Great site, found it on Google after searching for “WMC subprime”.
In the debate on who is to blame, the lender or the consumer, the answer is both.
I worked for a subprime lender and then my conscious got the best of me. I quit after a broker asked me what fees he legally could make-up to charge his borrower.
It is true that these subprime lenders offer loans with horrible terms that will most likely put the borrower in default. But I have never seen so many stupid consumers who are more than happy to be suckered in.
Look, I got great credit and I know I can go out there and some dealer will let me lease a Lexus LS. The thing is I know I leasing an LS is not in my best interest so I don’t do it. I know that the payments will overstretch me.
A lot of these borrowers are in on the scam. They set up fake employments (using a family member) to help them get a loan. They knowingly overstate their income. And why? Because they saw there house was worth more, so they want to take money out so they can buy a BMW 7 series or an Escalade. They continue refinancing and refinancing every time they get equity. I do not feel one bit of sympathy for these people. They get what they deserve.
The real problem in the mortgage industry is not lenders, it’s the brokers. Mortgage brokers are the shadiest most greediest people ever. Since my time dealing with mortgage brokers, I have come to look at attorneys as saints.
The government needs to regulate mortgage brokers with the same zeal they regulate securities brokers. To sell stock one must be licensed and then have the SEC watch over you . What do you need to do to be a mortgage broker? Work under someone who took some classes at community college. That’s it. During the boom, all these morons, criminals, con-men, high school dropouts all became mortgage brokers. They couldn’t care about compliance or the regulations and why should they. There is no institution like the SEC to watch over them. And what happens if a shady mortgage broker gets caught? They just reopen under their wife’s name after sending her to community college.
