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Ash4781

Mortgages Taken Out By Fraudsters

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http://www.bbc.co.uk/blogs/thereporters/ro...s_poison_1.html

Is there reason to believe that many of the securities manufactured out of subprime loans are worse than ordure?

I'm afraid so. Here are just three reasons:

1) As the FT pointed out this morning, many of the underlying subprime loans were taken out by fraudsters and will therefore never be repaid in full.

Peston (BBC)

http://www.ft.com/cms/s/8922f3e2-45dc-11dc...rime+fraudsters

US seeks culprits for subprime

By Brooke Masters and Saskia Scholtes

Published: August 8 2007 20:00 | Last updated: August 8 2007 20:00

At the height of the US subprime lending boom, taking out a mortgage could not have been easier. Low credit score and history of bankruptcy? No problem. Income too low to qualify for a mortgage? Inflate what you earn on a “stated income” loan. Nervous that your lender might check up on your “stated income”? Visit www.verifyemployment.net.

For a $55 fee, the operators of this small California company will help you get a loan by employing you as an “independent contractor”. They provide payslips as “proof” of income and, for an additional $25, they also man the telephones to give you a glowing reference should your lender need it.

:rolleyes:

It's a subscription article. THis coming after the UK BTL's who let out properties on residential mortgages.

It stinks!

Edited by Ash4781

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Capitalism at its best :lol:

agreed!

those who are overly greedy and/or fraudulent get punished.

..yes a lot of people got sucked in by slick media practice...but I'm afraid that's tough.

This is a necessary cleansing exercise.People may not like the remedy,but it s effective.

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it's all going to come out in the wash and it ain't gonna be pretty.

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agreed!

those who are overly greedy and/or fraudulent get punished.

..yes a lot of people got sucked in by slick media practice...but I'm afraid that's tough.

This is a necessary cleansing exercise.People may not like the remedy,but it s effective.

Yup -- Mortgage Fraud is HUGE in the UK - it is our "Sub-prime" poison... --- and endemic. Read this page --- http://www.housepricecrash.co.uk/forum/ind...52880&st=15 --- and follow all the links.

Edited by eric pebble

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The FT article has been posted on the Naked Capitalism blog if anyone wants to read it.

example:

Most fraud in subprime lending appears to have been so-called “fraud for purchase” – lying about income so as to win a mortgage approval. In reviewing a sample of “no doc” loans that relied on borrowers’ statements, the Mortgage Asset Research Institute recently found that almost all would-be home owners had exaggerated their income, with almost 60 per cent inflating it by more than 50 per cent.

These fraudulent borrowers are often difficult to uncover, says Ms Gelernt, because they often stretch to meet their minimum payments for some time before they eventually default. The time lag between initial fraud and default also makes a conviction hard to obtain, she adds, while mortgage investors also have little chance of recovering their losses from individual borrowers in these circumstances.

Full Article

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this is very wrong, the 'blame' does not lie with individual borrowers, I can see where this is headed and it's not pleasant <_<

where is it headed CL? - banks going under

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I saw an article on a private investors web site.

this was 2003 and it claimed that 1/3rd of all mortgages taken out at that time were doing so with no income verification.

It also stated that 1/5th of all outstanding mortgage debt was income non veirified.

I approached the FSA with this and essentially begged that they investigate and stop this process, I then insisted.

Their reply then was that there was no problem.

I approached the serious fraud squad, with my theory being that even the most conservative estimate would put mortgage fraud as orders of magnitude above all previous frauds added together...

their action was of course breath taking as they moved swiftly to...

Well okay, the Police told be to bugger of and that it wasn't in the countries best interest to investigate.

Quality Stuff...

Amarican Sub Prime? their multiples barely tickled 5 times salary.

England, some areas its thrashed past 10 times the slightly unbelievable official average wage...

Our woes? makes US subprime look like a tickle.

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where is it headed CL? - banks going under

Sorry, I mean in relation to the 'blame game'. In the words of Cramer "They have no idea, no idea"... Whilst the masters of the financial universe were playing hot potato with billions of unwanted junk, at the coal face regional reps of the UK sub prime lenders were/are under pressure from 'up the line' to get in volume by any methods. Underwriting as I knew it has not existed for some time. Getting someone into a mortgage if they've had/still got; 10K worth of CCJs, undischarged bankrupt, defaults, self employed...everything has been possible at a rate. So why should the little guy get spanked if the banks have created such an atmosphere? It worries me that individuals will be punished when the real crimes are much further up the chain.

There are a select few individuals that have made a billion or two out of sub prime, possibly a hundred or so who have made 100mil. Then there are thousands who have made themselves multi millionaires, they knew how it was going to unfold, even planned for it.

The masters will pick one or two to hang out to dry, think Drexell Lambert, the media will then focus on that and naughty borrowers, the real issues are far too complicated for most to take on board, meanwhile every man in the street will feel the impact from this fall out <_<

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