Remember GOP candidate(s) claiming the government FORCED banks to make bad mortgage loans? Well: Whistleblowers were ignored, punished by lenders for calling foul on lender fraud

’twas greedy lenders, engaging in fraud, not the government, ‘forcing’ loans on unqualified people. And the bastards punished anybody with ethical standards and the morals to point out the problems.

From linked article:

“Most of the workers who claimed they were punished for trying to fight fraud worked at giant firms such as Wells Fargo or Washington Mutual (WaMu). Others worked at smaller lenders that joined the rush to sell home loans during the boom years.

Wherever they worked, their accounts are similar. Many claim that commission-hungry workers falsified loan applicants’ incomes and bank statements, pushed appraisers to exaggerate property values and, in some instances, forged consumers’ signatures on documents.”

Since I knew some people who used to be in the lending and loan servicing industry back 20 years ago through well, now,  I have heard the same stories. Those whose jobs were to prevent internal fraud and assure their companies were always on the right side of regulations and laws got nothing bur grief and/or unemployment for their efforts. Rules? Regs? Laws? No no no, that is not what we hired you to follow! We hired you to give the impression that the company was alert and diligent to issues of fraud. We did not hire you to actually find and report on fraud!

Well, it wasn’t just local, not just in my little circle of friends.

From linked article:

” …
Parmer isn’t alone in claiming she was punished for objecting to fraud in the midst of the nation’s home-loan boom. iWatch News has identified 63 former employees at 20 financial institutions who say they were fired or demoted for reporting fraud or refusing to commit fraud. Their stories were disclosed in whistleblower claims with the U.S. Department of Labor, court documents or interviews with iWatch News.

“We did our jobs. We had integrity,” said Ed Parker, former fraud investigations manager at now-defunct Ameriquest Mortgage Co., a leading subprime lender. “But we were not welcome because we affected the bottom line.”

These ex-employees’ accounts provide evidence that the muzzling of whistleblowers played an important role in allowing corruption to flourish as mortgage lenders and their patrons on Wall Street pumped up loan volume and profits. Codes of silence at many lenders, former employees claim, helped discourage media, regulators and policymakers from taking a hard look at illegal practices that ultimately harmed borrowers, investors and the economy.”

Yep. Heard it more than a couple of times while letting disillusioned (and unemployed) friends vent.

Here is the real lead:

“Whistleblower advocates say weak federal and state laws also helped prevent finance industry workers from being heard. Congress passed tougher laws in the wake of the financial crisis, but whistleblowers and their advocates say labor-law enforcers, securities-law cops and banking regulators need to do more to ensure that banking workers can safely report fraud and other abuses.

Yep, those lobbyists and ‘historians’ sure did a lot to insure government ‘forced banks to lend money to people who didn’t qualify’ by buying pols who would squelch regulatory enforcement and/or ease the regulations all together. When the lobbyists are the ones with our reps ears, or the ones writing the damned legislation for that matter, things will go horribly wrong. After things go horribly wrong, they will blame ‘the government’ (that did just what they wanted) for it all. Oddly, the very same pols who were ‘the government’ at the time problems were created/allowed, campaign on the blame the government platform.

One holds a glimmer of hope, watching the various Occupy protests, that more and more of the 99% are holding the right people accountable.

 This is essential to grasp:

“In many cases, the former employees say, management encouraged the fraud and protected the fraudsters.”

Yep, I ALWAYS heard that for a time just before whistle blowing acquaintances were given so much grief at work, for months, that they quit or were ‘laid off’ when the pressure didn’t break them.

“Most of the workers who claimed they were punished for trying to fight fraud worked at giant firms such as Wells Fargo or Washington Mutual (WaMu). Others worked at smaller lenders that joined the rush to sell home loans during the boom years.

Wherever they worked, their accounts are similar. Many claim that commission-hungry workers falsified loan applicants’ incomes and bank statements, pushed appraisers to exaggerate property values and, in some instances, forged consumers’ signatures on documents.”

Oh, I heard that complaint a time or 12.

People tend to think about the 90s and 2000s when they think about this sort of fraud. But the genesis came before those years .

80s, Reagan, ‘greed is good’ and throw in some fairly new programs to help lower-income people get into homes (HUD was becoming big) Only those programs did not get enough lower-income people to qualify to suit the greedy banks and commission paid ‘loan officers’ who really were just mortgage SALESMEN, so they all started to fudge the rules. Since they got away with it, they pretty much just threw the rules into the crapper.

If it breathed/had a pulse, they found a way to ‘qualify’ it.  If some people realized the loan salesmen were resorting to questionable methods to get them qualified and they balked at it, sometimes their signatures ended up on loan paperwork they never signed.

This I know.

Some bank/mortgage company employees fought the fraud, were forced out. Sadly, some gave in to the attitudes and pressures that came from the top, and joined in. By the 90s and 2000s, some of those cavers were in management positions.  Little wonder things got so bad then.

This I know.

About those property ‘values’:

When just about every pair of hands shuffling transaction paperwork gets paid by commission, and don’t forget: GREED IS GOOD! what incentive is there to accept fair and accurate appraisals?

The appraisers who wanted to work did what they were pressured to do.  And everybody got bigger checks. Well, everybody except the people paying the loan payments. Their incomes did not keep pace. And property values still kept going up up up

Something’s real value is what someone will pay for it. That got perverted. The consumer was faced with housing prices strapped to rocket boosters by commission hungry agents, loan officer, mortgage bankers. Too many consumers figured ‘bite the bullet and buy now or never be able to get a toe in the door of a home of their own’. Besides, due to the artificially inflated housing values, rents were going through the roof too. Might as well buy the damned house!

Let’s not forget, loan SALESMEN

Loan officers were often still fudging the paperwork. S.O.P in too many places. Just plain required practice in some. Go along to get along or get out. So more and more people were (questionably)  ‘qualifying’ for loans on properties that had ever inflated artificial values.  ‘Well, the last 6 homes in this area sold for…..‘  is meaningless when THOSE prices were artificially inflated by an industry paid on percentages of sales prices.

People figured the ‘experts’, the ‘professionals’, must know what they are talking about. ‘Hells bells, Martha! We can buy this house at $XYZ and sell it in five or ten years when it TRIPLE S in value! Sure the mortgage will be a struggle, at first, but hey the economy is doing great so we are bound to get some real raises soon! Trickle down is bound to kick in any minute! Let’s sign the damned papers now before the price goes up again!‘ Of course, corporate America was outsourcing jobs and paying Americans less all the time while workers were hoping things were gonna trickle down into their own pockets any time now.

Yep, those were heady days.  America, and bank regulators in particular, didn’t seem to register the warning bells the S&L failures rang. Nope, the warnings went unheeded. People popped Prozac just to maintain the proper attitude in the workplace, and stay employed as job security disappeared and the water rose to their noses. Commenting on reality was the sort of thing that would get you harassed to the breaking point if not outright fired. Just look at what happened to the whistle-blower who used to work at the next desk. Pop the reality blocker  Rx and keep that smile on your face, lest the boss notice you think too.  One (attitude) for all, and all (security) for One (guy at the top).

Sign the papers, before the price goes up! Don’t worry, we can ‘adjust’ some numbers and get you ‘qualified’. Be a team player. Be positive. Or be the guy who lives in a cardboard box and rants at everyone.

These words I have heard. Family and friends in various aspects of ‘the industry’ heard these words.  People I know heard and objected. They got out or thrown out for having morals, integrity, limits.   Yes, I have sat in offices, watching, listening. I have poured coffee as hearts got poured out at my kitchen table.

This I know to be true. To this, I bear witness.

Otherwise known as WWJS (Who Would Jesus Scam)

Early 80s. Moral Majority taking financial flight. And buying political influence too. The flag was off the flagpole and run up a cross. Too many saluted.

The Way to HUDdle together and create riches for some shady ‘church’ enterprises.

Some (not sayin ‘all’ but not not sayin it either) “The Way” groups(?) congregations(?) patsies(?) had a practice of having young couples, just starting out in life, apply for HUD housing loan programs. HUD was a worthy effort, by the federal government, to get more people into the front door of home ownership.   The program did fall victim to abuse and fraud by commission paid loan salesmen, mentioned earlier, but lets forget about them for this chapter, and focus on people who probably did qualify for HUD loans, by the skin of their teeth perhaps, but usually legitimately.

Church or cult? You decide. I know where I stand on issue.

The Way often encouraged many young couples to get HUD backed mortgage loans. How helpful of them. They often did more than encourage. They guided, tutored, and pressured. True, the ‘followers’ didn’t have to follow. They could have used that free will their god gave them. But, peer pressure is a hard current to swim against and too many don’t manage it. Besides, ‘spiritual authorities were telling some that JEEEESUS wanted them to do this so they could help HIS ministry. Soul saving as motive for entering into fraud. Surely, God’s orders to spread The Word trumps the laws of men! Never mind that ‘render unto Caesar’  stuff; we’re talking raising capital to fund spreading the gospel and saving souls!

What a great bunch of spiritual authorities The Way had a way with. Perhaps you know of similar groups. Surely there were more than just the one I personally observed people being scammed.

Parishioners/believers would get the HUD loans. The feds required that they would be living in the homes they got via help from the program. The applicants had to sign papers indicating that they knew, and understood, that requirement and that they were going to be the occupants of said properties.

Yep, their necks were on the block, in the noose, not any church/cult financiers’. Nod nod, yes, we will be the occupants. Yes we understand any other use of the property we are buying via this program constitutes fraud against the US government.

And then? Then, THE WAY had the young couples move into larger houses, with other young couples who also signed the same kinds of papers. Why, they had themselves communal living arrangements!  Actually, this is probably a more natural human arrangement, but also violated some federal laws they all just signed papers saying they knew about, understood, and agreed to.

Ah, so we now have empty houses? Sorry, no. The houses, purchased by individuals via HUD backed loans, got rented out. A strict violation of the law. THE WAY got the money and the home ‘owners’ got the liability. The loan salesmen got the commissions, their employers got to package and sell the federally guaranteed loans, and probably got some higher prices for their own stocks too.

The taxpayers? Well, loans go bad sometimes. The investors? Well investments in loans go bad sometimes. The young couples? Well, prosecution happens sometimes. And it’s those whose signatures are on the papers who get hit the hardest.

This I have seen. This I know.

Praise the lord and pass the loot. Capitalism as religion is really a hoot!

Trust me, the fat cats in all parts of the industry learned a lot from what they got away with. And they passed down the culture of corruption, honed it to art, expanded it to inventions like derivatives (don’t ask, I don’t get it either).

The fat cats bought a lot of politicians with some of the money they made. They hired a lot of lobbyists to ride herd on those bought and paid for congresswhores.  Some lobbyists  actually did/do congresswhores’ work for them by writing actual legislation and the loosened regulations fat cats wanted enacted to keep their ever-expanding forays into criminal activity made legal.

Meanwhile, on American streets, on American campuses, the people who are calling foul on how the whole damned system snowballed into hell  are  being gassed by the departments they pay to serve and protect them; the departments that have been bought out by the Hoarder Class to protect the immoral status quo.

The whistle blowers get punished again and again and again. But more people are hearing them.  Time to protect them and back them up in the demands for simple economic justice on a level playing field.

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