It's funny to have the SEC, FBI, Senate, House, States Attorneys General and Federal Reserve all doing "investigations" and "getting to the bottom of it" when as we all know, it's way to late.
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.
4 comments:
They're a day late and a dollar short.
ooops.
I mean years late and trillions of dollars short.
Just the beginning...
Builders often key players in high-risk game
By David Olinger, Jeffrey A. Roberts and Greg Griffin
Denver Post Staff Writers
Article Last Updated: 12/26/2006 10:35:44 AM MST
Carmen Pedrego said the builder assured her she could own a brand-new home for no more than her monthly rent.
But when she came to the loan closing, a surprise awaited her. No one was in the room except a stranger from the title company. And after Pedrego signed a first mortgage loan, the agent produced a second mortgage. They totaled 64 percent of the single mother's take-home pay.
Because she had already signed one contract, "I felt trapped, like I couldn't get out of it any more," Pedrego said. She signed the second and made two mortgage payments, she said, then filed for bankruptcy. This year, she became one of 11 homeowners in a small Greeley neighborhood who have lost new houses in foreclosure sales
In August, Weld County had the worst foreclosure rate in the United States. Many foreclosures came on new homes sold by aggressive builders to people who had no money for a down payment and no real estate agent representing them.
On one Greeley street, seven adjacent new homes have been foreclosed. In Pedrego's former neighborhood across town, dozens of families paid $40,000 to $50,000 too much for a new home, according to an analysis by David Kiekhaefer, a Greeley broker and builder.
That neighborhood "is primed for foreclosure," he said.
A computer-assisted geographic analysis of Weld and metro-area foreclosures by The Denver Post found many concentrated in new neighborhoods developed by local builders. Others clustered in new neighborhoods where national builders doubled as lenders. In one, more than 90 percent of foreclosures on the original buyers involved loans from the builder.
Too many new homes
A complex set of causes pushed Colorado's home foreclosure rate to the highest in the nation this year and Weld County to the highest in Colorado, real estate experts say: stagnant prices, too many houses for sale, 100 percent loans with rising interest rates, mortgage fraud, unregulated brokers, false appraisals and buyers reaching beyond their means.
They also say the building industry has contributed to Colorado's foreclosure epidemic.
Builders have been permitted to flood Weld County with a "terminal oversupply" of new houses that devalued existing homes, said Lou Barnes, a Colorado mortgage bank owner.
"Weld County has no functional zoning," he said. "It's simply open season."
He and others say some builder incentive programs, particularly those that require buyers to use an affiliated lender, also can raise the risk of loan defaults.
When builders "have a preferred mortgage company, you may not get the best interest rate," said David Berenbaum, executive vice president of the National Community Reinvestment Coalition, a consumer watchdog group. "Over the life of the mortgage, you pay substantially more for a home.
"People are being oversold today on homes," he said. "It's not uncommon to see more than 50 percent of their income go to their mortgage payment. The debt-to-income ratios are very troublesome."
On the street where Pedrego bought her house, a show-home sign advertises easy terms. "Good credit, bad credit, no Social Security approved," it promises in Spanish. "Zero percent down payment."
more http://www.denverpost.com/ci_4890161
I work in the gov't so I have some idea of why everyone seems asleep at the wheel until it's too late. If a low-level gov't employee thinks something bad is going to happen, forget about it. It takes so much effort and time to get higher-ups to get on board that by the time they are on board, the damage has usually been done.
At my agency, I would literally have to convince five tiers of mangagement, most of whom don't even know I exist, along with 4 tiers in the Office of the Chief Counsel, to get significant action to be taken.
The only way anything gets done is if your manager and his manager are brave enough to take your issue right to the top. I'm sure that rarely happens, and even if it did, they would want to have about 15 meetings before they would say anything to the public because they would be more concerned about their appearance, not wanting to look like the bad guy, before something truly happens that gains national attention.
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