Complaint Review: Wilmington Finance Division Of AIG

Wilmington Finance was one of the Prime Culprits in the Subprime Meltdown and Market Collapse of 2008

The previous post from 2008 inspired me to share my experience with Wilmington Finance. 

Most people blame politicians, hedge fund managers and Wall Street for the collapse of 2008.

The harsh reality is that the subprime meltdown could not have happened without young male originators (useful idiots) in
their early-to-mid 20's who lived their lives like a National Lampoon's gross out flick after work. 

I saw it first hand at boiler room brokerages, Ameriquest and Wilmington Finance. 

The sad part is - a lot of them are still around.

William John McCloskey  

Well where do I start. I worked for Wilmington Finance for a little over 3yrs. and they certainly did take predatory lending to a new level. I can't think of one honest person who worked there, ever. Those types of company's like Wilmington Finance are closing down and going out of business quickly because the refi boom is over and so is sub prime lending for the most part. I used to laugh with my coworkers about how we could give a guy $80,000 cash out of his equity, but this same guy couldn't even walk into Sears with his 530 fico score and finance a washing machine. People who continued to make late mortgage payments already 1x30 lates 2x30 lates 3x30 lates on there mortgages. But Wilmington Finance didn't care and neither did any of the company's who would buy these loans from us didn't care( by the way they bought
them for a lot of money, that's why they always had a huge pre-pay to insure that who ever bought them would be able to make there money back by you paying 60 months worth of payments at your high rate average 8%-10.5% for subprime
people).... bottom line is people at that company and many like it across the country made a lot of money and got rich and screwed alot of people.

So when you are to lazy to get off your a*s and drive down the street to a local Bank where you sit face to face with a guy who lives in your community and would never dream of ripping you off,,,, then that's what you get for doing business on the phone or internet with some jackass three states away who wants to screw you so he can go out with his 22 year old buddies and buy $400.00 dollar t-shirts and drink their faces off at a night club.... I have just described for you
your typical Wilmington Finance employee, and employees of every other sub prime mortgage lender that used to do business in this country till it all ended a few months ago.

Every single little p***k that worked at these places would brag about how much they just made by screwing someone. They are all young dummies who I wouldn't have hired to make sandwiches at a deli yet they were all making $100,000 a
year lying to guys like you.

In the end I'm glad you did not go through with your loan with them, you were smart, some others were not so lucky. I'm sure there are thousands of people out there who were happy driving with their wives or girlfriends to settlement
and then were given papers that were completely different than the quotes they were given over the phone or e-mailed or the gfe's that were mailed to their homes, and these people ... most of them went ahead and signed and ruined their
lives and a lot of them eventually lost their homes because they couldn't afford the new payments and now we are hear 1-26-08 refi boom over, sub prime lending gone, foreclosure rates higher than ever, and now most of these little
pricks who were driving BMW's and partying all night are working at Gap or Taco Bell. America, what a great country... most people here in this country care about one person and one person only themselves... and that's the same person
who is to blame for whatever they are going thru now!

I haven't worked at Wilmington Finance since late 2005, but they are still in business and from what I hear still ripping people off, just not at the rate they once did.

Like the saying goes... buyer beware.

Go to a local Bank, Citizens,Wachovia, even as much as I hate to say it try Countrywide... but you go to a chop shop like Wilmington Finance and you will get screwed.

One last thing, most people that have used Wilmington Finance have gone thru Lending Tree, they are just as guilty. They know exactly what is going on, but they cover their asses. So screw them too.

My name is William John McCloskey. I blew the whistle on Wilmington Finance in 2005 when I walked out of WFI after a very short 4-week tenure. 

Attorneys from Wilmington Finance responded to my complaint to the office of the Pennsylvania Attorney General.

I responded back:


April 14, 2006

Carlos L. Cueva, Jr.
Commonwealth of Pennsylvania
Office of the Attorney General
801 Hamilton Street, Fourth Floor
Allentown, PA 18101

 Re: Complaint # G-000576-2006

Dear Mr. Cueva:

I would like to respond to the April 7, 2006
letter drafted by Timothy B. Hill, an Assistant Vice President and attorney at
Wilmington Finance. Mr. Hills letter does not constitute a rebuttal to my
March 16, 2006 letter, mainly because it is a well-worded public relations
statement.

Mr. Hill correctly states that WFI offers fixed rate
products with a variety of terms. As I have stated multiple times, Wilmington
Finances commission plan based on a tier system encourages loan officers to
place customers into programs that generate the most revenue for the company,
namely loans with high origination fees or their bread and butter loan, a
2/28 ARM with a 3-year pre-pay (they offer a 3/27 ARM that does not generate as
much revenue). This would be described as upselling. I have enclosed supporting
documentation about this concept.

Mr. Hill cites the fact that WFI does not originate Section
32 loans. Hypothetically, a loan officer could legally charge an A-plus
borrower a four-point origination fee for a 30-year fixed loan with an 80 LTV
(loan-to-value). At WFI, it would bypass their Section 32 analyzer. Ethically,
however, it would violate RESPA (Real Estate Settlement Procedures Act) laws. I
have enclosed supporting documentation which describes a Section 32 violation.

Mr. Hill cites WFIs implementation of the WilCompli
high-cost analyzer. I would like to point out that this program was not
utilized during my brief tenure at Wilmington Finance.

 Mr. Hill regurgitates that it is unclear why I have referred
to Section 404 of SOX. Because Wilmington Finance is a division of a publicly
traded company (AIG), they should be well aware of the ethical provisions of
the act. I was gracious enough to explain why I have cited the act in my March
16, 2006 letter, thus delivering a knockout blow. They are now playing
possum by continuing to give the appearance of being confused as to why I am
referring to the act.

 If an audit is
done at Wilmington Finance, and it shows that a disproportionate number of
borrowers have been charged excessive origination fees and that a
disproportionate number of borrowers have been placed in a 2/28 ARM program,
the value of those loans which WFI sells on the secondary market and are
eventually bundled as asset-backed securities or mortgage-backed securities
could be severely lessened. Thus, Section 404 of SOX applies because the
process starts with the origination of the loan.

 I would like to
point out that Mr. Hill did not address my accusation of age discrimination. I
am looking to be compensated not only for the reasons that I have previously
given, but because I was the victim of WFIs unethical hiring and firing
practices, which play a significant role in their predatory lending.

 Finally, I recommend that Wilmington Finance should be the
subject of an audit and I would also like to recommend that present and former
employees of WFI should be interviewed about the companys lending practices.
Once an audit is done, the data will prove that my complaint is not frivolous.

Sincerely,

 
Bill McCloskey

Enclosure

My name is William John McCloskey. I blew the whistle on Wilmington Finance in 2005 when I walked out of WFI after a very short 4-week tenure. 

I walked out because it was apparent to me that loan officers at WFI were trained to upsell borrowers into subprime loans for the refinance of their existing mortgages. It became readily apparent to me that the overwhelming majority of their borrowers belonged in a traditional or ALT-A 30-year-fixed mortgage. 

I could have made a six-figure salary at WFI. However, I had experience unlike some of the young loan officers, which were mostly kids right out of college. They did not have the slightest clue that what they were doing was unethical because most of them knew very little about the mortgage industry and the secondary market. They only did what they were told and functioned as salespeople. 

I articulated my observations to the Pennsylvania Department of Banking and the Pennsylvania Attorney General. I argued that WFI did not offer a proper training program like legitimate mortgage companies did during that time period. WFI's inexperienced loan officers were taught how to take a 1003 mortgage application, which was uploaded into WFI's dummy-proofed origination software, which then directed the loan officer/originator to a variety of subprime lenders.

Below is an excerpt of my complaint to PA State agencies. I have attached a screenshot from the movie Inside Job. The screenshot perfectly described Wilmington Finance.  

I like to bring your attention to the circumstances surrounding my abrupt resignation last week.

 I was hired by Mike ******* in September. He hired me on the spot because I had interviewed with him back in March after I was terminated by  Ameriquest Mortgage for blowing the whistle on them to government agaencies. I made it perfectly clear to Mr. ****** that I had only closed one loan at Ameriquest and that did not want my name on any of their loans because of all of the fraud that I witnessed while I was employed there.

Below is a copy of the email which lead to my resignation:

I do have 3 potential deals, I showed you them this morning.

Would it be possible to put me on another lead source? From what I have seen, your best lead source is your mail order source. Since I have experience, I might be a better fit with that lead source than with Lending Tree.

I cannot work on Saturdays.

-----Original Message-----

From: ******, Michael
Sent: Wednesday, October 19, 2005 2:48 PM
To: McCloskey, William
Subject: RE: Sat hours

A pipeline is your weekly ticket out. Today marks 1 month here and zero sales. Another week of no submissions and well look to sit down and discuss if your coming here was a correct fit. We issued you a guarantee above the norm due to your experience.

-----Original Message-----

From: McCloskey, William
Sent: Wednesday, October 19,2005 2:42 PM
To: ********, Michael
Subject: RE: Sat hours

I can't work on Saturday, I have a class.

-----Original Message-----

From: *******, Michael
Sent: Wednesday, October 19, 2005 2:20 PM
To: McCloskey,
Subject: Sat hours

Those of you with a putrid pipeline should plan on working 9-1 on Saturday. The 4 hours will be returned to you on Friday 10/28, you may leave at noon

In my interview in both March and September, Mr. ******* never informed me that I would be held to a different standard than employees without experience and I was never told that I would be required to work on a Saturday if I had a putrid pipeline. Furthermore, his high pressure tactics borderline on the absurd. Moreover, if he continues to treat experienced loan officers over the age of 30 like school children, he will have a huge turnaround on the sales floor. I shared my experience with several people in the mortgage industry, and they were completely appalled with the way I was treated.

From what I had seen, the overwhelming majority of newly hired loan officers at your company were between the ages of 22-30 with no experience. This is generally a red flag for me, because it is generally indicative of an "assembly line" environment. This was the case at your company.

Because of my background as a legitimate loan officer, I know the difference between subprime, Alt-A and A-paper loans. Your company is pricing all of its loans as subprime across the board. This coupled with your commission plan based on a tier system is literally forcing loan offers to charge outlandish origination fees to customers with B and B+ credit. I did not feel comfortable charging a 7.99 % interest rate with a 4.50% origination fee to a customer with a 684 credit score. Had I not, I would have not made any significant commission.

Not only is your company charging outlandish fees to people with good credit, your loan officers are not mentioning the origination fees in their sales pitches. I will acknowledge that Mike ****** trained employees to properly present a loan, but it was simply not the reality around me. I spoke to several loan officers who had been with the company 6-months to a year, and at least four of them advised me not to mention the origination fee specifically if I was on Lending Tree.

I would also like to point out that the majority of your loan officers are putting customers into 2/28 adjustable rate mortgages with a 3 year pre-payment penalty. At one point, I was attempting to put together a proposal for a customer with a credit score in the mid-600 range. I asked a loan officer, whose name I forget, for advice. His exact words were: You dont want to put this guy into a 30-year fixed, if you want to get a customer a great deal, then go work for a bank, if you want to make money here, you are going to have to sell people on a 2/28 ARM with a 3-year pre-payment penalty. This particular loan officer had awards for good salesmanship on his desk.

I did not foresee this type of used car salesman environment in my interviews with Mike ******, specifically because Wilmington Finance is a division of a large publicly traded company that is held accountable to the Sarbanes-Oxley Act of 2002.

I was quite vocal about my issues with your companys system of pricing deals. I suspect that this had gotten back to Mr. *******, but I am merely speculating. This could be the reason why he put me under additional pressure to sell. However, I do not have any proof.

I mentioned to ********* that section 404 of SOX pertains to the sales floor at Wilmington Finance. The Act charges management with the responsibility for annually assessing the design and operating effectiveness of internal control over financial reporting and requires external auditors to annually audit and issue a report on the effectiveness of the company's internal controls. Ms. **** informed me that it was her opinion that Mr. ******* intended to discuss my performance and was not threatening to terminate me. Quite frankly, I believe that she obfuscated, because at the very least, Mr. ***** email was a thinly veiled threat to terminate me.

During one of my training sessions with Mr. *******, he admitted that there are loan officers on the sales floor who do not mention certain fees till closing. He went on to say that loan officers at Wilmington who sell like that generally do not last. It is my opinion that Mr. ****** high pressure management style causes this type of behavior, and it is ironic that I struggled because I tried to present my loan proposals accurately, and more importantly - ethically.

I have a framed copy of Lending Trees Loan Officer Commitments, which I displayed at my desk. Your Wilmington Finance Loan Officer Commitments are essentially Lending Trees plagiarized. From my experience, a good majority of your loan officers are violating these commitments on a daily basis.

I feel that I should be paid the full months salary and the guaranteed commission that was promised to me in my package. I do not have any legal recourse to collect it, but I think my request is well within reason.

Sincerely,
Bill McCloskey

I would  like to clarify why the description of non-prime borrowers from my letter dated March 16, 2006 is relevant to how Wilmington Finance originates their loans:

The following definition describes the various borrower categories:

Non-Prime. Non-prime mortgage lending targets a credit score market that falls between Prime lending (also known as A-Paper lending) and Sub-prime lending (known as D-Paper lending). Many mortgage lenders measure potential borrowers loan risk by their credit score, known as a FICO score. A-Paper borrowers have the highest credit rating (750+ FICO), followed by Alt-A or A-Minus borrowers (680+ FICO), then B/C-Paper borrowers (540+ FICO) and finally D-Paper borrowers (below 540).

I had mentioned that Wilmington Finances bread and butter loan is the 2/28 ARM with a 3- year pre-payment penalty. This loan is generally strictly reserved for customers with a credit score below 540, and without a 3-year pre-payment penalty.

As I described in my previous documentation, a 2/28 ARM with a 3-year pre-pay is the most appealing loan to Wilmington Finances investors because it generates the most revenue, even though it is not a beneficial loan for the majority of their customers. The loan also creates possible residual income for Wilmington Finance, because the customer has to refinance into a fixed rate mortgage at the end of the 2-year fixed period. This violates section 404 of Sarbanes-Oxley because of ethical reasons.

Thanks,
Bill McCloskey  

Copy sent to Wilmington Finance

Well where do I start. I worked for Wilmington Finance for a little over 3yrs. and they certainly did take predatory lending to a new level. I can't think of one honest person who worked there, ever. Those types of company's like Wilmington Finance are closing down and going out of business quickly because the refi boom is over and so is sub prime lending for the most part. I used to laugh with my coworkers about how we could give a guy $80,000 cash out of his equity, but this same guy couldn't even walk into Sears with his 530 fico score and finance a washing machine. People who continued to make late mortgage payments already 1x30 lates 2x30 lates 3x30 lates on there mortgages. But Wilmington Finance didn't care and neither did any of the company's who would buy these loans from us didn't care( by the way they bought them for a lot of money, that's why they always had a huge pre-pay to insure that who ever bought them would be able to make there money back by you paying 60 months worth of payments at your high rate average 8%-10.5% for subprime people).... bottom line is people at that company and many like it across the country made a lot of money and got rich and screwed alot of people.


So when you are to lazy to get off your a*s and drive down the street to a local Bank where you sit face to face with a guy who lives in your community and would never dream of ripping you off,,,, then that's what you get for doing business on the phone or internet with some jackass three states away who wants to screw you so he can go out with his 22 year old buddies and buy $400.00 dollar tshirts
and drink their faces off at a night club.... I have just described for you your typical Wilmington Finance employee, and employees of every other sub prime mortgage lender that used to do business in this country till it all ended a few months ago.

Every single little p***k that worked at these places would brag about how much they just made by screwing someone . They are all young dummies who I wouldn't have hired to make sandwiches at a deli yet they were all making $100,000 a year lying to guys like you.

In the end I'm glad you did not go through with your loan with them, you were smart, some others were not so lucky. I'm sure there are thousands of people out there who were happy driving with their wives or girlfriends to settlement and then were given papers that were completey diffrent than the quotes they were given over the phone or e-mailed or the gfe's that were mailed to their homes, and these people ... most of them went ahead and signed and ruined their lives and alot of them eventually lost their homes because they couldn't afford the new paymentsand now we are hear 1-26-08 refi boom over, sub prime lending gone, foreclosure rates higher than ever, and now most of thes little pricks who were driving BMW's and partying all night are working at Gap or Taco Bell. America, what a great country... most people here in this country care about one person and one person only themselves... and that's the same person who is to blame for whatever they are going thru now!


I haven't worked at Wilmington Finance since late 2005, but they are still in business and from what I hear still ripping people off, just not at the rate they once did.

Like the saying goes... buyer beware.


Go to a local Bank, Citizens,Wachovia, even as much as I hate to say it try Countrywide... but you go to a chop shop like Wilmington Finance and you will get screwed.

One last thing, most people that have used Wilmington Finance have gone thru Lending Tree, they are just as guilty. They know exactly what is going on, but they cover their asses. So screw them too.

SINCE JOSE DID NOT GO THROUGH WITH THE LOAN THE INCREASE MAY HAVE BEEN A FIRST PUSH TO BREAK HIM DOWN SO THAT AT THE CLOSE WHEN THE RATE AND COSTS WERE EVEN HIGHER HE WOULD FOLD AND JUST "SIGN THE PAPERS AND BE DONE." TOO MANY "MISTAKES" HAPPEN TO BE "MISTAKES" NO LOAN OFFICER WHO IS HONEST HAS TO LIE TO HAVE LOANS CLOSE. ABOUT THE ONLY VARIABLE WOULD BE THE SHORT TERM INTEREST BECAUSE YOU DO NOT KNOW WHAT DAY THE LOAN IS GOING TO CLOSE WHEN YOU FIRST SPEAK WITH THE CUSTOMER.
GOOD LOAN PEOPLE WORK TOO HARD TO GET PAST THE LIES THESE BAIT AND SWITCH THROW OUT. GOOD FOR JOSE AND HIS CONTACTING THE PEOPLE HE DID.

SINCE JOSE DID NOT GO THROUGH WITH THE LOAN THE INCREASE MAY HAVE BEEN A FIRST PUSH TO BREAK HIM DOWN SO THAT AT THE CLOSE WHEN THE RATE AND COSTS WERE EVEN HIGHER HE WOULD FOLD AND JUST "SIGN THE PAPERS AND BE DONE." TOO MANY "MISTAKES" HAPPEN TO BE "MISTAKES" NO LOAN OFFICER WHO IS HONEST HAS TO LIE TO HAVE LOANS CLOSE. ABOUT THE ONLY VARIABLE WOULD BE THE SHORT TERM INTEREST BECAUSE YOU DO NOT KNOW WHAT DAY THE LOAN IS GOING TO CLOSE WHEN YOU FIRST SPEAK WITH THE CUSTOMER.
GOOD LOAN PEOPLE WORK TOO HARD TO GET PAST THE LIES THESE BAIT AND SWITCH THROW OUT. GOOD FOR JOSE AND HIS CONTACTING THE PEOPLE HE DID.

SINCE JOSE DID NOT GO THROUGH WITH THE LOAN THE INCREASE MAY HAVE BEEN A FIRST PUSH TO BREAK HIM DOWN SO THAT AT THE CLOSE WHEN THE RATE AND COSTS WERE EVEN HIGHER HE WOULD FOLD AND JUST "SIGN THE PAPERS AND BE DONE." TOO MANY "MISTAKES" HAPPEN TO BE "MISTAKES" NO LOAN OFFICER WHO IS HONEST HAS TO LIE TO HAVE LOANS CLOSE. ABOUT THE ONLY VARIABLE WOULD BE THE SHORT TERM INTEREST BECAUSE YOU DO NOT KNOW WHAT DAY THE LOAN IS GOING TO CLOSE WHEN YOU FIRST SPEAK WITH THE CUSTOMER.
GOOD LOAN PEOPLE WORK TOO HARD TO GET PAST THE LIES THESE BAIT AND SWITCH THROW OUT. GOOD FOR JOSE AND HIS CONTACTING THE PEOPLE HE DID.

SINCE JOSE DID NOT GO THROUGH WITH THE LOAN THE INCREASE MAY HAVE BEEN A FIRST PUSH TO BREAK HIM DOWN SO THAT AT THE CLOSE WHEN THE RATE AND COSTS WERE EVEN HIGHER HE WOULD FOLD AND JUST "SIGN THE PAPERS AND BE DONE." TOO MANY "MISTAKES" HAPPEN TO BE "MISTAKES" NO LOAN OFFICER WHO IS HONEST HAS TO LIE TO HAVE LOANS CLOSE. ABOUT THE ONLY VARIABLE WOULD BE THE SHORT TERM INTEREST BECAUSE YOU DO NOT KNOW WHAT DAY THE LOAN IS GOING TO CLOSE WHEN YOU FIRST SPEAK WITH THE CUSTOMER.
GOOD LOAN PEOPLE WORK TOO HARD TO GET PAST THE LIES THESE BAIT AND SWITCH THROW OUT. GOOD FOR JOSE AND HIS CONTACTING THE PEOPLE HE DID.

Wilmington Finance finally responds after the above actions were executed. AFter reporting specifically to LendingTree.com, a Regional Manager conacts me and inquires about the occurrances of my transaction. I explained in detail just as I did above.

He interviews the loan officer as well of the situation. Conclusion: Loan Officer lied about the NJ Statute that suppossedly changed from 5% to 1%. Regional Manager assures me that this was an isolated event, and the loan officer is under probation for his scrupulous methods of increasing the rate.

He further apologizes and honors the original rate that was given. At this point, I decline. I do NOT want to deal with this company any longer. He refunds my expenses incurred obtaining another appraisal.


To answer other's comments:
1. Loan Officer LIED. They cannot change the rates to their wanting. There are laws put forth to prevent these kinds of actions.
2. I have a Tier 1 Credit Score. I was able to obtain another Mortage Company within days that offered decent rates
3. The rate change of 0.25 % translates to $25,000 + $1,700 in additional origination fees is a huge amount of money.

I work for Wilmington, and if you only knew how often this kind of thing happens, you would not have wasted your time calling lawyers. There is NO WAY, I repeat, NO WAY to give 100% accurate numbers to a borrower until the appraisal is done. IMPOSSIBLE! The payoff may come in higher, the income could be lower, the appraisal could come in high / low, and YES! - programs and rates change on a daily basis.

If you applied with Wilmington, you ARE NOT a prime borrower. This means you can't qualify with a conforming bank at the best possible rate. Therefore, you have to deal with many sub-prime setbacks - including NO RATE LOCK! Since Wilmington NEVER guarantees a rate lock, you really have no complaint. I am SURE your lawyer has told you this already.

Here's a piece of advice: educate yourself about something before you get yourself all worked up. There is no use getting all upset over something that is sure to happen when you don't pay your bills on time and have to settle for a sub-prime lender. We are what we are, and you are what you are. I hate big business and fraud just as much as the next person; but when you get hiked 25 basis points and get charged an extra $1700, you are not a victim - you are just like every other consumer who has below prime credit and has to refinance through a subprime lender. It's the nature of the beast...

I am a loan officer that came across this comment while searching the site about Wilmington because I have many friends that work with the company. I would like to start by saying you weren't actually a victim of the "classic" bait and switch. A real bait and switch happens when a customer gets to the closing table, only to find out their loan amount; and or rate; have been changed. This particular loan officer has the professional integrity and courtesy to notify you of the changes 6 days before the closing. As a loan officer there are certain things we aren't made aware of until it gets closer to the closing date. There are so many rules and regulations in each different state, there's no way one person can keep up with them. If your loan was set up with a 5% pre pay and the loan officer found out it can only be 1%, then obviously your rate has to change a little. For example, if you lent money to a friend who was going to move out of state within a year as apposed to 5 years, you would want more security in your repayment. Even after all of this, your rate was only changed by .25%. I don't think that very small increase would have affected your payment by much at all. Even with the loan origination amount increasing as it did, your payment probably would have only increased by a minimal amount. Like I said, I know many people who work for the company and I can tell you this is not something the employees try to do to their customers on a regular basis. Things happen in the refinance process that is really no one's fault, that we as loan officers have no control over. Just imagine if this loan officer never even told you about the change, and then you got to closing; only to find out the rate is higher. Now that is what a real bait and switch is. I bet when you went to another company the rate and payment ended up being about the same. On an ending note, in my opinion, you wasted your time contacting all those people over a .25% increase.