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.
Sj
RSS Headlines
Fool UK