The Mortgage Broker

Things are so bad for Steve and his family these days that he sometimes asks neighbors for loans to pay utility bills. It embarrasses him, which is why he doesn't want to use his last name. "Borrowing money from our neighbors, not being able to pay it back- - it's rough," he says. "We are looking at welfare right now." Steve has been out of work for more than a year, and is struggling to keep the home he lives in with his wife and four kids.

Steve used to have a great job. He was a mortgage broker - he bought loans wholesale from banks, and sold them at a commission to homebuyers. Brokers like Steve don't have a great reputation in Las Vegas these days. And looking back, Steve can understand why. When he got into the business a few years ago, at the peak of the housing boom, pretty much anyone could be a broker, without much training. Steve says he knew nothing about the mortgage business when he started. He was a cement layer by trade, but he had a friend who sold mortgages.

"I walked into my friend's office in my construction clothes saying 'give me a job.' He was making lots of money - $40,000 a month, and I said 'why can't I?' He said, 'I'll teach you everything you need to know in two weeks, and then it's sink or swim.' And that's what he did. I couldn't believe how easy it was."

Steve made $100,000 his first year. He sold some traditional loans, with fixed interest rates, to people with high credit scores and high incomes. He also sold subprime loans, to people with poor credit, and smaller incomes, or no proof of income at all. But he doesn't sell loans anymore. When the first wave of subprime borrowers started to default, banks started to seize up on lending, and many mortgage companies went belly up. The firm that Steve worked for went out of business, and he was out of a job.

"I made a crap load of money really fast, more money than I was used to making," Steve says. And he and his wife spent it. They bought a nice house in a new subdivision, and didn't pay much attention to money. "Like a fool, I upgraded. You want to do better for your family, buy a bigger house, a bigger car- - I bought two cars- - and everything was fine for a couple of years." But Steve says when he lost his job, he had little savings, and not much of a safety net to fall back on.

Steve and his wife are now more than 8 months behind on their mortgage. His wife got a job at Trader Joe's to bring in some extra income, but she doesn't make enough to support their family. They've downsized to one car, pawned valuables, applied for food stamps. "I hope people learn to save their frickin' money, 'cause when you have none, and you're forced to swallow your pride and borrow, or sell stuff you'd never sell…" His voice trails off. "I mean I play guitar, and playing guitar is like my life. And I have pawned or sold all of my equipment, all of my guitars, except for one. I won't get rid of it, I hope."

Steve looks forward to a day when he'll have a job again, and can look back on these hard times feeling wiser because of them. But he says: "I hope it never comes back the way that it was, because we might end up in the same mess again."

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