Thread by @Cezary

My latest: I've been on the mortgage trail lately, trying to figure out why Fannie Mae and Freddie Mac would buy and securitize loans like these.

Fake tenants, fake income, but real loans? U.S. pursues one of the largest mortgage-fraud probes since 2008
wsj.com/articles/u-s-p…

Loans for apartment buildings where owners allegedly staged units to make them look occupied -- by playing radios inside units or putting doormats outside -- have sparked one of the biggest mortgage fraud probes since the 2008 financial crisis.

wsj.com/articles/u-s-p…

Lax and fraudulent lending on single-family homes before 2008 played a role in inflating and popping the housing bubble a decade ago. As demand for rental housing grows, will lax standards spread to the multifamily housing market?

Some in the industry are worried that the multifamily mortgage market is vulnerable to bad actors because everything works well when people are honest -- but if they're not, it can be easy for fraudulent loans to slip through the system.

And if borrowers do fake income to get bigger loans, it may be hard to spot thanks to increasingly generous lending terms. Loans with partial or full interest-only repayment periods have been making up a bigger share of multifamily mortgages bought by Fannie Mae and Freddie Mac.

My analysis identified about $1.5 billion of securities issued by Fannie Mae and Freddie Mac that are backed by mortgages from just one developer who has been under federal scrutiny. Thanks to @TRFinServices and @TreppWire for data for the story. wsj.com/articles/u-s-p…

Here is the federal search warrant application that colorfully describes some of the alleged deception that underpinned some of Morgan Management's multifamily loans. Income from storage units would appear by "magic" among other tricks described in emails
si.wsj.net/public/resourc…

Another question raised by the document: How come @DeutscheBank can catch these sorts of things but lenders who originate and sell these loans to Fannie Mae and Freddie Mac don't -- and the agencies buy & securitize the debt?

If you have any newstips on multifamily mortgages, self-storage or other deals, please DM me or send me an email: [e-mail]