Trust me - if you’re tracking the US housing bubble you’ll want to read this. 
In the winter of 2001 my wife Jeanine and I took our annual trips over Thanksgiving and Christmas down to Los Barriles, Baja California.  For those of you lacking Google Earth, Los Barriles is located south of La Paz and north of Cabo San Lucas.  It is on the Sea of Cortez and is frequented during the colder winter months up north by both Canandians and Americans the latter of which are mostly west coasters.  In …

I wrote the preceding three posts to shed some light on what types of individuals gravitated toward subprime lending as it grew within the mortgage industry.  Simply put, all types of people were lured by the potential profits of high risk lending.  Some of them were complete industry outsiders.  Some of them came from conventional lending backgrounds and saw subprime as a growth opportunity.  Finally, others were completely born into and bred by the subprime industry and knew nothing of conventional lending practices and the system of checks and balance built into conventional underwriting.
In the last post I …

I had left my position at my friend’s company whose focus was second mortgages and took a consulting position with another start up mortgage company.  The company was being formed by a young guy who I had actually gotten to know through my business partners in the mortgage company I had owned  a few years earlier.  This young guy had recently enjoyed much success in the infomercial arena.  His product had been a ‘home-based business’ package that he sold throughout the US via the infomercial and seminar model.
His partner was also my …

Two other cases where I had involvement during the start up phases of a mortgage company, one directly and one as an observer, raise some issues regarding just what it is some of these companies are motivated by.
One company where I was merely an observer has become wildly successful as the largest independently owned funder of second mortgages in the US.  The owner of the company happens to be my ex-employee.  Ironically, he was the first loan officer I’d hired at my mortgage company described in the first post in this series.  …

I can honestly look my fifteen year old son in the eye and tell him I have never done a fraudulent loan in my entire lending career.**  I can honestly tell him that I never sacrificed my morals or ethics when it has come to my professional life.  Simultaneously, I would also tell him that I have made a few mistakes along the way - one which stands out would be hiring on at New Century Mortgage.
In this blog I’ve written about some of the events that led me to …

Below is an excerpt from an AP article on Forbes.com regarding a new ‘All-In-One’ product from WAMU.  The mortgage enables borrowers to skip the hassles of refinancing to take advantage of fluctuating rates and also to take out ‘automatic’ HELOC’s once again turning their house into a veritable credit card.  Yippee!  They finally did it!  Now I can make irresponsible decisions and charge it to my house easier than ever!
On the surface this product may appear to offer some advantages to people who want to take advantage of interest rate fluctuations that fall in …

I’ve heard directly from sources at New Century that top Account Executives have been retained on hefty salary guarantees as New Century rides out their BK.  On the surface this may seem like a benign move on New Century’s part designed to maintain market share as they emerge from bankruptcy.  This notion would be plausible if New Century was still conducting business funding mortgages.  However, they are not.  A more plausible reason in this environment to pay substantial guarantees to your top Account Executives while they interview for other jobs …

When I first started in this business about twenty years ago there was a definite amount of respectability across the board in the industry.  My position as a loan officer for a major savings and loan was viewed in large part as a professional endeavor.  Borrowers were respectful of lending guidelines and of my position relative to their having access to information and loan product in general.  Mortgage brokers were thankful for the service provided by lenders in the issuance of mortgage product for their clients.  All in all it …

Now I am receiving inquiries from borrowers knowingly wishing to borrower more than their home is worth.  I had received a few of these over the last few days where the borrowers were unaware that their values had declined below their original purchase prices.  Last night I received two inquiries where the borrowers were well aware their proposed mortgage balances after refinancing would exceed the existing value of their homes.  One borrower was already exploring a short-sale while the other maintained a ‘hold on at all cost’ attitude.
The looming short sale was …

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