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View Diary: NY Atty. Gen. Schneiderman LOVES Today's Mortgage Fraud Deal. UPDATED x3 Liz Warren Likes it Too! (261 comments)

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  •  May be fine wrt to the mortgage (15+ / 0-)

    fraud. Not that I expect the ones most egregiously victimized to be fairly compensated.

    However, it doesn't begin to address the larger problem:

    From 2000 to 2008 mortgage debt rose from $6.9 trillion to $14.6 trillion, an increase of 110%.
    A goodly chunk of the new mortgage debt was based on phantom values but sellers still got the cash.
    •  And it was "legal", and people (22+ / 0-)

      agreed to pay higher prices hoping to cash in in a few years. It's all a crap shoot, isn't it? There's the common wisdom that housing is your safest investment and always pays off, and then there's the shadow banking industry, unregulated and invisible, creating an unsustainable bubble.

      Let's hope we're sadder but wiser in the future.

      I'm not looking for a love that will lift me up and carry me away. A love that will stroll alongside and make a few amusing comments will suffice.

      by I love OCD on Thu Feb 09, 2012 at 08:07:35 PM PST

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      •  I think we have returned to the old common wisdom (15+ / 0-)

        A home isn't an investment. It's where you live.

        Others have simply gotten old. I prefer to think I've been tempered by time.

        by Just Bob on Fri Feb 10, 2012 at 01:06:02 AM PST

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        •  And that's really the bottom line. (8+ / 0-)

          A home is not something you put money into expecting a good return.  They tend to hold their value and gain a little over the long run, but you'd be better off putting your money in big, dividend-paying stocks.

          It's not an investment.  It's a big, organized pile of rock, metal and wood that sits in the rain and rots so that you don't have to.

          It can be a rational choice to buy instead of rent -- and the math isn't terribly difficult if you do a little research -- but, alas, most people get that equation wrong, and most got it wrong spectacularly so over the last decade.

          Be nice to America. Or we'll bring democracy to your country.

          by Drew J Jones on Fri Feb 10, 2012 at 03:34:21 AM PST

          [ Parent ]

          •  I think the volatility of the (1+ / 0-)
            Recommended by:
            Just Bob

            housing market fooled a lot of people.  My first husband and I bought a house in 1973 for $30,000.  I stripped and refinished all the woodwork, pulled out all the carpet and shined up those hardwood floors and painted or wallpapered every inch of that place.  We sold it in 1978 for $140,000.  I'd love to take credit for that radical leap in value, but I could read and I knew the housing market was insane.  We kept benefiting, too.  We were lucky.  He bought down in 2003 in order to make retirement less of a financial crapshoot, so he was lucky again.

            We could easily have been on the foreclosure end of the market if we'd been playing real estate in the last few years.  Again, lucky.

            I'm not looking for a love that will lift me up and carry me away. A love that will stroll alongside and make a few amusing comments will suffice.

            by I love OCD on Fri Feb 10, 2012 at 05:32:25 PM PST

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      •  Every major (2+ / 0-)

        financial pundit told us to do two things: put everything we had into our 401ks, and use refinancing to consolidate high interest debt. This was the wise and sensible course of action. I don't remember a single dissenter pointing out that both of these strategies made the assumption that both the stock market and the housing market would continue to "grow."

        Now we know we were played.

        "YOPP!" --Horton Hears a Who

        by Reepicheep on Fri Feb 10, 2012 at 10:00:28 AM PST

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        •  And they all benefitted hugely from those (0+ / 0-)

          who followed their advice I'm betting.

          If you remember that Wall Street is Las Vegas in elegant shades of grey you're going to be okay.  Unless you think Las Vegas plays fair, then you're in shit to your armpits.

          I'm not looking for a love that will lift me up and carry me away. A love that will stroll alongside and make a few amusing comments will suffice.

          by I love OCD on Fri Feb 10, 2012 at 05:24:55 PM PST

          [ Parent ]

    •  Sellers still get the cash, as everyone who (2+ / 0-)
      Recommended by:
      Creosote, cslewis

      can continue to make payments under the phantom values created by the initial fraudulent loans are paying much more than they would be if those loans hadn't driven bidding up in the first place.

      It's the silent crime, and it's still ongoing.

       


      Today, if you exist... that's already suspicious.

      by Jim P on Fri Feb 10, 2012 at 01:08:13 AM PST

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      •  While I don't have much empathy for (0+ / 0-)

        all those entities that ponied up the cash that was used to finance the purchase of houses, they like the house purchasers were buyers not sellers.  The sellers and their accomplices were the prior owner or real estate developer, the real estate brokers, the appraisers, the mortgage brokers, the loan originators, the security loan packagers, and the ratings agencies.  Problem is that a whole lot of cash went to those folks and it is now all gone.

    •  Appraisers and Ratings Agencies (7+ / 0-)

      The most corrupt part of the mortgage bubble, apart from its bankster architects in the Credit Default Swap racket, was the appraisers and debt ratings agencies. Appraisers lied to wildly inflate home values, while debt ratings agencies lied to wildly inflate mortgage instrument values. The two reinforced each other in a feedback cycle that inflated the whole market. Each is supposed to be the point where the fraud is stopped; both accelerated the cycle.

      There are thousands of people in appraisal and ratings agencies who committed frauds personally in the $millions, and collectively in the $trillions. They should all be in jail.

      At the very least both industries should be completely reregulated.

      Instead they all walk free, continuing their crime spree. And only minimal, inadequate regulations are being passed.

      The banks rule the world.

      "When the going gets weird, the weird turn pro." - HST

      by DocGonzo on Fri Feb 10, 2012 at 05:05:17 AM PST

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      •  I'm not sure the appraisers did anything wrong. (0+ / 0-)

        If something sells for the inflated value, obviously your appraisal wasn't inflated, it merely reflected market value at the time.

        •  Sure they did (3+ / 0-)

          There is plenty of evidence of the banks telling the appraisers what number they needed to hit -- and if they didn't, the appraiser wouldn't get hired any more.

          Without faulty or fraudulent appraisals, there's no way the banks would have been lending 125% of the stated sales price -- "cash out" mortgages. And as the market began to tank, appraisers continued to use older comparables at least in some markets.

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