Whistleblower: Wall Street Has Engaged in Widespread Manipulation of Mortgage Funds

[alwaysinasnit]

https://www.propublica.org/article/whistleblower-wall-street-has-engaged-in-widespread-manipulation-of-mortgage-funds


Among the toxic contributors to the financial crisis of 2008, few caused as much havoc as mortgages with dodgy numbers and inflated values. Huge quantities of them were assembled into securities that crashed and burned, damaging homeowners and investors alike. Afterward, reforms were promised. Never again, regulators vowed, would real estate financiers be able to fudge numbers and threaten the entire economy.

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).

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This has the potential to be so much worse than the 2008 financial debacle. We need to reinstate Glass-Steagall.

[DeminPennswoods]

1. We need to regulate hedge funds

JHMO, but we also need to establish a seperate market just for betting on stocks. Bet and make trading algorithms to your hearts content and gamble away.

[yonder]

2. If the projection that moving workers out of offices

into a work from home scenario is or turns out to be, a real thing, then a commercial mortgage failure is only going to be made worse.

[Me.]

3. As Of Yesterday

There has been a 72% drop in rentals.

[Grins]

4. Gee. Wells Fargo, you say...?

AGAIN!

[uponit7771]

5. Nah, Wells Fargo would never do something like this.

[Yo_Mama_Been_Loggin]

6. Kick

[gratuitous]

7. The return of big shitpile

That's what Eschaton called it 12 years ago, and it looks like the banks are back at it. And why not? The U.S. taxpayers bailed out the banks then, and we'll get to do it again.