“New Century has made three loans in Lincoln, CA(Sacramento MSA) in the last 8 weeks. All three loans are at $200,000 over market value and all are at 100% of the purchase price. Three loans on one street? How much more is there in this area and throughout California? I believe these were “cash back acquisition” loans, where the buyer put the extra $200,000 in his pocket, or perhaps split the $’s with the sellers.
I have just notified the RMBS rating divisions of Fitch, Moody’s and Standard & Poors, with copies to the COB, CEO, & CFO.”
Steve, Are you saying the lenders have IQs of a turnip? Or are they poor victims of appraisal fraud? Doesn’t the lender have to review the appraisal to ensure it makes sense? Or are they so happy to have a borrower, that all common sense and scrutiny is laid aside?
We’re hearing enough of this now to know that mortgage fraud is occurring with some regularity, and lenders are participating. The participating lenders either know they are acting fraudulently, or they are stupid (lacking the intelligence to discern the loan is over market value). Now, which is more likely: 1)a lender is knowingly allowing a loan above market value to get badly needed sales revenue and prevent going out of business this month and to meet sales goals and to get the commission and avoid having to foreclose on their own homes, or 2)a lender lacks the ability to disccern an obvious lie about of sales price and appraisal.
