The FBI has been warning of an "epidemic" of mortgage fraud since September 2004.

geoffky

I REALLY THINK THE UK BANKS KNEW WHAT WAS GOING ON HERE.


80% of mortage fraud is from banksters, not homeowners



- The FBI has been warning of an "epidemic" of mortgage fraud since September 2004. It also reports that lenders initiated 80% of these frauds. When the person that controls a seemingly legitimate business or government agency uses it as a "weapon" to defraud we categorize it as a "control fraud." Financial control frauds' "weapon of choice" is accounting. Control frauds cause greater financial losses than all other forms of property crime -- combined. . .

The FBI correctly identified the epidemic of mortgage control fraud at such an early point that the financial crisis could have been averted had the Bush administration acted with even minimal competence. . .

Fraud is the principal credit risk of nonprime mortgage lending. It is impossible to detect fraud without reviewing a sample of the loan files. Paper loan files are bulky, so they are photographed and the images are stored on computer tapes. Unfortunately, "most investors" (the large commercial and investment banks that purchased nonprime loans and pooled them to create financial derivatives) did not review the loan files before purchasing nonprime loans and did not even require the lender to provide loan tapes. . .

Worse, the S&P document demonstrates that the investment and commercial banks that purchased nonprime loans, pooled them to create financial derivatives, and sold them to others engaged in the same willful blindness. They did not review samples of loan files because doing so would have exposed the toxic nature of the assets they were buying and selling. The entire business was premised on a massive lie -- that fraudulent, toxic nonprime mortgage loans were virtually risk-free. . .

What commentators have missed is that the big banks often do not have the vital nonprime loan files now. That means that neither they nor the Treasury know their asset quality. It also means that Geithner's "stress tests" can't "test" assets when they don't have the essential information to "stress." . . .

socrates

So this article is saying that it is NOT BTL LL's who are to blame.

That will change several people's lives on here - what can they talk about now?

Kez100

Of course they knew. The whole country knew years ago about liar loans - well those of us that watched Watchdog!

Guy_Montag

I seem to remember someone at HPC got in touch with the Serious Fraud Office back in 2005/2006(??) about widespread, individual, mortgage fraud. The SFO replied that their remit only covered frauds in excess of £1M (or something similar).

The HPC bod got no further when he suggested that while individual frauds were below the threshold the overall amount would be well in excess of £1M. Obviously the SFO didn't see this logic.

I fear it may have been one of the green crayon brigade for whom spelling is something that happens to someone else, which never helps credability.

(Checks carefully for typos).