Posted on 09/18/2004 12:24:54 PM PDT by Bobby777
WASHINGTON (CNN) -- Rampant fraud in the mortgage industry has increased so sharply that the FBI warned Friday of an "epidemic" of financial crimes which, if not curtailed, could become "the next S&L crisis."
Assistant FBI Director Chris Swecker said the booming mortgage market, fueled by low interest rates and soaring home values, has attracted unscrupulous professionals and criminal groups whose fraudulent activities could cause multibillion-dollar losses to financial institutions.
"It has the potential to be an epidemic," said Swecker, who heads the Criminal Division at FBI headquarters in Washington. "We think we can prevent a problem that could have as much impact as the S&L crisis," he said.
In the 1980s, many Savings and Loans failed because of poor management, risky loans and investments, and in some cases, fraud. Taxpayers were left with a $132 billion tab to cover federal guarantees to S&L customers.
The FBI has dispatched undercover teams across the country in an urgent investigation into dealings by suspect mortgage brokers, appraisers, short-term investors, and loan officers, Swecker, flanked by FBI executives and Justice Department prosecutors, revealed.
(Excerpt) Read more at cnn.com ...
Or the reverse --- it makes it look like the economy is booming --- what is the rate of foreclosures up to now?
It's very interesting because even those this region has the highest unemployment rate, and wages overall are dropping, home-buying is up --- one reason is that now the very low income class can buy homes with 0 down and use $400 or more in government housing subsidies to buy their house.
And the DNC
Which, even if one disagrees with the redistribution, shows an economy that is on a positive swing.
There is two ways of looking at your statement, one is we can afford to redistribute, and the second is our economy can afford such costs because of the cost generation through Government reallocation.
I opt for the first.
Which could just mean we're in the aftermath of a good (non-Socialist) economy --- but Socialism cannot end up being a good economy.
Many of the people getting government handouts now are actually working full-time --- making $5.15 an hour but with all the housing subsidies, food stamps, WIC, Medicaid and so on, they seem to be doing very very well --- but what happens if any of the handouts has to be cut back or they lose that minimum wage job? The difference of just a couple thousand dollars a year could do them in quickly.
That has already been proved to be an oxymoron.
Socialism leads to a destitute economy, however in some countries, the benefits of socialism outweighs the benefits of a free economy.
It would be a tough statement to make however without the generosity of the USA and our free economy as a part of the plan.
Go figure....
So in this case, the fraud is being committed by mortgage brokers, who are benefiting by charging excessive fees to broker bad loans based on false statements to lenders? Okay, that makes a lot of sense. It would also make a lot of sense if real estate agents were aiding in this, since they stand to benefit even more handsomely on each bad sale if they are getting a 6% commission on $200,000+ sales.
I searched and found this information about current real estate fraud problems from the IRS:
The same page then gives several actual examples of bad actors doing these things.
There are frauds being perpetuated by the real estate salesperson and the loan brokers...the loan broker does not have the money, he finds the mortgage company who lends the money...that is why he is able to be such a con..he is a middleman without anything to lose. It may only be one in a transaction or it could be both, it is really hurting honest brokers and honest REALTORS. The 6% is split four ways, the listing broker firm gets 1 1/2% as well as listing agent=3%, and selling Broker Firm gets 1 1/2% as well as selling agent in that firm for other 3% and that completes the 6% total fee.
Note that a REALTOR is bound by State Board of REALTORS and the National Association of REALTORS and they can be brought up on charges in a hearing, very different from someone who just has a state real estate license and isn't a member of the above organizations who police their own, although it can still happen and many exaggerate their properties...the con men try to stay away from Trade Organizations and operate independently when they can.
Depends on the situation. Many ARM's have caps that say the rate can't go more than 6% over the start rate. So if you start at 4.25% your max is 10.25%, hardly great but nothing near as bad as the Carter years.
ARM's can be good for some. If you have a fixed-period ARM, say it is a 3/1 (fixed for 3 years then variable yearly) its perfect if you are 99% sure you will sell or refinance for whatever reason within 3 years.
I wonder if Kerry's mortgage that he used to finance his campaign was fraudulent...
I have drilled the Carter years into my kids heads. Never an ARM, never an ARM, never an ARM.
Lived 'em. 5% fixed for 30. I ain't goin' nowhere. :-D
I see so much of that in Illinois and Wisconsin. It really blows my mind.
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