Friday, May 1, 2009

Mortgage Bankers Association – A Little More Background on the Snakes that Killed Durbin’s Foreclosure Amendment

The Mortgage Bankers Association (MBA) is the lobby that bought enough Senators to kill “cram down,” which is Sen. Dick Durbin’s (D-IL) attempt at helping homeowners in bankruptcy stay in their homes.  Jane Hamsher at Firedoglake reports that they had their sticky fingers in a couple of other pies as well.

Who are the Mortgage Bankers Association?

Well, they describe themselves as "the national association representing the real estate finance industry." They're lobbyists. They were good friends of the Bush White House and worked with Karl Rove to privatize Social Security.

Shortly after 9/11, the Bush administration reassigned 2/3 of the white collar crime division (2500 agents) of the FBI to investigate terrorism. According to Bill Black, they never replaced them, so the FBI formed a strategic partnership with the Mortgage Bankers Association. As Bill says, huge mistake:

The FBI erred by partnering with the Mortgage Bankers Association (MBA)—which represented the worst control frauds. The MBA’s priority was blocking regulation of mortgage banking—not stopping mortgage fraud.

Bill calls the MBA "the trade association of the perps." You can listen to him here talking about the "epidemic of mortgage fraud" that everyone knew about at an early stage. But the FBI "misdiagnosed the problem" -- despite the fact that an MBA study revealed that 80% of all mortgage fraud was "induced by the lenders," the MBA focused investigations on borrower fraud:

Black estimates there are as many as 500,000 cases of mortgage fraud that need to be investigated. Furthermore, such extensive mortgage fraud led to accounting fraud, which led to securities fraud at any/all publicly traded mortgage lenders. As with the FBI, the SEC was "completely ineffective" in stopping such crimes, much less investigating them now, he says.


It is for these reasons Black says the FBI's current level of 800 cases per year is "no longer symbolic prosecutions, it's shambolic prosecutions."

I’m disgusted.

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