Days
Commentator
Six years ago, today, the Stock Markets were in full blown panic, the DOW-Jones was moving a 1000 pts per hour, up and down, often in 2000 pt swings; a quarter of the index was often times erased in a bad 2 hour swing; it was total mayhem... what caused it?
We were told it was sub-prime mortgages.
that was a Lie
It was also reported that identity theft was knocking on the door of ten million per year in America... but no one asked how much theft that was adding up to. Identity theft could be as small as a $150 purchase on a credit card or it could be as big as a $1,500,000 mortgage for a new home. Just saying how many thefts were happening didn't really tell us how much money was stolen. That was not a number the banks wanted to show up in the media. Banks always want to appear to be secure, credit works by faith and it is ever so important that the general public's faith in your bank is well guarded.
So, would if, 10% of the id thefts were happening in the mortgage industry. And would if the average size of loan that was stolen was $500,000. That's $500,000,000,000 ($500 Billion) per year in mortgage fraud. Would that be enough to rock the financial institutions on Wall Street? Would if, 20% of the id thefts were mortgages? That's $1 Trillion per year in mortgage fraud. Would if, 50% of the id thefts were mortgages? That's $2.5 Trillion per year in mortgage fraud. Did you know at the height of the housing boom 40-50% of the mortgages bought by Wall Street were fraud? Did you ever stop to think how much money was stolen? If citibank was losing $10 Billion per quarter at the height of the fraud, does that really mean that their normal $10 Billion profit per quarter was undercut by a $20 Billion loss in mortgage fraud?
Not one penny of the massive write-offs were real mortgages, sub-prime or otherwise. A write off only happens on fraud. Mortgages are guaranteed by Title. Title insures every dime they close, that's what makes mortgages safe to sell. Wall Street banks were opening bundles of mortgages and 40-50% of them were complete fraud, even the Title insurance was worthless. I'll explain how the scam works next paragraph, but at this point, think about a genuine mortgage with a real borrower. That loan is insured by Title, so the Wall Street bank that buys it is protected from fraud. Now think about a genuine loan that goes bad from the gitgo... by the way, the worst it ever got was 10% of American loans defaulted on the first payment; most of them due to the servicing bank not being able to get the first billing out on time; those loans generally were not bad loans, and the payments were generally caught up... but lets look at a loan that has a genuine borrower and it goes bad from the gitgo, doesn't matter whether it is AAA credit or C,D paper (subprime is A-,B+) what happens to the banks that bought those loans? Do they write them off? Hell no. Mortgages are backed by real property. They sell the loan to Countrywide (because they have the biggest foreclosure unit) who then forecloses on the borrower. The banks do not lose a dime on real mortgages. It simply doesn't matter what the credit is, if it was a real mortgage, there was no write off.
However, if the mob set up a broker and Title (all legally) and if they had enough money for the Title to self insure (and they did) ... self insured just means that the Title company was insuring the loans it closed out of their own pocket; giant title companies like Chicago Title are self insured, all it took back then to self insure Title was proof of assets; you didn't have to buy a bond, just show you had enough $millions and opt to self insure ... then what they did was run fake loans for about two months. Their Title received the Lender table money, but instead of paying off the old loans, or builders, they ferried that money off God knows where, and after 6-7 weeks of closing loans, just as the system was closing in on them, the people running the operation would vanish. At the height of the housing boom, all Title companies were jammed, even a small office would close 25 loans per day, and a large office over 100. Let's say our mob operation closed 50 loans per day at an average of $500,000 per loan. That's $25 million per day, let's run it 6 weeks... 30 business days times $25 million per day = $750 million in mortgage fraud. Then pack up and move to the next state and spend 3 months setting up and run it again. One operation could do $2-$3 Billion per year. The mob jumped all over the game, even they had never seen money like that... the longer they ran the scam, the better they got at it. I heard about lots of professionals that got caught breaking laws, but I never heard about one single mob operation that got caught. Of all the illegal crap the mob pulls, this was probable the easiest thing they ever did. They just used false id for their brokers and Title; once they left the premises, the authorities had no way to track them.
Right around 2003, MERS took over. This was doing business on the internet. There was no security. The systems were brand new, clunky, confused, and the bankers only knew banking, not internet software. The IT people only knew internet, not banking. The mob jumped into the game immediately. By 2008 so much money was stolen, and not a dime of it was ever recovered.
take a breath. think about this:
at the height of the housing boom, 40-50% of it was fraud.
the real boom (real business) was only slightly over half as big as the actual boom we experienced.
And sub prime mortgages were never the cause, but they did become the victims, because after the collapse, some 3 million jobs were lost and that's what fueled the foreclosure tsunami.
Every banking professional familiar with the mortgage industry knows what I've written here. And yet, the truth never comes out. So are millions of Americans keeping it secret? Nope, just the media. Bankers talk to each other constantly, but the rest of you are too dense to understand. Do the large banks that incurred the big losses tell lies to the media to cover up their vulnerability to theft? Always have, always will.
We were told it was sub-prime mortgages.
that was a Lie
It was also reported that identity theft was knocking on the door of ten million per year in America... but no one asked how much theft that was adding up to. Identity theft could be as small as a $150 purchase on a credit card or it could be as big as a $1,500,000 mortgage for a new home. Just saying how many thefts were happening didn't really tell us how much money was stolen. That was not a number the banks wanted to show up in the media. Banks always want to appear to be secure, credit works by faith and it is ever so important that the general public's faith in your bank is well guarded.
So, would if, 10% of the id thefts were happening in the mortgage industry. And would if the average size of loan that was stolen was $500,000. That's $500,000,000,000 ($500 Billion) per year in mortgage fraud. Would that be enough to rock the financial institutions on Wall Street? Would if, 20% of the id thefts were mortgages? That's $1 Trillion per year in mortgage fraud. Would if, 50% of the id thefts were mortgages? That's $2.5 Trillion per year in mortgage fraud. Did you know at the height of the housing boom 40-50% of the mortgages bought by Wall Street were fraud? Did you ever stop to think how much money was stolen? If citibank was losing $10 Billion per quarter at the height of the fraud, does that really mean that their normal $10 Billion profit per quarter was undercut by a $20 Billion loss in mortgage fraud?
Not one penny of the massive write-offs were real mortgages, sub-prime or otherwise. A write off only happens on fraud. Mortgages are guaranteed by Title. Title insures every dime they close, that's what makes mortgages safe to sell. Wall Street banks were opening bundles of mortgages and 40-50% of them were complete fraud, even the Title insurance was worthless. I'll explain how the scam works next paragraph, but at this point, think about a genuine mortgage with a real borrower. That loan is insured by Title, so the Wall Street bank that buys it is protected from fraud. Now think about a genuine loan that goes bad from the gitgo... by the way, the worst it ever got was 10% of American loans defaulted on the first payment; most of them due to the servicing bank not being able to get the first billing out on time; those loans generally were not bad loans, and the payments were generally caught up... but lets look at a loan that has a genuine borrower and it goes bad from the gitgo, doesn't matter whether it is AAA credit or C,D paper (subprime is A-,B+) what happens to the banks that bought those loans? Do they write them off? Hell no. Mortgages are backed by real property. They sell the loan to Countrywide (because they have the biggest foreclosure unit) who then forecloses on the borrower. The banks do not lose a dime on real mortgages. It simply doesn't matter what the credit is, if it was a real mortgage, there was no write off.
However, if the mob set up a broker and Title (all legally) and if they had enough money for the Title to self insure (and they did) ... self insured just means that the Title company was insuring the loans it closed out of their own pocket; giant title companies like Chicago Title are self insured, all it took back then to self insure Title was proof of assets; you didn't have to buy a bond, just show you had enough $millions and opt to self insure ... then what they did was run fake loans for about two months. Their Title received the Lender table money, but instead of paying off the old loans, or builders, they ferried that money off God knows where, and after 6-7 weeks of closing loans, just as the system was closing in on them, the people running the operation would vanish. At the height of the housing boom, all Title companies were jammed, even a small office would close 25 loans per day, and a large office over 100. Let's say our mob operation closed 50 loans per day at an average of $500,000 per loan. That's $25 million per day, let's run it 6 weeks... 30 business days times $25 million per day = $750 million in mortgage fraud. Then pack up and move to the next state and spend 3 months setting up and run it again. One operation could do $2-$3 Billion per year. The mob jumped all over the game, even they had never seen money like that... the longer they ran the scam, the better they got at it. I heard about lots of professionals that got caught breaking laws, but I never heard about one single mob operation that got caught. Of all the illegal crap the mob pulls, this was probable the easiest thing they ever did. They just used false id for their brokers and Title; once they left the premises, the authorities had no way to track them.
Right around 2003, MERS took over. This was doing business on the internet. There was no security. The systems were brand new, clunky, confused, and the bankers only knew banking, not internet software. The IT people only knew internet, not banking. The mob jumped into the game immediately. By 2008 so much money was stolen, and not a dime of it was ever recovered.
take a breath. think about this:
at the height of the housing boom, 40-50% of it was fraud.
the real boom (real business) was only slightly over half as big as the actual boom we experienced.
And sub prime mortgages were never the cause, but they did become the victims, because after the collapse, some 3 million jobs were lost and that's what fueled the foreclosure tsunami.
Every banking professional familiar with the mortgage industry knows what I've written here. And yet, the truth never comes out. So are millions of Americans keeping it secret? Nope, just the media. Bankers talk to each other constantly, but the rest of you are too dense to understand. Do the large banks that incurred the big losses tell lies to the media to cover up their vulnerability to theft? Always have, always will.
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