Home prices are clearly taking another nose dive, reflecting the continued deflation of the real estate bubble from the early part of this decade. The chart is current through August, before the impact of the widespread foreclosure fraud is reflected. But it has become clear that the mega banks securitizing these mortgages knew they were putting defective loans into the pools. According to testimony before the
Financial Crisis Inquiry Committee one company responsible for due diligence found that of the loans they were asked to examine (about 10% of the total) for underwriting sufficiency 28% were determined to be disqualified in which there were no mitigating circumstances that would allow the defects to be waived. Nevertheless, the banks waived the defects in 39% of those loans rejected. The fact is that
Bank of America, JP Morgan, Citigroup
et al were shoveling the sub prime junk out the door as fast as they could create the CDOs. The banks used the negative information to negotiate better prices on the loans they were purchasing according to testimony. They did not inform their investors of the underlying loan deficiencies. Book 'em for bunco, Dano.
