Atlanta Scam Results In $6.8M In Fraudulently Obtained Loans From Bear; May Reflect Recklessness With Which Mortgage $ Was Handed Out

The Wall Street Journal reports:

• Skyrocketing foreclosures are a testament to how easy it was to borrow from mortgage lenders in recent years. It may also have been easy to steal from them, to judge from a multimillion-dollar fraud scheme that federal prosecutors unraveled here in Atlanta. The criminals obtained $6.8 million in mortgages from Bear Stearns Cos., including a $1.8 million mortgage to Calvin Wright, a New Yorker who told the investment bank that he and his wife earned more than $50,000 a month as the top officers of a marketing firm. Mr. Wright submitted statements showing assets of $3 million, a federal indictment alleged.

• In fact, Mr. Wright was a phone technician earning only $105,000 a year, with assets of only $35,000, and his wife was a homemaker. The palm-tree-lined mansion they purchased with Bear Stearns's $1.8 million recently sold out of foreclosure for just $1.1 million. Bear Stearns, meanwhile, posted the first quarterly loss in its 84-year history as it wrote down $1.9 billion of mortgage assets yesterday.

For more, see Fraud Seen as a Driver In Wave of Foreclosures (Atlanta Ring Scams Bear Stearns, Getting $6.8 Million in Loans). (may require subscription; if no subscription, go here - then click link for the story).

For a related opinion column, see Mortgage tale is a dopey one (The Denver Post) ("Banks around the world have written down more than $100 billion in bad mortgages").