The Latest News...And It Ain't Good for FNLC

Our friends over at the Mortgage Lender Implode-O-Meter say things are looking dire in Boca Raton:

"Have we seen the last of First NLC? It's anybody's guess, but recent posters on Last NLC (note: thanks for the shout-out) seem to be convinced, if not actually happy about it.

"Layoffs and branch closures have been going on some time now, the most recent of which came to our attention when it was reported here that another 100 employees were let go and the Anaheim, CA office was also being consolidated to their East Coast headquarters. Calls to the offices still listed on CityTownInfo.com revealed only 2 locations still receiving calls: Anaheim, CA's answering system is still on, and the headquarters in Boca Raton, FL. The company's web site now shows just one location - Boca Raton. For those tracking the numbers, that represents 24 offices nationwide, and now, approximately 725 of 1,350 employees gone in the consolidation.

"Concerns over the company's continued viability stem largely from losses reported in their parent company's 3rd quarter financial statements. On 10-25-07, Reuters reported that FBR Group (Friedman Billings Ramsey Group, Inc.) realized write-offs of $90 million associated with the sale of securitized loans, and an additional loss of $67 million from the sale of mortgage-backed securities. A company press release of the same date revealed the following additional losses:

• "an economic loss of $17.2 million(2) associated with restructuring and operating costs at First NLC Financial Services (FNLC), of which $15 million was incurred prior to the agreement announced in July to sell FNLC to an affiliate of Sun Capital Partners (Sun Capital), and
• "a $27 million valuation loss relating to the portfolio of conforming and non-conforming loans originated by FNLC and for which FBR Group took ownership under the Sun Capital sale agreement, reducing the value of those loans to $203 million.
  

"FBR Group announced its plans to sell an 80% share in First NLC to a Sun Capital Partners affiliate on 7-26-07, as part of a recapitalization plan to enable the struggling sub-prime lender to continue operations and satisfy a negotiated settlement of this employee class action lawsuit which received preliminary court approval in late September. The transfer to Sun Capital is expected to be completed by 2007 year end."

Pretty soon, they'll be running this company out of the family's garage.

Here are some additional notes from The Truth About Mortgage:

• According to sources, First NLC Financial Services plans to close 24 branches nationwide, shuttering their operations on the west coast and cutting more than 100 jobs in the process.
• It is believed that only six retail branches will remain open, along with an operations center at its headquarters in Boca Raton, Florida.
• I’ve been told that most of the 100-odd employees at its loan center in Anaheim, California have been laid off as a result of the migration to the east coast.
• In August, First NLC laid off 645 employees, or nearly half of its 1,350 member work force as the mortgage crisis continued to deteriorate.
• First NLC is one of the top non-prime residential mortgage lenders in the nation, originating over $7.4 billion in mortgage loans in 2006.
  FBR bought the subprime lending unit in 2005 for $101 million and arranged a sale this summer to an affiliate of private equity firm Sun Capital Partners.

Gone Daddy, Gone

Rumours are flying that First NLC shut down this past Friday. I haven't received confirmation yet - it may be only another ops center that has closed. Whatever the case, my sympathy goes out to the few working folks who were just let go during the holiday season.

Of course, if the company has been closed for good, my overwhelming joy is reserved for the the execs that ran this company into the ground - they have finally attained complete and total failure. Couldn't happen to a nicer group of selfish, arrogant a-holes. You get what you deserve. Life just handed you a "doing what is required" card. I hope you all lost your a$$es in stock while being blackballed in this industry.

More Shutdowns

Chicago's call center has been shut down - no surprise. Rumors of additional shutdowns (what's left to shut down at this point? The vending machines?) continue.

I thought I'd share this comment from a former FNLC'er that was posted a couple of days ago - this person is also happy to see upper management flailing. Enjoy:

I'm a former FNLCer and laying me off was the best favor FNLC ever did for me. I, now, work for a company that has a bright future and employees, including me, are happy and don’t live in fear. It's such a refreshing change. I read people's blog entries and frankly I'm amazed and a bit confused as to why people still choose to continue to work for them...especially in light of all that has happened. FNLC's senior management (a.k.a. the Hxxxxxs and their kiss a$$ lackeys) are the worst so-called “management” team I’ve ever seen and the company is obviously going down the tubes. I hope you do realize senior management doesn’t care anything about you, your family or your well being. I do understand how difficult the job market is but it is possible to move on. Most of the employees I had the pleasure of getting know during my time at FLNC were good hardworking people. Have faith in yourself! But, in spirit of the holiday season, I want to say "thank you" to Mr. Hxxxxx and all of his minions for laying me off. No doubt it was challenging for me at first but I prevailed! I take comfort in knowing the Henchel’s company is failing while I am growing professionally and am financial better off than I was work for your sad excuse of a company. It really is sad to have such ill will toward a group of people but this particular group doesn’t deserve anyone’s compassion or respect since they never bothered to give either to any of their employees. I am a person that does believe in karma. What goes around comes around. Mr. Hxxxx and all your minions, keep that in mind!

The Numbers Don't Lie

Here are a couple of nuggets from the FBR earnings (or, in this case "losses") statements for Q3. Does anybody out there know if this is enough to pull the Sun deal off the table? I am totally amazed that this company continues to operate, albeit with a skeleton staff. It's not like FNLC was a respected and well-known brand in the first place - why Sun would want it?

Friedman Billings posts wider Q3 loss

Friedman Billings Ramsey Group Inc's third-quarter losses tripled from a year ago, hurt by write-offs in its securitized loan portfolio and losses from sale of mortgage securities. The investment bank and brokerage posted a net after-tax loss of $214.7 million, or $1.28 a share, compared with a net after-tax loss of $67.4 million, or 39 cents a share, a year ago.

The Arlington, Virginia-based FBR also incurred a $17.2 million loss on restructuring and operating costs at its nonprime mortgage unit First NLC Financial Services. At the end of the quarter, Friedman's exposure to First NLC was $12 million.

FBR Group Announces Third Quarter 2007 Financial Results

Friedman, Billings, Ramsey Group, Inc. today announced its results for the quarter ended September 30, 2007. The company reported a net after-tax loss for the quarter of $214.7 million, or $1.28 per share, compared to a net after-tax loss of $67.4 million, or $0.39 per share, for the third quarter of 2006.

Among the principal components of the third quarter results are:

• An economic loss of $17.2 million associated with restructuring and operating costs at First NLC Financial Services (FNLC), of which $15 million was incurred prior to the agreement announced in July to sell FNLC to an affiliate of Sun Capital Partners (Sun Capital).
• A $27 million valuation loss relating to the portfolio of conforming and non-conforming loans originated by FNLC and for which FBR Group took ownership under the Sun Capital sale agreement, reducing the value of those loans to $203 million.

It's Not Over

Jeff Ostrowski of the Palm Beach Post notes that the "bloodletting" isn't over yet in the mortgage industry - something that shouldn't come as a surprise to any of us. What's most remarkable is that Sun has allowed FNLC to continue operating, albeit as a much smaller and limited organization. The only reason I can think is that Sun recognizes some type of value in the FNLC brand and they are just holding onto it until the industry turns itself around.

A commenter in an earlier post estimated that 95% of the folks let go by FNLC are still out of work - I thought that seemed a bit high, but after speaking with several former co-workers, I'm beginning to think that might be accurate. Anybody care to elaborate or share their stories?

Who's Left To Lay Off?

First NLC makes the local paper again, and it's not good news:

"First NLC Financial Services is shedding 154 workers in Boca Raton."

I'm not sure if the author is referring to layoffs that have already happened, or if this is a new announcement...

Now This Is What I Call "Doing What Is Required"

Some folks are questioning my motives for this blog. "Move on," they say, "you're just being vindictive." Perhaps I am. But when a company treats its employees and customers the way FNLC has during the past couple of years, I feel that these actions should not be forgotten nor swept under the rug. FNLC has many resources at its disposal to put a postive (and false) spin on what's been going on within the company. But who is the voice for the common worker? We don't have PR firms or the backing of a corporate parent. Really, all we have is a chance to tell our side of the story in forums such as this.

If you are reading this blog with the intention of defending FNLC, you're wasting your time. This blog is for people who have been burned by the company, whether they still feel the sting or not. If you want to talk about how great a company FNLC is, start your own blog, for that is certainly not the purpose of this one.

Now that this piece of business is out of the way, I'd like to focus your attention on a company that is trying its best to stand by its employees during difficult times, including bankruptcy. For those of you who think that FNLC has done everything they can for its workforce, consider what First Magnus is doing and then contrast it to some of the decision-making that has gone on this year in Deerfield and Boca Raton:

Bankrupt Firm's Owners Establish Employee Fund
$1 million fund set up for First Magnus headquarters employees

August 22, 2007

By JERRY DeMUTH

Owners of a bankrupt mortgage lender have established a $1 million fund for some of its nearly 6,000 laid off employees.

More than $1 million has been pledged to assist some former employees of First Magnus Financial Corp. by the mortgage company's shareholders and executives.

The privately-held, Tucson-based company, which originated more than $17 billion in loans this year, shut down on Aug. 16 and filed for protection under Chapter 11 of the U.S. Bankruptcy Code on August 21.

Although First Magnus had nearly 6,000 employees in more than 300 offices nationwide, monies from the "assistance fund" will be provided only to the approximately 800 employees who worked in its Tucson headquarters, according to a spokesman.

"We, as shareholders and executives of First Magnus," President and CEO G. S. Jaggi explained in a statement, "are committed to doing what we can to personally help those individuals in Tucson who will suffer the greatest hardship."

This is because the Tucson employees lacked the loan origination skills of employees elsewhere, the spokesman said.

The company also has helped arranged a job fair for former Tucson employees, which will be held Monday, August 27, in a Tucson hotel, which is donating the space.

When First Magnus told employees that it was halting lending operations, it told them to expect a delay in the payment of wages and that those payments would be mailed out as checks rather than made by direct deposit, according to a spokesman.

Now, making the payments that were scheduled to be made on August 20 is in the hands of the bankruptcy court, Gary Baraff, senior vice president, marketing, told MortgageDaily.com, pointing out, "We have asked the bankruptcy judge to make that his highest priority and make those funds available for the [Aug. 20] payroll prior to any other creditors being addressed."

No complaints regarding unpaid back pay had been filed with the Arizona Department of Labor as of late Tuesday, a department spokesman told MortgageDaily.com.

(NOTE: the entire article can be found and read by subscribers to MortgageDaily.com)

Bright Future In Retail

As many of you know by now, we've basically shut down our wholesale operations. We couldn't even keep it going in our own Florida backyard. I'm surprised the wholesale website ("Committed to Our Future Together" with a nifty picture of T. Rex) is still live. I guess they want to get full value from the folks that redesigned it. Plus, where else are we going to talk about FIRSTQUAL?

Retail is still limping along, but eventually there isn't going to be anything left to consolidate. Maybe Sun will just hold onto the brand and relaunch it when the market rebounds (which is still a long way away, according to all financial forecasters).

By the way, have any of you seen Jim Cramer's mortgage industry meltdown? Good stuff.

The Local Angle

Courtesy of the Boca Raton News...

Nearly 40 percent of local First NLC staff laid off

It was the sort of letter no employee wants to receive – that your services are no longer required.

And certainly not after having only been in your new home for such a short period of time. First NLC had completed a move from Deerfield Beach to Boca Raton only in April of this year – and said in December 2006 that with the move would come an expected 200 more jobs.

Now it’s August, and there’s no 200 more jobs. In fact, First NLC has reduced its Boca Raton workforce by about 40 percent -- last week laying off about 129 of its more than 320 employees in its new Boca headquarters office in T-Rex Park. The move follows a general nationwide fall-off in the sub-prime mortgage lending market, and reflects what the firm said is an attempt to stem money losses....

More

The Hammer Has Fallen

Judging by the comments on the last post, I think everybody knows that the poop has hit the fan again. With such a small amount of people left in the office, I haven't been able to post without fear of getting caught. These are sad and angry times around here.

It appears that management (or supporters of management) have been posting comments to the blog. Hey - that's fine - it's a free country and I'm not going to censor anybody. However, I do need to address an issue that has been brought up.

Let's get this straight right now: everybody's situation with this company is not nearly as simple as "if you don't like it, leave." Anybody expressing this sentiment is foolish, arrogant and self-delusional.

When a company hires you, they typically put their best foot forward during the interview process, just as you try to make a great impression by wearing a nice suit as an interviewee. Often, despite our best efforts, we find that the company isn't all that it was cracked up to be only AFTER we are hired and become firsthand witnesses to the general nonsense and shenanigans going on.

At this point, according to some commenters, we should leave the company. Nobody is forcing us to stay, right? ABSOLUTELY WRONG. In the REAL WORLD, people have bills to pay. Getting another job isn't easy, especially with the fear tactics First NLC uses regarding folks who access HotJobs, CareerBuilder and Monster. This industry is in the dumps right now, and other gigs are hard to find. Plus, right now, having "First NLC" on a resume isn't very desirable. The mortgage industry knows what this company's reputation is and doesn't place much value on anybody working for it.

You do what you have to do to keep the kids fed with a roof over their heads. Dare I say you "DO WHAT IS REQUIRED" to keep your home and family safe and secure.

How anybody can insinuate that we are being whiners and complainers while we are free to leave on our own accord is absolutely irresponsible and myopic. This is the type of thinking that plagues this company and will keep it from recovering on its own.

As for management: I wouldn't be so smug and cavalier if I were you. It is no achievement to get bailed out for a second time by a company that specializes in this sort of thing. Take a look at how Sun has turned around their acquisitions. They know dead weight when they see it, and I'm pretty sure their due dilligence will land them on this blog at some point, if not already.

Link: http://www.palmbeachpost.com/business/content/business/epaper/2007/08/03/a8b_firstfin_0803.html

All Hail Our New Benevolent Leaders

We're like a cat on our ninth life around here. I'm glad we've survived for the time-being, but I have to imagine major changes are on the way. I don't see why anybody would purchase us as is unless they had plans to shake things (or people) up. I guess that's what Sun Capital excels in.

FBR Group To Sell First NLC To Sun Capital Partners Transaction Includes Recapitalization of First NLC, Reduces FBR's Ownership to 20%

ARLINGTON, Va., July 26 /PRNewswire-FirstCall/ -- Friedman, Billings, Ramsey Group, Inc. (FBR Group) today announced that it has signed a definitive agreement with an affiliate of Sun Capital Partners (Sun Capital) that will result in a $75 million recapitalization of First NLC Financial Services, LLC (FNLC), FBR Group's non-conforming mortgage origination subsidiary. Sun Capital and FBR Group will invest $60 million and $15 million respectively, on a pari passu basis.

As a result of this transaction, FBR Group's future exposure to FNLC will be limited to its $15 million investment in the recapitalization, plus a $3 million indemnification to Sun Capital for certain potential liabilities. During the third quarter, FBR Group expects to fund approximately $15 million in losses associated with further restructuring and operating costs incurred prior to entering into the transaction with Sun Capital. FBR Group will also retain ownership of approximately $250 million of conforming and non- conforming mortgages recently originated by FNLC which are expected to be sold or securitized during the third quarter.

Full article: http://money.cnn.com/news/newsfeeds/articles/prnewswire/NETH05726072007-1.htm

Earnings Call Two Weeks Away

FBR is announcing their 2nd quarter results on 7/26. Let the speculation begin...

More S&P Woes

FBR Securitization Trust has been listed among the issuers who have had their credit ratings placed on CreditWatch in the following article:

S&P Warns on Subprime-Backed Issues

On July 10, Standard & Poor's Ratings Services placed its credit ratings on 612 classes of residential mortgage-backed securities (RMBS) backed by U.S. subprime collateral on CreditWatch with negative implications. The affected classes total approximately $12.078 billion in rated securities, which represents 2.13% of the $565.3 billion in U.S. RMBS rated by Standard & Poor's between the fourth quarter of 2005 and the fourth quarter of 2006. A list of the issuers of the RMBS securities in question appears at the end of this article.

Who Are We Trashing?

There's been a lot of talk in the comments section about the fact that I am focusing on the negative aspects at FNLC and some folks think that I should be concentrating on the things that are trying to make this company better. I often receive comments about two members of the exec team in particular, and there seems to be a perception that they are being unfairly singled out for all of the company's woes.

You know what? That is true. These two people are being unfairly singled out. They aren't to blame for all of FNLC's current problems. Let's not forget all of their cronies and sycophants who do their bidding while historically turning a blind eye to disastrous (and illegal) situations simply because they were still benefitting from the money they generated!

I ask you, the Last NLC community, to refrain from bashing the same two individuals over and over again. They have had plenty of help bringing this company to the verge destruction, and we shouldn't forget the below-average and underqualified management team members who have constantly demonstrated their ability to "do what is required" to save their own jobs while slogging through the path of least resistance. These fine examples of incompetence deserve our attention as well.

And for those of you looking for some positivity about FNLC, I suggest you read whatever nonsense passes for news and information on the corporate intranet site these days. I am well beyond giving the company any benefit of the doubt to believe that they have any of my best interests or well-being in mind and I will continue to make sure that the voices of the employees who have their livelihoods hanging in the balance with every poorly-made exec decision are heard.

At Least We Know Where The Rent Money Is Coming From

It's an Independence Holiday Week Miracle...

First NLC Financial Services Closes $481.8 Million Asset-Backed Securitization

BOCA RATON, FL -- (MARKET WIRE) -- 07/02/07 -- First NLC Financial Services, LLC ("the Company"), a wholly owned mortgage subsidiary of Friedman, Billings, Ramsey Group, Inc. (NYSE: FBR), today announced it has securitized $481.8 million of first-lien and second-lien residential mortgage loans originated by the Company through First NLC Trust 2007-1.
The securitization closed on June 26, 2007 and is expected to be treated as a sale for financial reporting purposes.

Standard & Poor's Rating Services and Moody's Investor Services, Inc. rated the securities. Credit Suisse Securities (USA) LLC served as lead manager for the transaction. The securities were sold only to qualified institutional buyers pursuant to Rule 144A under the Securities Act.
This release shall not constitute an offer to sell, or the solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

Source: http://www.sys-con.com/read/397664.htm

Eight Percent Is Enough

It should come as no surprise that we initiated another round of layoffs today. Approximately 8% of our employees have been let go, not coincidentally on our final day in the old office.

I said this the other day - every time the TRex money pit starts requiring more cash, employees are let go. Here we are on moving day, and sure enough, we've lost more people.

There's a full transcript of the memo that was sent to us detailing the reasons behind the layoffs in the comments section of the post underneath this one.

For all of you who have received the axe today, I strongly encourage you to do the following before signing your separation agreements:

• Gain a full understanding of your rights as a terminated employee, including the WARN Act
• Get a due date for FNLC to send you your final severance package and COBRA info
• Make sure your 401K contributions will be honored
• Demand full documentation of your final payments, including all deductions
• Make note of when your health benefits expire

Anyhow, now you know how FNLC can pay for TRex. I wonder what will happen when next month's rent is due?

Moving Day Is Almost Here!

We'll be moving our stuff tomorrow to the new office. As a commenter mentioned earlier, it would be a prudent idea to separate your personal belongings from your FNLC office materials when you pack your boxes. I have a feeling there will be several people who won't make it to the new building before getting laid off.

Some people have asked "how can we afford this?" Well, we've been "affording" this for several months already. The new offices have been a money pit, and every time the company needs to find some more cash, they do another round of layoffs. You can sense that moving into TRex is the only goal for certain members of the senior exec team. They figure that, if they are moving into new facilities, the company will appear to be successful and that they have done their job by "DOING WHAT IS REQUIRED." Unfortunately for these narrow-minded and myopic fools, most rational thinkers don't judge a company by their office buildings - they judge it by the amount of money it makes (or, in our case, loses).

Get ready for a deluge of self-congratulatory press releases about this move. It should be the last thing you hear about us until our rumoured sale in a couple of weeks. Afterwards, TRex becomes somebody else's problem.

Caveat Emptor.

FNLC Still On The Block

Now that our parent company, FBR, has generated well-needed funds by spinning off some assets and creating a new company (FBR Capital), it appears that they can get back to the task at hand: dumping First NLC to anybody foolish enough to actually pay for this financial burden:

"Friedman, Billings, Ramsey has been busy raising cash after struggling with its subprime home-mortgage business. The sector has been ravaged by defaults on such loans, which target borrowers with weak credit histories, and FBR has been seeking a buyer for its subprime lending unit, First NLC Financial Services.

"Shares of Friedman, Billings, Ramsey have dropped more than 30 percent since late July, when it reported a quarterly loss of $30.2 million. It has reported losses in three of the past four quarters."

I'd love to hear FBR's sales pitch to potential buyers ...

A Final Insult

I've received news that some former employees who were laid off this past spring DID NOT receive their company contributions when they rolled over their First NLC 401K accounts although they were clearly eligible and enrolled in this program.

As mentioned earlier on this blog, First NLC retains the right to decide if they want to contribute to any employee's 401K program, regardless of their tenure or status. Just because you have been with the company over a year does not mean you are going to get your funds matched. Daddy and Junior may decide you aren't worthy of this "generous" gift (for the record, FNLC has the lowest matching contribution percentage of any company I've ever worked for, especially considering that we are owned and operated by a financial institution).

I urge all current employees to confirm that they are receiving the matched contributions they may be eligible for. Don't take for granted that this company is going to do right by you. "Doing what is required" means doing what's best for a select few members of the executive management team and to hell with anybody who stands in their way of lining their pockets with a few extra bucks.

This is typical First NLC policy and procedure: take something that is commonly accepted, and twist it around so it works only in the company's favor while disguising it with fine print, murky documentation and unanswered questions. This is just another example of how this company preys upon the goodwill and intentions of its employees by twisting a knife into their backs whenever it becomes convenient.

You'll Have the Rent Money Next Tuesday

Did you know we still had people employed in the Concord (California) ops center? Neither did we, apparently. I received word earlier today that there was an EVICTION NOTICE posted on the front door of the office from the building's property management company. We haven't been paying our $50,000 monthly rent for quite some time. This was brought to accounting's attention and supposedly we are going to take care of this "error."

Can you imagine that? What company conveniently forgets to pay a $50,000 monthly rental bill? Sounds like we're doing "what is required" again by walking away from a problem and ignoring it while throwing a bunch of innocent employees under the bus. If I were any of the people still working in that office, I'd demand an explanation, apology and assurance this will never happen again. I'd also appoint one employee to camp out in the office overnight this evening to make sure everybody isn't locked out in the morning.

Yep, things are really looking good for us. Here's a tip for all of you: if there is an EVICTION NOTICE on your office door, you can make a safe assumption that our half-baked Alt-A program isn't going to be the magic potion that will turn this company around.

An EVICTION NOTICE. How embarassing.

Busy Day for Me...Slow Day for the Blog

I actually had some work to take care of today, so I don't have much to post. Below are a couple of articles about the latest rounds of mortgage industry layoffs. Oh, and for all of you grumpy folks down the hall: Lighten up, would you? The walls are thinner than you think.

Talk of the bay: Subprime jobs were just on loan, turns out
"Subprime mortgage lenders gaveth Tampa many jobs during the housing boom, but the industry continues to taketh them away. The city's layoff toll rose to 778 on Wednesday when New Century Financial Corp. disclosed plans to cut 177 local staffers. The California lender, which filed for Chapter 11 bankruptcy protection in April, follows layoff announcements by Fremont Investment & Loan (301 jobs), H&R Block Mortgage (141), First NLC Financial Services (92) and AcuLink Mortgage Solutions (67)."

Orange County mortgage casualties
"First NLC Financial Services LLC, Orange. Reported 113 layoffs in March to the EDD."

Great Food, Family Fun and Entertainment

Just a couple of quick facts about this year's company picnic:

• It's only for those of us in Deerfield, proving once again that if you don't work at HQ, you aren't important. However, you'll still receive all of the email announcements for this event, so while you don't get to have a picnic, at least you can hear about how great it will be for the chosen ones.
• It costs a lot of money. In a climate of slashing costs, we've spared no expense on this little shindig. We discontinue employees' health coverage the day they are laid off, but when the execs have a chance to make a big show about how great their company is, it's open checkbooks. "See how wonderful we are? We are your benevolent leaders! Eat your hotdogs while basking in the knowledge that tomorrow we may kick you to the curb in another workforce reduction!"

Let's Hear From You

I was pleasantly surprised by the amount of traffic this blog has received in just a few days. Some people at the office are fuming about what I've written, but since it's all true, they have nobody to blame but their own conceited selves. After all, did they really think nobody was eventually going to call them out for the way they've handled themselves over the past few years?

Sure, some executives are gifted with expensive watches just for turning another year older (wait until you hear THAT story), but most of us are treated as common help whose only purpose is to make a few individuals rich. We'll launch a new product and the execs feel their job is done. The entire company will receive a short email from an exec that will say something like "now go out there and make this happen." That's our motivation. Never mind that the product is already outdated and we can't make adjustments quickly enough to compensate for the market. The problem is now OURS. And guess who gets the blame when the numbers still don't hit our targets? Us - the regular folks who are stuck peddling an inferior product. The perception up top, apparently, is that brokers and borrowers don't shop for the best deal.

The main purpose of this site was to document all of the questionable practices employees and brokers have witnessed at First NLC. While there are still plenty of things I want to share with you, I thought it would be a good idea to solicit visitors for any information they may have. Feel free to leave your horror stories in the comments and I will post them on the main page. I encourage all of you to remain anonymous - many of you are still at the company and we know how petty and vindictive certain individuals are.

I am absolutely certain that if I am discovered, I'll be working the weekend shift at the Waffle House. Still, I figure I'll probably be let go prior to that because the company continues to fail (anybody want to buy a subprime mortgage company? Call 1-800-FBR-SELL).

Until then, see y'all at the company picnic!

See You In Court

Here's a handy little link y'all can use to see the lawsuits listing First NLC as a defendant. According to justia.com, there have been ten filed since February '06, including another case involving the Fair Labor Standards Act. Good thing we have so many lawyers on the payroll!

Here's some bonus links from the past:

• First NLC listed on ripoffreport.com (2006)
• Woman Loses Home After Agreeing To Loan (2005 predatory lending story from an ABC News affiliate)
• Merger of California and Colorado overtime lawsuits against First NLC approved (2006)
• A notary writes about not being paid by First NLC on the 123notary.com message board's "beware of these companies" forum (2006, about 3/4 of the way down the page)

First NLC and the WARN Act

I found a detailed list of the positions eliminated in our Orange offices at the end of March when the company notified California's state employment department for compliance with the WARN Act (it's a long document; you'll have to scroll down about 1/3 of the way - all companies are listed alphabetically). Among the positions cut: 17 account executives and 28 account managers. Interesting that the Northern California positions we eliminated during the same month are not listed. I wonder if that's why I've been hearing talk about a WARN Act lawsuit against us.

I know that the Northern California folks were not given much of a severance package when they closed Concord ops. It was something like 1 week's pay for every year of service. I guess the company was trying to cut corners (again) by separating all of the offices when reporting the layoffs.

You would think that a responsible company would take all of their planned layoffs (at least from the same state) and bundle them together in order to take care of the folks who stuck with them through these recent hard times and help them transition into the next phase of their careers, but First NLC has never been about anybody that doesn't directly service and affect the Powers That Be (our royal family) here in Deerfield.

News Flash: Florida Is Not California

For many years, First NLC has cut corners by allocating California resources to Florida cost centers. Several employees who work and pay taxes in California are considered Florida workers. This benefits First NLC because Florida has much cheaper and management-friendly labor laws.

I've overheard conversations and phone calls detailing how west coast employees were confused about certain corporate policies that conflicted with their state's labor laws. Things like not being able to roll over unused vacation time into the next calendar year are totally illegal in California, but they are par for the course in Deerfield. It wasn't until January that First NLC finally issued a California-specific policies document, but I've been told it doesn't address any labor issues that would be in the employee's favor.

Why am I telling all of you this? I just found out that some employees who were let go a few weeks ago are unable to collect unemployment benefits in California because, according to their state's records, they were employees of Florida. Imagine getting laid off and not even being eligible for unemployment just because some bean-counting weasels wanted to save a few bucks by classifying you as a worker in another state! Legal? Methinks not, but legalities don't seem to stop our organization.

Let this be a warning to all of you who are still employed out there on the west coast: find out what cost center your wages are being reported from. At First NLC, "doing what is required" means screwing over everybody who stands in the way of making the execs' bank accounts grow.

First NLC: Overtime? What Overtime?

Here's the latest status (as of April 5) on the class action lawsuit (filed by Nichols Kaster & Anderson, PLLP) against First NLC for failing to pay overtime wages:

"First NLC recently provided us with a list of approximately 1300 additional names of eligible employees that were omitted from a previous Court ordered list. The case has also expanded to include branch processors, senior loan officers and team leaders. We have mailed notice of the case to these 1300 people who have until May 22, 2007 to return their Consent forms and join the case."

You can read more and find out if you are eligible to participate here.

First NLC In The News

I just wanted to catch y'all up on how FBR (the parent company of First NLC, for those of you fortunate enough not to know) threw First NLC under the bus a couple of weeks ago after announcing their 1st quarter earnings for 2007. I don't think any of this is making Daddy and Junior's stock portfolios rise, do you? I should note that all of these statements happened about five weeks after FBR gave First NLC a vote of confidence during a company-wide conference call.

Mortgage Defaults Hurt Lenders
"Meanwhile, investment bank Friedman, Billings had a loss of $185.9 million, or $1.08 a share, because of write-downs at its First NLC mortgage unit and costs for "restructuring." The company is trying to sell First NLC."

Friedman Billings Posts Loss on Mortgage Writedowns
"The First NLC mortgage unit lost $124.2 million after writing down the value of goodwill, stakes in other "nonprime'' mortgage companies and its own home-loan investments, the company said. Friedman Billings also recorded $5.2 million of "restructuring and other costs.''

Mortgage Woes Send FBR to Quarterly Loss
"The Arlington investment bank reported a loss of $185.9 million ($1.08 a share) for the first three months of the year, compared with a profit of $26.6 million (16 cents) in the corresponding period a year earlier. FBR said its mortgage company, First NLC Financial Services, lost $124.2 million in the quarter. First NLC specializes in subprime loans, those generally offered to people with blemished credit or insufficient cash for a down payment."

Friedman, Billings, Ramsey Loses in Nonprime
"In the company's official 2007 first quarter report, it attributes most of the recent losses to its wholly-owned nonprime origination platform, First NLC Financial Services (FNLC). According to the company's first quarter report, FNLC experienced a net after-tax loss of $124.2 million."

Subprime mortgage fallout hits FBR
"FBR said in March it was evaluating alternatives, including the possible sale, of First NLC, which is FBR Group's non-prime mortgage origination business. The company now says it intends to act on those alternatives sometime this quarter."

At First NLC, Lies Start At The Top

Here's some insight into the typical line of BS we receive from the CEO. This was sent to us a few days after they axed a significant amount of the workforce. My comments are included.

Dear Fellow Employees,

Last Friday, First NLC was forced to implement a restructuring plan that required us to close some of our wholesale operations and to lay off employees. We did our best to ease the pain for the individuals involved (unless they were in actual pain and had to see a doctor and couldn't because we stripped them of their health coverage that very evening - however, that one week's severance for every year of service should allow them to eat Top Ramen and cat food for the next couple of months), and every affected employee was notified personally by a senior manager (to this day, some of the affected (former) employees still haven't spoken to a senior manager and weren't even notified of their dismissal that day - they found out through colleagues on the grapevine).

Since the founding of this great company, this was the most difficult thing we have had to do. You know what is going on as well as I do: nonperforming loans have disrupted the secondary market, which has caused a tide of put-backs to the originators. The whole subprime industry is a mess. In the big picture (big picture = all lenders),this is an anomaly (this is a long-term fact of life and NOT an anomaly for subprime), but in the meantime, many of our competitors - from the most respected to the marginal - have been put out of business, and many others are on the edge.

As painful as the restructuring has been, First NLC is better off than many (a boldfaced lie, especially in light of FBR's financial statement that came out three weeks later). We have been able to take steps to ensure our long-term success (long-term = "until our contracts with FBR expire this summer"). (Name Witheld) and I were in New York at a series of meetings to work through strategic alternatives. We're also investigating ways to enhance the value of our originations, including the possibility of holding loans in portfolio. And we are fortunate to be a wholly owned subsidiary of FBR (not for long), a well capitalized company (not sure the Washington Post agrees with that) totally committed to our franchise (totally committed to unloading us to anybody who will pay pennies on the dollar for us, that is).

My experience tells me that what we have seen these past few months is not the Ghost of Subprime Future. The market will restabilize, and First NLC will thrive again (with only his family on the payroll). In our industry, loan performance and loan quality are key. Our future depends on our continuing to work to originate the best product available, and I know we will.

(Name Witheld), your senior managers, our parent company, and I are proud to stand with you during this difficult period (as we scramble to save our hides). Tough times show what we are made of (ask any employee what you are made of - when the going got tough, your only solution was to downsize and cut overhead without actually attacking the issues at hand). We thank you for doing what you do every day, and we remain confident in our (my family's) future (fortune).

First NLC: Did You Know?

• That management in one of the West Coast wholesale ops centers routinely tapped into employee phone conversations? In a rare moment of truthfulness a few months ago, a floor manager openly admitted to it. Is that legal in California? I don't think it is in Florida.
• People who were laid off on March 30 had their health benefits expire at midnight that evening, even though there was one day left in the month. Some people weren't even notified on Friday that they had been laid off and unknowingly engaged in weekend activities without health coverage.
• Former employees received incorrect severance payouts that were automatically deposited to their bank accounts. A few days later, the deposits were reversed without notification. HR wasn't going to replace these funds until the following pay period. When forced to make these payments, the correct amounts were sent to the bank accounts - often with a wiring fee deducted. Amazing how quick the company could take its money back, but how reluctant they were to correctly pay it out.
• As of mid-April, several laid-off employees from the first week of March had yet to receive their severance.
• Speaking of layoffs, legal action is being taken against FNLC for violation of the WARN Act.
• Alt-A products were being developed as early as last summer, but Daddy and Junior but the kibosh on it. Think that might have helped us last Fall? We finally launched about a week ago, and as usual, it's too little, too late.
• Our swanky new offices (that we still haven't moved into) are costing a lot of money. When the execs were looking at possible cost-cutting measures a few months ago, the highest-ranking exec would not consider getting out of our lease and instead decided to continue slashing employees from the payroll. Too bad there won't be anybody left to occupy T. Rex by the time it's ready!
• The corporate 401k matching program is arbitrary. Even if you've been there for over a year, it is still at the company's discretion whether they will allocate matching contributions to you. The matching contribution normally takes place once a year (in March, allegedly) in a single lump sum. I know of several employees eligible for this program who were dismissed this past March without their matching contributions. Better yet, when pressed on this matter, HR representatives freely admit that they aren't exactly sure what the policies are. It's a shame to withhold such a pittance from hard-working regular folk, but since it puts more money into the execs' wallets (and really, it's all about the execs, right?), I suppose it's just another case of "doing what is required."

Job Searches Squashed

While reviewing the infamous Bakersfield Bubble thread, I saw a few FNLC supporters saying "if you don't like it, get another job."

Well, that's harder than it looks.

We've been told that all of our work computers are being monitored to see if we are visiting any job posting sites. In addition, we have been threatened that, if any of our resumes are found on these sites, we will suffer consequences.

So tell me - how can I look for a new gig if it means I'll get fired from my current one? I'm not talking about running a job search while I'm at work - I'm talking about posting my resume to Monster or Hot Jobs from my home computer during my personal time and having some HR weasel find it and rat me out.

This is what life is like as a First NLC employee.

Who Am I?

I may be a current FNLC employee working right down the hall from Daddy and Junior. I might be an AE who left the company when things took a severe downturn a few months ago. I may be a disgruntled Lending Center schmo that is desperately trying to find another job in this crazy industry.

I might be all of these people, or none of them.

One thing I definitely am, however, is somebody who has access to enough information on this company on a day-to-day basis to be able to pass along a fairly complete picture of how Daddy and Junior have run this organization into the ground with extremely questionable (if not illegal) practices.

And, I'm going to share this with you.

Stay tuned.

PS - if anybody has a problem with this, please keep in mind that it took five minutes to start this blog and I'm archiving all of this information in a secure place. If you shut me down, I'll just show up somewhere else. This is my mission until First NLC is closed for good.

The Post That Started It All

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