Large mortgage lenders off the hook?

Thanks to Jean Eaglesham for his article in the Wall Street Journal on page B1, printed on August 6, 2011 entitled “Criminal Mortgage Probes Fizzle Out”.

During the 2005 and 2006 mortgage boom period that led to our recession Wamu, Indymac and New Century made about 25% of these home loans.  The lending and accounting practices of these companies has come into question.  New Century, which sold subprime loans through mortgage brokers, filled for bankruptcy in 2007.  Similarly, Indymac and Wamu, which made so many state-income loans, where borrowers did not need to fully document their income or assets.  When the U.S. regulators seized Wamu’s banking operations in September of 2008 this was the biggest bank failure ever.  After these 3 lenders swooned, they were immediately investigated for criminal wrongdoing.  However, investigators seem to have come up empty handed.  In light of the shady practices that have created many of these mortgages bankruptcy attorneys have been successful at challenging standing of mortgage lenders to have a claim against borrowers.  For instance, by challenging standing in foreclosure proceedings the bank must prove that they own the mortgage and trace the note from lenders who originally owned it.  Often there are problems with false notaries and other technicalities that can force lenders to lower principal amounts due on a mortgage or settle out of court.