They are possibly the most despised financiers in America. But the nation's mortgage bankers, widely blamed for playing a central role in the global financial meltdown, are in no mood to be humble.
Thumping rock music, a glittering lilac backdrop and vast US flags decorated the stage at this week's annual convention of the Mortgage Bankers Association (MBA). The comedian Jay Leno, a quartet of Beatles impersonators and the former presidential adviser Karl Rove were on hand to lift the battered industry's spirits.
"We're all still here and we're still standing," declared Kieran Quinn, outgoing chairman of the association, who took the floor to a pounding chorus of Coldplay's Viva La Vida. He arrived shortly after a colour guard in full military regalia hoisted a US flag while an opera singer belted out The Star-Spangled Banner.
A uniform sea of grey suits, the thousand or so bankers at San Francisco's Moscone conference centre inhabit ground zero in this year's global economic crisis. President Bush, the treasury secretary Henry Paulson and the Federal Reserve's chairman Ben Bernanke, have all cited lax standards by mortgage lenders as key to the financial paralysis which has spread from Wall Street to Europe and beyond.
Billions of dollars worth of sub-prime mortgages were written at the height of America's property boom. These loans, never realistic, are deeply in default, leaving Wall Street with vast liabilities. More than two million Americans have lost their properties to repossession.
"Everybody believed that house prices would just keep rising," Quinn admitted to his members. "We, and everyone else, had unprecedented confidence that it was a golden age of finance. We thought we had solved everything - no more recessions, no more inflation."
In a normal year, nobody would take much notice of a wonkish gathering of homeloan originators. But a noisy group of protestors were on hand to remind the mortgage bankers of their unpopularity. Campaigners outside the conference centre wielded placards reading "grand theft bailout" and "jail greedy bankers - let them rot".
Despite tight security, one protestor made it into the hall and climbed onto the stage to deliver a speech "on behalf of the public", interrupting a talk about debt leverage by the chief executives of Fannie Mae and Freddie Mac. But before the activist could make her case for a freeze in foreclosures, she was hauled away by security guards.
Bill Hackwell of Answer, a protest coalition involved in the demonstration, said: "We wanted to make sure they didn't think it was going to be business as usual as they meet to work out how to cover themselves."
Critics say the mortgage industry got drunk on its own success. Unscrupulous lenders pushed inappropriate mortgages on customers who could never afford to repay them. The MBA's own figures show that 9.1% of mortgages on US family homes are in arrears - the highest figure since records started 39 years ago.
Among delegates, though, the mood was philosophical. Groups of mortgage bankers stood around, swapping stories and exchanging business cards. Some were willing to admit that their industry had made mistakes - but they argued that customers, regulators, the government and Wall Street were all complicit.
Jim Kunzler, president of an Indiana lender, 1st Source Bank, blamed "investor greed, some bad acting in the lending community and many uninformed borrowers" for the financial crisis.
"There's certainly no lack of blame to be shared around the entire global economy," he said. "To say one industry is responsible for all this is a little simplistic."
His view was echoed by Ted Eric May, managing partner of law firm Sheldon May which specialises in servicing the mortgage industry: "Politicians and the general public are looking for easy people to blame. All of us are to blame. Our society has gone from living within our means to borrowing without restraint."
Yet inside the conference's exhibition hall, specialists spoke of a reckless culture in which lenders failed to make even basic checks on borrowers' income. Phillip McCall, a mortgage fraud investigator, cited a case of a warehouse worker who applied for a mortgage, claiming an income of $7,500 per month: "Basic common sense is going to tell you someone in a warehouse is not going to be earnings $90,000."
Only since the credit crunch has bitten have mortgage firms begun to crack down on such fraud. McCall says his firm, Imarc, has seen its workload leap from four or five mortgage investigations per month to several thousand.
The MBA itself has not been immune. The association's membership has shrunk by more than 17%. The Washington Post reported recently that the organisation had struggled to find tenants for its $100m new 12-storey headquarters building in the US capital.
John Courson, the MBA's chief operating officer, closed his own firm, Central Pacific Mortgage, because of "cashflow" issues last year. He told the Guardian that the industry was being unfairly tarred - and that lenders' initiatives to keep customers in their homes have staved off 2.3 million more foreclosures.
"I don't think the American public is upset with the mortgage banking industry," he said, reeling off a list of programmes to aid struggling borrowers under the banner of Hope Now - an alliance between the US government and the mortgage industry aimed at helping homeowners. "Our industry has responded responsibly in terms of loss mitigation."As delegates drifted out of the hall clutching complimentary Freddie Mac document bags, there was a general sense of embattled defiance.
William Quick, a Seattle mortgage banker, blamed a few bad apples for his industry's loss of reputation and deflected responsibility: "Nobody could have predicted that house values could have stopped increasing as they did or fallen as precipitously as they did."
Sipping a drink as a guitarist played gentle melodies in the conference's foyer, Cary Burch, the chief executive of mortgage software provider LSSI, said mortgage lending was a force for good: "I'm proud to be part of this industry. It's been great to help people achieve their home-ownership dreams."
Copyright 2008 guardian.co.uk
