I’ve asked that question, but I think there are many more that should be examined:
‘The regulator of mortgage giant Fannie Mae has notified its board of directors that additional accounting issues “raise safety and soundness concerns.” The issues seem to focus on internal control and manipulation of income and expense. “This rule will ensure that Fannie Mae and Freddie Mac do their part to help combat mortgage fraud,” said Armando Falcon, Jr., OFHEO Director. “The Enterprises will now have a clear obligation to report fraud and help prevent a repeat of cases like the First Beneficial matter,” Falcon said.’
http://thehousingbubble.blogspot.com/2005/02/more-accounting-problems-at-fannie-mae.html
‘The Wall Street Journal reported that regulators are probing instances of employees falsifying signatures and accounting records.’ ‘The implementation of controls surrounding accounting ledger journal entries,including policies that prohibit the falsification of signatures..adoption of internal controls that limit the ability of personnel to overwrite database records.”
‘And on the 15th: “As it became known last week, Fannie employees have been “falsifying signatures and altering information in databases” and were “not isolated incidents”
http://thehousingbubble.blogspot.com/2005/03/smart-money-last-to-get-word.html
‘A new report put out by the Program on Corporate Governance at Harvard Law School attacks the “perverse incentives” at Fannie Mae. The Washington Post reports, “The study, distributed yesterday by the Program on Corporate Governance at Harvard Law School, also took Fannie Mae’s past pay practices to task for rewarding “failed” executives.”
http://thehousingbubble.blogspot.com/2005/03/open-corruption-rampant.html
‘David Reed writes in Realty Times that he doesn’t “like these..Payment Option ARMs.” “The name has been changed from the more sinister “Negative Amortization” moniker to the Barbie-like “Payment Option Arm.”…I’ll tell you why they’re being resurrected. Lenders can freak out pretty easily when they see their pipelines shrink..So what do lenders do? They find a new product and market the dickens out of it. And when one lender finds a new product, then the other lenders must follow or else they can be perceived as not having as many loan choices as the next guy.”
http://thehousingbubble.blogspot.com/2005/03/mortgage-broker-doesnt-like-credit.html
‘the Philadelphia Inquirer shows that even in a state with above average finances, the subprime programs are harming many communities. “For high-rate subprime loans..11.94 percent foreclosed each year..Two of every five mortgages made in Philadelphia by high-interest “subprime” lenders in 1998 and 1999 had resulted in defaults and foreclosures by 2003.”
“The article points out the financial trickery being employed. “Traditionally, the fear of losses kept banks from lending to people with bad credit. Since big banks have cut back on mortgage loans..Wall Street investors have stepped in, there is less risk for loan originators and brokers, because loans are quickly sold to other investors.”
http://thehousingbubble.blogspot.com/2005/03/subprime-defaults-rise-cracks-appear.html
‘Inman News. “‘We’re coming out with a ’stated Social Security program’,deadpanned Dan Rawitch,..igniting a delayed wave of laughter in his audience of listeners…Though joshing, Rawitch was making a serious observation about the headlong rush by lenders to market a slew of new, and more liberal, loan products intended to open up new flows of business, at a time when “traditional” originations are shrinking by as much as 40 percent.”
“One revived category is the “stated income” loan, where customers “state” their income amounts, without delivering the normal documented proof.’(T)he 40-year mortgage is really just a response to the fact that the market is shrinking.’ Lenders are trying to figure out “how to get that next customer into the game.” One firm “will pretty much originate [any]loan if an investor will buy it.”
“But not everyone is pleased with the environment, “Appraisers themselves are writing anonymous letters to regulators telling them that they are being pressured by lenders to come in with agreed upon values..and if they don’t come up with the value they’re off the job.”
http://thehousingbubble.blogspot.com/2005/03/mortgage-business-joke.html
‘National Mortgage News…”HUD’s Risk-Based Oversight of Appraisers Could Be Enhanced” “HUD’s process for verifying that appraisers meet all relevant criteria when applying for placement on its roster lacks effective quality control.. it does not require the HOCs (home ownership center) to target for review appraisers who have been recently sanctioned…HUD staff did not routinely visit properties to verify the work of contractors responsible for conducting field reviews.”
http://thehousingbubble.blogspot.com/2005/03/gao-appraisal-oversight-lacking.html
‘By now the newswires have changed the headlines from “CFO steps down” to “Countrywide names new CFO”. I couldn’t resist checking insider transactions for Thomas “Keith” McLaughlin, who has been Countrywides’ CFO since 2001.’
‘Lo and behold Mr. McLaughlin did sell over 200,000 shares on March 4th. You can’t blame him really, because everybody is doing it. Apparently insiders have sold 2.7 million shares in the last six months, 12% of their stake in the firm. And when you check how many shares were purchased; none.’
http://thehousingbubble.blogspot.com/2005/03/countrywide-exec-takes-money-and-runs.html
‘The National Association of Realtors put out a statement on their web site this morning which seems to reduce the significance of its own survey. Earlier this month the NAR report shocked the real estate scene with this revelation. “The new study, based on two surveys, shows that 23 percent of all homes purchased in 2004 were for investment, while another 13 percent were vacation homes.”
“But today NAR President Al Mansell said people buy homes for the long-term even if they are investors. “Real estate simply isn’t the kind of quick-in, quick-out investment that Wall Street is fond of. It’s a tangible asset.”
http://thehousingbubble.blogspot.com/2005/03/nar-backs-away-from-its-survey.html
‘Mr. Bill Fleckenstein went through the Federal Reserve meeting in December 1999, which was just released. “What I’d like to know is, given not just Alan Greenspan’s record but also what he says in public (and what we can now see he says behind the public’s back), how can this menace to society have any credibility whatsoever? (R)ead through these minutes just to get a flavor for how completely untrustworthy and shallow these people are.”
“And think about this statement from Greenspan the next time he says there is no collapse looming. From the 1999 transcript,”Owners’ equivalent rent is going to start to accelerate unless I misread how asset prices interact with consumer prices. The reason is that the ratio of owners’ equivalent rent to the value of housing has been going down continuously, and the implicit rate of return that that is suggesting cannot credibly be expected to continue.”
http://thehousingbubble.blogspot.com/2005/03/greenspan-fed-menace-to-society.html
I could go on, but I’m sure the point is made.
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