September 27, 2006

Shocking, disgusting and predictable expose on "Liar Loans"


Just watch the video.

We're going to hell in a handbasket.

What the heck happened in this country that allowed things to spin this out of control?

Nice to see the MSM (finally) doing their job and digging into this ponzi scheme now. My only question is - what took so long?

Thanks Darrell for the link.

46 comments:

Anonymous said...

Holy Shit.

This is looking far more dire than my worst imaginings. I thought people were boosting their 'stated incomes' by 10% or so, in an effort to fudge the numbers a little bit.

I guess it's the sad, but logical, end result of removing moral hazard from commerce. And the nasty tentacles of this beast are entwined with Mutual Funds, Pensions and who knows what else.

I think this may make the junk bond fiasco, LTCM & dot.com debacle look like a mere tempest in a teacup. This isn't going to work itself out by merely deflating home prices - it's going to end up fucking everybody in some fashion or another.

Butch said...

What's happened to our country is that the entire monetary and financial system has been HIJACED by the government/money center banks/hedgefund cowboys.

This latest iteration of monetary fraud stated in 1913 with the passage of the Federal Reserve Act.

This act institutionalized the frauds of:

1. Fiat currency

2. Fractional reserve lending

3. Central banking

...which put control of the monetary process in the hands of banking interests.

At time has gone on and the U.S. managed to free itself from ANY measure of restraint that gold and silver imposed (you know, that stuff that the constitution called for as the ONLY money to be used in the U.S.!), we have, for the last thirty-five years, been running amok, creating "money" and credit at will.

As the scam has reached it's terminal stages, we have reached the following milestones:

1. $43 TRILLION in total debt in the U.S. (plus another $50 TRILLION in forward liabilities)

2. $400 trillion in derivatives positions in the attempt to shift risk and hide losses in the financial community

2. The explosion of the hedge fund industry that impacts markets in all sorts of negavite ways (Amaranth being the latest example of the distortions), which controls $1 TRILLION directly and, through leverage, impacts markets to the tune of approximately $20 TRILLION dollars.

3. The enormous growth of "securitization" which has separated the lending process from the nasty business of actually being responsible for the loan, with current, outstanding ABS/MBS totalling $10 TRILLION and counting.

Now, at this terminal stage of the process, the U.S. continues to go collectively into debt at a $5 TRILLION PER YEAR rate to Communist China, to Muslim-dominated OPEC (BOTH of which are our avowed enemies), and other foreign entities, while we ship jobs overseas to feed the interest of multinational companies.

Tying all this together, the lending "standards" (if you can call them standards anuymore!) have been lowered to absurd levels to allow the game to go as far as possible, enslaving ever-greater numbers of suckers to debt.

I have already stated numerous times how this will play out going forward in various places on this blog, but again I warn the posters:

BE PREPARED FOR THE FALLOUT!!!

Anonymous said...

This is why this planet needs a low IQ plague cast upon it.

tie it all together said...

Here's another piece of the financial puzzle keith.. speaking of Hedge Funds, and fraud. Do a little reading on "naked shorting", or FTD's (delivery failures), hidden in the category called "derivatives" and the people working to expose this next mess... including Overstock.com CEO Patrick Byrne, and the 40,000 organized shareholders of CMKX (casavant mining)..

www.thesanitycheck.com

www.cmkmtaskforce.com

Everyone needs to realize that the whole financial web is corrupted.

Anonymous said...

Beverly said, "You know they say you make sacrifices to keep what you have, but they didn't tell me I would totally have to stop living and just exist because of somebody else's deceit."

Someone else's deceit? She knew she was getting into a loan she couldn't afford. What an idiot. This woman is a social worker who is supposed to be helping other people to make responsible decisions. Scary!

Anonymous said...

This was a scary, eye opening report. Question. Where has the MSM been all this time. Kudos to the reporter for bringing this story, but where have you been???

To quote Drew from another blog, "Must the house always be in ashes before the fire alarm is pulled???"

Jesus, we're screwed.

Anonymous said...

It's nice to see the msm talking about the housing bust everyday!
If you flip the channel fast enough, You'll see every station, cbs, nbc, abc, All talking about it at the same time.


I've never figured out how all three news stations could be talking about the same news at exactly the same time.

Anonymous said...

what an irony, the victim here is also a 23 year old. the kids are invading the real estate market. the only thing is that they're - stupid.

Anonymous said...

keith, you should save this and e-mail it to the senate members investigating the bubble.

Anonymous said...

Ok, I haven't had my morning coffee so please 'bear' with me..

Why are Hedge Funds viewed as evil?

I had a brief conversation on the train with a guy who said,"..hedge funds will send this country to hell..."

I'm not 'for or against' HF, just want to know what's the deal with 'em.

Muddy Mud Skipper

Anonymous said...

watch the video "money masters" on google video.

spailns everyting.

SeattleMoose said...

I just done wad they told me todo and now I be poor......BAWWAAAAA!!!

Anyone who is that stupid deserves a "hard lesson".

Unfortunately, the other side of the equation...the scumbag RE/Banking complex will have no accountability for their part in this.

Just look at what happened to one of the "Smartest Guys In The Room"....Jeff Fastow.

6 years in Club Fed (probably out in 3) because the judge said "he has suffered enough"!!!

What about the thousands of people who lost everything and the millions of people who paid thousands in inflated energy prices?

Fastow should be executed along with Skilling as an example of white collar crime accountability.

Instead...a slap on the wrist.

What kind of signal does that send about white collar crime?

I am quittng my job to be a scammer. I'll make millions, stay in Club Fed for a couple of years, come out, and then retire.

Nobody is accountable for anything...

trailer trash said...

Liar's Loans have changed radically since I first heard about them. Apparently, anyone can qualify now. Five years ago, a typical Liar's Loan required a 20% down payment AND a very high FICO score.

Liar's Loans were primarily designed for self employed people who practice tax avoidance, not to be confused with tax evasion. They take every legal deduction for such things as home office space, cell phone, truck depreciation, mileage, insurance, health care premiums, out of town business trips, computer, Internet connection, tools, business supplies, etc.

Once all of these things have been deducted, it makes them look like they haven't earned as much money as they actually did -- which is the whole idea. Showing a tax return to a lender is detrimental to self employed people. However, someone who is not self employed cannot deduct most of the things that self employed people can, so their tax returns make it appear that they are making more money than a self employed person with similar actual income. The difference is that self employed people actually earned the money to pay for all of the things that they deducted -- they just didn't have to pay taxes on it.

So, it's really not lying when self employed people take the amount on which they paid taxes and add back in all of their deductions. They really did earn the money. Contrast this situation with the typical wage earner with a weekly pay stub and it is easy to see that they were never the intended candidates for Liar's Loans.

LauraVella said...

This is why a sh*tbox in the bayarea is selling for 500+K!

Not only is it fraud, but it tells the truth about real salaries in the bayarea, that average people just dont make hundreds of thousands of dollars a year.

Houses are WAY overpriced for incomes. If its happening in the bayarea, its happening everwhere else to a lessor degree.

devestment said...
This comment has been removed by a blog administrator.
devestment said...

Look at the poor social worker. Serving the underprivileged publics need while unable to make her own financial decision. Oh my, what a coincidence, her husband is on disability. I wonder how many other extended family is on some form of state aid. Could she have helped them with that paper work? Were their lies on that paper work the same as the lies on the loan document? Now we see crocodile tears, is this designed to make me want to help her?

devestment said...

Oh Yea, Suzanne said it was OK. We’ll just refinance.

homeless said...

This is how people end up on the street pushing a shopping cart.

Anonymous said...

This is how people end up on the street pushing a shopping cart.

It's also how Lee Harvey Oswalds get created.

Anonymous said...

Hey Butch,

Is it just me, or has anyone else noticed that when the US helps "nation-build" some shithole, the first thing we do is setup a central banking system for the new country? I'm tellin' ya - the citizens are screwed right from the get-go.

I believe it was Henry Ford who said "People who keep their money in banks deserve what they get - screwed."

Anonymous said...

I would say that this entire housing bubble mess is PROOF that the education department was SUCESSFUL in its effor to DUMB DOWN AMERICANS!

A smart crowd is nearly impossible to control and enslave. A dumb crowd is easy.

Welcome to the great new American DEBT-SLAVE class. You will work the rest of your life to pay the interest on your personal and goverment debt obligations and die with a negative net worth; which guarantees that your children and grandchildren will be our slaves for life as well.

GOD BLESSES THE RICH

GOD DAMNS THE POOR.

Grow a brain today or be damned for life!!!!

Anonymous said...

i am continuously surprised at the profound impact the simplest of teachings from my father have on my life.

all the pain that will be felt by these individuals who entered into these fancy financing arrangements could have all been avoided by following one of my father’s simplest rules.


"you don't shit where you eat."

Jip said...

Sadly, most people who are not rich (and some who are) are quite niave about fiancial matters. For this reason, they swallow the lies the mortgage and realtors feed them....

Anonymous said...

I've made a decision to simply hate money. Period. The quest for this illusive vapor has ruined multitudes. Since the love of money is the root of all forms of evil, it's logical that hating money is a pertinent option. In this system we have to use it but it should be our slave rather than the other way around. Because of money we have lost our dignity. We have been obsessed with gain, and that obsession has shipwrecked us. Hopefully, our loss will ultimately cause us as we return to our moral roots. 1929 - 1934 was tough, now we'll see how it measures up against 2007 - 2012.

haggis said...

Man, I am sick of this fiat currency debate.

When gold reigned supreme, 95% were indentured serfs and the laird took half your subsistance farmed crops, your wife (if she was good looking) and your daughter likewise.

Gold is a bloody fiat currency. It was a casino chip paid in remuneration for your labours or produce which could be exchanged for favours or goods. Under the gold standard there were still booms, busts and all other kinds of financial shenanigans.

In the 16th century Spain shipped an unbelievable tonnage of gold from the New World to the Old. Guess what, the boom happened in Amsterdam. In tulips no less.

The only true non-fiat currency is if we start trading pigs at 20 chickens each. And that is the only true currency that has the wherewithall to keep up with inflation - a pig will produce a litter of piglets (interest on your investment).

Just try to keep a chicken in your wallet though....

panicearly said...

The woman and husband may or may not be victims. you can feel sorry for
them or throw them out on the streets.

But the point is regardless of the borrowers greed, incompetence or out right deceit,
the lenders, brokers, bankers, appraisers, realtors are the ultimate perpetrators of this whole scam. These people cannot use incompetence or innocence as an excuse.
it was a set up, a sting from the get go. a magnificient swindle the likes of which we have never seen.

Anonymous said...

Money is just a means to measure values in the economy. It can be gold, silver, copper, paper or any
other commodity people agree upon.
In the modern age, it's just government promises, not anything real.

People who don't like money, don't like making economic comparisons. It allows a certain amount of precision in transactions and allows a more liquid market since you can rarely find anyone that has something that you want but also wants what you have in return. People can sell their chickens for gold and then go exchange the gold for a sheep at a later date.

Anonymous said...

I plan on exchanging my gold with the banker who has the foreclosed house that I'll be interested in soon. I'll use it for the down payment or for a price reduction or even steven. When tshtf and the banks are stuck with all these foreclosures they'll take my gold eagles for one of their houses.
And it will all happen under the table.

Anonymous said...

Holy Shit.

I think this may make the junk bond fiasco, LTCM & dot.com debacle look like a mere tempest in a teacup. This isn't going to work itself out by merely deflating home prices - it's going to end up fucking everybody in some fashion or another.
++++++++++++++++++

Ditto--to everything you said. I am really getting scared. IMHO, Congress is clueless, both the Democrats and the Republicans, about the state and fate of the nation....

LauraVella said...

Anon said:"all the pain that will be felt by these individuals who entered into these fancy financing arrangements could have all been avoided by following one of my father’s simplest rules".

"you don't shit where you eat."

Thats good, but I thought your dad might have told you -

If its not straight forward, there's something wrong".

Anonymous said...

this is a good source for future investigation someday.

LauraVella said...

Haggis said: "The only true non-fiat currency is if we start trading pigs at 20 chickens each. And that is the only true currency that has the wherewithall to keep up with inflation - a pig will produce a litter of piglets (interest on your investment).

Just try to keep a chicken in your wallet though.... "

LOL, Everything would be fair and square-I love it!

Anonymous said...

The woman and husband may or may not be victims. . . . But the point is regardless of the borrowers greed, incompetence or out right deceit, the lenders, brokers, bankers, appraisers, realtors are the ultimate perpetrators of this whole scam. . . . It was a set up, a sting from the get go. a magnificient swindle the likes of which we have never seen.
++++++++++++++++++++++++

I agree. And the Republicans, who have been in control of Conmgress these last six years, have aided and abetted all the swindlers.

haggis said...

Laura,

I'd love to buy you a drink but I'm down to my last chicken.

Could you loan me a hamster?

Skol!!

Anonymous said...

Personal responsability is gone from our culture...the mortgage lender made me do it...wha wha wha...

Anonymous said...

"...republicans...have aided and abetted all the swindlers."

including a flood of illegal aliens.lol!

a.creampuff said...

Whatever you want to say about the two buyers in this piece, the brokers clearly stated most are clueless. I'm with you on blaming flippers, but think there are many innocent people getting nailed. What if someone choose just now to move, for instance? Contract on a house, but the old place won't sell, when six months ago, there'd have been a line out the door. Not their fault!
I think the "this is way worse than we've imagined" reaction is because of the incredible degree of baldfaced deception.
That said, my Dad's quote is better than your dad's: "you don't get somethin' for nothin'"

Anonymous said...

Loved the Monopoly board analogy. A million bucks for a box of rotten tulip bulbs.

Anonymous said...

listening to the story of that social worker, and especially when she realized that seh couldn't afford the payment, but instead was talked into by the loan broker to refi later is a clear deception and abuse of confidence. professional brokers or agents have a fiduciary duty to tell the truth and not to use their knowledge to influence the buyer one way or the other.

the consumer's tendency is to rely on the expertise of these professionals rendering their services. it is like a lawyer advising a client, or a doctor doing the same.

the loan broker clearly deceived the homeowner, at the expense of his knowledge, knowing that they won't be able to refi. the broker needs to be prosecuted.

Anonymous said...

Let's stop blaming hedge funds and fiat currencies. Those were there before the bubble and will be there after.

The overwhelming, central problem is MORTGAGE FRAUD.

This can be a number of things, but always is, in the end, lending more money than the property justifies, and more than the income of the buyer justifies.

There are two classes here:

1) Greedy flippers who knew full well of the risks and that they were lying but thought the property values would continue to rise at an obscene level. They are certainly at fault.

2) Sleazy mortgage brokers who convince the naive sheeple that "everything is alright", and then proceed to screw them worse than drunk sorority girls at homecoming. All for a fat commission check.

I think the ratio of #2 to #1 is about 10:1. Of course the #1 case (Greedy flippers) often have multiple properties.

The real estate agents were willing accomplices but they were tag-alongs. Transactions can't happen without money, and as the agents are finding out right now, they can't make money appear.

As usual, the problem is lending fraud.

This is why the 1933 Securities act was passed, because back then, stock brokers were as sleazy as mortgage brokers. Because of that, we didn't have lots of grannies losing their life savings in the dot com crash. Everybody who speculated in the dot coms knew what they were getting into and how it could vanish quickly.

Not so with the mortgage bubble.

"So many owe so much to so few" --- Winston Churchill, once upon a time.

Salt Lake Mortgage Guy said...

For the real skinny on stated income loans, aka liars loans, check out my latest post.

Jip said...

Anonymous Thursday, September 28, 2006 3:47:27 AM Said:

>>listening to the story of that social worker, and especially when she realized that seh couldn't afford the payment, but instead was talked into by the loan broker to refi later is a clear deception and abuse of confidence. professional brokers or agents have a fiduciary duty to tell the truth and not to use their knowledge to influence the buyer one way or the other.

the consumer's tendency is to rely on the expertise of these professionals rendering their services. it is like a lawyer advising a client, or a doctor doing the same.<<

You took the words out of my mouth. A lot of homebuyers(ESPECIALLY first timers), tend to believe/trust the professionals they are working with. Sadly, that trust tends to be violated, and the homebuyer get badly burned.

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