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Wednesday, June 11, 2008

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Cindy

I'd sure like to see more mention of the homebuilders' role in the mortgage mess. Our org has gotten increased complaints on builders being in on predatory lending with their in-house lenders. I've read news and govt press releases on the following in increasing number:

Violation of lending laws, particularly RESPA, re: illegal title insurance kickbacks, & illegally requiring use of the builder's lender.

Coercing appraisers to artificially inflate the price.

Tying incentives to use of the builder's lender which artificially inflates the value and may trap the buyer into predatory financing.

Toxic loans made to buyers who could ill afford the house.

Down payment assistance schemes that are akin to money laundering; HUD and the IRS have both tried to shut some of the down payment "charities" down. Higher foreclosure rates, and over paying, are often the result of these schemes.

Now that the housing and finance industries have done damage to the U.S. economy with this sham called the housing bubble, the industries want congress to approve a bailout to help these industries keep the bubble going. All at tax payers' expense of course. Some smaller less well connected co's have been indicted for mortgage fraud, but some big co's just pay a fine and admit no wrong doing.

All of this is still going on, and IMO the industries shot themselves in the foot. It's only right that some have gone under. Maybe many more should. They could've continued to make good profits by doing ethical and legal business but greed blinded them. For this, some deserve jail, and none deserve a bailout. Some home buyers who were truly defrauded deserve help and tried to get in many cases from law enforcement or the courts. Their recourse was abysmal. Nothing was done until banks and investors got burnt, then suddenly it was important. Buyer Beware!

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