White Collar Crime in Housing: Mortgage Fraud in the United States

White Collar Crime in Housing: Mortgage Fraud in the United States

White Collar Crime in Housing: Mortgage Fraud in the United States

White Collar Crime in Housing: Mortgage Fraud in the United States

Synopsis

Subprime lending and mortgage fraud spread rapidly throughout the United States financial services sector during the 1990s and early 2000s, and in turn have been credited with contributing to an unprecedented global financial crisis. Koller, using diffusion theory as an interpretive framework, utilizes industry insider insights to examine how and why these innovative lending and fraud strategies diffused so quickly and deeply throughout the housing industry. She also assesses the viability of contemporary criminological and diffusion theories to explain the creation and control of white collar crime opportunities. Koller concludes that not only was the housing crisis predictable, it may have been preventable.

Excerpt

Despite the strong support the economic system provides for
the ideals of competitive individualism, it is clear that the
pursuit of economic self-interest must be contained within
some normative boundaries – or social and economic chaos
would be the ultimate result. The economic rationality
necessary to industrialism demands that exchange
relationships be based on some set of mutually accepted
standards. Without these rules, exchange relationships would
become vastly more difficult for all parties involved, and
many of the complex economic relationships characteristic of
modern society would be virtually impossible to maintain
(Coleman, 1987:421).

Statement of the Problem

Headlines of record home foreclosures, financial institution bankruptcies, and white collar crime indictments have littered the news media on a daily basis over the past few years. A breakdown in “exchange relationship” standards in the form of financial crimes have assuredly contributed to this unprecedented display of economic selfdestruction, and contributed to the economic crisis which continues to reverberate around the world. By the close of the first decade in the new millennium, the Federal Bureau of Investigation (FBI) reported that annual losses due to fraud in the mortgage market alone had been estimated at $4 to $6 billion, and the problem continued to escalate . . .

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