Wednesday, January 30, 2008

Mortgage Fraud -- The Borrowers are the Bad Guys

Who's at fault in the mortgage default and foreclosure scandal? Who's defrauding whom? In the days of easy credit, it is the borrowers who have cooked up schemes to get money they don't deserve. It is borrowers who have found creative ways to abscond with funds.

First, borrowers misrepresent themselves and their capacity to repay. Common stuff. That's how many people obtain homes. Fudge a little information here, fudge a little there, and then you get a mortgage which hopefully remains affordable for the borrower.

Second, borrowers set out to steal money from lenders. In other words, “fraud for profit”.

Deceptive borrowers obtain multiple loans based on “elaborate schemes perpetrated to gain illicit proceeds from property sales”, the FBI report said.

Deceptive borrowers engage in “gross misrepresentations concerning appraisals and loan documents”. Mortgage fraud.

The most common form of mortgage fraud is “illegal property flipping”, which involves false appraisals and other fraudulent loan documents.

The critics of the subprime lending industry should wake up to the fact that it is impossible to earn a profit by giving money to borrowers who have no plans to repay it. That's the road to bankruptcy.

Meanwhile, subprime loans have enabled millions of borrowers with weak credit to own homes. Where's the problem with that? Ten years ago politicians were ranting about lenders who were unwilling to lend money with the same zeal as credit-card companies handing out the plastic. Now the same politicians -- like Chuck Schumer -- are blasting lenders for giving out money too freely!

I suppose that means Schumer and other like-minded politician really believe some people are bad for business. Wow!

FBI in subprime crackdown

By Jeremy Grant in Washington
Published: January 29 2008

The Federal Bureau of Investigation is investigating 14 companies for possible accounting fraud and insider trading offences related to subprime mortgages.

The development, another sign of fallout from the subprime mortgage crisis, comes as light regulation of the industry – in particular mortgage brokers – has been blamed for mis-selling and abuse of mortgage products.

The Securities and Exchange Commission already has about three dozen different investigations into a range of subprime-related issues.

Bill Carter, an FBI spokesman, said the agency had been working “very closely” with the SEC, with some of the latest investigations moving “in parallel”. He declined to name the companies involved.

The number of mortgage fraud cases opened by the FBI jumped to 1,210 in fiscal 2007 from 436 in fiscal 2003, the agency said.

“We’ve been raising this issue since 2004,” Mr Carter said. “We view mortgage fraud as a significant and growing crime problem and an area of concern. Combating this is a priority given the housing market’s impact on the wider economy.”

In a report out last year, the FBI classified mortgage fraud into two broad areas. The first is fraud for property, involving “minor misrepresentations” by a mortgage applicant for the purpose of buying a property as a primary residence.

The second category – of most concern to the FBI and the mortgage industry – is “fraud for profit”. This often involves multiple loans and “elaborate schemes perpetrated to gain illicit proceeds from property sales”, the FBI report said.

It said such schemes usually involved “gross misrepresentations concerning appraisals and loan documents”.

The most common form of mortgage fraud is “illegal property flipping”, which involves false appraisals and other fraudulent loan documents.

Some of the SEC’s investigations are related to potential insider-trading, focusing on wider-than-expected writedowns unveiled recently by some large Wall Street banks. The way credit rating agencies rated the securities into which mortgages were repackaged is part of the effort.
John Nester, SEC spokesman, said: “We’ve drawn no conclusions in terms of whether securities laws were violated.”

Attorneys general in New York and Connecticut are also conducting similar investigations.
On Tuesday, Democratic congressman Barney Frank said much of the money that made mortgage securitisation possible came from places other than depository institutions, which are regulated.


Anonymous m johnson said...

A real Jew is a very, very special human being.
And the beauty of this, if it's properly understood,
is that the Apostle Paul, being a Jew, speaking to Jews,
said that the Jew is not the Jew outwardly, by the
cicumcision of the male instrument. But the Jew
is the Jew inwardly, by the circumcision of the heart

You can take down my posts....but it doesn't change the truth

11:55 AM  
Anonymous Myron said... cannot offer a rebuttal? Are you afraid of the truth? Deleting my comments will not change the truth. You just really do not have the ability to refute the truth. Do you?

12:02 PM  
Blogger no_slappz said...

myron, unless you are even dumber than I thought, you will notice that your comments have not been deleted.

Anyway, your knowledge of Jews is zero, which means there is nothing to rebut.

12:22 PM  

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