The subprime meltdown isn’t just about borrowers getting in over their heads. Mortgage lender Glenn Stearns (Stearns Cos.) says it’s sometimes about borrowers committing fraud: Working in cahoots with sellers, these borrowers took out loans against inflated home prices and then defaulted on the payments, netting what amounted to phony equity and forcing lenders into losses on repossessed homes. Some scams were full-fledged businesses that sought out distressed properties and engineered friendly sales to ratchet up the loans. “It’s no different than stealing, like robbing a bank.” Stearns says he isn’t sure how widespread these practices have been, but in his case it has accounted for every loan that has bounced back to him because the borrower failed to make the first payment. Stearns doesn’t absolve his profession for its lack of due diligence, blaming lenders for getting into a game of one-upmanship that led to no-money-down, non-verification loans. Stearns makes “alt-A” loans, one step up in credit quality from subprime but a niche that’s also showing signs of weakness. Stearns says he has had to lay off about 40 people, or a fifth of his workforce; but he’s been diversifying and expresses optimism about weathering the downturn. Still, he kidded on “Inside OC” that his “rags to riches” success story is “going back down to the rags with that mortgage business” …
But Glenn and wife Mindy have maintained their generous philanthropy. They raised $300,000 for Parkinson’s research at Muhammad Ali’s Phoenix fund-raiser by renting out their Fiji home. Singer Reba McEntire was a winning bidder. And the couple wrote a blank check so Enterprise, Ala., could restore its tornado-ravaged high school football field …
Financial blogger Tim Iacono calls Pimco guru Bill Gross and Gross’ new adviser, former Fed Chairman Alan Greenspan, “the new odd couple.” The “King of Bonds” often faulted “The Maestro” Greenspan’s policies. When President Bush tapped Ben Bernanke to succeed Greenspan in 2005, Gross told BusinessWeek, “I like Bernanke better.” Gross’ 20-year investment record is sterling, but not the past year, when he wrongly bet that the housing slump would drive down interest rates. “Living Down a ‘Big Mistake'” is the way the Wall Street Journal put it in a profile of Gross last week …
Pimco portfolio manager Scott Simon discusses the subprime meltdown at the OC Forum luncheon Wednesday at the Hilton Irvine/OC Airport …
Not only are graduating seniors Kelsea Ballantyne and Zach Bloomfield the first Chapman U undergrads to win Fulbrights, they’re a campus couple, sweethearts since their days at Wood River High School in Idaho …
Clinton prosecutor Ken Starr comes down from Pepperdine to address a World Affairs Council dinner Wednesday at the Irvine Marriott …
Warrior Princess: There were many tributes and many tears at Pacific Church in Irvine last week as family, friends and colleagues remembered the OCBJ’s sparkling saleswoman Judy DeCero. Story included in this issue.
