In Sunday’s Orange County Register (h/t: MLImplode) there is an article about the owner of Quick Loan Funding; a typical chop-shop subprime mortgage company in California that gouged customers for millions of dollars during the refinance boom. The owner should be the poster child of the subprime depravity that marked the first half of the 2000’s. While the article is balanced there is no need for it to be; check out these choice quotes. (emphasis mine)
Over the next five years, Quick Loan wrote $3.8 billion in mortgages, lending money fast and often on onerous terms to people with shaky credit.
Boosted by high fees and interest rates high even for the subprime industry Quick Loan’s after-tax profits averaged 29 percent of revenue. In 2005, Quick Loan’s biggest year, profit topped $37 million.
Sadek used the earnings to live the high life, buying a fleet of Ferraris, Lamborghinis and Porsches,
dating a soap opera starlet and producing movies. He flew private jets to Las Vegas, where he gambled with high rollers at the Bellagio Resort.Subprime lenders typically charge 2.75 percentage points above the prime rate, says Michael Lacour-Little, a professor of finance at Cal State Fullerton who has researched lending practices. At the time of her refinancing, Nava-Oleson’s loan was 4 percentage points above prime.
A Register analysis of federal mortgage data shows Quick Loan’s median interest rate was about 5 to 6 percentage points above prime in 2005. The average for the subprime industry was 4 to 5 percentage points above prime.
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