'Pervasive' Fraud by Our 'Most Reputable' Banks

[eridani]

http://readersupportednews.org/opinion2/279-82/16261-pervasive-fraud-by-our-most-reputable-banks

A recent study confirmed that control fraud was endemic among our most elite financial institutions: Asset Quality Misrepresentation by Financial Intermediaries: Evidence from RMBS Market. Tomasz Piskorski, Amit Seru & James Witkin (February 2013) ("PSW 2013&quot .

<snip>

The greatest importance of the PSW 2013 study is that even the fraud deniers have to admit that our most prestigious banks were the world's largest and most destructive financial control frauds. Given this confirmation that the banks engaged in one form of control fraud in the sale of fraudulent mortgages (false representations about second liens), there is no reason to believe that their senior officers had moral qualms that prevented them from becoming even wealthier through the endemic frauds of liar's loans and inflated appraisals. Appraisal fraud is almost invariably induced by lenders and their agents. Given the "pervasive" willingness of the officers controlling our most prestigious banks to enrich themselves personally by lying about the presence of second liens, they certainly cannot have any moral restraints that would have prevented them from creating the perverse incentives that caused loan officers and brokers to put the lies in liar's loans and to induce appraisers to inflate appraisals - two other control fraud schemes that were far more "pervasive" (and even likelier to produce severe losses) than the two forms of fraud studied by the PSW 2013 authors.

Once the fraud deniers have to admit that one form of control fraud involving mortgages was "pervasive" among our most prestigious banks, it becomes untenable to ignore the already compelling evidence that other forms of control fraud involved in the fraudulent origination and sale of mortgages and mortgage derivatives were even more pervasive at hundreds of financial institutions. The PSW 2013 study destroyed the myth of the Virgin Crisis. It also exposes the falsity of the ridiculous "definition" of mortgage fraud that the Mortgage Bankers Association (MBA) foisted on the FBI and the Department of Justice that implicitly defines control fraud out of existence for mortgage lenders. Attorney General Holder and President Obama have no excuse for their faith in the Virgin Crisis, conceived without fraud and should repudiate the MBA definition immediately and train the regulators and agents to spot and prosecute the epidemic of control frauds that drove this crisis (and the S&L debacle and Enron-era frauds).

[orpupilofnature57]

1. "I thought they'd police themselves " Alan Greedspan

A plot ? no, Apathy among authorities .

[dkf]

2. The fraud was upon the investors not the people who got the mortgages.

I've never understood why those who got homes they should not have were the victims, nor why they should have been able to keep those houses. That is a double fraud upon investors.

[eridani]

3. Blaming people for falling for high pressure slales pitches is a nasty Republican thing to do n/t

[dkf]

4. Wow I didn't realize real estate agents were cold calling people with high pressure sales tactics.

This Is obviously not the banks fault then. No mortgage lender ever initiated a persons home purchase. That starts with real estate agents who apparently are the culprits of the mortgage debacle in your eyes?

[orpupilofnature57]

5. Initiating and turning a blind eye in the spirit of

" Doing business " are both cogs of the same gear .

[ms.smiler]

6. dkf, I find agreement with you in that investors were defrauded but disagree with you in that

homeowners were not defrauded.

You wrote:

“I've never understood why those who got homes they should not have were the victims, nor why they should have been able to keep those houses. That is a double fraud upon investors.”

Homeowners apply for mortgage loans and do not have the authority or ability to underwrite those loans. It is the responsibility of the lender to determine the credit worthiness of borrowers and those lenders did so poorly because their own money was not at risk in the loans, it was the investors’ money at risk.

Homeowners and investors never did business together and borrowers were not in a position to defraud investors. Most homeowners had no idea that at some later point in time investors would supposedly come to own their mortgage loans. It was the Wall Street banks that sat between borrowers and the investors, and they gathered as many loans as possible to offload on investors who were defrauded regarding the quality and viability of the loans.

Given that it was not the homeowners who defrauded the investors rather it was the banks, it is their responsibility to make the investors whole.

As a homeowner, it was not disclosed to me either verbally or in writing that I would be signing a mortgage contract with crooks. No one explained to me that MERS would soon breach the mortgage contract while violating numerous laws of my state as well as numerous other states.

No one disclosed the fact that I could no longer rely upon our public Land Records to determine the owner of my mortgage loan. No one explained to me that I would have to use my MERS MIN in the MERS look up tool to learn the identity of the owner of my mortgage loan, a party that does not appear in my local Land Records system.

No one disclosed to me that after my loan disappeared into the MERS black hole and after my property Title was clouded, and my loan was likely used to defraud investors, that years later my mortgage servicer would file a document in my local Land Records designed to paper over the gaps and breaks in my chain of Title created by MERS with a forged invalid Assignment of Mortgage thus slandering my property Title.

Moreover, no one explained to me that while I was dutifully making my mortgage payments, that under Pennsylvania law my mortgage would be null and void in only a few months time due to MERS violations of my states laws.

No, no one explained these things to me as they prefer that I believe that my mortgage remains valid and that my property Title is just fine and dandy regardless of bogus documents filed on my property which is a Felony, that paper over the gaps and breaks in the chain of Title unlawfully created by MERS.

It was the banks that created MERS as a neat little tool to ease the mortgage securitization process.

So, is it your position that no homeowners were defrauded or damaged as a result of the construction of non-mortgage backed securities that were used to defraud investors?



***I am still awaiting trial on my Quiet Title lawsuit.

[dkf]

7. Why isn't it the state's fault for having an antiquated title system?

The MERS debacle is a paperwork mess that shouldn't exist. Why they haven't done a federal fix with title automation is beyond me.

And it is the securitization of loans that makes mortgages available. If all the banks held all the loans, then they can't make enough to satisfy the homeownership goals of government officials. Fannie and Freddie were created by the government to securitize loans because government feels it is in the interest of the country for home ownership to be widespread.

So the securitization started with the federal government. Yet they did not create a system that allowed titles to be transferred with any efficiency. The MERS system was created to try to deal with what government left in a ridiculous state.

[ms.smiler]

8. dkf, now I’ll ask you why it isn’t the banks fault for developing such a complex

securitization scheme that it can not operate or function within the scope of the law.

Did it not occur to the banks to develop or utilize a system that was lawful?

Property law is a states issue and those laws vary from state to state. If a national system were developed, it would need to operate in accordance with the laws of each state. The best situation that I’ve imagined is that property records are kept properly and lawfully in each Recorder of Deeds office with the data automatically copied to a national database. If the banks or our government desired such a system, we would have had it in place and operational.

Instead, the banks opted for a private and secret approach to maintaining the trail and ownership of Promissory Notes via MERS. Such a system is superior in concealing fraud over our public land records system.

You wrote:

“The MERS debacle is a paperwork mess that shouldn't exist.”

What is a “paperwork mess” to you is Breach of Contract, a clouded and slandered property Title, forgery and commission of a Felony to me. All of that was worth the risk and found preferable to our banks who supposedly found our Recorder of Deeds offices too slow in recording Assignments of Mortgages.

These companies wanted to handle both investment and banking which the government enabled. They wanted entry to the mortgage market. Now, supposedly, they can’t make enough money to make it worthwhile?

[dkf]

9. It's because the world of investments has no use for an asset with

Liquidity problems.

If you want to securitize it then make it easy to transfer the title. Otherwise it should be considered a liquidity problem and possibly closed to large pools of possible funding.

This is the Government's problem child. They created it.

[ms.smiler]

10. dkf, do you suppose the world of investments has a use for securities with a fraud problem?

I feel like you are focused upon a mouse while I am focused on an elephant.

Yes, the government encourages home ownership while we have 50 states with different property laws and recording systems which are not readily compatible with complex securitization. Is it your position that those let’s say hurdles, encouraged or forced or explains or even excuses trillions of dollars in securities fraud?

In an ideal world where Title could easily be transferred, would there be no defrauded investors? Would no homeowner be wrongfully foreclosed? Would document mills, forgery, perjury and robo-signing no longer exist? Would there no longer be a reason to slander my property Title? Would my property Title no longer be clouded? Would my mortgage remain valid? Would the banks no longer face liability from investors and homeowners?

[mbperrin]

12. Oh, I think the industry had something to do with the government

passing it. Not for a moment do I think Congress woke up one morning and said, "How can we create a government agency or two that will buy all the mortgages that anyone throws at them after the initiators have wrung many billions of dollars of arcane and some frankly fraudulent up-front costs?"

I do think the mortgage writers did not want to service those loans for 30 years, and by not having to, were free to commit all the frauds and come-ons that were used during the whole debacle.

And yes, I WAS cold-called by a number of firms wanting me to finance my home (it was paid for cash twenty years ago) and use it like an ATM. After sweetly telling them I was not interested, I ended up having to explain their breeding, educational accomplishments and general effectiveness as sales people to get them to stop.

There should be no secondary markets, especially for mortgages. Lenders need to service them will all attendant risks for the full term. That will make their due diligence just a bit more diligent.

And yes, I do think that homeowners who got defrauded should get a free house. They were just looking for a place to live. Investors were looking to kill, and all investment carries risk. They need to get the haircuts - they got the pot of gold in the first place.

[mbperrin]

11. Thank you for saying it well.

They useta take bastids that treated people like this out back and come back without them.

Incredibly sorry that you were caught up in all this, and here's hoping for judicial relief!