3 Wood Sez: Now that the debate over the Bail Out Plan is over, focus shifts to cleaning up the mess. Indictments for fraud should become hot and heavy: Mother and son plead guilty in NY mortgage fraud
"NEW YORK (Reuters) - The mother and son operators of a New York mortgage brokerage firm and one of their employees pleaded guilty on Friday to taking part in a multimillion dollar subprime mortgage scheme. Twenty-seven people were charged in U.S. District Court in Manhattan with involvement in the scheme to defraud subprime banks and lending institutions from 2004 through January 2007 by the firm, AGA Capital NY Inc.The indictments were unsealed last year before the full impact was known of the easy credit and "no document" loans at the heart of the U.S. mortgage crisis. Thousands of Americans with weak credit who obtained so-called subprime mortgages have defaulted on their loans and lost their homes.
"The defendants committed the fraud by submitting loan applications and supporting documents, which contained false information and omissions, to subprime lenders in order to induce the lenders to make loans that otherwise would not have been funded," according to the indictment."
Essentially, these people admit that they made up numbers out of the blue to get the loan application into an acceptable condition. I think you will see a lot of this coming to the surface now.
~ 3 WOOD
June 2008: Mortgage Fraud
The Spleen Sez:
There's TONS of it. It's endless.
Connecticut Man Sentenced For Misreps
Mass Woman Charged In Mortgage Fraud Scheme
OK: Man Sentenced To 13 Years For Fraudulent Mortgage Rebate-Coupon Conspiracy
Defendants Sentenced In Louisiana Mortgage Fraud Case
2 Indicted In Arizona Mortgage Fraud Scheme
Maryland: Settlement Officer Pleads Guilty To Diverting Funds
etc etc infinitude
Oregon loan officer pleads guilty in fraud involving 70+ propertiesJune 2008: Las Vegas called 'mortgage fraud ground zero'
Title company owner, his son and a loan officer indicted in St Louis area fraud
5 sentenced in Louisiana mortgage fraud
PA man admits to supplying false documents for mortgage applications
etc etc ad naseum
August 2008: Mortgage fraud jumps 42% in the first quarter
FBI: 2006 Mortgage Fraud Report:
Analysis of available law enforcement and industry resources indicates that the top ten mortgage fraud areas are California, Florida, Georgia, Illinois, Indiana, Michigan, New York, Ohio, Texas, and Utah. Other areas significantly affected by mortgage fraud include Arizona, Colorado, Maryland, Minnesota, Missouri, Nevada, North Carolina, Tennessee, and Virginia. There is a strong correlation between mortgage fraud and loans which result in default and foreclosure.Oy. Friggin' investigative GENUISES, those FBI are, I tells ya.....
Mortgage Fraud Resource Center
2006: The Bonnie and Clyde of mortgage fraud
October 2008 ~ Fannie Freddie Fraud Adding to their woes, mortgage finance giants Fannie Mae and Freddie Mac are facing a federal grand jury investigation into their accounting practices.The mortgage finance companies said Monday that a federal grand jury in New York is investigating accounting, disclosure and corporate governance issues at Washington-based Fannie and McLean, Va.-based Freddie.
Fannie and Freddie said they received subpoenas Friday from the U.S. Attorney's office in Manhattan as well as requests from the Securities and Exchange Commission that they preserve documents. Fannie Mae and Freddie Mac were taken over by the government earlier this month as their mounting defaults and foreclosures threatened the entire mortgage market.
The government investigation focuses on activities starting in 2007, Freddie Mac said in a statement.
Critics have long questioned the companies' bookkeeping. Last November, for example, a Fortune magazine story said new accounting procedures at Fannie Mae masked potential losses on bad loans.
And several years ago, both Fannie and Freddie were forced to restate billions in earnings after federal regulators discovered accounting irregularities at both companies.
The scandals led to the replacement of the companies' top executives. Freddie Mac's former CEO, Gregory Parseghian was ousted in December 2003. Fannie CEO Franklin Raines and chief financial officer Timothy Howard were swept out of office a year later.
Both companies said Monday they would cooperate fully in the investigations, but their spokesmen declined to comment. Representatives of the SEC and Justice Department also declined to comment.
Three weeks ago, the government seized control Fannie Mae and Freddie Mac, the two biggest U.S. mortgage finance companies, with a rescue plan that could require the Treasury Department to inject as much as $100 billion into each to keep them afloat.
A spokeswoman for the Federal Housing Finance Agency, which controls the companies said the housing agency, "will work with the companies to assure a smooth and efficient process and will work with the government agencies as they undertake their inquiries."
Law enforcement officials said last week the FBI is looking at potential fraud by Fannie, Freddie, and insurer American International Group Inc. Additionally, a senior law enforcement official told said failed investment bank Lehman Brothers Holdings Inc. also is under investigation.
The inquiries will focus on the financial institutions and the individuals that ran them, the senior law enforcement official told the Associated Press last week.
Officials said the new inquiries bring to 26 the number of companies connected to the mortgage crisis under investigation over the past year.
Over the past year as the housing market cratered, the FBI has opened a wide-ranging probe of companies across the financial services industry, from mortgage lenders to investment banks that bundle home loans into securities sold to investors. FBI Director Robert Mueller has said the FBI's hunt for culprits in the U.S. mortgage crisis focused on accounting fraud, insider trading, and failure to disclose the value of mortgage-related securities and other investments.
Additionally, the FBI is investigating failed bank IndyMac Bancorp Inc. for possible fraud. Countrywide Financial Corp., formerly the largest U.S. mortgage lender and now owned by Bank of America Corp., is also under scrutiny.
WSJ: How Government Stoked the Mania Beginning in 1992, Congress pushed Fannie Mae and Freddie Mac to increase their purchases of mortgages going to low and moderate income borrowers. For 1996, the Department of Housing and Urban Development (HUD) gave Fannie and Freddie an explicit target -- 42% of their mortgage financing had to go to borrowers with income below the median in their area. The target increased to 50% in 2000 and 52% in 2005.
For 1996, HUD required that 12% of all mortgage purchases by Fannie and Freddie be "special affordable" loans, typically to borrowers with income less than 60% of their area's median income. That number was increased to 20% in 2000 and 22% in 2005. The 2008 goal was to be 28%. Between 2000 and 2005, Fannie and Freddie met those goals every year, funding hundreds of billions of dollars worth of loans, many of them subprime and adjustable-rate loans, and made to borrowers who bought houses with less than 10% down.
From the article: 42% of their mortgage financing had to go to borrowers with income below the median in their area.From above links: Mortgage fraud jumps 42% in the first quarter
Funny how that number matches EXACTLY.
Robert Preston ~ Trouble in River City
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