We all know that most, if not all, of the subprime lenders that were originating the loans we are now defending for homeowners were engaging in various degrees of widespread fraud and deceit in order to close the loans. Our borrower clients were not sophisticated enough to catch the fraud or participate in it, but every level of the originating lenders were. Take the attached lawsuit against filed by a mortgage insurance company against Countrywide Home Loans for instance, in it,
They admit we didn’t actually review the loans we were insuring, we trusted Countrywide and relied on our “delegated” model for reviewing. (That means we didn’t look at all at the loans, we just issued an insurance policy.) The astonishing this is that there were billions of dollars sloshing around between originating the loans with shady brokers here on the ground level to when they were packaged, insured and sold to trustee, then investors and no one was actually looking at the loans themselves. I was a broker, we made loans and we would never do a loan unless we actually looked at everything, credit, income, visit the home.
The subprime mess was caused because no one, and I mean no one was looking at anything and they were all lying to one another…every player at every step in the process. And they needed unsophisticated players like our clients to start the chain of lies that started when the loans were originated then went all the way to the White House.
There is so much pushback from the remaining servicers and lenders who are fighting and preventing even reasonable modifications from occurring. One fascinating thing that befuddles me is the fact that if the laws on fraud and improper inducement were really followed here that might provide us with real opportunities to use proven allegations of fraud to force the hands in these modifications.
Read the lawsuit and let’s use the swarm strategies to pull all these pieces together.