Thursday, May 17, 2007

How Do You Start A Mudslide?

According to this Innman article Floria is the mortgage fraud capital but look at how California is closing in
2006 2nd
2005 8th
2004 19th
2003 23rd
2002 30th

From the article:
Kempner said the MBA has asked the House and Senate Appropriations Committees to set aside $31.25 million over a five-year period to provide 30 new FBI field investigators and two new prosecutors at the Department of Justice to coordinate prosecution of mortgage fraud cases. The MBA also advocates providing $750,000 for task forces that would target areas with higher-than-average concentrations of mortgage fraud.

Perhaps the outrage is having an effect?


The Dude said...

FIRST!...yet again. Yawn......

Anonymous said...


Unknown said...

I posted this on the previous thread. This pertains to the this thread. I didn't make first b/c I was attempting to have some related info to the thread. Thus I am a looser once again.

Eth Real,

The bottom of the article has a phone number to send in tips.

Send tips or a Letter to the Editor to, or call (510) 658-9252, ext. 150

I wonder if they would like to do a piece on how much casey committed fraud? In the words of Casey... 'Let's do it'

Unknown said...

I just sent in a tip to the above article author's email address about Casey in case he is interested in looking into the amount of fraud one person can accomplish in just 8 months.

Unknown said...

and here is some fluff from Mr Bernanke. How can anyone believe the last 2 paragraphs??

'Bernanke said while it was likely that there would be further increases in mortgage delinquencies and foreclosures this year and in 2008, he did not believe this problem would be enough to derail the overall economy.'

'But in his speech, Bernanke said that the "vast majority of mortgages, including even subprime mortgages, continue to perform well."

He said that past gains in home prices have left most homeowners with significant amounts of equity in their houses and the growth in jobs and incomes should allow most households to keep their financial obligations in a manageable range.'

The Dude said...

Perhaps the outrage is having an effect?

Call me jaded, but I don't believe the authorities will do a damn thing. Oh, there will be a few high profile prosecutions to show the population how "on top of it" they are....but in the long run mortgage fraud will be just like the Anna Nicole Smith story. A flurry of attention and soon fade to a footnote and news filler on a slow day. '08 elections will crowd out any other "news" and politicians will be more focused on "victims" and bailouts than catching the bad guys.

Just my 2 1/2 cents worth

Anonymous said...

the dude:

" Oh, there will be a few high profile prosecutions to show the population how "on top of it" they are....but in the long run mortgage fraud will be just like the Anna Nicole Smith story."

I agree with you. If the mortgage fraud was a prevalent as I suspect it was, it'll be like freeway driving...the authorities will only pull over the most egregious violators.

Snowfake certainly fits that bill, but I ken that mortgage brokers will be the patsies on this one.

OT one hand, there's the public with their Dickensian foreclo stories...can't alienate them.

OTOH, there's the Money people.

In the middle, and taking heat from both sides?

Nigel Swaby and his ilk.

Rob Dawg said...

Bernanke's error is in assuming that those performing mortgages will behave as they had in the past. That behavior was predicated on borrowers having skin in the game." This time IS different. These people with 0% down are not going to tough it out for a few years to get back to zero unlike people in 1990 who toughed it out to get back their 20%. It gonna get fugly.

Unknown said...

I totally agree with you Rob. I have about 40% in mine right now so I consider myself safe. Besides I plan on staying in the house long term so even IT it's down right nasty here in the DC area as long as we make payments we're fine.

Off Topic. Anyone here deep into the IT world? My company has asked me what it would take for me to be qualified to perform client work in this area. George Mason U here offers several qualifications. I thought first would be to qualify for MS certs.

I though MCSE 2003, Information Technology Foundation which includes A+, Network+, MCP CCNA and Security +.

I have self taught for years taking care of our office but would need real certs to do client based work. An

If you have info on this email me at ride_29 at

I don't want to clutter this board with offtopic sccchtuff.

Kerriella said...

Rob, Please understand that I am your basic layman(woman) that stumbled into this whole housing mess through Casey's USA today article. I know just enough to be concerned about what is going down but could you or someone please put into everyday speech what we are looking at happening over this whole housing debacle in 6 months time/ a years time/ and beyond? I would really appreciate it.

Oh and sorry I haven't been around lately. This sweat equity is kicking my ass. I am really sick of coming to work just to get a rest. LOL I will sure be glad once we get moved. In 2 weeks maybe I can quit going through EN withdrawals and actually catch up.

R-Boy said...

The Mortgage Banker's Association is 1.5 blocks away from my office. With Flailing's condensed Casey Serin Document, I feel sufficiently armed to pay them a visit.

I'll see if I can go during lunch tomorrow.

Anonymous said...

Jeez Rob, dirt + rain + hill = mudslide, duh. If you had read my latest article at SLCRE, "Dirt, Rain, Hills, and Mudslides: Is There A Connection?" you would already know this. Unfortunately for you, I deleted it in protest over Duane outing me as a linkwhore.

My mommy says I write good and that your just a bunch of bullys!

R-Boy said...

I think I can call Matt this afternoon

Anonymous said...

I don't want to clutter this board with offtopic sccchtuff.

Have you ever seen an EN thread stay on topic?

Rob Dawg said...

The short answer is "No one knows." This is one of those rare societal "uncharted territory" moments in history. There are some generalizations that the doom and gloomers all share. Housing prices will fall in real terms. The dollar will be devalued. The unfunded obligations of government and businesses will be inflation eroded. The middleclass will shrink back to more historical patterns. Credit will tighten. A lot. A real lot. This will cause asset deflation which will piss off the rich who aren't expecting that. There will also be some pretty odious tax changes as govt will not shrink and won't screw it "own people" in the future obligations camp.

Good thing you caught me in an optimistic mood.

Anonymous said...

someone please put into everyday speech what we are looking at happening over this whole housing debacle in 6 months time/ a years time/ and beyond? I would really appreciate it.
Being old enough to have lived through two house "falls" and nearly getting burned in the last one, it goes like this:
Prices start falling. Usually in areas that were stretched in the first place like new estates and urban areas near better quality areas that "rode the coattails" of their better neighbours.
Lenders tighten credit. They get jittery over whether they have much if any equity in some properties so cut back lending and tighten credit controls.
Interest rates, ARM resets etc increase mortgage costs for borrowers. Borrowers can't afford loans any more or lose jobs, have health problems that insurance doesn't cover etc and foreclosures increase.
Because of foreclosure increases plus market sentiment, prices drop. This feeds back into market sentiment. If you can afford to buy now but prices are dropping you might as well wait. So anyone selling has to cut their price to encourage a sale. People see prices being cut so wait longer to buy. Result, prices spiral down.
If you have been realistic with your budgeting and can afford a few more points on your mortgage (if it is adjustable) then you will survive (continued income assumed). If you have borrowed like 6 times income on an ARM you are about to get stuffed.
(Apologies if any terms or words are in English UK and not English US)
PS I believe only two things drive the market: sentiment and affordability. The second has been overly increased in the last few years both in the US and the UK.

R-Boy said...


Let me try to put a spin on what's going on. I know, ask 100 different economists and get 100 different answers, and all that, but I'd like to think that I kinda know what I'm talking about.

If I recall, you bought a home with a fixed rate mortgage and carried a payment within your means and you're otherwise financially responsible. Therefore, you're very likely fine (aside from complete economic meltdown, and in that case, no one is safe).

Where you can influence your future is how/where/and what you're investing in for the future.

In the short-term, we're looking at a nationwide 10% decline in RE prices. In some locations and some properties, this correction will be severe. Ceteris paribus, property that has grass will hold its value much better than property that doesn't.

In the mid-term, we have a looming financial crisis dealing with baby-boomers retiring, high medical costs, and national debt situation that makes the chair of the GAO squeamish. We can expect higher taxes and less benefits in the future.

In the long-term, we'll come out of it just fine with a lot of infrastructure to help growth, assuming we don't mortgage it all away to pay for debt-service (US economy here). Skilled workers will demand a premium, and unskilled workers will see very little real wage growth.

The dollar will devalue, but at some point so will China's currency, and at some point, this will spur US exports and bring us more in line.

Credit will tighten and we're going to go back to standard lending practices for awhile, partly because we tried to advance a market of products too fast. Technology outpaced our ability to handle it. This is a normal property of business/market cycles.

So basically, what we're going to see over our life-time (the gen-x group) is essentially what happened to England after it lost its seat as the global power). I sincerely doubt that utter devastation will visit those who hold true to good financial practices.

I would however, recommend investing in foreign currency indexes and stock markets with a part of one's portfolio to hedge against risk here in the uS.

I will gladly tackle any questions about any of the broad generalizations I have made here to the best of my ability. I do this for a living folks, and the good thing is, I'm paid to not BS.

Anonymous said...

This sweat equity is kicking my ass.

Sweat equity! Bling! Hiccup!

Peripheral Visionary said...

R-Boy: Good comments. Unfortunately, there's a real lack of forex mutual funds and solid, heavily diversified overseas funds. Far too many international funds have jumped on board the China roller coaster to boost their returns, which means that they're heavily exposed to the imminent Chinese downturn (and that downturn is coming, and when it comes it's going to be very, very ugly.) There are very few "good", "safe" international funds out there, especially funds with low costs, and I have yet to find them.

In reviewing the available Fidelity funds for my retirement account, I couldn't find a single good "anything-but-the-dollar" foreign currency fund. Even worse, nearly all the foreign bond funds were loaded up with high-yield from Asia, all the "global" stock funds were loaded up with Asian telecom and Chinese internet stocks, and even the "safe" European stock funds were loaded up with highly speculative biotech and mobile communications. Unless you've got the ability to pick and buy stocks and forex directly, there aren't good opportunities out there for hedging against the dollar and/or a global downturn.

segfault said...

The MBA also advocates providing $750,000 for task forces...

Well, Tim MBA can probably afford it. Oh, they said "the MBA," my bad...

Rob Dawg said...

Good points all. I'm also more than a little concerned that what they are calling investments are cross collateralized hedges and such. Everbank has some low yielding GDs demoninated in single currencies or small baskets. Might be a hedge against the dollar meltdown we all know is coming but none of can say when.

Anonymous said...


"If I recall, you bought a home with a fixed rate mortgage and carried a payment within your means and you're otherwise financially responsible. Therefore, you're very likely fine"

I'm there with you, closed March 20th with fixed interest rate.

(Actually had to UNDERSTATE my income).

Plan to die in the house.

I'm actually looking forward to a dollar devaluation.

My biz is heavily export-reliant, so employment opps will escalate.

And, just like the aftermath of the late 70's-early 80's, we'll be paying off the same homes with "cheaper" future dollars.

That said, if gaoline prices keep escalating, this will KILL the economy.

(What was that crap about "War for Oil"? Yeah...right!).