FriendBurst Blog

It wasn’t a long part of my professional career. It was only a couple of years.

I remember the questionnaire I had to fill out when I applied for the job at Countrywide Home Loan’s Full Spectrum Lending Division:  How do you feel about sub-prime lending?  At the time in 2006, I didn’t even know what sub-prime lending even was, much less what I felt about it.

I got hired, and a year and a bit later, I was done with sub-prime lending just as sub-prime lending was going away as a financial industry.  It was four years ago tonight that I posted the video below, where I first complained that seemingly overnight, my challenges at work went from people saying “no” to me to me having to say “no” to people.  Lending guidelines had tightened up tremendously.   I could no longer give loans to pretty much anyone.  I didn’t lose my job; my job just sorta went away.

A couple months later, I barely managed to put together a California-sized $600,000 loan for a customer who was struggling to make his payments as it was.  My new loan for him didn’t reduce his payments at all, as he had hoped when he had the bought the home two years prior.  It didn’t lock him into a fixed rate for the long term.  All it did would was buy him another couple years of a barely-manageable sub-prime rate somewhere in the 8% range.  It was the best he could do, and I was with one of the only lenders that would give it to him.  The cost of this deal was $20,000 of his small equity.  I told him he really had no other options as he complained about this deal.

“Yeah, I have another option.” he retorted.  “I could put a gun in my mouth!”

I think that phone call, more than any other thing, lead me to quit the sub-prime mortgage business.  Now, as I start a new career as a drug and alcohol dependency counselor, I have the training I need to handle a suicide threat like that.  Back then, I did not. I was a salesman, not a suicide counselor.  At the time, I was just starting to reconnect with my true self and was discovering that the financial services world wasn’t for me.  A few weeks after I quit my job, Countrywide shut down the office where I was working .  I saw the handwriting on the wall.

Let me just say this about the small part of the sub-prime mortgage business that I witnessed first hand:  we bought into the same delusion that the country did.  We thought we were doing good by helping people with bad credit get loans to buy or refinance homes.  It was almost a noble pursuit. When we did well, we got paid a lot of money, but there were months where I made no money at all.  Can you imagine what it does to a family’s finances to find out you are not going to get paid for a month’s work?  Amongst many other factors, that was part of what lead to my divorce, the end of a 9 year relationship.

At the time, the idea that property values would actually decline was inconceivable to us.  We were putting people in loans under the assumption (although we never overtly promised people this would happen) that in a couple years, home values would increase, their loan-to-value ratio would decrease, their credit would get better, and they’d be able to refinance again into a more favorable “prime” loan.  Yeah.  None of that ended up happening.  That’s why there were so many foreclosures, bringing down the values of everyone’s homes, and here we are today in the midst of a mega recession.  For which, I am partly responsible.

We didn’t mean it!  We honestly believed home values would continue to increase! Even in California!

A week or so after I made the confessional video above, I followed up on what someone had suggested, namely that I should take my guitar out (this was in me pre-ukulele days) and go out busking.  Beg people for money… That is what I did. One of my favorite videos that “happened” in my ongoing hobby…  In my sub-prime lender blues style…