Mortgage fraud and the do nothing Congress
Though to some extent this sad story in today's Times is sui generis, it raises at least two concerns that merit consideration.
First, and to readers of Warren Reports, obviously, bankruptcy is very often the result of factors beyond the control of the debtor. The families in Martinsville who will be forced to file for Chapter 7 protection (dozens? scores? hundreds?) will have to jump through needless hurdles created by a skeptical Congress when it enacted BAPCPA.
Second, why is it that the folks in Congress who are so concerned about bad faith dealing among bankrupts are so obvlivious to the sharp practices of institutional lenders? The story notes that the FBI recently called mortgage fraud "epidemic," but I see no movement from Congress to protect borrowers from lenders who take advantage of the core middle class desire to build equity in a home.
In the lending game, it takes two to tango. If Congress is serious about the consequences of our credit-saturated economy, it would be wise to consider regulating lenders ex ante as well as borrowers ex post.
"(W)hy is it that the folks in Congress who are so concerned about bad faith dealing among bankrupts are so obvlivious to bad faith dealing among lenders?"
Because the lenders fund their campaigns and the would-be bankrupts (in places like Martinsville, VA anyway) elect them to office--at least up until they they get burned trying to flip houses they've never even seen in Indiana. Boo hoo! (I want to thank them for trying to drive up the property tax rates of my retired parents who live in Indy.)
September 28, 2006 11:48 AM | Reply | Permalink
BAPCPA stands for Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. They believe they have already done their bit for consumer protection.
Jim Anderson
The Truth About Credit
September 29, 2006 8:31 AM | Reply | Permalink
It's the Do Nothing FBI! Mortgage Fraud is already a Title 18 federal felony with up to $1m fine and 30 yrs prison per occurence. Mortgage Fraud is also Bank Fraud, Wire Fraud, Mail Fraud. Yet the FBI does not investigate, indict nor convict even when confronted with the evidence of a continuing series of fraudulent loans. It's the Do Nothing National Association of Realtors, State Association of Realtors, local associations of Realtors who don't hold their fellow Realtors accountable, even when they know who the fraudster Realtors are and that honest Realtors can't compete against the fraudster Realtors. It's the Do Nothing State Mortgage Divisions who take bribes from the fraudster Realtors and covers the Mortgage Fraud up. It's the Do Nothing State Real Estate Divisions and State Attorney Generals who also cover up the Mortgage Fraud even when presented with a preponderance of clear and convincing evidence. It's the Do Nothing Lenders who want that short-term quarterly profit to show Wall Street they made off the origination of the fraudulent loans who don't call the loans due when confronted with the evidence the loans are fraudulent. It's the Real Estate Brokers and their agents who threaten to blackball the loan officer who refuses to take the bribes offered by the fraudster Realtor for the fraudulent loans then closes the fraudulent loans with other lenders while threatening to get the loan officer fired for not "doing what everyone does." It's the Do Nothing Mortgage Bankers Association Fraud Committee Members (many presidents of their banks)who refuse to take action on the fraudulent loans their companies originated because they don't want to lose the Realtor business. So naturally their local managers nationwide do the same. It's the Do Nothing Freddie Mac and Fannie Mae who refuse to act on the fraudulent loans when presented with the Mortgage Fraud because they're worried Wall Street will find out how at risk they really are. The IRS has described perpetuators of Mortgage Fraud as "economic terorists" and profits from Mortgage Fraud as Money Laundering. Due to the fastest growing white collar crime, Mortgage Fraud, and all these Do Nothings the trillions of dollars in the American real esatate market is a House of Cards slowly crumbling down and makes the S & L Crisis look small in comparison which each one of us ended up paying for. Suck it up my fellow Americans as the Perfect Storm of Mortgage Fraud is upon us and Congress will find a way to make us pay again rather than Do Anything now to avoid it.
September 29, 2006 4:20 PM | Reply | Permalink