Sense on Cents

Fraud is fraud.

No matter how you disguise it — or dare I say, securitize it — fraud smells. That stench associated with improperly, and often fraudulently, originated mortgages is growing rapidly and is poised to back up into the Wall Street plumbing. The losses connected with the inevitable outcome of Wall Street banks having to repurchase fraudulently originated mortgages are enormous, although hard to quantify.

I highlighted this reality two days ago in writing, The Real Issues Behind the Foreclosure Crisis:

The imposition of principal forgiveness may actually be less expensive for banks and servicers than addressing the real root problem behind many mortgages. What is that problem? The fact that a lot of mortgages in our nation today were fraudulently underwritten from point of origination and were then fraudulently conveyed via mortgage securitizations.

I actually initially addressed this reality in November 2008 in writing, The Wall Street Model is Broken…and Won’t Soon Be Fixed: (more…)