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November 29, 2007

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Sorry for going OT but what is up with their trying to pin the causation of the mortgage crisis on this illegal activity--

By allowing Washington Mutual to hand-pick appraisers who inflated values, First American helped set the current mortgage crisis in motion.

as opposed to the legal and irresponsible practices--irresponsible underwriting and bent brokers' incentives.

Don't get me wrong, the illegal activity certainly is going to make the issue worse (especially considering the size of WaMu), but there is no way the mortgage crisis would be as large as it is without industry-wide problems.

Taechan

That's me making the connection, not the govt.

The govt is saying only that Tommy K has cost WaMu tons of cash.

I'm saying, "hey, do you think it's a coincidence that WaMu, which is already under investigation for doing corrupt things with 'legitimate' mortgages, also has this tie to Tommy K?"

There was a lot of detail taht came out earlier about how Tommy K would simply not file certain kinds of paperwork to cover up his bad mortgages. I'm wondering if he did it with WaMu because they weren't looking that closely.

Is it a coincedence, by any stretch, the EAPPRAISEIT is located in Poway, CA?

Poway, CA... Home to Brett Wilkes and home of ADCS!!

Citizen92

Is taht just a service center, or do they have a business office there?

Though I'll grant you, that is one mighty big coinkydink, if Tommy K was further involved with WaMu than we know.

Also, for the record, I used to live in Poway (affectinately called CowPie, back in the day), too. Lived spitting distance from Wilkes' house, before he lived there.

What a shock! Who could have predicted this? Heh heh. I have been saying from the outset that the Feds had a GIANT problem on their hands with ole' Special K. There is not one chance in hell the Feds, both working agents and their superiors, did not know about this. I think there is a whole long line of crimes they have effectively facilitated Tommy K in committing over the years and, some how or another, TK has them leveraged to where they can't stop.

Oops. Forgot to say this: Michaels' attorneys don't really believe the government was unknowing and clueless; they put that in there as a face saver for the prosecutors they are trying to get a no incarceration plea agreement out of. Trust me, if they don't get somewhere, Michaels' attorneys will suddenly realize the government was a knowing conspirator and must be disqualified and the case dismissed.

bmaz

I'm just wondering how deeply this ties into (as Atrios calls it) the shitpile.

Tommy K's $50 million in bad mortgages that he sold WaMu are really just a drop in WaMu's share of the shitpile. But what if he actually sold them a much bigger chunk? What if WaMu actually has a bunch of Tommy Ks out there, doing the same thing?

And what event happened in the last two weeks that would elucidate K's role? Cuomo filed his suit on Nov. 1. And as is Cuomo's habit, I'm sure he kept investigating. I wonder what Cuomo found?

bmaz

About Michael--yeah, I think they may well have gotten their client a big advantage here. I'm reading one of their filings, where they lay out K's method, and I can imagine they're going to find Michael a very useful witness in getting to the bottom of K's portion of the shitpile.

The problem with appraisal fraud (speaking as someone who once defended an appraiser in a suit to recover losses when the loans based on the appraisals went bad) is that the losses get seriously huge in a heartbeat. This, because (if you don't know this already) the lenders making the loan have, as a term and condition of their bundling the loan to sell to a downstream investor, a provision which requires the upstream loan-maker to take back the bad ones when they go bad. In other words, the securitized bundles of mortgages are like bonds, but bonds which have next-to-no downside risk for the downstream purchaser/investor. If the income stream stops because a particular loan goes bad, it's the upstream loan-maker who has to stand good for it to the downstream investor, and then go after whomever they deem responsible for the loan going bad.

[Now, when downstream banks start getting into trouble (I'm thinking by way of example about one or two German banks which had to be taken over because they became insolvent when their portfolios had too many losses in the US mortgage market.), that should tell you just how severe the credit crunch is getting. Because, if they were downstream investors, they had next-to-no exposure by the way those bundles are structured.]

So, when an appraiser does something like "making the appraisal meet the deal" (self-explanatory), then does that 100 or 200 times, all of a sudden that's tens of millions of dollars. And the appraiser might be getting only $200 or $300 per appraisal. But, some of these appraisers are doing two, three or four appraisals a day (and that's the lazy ones). So, in a month or two of making the appraisals to meet the deal, one appraiser can seriously hurt, if not kill, a bank. Even one as large as WaMu.

FWIW, beyond criminal liability doing that sort of twisted appraisal is also a good way to get sued in civil RICO for more money than anyone dreams of having.

EW - No idea whatsoever. TK is clearly an accomplished enough con man that there is no telling what he is in to. My guess is that he is also a very effective collector of incriminating information, even in things he is not personally involved in. So, who in the world knows? Does this mean there will be another run of Michaels/Kontogiannis family laundry comments at TPM?

The eAppraiseIT Poway location maps as four blocks away from ADCS old HQ in Poway.

First American describes the office this way:
Community Banks and national lenders alike benefit from First American eAppraiseIT’s bicoastal service centers, in Danvers MA and San Diego CA.

Our service centers house our traditional, custom, review and default/REO product departments, as well as our accounts receivable, strategic planning, and human resource divisions.

Our bicoastal structure ensures that we’re open when you’re open! Our customer service and quality assurance teams are working virtually around-the-clock to ensure the speediest and highest-quality valuation products available today.

You're right that it's probably a coincedence, but still...

According to the NCT articcle, Tommy K is telling the judge a different story

Kontogiannis' defense attorneys, in a separate court filing, argued to the judge that the fraud admissions cannot be used against Kontogiannis in his sentencing, because Kontogiannis told federal agents about the $100 million in fraud as part of his deal to cooperate.

TommyK's plea deal was in Feb. When John T Michael started blabbing about this a few months ago, the judge said that the AUSAs in San Diego didn't know about the mortgage fraud. Or maybe they were saying that they doid not know Kontogiannis was continuing with the mortgage fraud after the plea agreement.

What really reeks about this is that Tommy K is not a first time offender. He is still paying off the school district that he ripped off. Highly likely he used fraudulent mortgages to repay that debt. So now, if they let him go again, with promised to repay the school and the banks, he is going to have to cook up some new scam to pay it all off.

chrisc

No, that K filing came in before this USA filing. What he's saying there is that the fraud that the govt admits it KNEW about when they signed the plea can't be considered (there's a complaint about the probation report, too, which may be what he's responding to,but I can't get that off of PACER).

What the govt is saying is that, no matter what they said in the plea, this stuff is all new, and therefore all free game. They could now choose to indict K on all this fraud since. Which is why I say going to jail in teh first place is the least of his worries.

Besides the normal aromas of fall, you can almost smell in the air the odor of a death causing fatal flareup of Special K's heart/diabetes problems, one for which the only known medical remedy is placement of him in the depths of the witness protection program.

The NCT article also mentioned that John T. Michael's trial starts January 29.
The family has been very quiet since TPM removed all the comments.
It was quite a chore to read through all the comments about whose baby was uglier or who did or didn't screw whom just to get some real informational tidbits. But I remember one comment ( a likely GJ leak) accused JTM of saying the prosecutors were acting like 4th graders. Hmmm. do prosecutors engage in payback?

Another comment mentioned a civil suit involving Washington Mutual. And another comment related that someone who was possibly JTM's wife knew that K's eldest daughter was meeting with a lawyer about possibly suing JTM. She and Michael co-owned the mortgage company.

Kontogiannis and his daughter (the 2nd eldest, this time) are also involved in a RICO case in NY federal court. They bought up a food company and allegedly reneged on an agreement to pay the debt owed by the previous owner and improperly started transferring assets out of the company into other companies controlled or owned by K.

One of the strange things was that after K bought the company, 2 of the employees who were embezzling had pangs of conscience and turned themselves in. They ended up in jail. Another case in the newspaper reported a mortgage scam that Tommy K was apparently a victim of. That guy tried to kill an investigator. He ended up in jail. They guy who reported that Kontogiannis bid for the school district was fraud ended up getting beaten up. Seems as if a lot of people end up in jail or beaten up, but never Tommy K.


You guys are missing the "Beat"; Cuomo, the NY AG, Is headed for a big fall. This whole story on strong arming appraisals is for the AG to "set up" his political career, as did his predessessor with Martha Stewart, which most folks say was unfair and out of the bounds of sentenace she received. Another Nifong, in the making!AG's do this, you know.

Hey, Alan, where you been bro?!

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