Relevant:
2008-12-25 — nytimes.com
At the center of the controversy is an exotic but popular mortgage the Sandlers pioneered that helped generate billions of dollars of revenueat their bank.
Known as an option ARM — and named “Pick-A-Pay†by World Savings — it is now seen by an array of housing analysts and regulators as the Typhoid Mary of the mortgage industry.
...
The Wachovia Corporation, which bought the Sandlers’ bank two years ago, was so battered by the souring portfolio of World Savings that it began writing off losses now projected at tens of billions of dollars and eventually stopped offering option ARMs.
Through it all, the Sandlers have maintained they did nothing wrong beyond misjudging the real estate bubble.
“I didn’t mislead anybody, and to the best of my knowledge, our company didn’t, though there may have been an isolated case here and there,†Mr. Sandler said. “If home prices hadn’t declined by 50 percent, nobody would be raising these questions.â€
Mr. Sandler also finds it incredible that borrowers feel victimized by Pick-A-Pay. “All of a sudden their home is worth half of what it was, and they say they didn’t know.â€
Yet the Sandlers embraced practices like the use of independent brokers who used questionable methods to reel in borrowers. These and other practices, critics contend, undermined the conservative lending practices that the Sandlers built their reputations upon.
What Sandler fails to understand is that good intentions don't transmit through a corporate structure -- the only things that determine the outcome are profitability and competition. The only thing that can stop the excess proliferation of a product like POAs would be rigid qualification criteria -- but as we've seen, even those tend to get eroded in "soft" ways (like intimidating underwriters).
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Comments:
michaelsblomquist at 01:53 2008-12-26 said:
“You have to understand how independent brokers work,†Mr. Sandler says. “They are the whores of the world.†Paaalleeeasse Then the Sandlers must be the Mack Daddy Pimps of the World. The Sandlers set the guidelines and outrageous rebates that encouraged, approved and funded the whores business. Sure the brokers - l/os who were originating fraudulent loans should be charged with fraud, but the Lenders all knew that borrowers and loan originators would commit fraud if it only required inflating incomes. Unfortunately, many of the l/os have just destroyed one of the greatest and most rewarding professions ever. These crooks should be disgorged and indicted. Stealing from the masses so they could be come Philanthropists; what a joke. Anna Werner at CBS in Oakland has put together some good stories. http://cbs5.com/investigates/mortgage.world.savings.2.728889.html http://michaelblomquist.com/complaint/sandlercomments.htm Mr. Sandler and the rest of the industry still misrepresent the nature of the crisis - falling home prices. None are willing to admit that their fraudulent and deceptive practices/products were the reason prices were fraudulently, grossly and intentionally inflated in the first place. Lock em up. If our Nation is going to survive this crisis rule of law must be restored for all, especially the white collar criminals who have created tens of trillions of fraudulent securities just so they could make a few billion. Permalinkscloandude at 02:17 2008-12-26 said:
The option arm has always been a recipe for disaster. I am a broker who has never done one because of that. World was offerring 3 points aon the back end, providing you talked the customer into a 3 year pre=pay penalty. 10 years ago they had an office under mine and we used to joke about sliding through the slime to get to a loan officer. For him to call us whores is way funny. What is Wachovia then??????????????????? Permalinkscloandude at 02:25 2008-12-26 said:
I forgot one thing. A lawyer calling another profession whores, this gut needs to be a comedian. PermalinkLenderNSD at 15:33 2008-12-26 said:
POA ..No one understood this loan and its far reaching effects in a down market? I seem to remember a very well written article in BusinessWeek....from 9-11-2006..yes dust off the cover story folks....just google "nightmare mortgages" Ah then take a look at the list of 23 lenders who originated this loan.....its a who's who list of who has failed and been bought. Now last time I checked while BusinessWeek isnt the Harvard Business Review....its not Rolling Stone either. Now how could they write this very insightful article over 2 years ago and no one understood? Please folks... No one cared $$$. This loan from all lenders who origianted it was a piggish attempt at profit and thats about all. Any Executive connected with the loan or company deserves jail time..... Its that simple folks...they and they did not care. Permalinkcatherine at 22:41 2008-12-27 said:
blame the brokers, right, this option arm was created by savings of america in the late 70s and early 80s and was tied to COFI and was a 40 year loan and was a great loan UNTIL THE SUPPLY OF HOUSES CAUSED HOUSING VALUES TO FALL TO 50% -----30 year fixed rate loans are now failing and will be called bad shortly. The only blame here is that no one knew values would be falling 50-70%.......................this is just beginning guys, strap in................................and blaming the brokers is going to be the special of the year JUST LIKE THE IDIOTS BLAMED SUBPRIME and now know ALL LOANS ARE FAILING.................it was and always has been OVER SUPPLY OF PROPERTY................. Permalinkadd a comment | go to forum thread
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