Consumer Law

Predatory Borrowing?

By Jeff Sovern

Sunday's Times reported here on a study by BasePoint Analytics of more than three million loans.  According to the article, the study found that "[a]s much as 70 percent of recent early payment defaults had fraudulent misrepresentations on their original loan applications . . . . Applications with misrepresentations were also five times as likely to go into default."  The article explains: "In other words, many of the people now losing their homes committed fraud. And when a mortgage goes into default in its first year, the chance is high that there was fraud in the initial application . . . ."  The study is not posted on the web, but you can request a copy from BasePoint here.  In some cases, borrowers have claimed that the mortgage broker misrepresented facts in the applications without the borrower's knowledge, see e.g., Matthews v. New Century Mortgage Corp., 185 F. Supp. 2d 874 (S.D.Oh. 2002), so I'm curious to see if the study sheds any light on who is responsible for the fabrications.

Full post as published by CL&P Blog on January 15, 2008 (boomark / email).