Comments on: If Mortgage Fraud Occurred, Why Don’t We Prosecute the Offenders?

By: Stacey

Stacey — Tue, 30 Jun 2009 04:14:33 +0000

Or, that my friend, is stupidity! Buyer beware…

By: LoMo

LoMo — Mon, 29 Jun 2009 22:41:43 +0000

I would have said no but then where would my kids sleep and eat? How do i register them for school and what school seeing as you have to have a physical address!!! What about my business how would i run a business with no place to have it at? They took advantage knowing i HAD to have a place within the time limit. I did however refinance at the end of the following year but i couldnt get a good rate because they knew any fixed rate was better than an ARM!!!! so i got a high fixed rate! That my friends is fraud

By: LoMo

LoMo — Mon, 29 Jun 2009 22:30:41 +0000

Heres one for you. I got a loan based on what i showed i made which wasnt much. At first they said to me..oh you have good credit and we found a company that will give you 6% fixed on 30 years…Mind you they also knew i had to be out of my house and into the new house within 3 months. The closing got pushed back as it usually does and low and behold 2 days to the real closing and i get a call. Well we lost your paperwork and so you will have to resubmit it. So i did and wow this is not suprising…Well we cant get you that fixed rate at that percent the only thing we can get you is an ARM and 2 mortagues at that.
This my friends is fraud.

By: marru

marru — Mon, 29 Jun 2009 06:46:19 +0000

A mortgage broker can save you time and money.
In Australia many lenders rely on a mortgage broker or mortgage brokers to generate new business for them. Many Australian banks closed their branch offices during the late 1980s as they turned to technology and internet banking
to grow their businesses.
http://mgbfinance.blogspot.com/2009/06/mortgage-b…

By: foobarista

foobarista — Fri, 26 Jun 2009 09:25:40 +0000

A few other points:

1. Numerous no-doc loans were made to illegal immigrants. This was considered to be a feature, not a bug. Nearly all of these defaulted.

2. Other no-doc loans were made to owners of small "all cash" businesses who somehow drove Mercedes Benzes while reporting a couple of grand in profits each year (ie, they cheated massively). It was far from unknown for the owners of these businesses to themselves be illegal immigrants. These actually turned out fairly well as these guys aren't noted for overpaying or buying "too much house".

3. Yet more were made to people like me who had consulting jobs with irregular income (the LTV in mine was about 40%, but I still couldn't get a "doc loan" because I didn't have a W2 job). These are also decent loans unless the person overbought.

By: JLP

JLP — Fri, 26 Jun 2009 04:47:00 +0000

John,

Believe me…we have talked about all of the guilty parties at one time or another on this blog. Unfortunately, you are basing your opinion on one post.

By: John

John — Fri, 26 Jun 2009 04:36:42 +0000

you're a real law-and-order type. but i do think the real criminals ran Countrywide and AIG. 80% of the no-doc loans were lender-initiated. i think i had 2 no-doc loans. they can make sense at the right LTV. which logically leads to appraisals. can't you find some fraudsters there? and those who sold these dubious loans with the Moody's AAA rating… any fraudsters there? And those who bought them without due dilligence, contrary to promises otherwise. Fraudsters all the way down. Keep digging!

By: Lord

Lord — Thu, 25 Jun 2009 18:44:31 +0000

Many weren't even fraud because there were no income requirements; the property was the security. There have been some prosecutions, several hundred loan agents and brokers but it was far too widespread to make it worthwhile to pursue now. How much good money do you want to throw after bad? The time to do it was around 2003 when it could have had value not just cost. That would have interfered with someone's reelection though and more especially campaign contributions.

By: Mark

Mark — Thu, 25 Jun 2009 10:25:41 +0000

Of course many individuals and companies encouraged this, or benefited from it – but the fact remains that person who signed the false statement commited fraud.

If it is not practical to prosecute, it should at least be possible to withhold assistance of any sort from these borrowers. They do not deserve to stay in the homes that they bought under false pretenses. And they definitely don't deserve to do so with my tax dollars.

By: foobarista

foobarista — Thu, 25 Jun 2009 02:30:33 +0000

JLP: There Are No Lenders. You have the quaint idea that there was something called a "bank" that lent out its depositors' money to fund mortgages, after carefully qualifying buyers and doing extensive diligence on the value of the real estate in question.

In the glorious new world cooked up by Barney Frank, Chris Dodd, and Fannie Mae, that antiquated concept went away, to be replaced by "originators" who marketed loans to all and sundry. They did just enough information-gathering to get a magic number on the loan so it could be scored. Whether this information made any sense or not was irrelevant; only the "score" mattered. Once the loan was sold to Fannie Mae, it was split up into dozens of pieces, packaged, and sold again into a vast pool of badness sorted by "score".

The idea may have even worked, if the "scoring" had any basis in reality. The problem was, it didn't.

As for prosecuting people, since everyone in the chain had some interest in being deceived, it's hard to know where to start. And most of the loan originators went bankrupt, in many cases because many of them didn't realize they were in a massively crooked business and dove into the "can't lose" real-estate market they helped to bubble up.

Some – and probably most – of these brokers honestly thought they were helping people achieve their dreams of home ownership. If the money was great, that was wonderful too.