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FINANCIAL CRISIS INQUIRY COMMISSION REPORT
began their jobs during the boom, and some were less than honorable in their deal-
ings with borrowers. According to an investigative news report published in ,
between and , at least , people with criminal records entered the
field in Florida, for example, including , who had previously been convicted of
such crimes as fraud, bank robbery, racketeering, and extortion. J. Thomas Card-
well, the commissioner of the Florida Office of Financial Regulation, told the Com-
mission that “lax lending standards” and a “lack of accountability . . . created a
condition in which fraud flourished.” Marc S. Savitt, a past president of the Na-
tional Association of Mortgage Brokers, told the Commission that while most mort-
gage brokers looked out for borrowers’ best interests and steered them away from
risky loans, about , of the newcomers to the field nationwide were willing to do
whatever it took to maximize the number of loans they made. He added that some
loan origination firms, such as Ameriquest, were “absolutely” corrupt.
In Bakersfield, California, where home starts doubled and home values grew
even faster between and , the real estate appraiser Gary Crabtree initially
felt pride that his birthplace, miles north of Los Angeles, “had finally been dis-
covered” by other Californians. The city, a farming and oil industry center in the
San Joaquin Valley, was drawing national attention for the pace of its development.
Wide-open farm fields were plowed under and divided into thousands of building
lots. Home prices jumped in Bakersfield in , in , in ,
and more in .
Crabtree, an appraiser for years, started in and to think that things
were not making sense. People were paying inflated prices for their homes, and they
didn’t seem to have enough income to pay for what they had bought. Within a few
years, when he passed some of these same houses, he saw that they were vacant. “For
sale” signs appeared on the front lawns. And when he passed again, the yards were
untended and the grass was turning brown. Next, the houses went into foreclosure,
and that’s when he noticed that the empty houses were being vandalized, which
pulled down values for the new suburban subdivisions.
The Cleveland phenomenon had come to Bakersfield, a place far from the Rust
Belt. Crabtree watched as foreclosures spread like an infectious disease through the
community. Houses fell into disrepair and neighborhoods disintegrated.
Crabtree began studying the market. In , he ended up identifying what he be-
lieved were fraudulent transactions in Bakersfield; some, for instance, were al-
lowing insiders to siphon cash from each property transfer. The transactions
involved many of the nation’s largest lenders. One house, for example, was listed for
sale for ,, and was recorded as selling for , with financing,
though the real estate agent told Crabtree that it actually sold for ,. Crabtree
realized that the gap between the sales price and loan amount allowed these insiders
to pocket ,. The terms of the loan required the buyer to occupy the house, but
it was never occupied. The house went into foreclosure and was sold in a distress sale
for ,.
Crabtree began calling lenders to tell them what he had found; but to his shock,
they did not seem to care. He finally reached one quality assurance officer at Fremont
