Astounding:

Orson Benn, once a vice president at the nation’s largest subprime lender, spent three years during the height of the housing boom tutoring Florida mortgage brokers in the art of fraud.

From his office in New York, he taught them how to doctor credit reports, coached them to inflate income on loan applications, and helped them invent phantom jobs for borrowers.

While prosecutors looked at roughly $100 million in loans written by Benn and a cadre of co-workers, that represents just a portion of the loans they approved during his aggressive expansion into Florida.

The Miami Herald found that Benn’s network approved more than $550 million in home loans from Tampa to West Palm Beach to Miami, according to an analysis of court records. In Miami-Dade County alone, Benn’s office approved more than $349 million in loans on 1,913 homes — more than one in three have since fallen into foreclosure, the analysis shows.

Valdes brokered at least 100 of those loans worth $22 million — nearly all based on false and misleading financial information, the newspaper found

How did they doctor loan apps? Simple mortgage broker fraud: “non-existent employers, grossly inflated salaries and sudden, drastic increases in the borrower’s net worth.”

There apparently was an art to falsifying the documentation, and Benn taught his brokers precisely how, falsifying income and employment data:

He taught one of those brokers, Scott Almeida, a convicted cocaine trafficker, to prepare phony income statements and doctor credit reports. A few months later, Almeida introduced Benn to Tampa brokers David Tuggle and Eric Steinhauser. After Benn taught them to prepare phony documents, they began to write millions of dollars in loans.

The accompanying video is a must see, and the entire article definitely worth reading.

Nothing  on predatory borrowers, though . . .

>

Previously:
Laughable: “Tyler Cowen: Predatory Borrowing The Bigger Problem” (January 2008)

http://www.ritholtz.com/blog/2008/01/tyler-cowen-predatory-borrowing-the-bigger-problem/

Source:
Exec had mortgage racket down to an art
JACK DOLAN, MATTHEW HAGGMAN AND ROB BARRY
The Miami Herald, 12.06.08

http://www.miamiherald.com/457/story/802703.html

See also:
Legacy of tainted home loans: vacancy, vandalism, foreclosure
ROB BARRY, JACK DOLAN AND MATTHEW HAGGMAN
The Miami Herald, 12.06.08

http://www.miamiherald.com/news/florida/story/802698.html

Category: Bailouts, Legal, Real Estate

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

9 Responses to “Getting Mortgage Fraud Down to an Art”

  1. karen says:

    (Repost)

    Barry Ritholtz is in Barron’s this weekend… and it’s a great read! hope this link works without a subscription:

    “A big bear turns bullish, sort of”

    http://online.barrons.com/article/SB122852213723784245.html?mod=b_hps_9_0001_b_this_weeks_magazine_home_right&page=sp

  2. rww says:

    re: Barron’s

    BR, a “medium recession”? BR, WTF?? Is that a misquote?

  3. Bob_in_MA says:

    What do you want to bet these people are now out there figuring out how to game Obama’s $600B fraud trifecta?

    (oh, pardon me, I mean stimulus package.)

  4. RW says:

    “…figuring out how to game Obama’s $600B fraud trifecta?”

    Probably not until the bankers and wall street get through gaming Bush and Paulson’s $700B fr…, um, rescue program.

    You know it’s getting really bad when a fraud network like Benn’s generating over $500MM in bad paper starts to look like small potatoes.

  5. willid3 says:

    i doubt they had to work hard to game that Bush program. They didn’t want to have any one having to do any thing to get involved with it. or do any thing after they did. sort of wonder if there should be or is a claw back provision huh?

  6. Bob_in_MA says:

    Just so I’m not misunderstood, I’m a life-long Democrat. I just smell a huge pork fest coming on and don’t like the odor.

  7. Tom K says:

    @RW – you mean the wall street rescue plan the Dem in congress voted for and Obama supported? That rescue plan?

    Don’t get me wrong, the Bush administration and the Republicans in congress were fiscally irresponsible, anything but “conservative”. Unfortunately Obama and his friends in congress are going to use this crisis to spend us into oblivion. I hear few voices amongst politicians or the media say “geez, all this new government debt may not be a good idea”.

    We got into this mess because there was little scrutiny by regulators, politicians and media of mortgage lending standards. Now, as the government trys to soften ramifications with trillions of dollars in new debt, there seems to be even less scrutiny of how this money is being used.

    And the banking bailout is just a precursor to the porkfest coming down the pipe; the big 3 bailout, the stimulus package, Obama’s NEW New Deal…the horror stories will continue as we plow this country ever deeper in debt.

  8. Patrick Neid says:

    Stories like this will be the norm going forward. What will be forgotten and hardly mentioned is that most of the perps will go to jail.

    Our Mr Benn is doing 18 hard ones.