Skip to comments.Have lying mortgage bankers met their match?
Posted on 05/05/2011 7:44:03 AM PDT by Chunga85
How fitting that when Wall Street finally takes a hit after years of mortgage malpractice, the stick is called the False Claims Act.
If there is one thing that's never in short supply in banking circles, after all, it is false claims. Internet stocks are good as gold! House prices never fall! Derivatives make the financial system safer!
Those particular false claims aren't the ones that have Wall Street looking down the barrel of a $1 billion-plus government civil suit, mind you. Preet Bharara, the U.S. attorney who sued Deutsche Bank (DB) Tuesday, is going after the bank's alleged practice of making federally insured mortgage loans without actually checking, as it repeatedly claimed, on annoying details like whether the borrowers actually had jobs or incomes or bank accounts that would allow them to repay.
(Excerpt) Read more at finance.fortune.cnn.com ...
During the S&L crisis, hundreds of people were charged with crimes for their fraudulent practices. So far in this "financial meltdown," I'm not aware of any criminal referrals for any fraud or theft. The banksters just collected the taxpayer money and went on with their business.
Looks like they are about to get swept-up in a Populist wave that may result in televised public floggings live from Yankee Stadium.
The problem is, no one wants to point out the folks who are the real culprits: the idiot borrowers who agreed to 2,3,4,500 thousand dollar mortgages they knew they would not or could not pay back.
A mortgage closing takes and hour and you have to sign about 100 documents — all of which say the same thing: make the damned payments.
Why we want to let these folks off the hook is beyond me. Especially Freepers who want to let them off the hook.....
I think the banker and borrowers both should go to jail for fraud. Remember, after the banker consumated the deal, he sold the note to investors, pension funds, etc, etc as AAA rated products. Worst they claimed to physically own the note and title to the property. All written on a prospectus and signed off by the CEO of the bank. Guess what? According to SEC that is fraud. Bankers and borrowers need to face a judge and jury. It is starting to happen. Banks and borrowers are going to end up like tobacco companies, a decade of lawsuits. Atleast the cigarette companies were selling a legal product with known side effects. Bankers were selling fraud.
That wasn't the banks money they were lending out, by way of the Federal insurance, that was your and my money they gave out. The bankers had a fiscal responsibility that they failed to uphold, and they should be held to account.
“Why we want to let these folks off the hook is beyond me. Especially Freepers who want to let them off the hook.....”
There’s a fair amount of blame to go around, but I don’t put stupid consumers at the top of the list.
At the top of my list are the people who put together derivatives, and credit default swaps. The people who sold “toxic assets” knowing they weren’t worth spit, but doing all they could to get them off their own books. When the bubble burst a lot of pension funds, mutual funds, and 401k’s took a big loss.
Next are the mortgage bankers. I know, I know, caveat emptor, right? Well, back in the day, the bankers would make sure you could pay. They had formulas for your debt load and the mortgage payment, and if you didn’t meet the standards, no loan. In fact, the consumer could rely on banker’s approval as a measure of their ability to pay. Predatory banking was a new twist. Taking advantage of ill informed people may be legal, but it’s far from ethical. And it’s bad business. It establishes the bankers as adversaries, not allies.
Finally, at the bottom, I put stupid consumers. Yes, it’s the consumer’s responsibility to be as informed as possible. But trust me, in those closing sessions, the papers come fast and furious, and the summary by the banker is trivialized to the point of being useless. So, the consumer needs to either be experienced, or take a full day to read all that’s shoved their way, or have a lawyer at closing. I don’t give the consumer a pass, but I can understand how a first time buyer can get snookered. There are also those who speculated, bought more than they could afford, knowingly. Those people are just as bad as predatory lenders.
Just my 2 cents, since this is the place to spend it.
Not sure who here wants to let the wall street component off the hook, but there is a total lack of holding dumb (or fraudulent) borrowers to account too. That was my point.
And the lending component became totally estranged from the packaging of the credit default swaps and the other esoteric instruments packaged by banks.
Simply trying to get some proportion in the debate. The media acts like folks who BORROW FOUR HUNDRED THOUSAND and allowed to live in a huge house were somehow “held up” — it makes no sense.
There are an army of foreclosure lawyers going after the failed borrowers, and lots of empty homes. In some states, those folks are still on the hook for the money the bank can't get from the sale of the house. The failed borrowers are not having a fun time. You can find a number of articles on www.nakedcapitalism.com about folks who were robbed of their homes by the banks.
On the other side, we have seen sworn testimony about 10s of thousands of perjured documents by the banks. And yet, no banker has lost his house or been otherwise penalized.
Until we see a lot of perp walks, there isn't enough emphasis on the crime of the bankers.
You have bought all of the liberal populist victimology kool aid on this story and understand NOTHING about the mortgage industry.
I’ve not the time to educate you on how it works.
Please reconsider. Your country needs you now.
Were we to hold court with the issue at bar being our survival in imaginary case "Citizens [Plaintiff] v. America, Inc. [Defendant]" the defense would move the court to dismiss.
The Plaintiff could adequately plead the necessary elements of negligent misrepresentation in order to defeat a motion to dismiss.
Defendants would offer no valid case law to support their position because there is none.
The court would rule in favor of the defendants based on economics as opposed to law.
Yeah, da heck with holding the banks responsible for their shady business practices, or letting them face the risk they accepted. Not to mention ignoring the laws they broke.
bwahhhaa haahhhhaaaaa haahaaa
thanks for the laugh
It's not about the victimology of the borrower. It's about the criminality of the lenders, which is on all sides of the deal. The bankers & mortgage processors have shafted the borrowers, and the taxpayers who guaranteed the loans, and the pension plans that bought the loans via MBS.
And the banks did this intentionally.
Stupid, venal and corrupt borrowers are and have always been a problem and banks were supposed to exercise their fiduciary responsibility on behalf of the shareholders and despositors to not lend to these types of borrowers. What's new now is the flagrant disregard of the banking and mortgage industry in giving out huge money to this type of borrower.
Stupid, venal and corrupt borrowers aren't a problem if the banks properly refuse to lend to them.
What a child. You want to hold the business responsible but not the borrower - when in fact if the borrower had simply lived up to their obligation there would be no problem.
You have your ACORN membership with you? Or did you leave it at the unemployment office? Maybe in the government cheese line? Oh, i know, it’s under our work boots where you’ll NEVER find it.
“What a child. “
Thanks for the personal attack.
“You want to hold the business responsible but not the borrower -”
Where did I say that?
“when in fact if the borrower had simply lived up to their obligation there would be no problem.”
No problem with the banks committing fraud, perjury and a myriad of other crimes? Which bank do you work for?
I don’t work for a bank.
But I do have four mortgages. I understand them all. I pay them all. I accept responsiblity for them all.
You, meanwhile, agree with CNN.
The issue is not the forclosure, even with the document fraud.
The issue is the questionable ability of the mortgage holder to convey clear title to the new owners without the proper paperwork (which they cannot produce) because of MERS.
Can of worms and it is already opened. What a mess. Will take years to solve and there is no universal quick fix. Only case by case solution.
If you want to deny that the government under Carter and then Clinton forced banks to lend to folks they did not want to, then go ahead and join ACORN and the DNC and MSNBC and the Daily Kos and Huff Po and The Nation and all the others who agree with that sentiment.
“But I do have four mortgages. I understand them all. I pay them all. I accept responsiblity for them all.”
Well jolly for you. I guess you are so busy paying for those mortgages that you’ve ignored every bit of economic news for the last 4 years.
“You, meanwhile, agree with CNN.”
Again with the personal attacks. Perhaps you were so busy paying those four mortgages that you’ve forgotten all your social skills.
Did the govt force banks to give you those 4 mortgages?
You asked if I worked for the banks. Since I did not, it was only appropriate that you know on what basis I claim to understand the mortgage industry. I simply gave it to you.
As for agreeing with CNN, if you find that insulting, it is you who needs to soul search because you DO AGREE WITH THE OP CNN article. And with ACORN, and with the DNC, and with Barney Frank and Chris Dodds and MSNBC and Daily Kos and so on. I’m sorry, you DO parrot their line in this debate.
If you think that’s insulting, well, you should, but you chose to agree with them.
>>> Well jolly for you. I guess you are so busy paying for those mortgages that youve ignored every bit of economic news for the last 4 years.>>>
In response to your kindergarten chant, I am well aware of every bit of economic news the last four years. I wish I had been able to sell two of the four properties with those mortgages but could not. Thus, I have skin in the game. But I’m not whining about the banks or the sellers or anything else.
I think it’s instructive that you deride paying mortgages Shows true colors.
No, you show a distinct lack of judgement and tendency to make assumptions.
You got one thing correct, you are sorry.
go back to your ACORN meeting. The rest of the adults and I will go back to work.
****a $1 billion-plus government civil suit****
And how much did they get in the bailout?
Wow noob, you are one smart, sanctimonious SOB!
Yep, the scumbag bankers should be in jail right next to the scumbag deadbeat borrowers.
I love how people around here judge you on how long you’ve been registered on FREEP - as if that’s a legitimate measure of one’s expertise on a given subject.
I’ve written on the mortgage mess for national publications and for national talk shows for years. I’m no noob on mortgages and a few other subjects. When I’m a noob on something, rest assured I’ll ask questions and not take the very same take that CNN, ACORN, Daily Kos, MSNBC and every other liberal outlet takes on it and call myself a Free Republic type of guy.
That’s contradictory in and of itself. And yes, it’s too long of a subject to be understood in an internet thread.
Spend a little time researching those four mortgages and you just might find reason to be less complacent. This is not just about people who have been foreclosed upon, it’s also about people who have been paying on a note to entities with no legal basis to receive the payments and no clear claim upon the property as collateral for the loan.
It’s a legal nightmare, fraught with corruption and fraud. But, you’re OK with that, it seems, and you’re not alone. Just why that is, I’ll never understand. There are two parties to those contracts, under terms to which both parties are legally bound.
Breaking the law and defrauding not just investors but homeowners themselves is a far more serious infraction than default, the consequences of which are clearly laid out under the terms of th contract.
Your priorities are strangely askew, here. You’ve said you have “skin in the game.” It’s clear that you do, above and beyond those four mortgages.
What about the scumbags like Barney Frank and Chris Dodd who forced lenders to make loans they knew from underwriting would not work?
Here is a handy timeline of why the housing bubble burst (from a recent FR thread).
» 1977: Democrat Jimmy Carter signs the Community Reinvestment Act, guaranteeing home loans to low-income families.
» 1999: Democrat Bill Clinton puts the CRA on steroids by pushing Fannie Mae and Freddie Mac to increase the number of subprime loans.
» September 1999: The New York Times publishes an article headlined "Fannie Mae Eases Credit to Aid Mortgage Lending," which warned of the coming crisis due to lax lending policies of the Clinton administration.
» 2003: The White House calls Fannie and Freddie a "systemic risk" and the Republican Bush administration pushes Congress to enact new regulations.
» 2003: Rep. Barney Frank, D-Mass., says Fannie and Freddie are "not in a crisis," bashes Republicans for crying wolf and calls F&F "financially sound." Democrats block Republican-sponsored regulation legislation.
» 2005: Federal Reserve Chairman Alan Greenspan voices warning over F&F accounting, saying, "We are placing the total financial system of the future at a substantial risk."
» 2005: Sen. Charles Schumer, D-N.Y., says he thinks F&F "over the years have done an incredibly good job and are an intrinsic part of making America the best-housed people in the world."
» 2006: Sen. John McCain, R-Ariz., again calls for reform of the regulatory structure that governs F&F.
» 2006: Democrats again block reform legislation.
» 2008: The housing market collapses; Democrats blame the Republicans.
Fraud isn’t that hard to grasp, but you seem to be having some trouble.
What we have is a failure to communicate:
And No I do not have any relationship to the mortgage industry other than being a bigger customer at this time than I’d like to be. But I have researched it and written about it for years.
I am not ok with any fraud and corruption of course, and any business as big as the mortgage business is going to have some of that. Right now the biggest problems are with over burdensome government paperwork and bureaucracy along with non paying customers.
As for your claim that “its also about people who have been paying on a note to entities with no legal basis to receive the payments and no clear claim upon the property as collateral for the loan” — all I can say is I am not aware of that being a widespread issue - and if it is — that is out and out fraud or identity theft of some description and not directly related to sub prime borrowing and the derivatives that resulted therefrom.
I would love to see a link to more info on that, and I’m not being catty. I really would I will still write about this.
THOSE are the people I want to put in jail.
I've since sold the house, it was a lake house, my dream house, but the economy forced me to close my business in July, 2008 and reduced circumstances no longer permitted such a luxury. I dodged a bullet, with both the price declines in the second home market and with Taylor, Bean & Whitaker. They have since gone through quite the controversy:
WHEREAS, TAYLOR, BEAN & WHITAKER MORTGAGE CORP. ("Taylor, Bean & Whitaker" or the "Corporation"), a corporation headquartered in Ocala, Florida with full knowledge of its rights to Notice and Hearing pursuant to the laws of: the States of Arizona, Florida, Georgia, Idaho, Illinois, Louisiana, Maryland, Mississippi, New Jersey, Vermont, North Carolina, the District of Columbia and the Commonwealths of Pennsylvania and Massachusetts (collectively the "States") and having waived those rights, consents to this agreement ("Settlement Agreement") with representatives of the Arizona Department of Financial Institutions; the District of Columbia Department of Insurance, Securities and Banking; the Florida Office of Financial Regulation; the Georgia Department of Banking and Finance; the Idaho Department of Finance; the Illinois Department of Financial Professional Regulation-Division of Banking; the Louisiana Office of Financial Institutions; the Maryland Office of Financial Regulation; the Massachusetts Division of Banks; the Mississippi Department of Banking and Consumer Finance; the New Jersey Department of Banking and Insurance; the North Carolina Office of the Commissioner of Banks; the Pennsylvania Department of Banking; and the Vermont Department of Banking, Insurance, Securities and Health Care Administration (hereafter the "State Mortgage Regulators") dated June 22, 2009, solely for the purpose of resolving this matter in its entirety, and without admitting any allegations or implications of fact or the existence of any violation of laws, regulations, and rules governing the conduct and operation of the mortgage business in each of the States.
WHEREAS, the State Mortgage Regulators conducted a multi-state examination ("Multi-State Examination"), of Taylor, Bean & Whitaker in order to evaluate Taylor, Bean & Whitaker's compliance with applicable state laws, which included evaluation of Taylor, Bean & Whitaker's underwriting standards, risk management practices, and other applicable laws, regulations, and rules governing the Corporation's mortgage business.
WHEREAS, the Multi-State Examination was limited to non-traditional mortgage products (as defined by the Interagency Guidance on Nontraditional Mortgage Products Risks) (hereinafter "Non-Traditional Mortgage Products") originated by Taylor, Bean, & Whitaker in 2006.
WHEREAS, each State Mortgage Regulator conducted the Multi-State Examination pursuant to its statutory authority, and certain of the States conducted parallel examinations of Taylor, Bean & Whitaker resulting in the issuance of State-Specific Reports of Examination to the Corporation.
WHEREAS, Taylor, Bean & Whitaker is licensed under the laws of the States.
WHEREAS, the confidential findings of the Multi-State Examination and related State-Specific Reports of Examination which were prepared by the State Mortgage Regulators and issued to Taylor, Bean & Whitaker, identified alleged compliance exceptions with applicable laws, regulations, and rules governing the mortgage business. The confidentiality of information relating to the report of examination by Florida's Office of Financial Regulation will be determined by Section 494.00125, Florida Statutes.
WHEREAS, on or about February 25, 2009, Taylor, Bean & Whitaker filed Responses to the findings and violations alleged in the Multi-State Report of Examination, as well as State-Specific Reports of Examination (collectively referred to as the "Report"), with the State Mortgage Regulators whereby the Corporation contested the concurrent findings and alleged compliance exceptions described in the Report.
WHEREAS, after negotiation and solely for the purpose of resolution of all compliance exceptions alleged by the State Mortgage Regulators and noted in the Report, which the parties now dispute and wish to resolve without protracted administrative proceedings and judicial review, Taylor, Bean & Whitaker hereby waives its right to the hearing process relative to this proceeding and affirms that the Corporation desires to participate in and support industry reform, and is willing to take action as set forth in this Settlement Agreement.
WHEREAS, Taylor, Bean & Whitaker consents to the adoption of this Settlement Agreement and the entry of a Final Order in any settling State where so required, and further agrees that it waives all rights to appeal any such Final Order entered consistent with the terms of this Settlement Agreement.
THE MULTI-STATE EXAMINATION ALLEGATIONS
WHEREAS, the State Mortgage Regulators allege Taylor, Bean & Whitaker has been the subject of certain compliance exceptions under each of the various States' mortgage brokerage or mortgage lending laws, which alleged exceptions may include those further described herein.
WHEREAS, the alleged compliance exceptions set forth in the Report were based on a targeted sampling of select closed loans, and address the underwriting standards and oversight of risk management practices in connection with Non-Traditional Mortgage Products in the time-frame considered in the examination process.
WHEREAS, the alleged compliance exceptions were disputed by Taylor, Bean & Whitaker in a Response dated January 25, 2009 and no exceptions relating to compliance with applicable law, regulations or rules were admitted by the Corporation.
WHEREAS, the Multi-State Examination and Report cited allegations related to Taylor, Bean & Whitaker's offering of Non-Traditional Mortgage Products to prospective borrowers, and compliance with the Corporation's investor guidelines.
WHEREAS, the Multi-State Examination and Report identified certain changes to underwriting standards, compliance and risk management practices that were alleged to be necessary to address the Corporation's business practices and underwriting system.
WHEREAS, the parties now seek to resolve by mutual agreement all alleged compliance exceptions identified during the Multi-State Examination and Report, to promote industry reform and to serve the interest of consumers who have financing through the Corporation.
NOW COME the parties in the above-captioned matter, the State Mortgage Regulators acting under their statutory authority and Taylor, Bean & Whitaker, and agree as follows:
Dated at Ocala, Florida, this 19th day of June, 2009.
SIGNATORY ON BEHALF OF TAYLOR, BEAN AND WHITAKER MORTGAGE CORP
Chief Executive Officer
SIGNATORY FOR EACH STATE MORTGAGE REGULATOR:
Felecia A. Rotellini, Superintendent of Financial Institutions
Arizona Department of Financial Institutions
Thomas E. Hampton, Commissioner
The District of Columbia Department of Insurance, Securities and Banking
Terence M. Straub, Director, Division of Finance
Florida Office of Financial Regulation
Rob Braswell, Commissioner
Georgia Department of Banking and Finance
Gavin M. Gee, Director of Finance
Idaho Department of Finance
Jorge A. Solis, Director, Division of Banking
Illinois Department of Financial and Professional Regulation-Division of Banking
John P. Ducrest, Commissioner
Louisiana Office of Financial Institutions
Sarah Bloom Raskin, Commissioner
Maryland Office of Financial Regulation
Steven L. Antonakes, Commissioner of Banks
Massachusetts Division of Banks
John S. Allison, Commissioner
Mississippi Department of Banking and Consumer Finance
Steven M. Goldman, Commissioner
New Jersey Department of Banking and Insurance
Mark Pearce, Deputy Commissioner of Banks
North Carolina Office of the Commissioner of Banks
Steven Kaplan, Secretary of Banking
Pennsylvania Department of Banking
Paulette Thabault, Commissioner
Vermont Department of Banking, Insurance, Securities and Health Care Administration
Sure they are a factor (maybe 10%) but the biggest mess was created on Wall Street and by thieving Banksters who bundled these mortgages into securities to be sold and traded and to be bet against and to take out credit default swaps on
Look up Magnetar and articles by Gretchen Morgenson of the NYTimes
You need to follow the money and the billions made off this mess was made by Banksters/Wall Street/hedge funds
Barney Frank and Chris Dodd are to blame but they did not make millions off it
Senile Ayn Rand style hippie Alan Greenspan is to blame with his easy money policies that fueled insane lending ...but he did not make millions off it
House flippers ....bush league scammers compared to the Banksters
Angelo Mozillo and Countrywide ...made vast millions off the scam
The government’s got a lot of balls suing its co-conspirators.
So someone makes a bad financial move and fails to honor a civil contract is the same as a financial institution failing to do their do diligence and keep their paperwork straight and because of that they are forced to commit multiple felonies and Fraud on the Court in an effort to cover up their ineptitude in make, processing and documenting these loans loans that they made with other peoples money which they resold multiple times, while making a fortune in servicing fees and then getting most of the money back from the government insurance?
That’s like giving life to the corner three card monte dealer while handing out slaps on the wrist to the likes of Bernie Madoff, OH wait that’s pretty much what we do look at Countrywide for a good example!
What do you thing should be done to the growing numbers of these same financial institutions that are walking away/defualting on millions of Commericial real estate?
I’m jumping into the middle of the conversation you have been having here, so not directly related to a specific post. Just raising a point.
I’ve a few friends that have walked from their home loans. Not one of them can be characterized as getting a loan they could not afford. They had good steady jobs with loan amounts that did not have them over their heads.
They lost their good paying jobs and income. All but one had savings that could have carried them for awhile in the house. It became a business decision for them to walk.
They looked a house that was worth half what they owed. Another house that was just as nice was available for rent at less than half what their mortgage payment was. Why not walk? Why shouldn’t they?
Heck, why not go rob some liquor stores? They have cash around, booze too... so why not?
Because that would be against the rules.
Don't count me as one of them. The directors of the banks (and the rating companies like S&P and Moodys) should be in jail for the harm they have perptrated on this country. Instead they are getting record bonuses. It is called corruption. They should be in jail.
The skilled, knowledgeable "licensed" loan givers were duped by the stupid borrowers!
What the H!
Not saying there is no fraud by borrower, but they really need to give it a rest.
Loan GIVERS were prospecting potential borrowers like great white sharks at a luau.
Loan companies and banks told borrowers whatever they needed to hear to get them to sign on the bottom line.... some borrowers were ignorant of the fraud and some were aware (i.e., illegals... a la my former Xneighbor.. illegal who moved out in the middle of the night... of course he sent a car carrier truck to remove all of his new vehicles about a month before that).
If you want to deny that the government under Carter and then Clinton forced banks to lend to folks they did not want to, then go ahead and join ACORN and the DNC and MSNBC and the ....
You are echoing Rush Limbaughs infantile grasp of the situation ,, have you read any news in the last 4 years or so? How about any actual court transcripts or depositions ,, the fraud is everywhere , it was planned , the deals were designed to crash and burn because the banksters had “crash and burn” insurance in spades .. You are either a troll or you’re being played.
American Thinker Columnist / Rush ghost contributor
I apologize ,, I hadn’t read your tagline ,, you aren’t echoing Rush’s infantile understanding of what occurred ,, you provide him with your understanding and he is silly enough to go with it ... Pathetic ... Rush needs schooling on this subject more than any other ,, whenever it comes up it makes me cringe knowing that he should be doing a “face palm” ... Go tell the golfer that he needs to have ICE LEGAL send someone over (they’re right in Rush’s neighborhood) and ‘splain it all to him ... because this is far out of your league.
Do you know who currently holds them all?
If not, good luck in getting clear title once you've paid them off.
They’ll always be a certain ilk that will forgive criminal behavior if committed by the “right” kind of people against the “wrong” kind of people.