Fannie Mae and Freddie Mac did buy liar loans, they just don’t want to talk about it. The next round of foreclosures will come the moment the rates rise and these clients were PRIME borrowers with over 720 credit scores. These were stated income and no doc loans. The sub-prime mess had nothing to do with “poor people”. The poor people had excellent loans which were under the Community Reinvestment Act. These clients were fully documented with very cheap mortgage insurance, cheap rates and were better loans than FHA. The loan to value was up to 107 percent. They just put down $800.

Sub-prime had to do with clients getting higher rates but they could close in seven days!!!!! Realtors loved these loans and would pull their loans from mortgage brokers who would not close the loans fast enough. Realtors also would send their clients to mortgage brokers and receive ILLEGAL KICKBACKS of one percent of the loan amount. Nevermind that realtors already made three percent on the sale! Realtors would control the deal and if the mortgage broker’s appraiser did not get the “value” the realtor thought it had, they would take the loan and send it to the mortgage broker that could close it faster! Why can’t a loan close in thirty to forty-five days? We are not talking about five dollars, but thousands of dollars. The realtors got away with their dirty schemes and no back lash against them when they are the first point of contact in a home sale.

If I as a borrower wanted to cheat, it was quite easy to do. However, it would generally take some one with the actual expertise and inside knowledge to know all the ins and outs. how to set the proper Front and back ratios, how to generate the deposit verifications (some realtors and loan officers had bank accounts where they placed their clients and or used other clients accounts without their knowledge and approval to do deposit verifications), as far as the income, some loan officers had call centers and companies where they paid the individual verifying the income or employment reference, taking advantage of the fact that no income or low doc meant the verification of income would not include the tax form 4605 since they knew the warehouse lender would not run the 4506 because the account reps were making sure all the brokers and their loan officers knew that fact. They did not care, they all made money at different levels but the juiciest commissions came from the volume and the yields generated by the upselling of the interest rates (Yield Spread premiums), on top of that they brokers and lenders made money in the securitization or structuring
of the loans in packages to be sold to the banksters such as Goldman, Lehman, Merrill, etc.

the kick backs and gifts were the rule of the day, underwriting standards came in second.

The fact that most people used all their savings and hard earned money to pay the mortgage did not matter, as it still does not. After reading the transcripts of the testimony given by the Head Underwriter of Citi under oath in which he states the large degree of fraud present in all their loans and whatever they acquired, only reaffirms this fact.

It only surprises me to see that most people still believe that we the borrowers are at fault. Well We never designed the loan products, we never lowered the underwriting guidelines, we were not given kick backs, nor did we were fully informed of all the hands that were in the pot.

When are the regulators going to stop all foreclosures and start forcing the real crook fix the problem, their toxic mortgages and now the fraudulent foreclosures.

By allowing too much money into the system prices swelled for both home buyers, but also for renters: for anybody who hadn’t purchased a home before the bubble which, not coincidentally, is when the fraud became rampant.

Obviously the overwhelming majority of origination fraud came from mortgage lenders. Even if borrowers wanted to defraud banks in such large numbers bank underwriting systems could, would, and should have prevented that. The only way fraud on this scale could exist is if banks were engaged either explicitly, by perpetrating it, or implicitly, via defective fraud-screening products and processes. Hint, hint lawyers: quantifiable, enormous damages caused by defective products.