patrick.net

Which acts are illegal today and are appropriately prosecuted, which are illegal and are mostly slipping through the cracks?
What should be illegal, but is currently not?

I am not a lawyer, so I cannot comment on legal issues.

I think outright lying (or willful misrepresentation of material facts) is immoral. However, I rather have less regulation than more.

On the other hand, moral hazards are hazardous to morality and they are immoral.

Greed is what humanity stands for and it ought to be morally neutral.

Here's tough one:
A mortgage broker who intentionally leaves her customers in the dark about the risk level / the nature of the mortgage product she's selling to them.
As a result, her customer loses their family home to foreclosure a few years down the road.

Here’s tough one:
A mortgage broker who intentionally leaves her customers in the dark about the risk level / the nature of the mortgage product she’s selling to them.
As a result, her customer loses their family home to foreclosure a few years down the road.

Not tough. Unless the mortgage broker lies, she is not doing anything wrong. She is not doing anything nice though.

Caveat emptor. Her customers should have known better.

Tiny fine print should be illegal - you know where it explains the teaser rate advertized will add x amount to your mortgage, and your rate is only fixed for the first 6 months etc.

And stated income loans with out a tax return to back it up - liar loans.....the mortgage broker was actively telling us - don't tell me your income I don't want to know, just tell me what house you want to get into and I'll tell you what income bracket you need to be in!

Cash back/concessions at closing to the buyer to inflate the selling price.

The list could be endless......

Tiny fine print should be illegal - you know where it explains the teaser rate advertized will add x amount to your mortgage, and your rate is only fixed for the first 6 months etc.

Consumers should learn to read the fine prints. If a deal is too good to be true, it is!

And stated income loans with out a tax return to back it up

Stated-outcome loans should be outlawed. Bona fide stated-income loans are fine.

Cash back/concessions at closing to the buyer to inflate the selling price.

So long as the loan apprasial is valid, cash back or concessons is just part of the deal, right?

I drink,
Therefore,
I am

Sir Randal of the Fat Stacks.

Please answer the following: who is the money owed to? Let me get this straight the "Fed" "creates" "money" and then does what with it? One thing I've always not been quite able to understand is why Ollie North just didn't back an 18" Ryder truck up the Fed Reserve in name your city and just fill the baby up? I mean, who fucking cares? It's paper, well technically linen, but come the fuck on. Why sell drugs to buy missiles that you sell for a profit to buy guns for a covert army? Why all the bullshit? Why not just back the truck up the Fed loading dock?

Ok back to the question at hand, who is the money owed to? Fed does what? Sell "obligations" to whom? What does it mean when the money supply triples in 4 years? Whose money is in the first place?

We cannot have laws to protect every single misjudgement of fools. If they make the wrong move, they deserve to part with their money.

tiny fine print should be illegal

Fuck that, all fine print should be in 1/4 point Helvetica.

After all, Gen-X's arch enemies, the boomers, are getting long in tooth.

Sir Fur of Central Coast, another question: what is money?

Peter P. obviously you haven't spent time at UCSB, if so you would know that a fool and his money are soon partying.

Peter P. lover of all things Tuna.

Huh? I do not know. It seems rather odd to me that we have to toil for green line bank notes when a bald headed boomer can print them for free.

Peter P. obviously you haven’t spent time at UCSB, if so you would know that a fool and his money are soon partying.

Show me n a few days. :)

Money? What is money? A medium for exchange because the barter system breaks down when trying to barter for an F-16.

Today I exchanged $75 USD for a 1.75L bottle of Patron Anejo. That my friends is deflation in action.

I plan to stay at Paso Robles tomorrow night. Anything interesting there?

I plan to stay at Paso Robles tomorrow night. Anything interesting there?

Some good food, and of course, www.adelaida.com

Amazing wine.

You can take 84 W to the coast which is magnificent. Go West, turn right or left, can't go wrong. Hearst Castle is nearby. Now that boy had some fat stacks.

Hmmm, what acts are illegal?

I'm not an attorney, but as Peter P. pointed out, fraud (intentional misrep. of material facts with scientor), is probably the most common illegal act within the industry. Fraud can also occur where there's an omission of material terms, however, I think there needs to be a fiduciary relationship between the parties. Either way, I believe it would be tough to prove fraud unless the prosecution can show a pattern fraudulent behavior by the lender or agent.

The victim's best bet would be to try to void whatever contract that was created between the parties, (For example, any small print within the contract would be considered unconscionable, and therefore, voidable if a reasonable person would not have noticed the fine print and the provision included material terms).

As far as breaching some sort of ethical duty owed to the client, I'm not sure if that's a criminal offense. Rather, I think punishment would come from within the industry, (i.e., loss of license).

Anyway, that's my two cents.

But you gotta love Karma.

I suspect the Karma Interpol is looking closely at this international housing bubble.

"...And the worst part was the guy’s arrogance. He acted like he was the GOD of real estate."

There's got to be one in every group. In my case, the he is a she (and boy was she wrong about the current RE market). For a year, I had to hear about how Gary Watts was never wrong, and all the other bullshit about how the Orange County RE market would never stall or fall. I now take every opportunity to rub her face in it. For some reason, she doesn't want to discuss the RE market with me anymore.

Sir X who says what we all are thinking,

This isn't my thread, so I don't want to hijack it with a Fed/Money discussion. Suffices to say that the actual way the Fed creates money is a bit different than "just printing money". The Fed creates money through "seniorage", which involves how they make overnight loans to banks. The actual currency printed at the Treasury is pretty tightly controlled. A president wishing to illegally fund big stuff couldn't get away just ripping off the Treasury directly. Thus, drugs for guns, etc.

As it currently stands, no-doc "liar" loans certainly aren't illegal. Whether they are ethical is a bit harder of a question.

Is the lender unethical in offering such loans knowing they will be abused by people overstating/misstating their incomes?

Are the borrowers unethical for inaccurately stating their incomes?

Which party is primarily responsible?

I think in the US system it is the borrower. We don't have a "nanny state", and people are largely free to make bad decisions, throw away their money, even gamble themselves into living on the street. People are also free to decide whether to be honest or fraudulent.

When people lie on stated income loans they are committing fraud. They sign a statement that information provided in the document is accurate.

We could have an opposite system. A government that puts all the responsibility on the lender, in this case, to make sure a borrower "can afford" the loan. Of course, then the gov't would have to require your personal data is made available to the lender.

Given that my own blog is called Capitalism 2.0, you can guess which side I come down on.

Anthony,

Great video link in last thread with Rich Toscano! What a great guy, it seemed he didn't even have to "go after" the realt-whore all he had to do was let the guy bury himself with his own words. Thanks,

DinOR

Crime? Punishment?

What crime? As evidenced by my pal's massive ad campaign for mortgages in SoCal it's obvious (to me anyway) that it's the mortgage brokers themselves that are being viewed as the criminals here!

I mean it's bad. 9 out of 10 people answer the phone by saying "Is this some kind of finance company", "No we don't want to refinance" (before a word being said).

6 out of 10 claim to have refinanced within the last six months. (Is this a good sign?)

5 out of 10 claim to be "listing" or in some process of "selling" their San Diego area home (even if they are "just thinking" about it.

4 out of 10 can't speak english (but in broken english tell you they're not interested in refinancing)

3 out of 10 have trained their children how to screen a mortgage brokers calls. (I found that one kind of sad).

1 in 10 have anwering machines that say: "If you are a mortgage broker PLEASE do not leave a message, we are not interested in refinancing and take us off your list!

Folks, this is the state of the market. The sheer size of these loans is staggering! I mean scary. How could someone in Murrieta wind up owing 800K? The amount of "musical loans" and 11th hour damage control boggles the mind! As we revisit the mind of the FB it's definitely the criminal MB that created this situation. Certainly not themselves or the realt-whore that sold them that overpriced sh@tbox!

Where mortgage brokers will definitely find themselves "on the witness stand" is when the issue of "suitability" inevitably comes up!

Their tactics today are a mirror image of what con-artists have pulled on seniors for years. They call up some unsuspecting (and trusting) widow, promise prizes and gifts (with a small handling and shipping fee of say $1,000?) send them a toaster, or in most cases nothing.

Then they wait a few weeks and THEN claim to be part of a "victims property recovery unit" and promise to go after "those rotten bastards" and take the widow a SECOND time!

This is exactly how homedebtors are viewing the "lending" industry.

Of course mortgage brokers are trading roles with one another playing "good cop-bad cop" by rescuing the other brokers "victim".

Peter P Says:
Greed is what humanity stands for and it ought to be morally neutral.

I kinda agree. But where do you draw the line?
It certainly seems that deception (fraud) and violence are also a part of human nature.

Randy H says:
When people lie on stated income loans they are committing fraud. They sign a statement that information provided in the document is accurate.

Isn't there an adverse consequence for the borrower when such a loan blows up?

Seems like someone has already come up with a model bill against predatory lending: http://tinyurl.com/s6hqe

I'm not sure what the context is, though.
The bill also looks to be pretty far-reaching - as far as I can see, all current standard practices (no-doc, neg-am, flipping, "influencing" appraisers) would be prohibited.
Interesting.

What are the odds of this or something similar becoming law somewhere?

Isn’t there an adverse consequence for the borrower when such a loan blows up?

That's a good point. I think this is where it all gets complicated very quickly. Firstly, few lenders are on the hook for the debts directly; but most are for a portion.

Loans are packaged, "tranched" and then sold into the MBS and other CDO markets. Modern risk management.

That's why something like "nodoc" loans aren't necessarily unethical or illegal--from a particular perspective. Here's the nutshell argument (and please folks don't jump on me, I'm not saying I agree with it):

Kind of like the insurance industry, the home lending industry can both reduce their risks and costs by not examining each specific customer in depth. Instead, just ask the customer to self-report, then utilize intense actuarial/statistical data to profile segments/groups of customers. Like zip-code determining your base car insurance rate. This will capture both great and terrible drivers. But, when all added together, the company reduces the volatility (std. dev.) of returns on the loan.

So the lender claims they are making everyone's costs lower by only requiring customer self-reporting. It's a logically consistent and mathematically demonstratable argument. The social impacts, like moral hazards this creates, are another question for politicians to ponder. Just like w/ auto insurance, some people will figure out how to game the system. The larger the granularity of the technique, the more room for gaming by unscrupulous actors. The smaller the granularity, the greater the cost to everyone else.

George,

Thanks for bringing that to my attention! I've been wary of WaMu for some time. (How can you be in finance in the PNW and NOT have friends that work there?).

In time suitability issues will arise from their retail securities division as well. They have a mutual fund product line with ungodly payouts to brokers that virtually assure the investors will never see more than a bank return while taking market risk!

I can't wait to stay away from it!

SFWoman,

From just glancing through their data (Altos Research, the link at the bottom in the fine print), it appears they have a data anomaly in June that they didn't bother to clean out.

Click through some random cities and glance through the charts. Most have an aberration in June. The simplest answer is they are missing some data attribute. I can see some cities show an inexplicable inventory of 0 in June.

John,

LAW 5 (federal)) Interest rates may never drop below 7.5% since everytime it does people treat the dollar like toilet paper.

I hope that's tongue-in-cheek, lol. Otherwise we could just go ahead and call that "The Guaranteeing Another Great Depression Act".

ThomHall, Patron Tequila Anejo 375ML @28.99

Dude, that 56 bucks for a 750. The 1.75 at 75 is the deal

It's my new "strike price"

Inventory is falling!

http://bubbletracking.blogspot.com/2006/08/tracking-san-josesanta-clara-county.html

Please tell me it is because of the long weekend.

What should one look for in a good premium bottle of tequila? I've heard Sammy Haggar has this really expensive stuff out there. Is it really worth it? I usually just get the "Pancho Villa" stuff or house brand.

100% agave, worm at the bottom, how the stuff is distilled and aged.

Warning, I never drank tequila by itself, these guideline come from some piece of internet fluff or another. Consult wikipedia for more info.

What should one look for in a good premium bottle of tequila? I’ve heard Sammy Haggar has this really expensive stuff out there. Is it really worth it? I usually just get the “Pancho Villa” stuff or house brand.

Ahh DinOR, you Sir have come to the right place, the housing crash blog, source of all informations, including Tequilla.

Try some Patron Silver, pretty darn good and around 38/bottle at Trader Joes. Tequilla comes in 3 varities:

1) silver (unaged) Traditional, clear, fresh-from-the-still tequila is called Blanco (white) or Silver and must be bottled immediately after distillation. It has the true bouquet and flavor of the blue agave and is usually very strong. Patron has a nice "earthy" flavor to it, no wicing when drinking straight, try chilled a bit, very nice.

2) Reposado or Rested
Reposado is traditional, clear tequila that has “rested” in white oak casks for two months to one year. Reposado has a more natural mellowed taste than Oro tequila, with the oak barrels lending a pleasing bouquet and pale color. The blue agave flavor remains, but is gentler to the taste.

3) Añejo or Aged
Anejo tequila is traditional, clear tequila aged in white oak casks for more than a year. It’s amber color and distinctive woody bouquet and flavor come from it’s extended time in the porous oak barrels.

Personally I live the Anejo for sipping and the silver for margaritas.

SQT,

Well thank you. That's what I thought. (I know X isn't a fan of "blender drinks") b/c they cut into his serious drinking but after a few, who's gonna notice?

What I can't fathom is what's up all the different varieties of Rum? Coconut Flavored (which to me is like drinking sun tan lotion) and lime flavored and on and on? So if you are going to going to serve Rum drinks you can spend as much as you want to spend! In the end, what's the difference?

Btw, if you get a chance check out Ben's they have a great thread called "Free fall"! Wow.

-live
+love

Surfer X,

I stand corrected! So there IS a difference! In Oregon we have the OLCC (Oregon Liquor Control Commission) and they regulate the prices on everything. We can't even get a bottle at the supermarket. Only state controlled liquor stores with basically banker's hours. Very expensive.

Now if you want a bag of "da kine" NO PROBLEM! 24/7 availablity. It's incredible how many "grow operations" get busted up here every week.

newsfreak,

So true, so true. When I first moved out here I couldn't believe it! Chicago had a liquor store on every corner. Oregon has always been funny about hard liquor and I think for years it was a "3.2" state (meaning even beer could not exceed 3.2% alcohol). It was like drinking "near beer" for crissakes. No wonder so many people are hooked on dope! Sheesh.

I'll further agree that I can't ever recall any affiliation where I've learned as much as I have here. At work, it seems there's a lot of paranoia about sharing information b/c knowing something your co-workers don't could someday save you your job! We don't seem to have that problem here.