Could We Have Prevented Widespread Mortgage Fraud?

[mEDITate-OR:
not see the size of the tunnel, bcuz of the light...in/on it.
Daniel, we could not agree with you more. As you of course know the SEC exists to provide/require not only information for U.S., but to enforce disclosure AND to prosecute fraud. One of the major problems with Non-Agency "securitized packages" of RE loans was that they did NOT disclose - hence the lawsuits - by the SEC, some borrowers, AND by investor/purchasors.

My only problem with this article, and it is the 2nd problem with non-agency securitzed RE loans which is, as you know, that they created US$ 2.5 Trillion subprime and ARM loans over a four year period 04-07. That little problem is One Thousand (1,000) times larger than the US$ 2 Billion problem you are writing about.

While it is also true that US$ 2 Billion in fraud is only what they have FILED upon so far, what is also true is that IF subprimes and ARMs were badly made loans, this fraud made them a lot worse. And, please note, almost ALL of this fraud was by the originator/lenders, not the originatee/the borrows. Normally, It takes two to tango - here only one side can create fraud both ways - against lenders and borrowers.

But, as you rightly point out, the regulations that DID exist should have been, and were not being, enforced. And, if the appropriate regulations did NOT exist, we owe it to ourselves, literally and figuratively, to adopt them, asap.
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Daniel, there are two aspect of these filings that you might not be aware of: first, these are only "charges". Since these are "white collar" crimes, most will probably be plea bargained down. However, in order to GET a plea bargain, they may be required "to talk", about who above them, and who else, was party to the fraud. That may expand the size of the criminal forum.

Second, simply the act of filing against these accused defendants, may cause others - both victims and other perps, those already suspected and many still unknown - to come forward. Why other perps...? Bcuz if they cut a deal BEFORE the charges are even filed against them, they may be able to obtain greatly reduced sentences, and even not have any charges ever filed at all. Motivated sellers - of information.
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Could We Have Prevented Widespread Mortgage Fraud?

http://www.theatlantic.com/business/archive/2010/06/could-we-have-prevented-widespread-mortgage-fraud/58370/
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