As Predicted, It Starts All Over Again

The New York Times published a story on December 9, 2012 reporting that Wall Street's biggest banks and other "Investors" are poised to sell thousands of homes in which billions have been invested through purchases of foreclosed homes. The homes were purchased, at rock bottom prices, from owners who defaulted on their loans and lost their houses. Enough time has gone by, it seems, for those who caused the housing crash and the destruction of the economy to double dip and now profit again from their criminal acts.

Readers here know that there has been no significant or material criminal prosecution of any major player for mortgage fraud. Wall Street's conduct from 1999-2007 has been glossed over, civil fines paid, individuals left unscathed, and inventory accumulated for resale. The profits derived from the original fraud have been used to pay off the SEC and the Justice Department by way of wrist slap fines, while remaining profits, after distribution to the big boys, have been poured into purchasing foreclosed properties.

Now comes the big payoff. Who will buy the foreclosed properties? How much will they pay? How will they be financed? The speculators are arranging for the next round of mortgage fraud. In this economy, with current unemployment levels, and with income at near record lows, the only possibility is that mortgages will, once again, be given to unqualified buyers. These buyers will pay up front fees. Commissions will be paid up front. Insurance policies will be issued. All of the evils of the mortgage banking system will be repeated. The speculators will reap billions in profit, pocket the money, and walk away as their buyers struggle to make their payments and, ultimately, lose their homes again.

Once the spigot opens, all the high sounding Regulation in the world will not prevent fraud in the mortgage industry. There has been no deterrence against fraud in the past, so why would the purveyors of hope be afraid their practices will be subject to any greater scrutiny than in the recent past? It is only a matter of time. It's been going on for nearly fifty years, we have learned nothing, and it's about to happen all over again.

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