Sunday, September 28, 2008

The numbers don't add up. part 3

Predatory lending is defined as a type of lending that falls between appropriate risk-based pricing and blatant fraud and combines certain products, terms, prices and practices.  Ok lets think about this a loan is written to people with F type credit and  then 55.1% get a loan with little or no documentation required.   Then most of these people were written an ARM loan without concern if they would be able to pay the payment in the future. Many people are willing to do anything to get a home.  The practice of giving such a loan might be predatory lending.  Then again it could just be Mortgage fraud.  This happens when someone knowingly misrepresents the truth or concealment of a material fact in a mortgage application to induce another to approve the granting of a mortgage. Mortgage fraud refers solely to fraudulent schemes pertaining to residential mortgages.  Either way the question now is to bail the banks out or not to.  If you just paid all of the homes off it would sum up to $536,964,808,868.  But then if you pay off just those whose payments were late in the last twelve month which is 1,234,993 for a total of $227,136,207,581.  Maybe those in government should explain why they need $700,000,000,000.   

3 comments:

Connecticut Man1 said...

Reports of predatory lending practices are well documented. I have seen absolutely zero on mortgage fraud.

Unless you count credit check agenecies that were hand picked by lenders beause of their willingness "fabricate numbers" to ensure loan approvals? (That is documented fact in many of the cases as well)

BTW: Focusing on the mortgage aspect of it only excludes where the largest frauds were purpotrated: The shaow bank credit default swaps, credit derivatives, etc, that were manipulated to rape the financial system by these banks.

Mortgages, sub-prime or not, are just the tip of the iceberg in the crimes.

MauiBrad said...

"Either way the question now is to bail the banks out or not to. If you just paid all of the homes off it would sum up to $536,964,808,868. But then if you pay off just those whose payments were late in the last twelve month which is 1,234,993 for a total of $227,136,207,581. Maybe those in government should explain why they need $700,000,000,000."

Good question. First, I think Congress did the right thing today, regardless of the short-term reaction. To answer your question, most of that 700 Billion would not have been used for actual mortgages. It would have been wasted in trying to deal with 100's of TRILLIONS of dollars in worthless derivatives. Aloha, Brad

Alicia said...

I remember when you had to jump through some high hoops to get a mortgage. Show steady employment for 2 years, that you could afford the payment, have 20% down. Why is it such a surprise to have that down payment today?

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