Hundreds swept up in mortgage fraud arrests

Let's see ...didn't Bush bale them out? Could it be our president is selective in restoring balance?

Banks reported nearly 53,000 cases of suspected mortgage fraud last year, up from more than 37,000 a year earlier and about 10 times the level of reports in 2001 and 2002, according to the Treasury Department's Financial Crimes Enforcement Network.

The most common type of mortgage fraud was misstatement of income or assets, followed by forged documents, inflated appraisals and misrepresentation of a buyer's intent to occupy a property as a primary residence.

Phenomenal numbers. Where were the prosecutions? And what is with the bailout anyway?

The problem is the bailout itself, and the Democrats role in shaping the new law. There should have been more money devoted to mortage fraud prosecution, and less toward bailing out homeowners who were part of the fraud. They filled out fraudulent information and are personally responsible. Why are they escaping blame?

The most common type of mortgage fraud was misstatement of income or assets, followed by forged documents, inflated appraisals and misrepresentation of a buyer's intent to occupy a property as a primary residence.

I think there is blame to go around for all. I think that a large part of the problem is that mortgage brokers were steering people to fill out particular information a certain way, and indicating it was "normal" practice. It is not unlike how appraisers behaved, since they knew they would get no work if they didn't appraise at what the mortgage company wanted. While consumers and appraisers misrepresented information, they were influenced to do so by the mortgage companies.

I'll give you an example from personal experience. My husband and I owned our own business for 7 years. We live in an area with declining jobs and population. Eventually, we had to close. He was unable to find a job, while I found one. We couldn't afford our home on one salary and lost that about 5 years ago. None of this is anyone elses fault and we accept that. However, two years ago we vacationed with my parents and siblings. While on vacation, we were hounded by the vacation ownership people. We indicated that we were not in the market and really had no credit to even consider looking. They told me not to worry, that they would tell us what to put down, and they probably wouldn't do a credit check anyway! Needless to say, we laughed at them and turned on our heels. The fact remains that they were trying to lure people that had no business getting a mortgage to purchase vacation ownership, let alone a home!

I have heard many trapped in this mortgage fiasco say the same things happened to them when they went to obtain a small second mortgage or line of credit to make home repairs. They were talked into rewriting the whole mortgage at a low introductory flexible rate and told they could rewrite the mortgage before the rate jumped. When the rate jumped, they were told that they did not qualify for a standard fixed rate mortgage. People gave up sound fixed rate mortgages on the advice of mortgage brokers. (In the insurance industry that used to be known as "churning," and I'm quite sure it was illegal. Someone please correct me if I'm wrong.)

I'm sure there were many individuals that gamed the system. I'm sure there were many speculators that were caught house flipping. However, if the mortgage companies weren't playing so fast and loose with the rules - these individuals wouldn't have gotten these mortgages in the first place!

It is amazing to me that noone in the media has written about the role FreddieMac and FannieMae played in the sub-prime collapse. On March 5th, 2007, They both went to the sub-prime lenders and told them that the loan requirements under which FreddieMac and FannieMae would buy their loans have been changed. On that day alone 59 sub-prime lenders could not accept new applications because they would not have funds to fund them without being able to sell the closed loans. This change was done over the weekend and had the same effect that the Feds capital requirement had on the savings and loans. After 3 months, 195 sub-prime lenders were out of business because they could not sell their loans in the secondary market. All because of FreddieMac and FannieMae's actions. Why are they not being indicted. Obviously, the Federal Government wants people to think they had nothing to do with it when they had everything to do with it. So now we have these federal indictments which are a farce and are intended to convince everyone that mortgage fraud was at fault. The amount of mortgage fraud compared to the amount of mortgages is less than 1%. Hardly enough to do any damage. No people, it was FreddieMac and Fannie Mae, the main two federal corporations that keep the secondary market pumping. This is the reason that folks could not refinance with their sub-prime lenders when rates were in the 5s and convert to a fixed rate loan. Those folks who could not refinance are the very people who are defaulting and ending up in foreclosure. Why doesn't Lara Jordan write an article about that!!!!!!