JaneBlow
02-26-2009, 11:24 PM
This is a very disturbing article.
FBI saw mortgage fraud early
http://seattlepi.nwsource.com/national/397690_fbiweb28.html
An excerpt:
"Based on various industry reports and FBI analysis, mortgage fraud is pervasive and growing," Chris Swecker, then assistant director of the criminal investigation division, said in October 2004 before the House subcommittee on housing and community opportunity.
Then Swecker made a chillingly accurate prediction of the coming mortgage meltdown and financial collapse:
"The potential impact of mortgage fraud on financial institutions in the stock market is clear. If fraudulent practices become systemic within the mortgage industry and mortgage fraud is allowed to become unrestrained, it will ultimately place financial institutions at risk and have adverse effects on the stock market."
Swecker went on to describe the scenario that ultimately wrecked financial havoc around the world: "Often mortgage loans sold in secondary markets are used by financial institutions as collateral for other investments. ... When loans sold in the secondary market default and have fraudulent or material misrepresentation ... these loans become a nonperforming asset, and in extreme fraud cases, the mortgage-backed security is worthless. Mortgage fraud losses adversely affect loan-loss reserves, profits, liquidity levels and capitalization ratios, ultimately affecting the soundness of the financial institution itself."
Swecker declined recently to comment, other than to say, "My testimony in 2004 speaks for itself."
FBI saw mortgage fraud early
http://seattlepi.nwsource.com/national/397690_fbiweb28.html
An excerpt:
"Based on various industry reports and FBI analysis, mortgage fraud is pervasive and growing," Chris Swecker, then assistant director of the criminal investigation division, said in October 2004 before the House subcommittee on housing and community opportunity.
Then Swecker made a chillingly accurate prediction of the coming mortgage meltdown and financial collapse:
"The potential impact of mortgage fraud on financial institutions in the stock market is clear. If fraudulent practices become systemic within the mortgage industry and mortgage fraud is allowed to become unrestrained, it will ultimately place financial institutions at risk and have adverse effects on the stock market."
Swecker went on to describe the scenario that ultimately wrecked financial havoc around the world: "Often mortgage loans sold in secondary markets are used by financial institutions as collateral for other investments. ... When loans sold in the secondary market default and have fraudulent or material misrepresentation ... these loans become a nonperforming asset, and in extreme fraud cases, the mortgage-backed security is worthless. Mortgage fraud losses adversely affect loan-loss reserves, profits, liquidity levels and capitalization ratios, ultimately affecting the soundness of the financial institution itself."
Swecker declined recently to comment, other than to say, "My testimony in 2004 speaks for itself."