Ex-World Savings Loan Originator Sues Company For Retaliation For Reporting Alleged Improper Lending Practices

In Oakland, California, a story originally aired by KPIX-TV Channel 5 in May reports:

• A former employee of Oakland's World Savings is suing the company (now owned by Wachovia) and its former principals, saying he was fired in retaliation for his reporting of improper practices and violations of state and federal laws [...] by World in selling loans in San Francisco and the Bay Area.

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• In the complaint, [ex-loan consultant Paul] Bishop claims World "preyed upon" desperate borrowers who were "enticed into bad/predatory loans…without being told the complete truth about the loans" and that "borrowers were not told the full story about the terms, assumptions or risks of their loans".

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• The complaint says Bishop began working for World in November of 2002 and in 2004 began to observe practices such as World brokers "helping outside brokers to circumvent underwriting guidelines" through classes where "it walked brokers through (World's) loan application and specifically told them to be sure borrowers qualify for loans, even indicating the necessity to overstate income, if need be, to get a borrower qualified."

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• The complaint further alleges that "World managers routinely overruled underwriting guidelines that would hae prevented loans from being approved" by using what the filing calls an "exception to policy" to get those loans approved. It says some decisions to deny loans were "overridden" by senior loan originating executives.

For more, see Oakland Bank's Lending Sparks Ex-Employee Lawsuit (read story) (watch video).

For a CBS "60 Minutes" interview with Paul Bishop (aired 2-15-09; 13+ minute video), see World of Trouble (read story) (watch video).

Go here for other posts on whistleblower suits involving alleged fraudulent mortgage lending practices.