4closureFraud.org post featured in Daily Finance…
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The Making of a ‘Liar’s Loan,’ With Help From the Loan Officer
Now that we’re in the midst of the post-housing bubble foreclosure mess, it’s easy to lose sight of part of how we got here: “liar’s loans.”
Liar’s loans were mortgages that didn’t require the wannabe borrower to prove she could repay the loan. They came in various flavors, allowing the borrower to state without proving her income, or assets, or both. These loans violated all the basic principles of underwriting, the process banks abandoned during the housing bubble. And it’s no wonder most are ending in foreclosure.
And as a fax-email exchange first posted by the blog Foreclosure Fraud shows, the fraudulent nature of these loans was not only no secret at the banks, but bank staff steered applicants into filling out mortgage applications with false information. While I realize what follows is a single exchange, keep in mind when reading it that:
- It involves a “Senior Loan Officer” — how rogue can the behavior be?
- The tone and details indicate this was a normal activity for at least this employee.
- While it involves a JPMorgan Chase (JPM) loan, it cannot be true that Chase was the only mortgage lender behaving this way. Nothing that’s come out to date about housing-bubble loans suggests Chase was unusually irresponsible. To the extent a big mortgage lender has gotten that rep, it’s been Countrywide, which Bank of America (BAC) swallowed.
- The borrower was sent documents and apparently was asked to sign them. Rather than sign them, the borrower asked questions. When reading the questions, think about the idea that the borrower was asked to sign these papers.
- Finally, the borrower seems pretty sophisticated. Imagine how the process would work with a less sophisticated one. would they ask any of the questions?
See full article from DailyFinance: http://srph.it/gEhotc
Most of the out-of-state cold-calling brokers during the Boom seemed unable to answer questions. They were in a hurry to sign us up and get off the phone. Halfway through 2006, we finally connected with one who ssigned us up with WaMu– though WaMu was on the other side of town and not our first or second choice–because he understood our question and could arrange a loan (re-fi)ro bringt the interest down to 5.75%. We wanted to pay points to ahcieve this. My husband and I weren’t getting any younger; interest rates were high then and we wanted also to keep our payment as low as possible. Most brokers answered that someone more experienced than they would have to call us back. It was a long time before any of the companies followed through. Also, when I asked if they wanted me to fax information about the annuities (collateral) they said, “no,” they’d do stated income, also it was better to leave my husband off the application as he was between jobs at the time. That’s been difficult since, Chase (which now owns the loan) refused for over a year to answer his questions about the loan modication process/charges unless I was home to “authorize” it first, even thorgh I send many signed authorizations for them to talk with him. Is there a reason why both our names couldn’t have been on the loan? Other women had the same thing happen, the broker suggesting they leave their husband off the new loan..