The Massive Fraud In Mortgages Continues–Crooks and Corrupt Politicians In Charge–Videos

Posted on October 25, 2010. Filed under: Blogroll, Business, College, Communications, Crime, Demographics, Economics, Education, Employment, Federal Government, Fiscal Policy, government, government spending, history, Homes, Investments, Law, liberty, Life, Monetary Policy, People, Philosophy, Rants, Raves, Taxes, Technology, Video, Wisdom | Tags: , , , , , |

U.S. On The Verge Of Foreclosure Crisis (Oct-2010)(NWO ECONOMICS series)

 

Whalen Calls U.S. Foreclosure Crisis a `Cancer’: Video

 

Faulty Paperwork Prompts Deepening Foreclosure Problem

Is Your Mortgage Loan Illegal? Sue Your Lender

Mortgage Servicers’ Secret

Foreclosure Tsunami Coming?

 

DYLAN RATIGAN: FORECLOSURE FRAUD & $45 TRILLION DOLLARS

 

Prof. Bill Black – Financial crisis probe, prosecution failure – Fire Summers, Geithner, Holder

 

Fraudclosure – Just the Tail End of Systemic Fraud?

Foreclosure Fraud Hits Housing Market

 

William K. Black and L. Randall Wray

Foreclose on the Foreclosure Fraudsters, Part 1: Put Bank of America in Receivership

“…We make three propositions concerning what we believe to be institutions that are run as “control frauds”. To date, this situation has been ignored in the policy debates about how to respond to the crisis. The propositions rest on a firm (but ignored) empirical and theoretical foundation developed and confirmed by white-collar criminologists, economists, and effective financial regulators. The key facts are that there was massive fraud by nonprime lenders and packagers of fraudulent nonprime loans at the direction of their controlling officers. By “massive” we mean that lenders made millions of fraudulent loans annually and that packagers turned most of these fraudulent loans into fraudulent securities. These fraudulent loans and securities made the senior officers (and corrupted professionals that blessed their frauds) rich, hyper-inflated the bubble, devastated millions of working class borrowers and middle class home owners, and contributed significantly to the Great Recession — by far the worst economic collapse since the 1930s.

Our first proposition is this: The entities that made and securitized large numbers of fraudulent loans must be sanctioned before they produce the next, larger crisis. Second: The officers and professionals that directed, participated in, and profited from the frauds should be sanctioned before they cause the next crisis. Third: The lenders, officers, and professional that directed, participated in, and profited from the fraudulent loans and securities should be prevented from causing further damage to the victims of their frauds, e.g., through fraudulent foreclosures. Foreclosure fraud is an inevitable consequence of the underlying “epidemic” of mortgage fraud by nonprime lenders, not a new, unrelated epidemic of fraud by mortgage servicers with flawed processes. We propose a policy response designed to achieve these propositions.

S&L regulators, criminologists, and economists recognize that the same recipe that produced guaranteed, record (fictional) accounting income (and executive compensation) until 2007 produced another guarantee: massive (real) losses, particularly if the frauds hyper-inflated a bubble. CEOs who loot “their” banks do so by perverting the bank into a wealth destroying monster — a control fraud. What could be worse than deliberately growing massively by making loans likely to default, converting large amounts of bank assets to the personal benefit of the senior officers looting the bank and to those the CEO suborns to assist his looting (appraisers, auditors, attorneys, economists, rating agencies, and politicians), while simultaneously providing minimal capital (extreme leverage) and only grossly inadequate loss reserves, and causing bubbles to hyper-inflate?

This nation’s most elite bankers originated and packaged fraudulent nonprime loans that destroyed wealth — and working class families’ savings — at a prodigious rate never seen before in the history of white-collar crime. They created the worst bubble in financial history, echo epidemics of fraud among elite professionals, loan brokers, and loan servicers, and would (if left to their own devices) have caused the Second Great Depression.

Nothing short of removing all senior officers who directed, committed, or acquiesced in fraud can be effective against control fraud. We repeat: Foreclosure fraud is the necessary outcome of the epidemic of mortgage fraud that began early this decade. The banks that are foreclosing on fraudulently originated mortgages frequently cannot produce legitimate documents and have committed “fraud in the inducement.” Now, only fraud will let them take the homes. Many of the required documents do not exist, and those that do exist would provide proof of the fraud that was involved in loan origination, securitization, and marketing. This in turn would allow investors to force the banks to buy-back the fraudulent securities. In other words, to keep the investors at bay the foreclosing banks must manufacture fake documents. If the original documents do not exist the securities might be ruled no good. If the original docs do exist they will demonstrate that proper underwriting was not done — so the securities might be no good. Foreclosure fraud is the only thing standing between the banks and Armageddon. …”

http://www.huffingtonpost.com/william-k-black/foreclose-on-the-foreclos_b_772434.html

William K. Black and L. Randall Wray

Foreclose on the Foreclosure Fraudsters, Part 2: Spurious Arguments Against Holding the Fraudsters Accountable

“…Who is Guilty? Let us deal with the “borrower fraud” argument first because it is the area containing the most erroneous assumptions. There was fraud at every step in the home finance food chain: the appraisers were paid to overvalue real estate; mortgage brokers were paid to induce borrowers to accept loan terms they could not possibly afford; loan applications overstated the borrowers’ incomes; speculators lied when they claimed that six different homes were their principal dwelling; mortgage securitizers made false reps and warranties about the quality of the packaged loans; credit ratings agencies were overpaid to overrate the securities sold on to investors; and investment banks stuffed collateralized debt obligations with toxic securities that were handpicked by hedge fund managers to ensure they would self destruct.That homeowners would default on the nonprime mortgages was a foregone conclusion throughout the industry — indeed, it was the desired outcome. This was something the lending side knew, but which few on the borrowing side could have realized.The homeowners were typically fraudulently induced by the lenders and the lenders’ agents (the loan brokers) to enter into nonprime mortgages. The lenders knew the “loan to value” (LTV) ratios and income to debt ratios that they wanted the borrower to (appear to) meet in order to make it possible for the lender to sell the nonprime loan at a premium. LTV can be gimmicked by inflating the appraisal. The debt to income ratios can be gimmicked by inflating income. “Liar’s” loan lenders used that loan format because it allowed the lender to simultaneously loan to a vast number of borrowers that could not repay their home loans, at a premium yield, while making it look to the purchaser of the loan that it was relatively low risk. Liar’s loans maximized the lender’s reported income, which maximized the CEO’s compensation.The problem is that only the most sophisticated nonprime borrowers (the speculators who bought six homes) (1) knew the key ratios they had to appear to meet, (2) had the ability to induce an appraiser to inflate substantially the reported market value of the home, and (3) knew how to create false financial information that was internally consistent and credible. The solution was for the lender and the lender’s agents to (1) instruct the borrower to report a certain income or even to fill out the application with false information, (2) suborn an appraiser to provide the necessary inflated market value, and (3) create fraudulent financial information that had at least minimal coherence.When the overburdened homeowner began missing payments, late fees and higher interest rates kicked-in, boosting the stated income of mortgage servicers and the value of the securities. Not coincidentally, the biggest banks own the servicers and could maximize claims against the mortgages by running up the late fees. It was quite convenient to “misplace” mortgage payments, so even homeowners who were never delinquent could get hit with fees and higher rates. And when payments were received, the servicers would (illegally) apply them first to the late fees, meaning the homeowners were unknowingly still missing mortgage payments. The foreclosure process itself generates big fees for the SDI banks.And, miracle of miracles, the banks would end up with the homes and get to restart the whole process again — from resale of the home through the financing, securitizing, and fee-for-servicing juggernaut.  …”

http://www.huffingtonpost.com/william-k-black/post_1115_b_772820.html

 

Foreclosure-Gate Fallout: How Bad Can It Get For Wall Street?

Zach Carter

“…JPMorgan Chase loves using its research department to push its political agenda, and the bank is currently characterizing the foreclosure fraud outbreak as a set of “process-oriented problems that can be fixed.” That puts them in the rosy optimist camp for this crisis, and they’re projecting a total of $55 billion to $120 billion in losses for the entire industry, spread out over a few years.

But take a look at the analysts’ methodology. The actual scope of losses gets drastically larger if you just change a few arbitrary assumptions.

JPMorgan’s analysts look at about $6 trillion in mortgages issued between 2005 and 2007 — this is the height of the bubble, but it excludes plenty of lousy loans issued in 2003, 2004 and 2008. They then estimate defaults of $2 trillion and losses of $1.1 trillion on those defaults.

So far, these estimates are reasonable. According to Valparaiso University Law School Professor Alan White, banks lose about 58 percent of the value of a subprime loan at foreclosure. JPMorgan is estimating 55 percent. The notion that one-third of mortgages issued at the height of the bubble will default may seem extreme, but the analysis includes both first-lien mortgages and second-lien mortgages (home-equity loans). For houses with multiple mortgages, there’s going to be a double-hit when the first lien goes bad. Right now, the official statistics from Mortgage Bankers Association indicate that 14 percent of first mortgages are delinquent or in foreclosure. The longer unemployment stays near 10 percent, the higher that figure will go. …”

http://www.huffingtonpost.com/zach-carter/foreclosuregate-fallout-h_b_770359.html

Background Articles and Videos

“Stress tests Total Sham” William K. Black on Fox Business

 

BILL MOYERS JOURNAL | William K. Black on Fraud | PBS

 

Moyers 1/3: Sharing the Blame for the Economic Crisis?

 

Moyers 2/3: Sharing the Blame for the Economic Crisis?

 

Moyers 3/3: Sharing the Blame for the Economic Crisis?

William Black on Alex Jones Tv 1/5:Former Federal Regulator Tells All !!

 

William Black on Alex Jones Tv 2/5:Former Federal Regulator Tells All !!

 

William Black on Alex Jones Tv 3/5:Former Federal Regulator Tells All !!

 

William Black on Alex Jones Tv 4/5:Former Federal Regulator Tells All !!

 

William Black on Alex Jones Tv 5/5:Former Federal Regulator Tells All !!

 

GRITtv: William K. Black: Elizabeth Warren & Consumers

 

Obama Passing On Elizabeth Warren?

 

Foreclosure Defense Attorney Roy Oppenheim Discusses Bank Fraud and Foreclosures on CBS News

The Mortgage Meltdown

 

Related Posts On Pronk Palisades

Gillian Tett–Fool’s Gold–Videos

The American People Paid Off The Bets (Credit Default Swaps) Of Wall Street Investment Banks–Videos

Quantitative Easing–Videos

Deflation, Inflation and Uncertainty–Videos

The Trillion Dollar Bet–Videos

The Obama Depression Deepens–Federal Reserve Executes–QE II Plan–”Operation Pawnshop”–$2,500 Billion In Quantitative Easing–Money Printing–Will It Be Enough?

 


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