Wednesday, September 12, 2012

Cost of housing meltdown rivals GDP: MBA conference

The housing crisis cost the nation about $13 trillion when tallying all losses from lawsuits, mortgage-backed securities litigation and taxpayer bailouts, a representative with fraud analytics firm Interthinx said.
Ann Fulmer, vice president of industry relations for Interthinx, made that revelation while speaking at the Mortgage Bankers Association's Risk Management and Quality Assurance Forum in Dallas. To put this $13 trillion into perspective, U.S. gross domestic product — the nation's entire output of goods and services — hit $15 trillion in 2011.

"We did not pay attention to data integrity on the way up, and so we have wiped out almost an entire year of gross domestic product in the United States," Fulmer said.

When looking at just REOs, short sales, RMBS suits and crisis-related litigation, the meltdown cost the mortgage/housing industry roughly $2 trillion, Fulmer explained. In addition, U.S. taxpayers and the government lost $3 trillion, while losses tied to homeowner equity reached approximately $8 trillion.
So how should data analysts search for potential fraud in the future to prevent overwhelming losses?

Fulmer advised attendees to look for areas of obvious risk when conducting forensic loan file reviews. In the future, parties may fudge on loan applications or other documents as they try to comply with new mortgage regulations from the Consumer Financial Protection Bureau and other agencies, Fulmer suggested.

Read more: http://www.housingwire.com/news/cost-housing-meltdown-rivals-gdp-mba-conference

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