FBI Investigating 14 Subprime Companies? Smokescreen or Crackdown? : The Real Estate Bloggers

FBI Investigating 14 Subprime Companies? Smokescreen or Crackdown?

January 30th, 2008 • Related • Filed Under

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The FBI is investigating 14 unnamed companies who have been involved in the subprime lending industry. They are searching for fraudulent behavior in the packaging and selling of loans and the subsequent bundling for investment purposes.

We all know that there was a great deal of fraud that was in the system at the end of the housing boom that was tacitly approved of by the mortgage companies in the search for volume. At the time many were begging for the government to investigate and slow down the fraud, but it seemed like it was beyond the ability of the government to cope with it.

Now that the system is self correcting the FBI is looking into it, a day late and a dollar short.

Agency officials did not identify the companies under investigation but said the wide-ranging probe, which began in spring 2007, involves companies across the industry, from mortgage lenders to financial firms that bundle home loans into securities sold to investors.
The FBI is working in conjunction with the Securities and Exchange Commission, Neil Power, chief of the FBI’s economic crimes unit in Washington, said during a briefing with reporters. via Fox News

 More from the Financial Times.

In a report out last year, the FBI classified mortgage fraud into two broad areas. The first is fraud for property, involving “minor misrepresentations” by a mortgage applicant for the purpose of buying a property as a primary residence. The second category – of most concern to the FBI and the mortgage industry – is “fraud for profit”. This often involves multiple loans and “elaborate schemes perpetrated to gain illicit proceeds from property sales”, the FBI report said.

It said such schemes usually involved “gross misrepresentations concerning appraisals and loan documents”. The most common form of mortgage fraud is “illegal property flipping”, which involves false appraisals and other fraudulent loan documents.

Some of the SEC’s investigations are related to potential insider-trading, focusing on wider-than-expected writedowns unveiled recently by some large Wall Street banks. The way credit rating agencies rated the securities into which mortgages were repackaged is part of the effort. John Nester, SEC spokesman, said: “We’ve drawn no conclusions in terms of whether securities laws were violated.” via the Financial Times

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There Are 5 Responses So Far. »

  1. Comment by Raj C. on 30 January 2008:

    Why would we need the FBI to investigate? With Bush’s responsibility, accountability, you wouldn’t think something like this could ever happen…

  2. Comment by Daniel on 31 January 2008:

    I’ve published this story for my german readers on http://www.online-kredite.com/blog/news/us-hypothekenkrise-beschaftigt-jetzt-auch-das-fbi.html then because this problem has its origin in the USA it concerns people and companies around the world.

  3. Comment by Vanessa on 18 February 2008:

    2008
    Re: Tom and Vanessa L. Buddhasiri; John John (J.) Buddhasiri

    There are countless property crooks who caused the subprime fiasco. The enclosed is one such case.

    Tom and Vanessa L. Buddhasiri are husband and wife of 2341 W. 229th Place, Torrance, CA 90501-5237, Los Angeles County. Their son’s name is John John (J.) Buddhasiri. They all lived together at this address since 1995, when they purchased this house for $260,000.

    As shown in the public property title report, they took out a total of $600,000 in 2005 and 2006. Shortly thereafter, they stopped making mortgage payments. It was a well-planned and staged process. Many months later, the bank finally foreclosed the property on 07/19/2007. It had been easy for the Buddhasiris to refinance mortgage since they had connections in the mortgage business.

    When the real estate market eventually bottoms out, the buddhasiri’s will use the “free” money they ripped off from the banks to buy another home at the rock bottom price. They will then repeat the same mortgage game again as the property value rises.

    The Buddhasiri’s are career property criminals. Before Torrance, they ripped off the banks in Redondo Beach, before Redondo Beach, in Carson. Notice Tom Buddhasiri’s (the father) name is not on the Torrance property loan refinance history.

    It was only after the bank foreclosed their Torrance house that the bank realized how the Buddasiri’s operated to refinance on inflated appraisal values.

    Before each refinance, the Buddhasiri’s would inflate the appraised value with beautiful landscape, new paint, new windows, new French doors…, etc. Their son-in-law learned to do construction in the military. Together, the family beautified their house for the refinance appraisals.

    They did their last refinancing on 05/11/2006 when the real estate market was at its peak. They knew they would not be making loan payments for very long and began planning to move. They took time to remove the beautiful landscape, including trees and plants out of the property, and anything of value that could be removed. The front and back yards were left with raw dirt and holes where the trees and plants were. There were huge indentations in the dirt from large planter pots which the contents were never planted and intended to be removed. An added goodbye message to the bank was the deep scraping marks in the living room wooden floor.

    The Buddhasiri’s will make their next free money fortune on the next real estate market cycle. Stay tuned and watch them screw the credit and banking systems again. Waiting out 7 years to clear their credit history is not so bad of a deal for gaining hundreds of thousands of dollars.

    Concerned Citizens and Tax Payers

  4. Comment by Brittany Palimino on 7 April 2008:

    This is incredible information, where did you guys receive it?, and also how did you guys find out all of this information about them?

  5. Comment by JOHN J BUDDHASIRI on 10 May 2008:

    HELLO,TO ALL THE FOLKS THAT IS TRYING TO SLANDER MY FAMILY’S NAME AND IMAGE. WHOEVER WROTE THOSE HORRIBLE NASTY COMMENTS IS DEEPLY DISTURBED MENTALLY! YOUR FACTS ARE A COMPLETELY FALSE, WHOEVER’S GIVING YOU THE DETAILS OF YOUR STORY IS TAKING YOU FOR A SICK RIDE! FIRST OF ALL WE WERE SUCKERED INTO A SUB-PRIME LOAN FROM A BOGUS COMPANY, WHICH DOESN’T EVEN EXIST ANYMORE. YES WE HAVE PROPERTY THROUGHOUT SO. BAY, THAT IS TOTALLY LEGIT. HOW DARE YOU MAKE ACCUSATIONS AND COMMENTS REFERRING TO US GOOD HARDWORKING PEOPLE AS CRIMINALS! YOUR SO DECEITFUL THAT YOU DON’T EVEN HAVE THE GUTS OR THE BACKBONE TO PUT YOUR NAME, AS I DO MINE! JUST REMEMBER THIS? THE LORD JESUS CHRIST IS THE LORD AND THE ONLY ONE TO PASS JUDGEMENT ON ANYONE. WE ARE THE ONES THAT WERE TAKEN ADVANTAGE OF BY THAT BOGUS MORTGAGE COMPANY, WHO IN TURN IS NOW BEING INVESTIGATED BY THE F.B.I. AND FOR YOUR INFO OUR HOME IN REDONDO WAS PAID OFF AND SOLD BY US! THESE PROPERTIES WERE PAID BY US THROUGH THE HARD WORK OF BLOOD AND SWEAT, TO LIVE THE AMERICAN DREAM! IT IS VERY UPSETTING TO HEAR OR READ SOMETHING SO SLANDEROUS ABOUT US! WHEN YOU WHO WROTE THIS DON’T EVEN KNOW US! MAKE TIME IN YOUR SCHEDULE TO SET AN APPOINTMENT WITH ME TO DISCUSS MY FAMILY’S STORY, SO THAT I CAN LOOK YOU IN THE FACE EYE TO EYE. AND FILL YOUR GREAT CONCERNS WITH THE TRUTH OF MY FAMILY! BY THE WAY WHICH I AM TRULY PROUD TO BE A MEMBER OF!!!! AS I READ YOUR STORY, I LAUGH AND REMAIN CALM AND SEE HOW MUCH OF A STORY YOU CAN CONJURE UP, WHEN ITS ALL ASSUMPTION AND THE BOTTOM LINE IS ITS A BUNCH OF LIES! THE LORD IS WATCHING YOU SO KEEP IT UP. YOU NEED NOT ANSWER TO ME BUT ONE DAY YOU WILL ANSWER TO HIM! GO SLANDER SOMEONE ELSE’S NAME. BECAUSE THE TRUTH OF THE MATTER IS OUR FAMILY IS FINE!! AND OUR DIGNITY AND RESPECT FOR LOVE,LIFE,LIVING AND MOST OF ALL GOD, WILL NOT FALTER!!!! HAVE A BEAUTIFUL DAY!!!!!
    MR. JOHN J. BUDDHASIRI

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