It hasn’t been widely publicized, perhaps because most folks are pretty tired of talking about the Great Recession and the financial meltdown, but there have been thousands of low-level mortgage originators prosecuted, convicted and sentenced to as much as 30 years in prison for mortgage fraud in the last few years.
What is galling (to me) about the prosecutions has been that – for the most part – the offenses of the convicted were that they defrauded banks. What’s wrong with that? Two things:
- The level of investment in prosecuting lenders for hurting consumers has been substantially less, and
- While the low-level offenders certainly deserve some jail time, the high-level offenders (think executives of major banks and Wall Street investment bankers) have largely been given a pass.
In other words, hurt a bank, go to jail; hurt a consumer, well, not so much.
So imagine my surprise when U.S. Attorney General Eric Holder announced that he would go after banks and their executives for criminal misconduct. For a short but seemingly clear message from him, go to the DOJ website here.
Will this actually happen? We can only hope so, and it has certainly been too long to get started. One pundit suggested that the only reason Bernie Madoff was prosecuted was because he stole from the rich and not the middle class. I’d like to think more generously than that, but what has certainly been true so far has been that the investment bankers and the big-bank executives that created some of the most insane loan products that hurt everyday folks so much have had a pass up until now.
Here’s hoping that ends soon. I wish Mr. Holder luck.
Casey Fleming, Mortgage Advisor
Author, The Loan Guide: How to Get the Best Possible Mortgage
C2 Financial Corp.
NMLS 344378 / BRE 00889527