Mortgage Backed (in)Securities. 19y old sells nearly a billion$ of MBS

bubblesmoney

purch wrote: »

No.

This stuff, and other pieces I've read about firms such as Countrywide and Metropolitan , it beggars belief that these frauds were allowed to happen in such huge $$ amounts.

allowed to happen because
1. they were incompetent
2. they were complicit and had a finger in every pie making money
3. all of the above

bubblesmoney

Fraud was rampant. We found investors that were not re-pulling credit reports, so we would change a 500 fico to a 700 fico, a person in foreclosure and make It look like they were never late, fake w2s, pay stubs, bank statements, verification of deposits, none of which was being re-verified. These investors, who were securitizing these assets as AAA rated were not even verifying anything in the files? I am sure that their investors were [FONT=TimesNewRoman,Italic]assured everything from correspondents was being audited. Every time a lender caught a file we would “fire” the employee produce termination[/FONT]
paperwork to the investor, and re-hire the employee under a different alias. Over the course of the 3 years, over $810,000,000 in mortgage backed securities originated from my companies. That’s a 24 year old selling a billion dollars in bad mbs securities which by 2008 were in default with out doubt.

http://www.triduanum.com/memo.pdf

The very top ranks of the corporate ladders knew what was going on. “When a pool of loans gets audited they will audit less then 10% of that bulk pool, and if they find a loan with misreps we simply replace it with a loan from another pool and put the bad loan back in to another pool and hope it wont get audited”2002 Vice President of Collateral – Ameriquest Mortgage in Orange, CA.

currently I would speculate that over 40% of mortgage securitizations today in Q1 2009 have some form of misrepresentation on them, whether detected or undetected.

i will be surprised if this chap who now wants to spill the beans to the authorities ever makes it alive to the authorities. wont be surprised if the bigger fish take him out before he gets to spill the beans.

ps: the denninger website has also been mentioning this fraud in MBS where apparently one of the big banks packaged their mortgages as securities and sold them on and immediately started short selling the same securities once they had passed the bad apple along to someone they conned