FHFA Threatens Strategic Defaulters With Prison: "We're Going To Lock People Up"
"We're not just going to demand repayment, we're going to lock people up."
Check out this fear-mongering nonsense published by the Chicago Tribune over the weekend. So a 45-person enforcement office at the FHFA has the resources and incentive to put strategic defaulters in jail, but mention the name Jon Corzine to the 5,000 prosecutors at the Eric Holder Covington & Burling Department of Justice and they stick their heads so far down in the sand, their asses sprout beach umbrellas.
---
Mortgage Cops Taking Tough Stance
Chicago Tribune
Strategic defaulters, beware. The feds are coming for you. And they are not happy.
Investigators are searching not only for lenders who have sold materially deficient loans to Fannie and Freddie, but also individuals, including those who reneged on their promises to repay their mortgages. So if you are a "strategic defaulter" who decided it was better to walk away from your obligation than to keep paying for a house that was worth substantially less than you owed, it's time to start looking over your shoulder.
Heath Wolfe, assistant inspector general for audits at the OIG, figures that these mortgage scofflaws owe more than $1 billion to Fannie and Freddie. It's not a lot, perhaps, in the greater scheme of things. But Wolfe's mission is to get back as much of it as he possibly can.
One way the mortgage police can find defaulters is to forage Fannie and Freddie's records for borrowers who failed to mention on their loan applications that they had previous mortgages they did not pay. By Wolfe's estimate, Fannie Mae alone has about 18 million total mortgages on its books.
"We are working with Fannie and Freddie to build a mechanism" to identify strategic defaulters, Wolfe said at a recent mortgage industry conference. So if you walked away from one property and bought another, chances are fairly good that the OIG is going to find you.
If you conveniently left off the fact that you have an outstanding mortgage you failed to pay, or that you have a deficiency judgment against you for the difference between what you owe and what the house sold for at foreclosure, you've committed mortgage fraud. "Debts that haven't been repaid don't just go away," said a Treasury Department official who asked not to be named. "It doesn't matter whether it's on your credit report or not."
If there is any indication that you falsified information on your new loan application, the OIG is "absolutely" going to refer you for criminal prosecution, Wolfe said. "We're not just going to demand repayment," he said. "We're going to lock people up."
And if you think the mortgage cops won't find you, think again. The OIG's investigative office has a 45-person staff, "all experienced people with 15 to 20 years as investigators and prosecutors," according to Peter Emerzian, deputy inspector general in the Office of Investigations. They work out of 11 field offices, soon to be 14, nationwide, and they're looking for you.
---
So, what about these 2 cases:
The Mortgage Bankers Association strategically defaults on headquarters
Morgan Stanley walks away from San Francisco office towers
---
And don't forget who is doing most of the defaulting:
Biggest Defaulters On Mortgages Are Millionaires
Reader Comments (19)
I'm not sure who Mr. Sichelman is in the pocket of, but this is pretty obviously a "scare piece" designed to intimidate borrowers to stay in financially irrational contracts.
I cannot speak to IL, but CA, and AZ are non-recourse states. That means there is *NO* recourse for the lender to collect anything after foreclosure (or short-sale in CA). None. Not even if they carry a gun.
If the strategic defaulter is in a recourse states, they would have a constitutional right to use bankruptcy to clear any un-recovered debt left after foreclosure.
It's kind of senseless to force severely underwater borrowers to go through foreclosure and then go through bankruptcy as well. But, to save (eliminate) an average of $130K of negative equity per home, the 5M families with severe negative equity would be far better off. The OIG is pursuing fraud. That is very different than pursuing "strategic defaulters."
But, families do not need to lie or commit fraud to strategically default. To default strategically, you simply need to stop throwing good money after bad, and then honestly deal with the consequences. Those consequences are that you lose your home (usually). In exchange, you regain your financial future.
It's not illegal to default (even in Chicago). And, the OIG marshal is not going to have a takedown, or throw you in the pokey for defaulting if it is in your family's financial best interest.
Mark Moore, CEO
www.home-liberty.com
http://dailybail.com/headlines/delicious-irony-mortgage-bankers-association-mba-dumps-headq.html
http://dailybail.com/home/deadbeat-millionaires-biggest-defaulters-on-mortgages-are-th.html
http://dailybail.com/home/60-minutes-walking-away-from-your-mortgage-watch.html
http://www.reuters.com/article/2012/09/13/us-fanfred-lending-idUSBRE88C0CY20120913
A Huge Housing Bargain -- but Not for You
http://www.thestreet.com/story/11224917/a-huge-housing-bargain--but-not-for-you.html
Subprime Rally Building as Dealers Sop Up Supply: Credit Markets
http://www.bloomberg.com/news/2012-07-24/subprime-rally-building-as-dealers-sop-up-supply-credit-markets.html
and this
Distressed Home Prices Jump With Inventory Shrinking
http://www.businessweek.com/news/2012-08-30/distressed-home-prices-jump-with-inventory-shrinking-mortgages
Mortgage-Bond Spreads Fall to Record Low as Fed Starts Buying
http://www.businessweek.com/news/2012-09-14/mortgage-bond-spreads-fall-to-record-low-as-fed-starts-buying#r=bloomberg
Bernanke Buoys Big-Bank Stocks
http://online.wsj.com/article/SB10000872396390444433504577651902142190454.html
October surprise comes early this campaign
http://www.boston.com/news/politics/2012/2012/09/14/october-surprise-comes-early-this-campaign/6YvIcPUthLRfhboCLRVlgI/story.html
QE3: Will the Fed’s New Plan Really Help Housing?
http://www.thefiscaltimes.com/Articles/2012/09/17/QE3-Will-the-Feds-New-Plan-Really-Help-Housing.aspx#BZmfxq1XzBjAD0Jf.99
Dollar Index Headed for Rapid Collapse: Chart
http://www.cnbc.com/id/49068436
Fed Stimulus, Mideast Turmoil to Feed Oil Price Rally: Survey
http://www.cnbc.com/id/49056413
US inflation fears rise after QE3
http://www.ft.com/intl/cms/s/0/b2f99742-00cc-11e2-8197-00144feabdc0.html#axzz26llNs5KQ
Fed's Bernanke Thinks He Knows More Than 97% of Company Executives
http://www.thestreet.com/story/11700841/1/feds-bernanke-thinks-he-knows-more-than-97-of-company-executives.html
http://www.youtube.com/watch?v=MSWcbU-U7fE&feature=player_embedded
The banker criminals then bet against these same Mortgage-backed securities via unregulated Credit Default Swaps that, when these CDOs failed, it would also guarantee bankruptcy for the publicly funded insuring agencies (AIG, Fannie Mae, Freddie Mac); all bailed out through TARP, that never benefited Main Street, only Wall Street.
Now, in the wake of this debacle, we're experiencing extreme unemployment, homelessness, record poverty in Children; but Bernanke and the Fed are propping up their banking buddies by QE1, QE2, and QE3 guaranteeing hyper-inflation and food riots; and these assholes are threatening, not the bankers who caused this whole travesty, but those who are walking away from their mortgages?
benefiting a banking cartel for whom
the currency itself is its private domain
(free money for them, no interest for
you--why banks won't lend when they
ARE solvent?--what ends the banker losses
in suspension if it simultaneously places on
thumb on everyone else, except for cheapening
their debt with the dollar inflated to astronomical
translations?)
So it's the cartel's private prison.
The only things next would be
1:
ball and chain.
2:
throwing you overboard to pick up speed
http://www.ritholtz.com/blog/2012/08/understanding-price-dispersions/
http://lendermedic.com/strategicdefault.html
So all you unethical pieces of human genetic excrement who don't want to play with other peoples' genitals have a calling. Become an unethical coward and an opportunistic bully by joining the FHFA, an administration dedicated to personal cowardice and total prostration to the big banker buzzards taking advantage of the Rothschild/ fractional lending central bank's machine of mass repossession. Now if people were only smart enough to make it a felony to destroy a home suitable for habitation by instituting an elected local community inspection board, we might not have to bomb The City of London to stop the pillage of the U.S.. We could do it for fun.
I just saw the cover of The Globe featuring a photo-op taken of England's prince Harry in bed with three prostitutes. The accompanying article states on behalf of the chump, "Prince Harry says, "I'm giving up on royalty." Apparently mum did not tell her younger son that his prostitutes cost money. This week's 'Globe' stayed on the racks all of two hours. Our local store tastefully removed chump Harry from his public display of bad manners to save the royal hounds the embarrassment of over exposure. So little sense of tasteful discretion in the lizard monarchy. Someone else must buy the antiques for them.
The United States of America has BEEN DEAD FOR A LONG FUCKING TIME.
http://www.usatoday.com/news/nation/story/2012-03-01/buying-prisons-require-high-occupancy/53402894/1
They gotta fill those prison cells somehow
Hard for a judge to justify incarceration for a "criminal" who has strategically defaulted on a mortgage, but done nothing else, when she just heard a case of someone robbing a convenience store, or assaulting a spouse, or driving under the influence resulting in a traffic accident, or possession with intent to distribute of a big bag of ice, or shooting a cop.
And if this truly WAS the case, and the judge though defaulting was worse than violent crimes with victims, one could serve one's six-months with probabtion for defaulting on the mortgage and finance their next property purchase by robbing convenience stores and selling meth.