Ying and the Yang the hiring needs of Mortgage Lenders are at any time. This is largely influenced by factors such as the market and the talent pool and more so today than ever in the history of mortgage lending by government regulations among other influences. This is not a normal shift of going from refinance market to purchase market; it is a whole lot bigger than that. We are looking at a different set of models that are developing. Yes Branch Managers need to have a strategy, a process and maintain accountability and consistency (the science), but now more than ever in the last 15 years they need to know exactly how to Identify, underwrite, qualify and close (the art) the best candidates that they engage with. Even the most experienced Branch Managers have developed ineffective recruiting and hiring practices over the last 15 years for this new market and need guidance back to the art of recruiting and how to position themselves as the buyer throughout the recruitment cycle. With all the newly placed regulations and the disruption of the mortgage lending landscape there will be a lot of under or unqualified candidates seeking new positions within the Mortgage Banker Driven Model as suppose to the Mortgage Broker Driven Model. Just as there will be High Volume Producers that may be such a disruptive hire that it will be the undoing of that Branch. Understanding what Recruiter’s Fool’s Gold looks like, will just as important as disseminating who they need to let go of with their current loan officer staff. Retention starts at recruiting and the art of recruiting will end at future retention. Over 65% of Branch Manager’s have never had formal recruitment training with a Qualified Recruiting Coach and therefore lack the advance recruiting skills to be more than an average recruiter no matter how many goals and systems you put in front of them. And yes technology has its advantages, but the art of Recruiting Loan Officers is a voice to voice interaction transitioning to a face to face experience and finalizing in a person to person process. People work for people and that adage has not changed and until Artificial Intelligence is fully developed, that will not change. How to fully engage your candidate and truly underwrite their ability to fit within your company’s culture and to succeed with the products, pricing model, operational support, technology, the tools provide and local leadership will be crucial to any individual branch’s long-term growth and success. If you want to learn more please contact me @ chuckcowan@ccowan.com or 321-363-4384.
J.P Morgan whistleblower gets $63.9 million in mortgage fraud accord
J.P Morgan whistleblower gets $63.9 million in mortgage fraud accord
March 09, 2014
RECORDER REPORT
A whistleblower will be paid $63.9 million for providing tips that led to J.P. Morgan Chase & Co’s agreement to pay $614 million and tighten oversight to resolve charges that it defrauded the government into insuring flawed home loans. The payment to the whistleblower, Keith Edwards, was disclosed in a filing on Friday with the US district court in Manhattan that formally ended the case.
In the February 4 settlement, J.P. Morgan admitted that for more than a decade it submitted thousands of mortgages for insurance by the Federal Housing Administration or the Department of Veterans Affairs that did not qualify for government guarantees. J.P. Morgan also admitted that it had failed to tell the agencies that its own internal reviews had turned up problems. The government said it ultimately had to cover millions of dollars of losses after some of the bank’s loans went sour, resulting in evictions and foreclosures nationwide.
David Wasinger, a lawyer for Edwards, did not immediately respond on Friday to requests for comment. About $56.5 million of Edwards’ award concerns the FHA portion of the case, and $7.4 million concerns the VA portion. It is unclear how much of the award will go to his lawyer. Edwards, a Louisiana resident, had worked for J.P. Morgan or its predecessors from 2003 to 2008, and had been an assistant vice president supervising a government insuring unit. He originally sued in January 2013 under the federal False Claims Act, which lets individuals sue government contractors and suppliers for allegedly defrauding taxpayers. The US Department of Justice later joined as a plaintiff.
Copyright Reuters, 2014
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