Anytime a real estate agent has the chutzpah to speak up about “inequities” of the real estate industry and home mortgage biz, I’m all Obama ears. By the way, good looking men can have big ears. Remember Clark Gable? — Miki

Dear Miki:

Although current interest rates may be considered excellent, it may only be pie in the sky unless the benefits trickle down the consumer. 

Underwriting practices have become more stringent than ever. This is to be expected as lenders seek to protect themselves from the fallout from bad loans and fraudulent business practices.

However, there is a difference between caution and ludicrousness. Wells Fargo Home Mortgage, which is frequently the required lender for foreclosed/bank owned properties (REOs), has instituted particularly troubling underwriting standards.

Today, it is not uncommon for Wells Fargo underwriters to require borrower information that is nearly two decades old. This is troubling, to say the least. In one case that I am aware of, a borrower applied and was asked to provide bankruptcy information, divorce decree, and other documentation that is more than 18 years old.

When the situation was brought to my attention by a colleague, because of my long history working in the credit and finance industry, I contacted Wells directly. Several individuals high up in the mortgage department told me that in their 24 years of experience in the mortgage industry, they had never seen such strict and often ludicrous underwriting requirements.

This is bad news for buyers and bad news for all of us who have hopes for an economic upswing. That buyers with high credit scores and documented stable incomes are being asked to produce documentation from 18 years ago is deeply troubling. Not even the IRS requires documentation from that long ago.

So while the all-time low interest rate is a great thing, if buyers can’t get qualified for loans because of newly draconian loan-underwriting practices, it will take even longer before the economy is freed from the recession’s grasp.

That’s why it is not only the mortgage industry that must change — real estate sales professionals also have to improve their business practices.

Currently, the honor system is the only safeguard protecting both buyers and sellers from fraud. Listing agents are supposed to submit all realistic offers to their clients, whether sellers or banks, to allow them to make the decision on whether to accept.

However, in this market, listing agents have a conflict of interest under the honor system. Some agents do not submit offers because they don’t want to accept less commission. Thus foreclosures continue to increase.

In fact, this has been a problem all along. I realized quickly after working a short time in the title business, and then after becoming a licensed Realtor in California and Nevada, that no system of checks and balances exists for a Realtor or broker to know if a listing agent had submitted an offer to a bank or a homeowner.

This is a fact borne out by banks themselves. I researched for myself what systems were in place. I spoke to asset department managers inside banks, as well as sellers who had listed their homes.

The response I received from the banks troubled me. First of all, it took hours by phone to find the right person in the right department at any given bank. When I did, I was told that no measure existed to inform them of whether the listing agent was submitting the offers to them.

In fact, all of the banks said they were working on the honor system. This is based on the fact that the agents hired to list REOs are pre-screened, meaning they had to meet very “stringent” criteria before being able to list REOs for banks.

Several bank contacts said they would be able to follow up after an offer was submitted to be sure that it made it through their channels. However, other than contacting the banks directly, a person really has no way to know whether the bank’s listing agent has submitted the offer. This is nothing less than a crapshoot. 

As much as I want to have faith in those employed in the real estate industry, it is too easy to be skeptical, thanks to the mortgage crisis and all the fraud revealed within the past few years. In any industry there is always room for improvement, and the real estate industry is no different. Both the mortgage and the real estate industries need to avail themselves of 21st century technology to create a sound-offer tracking system. The honor system should not be the only safeguard in place to prevent and deter fraud.

Alexis A. Moore,

Licensed Realtor in California and Nevada

Expert in matters of high-tech crimes including fraud and identity theft

A victim advocate and the founder of the nonprofit group, Survivors In Action.

Dear Alexis:

It wasn’t too long ago when hordes of loan officers (from all kinds of banks) wore pinkie rings and Rembrandt smiles and hawked, “Have I got a deal for you!” But here I sit, getting dusty waiting for Wells Fargo Home Mortgage to return my call.

Of course, when Wells gets around to widdle me, I’ll start my conversation with “Yes, this is Ms. Tootzinelda Woofenpickle and must I crawl into the attic for bankruptcy and divorce files from my past life before we can talk turkey?”

In the meantime, I called the Department of Real Estate (DRE) and wanted to know what happens to naughty REO listing agents who cull offers.

Here you have it:

DRE: By law, licensees have to present all offers. However, there is no way of knowing if an offer was presented to the bank. Buyers and their agents must rely on the integrity of the listing agents. Sometimes banks tell listing agents they don’t want to be bothered with offers under a certain price.

Me: What if that is not the case, and the agent did withhold an offer? Will DRE discipline the agent?

DRE: Well, if the bank doesn’t care...uh…in other words, it would be a stronger case if the bank complained to us that it would have made a difference if the offer had been presented.

Me: So if the bank was harmed, DRE would take action?

DRE: We would begin an investigation to see if in fact the offer was presented, and that the bank lost business because the offer was withheld.

Me: And if you found evidence to support the complaint, what happens to the scoundrel agent?

DRE: Our attorney would submit the complaint to an administrative law judge.

Me: OK, the agent is guilty as sin, now do you put bamboo shoots under their toenails or what?

DRE: Uh…let’s just say the final decision for disciplinary measures rests with the real estate commissioner.

On behalf of you, Alexis, I invite readers to respond to your provocative letter. I’m sure they’ll bring it on.

Ask Miki is a column of opinion and entertainment, and anything herein is not intended for real estate, financial, psychological, legal, or tax advice. You may contact real estate agent Miki Garcia at askmikigarcia@yahoo.com.