It's hard to believe a detailed review of tens of thousands of homes could have been completed in a couple of weeks. If anything, it sounds like the review was done by the robo signer at GMAC Mortgage who testified that he had signed 10,000 documents in a month.
Lawyers for homeowners have found documents were lost or thrown out. No surprise since millions of mortgages have been pooled and sold as mortgage-backed securities over the years.
The lack of paperwork means banks could wrongly throw people out of homes. This is just the culmination of years of scams, frauds, and sloppy transactions.
A new book, titled The Monster: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America - and Spawned a Global Crisis, traces some of the root causes that spurred the housing bubble and collapse now plaguing the economy.
Author Michael W. Hudson details how the biggest subprime lender, Ameriquest, and a major investment bank, Lehman Bros., perhaps more than any other firms, created and financed the torrent of risky mortgages that include many now in foreclosure.
To be sure, the two firms didn't act alone. In some cases, borrowers were coconspirators. At the same time, many politicians and regulators turned a blind eye to the lending abuses and scams that others documented early in the decade.
Hudson's book offers a compelling and understandable read of a complex issue. (Full disclosure: Hudson and I worked together at The Wall Street Journal.) He details how Ameriquest set the low-down standard for the abusive lending practices, and how Lehman Bros. bankrolled many shady lenders and packaged many mortgage-backed securities before filing for bankruptcy in 2008.
Ameriquest was headed by Roland Arnall, who drove the company to boost the number of mortgages issued any way possible, including using so-called stated income loans that required no documents to show a person's salary.
One Ameriquest employee who started as a 28-year-old branch manager outside of Harrisburg told how the company created fake financial documents, forged signatures, and even used Wite-Out to alter the income for borrowers.
The company culture mimicked the film Boiler Room, which detailed a securities brokerage that cold-called customers and talked them into buying worthless shares in nonexistent companies. Ameriquest used the film as a training video for new hires.
Arnall, who died in 2008, rewarded top-selling sales reps with bonuses and other perks, including exotic trips and tickets to the Super Bowl. He also curried political favor by donating and raising millions of dollars for elected officials.
President George W. Bush rewarded Arnall's prodigious giving with an ambassadorship to the Netherlands in 2006. The same year, Ameriquest paid $325 million to settle charges of lending abuses with state attorneys general and federal regulators.
As Ameriquest's trail of lending abuses mounted, it essentially bought off critics with large contributions to their organizations or other perks. That approach didn't work with one legal aid lawyer in Philadelphia at the forefront of fighting predatory lenders.
While at Community Legal Services, Irv Ackelsberg filed a petition with the state banking department alleging Ameriquest had a pattern of "unfair, deceptive and unethical conduct." Company representatives flew to Philadelphia to meet with Ackelsberg.
The rep followed up with an e-mail offering Ackelsberg tickets to a Rolling Stones concert at the Wachovia Center. Ackelsberg, a Stones fan, replied no thanks, adding he would think of Ameriquest whenever he listened to "Sympathy for the Devil."
Ackelsberg was a source for a series of stories I did on predatory lending in 2001 at the Daily News. Even then he understood much of the scam, including how Wall Street firms, in particular Lehman Bros. and Bear Stearns, were bankrolling the subprime lending boom.
Ackelsberg likened the investment banks to the drug cartels, and the predatory lenders to crack dealers.
City Councilwoman Marian B. Tasco pushed through a bill in 2001 that went after predatory lenders. However, weeks later State Rep. Dwight Evans sponsored a state measure that overrode the city ordinance.
Almost a decade later, the city and country are still dealing with the fallout from the subprime-lending abuses.
E-mail deputy editorial page editor Paul Davies at firstname.lastname@example.org.