I have to agree with many of the others, that there is plenty of blame to go around, and virtually no one group is guiltless. From financiers to put the funds up to build homes, the builders, agents, brokers (of all types), lenders, the all but non-existent underwriters, and not least the buyers.
I’ve been inclined, over the last years, to identify the lenders, whose incentive to lend with impugnity had been unleashed by Gramm-Leach-Bliley, and the emergence of an unlimited supply of funds through securitization, as the prime culprit. Recent hearings in Washington confirmed these suspicions.
I’ve spent a few minutes trying to track down the origin of this quote from a liveblog of the WaMu hearings, so far to no avail, but the words, if accurate, are damning.
According to the FBI, 80% of mortgage fraud is committed by the lender. We’re not talking about stupid loan officers allowing borrowers to get away with something crazy that is bad for the bank. We’re talking about clever loan officers pushing fraudulent documents in order to score bigger paychecks, and bank executives looking the other way so that they can keep getting big paychecks from the securitization machine.
This isn’t a problem unique to WaMu. This is how the U.S. mortgage system operated for half a decade.
