Housing Finance Fraud

[piasabird]

Here is the article:

http://www.cnn.com/2007/US/09/...raud.heroes/index.html

This article lays our a method people were using to over-invlaty the value of a house to 200% by the estimator, and then allowed people to buy the house for twice what it was worth pay off the bank and then force a foreclosure.

This is a really evil plot. If these people were in your neighborhood, then the value of housing would be artificially inflated. Then your taxes go up. Then a whole bunch of foreclosures might appear in your area or even on your block. Thugs move into houses and then your property value goes down.

Isn't this just a lovely scam? Too bad some people got up to 30 years in the slammer.

 

[Starbuck1975]

In Southern California, such Ponzi scheme real estate rings were almost common place...and were part of the equation in the magical appreciation of real estate over the past 3 years.

There are several real estate blogs on the net now that highlight such maneuvers, and it blows my mind that these people were able to get away with it, and make a hefty profit in the process.

This is why many people, such as myself, are very much against a government bailout for the ever growing foreclosure crisis...sure, some families walked into dangerous loans due to unethical lending practices, but the speculators, flippers and real estate collusion rings were the real problem...and I don't want to see any of the latter group walk away from the mess they created without getting singed a bit.

 

[Lemon law]

Such schemes are really the lender beware. I have little sympathy for the lenders but I think the scammers should have the book thrown at them. And perhaps some regulations are needed. The appraisers who inflate the values should be held personally liable if the law does not jail them.

 

[Vette73]

200%?? You are not good at math are you.

 

[piasabird]

House costs 200,000
Estimater values house at 400,000
That is 200%

 

[Vette73]

Originally posted by: piasabird
House costs 200,000
Estimater values house at 400,000
That is 200%

NO, that is 100% increase.

See if something has gone up 100% that means it DOUBLES.
My $200 investment went up 100% this year to $400. If my investment had went up by 200% it would be $600.

 

[piasabird]

I never said it was a 200% increase, I said they valued the house at 200% of its value, cant you read?

 

[bsobel]

Originally posted by: Marlin1975
200%?? You are not good at math are you.

Actually, I your're not good at reading.

 

[Lemon law]

I agree, piasabird was accurate in stating it the way it was stated. Marlin1975 was accurate in stating the way he stated it, but had to change the original semantics to create an error when none existed.

Which still distracts from the fact there is much money to be made in the giant difference. All the con artist needs is a crooked appraiser. What I would like to know, is what fraction of such schemes are actually caught and convicted?

 

[alkemyst]

this was derailed quick. WTF is a $200 investment anyway...that's just dinner out.

When I was looking for homes over the last few years I keep seeing the same companies on titles. They weren't going to foreclosure with them (although now they may be). What they'd do is go in to the prime neighborhoods near newly built communities that most were overlooking 3-5 years ago. They'd buy up all the bargains.

They'd then buy each other's properties from each other to resell again at a higher mark. As they did this their other properties increase via the comparables.

I called a few on this. It was making it hard for me to buy at a proper price. Eventually it was so rampant I gave up. People were paying 3-4 times more than the value the same home had 1-2 years prior. It was INSANE. Not most of those people are stuck upside down if they sold today.

I finally bought a house at $250k. It's a nice 1788 sq ft home, but nothing like the one I bought in 1995 for $118k on a 1/2 acre, waterfront with pool and 2 car garage (I have a 1 car detached garage now which I think is better). My previous home was about the same under A/C dimensions but had about another 1000 sq ft of patio and non-a/c areas.

My house I think fair market value would be closer to $175k-200k in reality.

 

[imported_Shivetya]

Originally posted by: Lemon law
Such schemes are really the lender beware. I have little sympathy for the lenders but I think the scammers should have the book thrown at them. And perhaps some regulations are needed. The appraisers who inflate the values should be held personally liable if the law does not jail them.

you do realize if you borrow any money part of the costs you pay are to cover these scammers. So you essentially have little sympathy for yourself. You apparently don't care your paying for someone else's thieving. amazing