Holding people, institutions to account for the mortgage mess

Judge rules fraud trial can proceed; More perp walks needed?

When it comes to assigning blame in the mortgage meltdown that has led us into recession, there is a lot to go around. There are developers, investments bankers, politicians, the Federal Reserve and on and on.

In Pennsylvania a group of homeowners believe they were victimized not only by a developer, no surprise there, but the banker that financed it. In the great American tradition they took it to court.

A Federal Judge has ruled that their civil lawsuit alleging fraud by the developer and Chase Manhattan Mortgage and one of it's branch managers can proceed. According to a story in the Pocono Record;

U.S. District Judge Christopher Conner ruled Oct. 24 — for the second time this year — that Chase Manhattan Mortgage Corp. and branch manager William K. Spaner must stand trial on allegations that Chase conspired with Tannersville (PA.) developer Gene Percudani to fraudulently sell homes in excess of market value through inflated appraisals.

Nearly 100 sets of homeowners charge that Percudani, his construction and brokerage companies, Chase, and former home appraiser Dominick Stranieri violated the federal Racketeer Influenced and Corrupt Organizations Act (RICO) and state consumer protection law. The suit was filed following a 2001 series of stories in the Pocono Record detailing the sales practices.

Interestingly, the RICO laws were originally passed to prosecute the Mafia.

As Elk Grove struggles to deal with several half-finished housing developments, perhaps it is time for homeowners as well as the city to start looking at the actions of developers and holding them to account.