Jail is for mortgage buyers not the lenders. Feds make prosecuting the small fry a priority

[Liberal_in_LA]

In Prison for Taking a Liar Loan

By JOE NOCERA
Published: March 25, 2011

A few weeks ago, when the Justice Department decided not to prosecute Angelo Mozilo, the former chief executive of Countrywide, I wrote a column lamenting the fact that none of the big fish were likely to go to prison for their roles in the financial crisis.

Soon after that column ran, I received an e-mail from a man named Richard Engle, who informed me that I was wrong. There was, in fact, someone behind bars for what he’d supposedly done during the subprime bubble. It was his 48-year-old son, Charlie.

On Valentine’s Day, the elder Mr. Engle said, his son had entered a minimum-security prison in Beaver, W.Va., to begin serving a 21-month sentence for mortgage fraud. He then proceeded to tell me the tale of how federal agents nabbed his son — a tale he backed up with reams of documents and records that suggest, if nothing else, that when the federal government is truly motivated, there is no mountain it won’t move to prosecute someone it wants to nail. And it was definitely motivated to nail Charlie Engle.

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“The Department of Justice has made prosecuting financial crimes, including mortgage fraud, a high priority,” said Neil H. MacBride, the United States attorney for the Eastern District of Virginia, in a statement. (Mr. MacBride, whose office prosecuted Mr. Engle, declined to be interviewed.)

http://www.nytimes.com/2011/03/26/business/26nocera.html?src=busln

[GReedDiamond]

1. Well worth the read...

...the System is rigged in favor of the plutocrats and corporations, the Criminal/Ruling Class in 'merca.

Fuck everybody else!

Green Sparkle Frog

[TomClash]

2. A despicable tale

I spread this far and wide this a.m.

Why was Nordlander so relentless in trying to nab Engle? Didn't he have anything better to do?

Fry the guppy so the biggest sharks can swim free and eat everything in plain sight. Nice system.

[girl gone mad]

8. Worse still, the guppy was forced to pay "restitution" to the big fish!

"Even when he emerges from prison, though, his ordeal will not be over. As part of his sentence, Mr. Engle was ordered to pay $262,500 in restitution to the owner of his mortgages. And what institution might that be? You guessed it: Countrywide, now owned by Bank of America. "

[dickthegrouch]

13. Methinks Mr Engle needs a better lawyer

Disjoint thoughts about this whole mess. If usable, go for it!

Except for non-profits the IRS expects a business to use commercially reasonable efforts to make money overall. While it is acceptable to sell a few things at a loss, the expectation is that overall inventory will be sold at a profit.

Mortgage lenders frequently require not just title insurance but also Private Mortgage Insurance (PMI) which is payable until the balance is a specific percentage of the loan to value ratio.

The mortgage companies repossessed the house and effectively erased any equity the mortgagee had in it, and sold it at a loss. No-one has ever adequately explained to me why they haven't claimed the supposed balance from the PMI providers (the fact that they didn't adequately cover their potential losses is sad, but just cause for a potential remedy - jailing the PMI providers).

If I were Mr Engle, I'd be sending the bank to, or myself going after, that PMI provider for the restitution amount claimed by the bank. Otherwise I'd expect to have a massive fraud action (paid for by the consumer protection authorities) against that PMI provider.

[RKP5637]

3. Change you can believe in. n/t

[girl gone mad]

4. This is one sick country.

:puke:

[Hassin Bin Sober]

5. As someone who spent 10 years in the mortgage business...

... I can only laugh at this article/story to keep from crying.

I never DID get a straight answer from ANYONE to question of how we calculate income for people with irregular income who are STATING their own income..

The application asks the borrower their "monthly" income. The application gives NO guidance to the borrower OR the loan officer how to calculate income on a "stated" loan application. In fact, I'm not SUPPOSED to calculate income (like I might on a full-doc app.).

Which leaves the borrower on the hook. Right? Seems so.

Calculating income should be easy. No? Not really. You see, underwriters have different ideas as to what constitutes "monthly income" .... this differs, as seems to to be the case here, with what your accountant or your employer or your wife or anyone else considers income.

You, or the kid in the OP, may have year-to-date income of $180k so you and your accountant might say you have $15k/month income. Not according to the underwriter if, say, you didn't earn that same income in the previous 2 calendar years. The underwriter will take the 2 previous years and average 24 months to calculate income. BUT NOT ON A STATED loan app. That's the point.

Another example. You have worked at the same job for 10 years. You receive a promotion that entitles you to substantial bonuses but you can't use the income, according to the underwriters, due to a lack of 24 month history. If you apply for a stated loan do you use the income. Why not? Are you supposed to know standard mortgage underwriting guidelines? Why should you? Should you go to prison because of that lack of knowledge?

Say you are self employed and just signed a big contract to sell millions of widgets to Walmart. You now can conservatively expect to net $180k/year. You state $15k/month on the app. Are you a "liar"? An underwriter would never use it - not even with a signed contract. Should you go to prison?

Oh wait. I DID receive an answer on my question. It was from a CitiMortgage VP of sales at one of our sales meetings. And I quote: "just go on Jobs.com and put down what seems reasonable. "

[Diana Cessna]

14. As someone who is almost 20 years in the mortgage business...

I concur. Also, don't forget the actual NID/NAD/NED loans, or NINJA loans. These were the loans where borrowers were not asked and Brokers were not allowed to indicate any information about a borrowers income, assets or employment. It was pure equity lending because property values can only keep going up, right?

[Bluebear]

6. Hope! Change!

[Ilsa]

7. This is so aggravating.

I think I'd tell BofA (Countrywide) and the rest of them to fuck off. I wouldn't work for anything that would put money in their pockets. I think I'd leave the country as soon as legally possible.

[StarsInHerHair]

9. K&R to 10

corruption is what it's called & if it's left it will fester & damage society, how myopic those in power are

[varkam]

10. The kicker of the story is that Mr. Engle will have to pay restitution to Mozilo's Countrywide...

I'd laugh at the irony, except it's just not funny.

[Angry Dragon]

11. Off with their heads

A funny French saying

[midnight]

12. Why isn't Elizabeth Warren coming to the aid of the consumer?

Was putting her away in an office somewhere a joke?