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World Of Trouble

February 19, 2009 6:16 AM

Three years before the housing market crash, Paul Bishop says he warned his superiors at World Savings that many of the mortgages they were granting were misleading and predatory.

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by Jespino09 May 9, 2009 11:21 PM EDT
While Bishop is correct, he should have made the call. Still, no one forced anyone to accept loans they knew they could not afford. As for the Sandlers?, they knew and they didn't care. Not surprising since the bottom line is still more important than doing what is right. It's sad in every which way really.
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by cg37102006 February 25, 2009 11:39 AM EST
I think the facts speak for themselves. Like Bishop said, Wachovia is no more, due in large part to the loan portfolio they bought from World Savings was full of junk. Loan officers just were trying to push loans out the door. Period. This is what you get when greed runs amok. This company was not the only one doing it. Pretty much the whole financial system had dollar signs blinding them to common sense and reality. Thus you need regulations and enforcement. The free market cant be free otherwise you have economic collapse.
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by jussayno01 February 18, 2009 5:22 PM EST
...And after ''05, those "weekly audits" Mr. Sandler made reference to were just "sugar and spice and everything nice". Meaningless.
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by jussayno01 February 18, 2009 5:20 PM EST
Mr. Bishop is correct and is speaking the truth.
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by ownuptoit-2009 February 18, 2009 4:04 PM EST
maybe i''m asking too much for people to have some common sense. if you as a consumer already know that you cannot afford it and yet you continue to go on the same path and continue to borrow ultimately what do you think will happen. sure we all know there is enough blame to go around but to say that i''m an innocent bystander is hogwash.
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by w951fez February 18, 2009 7:52 AM EST
The individuals who chose to blame the borrower either don''t get it or don''t want to get it. While there is more than enough blame to be shared between borrower and lender, ultimately offers of mortgages should not have been extended to people who simply did not qualify.
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by ownuptoit-2009 February 18, 2009 12:39 AM EST
funny how the banks forced these people to take these loans, pull cash out...and when the money was spent and gone...well, i guess the bank forced them to spend it on themselves too. time to grow up and take some responsibility for your irresponsible behavior. guess who is bailing you out??...we the american tax payer.
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by retiredrob February 17, 2009 8:53 PM EST
World Savings were at fault just like many doing the same thing. A huge part of the blame needs to be on the customers who were buying/living in houses that were over 3 times their yearly income.
The same people were driving vehicle less than two years old, belong to a country/golf club, have a child taking dance, eat out 3-4 time a week and owe over 20K on credit cards. Now really who is to blame??????????
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by retiredrob February 17, 2009 8:48 PM EST
World Savings was at fault as were many in the home finance, but 75% of the blame needs to go back to the customers. If you are buying a house over three times your anual income, you are not very smart. People are buying houses they could not afford, they are driving two vehicles that were less than two years old, they owe $20,K on credit cards, now really who is at fault for being stupid.
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by retiredrob February 17, 2009 8:48 PM EST
World Savings was at fault as were many in the home finance, but 75% of the blame needs to go back to the customers. If you are buying a house over three times your anual income, you are not very smart. People are buying houses they could not afford, they are driving two vehicles that were less than two years old, they owe $20,K on credit cards, now really who is at fault for being stupid.
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by retiredrob February 17, 2009 8:48 PM EST
World Savings was at fault as were many in the home finance, but 75% of the blame needs to go back to the customers. If you are buying a house over three times your anual income, you are not very smart. People are buying houses they could not afford, they are driving two vehicles that were less than two years old, they owe $20,K on credit cards, now really who is at fault for being stupid.
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by pjpoirier February 17, 2009 8:21 PM EST
I applaud Paul Bishop for speaking his mind and doing the right thing. I worked in this industry for many years and found myself in the same situation. I was a Mortgage Credit Analyst that would not change anything to make a deal work. Working conditions became unbearable and I retired, the best decision I ever made. I''m only sorry that I didn''t have the courage to do what Paul is doing now.
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by ajdyer1 February 17, 2009 3:05 PM EST
This story gives World Savings too much credit. Wachovia had their own neg-am, pay-option-arm, pick-a-pay program as did most of the other big lenders: Countrywide, Greenpoint Mortgage, Wells Fargo. It seems the market perpetuated itself by continually coming up with more and more %u201Ccreative loan programs%u201D to keep the market going i.e keep the portfolio turning. It became so confusing to keep track of what loan programs a client would qualify for the lenders created their own internal search engines that would tell you which loan programs a borrower qualified for. At the peak of the market Greenpoint Mortgages daily rate sheet was 38 pages long. They are out of business today but if you compare that to today''s rate sheets are about 2 to 3 pages long.

I think the CEOs of all the major mortgage companies know they were creating unstable portfolios and felt the only way to keep the market going was to continually loosen the guidelines to allow the portfolios to keep refinancing and that%u2019s why you had rate sheets that were 38 pages long.

The big question is; what do we do now? Over the past 24 months or so we saw the $1.5 trillion subprime portfolio cycle through at a default rate of about 60% that resulted in real estate values dropping 30 to 50+%. Looking ahead their is $2.5 trillion in pay-option-arms and alt-A loans that has to go through a similar cycle which has the potential to be more destructive then the subprime loans.
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by dholly3 February 17, 2009 2:58 PM EST
I love how these people can say why should I bail out thses people ARE YOU READING WHAT THIS COMPANY DID TO PEOPLE !!!!
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by dholly3 February 17, 2009 2:55 PM EST
I love how these people can say why should I bail out thses people ARE YOU READING WHAT THIS COMPANY DID TO PEOPLE !!!!
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by dholly3 February 17, 2009 2:42 PM EST
I live this pick a pay loan the Sandlers are going to be sued from people like me working class that still knows better.If your a banker you and I mean You better know Banking..Same for Doctors or Lawyers We the people that rely on the professionals. They knew they convinced me ,sat me down and went though the loan how my loan will be paid off in 18 years Bull Sh............. I owe more in worlds fees the hell with you would Thank you Mr. Bishop He is right ... they will not ever help you with your loan I''m stuck with two of pick a pay loans for now But I will find a law firm thats going after the Sandlers for my money back...
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by sangradouro February 17, 2009 1:34 PM EST
Where are the law enforcement agencies when we need them to go after these crooks?
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There would be no crooks if people needed to pay off their credit cards by borrowing off their house. The majority of homeowners who were hit with this mess deserved what they got and I don''t think I or anybody should be bailing them out.


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by wapiti54 February 17, 2009 11:24 AM EST
Scott how about a story about the Canadian Banking System and Canadian Economy in general see this for the idea

WORLD VIEW
Fareed ZakariaWorthwhile Canadian Initiative
Now there is even more striking evidence of Canada''s virtues. Guess which country, alone in the industrialized world, has not faced a single bank failure, calls for bailouts or government intervention in the financial or mortgage sectors. Yup, it''s Canada. In 2008, the World Economic Forum ranked Canada''s banking system the healthiest in the world. America''s ranked 40th, Britain''s 44th.
Canada has done more than survive this financial crisis. The country is positively thriving in it.
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by oneauta February 17, 2009 7:10 AM EST
Does the term Oligopoly ring any bells? Removal of restrictions and government oversight has its benefits to few but that is what America chose when Ronald Reagan said government was the problem. We''re in a deep hole and most of us will not live to see America crawl out of it, if its possible at all.
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by world15yrs February 17, 2009 4:31 AM EST
I would like to say you people crack me up. Except that I''m not laughing. No one made the borrowers sign their loan documents. No one put a gun to their heads. I worked for World Savings for 15 years and am very proud to say so. The person who said the underwriter approved the file on a make sense approach was correct. We had a file come in where the borrower made $6,000/month selling shoes (selling shoes, not owning multiple stores). Obviously didn''t make sense and the file was denied. This interview is obviously from a disgruntled ex-employee who got fired for fighting with another employee. And, he''s now trying to capitalize on the situation by spreading a bunch of lies. I''m sure he made a ton of money in the "hey day" when we were very busy. He probably isn''t making as much these days and thinks by suing he can make that up. Whatever. Once again, no one made the borrower''s sign the loan docs., they had to be notarized and, like the woman in the story, took cash out. If I remember correctly, the lady in the story refinance 3 or 4 times and took out $20,000 each time. Where is that money?
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