Friday, February 27, 2009

As Seen on TV

What the Boston Fed hath wrought:
Christopher Brooks, 39, pleaded guilty last fall to conspiring to commit wire fraud in connection with fraudulent loan applications on 18 Puget Sound-area homes that went into foreclosure and were sold by banks at a loss of more than $2 million.

....Brooks' mortgage-fraud scheme and the fallout spotlight an intensifying debate over how to deal with millions of loan defaults and foreclosures that are crippling the nation's housing and credit markets. ....

The FBI received more than 66,000 reports from banks last year, compared with fewer than 7,000 in 2003. Those suspected-fraud reports capture a fraction of the problem. Only banks — not other types of lenders or real-estate professionals — are required to report suspicious activity.

....The deluge of mortgage-fraud cases that is straining law-enforcement agencies now, experts say, could have been prevented if all lenders had followed traditional underwriting standards and been required to report fraudulent activity.

....At his sentencing today, Brooks was apologetic. "My intent going into this was not to take money from people, just flip houses, like they show in infomercials," he said.

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