Just ran across this in letters to the editor section of the Aug 13 issue of BusinessWeek. Wanted to pass it along.
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Approving A Loan The Careless Way
“Why Fannie and Freddie are fidgety” (News & Insights, July 30) talks about “low-documentation loans.” It would be interesting to know how many “fake-documentation loans” have been made.
About three years ago we subpoenaed the mortgage application that a plaintiff in a bogus lawsuit had submitted to a national lender. Attached to her application were copies of W-2 forms stolen from two different people whose annual earnings were much higher than the plaintiff’s. The plaintiff had simply pasted her own name onto the copies. She did not even bother changing the Social Security numbers on the W-2 forms.
Thus, the lender received an application with two W-2 forms, which, between them, contained three different Social Security numbers. They still approved the loan!
David L. Hagan
Pismo Beach, Calif.
Morgan says:
Russell –
This is such an important point summed up in a nice, concise little package. People in the industry who work for the bottom-of-the-barrel frauds used to say there were two income documentation types: stated and fraud (instead of full) documentation. Whether their callousness is simply a result of their working environment or the problem of fraudulent full documentation loans is systemic is yet to be seen; but will surely bear out over the course of many lawsuits, audits and criminal charges.
September 23, 2007 — 11:02 am
John Wake says:
It been my contention that fraud in sub-prime loans was a far bigger problem than the sub-prime loans themselves.
http://www.arizonarealestatenotebook.com/2007/09/03/theme-song-of-the-us-sub-prime-mortgage-industry-circa-2005/
September 23, 2007 — 12:25 pm
Chris says:
A couple of years ago if you had a heart beat they would give you a mortgage. I’m pretty sure a monkey with a pen could have gotten a house.
September 23, 2007 — 6:33 pm