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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (227361)	11/4/2009 2:07:14 PM
From: Les H	Respond to of 306849

To garner more loans, some female executives sauntered into mortgage brokers' offices wearing "short skirts, cleavage showing, looking like hotties," said Christine Fidler, a former company vice president. Roxanne Bones, a former senior underwriter at New Century, said she was told that the women "spent a lot of time schmoozing with brokers at their offices, doing stuff with them on the weekends and getting drunk at night." Some New Century sales executives passed monthly kickbacks of $1,000 or more to company loan processers responsible for closing the loans, Bones said. It was a small tip to pay for salespeople who could earn as much as $1 million a year if their loans went to closing, she said. The company also rewarded sales and underwriting staffs with lavish junkets. In 2004, Fidler said, as many as 300 New Century employees spent a week at the five-star Arts Hotel in Barcelona, Spain, where rooms today run from $400 to $16,000 a night. Others scuba dived, golfed, took catamaran rides and sipped cocktails at Marriott's Ihilani Resort and Spa in Hawaii, shared a Caribbean cruise, made a summertime sojourn to Banff in the Canadian Rockies or were handed fistfuls of company cash before hitting the gaming tables during a conference at the MGM Grand in Las Vegas. When the sales teams weren't frolicking, they were finding it easy to write loans. New Century tossed out a requirement that every homebuyer make a down payment and began lending up to 80 percent of a property's value for a first mortgage and up to 20 percent for a second. It also lowered borrowers' minimum required credit scores into the 500s, although 700 or better is typically considered a good credit score. The nationwide average is 693, according to the consumer credit rating agency Experian. By 2005 and 2006, ex-employees say, it got crazy. Tim Lee, a former New Century underwriter in the Chicago suburb of Schaumburg, said his bosses relented and killed a $275,000 loan sought by a third-year kindergarten teacher who claimed a $180,000 salary. In most other cases, however, his objections led to a scene in a manager's office like this one: Manager: "We're going to go ahead and do this loan." Lee: "So you do it." Manager: "No, you're gonna do it." Lee: "I'm not going to." Manager: "Then I'm going to write you up." Lee said that his office processed 2,000 to 2,500 loans each month, and he could recall few that weren't approved with an "exception" waiving a key financial issue that otherwise might've torpedoed the deal. Missal's examiner's report estimated that 40 percent of the company's mortgages were "liars' loans" because any income claim on an application was accepted as truthful. A SIVA meant "some income, verified assets," but it went downhill to the NINA — no income, no assets. Lee said he nicknamed it "the no-doc, drug-dealer loan," because even "a street pharmacist" could qualify by listing his income but not his employer. Top New Century officials, including the late Vice Chairman Edward Gottschall, told skeptical underwriters not to worry because "volume outpaces bad debt all day long," Lee recalled. mcclatchydc.com