...Case Study: Atlanta Home Loan Synopsis of the Situation: Atlanta Home Loan was a mortgage lending and financing company based in Atlanta, Georgia. The company’s founder, Al Fiorini, had many years experience in the mortgage market, and he oversaw eight loan officers and four telemarketers. It was a profitable business with growth potential, so Al decided to find someone to run the business while he went to school to earn his MBA. His first attempts at partnership were unsuccessful, but he eventually found his new partner Wilbur Washington, who had a successful background in the mortgage business. Al began monitoring the company remotely and everyday keeping in touch Wilbur and the other employees. Al and Wilbur first quarreled over the hiring of a new office processor before a much bigger problem came up. Wilbur wrote pre-signed company checks without Al’s permission and they bounced. Even though Al spoke with a bank to transfer funds into a payroll account, to which Wilbur didn’t have access, Wilbur still managed to transfer money back to a general account. Al was frustrated and attempted to limit Wilbur’s power, but he was still able to open an account at another bank. Al called bank to freeze the account but the bank refused. Wilbur gained a signing authority with this second account. Al contacted the police and FBI with little success. Finally, Al asked the Georgia Department of Banking and Finance to withdraw AHL’s mortgage financing license. In the end, Al lost his business...
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...Atlanta Home Loan Eind 2002 raakte Albert (Al) Fiorini steeds meer gefrustreerd en gedeprimeerd. In september 2002 had hij vrij genomen om weer naar school te gaan om zijn MBA te halen. Hij ging ervan uit dat het door hem opgerichte hypotheek verstrekking bedrijf door zijn medewerkers zou worden gerund. Het was nu duidelijk voor Al, dat de medewerkers zijn bedrijf probeerden af te schermen voor Al. En verbazingwekkend genoeg het was ze ook nog gelukt. Al betreurde het, ze hadden niet alleen zijn bezit afgepakt maar ze hebben mijn hele bedrijf gestolen. Terwijl ik 2500 kilometer weg was en bezig was met mijn studie voelde Al zich bijna machteloos om ze te stoppen. Hij heeft veel slapeloze nachten gehad terwijl hij zich af vroeg wat hij kon en moest doen om zijn bedrijf terug te krijgen. Hij vroeg zich ook af waar het mis was gegaan, wat hij gedaan moest hebben om dit te voorkomen. AHL is een hypotheekverstrekker en financieringsbedrijf gevestigd in Atlanta, Goergia. Al Fiorini had het bedrijf opgericht in april 2002, met een eerste investering van ongeveer 40K. Hij begon vanuit huis te werken. Al had vele jaren ervaring opgedaan in de hypotheek en banken industrie. Hij heeft bij verschillende bedrijven gewerkt en hij is een jaar de directeur van de Orange County Chapter of the California Association of Mortage Brokers geweest. Onder zijn leiding groeide AHL in het eerste kwartaal snel. In de zomer van 2002 had het bedrijf 4 telemarketeers en 8 lening specialisten. Alle werkten...
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...MANC_C03.qxd 08/01/2007 10:42 AM Page 95 Atlanta Home Loan Case Study Atlanta Home Loan THE COMPANY Atlanta Home Loan (hereafter AHL) was a mortgage lending and financing company based in Atlanta, Georgia. Al Fiorini founded the company in April 2002 with an initial investment of about $40,000. He started operating the company from his home. Al had many years of experience in the mortgage lending industry. He had worked for several different companies and had also served a year as president of the Orange County Chapter of the California Association of Mortgage Brokers. Under his direction, AHL’s business grew rapidly in its first quarter of operation. By the summer of 2002, the company consisted of four telemarketers and eight loan officers, all of whom worked from their homes. “Telecommuting” was convenient for the employees because Atlanta was a large city with heavy traffic. Al established banking relationships that allowed AHL clients to borrow money at wholesale rates. The actual loan terms varied depending on the clients’ FICO scores.1 In summer 2003, banks might offer an AHL client with a very high FICO score (over 620) a rate of 6.25–6.75% on a fixed 30-year mortgage. This rate provided the bank with an operating margin of 1.5–2.0%. AHL earned a fee of 1.50% of the loan amount for every loan funded. This provided AHL with an average revenue per loan of $3,200. AHL bought leads from list brokers for $0.20 per name. These lists provided...
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...Short Summary Atlanta Home Loan April 2002 - Al formed Atlanta Home Loan (AHL), a mortgage lending and financing company, in Atlanta, Georgia - Initial investment of $40,000 - Operated the company from his home Summer 2002 - Company grew rapidly - 4 telemarketers and 8 loan officers who all worked from their homes - Established banking relationships which allowed clients to borrow at wholesale rates - Rates varied according to client FICO scores The Company - Leads were bought from list brokers - Telemarketers called people on the lead lists to assess their interest in refinancing - The lists were then passed on Al who distributed them to the loan officers - Loan officers helped with the applications and ordered an appraisal and credit report - Admitted for EMBA in California, Al had several options for AHL - As the company was appraised for $600,000 and was continuing to grow, he decided to find someone to operate the business in his absence Back to School - June 2002 A Partner- July 2002 - Impressed by Joe's sales ability and being people oriented, the two reached a verbal partnership agreement - Joe would invest $8,400 and be entitled to half of the profits - Al soon found out Joe was irresponsible and terminated the agreement while appointing a new manager that lasted 3 days prior to rehiring Joe A New Partner and licensing agreement - Sept 2002 - As Joe neglected his responsibilities once again, Wilbur, an acquaintance of Joe, was then hired and given the use...
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...Elements of Results Controls Albert (Al) Fiorini should continue running his business of Atlanta Home Loan (AHL) which is mortgage lending and financing company. He needs to fight to regain control over AHL perhaps only about $25,000 worth of equipment left. In other to get back his business Al can apply elements of results controls which require four steps. First, Al must define the dimensions. He must defining the right performance dimensions although is critical because the goals that are set and the measurements that are made shape employees views of what is important. In this case Al must defined AHL dimensions on which results are desired such as for profitability, customer satisfaction or product defects. This dimension will help company to achieve the target. Second elements of results control is measuring performance on these dimensions. In this elements measurements, which involves the assignment of numbers to objects, is a critical element of a results control system. Al will measure his company performance after de fined it in the first elements. It might many different results measures can be linked to rewards. Al can measures of financial such as net income, earnings per share and return on assets or in nonfinancial measures such as market share, growth, customer satisfaction and the timely accomplishment of certain tasks. Besides that, Al can use measurements involve subjective judgements. For example evaluators may be asked to judge whether a manager is being a...
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...tlanta Home Loan Case Introduction: Atlanta Home Loan was a mortgage lending and financing company based in Atlanta with initial investment of $40,000. It was founded by Albert Fiorini in April 2002 and was operated from his home. He decided to earn an MBA degree from California and left the controls of the company in the hands of his employees. The control systems he used, what went wrong in implementing them and what should Al do now is discussed hereafter. 1)Control systems: a)At the time Al Fiorini was running the company: The company showed rapid growth potential. He performed background checks of employees. Al monitored activities of loan officers by their tracking number. Great goodwill that the company got loans on wholesale rates. b)At the time Al left to earn his MBA: Al used several types of control systems while he was away in California. He used a combination of controls which consisted of action, result and performance controls. Examples of action controls are as follows: Authority to write checks was withheld by Al. Keeping a check on Joe’s attendance and terminating the agreement when he failed to show up. Spent four hours a day talking on the phone to his employees to observe their behavioral patterns. Centralized decision making (where Al was the central body). All business mails received at his California address. Supervised the loan applications electronically. Observed the progress of every...
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...Case --- Atlanta Home Loan 1. Identify the controls that Al Fiorini implemented to manage his business (both before and after he went back to school). Classify each control as a results, action, or personnel/cultural type control. a. Before Al went back to school •Result Controls: ① Telemarketers were paid a combination of an hourly wage plus a performance bonus ($10.00) for each lead produced. ② AHL paid the loan officers 40% of total loan revenue on loans that AHL originated, and 60% on loans they originated. •Action Controls: ① Telemarketers called and gave the potential clients’ names to Al and Al distributed the names to AHL’s loan officers. ② Al monitored the activities of loan offers, track the number of credit inquiries each requested. ③ Al monitored the loan application per lead ratios and their trends. ④ Under Al’s direction, AHL’s business grew rapidly. Telemarketers, loan officers and loan processors all took their responsibility. •Personnel Controls: ① Select the employees who work as telemarketers, loan officers, loan processors… to see if they were satisfied with these position or not. b. After Al went back to school •Result Controls: ① Al monitored AHL operations from afar. ② Al tracked the employee head count, the number of leads produced, credit inquiries requested, loan applications funded, office expenses and bank activity. ③ Al had the authority to sign checks written against AHL’s main bank account. ④ Al had all of...
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...ATLANTA HOME LOAN I. Devices that Al used to control his business Before he went back to school a. Result control: - Al paid each telemarketer a combination of an hourly wage plus a performance bonus ($10.00) for each lead produced. - Al paid the loan officers 40% of the total loan revenue on loans that AHL originated and 60% on loans they originated. b. Action controls: - Al bought leads from list brokers, then telemarketers called people on the lists to assess their interest in refinancing, gave Al the potential clients’ names to Al, Al then distributed the names to AHL’s loan officers. - Al monitored the activities of his loan officers by tracking the number of credit inquiries each requested. - Al also monitored the loan application/lead ratios and their trends. c. Personnel/ cultural controls: - Al hired four (4) telemarketers and eight (8) loan officers to work for his firm. - Al decided that all the employees would work from their homes due to heavy traffic of Atlanta. After he went back to school: a. Result control: - Al agreed to pay Joe 100% of the fees earned on loans that Joe closed to end their partnership. - Al made commission payments to Wilbur at 100% on all loans closed less than a monthly licensing fee of $5,000 or 10% of all revenue, whichever was greater. b. Action controls: - Al tracked the employee head count, the number of leads produced, credit inquiries requested, loan application funded, office expenses, and bank activity...
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...Mortgages ii. Housing Market iii. Subprime Mortgages 1. Demyanyk, Y., & Van Hemert, O. (2011). Understanding the Subprime Mortgage Crisis. Review of Financial Studies, 24(6), 1848-1880. 2. Karikari, J., Voicu, I., & Fang, I. (2011). FHA vs. Subprime Mortgage Originations: Is FHA the Answer to Subprime Lending?. Journal of Real Estate Finance and Economics, 43(4), 441-458. doi.10.1007/s11146-009-9218-7. iv. Housing Market Bubble Burst b. Overview and causes of the subprime mortgage crisis i. Fixed mortgage versus floating 1. Demyanyk, Y., & Van Hemert, O. (2011). Understanding the Subprime Mortgage Crisis. Review of Financial Studies, 24(6), 1848-1880. ii. High risk mortgage loans and lending/borrowing practices 1. Peterson, C.L. (2009). Fannie Mae, Freddie Mac, and the Home Mortgage Foreclosure Crisis. Loyola Journal of Public Interest Law, 101-149. 2. Razaki, K.& Koprowski, W. (2012). The Paucity of Fed Enforcement Actions Leading to the Subprime Mortgage Crisis. Journal of Finance & Accounting, 1190-108. iii. Mortgage fraud and predatory lending c. Fannie Mae and Freddy Mac- financial institutions link to the subprime mortgage crisis...
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...organized international and domestic rings, 8 street gangs, 9 terrorists, 10 drug traffickers, 11 real estate agents, 12 closing attorneys, 13 appraisers, 14 mortgage brokers, 15 The targeted victims distinguish mortgage fraud from predatory lending. In predatory lending cases the borrower is victimized by the illegal practices of the lender or its agents with respect to fees and disclosures relating to the cost of the loan. It is unfortunate that the media, consumer activists, legislators and law enforcement personnel frequently conflate mortgage fraud with predatory lending since it adds unnecessary confusion to an already complex issue and diverts attention and badly needed resources from the fight against true mortgage fraud. 2 The average “take” on a bank robbery is approximately $3,000.00. By contrast, the average straw borrower receives a “cut” of at least $10,000 and the orchestrator’s “take” in a mortgage fraud transaction frequently exceeds $100,000. In a few cases the orchestrator’s take was in excess of $1 million dollars, and in one, the perpetrator, who later fled the country, received $7 million in “profit” from the same-day flip of a mansion. 3 Financial Crimes Enforcement Network, “Mortgage Loan Fraud: An Industry Assessment Based on Suspicious Activity Report Analysis,” November 2006 at 10. http://www.fincen.gov/news_room/rp/reports/pdf/mortgage_fraud112006.pdf (accessed March 8, 2009). 4...
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...Asia Wright Mrs. Saffo 0 Period March 13, 2012 Counseling Portfolio Table of Content 1. My Career Choice a. Job Description 2. Letter of Introduction b. Agreement/Disagreement 3. Interview 4. Career Options 5. Earnings 6. Employment Outlook 7. Colleges an c. Courses Chart d. Compare and Contrast 8. Companies Hiring 9. Dream House and Car 10. Loan Information 11. Exponentials e. Graph f. Table 12. Creative Reflection 13. Conclusion 14. How to be Graded Career Choice, Letter of Introduction, Interview, Agreement/Disagreement of Career Career Choice and Job Description Counselor: works in diverse community settings designed to provide a variety of counseling, rehabilitation, and support services Introduction Hello, my name is Asia Wright. I am a successful and passionate Westlake honor roll student active in the Magnet program of medical sciences and athletics. I desire to secure a full academic scholarship to a top-tier medical university for a Medical Doctorate (MD) in Trauma with concentration in chronic diseases, clinical trials and surgery. For my Math and Technology course I had to take a personality test and chose a career from the list provided based on my personality. Various careers were on the list provided such as Fashion Designer, Photographer, and Child Care but I decided to select Counselor/Social Worker. Not that I don’t disagree with the career...
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...CASE-3 ATLANTIC HOME LOAN: I. Determine which category the case fits into: This case is diagnostic in nature and Albert Fiorini failed in checking the management failures. Based on the case facts, supposed to identify the lapse in control measures and propose solutions to them. II. Describe the case This case is talking about the illegal takeover of company “Atlanta Home Loan” by Albert’s partner cum manager Wilbur Washington. a. What are the facts of the case? ➢ Albert Fiorini (Al) founded a company named “Atlanta Home Loan” (AHL) in April’02. ➢ Recruited several staffs to take care of operations. ➢ After six months, in Sept’02, AL left to complete his MBA. Before leaving, started looking for someone to run his business. ➢ Impressed by Joe’s (one of AHL’s loan officers) performance, Al offered him a partnership. Joe accepted the same and reached a verbal partnership agreement. ➢ Afterwards Al found that conduct of Joe is not good for the company, parted his ways from him. He hired one manager also who lasted only for three days. Joe took away several loan files which did not got closed since August. Joe was also reluctant into returning those files to AHL. This resulted into a great loss of revenues to the AHL. ➢ In desperation, he entered into another written partnership agreement with Wilbur. In desperation, Al gave him all the management rights expect signing authority for checks. ➢ Wilbur without consulting Al used signed...
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...predatory lending? Predatory lending is any lending practice that imposes unfair or abusive loan terms on a borrower. It is also any practice that convinces a borrower to accept unfair terms through coercive, deceptive, exploitative, or unscrupulous actions for a loan that a borrower can’t afford, doesn’t need, or doesn’t want. Predatory lending benefits the lender, not the borrower by ignoring or hindering the borrower’s ability to repay the debt. These lending tactics attempt to take advantage of a borrower’s lack of understanding about loans, terms, or finances in general (Krulick, 2014). Who can be targeted in these illegal practices? Predatory lenders typically target minorities, poor, elderly, and less educated people. People who need immediate cash are also targeted. For example people that need to pay medical bills, need to make a home repair, or someone that needs help making a car payment. People with credit issues or people who recently lost their jobs can be targets as well. The credit issues often disqualify borrowers from conventional loans or lines of credit but yet they have substantial equity in their homes. Predatory lending can take place in many forms including payday loans, car loans, tax refund anticipation loans, or any type of consumer debt. Over the past several years, predatory lending practices were prevalent in the area of home mortgages. Since home loans are backed by a borrower’s real property, a predatory...
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...personnel and cultural controls forming a management control systems and, 2. apply conceptual knowledge to recognise and solve problems concerning real-world MCS issues. This seminar contributes to enhancing students’ discipline-knowledge and skills, and critical, analytical and integrative thinking. readings[1] 1. Merchant and Van der Stede (2012). Chapter 2 Results Control. 2. The Case of Atlanta Home Loans, Merchant and Van der Stede (2012), page 22. questions for discussion[2] 1. This case is described as an example of extreme control failure. Comment on this statement based on your understanding of the causes of management control problems. 2. What caused the company’s problems, that is were the problems due to failures in the company’s strategy or control system, or both? 3. How would you describe the results controls that Al Fiorini used to control his business both before and after he went back to school. (Hint ensure you identify all the major results controls used) 4. Generally, based on your understanding of this case, what did Al do wrong? 5. In your view, what went wrong with the use of results controls ultimately used? Give reasons for your answers. ----------------------- [1] Students must...
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... Risk Management | 5 | 3.0 Work Breakdown Structure | 6 | 4.0 Cost Estimates | 8 | 4.1 Cost Estimation Assumptions | 8 | 4.2 Cost & Contingency Estimation | 9 | 5.0 Financial Analysis | 11 | 6.0 Project Schedule | 12 | 7.0 References | 12 | 1.0 Executive Summary This project is a pilot project for the development of a business venture to promote the installation of energy efficiency and conservation features into homes to save home owners money through the reduction of monthly energy bill. The objective of the project is to install energy efficiency features into a home of about 2500 square feet in Atlanta, Georgia and expected to be completed within 5 months at an estimated cost of $96,558.21, using a three point estimation; and achieve about 50% savings in energy usage. The expected benefits include: * Reduced utility and maintenance costs * Increased home comfort * A healthier and safer indoor environment * Improved building durability * Ultimate increase in home value The project will begin on April 16, 2013 and be completed on November 20, 2013. A Financial Analysis on the cost and potential energy savings shows a positive net present value (NPV) of $49,889.24. The project is therefore financially viable and should be approved for bank financing. 2.0 Project Description ATL Energy Inc. is a business venture firm that undertakes entrepreneurial projects in the Energy Sector worldwide....
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