March 29, 2007
The crimes have been committed, the system got gamed, nobody was watching, the damage is done, and the NAR and NAHB made sure everyone who should have been watching was on the take.
US authorities stepped up investigations on Tuesday into possible fraud by companies in the high-risk mortgage market.
The Securities and Exchange Commission told Congress it had set up an enforcement unit to probe possible fraud involving subprime mortgage lenders.
The move comes as lawmakers increase political pressure on regulators to act over a growing crisis in the mortgage market. Lawmakers fear more than 2m Americans could be vulnerable to foreclosure on their homes in the next two years following a loosening of lending standards and allegations of mis-selling by mortgage companies.
More than two dozen mortgage lenders have shut down or gone bankrupt in recent months after a sudden increase in defaults.
Christopher Cox, chairman of the SEC, told the Senate banking committee the regulator had created a 25-person enforcement unit to investigate whether proper disclosures were made to investors who bought mortgage-backed securities.
"To the extent that these loans are securitised and to the extent that they become part of problems, fraud or accounting problems related to that, we want to be there as enforcers," said Mr Cox.
The SEC is also conducting a preliminary investigation into New Century Financial after the lender advised investors it was in talks with creditors.
The stepping up of enforcement action came as shares in Beazer Homes plunged amid reports that the homebuilder's lending practices and financial transactions were being scrutinised as part of a broader federal probe.