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A Step In The Right Direction

Well, finally we're seeing what I would consider "progress" in the collapse of the subprime mortgage front. And while it might be happening all across the nation (and I certainly hope it is), I'm proud to say that the first I've heard of it has been right here in New Hampshire.

State investigators are taking a very, very close look at The Mortgage Specialists, Inc., after numerous allegations that the company had done a few shady things.

State regulators and investigators claim an inspection showed that The Mortgage Specialists:

--Represented photocopied customer signatures as originals;

--Removed a signature from a loan file;

--Altered broker fee agreements after the consumer signed the documents;

--Failed to keep customer application files under lock as required by the Gramm-Leach-Bliley Act;

--Fraudulently issued a 40-year adjustable rate mortgage with a balloon payment at the end of 30 years to a customer who had applied for a fixed-rate, 30-year mortgage.

You know, the kinds of things that a lot of people have been saying must have been going on since the subprime mortgage crisis began.

Oh, I'm sure that a lot of people let themselves get sweet-talked into mortgages they couldn't afford, and didn't bother to read the reams and reams of paperwork they put their signature on. (The environmentalists must weep at the thought of all the trees who gave their lives for no real purpose.) But a lot of others said that they didn't sign the agreements that had their signatures, that the ones they did sign said something different, and that the documents were altered after they signed. I'd be willing to bet that at least some of them are actually telling the truth.

The subprime mortgage crisis was caused, at the core, by a lot of people getting mortgages they couldn't afford and, quite frankly, should not have been given. We need to look at just how those loans were issued and, when necessary, bring criminal charges against those who broke the laws.

We also need to take a hard look at the circumstances behind a lot of those loans that weren't the result of fraud. There was a huge push to get more loans out there, and a lot of loans were issued under very stupid circumstances -- no income verification loans come to mind first.

There is no "right" to a mortgage. There is no "right" to own a home. Not when you can't afford it.


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Comments (2)

Many here have said that wh... (Below threshold)
Oyster:

Many here have said that where fraud is found, the perpetrators should be prosecuted. I'm sure there are several cases of fraud. What concerns me is the way government usually handles things. They'll find cases of fraud, assume many more where that's not the case and they'll enact sweeping relief even for cases of simple ignorance. They won't be doing these people any favors. Nor the companies who actually followed rules and get the shaft.

What else is in the works by Congressional Democrats though is part of their energy plan. They're looking at prompting more mortgage companies to start offering Location Efficient Mortgages (LEM). Back in the late nineties they started Energy Efficient Mortgages (EEM) but have yet, to my knowledge, collected any data on default rates for them. I searched and searched for data on EEMs, and all I've found is where they've been requested to do so.

The idea behind the EEMs is that it's supposed, if a homeowner uses less energy, they have more to spend on a mortgage. The idea behind LEMs is that if they don't drive more they have more to spend on mortgages in urban areas where homes are generally more expensive.

I read a study on this where a couple researchers from Resources for the Future questioned the rationale of LEMs.

"The subprime mortgage c... (Below threshold)
Les Nessman:

"The subprime mortgage crisis was caused, at the core, by a lot of people getting mortgages they couldn't afford and, quite frankly, should not have been given.
...
There is no "right" to a mortgage. There is no "right" to own a home. Not when you can't afford it."


You racist.

/obvious sarc, yet precisely the mentality that got us in this situation.




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