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Please help get this info to people fighting for their homes.

FLASH:  Many homes were underwater the minute the homebuyer signed the closing papers.  Was yours?

Collusion by the real estate professionals and banks involved w/home sales set the stage.  Charts, reports, and quotes from appraisers prove this below the fold.

Appraisal fraud explains why homes went underwater and why banks refused to refinance those crazy sub-prime, high interest loans.

In the words of the National Mortgage Complaint Center in 2005:

In theory, it's in a bank's best interest to make sure its loans are based on accurate appraisals, said M. Thomas Martin, of the National Mortgage Complaint Center in Seattle. "But if you're selling the loans to the secondary market, you really don't care," he said. "The higher the value, the better."

  1.  The Banner Year of the Housing Bubble!

The problem is so widespread, that more than 8,000 appraisers – roughly 10 percent of the industry – have signed a petition asking the federal government to take action.

Before we begin:  The scope of mortgage and appraisal fraud is so vast, that it is almost impossible to grasp.  It's hard to wrap your mind around, because there are so many twists and turns that were taken in the last decade when a home was sold and/or refinanced.

I have found that, as I approach the Foreclosure Crisis issue hoping to help you and others understand and find resolutions, that every door that opens, leads to another door, and another door, then a hatch with a hitch.

The Housing Bubble Fraud isn't a rabbit hole.  It's the moon made out of swiss cheese!  Disgusting, rotten cheese!

This diary looks at two things:

  1.  Appraisal Fraud which is the crux* of the quick and high rise in property values we witnessed in the past decade; and
  1.  The neglect of those charged to protect the people. State and Federal officials knew about the fraud as reports below demonstrate.  They chose not to fund the FBI and they chose to let the Housing Bubble run at full speed with no one at the steering wheel.  Sheriffs were quick to throw people out of their homes but no one tried to protect people from being defrauded.

I am going to risk a conclusion. which may be full of holes, no pun.  But don't let the conclusion keep you from learning the facts about the appraisal fraud you or someone you care about may easily have been a victim to, k?  

In short, don't let your sense of moral hazard/outrage about the solutions to the foreclosure disaster discount the entire diary.  

There is a huge amount of empirical evidence, complete with maps and charts, to back up the assertion that many home buyers were underwater when they signed their mortgage.  And NO ONE is reporting this loudly enough.

I would suspect that the Masters of the Universe have worked very hard to keep this all hush, hush.  But THIS IS THE STUFF BLOGGERS ARE MADE FOR.

We care and we share with no thought of personal gain.  We are driven to help.

My conclusion:  Tens of Thousands made fortunes fraudulently.  Tens of Millions of ordinary citizens and their families were harmed.  Trillions of investments were based on fraudulent valuations.   It's time for some serious claw back!  

And it's time to stop this agonizing game of Musical Homes now.

Whoever is in a home needs to stay there until the history of each home is cleared up.  That is finally being done, or so the air waves report.

People need to return to and occupy empty homes as well.  Empty homes are not helping anyone, including the investors.  

And then reset the median home value based on the facts on the ground:  Median Income for the area.  

The homes are there.  

Put aside the issue of moral hazard.  That horse won't fly after the lack of regard for the moral hazard to protect the people for nearly a decade KNOWING they were being defrauded.  

To further this moral hazard argument, where's the ire and outrage now? No one is yelling about the moral hazard of the very same people who were enriched fraudulently sweeping the country like blood thirsty vultures ready to use their ill begotten gains to buy the homes back for $.10 on the $1.00?  

No one is yelling about the insensitive, crazy making TV ads that run 24/7 inviting ordinary citizens to get on board, buy foreclosed properties for $5,000!  or $9,000!  Get Rich, Have That Life You Have Always Dreamed About, and that runs on the very same news programs that are announcing the Foreclosure Freeze because the banks lost the notes and titles to the properties.

Where are the warnings to beware of buying any foreclosed and/or short sell properties until things settle down?   Where is the national campaign directing people to go over their paper work with a fine tooth comb so that, when/if they try to sell their homes, they aren't surprised to find that they can't grant a clear title.

Good grief, it's October, 2010, five years after the appraiser Rang the Alarm and the wolves are still free to have their way with the sheep.  Shameful.

Why enable these same people who defrauded homeowners the freedom to churn the same bubble again?  That is much more immoral than allowing people who were hoodwinked to stay in or return to their only home.

Once people are in homes, and empty homes have residents, the money clawed back from the fraudsters, who made billions, can be used to help the home buyers.

There is even a chance that the MBS investors will be whole, over time, IF the mortgage is paid and has a reasonable relationship to wages in each area.

And if HUD can sell foreclosed homes to towns and faith-based initiatives for $1.00 then surely HUD can afford to help people stay and get back into their homes.  I think this scheme needs to be investigated, btw, and used to help existing distressed homebuyers.  Pronto.


In April, 2005

Referring back to the  Appraisers Petition Petition written and sent to alert State and Federal Agencies about the problem referenced in the Intro above:

The petition was directed to the Executive Director of the Appraisal Subcommittee of the Federal Financial Institutions Examinations Course (who was that in 2005?) with copies to be sent to an unspecified list of "other state or federal agencies with authority in the following matter." (where is the list of who received the petition?)

The petition states in part

"Lenders have individuals within their ranks who, as a normal course of business, apply pressure on appraisers to hit or exceed a predetermined value,"

and lists six of what it terms "many types of pressures" that are brought to bear on appraisers:

The withholding of business if we refuse to inflate values;

The withholding of business if we refuse to guarantee a predetermined value;

The withholding of business if we refuse to ignore deficiencies in the property;

Refusing to pay for an appraisal that does not give them what they want;

"Black listing" honest appraisers in order to use "rubber stamp" appraisals, etc.

The petition requests that

"action be taken to hold lenders responsible and provide for a penalty on anyone who engages in the practice of pressuring appraisers to do dishonest appraisals that do not provide for independent judgments."

As of April 21, 2005 the petition had 8,326 signatures.

And from the same source, these comments submitted by appraisers in 2005:

"This continues unabated after the S+L debacle of the 1980s.

It requires both perpetrators (lenders) and willing accomplices (appraisers).

State regulators were purportedly established, in part, to control both.

It hasn't and will not happen.

Take Illinois for example:

2002 - 36 appraiser disciplines;

2003 - same number.

Then, new governor and political assignments.

2004 - 18 disciplines.

First quarter 2005 - 1 discipline.

The wolves are on the sheep with no shepherd in sight.".

"The article is a good, if abreviated, statement of the problem. The traditional relationships that existed between lenders and appraisers (as well as other service providers) have been seriously eroded in a lending environment that views loans as a commodity and values loan volume above the quality of the underlying security."

"I volunteer for a consumer org, and see the complaints about seriously defective construction in new homes every day.

Increasingly, we're seeing complaints that include lending irregularities, and inflated appraisals.

Many don't meet building code minimum standards.

The code is rarely enforced.

What will happen to all these overpriced disposable houses and the people that invested so much into them!?"

When lenders made their orginators go to straight commission in lieu of a salary, and demanded X amount of business per month, the whole industry went to the dogs.

I have been appraising single family residences for 17 years, and have been pressured to inflate values many times.

Needless to say due to my honesty, my income has suffered.

It is my opinion that about 60% + of the paper ( mortgage notes ) that is sold in this country is JUNK.

These Alarms went off in April, 2005.  In 2006?  Nothing/crickets.  2007?  Nothing/Crickets

Three years later, in 2008, Freddie Mac  f i n a l l y   addressed the problem:

AND  NO  ONE  PROTECTED THE  BUYERS from commissioned agents of Country Wide or any of the other large Mortgage Brokers, or addressed the issue in any meaningful manner until 2008!

I hope readers are shaking their heads by now.  And please get this message out there as this story needs to come out NOW, not two years from now.

It appears that everyone BUT the average John and Jane Doe home owner enabled and/or participated in this fraud, this criminality, either overtly or covertly, by either knowingly participating or willfully neglecting their duty.

Congress failed it's number one duty to their constituents:  To do no harm.


2008:  Freddie Mac Releases the Home Valuation Code of Conduct

And how did those new rules work out?  Not so well:  Appraisal Fraud continued to spiral upward.

An April, 2010 Appraisal Fraud report for the year 2009 (refers to the SARS submitted, not the millions of homes that may have fallen victim to appraisal fraud):

Appraisal Fraud 1

*Value inflation, subdivided into three categories, is also a large portion of reported appraisal fraud and misrepresentation:  

18% of loans in this category reported inflated values under 15%;

40% had inflated values between 15% and 30%; and

17% had inflated values over 30%.  

In short, 57% of appraisal fraud cases (those reported) in 2008 and 2009 were overvalued by more than 15% and many over 30% overvalued.

This is an astounding revelation.  Let's bring that reality home (no pun).

Mortgage Fraud Prevelance Map, FBI 2006:

2006 FBI Map of Mortgage Fraud

REAL 2006 FBI Map of Mortgage Fraud

2006 - The most common form of mortgage fraud is illegal property flipping which entails false appraisals and other fraudulent loan documents (see figure 1). Combating mortgage fraud effectively requires the cooperation of law enforcement and industry entities. No single regulatory agency is charged with monitoring this crime.

And the states with the most reported incidents of all mortgage fraud reported for the year 2009:

A Mortgage Fraud Map

And the worst areas of the country for appraisal fraud in 2009 are:

Appraisal Fraud, 2009  Worst Areas
Let's look at a real case scenario from 2002 as reported in a 2004 New York Times report

Here are a couple of examples, from a 2004 NYTimes article, of one of the ways appraisal fraud was used to defraud new home buyers:

Finally, she discovered that her house had been

sold for $180,000 in August 2002,

and then resold to United Homes three weeks later for $230,000.

Three months later, after a quick renovation, she purchased it for $399,000.

An appraisal commissioned at the time found this value fair, but a second appraisal commissioned later by Ms. Wragg's lawyers found that the value at the time was only $250,000.

Here's another United Homes deal.  A civil servant was hoodwinked:

Barkley, for example, claims the United Homes salesman didn't tell her until the day of the closing, even though she repeatedly asked him, the actual price of her new home.

The price turned out to be $359,000 for a home United had purchased for $153,000 - less than three months earlier.

Not a bad days pay!  United Homes L.L.C., of Briarwood, Queens made out like bandits!  As did their cohort, Olympia Mortgage Corporation.  Actually, everyone thereafter made more money on the value inflated deal except, of course, the homeowner and the investors that bought those Mortgage Backed Securities.

Again, many homeowners of properties purchased in 2002 through 2009 were underwater on their mortgage instantly, at the closing of their mortgage signing!  


Again, the Mortgage Backed Securities were attached to these properties valued at less than the mortgage; therefore, the MBS' real property values were also less than the investors thought they were.

Are we all supposed to believe that none of the Masters of the Universe had a clue?  If you do, I have some property to sell you (snark).

One-Stop-Buy-A-Home-Shops:  The Fraud Collusion Team

A BIG common denominator in mortgage/appraisal fraud are those One-Stop-Buy-A-Home-Shops.  They provide all the services you will need to buy a home:  The realtor, the appraiser, the mortgage broker, and the electronic means to apply for/receive the mortgage.  Once the deal is closed, another electronic system, MERS, took over.  You see, MERS made thousands of people their 'agents'.  

So, if you bought from a One-Stop-Buy-A-Home-Shop, do your research.  Your property should have a transaction record of purchases and sales.  Check it out.  Go to the place where your property transactions are recorded.  You will need to look at your paperwork to find the indentification of your property, often a Lot Number, Name of Subdivision.  Find out if your house passed hands several times in the short time before you bought the house.  If so, you could be a victim of appraisal fraud.

Can we assume that NO ONE in the secondary mortgage industry was checking the facts for each home? And how about the rating agencies?  Is there no Due Diligence Law to require all involved in the mortgage industry to check for fraudulent behavior?

Two other factors to keep in mind to help explain the huge volume of fraudulent mortgages processed during the Housing boom are:

  1.  The ability for mortgages to be sold, sometimes instantly, to the secondary market

Definition: The secondary mortgage market allows banks (and others, my addition) to sell mortgages, giving them new funds to offer more mortgages to new borrowers...

Many of the mortgages on the secondary market are bought by Fannie Mae. Other are packaged into mortgage-backed securities, and sold to investors.

  1.  And this is the key:  An electronic highway was invented to whiz the mortgages from one place to another, sight unseen:  Mortgage Electronic Registration Systems (MERS).  I have written exhaustively about MERS since the fall of 2008.  MERS, created by the Mortgage Bankers Association, Freddie Mac, Fannie Mae, and almost all of the TBTF banks, was the kingpin needed to handle the volume of mortgages processed and made into MBS during the Housing Boom.  It is also the kingpin in the disaster of missing notes and title deeds which, ironically, may save people from foreclosure.

From the advantage point of the real estate professionals, MERS, and the financial players, houses were just a tool used for all to make fortunes in commissions, fees, and kickbacks at the expense of victimized and average, John and Jane Doe home buyers and MBS investors.


We also know that the TBTFs bought  the mortgages and created MBS bundles.  The appraisal fraud explains, in large part, why the Mortgage Backed Securities were worth far less than the amount of the mortgages written.

Who owns the MBSs today?

What I find disheartening, and maybe shocking is that none of the mortgage/appraisal fraud was happening in a secretive vacuum.  

In this 2008 article by Digital Journal, the truth is that the Bush Administration and Congress wouldn't fund the FBI,whose resources were mostly shifted from white collar crime to the War on Terror:

From 2001 to 2007, the F.B.I. sought an increase of more than 1,100 agents for criminal investigations apart from national security.

Instead, it suffered a decrease of 132 agents, according to internal F.B.I. figures obtained by The New York Times.

During these years, the bureau asked for an increase of $800 million, but received only $50 million more.

In the 2007 budget cycle, the F.B.I. obtained money for a total of one new agent for criminal investigations.

I hope you find this as shocking as I do. in 2007.

In other words, while the people were being hammered by ads on the airwaves and promptings from the President to 'buy a home', it seems everyone but the uneducated home buyers and investors were aware that they were sitting ducks to be used for profit and gain in a market that was known to be hugely fraudulent.

Our Congress did not protect the people sufficiently.  On the contrary, it appears they actually shackled the very people who could have intervened.

Will Congress call hearings to investigate itself? There's an SNL skit to be written that would be quite funny as we watch Representatives run from their seats on the dias to the table to answer their own questions.

And who, at the FCC, is responsible to protect us from airway advertisements that are presently running, inviting us all to get rich and have the lives we have always dreamed of having via purchasing FORECLOSED HOMES?  Why is this allowed when it is obvious that bogus home valuations caused people to lose those homes?

And why is HUD allowing towns and faith-based initiatives to buy foreclosed homes for $1.00?  I see "rerun" all over this scheme.

Back to the under/defunding and FBI shackling:

From the same article discussing the underfunding of the FBI White Collar Crime Division:

It's so bad people have been hiring private investigators to do the legwork. The NYT piece is full of grim facts, but this is the one that stands out as most indicative of real need:

In 2004, one senior F.B.I. official, Chris Swecker, warned publicly that a flood of fraudulent mortgage deals had the potential to become “an epidemic.”

Yet the next year, as public warnings about fraud (really, public warnings? Do you remember public warnings in 2004?) in the subprime lending markets began to approach their height, the F.B.I. had the equivalent of only 15 full-time agents devoted to mortgage fraud out of a total of some 13,000 agents in the bureau.

That number has grown to 177 agents, who have opened 1,522 cases.

If you want to see the FBI charts that show the number of cases, etc, they worked on from 2003-2005 go here.

Is there a move to privatize the FBI?  That cannot happen, for the same reason that banks allowed to hire their own appraisers was a really bad idea.  But without the FBI to help homeowners who were defrauded, who will pay to have their case examined?

It is a modern scandal, imo, that ordinary people can't afford to litigate their cases.  Why should a citizen have to pay $30K-$40K to prove they were defrauded?

Another victim's story:

Mr. Fayez-Olabi said that at first he found almost no one, including a lawyer he hired early on, to believe his story, which he said required the cooperation of almost everyone in the room that day: the lawyer, the buyer, the mortgage broker and the closing agent, all named in his lawsuit.

Then he found that Ms. Cromer, the lawyer at the closing, was indicted and accused of being a ringleader of a group of 17 people including lawyers, a broker and a title closer, in a scheme to defraud mortgage banks by holding sham closings. Charges against her are still pending, and she and her lawyer did not return telephone calls for comment.

Now, as his family lives in a basement of the home of a member of his church, Mr. Fayez-Olabi is pursuing litigation in State Supreme Court in Queens trying to win back his house on the grounds of fraud.

He has so far found several mysterious documents in the court papers to support his allegations. He has received nearly identical photocopies of the same sales contract he was supposed to have signed, one provided by Mr. Mayfield, the other by Mr. Mayfield's bank, with different signatures for him and his wife.

And he has found copies of two bank checks in closing documents provided by the bank, showing payments of $75,000 to him at the closing, which he said he never received. He said that a bank manager at a Fleet Bank, which issued the checks, gave him a printout suggesting that the checks were forgeries, since the same check numbers were used in smaller money orders. A spokesman for Fleet said that the bank was attempting to assess whether the checks were legitimate.

So far, Mr. Fayez-Olabi said, he has spent $30,000 and owes $50,000 more in legal fees. His lawyer withdrew from the case, and he is searching for a new one.

He said that no judge has ever ruled on the merits of his fraud complaints, and that his case was in jeopardy because he failed to respond to court papers which he says were sent to an incorrect address after his eviction.

The 2006 FBI report and map seen above clearly indicates that Congress was aware of the mortgage/appraisal fraud citizens were unprotected from.

Where were the WARNINGS?  

Instead, the airways were riddled with advertisements luring in new customers to be, essentially, defrauded.  And now, good people have lost homes that were used simply to make money for the defrauders.  And the secondary market made this all possible:

Again, check the 2006 FBI map above.

The defrauding simply continued and, if loans can still be sold to secondary markets, still may be continuing.

One more time:  The homeowners of many properties purchased between 2002 and 2009 were underwater the minute they signed the closing papers.  

Home buyers were hoodwinked, even though this crime was blatant and known about for years by the FED/States.  Where was the consumer protection?  MIA!

Here's a look at housing valuations from 2001-Jan, 2010.  Nothing really justified the dramatic increases in valuation.  If it hadn't been for the ginning up of the market by the players, some very clever MERS software, and the Masters of Sales on Wall Street homeowners and investors wouldn't have been victimized. Wages were stagnant.   Layoffs were wide spread.

Appraisal-  Median Valuation

It is worth noting that value inflation is almost always a direct consequence of incorrect, fabricated or omitted comparables and other information.

EXCUSE ME?  You did not just admit that openly?  But you did!  For all to see.  Thank you!!!!

The report is highly worth reading, albeit a bit wonky.

It would appear that the Housing Boom/Bubble was a Fraudulent Bubble on many, many levels.  

However, none of the fraud incentives could have been realized without property values appraised for higher and higher home valuations.

The blame certainly doesn't belong to  all the appraisers.  They were manipulated and/or ostrasized.  However, those that played along are culpable.  And, to be sure, we can reasonably suspect that the players picked people, educated them as appraisers, and used them for their fraudulent deals.

Stats on numbers of fraud cases reported per year:

APPRAISAL Yearly fraud numbers

From an April, 2010 Mortgage Asset Research Institute TWELFTH PERIODIC MORTGAGE  FRAUD CASE REPORT

I'm going to dare, once again, to speculate on this chart and make some assertions.

Although it is clearly stated that the appraisal fraud and other mortgage frauds were alive, well, and even expanding in 2009, most of the homes were purchased before 2006.  

Many if not most with adjustable rates that wouldn't change for a few years.  I think, when homebuyers interest was about to rise and they found that no one would lend to them (now we know why), that they began doing some research and found fraud which didn't begin to be measurably reported until 2006.  This assertion might explain the huge spikes in appraisal fraud reports going up thereafter.  How many homes financed in 2004/5 were set to reset in 2009?

And lastly, it is important to see the huge increase in overall real estate fraud peaking in 2009 reported in the above referenced April, 2010 report.

Mortgage Fraud Indicators


Inflated Appraisals
• Exclusive use of one appraiser

Increased Commissions/Bonuses - Brokers and Appraisers
• Bonuses paid (outside or at settlement) for fee-based services
• Higher than customary fees

Falsifications on Loan Applications
• Buyers told/explained how to falsify the mortgage application
• Requested to sign blank application

Fake Supporting Loan Documentation
• Requested to sign blank employee or bank forms
• Requested to sign other types of blank forms

Purchase Loans Disguised as Refinance
• Purchase loans that are disguised as refinances
requires less documentation/lender scrutiny

Investors-Short Term Investments with Guaranteed Re-Purchase
• Investors used to flip property prices for fixed percentage
• Multiple "Holding Companies" utilized to increase
property values

A great history for understanding how "Mortgage Brokers" were unleashed:

A great case study:  The Largest Mortgage/Appraisal Fraud Case in Alaskan History

Will Short-Sale Appraisal Fraud Become the Big Story for 2010?




Personally, I am tired of our tax dollars being used to enrich the few, who don't even want to pay a fair tax on their ill begotten gains.  What socially unacceptable behavior!


Cartoon-  Student Loan

Originally posted to War on Error on Sat Oct 16, 2010 at 04:46 PM PDT.

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Comment Preferences

  •  Magnificent! n/t (13+ / 0-)

    50 states, 210 media market, 435 Congressional Districts, 3080 counties, 192,480 precincts

    by TarheelDem on Sat Oct 16, 2010 at 04:52:33 PM PDT

  •  this is my life in Riverside CA.. (15+ / 0-)

    foolishly I thought the appraisal on our house was real. Wells Fargo will be getting it back soon; sorry I've let the garden go to hell.

  •  I've got to admit (7+ / 0-)

    I worked in the mortgage field in the heyday, both as a broker and a closer/funder for a mortgage bank, and you are rather spot on, especially with regards to appraisals.  Please don't hold it against me LOL!

    Congrats! ;)

    Here is a test to find whether your mission on earth is finished: If you're alive, it isn't.

    by EdgedInBlue on Sat Oct 16, 2010 at 05:08:24 PM PDT

    •  No, no. I hope you made a bundle. (5+ / 0-)

      If you want to make a difference now, fill in the holes in the diary.  It's an outreach diary that I plan on publishing several times (UPDATE of course)

      I worked for a law firm 40 years ago and did a lot of real estate stuff, and my friend owned a title company, but to be honest, I have never worked in the business.

      Hey, I really enjoyed meeting you, btw.  Are you going to the Stewart rally?

      10.2.10 March On Washington ROCKED

      by War on Error on Sat Oct 16, 2010 at 05:15:08 PM PDT

      [ Parent ]

      •  Not even a lil (6+ / 0-)

        I got so disgusted with the process, I couldn't sell so I went to closing.  Then I got disgusted all over again and left entirely.  It was a not a fortuitous marriage of reality and misfortune I suppose cuz people made sackloads all around me.  I couldn't stomach it.

        I loved meeting you too.  No Stewart rally for me, I've got GOTV right up to the last minute, and CLEP in algebra, so no more DC for me.  'sides, my big man is coming from England in November, have to save my time up for that lil holiday! :)

        Here is a test to find whether your mission on earth is finished: If you're alive, it isn't.

        by EdgedInBlue on Sat Oct 16, 2010 at 05:18:55 PM PDT

        [ Parent ]

  •  I adore you. (6+ / 0-)

    I KNEW the appraisers were in cahoots.  I am a poster child for this scam.  I would have never signed a note knowing that the collateral for the note was anything but the real value of my real estate purchase.  The real value of my promissory was not the property, which is real, but rather a collateral debt instrument which is not.  I've been had.

    I would gladly volunteer to be a test case for any law group looking for a very sympathetic victim in a multi year battle over just this issue.  Litton Loan has been a nemesis since January 2008.  I have been in a courtroom three times facing eviction and negotiated a modification in a last minute Hail Mary.  The modification added considerably to the principal of the loan, lowered the interest rate for five years and was more cynical even than the original fraud.  Any legal eagles out there need a win?  I got a case for you.  MICHIGAN !!!!  We're number FIVE !!!!

    ObamaCare because Obama Cares. Next time you're hospitalized you can thank him. Just remember he delivered it for you.

    by Atilla the Honey Bunny on Sat Oct 16, 2010 at 05:32:34 PM PDT

    •  Call the FBI. (5+ / 0-)

      Why not?  You may be one of a group hoodwinked by whoever sold you your home.  Was it a One-Stop-Shop?  Was MERS on any documentation?

      And help take this story viral, K?

      It took 2 freaking years for my MERS story to make it to the network news.

      People don't have 2 years on this one.

      Here's a few websites to research the frauds.  Michigan was really hit hard, and is still being hit hard by mortgage/appraisal fraud.

      Justice Department - Foreclosure Fraud

      FBI Mortgage Fraud/Schemes - Beware of Reverse Mortgages, btw

      And a fascinating history of the MERS system that made the housing crisis possible:

      Even President Obama's property was RoboSigned!

      10.2.10 March On Washington ROCKED

      by War on Error on Sat Oct 16, 2010 at 06:02:27 PM PDT

      [ Parent ]

    •  Actually not most of them (4+ / 0-)
      Recommended by:
      devtob, chimpy, Lujane, indres

      Appraiser got totally screwed as a rule. Appraiser for the most part are independent contractors and not part of the big money grubbers in this mess.

      A few points;

      1. Appraisal fees did not go up in 10 years.
      1. Turn times go shrunk down to nothing. When I started doing appraisal average turn times were 2-3 weeks for a standard appraisal.  When I got out (because of the clear corruption going on) in 2003 turn times for a standard appraisal were between three and seven days.  Same amount of work.
      1. Banks started using more short form appraisals which often only required a drive by, no site inspection. These appraisals take almost the same amount of time to complete but the appraiser only makes 1/2 as much money.
      1. Many banks had moved to computerized appraisals, using sophisticated programs modeled on those the assessors office uses.

      There is way more going on than here than corrupt appraiser it is a corrupt system. The moral of this story is industry defined and enforced regulation does not work.

      •  Summer of 2010. (1+ / 0-)
        Recommended by:

        Electronic Appraisal Data Delivery

        Fannie Mae is launching its Collateral Data Delivery (CDD) initiative this summer in an effort to combat fraud, increase accuracy and bring transparency to its loan purchase process.  ...

        With the implementation of CDD, Fannie Mae requires that appraisals be delivered in MISMO-compliant electronic format at least 24 hours prior to loan purchase.

        Go to end of report to read this.

        What could possibly go wrong.  24 hours before loan purchase?  How about 5 days before, at least.

        10.2.10 March On Washington ROCKED

        by War on Error on Sat Oct 16, 2010 at 08:01:22 PM PDT

        [ Parent ]

      •  I suspect some appraisers made some (1+ / 0-)
        Recommended by:

        money, as in partnerships with the flippers.

        This statement from the report:

        It is worth noting that value inflation is almost always a direct consequence of incorrect, fabricated or omitted comparables and other information.

        Isn't this one of those truthisms that doesn't change over time?

        And, if so, it was true during the ridiculously inflated housing prices of the past 8 years.

        10.2.10 March On Washington ROCKED

        by War on Error on Sat Oct 16, 2010 at 08:04:28 PM PDT

        [ Parent ]

        •  That is the truth (1+ / 0-)
          Recommended by:
          War on Error

          And by the way is against the code of ethics and has been since there was a code of ethics.
          One of main problems is that the manipulation of the appraisal industry by the banking industry has made an honorable living into something that more and more honorable people run from.  Ridiculous deadlines, flat fees, long pay times and oh yea and huge liability.  

  •  I know someone in the appraisal (9+ / 0-)

    business during the real estate hey day a few years back.  He lost business because he refused to appraise homes higher than what he felt they should be.  He lost a great deal of business as bankers went to other appraisers who would give them what they wanted.  He went through some lean times while other appraisers around him did what the banks and real estate agents wanted.  He kept his integrity and he's busier than ever these days, even in a down market.  We used to have conversations about what was coming in the housing market well before it was news because you could see what was going to happen sooner or later.  

    •  I hope I mentioned that not all appraisers are (7+ / 0-)

      bad in the diary.  

      Good for him.  And the others need to take some time somewhere barred to think about their moral obligation to their fellow citizens.

      I hope he speaks up and helps people in your area fight back.  He could be a great witness for them to bring to court, along with this diary and a good lawyer.

      10.2.10 March On Washington ROCKED

      by War on Error on Sat Oct 16, 2010 at 06:05:00 PM PDT

      [ Parent ]

  •  fraud, and more fraud, I so hope for (4+ / 0-)
    Recommended by:
    devtob, chimpy, War on Error, indres

    investigations and indictments. Saw a new commercial today on national tv by JPMorgan, and how friendly they are and want to keep you in your home, and small businesses can complain about their loan if they don't think the terms are right. A real family commercial, but a load of BS just the same.

    All you need is ignorance and confidence and the success is sure. Mark Twain

    by pickandshovel on Sat Oct 16, 2010 at 06:02:51 PM PDT

    •  Really! I agree. (3+ / 0-)
      Recommended by:
      devtob, chimpy, pickandshovel

      I wonder how many subsidy companies they have working out there to steal back the homes at auction?

      Do see the movie Wall Street.  Michael Douglas gave us all a great gift as well as Oliver Stone.  It's all there.  The cards are laid out.  Wall Street is very, very dark.

      10.2.10 March On Washington ROCKED

      by War on Error on Sat Oct 16, 2010 at 06:08:13 PM PDT

      [ Parent ]

  •  What amazes me is how so many people persist (7+ / 0-)

    in blaming people who bought homes during this period for the mortgage crisis.

    It's long been clear that it was fraud, or negligence, or bad record keeping that got America's housing market in the mess it's in now.

    But read any article about the mortgage industry, and you will see readers comment that the home buyer was to blame for buying a house they could not afford.

    How people manage to cling to this belief in spite of all the information that the whole mortgage market was rigged is beyond me.

    I'm afraid that this 'blame the victim' attitude will get in the way of creating controls for the mortgage market that can --- at least for a while --- stop this abuse.

    As long as people persist in believing the fault for this crisis is the victim's I'm not sure there will be political will to create better oversight of banks.

    HylasBrook @62 - fiesty, fiery, and fierce

    by HylasBrook on Sat Oct 16, 2010 at 06:15:31 PM PDT

  •  I posted this on 2 March 2009... (5+ / 0-)

    Fight a guerilla war on foreclosures!
    by CT yanqui [Unsubscribe] [Edit Diary]
    Mon Mar 02, 2009 at 05:13:47 PM PDT
    Hundreds of thousand of American home owners are faced with overwhelming mortgages and many are facing foreclosure.  There is a way to fight back using a grassroots guerrilla operation and it’s important to do this before the hapless dupes in treasury start negotiating with the banks about foreclosure options.  What huge numbers of people must do is tell their banks, mortgage companies, lending institutions, or loan sharks to “produce the note.”  The actual promissory note between lender and borrower is the only evidence that a debt on anything is actually owed, and to whom.  The problem for the banks is that they are required to record and log every transfer of the thousands of notes they bundled and transferred into securitization trusts.  The banks have been sloppy in maintaining their books and most cannot find the original note, which is the actual contract that says you owe money.   If they cannot find the note (within a statute of limitations), they cannot prove you owe anything, and you cannot be evicted from your home.  So stay put.

    •  A Pyrhhic Victory (2+ / 0-)
      Recommended by:
      War on Error, zaka1

        We've already been sold down the river, unfortunately. Of course more property owners are waking up to the size of the scndal, but the they, as taxpayers now also "own" fraudulent MBS upon which CDS are based - i.e. the Fed - Maiden Lane II for example; Fannie, Freddie - the cute expedients that Bernanke and Hank Paulson conjured with the help of the big banks to securitize the bailouts are now ownned by global investors - Deutsche Bank, Saudis, Japanese, Chinese, god knows who else. So, if there is a "guerilla war" (which i nevertheless thoroughly endorse) by homeowners to bring the banks to heel, the banks will quickly find tehmselves under demand by their investors to refund the money - possibly including the Fed, Fannie & Freddie this is the nightmare. Not only will the investors expose the insolvency of the banks, and hence the US Govt., but the homeowners will have destroyed the value of the housing market by bankrupting the financial system. The US Govt cannot bail itself out of this one. The dominoes are all in place.

      "America is ruled by the moral philosophy of the dollar." Leon Trotsky, New York, Dec, 1916

      by runningdoglackey on Sat Oct 16, 2010 at 07:47:05 PM PDT

      [ Parent ]

      •  One can hardly blame the homeowners (1+ / 0-)
        Recommended by:

        There is a fix, imo.  It's in my conclusion statement at the beginning of the diary.

        10.2.10 March On Washington ROCKED

        by War on Error on Sat Oct 16, 2010 at 08:06:26 PM PDT

        [ Parent ]

        •  The fix is a matter of timing (3+ / 0-)
          Recommended by:
          alizard, War on Error, zaka1

          which i don't agree that the markets will accept. What if, for example, Bank of America found itself $70 Billion short suddenly - or rather the market found B of A that short? No bank has $70 Billion in cash it can afford to cover and that figure is not just pulled out of the air - it is the figure estimated for loan fraud simply from undocumented transfers on forecclosed properties - a guess but an educated guess.
            Reststructuring takes time. the only way to do that is through a resolution authority. the resolution authority must be backed by full faith and credit of the US Govt., but the Us Govt. holds MBS as security on those same properties, efffectively calling its own solvency into question.
            As bad as the forecclosure scandals are presently, they are chickenfeed to the potential cascade of problems from the same MBS/ CDS fiaso that crashed the markets in 2008. The difference this time is that the US legal system, and not the financial apparatus, may precipitate forced disclosure of liabilities. Quyick fixes to that are out of the question without broad and relatively quick nationalization: i can't see eitherr Congress or Obama having either the balls or the foresight to do that since they didn't do it when disaster was staring in the face a little over 1.5 years ago.

          "America is ruled by the moral philosophy of the dollar." Leon Trotsky, New York, Dec, 1916

          by runningdoglackey on Sat Oct 16, 2010 at 08:23:26 PM PDT

          [ Parent ]

          •  The darn laissez faire idiots (2+ / 0-)
            Recommended by:
            alizard, runningdoglackey

            took the bailout in the wrong direction.

            The citizens buying power is what held the country up.  Not the TBTFs.

            And no credit after the bailout.  That was, imo, an act of war against the security of our country.

            And now the ax is poised to fall.

            Did you read Pluto's diary?


            And this insight to the new IMF?


            And that food prices are poised to go up a lot?


            Together, they paint a gloomy picture of hyperinflation and a devalued dollar.

            The US is about to lose the Economic World War unless they pull their head out of the sand and MAKE the banks lend and the corporations hire AND make sure someone is living and paying something for every home in America:  No empty homes.

            It will be slow, but there is window for recovery unless this is all being done on purpose with the powers of the IMF.  Our very own Shock Docrine.  It's our country's karma.

            10.2.10 March On Washington ROCKED

            by War on Error on Sat Oct 16, 2010 at 08:50:35 PM PDT

            [ Parent ]

            •  Central Planning anyone?? (1+ / 0-)
              Recommended by:
              War on Error

                 With Republicans taking over more seats, and even without a majority, being in position to block anything sane and rational, who thinks the chances of a World War II style central planning for the real economy has even as much chance as a snow ball has in hell?
                 This is the result of government by patronage.
                 And it's going to feudalize the US Government to the point of effective insolvency at which point the global markets will attack.
                 Does anyone actually believe that the Age of the Middle Class is not over?
                 Those who do are the only ones who will be surprised when the fascists and the corporatists legalize violence and suppression. And what's left of the Midle Class will be the enablers until they realize, too late, that they are the victims.

              "America is ruled by the moral philosophy of the dollar." Leon Trotsky, New York, Dec, 1916

              by runningdoglackey on Sun Oct 17, 2010 at 05:55:53 AM PDT

              [ Parent ]

              •  Are you saying It Is Happening Here (1+ / 0-)
                Recommended by:

                Sinclair Lewis was psychic

                If you get a chance and haven't already I recommend reading

                The Rise of the Fourth Reich by Jim Marrs.

                It's full of empirical evidence to back up what you posit above.

                10.2.10 March On Washington ROCKED

                by War on Error on Sun Oct 17, 2010 at 07:55:43 AM PDT

                [ Parent ]

  •  more information on the crime of the millenium (6+ / 0-)
    Recommended by:
    devtob, chimpy, Pluto, War on Error, zaka1, Joieau

    Lots of stuff on Naked Capitalism and and Foreclosure Hamlet.

    I recommend Naked Capitalism first for an overview.

    When we have a situation , where banks have thrown people out of homes they had no mortgage on because they paid in full, where mortgage payments frequently don't get credited against the mortgage accounts, where two or more lenders tried to foreclose on the same property at the same time... the problem is a lot deeper than "deadbeats" and 'minor paperwork problems.

    It's very likely that any title MERS did mortgage stuff on may be questionable.

    Wondering who holds the note for your mortgage?

    SEIU has a Where's The Note website that will walk a homeowner through the composition of a legal demand letter for information regarding who owns one's mortgage. And encourages the homeowners among their members to find out whether there is a problem or not.

    Looks like good advice to me.

    Looking for intelligent energy policy alternatives? Try here.

    by alizard on Sat Oct 16, 2010 at 06:27:09 PM PDT

    •  Here's my concern. (4+ / 0-)
      Recommended by:
      devtob, chimpy, alizard, Pluto

      I wrote this because there is little focus on the proven fact that people were underwater the minute they signed their closing papers.

      It took years here for MERS to make it to the mass media.

      People don't have 2 years.

      PLEASE help me take this APPRAISAL FRAUD STORY viral.

      Not only is the note separated from the MBS, but there is no record of title transfers either.  If MERS doesn't have an electronic record, anyone of the mortgagors along the way could make a claim on a property.

      AND OUR DAMN CONGRESS LET THIS HAPPEN by underfunding/understaffing the COPS/FBI.

      10.2.10 March On Washington ROCKED

      by War on Error on Sat Oct 16, 2010 at 06:43:14 PM PDT

      [ Parent ]

      •  I'll put this out on my mailing list (1+ / 0-)
        Recommended by:
        War on Error

        I doubt anyone will be surprised. Given the level of demonstrable fraud in the rest of the process, it would be more surprising if there weren't appraisal fraud at the front end. Appraisal fraud on a massive scale would also be a good way to manipulate the markets.

        And getting people to do it is just a matter of picking the right incentives.

        Looking for intelligent energy policy alternatives? Try here.

        by alizard on Sun Oct 17, 2010 at 03:12:07 AM PDT

        [ Parent ]

  •  Tipped and (5+ / 0-)

    rec'd for one hell of a great diary chock full of truth.  I lived in Chicago when all this started, being as old as I am I knew this was going to be a mess when I watched the house across the street rise in value about $200,000.00 in a one to two year period.  Made me feel like I was living in some alternative universe.

    Those of us with average salaries were priced out of living in whole cities, and then states.  I agree with you, America is one big crime scene and where the hell were our representatives?  This should and could have been prevented.  What a sad ending for many of us that just wanted a better life and a place called home.

    Thank you War on Error.

    Certain violations of the social compact are too terrible to utter aloud: this is the meaning of the word unspeakable. Herman.

    by zaka1 on Sat Oct 16, 2010 at 06:59:20 PM PDT

    •  I know what you mean. I had to sell the (3+ / 0-)
      Recommended by:
      chimpy, zaka1, runningdoglackey

      family vacation home because the taxes went from $2,000 to $8,000 in three years based on the inflated property values.

      It was a summer place, no furnace, just a wood stove on an island in Maine.  Sigh.

      The people whose generations had lived there were forced off the island.  Now just rich, snobby people live there.  Hope the sea rises and swallows their ocean-gated community.

      10.2.10 March On Washington ROCKED

      by War on Error on Sat Oct 16, 2010 at 07:17:41 PM PDT

      [ Parent ]

      •  LOL (1+ / 0-)
        Recommended by:
        War on Error

        I know what you mean when you say that you hope the "sea rises and swallows their ocean-gated community."  I have that feeling of the ruffed-up seven year old in me too saying things like that as well.  Well, not only do I hope the sea rises, but I hope their teeth fall out too.

        I'm so surprised this didn't make the rec'd list, it should have.  And I'm sorry you lost your vacation home, it sounded simple, but a get-away, something we all need even if we aren't rich.

        Certain violations of the social compact are too terrible to utter aloud: this is the meaning of the word unspeakable. Herman.

        by zaka1 on Sat Oct 16, 2010 at 08:25:13 PM PDT

        [ Parent ]

        •  We had our very own beach! I miss that (1+ / 0-)
          Recommended by:

          and the ocean.  In the western mountains now.

          10.2.10 March On Washington ROCKED

          by War on Error on Sat Oct 16, 2010 at 08:51:45 PM PDT

          [ Parent ]

        •  I think the rec list is for GOTV until after the (1+ / 0-)
          Recommended by:

          elections, as it should be.  Pluto's diary should have been rec listed, too.

          I will repost a few more times so people can get the help this diary offers.

          10.2.10 March On Washington ROCKED

          by War on Error on Sat Oct 16, 2010 at 08:52:45 PM PDT

          [ Parent ]

          •  I don't (1+ / 0-)
            Recommended by:
            War on Error

            want to get banned, but I'm getting politically burned out, very badly, after almost forty years of bad politics and things keep getting worst.  I know that is very glass half empty, but it is how I feel.  I think a lot of us worked hard, I know I did and a lot of others probably like yourself did too.  I'm too old to rebuild and have been sick, so this last ten years has been a doozy.  

            I do hope for better times, and I hope someday you get a piece of beach back.  I think this diary as well as Pluto's, which I missed, really are more of a comfort to people and give people more pertinent information than what other idiots we can elect to keep screwing us.  Sorry, just tired of the American struggle.  

            Certain violations of the social compact are too terrible to utter aloud: this is the meaning of the word unspeakable. Herman.

            by zaka1 on Sun Oct 17, 2010 at 01:02:37 AM PDT

            [ Parent ]

            •  It is tiring. (1+ / 0-)
              Recommended by:

              And you take care of yourself and others.

              There's plenty of us left who are lucky to have health and determination.  We will carry you.

              And thanks for your years of political service.

              Do vote, however.  The thought of the tea baggers being used by soulless corporations as poliltical fronts for their bidding is much to frightening, especially coupled with their intolerant and misguided "religious" fervor.

              I'm not quite ready for a fascist, theocratic, totalitarian existence.

              10.2.10 March On Washington ROCKED

              by War on Error on Sun Oct 17, 2010 at 08:00:45 AM PDT

              [ Parent ]

  •  Killer Diary! (5+ / 0-)
    Recommended by:
    chimpy, alizard, War on Error, zaka1, whoknu

    Thank you for compiling this. Just the info I was looking for.

  •  Oh there was this little tickle (2+ / 0-)
    Recommended by:
    War on Error, zaka1

    in the back of my mind...

    I remember hearing rumors of appraisal fraud back in 2005-2006.  People losing their license but others willing to take their place.  

    Fortunately, I bought in 1996.  The market was still hot, but even with a few refinances and taking a little cash out, I am still sitting with some equity even if I use a conservative estimate, like $30,000 below market.

    Thanks for doing the leg work on this.  I have been trying to hit this whole story of foreclosure fraud hard on twitter and with people I know so they will be aware of the implications.  

    Interestingly, had a meeting with some clueless bankers on Thursday who don't happen to have their name in the news (yet).  They were rather smug and one gave a little speech about how it was too bad this little glitch happened because it was slowing down the foreclosures. He said "We need to get it all behind us".  I had a hard time not laughing in his face.  I told him, "I've been following this story and I could quote you chapter and verse..." and left it at that.  Whatever, go back to your golf game buddy, enjoy it now because you won't be so smug soon if there is any justice.

    Loyalty to petrified opinion never yet broke a chain or freed a human soul in this world--and never will. Mark Twain

    by whoknu on Sat Oct 16, 2010 at 08:07:16 PM PDT

    •  Thanks, please help (2+ / 0-)
      Recommended by:
      zaka1, whoknu

      this go viral.

      These charts and info need to be on the TeeVee asap.

      Good grief!  It took them 2 years to catch up with the MERS story.

      10.2.10 March On Washington ROCKED

      by War on Error on Sat Oct 16, 2010 at 08:10:37 PM PDT

      [ Parent ]

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