Please make sure you LISTEN to the video of loan officers complaining about inflated incomes and forced to push through the loans anyhow.
On a PERSONAL note, I was set to build a "spec" home in the St. George, UT, (the fastest growing city in the U.S.) area; bought a spectacular scenic lot ($85K), and proceeded to go through the construction loan process. After submitting all my financials, I received a completed loan application from this firm who was going to oversee the building in that state (along with my brother who lived there and was building a spec home also). I could not secure a loan from my state as they did not have a branch in Utah.
When I received the construction loan application, to sign and return, I noticed they has substantially inflated my monthly income and noted on the application that I would be living in the home. Both were not true. When I tried to get it corrected, and told them I would not sign, the whole deal fell through.
It is now under investigation by the FBI, State and Federal officials. Subsequently, the banks this firm did business with were notified and stopped loans in process, as well as future dealings with the firm.
Many of this "firms" loans did go through, as mine would have too, had I signed the fraudulent document. Learned later that many had signed without reading and analyzing them properly. It turned into a huge nightmare for them and theirs are part of the investigation also.
How Goldman secretly bet on the U.S. housing crash
How Goldman secretly bet on the U.S. housing crash
Goldman Sachs' secret bets.
WASHINGTON — In 2006 and 2007, Goldman Sachs Group peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in U.S. housing prices would send the value of those securities plummeting.
Goldman's sales and its clandestine wagers, completed at the brink of the housing market meltdown, enabled the nation's premier investment bank to pass most of its potential losses to others before a flood of mortgage defaults staggered the U.S. and global economies.
Only later did investors discover that what Goldman had promoted as triple-A rated investments were closer to junk.
Now, pension funds, insurance companies, labor unions and foreign financial institutions that bought those dicey mortgage securities are facing large losses, and a five-month McClatchy investigation has found that Goldman's failure to disclose that it made secret, exotic bets on an imminent housing crash may have violated securities laws.
"The Securities and Exchange Commission should be very interested in any financial company that secretly decides a financial product is a loser and then goes out and actively markets that product or very similar products to unsuspecting customers without disclosing its true opinion," said Laurence Kotlikoff, a Boston University economics professor who's proposed a massive overhaul of the nation's banks. "This is fraud and should be prosecuted."
For the past year, Goldman has been on the defensive over its Washington connections and the billions in federal bailout funds it received. Scant attention has been paid, however, to how it became the only major Wall Street player to extricate itself from the subprime securities market before the housing bubble burst.
Goldman remains, along with Morgan Stanley, one of two venerable Wall Street investment banks still standing. Their grievously wounded peers Bear Stearns and Merrill Lynch fell into the arms of retail banks, while another, Lehman Brothers, folded.
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