Posted on 02/22/2008 6:28:38 AM PST by AdamSelene235
In 2006, the FBI studied three million mortgage loans and found that 30 to 70 percent of early payment defaults can be linked to misrepresentations in mortgage loan applications.
The figures aren't really surprising when you consider the fact that most of the defaults occurring right now involve borrowers who have not yet seen a payment reset. It is blatantly obvious there were an overwhelming number of borrowers approved for mortgages they could not afford.
The only way for this to happen was for someone to lie on a mortgage application. Some media stories have implied that it was lenders who did the lying and that most borrowers are victims of predatory lending schemes.
The truth is that borrowers did their fair share of lying too. More than 40 percent of subprime borrowers received loans without having to document their ability to pay. The borrowers simply 'stated' their income on the mortgage applications.
Almost 60 percent of stated-loan applicants inflated their incomes by at least 50 percent, according to the Mortgage Asset Research Institute. The worst part is that everyone knew the income was being inflated. The industry even had a name for these kinds of loans--'liar's loans.'
FBI Barking Up the Wrong Tree
Although lying on a mortgage application is a federal crime, borrowers who committed mortgage fraud are low on the FBI's list of priorities. Joseph Schadler, an FBI spokesman, said investigators will be focusing on organized property flipping rings and bogus foreclosure rescue schemes instead of lying buyers.
'We're going to pick the ones that are the most egregious and have the greatest impact on the economy,' Schadler said. 'Fraud for property is less impactful on the economy than the speculative fraud where people are trying to flip homes for profit.'
Time out.
The FBI had better run the numbers again. Borrowers who committed fraud by lying on their mortgage application could cost this country trillions of dollars.
There are plans to allow lying borrowers to refinance loans they cannot reasonably afford through federally sponsored mortgage programs implicitly backed by taxpayers. Presidential candidates are talking about robbing taxpayers to help lawbreakers and other homeowners who are facing foreclosure.
The impact to the economy will be enormous and beyond any effect created by a foreclosure rescue scam or house flipping ring.
States Not as Lenient
Although the FBI has no intention of enforcing federal laws, borrowers may not be able to get away with lying much longer if some states have their way.
In Texas a new state law was passed last year that holds borrowers accountable for the information supplied on mortgage applications. Borrowers are required to swear that all of the information they supply is correct.
Lenders who suspect they are being lied to are required to report borrowers to new task forces that are being set up specifically for this purpose. Borrowers who are reported will have no idea what is going on until it is too late because lenders are not allowed to notify borrowers that the task force has been contacted.
Borrowers who are caught lying or inflating income could face up to 99 years in jail and a $10,000 fine.
Why are we wasting the FBI on this crap? Borrowers lied and lenders didn’t verify the stated income. Why does that lead to the FBI? Don’t we have enough problems with terror cells and MS-13 to keep the FBI busy?
At what point does FRAUD become inconsequential?
It might not be “practical” to put them in jail, but a good chunk of the people involved in this mortgage mess brought this upon themselves, either by fraud or naivete.
After the next election they will be too busy working on Gun Control to deal with any of that.
That does it!! I’m going to use illegal light bulbs then.
HA HA!!! You’ll never take me alive coppers!!!
Earlier today: http://www.freerepublic.com/focus/f-news/1974411/posts
Earlier today: http://www.freerepublic.com/focus/f-news/1974411/posts
This is what happens when you take the ten commandments out of Society and the shame that ensues when you break them. Money and material have replaced God, so therefore, anything to do to get to the main goal has become acceptable by the new societal standard.
Sure lying on the form is irresponsible. But throwing someone in jail for doing it is something that only someone like Stalin would think of doing. The bank is still responsible to verify the data since as anyone knows PEOPLE HAVE BEEN LYING TO GET LOANS FOR THOUSANDS OF YEARS. Only a totally incompetent organization like HUD, FHA or Wells Fargo would rely on an applicant’s veracity.
You hit that one on the mark.
It is not so much the borrowers as it is the brokers who either encourage or facilitate the transaction and obscure the facts from the borrower.
I like to see somebody start going after these guys, or at least someone talking about not giving any bail out to anyone who made one material false statement on their application.
My wife and I just applied for our mortgage about a year ago, and we were debating how to calculate our annual income (if you go my our monthly pay checks, my salary looks to be $4 less than my annual salary, because for some reason my last two or three pay checks each year vary by a couple of bucks). We were actually worried about that $4.
Somebody gets a $100,000 loan that they can’t pay back by lying to the bank, and the bank has to spend a couple thousand dollars trying to collect past due payments, and then foreclosing on and selling the house, which may or may not satisfy the loan. That couple of thousand dollars lost is probably as much as the average bank robber takes (it doesn’t matter if the mortgage is insured, any more than whether a bank, or store that’s robbed has insurance to cover the loss).
LOL!!!
Actually, in a lot of cases, proving the charge would be impossible. The files are really far from secure, and on far too many occasions the application the borrower signed (stating one income) was not the one reviewed by the underwriters (with a mysteriously larger income).
Capitalism is failing because of the morales taught in Union operates schools.
The US must become a socialist nation.
The NEA has won.
Not to worry , we’ll ALL be paying for the lies of others.
And Hillary Clinton would like to establish a taxpayer financed fund to help pay the mortgages for these liars.....
I know a lot of fine folks named Morales -- I don't think you can blame the ills of the world on their being in public schools. /sarcasm
LOL, and whose idea were these 'stated income' loans? Did the borrowers create them??? Banks came up with these goofy ideas then sold off these stupid loans to unknowing investors. It is not like it is that difficult for banks to run credit and ask for proof of income.
Love the way the government continues to build a nation of scofflaws.
HA HA!!! You’ll never take me alive coppers!!!
=======================
LOL!!
George 'Baby Face' Nelson The Troll: "Hello, boys! Well, these little men finally cought up with the criminal of the century. Looks like the chair for George Nelson The Troll. Yup, gonna electrify me. I'm going to go off like a Roman candle. Ha ha ha. 20,000 volts chasing a rabbit through yours truly. Gol damn, gonna suck all the power right out of the state. Gonna shoot sparks out the top of my head and lightning from my fingertips! I'm George Nelson The Troll , and I'm feeling 10 feet tall!"
Well, somebody better start doing some real adult thinking.
These are the same people who are equally clueless about the reality of financing as they are of politics. They vote "progressive" over and over; they believe "National Healthcare" is not only possible, but necessary; they defer caring for themselves because "the government" will do that: the rest of us.
They are ciminal just as the ones "flipping" houses. They are sucked into the endless TV commercials assuring them they can get rich. They are not only idiots, but criminal idiots.
Of course, governments at all levels feed the delusion, too, but that's another story...
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