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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Allen GREENspan
The Roots of the Mortgage Crisis
December 12, 2007; Page A19
On Aug. 9, 2007, and the days immediately following, financial markets in much of the world seized up. Virtually overnight the seemingly insatiable desire for financial risk came to an abrupt halt as the price of risk unexpectedly surged. Interest rates on a wide range of asset classes, especially interbank lending, asset-backed commercial paper and junk bonds, rose sharply relative to riskless U.S. Treasury securities. Over the past five years, risk had become increasingly underpriced as market euphoria, fostered by an unprecedented global growth rate, gained cumulative traction.

The crisis was thus an accident waiting to happen. If it had not been triggered by the mispricing of securitized subprime mortgages, it would have been produced by eruptions in some other market. As I have noted elsewhere, history has not dealt kindly with protracted periods of low risk premiums.

The root of the current crisis, as I see it, lies back in the aftermath of the Cold War, when the economic ruin of the Soviet Bloc was exposed with the fall of the Berlin Wall. Following these world-shaking events, market capitalism quietly, but rapidly, displaced much of the discredited central planning that was so prevalent in the Third World.

A large segment of the erstwhile Third World, especially China, replicated the successful economic export-oriented model of the so-called Asian Tigers: Fairly well educated, low-cost workforces were joined with developed-world technology and protected by an increasing rule of law, to unleash explosive economic growth. Since 2000, the real GDP growth of the developing world has been more than double that of the developed world.

The surge in competitive, low-priced exports from developing countries, especially those to Europe and the U.S., flattened labor compensation in developed countries, and reduced the rate of inflation expectations throughout the world, including those inflation expectations embedded in global long-term interest rates.

In addition, there has been a pronounced fall in global real interest rates since the early 1990s, which, of necessity, indicated that global saving intentions chronically had exceeded intentions to invest. In the developing world, consumption evidently could not keep up with the surge of income and, as a consequence, the savings rate of the developed world soared from 24% of nominal GDP in 1999 to 33% in 2006, far outstripping its investment rate.

Equity premiums and real-estate capitalization rates were inevitably arbitraged lower by the fall in global long-term interest rates. Asset prices accordingly moved dramatically higher. Not only did global share prices recover from the dot-com crash, they moved ever upward.

The value of equities traded on the world's major stock exchanges has risen to more than $50 trillion, double what it was in 2002. Sharply rising home prices erupted into major housing bubbles world-wide, Japan and Germany (for differing reasons) being the only principal exceptions. The Economist's surveys document the remarkable convergence of more than 20 individual nations' house price rises during the past decade. U.S. price gains, at their peak, were no more than average.

After more than a half-century observing numerous price bubbles evolve and deflate, I have reluctantly concluded that bubbles cannot be safely defused by monetary policy or other policy initiatives before the speculative fever breaks on its own. There was clearly little the world's central banks could do to temper this most recent surge in human euphoria, in some ways reminiscent of the Dutch Tulip craze of the 17th century and South Sea Bubble of the 18th century.

I do not doubt that a low U.S. federal-funds rate in response to the dot-com crash, and especially the 1% rate set in mid-2003 to counter potential deflation, lowered interest rates on adjustable-rate mortgages (ARMs) and may have contributed to the rise in U.S. home prices. In my judgment, however, the impact on demand for homes financed with ARMs was not major.

Demand in those days was driven by the expectation of rising prices -- the dynamic that fuels most asset-price bubbles. If low adjustable-rate financing had not been available, most of the demand would have been financed with fixed rate, long-term mortgages. In fact, home prices continued to rise for two years subsequent to the peak of ARM originations (seasonally adjusted).

I and my colleagues at the Fed believed that the potential threat of corrosive deflation in 2003 was real, even though deflation was not thought to be the most likely projection. We will never know whether the temporary 1% federal-funds rate fended off a deflationary crisis, potentially much more daunting than the current one. But I did fret that maintaining rates too low for too long was problematic. The failure of either the growth of the monetary base, or of M2, to exceed 5% while the fed-funds rate was 1% assuaged my concern that we had added inflationary tinder to the economy.

In mid-2004, as the economy firmed, the Federal Reserve started to reverse the easy monetary policy. I had expected, as a bonus, a consequent increase in long-term interest rates, which might have helped to dampen the then mounting U.S. housing price surge. It did not happen. We had presumed long-term rates, including mortgage rates, would rise, as had been the case at the beginnings of five previous monetary policy tightening episodes, dating back to 1980. But after an initial surge in the spring of 2004, long-term rates fell back and, despite progressive Federal Reserve tightening through 2005, long-term rates barely moved.

In retrospect, global economic forces, which have been building for decades, appear to have gained effective control of the pricing of longer debt maturities. Simple correlations between short- and long-term interest rates in the U.S. remain significant, but have been declining for over a half-century. Asset prices more generally are gradually being decoupled from short-term interest rates.

Arbitragable assets -- equities, bonds and real estate, and the financial assets engendered by their intermediation -- now swamp the resources of central banks. The market value of global long-term securities is approaching $100 trillion. Carry trade and foreign exchange markets have become huge.

The depth of these markets became readily apparent in March 2004, when Japanese monetary authorities abruptly ceased intervention in support of the U.S. dollar after accumulating more than $150 billion of foreign exchange in the preceding three months. Beyond a few days of gyrations following the halt in purchases, nothing of lasting significance appears to have happened. Even the then seemingly massive Japanese purchases of foreign exchange barely budged the prices of the vast global pool of tradable securities.

In theory, central banks can expand their balance sheets without limit. In practice, they are constrained by the potential inflationary impact of their actions. The ability of central banks and their governments to join with the International Monetary Fund in broad-based currency stabilization is arguably long since gone. More generally, global forces, combined with lower international trade barriers, have diminished the scope of national governments to affect the paths of their economies.

Although central banks appear to have lost control of longer term interest rates, they continue to be dominant in the markets for assets with shorter maturities, where money and near monies are created. Thus central banks retain their ability to contain pressures on the prices of goods and services, that is, on the conventional measures of inflation.

The current credit crisis will come to an end when the overhang of inventories of newly built homes is largely liquidated, and home price deflation comes to an end. That will stabilize the now-uncertain value of the home equity that acts as a buffer for all home mortgages, but most importantly for those held as collateral for residential mortgage-backed securities. Very large losses will, no doubt, be taken as a consequence of the crisis. But after a period of protracted adjustment, the U.S. economy, and the world economy more generally, will be able to get back to business.
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Nice try Al.  But it was just plain simple fraud on the part of brokers and appraisers.  It's that simple.

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I think he's worried about a law suit #1.

#2 I think he's seen enough, & heard enough criticism that he feels as if he "must" inform the nation that this wasn't his fault.

#3 I think he's in denial about his GARGANTEOUS stupidity.

#4 I think he's trying to pass the buck on someonelse, during some other time.

~~~Hey! Why not? If ya can get away with it, and not "HAVE" to accept responsibility for something gone wrong, then why the heck not try it??????


That's the problem with America today.
People unwilling to accept the consequences of their actions.
&  People unwilling to try to fix what their stupid azzes did.

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Lowering interest rates does not raise property values.

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Thursday, December 13, 2007

Guilty Plea in Missouri Mortgage Fraud Case

Leslie Saunders II, 34, Kansas City, Missouri, pled guilty to conspiracy to commit money laundering stemming from a $14 million mortgage fraud that had focused on low income borrowers.  Saunders had been involved in the same mortgage fraud scheme that triggered a federal indictment against six others in early November, 2007. He had not been identified in the indictment and was charged separately.

According to his plea, Saunders admitted that he conspired with others to get mortgage loans fraudulently by submitting inflated appraisals of the properties and other false information to lenders. Specifically, Saunders participated in a fraud involving a residence in the 12400 block of East 58th Street, Kansas City, Missouri. A loan on the property was gained by using an appraisal that bore the forged signature of a supervisory appraiser, federal officials said.

Saunders caused more than $198,000 from the loan to be transferred to an account belonging to Scott Alexander, a Merriam man indicted Nov. 7. Federal officials also said Saunders stipulated that he participated in illegal acts that led to actual losses of $2.5 million.

Saunders faces as much as 20 years in prison and $500,000 in fines at his sentencing set for February 11, 2008.

Others indicted were Wildor Washington Jr., Leawood, Missouri, Maurice Ragland, Lee’s Summit, Missouri, Victoria Bennett, Leawood, Kara E. Robinson-Franks, Grandview, Missouri, and Terrence Cole, Kansas City, Missouri.

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Joe B

     You don't mean that do you? Lower interest rates, and the low-cost access to capital is PRECISELY what raises prices. Whether it is in the housing sector, consumer goods, business investments, etc. When you have sustained low access to capital, people spend. Businesses use the lower cost of capital to try to achieve a return on capital greater than their cost of capital. People use low mortgage rates to trade-up to a bigger house, get out of a rental property, or buy an investment property!

     When all of these people out there buying houses, home prices go up...please check your basic supply and demand economics textbook if you don't believe me.

     Please don't try to confuse people. They come here for advice, and we have an obligation to provide good advice. You may have inadvertently confused them!

     Folks, when interest rates are low, people buy houses. When there are more people out there buying houses, the price of those houses go up!

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Brokers will try anything to avoid responsibility.

Supply and demand do not drive the real estate market.  The real estate market is controlled by the real estate industry.  There has always been an oversupply of housing.

Another fact is that mortgage interest rates are not tied to the prime rate, they're tied to the prime rate.

Fact, I have an MBA in Econ. and have been in the business.  This boom and bust was all fraud and Greenspan is not in the least at fault.

Simple root cause analysis proves the truth and the root cause of the problem is the same as it was in the late 80's, appraisals inflated as ordered by the real estate agents.  That's why the licensing program was instituted.

Don't try to match wits with the big boys.  You're a babe in the woods and 3 miles behind the train.  Talk to the FBI.  Blame has been fixed.
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Joe B

     OK, you have your opinions, so how about backing up your comments then. How about you put that MBA to good use and prove for us lesser mortals how supply and demand don't apply to real estate. How about you explain why cheaper cost of capital does not lead to investment. How about you demonstrate that there has always been an oversupply of housing. How about you explain how the real estate market is controlled by the real estate industry. How about you explain how "mortgage interest rates are not tied to the prime rate, they're tied to the prime rate." HUH? 

     I don't appreciate your patronizing outlook frankly. If you are the same Stephen as quoted here, "What I read on this board is a lot of people bitching and moaning because they bought a home on credit they couldn't afford and now are facing the repurcussions (sic).  Of course it's the American way to sue others due to your own ignorance." you came here with a chip on your shoulder, and are demonstrating arrogance and ignorance; both of which serve you poorly on this board. Many of us here are far smarter and far more experienced than you may believe.

     I also suggest you go back and re-visit your root cause analysis, or prove it here! Are you suggesting that the late 80's S & L crisis was related to appraisals? How about showing all of us that root cause analysis for the 80's and today!

     Incidentally, I know what you MEANT to say about interest rates, and invite you to go back and re-read my post. I think you will see lower cost of capital, and how low interest rates lead to people looking to buy more homes. No where in my post did I suggest that Greenspan lowered mortgage interest rates, now did I? I know the interest rate that Greenspan lowered again and again. I also know how the overnight lending rate influences other rates, and why he played with the fed funds rate, instead of playing with the money supply.

     So while I may not have an MBA from whatever online school from which you got yours, I am neither a babe in the woods, nor three miles behind the train. And before you offend nearly everyone else on this board, you should be careful about that chip on your shoulder! Many here are far smarter than you seem to think we are!!

     You should be ashamed of yourself first by your misleading people, and second by not only attacking my posts, but by attacking me. You are out of line, and grossly misinformed. You are welcome to disagree with me, but you don't need to attack me to do so. Many people here on this board are capable of honest discourse, and even disagree on intellectual topics without attacking each other personally. Clearly you are not. You know nothing about me, my experiences, my background, why I post on this board, or why I so freely give my opinions to help others on this board. You however, have given us all a keen insight as to why you are here Steve-O!!

     I, and may others, look forward to your subsequent posts attempting to prove your earlier comments.


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Greenspan did keep interest rates artificially low while pushing "weirdloans". He is at fault in part because he kept the rates artificially low for so long, too long, long enough to allow the crooks to build their gigantic "scam packages" which did include everybody from the brokers and appraisers on up to the top and to Wall Street. He may be an indirect cause; think of Greenspan more as an enabler rather than a conman per se.

The Fed should be interested in preventing bubbles, but it seems that they are really better at producing bubbles. Boom and bust until the empire falls will be America's fate as long as we have the Fed.

Pick your index, pick your rate. I was thinking that LIBOR was the most commonly used, but who knows with all the manipulations.

An adjustable rate mortgage (ARM) is a mortgage loan where the interest rate on the note is periodically adjusted based on a variety of indexes.[1]. Among the most common indexes are the rates on 1-year constant-maturity Treasury (CMT) securities, the Cost of Funds Index (COFI), and the London Interbank Offered Rate (LIBOR). A few lenders use their own cost of funds as an index, rather than using other indexes. This is done to ensure a steady margin for the lender, whose own cost of funding will usually be related to the index. Consequently, payments made by the borrower may change over time with the changing interest rate (alternatively, the term of the loan may change).

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I don't have to prove anything to you unless you're a member of Congress.

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Joe B
Yeah, somehow I think you would cower in front of them as well!

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I was hired to work for Miami-Dade County in November 2006. I purchased a home in Miami for $200,000 in January of 2007. 

During the mortgage discussions with Countrywide I had stated my desire for a fixed rate loan. I also stated I wanted nothing to do with variable rate mortgages.

I was told I had great credit and I would be put in the best mortgage the broker could get for me.

The mortgage was for $160,000 with a home equity loan for $40,000 to arrive at the $200,000 home price.

In April 2007, due to a crumbling Miami economy caused by a crumbling Miami real estate market, Miam-Dade County starting making budget cuts. My position was eliminated, I lost my job due in April of 2007.

A condo that I had purchased in January 2007 for $200,000, I was now unable to sell for $130,000 in April.

I believe I was caught in a real estate scam that was known by the government, banks and mortgage companies. These people allowed it to go on knowing that some types of mortgages being sold had 50% foreclosure rates. 

Mortgages were sold to people that did not have to prove they were employed or prove what kind of assets they stated they had.

I was not made aware of these facts. The government, banks and mortgage companies all were aware of these facts. My only interpetation can be, they let it go on because they wanted the Madoff-like Ponzi Scheme to continue.  They were raking in the bucks and were looking the other way.

You ruined the lives of hard working people by your greed. Some of you have the nerve to blame it on the small time mortgage buyer....stating we had the free will not to buy these mortgages.....unfortunately we did not have access to the information the government, banks and mortgage companies had.

Best of luck to all of you. I hope you get over your addiction to money.
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See to see who's going to prison in droves:  Brokers primarily, realtors, appraisers, title agents, even mortgage processors.

One of the first things Obama did was initiate a nationwide mortgage fraud task force and now a Financial Crisis Investigative Committee has been established.

The FBI was given $532 million of TARP funds to ramp up mortgage fraud investigations and prosecutions.

Read the declarations of Mark Bomchill (Ameriquest) and Christopher Warren (Countrywide) to fully understand how mortgage brokers broke the back of this country.

I was an appraiser and I can assure you that mortgage brokers think "Unregulated" means no rules, and will do ANYTHING to sell a loan to a bank.

New regulations are being put in place frequently, such as HVCC (the Home Valuation Code of Conduct) to stop brokers and appraisers from inflating property values.

Now, FHA is dropping mortgage brokers entirely.
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tired and tattered

They are only getting the small guys in the grand scheme of things. They are only trying to let us think they are doing something. Yet the big companies keep on taking homes. Wells Fargo, Country Wide, HomEq, Homecomings, EMC, and the like continue to this day to keep stealing homes. (Just to name a few) Citygroup contributed a large amount of money to the Obama campaign. No one will bite the hand that feed them. It is all a cover for show. Nothing more.

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    Here's a true story from Tampa, Fl to show what's going on and how to
possibly deal with the problem.
    Mr Feaster bought a home in 2004 for $115,000. He put down $23,000.
In 2008 he lost his job, and the foreclosure took place on May 6, 2009.
Wells Fargo was the servicer and Mr. Feaster did not even contest it. Wells
Fargo was not the owner of the Note or the Mortgage but because the
defendant didn't fight it, they bought it on the court house steps for $100.
    On June 19,2009, Wells Fargo sold the house to an investor for $28,500!
Suppose Mr. Feaster had gotten his note reduced 50% to $45,000. Wells
Fargo would have realized more money by modifying the loan than they got
by selling it to an investor!
    As Donald Trump has pointed out on his web site, this scenario is happening all across the country! His solution to the problem is to contact
the banks REO department and try to buy these houses after the foreclosure!
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