Tags: AEI | Weiser | lender | Housing

AEI's Weiser: Government, Not Lenders, Caused Housing Debacle

By    |   Wednesday, 19 Mar 2014 04:29 PM

The Justice Department Inspector General’s recent report on mortgage fraud belies the Obama administration's claim that wicked lenders were behind last decade's housing collapse, writes American Enterprise Institute blogger Jay Weiser.

Government loan guarantees represented a more important problem, he says.

"The Obama administration still sticks to its narrative that the [housing] bust was the result of nefarious fraud-committing executives, rather than government subsidies for reckless loans," Weiser writes.

Editor's Note: Secret Wall Street Calendar Uses Strange ‘Crash Alert System,’ Gets 18.79% Annual Returns

"Yet the Inspector General’s report suggests that, given the scale of the market, the level of criminal fraud was small-scale: 107 persons charged (apparently mostly lower-level), with losses from criminal activity totaling $95 million, or about $900,000 in alleged losses per defendant."

Government loan guarantees during the housing bubble allowed borrowers to buy homes putting almost no money down, Weiser says. Low-quality loans mushroomed and defaults followed suit.

"If the government required borrowers to have significant home equity, reckless or unethical lenders would have far fewer customers to collude with, and Attorney General [Eric] Holder would have less need to invent mortgage fraud prosecutions," Weiser writes.

Meanwhile, three Democrats in Congress have requested a meeting with Holder in light of the Inspector General report's finding that mortgage fraud prosecution wasn't a high priority for the FBI from fiscal 2009-11, HousingWire reports.

The trio includes Sen. Elizabeth Warren of Massachusetts, and Reps. Elijah Cummings of Maryland and Maxine Waters of California.

"This report calls into question the Department's commitment to investigate and prosecute crimes such as predatory lending, loan modification scams, and abusive mortgage servicing practices," the three wrote.

Editor's Note: Secret Wall Street Calendar Uses Strange ‘Crash Alert System,’ Gets 18.79% Annual Returns

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The Justice Department Inspector General's recent report on mortgage fraud belies the Obama administration's claim that wicked lenders were behind last decade's housing collapse, writes American Enterprise Institute blogger Jay Weiser.
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2014-29-19
Wednesday, 19 Mar 2014 04:29 PM
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