More on the MBS lawsuit against 17 major banks

The FHFA, overseer of the government-sponsored enterprises, filed suits against 17 major banks and scores of individual executives, alleging they knowingly falsified the quality of mortgage-backed securities sold…

I concluded years ago that the fraud was an open secret in the industry. The industry was making incredible amounts of money. No one wanted to blow the whistle and kill the golden goose

On one Bear Stearns securitization platform, called SACO 2007-1 and containing loans originated by EMC – both acquired by Chase – the prospectus disclosed to investors showed none of the loans held an LTV above 100%. According to the FHFA, more than 57% of the mortgages were actually worth more than the underlying property.

Holy Mackerel!

The housing boom and bust had several causes. Fraud in the mortgage and banking industries was certainly a top reason for the real estate boom and bust.

September 7, 2011 by Realtor John Wake

About The Author

John Wake

Born in Phoenix, trained as an economist and now a licensed Realtor, John uses hard data from the real estate market to help his clients -- buyers and sellers of residential real estate -- uncover their best choices for finding the right home or finding a buyer for their current home.

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