Tokyo We have been a broken record about the fact that not only did Wall Street largely get away with their shenanigans the precipitated the US and worldwide housing crises in 2008, especially for their subprime fast dealing and dodging, but so for the most part did the wheeling and dealing mortgage brokers. Over and over again we documented cases where the mortgage simply lied to borrowers about the nature of their subprime loans. Over and over again from New Century to Ameriquest and Citi, Wells, and the rest, it was clear that in many cases there was simply no management oversight on brokers at the street level or in fact the brokers were given financial incentives to lie in order to run-and-gun and make more money for themselves.
Now it is clear that the same thing – not surprisingly – is happening with reverse mortgages, a product designed purportedly to allow seniors to stay in their houses without selling by pre-promising the properties to mortgage companies in order to be able to “cash out” while still living in the home during their lifetimes. The Times ran a story this morning about elderly people being bamboozled, and damned if it’s not some of the same subprime mortgage brokers back with a new scam.
Pitifully, their industry spokesman claimed that they were already heavily regulated, but of course that’s not true at all. Most of the regulations are weak, and exist on a patchwork basis state by state with no federal regulation really even though a lot of the mortgages are guaranteed federally. The National Consumers’ Protection Bureau (NCPB) also predictably said they were working on more disclosures, but those are always fairly toothless for people in predatory situations.
This is just plain theft, and we continue to let the criminals get away by turning a blind eye to the mortgage brokers and their tactics. How many more times are we going to allow this?