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Talk to Me: A woman who once originated subprime mortgages now spends her days answering desperate calls from people in danger of foreclosure

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By Elizabeth Razzi
Sunday, March 1, 2009

The phone rings in Stacie Rillo's tiny gray cubicle at a Freehold, N.J., call center, the front line of one of the nation's most high-profile foreclosure-prevention efforts.

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"Thank you for calling 888-995-HOPE," the 30-year-old mortgage counselor says in a crisp, friendly voice. "May I have your phone number, please? Are you behind on your mortgage right now?"

Rillo works at Novadebt, one of the 10 credit-counseling centers scattered across the nation where calls to the nonprofit, federally touted Homeowner's HOPE Hotline end up. She and about 30 other women (only a smattering of Novadebt's counselors are male) working this weekday shift are part of a nationwide network of 415 trained housing counselors. Those at Novadebt spend their days inside this nondescript, one-story industrial building trying to help troubled borrowers at risk of losing their homes to foreclosure. All day the counselors listen to pleas for help from people beleaguered by bad debt, bad decisions and bad luck.

Rillo's first caller, at 8:50 a.m. on this blustery January day, is a man from the Milwaukee area. His voice is raspy, and his tone verges on combative.

"Why would my mortgage company be willing to work with you and not with me?" he growls at Rillo. He has already asked his lender for a loan modification to reduce his interest rate from its current 7.875 percent, which he says he cannot afford. But the lender has told him he would need to refinance to get such a break. Refinancing, though, is not an option. About half of the homes in his neighborhood are already in foreclosure, and his home is probably worth about $85,000 less than he owes, he says.

The caller wants to know why his lender won't just cut his interest rate, instead of getting another foreclosure on its hands. He sounds as if he's ready for a fight. Rillo tries to soothe him, saying: "I completely understand, sir. I appreciate your opinion."

There is some irony to Rillo being on the receiving end of calls like this. She once profited from the loose-lending spree that led to many of today's foreclosures. From the late 1990s until she was laid off two years ago, Rillo was a loan officer at one of the country's most notorious subprime lenders, Ameriquest Mortgage Co.

In a lawsuit brought by officials in 49 states and the District, the company was accused of numerous illegal lending practices, including giving borrowers incorrect information about interest rates, inflating appraisals and persuading borrowers to refinance even though the new loans would give them no financial benefit compared with their existing loans. In 2006, Ameriquest agreed to pay borrowers $295 million to settle the lawsuit, and it ceased doing business in 2007.

"We were bottom feeders; that's what we would call ourselves," Rillo says of her days working for Ameriquest. Borrowers would turn to them when they had credit scores too low for mainstream lenders, or when their debt was too high, compared with the value of their home, for other lenders to accept.

"The borrowers knew the reason you're going with us is you're a high-risk borrower," says Rillo, who adds that all the homeowners she worked with understood every detail of the loans they took out. "I did not do anything illegal, by any means. There were no surprises for my borrowers whatsoever."

For the past two years, Rillo has had a much different job: finding ways to help distressed borrowers, many with the same type of subprime loans she used to originate and in danger of losing their homes to foreclosure. Novadebt has allowed a reporter to listen in as Rillo works, on the condition that callers not be identified.

Rillo's caller from Milwaukee asks about help from the government's HOPE for Homeowners refinancing program, which the U.S. Department of Housing and Urban Development launched with great fanfare in October. It was supposed to provide lower-cost government-backed mortgage refinances to borrowers whose home values are now worth less than the amount they owe on their loans. But, for borrowers to participate, lenders have to forgive tens of thousands of dollars of debt for each borrower they approve. In theory, lenders ought to be willing to absorb that kind of write-off because foreclosure could cost them even more. In practice, however, they have never quite warmed to the idea. By December, only 312 borrowers had formally applied, and federal officials began looking for people to blame for the program's failure.

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