Nice to see some in the MSM waking the f*ck up. My only question is - WHAT TOOK SO DAMN LONG?
Meanwhile, the undisputed champion of liar's loans - IndyMac - reports tomorrow. Will they come clean? Or will they continue to lie and spin on their way to bankruptcy? (yup, I'm short IndyMac!)
April 25 (Bloomberg) -- Cheating on mortgage applications is so widespread and so seldom punished that it's fueling an increase in foreclosures that will prolong the housing slump, said Robert W. Russell, counsel to the director of the Office of Thrift Supervision, which oversees savings and loans.
Borrowers and brokers commit fraud when they exaggerate the applicant's income, qualifying the borrower for a home he otherwise couldn't afford. Such fraud robbed lenders of an estimated $1 billion last year, according to data collected by the Washington-based Mortgage Bankers Association and the Federal Bureau of Investigation.
``Misstatements about employment and income are being made every day,'' Russell said. ``The brokers are just putting down on paper what the underwriters would require. There are borrowers providing false information as well.''
Loans that require little or no documentation of income soared to $276 billion, or 46 percent, of all subprime mortgages last year from $30 billion in 2001, according to estimates from New York-based analysts at Credit Suisse Group. Homebuyers with those loans defaulted at a 12.6 percent rate in February, compared with 1.5 percent of fully documented prime mortgages, said San Francisco-based First American LoanPerformance, a mortgage consulting group.
A 2006 study cited by the Mortgage Asset Research Institute showed that almost 60 percent of stated income loans were exaggerated by at least 50 percent.
``Everyone calls these loans `liar loans' because we know these people were lying,'' said Jim Croft, a spokesman at the Reston, Virginia-based Mortgage Asset Research Institute.
``Everyone calls these loans `liar loans' because we know these people were lying,'' said Jim Croft, a spokesman at the Reston, Virginia-based Mortgage Asset Research Institute.
``The loans were available to anyone with a pulse,'' said Greg Bass, a former account executive in Austin, Texas, for subprime lender Long Beach Mortgage Co.
``When everyone was eating up the subprime market, it was great to be in the business,'' said Josh Tullis, sales director for A. Anderson Scott Mortgage Group in Falls Church, Virginia. ``In the heyday, I knew guys who went from making $2,000 a month working 60 hours a week at McDonald's and they'd come over here and work 15 hours on a loan and make $4,000.''
9 comments:
This is why so many FB's are walking away from their homes without a fight and why they're not interested in being bailed out. They don't want to draw any attention to themselves. They know they or their brokers lied on their loans, just as they know they wouldn't have gotten the loans in the first place if traditional lending standards had been in place.
Bush really sold the country up the creek!
NOT OWNERSHIP SOCEITY!
DEBTSHIT SOCIETY!
When are they finishing development on the new Debtors Prisons? That should definitely help out some of the sales numbers.
FB's are now just getting 6 months of free rent in San Diego and most other places - once they stop making payments (often first mortgage payment default) it takes at least 6 months for the system to work and the sherrif to come and kick them out. . .gee . . .live in a million dollar house for 6 months to even a year (if you try to fight things) for free!!!. . .so who cares if your credit is ruined - it was probably ruined when you got your liar loan. . .
HOUSING SERFDOM IS HERE
Kick out the sub-prime low down loan lenders from the market place .Remove all those comps from the appraisal data base from sub-prime lenders because they are fake comps not based on true able buyers (or the loan is a cash-back fraud deal ).
State and Federal chartered lenders have to go back to prudent lending practice in the interest of protecting the deposits of savers and the general wefare of the people of America.
I know that this will create a faster crash of the real estate market ,but the lenders have no other choice . The value of property will level out to end-user qualified affordability .
We can not have a real estate market and tax base on property taxes based on inflated values that were the direct result of massive fraud and unqualified/ unable buyer purchases who are destined to go into foreclosure .
It will do no good to replace one bad loan with another bad loan because the premise of the loan package was fraud regarding ability to pay to begin with .
The FBI/police and lenders should seek out the cash-back fraud deals and throw all those bad guys in jail (including Casey ).
The money will dry up from wall street anyway with time but no point to continue with the fake lending and put more people at risk .Lower all inflated adjustments (such as property taxes ) based on the most massive lending fraud in American history .
$1 billion is so ridiculously low its not even funny. I guarantee that number is going to skyrocket, especially at the end of '07 and in 2008 as the '05/'06 vintages of subprime liar loans start to adjust.
Amazing that you could go to 55% debt to income on a stated income loan. You could have a gardner making 15K a month as a Landscape Engineer; you could have a hair dresser pulling down 20K as a Lead Stylist. And they could borrow a loan that would take up 55% of that fake income. That $1 billion is going to seem like a sweet memory here shortly. What a joke.
Keith maybe you can go into this a little further. I went over it a little on my blog, but unlike yours nobody reads mine.
Is it me or is the MSM taking the easy way out on the bubble bursting. If you came from another planet and began reading today's current events you would think the entire housing bubble could be blamed on the segment of sub-prime and shady loans. However the MSM is missing the forest from the trees because the main problem was massive speculation (tulip craze) fueled by the government and the REIC. Yes sub-prime is showing up now, but it was only a symptom of the great housing bubble not the disease. Maybe the MSM can't comprehend what kind of trouble were entering, I just don't know. My 2 cents....
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