Re:Woman Who Couldn’t Be Intimidated by Citigroup Wins $31 M...
by Klinky on Thursday June 21, 2012 @09:47PM
(#4145045)
Many of the lenders were complicit in fudging numbers to make people qualify for loans they should not have qualified for. They are just as responsible, if not more so than the borrowers.
Re:Woman Who Couldn’t Be Intimidated by Citigroup Wins $31 M...
by FJim on Monday June 25, 2012 @10:52PM
(#4159984)
Originators lend the money and sell the loan. It is agreed that the originate to sell model has perverse incentives. However, the point is that home borrowers are not the victims of this fraud. The people who bought securities backed by these loans are the victim of the fraud.
The homeowners got the money, the investors lost the money because the homeowners can't pay it back. The originators and the securitizers (Citi) facilitated the fraud, because they got their cut as the money passed through the pipeline.
Re:Woman Who Couldn’t Be Intimidated by Citigroup Wins $31 M...
by Klinky on Wednesday June 27, 2012 @08:10PM
(#4169854)
Homeowners were mislead as to the viability of the housing market & the concept that a house was a great investment. Many wanted to get in before it got "too expensive". Many of the loan products on the market were misleading as far as the actual costs and mortgage brokers who were hungry to get people into houses often glossed over explaining the viability of the loan.
Some homeowners were stupid, but most people are their own unpaid, untrained, part time financial adviser. The banking, investment & real estate industries have extremely well paid employees who should know better and are paid as though they do.
Citi passed fraudulent mortgages on to investors. That is, either homeowners or third party mortgage brokers fraudulently obtained loans to which they otherwise would not have been able to get. The victim of this fraud is not the homeowner, but the lender.
Citi became culpable only when they bought loans that a prudent man would have recognized as obtained through fraud and packaged and sold them as securities.
Now if you're willing to send officers of Citi to jail for complicity in a fraud perpetrated by and large by home owners and small time mortgage brokers, who also were the primary beneficiaries, you've got to be willing to send them to jail as well.