Mortgage Meltdown

[JOEBIALEK]

Until recently I was an underwriter for a sub-prime mortgage company that is about to close. It seems that most media outlets and government officials fain ignorance about the real underlying cause of the problem. There is either a tendency to blame the borrower or act as though no one in the industry {or outside of it} saw this coming. They fail to mention that those who gained the most financially got off scot free while leaving the mess behind for everyone else to clean up. In my former company, the sales managers and loan officers "held the keys to the safe" while deciding which guidelines to ignore sometimes going so far as to bribe fellow underwriters to "look the other way". Sales managers often overrode an underwriter's decision they did not agree with. Other times fellow underwriters would be threatened with their job for "impeding company growth and progress" just because they refused to go along with the flagrant disregard of guidelines . I complained to the sales managers about the bribing but all I got was a formal write-up for making "inappropriate comments".


There was absolutely no support from the owner of the company all the way to the human resource representative. This company is as corrupt as they come. I can't tell you the number of sexual affairs that occurred between married and unmarried people; primarily among the management staff {at the workplace itself}. Promotions were strictly political thus moving people "up the ladder" who never proved themselves worthy or were on a final written warning to be terminated {for poor performance}. As a result of the corrupt management of this company, I and several hundred others were laid off. I believe the federal government needs to investigate this company and bring to trial those corrupt individuals who broke the law. This would set an example for the rest of the mortgage industry that absolute corruption corrupts absolutely.

[LaurieAG]

Hi Joe,

Originally Posted by JOEBIALEK

Until recently I was an underwriter for a sub-prime mortgage company that is about to close. It seems that most media outlets and government officials fain ignorance about the real underlying cause of the problem. There is either a tendency to blame the borrower or act as though no one in the industry {or outside of it} saw this coming. They fail to mention that those who gained the most financially got off scot free while leaving the mess behind for everyone else to clean up. In my former company, the sales managers and loan officers "held the keys to the safe" while deciding which guidelines to ignore sometimes going so far as to bribe fellow underwriters to "look the other way". Sales managers often overrode an underwriter's decision they did not agree with. Other times fellow underwriters would be threatened with their job for "impeding company growth and progress" just because they refused to go along with the flagrant disregard of guidelines . I complained to the sales managers about the bribing but all I got was a formal write-up for making "inappropriate comments".

There was absolutely no support from the owner of the company all the way to the human resource representative. This company is as corrupt as they come. I can't tell you the number of sexual affairs that occurred between married and unmarried people; primarily among the management staff {at the workplace itself}. Promotions were strictly political thus moving people "up the ladder" who never proved themselves worthy or were on a final written warning to be terminated {for poor performance}. As a result of the corrupt management of this company, I and several hundred others were laid off. I believe the federal government needs to investigate this company and bring to trial those corrupt individuals who broke the law. This would set an example for the rest of the mortgage industry that absolute corruption corrupts absolutely.

Unfortunately there is no political desire to remove corrupt practices or they would be doing something about it.

The state of play at the moment leaves a lot to be desired. While there are known pools of mortgages that will implode on the market over the next year and a half, the FED has decided to push loads of money onto the market, that will have very little impact on those currently in posession of the known time bombs.

It's a classic Curate's egg - Wikipedia, the free encyclopedia

I sympathise with you because I have had a similar experience with a company that operated on similar principles. At least that business is up for sale now.

[JOEBIALEK]

thanks

[HydrogenBond]

This is a difficult situation in terms of the proper course of action. One thing I heard somewhere, was that the problem was unintentionally created by the liberal thinking. There was a social push, at the beginning of this loaning process, to allow more people to qualify for home loans. The intent was altruistic, so loans could be granted to people who would not have qualified in the normal free market. The creative loan resulted. If the Fed had been concerned with cold hearted market forces, these types of loans would have raised a yellow flag and would have been regulated. It got as far as it did because the hope was this altruist gesture, would pan out. If the economy had kept going strong for another 5-10 years it may have worked. The wages would have kept pace with the change in interest rates.

One of the considerations for bailing out homeowners can be understood with an analogy. Say we had two families living in apartments. One family takes the chance and buy a home, knowing that in a few years, the interest rate will go up. The other family is more timid and decides not to take the risk and stays put. The family with the house not only has the bragging rights of a new home but also the tax advantages of owning a home. Based on this example, the person who bought the home has more benefit.

When the default begins to occur, the homeowner's worse nightmare is losing their home and having to go back to an apartment. If we decide this apartment life is cruel, and we bail them out, what are we going to do for the apartment family, who never gained any benefit. At the very least, this apartment family should get a "get out of mortgage debt free card" that they can use anytime they wish in the future. This would make it fair so both families can enjoy the ups and downs of home ownership.

As far as the mortgages companies let the free market adjust.

[LaurieAG]

Originally Posted by HydrogenBond

This is a difficult situation in terms of the proper course of action. One thing I heard somewhere, was that the problem was unintentionally created by the liberal thinking.
...
When the default begins to occur, the homeowner's worse nightmare is losing their home and having to go back to an apartment. If we decide this apartment life is cruel, and we bail them out, what are we going to do for the apartment family, who never gained any benefit. At the very least, this apartment family should get a "get out of mortgage debt free card" that they can use anytime they wish in the future. This would make it fair so both families can enjoy the ups and downs of home ownership.

As far as the mortgages companies let the free market adjust.

Hi Hydrogenbond,

If anything the problem was created by a lack of transparency of risk in financial instruments that led to a mispricing of these very same instruments by the market. It is up to governments and the regulators to keep a straight market, otherwise.

While (I believe) people who have not missed payments in the past may get some federal government mortgage assistence when their interest rates get reset higher, the main problem is increase in mortgage failures before the interest rate reset.

[Michaelangelica]

Originally Posted by JOEBIALEK

There was absolutely no support from the owner of the company all the way to the human resource representative. This company is as corrupt as they come. I can't tell you the numbe.

Sounds like you have been badly scared by the experience.
I know the sort of environment you are talking about.
I worked as a HR, and training psychologist in many organisations.
I left when I found out how managers were using what I had taught them not to help others but to manipulate others.
I felt my position was ethically untenable. That, and the stress, made be literally "go bush' and chuck in a promising career.
I could be earning a million dollar salary by now.
I miss the money but not the toxic environment.

See
the many threads here on corporate ethics.
Also the work of the St. James Centre in Sydney. More and more corporations are taking note of these I think, Major,Ethical problems. It seems once an organisation gets past c 100 people it deveolops its own ethical structure, and raison de etre.

The sub prime-how bad is it
http://hypography.com/forums/social-...risis-how.html
Economics and the free market
http://hypography.com/forums/social-...ee-market.html