Thursday, March 22, 2007

This Ain't No USAToday

The Economist. Not some fluffy rag or throwaway PBS piece. A real magazine, with respect and reputation holds our very own Fliptard™ as a poster child of the comming collapse.

CASEY SERIN knows all about the excesses of America's housing bubble. In 2006 the 24-year old web designer from Sacramento bought seven houses in five months. He lied about his income on “no document” loans and was not asked for anything so old-fashioned as a deposit. Today Mr Serin has debts of $2.2m. Three of his houses have been repossessed; others could share that fate. His website, Iamfacingforeclosure.com, has become a magnet for those whose mortgages are in trouble.



Hat tip to long time reader/contributor Metroplexual.

95 comments:

aaron said...

first tony!

aaron said...

oh and yes. economist is excellent reading. that article was spot on.

Miguel said...

As a long-term Economist subscriber, I have to say that I'm impressed - in terms of genuinely heavyweight reputation, it's miles ahead of any of the media outlets that have featured Snowflake so far.

But I doubt it's especially good news for him, as the crucial difference between this and other mentions in the likes of USA Today is that The Economist is an international publication - and by highlighting the fact that Casey hasn't yet been punished for his undoubted crimes, it's an implicit rebuke to all the law enforcement agencies who should be taking an interest.

Mozatta said...

All this press is SWEEEET! Come on guys, this is perfect for slimenuts. Think about it, most of the people who read The Economist are wealthy, educated and intelligent. Casey needs those contacts. Surely some of these wealthy, educated and intelligent people will want to do business with ol' Serin. Perfect opportunity to develop sweeet contacts.

Tony Soprano said...

man, this place is getting busy. I think the days of easy firsts are over for me.

Rob Dawg said...

Miguel,
Interesting that a site supposedly made up of neer-do-well haterz™ turns out to be composed of readers of the Economist and FT with their own businesses and investment portfolios and such eh?

There's no way any prosecutor can stand a question like; "How is it you let this criminal roam free for 3 months after a magazine in England ran a story of his crimes?"

Mozatta,
This is not the attention Casey wants. The kind of people who read this are sometimes the CEO of Cashcall or Countrywide. Imagine sitting in your Gulfstream IV getting a foot massage and you reach over and pick this up and read it. "Pilot! Pilot! Head this bucket to Sacramento! Heidi, no, Heidi... that tickles, no, really get me Guido and Big Nose on the private line, the one that can't be traced. I have a "special" for them. Then call up that clown, no not the Governator, that DA Clown we were so generous with last election, fax him a list where he can find the pieces. Then get me Ahnoold, I wanna talk to him about "terminating" the rest of these cockaroaches! Wait, Heidi, finish that "massage" first there's a good girl. "

Tony Soprano said...

me thinks the Economist article might turn up DA heat a bit. I know if I was doing something shady, I sure wouldn't want it spelled out there.

Interesting that Snowflake has chosen to sleep in today rather than capitalize on all the "Sweet" rewards of the show last night. That had to hurt seeing only about 4 names on there, all haterz.

Khatie said...

Mr. Linkwhore gave this as a reason why he deleted the comments at his Clingon blog:

"Two of them were me, signed in under a different account. My bad.

I don't expect the "comments elsewhere" will ever be favorable. That's the nature of those sites."

Perhaps he was generating positive posts? Who knows, with Mr. Linkwhore Clingon?

Anonymous said...

Just as long as references to him keep on statting that Casey lied on his loans - maybe one day a law enforcement official will act.

By the way, I bet Casey will look at this publicity as a good thing. His next post: "Iamfacingforeclosure mentioned in the Economist!"

Rob Dawg said...

Khatie,
Saw that too. Pretty pathetic to have to post false traffic to a site with a half-life measured in days.

I just posted this:

Rob Dawg said...
r-boy,
Yep, you win hands down, not just a knock-out an knock out of the ring.

Nigel, The Economist. The Economist disagrees with your analysis. Are you understanding some of the negativity? Honest, it isn't some weird creppy feeling people got from your association with Dandelion, it was a fear that your opinions could, in the wrong circumstances, cause real harm. Nobody wants to take a ball-peen to your halogens, they just don't want you taking a rotten tranch to their 403k. You aren't stupid and while thicker skin would serve you well it isn't required. Can you concede the possibilty that the replies you've seen are serious and based on reliable foundations?

March 22, 2007 12:43 PM
----

Bets he can't suck it up and admit defeat?

R-Boy said...

I am glad to see that some of my behind the scenes efforts are yielding fruit. I'd been forwarding information to a few chaps (I too, am I subscriber to the economist). I enjoyed talking to Seth over at MotleyFool, and a few other folks. It's what I can do as a concerned citizen to voice my concerns to the private enterprises that can inform the public.

I will pimp out this site, the wiki, and some contact info on economist forums. In the meantime, FORWARD THE ECONOMIST ARTICLE to the FBItip, call FBI-Sacramento and let them know, the Mortgage Banker's Association, and the Sacramento DA. This is a bigger piece than USA TODAY.

Oh, and Nigel.

::You just got knocked the FUCK OUT!::

R-Boy said...

By the way, do you realize that Casey Serin is in the LEAD STORY for next week's issue.

I'm hanging this MF on the wall

Mozatta said...

To Casey, The Economist is the same as The Onion.

Metroplexual said...

R-Boy,

Nice work behind the scenes. I too have been doing some with Bloomberg. Let show the world a little blogger muscle!

LOL said...

Casey is trying to build his domain name into something he can sell for $$$ so there is no such thing as bad publicity in his eyes.

Now if he humilates himself on several news outlets with no money shot at the end that will be "sweet".

I can't wait for Suze to get ahold of Snowflake.

ratlab said...

I miss my old job where I had a subscription to The Economist for free.

Metroplexual said...

I think the last line in the article while true belies the real impact and that is less buyers thus less demand. Just wait till the pols get their chance to overregulate.

Benoit™ said...

His website [IAFF] has become a magnet for those whose mortgages are in trouble.

It has? I'd say it's become a magnet for people hatin' on Serin and his lying cohorts. People who post pleas for Casey to help them are just trolling...

Anonymous said...

I say that we post anything from Nigel's craptastic new site here so it's saved for posterity. Should he erase something, we know what it was that was taken down.

Add the time as well. This would throw a monkey wrench into Nigel's stinkin' thinkin'.

You know me... said...

My letter to the Ed of The Economist (great publication! Very witty).:

Sir:


Your 3/22 article on the US subprime mortgage market http://www.economist.com/finance/displaystory.cfm?story_id=8885853 uses the story of Casey Serin as a poster boy for the failing market. Fortunately, most of the homeowners at risk are not at all like him. Typical subprime borrowers stretched the truth to squeak into a loan for which they would not otherwise qualify to buy a house in which they live – minor fraud in the perhaps excusable guise of naivety.



Mr. Serin took fraud to a much higher level. According to his site, he stacked transactions close to each other so the loans would not be reflected on his credit report before new loans were taken out, he claimed each home would be owner occupied both to borrow more and to get a preferential interest rate, and he manipulated the sales price to artificially inflate the value of the home and get cash back at closing. He not only didn’t put a penny down, but also walked away with tens of thousands of dollars from most deals. His was not minor fraud committed to live the American homeowner dream. His was deliberate and repeated fraud committed to buy the get rich quick fantasies peddled by questionable real estate educators.

Anonymous said...

Check out Nigel's SLC blog. Does the picture he used (I believe it's comedian Rob Cordry) not look like it could be Nigel? Same balding hair, same silly look on his face.

Also, is that not a violation of copyright laws since Nigel LOVES to quote them to anybody using Casey's quotes and pics? LOL, hypocrite!

Anonymous said...

You Know Me...

Don't forget that he could also claim he was mortgage shopping. Mortgage loan offers do not hurt your credit score.

I could see him selling each loan officer on why so many hits to his CR. He probably said he was trying to find the best deal. That is what a lot of these idiots do.

Anonymous said...

Benoit,

If anybody in real foreclosure trouble EVER used Casey as a source for help, they must not be the brightest.

I just don't see ANYBODY asking Casey for help. No way, no how.

Rob Dawg said...

Nice copyright violation there Nigel. If you are gonna throw stones it is best to check the glassiness of your own blog. Now remember, you promised to pursue violations not just correct them. Please report yourself.

Anonymous said...

What's the web address of the nasty nigel?

Jerry Mander said...

Hey R-Boy

I appreciate your effort to bring Casey's details to the attention of the authorities.

This is kind of a tall request but do you have any way of doing the same thing (for those involved congressional hearings) about these 'homeowner victims' (i.e. the notion that these people are just as bad or worse than the lenders. They knew exactly what they were getting into and were just betting that their house value would go up forever).

I'm so sick of hearing Dodd and Clinton saying 'we need to protect these people' and then reading about the two guys in LA who barely made a $150 deposit on a house and refinanced 3 times and took out two HELOCs. Or the 4 people in Irvine who bought 27 houses. Or my personal favorite Mr. 'I bought 8 houses and all I have to show for it is this stupid murse'.

R-Boy said...

I think anything I do on the government side would hit a COI problem. (Conflict of Interest).

I can speak as a private citizen to private entities that I have associations with about my opinions, but I can't use my position to exert influence otherwise.

I am bummed

Some Guy From Colorado said...

It looks like they changed Casey's wiki page. It no longer says that it is being considered for deletion.

Aspeth said...

I'm glad you posted this here. It's funny--I was just reading this article this morning and forwarding it to some of my favorite "optimists" to ruin their morning coffee...

Jimmy C said...

That's right -- because it was decided to *keep*

Any Google of Casey Serin brings it right up!

Anonymous said...

Re: The Economist as reference

Suck it, Wikipedia editors!

Miguel said...

On the Discussions page (here) it says "This article was nominated for deletion on March 16, 2007. The result of the discussion was KEEP."

Rob Dawg said...

Somebody remember to edit the wiki to include the Economist article.

I didn't realise it was the cover story and special feature. Now somebody needs to whisper in Mozillo's ear that this punk kid is screwing CFC in front of the whole world. Just think, if Casey can skip on that $50k note what's to stop every homedebtor from doing the same thing.

In fact I think we need to organize a campaign: April is Don't Pay Your Mortgage Month! Heck, Casey didn't pay 15 mortgages for 11 months and absolutely nothing happened to him. Why not? Or as Arlo Guthrie explains; I just one person does it they'll think you are nuts and let you get away with it. If two people do it they'll think you are homosexuals and they'll be afraid to do anything but if lots of people do it they'll think it's a movement. and they'd be right; The Great Casey Serin Mortgage-Out Movement. Everybody sing along.

Anonymous said...

My bad- I left a comment several months ago on one of the writers for the Economists' blog.-asymmetrical She quickly picked up on our little snowflake.

I really have no sympathy for the little hobbit- he dug his own grave and the real estate industry profited handsomely from his gullibility.

Oh yes, Economist subscriber for almost 20 years.

allenm

Aspeth said...

@Jerry Mander 2:01....

Chris Dodd's Senate contact form is at
http://dodd.senate.gov/index.php?q=node/3128&cat=Opinion
Phone (DC): (202) 224-1083

Chris Dodd's Presidential campaign contact is
http://www.chrisdodd.com/contact
Phone (CT): (860) 561-8843

Hillary Clinton's Senate contact form:
http://clinton.senate.gov/contact/webform.cfm?subj=issue
Phone: (202) 224-4451

Her Presidential campaign:
http://www.hillaryclinton.com/help/contact/
Phone (DC): 202-263-0180
Phone (NY): 212-213-3717

As someone who's worked on the Hill, I'll tell you that actually writing in on an issue *does* carry weight, since so few people ever do. Further, an honest-to-god phone call is weighted at something like 10x a piece of mail or email, again, since such a small portion of the population ever does this.

Be sure to contact both their current Senate offices and their campaigns, since they will be both legislating and campaigning on the issue. And communication between these two camps can be freaking horrible, at best.

Anonymous said...

From the Economist article:

"... lenders pepped up the pace of sales by dramatically loosening credit standards ..."

Hmmm, there's that l-word again. So, are we supposed to drink if it's used correctly?

Anonymous said...

Question:

Who's worse?

Nigel is a self promoting, arrogant know it all who loves to lecture people to make himself look good. He never has facts JUST his weak opinions.

Casey is a greedy, self absorbed, neurotic OCD candidate who is more fascinated with his looks, health and shiny objects than he is anything else.

Who is worse? I vote Nigel as it appears he is a bad man.

Anonymous said...

hahah. Still no posts over at wackoland. Looks like tard-boy can't figure out how to spin last night's conference call to mitigate the damage, much less cast himself in any sort of favorable light....

A Real Conservative (Nigel is not) said...

Good one Rob Dawg!

I know that picture Nigel is using is a Fox TV show. Can we ask Nigel if he asked Fox Television's permission to use that photo? Next time he lectures about copyrights and blogs about blogs with zero originality let's remind him he is no better!

Anonymous said...

Anon 3:25,

How could he? He told the world that people email him all the time for help. Nigel and Casey constantly tell us that Casey's got fans. Where the f--- are they? Why was it just the realists calling him nonstop?

I don't believe he has any "fans." Nobody besides the realists and folks who pop in for entertainment care about Casey Serin, guru. Nigel uses him to get hits for his site. Problem for Nigel is that based on the comment section of his SLC blog, he has no fans. The few that post (and he lets through) STILL have issues with his opinions. Nigel's hits are deceiving. They are derived from the very "haters" he so despises. Nigel is so desperate to shove the haters faces into the ground he censors the comments from the more reasonable of us.

Both idiots have been exposed as frauds. Nobody CARES about Casey outside of his family and break dancing buddies. Nigel is an enigma but I think the same can apply to him as well.

Eth Real said...

IAFF keeps referring to Suze Orman - is he goign to be interviewed by her? TV or print? She really creeps me out - it's the hyper insense look she gives all the time...

Rob Dawg said...

I know that picture Nigel is using is a Fox TV show.

Get this! Too rich. He claims the picture is "public domain." These people copyright their craps and sue if yours is remotely the same color. He just makes up everything on the fly and poorly at that.

Mrs Beasley said...

Breaking news!
Casey Serin to testify before Congress!

ok maybe not, but we should thank fliptard for going out of his way to show how awful lending standards were/are are getting in every magazine everywhere to 'wake up' America re the pending collapse.

lets hope for a 50% drop in RE prices so Rob Dawg can expand his empire!

More good news everyday, 2007 is a BubbleHead's wet dream and its just started!!!

cheers!

Will Reyes said...

Dear Exurban Nation readers,

our newspaper is working on a story on Casey Serin.

he has so far refused to be interviewed by our reporters.

if you have any information pertaining to Casey Serin and his real estate investment activities please contact our newspaper.


Will Reyes
Editor-in-Chief
Valley Star newspaper
LOS ANGELES VALLEY COLLEGE
5800 Fulton Ave
Van Nuys CA 91401

818.947.2576

thevalleystar@yahoo.com

Mrs Beasley said...

Just a thought:
Why dont Dodd and Clinton instead of running on 'bail out the FBs' platform they should instead run on a 'PUT THE FB's in JAIL' platform. They are defaulting on contracts and/or commited loan fraud. Also put the subslime lenders in jail/out of bidness.

This is a law and order back to common sense concept so is ridiculous today of course.

I think theyd get more votes. Start with snowflake as the example. He is harming everyones children by making loans/houses more expensive for all so he can gamble with free chips.

Rob Dawg said...

if you have any information pertaining to Casey Serin and his real estate investment activities please contact our newspaper.


Will Reyes
Editor-in-Chief


Gosh Exurban Nation. Do we have any information? Will, read the blog.

When Editors Can't Read said...

Waaaaaaaaah!

Anonymous said...

Rob Dawg:

You can find the photo here. Since when did a PR photo become automatically "public domain?"

He used that logic on you, Dolph and a few others and all the while hid anonymously while doing it.

He thinks we are dumb, but if he is going to cry about violating Casey's copyrights then he should respect other's since I seriously doubt he asked Mr. Corddry's, Comedy Central's or Fox's permission to use his likeness to headline his blog.

Anonymous said...

BTW: See for yourself here -

http://www.popmatters.com/pm/news/article/31420/daily-show-alum-rob-corddry-shines-in-new-fox-series/

Anonymous said...

Salt Lake Mortgage Guy said...
Public domain rdawg. If they ask me to remove it, I'd be happy to.

You did say you'd agressively pursue violations right?

Where did I say that? I don't recall it.
---------------------------

You said it on Wiki Nigel. The IP address using the COPYRIGHT VIOLATION argument was from a provider in SLC. Who else COULD it be that is so involved in the life of Casey Serin?

You said it anonymously here because we KNOW it's you. The IP address with the longest logged times is always from either Sandy, UT or SLC, UT.

Don't feign ignorance. YOU violated somebody's copyright. Be careful, somebody may call you on it.

Anonymous said...

Can we just rename the Donthatecasey blog to pleasehatenigel?

Did Nigel ol boy think that Casey had fans who would take the time to post on this dumb idea of a board?

John said...

Nigel says he works in home mortgages. but he also works in search engine optimization. Poke around and you'll see. That should help explain why he's self-referencing with every comment. He knows Google watches and learns. His mentality of self-promotion is so entrenched, that it probably accompanies a titanic ego... he self-promotes because he *should* be promoted. He has worked hard promoting his blog. He routinely joins blog discussions with the goal of saying some pap and consistently including a hyperlink to his own blog. This explains everything about his interest in Casey.

It's not uncommon for people to rip Nigel a new one. We're not the first. He doesn't exactly care, so long as the sweet, sweet rubes keep clicking through.

The easiest way to piss him off would be to register nigelswaby.com. Quick. Before he does, and he will, as soon as he reads this.

Anonymous said...

Nigel gets owned in this comment section of the Patrick.net blog.

http://patrick.net/wp/?p=404

Read it, the responses are freaking SWEET!

Anonymous said...

BTW - special thanks to the awesome John for the Patrick.net tip.

Anonymous said...

John,

You said this in response to Nigel's lame comments on Patrick.net:


"Yet here he's saying the reduction of this function by fraud has no impact on society. Rich!"

Sure, it's shelter but if idiots like Casey bring the prices up to a level most cannot afford, it's nothing. Idiots like Casey have made the market unaffordable and Nigel doesn't admit this. Many reports decry the fact that the average American is priced out of the market!

Problem #2 is that Nigel must have no problem with fraud, cash back and other crap because he thinks it doesn't hurt anybody. He thinks shareholders, bond holders, debt holders as well as neighbors whose homes come down BIGTIME in price are not hurt by the actions of irresponsible assholes like Casey?!?!?!?!?!

Stephanie J. said...

Just remember...
At the top of Casey's blog-page, there's the title, and then a blue bar with a lifesaver on it... and the words "Getting Saved."

Is Nigel the one jogging on the beach in slow motion; pasty-skinned, balding and toting red trunks?

R-Boy said...

i already had edited in the wiki article the economist reference, and I added some definitional entries also on mortgage fraud.

I've also decided that nigel is not worth my brain sweat, nor the sweat from my balls.

Therefore, I'm done posting to his blog. I shudder to think that I contributed to his income.

I like the idea of a national casey serin awareness day

R-Boy said...

when we get the forums up (ROB!) we can work alot more efficiently

Stanley said...

Ditto on the forum type board. If the kitty jar needs add'l funds to make it happen, I'll pick up the tab.

Akubi said...

Steph J,
Horrid image of Nigel jogging on the beach. If my dogs ever encountered such an abomination, they'd be in immediate attack mode.

segfault said...

r-boy @ 6:26 PM:
when we get the forums up...

I propose hiring Casey to set up the forums. We would probably have to deposit a $10,000 retainer to obtain his much-sought-after skills, since, as a professional, he entertains only those who are serious about obtaining his services, but we would receive the balance of the $10,000 (less his billable hours) once the forums were set up. Sweet!

Sprezzatura said...

Speaking of the Snowflake, it occurred to me that he might be using one of the 'bid for work' sites like Guru.com to get some of those web design jobs he keeps talking about.

One wonders if he's fool enough to use "sercasey" as his username there, or if he has some other alias.....

Sprezzatura said...

About forums -- many, if not most, web hosts these days have "one button" setup for the popular forums like phpBB as well as for WordPress blogs. You can literally take this kinds of site online in a day, if you want to.

The time-consuming part is if you choose to DIY and/or do a lot of customization.

Akubi said...

The TimeLineGuy is sounding increasingly more and more like Casey than Casey. Perhaps they can have a dialogue in the next podcast if that ever. Excellent work TimeLineGuy, whoever you are.

Anonymous said...

I like having a package that I can bite into.

Casey Luvs Teh Package

Tony Soprano said...

24 hours since Snowflake did the call in and not a fucking peep. WOW! My guess is Snowflake is in full downswing bunkered down lender ignore mode now that he realizes he can't even do a podcast without fucking it up and the Haterz crushing his dandelion. Now he's hit the big time press with the Economist article. In the past, wouldn't he have trumpeted this from every hour as a "sweet" deal?? Casey! What's up? Clown got your tongue or is it too far up Nigel's ass? Scared now bitch?

Anonymous said...

Segfault,

We could give Casey a note for $10k...then let him see how it feels to hold worthless paper.

Ogg the Caveman said...

anon@5:20:

I've never heard the phrase "impaled on the turgid wang of the devil" in the context of real estate before. Good find.

Mer Merde said...

Sort of reminds me of my dead chi http://blog.wired.com/tableofmalcontents/2007/03/who_designed_th.html

Ogg the Caveman said...

@ Stephanie J:

Somewhere on the internet there is a drawing of a bunny rabbit removing its head with a cheese grater, captioned "desperately trying to get that image out of my head".

I am that bunny.

Akubi said...

Exactly, Ogg.

Tony Soprano said...

Snowflake just updated and NOT A WORD about the show or the article in the Economist. Just whining that he doesn't feel he should have to sign a promissary note for the next short sale.

Legion said...

got this gem (patrick.net) from Casey's favorite ass toy...

Nigel Swaby Says:

February 26th, 2007 at 12:17 pm
HARM,

Thanks for showing how weak your anti-housing arguments are by going straight to the name calling.

I understand there is nothing I can say that will convince the regular posters here to change their minds about housing.

I just hope the readers who are undecided, like the person whose comments started this thread, will be able to see the alternative points of view that I bring to the discussion.

You keep calling names and making personal attacks, but I don’t think it helps sell your position any better.

Nigel

I really love the way this moron tries to play the moral high ground when we here at EN all know all the name calling is not beneath him, and it is in fact Nigel who has the weak arguements and has to resort to deleting comments from his 'award winning self nominated' blog.

Legion said...

The nerve of that guy stating the lender should just be happy to break even. No moron, lenders are there to make money, not subsidize your hare brained schemes and lavish unearned lifestyle! what a whiner!
You're right, he didn't mention last night's crash and burn talkie show, nor the Economist article, which means I think he gets the picture that maybe his tale of bullshit is getting a little to public.

Schnapps said...

So did anyone ever see these photos? The traffic ticket is still there:

http://www.flickr.com/photos/94588127@N00/

-Nicole

Stupidtoo said...

Wow, I sure have missed a lot. It will take me week to catch up. I just read the call and that was some funny stuff. To bad I had to go to an Automation conference this week. I guess it was better than sitting in my cube.

I started the legal process to evict one of my tenants. It really sucks. I feel horrible for the family. But they are now 5 months behind and they can not live rent free especially when I am working my butt off to pay the mortgage. I sure would like to stay home with the kid. I have a feeling they are going to trash the place when they leave.

I have already put the house on the market. I cannot wait to get that monkey off my back. Being a landlord is not that great. It is worse when you are not financially secure. Every time a tenant is late my budget for the month sucks. The worst thing is that each of my tenants lives in a nicer/bigger place than my crappy, tiny, slum apartment.

Casey Serin is a fucking faggot said...

The New York Times

March 23, 2007

The Subprime Loan Machine

By LYNNLEY BROWNING

Edward N. Jones, a former NASA engineer for the Apollo and Skylab missions, looked at low-income home buyers nearly a decade ago and saw an unexplored frontier.

Through his private software company in Austin, Tex., Mr. Jones and his son, Michael, designed a program that used the Internet to screen borrowers with weak credit histories in seconds. The software was among the first of its kind. By early 1999, his company, Arc Systems, had its first big customer: First Franklin Financial, one of the biggest lenders to home buyers with weak, or subprime, credit.

The old way of processing mortgages involved a loan officer or broker collecting reams of income statements and ordering credit histories, typically over several weeks. But by retrieving real-time credit reports online, then using algorithms to gauge the risks of default, Mr. Jones’s software allowed subprime lenders like First Franklin to grow at warp speed.

By 2005, at the height of the housing boom, First Franklin had increased the number of subprime loan applications it processed sevenfold, to 50,000 every month. Since 1999, Mr. Jones’s software has been used to produce $450 billion in subprime loans.

The rise and fall of the subprime market has been told as a story of a flood of Wall Street money and the desire of Americans desperate to be part of a housing boom. But it was the little-noticed tool of automated underwriting software that made that boom possible.

Automated underwriting software spawned an array of subprime mortgages, like those that required no down payment or interest-only payments. The software effectively helped move what was a niche product only a decade ago into the mainstream.

Automated underwriting “replaced the ways we used to extend credit,” said Prof. Nicolas P. Retsinas, director of the Joint Center for Housing Studies at Harvard.

Automated underwriting is now used to generate as much as 40 percent of all subprime loans, according to Pat McCoy, a law professor at the University of Connecticut who has written on real estate lending.

The software itself, of course, cannot be blamed for lowered lending standards or lax controls. But critics say the push for speed influenced some lenders to take shortcuts, ignore warning signs or focus entirely on credit scores.

“Used properly, automated underwriting is a wonderful thing,” Professor McCoy said. The problem, she said, comes when lenders customize it to approve the wrong borrowers.

During the housing boom, speed became something of an arms race, as software makers and subprime lenders boasted of how fast they could process and generate a loan. New Century Financial, second to HSBC in subprime lending last year and now on the brink of bankruptcy, promised mortgage brokers on its Web site that with its FastQual automated underwriting system, “We’ll give you loan answers in just 12 seconds!”

Dozens of little-known software companies compete with Arc Systems. They include MindBox of Greenbrae, Calif.; Metavante, in Milwaukee; Mortgage Cadence of Greenwood Village, Colo.; and Overture Technologies in Bethesda, Md.

With small staffs, the companies typically sell their software to home lenders with vast networks of call centers employing hundreds of thousands of loan officers. Some big Wall Street banks and housing lenders bought the software, then developed their own systems. First Franklin, which has been acquired by Merrill Lynch, said that it stopped using Arc Systems’ software last year to create its own proprietary system.

Subprime lenders like automated underwriting because it is cheap and fast. A 2001 Fannie Mae survey found that automated underwriting reduced the average cost to lenders of closing a loan by $916. The software quickly weeds out the very riskiest of applicants and automatically approves the rest.

“You don’t have to chase every lead — just greenlight ’em,” Mr. Jones of Arc Systems said in an interview.

And greenlight them they did.

By mid-2004, Countrywide Financial, a major subprime lender, had used MindBox’s automated underwriting system to double the number of loans it made, to 150,000 monthly.

“Without the technology, there is no way we would have been able to do the amount of business that we did and continue to do,” Scott Berry, executive vice president for artificial intelligence at Countrywide Financial, told a trade publication, Bank Systems & Technology, in the summer of 2004. Countrywide now uses a proprietary system.

Early forms of automated underwriting were first developed and used in the 1970s to process car loans and credit card applications.

By the mid-1990s, software for home buyers with good credit had gone mainstream at Fannie Mae and Freddie Mac, the large government-sponsored mortgage finance companies, and big traditional lenders. But none had been developed for subprime lending, then a niche market.

There are no estimates of the sales volumes for this software niche, but companies like Arc Systems often have annual revenues in the tens of millions of dollars. Arc Systems, whose name is something of a pun — Mr. Jones’s middle name is Noah — earns $10 to $30 each time a borrower submits a loan application.

Proponents say the software makes things fairer and more objective for risky borrowers.

“It takes the subjectivity out of the good ol’ boy system in which Martha knows Joe, who approves the loan — then you end up with a bad decision,” Mr. Jones said.

Samir Rohatgi, a vice president at MindBox, said that old system of manual underwriting actually encouraged loan officers working on commission to grant bad loans.

“Those people were feeling pressure because of the way their company’s performing, so the decisions are sometimes biased,” he said.

Mr. Jones said that because his program, LendTech, could parse credit reports for more than 3,000 risk variables, “we had better analytics than the trading desks” on Wall Street.

But some question whether such analysis gave comfort where it was not deserved.

“Automated underwriting put the credit score on such a pedestal that it obscured the other important things, like is the income actually there,” said Professor Retsinas of Harvard. “Before there was A.U., down payment mattered a lot. Where we’ve crossed the line in recent years is to say, we don’t need down payment.”

Michael Perna, Arc Systems’ marketing director, said that income “is supposed to be verified by a person.”

Mr. Jones founded Arc Systems in 1984 to produce software for Suwannee County, Fla., which used it to track when policemen issued parking tickets and when jail wardens fed inmates. Then in 1992, a local subprime lender called Home Inc. asked Mr. Jones to develop a program to screen risky borrowers. In 1997, amid the adoption of the Internet, “we ditched that software and went Web-based,” Mr. Jones said.

Since 1999, his software has been used by major subprime lenders including HSBC and its former Household subsidiary, Deutsche Bank and the Virginia Housing Development Authority. Lehman Brothers and the Ellington Management Group, a big seller of mortgage-backed securities, have used LendTech to analyze pools of billions of dollars of subprime loans that they sold to big institutional investors.

“We’ve had clients all along the food chain,” Mr. Jones, who is 66, said.

An electrical engineer by training who worked at NASA in the 1960s and then Unisys, Mr. Jones keeps his NASA patches on a wall in his office. He likes to clear cedar and juniper brush on his 100-acre property near Austin. His wife, Gayle, a nurse by training, is the company’s executive vice president. Arc Systems has 52 employees and at one point employed seven married couples.

“We like to have picnics and play softball,” Mr. Jones said.

Since the subprime housing market began falling apart late last year, Arc Systems’ sales have dropped 30 percent. Still, Mr. Jones sees a sparkling future for automated underwriting. “The smart money on Wall Street is now looking for the gems — and they’ll use A.U. to find them.”

Then he added, “You know that old symbol of the snake eating its own tail? Well, we’ve always thought the industry was that. And that’s kind of where we’re at right now.”

Anonymous said...

Ummm, am I one of the few that believe the housing prices are bloated? Everyone is going on about the bad loans, but not many are going on about how even the good loans, will be bad loans as a result of the homes that were bought with them arent worth as much as they were 'appraised' at. I know people, as everyone does who went out and bought homes with standard fixed rate mortages that they couldnt afford. Colleagues of mine who earn roughly the same alary went out and bought homes that were uo to 5 or even 6 times their annual salary. And these home values have no appreciated at all. Several of them want out, but theyve fund that their home wont sell for what they owe. And this sadly seems commonplace, and this is in 'middle america', not florida or cal. Someone should have told then, that a 2500 sq ft McaMansion on a quarter acre lot 50 miles outside Cleveland in the middle of nowhere isnt worth $400k. The whole real estate market was and is built on hype. The issue at hand goes way deeper than just bad loans.

aaron said...

hey guys/gals,
bit off topic here but i actually got something out of casey's blog. Someone posted this link saying that this was a site worth visiting

http://www.smilesforsophie.com/

I am glad I actually got something good out of his blog. There is someone worthy of charity.

Aaron

PS. Rob maybe you could make a post just for this site.

aaron said...

anon: 12:48

I agree with you to an extent. When i first bought my home i qualified for a loan that was 7 times my take home. At the time i was living with my girlfriend(now wife) so her salary was not included. A year later i refinanced at a fixed rate of 5 5/8%.
I was lucky. well not lucky b/c i knew we were going to get married(even though she didn't know it). even though she is not a US citizen she could be part of the income on our fixed rate loan.

But i do know a few folks who bought this past year here in NOVA. I feel for them but most will live here a long time. long enough that there houses will appreciated. plus this area will not suffer as much as other areas due to government jobs and actual increase in jobs for gov't IT workers with security clearance. I think at most here we see another 10-15% correction in prices. West coast and Northeast...more for sure.

Tell you what though. no matter where i lived i would sit on my cash if i were looking for a home.

CASEY'S WIFE said...

Foreclosures Force Suburbs to Fight Blight

SHAKER HEIGHTS, Ohio — In a sign of the spreading economic fallout of mortgage foreclosures, several suburbs of Cleveland, one of the nation’s hardest-hit cities, are spending millions of dollars to maintain vacant houses as they try to contain blight and real-estate panic.

In suburbs like this one, officials are installing alarms, fixing broken windows and mowing lawns at the vacant houses in hopes of preventing a snowball effect, in which surrounding property values suffer and worried neighbors move away. The officials are also working with financially troubled homeowners to renegotiate debts or, when eviction is unavoidable, to find apartments.

***
whole article @

http://www.nytimes.com/2007/03/23/us/23vacant.html

****

the picture shows a sign in front of the house that says 'no money down' just like GASEY!

http://galinaserin.blogspot.com/

TK said...

Dawg,

Speaking of Copyright Violations, I just contacted the Economist.

"I am writing today to inform you of blatant copyright violation on (Nigel's bad blog, with details). This blogger has not simply used a snippet of copy, he has resorted to wholesale cutting and pasting. Worse still, he does this on a regular basis and earns ad revenues for "producing" content. As a former editorial staffer who used to chase down people like Nigel, I do not know whether it is worse that he is making money from your content or that he is too lazy to write his own. Thought you should know. And thank you for producing a first-rate publication."

I Am Not Facing Foreclosure said...

Speaking of Nigel, when I first started my blog, he would pop in every couple days over there and post something like "Read more about Casey here" and link back to one of his bs 'Casey is a victim' articles. I removed all his links once I quickly figured out his game.

I schooled him on one of his inane posts about what a subprime loan is and of course he never responded.

Internet Police said...

I asked Nigel about using the actor's photo w/o permission....he let the question post, but no response.

TK said...

No I believe he said "If (he) were asked to remove it he would.

I for one intend to be all over his ass. Or rather all over the people whose content he steals with abandon. His cut and paste bullshit still leaves him without any worthwhile copy. Imagine if he had to come up with his own? Oh yeah, you'd end up with a 200 word post like his latest in I LOVE CASEY LAND. No wonder this guy's a traffic repellent.

Some Guy From Colorado said...

Does anybody know how much cash back Casey got on the Modesto property? Also, if this property is short sold does the lender on the 2nd get 100% screwed?

Casey, you son of a... said...

Posted this at IAFF, sure it won't get through:

Don't you think that at this point all your lenders have read the site, see that you have no intention to repay, and that you willingly and cluelessly signed a promissory you didn't understand for Countrywide? Don't you think that from the lenders' viewpoint, if they let you get out of this situation debt free, that it will be setting a shining example for all of the tens of thousands of other foreclosees that they can do the same?

You haven't garnered much public support for your deeds. You aren't a homeowner who foolishly refi-ed and took out a wad of cash and now is stuck owing more than their home is worth. You're an unemployed flipper who bought eight houses at once using liar loans, has had three foreclosures with two more on the way, and still goes out to Macaroni Grill and snowboarding trips. If you wanted public support, you should have gotten a job a long time ago and started taking pictures of your pantry full of Ramen noodles.

As things stand, it's in the banks' best interests to put the screws to you. You clearly tried to game the system, and they need to prosecute you and others like you to show that they aren't going to roll over and eat every last dime of bubble fraud. Their stocks are already in the crapper, so imagine what investors will think if they see people like yourself walking away from this with their debt erased. Expect them to tally their losses after the foreclosures, sue you, attempt to force you into bankruptcy, and then push to keep your debts from being released under grounds of mortgage fraud.

I know you think that every time you take a picture of yourself at Macaroni Grill or downing wheatgrass shots with Nigel that you're sticking up your middle finger to the haters. But you don't owe us money, you owe the lenders, so keep that in mind the next time you offer up a "screw you guys" photo. You're a very public figure, with very little public support. In other words, you're a juicy target.

Why no comment on the call-in or Economist? Economist is no USA Today. Expect a lot of new traffic and not of the cheerleading variety.

Nacho rules!!! Shout out to my main cat. (sorry Sputnik)

ASW: NigelSux

Anonymous said...

How do you change the picture for Casey's Wikipedia entry? The one know looks too "nice".

The picture of Casey sucking on a Jamba and holding a phone to his ear while wearing his murse is classic!! Can someone replace it?

Lost Cause said...

Patrick.net drops the hint. The Galind - O mystery...hehehe.

Miguel said...

I just got the print edition of The Economist.

The bad news is that he's only on page 87(*), not right upfront as we thought.

The good news is that 'Casey' and 'Serin' are the first two words of a separate highlighted feature about the US housing market meltdown - so it's overwhelmingly likely that the CEOs of any companies involved will read it.

(*) of the UK edition, international editions may vary.

astrid said...

I dispute your characterization of PBS and the Economist.

PBS produces some of the most in depth, thoughtful, and serious minded news/current events programming anywhere.

The Economist, on the other hand, continues its schizophrenic support George W Bush and his (obvious to everyone but Dubya and half of the Economist staffers) policy failures. It's as much of a joke as The Nation or The New Republic, though at least The Nation makes no pretense at impartiality.

Rob Dawg said...

You are correct about PBS for the most part. I just thought I'd stir things up a bit. As to the Economist however IMO you are just projecting. They've been quite harse about Bush's prolifigate spending for one thing. You know for a decade we've been hearing a relentless drumbeat of the media agenda trying to emasculate Bush so when we hear legitimate criticsm like the Economists' it sounds tame. Clinton was a better Conservative than Bush by far even if or maybe because he faced a hostile Congress. THey must put something in the water at 1600. All we needed to do was pacify the damn place, draw up a partition map, sign corporate oil contracts and leave. Nooooo we had to build nations and not coincidentally legacies. The E doesn't take on the President, just his economic policies and there I find their analysis evenhanded.

Miguel said...

The Economist, on the other hand, continues its schizophrenic support George W Bush and his (obvious to everyone but Dubya and half of the Economist staffers) policy failures.

That bears very little resemblance to the line taken by the Economist I'm familiar with, which has been strongly critical of Bush throughout most of his presidency.

True, the magazine initially supported the Iraq war, but retracted that support pretty quickly when it was clear that Bush had no idea how to manage the fallout, and since then the tone has been overwhelmingly critical, of domestic as well as foreign policy. They even plumped for Kerry in the 2004 election.

astrid said...

Perhaps I just read The Economist on a series of bad days, though I assure you that I am not projecting. I read the Economist through most of college and finally let the subscription lapse because they were letting GWBush get away with things they harshly criticized in other governments.

I've read their tepid comments in 2004 - in my mind, they greatly understated the critical importance of kicking Bush out of office.

And I recently got a subscription to the Economist in exchange for some unused frequent flier miles. Read it for three weeks, swore a whole lot more at their pathetic coverage, and gave away the rest of my subscription.

Miguel said...

This article appears in the current edition.

And here's its conclusion:

The man who will pay the biggest political price for Iraq will ultimately be Mr Bush. It is hardly surprising that liberal historians debate whether he is the worst president ever. But now conservatives are beginning to play the same game. A recent poll of hard-core conservative activists found that only 3% described themselves as George Bush Republicans, compared with 79% who regarded themselves as Ronald Reagan Republicans. But the damage will not be limited to the party leader. For years to come, the Republicans will be paying a collective price for the "stuff" that happened in Iraq.

This is not in any way an unusual comment for them: they've had it in for Bush ever since they realized that his fiscal irresponsibility was anything but conventionally conservative.