Traci Gregory, Financier

Feds move up from originators, go for IndyMac, Countrywide and New Century Mortgage

I've just heard today that those three, IndyMac, C'Wide and New Century have been issued subpoenas as the subject of a federal grand jury investigation. The Justice Department was focusing primarily on smaller operators thought to be defrauding homeowners and mortgage lenders . . . as if there could have been a coordinated effort across the country large enough to create the mess we're in. . . Now they've decided that it was fraud on the part of large sub prime lenders. According to Los Angeles Times, they have asked for e-mails, phone bills, financial records and other information. The Times said this is part of an investigation into whether fraud and other crimes contributed to the mortgage crisis.

I find this stuff small time compared to the creation of the programs that required a heartbeat and a signature to get a loan, but I'm just a loan officer . . . They didn't need fraud to lose money on those programs! There were such minimal requirements for loans an enterprising 12 year old could have made them work.

You already know about Countrywide and Angelo Mozilo, with the "friends of Angelo" mortgage program . . . interesting that the only "friends of Angelo" that we know about are politicians . . . who probably can't repay the favor for him now . . . too much daylight shining on their relationships . . . and you probably know by now that Countrywide is being sued in Illinois, Florida and California. I'm sure Cuomo will jump in there soon. After his win with Fannie Mae, he couldprobably take on any lender and win.

Countrywide and all its memories will fade though, except maybe for Angelo and anyone else who actually attends a trial. BOA bought it, and they'll swallow it whole. . . they're already changing the names of the divisions to "Anything But Countrywide".

I was surprised to hear that a court-appointed examiner has determined that New Century was involved in inappropriate accounting practices that inflated its profit and gave top executives the ability to acquire millions of dollars in undeserved or inflated bonuses. I guess I was surprised that I had not heard it sooner . . . I'm certainly not surprised at the charges.

They were not a lender that I sold loans to . . . they were quick to change program details, interest rates, etc, at the closing table and they only had to embarrass me once for me to take them completely off my list of possibilities. They filed Chapter 11 in April of 07 . . . and I felt almost the same way when I heard that news as I did when I heard Greenpoint had "bitten the dust." (What goes around comes around doesn't it? Couldn't have happened to anyone who deserved it more.)

The FBI is up to 21 cases against corporate and other large companies relative to subprime market defaults. They've inferred they want brokers, lenders, and now securities firms, hedge fund operators and credit rating agencies. The Securities and Exchange Commission (SEC) is reportedly working closely with the fibbies to find and charge anyone who may have contributed to the credit crises . . .but because of deregulation they're struggling with making criminal cases about the subprime debacle.

I've recently thought of two youtube videos I think I'd like to make . . . Bear Stearns indictees, set to the tune of Dirty Laundry, by Don Henley

You may listen to it in the next post

DOJ/Antitrust on Real Estate Commissions

The Department of Justice, Antitrust Division has unleashed a firestorm with its new website "Competition and Real Estate". 

They have links on the front page to articles named Consumers can save thousands of dollars in commissions  and Calculate how much you can save.  You can look up your state and see what discounts and rebates are allowed by law there . . .

Georgia, for instance, allows for choice of brokerage services (Discounted commission for selling agent; or MLS Listing fee only) and allows brokers to offer rebates to consumers.

In the firestorm, the National Association of Realtors has posted on their website . . . "The DOJ arguments at the Web site display a flagrant disregard for the free competition the agency is supposed to champion. It uses the Web site as a promotion for unbundled and discount services. It doesn’t present persuasive argument to show that one model has certain advantages over another. Instead, it dictates what it believes is the ultimate wisdom about real estate brokerage."

You can read their entire commentary at Realtor.Org

Real Estate Agents may make a lot on a commission, but they work hard for it, and honestly, it is like any other service you buy, you can spend the money or do it yourself, but paying a professional is probably the way to go unless you have a lot of time to spend on doing the sales job.  My hero Frank McKinney uses Real Estate Agents, AND helps them sell his houses . . .

Maybe the Justice Department is trying to boost the economy by recommending people get cheaper in the way they do things, but historically, I believe agents sell houses faster than FSBO owners.  And nothing is selling fast right now.

And, that's why I have time to blog on a daily basis  . . .