by Caitlin Kenney

Bob Bonifacio started working in the mortgage industry about 11 years ago. He writes:

I landed a job (much quicker than I had anticipated) at another broker financing home improvement loans for a pool builder. These loans were often exotic and risky endeavors, they only required minimal documentation (if any at all) and the lenders appeared to have no regard for their position's safety. If a person owed 200k on a 200k house, they would lend dollar for dollar OVER the value of the house to complete a pool installation which could range anywhere from 15-20k to 60-80k. Risky, I thought, but shoot these are big time companies lending serious money they must've done their homework. After about a year I moved into what I perceived to be the cleaner and better path in the mortgage industry; I accepted a position as an account manager / underwriter for a lender. The lender was known for it's extremely aggressive underwriting guidelines and seemingly endless creativity in devising new and elaborate ways of structuring loans.

 

It was there that I really started to be inside the machine of mortgage originators. The company had guidelines which seemed to be up for loose interpretation by anybody and in many cases management was empowered to just make judgment calls based on their instincts or the relationship with the broker. I encountered fraud on several occasions. Underwriters who stuck to their guns to enforce the guidelines were ridiculed and deeply disliked by almost everyone in the office, including the managers. The market was competitive, we were in a significant growth mode and there seemed to be an endless line of "investors" (nameless, faceless money barons on the other side of Wall Street) willing to purchase just about anything. Speed and willingness to overlook certain facets of a potential borrower's financial situation were prized attributes on our ops team. Everyone was playing ball.

While this was all going on home prices were on the rise so we all just shrugged it off. It almost didn't matter if the borrower couldn't repay the loan, the bank would end up owning a property that was most likely worth quite a bit more than it was a year ago. The borrower, at times, seemed like a vehicle for generating paper. I moved to another (more conservative) company in the same competitive space, subprime. The practices were nothing like what I had seen at the prior company but still, here more than anywhere because I was doing loans in the red hot and expensive mortgage market in Southern California, I started to sincerely question the borrowers ability to repay their loans. I have always been taught about money by my father from a very early age. I'm proud to say that I've not paid a penny in credit card interest in my entire life. It just didn't add up that these people who couldn't provide documentation about their incomes could actually pay the loan we were writing for them.

Well, long story short, I was out of work in August of 2007 and struggled to regain employment in Arizona and following 6 months of unemployment have since relocated back to NY. I have had to reinvent myself again and have had a mix of emotions over the last year as I look back on the wild journey at the heart of the current crisis. Sometimes I want to hang my head in shame for having been a part of something that I knew, in my heart, wasn't benefitting unsuspecting people. There are times when I feel unlucky for having been in an industry which completely imploded to the point where it no longer exists while I see peers of mine employed with stability and growth while I have to start from scratch. I still own a condo (my wife does too) in Arizona and have it rented out but am taking a loss on it month after month the only hope I have is to break even on it and maybe make a little money eventually. More often than not, I feel grateful for the opportunities I had in the industry and the money I made while there and feel like I can hold my head up because isn't this what you're supposed to do? Get a job, aspire to do better at it, buy a home? It hasn't worked out as I would have hoped but I have faith and hope for the future.