Oct 29, 2009 by Tomek Pilch
It's been almost two years since the mortgage and housing market fell into shambles, and the economic ripples continue to propagate, affecting pretty much everyone in the country in one way or another. I have been doing some serious research on the subject (I Googled it) and to say I was shocked by the results is an understatement. I was completely dumbfounded that I couldn't find anything, no news or updates, regarding an investigation into, or prosecution of anyone for fraudulent lending practices.
Maybe it's just me, but doesn't anyone else feel that criminal investigations and prosecutions should be pursued, if for no other reason than to prevent this type of thing from happening again? I have seen several one-off investigations, but wish there were more of a concerted effort, and public address of the issue.
I would like to see President Obama address the nation, and give his assurance that this type of thing is not acceptable, and those responsible are going to spend their lives paying for it in the form of 23 hour confinement or labor in a chain gang.
I'm sure their are a wide array of opinions on this one, ranging from locking up the leaders of these lending companies who knew that were doing something wrong (and stupid) but refused to consider anything other than their $10 million bonus. Others might say that the consumers had it coming thinking they could afford an $800,000 mortgage on a $40k salary.
Ultimately, the fault lies with both the borrowers and lenders. See the Wikipedia graph for a breakdown of the causes of the housing bubble and ultimate failure of the mortgage market from both sides. Borrowers are to blame for not having the common sense to do some research, ask knowledgeable friends, or otherwise make themselves aware of the situation they were getting themselves into. Namely that they would be facing foreclosure a few years down the road, once their interest rates and mortgage terms adjusted to something resembling a rational loan. On the other side of this debacle, is the lender or mortgage broker. These people should obviously be held to a different standard than the people purchasing their product. These are "professionals" marketing themselves as just that, so were people really in the wrong for believing them, or did they get duped and pressured into taking on a loan that was bound to get them in trouble?
I think an example should be made of the guys who violated the trust of their clients in the most obscene way. Let me be a little more clear about who exactly I'm talking about. I'm not talking about the guy who pressured people into getting into "less than ideal" loans to get his commission, or the guy who assured his customers that 60% of your gross income going towards your mortgage is normal. No, I'm talking about the guy who deliberately fudged his "clients" income numbers, so that he could sell them a "creative" loan that he KNEW would end up wreaking havoc on their livelihood later on. The guy who ruined peoples lives, getting them so under water that they grew gills, forcing them into foreclosure, or filing bankruptcy, all so he could get a fat commission check. These are the guys that should be flogged and hung out to dry.
That's my two cents. What are your thoughts? Please cast your vote and share your opinion in the comments below: