Monday, November 24, 2008
Subprime brokers: they're back, and they're always closing!
I got at least one random call a few months ago inviting me to become some sort of mortgage loan broker or manager, even when we all knew the subprimes were going bad. The New York Times today (Nov 24) runs an editorial on p A22, “Return of the predators” and it’s not talking about Chris Hansen’s Dateline show. Characterized now as “sharks without a frenzy” (or maybe snakes dropped from a plane), they’re back now as “loan-modification companies.”
The Times talks about both “for profit” and nonprofit consumer loan mod companies, and the idea that many homeowners in trouble don’t necessarily go looking for help on their own. They have to be courted, it seems, by salespersons. Then, the salesperson, to keep his or her job, still must follow the “always be closing” 200-mile rule.
The link for the editorial is here.
Update: Nov. 28, 2008
A North Carolina federal bankruptcy judge, Rich Leonard, describes how loan salesmen pushed bill consolidation ARM's not tied to the prime rate, and how this contributed to the foreclosure problem. He argues that bankruptcy law ought to allow modification of mortgages. "Chapter 13 is not a walk in the park" he writes. The op-ed appears on p A29 of the Nov 28 Washington Post and is titled "A Win-Win for Bankruptcy Reform," link here.