Fraud and Corruption in American Real Estate

The Wall Street meltdown of late 2008 was because the big banks were putting together fraudulent "asset backed securities". They had sliced and diced stuff and made up "synthetic" securities to the point where even the insiders couldn't unravel the mess, so it all blew up, and that took down Main Street.

Now, nearly two years later, the Do-Nothing Republicans and the Timid Obamaites have done nothing to fix the rot and fraud at the heart of the economic system. So now the fraud has morphed into fun-and-games in the foreclosure business. Quick money for the heartless and rapacious. Grief, confusion, and dark days for Mr. Middle Class. And the politicians whistle and look the other way.

Here's a good article on "Foreclosure Fraud For Dummies, 1: The Chains and the Stakes" by the blog Rortybomb.

The current wave of foreclosure fraud and the consequences for the economy are difficult to follow. As such, I’m going to write a few posts to simplify what is going on so you can follow stories as they unfold. This is very 101 level, and will include a reading list of blog posts and articles at each stage to help provide depth. (Special thanks to Yves Smith and Tom Adams for walking me through much of this.) Let’s make three charts of the chains involved in the process.

Go read the article to get the graphs and all the gory details.

Oh... and go and read this post “Foreclosure-Gate”: Who Will, and Who Should “Pay”? by Tom Lawler on The Calculated Risk blog. I liked the suggestion:

Maybe large servicers should be forced to put up billions in "claims fund," like BP?

Here are some suggested reading from Calculated Risk:

From Dina ElBoghdady at the WaPo: Buyers anxiously await foreclosure deals to go through

From David Streitfeld and Nelson Schwartz at the NY Times: Largest U.S. Bank Halts Foreclosures in All States