Blown Mortgage

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What do you get when you overcharge customers, disregard loan products that they qualify for and place them in expensive, exploding ARM products with insane fees?  A nice tidy $3.8 billion first quarter profit.  At least that’s what you get when you are giant conglomerate AIG.

AIG - which was recently fined a combined $174 million dollars by the Office of Thrift Supervision:

OTS said during a regular yearly examination of AIG Federal, loans
outsourced to another AIG subsidiary, Plymouth Meeting, Pa-based
Wilmington Finance Inc., contained excessive fees and did not
adequately consider borrowers’ credit status.

The settlement also included the following provisions:

AIG said some of the money will be used to help borrowers with weak
credit who face foreclosure after taking out mortgages from AIG Federal
Savings Bank between July 2003 and May 2006. AIG Federal Savings is a
Delaware-based unit of AIG, which is based in New York. Some of these
borrowers may qualify for a refund of mortgage fees instead of a new
mortgage, the company said.

Under the terms of the settlement, AIG is required to identify the
affected borrowers and provide aid to them. The company also must hire
an independent consultant to monitor its process and report back to the
government.

AIG also agreed to pay $15 million over three years to nonprofit groups that promote financial literacy and credit counseling.

So let’s step back and do some quick analysis here:

1. Engage in predatory lending on massive scale
2. Get caught
3. Get fined
4. Make $3.8 billion dollars IN PROFIT in 1 QUARTER
5. Rinse, repeat?

Does this make anyone else FREAKIN’ FURIOUS? How does the government and regulators sit there in front of Congress, in front of America, in the midst of one of the biggest mortgage crises in the history of our country and let the perpetrators of this great scam walk away with BILLIONS? How is this justice?

Mortgage brokers?  Sure dump on them.  Dump on the small guy with no Washington D.C. ties, with out coffers full of cash - pick a loan, single them out, revoke their license, issue a press release "we’re doing our job."  But the major perps - the real crooks - make out like bandits.  Don’t get me wrong there are plenty of brokers that should go to  jail or be shut down too.

Sounds like predatory prosecuting and justice if you ask me.  I believe that all should be equal in the eye of the law.  Small shop - huge shop: it don’t matter.  If you’re guilty, pay the price.  I think it is disgusting that the legal system will eliminate some small businesses because it is easy and full of publicity while they will sit and refuse to take serious action against the biggest offenders.

How can OTS sit there with a straight face and say to the public:

John Reich, director of the OTS, said in a prepared statement that the
agency "is taking the action necessary to address problems in the
mortgage markets and protect the interests of homeowners in jeopardy of
losing their homes.”

Where is the punishment?  Where is the crippling of the business units of these companies that stole from the American public? 

One last note - AIG does not have to admit to any wrong doing in the settlement.   Justice is  hardly  served.

Hat Tip to Housing Wire for a story that I hope generates tons of public outrage.

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