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Examiner Editorial: Obama chases AIG bonuses as mortgage fraud metastasizes

Examiner Editorial
-
March 16, 2009

Many cancers become untreatable once they metastasize - spread throughout the human body. Something not unlike that appears to be happening in the mortgage industry even as President Barack Obama is off chasing AIG executive bonuses he deems as excessive. To see what is wrong with this picture, one need look no further than the latest data from the Mortgage Bankers Association on mortgage delinquencies, covering the fourth quarter of 2008. Nationally, a little more than 92 percent of all mortgage loans were current, while 6.30 percent were seriously delinquent (i.e. more than 90 days past due). For sub-prime mortgages, which make up 11 percent of all mortgages, however, the overall delinquency percentage is 23.11 percent, and 33 percent for those with adjustable rates (ARMs). California’s ARM delinquency percentage is 39 percent and Florida’s a staggering 47 percent. In other words, one of every four sub-primes is seriously delinquent nationwide, as is one of every three ARMs. It’s much worse in the two states thought to be havens for speculators. National delinquency rates like that simply cannot happen without extensive speculation and mortgage fraud, especially loan officers and applicants using false income, debt and other data.

Considering the pivotal role played by toxic bank assets made up in part by securitized packages of sub-prime mortgages in freezing up the financial sector, one might expect Obama to make a high national priority of identifying mortgage fraud perpetrators and prosecuting them to the fullest extent of the law. Otherwise, it will be impossible to prevent such fraud from continuing and even expanding – metastasizing – throughout the mortgage finance industry. But when The Examiner asked the White House press office if the president plans a national anti-fraud program, we were referred to the Justice Department. There, a spokesman said he was unaware of such a program, though individual U.S. prosecutors might be launching their own efforts. The FBI has an anti-mortgage fraud effort, but the G-men clearly could use some help.
 
Mortgage fraud was and remains a serious national problem, according to Patrick Duffy, a principal of Metrointelligence Real Estate Advisors division of Beacon Economics and author of the Housing Chronicles blog. “I do think there was pervasive fraud at all levels of the mortgage process, from agents getting kick-backs from affiliated lenders to appraisers who couldn't get work unless they played along,” Duffy told The Examiner. “I also think the fraud continues, and I have very grave concerns that we're not learning any lessons in this country.” Duffy worries that the fraudulent practices are being spread by the same companies from the sub-prime arena to FHA mortgages, which may explain the recent uptick in delinquencies there. Which is more important, Mr. President, widespread mortgage fraud or a comparatively few executive bonuses on Wall Street?
 


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Reader Comments

All comments on this page are subject to our Terms of Use and do not necessarily reflect the views of the Examiner or its staff. Comment box is limited to 250 words.

Marie Antoinette

Mar 17, 2009

Great story this admin is metastasizing with incompetant people, who have memory lapses of elderly folks Imagine if this was Bush and Cheney?

 

Greg

Mar 17, 2009

"One might expect Obama to make a high national priority of identifying mortgage fraud perpetrators and prosecuting them to the fullest extent of the law." If he has made this a priority, you would be complaining that President Barack Obama should be "chasing AIG executive bonuses he deems as excessive". Then others complain he is doing too much at one time. But this is what is to be expected from this newspaper, the voice of the Republican Taliban Party. Whine, whine, whine.

 

Springman

Mar 17, 2009

Would it be safe to say that Ms. Gorelick and Mr. Johnson are off the hook for their FMac and FMae theft of taxpayers money?

 


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