Mortgages for the subprime and non subprime groups are full of fraud.
There are very few EU and US states to my knowledge, that did not partake in their finance market's and licencing and credit rating authorities' frauds. The mortgages amongst other instruments in the US, UK and Europe are saturated in illegal transactions. They are all involved in their national finance system's fraud, with very few exceptions in the Western democratic states.
From manipulated and overly stimulated real estate asset values. Promoted by the markets' and the banks' easy cash, driving market demand to the Prime market, whilst not for the Sub prime mortgages, which corrected to extraordinary rates soon after their honeymoon period. Many of which were illegal and speculative, coming from bankers and brokerages directed through banks and shadow banking services. These brokers were licenced by the state and presumably monitored too, to ensure no illegal behavior took place. In reality this was not the case, see no evil, hear no evil, speak no evil was the order of the day, whilst offering mortgages to these dreamers from the lower rated levels of the borrowing groups, as the systen defined them. The OCC were heavily involved in holding back regulation to stop this practice, as was the US goverment. Read the Eliot Spitzer story for the background.
Watch this video before reading on.
DYLAN RATIGAN: FORECLOSURE FRAUD & $45 TRILLION DOLLARS
The banks have committed mortgage and foreclosure fraud (nov) 2010
2nd Look News
William K. Black on Financial Crime Cartel | April 20, 2011
The Mortgage scam in the Sub-Prime Market
The story I've yet to hear, in any investigative and explanatory way, is the sub-prime mortgage market and how the plot was set up, the repeal of the Glass Seagall Act would prove to be a foundation stone. William Black's clear understanding of the institutional and government fraud does not get into the Sub Prime problem specifically. Whilst I know from previous interviews that he understands the points, I wish to illuminate the issues. I will explain as succinctly as possible the sub-prime issues alone.
The banks and shadow banking world sent out brokers (newly licensed, by the FSA and FDIC authorities amongst other states' authorities), with no interest in anything but their fees. They sold really poor products to medium and low income families, with short term low interest rates or teaser rates as they were known. These teaser rates quickly changed to interest rates 100% plus higher than market interest rates at that time. From very aggressive and fraudulently acting lenders, who, at the first sign of late payment, would consume the payments as costs and increase their interest rates well above LIBOR. During this time the licensing authority would turn a blind eye, or be paid off by the industry. This guaranteed in many cases that the borrower would slip into default -and then the borrowing costs would increase yet again, finally culminating in the property being taken and sold back into the market at a loss to the securitised borrowers' and real lenders' (the investment markets'). Leaving the bankers' and Brokers' reaping their profit in fees, whilst the investors and banks passed their looses back to companies like AIG, Fanny Mae and Freddie Mac et.al style insurers. The loses would then be backed financially by their governments' tax payers, the people, which is where we are today.
This is a very simplified summary of the sub-prime issues and it was not limited to the sub-prime market. Because the AAA borrowers invested their profits back into the system too, through house portfolios and investment instruments, newly designed by the finance and banking markets. What was guaranteed, was, the Brokers and Banker fees, not to mention the high interest rates, which were very interesting too the investors, when looked at in tranche value terms on the securitised investment market. Everyone, but, the true lender, (who would became, the last one holding the security when the music stopped) -and the borrower, both lost, whilst the others took all the profits and little or no risks.
The trap had been set to confirm yet again, that people from sub-prime defined markets were not as valuable as AAA borrowers -and so, could be driven over the cliff for short term profit by bankers and brokers. Well now, due to the crises, we see the disappearance of many parts of the borrowing market as well as the lending market loosing their AAA ratings. And where the system of finance thought it would feed off the sub-prime market, for quick and short term profits, it soon found that liar loan products for the AAA and lower rated groups brought new fees too. The decease has now become a pandemic. The system is the disease -and it was organ driven, by that I mean the system was the major organs -and now the body is fully infected and quite possiblely, terminally ill, in systemic terms.
A warning to the newly formed and re calibrated AAA world.
For those who believe what they are told by the media and their governments today, they are no better off than the person making sand castles on the beach because the water has suddenly gone out, leaving them with what looks like a new or secured area to play. When this water finally returns, there will be sand in the Capitals' of many Western Democratic states in the west. We may also see some eastern states within the group if they allow western style central banking and bankers to continue bedding themselves into their finance system. As well as the Asset and Fund Managers who are in-bedding themselves too. Not to mention their financial markets which appear to have fully linked in recent times. This crisis has an enormous amount of energy left to expel -and it will over this decade ahead.
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