An embarrassment of World-ly proportions

A CBS affiliate in San Francisco got their hands on training videos that probably has execs at Wachovia cringing over how World Savings originated its now-infamous “Pick-A-Payment” loans. From CBS 5’s coverage:

… what were World Savings employees instructed to tell these customers? The training videos obtained by CBS 5 investigates provide some clues … “So if I’m paying that minimum payment, I’m not actually putting a dent in my principal though right? My principal and interest they’re just going to keep climbing up right?” the borrower asks in the video tape. “It’s optional,” the broker in the video replied. “What kind of answer is that?” said Brown after watching the video. “The answer would really be ‘Yes.’ That’s the right answer, that to me would be the true clear straightforward truthful simple answer.” And in still another scenario, the video instructs brokers to explain those loans. “Why would I offer a loan that has a negative amortization?” the broker asked. The World Savings representative replied: “Most brokers refer to them as negative amortization, but we try to use the words a little more user friendly, ‘deferred interest.'”

(H/T to Tanta at Calculated Risk.)

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