The subrpime mortgage mess has economic and political reprucussions but the legal ones are also showing up. Two different articles from two different sources give us some idea of how the legal system will be dealing with this problem.
From The New York Time comes this story out of Florida: 31 Accused in Florida of Falsifying Home Loans:
"Officials said the scheme included participants at every stage of the transactions, including bank employees, title agents, appraisers and fake buyers, and involved property in Miami-Dade and Broward Counties and in the city of Marco Island on the state’s southwest coast."
According to the indictment, Juan Torrens, 40, a defendant and the owner of two real estate investment companies, would identify property owners who were willing to overstate the selling price of their properties.
Mr. Torrens and another defendant, Daniel Ramos, 40, would recruit people to pose as buyers, the indictment said. Mr. Torrens and his wife, Rachael, would then prepare fraudulent mortgage loan applications on behalf of the straw buyers, including false pay stubs and tax forms, according to the indictment.
Meanwhile, to support the inflated sales prices, Alonso A. Muxo, 48, an appraiser, would prepare fraudulent appraisals, the indictment said.
In at least one case, the indictment says, Roger Rosario, an employee of Regions Bank, provided a fraudulent verification of deposit in connection with a mortgage loan application.
The defendants would skim off the difference between the sale price and the mortgage loan and pay off all the participants in the scheme, officials said.
Lawyers.com published Economy's Frowns Turned Upside Down for Boutiques:
"Coming off a four- or five-year dry spell, small bankruptcy boutiques like McNutt's are watching the ripple effect of the subprime mortgage meltdown and the ensuing credit crunch. They say the ailing run the gamut, from hospitals to retail and high-tech businesses.
McNutt said the firm is getting three times more calls than last year about Chapter 11 from distressed midsize companies -- those with between $5 million and $15 million in annual revenue. Recently, the firm also was tapped to represent the creditors' committee in the SonicBlue bankruptcy and in a case regarding Selix, a troubled tuxedo rental company that owes $9 million to creditors and is going through liquidation.
The McNutt firm also represents four hedge funds in asset acquisitions in Delaware bankruptcy court.
'The difficulties in the subprime mortgage industry are a preview of what's going to happen in the world of corporate insolvency,' McNutt said.
Murray & Murray, a bankruptcy firm in Cupertino, Calif., has added three lawyers in the past four months, for a total of six lawyers. Name partner John Murray says his practice has expanded as a direct result of the subprime mess.
'We're going to be filing a significant Chapter 11 case for a subprime lender in the next couple of weeks,' he said. Small and me"