There have been numberless highly successful prosecutions for predatory lending, even though there is no plausible evidence that predatory lending has ever happened in recent decades, nor has such evidence ever been presented in court, nor is it plausible that predatory lending could be profitable except for lenders who break the borrowers legs and arms in the event of default.I have personal and direct knowledge of numerous incidents of predatory borrowing, mortgage fraud, but there has not been a single successful prosecution for mortgage fraud, even though it looks very much as though predatory borrowing collapsed the economy and cost the taxpayer trillions.
However, MGIC has objected to paying out on its insurance of numerous defaulted loans, and has presented a highly amusing motion to the California Superior Court in San Francisco, which includes its motion to American Arbitration association, alleging that Countrywide Bank committed and/or tolerated massive mortgage fraud
Representative Claims in Dispute
…
MGIC Certificate No. 23755967
… purchase of a $600,000 home in San Jose, California. …
MGIC investigated the claim …. First, contrary to Countrywide’s insurance application, she was never an account executive at GNG Investments. There is no such enterprise operating in
Santa Clara or anywhere else in California. Nor did she earn $13,494 per month, as Countrywide represented. Instead, she earned $3,901.58 per month as a janitor for Santa Clara Valley Medical Center. … she never had a bank account at Wells Fargo, let alone one worth $45,000. Nor did she put a $30,000 down payment—or a down payment of any amount—on her
house.…
MGIC Certificate No. 25639575
… purchase of a $360,000 home in Chicago, Illinois. … Nor did she earn $6,833 per month, as Countrywide represented. She was a part-time housekeeper who earned $200 to $300 per week, or approximately $1,300 per month. … A few months after closing, she returned to her home in Poland because she was unable to find steady work in Chicago.
…
MGIC Certificate No. 23789635
… refinancing of her home in Ceres, California. … a $398,050 mortgage loan … She never worked as a sales executive for Bay Area Sales and Marketing. There is no such enterprise. Nor did she earn $8,700 per month, as Countrywide represented. Instead, she had been unemployed since 1989 …
MGIC Certificate No. 25616578
… Contrary to Countrywide’s insurance application, his home was not worth $395,500 as of August 28, 2007. His home had sold three times in the year prior to the effective date of Countrywide’s appraisal: on October 3, 2006 for $199,750; on February 6, 2007, for $127,500; and on March 23, 2007, five months before the represented appraisal, for $200,000.
And, of course, lots and lots more of the same. These are alleged to representative of defaults, not the worst of the worst, not egregious and outrageous examples, but par for the course
The example of an overvalued house is striking it that the prices are obvious inconsistent. It fell to 127,500, and then, 45 days later, supposedly rose to the curiously round number of $200,000, before supposedly reaching the astonishing height of $395,000
My personal observation (for which I plenty of evidence, but no evidence that I can show to others) was that housing prices peaked 2005 November, and crashed swiftly thereafter, and the sales at higher and higher prices were all fraudulent, with straw man buyers and cash passing back under the table. If a house sold for a hundred thousand more, it was because $200 000 went under the table. All the sales at rising prices that I could know the truth about were fraudulent, and yet most sales for the next couple of years were at higher and higher prices, indicating a market completely dominated by massive mortgage fraud.
In the cases cited above, an interesting question is: “Whose hand was moving the pen which wrote those fraudulent things?”
It seems not at all improbable to me that it was a mortgage broker or a loan officer rather than a janitor, chronic layabout, or limited English proficient cleaning lady. What’s wrong with calling that “predatory lending?”
Little good purpose would be served by going after the janitor, the layabout, or the cleaning lady. These are likely stupid, insane, or chronically clueless people who can’t be given effective incentives anyway, especially on a rare event like a mortgage app.
Put the mortgage broker in jail. Put the loan officer who carefully failed to check any of this in jail. Put the executive who created the incentives for this and then carefully failed to monitor for fraud in jail. Put the accountants and lawyers who offered this crap up to Goldman to be made into MBSs, who represented it as good paper, and who carefully failed to check for fraud in jail. Put the lawyers, MBAs, and accountants at Goldman in jail. Put the auditors at S&P, Moody’s, and Fitch in jail.
“Hey, I just assumed that the stuff on the paper was true” ought not to be a defense, and I assume that, in black letter law, it isn’t a defense.
It’s incredible that there is not even any discussion of prosecuting anybody. Actually, it’s not incredible. Since, to be consistent, you would have to prosecute everybody all the way up and down the line. So, better to prosecute nobody, I guess.
Bill:
Almost certainly it was not the janitor or the cleaning lady with limited English. These are what we call in the business “straw man buyers”. But the real question is who got the money? By and large, the loan officer, valuer, and so forth, only got about $10 000 to $20 000 of it.
Real housing prices peaked in 2005 November, but the Case–Shiller Home Price Indices somehow showed prices continuing to rise for two more years? How so?
You purchased for $650,000 in 2005 November. One hundred days later, you see a similar house down the street has been foreclosed, and they are asking $550 000 and not getting it. What do you do?
Answer: Have your gardener buy it for $800,000.
Hence the odd behavior of the Case Shiller Home Price Index. Hence the curiously low social status of many of the purchasers listed by MGIC. These are the end of the line borrowers, the borrower who will take the rap. They bought the house from a higher status, more sophisticated borrower, who very likely helped them arrange financing. But these borrowers, just like the guy they bought the house from, were gambling with other people’s money. They purchased the house, hoping to resell at an even higher price, with none of their own money at risk – they are as much predators as the guy who flipped the house to them.
Quite so. The document from which I quote primarily indicts Countrywide Bank, rather than the assorted lowlifes that borrowed the money. Indeed, the reason every prosecution has failed is that when the little guy was charged, he truthfully pointed the finger at the bigger guy, and no one wanted to prosecute the bigger guy. The chain goes all the way up to the regulators, and from the regulators to the politicians. If we were to prosecute those at the bottom, and then follow the chain of pointing fingers, we would wind up jailing most of congress, who, remember, wanted easy money to be liberally supplied.
I am a student and currently studying Forensic Science, but the information on your site helped me in one of my recent projects I was working on. I have provided the link to your site in my report and actually posted a link back on my education blog. Hopefully that will get some additional respect to you, as you deserve it. Thank you.
I found this site and decided to take a look at our paperwork that was given to me after our loan went threw with Country Wide. It seems that Wells Fargo was the bank of choice for large saving accounts. It stated that we had over 250,000 in savings @ Wells Fargo. I have never had a bank account there. It also has me making way more than I did at the time. Now I am understanding why I have had so many problems with this loan.
Yes, as Bill says:In the cases cited above, an interesting question is: “Whose hand was moving the pen which wrote those fraudulent things?â€
A Two Million Unity Rally Aimed at Gathering Together America’s Disenfranchised Middle Class, including labor unions, the unemployed, and progressive groups; to address various urgent issues afflicting them including: unemployment, anti-labor laws, women’s rights, gay rights, separation of church and state and fraudulent bank foreclosures, is currently in the planning stages by various power movements. If successful, this would be the largest rally in the history of the United States of America. The rally is being planned for October, before the 2012 elections. http://solidarityus.org
It seemed to be on a timer; we had to turn it back on twice.
One thing that impressed me as I saw more of the park was how well they used water in their landscaping.
What does the average human resources manager have to do to save a buck in this day and age.