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BOO freakin' HOOUser Forum Topic
Submitted by hipmatt on March 31, 2008 - 8:56pm
http://money.cnn.com/2008/03/31/news/eco... Careers vanish after subprime 'free fall' SAN CLEMENTE, Calif. (CNNMoney.com) -- Kent and Mysti Cope met and fell in love working for one of the nation's top subprime lenders. Now, their life has been turned upside down after the sudden implosion of the subprime mortgage industry. Mysti was one of the last people out the door at New Century Financial, once the nation's No. 2 subprime lender. She had been in charge of e-commerce customer service with dozens of employees reporting to her. It was at New Century where the Copes met in 2000. Kent worked for several of the firms that helped give birth to the industry, which specializes in making loans to people with less-than-perfect credit, in the 1990s. He has been out of work since August when he was laid off by Friedman, Billings, Ramsey Group (FBR) unit First NLC Financial Services. "We're still both in shock that it could go from something so good to so bad so quick," said Kent, 59. "New Century in 60 days went from top of the heap to out of business." The two didn't say exactly how much money they made at their last jobs but Kent admitted they each had six-figure incomes. Today, they're trying to get by on his unemployment benefits of about $450 a week, which covers only about an eighth of the basic payments they owe every month. Only $1,800 to cover $10,000 in bills Their home equity line, mortgage, health and life insurance premiums alone cost about $10,000 a month. Still, they are trying to hang onto what they call their dream home with a view of the Pacific Ocean where they live with Mysti's 11-year old son. Kent estimates the mountainside home in San Clemente, Calif., which they bought in 2005, is worth 20% less than it was a year ago. And in the current market, he said he's not sure he could sell it for even that amount. "We've used up most of our reserves, cashed in her 401K," said Kent. "We're going Mach 1 into a wall. When we run into it, then we've got to decide what to do next." Despite their financial problems, the Copes have worked hard to protect their credit rating, staying current on bills. And they've made cutbacks: trading in Kent's Corvette for a Suburban and getting rid of the gardener, for example. But the couple also has learned that it didn't need everything it used to spend money on. "We used to eat out a lot. Now we are the leftover king and queen," said Kent. Since he lost his job, Kent has gotten a real estate license and is trying to start a business selling the rapidly increasing inventory of foreclosed homes in Orange County, Calif. Mysti is trying to build an online business selling jewelry and beachwear, some of which she designs herself. "Is it scary? Yeah," said Kent. "How long do you have to hold on before it starts to turn around? If anything, that piece of it is the most unnerving for us." For Mysti, 37, all her efforts to find work since she lost her job last May have been futile. She said she believes the attention given to subprime borrowers who have run into trouble paying their mortgages work against her and other former colleagues. It's almost like having "Enron" on your resume. "The media has somewhat tarnished the subprime industry and all the employees, and portrayed them as being dishonest," she said. "We're not dishonest. Not everybody was a bad borrower. Not every company was a bad lender." Hopes of hanging on to jobs quickly dashed Mysti said she and many other employees who survived the early rounds of layoffs at New Century thought they'd be able to ride out the bad times even after the firm stopped taking new mortgage applications in March of last year and filed for bankruptcy in April. "We were New Century. We were a large corporation. We were the No. 2 subprime lender in the industry," she recalled. "You figured someone would come in and want to invest and take it over." But the potential buyers soon disappeared as did the remaining jobs. She and her co-workers got word on May 3 that they were being laid off, effective the next day. Kent's story is similar. Throughout last summer, he tried to keep up the morale of the 150 sales people he had reporting to him. Friedman Billings had a deal to sell First NLC Financial Services to Sun Capital Partners, the private capital firm that had sold it to them only two years before. So there was hope. Or so he thought. "We knew we're going to lose money, we were just going to try to not hemorrhage," he said. "That's the message we all had to deliver to our troops -- Sun Capital is going to come in, they're behind us, they wouldn't be buying us if they didn't think we could ride out the storm," Kent recalled. But by August it was apparent that deal was no longer going to happen, and he too was laid off. For some, getting laid-off is better than still working The Copes are just two of many in Orange County, formerly the center of the nation's subprime lending industry, now trying to move on. Nearly 9,000 jobs have been lost there in the past year, with more than 4,000 alone in Irvine, where New Century was based. But the damage extends far beyond those like the Copes who lost their jobs. "You can't run into someone who isn't impacted by what's going on," said Kent. "It's very expensive to live in Orange County, and you pay a lot for your home and you can't get what it's worth now." Some of their former colleagues found jobs with other lenders, only to get laid off again when those firms closed up. Kent said some of the sales people he knows who still have jobs are actually the worst off. "They may be employed by a company for months and months, but they can't close a deal," he said. "They've got the borrowers, but unless that thing is pure gold, it isn't made. It's a commission business. They're to the point frankly where they would rather get laid-off so they can go collect unemployment than be employed and make no money." The subprime industry in Orange County was a close-knit close cluster of lenders. The industry rapidly expanded as executives at one firm would strike out on their own and setup shop nearby. But the industry fell apart even more quickly. The Copes and their colleagues tracked the collapse through rumors and Web sites, such as lenderimplode.com. "You kept looking everyday to see if your company was on there or not," said Kent. "It seemed like every day there was a company going under." "You know you could take a roller coaster ride down," he said. "But you never envisioned it could be a free fall." To top of page
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"We used to eat out a lot. Now we are the leftover king and queen," said Kent.
It's obvious it's getting rough for a lot of people. One thought: They could learn to make some tasty dishes with leftovers. I do ok.
I was waiting for them to lash out "...and we'd still be living large if it weren't for you mettling kids"
My personal favorite part was trading the corvette in for the suburban, like that is sacrificing?
Josh
They will save with the trade in. The Corvette is an 8 MPG car, the Suburban is an 11 MPG truck. Some people never learn.
A Corvette actually gets better gas mileage and the costs of the 2 vehicles is fairly close....depending on the models. I don't understand how that is a sacrifice at all.
How can people earning what they were earning not have saved and paid off the things they were buying? That is so irresponsible. Nobody could possibly feel sorry for this couple.
"It's very expensive to live in Orange County, and you pay a lot for your home and you can't get what it's worth now."
.. NO, you paid a lot more for your home than it's worth... it's just now starting to get closer to what it should be.
"We're still both in shock that it could go from something so good to so bad so quick," said Kent, 59. "New Century in 60 days went from top of the heap to out of business."
.. it's funny how many "educated and trained" people in the business, on wall street, and in the media couldn't see this coming. You never hear a responsible person quoted in the media, like a piggie... saying that prices are insane, and loaning money to people with bad credit, no savings, no documentation makes no sense and is HIGHLY risky and could most likely end badly. To say this (housing crash/subprime defaults) was a "shock" has to be the most over-used line of BS this decade.
I noticed that they managed to have a home equity line rather than living off their income. I'm always amazed that 6 figure incomes need to use the equity in their homes to support a certain style of living.
BTW our Corvette Z06 got 24.9 MPG average from SD to Scottsdale and back.
Freaking unbelievable! Why trade for Suburban when you can get better mileage and less depreciation for a Prius, Accord or Camry? Oh, some big sacrifice. What's wrong with leftover? Isn't it still food if not spoiled? Man, these people need to learn to be frugal and humble. Maybe someone should send this family to a 3rd world country to see what life is like so they can appreciate what they have instead of whining about what they used to have.
Is it scary? Yes. It is for the rest of us who have been living within our means for years. What is scary is how many more stories like this the media is going to print.
Look at the upside, Ken is 59, Mysti is 37. It was cute when they were rolling in the dough but "times they are a changing." Mysti, no doubt, after the vehicle trade in doesn't work will go with a "man upgrade." Sorry, Ken, we piggys may end up with owning your house, but we'll only borrow your gal, I may have the means to handle the mello roos on your pad, but no sense paying the freight for one of these, "spoiled by the R/E boom" women, at least not on a permanent basis.
Hipmatt beat me to it, but my favorite quote is: "It's very expensive to live in Orange County, and you pay a lot for your home and you can't get what it's worth now."
Oh sure you can. In fact you can ONLY get what it's worth now, not some stupid wishing price that will keep you in new corvettes every year. This reminds me of that Florida auction video last year when the woman proclaimed"they promised us they wouldn't go below market value!"
http://www.youtube.com/watch?v=10WoQZKZk...
Welcome to market value. And by the way, the 'vette will get much better mileage that the suburban in ordinary driving at the same price point. This guy has his head so far up his own ass he can see what he ate for breakfast.
Still circling above, I will enjoy picking over the corpses of people like this.
"You've gotta be kidding me dude, it's not fair!" (watch the video)
Wow. they went from one POS GM gas guzzler to another POS GM gas guzzler. And yet these are the folks that the government wants to bailout???? Oh boy.
selfportrait
----- Sour grapes for everyone!
Look at the upside, Ken is 59, Mysti is 37. It was cute when they were rolling in the dough but "times they are a changing." Mysti, no doubt, after the vehicle trade in doesn't work will go with a "man upgrade." Sorry, Ken, we piggys may end up with owning your house, but we'll only borrow your gal, I may have the means to handle the mello roos on your pad, but no sense paying the freight for one of these, "spoiled by the R/E boom" women, at least not on a permanent basis.
You know. Maybe it's me...But it seems like there is a lot of this in Carmel Valley too. I mean i always see some bald headed old fart walking around with someone I swear was their daughter, until they start kissing.....
selfportrait
----- Sour grapes for everyone!
I don't understand how they ran through their savings so quickly. At age 37, her 401K should have grown to about 1 years salary, or at least $100K.
Also, they would have had 6-9 months of salary in the bank, so that would have been at least another $100K if not $200K.
That means that they blew through probably $250K of savings to get to this point, in 10 months. Since the burn rate is only $10K, where did the other $150K go?
Can I nominate this post for best subject headline.
BOO freakin' HOO
I am still laughing!
I'm glad when the media highlights people like this.
It just reinforces the fact that the bubble is over and at some point you actually have to live within your means. No one anywhere is going to feel sorry for this couple.
BOO freakin' HOO.
Well said.
The Copes are just two of many in Orange County, formerly the center of the nation's subprime lending industry, now trying to move on. Nearly 9,000 jobs have been lost there in the past year, with more than 4,000 alone in Irvine, where New Century was based.
Remember when everyone used to say that housing could never fall here like it did in the 90s because we wouldn't have the massive layoffs like they did in the defense industry then? Perhaps they spoke too soon...
I know a couple in a similar situation (overspenders, bulk of income has vanished from real estate jobs) who have also 'downsized' by getting rid of their 4th car and got rid of a couple premium movie channels, but STILL don't get that they need to return to planet EARTH. They still have a maid (maybe only monthly instead of biweekly), gardener, someone to clean the airducts, and who knows what other ridiculous services. Unless the housing bubble reinflates folks like these are in for a serious rude awakening.
Hey guys,
This guy is one 2-3 years away from Social Security. He has no savings, 1/2 the 401k, 10k in monthly expenses and no real hope of finding gainful work any time soon. I am pretty damn sure I have a better balance sheet than this guy, and I am in my late 20's! Maybe the trophy wife will support him in his retiremet, but I doubt it. So either this guy wins the lotto, looses the house and moves to Mississippi, or the public supports him for the rest of his life. Greaatttt! Can we use him as a poster child of the bailout instead of some poor widow with 3 kids in detroit who just lost her job?
My heart is bleeding for them. Someone needs to go over there and play a violin.
I want a follow up story later when they trade in the Suburban for a Pinto.
hipmatt - I agree. I am more amazed that it lasted this long. It's like everyone was drunk and turning a blind eye to this. I am no econ major and when they tried to give me one of those loans, I knew I wouldn't be able to afford it, especially when/if the loan reset higher. Yet everyone else jumped on the crazy train. And now they're amazed.
FLU - exactly. Like the gov. needs to bail these people out. I will march in Washington. BS!!!
On the reverse of the CV daughter kissing thing, the very first time I saw Ocean Pacific Ken Cornell, I swore he was having breakfast w/his mom, til they kissed and I almost went blind.
"Can we use him as a poster child of the bailout instead of some poor widow with 3 kids in detroit who just lost her job?"
Oh and guess what else DWCAP, this same clown or one of his many clones in SoCal, would have gladly expected you to pay for his corvette and his trophy wife by over paying for this house one day in the future. Nice huh?
if they're looking for sympathy they can look between shit and syphilis in the dictionary.
I remember about a year ago when New Century imploded, I read that at it's peak, the employees were making loads of money just for "showing up." NC is like CW...benefit from the same stupid lending practices and yet, people like those in this article raked in a lot of $$$ and still blew it away. They don't evoke one drop of sympathy from me. Especially since they were up close and personal with the industry.
That's something, to make all that money and have it disappear like that, just b/c living large, never thinking of tomorrow. WTH. There's no tomorrow for these people and that's why we're in the mess we're in. Consumers who are avarice.
Who would have thought that six figure jobs where you trained people to black out income (proof they could not repay) would someday vanish. I am sure they have advanced technical college degrees and that they will soon be back on their feet as engineers, scientists, doctors, etc. And lastly how much money did this man spend on his trophy wife. I mean 30 years in the industry earning six figures and you were not prepared for retirement with millions. Does anyone remember the excercise if you start at 29 putting $100 a month away how much you would have at 59.
Heh, heh.... Well, every generation needs to pass along a "poor days" story to their kids. If anyone needs the recipe for how to make ketchup packets look and taste like tomato soup, send me an email.