1) The originator can be forced to buy back the loan package (once it is securitized, it is no longer handled as individual loans at the bank/investment level). This occurs if the originator or securitizing bank has misstated the inherent risk on the package.
2) If the mis-statement of the income is intentional, it is a crime. See the part near where the signature is on a mortgage application. I also point you to 18 USC 1011 (Title 18, Part 1, Chapter 47, section 1011), 18 USC 1014 (Title 18, Part 1, Chapter 47, 1014). The real thing that has to happen is that the injured parties (banks/investors/trustee) has to file the complaint. The only thing is that the way the mortgage packages get sliced up.. it is hard to tell… and many of the banks/investors/trustees are not really pursuing this avenue yet. I would not make the assumption that they won’t eventually.
Other interesting parts may apply.. ie Title 18 Part I Chapter 9 depending upon what happens afterwards or events leading up to (cash back?)
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