As the foreclosure crisis has escalated over the past several months, one overarching debate has been about who bears the most blame: homeowners or banks?
After everything I’ve learned and written about the foreclosure mess, my verdict is: The banks are responsible for 90% of the problem, troubled homeowners 10%.
Yes, every foreclosure involves a homeowner not paying his mortgage. But every foreclosure also involves a bank that made the loan. And usually another bank, or several more, that profited from securitizing the loan. And still another bank, or several, that profited from servicing the loan. Together, those banks have done three things that created the massive glut of foreclosures choking America’s legal systems and laying waste to its real estate markets:
They knowingly made millions of loans doomed for foreclosure as soon as the check was written.
They deliberately and/or incompetently failed to modify many salvageable mortgages.
They were so careless with their paperwork and processes that they’ve undermined the rule of law, clouded the title to untold numbers of properties and complicated the processing of the massive backlog of foreclosures that hurts the economically crucial real estate market.
Again… look towards the “Common Thread”chances are MERS is involved if they’ve been securitized . Remember every loan needs a “MOM“
FBI crackdown on fraudulent mortgages may underestimate scope of problem
by CHRISTINE RICCIARDI
Tuesday, September 14th, 2010, 1:00 pm
When the Federal Bureau of Investigation began Operation Stolen Dreams in March 2010, the government’s largest mortgage fraud takedown, the FBI estimated about $2.3 billion of fraudulent mortgages were originated in 2009. However, recent estimates from a source monitoring the operation indicates that number is now closer to $14 billion.
The numbers were put together recently by an European investment bank in the run-up to a mortgage fraud conference in the U.K. next month. It found that mortgage fraud in the U.K. stood at $120 million in 2009. “The phenomenon, though worrying and one that certainly requires strong intervention from authorities, is not of the same scale as in the U.S.,” said the source. “Securitization is therefore well protected from this issue.”
Banks Are Quietly Reestablishing Mortgages That Don’t Require Income Documentation
By Stephane Fitch, Forbes.com
July 8, 2010
Did you think the housing collapse killed off “liar loans”–those infamous bubble-era mortgages for which people were allowed to get creative in portraying their ability to make the payments? Well, they’re back, and that may be a good thing.
All the rage during the peak of the housing boom, these mortgages went by names like “no-doc” (meaning no documentation of income required), “low-doc” or “stated-income” mortgages. In all cases, banks set aside their underwriting standards based on what borrowers could prove they were earning with pay stubs, tax returns and the like. Instead, lenders started trusting borrowers to “forecast” future income and underwrote loans based on those projections (using as a fallback the house itself as collateral).
In the height of the housing boom in 2006 and 2007, low-doc loans accounted for roughly 40% of newly issued mortgages in the U.S., according to mortgage-data firm FirstAmerican CoreLogic. University of Chicago assistant professor Amit Seru says that for subprime loans, the portion exceeded 50%.
Then came the housing collapse, with subprime loan defaults playing a leading role, particularly the low-doc “liar” variety. The delinquency rate for subprime loans reached 39% in early 2009, seven times the rate in 2005, according to LPS Applied Analytics.
Ashlyn Aiko Nelson, a public policy lecturer at Indiana University, studied the low-doc loan craze. She and two of her colleagues concluded that low-doc borrowers exaggerated their incomes by 15% to 19%. “Our sense was that investors knew that people were lying, but figured it was OK because house prices would keep going up and the homeowners could refinance,” says Nelson.
DinSFLA here: Again, who exaggerated their incomes? All of a sudden the consumer is in charge of the loan origination? Who exactly sent the file to the Underwriter? Surely not the unlicensed borrower who’s job is to broker loans!
The most outrageous types of no-doc lending disappeared entirely in 2009. Many mortgage pros say they’re unaware of banks making any low-doc loans in recent months. (A Forbes editor was, however, approached by a leading bank recently with an offer to refinance his home without documenting his income.)
Stop trying to get through the front door…use the back door…Get a Forensic Audit!
Not all Forensic Auditors are alike! FMI may locate exactly where the loan sits today.
This will make your lender WANT to communicate with you. Discover what they don’t want you to know. Go back in time and start from the minute you might have seen advertisements that got you hooked ” No Money Down” “100% Financing” “1% interest” “No income, No assetts” NO PROBLEM! Were you given proper disclosures on time, proper documents, was your loan broker providing you fiduciary guidance or did they hide undisclosed fees from you? Did they conceal illegal kickbacks? Did your broker tell you “Don’t worry before your new terms come due we will refinance you”? Did they inflate your appraisal? Did the developer coerce you to *USE* a certain “lender” and *USE* a certain title company?
If so you need a forensic audit. But keep in mind FMI:
DO NOT STOP FORECLOSURE
DO NOT NEGOTIATE ON YOUR BEHALF WITH YOUR BANK OR LENDER
DO NOT MODIFY YOUR LOAN
DO NOT TAKE CASES that is upto your attorney!
FMI does however, provide your Attorney with AMMO to bring your Lender into the negotiation table.
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