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Tracking Fraud, Liars Loans and the Housing Market Darkside


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We know it goes on, the dodgy deals, loose lending practices and outright breaking of laws, at the top of a bubble it always gets worse. Post examples here.

 

Liar's loans'

 

Over the past decade, the mortgage industry has turned itself into a very big tent.

 

People who might have had trouble borrowing found it much easier to get a loan. Lenders devised new types of loans and eased standards to bring buyers into the market.

 

As a result, homeownership reached record levels. But as interest rates rise and the market cools, it becomes clear many people were put into punishing loans they couldn't afford.

 

That is particularly evident in the enormous growth of what the industry politely calls "stated income" loans — also known as "liar's loans."

 

Stated loans — whose borrowers list income and assets without having to prove anything — were meant for solidly self-employed buyers. Then they "morphed into a huge monster," says Connie Wilson of Interthinx, a maker of mortgage fraud detection software. "Now we have stated income programs for everyone."

 

The loans have become a huge piece of the subprime market. Last year, nearly half of subprimes required little or no documentation of income, a share that has nearly tripled since the start of 2000, according to First American LoanPerformance.

 

But in its love of these quickly processed loans, the industry overlooked the pitfalls.

 

A study by the Mortgage Asset Research Institute Inc. of 100 stated loan applications last year found almost 60% exaggerated incomes by at least half. A study by BasePoint Analytics found that 70% of mortgage defaults were linked to "a significant misrepresentation on the original loan application."

 

Mortgage fraud is most visible in the spectacular cases that draw prosecutorial muscle, involving fake buyers, property flipping, vast amounts of money. But that overlooks smaller-scale foul play now costing many subprime borrowers their homes, experts say.

 

Often it's not considered fraud. It's pushing the envelope. It's a dollop of distortion topped with a measure of creative exaggeration. It's doing whatever it takes.

 

"There's a huge amount of broker fraud out there," says Kerstin Arusha of the Fair Housing Law Project in San Jose, Cal., which represents low-income homeowners stuck in such loans. "When you look at the applications of many of these borrowers, I see it reported that they make $10,000 or $12,000 a month, sometimes $20,000 a month. They always have $100,000 in personal assets ... You can see that these things are created by the broker."

 

http://www.usatoday.com/money/perfi/housin...tgagewoes_N.htm

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When the market keeps rising, few care very much.

 

 

Butr once the market turns, and many are nursing losses, many will care. There will be a search for scapegoats. The main villains are greedy people. But those who encouraged greed (and there are so many VI's), and those who benefitted from it, and performed fraudulent actions, will be villified.

 

Would you want to be one of the main presenters of one of those old property porn shows in 1 to 2 years time? No wonder the inteilligent Sarah Beaney has turned bearish. And even Kirstie is making bearish noises, i heard.

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Those naughty BTL boys and girls.

 

"The taxman is preparing to clamp down on tens of thousands of buy-to-let property owners who may not have paid enough tax, The Times has learnt.

 

HM Revenue & Customs has identified 80,000 landlords who may have claimed too much tax relief or have failed to declare the amount of rent they receive from the property, or a capital gain made on the sale of the property.

 

The Revenue can claw back unpaid tax from as far back as six years, which means that some of those who have bought properties to rent or are letting their own home could face tax bills so large that they may have to sell their property."

 

--------------------------

 

Landlords in Britain face a capital gains tax bill of more than £4.1 billion, with landlords facing an average bill of £48,600 based on 2006 housing prices, according to figures from Landlord Mortgages, a specialist buy-to-let mortgage broker.

 

The average house price in 2006 according to Halifax, Britain’s largest mortgage lender, was £179,601.

 

A spokeswoman for the Revenue said: “We met representatives of the accountancy profession this week for their views on how we can best inform landlords of the obligation to report their property income to us.”

 

http://property.timesonline.co.uk/tol/life...icle1851885.ece

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Fionnuala Earley, chief economist at Nationwide building society, said:

“In our view, the talk of rates climbing to 6 per cent are overblown and if implemented in the current climate, could be damaging to housing market stability. With the market already showing signs of cooling, too sharp a rate hike could undermine market confidence and dry demand up swiftly. On top of this it could also lead to widespread payment difficulties, which could precipitate price falls.”

@: http://business.timesonline.co.uk/tol/busi...icle1854838.ece

=

 

She is worried, and instead of baldly admitting her fears, puts "talk is overblown" in front of her honest remarks.

 

Net net, she is saying "Prices will fall" as rates rise

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They will get the money out of you one way or another.

 

-------------------------------

 

Research by Moneyfacts.co.uk has found two-thirds of prime lenders will employ some form of higher lending charge (HLC)

 

Julia Harris, mortgage analyst at Moneyfacts.co.uk, commented: "As more people are struggling to afford the substantial deposits required to take that first step on property ladder, it is commonplace for the mortgage advance to represent at least 90 per cent of the property value for many first-time buyers.

 

"Those borrowing over 90 per cent loan-to-value (LTV) will find that many lenders will hit them with yet another fee – a higher lending charge. Research by moneyfacts.co.uk has found 66 per cent of all prime lenders will charge an additional fee for high LTV mortgages, typically ranging between 7 per cent and 8 per cent, but it can reach as high as 12 per cent in several cases. While a fee may only apply to LTVs in excess of, say 90 per cent, most lenders will back charge this to a lower LTV of 75 per cent to 80 per cent.

 

"Being subjected to a HLC can prove a very costly addition to the fees already associated with house buying, and can more than wipe out the initial savings made on what was a competitive rate. But don’t be lulled into thinking that, by choosing a lender which does not charge a HLC you will not be faced with higher charges, as it may mean you pay a higher interest rate instead.

 

http://www.mfgonline.co.uk/story.asp?story...sectioncode=110

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  • 5 months later...

The US is looking to bring in legislation to stop a repeat of the sub-prime fiasco. The VI's are not happy. I can't see this happening in the UK, after all, we are still in denial, no sub-prime, no problem with self-cert fraud and loose lending according to UK VI's.

 

US backs home lending clampdown

 

The US House of Representatives has voted to regulate mortgage brokers in an attempt to prevent a recurrence of the current housing market crisis.

 

The bill calls for the licensing of mortgage brokers and loan officers and also bans predatory lending practices.

 

Lenders would have to take steps to ensure than prospective borrowers would be able to repay their loans.

 

There would also be a ban on incentive schemes that encouraged brokers to steer borrowers into unsuitable loans.

 

Sue your bank

 

The bill also contains provisions that would allow borrowers to sue the bank that issued the mortgage, even if they sold it on to bondholders, if the bank had not exercised 'due diligence' in checking that the loans were made fairly.

 

This provision is fiercely opposed by the mortgage industry, which argues it would kill the $6 trillion mortgage bond market, and make it more difficult for poor people to get mortgages.

 

"What we have today is a bill that cannot undo what happened, but makes it much less likely it will happen in the future," said Congressman Barney Frank, chairman of the House Financial Services Committee.

 

http://news.bbc.co.uk/1/hi/business/7097714.stm

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  • 2 months later...

CBS video from 60 minutes on scams used in America

 

House Of Cards

Steve Kroft reports on how the U.S. sub-prime mortgage meltdown, in which risky loans drove a housing boom that went bust, is now roiling capital markets

http://www.cbsnews.com/sections/i_video/ma...tml?id=3756665n

 

(More than 100% loan - "the banks were paying them to borrow money"):

 

...

 

"Matt and Stephanie Valdez say they knew exactly what they were doing when they bought this small two bedroom house for $355,000."

....They cannot refinance because the value of the house fell below the existing mortgage. They say they can afford the higher payments but see no point in making them.

 

Matt: The value of the house keeps going down and the payments keep going up. Where's the logic in that?Stephanie: Why make a $3200 a month payment on a 1200 square foot home? It makes no sense.

 

Steve Kroft: But that's what you agreed to do when you bought the house.

 

Stephanie: Fine if the value was going up. The value is going down.

 

Steve Kroft: You are saying essentially you are going to stop making payments.

 

Stephanie: The only advice we've gotten so far is to walk away.

 

60 Minutes Legitimizes Walking Away

 

What 60 minutes described was a Beautiful Model For Fraud. That model is now imploding as all fraudulent schemes eventually do. And for those on the fence, 60 Minutes may just have legitimized it walking away.

 

The LA Times is writing A tipping point? "Foreclose me ... I'll save money"

 

A homeowner who can't sell his house tells the L.A.Times, "Foreclose me. ... I'll live in the house for free for 12 months, and I'll save my money and I'll move on."

 

/see: http://www.housepricecrash.co.uk/forum/ind...showtopic=67064

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FBI investigates sub-prime crisis.

 

Fourteen companies, including some of the world's largest banks, are being investigated over possible accounting fraud, improperly securing loans and insider trading during the sub-prime mortgage scandal.

 

The FBI said yesterday that it had opened criminal investigations into improper lending in the American housing market.

 

Neil Power, head of the FBI's economic crimes unit, told journalists that the investigation includes the companies that securitised the loans and investment banks that bought those products, as well as the developers and sub-prime lenders.

 

"We're looking at the accounting fraud that goes through the securitisation of these loans," said Power.

 

The FBI did not name the companies it is investigating.

 

Several of the world's largest banks separately revealed yesterday that they are cooperating with official investigations. Bear Stearns, Goldman Sachs and Morgan Stanley all announced, via official filings to the US Securities and Exchange Commission, that government investigators have asked for information about their sub-prime lending practices.

 

According to Reuters, Swiss bank UBS – which today unveiled new sub-prime losses – is also being investigated by the FBI.

 

http://www.guardian.co.uk/business/2008/ja...ed=networkfront

 

In the UK, Darling wants to introduce a secrecy law to protect the banks. :lol:

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  • 2 weeks later...

You have to doubt whether reducing IR's will make any difference to the UK housing market. Assuming the banks are now getting tougher on self-cert, and loose lending will no longer be available, it will be interesting to see what holds prices up.

 

Certainly more tales of fraud are emerging every day.

 

“Endemic” mortgage fraud on new homes has triggered a wave of repossessions and forced a widespread crackdown by regulatory authorities.

 

Initiatives to address lenders’ concerns that residential mortgage fraud is on the rise are either under way or will be launched by the Council of Mortgage Lenders, Financial Services Authority – the City watchdog – the Royal Institution of Chartered Surveyors and police forces around the country.

 

These are aimed at restoring confidence in the new-build property market as fears grow that lenders are suffering large losses on the back of fraudulently obtained mortgages.

 

It is feared that this type of mortgage fraud will compound already increasing home repossessions. The CML said Friday that repossessions rose to an eight-year high of 27,100 last year, from 22,400 in 2006.

 

“In areas where there has been oversupply of city-centre flats, this kind of fraud has been endemic,” said Matthew Wyles, group executive director of Nationwide.

 

http://www.ft.com/cms/s/0/a28a8930-d687-11...?nclick_check=1

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FSA warn New-build property scam worse than feared.

 

==============

 

The new-build property fraud carried out by criminal gangs is more serious than originally feared, the regulator admitted today, with more than 200 cases already under investigation and more appearing every day.

 

The scams appeared to be run by ‘organised rings, using mortgage and property fraud to make significant profits', FSA crime director Philip Robinson told a Council of Mortgage Lender’s fraud seminar.

 

'There seem to be a lot of criminals who have realised that mortgage fraud allows them not only to wash their ill-gotten gains, but make a profit in the process,' Robinson said.

 

The average loss on each property is estimated to be around £45,000. Accomplices can include brokers, solicitors, valuers and other professionals in the property market. Robinson warned that these were often hardened criminals involved in other criminal activities, included drugs or people-smuggling.

 

http://www.citywire.co.uk/News/NewsArticle...sionID%3d101089

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FSA warn New-build property scam worse than feared.

The new-build property fraud carried out by criminal gangs is more serious than originally feared, the regulator admitted today, with more than 200 cases already under investigation and more appearing every day.

 

The scams appeared to be run by ‘organised rings, using mortgage and property fraud to make significant profits', FSA crime director Philip Robinson told a Council of Mortgage Lender’s fraud seminar.

 

It is surprising and not surprising at the same time.

It is obvious criminals would try scams here, and surprising that banks would not make greater

efforts to stop them

 

TRULY, Lending was undisciplined and "out-of-control" -- in both the US AND THE UK !

 

Where was the FSA during this time???

 

I was busy writing warnings about fraud and scams on SP, and HPC... and these guys were

asleep at their desks! Shameful !

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  • 1 year later...

Shame that this thread died a death, but it was so right about what was happening and the end result of it all. Worth bringing back to life if only to remind those who think the worst is over and that we can go back to the good old days of the recent fraudulent past, that it can't happening without the banks returning to the bad habits that got us here.

 

13 May 2009

 

A startling fact about mortgage lending was highlighted by the Financial Services Authority (FSA) this week.

 

At a conference on the future of the industry, a senior FSA official pointed out that by 2007, at the height of the lending boom, 45% of all mortgages were being granted without the lenders checking if the borrower's stated income was correct.

 

It is now clear that the FSA has this sort of practice very much in its sights.

 

"We have found substantive evidence of irresponsible lending and inadequate affordability assessment," said Jon Pain, a managing director at the FSA.

 

"We will ask whether we should change our rules to require income verification for all mortgages, with lenders required to verify the plausibility and authenticity of the documentation by the customer before an offer is made," he added.

 

Irresponsible

 

Most people will be surprised that lenders had got into the habit of lending billions of pounds to people without, apparently, making basic checks on their ability to repay.

 

http://news.bbc.co.uk/1/hi/business/8047383.stm

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Another reminder of banking's recent glorious history.

 

2002, FSA warns HBOS about the bank's business model.

http://news.bbc.co.uk/1/hi/business/7885059.stm

 

29 October, 2003, Mortgage customers 'urged to lie'

http://news.bbc.co.uk/1/hi/business/3222053.stm

 

29.10.03, The Money Programme uncovers massive mortgage fraud.

http://www.bbc.co.uk/pressoffice/pressrele..._mortgage.shtml

 

Wednesday, 11 February, 2004, Self-cert mortgages could skew market.

http://news.bbc.co.uk/1/hi/business/3478635.stm

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And under the heading of "help for first time buyers" Lloyds (state/taxpayer owned Lloyds/HBOS) may be about to go back in with a loose lending loan, as long as you can get your parents/grandparents or friends to act as a guarantee - what a joke! Just more dodgy dealing from the banks. Here's the answer for all first time buyers, prices have to fall to level at which you can afford it without crippling yourself in debt - simple. Long way to go to get there and remove all the excesses of the loose lending years, despite the best efforts of the Government and their banking friends to defy the financial reality of the situation.

 

Lloyds TSB's new first-time buyer mortgage could mark the end of the problems that have been strangling the housing market.

 

The Lend a Hand mortgage is designed to help first-time buyers onto the property ladder. Since the onset of the credit crunch there has been a scarcity of mortgage products available to those with small deposits and those that are available have been priced at a premium.

 

This has prevented many would-be first-time buyers from buying their first home, which in turn has magnified the downturn in the housing market.

 

Lloyds TSB's Lend a Hand mortgage has a rate of 4.39%, fixed for three years. There is a £995 arrangement fee and the deal is available for loans up to 95% of the property's value.

 

But while a first-time buyer only needs to put down a 5% deposit, his or her parents, grandparents or friends, must set a further 20% of the property's value against the loan.

 

This money will be held in a savings account which will pay a fixed rate of 3.5% for three and a half years. No money can be taken out of the account until the borrower has built up a 10% equity stake in the property.

 

A legal charge is held against this savings account which effectively reduces the risk to Lloyds TSB because in the event of the property being repossessed, the bank's exposure to that property would be just 75% of the original value rather than 95%.

 

http://money.uk.msn.com/mortgages/mortgage...1&GT1=63258

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And under the heading of "help for first time buyers" Lloyds (state/taxpayer owned Lloyds/HBOS) may be about to go back in with a loose lending loan, as long as you can get your parents/grandparents or friends to act as a guarantee - what a joke! Just more dodgy dealing from the banks. Here's the answer for all first time buyers, prices have to fall to level at which you can afford it without crippling yourself in debt - simple. Long way to go to get there and remove all the excesses of the loose lending years, despite the best efforts of the Government and their banking friends to defy the financial reality of the situation.

 

Why would anybody take this offer up? Interest rate on mortgage 4.39%, interest rate on savings account 3.5%, giving a loss of 0.89% per year and God knows what the difference will be in the last 6 month gap when the mortgage swings to most probably an SVR. Just put the money that has to go into the savings account in the mortgage and if needs be secure with a charge against the mortgage. Or is there something that I am missing?

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Why would anybody take this offer up? Interest rate on mortgage 4.39%, interest rate on savings account 3.5%, giving a loss of 0.89% per year and God knows what the difference will be in the last 6 month gap when the mortgage swings to most probably an SVR. Just put the money that has to go into the savings account in the mortgage and if needs be secure with a charge against the mortgage. Or is there something that I am missing?

 

Perhaps the only 5% deposit needed?

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...Here's the answer for all first time buyers, prices have to fall to level at which you can afford it without crippling yourself in debt - simple. Long way to go to get there and remove all the excesses of the loose lending years, despite the best efforts of the Government and their banking friends to defy the financial reality of the situation.

 

Ah, but that takes discipline.

Many banks lack discipline, and far too many homebuyers lack it too

 

Now the banks put the parents on the "hot seat", through the guarantee program.

 

At least now those who are pressurizing their children to throw caution to the winds, and "get on the ladder",

can participate in the financial losses they are wanting to lumber upon their children

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Who watches the watchdog? FSA hikes bonuses by 40%. Despite their failure to spot the biggest bubble in the history of the UK housing market and the loose lending and fraud that went with it, the FSA were nicely rewarded last year.

 

Despite presiding over the biggest financial crisis in living memory, FSA staff are getting bigger bonuses.

 

The FSA shelled out nearly £20m in bonus payments to its staff this year, a 40% increase on last year, with some staff pocketing an extra £50,000 on top of their salary. The much-maligned regulator insists that it has to pay more to attract a better quality of staff. But unless these bonuses are entirely unrelated to performance (which seems improbable), it’s a bit hard to see how the FSA can possibly justify them – when the banking regulator fails to prevent a once-in-a-lifetime banking crisis, surely that counts as a pretty bad year…?

 

The figures, obtained by Lib Dem MP Don Foster under the Freedom of Information Act, show that working at the FSA can be a pretty good gig. 174 FSA staff got paid at least £100,000, while also taking home an average bonus of £22,845. Ten of them even got a bonus of more than £50k, while just three failed to get any bonus at all (we can only wonder what this trio must have done to deserve that). MPs – no doubt keen to see someone else take the heat for a change – have been queuing up to put the boot in, with Foster describing it (not unreasonably) as ‘utterly bizarre that the FSA is actually paying bonuses to anyone this year’.

 

http://www.managementtoday.co.uk/channel/F...kes-bonuses-40/

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From loose lending to no lending.

 

Lenders derail house market rally

 

Britain's leading mortgage lenders have launched a new crackdown on borrowers that threatens the property market revival.

 

Halifax, Britain’s biggest provider, said last week that house prices rose 2.6% in May to an average £158,565 — their fastest rate for seven years. Nationwide’s index had prices up 1.2% in the same month. It is the first time both indexes have risen together since August 2007.

 

However, in a worrying trend, banks and building societies are pulling mortgage deals and raising rates, hampering borrowers’ attempts to re-enter the market.

 

Over the past three weeks, Woolwich, Lloyds and RBS have all withdrawn loans for purchases and have not replaced them.

 

Lloyds withdrew its five-year fix at 6.59% for borrowers with a 10% deposit and its two-year fixes at 4.49% and 5.89% for those with a deposit of 25% and 15% respectively.

 

In April, HSBC cut rates for borrowers with deposits of just 10% but admitted last week that of the 12,000 applications above 75% of the property purchase price, only one in five borrowers received funding.

 

The moves come as banks have pledged to lend billions, under government pressure. However they have not set these funds aside, merely promising to make them “available”. This means the cash stays on their balance sheet, boosting confidence in their capital position.

 

Brokers surveyed by The Sunday Times are finding a higher number of applications being turned down. Savills Private Finance reported about 30% were being rejected, against 20% a year ago. John Charcol said lenders had been surprised by the strength of the market and were using up mortgage funding faster than anticipated.

 

Estate agents added that buyers were interested in bargains but transactions were falling through as they failed to secure funding. We answer your questions on prospects for the market.

 

http://www.timesonline.co.uk/tol/money/pro...icle6445365.ece

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The US approach.

 

NEWARK, N.J. - The former president of a New Jersey mortgage company has pleaded guilty in a $139 million fraud scheme that bankrupted the firm.

 

Michael J. McGrath Jr. of Montclair pleaded guilty Thursday to federal charges of mail and wire fraud and money laundering. Under his plea agreement, he faces between 12 1/2 to 20 years in prison when he's sentenced Oct. 1 and will have to pay restitution.

 

http://www.philly.com/philly/wires/ap/news...tgagefraud.html

 

Eight Kansas City-area residents are among 10 people named in a federal indictment that alleges a $3 million mortgage fraud.

 

The indictment, announced in a Thursday release, describes a scheme in which straw buyers bought homes with bogus loan applications. The houses in question were in Olathe, Kansas City and Lee’s Summit. The indictment is in federal court in Kansas.

 

Anthony Carollo, a manager of Gourmet Grocers in Kansas City, allegedly had straw buyers list his business as their employer and forwarded fraudulent employment verification forms to lenders.

 

http://www.bizjournals.com/kansascity/stor...08/daily36.html

 

A state and federal task force charged a Dearborn resident Thursday with eight felonies, accusing him of running a major mortgage fraud operation.

Advertisement

 

Eddie Zaben, 39, is accused of using his company, Mya's Investments, to push phony and inflated mortgages through lending companies and banks where he had paid other people to cooperate as part of the scheme. He was charged in Dearborn District Court with running a criminal enterprise and multiple counts of making false pretenses.

 

Six others have been arrested on other charges. Assets worth about $1.6 million have been seized, authorities said.

 

The joint investigation, which is still under way, involves the Michigan State Police, the U.S. Secret Service, the state Attorney General's Office and the U.S. Attorney's Office in Detroit.

 

State Police Lt. Marty Bugbee said Zaben was able to pay off employees in appraisal, title and lending companies in order to shepherd the applications through the system. A common scheme would be to buy a house then give an inflated appraisal for resale to a front man or a person using a stolen identity.

 

"They doctor up employment records and pass it along to a title company for closing," Bugbee said. The phony buyer might be paid $10,000, with Zaben pocketing the mortgage money, and the property eventually going into foreclosure.

 

http://www.freep.com/article/20090612/NEWS...raud+operation+

 

UK. Tokenism so far.

 

Nine people were arrested this morning in raids by police investigating a suspected £40 million mortgage fraud.

 

Officers from City of London Police fraud squad are searching six homes and three business premises in southern England.

 

The alleged fraud involves the purchase of 500 properties between 2005 and 2007 and the operations of a now defunct firm Eastbourne Financial Services.

 

Det Supt Bob Wishart from City of London Police said: “The scale of today’s operation shows City of London Police’s commitment to investigate frauds and bring those behind them to justice.

 

http://www.timesonline.co.uk/tol/news/uk/c...icle5879928.ece

 

Latest FBI stats.

 

Estimated Annual Losses*: $4 billion to $6 billion

 

Total Mortgage Fraud Suspicious Activity Reports (SARs) in Fiscal Year 2008: 63,173, with more than $1.5 billion in losses

- So far in fiscal year 2009 (through 4/30/09): 40,901

 

Total FBI Mortgage Fraud Task Forces/Working Groups: 65

 

Pending FBI Mortgage Fraud Investigations (through 4/30/09): 2,440

 

Cases opened in Fiscal Year 2009 (through 4/30/09): 965 (compared to 136 in all of Fiscal Year 2004)

 

Successes in Fiscal Year 2008: 574 indictments/informations; 354 convictions

 

States with Significant Mortgage Fraud problems in 2008**: 1. Rhode Island 2. Florida 3. Illinois 4. Georgia 5. Maryland 6. New York 7. Michigan 8. California 9. Missouri 10. Colorado

 

http://www.fbi.gov/hq/mortgage_fraud.htm

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This report can be downloaded for free, looks good.

 

The Madness of Mortgage Lenders:

Housing finance and the financial crisis

 

ISBN:

 

Author: Professor Chris Hamnett, Department of Geography, King’s College London

 

We are all familiar with the collapse of the UK housing market since its peak in autumn 2007. House prices have fallen 20 per cent from their peak, the number of sales is down 50 per cent – as is the volume of mortgage lending – and new housing starts are down by around 70 per cent to a projected 60,000 in 2009. In addition, mortgage arrears and the level of repossessions have risen sharply. The housing market is in trouble.

 

The argument that this paper makes is that the housing bubble, and the subsequent collapse, owe a great deal to the reckless lending behaviour of a number of mortgage lenders, particularly the demutualised lenders such as Northern Rock, the Alliance and Leicester and the Bradford and Bingley, who were driven by highly incentivised senior executives in a drive for market share and expansion. In so doing, they abandoned many of the principles of sound lending that had guided the building societies for decades and failed to learn the very clear lessons of the late 1980s and early 1990s housing market boom and bust. The early 1990s slump generated significant losses for mortgage lenders and led 500,000 owners to be repossessed.

 

http://www.ippr.org.uk/publicationsandrepo...tion.asp?id=664

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  • 2 weeks later...
Four mortgage brokers are banned

 

A crackdown by the financial regulator on mortgage fraud has led to four more brokers being banned from operating.

 

Three brokers in London and one in Belfast were banned by the Financial Services Authority (FSA) for their parts in false mortgage applications.

 

The brokers are Rafiu Adisa Akanbi, Erinma Didi Jordan, Byron Brown and Gerard McStravick.

 

The FSA says it will continue to act on information from lenders and whistleblowers to tackle fraud.

 

Mortgage applications submitted by Mr Akanbi, trading as Rafin Adisa Akanbi of Greenwich, were supported with false documents such as driving licences, passports and utility bills, the FSA found.

 

In the case of Mr Jordan, one customer - whose application was backed by a faked accountant's certificate, false copies of a passport, a council tax bill, and a rental value of his current property - told the FSA he had never heard of Mr Jordan of Trekfree Associates Ltd of Peckham.

 

http://news.bbc.co.uk/1/hi/business/7444381.stm

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From buy-to-let to fraud and a lost £100k

 

Richard Dyson, Financial Mail

 

5 July 2009

 

Philip George had suffered a divorce and was unhappy. To rebuild his life he hoped to make a fortune through property.

 

That was 2006. Today all his money has gone, debts are mounting and bankruptcy looms.

 

First he lost tens of thousands of pounds in a Bulgarian property swindle. A further £7,000 disappeared in a property-related insurance scam.

 

Philip was greedy and naive, probably. Unlucky, certainly. But his most ruinous venture was the Manchester flat on which he is losing £1,000 a month and where his mortgage is £100,000 greater than the property's value.

 

To buy this property, a two-bedroom flat in a vast, canal-side development called Spinningfields, Philip committed mortgage fraud, though he says it didn't seem like it at the time.

 

http://www.thisismoney.co.uk/mortgages-and...ticle_id=488240

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