| Author | Message | ||
     Sifo |
The bank doesn't verify income on stated income loans. The bank doesn't verify income, employment, assets, or payment history on no-doc loans. You don't seem to know your loan products. | ||
| Buellifer |
Then the banks ignored the securities law and let the falsified or inflated incomes go threw. | ||
| Sifo |
In what way did the banks ignore any securities law in this hypothetical? The terms of the contract are stated income that isn't verified. If the stated income is inflated, that's a violation of law on the part of the applicant, but the bank has no way of knowing this. That's why it's called a stated income loan. | ||
| Buellifer |
Then it is still the banks fault for have stupid loans like that!!!!!!!!!!!!!!!! Face it they saw a quick way to make a lot of money and it back fired. | ||
| Sifo |
Those loans were Fannie/Freddie loans. They are under government control. | ||
| Sifo |
BTW, you are exactly the kind of juror the government is hoping to get on the jury in this case. Facts be damned, the greedy banks must be at fault. | ||
| Sifo |
Here's a fairly good description of stated income loans, as well as some other related products. http://www.mymortgagebrokerage.com/post/stated_income_loan_585.htm Note the blue box at the end which states...
Now how do I know the loans in question were Fannie/Freddie loans? Because those are the only loans that Fannie/Freddie purchase. The government set the rules. The government rated the the loans. Now the government is blaming the banks that followed the rules. EDIT to include link. (Message edited by SIFO on September 02, 2011) | ||
| Blake |
You gotta be some kind of mental magician to excuse liars in favor of condemning those who followed the rules. | ||
| Buellitup |
As Buellifer showed, our government believes the banks are to blame: http://finance.yahoo.com/news/Feds-sue-biggest-US- banks-apf-3066897747.html That article is from today. The government enabled banks to do this by hiring those banks' board members, future board members, past board members into key government positions. Normally this make since, because they know what they're talking about, but what they did is they took what they knew and exploited it to their own gain. If you hire someone who is really get at spot welding at their business, and then that person deliberately does a crappy job at your business to drive people back to his business, who is the bad guy? You, because you hired him? Or him, because he's a jerk? Banks did it. | ||
| Sifo |
The government enabled banks to do this by hiring those banks' board members, future board members, past board members into key government positions. Normally this make since, because they know what they're talking about, but what they did is they took what they knew and exploited it to their own gain. If you hire someone who is really get at spot welding at their business, and then that person deliberately does a crappy job at your business to drive people back to his business, who is the bad guy? You, because you hired him? Or him, because he's a jerk? Banks did it. Not that I agree that you have any facts correct, but just arguments sake let me see if I have this straight... Because the government hired people to do a job who had a conflict of interest, the folks who were hired are to blame, not the government who hired them. It amazes me how some people can never see the incompetence of government, even when blaming the government for being too incompetent to hire people without a conflict of interest. Yes, it you hire a jerk, you are responsible for hiring a jerk. That's called being responsible for your actions. So who exactly are these bank board members who were also calling the shots at FM/FM? It would be great to know the names of the people who are to blame. | ||
| Kenm123t |
The Government forced banks to make loans we had a stock holders meeting and decided to sell out after the Gov sued NCNB for supposed redlining. The officers and board were sued for racial discrimination and lost. 11million award. The plantiffs has reasonable credit scores but didnt have the net incometo qualify so DOJ sued when the bank wouldnt underwrite the loans. NCNB was sold and the rest of the banks went nuts when the CRA was pushed fearing another DOJ action. Barney and Chris Dodd leaned on Freddy and Fannie t buy the originators loans. Now along comes Elizabeth Warren and packages up the bad loans into Mortgage backed securities. Freddie and Fannie hung the bad paper on every country they could since smart investors would not touch them. Elizabeth Warren is no longer there Barney Frank and Chris Dodd have congresional oversite One of Barneys gay lovers was there since left with a Golden Parachute. Franklin Raines was the head of it for many years since left again with a major Golden Parachute | ||
| Sifo |
The sad thing is that we are being asked to believe that there was a huge conspiracy to commit loan fraud. It would have to start with fairly high level executives at the corporate office to set the policy. It would then require that every level in the chain at the branch level follow this obviously illegal policy. At a minimum we are talking a branch manager, the processing manager, and each loan processor involved. A large mortgage bank will have hundreds of branch offices. Then multiply all of this by 17 (they are filing suit against 17 banks). We are talking about conspiracy to commit fraud involving literally thousands of individuals. This would be a conspiracy that had direct implications in a global economic meltdown. This would be loan fraud that would be documented in each and every loan that was involved. The paper trail on this fraud would be so obvious that it would make a criminal case an easy slam dunk for even the most incompetent prosecutor. Yet we are asked to believe that the government has chosen to not go after the individuals involved criminally, but to go after the corporations instead. This means rather than prosecuting the guilty and weeding them out of the banking system, leaving them in their positions collecting salaries untouched and instead going after corporate assets which will hurt innocent people who work for these corporations as well as innocent people who have investments in these corporations (got an IRA or pension fund). Anyone who buys into the idea of this kind of grand scale fraud on the part of the mortgage banks should be absolutely outraged that the government has chosen to not prosecute these people to the full extent of the law. This would easily be the single most far reaching conspiracy in it's negative effect that the world has ever seen. Now you expect me to believe that the government is going to ignore criminal prosecution? Please explain to me again how the government isn't completely incompetent! | ||
| Sifo |
Or you could believe that an incompetent government which screwed up big time is now trying to cover it's tracks by vilifying the banking industry. Somehow, one version of events seems to be far too fantastic of a story to believe, and one seems to be a repetition of history. Boy, what to believe? | ||
| Buellifer |
Sifo, It is still the Big Banks fault not Freddie and Fannie. They purchased the bad loans. But at the time nobody knew the loans the "Big Banks" were making would end up bad. The banks screwed up by making these crappy loans and in the process ignored the securities law and then sold the soon to be defaulted loans to Freddie and Fannie. Us tax payers bought them. So technically it was the big banks JP, Citi, Chase, etc. that ef'd it all up... What do you think would have happened if Freddie and Fannie would not have bought the bad loans? Yeah the mortgages would have still gone into default. Defaulted right in the laps of those who made the loans and not on the Government funded (taxpayers) mortgage companies!!! In the end it all comes down to the Big Banks!!! Look at all the money they made on the points and fees. But screwed up as well by keeping the loan they "thought" were not a high risk of default!!! (Message edited by buellifer on September 04, 2011) | ||
| Aesquire |
Not defending the banks here...but.... In the end it all comes down to the Big Banks!!! So, the bribes the politicians took, ( millions ) FROM the people at FM/FM who lied, repeatedly, about how they were doing with loans the banks did NOT want to make but were forced to by those politicians to sell.... is ALL the banks fault? Really? Seriously? Hey, they did the crime, put them away. I Don't Care what party. I Don't Care the ideology. I DO Care that the politicians are NOT going to jail. Barney Frank should be in Prison, where the prostitute ring his lover runs can be up close and personal. I'm not sure that the Sec Treas, Sec State, AG don't belong in the next cell. If the heads of Citigroup belong there too, I'm good. Just don't be a tool and "blame it on the rich" it makes you seem like you're dumb enough to buy their crap. ( and remember, the Pol's are "the rich" they want you to blame.... sucker. | ||
| Ft_bstrd |
Buellifer, They purchased the bad loans. But at the time nobody knew the loans the "Big Banks" were making would end up bad. The banks screwed up by making these crappy loans and in the process ignored the securities law and then sold the soon to be defaulted loans to Freddie and Fannie. Us tax payers bought them. Do you know why FM/FM buy loans? Particularly, do you know why specifically these subprime loans were purchased? FM and FM knew EXACTLY what they were buying. Adding the full faith and credit of the Federal government was the only way to keep the CRA machine running. See Federal Housing Enterprises Financial Safety and Soundness Act of 1992 FM and FM weren't "duped" into buying bad paper. They were ordered to buy bad paper under this law knowing full well what it was. | ||
| Sifo |
But at the time nobody knew the loans the "Big Banks" were making would end up bad. The banks screwed up by making these crappy loans and in the process ignored the securities law and then sold the soon to be defaulted loans to Freddie and Fannie. Bullifer, Just where do you see the banks ignoring securities laws? The problem seems to be that you don't know how the mortgage industry works. Freddie/Fannie were set up by our government for the purpose of purchasing mortgages from banks to free up cash so that the banks can continue writing mortgages to meet demand. There are two general categories of loans: 1) Conforming loans. These are loans that conform to the specifications and requirements as set forth by F/F. 2) Non-conforming loans. These are loans that deviate in any way at all from the specifications and requirements as set forth by F/F. F/F will not purchase non-conforming loans. If a banks writes a non-conforming loan it is up to them to either find a private market that will purchase it or service the loan themselves. F/F is required to purchase conforming loans. The government guarantees that for loans that conform to these specific specifications and requirements, that the cash will be available to purchase the loans from the private banks and make it possible for the banks to meet demand by issuing more loans. So it isn't the bank that decides what criteria will be used in qualifying for a conforming loan, it is F/F that decides that. The banks simply originates the loan and collects the required documentation. As I said earlier, it would be possible for a bank to fraudulently ignore the documentation process. If this was the case then a criminal prosecution would be a slam dunk and there is no excuse for not going after them with criminal charges. If you believe this to be true then you should be outraged that they are going after the banks in civil court instead of targeting the individuals involved in the criminal securities fraud. Personally, based on the fact that they have skipped an easy criminal case and gone directly to a civil case, the loans were almost certainly processed as required by law. It's just a simple matter of designing loans that encouraged the home buyer to overreach on what they could realistically afford and a higher than anticipated percentage defaulted. The blame for this falls directly on those who set the specifications and requirements for the loans. In the case of ANY loan purchased by F/F, that is F/F themselves. F/F are run by committees set up under congressional oversight. The responsibility for this mess lies directly with our Federal government. This is simply a case of the Federal government having the power to place the blame on other parties that were innocent of any wrongdoing. I find that reprehensible! Again, I say this as a person who was an insider of this industry when all of this was going on. I'm not going to defend banks that put together their own non-conforming mortgage products that had high default rates. There's no question that this situation also exists, but that has nothing to do with any loans that involved F/F. It just doesn't work that way. If you want to continue with your allegations that the banks are at fault this conversation is about to get very repetitive as I simply refer you back to this post repeatedly. I'm not sure how much more clearly this can be laid out for you. The bottom line is that if F/F bought a loan, it was a loan that they designed. | ||
| Blake |
Y'all stop with the factual information. It's much more convenient to demonize big banks and stir up emotions to ignite class warfare. | ||
| Ft_bstrd |
If Dodd and Frank are blaming someone, you can GUARANTEE that the ones being blamed are innocent. | ||
| Davegess |
Nobody "required" the banks to make bad loans. I want to see it in black and white where the CRA required companies like Countrywide to make bad loads? | ||
| Mortarmanmike120 |
Agreed | ||
| Mortarmanmike120 |
Too slow, I was agreeing with FB | ||
| Fahren |
Well then, I'll agree with Dave. In another thread, I asked Tom (Sifo) to help me out with some direction for researching the "forcing banks to make bad loans" bit. As suggested, I looked into the Community Reinvestment Act as it has morphed over the years. I found that at one time, Ron Paul accused the CRA with "forcing banks to lend to people who normally would be rejected as bad credit risks." But many, many other, noted financial experts have refuted this notion, and refuted even that the CRA encouraged banks to make the bad loans. I just don't see the hard evidence that the banks were forced to do this. I do, however, see huge fraud being exposed throughout the mortgage banking and related investment banking industry, fraud and illegal activity that is now being investigated and prosecuted. So yes, please, show us this "forcing of the banks' hands" in black and white. I came into this with an open mind and willing to research it - I just don't see it, and instead, I see overwhelming evidence that banks were committing fraud, breaking laws and rules, and avoiding payment of taxes (through MERS transfers). Rule of law, man. Rule of law. | ||
| Ft_bstrd |
Dave, See CRA Scoring, Clinton, 1993. Community Reinvestment Act--Ensuring Credit Adequacy or Enforcing Credit Allocation Banks who wanted to merge, expand, aquire or move into new states were denied based soley upon their CRA compliance score. | ||
| Ft_bstrd |
Mergers and Acquisitions are the two primary ways in which banks grow and become more efficient. By preventing a merger or acquisition due to a CRA score, the Federal government can prevent a bank from being able to secure new credit facilities, gaining efficiencies, and competing in the marketplace. | ||
| Blake |
Dave, About ten seconds on google... Ya gotta look if you really want to learn the truth. Don't rely on the mainstream news media. Clinton's HUD Secretary admits it in one specific case. See following starting at around 2:20 and then 5:00. "They would not have qualified but for this affirmative action on the part of the bank." ... "which will be a higher risk and I'm sure there will be a higher default rate on those mortgages than the rest of the portfolio..." | ||
| Blake |
Also read this report, written in 2007, before the crash. More... | ||
| Mortarmanmike120 |
So it's more coercion then blatantly forcing of shaky loans? Much like the Fed gubment doesn't force a state to set it's speed limits, it only withholds sizeable money unless it does so. | ||
| Strokizator |
Nobody "required" the banks to make bad loans. That's a bit disingenuous. Banks were not required to make "bad" loans,they were required to just make loans. If minorities couldn't qualify then it was ruled de facto discrimination and threats of govt audits and penalties were very real. The fact that people later defaulted on these loans makes the gov't look bad. They therefore must shift the blame. | ||
| Blake |
... for years irrational lending standards have been forced on lenders by the federal Community Reinvestment Act (CRA) and rewarded (at taxpayers' expense) by multiple government bodies. |
