Washington Mutual's Lending Operation: A Boiler Room Environment
Attorney
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Yesterday, the New York Times reported on a senior mortgage underwriter who had, previous to the subprime and pay option ARM loan boom, been proud of her ability to spot fraud and other problems in loan applications.
Keysha Cooper said she found herself stuck between a rock and a hard place during the latter part of the mortgage boom, as brokers squeezed her from one side, her superiors, like the ones working under disgraced WaMu former CEO Kerry Killinger, pushing her from the other, with both sides pressuring her to approve loans, regardless.
Ms. Cooper told the Times, "At WaMu it wasn't about the quality of loans; it was about the numbers [. . .] They didn't care if we were giving loans to people that didn't qualify. Instead, it was how many loans did you guys close and fund?"
And what if Ms. Cooper didn't approve the loans that were coming through WaMu's doors? She and other mortgage underwriters were punished. The loan officers that were complicit with WaMu's irreverent regard to shareholders and whether or not borrowers could keep current with their payments: They received free trips to places like Hawaii and Jamaica... for a month!
Ms. Cooper was even placed on probation for a month for refusing to approve a loan, which she said was filled with so many discrepancies that is clearly was an example of mortgage fraud.
Why would Washington Mutual want to sell hundreds of thousands of these loans that mirrored or were explicitly deemed fraudulent to loan officers? Because surreptitiously placed throughout the loan documents were several hidden fees and/or penalties, which would result in $20,000 to $40,000 on a loan that was approximately $500,000. Thus, the more TILA violations in the loan, the more money WaMu could rake in.
Kerry Killinger, the recently ousted Chief Executive of this whole guerilla-like, Boiler Room environment, and the man who tops the list of defendants who are being sued by shareholders, should not only be held responsible in paying back the tens of millions of dollars he "pocketed" from Washington Mutual under his helm, but the topic of "prison" should also be thrown into the mix.