TOOL MAY HELP APPRAISERS CONNECT DOTS TO UNRELENTING CHARACTER ATTACKS
It’s reminiscent of a practice pioneered by Texas savings-and-loan kingpin Tom Gaubert in the 1980s. The idea was to have employees at his crumbling institution and those of his friends funnel a large number of small-dollar political donations to his buddy, Democratic House Speaker Jim Wright.
The speaker, one of the most corrupt to hold the position (and that’s really saying something), spread the wealth. The payola bought time and influence with Congress and increased the ultimate cost of the S&L clean-up to taxpayers. At Gaubert’s institution, one inventive employee reportedly expensed a contribution as a “weed whacker.”
The House Ethics Committee later investigated the speaker’s financial affairs at the urging of a largely unknown Georgia congressman named Newt Gingrich. The bipartisan panel charged Wright with 69 violations of House rules on reporting gifts, accepting gifts from people with an interest in legislation, and for exceeding limits on outside income.
Fast-forward to 2020.
The nation’s real estate appraisers came under surprise attack in early 2020 when then-presidential candidate Joe Biden, apropos of seemingly nothing, rebuked members of the real estate appraisal profession for creating a racial wealth gap in America. Candidate Biden pronounced appraisers “unregulated” and a chief cause of racial wealth inequality in America. He made the statement as though it were the most well-known and widely accepted fact in the world.
…had a strangely anti-appraiser agenda.Before Biden’s bolt from the blue, a hearing of the House Subcommittee on Housing, Community Development and Insurance in June 2019 had a strangely anti-appraiser agenda. Now, a web screening tool recently improved upon by the Federal Election Commission may provide some answers.
Like the S&L employees of an earlier shakedown, thousands of workers at loanDepot, Guaranteed Rate, Fairway Independent Mortgage, Caliber Home Loans, New American Funding and United Wholesale Mortgage have been funneling millions in small-dollar donations to political action committees across the political spectrum; much of this activity was in 2019 and 2020 and much of it went to the people currently in office.
Using the screening tool, author-appraiser Jeremy Bagott has compiled an Excel spreadsheet with over 43,000 small-dollar donations totaling more than $11 million from individual employees of nonbank lenders. You can view and download the Excel file here. Or you can run the filters yourself at the Federal Election Commission’s website. (See the sidebar at the end of this press release for instructions.) All of the information is public and available to anyone with a browser and a little time.
Many of the donations are in uneven amounts and many repeat donations were made at irregular intervals – as if created by a random-number generator. This becomes apparent when the data is sorted by donor and date in Excel.
In 2019-2020 alone, Rocket Companies employees (including those of Quicken Loans) made 11,005 distinct contributions to a handful of political action committees. Guaranteed Rate employees made 4,819; Caliber Home Loans employees, 4,719; loanDepot employees, 4,103; Fairway employees, 2,430; and UWM employees, a “mere” 648 for the period.
There are many open questions here. Were employees reimbursed or able to expense these contributions? Were employees pressured into making them? We’re employees aware of the contributions made in their name? Was PPP money used in any way to make these donations?
…current anti-appraiser narrative being embraced by key public servants…Although cause and effect is notoriously difficult to prove, some of this money may have been used to buy influence and promote the current anti-appraiser narrative being embraced by key public servants in the executive and legislative branches.
The largely unregulated nonbank lenders have never minced words on their frustration with human appraisers. They have every interest in increasing their production velocity by marginalizing the sloth-like homo sapiens involved in the collateral valuation process.
Executives like Brian Covey, vice president of regional production for loanDepot, have voiced the industry’s collective frustration with the inability of appraisers to keep pace with the volume these largely online lenders are capable of generating (with risk exposure to the U.S. taxpayer through Fannie, Freddie and the FHA). It’s a world in which there’s no clear line between the private sector and the government.
“The vision that hipsters will someday be able to apply for and instantly obtain federally backed mortgages from their smartphones at single-location coffee houses and urban gastro-pubs is the holy grail,” said appraiser-author Jeremy Bagott. “Human appraisers are a big impediment to that vision.”
Another big question is to what extent, if at all, companies like loanDepot, Guaranteed Rate, Fairway Independent Mortgage, Caliber Home Loans, New American Funding and United Wholesale Mortgage through their powerful trade group, the Community Home Lenders Association, are donating to think tanks and funding quasi-scientific research and public relations campaigns that discredit appraisers.
These tens of thousands of small-dollar donations should be investigated for veracity and to determine whether the employees who made them were pressured in any way, as should many of the current phantom narratives that shoot the messenger – the nation’s 80,000 independent appraisers – and threaten to introduce new risk into the system.
To see how employees of the nonbanks are sending cash to political action committees, go to the Federal Election Commission website at www.fec.gov. Click on “Campaign Finance Data” on the top menu bar. Then click on “Look up contributions from specific individuals.” Be sure to “X” out of the default date range and select “2021-2022,” then go into “More” under the “Report Time Period” drop-down filter and select, for example, “2019-2020” or any other date range. You may have to tinker with it a little. Under “Employer,” enter the name of the mortgage lender you wish to research, for example, “Quicken Loans” or “Loan Depot” (“loanDepot” is two words in the database). You can download the returned data as an Excel spreadsheet and then filter it in different ways.
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