Use access key #2 to skip to page content.

TMFBent (99.18)

Fraud, the RE bubble, and why it's got lots of downside left



November 16, 2007 – Comments (7)

Blown Mortgage alerted me to this amazing story. The summary: 2/3 of units in a 640 unit Miami Condo in foreclosure as a result of cash-back, straw-buyer mortgage fraud.

The dubious transactions all fit a pattern that Theobald said should trigger "bells and whistles" for law enforcement anywhere -- time and time again properties that failed to sell for months when listed at around $450,000 were pulled from the market and then suddenly sold for more than $800,000.

These kinds of frauds, by the way, were rampant across the country during the entire housing Ponzi scheme, driving up prices even in places like suburban Georgia, Indianapolis, Ohio, and Minnesota. (Subscribe to the RSS feed at the Mortgage Fraud Blog, and you'll get a daily update on this stuff.) Those "healthy" and "fundamentals" driven gains that serial fibbers like NAR were crowing about were built not only on easy money and stupid, old-fashioned speculation, but on widespread thievery like this. (Snowflake was not alone in making sweet -- but often illegal -- cash back deals under the table.)

Just another reason that housing has a LONG way left to fall, especially in the markets that were hottest, where housefraus, xbox-playing 20-somethings, and busboys were "making" millions in real estate.


7 Comments – Post Your Own

#1) On November 16, 2007 at 8:12 AM, wingedcreat0r (41.53) wrote:

I remember years ago when just about everyone I knew was going to real estate license school, just to sell part time.

Report this comment
#2) On November 16, 2007 at 8:41 AM, Gtrinvestor (93.75) wrote:

I used to live in Florida, and these exact scams were being perpetrated in my neighborhood.  I thought is was a "one-off" situation, as I never really heard anything publicly about it.  But alas, it was just a loose thread on a sweater... once you start tugging on one string the whole sweater comes unthreaded.

Report this comment
#3) On November 16, 2007 at 12:32 PM, TMFBent (99.18) wrote:

correction to the first line above. Only 1/3 of those condos deals are suspected of being crooked... Still amazing.

Report this comment
#4) On November 17, 2007 at 12:38 AM, abitare (29.56) wrote:

Good post. It is still amazing the amount of building that is still going on. I am sticking by my guess of 40-70% drop in real estate prices from 2005 peaks.

People will be paying for the loses for decades.

Report this comment
#5) On November 17, 2007 at 9:38 AM, GS751 (26.69) wrote:

yes my kids (I am not married and wont be for a long time) and their kids will be paying for some of this stuff.

Report this comment
#6) On November 17, 2007 at 7:01 PM, dwot (28.86) wrote:

There seems to also be a lot of fraud in insurance.

Report this comment
#7) On November 18, 2007 at 4:39 AM, abitare (29.56) wrote:

Real Homes of Genius: Riverside 40 Percent Off! 980 square foot home for $209,900.

FYI - 40% price drop in a year, Southern CA

Report this comment

Featured Broker Partners