Sandy Robinson allegedly reported on his mortgage application that he earned $3,400 a month working at Perfect Choice Cleaning & Maintenance.
The truth was less creditworthy: Robinson, 50, had recently been released from a two-year sentence at the Michigan Department of Corrections. Prosecutors say Perfect Choice Cleaning & Maintenance was a shell company.
Robinson also allegedly listed a phony residence and rent history that was allegedly falsely verified by the wife of Pierre Greene, the man selling Robinson the house.
Greene, 27, is a former Detroit cop whose uncle Jacque Miller, 37, was a city tax assessor. Together, they allegedly ran a $2.1 million mortgage-fraud scheme, obtaining inflated appraisals on more than 35 properties and recruiting straw buyers to buy them.
An indictment unsealed in U.S. District Court last week charged them with bank and wire fraud. They have denied wrongdoing.
“Defendants submitted at least 35 mortgage loan applications that they knew contained false and fraudulent representations,” reads the indictment. “The defendants obtained in excess of $2.1 million . . . (from) Fidelity Bank, Deutsche Bank National Trust (New York City), Wachovia Bank, Mellon First business Bank FA, Standard Federal Bank and Comerica Bank.”
Scores of cases like this one have been cropping up across the country. The allegations they contain often reveal loan applications so riddled with fraud, it’s hard to imagine anybody checked them.
For a man released from prison in April 2005, Robinson was doing well, buying at least five houses in the following months, according to the indictment.
It’s enough to make you wonder whether some of the world’s biggest banks even bother to lock their vaults at night. When big fat lies sailed right through the underwriting process, imagine how easy it was for little lies to go undetected.
Did anyone care what the loan apps said?
Mortgage brokers were making commissions. Banks were making fees. Investment banks were making billions turning home loans into exotic securities. And if these loans were never repaid, it was somebody else’s problem.
Somebody like Fannie Mae or Freddie Mac.
On Sunday, the federal government took over these staggering giants, which hold half of the nation’s $12 trillion in mortgage debt. This will cost taxpayers untold billions as mortgage foreclosures continue to rise.
Regulators and lawmakers could have cracked down on predatory lending, predatory borrowing and predatory mortgage-securitization practices years ago, but they let the flames roar.
Now it looks like the “ownership society” is turning into a deadbeat club. And if you are a taxpayer, you will be paying the dues.
Whether you’re for John McCain or Barack Obama, you’re for politicians who must essentially support one of the greatest government interventions in the free market in post-World War II history.
They say nationalizing Freddie and Fannie will protect homeowners. They warn that if Fannie and Freddie fail, mortgage lending will come to a grinding halt, stalling the economy for years to come.
They may be dead right — and this forces them to reward Wall Street for inventing a way to make billions flipping bad loans.
Perhaps our government should come up with a name for its new home lending division. I know one that may be available: Perfect Choice Cleaning & Maintenance.
Al Lewis: 201-938-5266 or al.lewis@dowjones.com
