‘Chain of Blame: How Wall Street Caused the Mortgage and Credit Crisis’

This is an excellent new book on the mortgage and credit meltdown.

The authors get inside the lives of the leading characters in the mortgage meltdown and explain what makes them tick and what makes their business work (or fail).

The Roland Arnall story begins on page 73.

You can read the whole book for free here.

Arnall was a big funder of Orthodox institutions such as Shalhevet and Chabad. His son Daniel lives in Pico-Robertson (he got semicha from Rabbi Abner Weiss).

At Long Beach Mortgage, Arnall’s secondary market manager was Yankee Dinovitz, an Orthodox Jew who liked to shoot guns.

Arnall loved technology. He pioneered the placing of borrowers into various risk categories (more detailed than just prime and subprime). Your rates and fees were determined by your risk.

Arnall was zealous about staying out of the media. He never gave interviews.

He was born in Europe in 1939.

Arnall was the godfather of subprime lending with Ameriquest and related businesses.

From the perspective of mortgages, recessions are good for refinancing booms and creating more subprime borrowers. Arnall’s Ameriquest took off in 2001 and boomed through 2004.

Arnall pioneered stated-income loans aka liar loans aka no documentation loans (starting in 2001), whereby Ameriquest accepted the income stated by potential borrowers as long as their credit scores checked out.

Loan officers for Ameriquest got paid on the volume of loans they made. They had little incentive to worry about a person’s ability to repay a loan. When a lenders make loans without concern about being repaid — because he sells those loans to an investor in the secondary market — this is called predatory lending.

It’s what Roland Arnall was doing.

By 2005, Arnall was seeking an ambassadorship. His first choice? Israel. He ended up in the Netherlands, returning to the United States a few weeks before his death.

At his funeral, politicians from all over came. The focus was on Arnall’s achievements with humanitarian work, with the Simon Wiesenthal Center. Remembers Terry Rouch, a former employee of Arnalls, "It was a touching Jewish ceremony. You could say there wasn’t a dry eye in the place — but it wasn’t necessarily for the passing of the father of subprime. It was for our own futures."

About Luke Ford

I've written five books (see Amazon.com). My work has been followed by the New York Times, the Los Angeles Times, and 60 Minutes. I teach Alexander Technique in Beverly Hills (Alexander90210.com).
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