Here’s another great story on the mortgage meltdown.
And while 2008 was certainly one we would all like to forget, it is important to remember the greed, fraud and stupidity that made it all possible. (In fact, I wrote about it this article over two years ago entitled: Housing’s Ill-gotten Gains)
Because the truth is it all could have been stopped in 2005--but it wasn’t.
So the insanity of the housing bubble went on for years—long after it should have ended.
Unfortunately, all that is left now is the pain of its greed.
In the meantime here’s another great look at how the train came so far off the tracks.
It’s in a story on Washington Mutual that appeared over the weekend in the New York Times.
In case you missed it, it is well worth the read…
It’s by Peter S. Goodman and Gretchen Morgenson entitled: At Washington Mutual, a relentless urge to approve any loan
“As a supervisor at a Washington Mutual mortgage processing center, John Parsons was accustomed to seeing baby sitters claiming salaries worthy of college presidents, and schoolteachers with incomes rivaling those of stockbrokers. He rarely questioned them. A real estate frenzy was under way and WaMu, as his bank was known, was all about saying yes.
Yet even by WaMu’s relaxed standards, the mortgage on one home four years ago raised eyebrows. The borrower was claiming a six-figure income and an unusual profession: mariachi singer.
Parsons could not verify the singer’s income, so he had the applicant photographed in front of the home, dressed in his mariachi outfit. The photo went into a WaMu file. Approved.
“I’d lie if I said every piece of documentation was properly signed and dated,” said Parsons, speaking through wire-reinforced glass at a California prison near here, where he is serving 16 months for theft after his fourth arrest – all involving drugs.
While Parsons, whose incarceration is not related to his work for WaMu, oversaw a team screening mortgage applications, he was snorting methamphetamine daily, he said.
“In our world, it was tolerated,” said Sherri Zaback, who worked for Parsons and recalls seeing drug paraphernalia on his desk. “Everybody said, ‘He gets the job done.”‘
At WaMu, getting the job done meant lending money to nearly anyone who asked for it – the force behind the bank’s meteoric rise and its precipitous collapse this year in the biggest bank failure in American history.
“It was the Wild West,” said Steven Knobel, a founder of an appraisal company – Mitchell, Maxwell & Jackson – that did business with WaMu until 2007. “If you were alive, they would give you a loan. Actually, I think if you were dead, they would still give you a loan.”
Speculation, fraud and greed….you can’t have a bubble without them.
