The mortgage fraud news are now making the rounds. Countrywide is suing for a $80 mil loan fraud perpetrated by one group of investors, and the FBI is investigating many others. If you check the website of the attorney in that LA Times article, she has a lot of stories from all over the U.S. Some of the fraud seemed hard to prevent. They are stories like Casey Serin’s, where the borrower closed on more than one home at once, so the lender did not know about the other home.
Other times, the lender is completely to blame for not verifiying bank statements or income.
As others have said before, when the euphoria ends, we will see all the fraud. Even 5 years after the dot com bubble, we are just now getting wind of all the options backdating and the pension fund shortfalls. The fraud that has been going on will be spread wider and deeper than we can even imagine.
