The Same Foreclosure Story About To Rerun
A casual glance into what is going on behind the scene of the much hyped rescue measures to bailout the nation from the financial crisis will show that the same foreclosure story is about to rerun, if steps are not immediately taken.
In Melville New York is located Lend America. It makes itself known through infomercials and toll free numbers. Borrowers in foreclosure trouble are encouraged to refinance and take fixed-rate mortgages that are guaranteed by FHA. Lend America had anticipated this foreclosure crash and had changed business tactics from 2005 by shifting over from peddling sub-prime mortgages to those backed by FHA. At the helm of this brilliant move is Michael Ashley. This year the firm will be advancing 7,500 loans amounting to a total worth of $1.5 billion. Ashley confidently said, “FHA is a big part of the future. It’s the major vehicle for the government to bail out the housing industry.”
It is strange and perplexing that the federal government should work in tandem with Lend America. Ashley has an uncomfortable past of legal wrongs. In 1996 he pleaded guilty in court in Uniondale New York on two counts of fraud related to mortgage scam of another company run by his family under the name of Liberty Mortgage. He was fined ($30,000) and sentenced to probation (five years). Kenneth Ashley, his father has the dubious distinction of having served a jail sentence of four years. Younger Ashley, now aged 43, defended himself and said, “ I was just a pawn in a chess game between my father and the government”. The current default rate of Lend America’s FHA insured loans is 5.7% or 53% – much higher than the national average.
Lemar Wooley of FHA was asked about overlooking the transgressions of firms that had formerly dealt with sub-prime loans. He replied, “FHA has taken appropriate actions, where necessary, with these lenders with respect to their participation in FHA programs.” According to him First Magnus, Lend America and Nationstar have all met the conditions laid down by federal rules. He however admitted that since 2000 on two instances, Lend America lost its right to issue FHA backed loans because of increased default numbers. Wooley also said that he did not know about the previous convictions of Ashley. Lend America had not projected Ashley as a major representative of the firm. As per rules the lenders working under FHA are expected to disclose past sanctions and not to employ personnel with criminal history.
