Tracking the housing finance breakdown: a saga of corruption, hypocrisy, and government complicity.http://ml-implode.com/
Article about the above siteLoan Pains Turned Site Into a Hit
By LOUISE STORY
The misery in the housing market is registering on the Implode-O-Meter.
As millions of homeowners fall behind on their mortgages, a fledging Web site called the Mortgage Lender Implode-O-Meter is gleefully tallying the number of lenders that run into trouble too. On Monday, the count was 265 — and rising.
With its tongue-in-cheek tone and running lists of the “imploded” and the merely “ailing,” the Implode-O-Meter has become a sort of Gawker of the subprime world. At a recent Mortgage Bankers Association conference, a speaker addressed what has become a hot topic among lenders: how to keep your company’s name off the site.
“No one wants to be number 266,” said Jim Reichbach, a vice chairman and leader of Deloitte’s banking and securities team. “This is a death toll that is equivalent to the casualty ticker of the Vietnam War.”
The Implode-O-Meter is the brainchild of Aaron Krowne, a former researcher at Emory University in Atlanta. A computer scientist and mathematician, Mr. Krowne, 28, started the site in 2007, believing that the troubles in the housing market, and by extension the mortgage industry, would worsen.
He was right — and the Implode-O-Meter took off. Traffic on the site soared, reaching as many as 100,000 regular visitors, and advertising dollars rolled in. Mr. Krowne quit his day job and hired 10 people for his company, Implode-Explode Heavy Industries.
“The crisis has come in waves,” Mr. Krowne said. “It just keeps coming.”
With the economy struggling, more financial companies, even well-known ones, are finding themselves on the fated list. When parts of Bear Stearns’s residential mortgage unit were sold to private equity investors, for instance, the Implode-O-Meter recorded the sale. And E*Trade Financial could not remove the link on its site to its mortgage division or change the recording on its mortgage division’s 1-800 number without the site chiming in.
The tips usually come anonymously from employees at the troubled mortgage companies. Critics of the site say some of the tips have been more gossip than reality. But the Implode-O-Meter often posts the phone recordings and company e-mail to back up the bad news coming out of places like Merrill Lynch, which in March fired nearly everyone at First Franklin Financial, a business it purchased in 2006.
The Implode-O-Meter is just the latest iteration of online death-watch lists. When the dot-com bubble burst, a slew of similar sites popped up, most notably one with an obscene name playing off the title of Fast Company, the magazine. That site and others like it faded when the technology company blowups were no longer front-page news.
Mr. Krowne is hoping to keep his franchise around longer by looking for trouble in areas like hedge funds, banks, home builders — the list goes on. It has been an adventurous 18 months for the site, including a nasty lawsuit, a run-in with a celebrity and attention from financial commentators like CNBC’s Jim Cramer.
As more mortgage companies go broke, Mr. Krowne hopes to turn a tidy profit by selling his site, possibly to a media company. He takes advertising from “nonimploded lenders,” which, he says, his company has scrutinized. On occasion, he says, he has had to remove a lender’s name from the safe list as their fortunes turn, though he declined to name which ones.
The Implode-O-Meter, Mr. Krowne likes to say, has beat out the mainstream media time and again. Case in point, he says, was last October when it broke the news that Michael Jackson faced foreclosure on his Neverland property. Mr. Jackson’s representatives quickly denied the Implode-O-Meter’s story, which Mr. Krowne chalks up to his start-up status. His response? He posted the notice of Mr. Jackson’s defaults.
In December, proof of trouble at one mortgage company came in the form of a 42-second audio track. Family First Mortgage, a lender in Palm Coast, Fla., now out of business, laid people off by phone recording. The call began, “Thank you for calling Family First Mortgage Corp. If you have been directed to this voicemail box, your employment with Family First Mortgage Corp. has been officially terminated, effective immediately.”
Glenn Hill, the vice president of the company, wrote by e-mail in late June that the recording as played on the Implode site had been altered, but he did not provide evidence backing up the claim. Implode-O-Meter denies it altered the recording. The Family First call, which is still available on the Implode-O-Meter site, explains that the company was trying to focus attention on brokers who were still generating profits. It ends with: “Thank you to everyone, and have a great day.”
Mr. Krowne can hardly suppress a laugh when describing the recording. What surprises him is that failing companies seem to put on “Herculean efforts” to convince the rest of the world, and their own employees, that they are sound.
“Every company thinks it is different,” Mr. Krowne says. He points to April last year as an example. Employees of SouthStar Funding, a mortgage company in Atlanta, bombarded him with phone calls at his day job, trying to persuade him that the company was fine after he placed it on his Ailing Lender list, he said. After all, the employees told him, they were being sent on a team-building trip to the Bahamas. Soon, Mr. Krowne said, he started getting threats from the company.
When SouthStar folded, Mr. Krowne wrote: “I have to say that it is with genuine satisfaction that I post this report of SouthStar’s closure.”
Not every company goes down without a fight, though. Loan Center of California, of Suisun City, Calif., sued Mr. Krowne’s company over a posting, saying it published false information, including that the company was out of business when it says it was still making loans. The parties settled in December, and Mr. Krowne insists he was unfairly pursued as a small Web entrepreneur.
But while Mr. Krowne records the pain of the mortgage industry, he said he does not relish it. “I really wish that our esteemed policy makers would pay attention and not repeat the same mistake,” Mr. Krowne said. “It’s so depressing.”http://www.nytimes.com/2008/07/08/business/08implode.html?ref=business