It doesn’t matter whether its tulip bulbs, dot com stocks, or overpriced McMansions, the elements of every bubble are exactly the same. And without easy money, speculation, and fraud none of them ever could have happened.
Here’s a mind boggling story from Detroit that has them all.
From the Detroit News yesterday by Ron French and Mike Wilkerson entitled: Fraud deepens Michigan housing crisis.
"Mortgage fraud was easy for Hani Mortada. And the money was a lot better than what he had earned as a part-time clerk at the Dollar Store.
From 2002-04, the Lebanese citizen went from a struggling part-time college student in Dearborn to a mortgage loan officer with $25,000 in the bank and a Cadillac Escalade in his garage. In those heady days, money came fast and the chances of getting caught were slim.
"I knew (lenders) would not call to verify (loan information)," Mortada told a federal jury in Detroit. His group of scam artists had "the best underwriters and the best banks — you would not even believe what they would do."
Instead of income statements to see if they qualified for a loan, Mortada would do just the opposite: Calculate how much income was needed and write that number down as the applicant’s income.
"So do you say, ‘Sir, you’re applying for a loan, how much do you make?’ " asked Assistant U.S. Attorney Cynthia Oberg.
"Basically, we don’t ask the customer anything," Mortada said.
To justify the false income, Mortada would create phony W-2s and pay stubs. Some buyers approved for mortgages didn’t even have bank accounts. If Mortada believed the loan underwriter might check on the homeowner’s finances, he’d add the home buyer’s name to his own bank account until the mortgage was secured. Others had no credit score because they had never borrowed money, and Mortada and his cohorts would create phony loans on which the home buyer had allegedly made timely payments.
At times, Mortada would pose as the employer of a loan applicant to verify employment.
"Sometimes we chose where we wanted him to work," Mortada testified. "If his income should be $60,000 (to qualify) and he work(ed) as a waiter, it’s not going to make sense So, we put him as a manager, accountant, any job that fits the profile."
Committing fraud is easy, explained Abed Hammoud, Wayne County assistant prosecutor and member of the county’s interagency Deed Fraud Task Force.
‘You don’t have to pull a gun on someone. You don’t have to be on camera with a dye pack (as you are when robbing a bank). You’re sitting at a desk. Someone brings you coffee. There’s a lot of money, and sometimes it doesn’t take any more than one forged signature,’ he said."
Is there any wonder why foreclosures are up 93% nationwide since last year?