There has been plenty of talk about “predatory lending,” but “predatory borrowing” may have been the bigger problem. As much as 70 percent of recent early payment defaults had fraudulent misrepresentations on their original loan applications, according to one recent study. The research was done by BasePoint Analytics, which helps banks and lenders identify fraudulent transactions; the study looked at more than three million loans from 1997 to 2006, with a majority from 2005 to 2006. Applications with misrepresentations were also five times as likely to go into default.http://www.nytimes.com/2008/01/13/busin ... ref=slogin
Many of the frauds were simple rather than ingenious. In some cases, borrowers who were asked to state their incomes just lied, sometimes reporting five times actual income; other borrowers falsified income documents by using computers. Too often, mortgage originators and middlemen looked the other way rather than slowing down the process or insisting on adequate documentation of income and assets. As long as housing prices kept rising, it didn’t seem to matter.
In other words, many of the people now losing their homes committed fraud. And when a mortgage goes into default in its first year, the chance is high that there was fraud in the initial application, especially because unemployment in general has been low during the last two years.
FBI Will Not Go After Borrowers Who Lied on Mortgage Applicationshttp://www.freerepublic.com/focus/f-news/1974459/posts
So there you have it. Even though it's a federal crime to lie on your loan application, which is a fine of $10,000 and up to 99 years in jail, the FBI is not going to investigate or prosecute any liars. None at all.
In the end, this part of the story will be forgotten. The populist and liberal views of the crises are what will transform the new policies of the nation, as can be seen with all the new proposed Fed regulation over the banks. It's all bullshit. Let me know what you think. Sorry this post was so long.
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