by Melanie Wood

Created on: October 23, 2008   Last Updated: October 27, 2008

Blame is an ugly word often used in hostile environments when the word "accountability" is more appropriate. There is plenty of accountability not being assumed in this whirlpool of foreclosures and subsequent undermining of world finances.

I was a funder for Headlands Mortgage Co., later sold to Greenpoint Mortgage Company, (GPMF). I was a Funder, a Pre-funding Analyst, and a Loan Processor. I eventually realized that "make it work" was the framework within which employees were expected to adhere. Frequently I found serious discrepancies in documentation such as Social Security Number variations, inflated income, or evidence that owner-occupied homes were rentals. I saw checks paid to the broker at closing called a Yield Spread Premium. Co-workers called this Broker Rebate, a thanks for bringing the loan to us. It was only years later that I understood our brokers got this rebate from us in exchange for producing high interest rate loans.

If I halted a funding, I reviewed issues with our Underwriting Manager get a decision to deny or proceed. He eventually left the company, and I coincidentally was invited to join the Prefunding Analysis Department, the fraud squad. I now view this Manager and myself as both old dogs; we were clearly were interfering with funding "numbers".

Greenpoint expanded, was purchased by Northfork Bank (NFB) who retained the well known Greenpoint logo. Troops of young sales persons, often with only a high school education, were hired; and the phenomena of "home-grown underwriters" took hold. With inexperienced sales teams and underwriters our company appeared sales-driven: their monthly bonuses were based on total loans funded.

As an analyst I began to believe we were simply window dressing to assure investors of quality loans. We were told to no longer to recommend denial and all suspicious loans were kicked upstairs for decisions. Meanwhile, the Secondary Market Department immediately packaged and sold loans to investors like Countrywide and quality vs. quantity shifted. Most loans were sold prior to funding, and new loan programs were constantly designed to appeal to the unplowed fields of potential borrowers.

In May of 2005 our CEO left to join Radian, a global credit company as their new CEO. The following year Greenpoint was purchased by Capital One (ONE) and subsequently dissolved one morning in August 2007, leaving over 1900 persons to the unemployment lines.

Who is to blame? Mr. Borrower: ignorance may be no crime, but it ultimately is no excuse. Mr. Broker: you charged your fees to borrower and upped the interest rate to collect lender rebates. Mr. Lender: you wanted Bigger-Better-Faster-More, using inexperienced, untrained, maybe unethical employees to feed Wall Street the credit backed securities they craved. Wall Street: it could have, should have stopped with you.

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