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The government's finally sending people to jail for mortgage fraud, just not who you'd expect....

The government's finally sending people to jail for mortgage fraud, just not who you'd expect. Charlie Engle's behind bars not for selling bad mortgages, but for borrowing - allegedly lying on a pair of liar loans. It took months of probing and a flirtatious undercover agent to put away a single borrower, Joe Nocera writes in a good read, while Countrywide's Angelo Mozilo is still at large.
Comments (45)
  • davidingeorgia
    , contributor
    Comments (2713) | Send Message
     
    Mozilo owns (or owned) lots of big name politicians.
    Engle did not.
    26 Mar 2011, 08:44 AM Reply Like
  • SA Editor Stephen Alpher
    , contributor
    Comments (540) | Send Message
     
    Great story, Jason.
    26 Mar 2011, 08:56 AM Reply Like
  • MarketGuy
    , contributor
    Comments (3983) | Send Message
     
    In other news, Gulf of Mexico fisherman will be going to prison for allowing crude oil to get on the hull of their boats.
    26 Mar 2011, 09:00 AM Reply Like
  • Bozerdog
    , contributor
    Comments (464) | Send Message
     
    that may be a stretch of the truth marketguy, they are sending the fishermen to prison for having a leaking oil pan...
    26 Mar 2011, 10:14 AM Reply Like
  • berated
    , contributor
    Comments (389) | Send Message
     
    While it's easy to become angry at Mozilo, we've got to remember it's the larger system (that allows these slimeballs to operate with impunity) that is at fault. Mozilo and his ilk were doing what the system allowed them to get away with. Until we destroy that system, this abuse will continue.
    26 Mar 2011, 09:31 AM Reply Like
  • neutrinoman
    , contributor
    Comments (700) | Send Message
     
    It wasn't just the system that let them get away with it. The system *wanted* it. The whole misadventure of government-backed subprime lending that started in the 90s required a sleazy underside to the financial system (""shadow banking") and lots of poorly regulated, opaque "nontraditional lenders." Questionable lending requires questionable lenders.

     

    Contrary to myth, the problem was never mainly the regular banks. They just ended up as the final holders of a lot of this crap. They didn't originate most of it.

     

    To start understanding why Mozilo et al. are not in jail (unlike their S&L counterparts of 20 years ago), start with Chris Dodd and Barney Frank, both "protectors of the American dream of owning a home" and among Mozilo's biggest protectors.

     

    The sad thing is that the Republicans generally bought into it ("ownership society" -- shouldn't that be "owership society"?), with occasional exceptions. They could have formed an effective opposition to this insanity, but failed.

     

    Unfortunately, liberal journalists like Nocera have missed the story over and over. They usually start in 2003 or 2004, instead of in 1992 or 1996. 1992 is when the push for "community lending" in subprime areas started. 1996 is when Fannie and Freddie started large-scale securitizations of subprime mortgages, under the hapless Jamie Gorelick. The big change after 2001 was that these bad practices spread to the general mortgage market, out of just subprime, and the Fed gifted the housing industry with ultralow interest rates.
    26 Mar 2011, 09:48 AM Reply Like
  • wyostocks
    , contributor
    Comments (7620) | Send Message
     
    Godd summary.
    I'll bet poor old Charlie wasn't associated withe ACORN.
    26 Mar 2011, 09:54 AM Reply Like
  • American in Paris
    , contributor
    Comments (5504) | Send Message
     
    It's a right wing myth that that community lending was behind the bubble. Indeed, if you look at the default rates, it was not just the poor who defaulted on their loans.
    26 Mar 2011, 10:00 AM Reply Like
  • spald_fr
    , contributor
    Comments (2702) | Send Message
     
    [" . . . under the hapless Jamie Gorelick."]

     

    For which she was paid $26MM. Word has it that the 0bama admin wants to nominate Gorelick for FBI director. This is the depth of the corruption in this government, where the perpetrator of the fraud suddenly has investigative control over the course of investigations, with Eric Holder (AG) already on board to protect the guilty, and this truly represents a potential criminal enterprise.
    26 Mar 2011, 10:50 AM Reply Like
  • apberusdisvet
    , contributor
    Comments (2860) | Send Message
     
    MERS was founded by the TBTFs in 1995, coincidentally when F&F started the securitization process. MERS is prima facie fraud and has almost destroyed the chain of title in this country, not to mention the monies unpaid to county courthouses for property transfers. Many securitized properties changed hands numerous times. Florida counties alone may be owed as much as $500 million, but it is all being swept under the rug.

     

    Further, courts have ruled that MERS has no standing to foreclose, and therefore neither do the servicing agents nor the loan originators, primarily because the chain of title has been irretrievably broken, and
    the Rule of Law as well.
    26 Mar 2011, 11:01 AM Reply Like
  • Good Captain
    , contributor
    Comments (454) | Send Message
     
    Is it your contention then that gov't policy had no or little role in the "housing bubble" because that essentially laid the foundation for the excess at least IMO. Few, if any, would argue that private entities gladly used/misused the opportunity for the sole benefit of themselves to the detriment of the public good.
    26 Mar 2011, 11:48 AM Reply Like
  • Freedoms Truth
    , contributor
    Comments (833) | Send Message
     
    It's a left-wing myth that the problems with CRA are a right-wing myth. It wasnt the only problem, but it was a key part of the govt incentives that led to the bubble ("loans = good, no matter who the borrower is")
    26 Mar 2011, 12:19 PM Reply Like
  • fxmaven
    , contributor
    Comments (1455) | Send Message
     
    the financial deregulation promoted by greenspan et.al. is the big culprit. CFMA (commodity futures modernization act) and securitization of of junk loans that everybody wanted to write and then get off the books asap have led to the great nightmare of declining housing prices, insolvent banks, and spiraling energy/commodity costs.

     

    with the enormous sums involved in lobbying, campaign finance and corporate profits, this cannot be an accident.

     

    the only parties who truly miscalculated were the banks (except for goldman who sold cdos and then went immediately short), who finally realized they can't dance (to paraphrase chuck prince). US taxpayers will be paying for bailout after bailout as real estate declines another -30% and the losses have to be compensated with higher fees, zero interest rates, free bank profits on bond trading and taxpayer money.

     

    ironically exactly like japan, except you have millions of uneducated illegal aliens to bid down the price of labor, and drain the public purse.
    26 Mar 2011, 12:31 PM Reply Like
  • fxmaven
    , contributor
    Comments (1455) | Send Message
     
    the entire govt, federal, state and local, enabled the fraud, why pick on one average guy who tried to ride the bubble?

     

    simple, he was an easy target. try going after the bosses and capos, not just the low level bookie (a mafia analogy).
    26 Mar 2011, 12:38 PM Reply Like
  • fxmaven
    , contributor
    Comments (1455) | Send Message
     
    they knew exactly what they were doing, why do you think goldman went massively short cdos?

     

    of course they enriched themselves and crony politican friends, knowing the whole thing would blow up, simply not knowing 'when".

     

    watch "inside job", mate.
    26 Mar 2011, 12:40 PM Reply Like
  • Duude
    , contributor
    Comments (3358) | Send Message
     
    "it was not just the poor who defaulted on their loans. "

     

    That is very true. In fact, it wasn't just the poor that took advantage of sub-prime and alt-a adjustable rate mortgages. There were plenty of people using these loans to string together their own personal real estate portfolio. At the real estate peak in 2005 and 2006, it seemed like everyone was interested in flipping homes as the insatiable demand for real estate escalated.
    26 Mar 2011, 01:22 PM Reply Like
  • Augustus
    , contributor
    Comments (1918) | Send Message
     
    Let me try to see if I understand what the author is trying to explain.

     

    Engle lied on his loan application and is in jail. but that is a miscarriage of justice as everyone knows that misrepresentation of finances and defaulting on debts is not really a crime.

     

    However Mozillo, who accepted the fellows loan application, wrote the check and made the loan based upon the false application, is the one who should be going to jail.

     

    It really does seem that something is mixed up in that reasoning.
    26 Mar 2011, 01:28 PM Reply Like
  • davidbdc
    , contributor
    Comments (3141) | Send Message
     
    I think you leave out 99% of the facts with that summary.

     

    Mozillo employed thousands of people who were told/encouraged to write mortgages "no matter what". They falsified documents, encouraged borrowers to lie, told lies to seniors to get them take mortgages out on homes they owned free and clear, made clearly false promises of easy refinancing in two or three years, etc, etc,

     

    Mozillo oversaw a vast criminal enterprise that contributed to the collapse of the financial system and cost taxpayers trillions of dollars. And for that he more than deserves to spend the rest of his days in jail.
    26 Mar 2011, 01:41 PM Reply Like
  • davidbdc
    , contributor
    Comments (3141) | Send Message
     
    And I might add, the gentleman in this story indicated that he never filled out the 32,500 monthly income, nor did he sign the paper. And the only person that says he did sign the paper is a convicted criminal given a lesser sentence for saying so. That how you'd like to be convicted of something? The "expert" says he can't tell if the handwriting is yours, but the government produces a convicted criminal to say it is..... he gets half his sentence written off.... and you head off to the slammer.

     

    Yeah that sounds like justice.
    26 Mar 2011, 01:43 PM Reply Like
  • neutrinoman
    , contributor
    Comments (700) | Send Message
     
    I didn't say the bubble was *just* community lending, only that it started there. It's not a myth: it's a fact. Check your history. The media and others have just avoided looking into the origins of the bubble, the "pre-bubble," as it were, in the 90s. What happened after 2001 was that the bad practices once confined to the subprime market spread to the whole mortgage market.

     

    A terrific recent book on the current and coming financial crises is Raghuram Rajan's Fault Lines. One chapter gives the whole history of the subprime lending push that started in 1992, in the wake of the LA riots of March 92. Cheap credit was then and has long been one political response to growing inequality. Our politicians have chosen to deal with it that way, rather than look deeper into the 40+ year trend of growing inequality and the basic divides in skills and education that drive it. Rajan's view isn't "right-wing," because he grapples with the inequality issue directly, which many conservatives are unwilling to talk about. OTOH, he doesn't fudge basic facts either. He has no stake in ducking responsibility for this debacle, unlike, say, Barney Frank.

     

    As far as prime borrowers defaulting, that's only very recent, in the last few years, in the aftermath of the bubble. Before that, it was almost entirely a subprime problem.
    26 Mar 2011, 07:30 PM Reply Like
  • Tom Au, CFA
    , contributor
    Comments (6775) | Send Message
     
    Mozilo looked the other way when the "Engles" of this world lied on their loan applications.

     

    They should both go to jail or not, but basically both suffer the same fate.
    28 Mar 2011, 10:36 AM Reply Like
  • Tom Au, CFA
    , contributor
    Comments (6775) | Send Message
     
    And Bernie Ebbers "Big Lie" was that internet usage was doubling every 100 days in 2000 (it actually doubled for the whole year), causing companies like Global Crossing to spend themselves broke trying to keep up with overstated demand.
    28 Mar 2011, 10:37 AM Reply Like
  • Bozerdog
    , contributor
    Comments (464) | Send Message
     
    this is what happens when you put a little dork like Nordlander in a position of power...similar to Bernake
    26 Mar 2011, 10:18 AM Reply Like
  • wkl
    , contributor
    Comments (289) | Send Message
     
    The author of the article misses the point. Yes, it is easy to be on the side of the little guy. But the break down of the mortgage industry has equal blame on both the lender and the borrower. And as such, both the Mozilo's and the Engle's of the world need to do their time. Because both have stolen from, and harmed our society. As far as the politician's role is concerned, just bad judgement in policy. But when we the people keep them in office by our vote, we get what we vote for.
    26 Mar 2011, 10:18 AM Reply Like
  • wyostocks
    , contributor
    Comments (7620) | Send Message
     
    wki:"just bad judgment in policy."
    It was worse, remember that Dodd and who knows who else got favors from Mozilo. I forget the name inside the company that was used to bestow favors on Mario's favorite politicians.
    26 Mar 2011, 10:26 AM Reply Like
  • Bozerdog
    , contributor
    Comments (464) | Send Message
     
    the point seems pretty clear to me. the guys who influenced the financial crisis the most are not going to prison and they guys who were picking up the pieces are. the problem is you pay the SEC and they have to do something for their paychecks. they aren't allowed to touch the big fish so they have to do something. this is prime example of the problem with government.
    26 Mar 2011, 10:27 AM Reply Like
  • wkl
    , contributor
    Comments (289) | Send Message
     
    You are correct, I believe Dodd received a mortgage with very favorable terms. But my point is politicians such as Dodd & Frank keep getting reelected until they decide not to run again. If their electorate keeps returning them to Washington, it must be because they approve of their policies. Maybe some day, but I doubt it, we the people will understand the truism of the words spoken; "The best government is the government that governs the least". While our government has become so intrusive in our daily lives, political connections have to be made to survive. Hence, the Mozilo's and those who govern through those connections, will never pay the price for the destruction they cause. And when the Engel's of the world observes this corruption and believes it to be ok to justify his lies for his own profit, there sits our society today. Hence my call for prosecution for both the lender and the borrower who committed crimes.
    26 Mar 2011, 11:27 AM Reply Like
  • Good Captain
    , contributor
    Comments (454) | Send Message
     
    I believe it was the "friends of Angelo" program to which Sen(s) Conrad and Dodd received their favored loan status.
    26 Mar 2011, 11:51 AM Reply Like
  • fxmaven
    , contributor
    Comments (1455) | Send Message
     
    then you need a jail the size of australia to house the millions of mortgage fraudsters, and trillions in additional debt to pay the costs.

     

    selective justice is simply persecution.
    26 Mar 2011, 12:33 PM Reply Like
  • Duude
    , contributor
    Comments (3358) | Send Message
     
    Actually, Dodd and Conrad are only the headliners of Congressmen that participated. The list is much longer but was covered up by Rep. Edolphus Towns (D-N.Y.), who served as the chairman of the Congressional ethics committee during the last congress. As it turns out, Towns was also on the list of 'Friends of Angelo'. How's that for conflict of interest? Nevertheless, Towns isn't worried as corruption is a privilege of democrat house members from New York. With new committee chairman, Darrell Issa (R-Calif.) pushing forward in the 'friends of Angelo' investigation, the hope is that more complete findings will be unveiled. Stay tuned.
    26 Mar 2011, 01:37 PM Reply Like
  • enigmaman
    , contributor
    Comments (2686) | Send Message
     
    We tip our hats to MAJOR thieves and hang the minor ones
    26 Mar 2011, 11:27 AM Reply Like
  • fxmaven
    , contributor
    Comments (1455) | Send Message
     
    Shocking that the mortgage broker received a shorter sentence for testifying against Engel.

     

    An egregious violation of legal rights, prosecutorial misconduct and incompetence, and proof that big business and finance own the "justice" system through lobbying and corrupt campaign finance contributions.

     

    it's time to abolish lobbying and campaign finance, repeal corporate subsidies, and stop paying into a system completely designed to fleece consumers and 'citizens' in favor of the mafia-esque coporate cabal.

     

    And now AT&T is perhaps one step from rebuilding its monopoly-without regulation, the capitalist dream come true.

     

    where is Teddy Roosevelt when we need him?
    26 Mar 2011, 11:41 AM Reply Like
  • Neil459
    , contributor
    Comments (2644) | Send Message
     
    The entire housing crisis was created so Democrats could launder money back into their political campaigns and to reward loyal voters that received houses way in excess of their ability to pay. If you look at the outcome and not the intention, then this is the only conclusion one can arrive at. Of course, there are many people that continue to delude themselves that the politician's were really trying to help the unfortunate. Yah, right and I have a bridge to sell you.
    26 Mar 2011, 12:06 PM Reply Like
  • fxmaven
    , contributor
    Comments (1455) | Send Message
     
    democrats only? all politicans, they gorged on the property tax windfall to support their pet projects.

     

    again, selective blame/prosecution is persecution.
    26 Mar 2011, 12:35 PM Reply Like
  • Seeking Curtis
    , contributor
    Comments (2) | Send Message
     
    I am glad that there is so much interest in what passes as justice.
    26 Mar 2011, 12:09 PM Reply Like
  • wkl
    , contributor
    Comments (289) | Send Message
     
    I found this quote of President Clinton to be very interesting in regards to so many comments being stated here. These are his words when signing the "Financial Services Modernization Act" in 1999.
    "This establishes the principles that, as we expand the powers of banks, we will expand the reach of the Community Reinvestment Act".
    26 Mar 2011, 12:57 PM Reply Like
  • Duude
    , contributor
    Comments (3358) | Send Message
     
    Angello Muzillo, Daniel Mudd, Franklin Raines, Herbert and Marion Sandler......the list goes on and on. But all these people have contributed millions to Congressmen over the years. The likelihood of Federal charges is doubtful. It would lead to closer scrutiny of Congressional lack of oversight and the campaign contributions they coincidentally received.
    26 Mar 2011, 01:05 PM Reply Like
  • davidbdc
    , contributor
    Comments (3141) | Send Message
     
    This article shows a larger problem in our society. If I read this correctly the guy had one loan that looks legitemate.... one loan that you'd certainly have to question. But the second loan was written by a convicted criminal.... convicted of falsifying mortgage documents!!!

     

    Now, the government went after him because a BUREAUCRAT didn't like the fact that the man could live the life he wanted to live!!! After all the BUREAUCRAT goes to work every day from 9 to 5 - except of course the days he oversleeps, he has to run errands, he needs to leave early to see his daughter's soccer game, he just "needs some air", etc, etc. And he sees someone that has created a life that allows him to do what he pleases. And for that he is investigated by the government!!!!!

     

    Folks that is called the USSR.... plain and simple.

     

    This BUREAUCRAT is the one that should be thrown behind bars and throw away the key!!!!!
    26 Mar 2011, 01:49 PM Reply Like
  • 867046
    , contributor
    Comments (398) | Send Message
     
    "By Emily Peck
    So we’ve discussed the ethics of individual borrowers walking away from their mortgages. (Some say we’ve over-discussed it.) If it’s immoral, as some would say, for a borrower to walk away their mortgage, is it any different for a bank?

     

    Morgan Stanley is doing just that. News reports on Thursday said the bank plans to give back five San Francisco office buildings to its lender–just two years after buying them at the top of the market.

     

    “This isn’t a default or foreclosure situation,” spokeswoman Alyson Barnes told Bloomberg News. “We are going to give them the properties to get out of the loan obligation.”

     

    Sound familiar?

     

    Morgan Stanley bought the buildings, along with five others, in San Francisco’s financial district as part of a $2.5 billion purchase from Blackstone Group in May 2007. The buildings were formerly owned by billionaire investor Sam Zell’s Equity Office Properties and acquired by Blackstone in its $39 billion buyout of the real estate firm earlier that year, Bloomberg reports. One analyst estimates that the buildings are now worth half of what Morgan Stanley paid.

     

    The buildings Morgan Stanley is giving up are One Post, 201 California St., Foundry Square I, 60 Spear St. and 188 Embarcadero. The bank will continue to own the five other office buildings it acquired in the deal.

     

    Some proponents of strategic default argue that since the lender gets the collateral back, walking away is simply the termination of a business arrangement between consenting adults. Certainly, it seems as though that’s what’s happening here.

     

    Calculated Risk hastens to point out that Morgan Stanley is current on the loan–thus this is essentially a “strategic default.” If banks can walk away from commercial buildings, does that weaken the social pressure on homeowners to stay in their home when they’re underwater on their mortgages?"
    26 Mar 2011, 01:52 PM Reply Like
  • Duude
    , contributor
    Comments (3358) | Send Message
     
    Apparently, what's good for the goose is good for the gander.
    26 Mar 2011, 02:01 PM Reply Like
  • The_Hammer
    , contributor
    Comments (3809) | Send Message
     
    When the sheeple realize the USA is bankrupt a revolution is coming to a hood near you. It is one big ponzi scheme where one man the Fool Bernank can dilute your savings whenever he likes.
    26 Mar 2011, 02:01 PM Reply Like
  • ebworthen
    , contributor
    Comments (2811) | Send Message
     
    State Attorney Generals eager to sweep MERS under the rug as long as they get their fees and tax dollars - individual property rights be damned.

     

    Supreme Court KELO case was greenlight for banks to steal property; the bailouts of CDS and mortgage bankers was icing on the cake.

     

    Bernie Madoff is in prison but Blankfein, Thayne, Dimon, Paulson, Timmy, Mozillo, and all the other big time crooks are having catered luncheons talking about how to fleece the populace some more.
    26 Mar 2011, 02:51 PM Reply Like
  • coddy0
    , contributor
    Comments (1182) | Send Message
     
    The government's finally sending people to jail for mortgage fraud, just not who you'd expect.
    ======================...
    Actually I expect both to be prosecuted

     

    For they are part of the same crime

     

    Where Bank and taxpayers are victims.

     

    Class of kind A fraudulently obtained access to Bank's money and got mortgage as their reward

     

    Class of type B pretended not seeing what class of type A is doing and got bonus as their reward

     

    There are also are class of type C who are lawyers and class of type D who are politicians both diligently crafting their rewards as well

     

    And we are miscellaneous masses, who do not belong to any class above
    26 Mar 2011, 05:14 PM Reply Like
  • Philip Mause
    , contributor
    Comments (3471) | Send Message
     
    I think that the problem may be that financial arrangements have become so complex that the SEC, IRS and the prosecutors just don't understand some of the elaborate razzle-dazzle going on and, even if they did, could not possibly explain it to jurors. So it is easier to make a case where the facts are relatively simple and do not require an analysis of non-recourse loans, CMBS securities, credit default swaps, etc.
    26 Mar 2011, 10:45 PM Reply Like
  • ebworthen
    , contributor
    Comments (2811) | Send Message
     
    This is why the average citizen needs to invervene with fist on face, knee in groin, and neck in noose.

     

    Too many lawyers and equivocation and sophistry.

     

    Nothing cuts to the chase quite like physical manifestation of consequences.
    27 Mar 2011, 03:23 AM Reply Like
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