This post is the first in a series covering my days as an Account Executive at New Century Mortgage. It also includes some preceding events relative to the story line.
I began this post by jotting down some notes. As I began to write, I couldn't believe what I was putting down on paper. Fraud rings, FBI investigations, abusive brokers, rampant sexual harrassment and favoritism, and way too many other bad memories to list in this first paragraph.
As I began to write I also began to question myself. Why was writing this important enough to take time away from my schedule? Why would anyone want to read it? What lesson can be learned? The answer is simple - and stems from one word. Greed. Greed is not good. Greed is bad. Nothing good comes from greed. And if there is one thing I know after spending nearly four years in the subprime lending industry it is this simple truth - in subprime lending greed, before all else, was the underlying doctrine.
So let me begin in 2003 when my wife Jeanine and I both went to work at New Century as Wholesale Account Executives. Jeanine had been in subprime wholesale since its inception and I was coming from a 15 year background in conventional retail lending. What led us to New Century was a sordid story in itself. Our transition began before New Century when Jeanine had been sexually harrassed and subsequently mistreated by management at BNC Mortgage in Irvine. At that time we were forced to retain a high profile attorney who wanted desperately to pursue the case. Financially there was a lot at stake. Jeanine's income at the time was well over a quarter of a million dollars per year and growing.
The culture at BNC was one of ‘you've got to party with the managers' in order to get anywhere with the company. Their annual sales conference was of course in Las Vegas, no spouses allowed. Pictures of managers in jacuzzis with strippers and accounts of infidelity among married managers and female subordinates followed every event. BNC on a whole was a sexually predatory environment to say the least. As a matter of fact, and no BNC employee at the time will dispute this, BNC's top rep, female, with disgustingly huge boobs, tiny waste, an easy 8 on a 10 scale and who came to work at the company with absolutely no lending background became the top rep overnight by sleeping with management - and not just one manager, but many.
My wife had refused to go to the Las Vegas events and all other formal BNC functions as it had become evident shortly after she went to work there that a problem existed. As a couple, we struggled with the situation but tried to deal with it as adults - attributing it to a youthful workforce mostly.
Jeanine was at BNC for two and half years, long enough to be invited to two national sales conferences. It was before the second conference where Jeanine was overtly approached seperately by her regional manager and a co-worker who wanted to ‘hook-up' in Vegas. It was at this point that Jeanine had enough and went to management - who immediately took a confrontational position. Jeanine's accusation of sexual harrassment was almost immediately leaked to her co-workers, an illegal act violating federal right to privacy laws, and she was subsequently shunned in the work environment. Loan files that would have previously glided through the system were all of a sudden scrutinized and turned down. Needless to say her production dropped.
The situation unfolded so clearly and quickly that we contacted an attorney who after a little investigating informed us BNC was already being sued for sexual harrassment by another employee. Ironically the case was being handled by an associate of the attorney we had just retained. Subsequently we decided to forego the ordeal of a law suit and began looking to transition to another company. A lot of people would say we should have sued.
The stress of this episode, we believe, caused my wife to miscarry a pregnancy. Unfortunately, this is as true as I am sitting here on my couch writing this on my laptop right now. It's painful to know that I could not do anything to these people without causing more duress in my wife's life by putting her through a lawsuit. So we walked away.
Jeanine was not ready to quit wholesale subprime lending. The money was just too good. She also did not want to continue in this career if it meant entering another environment similar to BNC. So I came up with a plan. I researched the subprime lenders in the market and concluded that New Century Mortgage Corporation had the best management structure and the most professional culture. They were a public company, well run, and poised to take over majority market share in the US subprime lending industry. Jeanine's track record of production was self-evident. My background in the lending industry qualified me to waltze into any Account Executive position and command a favorable compensation package. So Jeanine and I decided to work together. As a husband and wife team we approached New Century and ultimately signed a compensation package including a $100,000 signing bonus and $25,000 per month continuing for six months base guarantee (a $250,000 guaranteed compensation package regardless of production).
A very key point here - at the time we signed with New Century we were warned by industry acquaintances to stay away from a particular regional manager who by dumb luck did in fact become our regional manager. Conversely, the Senior Vice President who we ultimately interviewed with and who I believe is one of the few good men in a tarnished industry, worked side-by-side with his own wife - and I mean literally side-by-side, their offices were next door to each other. It all seemed so perfect to us. In our interviews with the SVP we were very candid about what went on at BNC and expressed these concerns as a condition of us coming on board. We were assured that no circumstance such as we had described would ever be tolerated at New Century.
So we took the deal. We were so relieved to have finally found a good company with moral and ethical standards where we could flourish. We went to work. We were excited. Together we brought in more production than needed for New Century to recover its generous investment in us. Most importantly for me, I was in a position to protect my wife who by this time was in a fragile state but hanging tough.
At this point I have to remind everyone that my background was entirely in conventional lending prior to New Century. I was used to working with borrowers who had perfect credit, liquid reserves, substantial retirement savings, excellent job histories, etc. I could count the subprime loans I had done over a fifteen year career on one hand - and all of those had gone to my wife at her previous employers. I also want to remind everyone that we are not crying foul about anything that has happened to us as a result of being associated with subprime lending. We are simply telling a story and being as truthful as possible. We have no axe to grind. We have moved on by seperating ourselves from the subprime environment and are quite happy in our decisions.
Moving on... my daily routine consisted of mostly mundane sales activity, generating new business, that kind of thing. But one apparently benign aspect of being a wholesale rep was anything but benign. What I am speaking of is the simple act of taking calls from mortgage brokers regarding new loan scenarios. It sounds pretty basic, but not when you consider that most often these brokers were fishing for clarity on how to send in a loan package that under the surface was not what it appeared to be. This is an extremely key issue that those outside of the lending industry need to understand. The issue begins with a wholesale account executive acting as an interface between broker and lender. Their primary function, aside from procuring new business, it to explain loan product and underwriting guidelines to brokers. As I have said it sounds benign. But in reality what exists is tantamount to an attorney-client privelege. Mostly, when a broker calls an account executive with an underwriting question they are trying to fit a square peg in a round hole. They are trying to figure out how to get around a qualification issue a borrower might have and are inquiring with the lender how to do it. In other words they are asking the funding source how best to misrepresent their clients qualifications. It's like asking a judge how to get away with murder then going out and committing the murder - with the blessing of the judge.
After less than six months of being on the front line dealing with mortgage brokers who did not know how to simply tell a client "No, you do not qualify for the loan you are attempting to obtain", I was at my wit's end. I had developed a nervous twitch in my left eye that continued for almost two months. It was non-stop. And for those of you who know me, you know I'm a pretty level headed guy. I don't rattle easy. I'm emotionally stable and mentally as tough as the next guy. But these brokers had my number. It was a continuous barrage of half-truths and outright lies from a group of under-educated hucksters most of whom did not even hold the necessary licensing to transact mortgages let alone the expertise, product knowledge, or practical sense to understand the ramifications of falsifying information or even simply putting someone into a home loan they couldn't afford.
I'll conclude this first post by saying that it was about six months into our employ at New Century that we learned of a rampant sexual favoritism problem with our region management. With that will begin the next post.
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