- May 30, 2016
Well I listened to most of that.I just received a notice that a five part series on the 2008 crisis will begin tonight at 8pm ET at this facebook site:
There is a trailer on youtube.
I have no idea about its quality or merits. I sure wish it had been available a decade ago, though.
Here is my commentary, and keep in mind, I'm somewhat consider myself a equalizer and like to understand both sides of the story.
In that Documentary, they focus on some of the worst of the worst Mortgage Fraud that was going on. These were the loans that were extremely problematic for lenders like Countrywide or New Century, as the appraisals were totally bogus, and in some cases, inflated by as much as 2 or 3 times their actual value. These loans were also being combined with bogus full documentation like photoshopped bank statements, W-2's, and Tax Returns, or were being used with Stated Income and Asset figures.
These loans proved to be extremely costly as they typically were the loans that were forced to be purchased back by Wall St, when they went into Early Payment Default, and a Severe Loss was seen. Or, even worse, the Quality Control supervisors at the Originator (let's say Countrywide) would catch some of the fraud, and force the loan into a Scratch and Dent trust at a Severe Markdown to Value.
Countrywide, IndyMac, New Century, Option One, Etc... do not get completely off scott free here, though. They knew loans like this were making the way into the company's pipelines, and the loans were being funded and bundled for Wall Street Securitizations. I'm sure even Wall St knew some of the loans were outright defective. But, I do argue, that in a lot of cases, they had no clue just how bad the problem was, or how concentrated it was in certain areas.
I give a lot of doubt that no one would intentionally want to Risk $200k on a worthless $50k home. Especially, when it's Countrywide or Option One that WILL be eating that loss, when the loan goes sour.
This was a small segment, and not as widespread as the documentary would make it out to be. These were small gangs of people who took advantage of basically a overwhelmed, over-loaded assembly line that wasn't processing anything correctly.
The Real Fraud is Subjectable. But I would say it starts with Investment Banks like Goldman Sachs, purchasing a whole loan bundle from Indymac or Countrywide... Securitizing it into a Mortgage Backed Security, and then taking a short position on it -- as it's being sold to clients.