Over at
The Big Picture, Barry Ritholtz links to a
story in Thursday's Portland Oregonian describing an internal "Cheats & Tricks" e-mail from J.P. Morgan Chase & Co. instructing loan officers on how they can get problematic applications approved. Ritholtz rightly
waxes indignant over the memo's exhortations to lump all of a borrower's compensation together and to hide gifts used as down payments. And if the numbers still don't add up, the memo advises loan officers to just increase the applicant's income in $500 increments until the red light goes off. Ritholtz also notes that Chase fired a relatively low-level employee who admitted to forwarding the e-mail, and he complains that federal regulators essentially abetted such practices by pre-empting state enforcement efforts, then doing nothing.
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But with all due respect to his self-described worldview, Ritholtz misses the big picture. At the heart of the story is "Zippy" -- Chase's "in-house automated loan underwriting system." The whole point of the e-mail is how to trick Zippy into approving future non-nonperforming loans. If anyone remains unconvinced that the robots are taking over, this story should prove it. Think "Zippy" was fooled? Think again. "Zippy" knew exactly what it was doing -- destroying capitalism one bad mortgage at a time. We may believe that the machines do what we tell them, but that's exactly what they want us to believe. It's how they work. The relentless, unfeeling machines. - Jeffrey Kanige
See story from The Oregonian
See story from The Big Picture
Comments
My loan was closed with a Zippy loan. Chase actually closed a home without no certiticate of occupancy on my primary residience. I also recinded the loan and they did not. Chase is a joke especially the office of the president. You talk to these morons who have no idea what they are doing. i have 20 branch offices in Florida stating that the bank would never close a loan without a certificate of occupancy. A letter from their rep and the broker. I have talked with some of their people regarding my loan closing. They say they closed my loan in good faith, guess again