We seem to be facing a looming financial crisis because of irresponsible lending practices that enabled a lot of people to buy property that was beyond their means.

Many will blame the people, who took out the mortgages, but are there other factors bear consideration when looking into the cause?

Although fraud hasn’t been cited as a reason, government investigators might be pretty busy in a effort to discover why this problem occurred.

The Herald Tribune is reporting:

Within the next six months, it should be clear how regulators will proceed against those companies, said Michael Malloy, a former enforcement official of the U.S. Securities and Exchange Commission.

“Odds being what they are, somebody’s going to get hooked,” said Malloy, who now teaches at the McGeorge School of Law, part of the University of the Pacific. “From an investigative point of view, they’ll be looking at how much of this was the result of stupidity and misfortune and how much is broader manipulation.”

The broader manipulation could include failing to appropriately disclose the value or the risk of securities backed by subprime loans, which could constitute fraud, experts say.

Mortgage fraud is a bigger problem than most people think.

A good place to learn about all the various schemes and who is getting caught committing mortgage fraud is the Mortgage Fraud Blog, which can be viewed, here.

Herald Tribune story, here.