Tony Soprano Meets Subprime Lending

From a recent Washington Post article:

"Maggie Hardiman cringed as she heard the salesmen knocking the sides of desks with a baseball bat as they walked through her office. Bang! Bang!

'You cut my [expletive] deal!' she recalls one man yelling at her. 'You can't do that.' Bang! The bat whacked the top of her desk. As an appraiser for a company called New Century Financial (NEWC.PK), Hardiman was supposed to weed out bad mortgage applications. Most of the mortgage applications Hardiman reviewed had problems, she said.

But 'you didn't want to turn away a loan because all hell would break loose,' she recounted in interviews. When she did, her bosses often overruled her and found another appraiser to sign off on it.

'There was instant notification to everyone as soon as you rejected a loan. And you dreaded doing it because you paid for it. Two guys would come with a bat, and they were all [ticked] off because you cut their deals.'

This sounds like something out of The Sopranos, except it was happening at the nation's third largest subprime lender, which wrote tens of billions in loans.

It's really not that surprising. This story could have come from a book about S&L Crisis I.

Comments

[Tom B:]

Republicans whine ad nauseum about "governement regulation", but government being in bed with industry gives us subprime mortgages; student loan scandals; the Sago Mine disaster; the melamine in dog food disaster; E Coli in our spinach; lack of desire to control auto emissions-- I could really go on all day. What is the Government FOR if not to protect its citizenry?

2007 May 22 08:47 AM

[dave mckay:]

Face it, government causes a lot more problems than it solves, (despite your examples) any Republican knows that, few Democrats do. Republicans trust the individual to make the correct decisions in life, democrats want a nanny state to control everything for everybody. In this particular case, instead of blaming the republicans for lack of regulation of this problem, shouldn't you be blaming the individual who shouldn't be applying for the mortgage in the first place? It's like blaming the gun for the murder and not the person shooting it. Misplaced blame.

2007 May 22 09:23 AM

[Tom B:]

Most people are basically greedy; in the absence of over-sight, they misbehave. Look at Enron. I participate in the capital markets. My wife lost a bunch when Enron imploded.

BTW: not to inflame the passions of gun nuts, but guns DO kill people; I believe in liability for people who sell them. The gun shop owner in Virginia should have had a red flag go up when a college came in looking for a gun. I sure would have been suspicious. And a simple background check would have worked in this case-- there was a history of mental illness.

2007 May 22 09:44 AM

[dave mckay:]

Do you also believe in liability for car dealers who sell to people previously convicted of drunk driving and to alcoholics? Should car dealers do a alcohoilc background check? Should we ban all cars because some people (drunks) use them to kill people? How about knives? Should we ban them from kitchens, and especially restaurants? You are on the slippery slope and don't even realize it. And your facts are wrong about Va. Tech. No record of mental illness (diagnosed "not a danger to others") when he saw a shrink. And a background check was done (it's the law). What was part of the problem is that other students were prevented from having a gun to defend themselves. Your government-campus regulation hurt more than helped in this case. Here's an actual case that backs me up...

en.wikipedia.org/wiki/...

2007 May 22 10:17 AM

[Tom B:]

"Should car dealers do a alcohoilc background check? "

You take ANY arguement to an extreme and it sounds ridiculous. The fact is, most people don't buy cars with the intent of using them as a weapon; many gun buyers do.

2007 May 22 10:56 AM

[texasgolfer:]

I think Mr. Barta should have taken out market loss insurance or at the least considered suit for devaluation of community property and possibly conducted a genetic screen to see if his spouse might be genetically disposed to adverse investment decisions, possibly due to pre global warming causes. John Warren

2007 May 22 10:25 AM

[jonathan:]

Not intending to "pile on" Thomas, but you should consider that ALL of the industries you mentioned are already regulated.

The mortgage market is regulated but unless government starts making the decision *for* potential homebuyers, which would be a horrific affront to independance (can you imagine standing in line at some "Department of Homebuying" for permission to purchase a house from some bureaucrat that cares less about your personal success than does the DMV?) people will take chances. That's a good thing in general; no risk no reward. In this case the homebuyer doesn't even really get burned. Sure their credit takes a big ding...which prevents them from racking up new loans for a while...but the lender is left holding the bag. The guy that loses the money learns the lesson for sure.

Food safety regulations cannot stop infection (e.g. e.coli) from happening...bacteria don't read law. The companies whose product was impacted lost huge amounts of money due to customers sudden fear of spinach...that is the world's best incentive for improvement. This happens periodically everywhere around the world, less here than in most places, and will only get worse with "organic" foods that (by regulation) will not be able to take many of the protective actions that non-organic food producers can use. Yay!

Student loan scandals are still unfolding but the regulation itself is most likely to turn out to be the culprit. How did it turn out that the schools that make the decision to accept or reject student applications are also the ones approving loans? Hmm, couldn't have to do with the Federal Education Department could it? Interestingly the regulations *already* require college financial aid officers to use impartial judgement...but they did not. So much for regulation fixing things.

Lack of desire to control automotive emissions? I can only assume that you mean the government's lack of desire. Implying that the government should control *citizens* desire for emission control woul dbe Orwellian. The government is not an entity unto itself, it is a reflection of the will of the people...or at least a properly functioning government is...so when the American people desire cleaner emissions rest assured that the government will turn that into some new action. Of course, long before the government does anything that desire will be reflected in the products that people buy and the market will already be adapting. Witness sales of hybrid vehicles.

If you mean to say that you cannot understand why everyone else does not share YOUR particular desires, and you wish that the government would bend people to your way of thinking by force (regulation) then perhaps you should just say that.

BTW, to answer you last question (serious answer): Government is not formed to rule people, it is formed to undertake tasks collectively that; a) everyone agrees on and that b) are too big for individuals to take on by themselves. Part a) is very important. If a task cannot be agreed on nationally then it should be handled at the state level...so different states can agree on different courses...if no agreement is reached at the state level then it should be done at the local level, etc. The only exceptions are those problems that have both a "Critical" component (mortal or other no-solution problems) AND a "Free-Rider" component. E.g. national defense is both life or death and even if you conscientiously object or disagree the nation still protects you so you are forced (via taxes) to share the burden.

I could go on all day.

2007 May 22 10:58 AM

[Tom B:]

Food safety: just to pick one example, many believe that the FDA and USDA do not field an adequate number of inspectors. Imported food is inspected hardly at all. Source: Science Friday.

2007 May 22 11:24 AM

[Dave McKay1:]

Barta said..."The fact is, most people don't buy cars with the intent of using them as a weapon; many gun buyers do. ".

Really? Please provide evidence for your claim. Otherwise you are just speculating. And don't count buyers using them as a defensive weapon, only offensive use (crime) only statistics, please. I think you are way off the mark here. Let me engage in a little speculation....If you count target shooters, gun collectors, and defensive protection owners, I would think that they would vastly outnumber the pure murderous intent users.

2007 May 22 08:19 PM

[duanehamm:]

I had the misfortune of working with Maggie Hardiman as the appraisal clerk (my job was to assist her and the other appraisal reviewer) in the New Century branch she's talking about in this article and I have to say that not only is every word she said in that article a lie, she left out the fact that she was a difficult unreasonable monster to work with. She would reject loans because there was a shadow on the roof from nearby trees or in some cases simply because she didn't like the appraiser. I remember one time she had me spend all day gathering information on a certain appraiser she knew personally in order to get him blacklisted from New Century. When the information I provided showed he was a competent appraiser she got mad and accused me of working against her.
Paranoia was a common theme with her. Whenever anyone disagreed with her she would accuse the whole office of being against her.
Yes, it's true that when she would reject something, they would bring it to the other reviewer. But again, she neglects to mention that he was a well respected, competent appraiser with years of experience. And he didn't always overturn her decision, just the insane ones. While we're on that note, I should mention that whenever he rejected an appraisal, she would seek out the account executive and do anything in her power to accept it just to spite him. Since he only rejected appraisals for legitmate reasons that means many loans that never should have made it out did because of her.
I'm not normally one to celebrate another person's misfortune but the day she was fired was a great day for me and my job became so much more enjoyable after she was gone. The whole office breathed a sigh of relief that day.

I'm not saying things like this don't happen or that my office was perfect, and I wasn't aware of every single dealing in that office. I can only say that what Maggie Hardiman says in this article is completely false and I can't stand by and see my former co-workers and friends slandered like this.

I could go on but I'll leave it at this. If anyone is interested, you can email me at [e-mail] and Maggie if you read this, shame on you.

One last thing about Maggie, google "Margaret Hardiman" "Hopkinton" for a nice little story about the nightmare she put a small RI town through in her next job.

2007 May 31 06:06 PM

[GaryD:]

Give me a break McKay. Almost every Republican I know (a) says they believe in less government and (b) either works for the government or for some corporate welfare case. Republicans believe in corporate socialism while democrats believe in bureaucratic socialism. That is the only difference between the two.

2008 Mar 17 09:25 PM