s skippy the bush kangaroo: skippy looks at books: the monster

skippy the bush kangaroo

Monday, October 18, 2010

skippy looks at books: the monster

just in time for halloween, comes the scariest story of all: how the mortgage scams on wall street descimated america's economy.

michael hudson has written the monster: how a gang of predatory lenders and wall street bankers fleeced america--and spawned a global crisis (it will be on sale oct. 26...you can pre-order here).

here's an excerpt from the introduction:
a few weeks after he started working at ameriquest mortgage, mark glover looked up from his cubicle and saw a coworker do something odd. the guy stood at his desk on the twenty-third floor of downtown los angeles's union bank building. he placed two sheets of paper against the window. then he used the light streaming through the window to trace something from one piece of paper to another. somebody's signature.

glover was new to the mortgage business. he was twenty-nine and hadn't held a steady job in years. but he wasn't stupid. he knew about financial sleight of hand—at that time, he had a check-fraud charge hanging over his head in the l.a. courthouse a few blocks away. watching his coworker, glover's first thought was: how can i get away with that? as a loan officer at ameriquest, glover worked on commission. he knew the only way to earn the six-figure income ameriquest had promised him was to come up with tricks for pushing deals through the mortgage-financing pipeline that began with ameriquest and extended through wall street's most respected investment houses.

the wayward behavior didn't stop with drugs. glover learned that his colleague's art work wasn't a matter of saving a borrower the hassle of coming in to supply a missed signature. the guy was forging borrowers' signatures on government-required disclosure forms, the ones that were supposed to help consumers understand how much cash they'd be getting out of the loan and how much they'd be paying in interest and fees. ameriquest's deals were so overpriced and loaded with nasty surprises that getting customers to sign often required an elaborate web of psychological ploys, outright lies, and falsified papers. "every closing that we had really was a bait and switch," a loan officer who worked for ameriquest in tampa, florida, recalled. " 'cause you could never get them to the table if you were honest." at companywide gatherings, ameriquest's managers and sales reps loosened up with free alcohol and swapped tips for fooling borrowers and cooking up phony paperwork. what if a customer insisted he wanted a fixed-rate loan, but you could make more money by selling him an adjustable-rate one? no problem. many ameriquest salespeople learned to position a few fixed-rate loan documents at the top of the stack of paperwork to be signed by the borrower. they buried the real documents—the ones indicating the loan had an adjustable rate that would rocket upward in two or three years—near the bottom of the pile. then, after the borrower had flipped from signature line to signature line, scribbling his consent across the entire stack, and gone home, it was easy enough to peel the fixed-rate documents off the top and throw them in the trash.

at the downtown l.a. branch, some of glover's coworkers had a flair for creative documentation. they used scissors, tape, wite-out, and a photocopier to fabricate w-2s, the tax forms that indicate how much a wage earner makes each year. it was easy: paste the name of a low-earning borrower onto a w-2 belonging to a higher-earning borrower and, like magic, a bad loan prospect suddenly looked much better. workers in the branch equipped the office's break room with all the tools they needed to manufacture and manipulate official documents. they dubbed it the "art department."
read more of the introduction online here.

also of interest is a huffpost piece hudson wrote: boiler rooms and foreclosure mills: a brief history of america's mortgage industry
the news about the nation's foreclosure scandal has been coming fast and furious, fueled by tales of backdated documents, false affidavits and "rocket dockets" that push families into the street.

a former employee with one of the nation's largest lenders testifies that he signed off on 400 foreclosure documents a day without reading them or verifying the information in them was correct.

ex-employees of a law firm that serves as a "foreclosure mill" for major lenders describe a workplace where speed -- not accuracy or justice -- trumps all. "somebody would get a 76-day foreclosure," one recalled, "and then someone else would say, 'oh, i can beat that!'"

shocking stuff. but surprising? not for anyone who's been tracking the recent history of the mortgage machine. just about every corner of america's mortgage industry has been blemished by significant levels of fraud over the past decade.
if the introduction and the huffpost piece are any indication, hudson's book will prove to be a fascinating and easily-digested foray into the scams and cheating that drove the mortgage bubble of last decade into the depression of today.

the monster will also be available as an ebook.
posted by skippy at 1:14 PM |


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