Government Intensifies Mortgage Investigation

Federal agencies are intensifying a criminal investigation of the mortgage industry and focusing on whether some lenders turned a blind eye to inflated income figures provided by borrowers.

The Federal Bureau of Investigation and the criminal division of the Internal Revenue Service have formed a task force to examine mortgages that were made with little or no proof of the earnings or assets of borrowers, a government official who had been briefed on the matter said Sunday.

The group also includes federal prosecutors in New York, Los Angeles, Philadelphia, Dallas and Atlanta, said the official, who spoke on the condition that he not be identified.

The task force, which was established in January, stepped up its investigation in recent weeks as the financial industry disclosed billions of dollars in additional write-downs from bad mortgage investments. The latest inquiry is broader and deeper than a separate F.B.I. investigation of mortgage lenders that is also under way.

Read the whole story here.

Comments

[blogisti]

The subprime debacle is but another example of how money is transferred from the bottom of the social order to the top. The lower classes are used as cheap labor then barraged with thousands of ads telling them to spend and finally if they have anything left they are lured into buying houses and paying thousands a year. In the end they can't pay of course, and they are reminded coldly that is the reward for getting uppity. They are crushed yet again.
Of course, they should pull themselves up by their bootstraps right? Bullshit. This kind of mass abuse will, in the end, come back and bite the rich. Americans don't know history or have memory so I will just tell you what the inevitable result is, Revolution. Peaceful or violent, depending upon numerous variables at the time of eruption. When will this occur? Perhaps the next depression. It was in the last one that people began looking around for alternatives to capitalism. Lucky for the capitalist a good president saved another civil war. Is America going to be lucky next time?

[thegreatgiginthesky]

Is this the next enron dog and pony show?

[Rule Of Law]

For every Neo-con and Neo-Lib who wrote in to every article about the Sub-Prime Rip Off screaming that those greedy, stupid, self serving home buyers who got stuck deserve what they got; How you gonna explain this away? The mortgage lenders didn't do their due diligence, and in many cases, in fact led new home buyers down the garden path with out right lies about what was required to get a loan. Those new "creative lending instruments" that Greenspan demanded of the industry back in 2003, and the subsequent loosening (or outright suborning) of the lending laws have given us over 2 million foreclosures last year, and we are on track to beat that handily this year. And, Oh MY God, there are investigations! I agree with Patriot, that no big boys will ever do time for their crimes, That's not how the game is played in this great "free market" economy of ours. But at least a part of the truth is coming out, and before you donuts ever again blame this mess on average Americans trying to reach the dream of home ownership were all raised on, remember that this cascade of financial bull**** started right at the top and flowed down over all the rest of us.

[chinacatsunflower]

however, a lot of those people now facing foreclosure did lie about their income on their loan application. lying is lying, no matter if some sleazy loan officer told them it was ok to inflate their income to get the loan, it doesn't' make it so. by no means am i denying that people were misled or that the investors (lenders) aren't also to blame for pushing these ridiculous products, but if they lied on the loan application & signed a promissory note that was made based on that mis-information, in the end its really the fault of the borrower when they can't make their payments.

[HippieChick]

"a lot of those people now facing foreclosure did lie about their income"

The mortgage lenders created twisted terms and documents full of traps aimed specifically at the weaker participants in this economy - the "creative lending instruments" referred to by RuleOfLaw. Countrywide was certainly one of the worst, but I worked for a mortgage document preparation vendor that serviced several large lenders, and all were operating with the same types of twisted terms. I was horrified to see on a daily basis just how abusive lending practices were, and those of us handling the documents predicted years ago the outcome we are witnessing now. The "chickens came home to roost" alright...and have taken the world's economy down as a result. Those legislators who freed corporations to become economic vampires, as well as the corporate vampires that have caused so much damage, should be held accountable.

[Rule Of Law]

How great to hear from someone who has had an inside view of the problem! So often we just bounce 2nd hand info around, but you've verified what many others have told me off line. I wrote because it seems that there are always those who for some perverse reason need to blame poor and working class people for the problems that the system creates. Frankly, I'm tired of it. Did a few folks use the low rates and lack of enforcement to "cheat" their way into a house. Probably. But that doesn't change what you yourself have seen and the millions who are now losing their homes due to the predatory and illegal lending that was created right at the top.

We, as Americans, endure so much at the hands of our Corporate and Political oligarchy, that I just don't think it does us any good to pile on each other, when we should be standing shoulder to shoulder. Thanks so much for your input.

[WIpatriot]

Bet you a dollar no big boys get nailed.

[Novista]

I'm still wondering about that $51.1 Billion bailout to Countrywide last September.

Maybe Sen Schurmer is, too.

Not long after that, Countrywide had the buyout offer from Bank of America. I don't think that marriage made in Hell has been consummated yet.

[peaceandfreedom]

Let's just say that there are no virgins involved...