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Editor’s note: From time to time, Flipping Frenzy readers contact us offline to request that they be allowed to ‘guest blog’ an entry or two on a topic related to Real Estate and Mortgage Fraud. One such reader is Clearwater Beach, Florida-based Larry Rubinoff, who serves a branch manager for Mortgage Lending Direct, a dba of MLD Mortgage, Inc. To paraphrase, Larry says that much of the dialogue surrounding the current mortgage meltdown overlooks and ignores the dramatic impact the crisis is having on honest, hard working mortgage professionals like himself.

In his own words…

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The Real Face of the Meltdown
By Larry Rubinoff

There are millions of stories on what this mortgage meltdown has done to our population and to our economy. While we cannot address or recognize all of them, I will attempt to put a “face” on some of them through a series of guest blog entries, as the story cannot be told in just one.

To date, most of what we hear about are the millions of victims (the homeowners) and the hardships many of them are now facing. There are other victims as well who are also facing hardships due to the “meltdown.” One such group are the professional who work in the mortgage industry. The underwriters, the account executives, the loan originators, the processors, the clerks and staff of the hundreds of companies that have gone out of business not necessarily due to their actions or fraudulent deals, but just due to the shrinking of the real estate and mortgage markets. While this shakeout is getting a lot of bad apples out of the business, it is similarly forcing many good people out as well. My business, as well as the business of many of my friends, has shrunk to almost nothing but this does not even address the thousands of employees at the nearly 190 and counting companies that have gone out of business or those who have had to layoff staff just to survive the mess.

Almost 28,000 people per month are losing their jobs in the mortgage industry. Little is said or reported about them. Many of them are not counted in the unemployment rolls nor do they qualify for unemployment insurance. These people, though faceless, are homeowners themselves, and they too are losing their homes to foreclosure. Like many other people nowadays, they are heads of households with kids to support, car payments to make, and bills to pay (which in many cases they cannot, and like others, their credit is being destroyed). I would say that the majority of these newly unemployed were not the fraudsters, just the everyday hard working people putting in their 8 hours plus per day to feed and support their families.

Many of these people have been in the industry for 10 to 20 years and longer. They are now faced with the challenge of finding new careers and job-related training. In each case, this is becoming a difficult task. Many employers (in ads that I have actually seen) will not even entertain an applicant that has been in the mortgage industry. The belief, as has been constantly reported over the past year, is that anyone with mortgage industry experience is a bad apple; and when you stop to think about it, why would anyone want to hire a media-tried and convicted criminal. A Harvard law professor in an article in the Boston Globe even went as far as to say that all mortgage brokers were “crooks” who took Yield Spread Premium (YSP) from lenders which she called “bribes.” The fact is, the overwhelming majority of YSP are just ordinary mark-ups on a product to produce profit much like the can of the corn we typically find on a grocers shelf (which is marked up from their cost to cover overhead and produce a profit).

I know an underwriter who truly is one of the most knowledgeable people I know; someone who worked for one particular company for over 10 years yet was given only 30 minutes notice that her company was closing and she was terminated. I know and am friends with many brokers who are honest and knowledgeable and who always worked for the best interest of their clients — yet they too are now out of work and are faced with the prospect of having to end their careers. My own stepdaughter is even a casualty in all of this. I brought her into the business nearly eight years ago as an administrator and processor, and she ultimately became my director of branch relations. When I relocated my business and she was unable to move with us, she went to work for a former associate of ours. He is one of the good guys who at the end of this month will be closing his doors after over 20 years in the business. While he will be ok, my stepdaughter may not be. She has applied for over 100 jobs, makes at least five new contacts a day, and has not had one response as of yet. She is a single mother of two children, and is extremely well qualified in operations, accounting and administration.

While what is happening to homeowners is truly tragic, we do not hear nearly enough about the professionals who have been similarly impacted (they number well over 100,000 and growing). Sadly, all of us are victims, which is even more reason for all of us–homeowners and professionals alike–to educate ourselves and police our motives and actions.

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