1 Family + 43 WaMu Mortgages = $2.7M in Likely Lender Losses Since 2007

Real Estate & Property Law

1 Family + 43 WaMu Mortgages = $2.7M in Likely Lender Losses Since 2007

Posted Sep 22, 2008, 04:20 pm CST
By Martha Neil

Since 2007, one California family reportedly bought and sold 43 properties with the help of at least 43 mortgages from Washington Mutual that added up to a total of nearly $25 million.

Now, the lender is likely to take a $2.7 million bath on six problem properties among the 43 transactions concerning Vijay and Supriti Soni and other family members, reports the Orange County Register.

Among them is a Santa Ana home for which the couple paid $440,000 in July 2007, before reselling it five weeks later for $660,000 to their family gardener and handyman, the newspaper recounts. WaMu financed both transactions and in July 2008 foreclosed on the home which, according to the trustee's deed, is worth $220,000 less than the mortgage balance.

An investigation reportedly is ongoing into the situation. WaMu, like many other lenders, apparently did not focus before issuing the mortgages on potential red flags, including a resale, or "flip," of a property within 90 days of purchase, and the parties' criminal background, the newspaper writes. "The Sonis had been convicted in 2003 of numerous felonies for a real-estate-fraud scheme. WaMu checks criminal backgrounds of loan originators, such as outside mortgage brokers, but not borrowers."

Family members declined to comment, but a lawyer for Vijay Soni says he is confident the facts will show his client has done nothing wrong.

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Posted by J.D. - 3 months, 2 weeks, 2 days, 2 hours, 16 minutes ago

So a private company made a stupid decision to finance criminals.

How long before the taxpayer is forced to pay for this?
Posted by Ellen Barshevsky - 3 months, 2 weeks, 8 hours, 12 minutes ago

I agree and will NEVER understand why I have to pay to bale out companies like this one.

I heard on the radio that this bank just failed, and we will have to add this bank to the list that we have to pay for.

Why is that? Who in the bank wrote all of these loans? Why don’t they pay for their mistakes?

As a taxpayer, I resent having to subsidise these fat-cat bankers at WA-MU, or whatever their called.

This is also going to make it very difficult for me to get a loan and even with my boyfriend’s income, we can’t buy our own home unless my father signs the loan also. That is NOT right.

Going forward, I hope that whoever is elected sets up a plan to deal with all of these messes they got into.
Posted by H C - 3 months, 2 weeks, 7 hours, 21 minutes ago

How was their gardener and handyman able to qualify for a $660,000 house? Using normal logic you could only qualify for that if you make a $150,000+ income a year and I wouldn’t want to have that high a mortgage payment at that level too.
Posted by Geoff - 3 months, 2 weeks, 6 hours, 30 minutes ago

Does the fact that JPMorgan Chase took over WaMu mean that taxpayers are off the hook for this type of foolishness? Or has the government retained some liability through the FDIC or otherwise?
Posted by Joe B - 3 months, 2 weeks, 6 hours, 20 minutes ago

This is crazy, Katie! FDR never would have allowed this! He would have shut down that one-horse Baily Bros. Building and Loan and let Mr. Potter run the whole show. And he would have used eminent domain to take the ruby slippers from Dorothy and tapped the heels together CLICK, CLICK, CLICK, “There’s no more bad loans. There’s no more bad loans…“That’s what Barry and I are thinking. We’ll get Captain Kirk to beam us to Wall Street, accompanied by some of those Hogwarts kids, and we’ll fix everything. Because a President and a V.P. need to know what they’re talking about.
Posted by brad - 3 months, 2 weeks, 6 hours, 4 minutes ago

Another bailout in the works. Just more of the Clinton/Bush socialism at work here. If only the dems werent so in the tank with freddie or fannie that reform measures championed in 2003/2004 by certain republicans were put into place, this would have never happened.

Thanks FDR and fellow democrats. Your “fairness” in lending policies, aka banking AA, will be the downfall to this country. Let the banks fail. The more we bail them out, the worse the fall will be. At this point, the next fall will be our entire country going bankrupt, life savings confiscated or eliminated, and god knows what else.
Posted by Dan - 3 months, 2 weeks, 5 hours, 55 minutes ago

Holy sh*t Joe B, I didn’t get that the first time I read it… then I went back and realized who you meant by “Katie”... priceless.
Posted by AJ - 3 months, 2 weeks, 5 hours, 43 minutes ago

Don’t worry Paulson and the Feds will sell your company to their ivy league friends without you knowing about it.

“The government then stepped up its efforts, at points going behind WaMu’s back to work privately with four potential bidders on a deal.”…
“the seizure and the deal with JPMorgan came as a shock to Washington Mutual’s board, which was kept completely in the dark: the company’s new chief executive, Alan H. Fishman, was in midair, flying from New York to Seattle at the time the deal was finally brokered…”
http://www.nytimes.com/2008/09/26/business/26wamu.html?_r=1&hp&oref;=slogin
Posted by Informer - 3 months, 2 weeks, 4 hours, 45 minutes ago

This is what I don’t like about the theoretical bailout. If JP Morgan can just come and cherry pick the best parts of WAMU and let the rest die- why do we need the bailout? So these banks can sell their junk to us and go on there merry way as if it never happened. If a bailout does occur there should be no way for a bank to dump its garbage and keep the good paper to itself.
Posted by JG - 3 months, 2 weeks, 4 hours, 38 minutes ago

They did NOT get a bailout. The bank was closed by its regulator, the FDIC was appointed receiver, and then FDIC sold off the profitable parts to the highest bidder.

The shareholders lost everything - no bailing out. The taxpayers paid nothing. The Deposit Insurance Fund will have to pay nothing. The other people that probably lose are WaMu’s creditors, but otherwise no harm, no foul.
Posted by Annie - 3 months, 2 weeks, 4 hours, 31 minutes ago

H.C. commented: “How was their gardener and handyman able to qualify for a $660,000 house?”

This wasn’t a real deal. The couple, alogn with their handyman as a witting or unwitting assistant, defrauded the mortgage company by rigging up a fake sale. So the couple probably gave him the collateral, or stated that they paid him a high enough salary or something like that to make him qualify. They must have had help from an appraiser as well. This is the probalem with securitization of mortgages—WAMU no doubt was planning to sell the mortgage right away and thus did not need to be very careful about making sure the sale was on the up and up.
Posted by alex - 3 months, 2 weeks, 4 hours, 22 minutes ago

no harm, no foul.

huh - lots of harm and foul were committed and lots of fraud lawsuits will be coming in the short term.

hope these companies all bugeted more for legal expenses
Posted by GJ - 3 months, 2 weeks, 3 hours, 53 minutes ago

Let these banks burn to the ground and let these homeowners lose their houses. This is all GREED and because I am responsible I have to pay for other people’s greed and incompetence. When we are getting taxed at 60% rates in a few years, you will see the plight of the wealthy to other countries just as has been happening in Canada for years. This will be especially true if NOBAMA is elected with his moronic dufus running mate NOBIDEN. These morons are no good for america and will drive us into a depression. What bank will be next to add to the Bush Chavez takeover regime?
Posted by JG - 3 months, 2 weeks, 3 hours, 41 minutes ago

Obviously I was talking about that in terms of cost to taxpayers and it not a bailout, etc. Sheesh.
Posted by Matt - 3 months, 2 weeks, 3 hours, 40 minutes ago

@ Brad - Interesting that you think the Democrats should get the blame for blocking legislation (that wouldn’t require a majority) that was proposed when the Republicans controlled both houses of Congress and the White House. Even if the Dems voted on party lines (which they reportedly did), they were in the minority - they had to have Republican help to block the bill that would have required more oversight of Fannie and Freddie. It wasn’t and still isn’t only Dems who are cozied up to Fannie and Freddie - all kinds of pols have taken all kinds of cash from them. So maybe thinking about the facts rather than just parroting what McCain’s finance advisor and FOX news are reporting would be a good place to start next time you want to make sweeping, incorrect statements.
Posted by Pessa - 3 months, 2 weeks, 3 hours, 4 minutes ago

Recent phone call to dad:
Dad! Sister and I just went to see this condo. It’s fabulous. Scraped ceilings, hardwood floors, upgraded vanities, two car garage, tons of storage space… Dad: How much is it? Me: 299k. Dad: You can’t afford it. Me: Cry. Ok.
Let’s try those conversations for a change.
Posted by BAB - 3 months, 2 weeks, 2 hours, 1 minute ago

Amen to #16. Everyone these days thinks that they are entitled to immediate gratification. What happened to working hard - two jobs even - saving and THEN buying a house you can actually afford the payments on. The lenders aren’t the only ones responsible for this mess. At some point individuals have to take responsibility for their actions as well. Oh, yeah, I forgot no one explained that to them in today’s generation.
Posted by Charles W. Skinner - 3 months, 2 weeks, 17 minutes ago

Apparently Matt in #15 has never heard of a “Filibuster.” Simple majority won’t do it in the Senate if the opposing party doesn’t like what you’re trying to do.
Posted by R - 3 months, 1 week, 6 days, 23 hours, 25 minutes ago

Sounds like this Washington Mutual company needs to reform its…. Oh, really? Never mind.
Posted by Tom - 3 months, 1 week, 6 days, 20 hours, 16 minutes ago

I keep hearing everyone whining about GREED. No kidding? Yeah, I have people offering me twice my normal bill rate, but I turn it down, because I don’t want to be greedy. That’s retarded. This is a capitolistic society, people work for MONEY. If you allow a scam to exist where people can make money off of it, and it’s marginally within the law (or close enough to where they won’ t get caught right away), people will figure out a way to do it. This was the equivalent of putting screen doors on the banks and now people are SHOCKED that someone came in and helped themselves to it. Duh.
Posted by George Sly - 3 months, 1 week, 6 days, 1 hour, 52 minutes ago

Brad needs a history lesson. In 1929 the banks were allowed to fail and the result was the Great Depression. Under moderate liberals like Franklin D. Roosevelt and Harry Truman laws and regulations such as the Glass-Stegal Act acted to mitigate against the type of frauds and bad investment decisions that were made in the 1920s which nearly destroyed the economy. Moderate Conservatives like President Eisenhower understood this and while allowing the market to work also enforced the rules. Repeal of many of those laws and regulations in the last twenty-eight years, resulted in the S&L crisis of the 1980s, the Enron, MCI and Tyco frauds at the turn of this century and now the current banking crisis.
The Republican party has held the White House for twenty of the last twenty-eight years and one or both Houses of Congress for at least fourteen of those years. How then can “liberals” or Democrats be responsible for the current condition since they have not been running America. The laws and regulations created during and after the Great Depression went unenforced by Republican Presidents beginning with Ronald Reagan and were repealed by Republican Congresses. The result has been economic anarchy.
I’m not crazy about President Bush and Secretary Paulson’s bailout plan and I hope that it is improved so there is a chance that the government and we taxpayers can recover some of these losses. But the price should be to put back in the laws and regulations that would have prevented this debacle in the first place. Otherwise since Brad and many others have forgotten the lessons of the Great Depression, they may be condemned to relive it. I would like to pass on that opportunity.
Posted by kemkem - 3 months, 1 week, 4 days, 18 hours, 50 minutes ago

I am not surprised at all at the WaMu failure. I don’t want to repeat myself, take a look at http://lifeaslknowit.blogspot.com/ for my take on Washington Mutual.
Posted by CJ - 3 months, 1 week, 4 days, 4 hours, 43 minutes ago

To BAB #17,

I hope you’re a baby boomer because that would make your statement even more hilarious!!! Instead of making stupid statements that you can’t back up why not look around. You’d see that Generation Y and Millennials are required to be smarter than previous generations to compete in a globalized economy. They’re more likely to go to school longer to get the necessary degrees that the job market requires. That school is significantly more expensive than when the boomers went to school and we’re paying for it ourselves. Finally, when our generation finishes with schools we have to work harder to find a job.

Now this may sound like bitching but it’s not meant to be. I’m just sick to death of hearing the middle aged attack the work ethic of younger folks.
Posted by Andy the Lawyer - 3 months, 1 week, 4 days, 2 hours, 28 minutes ago

Funny how since the meltdowns of the real estate appraisal, home loan, investment banking and credit default swap industries we haven’t once heard Bush promoting the “home ownership society” that he babbled about during the 2000 and 2004 campaigns.
Posted by Mike - 3 months, 1 week, 3 days, 16 hours, 28 minutes ago

#20, Tom, that’s the problem - we live in a Capitolistic rather than a capitalistic society.

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