Audit Notes: HAMPered, FHA Criminals, Student Loan Racket

David Lazarus of the Los Angeles Times finds a couple booted out of their home by Wells Fargo, which had just told them it wouldn’t do such a thing.

But a few days later Wells did, having sold the house to a vulture fund. It would have been nice to know what the house sold for. You can bet it wasn’t much and that the bank could have just reduced the principal on the note and come out better.

After all, banks are doing that with commercial real estate loans.

Here’s BusinessWeek in a story on “Large Loan” Verrone, who it should be noted doled out massive, stupid loans for Wachovia, which is now owned by Wells Fargo.

The same lenders that are foreclosing on cash-strapped owners single-family homes are quietly striking deals with cash-strapped developers, extending loans and restructuring debt so the big borrowers can avoid default.

— Brian Grow of the Center for Public Integrity finds that the Federal Housing Administration has failed to root out convicted criminals and other bad lenders amongst the companies it does business with.

But documents and interviews reveal that more than 34,000 home loans have been issued over the past two years by a dozen FHA-approved lenders that have employed people who were convicted of felonies, banned from the securities industry or previously worked for firms barred by the agency.

Wouldn’t you know it:

More than 3,000 of those loans, about 9 percent, were seriously delinquent or already a claim on the FHA insurance fund as of June 30. That’s nearly triple the rate for all loans made by FHA lenders over the past two years, about 3.4 million.

— Here’s a fascinating infographic on the student-loan racket. Particularly fun is the Sallie Mae, General Revenue Corporation, government backstop roundabout. And I had no idea about the evolution of default laws.

Good stuff:

Student Loans Scheme.

Infographic by College

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum.