What does it matter if she went no doc, low doc or full doc? if Gramma’s house were actually worth what she was allowed to borrow against it, there would be no housing slump. Isn’t that why you order an appraisal on a home before funding?

Verifying the value of the asset and the risk involved in funding the loan is the lender’s job to ensure they are covered if she doesn’t pay. They sell the home and rover the loss.

Artifically inflate prices on the collateral of loans via hocus pocus and here we are. Unfortunately, they now sell the home and cannot cover the loss. You can’t tell me they didn’t see this coming.

Philip Shenon and Jenny Anderson contributed reporting.

“The Federal Bureau of Investigation has opened criminal inquiries into 14 companies as part of a wide-ranging investigation of the troubled mortgage industry, F.B.I. officials said Tuesday.

“The F.B.I. said it was looking into possible accounting fraud, insider trading or other violations in connection with loans made to borrowers with weak, or subprime, credit.

“The agency declined to identify the companies under investigation but said the inquiry, which began last spring, involves companies across the financial industry, including mortgage lenders, loan brokers and Wall Street banks that packaged home loans into securities. It is unclear when charges, if any, might be filed.

“As part of its investigation, the F.B.I. is cooperating with the Securities and Exchange Commission, which is conducting about three dozen civil investigations into how subprime loans were made and packaged, and how securities backed by them were valued. State prosecutors are also investigating various areas of the mortgage industry.

“It’s significant firepower, depending on how far along the investigation is,” Carl W. Tobias, a professor at the University of Richmond Law School, said about the F.B.I. investigation.

“The F.B.I. has been warning for years that mortgage fraud is a significant and growing problem. In the 2006 fiscal year, it documented 35,600 suspicious-activity reports related to mortgage fraud, up from 22,000 the year before and as few as 7,000 in 2003.

“Many of the cases the F.B.I. has brought so far have focused on local or regional mortgage fraud rings that involve speculators, loan officers, brokers and other housing professionals.

“State officials have been active in bringing mortgage cases. The New York attorney general, Andrew M. Cuomo, is investigating whether Wall Street banks withheld damaging information about the loans they were packaging. Prosecutors in Ohio, Massachusetts, Illinois and Connecticut have also been looking into the industry.

“Earlier this decade, a group of attorneys general reached settlements totaling more than $800 million with two large lenders: Household International, now part of HSBC, and Ameriquest.

“State and federal officials share jurisdiction over the mortgage industry and have often squabbled over who should police it. Many lenders that specialize in making loans to people with blemished credit have state charters, but some of them are owned by or affiliated with federally regulated banks.

“Mortgage companies and Wall Street banks have said they are cooperating with numerous federal and state investigations. The firms have also sued each other and have been accused of various infractions by investors and borrowers in numerous cases.”

http://www.nytimes.com/2008/01/30/business/30fbi.html?_r=1&th&emc=th&oref=slogin

The problem we have isn’t because of grandma, it was the people that allowed grandma to get this money and profited immensely off of grandma. They knew all too well that grandma would never be able to afford this loan long term.

Bottom line is that these loans were made to fail and the people that made these toxic mortgages need to fix grandmas cancerous tumor of a loan. Grandmas happy and Moe’s happy.

Just my 2 Gazillion cents……………………………..