May 07, 2007

FLASH: New Century Mortgage Exposed: Lies. Cheating. Intimidation. Baseball bats. And a corrupt REIC spinning out of control.

Great expose in the Washington Post on the now-bankrupt former #1 independent mortgage lender New Century.

Why do I have such dot-com deja-vu?

The housing crash and REIC fraud will be the biggest domestic issue of the 2008 campaign. Look for hearings, politician posturing, bailouts, regulation, investigations, arrests and frog-marches. The biggest bubble in human history also produced the most financial corruption ever seen. New Century is just the tip of the iceberg. And the stench is worldwide.

Too bad the media was asleep when it was happening.

Pressure at Mortgage Firm Led To Mass Approval of Bad Loans

Maggie Hardiman cringed as she heard the salesmen knocking the sides of desks with a baseball bat as they walked through her office. Bang! Bang!

" 'You cut my [expletive] deal!' " she recalls one man yelling at her. " 'You can't do that.' " Bang! The bat whacked the top of her desk. As an appraiser for a company called New Century Financial, Hardiman was supposed to weed out bad mortgage applications. Most of the mortgage applications Hardiman reviewed had problems, she said.

But "you didn't want to turn away a loan because all hell would break loose," she recounted in interviews. When she did, her bosses often overruled her and found another appraiser to sign off on it.

Hardiman's account is one of several from former employees of New Century that shed fresh light on an unfolding disaster in the mortgage industry, one that could cost as many as 2 million American families their homes and threatens to spill over into the broader economy.

New Century has become the premier example of a group of companies that grew rapidly during the housing boom, selling working-class Americans with questionable credit huge numbers of "subprime" loans with "teaser" rates that typically rose after the first two years.

This business transformed the once-tiny New Century into a lending powerhouse that was held up as a model of the mortgage industry's success.

But now, with home values falling and adjustable loan rates rising, record numbers of homeowners are failing to make their payments. And a detailed inquiry into the situation at New Century and other subprime lenders suggests that in the feeding frenzy for housing loans, basic quality controls were ignored in the mortgage business, while the big Wall Street investment banks that backed these firms looked the other way.

New Century, which filed for bankruptcy protection last month, has admitted that it underreported the number of bad loans it made in its financial reports for the first three quarters of 2006. Hardiman and other former employees of New Century interviewed said there was intense pressure from bosses to approve loans, even those with obviously inflated housing appraisals or exaggerated homeowner incomes.

"The stress in that place was ungodly. It was like selling your soul," said Hardiman, who worked for New Century in 2004 and 2005. "There was instant notification to everyone as soon as you rejected a loan. And you dreaded doing it because you paid for it. Two guys would come with a bat, and they were all [ticked] off because you cut their deals."

Salespeople were supposed to be the "first line of defense" against fraud and bad loans, said Steve Krystofiak, president of the Mortgage Broker Association for Responsible Lending, a group that is trying to retool practices in the industry.

But salespeople worked on commission -- meaning the more loans they sold, the more bonus money they received. "That's a bad business model. It's absolutely contradictory," Krystofiak said, adding that he has witnessed salespeople tweak numbers in mortgage applications to ensure that the loans would be approved.


har said...

wow thats nuts, the baseball bat banging is soooooo against the laws in CA. Its a 'hostile work environment'.

Too bad there is nuthing left to sue!

Take that, oppressively liberal yemployee rights laws!

The new model is to create throwaway companies that wont be around long enough to sue and collect settlements. That is what they meant by 'new century'. A New Century of fraud and fly by nightism business ethics.

Thank you GWB!

diver damn said...

It's a job, it has pressure, that's why it's called 'work'. If you commit fraud because of 'atmosphere' you're a weak suck and should get another job. I did. New legislation that makes it illegal to 'put pressure' on an appraiser is so damnably stupid I can't even envision it. "he hollered at me' is the only defense these frauders can come up with. I'm not surprised that the article left out that she was paid piece work and was too greedy to just say no.

Anonymous said...

>> "Two guys would come with a bat, and they were all [ticked] off because you cut their deals."

Just in case you two guys with the bats are reading this, you are:

1. Human douchebags
2. Greedy, bottom-feeding maggots
3. I hope you lose EVERYTHING

sac'to watcher said...

Shocked, I say, shocked. People were actually pressuring the gatekeeper to stop watching the gates.

Seriously, I'm beginning to think that the REIC is far more devious than the DoD in using "weasel words". Consider the fact that almost all of you on this blog call it a home when it's really a house. Also, "row houses" (which my father proudly grew up in) became "row homes" then condominiums. Consider "duplex" or that - and this is the best one - apartments are now called "attached homes".

What I'm curious about is how all this bubble nonsense will affect the cost of undeveloped land over the next decade. Thoughts?

Out at the peak said...

Home run!

my little b@tch said...

These lenders are as shady as I imagined they are.Can you imagine someone acting like a prison warden running around the office with a baseball bat?I am glad the company is going bankrupt. Hopefully walmart will hire all the reject lenders out there.Oh, I hear hooters and go are accepting applications for well endowed women.

Anonymous said...

To paraphrase the soothsayer:

Beware the Frogs of March

One of the most amazing aspects is the tendency of the masses to assume that everything that goes on behind closed doors at a financial institution is done with professionalism and deportment.

We continue to forget history, and fail to realize that the most money-hungry among us will stop at nothing to fill their greed (If such greed could ever be sated).

Human actions often disappoint me, but they seldom surprise me.

Here's hoping the bat-wilding ogres of new century wind up living in a mobile home somewhere.

buyerwillepb said...

Two guys would come with a bat, and they were all [ticked] off because you cut their deals


MBS must actually be Mob Backed Securities, eh?

Morgan said...

I can certify that this 100% happened on a large number of loans. New Century was able to "get value" on properties where other banks would cut the appraisals - along with other 'amazing' exceptions.

I know personally that sales reps would go in to the operations side and pressure underwriters, appraisal review folks, and just about any one else to approve their deals.

Anonymous said...

I checked the old neighborhood for homes and all I can say is WOW!! I started out asking $519K. Lowered down to $509K, then $489K and sold in Jan for $472K.

There are now 11 homes for sale in the old subdivision of 103 homes. One of them has lowered all the way down to $429K and since my sale, nothing else has closed in almost 2 months.

Damn if I didn't make it out of there just in time!!

This is in Las Vegas.

Anonymous said...

That was on the front page baby

AlC said...

"the firm had safeguards to make sure workers did not feel pressure to approve questionable loans."


Anonymous said...

I have been saying from the day I found out about sub-prime lending that it was the front line loan agents and their managers that allowed this fraud lending and appraisers would starve if they would not go along .

Now we find out that guys with bats came around to make sure loans were made . This is going to be a big scandal .

Anonymous said...

Dow: Longest bull run in 80 years
5:50pm: Blue-chip gauge matches 1927 record for longest up streak

now STFU!

Anonymous said...

FIAT EMPIRE - Why the Federal Reserve Violates the U.S. Constitution

interesting to watch before the actual meeting tomorrow..

they are all in cohouts....

Lars said...

Housing collapse (literally) $525,000 fixer:

Anonymous said...

Anonymous said...
Dow: Longest bull run in 80 years
5:50pm: Blue-chip gauge matches 1927 record for longest up streak

now STFU!

May 07, 2007 11:12 PM
The Dow has now risen in 23 of the last 26 sessions, marking its longest bull run since the summer of 1927, when the indicator ended higher in 24 of 27 sessions, according to Dow Jones. Should the Dow end higher both Monday and Tuesday, it would set a new record.

Then: Stock investing was directly highly leveraged with margin accounts.

Now: Stock investing is indirectly highly leveraged with HELOCs based upon overvalued housing assets.

FYI-Housing market & Stock market are two completely different markets with some overlap. Just ask the Oracle of Omaha.

Anonymous said...

``Dow: Longest bull run in 80 years
5:50pm: Blue-chip gauge matches 1927 record for longest up streak''

Let's hope that 2009 isn't like 1929 then.

Anonymous said...

I'm glad this is all coming out so those New Century douchebags won't be able to find another decent job for the next few years. New Century will have the same stigma as Enron

Anonymous said...

The Retail Price of homes is still way too high. You would think that once they produced enough of them, the price would come down, just like X-boxes and Play Stations. I want to see someone put homes on sale at 40 to 50% off. This would reflect the true value of homes.

Anonymous said...

I'm not paying retail for a house!

Anonymous said...

Holly batshit ,the bat bashers got into the real estate lending offices.
Nobody had the balls to report the bat swinging creeps to the FBI .The real estate market is going to crash and burn Nationwide because of faulty fraudulent lending and nobody, not even the owners of the company, dared call the police .

CashFLo said...


"Housing collapse (literally) $525,000 fixer"

That was too much - half a mil' down the tubes. Maybe someone from New Century was upset at losing a deal and...hit it with a baseball bat!

Greg said...

Have any upside-down homeowners started killing their lenders yet? I remember a few such incidents following the dot-com crash.

Live by the bat, die by the bat.

cobra2411 said...

"... You just cost me six thousand dollars - six thousand dollars and one Cadilac. That's right. What are you going to do about it?"

"Who ever told you that you could work with men?"

"WHAT YOU'RE HIRED FOR, is to help us... does that seem clear to you? TO HELP US, not to... F&%#-US-UP... to help those who are going out there to try to earn a living... You fairy. You company man."

Is New Century the sequal of Glengary Glen Ross????

panicearly said...

MBS, "mobster backed securities"

this is organized crime, the largest swindle from the fed reserve on down..

borkafatty said...

I would have taken that bat, beaten him over the fucking head with it, then I would have shoved it up his ass...then i would have gone for the wallet...have a good day sir.

Anonymous said...

This intimidation didn't limit itself to employees at New Century--our rep from their company knew we were in a financial delimma and a "deadline" position involving a medical procedure, which was why we agreed to refinance through them. When we got to the closing, the amount we were receiving in cash was $7,000 less than we were shown, two riders were added (one for a variable rate after two years which we were assured would raise our payments no more than $50 or so a month). We were basically not allowed to leave the building until we signed the loan. I remember sitting there in tears, telling them the facts and figures didn't match anything we'd been quoted and that the equity we were getting back also didn't match what we'd been told but knowing if I did not sign I could not get needed medical treatment. Insurance and taxes were supposed to be included in our payments, but they weren't--in fact, just a couple months after we refinanced our homeowners insurance was cancelled and we found the taxes had in fact not been paid.

We're now losing our house because
that "only about $50 more" has turned into almost $300 more, which we cannot meet on a veteran's pension.

These people are bottom feeders -- I hope someone catches up with them with a bat!