"As his team analyzed the individual loan files, Zimmer said he was struck by evidence of fraud, such as doctored bank statements. "Fraudulent loans were a big part of the subprime mess," he said. Mortgage brokers forged borrowers' signatures and pumped up their income, he said. People seeking to buy and sell a home for a quick profit lied that they were going to live in the home -- qualifying for a lower interest rate. But People's Choice calculated that it would have been too complicated and expensive to go after fraud, Zimmer said.
Even as People's Choice sought to preserve its business, the housing climate continued to deteriorate. Many borrowers were defaulting so quickly that the company did not have time to pool those mortgages and sell them off as securities."
"too expensive and complicated to go after fraud" when "borrowers were defaulting" before the hot potato could be passed along to the next chump in the chain? Nice math, guys!
Read it all at: http://www.washingtonpost.com/wp-srv/business/creditcrisis/
Well, you'll have to wait until Tuesday for part 3.
