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More from New York

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Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
"As part of the deal, Clayton has told the prosecutors that starting in 2005, it saw a significant deterioration of lending standards and a parallel jump in exception loans.

Investment banks hired companies like Clayton to evaluate a sample, say 20 percent, of the loans. The review was supposed to determine whether the loans complied with the law and met the lending standards that the mortgage companies said they were using. Loans that did not were classified as exceptions.

As demand for the loans surged, mortgage companies were in a strong enough position to demand that investment banks have Clayton and other consultants look at fewer loans. The lenders wanted the due diligence to find fewer exception loans, which were sold at a discount."

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After all, "don't ask, don't tell" is "Sufficient for the Needs of the Client" - just make the numbers $$ work.

The Genus for similar relaxed verification of underwriting and appraisal standards and the hydrogen bomb explosion in drive-bys and avms and desktops on the Loan Origination end of the equation -

"Just gimmee the damn number$$ and let someone ELSE worry about whether it's REAL!"
 
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Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
I watched some Jerk on TV selling cars telling how he could get deadbeats into a new car.

As a volume dealer they played banks against each other. To guarentee the bank a minimum volume of "A" (good) loans, they made them agree to fund a certain number of "C" [bad credit but a job] and "D" [really bad credit] clients. Of course to do that the bank charges more for everyone
 

Marcia Langley

Senior Member
Joined
Aug 26, 2005
Professional Status
Certified Residential Appraiser
State
Missouri
Terrel,

I guess it's the same all over. Sales agents have leverage on loan officers. I think that is the free enterprise system. The subsidy for the deadbeats will always be with us.
 
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