Some similarly business-minded folks from the old country also run into tough times, due to their own innovative ideas for creating wealth, just like Casey:

Uzbekistani immigrants await discussion of entrepreneurial methods

This will definitely help the bubble POP!

http://www.federalreserve.gov/boarddocs/press/bcreg/2006/20060929/attachment1.pdf

:-)

I can’t wait ’til all the homes in escrow TODAY will fall out of escrow this month!!!

hhahahha

Part of the issue with the manner in which these loans are handled is that people are too nonchalant when acquiring them. They are just under the comfortable notion that they will not be held accountable if they decide to default on their loans. Just file for bankruptcy and walk about with a poor credit rating.

How much more responsible would we be as a society if there were recriminations on loans and that we needed to work off all our debt. I bet that would produce some nice stabilization in both the credit card and mortgage industries.

Incidentally, although I am not a conspiracy theorist, but does anyone not find it VERY coincidental that the bankruptcy laws were changed last year? Certainly appears as though our government had an idea of what was coming and starting taking proactive measures to protect the banking system at the expense of people like Casey and his kind.

declaring bankruptcy = filing for bankruptcy PROTECTION from creditors
having applied for loans fraudulently => bankruptcy protection denied

I don’t want to see him in jail (which is also expensive to us, as someone already pointed out). I want him to see working for paying back his debts over 10-20 years, following a court-ordered payment plan, with this plan written into his credit report. Some hours of community service might fit in, too, as suggested.

> And, if we start chucking people in jail for overstated income & multiple ‘primary’ residences I strongly suspect the jails will fill up all to quickly.

Not jail, but paying off their loans without ability to discharge them through bankruptcy protection. Bankruptcy protection should be a privilege of the unlucky, and maybe stupid, but honest debtor. Fraud because of greed should be rewarded with a lower standard of living for a long time.

Sounds like the basis of the problem is that no one perceived their actions as having criminal intent - or to put it otherwise, most stated loan borrowers viewed their actions as nothing more than a ‘white lie’. And as you’ve describe it, it seems impossible to verify things ‘on the fly’.

Which leads to a big ouch! And a bigger ouch when the tab for tottering financial institutions is picked up by the taxpayer.

From your description the system is in disarray. It should have precluded people like Casey from borrowing that much but evidently it didn’t. I know that some will argue that that’s just capitalism at work, and you should own up to your mistakes. But loansharking is capitalism too, and that’s illegal. And giving a 24 year old access to ’stated income’ money is like giving them a Ferrari and bottle of scotch.

In the absence of moral hazard, the old rules of 20% down and verified income seem like they provided a good hurdle to fraud. It’s too bad those standards have been mothballed. I’m getting teary eyed thinking about the ruthless grilling the mortgage loan officer gave me some 20 years ago.

We’ll all be picking up the tab for this mess.

Cheers.

PS - And BTW, the mortgage officer of 20 years ago was right…

There are many tools out there…but IF the loan hasn’t closed, and the property is NOT in the persons name yet, how can a data base check that?

That is why they do it simultaneously.

There are only small signs that a person might be doing such a thing. I am not going to post the things a borrower can do to make it harder to catch. You would be surprised at how ‘dumb’ some people can be, and how surprised they act when you ‘catch’ them trying to do such a thing.

I don’t think it was much of an issue until the past few years when people wanted to ‘leverage’ as much as possible to make even more ‘easy money’.

SoCalMtgGuy

He won’t go to jail for debt - he’ll just declare bankruptcy. That much of the story is above board and legal. And, if we start chucking people in jail for overstated income & multiple ‘primary’ residences I strongly suspect the jails will fill up all to quickly. Perhaps the stocks need to be pulled out of storage and given a good airing in the public square!

SoCalMtgGuy,

I’m surprised there’s no computerized central registry? It would seem that loans of hundreds of thousands of dollars would warrent some real time - online credit checking mechanism. Though, I suppose that would defeat the the purpose of stated income loans.

What a truly strange industry. I suppose thats a result of having a commissioned person processing paper that someone else is holding the bag for. I suspect in 6 months there will be a lot of angry pensions funds (and no doubt, Chinese & Japanese investors).

This whole thing is like a dog turd on your shoe that you’ve just tracked through the wall-to-wall carpeting in your new house.