On Thursday, June 19, the U.S. Justice Department announced the results of phase ONE of “Operation Malicious Mortgage”-- a nationally coordinated crackdown against conspiracy, corruption, and fraud in the country’s leading mortgage companies.
Final tally: In the past three months, the number of mortgage executives who have gone from corner office to cellblock multiplied from two to 406, and counting. In the words of one legal advisor: “[This] may lead to a cascade of criminal cases and civil suits. The floodgates could open.” (Chicago Tribune)
They already have: Investigations into mortgage schemes has tripled, with 1,400 now underway. In all certainty, white-collar membership to “Club Fed” is going to grow -- just as our analysts anticipated it would.
On this, the March 2005 Elliott Wave Financial Forecast went against the bullish housing crowd with a compelling lead story titled “Real Estate Bust Begins.” Here, our analysts wrote: “As the most aggressive dispensers of credit to the housing industry, subprime firms are on the front edge of the housing bubble.”
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The March 2005 EWFF also presented the following chart that likened the near vertical rise in the S&P Homebuilding Index to the notorious NASDAQ rally from October 1998 to 2000.
Our analysts had come to a powerful conclusion: The “potential for a serious unraveling of the housing market” was undeniable. The S&P Homebuilding Index would suffer a dotcom-like fall AND every institution and instrument that facilitated the boom would tumble right alongside.
Here, the July 2005 Elliott Wave Financial Forecast outlined the coming recrimination against the housing mania’s biggest enablers:
“This time, there’s no mistaking who the Enrons of the bust phase will be. They will be the firms now peddling adjustable-rate, no interest/nothing down and assorted other types of subprime mortgages.”
Now, flash ahead to the following close-up of the S&P Homebuilding Index. From its 2005 peak, prices have plummeted nearly 80% AND the crusade against the bad guys behind housing has begun.
The “floodgates” have opened indeed. But you don’t have to end up in deep water, so grab the FREE WEEK life raft today. Get ALL three leading Financial Forecast Service publications for absolutely ZERO dollars. You can’t afford NOT to.