Los Angeles and/or Orange Counties lenders are key mortgage meltdown culprits
According to a new analysis released by the Center for Public Integrity, the top five subprime lenders in U.S. were based in Los Angeles or Orange counties. Countrywide, Ameriquest Mortgage Co., New Century Financial Corp., First Franklin Corp. and Long Beach Mortgage Co. are the top five lenders who accounted for nearly $998 billion of the $1.4 trillion subprime mortgages made from 2005 to 2007. Countrywide Financial Corp., formerly headquartered at 4500 Park Granada in Calabasas, is a "key mortgage meltdown culprit" as coined by the Daily News. Countrywide topped the center's list of 15 lenders responsible for extending subprime mortgages to homeowners who might not otherwise have qualified for a mortgage.
For instance, the borrower was qualified for the loan at an introductory "teaser rate." The "teaser rate" is only good for a few years, and then the payments increase with the thought that the borrower's income would likewise increase. Regretfully, the borrower's income has often decreased in this economy, especially for salesmen on commissions. The salary decrease, along with the homes prices decrease, have left homeowners "underwater" and unable to continue the roll of refinancing.
John Dunbar, Director of the center's mortgage analysis project, is quoted as saying: "It was just a real lust for high yields and profits. Call it greed if you want." Kirk and I have seen clients in our Pasadena Bankruptcy law offices who were refinanced year after year with their mortgages increased by closing costs such as loan origination fees. Even more sadly, the loan officer would encourage the borrower to increase the loan even more to cause higher origination fees. The loan origination fees are the fees charged by the lender and one of the charges that go directly into the lender's profit pockets leading the borrower into "underwater" coffins.
-RoseAnn Frazee
