Mortgages and Consumer Lending

The USA is having an internal debate as to how many people are living in poverty. Ultimately, the absolute figure is not especially important: when it gets to one in six of the adult population, the question is not whether there is a crisis, but how big the crisis is. And how long mortgages in full or partial default can be supported.

Paying USD3.6 million in restitution has not been enough to save Richard A. Maize, 53, of Beverly Hills from jail as a result of his involvement in a variety of frauds.

It seems like a neat idea: a bank starts a sideline business preparing tax returns and then, when the tax return shows that a tax refund is due, the bank will lend against that refund. It's a short term loan so the returns are high - and that doesn't take into account the risk that the tax authorities may not agree with the calculations. Welcome to the world of the "Refund Anticipation Loan."

The USA's Federal Trade Commission has issued proceedings against Sam Tarad Sky, Allrepco LLC, Credit Restoration Brokers LLC (CRB), and Debt Negotiations Associates LLC (DNA) alleging that they have breached the terms of a court order banning them from " deceptively marketing any good or service and from breaching the Credit Repair Organisations Act."

The story from the US Treasury is one of positive news: it is to authorise the sale of some USD10,000 million worth of mortgage-backed securities it picked up as part of the financial sector rescue. But there's a caveat and four little words raise the prospect of it not happening.

Desiree Brown, the former treasurer of a private mortgage lending company, Taylor, Bean & Whitaker (TBW), has pleaded guilty to conspiring to commit bank, wire and securities fraud for her role in a more than USD1,900 million fraud scheme that contributed to the failures of Colonial Bank and TBW.

When LloydsTSB, as it was, was half-strong-armed and half-suckered into into taking over what was once the UK's mightiest mortgage lender, it did not know that the deal would almost sink what had been the UK's most stable high-street bank. Nor did it know what lay beneath the surface. The bugs are coming out of the woodwork and they are expensive.

A good way of expanding government expenditure is to keep inventing "offices." In the USA, they have the "Office of Homeownership (sic) Preservation. It's part of the Treasury (which makes sense). Yesterday, it's Chief made a speech with some political hogwash but some very good points. Here's the transcript.

When George Greenwood approved a loan of USD500,000 and then dispersed the moneys to five different persons, he did so to a straw borrower, prosecutures allege. He's charged with various offences including money laundering.

Alfred Eugene Parker, 32, of Woodland Hills, Los Angeles, has been sentenced for running a ponzi fraud which netted him USD in one year, targeting people threatened with repossession of their homes. The irony was that he was a "debt counsellor at a non-profit agency" which was supposed to help those in dire straits. But it was how he raised the money that seeded the scam that has drawn attention to the case in Tinsel Town.