In a move that should surprise no one, the FBI, says CNN, has opened an investigation into Fannie Mae, Freddie Mac, Lehman Brothers Holdings Inc., and American International Group, the four companies now at the very heart of the proposed $700 billion dollar theft–I mean taxpayer bailout–plan being pushed by Bush and gang in Washington.

This apparently brings to 26 the number of financial insitutions under law enforcement scrutiny just in the past year.

CNN quotes two law enforcement officials as saying the FBI is looking for “potential fraud” by the four giant and now collapsed companies.

Faster, Faster, Faster

Meantime, perhaps the FBI should also take a closer look at why the Bush administration is in such a hurry to ram through the Congress this enormous rip-off of the American taxpayer in order to rescue some fat-cat Wall Street big wigs who drove their companies and the U.S. economy into the ground.

We are being told we must act quickly…yesterday if possible. Don’t ask any questions. Don’t provide oversight. Don’t permit judicial review. Don’t hold hearings. Don’t consult experts. Don’t hold anyone accountable. Just hand the $700 billion over to the very sleeze bags who brought the country to its fiscal knees.

Don’t help people who face forclosures. Don’t limit executive pay for the CEOs of failed companies. Don’t attach amendments to increase unemployment insurance. Don’t change the bankruptcy laws to allow judges to change the terms of a mortgage to help keep someone in their home.

No. Don’t do any of these things. Just fork over the greenbacks. Sign the big check. Shut your mouth. Close your eyes. Plug your ears. And, while you are at it, hold your nose because the stench from this crap will burn through your throat.

Recently, China executed some key industry executives who were responsible for tainted products being exported to other countries, tarnishing China’s still developing reputation.

Maybe China is on to something? The Chinese, after all, brought us citrus fruits, gunpowder, paper, fireworks and now, corporate executions. Isn’t there something to be learned,then, from the Chinese when it comes to dealing with this financial crisis??

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Tags: AIG, fannie, FBI, fraud, freddie, lehman, mortgage-fraud

I was just reading an article about how Mortgage Fraud is now a specific crime in Missouri, but couldn’t help but think to myself whether or not this law goes far enough. While I haven’t read the law itself, a $2,500 fine and/or jail is just not going to cut it. The loans must still be written off by the lenders, and of course, what happens is the banks eat up the cost, and the general public funds the bailout.

We’ve been bailing out banks due to the housing bubble for months now, and funding the crimes of those people who engaged in mortgage fraud and who in the end, couldn’t afford, or simply didn’t want to pay their mortgage anymore. I was thinking about all of this and came up with an innovative idea that would likely stop 90% of future mortgage fraud. Is it something that would ever go into law — not a chance — but if it did, it could change the fate of lenders and could prevent the average citizen from having to pay for the stupidity of others.

A Thought Experiment to Create a Law that Properly Punishes Mortgage Fraud

Those people who specifically committed this crime should NOT be let off the hook for the rest of us to pay. I believe that the law should mandate some kind of recourse beyond simply imposing a fine and/or jail. Frankly, I think the law is extremely weak. While it may have some teeth when dealing with real estate professionals who endorse such crimes, if the law looked deep enough, it would actually hold people responsible for their default.

Why not write a law that requires people who commit mortgage fraud and who default on their loan, to be responsible for a long-term payback of that loan?

If they couldn’t afford the loan in the first place, you’re asking how exactly they’d be expected to pay it back, right?

Why not add the ability for banks to garnish wages for people who commit mortgage fraud?

Actually, we can take it even further and also garnish the wages of those professionals who allowed or encouraged you to commit this fraud. Basically, you put the professionals on the line for the money in addition to the guy who directly engaged in the fraud . . . that would be a deterrent, wouldn’t it!

Landlords can go after renters who stop paying the rent and owe them money, with a garnishment. Why shouldn’t the banks or the federal government be able to go after the money that were screwed out of by the lying consumers/professionals?

While they may not be able to recover all of the money that was lost due to this mortgage fraud, at least they’d continue to bring in funds, ad-infinatum, from the guy who committed the crime and the “professional” who allowed it to happen.

Not only would this act as a deterrent from committing mortgage fraud, but it would also place a big red flag on someone’s credit saying that they are now paying off a loan that they lied to get. Essentially, the law could create a scarlet letter. Any future lender would then know to scrutinize your application EXTREMELY closely before giving you the benefit of a doubt and loaning you any money.

Wrap Up
Would such a law ever come to pass . . . I think it is extremely unlikely. But, if it were to, I believe we would see the virtual end of mortgage fraud as we currently know it!

Any thoughts on this little thought experiment about dealing with Mortgage Fraud?

Tags: foreclosure, loan fraud, mortgage-fraud, real estate, Real Estate Fraud

First came the subprime mortgage crisis; now comes the cases of alleged fraud.

An amazing story Tuesday out of Southern California where the state attorney general has busted an alleged mortgage scam that may have bilked thousands of SOCAL homeowners out of millions of dollars.

And, California Attorney General Jerry Brown told me, in some cases, signatures of homeowners were actually forged on the mortgage documents!

How it worked

According to the attorney general’s office, at least six companies operated by one family enagaged in “predatory lending” by pushing the alleged victims into “illegal and unconscionable loans.”

Brown blames this scheme on the worsening mortgage crisis, which, he says, is creating a number of “fly-by-night” operations.

Brown told me he has never seen anything like this–and the man was even once governor of California, so he’s been around a bit.

The alleged victims were often targeted because they lacked command of English. They were promised one fixed rate on a mortagage but, later in the day, they would be visited by a representative of one of the companies who often had forms with incomplete information.

They would promise that, once signed, the proper numbers would be inserted back at the office, Brown says. If the homeowner declined, says Brown, in some cases their signatures were forged, often with improper spellings of their names.

Many lost homes

Brown says the scheme robbed many homeowners of their homes because they could not afford the paymens.

Growing California Mortgage Scandal?

Brown thinks so. His office says that in the coming weeks, “Brown intends to bring additional legal actions, both civil and criminal, against other mortgage lenders and foreclosure consultants who are taking advantage of homeowners across California.”

Let us know if you have heard of such practices in YOUR state or community.

Tags: california attorney general, edmund brown, jerry brown, mortgage scam, mortgage-fraud, real estate, real-estate-scam

Last week we talked about the emergence of the selfless real estate agent. Today, we’re going to look at a piece of dirt who makes the rest of the agents out there look bad.

A real estate broker in Shakopee, Minnesota was charged with with 15 felony counts of identity theft; in addition, she filed $3 million in fake loans.

According to Freeman, “in one case, she promised to buy a piece of investment property for someone, said ‘Don’t worry. I’ll pay the mortgage and pay the rents and give you your share.’ She collected the rents, didn’t pay the mortgage and didn’t give the person any money.”

This is yet another warning to everyone to be careful out there. There are so many dubious people out there just looking to scam you, that you really need to protect yourselves. With that in mind, anyone considering investing in real estate has got to be sure that they have a real estate attorney handy.

While your lawyer can’t do too much to stop someone from stealing your identity, they can be sure that the deal you’re considering is legit, and serve to protect you by reviewing all of your paperwork. They are your first line of defense!

The part of this whole story that is most astonishing is, because this is what some call a “white collar crime,” she has not been taken into custody. She also still has her real estate license and won’t lose it unless she is convicted.

Looks like another failure of government to step up and do something. Here’s an idea . . . lets temporarily suspend her license . . . no, that would just take too much paperwork . . . we’ll just let her keep serving in a position where she can steal more money and identities.

I’m not sure who I’m more appalled at, the thief, or the authorities who fail to stop her from doing it again.

Tags: fraud, mortgage-fraud, real estate, real estate agent, real-estate-scam