Robo-Approved: Underwriting Loans Always Controlled by MegaBanks

submitted by David

Editor’s Comment: This underscores the reality of the situation. Whereas the borrower thought the lender was disclosed, was underwriting the loan and was taking the risk and therefore was interested in the viability of the loan, none of those things were true. The party disclosed as the “lender” was not the source of any money that went to or on behalf of the borrower. That was merely an agent being paid as such for the origination of the loans, which were aggregated and sold at a “profit” (yield spread premium) to pools that were “owned” by investors. The “profit” was kept by the investment banker who set up the scheme. I think if the investor actually saw the numbers they would call that theft not profit.

The originator had instructions to close the deal at the highest amount possible which meant getting appraisers who were willing to throw their industry standards to the wind. When the loan failed, as it was designed to do, then people higher up in the securitization chain would make even more money than the profit they already made in setting up the sale of bogus securities to investors.

These are probably grounds for rescission and the time limits that some people have made reference to in TILA are probably being misapplied — unless the borrower knew the true facts of the deal at the time of the closing of the transaction. Not likely, since the whole modus operandi was obviously to keep that information secret. The servicers call it “proprietary” information to which the borrower is not entitled despite provisions in TILA and RESPA to the contrary.

Regarding Countrywide – BofA and SISA & NINA Loans…

You download these two cases…

http://www.scribd.com/doc/44195296/CW-Lawsuit-EPS-and-Predatory-Lending

http://www.scribd.com/doc/44195438/Countrywide-Employee-Explaining-Illegal-Acts-by-CW

Countrywide used and Underwriting ADD-ON Software program – that automatically changed a borrowers application from conventional to a NINA or SISA loan app. This was done WITHOUT a borrower knowing it. In fact, this Underwriting program was specifically designed to capture a REJECTED LOAN APP – change it to fit the criteria – return it to the Originator APPROVED… If you read these and other lawsuits against Countrywide – it is evident that Countrywide DEFRAUDED at least – 3.5 MILLION BORROWERS.

IMHO – there is absolutely NO-WAY a judge can determine if borrowers were properly disclosed. The loan docs will NOT tell the story because most folks have NO IDEA what they were handed. They were given a fist-full-of documents and usually SEVERAL times. The more I talk with folks about how many times they signed docs for different loans or supposed “Good Faith” estimates it is blatantly clear what they were doing was gather signatures on DIFFERENT loan pkgs to sell the borrower WHATEVER paid the agent the MOST.

Specifically about UNDERWRITING – the big-dog LENDERS ALWAY controlled the UNDERWRITING standards – no matter WHAT bank – agent-broker – whatever – the Underwriting was always controlled by a select FEW big lenders. If the loan ended up with Countrywide – it was their underwriting – BofA – then BofA – no-matter who wrote the loan – the standards were from the party that was SOLD the Note – at least, that’s my experience thus far…

Posted in bubble, Corruption, Eviction, securities fraud |