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Friday, October 06, 2006

 

Lawsuit Alleges Mortgage Fraud Fed By Froth

Few of those paying attention to the housing market during the past five years will be surprised by this one.

A story in The New York Times today details an alleged mortgage fraud case in Indiana. Industry experts and regulators say the housing boom of the past few years, and its associated avarice, proved fertile ground for swindlers. "Rising home prices served as cover for quick-flip plans and an easy hook to recruit investors," says The New York Times:
And the boom created incentives for the mortgage industry not to look too closely. As the appetite for home loans soared on Main Street and Wall Street, the industry came to increasingly rely on networks of independent mortgage brokers, appraisers and other officials to keep the lending assembly line well supplied. All had incentives to minimize hold-ups.

“If the deal doesn’t go through, nobody gets paid,” said Bill Matthews, a senior vice president at the Conference of State Bank Supervisors.


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