We’re not making this up.
The Oregonian reported Thursday that it had obtained a memo distributed by at least some Chase account executives to brokers, detailing how to manipulate the company’s own automated underwriting software in order to get a stated income loans approved that would otherwise be rejected. Hat tip here goes to Calculated Risk for uncovering the story.
The memo’s title: Zippy Cheats & Tricks. (Zippy, for the record, is Chase’s own AUS.)
We especially like how the AE — who was fired for sending the memo out — explained things to the press:
The March e-mail was sent by Tammy Lish, a former Chase account representative in Portland. Chase fired her days after discovering she had sent it.
“I did not write it,” Lish said. “It was sent to me by another (Chase) rep in another office along with some other documents that were more step-by-step customer training documents.”
It’s always the other guy, right? We wouldn’t be surprised if another AE forwarded the rogue memo to her, and we can pretty much vouch for the fact that Chase didn’t sanction any of this — some enterprising AE probably decided to codify a cheat sheet and slap the company logo on it. Maybe after having a beer or two after work. You know, one of those jokes for his buddies? Something you do when you’re bored. Whatever.
Problem is, those kind of things always end up getting out, and into the hands of obviously dimwitted AEs dumb enough to send them out to clients. The three step process to loan fraud using Zippy is laid out thusly:
Do not break out a borrower’s compensation by income, commissions, bonus and tips, as is typically done in a loan application. Instead, lump all compensation as the applicant’s base income.
If your borrower is getting some or all of a down payment from someone else, don’t disclose anything about it. “Remove any mention of gift funds,” the document states, even though most mortgage applications specifically require borrowers to disclose such gifts.
If all else fails, the document states, simply inflate the applicant’s income. “Inch it up $500 to see if you can get the findings you want,” the document says. “Do the same for assets.
That Lish, she’s a bright one. She confused this with a training document? Seriously, whoever wrote it is laughing his you-know-what off somewhere about this. We just know it.
Update: Tanta at Calculated Risk decided to get serious about this, and we feel obligated to note a more sobering analysis. That said, to us, the memo is really an illustration of two problems: one, the levels the AE talent pool ended up reaching into; two, proof positive that any automated system can — and will — be gamed by those forced to use it.
You think the memo was a joke? I honest-to-god think it WAS intended to help brokers manipulate the system in order to get more loans approved. Given the fact that ONE HUNDRED PERCENT of the AE’s income is commission then I’m quite sure this “cheat sheet” was the real deal, but the brilliant Tammy Lish had an “I.D. Ten T” error and distributed it to her brokers with the appearance of it being a official Chase memo. I’ve writen joke memo’s before and this does not have the tone or appearance of a joke.
Along with Tammy’s apparent high level of intelligence, the fact that she had to distribute it to her brokers indicates THEIR level of intelligence. Every sharp broker I know is aware of how the system works and I’ll say no more about THAT.