Good old fashion cheating has more to do with it.
Predatory Lending, or Mortgage Fraud?
"Mortgage fraud, the institute found, had soared in America, especially in states with a high concentration of subprime mortgages.................By one estimate, total losses from fraudulent mortgage applications were estimated to be about $3 billion annually�"and growing. The deception was clearly widespread, including false statements on mortgage applications about family income and current levels of indebtedness, submission of phony documents, and lying about the intended uses of the property that was being purchased.................bailout package agreed to by both Republicans and Democrats in Congress last week, essentially treat many subprime borrowers as victims of seedy mortgage brokers, opportunistic lenders and aggressive Wall Street houses..................the more time that passes the clearer we begin to see the extent to which many borrowers themselves may have participated in creating the mess from which we are preparing to rescue them.................many borrowers were more than simply naïve or overly optimistic; a good many were probably cheating.....................occupancy fraud’�"in which a speculator claims he will live in a house he is buying when it is actually a property he is purchasing for investment purposes— accounted for about 20 percent of all mortgage swindles during the go-go years of subprime lending...............Buyers hid their intentions because lenders generally require bigger down payments on purchases of investment properties.....................it now appears that as many as a quarter of their homes were being snapped up by speculators..................defaults by known speculators (that is, those who admitted they were buying investment properties) account for more than one-fifth of all mortgages going bad.......................Mortgage fraud, however, doesn’t stop at cheating by investors. There’s evidence that a wide range of borrowers, many probably aided by unsavory brokers, were using inaccurate data and phony documents to purchase homes they otherwise couldn’t afford.....................One lender which compared 100 stated income loans with IRS data found that in 60 percent of cases, the income that borrowers claimed exceeded their actual earnings by 50 percent or more. BasePoint found in its study that some applications exaggerated income by as much as 500 percent.........................Many apparently sought ’guidance’ from brokers in to how to tailor their personal details to qualify for mortgages they were seeking, and some merely turned over their applications to brokers and allowed them to fill in the details..................." |
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Written By:
jfw1961
URL:
http://
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It’s not just High school seniors
Frankly, these people are economically illiterate ;) |
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Written By:
Ralf Goergens
URL:
www.Chicagoboyz.net
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Yeah, its why depressing as it is, I think libertarian paternalism has a point. |
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Written By:
Harun
URL:
http://
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I do not think it is an accident that wide swaths of our population do not understand economics. To understand economics is to take power away from the political class. For instance, current energy concerns could be ameliorated if market drivers were allowed to operate with fewer constraints. Yet, that condition means a much smaller role for the political class.
Summary: If I’m a politician, I have much more power if YOU, my constituent, do not understand economics. When you understand economics, you will rarely ask me to manipulate market drivers.
—-John Johnson |
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Written By:
John Johnson
URL:
http://
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John,
I think you give politicians too much credit. Same end result though. |
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Written By:
Is
URL:
http://
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