Mortgage Fraud Explained From The Inside

Here's another great example of how they did it--as in, how a handful of crooks gamed the mortgage industry and helped bring our economy to its knees...
Orson Benn, once a vice president at the nation's largest subprime lender, spent three years during the height of the housing boom tutoring Florida mortgage brokers in the art of fraud.

From his office in New York, he taught them how to doctor credit reports, coached them to inflate income on loan applications, and helped them invent phantom jobs for borrowers.

When trouble arose -- one broker got caught, another got cold feet -- Benn called his trusted fixer in Miami to remove the problem and get the loan approved: Yvette Valdes.

The 48-year-old Valdes was a key figure in helping Benn tap into one of the country's most lucrative mortgage markets during his run with Argent Mortgage, The Miami Herald found.

Benn and several associates were convicted of racketeering this year, but Valdes still sells mortgages from a nondescript storefront in Homestead.
Creating all those fraudulent mortgages that people couldn't pay back wasn't the entire story--we now know what Credit Default Swaps and lack of regulation had to do with it--but it is typical that we are getting such a simple, plain and basic example of how it was done. Typical in that if there was a layer of oversight or regulation designed to prevent it, the damage done could have been mitigated.

We cannot be naive enough to think a crook wouldn't find a way to steal--but that doesn't mean we should absolve these people of their crimes. It was too easy to steal. It was too easy to game the system. The barn door wasn't shut, in other words. Well, the barn door needs to be shut from now on, and more attention needs to be paid to the mortgage industry to lock down the bad practices that were used to rip off the consumers and, ultimately, the entire country.

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