phil.rice

For several months beginning (about) August 2005, I tried really hard to notify Fremont and New Century of the mortgage fraud. At first, I thought they were a victim. I thought if they just knew what was going on, surely they would want to stop it. I was wrong about that. It took a few weeks/months for me to “get it”, but eventually I realized they were not a victim, they were actively involved. I described their business plan as – “act dumb and repeat the process as often as possible”.

I tried telephone, email, snail mail. I sent letters to upper management, and in the case of NEW, I exchanged emails with a major stockholder. Did they listen? Did they take me serious? Maybe – but one thing is for sure, they didn’t do anything to stop the mortgage fraud. They continued to act dumb and repeat the process as often as possible.

I notified “the authorities” – basically everyone I could think of that might be in a position to make a positive difference. See for example – letter #2 dated Sept 26th, 2005, and the distribution list.

New Century (NEW)

NEW YORK (MarketWatch) — Several analysts agreed Monday [03/05/07] that New Century Financial Corp., one of the nation’s largest subprime mortgage lenders, likely faces liquidation or bankruptcy following revelations that it’s under criminal investigation and in violation of debt covenants with several lenders.

My comments: About 2 months ago, NEW was trading at $35 per share. Now they are facing possible bankruptcy and possible criminal charges. As I write this – NEW is trading at $6.25 per share, down $8.50 for the day. And the news about Fremont is even worse (see below).

I reported 2/15/07 (3 weeks ago) the common stock of New Century got hammered on wall street. I wrote:

New Century was one of the original Shawn Tieskotter lenders. The common stock got hammered last week. I expect to see this get much worse. It’s going to be ugly.

I reported 2/22/07 (2 weeks ago), I wrote:

What is going to happen when Countrywide and/or National City has to face the music? If they go kaput – it’s going to be a very big deal.

and

if (when?) the ‘nothing down’ loan goes away, the immediate (short term) impact on the local real estate market is going to be a large decrease in the number of people who can buy a house. And therefore, a large decrease in the $amount homes sell for. I am not talking about a 3% – 5% correction. There will be no polite way to describe it. I use the term “train wreck”.

Fremont (FMT)

My comment: The item printed below is copied from an unconfirmed site on the Internet – it could be legit, it could be bogus. All things considered, I tend to believe it and accept it at face value.

: Brian Daily
Sent: Sun 3/4/2007 4:22 AM
To: *Tampa 2 Office; *Tampa 1 Office; *ResRe Tampa 1 AE
Subject: Fremont ceasing doing business.

Teams,

It is with great regret that I must inform you that Fremont Investment and Loan will cease funding loans and doing business.

At 12:35 (pst) Saturday, Fremont General received notice from the FDIC that they are not permitting any more loans to be funded by Fremont. In short, our funding available was terminated by the Federal Home bank.

The suddenness of the change and the shift from our communication literally less then 24 hours previously simply perplexes me. However, this simply validates the volatility on our business. None of us in Hawaii realized or appreciated the gravity of the situation we were facing.

There are many questions that many of you have. There is a conference call that will be conducted on Monday that will answer many of these questions that you will have.

Jerry Casanova will be able to communicate with you more specifics on Monday morning. Please show up for work to receive these instructions. I will be leaving the meeting here in Hawaii early and attempting to return to the office sometime on Monday.

In order to assist our clients with some instructions- I have listed some Q and A’s to assist you in your communications:

Q: Do I continue to solicit loans?
A: No. As of the 3rd, we are no longer sourcing new business.

Q: Will I close what is in the pipeline?
A: This will be clarified on Monday. I would suggest to sent back all loans to the broker

Q: What do I tell the brokers?
A: Fremont Investment and loan is no longer conducting business. Any files that are pending or have been submitted will be returned to you.

Q: Will I get paid for the loans closed?
A: Yes.

Q: Does termination take effect immediately?
A: Clarification on this item will be determined on Monday.

Q: What about benefits and severance?
A: This will all be clarified on Monday or the early part of the week.

Everyone, I cannot tell you how sadly I am disappointed this industry has trended so deeply in this direction. You all have accepted me so warmly upon my arrival at Fremont and I will always cherish those relationships forever. At this point, I wish I had more information to share with all of you but I simply do not. My travel logistics are extremely complicated right now and hopefully I will have more information in the next 24 hours.

So I do not lose valuable contact with any of you, please forward to Jo Haynes your cell phone, home phone and home address. I would like to keep this information as we begin to search for alternative strategies to consider

This entry was posted on Monday, March 5th, 2007 at 12:00 pm and is filed under Mortgage Fraud. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.