There is more to this ugly situation. New research by Edward Pinto, a former chief credit officer for Fannie Mae and a housing expert, has found that from the time Fannie and Freddie began buying risky loans as early as 1993, they routinely misrepresented the mortgages they were acquiring, reporting them as prime when they had characteristics that made them clearly subprime or Alt-A.
There’s the allegation right there.
Not mine folks – I’ve told you what I believe about the GSEs over the last two years and change, and have chronicled several other claims of outright fraudulent conduct, including providing links to legal pleadings and other files from periods of time when some of their executives tried to blow the whistle on allegedly-questionable practices.
But now we have The Wall Street Jourmal willing to put into print (albeit on the opinion page) an outright allegation of intentional misrepresentation.
Here’s the definition of fraud from one common online resource:
Fraud is generally defined in the law as an intentional misrepresentation of material existing fact made by one person to another with knowledge of its falsity and for the purpose of inducing the other person to act, and upon which the other person relies with resulting injury or damage. Fraud may also be made by an omission or purposeful failure to state material facts, which nondisclosure makes other statements misleading.