HR lady pulled Michael Walker into a room and told him he was fired.
"I was stunned," Walker told me. "I couldn't believe it. But that's what she said."
Walker, a "high-risk specialist," was then walked out of the building as if he were the risk. His job at Aurora Loan Services LLC, Littleton, Colo., ended on Sept. 4,
This story is about Michael Walker. Walker worked as a fraud specialist for Aurora Loan Services. Auroro was a subsidiary of the now infamous Lehman Brothers. Aurora had a solid nitch in some of the exotic Alt A loans. Aurora was doing a lot with stated and no and little money down loans. Aurora was also a wholesale lender. That meant that they were getting their loans through mortgage brokers.
Walker was investigating income fraud and so called "straw buyers". Straw buyer are those with good credit put forth to buy a property as a front because the real purchaser had some sort of credit or income issue. Another common scam was to have the same buyer buy several properties all at once and claim all as primary residences because those got the best terms.
Walker was busy. That should surprise no one. If you specialize in stated and low money down loans, you simply invite fraud. As such, he eventually compiled such a massive list that he was contacted by both the IRS and the FBI. For speaking to them, Aurora was fired. That should also surprise no one. That's standard operating procedure for all corrupt firms to deal with whistle blowers. As soon as Walker went and spoke with the feds, he became a whistleblower. He was dealt with.
It's also symptomatic of what was happening at the height of the boom. Many banks convinced themselves that the fraud was fine. These loans were selling. The property values were booming. As I've said before, if you give someone a stated loan with no money down, it's actually a good deal for you if you know that you will have 20% equity in six months. That's what was happening. As such, many banks didn't necessarily want to find too many problems in their portfolios. Finding too many problems might have rocked a boat they didn't want to rock.
Walker was rocking the boat and he was dealt with. Aurora loan services is no longer in business.