RonJeremy Posted November 24, 2008 Share Posted November 24, 2008 Sex, Lies, and Subprime Mortgages The sexual favors, whistleblower intimidation, and routine fraud behind the fiasco that has triggered the global financial crisis By Mara Der Hovanesian November 24, 2008 It may seem like ancient history now, but not long ago the mortgage industry was turning ordinary people into millionaires. One of them was Sharmen Lane, a high school dropout who, like many other young women during the boom, found her way into an obscure banking job with the clunky title "mortgage wholesaler." Her experience—and the experiences of other wholesalers like her—offers a glimpse into the recklessness and indulgence that drove the industry to ruin. The rise of mortgage wholesalers from grunts to rainmakers is one of the more curious developments of the housing bubble. Wholesalers work for banks and other lenders. The wholesaler's job is to buy loan applications from independent mortgage brokers so that lenders can turn them into loans. Wholesalers are paid on commission: the more loans they generate, the more money they make. During the housing boom, lenders typically approved the loans and then packaged them into securities. That path—from mortgage brokers to wholesalers to lenders to securities—turned out to be a road to disaster. But as the housing bubble inflated, wholesalers—though hidden from public view—became high-earning superstars. Lane, a manicurist before joining now-defunct subprime lender New Century Mortgage in 1997, says she brought home $1 million in 2002 and $1.2 million in 2003. Eventually the deal-making turned frenetic. Multiple wholesalers began inundating mortgage brokers with offers for the same applications. Some brokers chose to exercise their power by asking for something extra in exchange for their business: sex. Dozens of former brokers and wholesalers say the trading of sexual favors was so common that it came to be expected. Lane recalls one visit to a mortgage brokerage near San Jose (Calif.) in which the manager lewdly propositioned her in his office. She says she declined the advance, and he didn't sell her any applications. But other female wholesalers didn't have the same qualms about crossing the line. "Women who had sex for loans were known very quickly," says Lane, who left New Century before it failed in 2007 and now works as a $200-an-hour life coach and motivational speaker in New York. "I didn't want to be a mortgage slut." WHOLESALE CORRUPTION Investment bubbles always spawn excesses, and housing was no exception. The abuses went far beyond sexual dalliances. Court documents and interviews with scores of industry players suggest that wholesalers also offered bribes to fellow employees, fabricated documents, and coached brokers on how to break the rules. And they weren't alone. Brokers, who work directly with borrowers, altered and shredded documents. Underwriters, the bank employees who actually approve mortgage loans, also skirted boundaries, demanding secret payments from wholesalers to green-light loans they knew to be fraudulent. Some employees who reported misdeeds were harassed or fired. Federal and state prosecutors are picking through the industry's wreckage in search of criminal activity. Now wholesalers, who for a brief moment rose to prominence, are an endangered species. The failures of large subprime lenders like New Century, BNC (a unit of Lehman Brothers), and GreenPoint Mortgage, owned by Capital One, threw thousands out of work. Some lenders still in business have curtailed or shuttered their wholesale operations. In the end, the wholesalers were undone by the same people who allowed for their rise: their Wall Street overlords. During the boom investment banks bought as many loans as they could to pool together and turn into securities. In 2006 the top 10 investment banks, which included Merrill Lynch (MER), Bear Stearns (BSC), and Lehman Brothers, sold mortgage-backed securities worth $1.5 trillion, up from $245 billion in 2000. To keep the supply of loans coming, the investment banks increasingly took control of the industry's frontline players as well. The rest of the article is at the link http://www.businessweek.com/magazine/content/08_47/b4109070638235.htm Link to comment Share on other sites More sharing options...
RyansRangers Posted November 24, 2008 Share Posted November 24, 2008 I read the article a couple weeks ago when it came in the mail.. I can tell you as a former Broker that these Girls existed, mostly in 2004 -2006 when competition was at its peak.. As time went on the Acct Execs got hotter and dressed more slutty when visiting your office. I knew a couple of Acct Reps that would trader Bj's for deals. I never participated because I am married and I never got mixed up in the mortgage fraud and misrepresentation that was rampant. The Lenders are the first to blame giving ungodly amounts of money to brokers to pedal products that never safe. Then the greedy brokers (who couldnt sell a umbrella in a rain storm) made loans work fraudulently cause they sucked at thier job and secondly because the gov did not regulate Net Branches Link to comment Share on other sites More sharing options...
RonJeremy Posted November 24, 2008 Author Share Posted November 24, 2008 I always worked for a direct lender up until a year ago. None of my AE's have offered me anything other than a gift card to Target. Link to comment Share on other sites More sharing options...
Major Harris Posted November 24, 2008 Share Posted November 24, 2008 "i didn't want to be a mortgage slut." :rotflmao: Link to comment Share on other sites More sharing options...
SkinInsite Posted November 24, 2008 Share Posted November 24, 2008 I need to switch careers. Link to comment Share on other sites More sharing options...
RyansRangers Posted November 24, 2008 Share Posted November 24, 2008 I always worked for a direct lender up until a year ago. None of my AE's have offered me anything other than a gift card to Target. I miss all the free lunches, I would go weeks without paying for lunch and happy hours from attorneys, title co's acct reps, appraisers Link to comment Share on other sites More sharing options...
RonJeremy Posted November 24, 2008 Author Share Posted November 24, 2008 I miss all the free lunches, I would go weeks without paying for lunch and happy hours from attorneys, title co's acct reps, appraisers Me too. I had an appraiser take me out to lunch two weeks ago. First time in about a month someone offer to buy me lunch. I did get a free happy hour with a title attorney last week. ..and don't forget the free golf. Free lunches, happy hours, golf...those were the days. Link to comment Share on other sites More sharing options...
zoony Posted November 24, 2008 Share Posted November 24, 2008 I read the article a couple weeks ago when it came in the mail.. I can tell you as a former Broker that these Girls existed, mostly in 2004 -2006 when competition was at its peak.. As time went on the Acct Execs got hotter and dressed more slutty when visiting your office. I knew a couple of Acct Reps that would trader Bj's for deals. I never participated because I am married and I never got mixed up in the mortgage fraud and misrepresentation that was rampant. I'm not sure I understand- what were they trading sex for? Link to comment Share on other sites More sharing options...
Fifty Gut Posted November 24, 2008 Share Posted November 24, 2008 What a disgusting display of humanity. It just goes to show you how pathetic and sad some people really are. They should all be hung for all this new debt the Feds are pushing on myself, my children and my grandchildren. Link to comment Share on other sites More sharing options...
RyansRangers Posted November 24, 2008 Share Posted November 24, 2008 I'm not sure I understand- what were they trading sex for? Your loan files. Basicallly as a broker you have your customer prequaled for a purchase or a refiance. Brokers are signed up with 40-75 banks and lenders the broker chooses who the best lender or bank is by a combination of lowest rate and most ysp (amount the bank pays you for the loan). So you can choose which bank you want. Acct Reps work as the middleman between the bank and the broker and get paid STEEP commissions for the amount of businness they bring in based on Volume. So they will do anything to bring in more loans. Example Acct rep payscale. If they bring in 1 million in business they would get 1-2k 2 million = 5k 3 million - 15-20k so each loan can push them over the edge to the next commission bracket Link to comment Share on other sites More sharing options...
zoony Posted November 24, 2008 Share Posted November 24, 2008 Your loan files. Basicallly as a broker you have your customer prequaled for a purchase or a refiance. Brokers are signed up with 40-75 banks and lenders the broker chooses who the best lender or bank is by a combination of lowest rate and most ysp (amount the bank pays you for the loan). So you can choose which bank you want. Acct Reps work as the middleman between the bank and the broker and get paid STEEP commissions for the amount of businness they bring in based on Volume. So they will do anything to bring in more loans. Example Acct rep payscale. If they bring in 1 million in business they would get 1-2k 2 million = 5k 3 million - 15-20k so each loan can push them over the edge to the next commission bracket okay, I get it now. Thanks- you should write for Newsweek, you explained it much better Dam, I wish I'd known about this. Hotties beating down your office door all day willing to do anything for a file or two? As usual, I missed out Link to comment Share on other sites More sharing options...
zoony Posted November 24, 2008 Share Posted November 24, 2008 I can tell you as a former Broker that these Girls existed, mostly in 2004 -2006 when competition was at its peak.. As time went on the Acct Execs got hotter and dressed more slutty when visiting your office. I knew a couple of Acct Reps that would trader Bj's for deals. And I wonder how upset the pharmaceutical industry is? Someone completely ripped off their business model. Actually, its the doctors that should be pissed. Their free lunches and strippers in business suits waiting on them 24/7 might get some unwanted exposure here. Just kidding. ha ha ha. No I'm not. .... Link to comment Share on other sites More sharing options...
RyansRangers Posted November 24, 2008 Share Posted November 24, 2008 okay, I get it now. Thanks- you should write for Newsweek, you explained it much better Dam, I wish I'd known about this. Hotties beating down your office door all day willing to do anything for a file or two? As usual, I missed out LOL yea you missed out, they all switched over to the pharmecitical once the mtg bus. crashed Link to comment Share on other sites More sharing options...
zoony Posted November 24, 2008 Share Posted November 24, 2008 LOL yea you missed out, they all switched over to the pharmecitical once the mtg bus. crashed LOL- great minds. See above Link to comment Share on other sites More sharing options...
RonJeremy Posted November 25, 2008 Author Share Posted November 25, 2008 I know a girl that works in Pharmaceutical Sales...I believe she fits the "profile". Link to comment Share on other sites More sharing options...
RyansRangers Posted November 25, 2008 Share Posted November 25, 2008 I know a girl that works in Pharmaceutical Sales...I believe she fits the "profile". Let me guess she worked for BCN MORTGAGE.. LOL Link to comment Share on other sites More sharing options...
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