many borrowers submitted loan applications that overstated their financial condition, making it more likely that they won’t be able to afford even a modified loan. FirstFed figured that some borrowers had fudged their incomes and tried to protect itself with tighter credit standards. “But we were shocked by the magnitude of the lies,” Ms. Heimbuch says. “You expect a 20% fudge. You don’t expect 500%.” [emphasis added]
Really? And why not? When I hear the CEO of a bank specializing in option ARMs underwritten with stated income criteria say they’re surprised by the extent of fraud in their loan book — one that’s done this sort of lending for 20+ years, like FirstFed, no less — it underscores to me just how difficult it has been for all parties to come to terms with the scale of fraud perpetrated throughout the entire system.
The “good customer” : Housing Wire.
I was going to start out my comments to Paul Jackson’s article in Housing Wire by apologizing for being angry, but I won’t. I’m mad when I read things like this. A couple of reasons:
1. It shows the world what a bunch of crooks there are that have been running many of the mortgage companies that made this mess.
2. It shows how common sense totally left the system and was replaced by greed. Greed on the part of Wall Street, greed on the part of the mortgage companies, greed on the part of the lenders and greed on the part of the customers. What did this guy think taking out that size of a mortgage? How could the lender sleep at night doing something like that?
Let’s just leave at this…..
I’ll sleep just fine with the loans that I write, and I’ll sleep better when more of those types of purveyors of fraud are out of our business!
Now I’ll get off my soapbox for tonight!
Tom Vanderwell
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