Unbelievable. At least the home renter is actually current on the loan as it would probably impact his financial career. While I hope him well, I can only think of John Wayne's quote:
"Life is hard. It is even harder when you are stupid."
OT - The trickle of bad news is turning into a torrent. Choice Bloomberg headlinesas of now:
GM Will Close Four Truck Factories in Shift to Small Cars, May Drop Hummer...
ResCap to Sell Assets to GMAC, Cerberus to Bridge $1.4 Billion Funding Gap...
Lehman May Need to Raise Capital as Analysts Predict First Loss Since...
Bernanke Optimism on Growth Rebound, Inflation Dashed by Oil-Price...
Wachovia's Ouster of Thompson May Foretell More Losses...
Airlines Consider Treating Passengers `Like Freight' to Combat Fuel Surge...
Casino Bonds Crush Herbst, Harrah's as Apollo Suffers With Recession Debt..
Porsche Stock Falls as Credit Suisse Says Volkswagen Dispute Poses Risks...
In a sign of how difficult it is to sell new homes in Southern California right now, a San Diego developer is offering a "buy one, get one free" deal, pairing million-dollar homes with less expensive homes.
"We thought, 'Why does it just have to be on Pop Tarts and restaurants? Why not buy one home, get one free,'" Dawn Berry of Michael Crews Development told 10 News in San Diego.
If the place is truly as uninhabitable as the article claims, perhaps more than one type of fraud went on here... (I find it hard to believe that all of the damage and disrepair occurred AFTER closing.)
Fraud is like a bouquet of flowers, with each individual bloom expressing a new and different incarnation of the over-arching species. It is also notoriously difficult to prove and recover from!
"We thought, 'Why does it just have to be on Pop Tarts and restaurants?' Why not buy one home, get one free."
Umm, because Kellogg's won't hit me up for hundreds of dollars a month on maintenance and upkeep on my "free" Pop Parts?
And, while we're on the subject, how long do you think it'll be before the first title company representative mixes up the HUD-1's from the two properties at closing, and winds up giving away the million-dollar home with the purchase of the cheaper one?
I'm waiting for GM to start offering two cars for the price of one when they go bankrupt. "Buy are unmovable behemoth SUV and get a cavalier for free!"
They are going to d/c the hummer. "Get them now before they're gone forever!" Hallelujah.
In a sign of how difficult it is to sell new homes in Southern California right now, a San Diego developer is offering a "buy one, get one free" deal
This is actually a smart idea if the free home isn't part of the lien. The buyer can raise cash in an emergency by selling the second house or HELOC'ing it and use the money to float their mortgage for a while.
"What the article forgot to mention was his loan received a AAA rating from S&P and Moody's."
A lot of student loans are rated triple AAA because of the inability to discharge the debt in bankruptcy. I know a lot of students who have far from AAA job prospects. Watch this space in the future.
I just listened to Bernanke. What a waste of time. A bit of a stooge. It's clear the FRB is way behind the hedge funds curve and they are becoming increasingly less relevant.
This borrower needs to stop making payments, retain a lawyer and sue everyone connected with this transaction. With these facts, decent counsel could negotiate a walk away with trade line deletion in his sleep.
Over the years, Long has been ticketed at least 18 times for traffic offenses, including once for driving 137 mph. He spent about 1 1/2 years in prison nearly a decade ago on a probation violation stemming from drug and gun charges. He is on probation until May 2009 on charges of fleeing police.
From Journal article... State officials said felony convictions do not necessarily prevent a person from receiving a broker's license.
Probably speed up the approval process - shows a level of moxie.
That paper did a nice job - it often does though. My in laws read the MJS - usually find a stack of them in the downstairs bathroom... I always ASSUMED they were for reading anyway.
BTW I get into that neighborhood also - LOL - there is a plant I call on not too far from those addresses, less than a half mile away, right off Teutonia. I'm becoming a connoisseur of beaten down industrial neighborhoods it appears. Note to self: must remember to include that on the resume.
The credit crisis is also revealing the dark underside of human's nature as a Social Species"; where social use to only have a warm-n-fuzzy connotation that we 'make friends', 'fall in love', and 'build bonds'.
Now we see unavoidable evidence that "Social Species" also means 'follows others instead of thinking 4 oneself', 'following the crowd', 'Go Along to Get Along', 'Gullibility to smooth-talkers', etc.
We just don't value critical thinking and independent thinking like we should.
So, unless I'm reading this wrong, we have a conspiracy to commit fraud against a developmentally disabled man and the MBS investors. Is that right?
The lender was certainly involved, just as much as the con man. The only correct outcome is for Medellin to get all of his money back, be discharged from the loan, relieved of homeownership, and let all the fraud conspirators fight among themselves to hold the bag.
But seriously, I keep arguing that everyone should get precisely what they signed up for. Admittedly, this looks like an exception.
I do not understand why this guy is still paying the mortgage when the fraud was so blatant. Aren't there entire slime pits full of lawyers who would gladly take a case like this on spec?
Interesting that Ben somehow now suggesting that there's a link between the sinking dollah and inflation. It was just last fall in front of congress that he testified (under oath) that a weakened dollah only affects consumers if they happen to be on travel to Europe. Liar or dolt?
Why the sudden abrupt change in tune? Did someone teach the Dr that globalization can have adverse effects? Hope based central banking.
Stories of predatory lending have been coming out of that part of Milwaukee for 3 or 4 years now. The FBI has been investigating mortgage fraud for last 3 years, and several companies have been shut down as a result. One conviction and a bunch more cases pending.
Totally off topic, but once, when we were talking cars at work, a co-worker actually said, "Every man loves a hummer." That was good for a five minute laugh fest.
On topic: I couldn't get more than halfway through the article before I started feeling too stabby to continue. Hopefully putting everyone's names in the paper will somehow help this come to a happier ending.
The only correct outcome is for Medellin to get all of his money back, be discharged from the loan, relieved of homeownership, and let all the fraud conspirators fight among themselves to hold the bag.
Markel | 06.03.08 - 10:05 am | #
Could a conviction or two for fraud also be part of the deal, as long as we're wishing for a "correct outcome"? Or at least revocation of some licenses?
My guess is if he walks away from the home or lets it go into foreclosure, he also risks losing his job. He's screwed every which way. Here's to hoping he wins the lottery.
Second - It's not surprising that the house was vandalized after closing. Milwaukee has had a real problem with people stealing all the metal out of abandoned buildings to sell for scrap.
To cover the loan, Medellin sends a check each month to a local lender for $1,079 - more than his monthly take-home pay. He must dip into his small savings account or hit up his mother for cash to make up the difference.
Later:
Despite all this, Medellin said he is current on his mortgage - a fact confirmed by Central States...He said he will not consider walking away from the loan. Doing so, he fears, would label him a deadbeat and prevent him from achieving his dream of owning a house he would be proud to live in.
I guess the outcome of the court case is pending. Until then someone should take his checkbook away from him.
I do not understand why this guy is still paying the mortgage when the fraud was so blatant. Aren't there entire slime pits full of lawyers who would gladly take a case like this on spec?
Until this article appeared, who would have known about the case? After reading the article, do you really think Medellin would contact a lawyer on his own?
I'm interested in the article. My bet is that the publicity will help his lawyer negotiate an exit with no penalties.
FT Woods - yes, that is the issue. I do believe this man was completely innocent, because otherwise he wouldn't have taken the paperwork to his boss. Only a person with no clue as to what had transpired would have done that, because this is such a huge problem for a bank employee. It appears his livelihood is being held hostage by the mortgage company.
A man like this with a high credit score is a great target for con men.
This article clearly demonstrates how a large number of operators could create such a huge mess. I'm sure that there are scores and scores of people who don't have anyone to look after or advise them--the elderly, the mentally disabled or deficient, the drug-addicted, who were roped in to sign a bunch of documents. It's a scam, a scheme, calculated to take advantage of people who are barely able to manage. Combine that with house flippers and genuine economic distress across the entire nation, and you get a monetary, credit, housing, employment catastrophe.
Where was the FBI when this large-scale, easily-documented crime wave was going on? Even journalists can research this. A commenter above says that there has been a conviction. One conviction? Where was the comptroller of the currency? Where was the Securities and Trade Commission?
A large number of people ned to go to prison for this, and not the illiterate retards who sign (or not, as the Journal documented) stacks of legal papers that are incomprehensible to most borrowers.
The first step in detiorating UW standards is the changing your mindset from "is this a good risk?" to "will someone buy this?". With the disappearance of the scratch & dent buyers most bulk purchasers got smarter about kicking bad loans. An AVM or address verification would have red flagged this from the start.
I'd be interested to know the approximate percentage of real estate agents who are felons. I don't think there's any way to get that data because most state boards don't care to collect it. Is there a question on RE sales license applications about criminal background in most states?
For people reading this blog being so much smarter than the average bear, the article identifies that the guy already has a lawyer; so, why do ming nemo and yalt all suggest that the should get a lawyer. Are for everyone thinking this is a cherry case, have you considered that the courtroom gives natural advantages to individuals who speak well, and this guy can be tied in knots whenever he is forced to think and speak at the same time. Lastly, where is the deep pocket that you are going to get your money from? And don't you think your deep pocket will point fingers at some assetless wrongdoer, who will also spend less to defend themself?
The guy's lawyer, by cooperating with the paper appears to be up to her eyeballs in working for this guy, and I don't hear much in this discussion that sounds like how the system will make this come out right.
"After three times of changing what I typed,I will just say,all parties better be happy the DD guy was not related to me. "
I would agree with that, Cobradriver. I have a DD sister, and if these guys had dome that to her there is no law I wouldn't break to protect her. Skip the lawyers and go straight to the knee-cap breakers.
Jonathryn: the FBI was too busy helping to coordinate with the DEA to bust medical marijuana in Cali, non-violet drug dealers, and investigating <strike>vegans and environmentalists</strike> terrorists to bother with simple white collar crime.
Sigh, haloscan doesn't allow the "strike" tag? WTH?
AVM? Address verification? The loan application was "largely blank"; had this loan file hit an underwriting desk at a portfolio lender I'm guessing it would have been about a tenth of a second before a "WTF is this????" was heard through the office. I'm not sure anyone would have bothered with the AVM.
But this wasn't a portfolio lender--everybody involved (except the borrower) either was in on the scam or had a material incentive to look the other way. Even now, everyone has made money on the deal as long as Medellin keeps paying the note.
The ultimate bagholder here may be whoever writes the Central States fidelity bond. I've forwarded this article to some bond underwriters this morning--I don't know if any of them are on ths risk....
Sending the cops in to clean up the mess after the fraud has come to light isn't going to solve the broader problem. Law enforcement is supposed to be a backup plan; it's the lenders who need to be the primary defense against fraud. This loan needed to be stopped before it ever got originated.
I think Racer was right on target: there's a systemic problem here, and it's in the systemic separation of underwriting from participation in the risk. If the lenders have no incentive to write good risks, there's going to be a lot of fraud.
Thanks for posting this, Tanta. This is one of the few examples where a MSM outlet actually took some time to thoroughly investigate a mortgage-related story.
Of course, this is a very upsetting story. There is fraud and manipulation at just about every turn here; I think Yalt really got to the key take-away as far as what is broken within the mortgage industry: the systemic separation of risk participation. That, more than anything, created such lucrative opportunities for the fraudsters.
Yalt writes:
Sending the cops in to clean up the mess after the fraud has come to light isn't going to solve the broader problem. Law enforcement is supposed to be a backup plan; it's the lenders who need to be the primary defense against fraud. This loan needed to be stopped before it ever got originated.
My take is that the fraud was an ongoing concern for several years. It was impolitic for the FBI to actually lift a finger. For the FBI and other regulatory or law enforcement concerns to have looked the other way--just like the other actors in this fraud--makes them practically accomplices through inaction. Can you really seriously say that sending in the cops after the fact is a bad idea? What about after other felonies, like arson, rape, kidnapping, drug trafficking, child molestation, terrorism, murder? We shouldn't bother to investigate, indict, prosecute, and mete out punishment to people like that? Huh?
Can you really seriously say that sending in the cops after the fact is a bad idea?
What? I explicitly said I hoped we would see convictions.
What I also said is that the systemic solution is not police action; only the people involved in the transactions can put a stop to them. It's a bit like shoplifting; a retail store can whine about the inaction of the police when they aren't able to respond to the call in time to catch the thief, or they can tag their goods and maybe hire security, if necessary, and then rely on the police for those few cases that get through their own safeguards.
But never mind my actual point--what is it that makes you think the FBI has been inactive? There have been plenty of convictions--visit one of the mortgage fraud websites and you'll see news just about every day. And if you google "FBI" and "mortgage fraud" you'll find a ton of activity going to back to at least 2005.
Is it enough? Not nearly. Should or could they have done more? Probably. But to blame the FBI for a fraud epidemic when lenders were willing to write loans to developmentally disabled borrowers based on nearly blank applications? That's ridiculous.
Since when we start calling stupidity "learning disability"?
It is not disability. It is stupidity.
If a person signs the papers but cannot understand what's there - this person should be declared legally incapable, with the cosequences.
If a person signs the paper without reading them - this is stupidity, and person shall eat it now. I bet next time he WILL read the papers before signing them, together with a bunch "oh-I-didnt-read-the-loan-docs-please-let-me-out-of-the-loan" crowd.
...there's a systemic problem here, and it's in the systemic separation of underwriting from participation in the risk.
I agree. I'm still puzzled by the process in which this was enabled. Granted this loan was not purchased by a secondary investor but the originator thought it would.
..And why is racerx picking on the University of Wisconsin?
Sorry about that, I use UW as shorthand for underwriting.
RP writes:
How does a person determine who is a good mortgage lender?
My main criteria would be if you can walk out of the place understanding the deal and what your options are.
See if you can get questions answered clearly and promptly. It's not just that being friendly is a matter of good customer service (which after all is what the loan originator is really providing), it's that a failure to clearly and promptly answer questions is often an indication that they don't really understand the business.
I tend to prefer local or regional banks (as opposed to brokers) because they're more strictly regulated, they've usually been around a while and plan on staying around, and they have a loan portfolio so even if they end up selling your loan at least they should know what a good loan looks like. There are lots of exceptions, of course - there are good brokers and clueless banks.
Walk in to at least two places and ask to talk to someone about a mortgage. You'll be able to compare rates and (more importantly) how you get treated.
I don't understand all the antipathy to the borrower. He got screwed eight ways from Sunday and yet he is STILL doing the right and honourable thing--he is abiding by the terms of the contract he signed, regardless of whether he understood it or not. It's killing him, definitely financially and quite possibly the stress might literally kill him, but he is doing it. Whether he is doing this out of a sense of nobility or out of necessity (he is a bank teller, and a big financial blow like foreclosure will probably mean he loses his job) is moot. The point is, he's doing it. One hopes that eventually he will stand before a judge, and the fact that he did the right thing even in the face of massive fraud will probably save his bacon.
It isn't a crime to be ignorant, and it isn't a crime to be, as the borrower puts it, slow. It is a crime to forge signatures, it is a crime to misrepresent your income on a legal document, and it is a crime to swindle.
Get off your high horses and save your righteous wrath for the people who deserve it.
Kudos to the Journal Sentinel for digging into the details of this one.
Holy crap, was that a compliment to the MSM?
Toll Brothers Reports $93.7 Million Loss (Good morning all.)
- NY Times
Unbelievable. At least the home renter is actually current on the loan as it would probably impact his financial career. While I hope him well, I can only think of John Wayne's quote:
"Life is hard. It is even harder when you are stupid."
OT - The trickle of bad news is turning into a torrent. Choice Bloomberg headlinesas of now:
GM Will Close Four Truck Factories in Shift to Small Cars, May Drop Hummer...
ResCap to Sell Assets to GMAC, Cerberus to Bridge $1.4 Billion Funding Gap...
Lehman May Need to Raise Capital as Analysts Predict First Loss Since...
Bernanke Optimism on Growth Rebound, Inflation Dashed by Oil-Price...
Wachovia's Ouster of Thompson May Foretell More Losses...
Airlines Consider Treating Passengers `Like Freight' to Combat Fuel Surge...
Casino Bonds Crush Herbst, Harrah's as Apollo Suffers With Recession Debt..
Porsche Stock Falls as Credit Suisse Says Volkswagen Dispute Poses Risks...
hatip to Big Picture. I can't believe this isn't a joke.
In a sign of how difficult it is to sell new homes in Southern California right now, a San Diego developer is offering a "buy one, get one free" deal, pairing million-dollar homes with less expensive homes.
"We thought, 'Why does it just have to be on Pop Tarts and restaurants? Why not buy one home, get one free,'" Dawn Berry of Michael Crews Development told 10 News in San Diego.
"In the rarefied atmosphere that we had in this country, my dog could have gotten a mortgage. With a paw print, it might have gotten through."
bow wow
I wonder how many canines and felines actually did get loans.
If the place is truly as uninhabitable as the article claims, perhaps more than one type of fraud went on here... (I find it hard to believe that all of the damage and disrepair occurred AFTER closing.)
Fraud is like a bouquet of flowers, with each individual bloom expressing a new and different incarnation of the over-arching species. It is also notoriously difficult to prove and recover from!
"We thought, 'Why does it just have to be on Pop Tarts and restaurants?' Why not buy one home, get one free."
Umm, because Kellogg's won't hit me up for hundreds of dollars a month on maintenance and upkeep on my "free" Pop Parts?
And, while we're on the subject, how long do you think it'll be before the first title company representative mixes up the HUD-1's from the two properties at closing, and winds up giving away the million-dollar home with the purchase of the cheaper one?
Bad day for GM auto workers...
GM to Close Four Truck Plants, Shift Output to Cars (Update7) - Bloomberg.com
Wouldn't a better deal to move merchandise for the SD developer be to TAKE two homes off your hands if you buy one of theirs?
What the article forgot to mention was his loan received a AAA rating from S&P and Moody's.
I'm waiting for GM to start offering two cars for the price of one when they go bankrupt. "Buy are unmovable behemoth SUV and get a cavalier for free!"
They are going to d/c the hummer. "Get them now before they're gone forever!" Hallelujah.
No-doc loan, huh. Well, he should just let the lender take their precious house back. After finding a decent place to rent, of course.
In a sign of how difficult it is to sell new homes in Southern California right now, a San Diego developer is offering a "buy one, get one free" deal
This is actually a smart idea if the free home isn't part of the lien. The buyer can raise cash in an emergency by selling the second house or HELOC'ing it and use the money to float their mortgage for a while.
"What the article forgot to mention was his loan received a AAA rating from S&P and Moody's."
A lot of student loans are rated triple AAA because of the inability to discharge the debt in bankruptcy. I know a lot of students who have far from AAA job prospects. Watch this space in the future.
Free Hummers for everyone! SUVs as well!
I just listened to Bernanke. What a waste of time. A bit of a stooge. It's clear the FRB is way behind the hedge funds curve and they are becoming increasingly less relevant.
OT:
bernanke talking dollar up from barcelona.
soros testifying on oil speculation today.
coincidence? or maybe da gubbermint is attempting a pre-election crusade against crude oil?
To paraphrase Bernanke:
"We got this, yo!"
This borrower needs to stop making payments, retain a lawyer and sue everyone connected with this transaction. With these facts, decent counsel could negotiate a walk away with trade line deletion in his sleep.
"I'm not a bad guy"
Over the years, Long has been ticketed at least 18 times for traffic offenses, including once for driving 137 mph. He spent about 1 1/2 years in prison nearly a decade ago on a probation violation stemming from drug and gun charges. He is on probation until May 2009 on charges of fleeing police.
Enough said.
From Journal article... State officials said felony convictions do not necessarily prevent a person from receiving a broker's license.
Probably speed up the approval process - shows a level of moxie.
That paper did a nice job - it often does though. My in laws read the MJS - usually find a stack of them in the downstairs bathroom... I always ASSUMED they were for reading anyway.
BTW I get into that neighborhood also - LOL - there is a plant I call on not too far from those addresses, less than a half mile away, right off Teutonia. I'm becoming a connoisseur of beaten down industrial neighborhoods it appears. Note to self: must remember to include that on the resume.
The credit crisis is also revealing the dark underside of human's nature as a Social Species"; where social use to only have a warm-n-fuzzy connotation that we 'make friends', 'fall in love', and 'build bonds'.
Now we see unavoidable evidence that "Social Species" also means 'follows others instead of thinking 4 oneself', 'following the crowd', 'Go Along to Get Along', 'Gullibility to smooth-talkers', etc.
We just don't value critical thinking and independent thinking like we should.
It's worth reading, both for an understanding of how many parties need to be complicit for such a blatantly fraudulent transaction to occur...
Most important of all are the central bankers, the investment bankers, the politicians, the lobbyists and the fine folks on CNBC.
Sorry no one seems interested in Tanta's post.
So, unless I'm reading this wrong, we have a conspiracy to commit fraud against a developmentally disabled man and the MBS investors. Is that right?
The lender was certainly involved, just as much as the con man. The only correct outcome is for Medellin to get all of his money back, be discharged from the loan, relieved of homeownership, and let all the fraud conspirators fight among themselves to hold the bag.
Cocaine? Speeding? Guns? Burglary? Enh, victimless crimes.
...
But seriously, I keep arguing that everyone should get precisely what they signed up for. Admittedly, this looks like an exception.
I do not understand why this guy is still paying the mortgage when the fraud was so blatant. Aren't there entire slime pits full of lawyers who would gladly take a case like this on spec?
Interesting that Ben somehow now suggesting that there's a link between the sinking dollah and inflation. It was just last fall in front of congress that he testified (under oath) that a weakened dollah only affects consumers if they happen to be on travel to Europe. Liar or dolt?
Why the sudden abrupt change in tune? Did someone teach the Dr that globalization can have adverse effects? Hope based central banking.
It IS the Morality, Stupid! (That WILL take American economy DOWN to its knees).
And why wouldn't financial immorality florish during the Era of the Evildoers -- Greenspan, Bush and Bernanke, Debt Pushers all.
Jas
Stories of predatory lending have been coming out of that part of Milwaukee for 3 or 4 years now. The FBI has been investigating mortgage fraud for last 3 years, and several companies have been shut down as a result. One conviction and a bunch more cases pending.
Free Hummers for everyone! SUVs as well!
Totally off topic, but once, when we were talking cars at work, a co-worker actually said, "Every man loves a hummer." That was good for a five minute laugh fest.
On topic: I couldn't get more than halfway through the article before I started feeling too stabby to continue. Hopefully putting everyone's names in the paper will somehow help this come to a happier ending.
Two bit scammers - they need to aim higher - like this dude*.
*Warning - advertisement loads first.
The only correct outcome is for Medellin to get all of his money back, be discharged from the loan, relieved of homeownership, and let all the fraud conspirators fight among themselves to hold the bag.
Markel | 06.03.08 - 10:05 am | #
Could a conviction or two for fraud also be part of the deal, as long as we're wishing for a "correct outcome"? Or at least revocation of some licenses?
The "buyer" Pedro Medellin is a bank teller.
My guess is if he walks away from the home or lets it go into foreclosure, he also risks losing his job. He's screwed every which way. Here's to hoping he wins the lottery.
Two things -
If you think this mortgage broker was trouble, you aren't familiar with the "Body Snatchers" group. This article talks about the mortgage operation:
Mortgage broker faces parallel prosecutions - JSOnline
Homicide, racketeering, etc:
body snatchers - Proof and Hearsay
Second - It's not surprising that the house was vandalized after closing. Milwaukee has had a real problem with people stealing all the metal out of abandoned buildings to sell for scrap.
From the article:
To cover the loan, Medellin sends a check each month to a local lender for $1,079 - more than his monthly take-home pay. He must dip into his small savings account or hit up his mother for cash to make up the difference.
Later:
Despite all this, Medellin said he is current on his mortgage - a fact confirmed by Central States...He said he will not consider walking away from the loan. Doing so, he fears, would label him a deadbeat and prevent him from achieving his dream of owning a house he would be proud to live in.
I guess the outcome of the court case is pending. Until then someone should take his checkbook away from him.
"So, unless I'm reading this wrong, we have a conspiracy to commit fraud against a developmentally disabled man and the MBS investors. Is that right?"
After three times of changing what I typed,I will just say,all parties better be happy the DD guy was not related to me.
Chris
Nemo writes:
I do not understand why this guy is still paying the mortgage when the fraud was so blatant. Aren't there entire slime pits full of lawyers who would gladly take a case like this on spec?
Until this article appeared, who would have known about the case? After reading the article, do you really think Medellin would contact a lawyer on his own?
"Aren't there entire slime pits full of lawyers who would gladly take a case like this on spec?"
A friend of the parents who retired a few years ago takes cases like this just for fun. He has made more than one shyster miserable.
Chris
I'm interested in the article. My bet is that the publicity will help his lawyer negotiate an exit with no penalties.
FT Woods - yes, that is the issue. I do believe this man was completely innocent, because otherwise he wouldn't have taken the paperwork to his boss. Only a person with no clue as to what had transpired would have done that, because this is such a huge problem for a bank employee. It appears his livelihood is being held hostage by the mortgage company.
A man like this with a high credit score is a great target for con men.
Have a look at (and maybe listen to) Mr Randez Long, who's a "real estate investor".
This article clearly demonstrates how a large number of operators could create such a huge mess. I'm sure that there are scores and scores of people who don't have anyone to look after or advise them--the elderly, the mentally disabled or deficient, the drug-addicted, who were roped in to sign a bunch of documents. It's a scam, a scheme, calculated to take advantage of people who are barely able to manage. Combine that with house flippers and genuine economic distress across the entire nation, and you get a monetary, credit, housing, employment catastrophe.
Where was the FBI when this large-scale, easily-documented crime wave was going on? Even journalists can research this. A commenter above says that there has been a conviction. One conviction? Where was the comptroller of the currency? Where was the Securities and Trade Commission?
A large number of people ned to go to prison for this, and not the illiterate retards who sign (or not, as the Journal documented) stacks of legal papers that are incomprehensible to most borrowers.
The first step in detiorating UW standards is the changing your mindset from "is this a good risk?" to "will someone buy this?". With the disappearance of the scratch & dent buyers most bulk purchasers got smarter about kicking bad loans. An AVM or address verification would have red flagged this from the start.
I'd be interested to know the approximate percentage of real estate agents who are felons. I don't think there's any way to get that data because most state boards don't care to collect it. Is there a question on RE sales license applications about criminal background in most states?
For people reading this blog being so much smarter than the average bear, the article identifies that the guy already has a lawyer; so, why do ming nemo and yalt all suggest that the should get a lawyer. Are for everyone thinking this is a cherry case, have you considered that the courtroom gives natural advantages to individuals who speak well, and this guy can be tied in knots whenever he is forced to think and speak at the same time. Lastly, where is the deep pocket that you are going to get your money from? And don't you think your deep pocket will point fingers at some assetless wrongdoer, who will also spend less to defend themself?
The guy's lawyer, by cooperating with the paper appears to be up to her eyeballs in working for this guy, and I don't hear much in this discussion that sounds like how the system will make this come out right.
And why is racerx picking on the University of Wisconsin?
"After three times of changing what I typed,I will just say,all parties better be happy the DD guy was not related to me. "
I would agree with that, Cobradriver. I have a DD sister, and if these guys had dome that to her there is no law I wouldn't break to protect her. Skip the lawyers and go straight to the knee-cap breakers.
Jonathryn: the FBI was too busy helping to coordinate with the DEA to bust medical marijuana in Cali, non-violet drug dealers, and investigating <strike>vegans and environmentalists</strike> terrorists to bother with simple white collar crime.
Sigh, haloscan doesn't allow the "strike" tag? WTH?
AVM? Address verification? The loan application was "largely blank"; had this loan file hit an underwriting desk at a portfolio lender I'm guessing it would have been about a tenth of a second before a "WTF is this????" was heard through the office. I'm not sure anyone would have bothered with the AVM.
But this wasn't a portfolio lender--everybody involved (except the borrower) either was in on the scam or had a material incentive to look the other way. Even now, everyone has made money on the deal as long as Medellin keeps paying the note.
The ultimate bagholder here may be whoever writes the Central States fidelity bond. I've forwarded this article to some bond underwriters this morning--I don't know if any of them are on ths risk....
Sending the cops in to clean up the mess after the fraud has come to light isn't going to solve the broader problem. Law enforcement is supposed to be a backup plan; it's the lenders who need to be the primary defense against fraud. This loan needed to be stopped before it ever got originated.
I think Racer was right on target: there's a systemic problem here, and it's in the systemic separation of underwriting from participation in the risk. If the lenders have no incentive to write good risks, there's going to be a lot of fraud.
The first step in detiorating UW standards is the changing your mindset from "is this a good risk?" to "will someone buy this?".
Watch that first step, it's a doozy.
How does a person determine who is a good mortgage lender?
Thanks for posting this, Tanta. This is one of the few examples where a MSM outlet actually took some time to thoroughly investigate a mortgage-related story.
Of course, this is a very upsetting story. There is fraud and manipulation at just about every turn here; I think Yalt really got to the key take-away as far as what is broken within the mortgage industry: the systemic separation of risk participation. That, more than anything, created such lucrative opportunities for the fraudsters.
Yalt writes:
Sending the cops in to clean up the mess after the fraud has come to light isn't going to solve the broader problem. Law enforcement is supposed to be a backup plan; it's the lenders who need to be the primary defense against fraud. This loan needed to be stopped before it ever got originated.
My take is that the fraud was an ongoing concern for several years. It was impolitic for the FBI to actually lift a finger. For the FBI and other regulatory or law enforcement concerns to have looked the other way--just like the other actors in this fraud--makes them practically accomplices through inaction. Can you really seriously say that sending in the cops after the fact is a bad idea? What about after other felonies, like arson, rape, kidnapping, drug trafficking, child molestation, terrorism, murder? We shouldn't bother to investigate, indict, prosecute, and mete out punishment to people like that? Huh?
Can you really seriously say that sending in the cops after the fact is a bad idea?
What? I explicitly said I hoped we would see convictions.
What I also said is that the systemic solution is not police action; only the people involved in the transactions can put a stop to them. It's a bit like shoplifting; a retail store can whine about the inaction of the police when they aren't able to respond to the call in time to catch the thief, or they can tag their goods and maybe hire security, if necessary, and then rely on the police for those few cases that get through their own safeguards.
But never mind my actual point--what is it that makes you think the FBI has been inactive? There have been plenty of convictions--visit one of the mortgage fraud websites and you'll see news just about every day. And if you google "FBI" and "mortgage fraud" you'll find a ton of activity going to back to at least 2005.
Is it enough? Not nearly. Should or could they have done more? Probably. But to blame the FBI for a fraud epidemic when lenders were willing to write loans to developmentally disabled borrowers based on nearly blank applications? That's ridiculous.
gc writes:
And why is racerx picking on the University of Wisconsin?
gc | 06.03.08 - 11:02 am | #
"Because its such an easy target?" dryfly asks from the 'right' [western] side of the Mississippi River.
Since when we start calling stupidity "learning disability"?
It is not disability. It is stupidity.
If a person signs the papers but cannot understand what's there - this person should be declared legally incapable, with the cosequences.
If a person signs the paper without reading them - this is stupidity, and person shall eat it now. I bet next time he WILL read the papers before signing them, together with a bunch "oh-I-didnt-read-the-loan-docs-please-let-me-out-of-the-loan" crowd.
dryfly writes:
gc writes:
And why is racerx picking on the University of Wisconsin?
gc | 06.03.08 - 11:02 am | #
"Because its such an easy target?" dryfly asks from the 'right' [western] side of the Mississippi River.
We'll start taking you seriously when you stop being a golden gopher.
...there's a systemic problem here, and it's in the systemic separation of underwriting from participation in the risk.
I agree. I'm still puzzled by the process in which this was enabled. Granted this loan was not purchased by a secondary investor but the originator thought it would.
..And why is racerx picking on the University of Wisconsin?
Sorry about that, I use UW as shorthand for underwriting.
RP writes:
How does a person determine who is a good mortgage lender?
My main criteria would be if you can walk out of the place understanding the deal and what your options are.
See if you can get questions answered clearly and promptly. It's not just that being friendly is a matter of good customer service (which after all is what the loan originator is really providing), it's that a failure to clearly and promptly answer questions is often an indication that they don't really understand the business.
I tend to prefer local or regional banks (as opposed to brokers) because they're more strictly regulated, they've usually been around a while and plan on staying around, and they have a loan portfolio so even if they end up selling your loan at least they should know what a good loan looks like. There are lots of exceptions, of course - there are good brokers and clueless banks.
Walk in to at least two places and ask to talk to someone about a mortgage. You'll be able to compare rates and (more importantly) how you get treated.
I don't understand all the antipathy to the borrower. He got screwed eight ways from Sunday and yet he is STILL doing the right and honourable thing--he is abiding by the terms of the contract he signed, regardless of whether he understood it or not. It's killing him, definitely financially and quite possibly the stress might literally kill him, but he is doing it. Whether he is doing this out of a sense of nobility or out of necessity (he is a bank teller, and a big financial blow like foreclosure will probably mean he loses his job) is moot. The point is, he's doing it. One hopes that eventually he will stand before a judge, and the fact that he did the right thing even in the face of massive fraud will probably save his bacon.
It isn't a crime to be ignorant, and it isn't a crime to be, as the borrower puts it, slow. It is a crime to forge signatures, it is a crime to misrepresent your income on a legal document, and it is a crime to swindle.
Get off your high horses and save your righteous wrath for the people who deserve it.