Criminal investigations for sub prime lenders imminent

Today New Century Mortgage announced it is filing for chapter 11 bankruptcy which is no surprise given recent trends. Since January of this year they were cut off by major lenders and have now announced criminal probes into it’s practices.

As with the corporate meltdown on Wall Street a few years back, I believe this will open the door for criminal probes into the practices of many subprime lenders. In 2006 the subprime mortgages accounted for $640 billion in revenue for the subprime lenders alone. This was nearly twice what it was in 2003, a strong indicator that the current market slide has been fueling the subprime growth. Many of these mortgages were “illegally” approved through fraudulent practice…especially for stated income qualifiers. This is something I have written about previously. However, now that these lenders are going belly up there will undoubtedly be more of these criminal probes on the horizon.

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