The Real Estate Weblog

From Orlando to Seattle, the subprime saga keeps getting more and more dramatic. According to a superb article by Mark jewell of the Associated Press news network (and i mean this guy is one of the best writers of the subject, in my own opinion),
Regulators are attempting to punish the stock market community for it’s mortgage finance practices that greatly enlarged house ownership while spreading the pertinent risk to many new players, yet also may have essentially tricked borrowers plus investors who supplied funds to fuel a housing boom that has now turned very bust, to say the least.
Several state securities regulators plus 2 foreclosure-blighted urban areas have fired the opening salvos via lawsuits attempting to prove that investment banks and the other lenders in question are indeed guilty of more than simply poor or incompetent business decisions and not predicting a pending mortgage crises in general. Certain regulators even state that
raw greed or even outright fraud underlie many of the subprime mortgage chaos which has spread virulently across the wider real estate market, causing a plethera of foreclosures in an appalling fashion.
But in addition to these very considerable civil cases, no less than the Federal Burue of investigation is even conteplating potential criminal action, and more specifically, which particular Wall Street companies actually were aware of the relative risks of mortgage securities backed by these rather flimsy subprime loans, plus whether or not they hid these same risks from the poor investors.
Speaking of criminal cases, if you are in Seattle or the greater Puget Sound are and you require a competent Seattle criminal lawyer then take a look at the offices of Kirk c. Davis
His firm also covers dui and other criminal cases in the Seattle area.
All in all, these particular legal cases could very well turn up ample evidence which will compell Wall Street to defend itself as authorities ttempt to ease subprime-related financial strains on the various bond insurers. In addition, these aforementioned actions could even prompt other investors to file additional lawsuits than the ones that they have brought to bear up to this point in time.
There sure were a lot of resources wasted, that is for sure. All of those foreclosed homes sitting vacant due to the rampant speculation that went on.
Even though the affected urban areas of Cleveland and Baltimore have already sued to try to recover damages from the “big bad” mortgage lenders in question, the vast majority of the cases filed up to this point are from the official regulators who are alleging violations of the state securities laws.
Some prosecutors in East Coast jurisdictions are targeting the possible systematic inflation of propert values by the big lenders plus appraisal companies in general. At a minimum they wish to show which specific banks did not properly disclose the risks involved to the investors who purchased mortgage-related securities and were not up front about the various conflicts of interests that were actually involvedin this whole fiasco.
This thing sort of has the same ring to it as the Savings & Loan disaster of 1986-7.
 Behind the scenes, it seems, credit-rating companies offer advice on whether the investments are secure, and this may of course be a part of the problem at hand
Until recent months, funds from stock market banks extended increasing quantities of credit to low &  middle-income people who were possible lured into to a market when house prices seemed to be going up steaply.
This bubble that was created brought in huge fees to mortgage brokers, lenders, banks and other similiar interested parties. Wow, what a tangled web we weave!
But now that prices are dropping, those players are hurting. The losses have truly been staggering for some of the concerned parties.
At this early point in time, the raw number of these types of cases filed fast outpacing the rate of litigation which emerged from the S&L meltdown that was mentioned earlier, the article went on to say.
The nearly three hundred cases filed last year already equals about fifty percent of the S&L cases handled over many years, apparently.
Furthermore, Criminal action is also a distict possibility in some of these cases, according to statements made by FBI officials.
All in all,  there is indeed a plethera of blame to go around in the subprime meltdown, the story goes on to say (and i agree,it is a variety of causes really, and not all of them are necessarily criminal in scope)
Those causes include (but are not limited to) investors purchasing mortgage-related investments and not fully comprehending the risks, to credit-rating agencies which failed to alert investors to lenders’ precarious positions as mortgage delinquencies went up.