Mortgage Company Horror Story

Do you ever wonder what exactly is going on at your mortgage company? If it ever seems like your loan is being handled by a bunch of drunk, barely trained weirdos...it could actually be the truth.

A shocking story about the rise and fall of a mortgage company called Merit was published in The Seattle Times on Sunday. This company specialized in loans for subprime consumers and claimed to have written almost $2 million in loans at its peak. Merit boasted having a 400% growth rate during a time of mortgage slow down. Behind the profits was a web of dysfunction that is hard to believe:

• "Merit did put loan officers through a 19-step program. "Loan Officer 101" was 15 minutes long, as was "Mortgage Glossary." Thirty minutes were devoted to "10 Step Loan Flow."
• "One loan officer had come to work fresh from being a Hooters Girl. Another solicited clients for two endeavors: writing mortgages for Merit and selling marijuana paraphernalia on the side."
• "Several Merit loan officers boasted online that doing drugs was a favorite pastime."
• "Merit's loan officers executed mortgages that were so flawed that the investors who bought the loans from Merit forced them to buy them back."

Eventually Merit was sued by their creditors, partners and service providers and the 400 person company shut their doors. The founder of the business is struggling to keep his own $4 million dollar home and is facing possible bankruptcy.

How can you avoid working with a mortgage company like this? First, investigate the lender's record with the Better Business Bureau. Merit had over 40 consumer complaints filed with the Washington BBB. You can also do a quick online search for other consumer complaints and should ask for client references before you sign up. Also, investigate if your state requires that mortgage loan officers are trained or certified and check the credentials of your loan officer against these standards. And don't be afraid to ask a lender about their experience writing loans.