Bottom line is that he is in an Pick a Payment loan, the World Savings rep inflated his income and essentialy helped contribute to his demise.

Is he to blame? I would say that this is down right predatory, regardless if he knew or contributed, which I know is not the case. His contribution was ignorance and in this case, it is not bliss.

Millions of borrowers have been encouraged and allowed to commit loan fraud.

http://www.michaelblomquist.com/complaint/Title/18/1014.htm

Clearly everyone involved should have known better; borrower, agent and lender. A second grade education, calculator and a few keystrokes should have raised enough warning flags to not proceed with this loan. This is just one of millions.

http://www.youtube.com/watch?v=Oya0PlwA-NM

After 20 years in the business I have seen this scenario hundreds of times and the homeowner will do whatever it takes to save their home…even commit loan fraud.

Now the borrower has lost his house for his involvement in the crime, but those who were most aware or should have been most aware of the crimes have been rewarded instead of punished. The agent received a commission and the executives at the lender have been grossly over-compensated for their roles.

Because we do not know all the circumstances regarding the loan origination we should not jump to conclusions, but most likely ignorance is not bliss nor does it place anyone above the law (foreclosure). We have to let the courts decide.

Hopefully, the lender received over-bids and there are excess proceeds to help out the owner. Regardless, if all the facts are as simple as presented the l/o should be forced to pay the borrower his commission and possibly lose his ability to originate loans, WB should be fined and the manager/executives indicted for loan fraud or at a minimum aiding and abetting.

Bank examiners and other market participants (debt rating agencies, investment bankers, etc) should also receive punishments for their roles in these crimes.

The impact from this fraud on our economy is incalculable. This has been a giant ponzi scheme, highly illegal and financial anarchy.

What I find very ironic is many of the l/os who were selling the deceptive option arm and SI guidelines are now one of the biggest percentage of foreclosure victims. Like the retired oldman the l/os were praying for a miracle (unlawful, lending madness to last forever)

The American Dream of Homeownership has been destroyed and this could lead our country and the world into the next depression….or worse yet the next world war.

LTCM, S&L crisis and the dot.com implosion combined pale in comparision. The American taxpayer will be paying for many years if not decades for these crimes. We need to address this issue not provide bail outs.

If I see another article about “laxed” lending guidelines I am going to puke. Current guidelines are not laxed; they are fraudulent and should be dealt with accordingly.

Either our government regulators are extremely inept or corrupt; either scenario is not acceptable. Duggan, Reich and Bair should all be removed from office immediately!

Loan fraud is just one of the many violations and is very easy to prove. A loan application and verified 4506-t is all that is needed.

Stated income guidelines had well established and prudent guidelines prior to 2004.

2 years of current, consecutive self-employment documented by CPA letter or business license

20-25% downpayment or equity (refi – c/o 25%)

excellent credit

6 months of stated income in reserves after down payment (not including cash out)
theme in the industry and one that has developed on the back of criminal activities.

These are prudent guidelines and should have remained the standard. Instead millions of borrowers were allowed to reduce existing housing supply. The lack of supply and unqualified demand created this enormous bubble that should have been stopped years ago.

This unconscionable sheep mentality and lack of rationale judgment has not been experienced since the holocaust.

Like the war on drugs you cannot improve the situation by convicting the user (borrower) nor the corner store dealer (broker). You need to arrest the kingpins. Lenders, credit rating agencies, investment bankers and corrupt government officials.

Unlike the war on drugs; credit and money is not a psychological addiction it is a necessity. Preying on the ignorant and greedy has created a situation where millions of Americans may receive bail outs at the cost of prudent Americans.

This potential bail out sends a very dangerous message; F/U as much as you want provided millions of others also F/U and you will get bailed out.

We need to demand that our government convicts these criminals instead of taking their campaign contributions.

http://www.discountrealty.com

As for refinancing to a fix rate, don’t even bother. At 6% 30fix he would be paying 1690 (PI only, TI not impounded) with the original loan amount.

Even though there are rampant abuses in this industry, I think this site and Moe have picked a particularly bad example. He signed the initial/final 1003, the final TIL, the GFE, the HUD-1 and had the presence of mind to pay down the prepay. He is of legal age and has the intellectual capacity to understand written contracts and notes. He should have been able to afford at least the minimum payment but was late BEFORE recast. I have to assume he made a bad bet, and now has to pay the price.

I understand that this is not a good loan to make, after all if you have a 50% front DTI on the MINIMUM payment, you’ll almost certain to run into problems in the future. However the fact that he received cash out and most likely able to understand what he signed will make this a weak case. He should not have refinanced his house at that LOAN AMOUNT, period.

I’m actually more concerned about WS having stated program on FIXED income. Stated deals are prevalent in the industry, and we need to have a tighter guideline (no fixed or wage earner stated or high net worth) or abolish it altogether so this kind of thing will not pass U/W in the future.