The banking authorities were shocked – shocked – to discover last week that an awful lot of mortgage paper in this country is not quite in order… appears to contain, er, irregularities. . .
- How 2 Civilian Sleuths Brought Foreclosure Problems To Light
- The Foreclosure Fraud Crisis,
- Officials in 50 states launch foreclosure probe,
- The Daily Show-foreclosure-crisis
What’s going on here?
There is no rational way to discuss one aspect or another of the hydra facing us. Yes, fraudulent affidavits were used to keep foreclosure mills running. Why not? The mortgages were frauds at inception – deceitful loans made to deceitful buyers. The fraudulent mortgages were quickly passed on to the slice and dice middle-men who knew what they were cutting up was fraudulent but didn’t care as long as they could pass it on – nudge, nudge, wink, wink – as MBS given fraudulently high ratings by firms that were no better than houses of prostitution. A “service” industry grew up that was designed to keep all the players fat, dumb and happy until they were starved, very unhappy, but still greedy, still dumb. (Source)
Want more details? Read this: Nine stories the press is underreporting — fraud, fraud and more fraud
As one commentator summed up the situation: (Source)
You need to be careful of these stories that portray the gang-rape of Americans by the bankers as purely a foreclosure fraud issue. It isn’t. Amy has missed the real heart of the story. The core of the crime is that the mortgages backing the mortgage-backed securities were resold over and over, as many as 20 times, reaping billions in instant profits. But there is no way the sellers of those mortgage-backed securities could make good on the over-subscription, so the only way for the scheme to work is for the housing market to be crashed, and all those mortgages foreclosed as quickly as possible to erase the paper trail that could land the fraudsters in jail!
This scam is not unlike the one portrayed in the Mel Brooks movie “The Producers” in which the producers intentionally choose what they think is a terrible script, “Springtime for Hitler”, which they hope will close the first night. The producers then over-subscribe the investment in the play by 1000%. 100% is spent producing the show, with the other 900% to be pocketed after the show fails and the investors, unaware of the extra shares in the show, accept their losses and leave.
If the over-selling of mortgages into mortgage backed securities was intentional, and that appears to be the case since so many companies were doing it, then the same financial institutions that profited from the selling of mortgage backed securities intended to crash the housing market to cover their escape. They took mortgages and sold them as mortgage-back securities over and over again, then foreclosed the properties to end their obligations to the over-subscribed mortgage backed securities. This is why nobody cared whether home buyers were actually qualified for the mortgages, as the mortgages were never intended to be repaid, only foreclosed on!
Meanwhile, Wall Street gives points the finger to homeowners:
With fraud absolutely everywhere in our banking system, like some advanced metastatic cancer, financial metabolism comes to a sickening stop. Nobody can buy or sell property. Nobody can trust any American financial institution. Money can’t circulate. Nobody will be able to get any money. It won’t be long before that translates into nobody getting any food. (Source)
In the US, housing is central to the economy, to the financial system, and to the society. It has failed. And with it the consumer economy has lost its main support, so, too, have employment, taxation, the social contract and governance. (Source)
Rollover, a 1981 movie paints the picture:
Repeat after me: It’s only a movie, it’s only a movie.