Posted on 01/16/2009 10:10:21 PM PST by Lorianne
What gets me: If you draw a line and put borrowers on one side and lenders on the other, it’s all OK and gravy when 6.5% of the gross value of all mortgages crosses the line in one direction each year, but we all lose our jobs when even a little net money flows the other way.
I don’t share your sentiment. I think the feds need to review the mortgage application. If income and/or assets are mistated, the borrower will have to explain to the feds why there is such a huge discrepency. Many borrowers will blame the mortgage broker, then the feds should haul both in front of an investigator. Either or both lied and have committed fraud. I don’t think the borrower should just suffer foreclosure, he/she should also suffer jail time if they lied on the loan application. That is how all this crisis started, broker and borrower lying on the application.
And then they will import all of Kenya and put them in that nice government housing with their flyswatters and stools. It’s only fair.
We don’t even jail, enough, real criminals in this country. The banks voluntarily loaned, on known shaky collateral, to minimal borrowers that they had reason to believe would have trouble making payments. That is a personal, civil problem between these two parties.
Since the government chains us all together such that if a crack addict can’t get the full cable sports package, we have to be taxed for it, we are now chained to those two above parties by both Republicans and Democrats ‘to help the homeowner’, which means help the sloppy, lazy, greedy banks, mortgage underwriters, and bowers and even the local governments.
Nice.
And the government wonders why productive citizens don’t want to risk their money, make investments, fend off local, state and Federal business codes, permits, permissions, inspections, laws, rules, regulations, fines, fees and penalties....plus had over half of your profits.....and pay for others and, if in the real estate or banking business..pay for your failed competition.
The "civil problem" and local governments... The local courts are corrupt, especially when a property owner (like myself) can arbitrarily and falsely sue a rental tenant for damages which are really a failure to perform maintenance.
I have seen some homeowners "helped" by the courts, because they have connected friends or have bribed local officials screwing an honest working person to pay for remodels. The tax evasion is another question. Local contractors drawing up false bills for work never done to help their buddies in damage claims. They give the judge a cut buying the judgement award and all feast on the profit.
Slum lord economics. Kind of like Dianne Fiendstein. Get a suspect loan, buy a pile of junk, rent it out, sue the working tenants for money to remodel. This works especially well if you have a lot of Section 8 housing tenants and the government to carry the loan payments while you use your security deposits to file small claims against those who have jobs.
It is more difficult to do in a larger city unless you are one of the "in" crowd.
I have been aware of the Section 8 scam. I knew one case where the extended family owned the apartments, the single mother daughter rented it under Section 8, while working under the table and living with her working boyfriend husband, and then the family charging back repairs on non existing damage repairs to the feds.
It doesn't require much work for the 5k and you have all your fees covered by the deposits.
Wonder where they were in ‘06, when dim-0s were running for control of congress promising “CHANGE?”
That's 1.85% of households!!!! That must mean "everyone".
You better read any loan contract carefully and state laws to assume that lenders can coax borrowers or borrowers can say anything on a loan application. It is one thing to state that you only earn 45000 dollars and the bank gives you a 600000 dollar loan, and another thing to say you earn 70 000 dollars when you actually earn 45000 dollars in order to meet the minimum debt ratios to qualify for a 600000 dollar loan. It is the later type fraud that the feds should go after. Read about the WaMu civil lawsuit where loan originators are now the star eyewitnesses against the bank. You will be appalled at the deliberate mistatements on the loan application colluded by the originator and the applicant.
>>>The GOP was in on it too I’m afraid. GWB pushed hard to make loans available to all Americans.<<<
Your information is just flat wrong. The Bush administration, early on, was warning of excesses at Fanny and Freddie...and later (2005) pushed for more
stingent regulation. Here’s film (2004)....look at it carefully.
http://www.youtube.com/watch?v=_MGT_cSi7Rs
That's the mortgage loan officer at the Bank's job! Geeze - you want government to run everything. Obama would love it! Borrowers/lenders colluded because the CRA made it almost illegal for Banks to underwrite loans.
What is the government's job is making sure fraudulent operations like Acorn can't operate - and that means stringent laws about loan to value, income verification, amount limit on seconds, limit on number of houses you can leverage, equity requirements etc.
It is up to the Banks to enforce these laws...you seem to want some weenie in DC deciding if your a good guy or not. I want my Banker, who I have built up a relationship with over time, to be in charge of that.
CRA gave breaks to the poor or minority groups. What makes the government hypocritical is they are shocked that many of these victim groups are defaulting on their loans. CRA did not apply to nonvictim groups. You and I are suppose to meet debt ratios and enter accurate info on the application. Example if you earn 45000 a year and you put down 60000 as your income, that is fraud even if the bank does not verify it. I dare you to do that on a loan application and use that as an excuse in front of a judge when you are caught. Better yet, show me in the CRA regs that encourages an applicant on a conventional loan to falsely enter his/her income/asset. On the other hand if you enter 45000 and the bank gave you a loan that requires a minimum income of 60000, then you as the borrower is off the hook legally. The bank commits fraud by putting your loan into a portfolio and tells the investor that all the loans data are verified and the loans were givened to solid borrowers backed by real property. There is a civil law suit against WaMu where the mortgage originators are now the star witnesses against the bank. Read about it and you will see that the borrowers committed fraud and the mortgage originators under pressure from the immediate supervisors encouraged fraud. The government is not going to prosecute because they need the banks to cooperate during the bailout, but fraud was committed by borrower and bankers. It is common knowledge amongst real estate agents, builders, bank staff and mortgage staff that false entry and collusion is common, and there is grounds for the feds or state to audit the loans originated by banks that fail miserably. There are also state laws that govern bank practices, and based on what I read about the WaMu case, many of these regs were violated and the borrower/lenders can be criminally liable.
“ ‘My guess is the government will buy the homes from them and turn them into government run housing (like in England).’
I agree. I think that has been the plan by the far left and people like Barney Frank for years. If even one welfare family moves into a foreclosed home in my neighborhood, we’ll be selling and buying about 50 acres of land further out and building a house there.”
<<<Sadly, I think you both are on to something, I too am wondering about future values in my area; if this were to go thru, then would need to get out way before any homes are foreclosed or rezoned by government.
Just happened to read this today. While it doesn't address the CRA issue and sub-prime mess by name, as usual, Thomas Sowell capsulizes things in a few well chosen words. He pretty much says it all:
Lured To Disaster
http://www.freerepublic.com/focus/f-news/2167865/posts
Read the WaMu lawsuit. It does not involve CRA type loans. WaMu wanted to become a nationwide bank, and they intended to build up their asset value by originating as much loans possible. They abandoned the debt ratios and verification process for conventional loans. Borrowers were encourage to inflate their income and asset entries while the originator looked the other way knowing no one in the bank will review the data. Loans were made to average Joes who did not qualify for it. These types of loans were bundled into portfolios and sold to investors as solid loans. Finally on the CRA issue, no industry will lose money by making loans to people without a fight. Look at the tobacco industry when they fought tooth and nail against lawsuits. The banks rolled over on the CRA mandates because they thought they can take advantage of the government stupidity to give loans to people who were not qualify. Banks simply approved the loan and sold the mortgage within six months. Investors brought into it because it was backed by real estate properties that will not drop in price. They did not care because if a default occurs they can always take the valuable property. People forget that home prices can drop. The real estate bubble popped, the CRA loans and the fraudulant conventional loans came back to haunt the bank, and leveraged investors.
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