With the rising default rates in FHA loans, the Housing and Urban Development Department, or HUD to the rest of us, is searching out fraud with some of it’s lenders.
15 banks have been subpoenaed to see if fraud has been committed in their lending practices, reminiscent of the mortgage fraud that permeated 2000–2006.
The banks being subpoenaed are:
- D and R Mortgage Corp. of Farmington, Michigan;
- Webster Bank of Cheshire, Connecticut;
- Mac-Clair Mortgage Corporation of Flint, Michigan;
- Americare Investment Group of Arlington, Texas;
- 1st Advantage Mortgage of Lombard, Illinois;
- American Sterling Bank of Independence, Missouri;
- Sterling National Mortgage Co.
- First Tennessee Bank N.A. of Memphis, Tennessee;
- Alethes LLC in Lakeway, Texas;
- Security Atlantic Mortgage Co. of Edison, New Jersey;
- Pine State Mortgage Corp. of Atlanta;
- Birmingham Bancorp Mortgage Corp. of West Bloomfield, Michigan;
- Alacrity Financial Services LLC of Southlake, Texas;
- Assurity Financial Services LLC of Englewood, Colorado.
This looks like a warning shot across the bow of lenders nationwide.
HUD officials, who oversee the FHA mortgage insurance program, said they haven’t found any evidence of wrongdoing at the lenders, and were singling out those with the highest default rates.
The investigation is “focusing on many of the worst performers in the FHA portfolio,” FHA Commissioner David Stevens said on a conference call with reporters in Washington.
“We aren’t making any accusations at this time, we have no evidence of wrongdoing, but we will aggressively pursue any indicators of fraud,” HUD Inspector General Kenneth Donohue said. “The fact that there are 15 institutions on this list today does not in any way suggest that there aren’t other institutions that we will not look at later. via Bloomberg
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I'm sure you can find some evidence of "skating around the rules" among these lenders, but where is the accountability for stated income mortgages for FICO scores of 600 or more and other "no doc" practices that went on? Lending and real estate in general became so big, so fast that new and more shoddy loans were being created all the time. There's dirt to find among the lenders but the problem was truly systemic.
Take a good look at the people involved up there. These were low income to middle income loans. Targeted at people that could not afford to buy in the first place. Thats putting it kindly. The truth is the red-lining and all the other borrower profiling they stopped looking for. NOT BECAUSE IT WAS UNFAIR. Because they wanted to bilk people with as many mortgage backed securities as they could sell. So they lent to anyone with two legs and could work a pencil.
This ain't no big suprise. It's just a way to get themselves out of trouble by pointing their stupid finger at something stupid. See they dont' want to look like crooks. They also don't want to be seen as stupid.
So now with all of their stupidity. The countries that were scammed with the mortgage backed securitys that were backed by nothing. Said screw this we aren't buying. Now all of their people are unemployed can't pay taxes. So they have to raise the price of gas to bring in revenue. Which the stupid don't understand they do of course. Digging another big fat ass hole for themselves. Its really hysterical to watch.
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