July 21, 2006

The stench of housing bubble fraud

Nice to (finally) see the MSM reporting this stuff. Johnny come lately, but better late than never. Thanks trex for the link.

There's been so much fraud and deception out there, for years we're talking, that it'll take a decade to wash ourselves clean I think. And for goodness sake, when will the Congressional Housing Bubble and Fraud hearings start already?

Attack of the real estate rip-offs - Urge to cash in on the housing bubble has spawned an industry of schemers

Every boom has a dark side. The merger mania of the 1980s produced insider trading scandals. The ’90s stock bubble was busted for biased investment research.

And so it is with real estate, the hottest market of the past eight years. The urge to cash in on rising home values has spawned a growing share of hucksters, schemers and rip-off artists.

So far, it is tough to know exactly how widespread the problem is. Just as conflicts with stock analysts and bankers didn't come to light until after the Internet bubble popped in 2001 and investors started to get hurt, only now, as the market starts to turn, are complaints over shady real estate practices pouring in.

The market was so hot that everyone was looking to jump in and make a fast buck,” says Martin. “You have a lot of property flipping and false appraisals.”

Stripping people of their home equity has become rampant in the subprime lending market. Credit-challenged home owners who often don't know exactly how much home equity they're sitting on are easy targets, says Allen Fishbein, director of housing and credit policy for the Consumer Federation of America.

“It's pushed by mortgage brokers, who are largely unregulated,” he says. “They have no fiduciary duty to the borrower.”


autofx in Phx said...

The housing bubble has made it into the mainstream media, FINALLY.

Now that it has, TAKE COVER, and if you happen to be someone who has been smart with your money, stay quiet and humble, because the masses are going to go crazy. I expect to see more road rage, spouse homocide, suicide, realtors and/or their clients going "postal", etc. You wouldn't want to provoke some of these maddened people into a fit of jealous violence by rubbing their faces in their own greed and stupidity.

Those who are underwater with their "investment" properties are already cashing in their 401k's, I'm sure, which of course is not helping the stock market. This will continue to snowball in the coming months and probably years.

Lots of smarty-pants people who thought they were on top of the world a year ago will be selling their Rolexes, their Hummers, the fancy rings they bought their wives, their boats, their big screen TVs....so look for the bargains you'll be able to get on used luxury items, on top of houses possibly becoming affordable again.

Anonymous said...

When these homeowners find out they have been "had" by the lenders,who dropped all ethical lending standards with no downs etc. you will see a uprising that will make Paris seem mild. The lenders new from the start that the homeowner could not walk away with their refin,teaser adjustables as they new the passing of the new bankruptcy law would take place due to their millions of dollars spent for "new laws of enforcing judgements" against these naive homeowners. Granted, some buyers were also greedy investors too. The day of reckoning is coming soon. When these homeowners know they have been had, they will strike out at the government, lenders who hoodwink them. When they lose their homes and realize their "still hooked for their loans", riots will result. Bank on it.

Why they call them riot guns said...

Yup. i was talking with a old guy who was cutting the grass on a house across the street that he inherited. he thinks we are headed for a depression. He said a couple of people he knows who lived theough the 30s and remember - also think we are headed into a depression. Oil, heat waves, hurricanes, muzzie terrorists, dollar collapsing, housing ATM going dry, credit cards maxed out with rising interest, bk laws changed.

After that Duke lacross thing there were a bunch of "black muslims" marching there. They all had uniforms. I wonder if there is a big underground malitia that could emerge?

Guns, dogs, cash, gold (squirrelled away in multiple stashes), maybe food and water if you have a way to store it. i hope it doesn't come to that nationwide. I could see it in cities like LA. Remember NOLA was a glimpse. So was the South central LA riots.

foreclose_me said...

If the USA is so key to the world economy, how can the government allow order to collapse in that manner? Foreigners would take massive losses. It is more likely there would be a bailout; just enough to keep the world turning and people paying.

Free for all (every man for himself) said...

The gov't is broke. The country is getting bought by foriegners who have 5% of the estimated USA worth in cash (Buffet). That number increases 1% per year at $500B trade imbalance. When the economy tanks there will be less tax revenue and we will still be at war with the muzzies. How will the gov't bail out anyone? Do not see it.

autofx in Phx said...

If the USA is so key to the world economy, how can the government allow order to collapse in that manner?

The government HAS been doing everything it can to prevent collapse, especially since 9/11. The lowering of the Fed rate to 1.0 for most of 2004 was one of the main things that was done to try to prevent complete collapse. It worked, at least for a while. The stock market liked it, and some home flippers did very very well, but it created a monster that most likely cannot be contained now. It hasn't helped at all that we are spending insane money in Iraq and that we have let our national budget deficit swell obscenely along with the trade deficit.

The US govt only has so much power. It cannot intervene for someone who desperately needs to sell their overpriced home. The house market is not one that can be easily manipulated once this stage is reached.

If things could be done, they'd be done, but now I believe our policymakers realize it has to let the suffering begin to be able to have any chance of resetting the system to a healthy equilibrium. Those who haven't played their cards well since the tech stock bubble that started in the mid 90s are beyond help.

Anonymous said...

The gov't owns the $ printing presses. They are NEVER broke. Understand? If you could print new money when you ran out would you? Exactly. And who is to stop the US. Gov't from printing more $. The US debt is a totally meaningless #.

Anonymous said...

I love the stench of dead realtors in the morning.

Anonymous said...

Guys, this is America, there will be no organized long term uprising. When WWI veterans tried it back in the depression era in DC, MacArthur sent in the military, shot at the masses, and sent them home (whenever home meant back then). There's no Paris uprising, Lenin/October revolution or any of that stuff in the US.

What will happen is gang violence on the former middle class, the rich living in secured neighborhoods, and a situation not too different from Johannsburg, SA but with money (cash, precious metals) being the prime differentiator than racial categories like in the post-Apartheid country.

The govt will do everything in its power to perserve the dollar on the forex and thereby, allow housing to fall off the cliff, and into the grand abyss. The USD is the key to the ability for the US govt, the various commodities/oil exchanges, and the other central banks to do their business. Over the decades, however, these international organizations will slowly divested themselves of their dollar denominated holdings and the US will slip into a faded British Empire type of appearance but with probably less financial clout than London has today on its continent. At that time, the Pacific Rim nations, with China as the lead, will be the leaders of the world economy and the US may have to go back to agriculture, minerals, and coal exporting for its sustainence. It's not a pretty picture but it does beat being a Chad or Central African Republic.

BTW, I think the cold war helped Britain in finding a bottom to its falling empire (1945 to 1975). I don't imagine it becoming a European financial and service center capital without the US cold war efforts to keep eastern Bloc countries out of the world's economies.

SittinPattSanDiego said...

Wait till they find out that their loans are "NOT" THE NO RECOURSE TYPE - NO STEALING AWAY IN THE MIDDLE OF THE NIGHT - YUP CHECKMATE - I hear the sound of crashing portfolios - no money - banks hounding you - old lady rubbing in what a dope you are - WELL WHAT YOU GOING TO DO NOW SMARTY-PANTS? should have listened to the OLD Farts that tried to warn you...

Maine Real Estate Fraud said...

You want to see real estate sleaze - come to Maine!


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