Thursday, December 8, 2011

'A Mortgage Broker on Rapid Credit Rescores for Subprime Loans'

Below is the partial transcript of a call to Rush Limbaugh about the economic meltdown in 2008 and the true cause of the debacle.  This call is astonishing. Our government has been and is continuing to destroy our currency and our economy.

One of the most diabolical pieces of information is not included in the transcript because Rush mentioned it after the call was over. The Caller said that everyone involved in this scam knew that it would all blow up in 2008 and George W. Bush would be blamed for it. - Reggie

RUSH: Laurie, who can't say where she is. Is that right? She's worried about lawsuits, so she can't say where she is. Laurie, welcome to the EIB Network. You're worried about the lawsuits from what you're going to say here?

CALLER: Well, it's possible, Rush, and, by the way, it's an honor to speak to you.

RUSH: Thank you.

CALLER: I worked as both a packager and an advertising executive for a mortgage brokerage firm. I saw the rise and fall of the housing market and what infuriates me about when Obama speaks or Barney Frank or anyone else who talks about these mortgage-backed securities and everything that happened is that nobody knows the real truth about what goes on in the mortgage business and why it failed. It's not just people going to the bank, getting a loan, paying the bank back. You know, in the late '90s and early 2000s when real estate prices were sharply on the rise, you know, anywhere between '99 and '03 depending upon what part of the country you lived in, housing prices were on the rise dramatically, and there was a lot of pressure at Fannie and Freddie to get mortgages out the door.

We had a representative from FHA, HUD, Fannie and Freddie, all of which visited this mortgage broker's office. And when Fannie began this idea of packaging these things as securities and grouping them together, you'll find that the number of mortgage brokers for residential mortgages in the country skyrocketed because they were suddenly getting what we call wholesale lines of credits from banks. So mortgage company A or B goes to the bank and he gets a $15 million line of credit called a wholesale line. He fills that line up with mortgages and then they're guaranteed, they're bought off. Fannie and Freddie buy them up immediately, repackage them, or leave them whole and send them out to places like Lehman Brothers. And I worked for a company --

RUSH: Wait, wait, wait. Hold a minute. Why would somebody like Lehman Brothers buy these things?

CALLER: Well, at the time, no one knew that they were insolvent, number one.

RUSH: Why? These were mortgages, a lot of them -- I'm sure you're not talking explicitly here about subprime, but a lot of these mortgages were made to people that weren't paying back, there wasn't an income stream on these mortgages.

CALLER: Yeah, but here's the problem. People talk about subprime. I'll bet 95% of the mortgages that went out of our office were subprime even if they weren't rated that way because I'll tell you the pressure we got from somebody else. We used to get visits by our credit representatives from the three major credit bureaus. They were under a lot of pressure to develop a program to allow people to, quote, unquote, fix their credits faster so --

RUSH: Well, who's -- (crosstalk)

CALLER: -- type of loan --

RUSH: Who was the source of this pressure, Laurie?

CALLER: Well, according to the people from the credit managers bureau, they were getting that pressure from Congress and FHA and Fannie and Freddie that they weren't doing enough to help people --

RUSH: The government.

CALLER: Yeah. The credit agencies were being unfair because they weren't doing enough to allow people who had had financial problems to fix their credit. So here's what happened. It went from, yeah, maybe it took a long time to fix your credit to what we call rapid rescore process. Our office could literally, in one day, take everybody's bad credit issues, write a one-line sentence about each one, fax it over to the credit bureau that we were members of it that we paid to be members of, and, boom, within an hour, they were dropped off and the credit was rescored.

RUSH: Why? Why would this be done?

CALLER: Right. You tell me. Because people wanted people to qualify for mortgages. Especially at the beginning of this problem was what they call nonincome mortgages, people who are unemployed, 1099s or W2s --

RUSH: (laughing) What are we hearing, nonincome mortgages.

CALLER: Yeah, that was the original part of this rapid rescoring problem. If you had a business or you were a small business person and you didn't necessarily have a 1099 or W2 or your books didn't show or you didn't want it to show that you had enough to pay for this loan, all you had to do was walk in the door with a credit score greater than 700.

RUSH: Okay.

CALLER: And I can tell you that if you were anywhere up north of 580 we could rapid rescore you to 700 within an hour.

RUSH: Let me cut to the chase here. So everything that's happened since all this fell apart is all these people that you had to deal with that were forcing all this credit readjustment, all the crime labs, all the churn, all the volume, everything being said now is by people to cover their rear ends?

CALLER: Yeah. And then what happened is I ended up going to work for a firm on the East Coast that saw the beginning of the end here and tried to start buying small portions of these packages from people like Lehman Brothers because they knew they wouldn't get bailed out because they weren't Goldman Sachs.

RUSH: I gotta break, I gotta break in five seconds. Don't lose your train of thought. We'll come back to you after this obscene profit time-out, which does not consist of any mortgage company.


1 comment:

EJ said...

As a loan officer working for a mortgage broker during that time rapid rescores didn't work that way. In order to remove or change a specific account from your credit history the borrower had to provide documentation. The documentation had to be reviewed by the credit bureaus and it was normally from the creditor on their letterhead.

In my experience the loan programs she describes sound correct. I just don't like how she references brokers. Mortgage Brokers sell what lenders offer and they have never created loan programs. Everything a broker originates is underwritten by the lender. Brokers use 3rd party credit companies. They aren’t the cause for the mortgage crisis. Mortgage brokers actually help consumers by driving down interest rates. They also help the economy by producing jobs.