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Mortgage Deceptions Unlocked With George KorzWe have a special guest for you. We want to start by saying hello to George Korz. We’re so excited to be here with you, George and to hear your stories about money.
It’s always green.
George, we’d liked the audience to know some of the shenanigans and things that go on with money, proof of funds, getting loans and the paperwork. I’ll start it off by just telling you a quick story that a woman said she wanted to spend $30 million on a house. She gave me a proof of funds. It was on a Bank of America letterhead and really legit looking. I went to the bank, which is in Beverly Hills and I walked inside. I have this paper and I said, “Can you tell me if this customer has an account here? They said, “Ma’am, we cannot tell you who our customers are.” I said, “Let me just turn the paper to face you and tell me if it looks legit.” She looked at me and shook her head and she says, “Our accounts don’t have an S.”
You went to Banks of America. That’s where you should have gone, not the Bank of America.
Maybe I missed it. Maybe there was $30 million in that account. Tell us some funny things. I’m sure you have come against so much of it. All these many years that you’ve been doing private mortgage brokering.
Unlike children, numbers don’t lie. Neither does the paperwork.It’s not always fun and games. It’s usually stressful and problematic. As people live in their own reality with not only documents but whatever they think that they can do and get away with. We had that one episode where a guy came up with proof of funds from the Bank of George. Do you remember that one?
I do remember the bank. Have you heard of the Bank of George, Bob?
No, but I’d like to get some money from it if I should.
They should have written Bank of Valerie or Bank of Bob but people do create everything and anything. In our business, we not only have to make sure that what they give us is correct but we have a fiduciary duty to investigate it and take it to the next level. Most of the time people do not like that. They get very belligerent about us asking them to give further proof but unlike children, numbers don’t lie neither those paperworks.
Tell us one of the more interesting, funnier, wildly and crazy stories that you can remember.
There are so many of them but I remember many years ago I was doing a mortgage for a client for the purchase and the seller called me one day. Probably about 3 or 4 days after the deal started and she questioned me about the availability of funds, about the credit and about everything of the buyer of her home. I said, “I can’t divulge anything,” and she said, “When are you going to have loan approval?”
I said, “It’ll probably take about a week or so to get everything together.” She said, “Can you speed it up? Can it be quick?” I said, “No. It’s, unfortunately, the processing time.” She calls me the next day. “Is there anything happening? Is the loan approved?” I said, “It’s going to take several more days. We’re still at the beginning of everything.” She calls me the following day and I try to be nice and keep everything together, telling her how the deal is going. This goes on every day.
On the fourth day, she calls me and says to me, “Do you realize what you’re doing to us?” I said, “I’m sorry.” She said, “My husband and I are trying to start a family and all the stress that you’re putting me through, my doctor says I’m not ovulating properly.” How do you answer that? That’s one of the earlier issues that we’ve encountered of getting loan approval on an ovulation schedule.
Bob, you certainly have had a few I’m sure with funds.
Countless ones. It’s interesting because George gets them at the second level when they’ve already passed what we’re dealing with. We get more fixed up on the pure all cash transactions where people come in with totally bogus verification of funds. This actually is happening to me on a $40 million transaction where they’ve delayed sending their deposit in and everybody’s walking on pins and needles. I’m like, “If someone doesn’t put their deposit, in my entire career, I’ve never yet seen the deal go through.” I wrote a very straightforward email saying, “This is a small percentage of the actual purchase price and you’re going to lose it out to somebody else.”
I knew that as soon as that happened if it wasn’t going to happen, the guy would get angry at me because I called him on it and that’s exactly what happened. We deal with a lot of super fake stuff and fraudulent things. It’s like things that come to you, George, probably they already have passed a little bit of the smell test with us and you have to deal in a more sophisticated manner in terms of establishing their bonafides to get a loan.
We write the contract and they tell us they can put 25% down, we try to get a loan and then let’s say we hand it to George and George goes, “They can’t afford that house.” That happens, right George?
Yes and Bob, just to further what you said, a lot of times and the majority of the realtors probably don’t protect their clients like Valerie or you do, where they just basically take or believe what that person is saying to make sure that the deal works out in their mind. I’m talking about the realtors who don’t flush out, don’t question, don’t go into a bank or make a phone call to whoever that institution is.
We all know that if people have the wherewithal, they either have a banker who’s been authorized to tell you, “The funds are there. I can’t tell you the exact amount but it’s in the 6-figure or 9-figure range.” A lot of times the realtors, I don’t know if it’s their wishful thinking that this is not true, that the money’s not there but basically, they push it on onto me. I’m the bad guy because I’m the one who says that the money is not there. That also is going on a lot especially these days where people want something but yet they don’t have the wherewithal to even make the initial deposit.
Don’t close the business deal until the documentation comes in.That’s a succinct point and it mirrors what I’m sure, Valerie and I see a lot, which is agents, especially, when times are tough, desperately want a deal to happen. By wishful thinking, they believe that somehow it is going to manifest itself and come to fruition when in fact it’s impossible. I know, Valerie, you’ve dealt with this as well. I’ll say, “This person is bogus.” They’ll go, “I’ve worked with him for a year.”
“Why are you being so negative, Bob? We do need to make this deal work out. Are we role-playing here?”
You’ve obviously heard this before. It’s like they desperately want it to happen and what I find interesting too is sellers will go, “Let’s go forward.” I’ll say, “Are you kidding?” If we tie up your property and this person is bogus, which they are and then we get a real buyer, how do we get rid of this person? They’ll file a lis pendens or whatever. Don’t bite down on the hook when it’s bogus.
It happened before where the seller had to pay money to these bogus people to get rid of them, to get them to sign off the cancellation. There is a lot of protection that we have to do and see. We had somebody give us proof of funds. Three different accounts and one had $3.85 in it. I don’t think we even got to half of the deposit. It’s amazing what people think they can do with buyers that they can go and buy real estate. They don’t realize that they have to have money.
George, what stuff do you run into? Normally, I’m sure like me in Valerie, obviously, you’re a professional. You’ve been doing this a long time. You see dealing on the high-end and everything else. I leave it in the hands of the mortgage broker that I trust, which is you in this case. How quickly do you suss out if they’re bogus?
My job unfortunately is black and white. Numbers don’t lie and paperwork and documentation don’t. We all know when somebody wants to get something done and they are in the deal which benefits them. They will pick up the phone. They will answer your texts. They will get their assistant to make the wire go through. They were in communication with you but a lot of times these people make up excuses. “The bank said that the wire had to be in by 1:00. I got there five minutes after 1:00.” “The person that takes care of my wires at the bank is out this week. They’re coming back next week.”
These excuses pile up and very early on, I sense that they’re just not into the deal because if people want to make something happen, they will make it happen. A lot of times, we work with realtors who want to keep the deal together just to maybe hopefully think that it’ll appear or the money will come together somehow but it’s early on because if the documentation doesn’t come in, we don’t have a deal.
Salespeople are easy to sell and notwithstanding what people see on TV and the bogus scripted shows and everything else. Ninety-five percent of the real estate agents are eating Alpo three times a week so they desperately want to make a deal. They will try and wish it through and they will get upset when faced with the facts and the reality that the person, for whatever their reasons in their myriad, want to tie up the property for some reason or they’re delusional, which also happens. They pass our smell tests or maybe a lot of agents fork them over to you and say, “Make it happen,” and you can’t do it. You’re the person that provides the loan. We’re the people that represent the buyer and the seller but we cannot buy the property and we cannot sell the property. Sellers need to recognize that. It’s out of our control once we put the deal together.
I think it’s being realistic and a lot of times, a lot of people want to make the best situation work out but as we all know, not everything is very clear-cut and easy. When you hit these hurdles, you can overcome them if everybody works together but not having the money, resources, income or the wherewithal to pull through. I can see that within a matter of a day or two. When I pick up the phone and call the realtor and this has happened with Valerie.
I speak to the person and they can’t produce something or what they say it doesn’t make sense and I say to Valerie, “There is no deal here.” She appreciates it and understands it because then she moves on to a deal that can be made. A lot of realtors are desperate for a deal and they will keep everybody going until I say something along the lines like, “The people can’t perform,” but then they turn it on me and say, “George couldn’t get them a loan.” Even though they don’t have money or their credit is 432 or 405 like the freeway. I then become the bad guy.
You need more people working together to make a deal happen.I’ve had a few people said it to me that I’ve sent over to George to smell them out for me. They’ll say, “George could not get me the loan.” How about the debt? You find out how much debt they have. When they have a lot of debt then it doesn’t go work well with trying to get a high-end loan. Don’t we hear a lot of stories, George that Bob and I talk about all the time? The stories are incredible. Every day is a new day.
If it makes you wonder if these people do not have anything else to do or why are they sucking up your time and anybody else’s time, even though they know that they can’t get this done? It’s almost like a reality show sometimes.
I’ve asked people who I knew were bogus. The fact that you can use someone that you know can’t perform in order to try and create a sense of urgency for somebody else, a potential buyer. I give a lot of rope to some of them to let them hang themselves because you never know. Sometimes people look like they’re broke but they are loaded but I’ve said to people at first, “I’m just curious why you did this. You have no money obviously.
I’ve done this and send emails. People will either not reply or will give them a sense going, “I do have money,” but they don’t have any money. It’s weird. They’re either delusional, which some people are or they’ve got some scam they’re running. Maybe using the credibility of a top agent like Valerie and myself in order to rip off somebody else. “I’m buying some big property from this legitimate agent. You can Google.” That happened before. There are a number of possibilities, which you wouldn’t think of normally but I’ve sussed out especially with dealing with a lot of overseas people that come up with weird stuff.
Even with overseas people, they have statements, accounts and numbers that make up for what is needed to get the deal done. They can always wire money in but if that wire doesn’t come in a day or two or even a week, it doesn’t take that long to wire funds from overseas. They say one thing and the actuality, the results are zero.
What’s strange to me is how some of these people will send you a verification. They’ll say, “I need to be able to contact someone at the bank because anybody can create and Photoshop or whatever they need and we’ve all seen this. They’ll give you the name of their private banker and I’ll use Google and the person has been arrested for fraud. Why not come with a fake name? They’re not even smart enough to do that, strangely enough.
When you did reach out to people who said that they’re going to do something and their response is they get very defensive or I’m surprised that they even respond to you when you call them on it.
I’m shocked too. They do get defensive a lot of times and this just happened or they just ignore it. They waste your time and I’ll go to them later on and I’ll say, “Where are your morals? Why’d you waste my time, the seller’s time and put my credibility on the line?” and they just won’t respond. It’s weird. There are a lot of red flags I find right off the bat where you can pretty much tell if someone is completely a fraud. There are a number of those tells but sometimes they’re pretty sophisticated and they weave in a certain amount of truth, which makes the bigger lie more believable but they sometimes they’ll just ignore you and you’ll never hear from them again.
We’ve seen that on a huge scale, not so much in the real estate but with Bernie Madoff and some other people who have propagated these schemes in big time. It gives the little people who’ve watched this on TV, some ammunition to go out and do it themselves.
I think when you have the agents in particular and most agents are ready to deal with. The reality is even when sometimes are successful when times are bad, they will go for the wishlist and try and get you to at least give this person a shot. The problem is you’re violating your expertise and your fiduciary responsibility if you represent the seller to let them get into a deal, which you know is probably bogus. That’s why you’re the bad guy often and I understand that but that’s sometimes the way to go. I say, “Let them talk to this mortgage professional who knows what they’re doing and let you say, ‘They’re bogus.'” Unfortunately, that falls on you but at least it’s the second person that doesn’t have a vested interest to try and promote it.
A lot of times people always come into a deal and say, “I can pay cash but I’m going to get a loan.” When they start with, “I can pay cash,” and then when they come to me, I say, “You don’t even have enough money for the down payment. Am I missing a brokerage account? Where is the money or where is the beef,” as they say? That goes, no and then the realtor calls and says, “They said they can pay cash. Why can’t you get them a loan?” It’s this catchphrase of they can pay cash but yet they don’t have anywhere near to pay cash or even get a loan on the transaction. That becomes a problem.
They carry a Rolls-Royce that costs $10,000 a month for the lease.
We’ll talk about things like that. I had a client and it was a very large mortgage. We got them a much better rate. We probably saved them about $12,000 per month on their mortgage payment. A very lovely couple. They were having some financial issues where cashflow wasn’t exactly there. I felt very good that I was able to save them maybe $150,000 a year. We meet for dinner one night and I’m at the restaurant waiting for them. I could see that my client pulls up in a brand-new Bentley, not the inexpensive ones. I figured it’s probably, $5,000 or $6,000 a month and the wife pulls up in a brand-new Rolls-Royce Cullinan which is the SUV also like another $5,000 or $6,000. I said, “You guys have new cars.” “You saved us so much money every month.” I sometimes feel like I’m an enabler.
George, I love talking to you. We love sharing stories with you. We hope you’ll come and join our show again. Thank you so much for spending this time with us and sharing your insight and information. This was fun.
Thank you. I feel honored.
George, you’re a trip. I enjoyed it.
Thank you, Bob. It’s great chatting with Valerie and you. Hopefully, we’ll do this again soon.
—George is great.
He’s got some good insight and good stories and he usually makes me laugh. He’s got that self-deprecating humor. He’s got twists on things usually and it’s fun for me to work with him. I’ve worked with him for a long time. If anybody wants to reach out to him, it’s [email protected]. We both have been on the same lines of sharing the same experiences in the cash, clients and deals. Haven’t we, Bob?
Yeah, and it is interesting because I don’t think people hear about that so much. They hear about the huge success stories, really easy to sell this $80 million house and this, that and the other. That’s why it’s key for sellers to have an experienced agent because it literally can cost millions of dollars to a seller. If they have someone that isn’t sophisticated enough or experienced enough to see past these various schemes and get to the crux of them.
Someone like George is key as well because that’s the first time I’ve ever talked to him but he’s good at what he does but he’s also very personable. He’s got the personality that transcends to sometimes robotic by the numbers type of mortgage broker. The more people working together to make a deal happen, you can do it if the person is legitimate. Most people are but sometimes, someone that just goes by the numbers without thinking outside the box a little bit is not exactly the best fit to make a deal happen.
I find that as well and that’s why I tend to gravitate towards the same team of people I work with within my deals. Readers, if you have a funny or interesting story, tell us a little bit about it at [email protected] and maybe you could be a guest on our show. Bob, it’s been another great time, a great day.
It’s always fun. Nothing is scripted. Everything is just extemporaneous and I like that. George is a great guest. We should do that again. It’s fun. I’m looking forward to the next one.