Thursday, June 19, 2008

Victim or Co-Conspirator?

"In a ruling that backs borrowers even when they have lied on loan applications, a federal bankruptcy judge held that borrowers who inflated their income to get a loan don't have to pay back a bank because the lender should have noticed a 'red flag' about the deceit. ... Inaccuracies in loan documents have emerged as a factor behind the wave of foreclosure and banckruptcy actions. The Oakland case highlights a debate that has emerged over whether responsibility for homeowner's woes should fall to lenders or borrowers", WSJ, 31 May 2008.

Why is National City Bank (NCC), see my 18 June 2008 post, surprised? Do we really know what went on here? Did NCC expect to sell the mortgage in the market, then got stuck with it, which might explain NCC's failure to investigate the borrower's financial bona fides?


Anonymous said...

Blogger back on-line? Try again:

Hello i.a.,

Bottom line: They aren't going to pay. If I were them (the borrowers) I wouldn't pay either. The U.S. banking system is the biggest racket ever. The bankers can always pull a few more trillion out of their a$$ without ever breaking a sweat.

Independent Accountant said...

See my 10 and 21 December 2007 posts on this topic. As long as Helicopter Ben is at work, you are correct, there will always be more $$$$ for the TBTF banks.

Anonymous said...

They don't call him Heli-Ben for nothing.