I think it is time to consider bulldozing homes that have been abandoned for over 12 months and whose property value has dropped more than 60 percent. This would eliminate many high crime areas . I would much rather have a vacant lot next to my house than drug dealers or criminals. Also if mortgage companies and Banks knew that they would be taking a complete lose, they might be more than willing to make loans so that people would purchase the property before being bulldozed. It could be a stipulation in the loan that the property must be lived in by the purchaser and could not be resold for 5 years and have no other mortgages placed against the property for the same 5 years.

We need to prosecute and jail these white collar criminals. Empty out the jails by sending the illegals back to Mexico and throw in the Bankers.

If they started hanging people for white collar crimes crooks would think twice before they engaged in such scams.

This story really doesn't pass the smell test, mabe it's becuase it's a "non-profit" lender, or maybe it's just the way they do things in Chicago.  I am a professional lender, a large chunk of my time is spent  verifing facts, reviewing appraisals and ordering various reports to verify everything about a real estate transacton and the parties involved.  If this "lender" isn't doing his "due diligence" he shouldn't be in business and he deserves the results he gets. 

One simple tool to reduce fraud is one that the banks already have and charge you for but don't use. When you apply for a mortgage you have to pay an appraisal fee. The bank takes this fee but the appraisal is done from a desk. If banks simply required that their own appraisers or underwriters go out and personally assess the property and the neighborhood this would eliminate a lot of the type of fraud that's going on in Back of the Yards and in Atlanta and other places.

It may be illegal, but very few are prosecuted. Amazing I thought we were a nation of laws.

And let's not forget the greatest mortgage fraud of all; the one where our government has the taxpayers bailout all the bankster's failed mortgages because someone said the economic world would end if we didn't.

Maybe this is being done so it looks like the housing prices are increasing in the greater Chicago area, giving fuel to the idea the economy is improving there. Now who would do that? and who would benefit from it? Can you say Obama?

Mortgage fraud happens everywhere. as a mortgage industry participant, sr underwriter, we applied some common sense to every loan application presented. mtg industry got too greedy over the last few years and now that large push for production and profits has put us where we are now. there are still good loans out there just need common sense underwriting and review.

So now Obama is to blame for the American way of life (greed and corruption)?

Actually for as long as the lenders and investors keep relying on the famous fico scores as to demonstrate the ability and honesty of a buyer to get a loan this will continue, this has been the biggest mistake that capitalism has done to our society, to consider that a person with a 620 or more fico score has the ability and stability to payback a loan.

the automation of a person's financial and ethical conduct expressed in a number cannot and should not b a determinant factor in issuing a loan to that person, a computer program should not determine personal responsibility, is misleading and allows for that industry to play around and commit scams.

Until We realize that statistics and fico scores are not the panacea of decency and responsibility there will continue this activities and it will keep hurting our economy and the lives of thousands.

In sum We sold our american soul and moral standing to a computer generated number, where the abuses comes from all sides (banks, creditors, credit repair companies and others) that profit from the scams realized based simply on a number that supposedly represents the whole human behavior under one single number.

During the decade from 1991 to 2000 hundreds of Fha loans were issued based on a full documentation and process, everything changed in 2001 when the "funny" loans with their fico only requirement were started ti be used widely, now people needs again (under FHA) to have a fico score as the main directive to get a loan, this in practice creates the illusion of a "good" borrower based mostly on that number and in the end does not provide a real picture of who that borrower is.

For as long as the fico scores try to determine the ability to repay a loan there will be no end to the scams and fraud, not until We realize that lenders need to institute a personal interview and logical cohesive rules are placed to determine a person's ability to repay based on more than a number.

Banks and investors need to be on the local level and familiarized with the geographic area where they lend, it should not be allowed that a lender in Illinois makes a loan in San Diego for a buyer and a house that they have not even seen.

A share of information among the lenders will never solve the rampant fraud, it will only serve to have all scam artists well informed of their activity (the scam artists are all around the industry and at all levels).

The main reality is that loan officers, realtors, appraisers, escrows, and any others in the industry should not be commision based (but salaried) , this will take off immediately the greed off the transactions that they can engage and will create a stable environment where these individuals can be sibjected to more honest approaches, if there is no hefty comission involved there is no reason to deceive, therefore the market is more regulated and stable and it will be easier to detect and to regulate.

Actually for as long as the state of affairs continues as to have substantial comissions involved in a loan or purchase there will be the fraudulent activities and the undesired result.

To notawhiner...first off, the FICO score is a very good indicator of a person's financial responsibility. It takes into consideration a variety of elements in the borrower's financial history and is certainly better than any "interview" that a lender could perform to assess financial responsibility. Lenders use the FICO score in conjuction with other factors in a loan file to determine the borrower's willingness and ability to repay a loan. For example, a borrower could have a FICO score of 750 but only make $30K per year. Regardless of the high FICO score, any lender certainly would not qualify this borrower for a half-million dollar loan. The FICO score takes away the human error in determining favorable or unfavorable financial history. It does not, however, account for a borrower's willingness or ability to repay the loan. That is exactly where an underwriter is asked to perform their job.

I do agree that the mortgage industry should move from a commission-based pay system to a salary-based system. It has never made sense to me that a loan officer working on a loan for husband, wife and perhaps even another party (such as a father, mother or son) needed to enter into the contract to afford a home in some parts of the county would charge a couple percent on the loan. This loan would require two or three credit reports (one for each borrower) and some healthy math to determine ability to repay. Whereas a borrower with a low FICO score but a high amount of liquid assets would be a much simpler transaction (and likely a much more expensive home). Why should one get paid more on the high-dollar loan than the lower-dollar loan? Let's just make it a flat-fee process...say $1,000 for originating a loan, regardless of the loan amount. What does loan amount have to do with the amount of work actually performed on the transaction? NONE!

Until they crack down on appraisers this type thing will continue to happen.  Most apprasing

now is done from the desk or a windshield drive by in our area. First thing the appraiser wants to know is how much the loan is going to be for or what is the selling price. I lost a sale on a house because buyer was only borrowing 100,000 on a 300,000 house so appraiser assumed the house was worth close to the amount borrowed and appraised it for 125,000 and i lost the sale. When confronted with this the appraiser said he did thorough job of inspecting house inside and out even tho the house was locked and he could not have possibly entered it. These guys are the ones who should be locked up along with the sellers.

Here in Michigan, if a house was purchased as a foreclosure, a bank will not give a loan on it for six months and then only at what it was originally sold for. They will not approve a loan for a higher amount than the foreclosure price even if it now appraises for much higher. I'm not sure about home improvement loans or if this is just a "Bank" policy. Seems like a smart "fix" to prevent "flipper fraud"...

The banks have made the mortgage industry a total mess. They took TARP money to cover their irresponsible lending practices now they are not letting people get mortgages because of new rules they instituted. They are now trying to rent out forclosed properties to gain even more money. The banks created this mess and we just stand idle letting them get away with it. Thank you Mr. Movie Star President. As far as the fraud part of the mortgage mess, the banks have their hands in it to and they do nothing about it. The appraisers are on the mortgage companies payroll which all goes back to the banks. Serious problem the way I see it. More foreclosures to come, more profits for the crooked banking system. They all suck and should be held responsible but it will never happen. GREED is the way and we let it happen by voting in Dumb and Dumber into office.

Hank

Your suggestion of a flat fee is very demonstrative of the ignorance of this industry by the general public, as well as the lay-media. Why stop at $1,000 for EVERY loan, regardless of how much time it takes, and just have one bank do every loan in the US? I am fairly certain you wouldn't have a problem with that. That will be the result, incidentally, whether you like it or not.

You have no idea what you're talking about, so please keep your silence and maintain some doubt as to whether you're a fool. By the way, what do you do for a living (if you work at all)? It's pretty clear you don't have the first grasp of how simple supply and demand works. Do consumers in your business, if you have one, ever negotiate a price? For any reason? Do you get paid the exact same amount, if you're even in the private sector, as EVERYONE SINGLE OTHER PERSON IN A COMPARABLE POSITION IN THE COUNTRY? For EVERY SINGLE THING YOU DO?

Or do your customers simply take the price that you and you alone determine, or what the govt. says it will be? One little bit of info for you: this plays directly into the costs people ultimately pay. You clearly don't grasp that.

If you pay every loan originator one fee, they will turn away from the business because it won't be profitable, especially for loans that take 2-6 months' of work before being paid one dime. For a short time this may save a few folks a little bit of money --- those that get approved, because, believe me, there will be a logjam like you never imagined getting a loan thru under your system, as there will only be a few people left doing it - all at banks. Then, we can consolidate all the biz into the hands of 1 or 2 banks, who hire incompetents who are only capable of quoting 1 rate, and get paid a set amount determined by you.

Everyone will soon find out that it was worth having some varied compensation, even if that meant having capable loan officers who may make more than the next guy. It's called competition. If you don't like the idea, go work for the govt (though I'm fairly sure you already do)

What a country, and the wealthy get wealthier best of all no one goes to jail again and they can blame it on Obama so why not.

Jeff-393477
This CAN'T be happening. . .this is the summer of recovery for goodness sake!!!!!

What planet are you living on?

How many have been prosecuted for lying on a federal backed loan which is a felony ?? That's what I thought-cash for cons!

Most people I talk to are under the impression that the Obama administration gave the banks the money. It was one of the last things Bush did jwith no strings attaced ust before he left office.

In the meantime, the Obama administration has been unable or unwillng to rein in the Banksters who are setting us up to do it again.

When I view the election choices, see that FOX, a supposed news network is part of the Republican machine and the looney tunes running for office, I'm beginning to see where we may wind up in a hot revolution.

Unfortunately, the only hot revolution that did not wind up with bad people taking over from bad people was the American revolution. I'm almost 80 and still care for my country but see that we just never learn. Things are going to get a lot worse before they get btter. The Supreme Court has ruled that corporations are the same as people and that pretty much is the last nail in our coffin.

Good luck, America.

The 'banks' and 'capitalism' didn't create this system. Virtually all these loans and 'affordable home loan programs' were designed to satisfy the criteria FHA, Fannie, and Freddie established. The 'banks' did these loans because they could sell them (and the risk) to government supported entities and get Community Investment Act credit for 'affordable home lending'. This mess is not a failure of the free market but is due to the unintended consequences of government efforts to manipulate market incentives.

You have to look at the bigger picture. The threat of a financial collapse wasn't from the mortage industry, for who owned most of the failed loans, not the U.S. Most where sold by the U.S. "lenders" to other world "lenders" such as China, Japan and so on. Most of our debt is owned by just a handful of countries. Do you really think these countries are just going to sit there and watch there hundreds of Billions (In China's case almost a Trillion) dollars disapear? No, they like many of us would have pulled out. If we where forced to pay the majority of our national debt at a time of financial stress, it would have certantly brought another financial depression.

Lenders that do a fast drive by or a fly over instead of a detailed on site physical inspection deserve to lose money.

As long as there are realtors, brokers and appraisers, this situation will not change.

That last line pretty much sums it all up "I'm sure they would want to do what was right"

Yeah right, fraudsters with hearts of gold ?