Stock markets around the world take a huge hit based on the uncertainty created by the mortgage mess in the United States. The headlines are in every paper. I just read the Los Angeles Times, New York Times and Chicago Tribune, along with The Herald, Seattle Times and P-I. The mortgage mess didn’t just happen, it was created by the mortgage industry making questionable and even fraudulent loans and then selling the loans to others as good.
These lenders lowered or eliminated their underwriting standards in order to make huge up-front fees because they knew they could then sell the bad loans to someone else and escape the burden of risk and potential loss.
Lenders had a name for these loans; they called them “liar loans.” That’s correct, the lenders themselves called the loans “liar loans” because they knew the loans were based on lies. Everyone knew this was going on; the Fed, SEC, the state regulators and of course the industry. As a real estate broker I watched and waited for someone to blow the whistle and stop this insanity. No one did.
All the large lenders should be under investigation for fraud. They intentionally loaned money to very bad risks, and then packaged and sold the loans to others. They didn’t disclose the risk (as required by law) and now every single homeowner has had their property values eroded. Investors and pension funds are facing large losses. The credit markets and the real estate market will take years to recover. Where are the investigations of the lenders that created this mess?
Mike Mitte
Lynnwood
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