The securities fraud is quite interesting. This lady risked a lot to do the right thing.
Her comments about the quality of these troubled mortgages and the circumstances of their application is even more interesting. I’m stunned that people were able falsify their reported earnings and actually got these mortgages. WTH was asleep at the wheel?
I got checked out so thoroughly in 1989 that I even had to submit two letters explaining why I had two late credit card payments on my credit report. Both times they were late a few days because I simply didn’t mail them quickly enough. Sears especially will ding your credit if that payment is even a day late. First, I shredded my Sears cc, then I wrote the two mea culpa letters and submitted them. Got my mortgage. It’s been paid off since 2004. (I made extra equity payments on every one of my mortgage payments).
How could anyone just blatantly lie and get a mortgage? :dubious: I can see why the mortgage market crashed a few years ago.
There was other crap going on, too. I was looking into doing a refinancing at one point. Our income wasn’t an issue - two fairly senior engineer pull in decent money. But the “loan officer” or whatever he was bulked up the refi to “give” us some “equity” by claiming our house was worth something like $40K over the current market value (we knew what houses in our area sold for.)
Between the cash back and his fees, our mortgage payment would have barely gone down at all, which was the point of the exercise. And even when I pointed out that he’d overinflated the value of our house, he still tried to argue with me. Needless to say, we didn’t do it, but I have to wonder how many others took way too much imaginary equity out of their homes in deals like this.
And as it turned out, it was a damned good thing we turned the guy down. We wound up moving 2 years later and there’s no way on god’s green earth we’d have gotten even close to what our mortgage balance would have been. As it was, we put barely over $2K in our pocket after 4 years.
I’m not surprised. When me and the Mrs bought our first house we got a no-doc loan because that’s what was out there. We honestly reported our income and the broker wanted us to change it because nobody would verify anything and we deserved more house. We’d surely regret not fudging the numbers when we deserved even more house in a few years but couldn’t afford it because prices doubled again. We didn’t do it - we spent about half of what we legitimately qualified for - but I can see how it would be tempting to get into a bigger and fancier house in a nicer neighborhood because you deserve it.
If only it were as simple as making bad loans for profit. They figured out they could bundle the risky loans together and make a financial product out of them and sell them. PROFIT! Then they figured out that they could insure these bundles…even if they themselves did not own them. If they failed, PROFIT. The insurance companies fell over themselves writing policies on these. PROFIT!