Housing.com News, Analysis & Opinion: Saturday Housing News: ABN AMRO Been Rolled

According to the settlement, ABN AMRO employees basically rubber-stamped 28,000 loans to offer to FHA as insurable, when they didn't qualify, or the underwriters in question didn't even bother checking. See, this is yet another example of the dangers of the frenzied housing market--all those wacky no-document loans with no one properly fact-checking to make sure the people can qualify for assistance. Here's more about it from ABN AMRO's own press release, as well as articles from ABC News and USA Today.

Money quote from the ABC News article: It also came amid a housing boom that led many lenders to skip steps to boost loan volume, and HUD's general counsel said he expects many other lenders took short cuts as well.

HUD's Office of Inspector General is working on other cases of false certification, HUD said.

You can expect to see a lot more cases like these as the market slows down and more people start checking into the volumes of cheesy loans banks handed out like cotton candy at the fair.

The ever-marvelous Housing Finance blogerati has some additional investigating on this. Given that the Bush administration's record on prosecuting corporate crime and oversight is anything but stellar, one has to wonder if their zealousness about this is more in line with their desire to privatize more and more of the government housing industry.

And at this point, it's almost par for the course that Bush would hire yet another crony to handle this job--after all, being a bank president somehow made Donald Powell qualified to run the Gulf Coast recovery effort.

Still, it's not like ABN AMRO's hands are somehow pristine. After all, if they couldn't keep track of where their customer data went, would you trust them to handle your mortgage underwriting?

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With all the scandal and corruption in the news of late, one very interesting bit of business got the short shrift, that being HUD extracting a a $41million settlement from the ABN AMRO mortgage group. According to the settlement, ABN AMRO employees basically rubber-stamped 28,000 loans to offer to FHA as insurable, when they didn't qualify, or the underwriters in question didn't even bother checking. See, this is yet another example of the dangers of the frenzied housing market--all those wacky no-document loans with no one properly fact-checking to make sure the people can qualify for assistance. Here's more about it from ABN AMRO's own press release, as well as articles from ABC News and USA Today. Money quote from the ABC News article: It also came amid a housing boom that led many lenders to skip steps to boost loan volume, and HUD's general counsel said he expects many other lenders took short cuts as well. "I am sure that they are not the only lender — large or small — that has taken shortcuts during this housing boom," said HUD General Counsel Keith Gottfried. "It is correlated with the housing boom and the refinancing boom. How pervasive that is that people are taking shortcuts, we don't exactly know that," he said. HUD's Office of Inspector General is working on other cases of false certification, HUD said. You can expect to see a lot more cases like these as the market slows down and more people start checking into the volumes of cheesy loans banks handed out like cotton candy at the fair. The ever-marvelous Housing Finance blogerati has some additional investigating on this. Given that the Bush administration's record on prosecuting corporate crime and oversight is anything but stellar, one has to wonder if their zealousness about this is more in line with their desire to privatize more and more of the government housing industry. And at this point, it's almost par for the course that Bush would hire yet another crony to handle this job--after all, being a bank president somehow made Donald Powell qualified to run the Gulf Coast recovery effort. Still, it's not like ABN AMRO's hands are somehow pristine. After all, if they couldn't keep track of where their customer data went, would you trust them to handle your mortgage underwriting? (OK, it's really more DHL's fault, but still...)