Friday, January 12, 2007

"Option One... a compassionate, humane approach"

Looks like Sub-Primer Option One is a little upset with an unflattering Business Week Story :


ARMs And Foreclosure: Option One Begs To Differ

"The foreclosure factories' vise" (News & Insights, Dec. 25/Jan. 1) was wrong to mention a mortgage foreclosure recently experienced by borrowers who had a loan with our company. There's absolutely no association between the borrowers' situation and the story's premise that mortgage services are using predatory tactics to harm consumers.

The article grossly misrepresents, solely as late charges and attorney fees, an amount it states was owed on the loan. The fact is, the actual amount owed would have consisted almost entirely of past-due principal and interest and amounts advanced on the borrowers' behalf for real estate taxes and insurance. The borrowers also received and signed disclosures from their broker as well as additional plain-language disclosures from Option One Mortgage (HRB ) indicating that they understood how an adjustable-rate mortgage works, contrary to what the article contends.

No one wins when a borrower loses a home. As a top-rated servicer, Option One did all the right things to help the borrowers get back on track toward curing their loan default and repaying their debt.

While the reasons for foreclosures, such as bankruptcy, job loss, and divorce, remain outside the control of the servicer, there are remedies. At Option One we will continue to focus on keeping people in their homes through early intervention, workout plans, and a compassionate, humane approach.

Teji Singh
Chief Servicing Officer
Option One Mortgage Corp.
Irvine, Calif.

7 comments:

SCProfessor said...

Doing a little research, I believe this person's email address is Teji.Singh@oomc.com. think I'll pay a personal email call.

Bakersfield Bubble said...

Let us know what he says, if he responds...

scprofessor said...

Below is the email I sent Singh. I'll let you know if I receive a response.
--------------
I read with interest your response to the Business Week article that criticized the alleged predatory practices of your employer (see it at http://www.businessweek.com/magazine/content/07_04/c4018020.htm#ZZZ82BEOSWE ).

I speak from a position of experience, having served as a transactional insider during the two previous downturns in California's real estate economy ('79-'83 and '90-'94). I think it is simpler to cut to the chase rather than beat around the bush. Plain and simple, sub-prime lenders like Option One have, through loose and predatory lending practices, and with the assistance of the entire real estate community, abandoned prudent lending practices in favor of the creation of imaginary suicide loans designed to put unqualified borrowers into situations where they have little chance of paying their debt in accordance with its terms and conditions.

I would have thought we'd learned something from the savings and loan crisis. Your attempt to defend Option One fails for one specific reason. They are a direct and active participant in schemes like putting idiot borrowers in situations where they borrow more than 100% of the purchase price utilizing negative amortizing variable interest loans. Talk about a solution headed for disaster. This didn't happen when lenders made loans that would be retained in their own portfolio. The excuse that prudent lending practices can be abandoned because the originator quickly dumps the paper on the secondary market is idiotic and will result in taxpayers like me having to pay for this mess once Option One and other sub-prime lenders go out of business because of their willing participation in a scheme designed to promote fraudulent lending activity.

Turning a blind eye to situations where subordinate financing serves as a substitute to an alleged buyer down payment simply doesn't cut it. What ever happened to lender requirements that necessitated us of a "verification of deposit" form? In my humble opinion I'd be looking for a new job. Option One, like a number of other sub-prime lenders is going to be added to the list of failed sub-primes maintained at http://ml-implode.com/ .


Sam Miller

scprofessor said...

Below is Singh’s response together with my reply

------------------------------------
Teji Singh Teji.Singh@oomc.com wrote:
I got this e-mail today....

Interesting enough, our response is being read. However, the issue that irresponsible lending has caused an issue with many borrowers stays prevalent. So, it is not Option One that is the issue, all of sub-prime is being targeted and compared to the savings and loan crisis.


------------------------------------
Sam Miller smiller1961ca@yahoo.com wrote:
Date: Sun, 14 Jan 2007 07:07:33 -0800 (PST)
From: Sam Miller smiller1961ca@yahoo.com
Subject: RE: Business Week Article Response
To: Teji Singh Teji.Singh@oomc.com,
Robert Chaffin Robert.Chaffin@oomc.com,
Christine Sullivan Christine.Sullivan@oomc.com

You are correct and I submit it is a fair comparison. There is some clear responsibility here that can't be avoided. That is acting as a willing participant in fraudulent lending practices. Those ultimate purchasers of mortgage backed securities are not going to be barred by any sort of limitation of action time line because their time doesn't begin to start for the initiation of their recovery until they, through their exercise of reasonable prudence, discover (or should have discovered) the fraud that has been committed. Hiding behind terrible industry practices like "income stated" loans just isn't going to cut it. We've all heard stories about the McDonald's shift worker who claims a $100,000 income on his loan application. Underwriting practices that ignore the unrealistic nature of such a claim, do not excuse the exercise of common sense.

Regards,

Sam Miller

scprofessor said...

Below is the continuing dialog:

Below is the continuing email dialog:
----------------------------
Teji Singh Teji.Singh@oomc.com wrote:

Sam,

As a servicer of non prime loans we are constantly looking at ways to assist our borrowers. That was the purpose of the response, that was not how we were portrayed in the article. As a servicer, we are not looking at foreclosing (that is a lose/lose proposition) rather discovering innovative ways of assisting (albeit after the fact). But, I do appreciate you reading the response and reaching out to contact me.

Teji
----------------------------

Sam Miller smiller1961ca@yahoo.com wrote:
Date: Sun, 14 Jan 2007 08:02:04 -0800 (PST)
From: Sam Miller smiller1961ca@yahoo.com
Subject: RE: Business Week Article Response
To: Teji Singh Teji.Singh@oomc.com,
Robert Chaffin Robert.Chaffin@oomc.com,
Christine Sullivan Christine.Sullivan@oomc.com

As you no doubt sense, I've been in your position and done your job. The patchwork attempts relative to workouts don't solve the problem that could have and should have been handled at the time or origination. One of the joys of academic freedom is, having tenure; I can freely speak my peace without fear of repercussions. You and other executives at Option One cannot and I understand that.

My sense is that unless the industry has gone through even more changes than when I left it in 1995, you are a salaried employee. Back in the good old days, all who worked for lenders were. That salary provided us with an incentive designed to promote loyalty to our employer. Today many who work on the loan origination side of the house base their income on a commission. No production means no income. What a paradox. I need to act as a loan officer. However if I exercise prudent lending practices I'm going to be cutting my income. The result, as we see it, is the quality of paper that is created is not as represented.

I don't blame you. I certainly don't blame any loan servicers. But let's face it. Each day you see the results of this situation first hand. Crappy loans that never should have been written. Deals that just don't make sense now and didn't make sense when they were made. And of course lack of loyalty means the responsible employees are now working for the competition, continuing to make crappy underwriting decisions. It has to and needs to be stopped. I'm thinking RESPA II is going to be one hell of a restraint on the mortgage business. But a necessary restraint.

Take care,

Sam Miller

Bakersfield Bubble said...

sc professor-

I will make a specific for this. Thanks!!

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