No this is not a blog entry about a new CBS drama series but instead a lurid tale of New Century the poster child of abuse for the sub-prime mortgage industry. Writing in his blog a supposedly ex-employee of New Century writes of sexual harrassment, mortgage fraud, Las Vegas hot tub parties and the like here are a few excerpts:
Regarding his manager’s open-fly policy:
Almost three years into our time at New Century our region manager finally got caught with his fly open. It turns out one of his latest conquests was none to pleased with her funding results after having put out for the old boss. It’s a pretty safe bet she expected to reign at the top of the food chain as her reward. However, I can only guess that our region manager had spread himself a bit too thin in returning the favors that had been granted him by half a dozen or so morally suspect females. This last one sued New Century. Our region manager subsequesntly took a one month involuntary leave and attended counseling. The girl was paid off. She’d been a low level producer before the affair but suddenly was awash in new business and loads of cash. Wow. Fun times, fun times
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The writer also spreads the blame for the state of the mortgage industry around - placing some solely on the shoulders of realtors…
Case in point - while I was at New Century one of my brokers acted as a ’speaker’ at first-time homebuyer (no money down) seminars for a real estate office where they procurred a good portion of their business. These first-time homebuyer seminars were commonplace around the country during the real estate run-up. In conversation with this loan officer I learned of the content these seminars provided to first-time homebuyers. The gist of it was this - all you needed was the right credit score and a few other basic qualifications and these agents could get you into a home. There was no regard to whether the buyer could actually afford the home. There existed no content wherein the agents discussed affordability or budgeting or future financial scenarios once the adjustable mortgages they were utilizing actually adjusted. As a matter of fact, this loan officer told me the agents discouraged talking about affordability and budgeting. All they wanted the loan officer to focus in on was the payment to get the buyer into the home. They would also tell the buyers to refer to their accountants (as if the buyer’s even had tax or financial advisors) for any budgeting advice. The loan officer was futher instructed to refer to the first-time homebuyer loans as ‘entry-level’ loans meant to get the buyer into the house which was sure to appreciate thereby enabling the borrower to refinance into a conventional loan down the road.
http://0182eb9.netsolhost.com/blog1/?cat=21
And finally writing about the overall mental state of the industry:
It was also during this time that the SubPrime machine was firing on all eight cylinders. Loans were flying in, everything was getting approved, foreclosures were something that happened back in the Great Depression. Everything was great. Or so you might think. Because there was a new phenomenon taking place, the predatory broker. Now this is where a real departure between morality and immorality in SubPrime lending begins to appear. I say this because part of a lender’s moral and legal responsibility is to protect the interest of its borrowers. However, when the lender itself has created the platform on which brokers can prey on the unsuspecting, then the lender is just as culpable as the predator.
It is a hard position to believe on one hand you’re helping people get into homes or maybe helping them through a rough financial patch, then on the other hand knowing that you might be setting them up for failure. It’s a tough call. And here’s my take. You can lead a horse to water but you can’t make him drink - unless he wants to drink. Therein lies the paradox of SubPrime lending. Who’s at fault? The water source, Wall Street. Or maybe the well-keepers, the lenders. Or could it be the horse-trainer, the mortgage broker, who leads the thirsty horse to the well. Or could it even be the horse, our poor borrower, who wants only to share in the American Dream. Well let me tell you, while I may have slept through Home Economics in high school I at least learned that the American Dream doesn’t come with a 5.99 Margin on a 2 Year LIBOR ARM with a prepayment penalty that could choke a donkey and an exploding payment at the end of two years that won’t help the borrower’s chances of continuing in good standing on their mortgage down the road - it will hurt their chances! It actually forces them to keep refinancing thereby creating more fees and more earnings and good God do I need to explain any more. It should be crystal by now. Don’t anyone forget that the people taking out SubPrime loans were adults - not children. It is their responsibility to be responsible for their own actions. Easy money does not mean it’s free.
On that preceding note, if I had to put a number to it I would guess that three quarters of the brokers I dealt with overcharged their clients and put them into loans only for the sake of generating the highest commission for themselves. The half-truths and bald-faced lies they must have told to force feed these loans down most borrowers throats I can only imagine - let alone the lies they were slinging the lender’s way. And I had to deal with these people every day. The norm would have me talking to one broker who was obviously fishing for guidance on packaging a kinky deal with another one on hold ready to rip me a new asshole because he couldn’t get more rebate by jacking the borrower’s rate any higher and another one in the lobby frothing at the mouth because we found out the W2’s he’d submitted were doctored and the poor bastard wouldn’t be able to make his Beamer payment that month - no wonder he was frothing.
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There is no evidence that all of this is not a mere fabrication - you the reader must decide - however the writer seems to name names (at least his own) and clearly points people to his new mortgage company - so this is not an anonymous person throwing words at a blog.
Original post by mortgage blog