正文
this is an excerpt from a post back in 2006:
"Iworked as an independent loan officer for 2 yrs in Houston. Ispecialized in cash out refis in subprime market. I'd buy 200 leads whoinquired online by target zipcode in Houston area per month in hopes ofclosing at least 6-7. I'd pull credit history and they all either hadhuge debt to income levels, poor payment history, delinquencies,chargeoffs, and or bankruptcy. That is why they were subprime. I workedwith all income levels, races, investors, and focused on houses100-350k. Median house in houston is about $145k. Anything over $350required more work, had a much lower closing rate, and customer shoppedmore.
The shocking part is I did loans on several doctors andlawyers making well over $250k who couldnt pay monthly obligations andhad to cash out equity to consolidate CC and vehicle debt, or get cashno questions asked. Many people seem to think only dishonest immoralpeople file for bankruptcy. I was shocked at how many people likeeducators and seemingly successful people had Bankruptcies on theirrecords and were then able to possibly get more credit cards to becomedelinquent and get another mortgage to get forclosed. Many loans wererefinanced at a higher rate, some actually going from a nice 6% 30 yrfixed with 10-15 yrs left to a 7-8% or higher 2 yr ARM that would getthem cash needed to get caught up on debts. Lawyers, and many otherbackgrounds I did as well. People who should be making enough money tolive a comfy life, grow assets and stay out of debt, and who you'dthink had some financial sense. It was madness and to see someoneresort to a last desperate act to salvage their materialisticunaffordable lifestyle because personally I can't stand debt and don'thave any except in my margin account.
These people are many ofyour 2 income neighbors living in nice suburban homes, driving 2 nicecars, a college student at home w/car etc that look well off on thesurface but are barely going month to month Consolidating debt with acash out refinance loan may reduce monthly pmts by a few hundreddollars but you may have to refinance a bigger loan at a higher rate,some even going from a low fixed rate to an ARM loan because that's theonly way they could initially afford it and reduce monthly cash outflow.
Ihad 35 cos to write business through and each month they ran loanspecials which were emailed to me. Some would take loans with up to 55%debt ratios, Thats total monthly obligations as shown on credit report/ documented W2 income. If they had a bankruptcy on history, I had co.sI that would do loan if it had been discharged 1 yr by the court. A 500trimerge credit history (middle score on 3 agencies) is all i needed todo the loan. Some loans were stated income meaning all I had to do wasget a letter signed by them stating that they made X per yr. Idcalculate debt ratio needed to get a certain rate to push the loanthrough, explain what I needed and never had anyone question it. Thereality was that they didn't make this much. Most self employed didthis type.
Appraisals were inflated if I need it to be. I'd tellthe 3rd party independent appraiser what I needed to get 20% equityrequired for refinance loan and he'd “see what he could do” .I was notlegally responsible for anything done 3rd party. If I need some magicalnumbers I knew who to go to and they made $300-400 per appraisal donein an hours work. Win by me, win by all 3rd parties, and win bycustomer…at least short term.
When people would inquire about aloan online, they'd get their contact info forwarded to up to a dozenplaces where loan officers purchased leads. In order to differentiatemyself from the sharks, I was brutally honest always explaining theprocess and risks involved while documenting that they were aware, evenwhen laws or my co. didn't require it.
To speed process up I'dprice the loan to where I'd make about a third less than what I knewthe other guys charged and could lower fees to what I needed. Icouldn't imagine used care salesman worse than some of those I knew whowould lie, forge documents like W2s, sometime with customer knowledge,most not. I differentiated myself by giving them a rate and/or feesthat few else would do, being brutally honest, and if they didn't wantto do business with me, to send me the other loan officers paperworkand I'll tell you how to make him lower the rate and/or fees. Thenature of it all was much worse in other states like CA and NV whichhave much less state regulation.
Even though I knew of lawsuitsagainst brokers for fraud, I didn't know of any who were neverprosecuted criminally. The loan officer would be fired and the brokeragency insignificantly fined, and a lawsuit possibly settled. Nothingever published in papers and business continued. FBI raided severalAmeriquest office and they eventually shut them all down but no one wasconvicted and co. settled lawsuit.
I never did anything illegalbut their were so many loans I did that I knew would eventually lead toforeclosure b/cI knew the people lacked discipline and wouldn't makethe necessary changes required.
Before Oct 06 Bankruptcy Lawtook place, you could file for bankruptcy every year and some mortgagelenders would get you a new loan once it was released by court for ayear. You could run up a credit card limit, not pay it, and a yearlater apply for a new one. Foreclosures and Repos the same way. Sopersonal bankruptcies never affected our economy like they will nowwhen you owe the money until its paid otherwise you won't get a loanfor anything.
Interest rates staying the same still won't stop300 billion in ARMs to reset 2% or more next year and over 1 trillionin 08. Assuming a best case slowdown in foreclosure growth rate, itwill be a disaster. But realistically, foreclosures will increasefaster % as this first wave resets at a time of falling prices andpotential recession. Also assuming home inventories stay the same andhome prices stabilize, it will be a disaster. Add a recession withmassive layoffs, you will have millions of homes purchased at top ofprice cycle with negative equity forclosed on, and millions having nopossible way to get themselves another home for years to come at best.The fact is, regions don't matter in a macro discussion. TX will feelseveral hundred thousand foreclosures on the market and a few millionwho no longer have a dime of credit.
Foreclosures are increasingat an increasingly faster rate, thus increasing home inventory,builders reducing new home costs to compete with huge existing supply,causing median prices to fall a few %.
When you have a few % invalue drop for millions of homes purchased a couple of years ago withlittle or no equity and not a chance to sell it within months unlessyou take a huge loss, and new laws on the books.you have a decade longdisaster waiting.".....
"Iworked as an independent loan officer for 2 yrs in Houston. Ispecialized in cash out refis in subprime market. I'd buy 200 leads whoinquired online by target zipcode in Houston area per month in hopes ofclosing at least 6-7. I'd pull credit history and they all either hadhuge debt to income levels, poor payment history, delinquencies,chargeoffs, and or bankruptcy. That is why they were subprime. I workedwith all income levels, races, investors, and focused on houses100-350k. Median house in houston is about $145k. Anything over $350required more work, had a much lower closing rate, and customer shoppedmore.
The shocking part is I did loans on several doctors andlawyers making well over $250k who couldnt pay monthly obligations andhad to cash out equity to consolidate CC and vehicle debt, or get cashno questions asked. Many people seem to think only dishonest immoralpeople file for bankruptcy. I was shocked at how many people likeeducators and seemingly successful people had Bankruptcies on theirrecords and were then able to possibly get more credit cards to becomedelinquent and get another mortgage to get forclosed. Many loans wererefinanced at a higher rate, some actually going from a nice 6% 30 yrfixed with 10-15 yrs left to a 7-8% or higher 2 yr ARM that would getthem cash needed to get caught up on debts. Lawyers, and many otherbackgrounds I did as well. People who should be making enough money tolive a comfy life, grow assets and stay out of debt, and who you'dthink had some financial sense. It was madness and to see someoneresort to a last desperate act to salvage their materialisticunaffordable lifestyle because personally I can't stand debt and don'thave any except in my margin account.
These people are many ofyour 2 income neighbors living in nice suburban homes, driving 2 nicecars, a college student at home w/car etc that look well off on thesurface but are barely going month to month Consolidating debt with acash out refinance loan may reduce monthly pmts by a few hundreddollars but you may have to refinance a bigger loan at a higher rate,some even going from a low fixed rate to an ARM loan because that's theonly way they could initially afford it and reduce monthly cash outflow.
Ihad 35 cos to write business through and each month they ran loanspecials which were emailed to me. Some would take loans with up to 55%debt ratios, Thats total monthly obligations as shown on credit report/ documented W2 income. If they had a bankruptcy on history, I had co.sI that would do loan if it had been discharged 1 yr by the court. A 500trimerge credit history (middle score on 3 agencies) is all i needed todo the loan. Some loans were stated income meaning all I had to do wasget a letter signed by them stating that they made X per yr. Idcalculate debt ratio needed to get a certain rate to push the loanthrough, explain what I needed and never had anyone question it. Thereality was that they didn't make this much. Most self employed didthis type.
Appraisals were inflated if I need it to be. I'd tellthe 3rd party independent appraiser what I needed to get 20% equityrequired for refinance loan and he'd “see what he could do” .I was notlegally responsible for anything done 3rd party. If I need some magicalnumbers I knew who to go to and they made $300-400 per appraisal donein an hours work. Win by me, win by all 3rd parties, and win bycustomer…at least short term.
When people would inquire about aloan online, they'd get their contact info forwarded to up to a dozenplaces where loan officers purchased leads. In order to differentiatemyself from the sharks, I was brutally honest always explaining theprocess and risks involved while documenting that they were aware, evenwhen laws or my co. didn't require it.
To speed process up I'dprice the loan to where I'd make about a third less than what I knewthe other guys charged and could lower fees to what I needed. Icouldn't imagine used care salesman worse than some of those I knew whowould lie, forge documents like W2s, sometime with customer knowledge,most not. I differentiated myself by giving them a rate and/or feesthat few else would do, being brutally honest, and if they didn't wantto do business with me, to send me the other loan officers paperworkand I'll tell you how to make him lower the rate and/or fees. Thenature of it all was much worse in other states like CA and NV whichhave much less state regulation.
Even though I knew of lawsuitsagainst brokers for fraud, I didn't know of any who were neverprosecuted criminally. The loan officer would be fired and the brokeragency insignificantly fined, and a lawsuit possibly settled. Nothingever published in papers and business continued. FBI raided severalAmeriquest office and they eventually shut them all down but no one wasconvicted and co. settled lawsuit.
I never did anything illegalbut their were so many loans I did that I knew would eventually lead toforeclosure b/cI knew the people lacked discipline and wouldn't makethe necessary changes required.
Before Oct 06 Bankruptcy Lawtook place, you could file for bankruptcy every year and some mortgagelenders would get you a new loan once it was released by court for ayear. You could run up a credit card limit, not pay it, and a yearlater apply for a new one. Foreclosures and Repos the same way. Sopersonal bankruptcies never affected our economy like they will nowwhen you owe the money until its paid otherwise you won't get a loanfor anything.
Interest rates staying the same still won't stop300 billion in ARMs to reset 2% or more next year and over 1 trillionin 08. Assuming a best case slowdown in foreclosure growth rate, itwill be a disaster. But realistically, foreclosures will increasefaster % as this first wave resets at a time of falling prices andpotential recession. Also assuming home inventories stay the same andhome prices stabilize, it will be a disaster. Add a recession withmassive layoffs, you will have millions of homes purchased at top ofprice cycle with negative equity forclosed on, and millions having nopossible way to get themselves another home for years to come at best.The fact is, regions don't matter in a macro discussion. TX will feelseveral hundred thousand foreclosures on the market and a few millionwho no longer have a dime of credit.
Foreclosures are increasingat an increasingly faster rate, thus increasing home inventory,builders reducing new home costs to compete with huge existing supply,causing median prices to fall a few %.
When you have a few % invalue drop for millions of homes purchased a couple of years ago withlittle or no equity and not a chance to sell it within months unlessyou take a huge loss, and new laws on the books.you have a decade longdisaster waiting.".....
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