Are sub-prime victims entitled to some form of compensation?

It has been established that Freemont Investment & Loan has been [operating] "without effective risk-management policies and procedures in its subprime mortgage and commercial real-estate lending operations": www.iht.com/articles/2007/03/08/yourmoney/mortgage.php
And now the question presents itself ... are those unfortunate people who fell vivtim to this crisis eligible for financial compensation?

Thanks, Phil

Yes Philip this has been established but lets be logical in all fairness. I agree that there were definitely "victims" of this crisis, however some of these so called "victims" knew before signing at the closing that they could not afford the loan. So really now should 100% blame be put on the lender? I find it difficult to accept that 70% of americans were led unknowingly to their financial slaughter as only an unintelligent sheep would have been.

Just as it is not possible to read the minds of people who file frivolous law suits, it is likewise impossible for the judiciary to determine who is telling the truth -- or stretching the truth within the legal language to such an extent to award people for lying. It happens every day. Moreover, I am posing this question on behalf of a friend who is currently losing 150k in equity in her home, and is now making plans to move to Florida from New York because she can't afford to live here anymore. I hate what is happening to her and all I want to know here is who she can contact in pursuit of, as I said, financial compensation?

On this link >> dockets.justia.com/search?q=Fremont+Investment+%26+Loan << one can see some of the lawsuits filed against Freemont Investment & Loan. Through a little digging I guess I answered my own question. Since they are not as yet and probably never will be required by law to make reparations directly to those who lost not the equity in their homes, but real money, for items such as home improvments and extentions, the only other recourse available is a lawsuit. It seems to me that some people should be in jail because of this debacle.

I can't stomach the ongoing pity party... How about a counter-suit against those parties that obtained their mortgage through stated income? Making $13/hr getting a loan for $500k. Fraudulently representing their income as much higher in order to obtain the loan in the first place. Seems like fraud to me... Seems to me Philip there are two parties that need to take responsibility here. The lender as well as the consumer. BOTH PARTIES SHARE RESPONSIBILITY. You seem very well spoken Philip, however it's beyond my capabilities of comprehension how you can mention reperations for people that lost the "real money". Come now, let's use just an ounce of common sense here, how can someone possibly put responsibility of our economic downfall on a lender. Let's not forget, we are ALL a victim of overspending and potential national bankruptcy by our govt. Can you blame the every person driving to work in the morning shooting exhaust into the air for global warming? Obviously not. There's a much bigger picture here and unfortunately some people only see what's in front of them.

Josiah, part one:

You seem to know which side of the “Fraudulent representation” debate my friend is on. Wow! That is arrogant and condescending. Either that or you are blessed with amazing powers. Then you said “Seems to me Philip there are two parties that need to take responsibility here”. OK, I agree. You said, referring to yourself, “It's beyond my capabilities of comprehension how you can mention reparations for people that lost the "real money". Is it ‘really’ “beyond your comprehension”? Well then, I guess we’ve established that your powers of comprehension are not too good. Then you made an even wider and more baseless accusation, which has absolutely nothing to do with the question I raised, you said, “How can someone possibly put responsibility of our economic downfall on a lender”. Gee, I don’t know. How could they? Is your world really that black and white? Perhaps the lender was also a victim. I guess yours was rhetorical question. Is it a straw man argument of sorts? Or are you just pretending to be able to write and carry on a debate? You said “Can you blame every person driving to work in the morning shooting exhaust into the air for global warming”? No, of course not – why even ask such a non analogous question? You’re right about the “bigger picture”, though. But we’re not going to get into that. You already have several self-inflicted wounds. I see where this is going. My advice to you is to take me at my word that the person on whose behalf I am making this inquiry really did lose a lot of equity, and actual cash in her home. The combined total is around 150k of which 60k was out of pocket. Her husband is a Sergeant in the United States Army. I believe he was making $2,300.00 a month at the time the loan was approved by Freemont Investment & Loan. She (my friend) was also employed although I don’t know how much she was earning.

Josiah, part two:

I personally witnessed a large portion of the installation of the materials, including labor, of the home improvements they paid for. As far as I and others can tell, in THIS PARTICULAR CASE, Josiah, they, my friend and her husband absolutely deserve compensation under Truth in Lending as a Cause of Action in filing a lawsuit. There are also other statutory measures that can be taken. In my opinion those who really lost something, should sue. In a perfect world those who sue frivolously should get nothing. But since we don’t live in a perfect world, Josiah, a [smaller] portion of the payout will go to some who do not deserve it. However, not in ‘this’ particular case.

Josiah in Rancho Cucamonga, California said: I can't stomach the ongoing pity party... How about a counter-suit against those parties that obtained their mortgage through stated income? Making $13/hr getting a loan for $500k. Fraudulently representing their income as much higher in order to obtain the loan in the first place. Seems like fraud to me... Seems to me Philip there are two parties that need to take responsibility here. The lender as well as the consumer. BOTH PARTIES SHARE RESPONSIBILITY. You seem very well spoken Philip, however it's beyond my capabilities of comprehension how you can mention reperations for people that lost the "real money". Come now, let's use just an ounce of common sense here, how can someone possibly put responsibility of our economic downfall on a lender. Let's not forget, we are ALL a victim of overspending and potential national bankruptcy by our govt. Can you blame the every person driving to work in the morning shooting exhaust into the air for global warming? Obviously not. There's a much bigger picture here and unfortunately some people only see what's in front of them.

I agree with you on certain items, yes we are responsable for ourselves in the end, but the lenders do have a fiduciary resposabilty to their clients, as well the back stop, the underwriter, should be able to spot things like a housekeeper that makes 8000.00 a months, that has been renting for all her life-and is getting into a loan that is 100% Sure there will always be people who try to manipulate the system, and get what they want, being shotsited on how it ends, but there are also peole who are manipulated and coached and are set to fail.

Paul Orebaugh in Sacramento, California said: the underwriter, should be able to spot things like a housekeeper that makes 8000.00 a months, that has been renting for all her life-and is getting into a loan that is 100% Sure there will always be people who try to manipulate the system, and get what they want.

Sorry to jump into your conversation late but it seems to me I ran into 2 different type of underwriters while underwriting myself. And in these scenario's it didn't matter what credit risk grade it was, either "A" paper, Alt-A or sub prime but it did depend on whether it was retail or wholesale & I saw this mainly in wholesale.

With the scenario listed above:

Underwriter #1: Would decline this due to overstated income but it would get over ruled by a managing u/w who was just bi&%ed out by a broker who threatened to pull his/her whole pipeline. Before that the broker chewed out the Acct Mgr long enough to make that person either cry or quit! For those who worked wholesale YOU KNOW this happened all the time!

Underwriter #2: Underwriter seems to be able to justify almost any income on a 1003 because a friend, family member or NEIGHBOR makes this much money. I sat next to an underwriter who did this constantly. After a year she must have had at least a thousand neighbors she knew personally who made 6 figures doing the most mundane blue collar work imaginable.