Anna Davis - Jim Stamos - Wilmington Finance ripoff Wilmington Delaware

My name is William John McCloskey. I blew the whistle on Wilmington Finance in 2005 when I walked out of WFI after a very short 4-week tenure. 

I walked out because it was apparent to me that loan officers at WFI were trained to upsell borrowers into subprime loans for the refinance of their existing mortgages. It became readily apparent to me that the overwhelming majority of their borrowers belonged in a traditional or ALT-A 30-year-fixed mortgage. 

I could have made a six-figure salary at WFI. However, I had experience unlike some of the young loan officers, which were mostly kids right out of college. They did not have the slightest clue that what they were doing was unethical because most of them knew very little about the mortgage industry and the secondary market. They only did what they were told and functioned as salespeople. 

I articulated my observations to the Pennsylvania Department of Banking and the Pennsylvania Attorney General. I argued that WFI did not offer a proper training program like legitimate mortgage companies did during that time period. WFI's inexperienced loan officers were taught how to take a 1003 mortgage application, which was uploaded into WFI's dummy-proofed origination software, which then directed the loan officer/originator to a variety of subprime lenders.

Below is an excerpt of my complaint to PA State agencies. I have attached a screenshot from the movie Inside Job. The screenshot perfectly described Wilmington Finance.  

I like to bring your attention to the circumstances surrounding my abrupt resignation last week.

 I was hired by Mike ******* in September. He hired me on the spot because I had interviewed with him back in March after I was terminated by  Ameriquest Mortgage for blowing the whistle on them to government agaencies. I made it perfectly clear to Mr. ****** that I had only closed one loan at Ameriquest and that did not want my name on any of their loans because of all of the fraud that I witnessed while I was employed there.

Below is a copy of the email which lead to my resignation:

I do have 3 potential deals, I showed you them this morning.

Would it be possible to put me on another lead source? From what I have seen, your best lead source is your mail order source. Since I have experience, I might be a better fit with that lead source than with Lending Tree. 

I cannot work on Saturdays.

-----Original Message-----

From: ******, Michael 
Sent: Wednesday, October 19, 2005 2:48 PM
To: McCloskey, William
Subject: RE: Sat hours

A pipeline is your weekly ticket out. Today marks 1 month here and zero sales. Another week of no submissions and well look to sit down and discuss if your coming here was a correct fit. We issued you a guarantee above the norm due to your experience. 

-----Original Message-----

From: McCloskey, William 
Sent: Wednesday, October 19,2005 2:42 PM
To: ********, Michael
Subject: RE: Sat hours

I can't work on Saturday, I have a class.

-----Original Message-----

From: *******, Michael 
Sent: Wednesday, October 19, 2005 2:20 PM
To: McCloskey,
Subject: Sat hours

Those of you with a putrid pipeline should plan on working 9-1 on Saturday. The 4 hours will be returned to you on Friday 10/28, you may leave at noon

In my interview in both March and September, Mr. ******* never informed me that I would be held to a different standard than employees without experience and I was never told that I would be required to work on a Saturday if I had a putrid pipeline. Furthermore, his high pressure tactics borderline on the absurd. Moreover, if he continues to treat experienced loan officers over the age of 30 like school children, he will have a huge turnaround on the sales floor. I shared my experience with several people in the mortgage industry, and they were completely appalled with the way I was treated.

From what I had seen, the overwhelming majority of newly hired loan officers at your company were between the ages of 22-30 with no experience. This is generally a red flag for me, because it is generally indicative of an "assembly line" environment. This was the case at your company.

Because of my background as a legitimate loan officer, I know the difference between subprime, Alt-A and A-paper loans. Your company is pricing all of its loans as subprime across the board. This coupled with your commission plan based on a tier system is literally forcing loan offers to charge outlandish origination fees to customers with B and B+ credit. I did not feel comfortable charging a 7.99 % interest rate with a 4.50% origination fee to a customer with a 684 credit score. Had I not, I would have not made any significant commission.

Not only is your company charging outlandish fees to people with good credit, your loan officers are not mentioning the origination fees in their sales pitches. I will acknowledge that Mike ****** trained employees to properly present a loan, but it was simply not the reality around me. I spoke to several loan officers who had been with the company 6-months to a year, and at least four of them advised me not to mention the origination fee specifically if I was on Lending Tree.

I would also like to point out that the majority of your loan officers are putting customers into 2/28 adjustable rate mortgages with a 3 year pre-payment penalty. At one point, I was attempting to put together a proposal for a customer with a credit score in the mid-600 range. I asked a loan officer, whose name I forget, for advice. His exact words were: You dont want to put this guy into a 30-year fixed, if you want to get a customer a great deal, then go work for a bank, if you want to make money here, you are going to have to sell people on a 2/28 ARM with a 3-year pre-payment penalty. This particular loan officer had awards for good salesmanship on his desk.

I did not foresee this type of used car salesman environment in my interviews with Mike ******, specifically because Wilmington Finance is a division of a large publicly traded company that is held accountable to the Sarbanes-Oxley Act of 2002. 

I was quite vocal about my issues with your companys system of pricing deals. I suspect that this had gotten back to Mr. *******, but I am merely speculating. This could be the reason why he put me under additional pressure to sell. However, I do not have any proof.

I mentioned to ********* that section 404 of SOX pertains to the sales floor at Wilmington Finance. The Act charges management with the responsibility for annually assessing the design and operating effectiveness of internal control over financial reporting and requires external auditors to annually audit and issue a report on the effectiveness of the company's internal controls. Ms. **** informed me that it was her opinion that Mr. ******* intended to discuss my performance and was not threatening to terminate me. Quite frankly, I believe that she obfuscated, because at the very least, Mr. ***** email was a thinly veiled threat to terminate me.

During one of my training sessions with Mr. *******, he admitted that there are loan officers on the sales floor who do not mention certain fees till closing. He went on to say that loan officers at Wilmington who sell like that generally do not last. It is my opinion that Mr. ****** high pressure management style causes this type of behavior, and it is ironic that I struggled because I tried to present my loan proposals accurately, and more importantly - ethically.

I have a framed copy of Lending Trees Loan Officer Commitments, which I displayed at my desk. Your Wilmington Finance Loan Officer Commitments are essentially Lending Trees plagiarized. From my experience, a good majority of your loan officers are violating these commitments on a daily basis. 

I feel that I should be paid the full months salary and the guaranteed commission that was promised to me in my package. I do not have any legal recourse to collect it, but I think my request is well within reason.

Sincerely,
Bill McCloskey
_______________________________________________________________________________
I would  like to clarify why the description of non-prime borrowers from my letter dated March 16, 2006 is relevant to how Wilmington Finance originates their loans:

The following definition describes the various borrower categories:

Non-Prime. Non-prime mortgage lending targets a credit score market that falls between Prime lending (also known as A-Paper lending) and Sub-prime lending (known as D-Paper lending). Many mortgage lenders measure potential borrowers loan risk by their credit score, known as a FICO score. A-Paper borrowers have the highest credit rating (750+ FICO), followed by Alt-A or A-Minus borrowers (680+ FICO), then B/C-Paper borrowers (540+ FICO) and finally D-Paper borrowers (below 540).

I had mentioned that Wilmington Finances bread and butter loan is the 2/28 ARM with a 3- year pre-payment penalty. This loan is generally strictly reserved for customers with a credit score below 540, and without a 3-year pre-payment penalty.

As I described in my previous documentation, a 2/28 ARM with a 3-year pre-pay is the most appealing loan to Wilmington Finances investors because it generates the most revenue, even though it is not a beneficial loan for the majority of their customers. The loan also creates possible residual income for Wilmington Finance, because the customer has to refinance into a fixed rate mortgage at the end of the 2-year fixed period. This violates section 404 of Sarbanes-Oxley because of ethical reasons.

Thanks,
Bill McCloskey  

Copy sent to Wilmington Finance