The mortgage crisis was caused by malfeasance in both the board room and the boiler room. From the arrests of Bear Stearns' hedge fund managers to the widespread sweep of small-time crooks for fraud, the government is taking strong action toward prosecuting those responsible for the current credit crunch and over $350 billion in Wall Street write-offs.

Let the healing begin.

Two former managers of hedge funds at Bear Stearns, Ralph R. Cioffi and Matthew Tannin, have been charged with securities fraud on email and testimonial evidence that they misled investors about the health of the funds they were managing. While expressing their doubts about the health of their hedge funds to employees and others, they allegedly failed in their fiduciary duties to investors by letting them know the facts. The funds were heavily leveraged, causing not only the investors but the company itself to go into bankruptcy when the subprime loans failed to perform.

The names of the funds should be enough to put them in jail. High Grade Structured Credit Strategies Fund and the High Grade Structured Credit Strategies Enhanced Leverage Fund obfuscated the fact that the funds were loaded with the purchases of high risk subprime securities.

In similar news, the FBI and the Department of Justice have commenced with the arrests of over 400 people in major cities across the nation for their roles in committing mortgage fraud to consumers.

The reason this is important is that the secondary market for buying mortgage-backed securities is crucial to keeping mortgage money flowing. Banks make loans, and then sell them to investors in the secondary market. As they are repaid for the loans, money is available to new home buyers.

The collapse of the Bear Stearns and other funds has caused investors to lose faith in buying mortgage-backed securities. By purging the fraudsters, the government and banks are sending a strong message that today's mortgage loans are much safer bets.

When the secondary market's outlook improves, so will bank lending to consumers. And this market will be on the road to recovery.

Published: June 20, 2008

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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.