27 March 2008

[modern times] With An Automated Mortgage Program Called ZiPPY, Maybe We Should Have Seen It All Coming

1448. Item, The Big O, Dateline today (Link (goes behind the pay wall in 14 days)):

A newly surfaced memo from banking giant JPMorgan Chase provides a rare glimpse into the mentality that fueled the mortgage crisis.

The memo's title says it all: "Zippy Cheats & Tricks."

It is a primer on how to get risky mortgage loans approved by Zippy, Chase's in-house automated loan underwriting system. The secret to approval? Inflate the borrowers' income or otherwise falsify their loan application.

[Fade into mortgage borker's office, where Underwriter Jones is logging into ZiPPY, Chase's in-house mortgage-loan undrewriting system]

Mortgage Underwriter Jones: [Logging into Zippy, Username: mjones, Password: YOW!]

Zippy: Good Morning! Are we having Prime Rate Cuts yet?

Jones: Zippy, please underwrite this mortgage for Joe Schmoe.

Zippy: Yow! I can see clearly now the income is gone!

Jones: Well, how about if I change this three in the yearly income to a six.

Zippy: When Bubblicious is outlawed, only outlaws will have Bubbllicious!

Jones: [Enters cheat code GREENSPAN IS GOD]

Zippy: Yow! It's like that Deep Impact movie, only I'm Elijah Wood and you're Leelee Sobieski!

Jones: And the debt to income ratio is really 20 percent lower.

Zippy: You have your loan. You move like a NINJA!

[... aaaaand, scene! ]

Once again, why are we all surprised things have turned out the way they did?

If there's any indication how Bill Griffith feels about all this, we don't know what it might be. But we can guess!

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