In 2004, corporate giant General Electric (GE) jumped into the booming subprime market by purchasing WMC Mortgage Corp. in Burbank. In short time, WMC loan officers, who, according to a former auditor, numbered shoe salesmen, strippers and a porn actress as their employees, began earning commissions as high as $1 million annually.
Years later, the FBI and Justice Department are finally looking into the defunct lender, perhaps as a reaction to Occupy Wall Street protests over Wall Street greed and excesses, or the extremely high numbers of defaults of WMC loans in the country’s most devastated real estate markets. Only New Century Financial Corp. in Irvine had more foreclosures on its subprime loans (subprime loan fraud).
Whistleblowers who claimed their complaints about loan officers falsifying loan documents (loan fraud) were ignored, are now coming out of the woodwork. Former compliance manager Dave Riedel recalls how a WMC manager told him “Fraud pays.” WMC eventually demoted Riedel and took away his work, effectively shooting the messenger, much as Bank of America had done with whistleblower Eileen Foster, a former internal auditor with Countrywide Home Loans in Boston. Foster was the subject of an earlier posting in the California Real Estate Fraud Report.