No mortgage lender in jail but a borrower does

Written by Biloxi

What a country that we live in has become. Law enforcement often says "no one is above the law."  But, imagine that the government using an attractive female FBI agent to seduce and trap you, dives through your garbage, builds the most absurd case on you with shaky facts, and destroys you as whole. The government is certainly hard at work prosecuting a common man while the banksters walk around with a "get out of jail free" card. Not one bank executive involved in the collapse of the financial mess has gone to jail but there is one person that has a gone to jail: a borrower.

The man's name is Charlie Engle. He's an ultra-marathoner and a home owner: A homeowner who may have overstated his income on two "stated income" loans [or called liar loans] to buy two properties. Reporter Joe Nocera tells Charlie Engel's story over at the New York Times.

Mr. Engel got caught up into the web of the government when Federal agent saw him featured in a movie in which Charlie ran across the Sahara Desert. The federal agent had questioned how Mr. Engel could afford to train for that race and began to question whether Mr. Engel was hiding his income or committing tax fraud.

So what did the federal agent do with his suspicion? The Federal agent conducted a full investigation of Mr. Engle to look for incriminating evidence including personally going through Mr. Engle's garbage, sending an attractive female agent with a wire to flirt with Mr. Engle and get him talking. And in one of his conversations with the agent, Engle said something about speculating in real-estate using liar loans. Mr. Engel told the agent that "everybody was doing this" meaning that people were taking out liar loans. This of course was true.

So what is the story of Mr. Engel taking out the liar loans? From Business Insider:

On one of these loans, he wrote his actual income (no fraud there).

The other loan, which was prepared by Engle's mortgage broker, included a wildly inflated income number. Engle says he never saw this income number or signed the loan application. A forensic handwriting analysis of Engel's "signature" and initials on these documents suggests that the signature was likely forged. Engle's mortgage broker was later arrested and convicted of mortgage fraud. Engle's mortgage broker later testified against Engle in exchange for a lighter sentence. The mortgage broker said Engle had signed the papers.

Charlie Engle eventually lost his two houses and lost the equity he had in them. Mr. Engle is currently serving 21 months in Beckley prison for "mortgage fraud" while his mortgage broker is serving 10 months. As further punishment for his alleged crime when he gets out of jail, the judge ordered Mr. Engle to pay $236,000 of "restitution" to the entity he harmed.

And what's that entity that Mr. Engel has to pay to? Countrywide [now owned by Bank of America]! You remember Countrywide, the large mortgage lender which was formerly owned by CEO Angelo Mozilo who skated prosecution by the Justice Department a few weeks ago and prosecution by Securities Exchange Commission for alleged insider trading charges. On March 14, Mr. Engle wrote on his blog:

On February 14, 2011 (Valentine’s Day) I reported to Beckley Federal Correctional Institute to begin a 21 month sentence. I am here because I allegedly overstated my income on a home loan application in 2005.

If millions of homeowners who took out liar loans went to jail for the same crime that Mr. Engel was convicted for by the government, then the jails would be overcrowded full over liar loan convicts. Certainly, the justice system has sent the wrong message to the citizens in this country:  No one is above the law except for the banks and corporations. Running a crooked subprime company, trafficking in predatory loans, and selling and profiting off of toxic assets will get you a free pass from the law. But, lying on liar loan applications will land you in prison.