Rob's Blog

Ninja lounge singer extraordinaire.

I Pressured People into Bad Loans

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My Worst Secret is…

I own a Loan Brokerage who worked with thousands of clients during the booming years of the Real Estate market. We ran a very successful brokerage and processed mainly Adjustable ARM Loans….for the sole reason they paid so much on the backend by the banks. Not only were we able to get 1 point on the loan processing fee up front we also got 3 points on the backend by the banks. Our main clientele were purchasing homes on average of $500,000 + which meant a 4 point commission would net us $20,000+ just for processing the loan. People would come to us wanting a simple 30 year fixed and we would manipulate them into wanting the adjustable ARM.

I would say about 75% of the loans we processed are now in default and will probably go higher as the year goes on as they are all starting to adjust to the higher percentage now. The houses were appraised for more than they were worth so they could also take out a line of credit on the house for “investment opportunities”. Generally speaking the houses cannot be refinanced since they are now worth well below their previous appriasal sometimes more than a hundred thousand dollars. Sometimes I wonder who was at fault… for being a great salesman on the Adjustable ARM mortagages, or the banks for incentivising us to push them onto the public?

Via:my worst secret


Written by Roberto

July 8, 2009 at 12:43 pm

Posted in Stuff

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