Mortgage Fraud Securitization | FBI Whistleblower Interviewed by Sacha Stone and Rebecca Cope

The degree of fraud within the mortgage industry is multi-tiered and pandemic. Fraud, deception, coercion and manipulation are staples, not the exception. Julian and I lost our home in 2013 to Foreclosure Fraud, despite our having the law our side.

Sacha Stone and Rebecca Cope expose part of this in an interview with an FBI whistleblower who spent several years investigating the securitization aspect of the industry.

Securitization is a term referring to the grouping of loans into investment packages for resale after the loan has been originated. Having worked for Bank of America Correspondent lending in 2009, I was responsible for analyzing loans, ensuring they were ‘compliant’ with the protocols at the time. We had monthly goals of purchasing 10’s of billions of dollars in loans from all over the U.S.

This is generally how the process works.

A potential borrower comes into an originating bank, a small local bank, wanting to secure a loan for a house, and signs a loan application. The lender approves the loan once all the requirements are met, and after a short period of time the borrower is required to send monthly payments.

In the past, the bank would keep the loan on its books until it was paid off, which means it can only lend so much money to new borrowers. If the loan was for $100,000 and the local bank had a $1,000,000 credit limit, it would have only $900,000 left to lend to other borrowers. Eventually the bank maxes out its credit limit and would not be able to lend any more money until the borrowers paid back portions of their loans.

Enter Securitization, and the correspondent lending scheme which occurred in the early 1990’s. The originating bank, the small local bank with a limited line of credit now has the chance to sell its loan portfolio to a larger bank called a warehouse bank. This larger bank can purchase billions of dollars worth of loans and repackage them as security investments. What this did is allow the flow of credit into a community with little to no risk for the banks involved. As long as the originating bank can sell its loans to the warehouse bank, they can keep lending money out to borrowers.

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It doesn’t seem all the bad on the surface, but what this did is create the so called subprime mortgage crisis of 2007 and 2008. Because originating banks wanted to keep making more money, they lowered their lending guidelines or waved them completely in some cases, lending money to borrowers with less of a capacity to make payments. The loan could be sold to the warehouse lender after only a few months of origination, ensuring the risk of default was very small. The warehouse lender would in turn package a massive amount of loans into an investment product, pushing the risk to investors. The whole scheme depends on new borrowers, and willing investors, which means the banks would have a very high incentive to manipulate numbers, credit ratings and even sell bad loans to investors to keep the flow going. And that is exactly what happened, becoming not just a few bad cases, but the standard policy.

The following video details much more of this process, revealing that the warehouse banks would go through all sorts of deceptions, manipulation and frauds to keep investors buying.

After the housing crisis, the investor pool dried up for the most part, and something unprecedented happened, the Federal Reserve Bank actually began buying bad securities from warehouse banks, which became known as Quantitative Easing. The effect this has on the money supply and inflation is disastrous, as there is no hope of real recovery unless these bad investments are addressed, meaning wiped clean as fraudulent debts.

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Now the fraud goes much deeper then that, but this is just a small slice of the poison pie being force fed into the world economy and is a debt bubble unlike anything which has ever come before. Eventually the Fed will be insolvent, which may have already happened, and the value of the Dollar will plummet, affecting the world economy.

Despite this sobering reality, I think it can only cause chaos and problems, if we as the people giving energy to these systems, continue to rest on our laurels and do nothing. The fact that fraud is pandemic in the system means we can take actions to reveal it and ensure that a new system is developed which does not employ usury and various other deceptive acts and practices. This situation developed in plain sight, and will undoubtedly occur again if we remain ignorant and in active.

I like to think of this as a big red pill for those suffering from economic hardship. It allows us to channel our frustration into a productive expression, we can become change agents for a better world, and many of our sleeping brothers and sisters are looking for a way to make sense of this madness, which we can help them with.

Source – Ascension With Mother Earth

FBI Whistleblower Interviewed by Sacha Stone and Rebecca Cope

Source:

http://www.ascensionwithearth.com/2015/05/fbi-whistleblower-interviewed-by-sacha.html