Day of Reckoning for NINJA Loans

Go Lean Commentary

Be not deceived … whatsoever a man soweth, that shall he also reap. – King James Version – The Bible

It is time for the Day of Reckoning for one of the players in the recent housing bubble and financial crisis, referred to as the Great Recession of 2008. Industry stakeholders had been “skimming of the public coffers for mortgage guarantees and giving unwise mortgages to people who had what was considered NINJA qualification:

  • No Income
  • No Job & Assets

LB 1Such activities in the retail mortgage industry, plus bad practices in the wholesale lending, credit ratings and mortgage-back securities industries had congealed to form a “perfect storm” for disaster in the financial markets (Wall Street, et al) in the US and around the world.

Many innocent people lost fortune and faith in the American eco-system. There had to be an accounting of the “sins and sinister plots”; there had to be a Day of Reckoning. That day came for one Michigan-based (Detroit area) company, United Shore Financial Services. See the full story here:

Title: United Shore Agrees to $48M Settlement with DOJ
By: Jacob Passy

CU Blog - Day of Reckoning for NINJA Loans - Photo 1United Shore Financial Services, a Troy, Mich.-based lender, has agreed to pay $48 million to settle allegations that it violated the False Claims Act.

The Department of Justice alleged that USFS did not comply with certain origination, underwriting and quality control requirements while participating in the Federal Housing Administration’s direct endorsement lender program. Consequently, the Department of Housing and Urban Development insured hundreds of loans that UnitedShore approved that should not have been eligible for FHA coverage, subsequently taking losses due to claims on those loans.

“USFS acknowledged that it failed to comply with FHA underwriting and quality control requirements, resulting in improperly originated mortgages,” John Vaudreuil, a U.S. attorney for the Western District of Wisconsin said in a news release. “While USFS deserves credit for acknowledging and resolving its conduct, that conduct not only resulted in substantial losses of public funds, but also put Wisconsin homeowners at risk of losing their homes or ruining their credit.”

United Shore, which is both a retail lender and the parent of United Wholesale Mortgage, did not immediately respond to a request for comment.

In particular, the DOJ said that UnitedShore admitted to pressuring underwriters to approve FHA mortgages under a compensation plan that tied pay to the percentage of loans approved. United Shore also falsely certified that direct endorsement underwriters reviewed appraisal reports prior to mortgages being approved for FHA insurance; under the DEL program, the FHA does not review that lenders are complying with the agency’s requirements.

The DOJ also identified other issues with UnitedShore’s compliance practices. The lender allegedly did not provide senior management with “meaningful information” regarding quality control findings. Additionally, UnitedShore did not meet HUD’s self-reporting requirements, only self-reporting three loans to the department despite quality control reviews finding hundreds of FHA-insured loans that were materially deficient at issuance.

The alleged activities occurred between from 2006 through 2011. The DOJ also said that United Shore “made certain discretionary distributions to a shareholder in the company” after the federal government began investigating the company in January 2014.
Source: National Mortgage News – Industry Trade Journal; posted 12/28/2016; retrieved 01/18/2017 from:

This story aligns with the book Go Lean…Caribbean; it serves as a roadmap to introduce and implement the technocratic Caribbean Union Trade Federation (CU) and Caribbean Central Bank (CCB) for better stewardship of the Caribbean banking eco-system, to ensure the economic failures of the past do not re-occur in the Caribbean. The book was inspired by the events of 2008, by people engaged in the mortgage-housing-investments industries. These ones engaged in the post-mortem analysis – dissection of the crisis – of all the bad community ethos, strategies, tactics and implementations leading up to 2008 and saw the need for this Day of Reckoning.

The goal of this roadmap is to apply the lessons-learned from 2008 in the stewardship of the economic engines in the Caribbean region. It turns out that we were affected by 2008 as well; we were devastated by the elasticity in the global markets.

Welcome to the Caribbean’s Day of Reckoning!

The Caribbean economy is a parasite of the US and so when the American market “catches a cold, we sneeze”. (This is referred to as “financial contagions”). We can – we must – do better and guide our own economy away from American dependence to a regional interdependence.

We are on the way…

With the proposal for the CARICOM Single Market & Economy (CSME), a more integrated region is expected to emerge with greater linkages among the member-states of the economic union. Issues of financial contagions will now have to be a constant concern for a regional sentinel. The Go Lean roadmap calls for the deployment of the Caribbean Central Bank as that sentinel, to proactively and reactively shepherd the financial institutional processes (wholesale and retail). We do not want to “get caught with our pants down” in our region. We do not want government loan guarantees for mortgagors that have NINJA qualifiers. (That money would be better placed in more substantial investments in Caribbean people and processes). The lesson from 2008 is to follow the money and discern those who profited from this bad behavior; see the VIDEO in the Appendix below.

Mortgages with a government-guarantee stamp of approval are readily sold in the secondary markets. Bad actors are able to glean quick profits from loan origination fees and then “wash their hands” of any inherent risk from deficient payment collection. (See the VIDEO in the Appendix below). This was the direct charge against United Shore Financial Services in the forgoing article: “[funding] hundreds of FHA-insured loans that were materially deficient at issuance”.

Bad actors … profiting from existing supplies of capital!?!?

This is so familiar! The Go Lean book details (Page 23):

… history teaches that with the emergence of new economic engines, “bad actors” will also emerge thereafter to exploit the opportunities, with good, bad and evil intent. A Bible verse declares: “What has been will be again, what has been done will be done again; there is nothing new under the sun” – Ecclesiastes 1:9 New International Version.

This roadmap for Caribbean integration declares that peace, security and public safety is tantamount to economic prosperity. This is why an advocacy for the Greater Good must be championed as a community ethos. A prime precept is that it is “better to know than to not know” – this implies that privacy is secondary to security. A secondary precept is that bad things will happen to good people and so the community needs to be prepared to contend with the risks that can imperil the homeland.

The prime directive of the Go Lean/CU/CCB roadmap is to optimize economic, security and governing engines to impact the Caribbean’s Greater Good, for all stakeholders: residents, visitors, bank depositors and mortgage-holders. This need was pronounced early in the Go Lean book, in the Declaration of Interdependence – (Page 13):

xxv.  Whereas the legacy of international democracies had been imperiled due to a global financial crisis, the structure of the Federation must allow for financial stability and assurance of the Federation’s institutions. To mandate the economic vibrancy of the region, monetary and fiscal controls and policies must be incorporated as proactive and reactive measures. These measures must address threats against the financial integrity of the CU and of the member-states.

The foregoing news article shows the type of functions executed by technocratic financial regulators: monitoring risks, policing the industry stakeholders, and reckoning bad practices. The “bad actor” in the article – United Shore Financial Services – had their Day of Reckoning.

The related subjects of banking oversight and optimizing financial governance have been a frequent topic for blogging by the Go Lean promoters, as sampled here:

For Canadian Banks: Caribbean is a ‘Bad Bet’
Christmas presents (2015) for American Banks
Bad Actors profiting from a supply of capital in private education
Too Big To Fail – Caribbean Version
5 Steps of a Bubble – Learning to make a resilient economy
Canadian Imperial Bank of Commerce failing investment in FirstCaribbean Bank
Bitcoin needs regulatory framework to change ‘risky’ image
Open the Time Capsule: The Great Recession of 2008
What Usain Bolt can teach banks about financial risk
Barbados Central Bank records $3.7m loss in 2013
US Federal Reserve Releases Transcripts from 2008 Meetings
Dominica raises EC$20 million on regional securities market
Fractional Banking System – How to Create Money from Thin Air
Book Review: ‘Wrong – Nine Economic Policy Disasters and What We Can Learn…’
10 Things We Want from the US – # 2: American Capital
The Erosion of the Middle Class

All the Caribbean has experienced economic dysfunction due to the 2008 Global Financial Crisis. In line with the foregoing news article, the Go Lean roadmap seeks to mitigate bad behavior from bad actors like United Shore Financial Services in our local region. The book details the many infrastructural enhancements/advocacies to the region’s financial eco-system; to facilitate efficient management of the economy, and policing of this important financial/banking industry-sector:



Anecdote – Caribbean Single Market & Economy


Anecdote – Puerto Rico – “The Greece of the Caribbean”


Confederating Non-Sovereignty Inter-Governmental Entity


Facilitate Currency Union/Co-op of Caribbean Dollar


Fostering a Technocracy


Caribbean Central Bank


Deposit Insurance Regulations


Securities Regulatory Authority


Modeling the European Union / Central Bank


Lessons from 2008


Anecdote – Caribbean Currencies


Growing the Economy


Better Manage Foreign Exchange


Improve Credit Ratings


Improve Housing – Mortgage Standards Enforcement


Foster Cooperatives


Banking Reforms


Wall Street – Capital/Securities Market


Impact the Diaspora


Impact Retirement – Need for Savings


Help the Middle Class


Appendix – Credit Reporting and Ratings Good Governance


There is no doubt that there has been previous corruption of the American financial eco-system. They have “made themselves sick; given themselves colds”, and yet we, in the Caribbean, “have had to sneeze”. We hope that the new oversight methodology in the US is more effective for managing their stakeholders. But management of the US is out-of-scope for the movement behind the Go Lean book; our focus is limited strictly to the Caribbean economy. So now is the time for change to a new regulatory regime here in our region; now is the time for new stewards of the Caribbean economy, security and governing engines. It’s time for the CU/CCB. We must prove that we have learned from the bad American past. A lot is at stake: our financial security; our future.

We urge all stakeholders – residents, mortgage-holders, mortgage lenders, banks – to lean-in to this Go Lean roadmap to elevate Caribbean society. The destination is common and desired for all Caribbean men, women and children: a better place to live, work and play. 🙂

Download the book Go Lean … Caribbean – now!


Appendix VIDEO – NINJA Loans: The Big Short

Published on Apr 27, 2016 – Clip from Academy Award Winning Best Picture “The Big Short”.

  • Category: People & Blogs
  • License: Standard YouTube License


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