Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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Warren E. Buffett

To the Shareholders of Berkshire Hathaway Inc.:
Our gain in net worth during 2007 was $12.3 billion, which increased the per-share book value of
both our Class A and Class B stock by 11%. Over the last 43 years (that is, since present management took
over) book value has grown from $19 to $78,008, a rate of 21.1% compounded annually.*
Overall, our 76 operating businesses did well last year. The few that had problems were primarily
those linked to housing, among them our brick, carpet and real estate brokerage operations. Their setbacks
are minor and temporary. Our competitive position in these businesses remains strong, and we have firstclass
CEOs who run them right, in good times or bad.
Some major financial institutions have, however, experienced staggering problems because they
engaged in the “weakened lending practices” I described in last year’s letter. John Stumpf, CEO of Wells
Fargo, aptly dissected the recent behavior of many lenders: “It is interesting that the industry has invented
new ways to lose money when the old ways seemed to work just fine.”
You may recall a 2003 Silicon Valley bumper sticker that implored, “Please, God, Just One More
Bubble.” Unfortunately, this wish was promptly granted, as just about all Americans came to believe that
house prices would forever rise. That conviction made a borrower’s income and cash equity seem
unimportant to lenders, who shoveled out money, confident that HPA – house price appreciation – would
cure all problems. Today, our country is experiencing widespread pain because of that erroneous belief.
As house prices fall, a huge amount of financial folly is being exposed. You only learn who has been
swimming naked when the tide goes out – and what we are witnessing at some of our largest financial
institutions is an ugly sight.

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