Whistleblower: Wall Street Has Engaged in Widespread Manipulation of Mortgage Funds
Cold Mountain TrailParticipant
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Among the toxic contributors to the financial crisis of 2008, few caused as much havoc as mortgages with dodgy numbers and inflated values… Twelve years later, there’s evidence something similar is happening again…Some of the world’s biggest banks — including Wells Fargo and Deutsche Bank — as well as other lenders have engaged in a systematic fraud that allowed them to award borrowers bigger loans than were supported by their true financials, according to a previously unreported whistleblower complaint submitted to the Securities and Exchange Commission last year.
Whereas the fraud during the last crisis was in residential mortgages, the complaint claims this time it’s happening in commercial properties like office buildings, apartment complexes and retail centers. The complaint focuses on the loans that are gathered into pools whose worth can exceed $1 billion and turned into bonds sold to investors, known as CMBS (for commercial mortgage-backed securities)…
The result: Many properties may have borrowed more than they could afford to pay back — even before the pandemic rocked their businesses — making a CMBS crash both more likely and more damaging. “It’s a higher cliff from which they are falling,” (John) Flynn said. “So the loss severity is going to be greater and the probability of default is going to be greater.”
Lenders and securities issuers have regularly altered financial data for commercial properties “without justification,” the complaint asserts, in ways that make the properties appear more valuable, and borrowers more creditworthy, than they actually are. As a result, it alleges, borrowers have qualified for commercial loans they normally would not have, with the investors who bought securities birthed from those loans none the wiser…
Data from early April showed a sharp spike in missed payments to bondholders for CMBS that hold loans from hotels and retail stores, according to Trepp, a data provider whose specialties include CMBS. The default rate is expected to climb as large swaths of the nation remain locked down…
May 17, 2020 at 6:40 PM #316403Ohio BarbarianModerator
- Total Posts: 13,776
This is good journalism to publish these details. This depression is going to start driving millions from their homes when the ruling class cranks up the foreclosure proceedings whenever an end is declared to the pandemic, or maybe even earlier. Hedge fund managers and real estate investors like Nancy Pelosi’s husband are chomping at the bit.
It is better to vote for what you want and not get it than to vote for what you don't want and get it.--Eugene Debs
If Democrats don’t stand for the people, why should people stand for them?--Jim Hightower
May 17, 2020 at 8:24 PM #316421
May 17, 2020 at 11:57 PM #316469not4saleParticipant
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It’s why most strip malls, which is most of American shopping now, are 1/3rd empty, corrupt banks inflate their mortgages so businesses can’t afford to do business there. Then the corrupt banks lie about it on “financial reporting sheets” while nobody looks into it, aka “deregulation”. The end result is there’s no chance for any mom and pop, brick and mortal business to make a living. If that doesn’t change the U.S. economy will never recover from covid-19.
The best thing that could happen is for the big banks to go under due to mortgage fraud, it would give the average American a chance again and would be huge for developing community businesses.
May 18, 2020 at 12:03 AM #316471Cold Mountain TrailParticipant
- Total Posts: 8,492
The end result is there’s no chance for any mom and pop, brick and mortal business to make a living…The best thing that could happen is for the big banks to go under due to mortgage fraud.
= exactly @not4sale
but it seems the plan of the ptb is to bankrupt everyone but big corporations, but all transactions & shopping on line where it can be monitored completely, and hide the real labor required in warehouses, fields, and delivery vehicles — disposable labor that can also be monitored and controled
Meanwhile, the shadow economy of the 1% will keep getting bigger uncontrolled & unmonitored.
May 18, 2020 at 12:14 AM #316473
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