Reply #4: There is a video of Bill Balck on this at Naked Capitalist.

[JDPriestly]

He elaborates on precisely how the mortgage companies committed fraud -- by blacklisting honest appraisers and hiring dishonest ones.

I would say that is not the only way that the mortgage companies and lenders committed fraud on prospective borrowers.

In addition, I saw that mortgage company reps and lenders were jacking up the reported incomes of borrowers by claiming an additional one or two wage-earners as borrowers, as living in the homes whether they were or not.

In general, we should change our laws to impose some liability on the mortgage lender when that lender who is assumed to be an expert does not adequately vet prospective borrowers or warn borrowers about potential downsides to borrowing.

The law should impose a fiduciary duty on the mortgage lender if it doesn't already. Real estate agents in California do have a fiduciary duty, a duty of trust, to their clients. So they have an obligation to protect their clients' interests. Seems to me that would include making sure that a person really does qualify for the loan they need to receive for a given house.

Also, severe limits should be placed on the practice of co-signing.