Real Estate Attorney Names Names

It turns that if a mortgage lender treats a small-town attorney with disdain and indifference then it is fairly likely that they will show the same disregard for good business sense.

I was in for a surprise when I called my long-time real estate attorney about my upcoming refinance.

“I am through with real estate closings,” he said. “I am through with those banks. They make it too tough to do even a simple closing. I can’t afford to work with them and have enough money to pay my secretary.”

I can imagine that when he left Duke Law School, my attorney thought he would have to work so hard for $395. His experience has been that he had to call their people several times each week. Now he has left for brighter pastures. He helps people protect their intellectual property. It is a good job if you live in a city with scores of creative economy workers.

He told me his four least favorite mortgage lenders:

• Number Four: Bank of America: “Some day, and it may not be too far off in the future, their culture is going to catch up with them.”
• Number Three: World Savings Bank (Golden West). “Slow people pushing bad mortgage products to people that have no business getting a loan. The interest rate would start at one percent, but then it was allowed to reset after 45 days, and then they ended up being negative amortizing.”
• Number Two: Countrywide: “Ditto with World. It seemed like they wanted to do the mortgage, but they didn’t want to answer any phone calls.”
• Number One: Taylor, Bean and Whitaker: “You have to understand that they were just mortgage brokers (also, servicers.] Just indifferent to their customers. I often wondered why people didn’t just walk away from the deal.”

One common thread that the top three share is that they are no longer in business.

World Savings Bank had been purchased by Wachovia before Wachovia was sold in a fire sale to Wells. People may forget that initially, Citibank bought Wachovia. Several days later, the sale was called off. The new suitor was Wells Fargo. World Savings Bank popularized the pay-option loan.

After 2007, the only question about Countrywide was who was going to buy them. I remember having lunch sometime during 2006 with an in-the-know friend of mine who believed that Bank of America wanted to buy them. Turns out that Bank of America was forced to buy Countrywide. Maybe the Fed didn’t have to twist their arm as much as we have been led to believe since then. You could also argue that buying a bad lender is a smart move at the right price. Four billion for one of the nation’s largest mortgage lenders is not much money. To put that sum in perspective, Bank of America sold a 5 percent position in China Construction Bank for twice as much.

The FBI shut Taylor, Bean and Whitaker down. Turns out that executives at TBW had been committing massive fraud for almost a decade. My favorite was the report that they sold $1 billion in mortgage securities that they did not own. TBW wasn’t singling out individual lenders for bad service. They treated the big guys the same way. An executive at one of TBW’s subsidiaries (Ocala Funding) improperly sold $1.5 billion in commercial paper to BNP Paribas and Deustsche Bank.

His story is a cautionary lesson. You will not remain in business for long if you do not act with integrity. It is somewhat of a refreshing commentary about the American economy. Sooner or later, our system identifies the bad actors. Doing things the wrong way might work out in the short run, but in the long run any business needs to do well by its customers.