A top lobbyist for bankrupt New Century Financial Corp., once the nation's second-largest subprime lender and now the target of a federal criminal investigation, is taking over today as commissioner of the Nevada Mortgage Lending Division.
Mendy Elliott, director of the Nevada Department of Business & Industry, Tuesday confirmed reports about the appointment of Joe Waltuch, formerly senior counsel of regulatory and legislative affairs at New Century.
A key lawmaker expressed surprise at the appointment.
"I'm in total disbelief that the governor would appoint a former executive for a company that's under federal criminal inquiry, bankrupt and caused countless people to lose their homes," said Assembly Speaker Barbara Buckley, D-Las Vegas. "This company is a poster child for what not to do in mortgage lending. And now the appointee is supposed to watch out for consumers? Unbelievable."
Waltuch is not part of the government investigation of New Century Financial for possible criminal violations, Elliott said.
Tom Powell, CEO of Reno-based Equity Lending Partners and chairman of the Nevada Mortgage Advisory Council, said he was initially worried about Waltuch's involvement with the subprime lender, although he now believes the new commissioner has integrity.
"He wasn't in charge of day-to-day operations (at New Century)," Powell said.
David Goldwater, president of Goldwater Capital Nevada and a member of the advisory council, took no position on whether Waltuch avoided entanglement in alleged wrongdoing at New Century.
"That's not my call to make," Goldwater said, noting that he relied on Elliott's review of Waltuch.
The U.S. attorney's office has been investigating New Century for possible securities trading violations as well as accounting errors, according to the Irvine, Calif.-based company.
New Century originated $51.6 billion in mortgage loans last year, but it filed for Chapter 11 bankruptcy in April. It originated loans for borrowers with below standard credit ratings. Analysts fear that many subprime borrowers will be unable to continue making payments as interest rates on their adjustable mortgage loans are raised.
As commissioner of the mortgage division, Waltuch will help the government deal with the growing number of home mortgage defaults, which some blame on overly aggressive lenders.
Elliott said she and others in Gov. Jim Gibbons' administration are working to find a solution that would not cost any taxpayer money but would enable some Nevada homeowners to avoid foreclosure. She declined to elaborate.
Elliott said Waltuch is passionate about correcting abuses in the mortgage industry, in part because he and 6,000 other New Century employees were laid off. "These people have given their lives to the industry," Elliott said.
"Mr. Waltuch understands and appreciates the role that the Mortgage Lending Division plays as well as his role as commissioner," Elliott said. "He is going to hit the ground running."
Powell said he and other advisory group members helped Elliott select the new mortgage commissioner but did not recommend any specific candidate.
"He was definitely my top contender," Powell said.
Goldwater took a similar position: "I'm sure Director Elliott picked the best candidate for the job."
Waltuch fills the vacancy left by the resignation of former Commissioner Scott Bice, who joined Town and Country Bank. Waltuch will make $94,000 yearly.
Waltuch, a licensed attorney in California, holds a master's of business administration degree in real estate. He received his undergraduate degree from the University of California at Berkeley.
The new commissioner has worked in private practice, for the California Legislative Counsel Bureau and for the Federal Deposit Insurance Corp.