Realtors haven't eaten in months. Mortgage brokers, those not yet laid off, probably are looking at their leased Lexus and wondering how many more weeks they can go until it's hauled away.
Homebuilders show up to work and don't see a soul all day, as they sit amongst a sea of unwanted spec homes.
With the housing disaster in full swing, and more desperate by the day, I've gotta believe that fraud is even more likely at this point in the cycle, as realtors, appraisers, builders and mortgage brokers do just about anything, ANYTHING, to get a buyer approved, a commission earned, and dead inventory sold. And watch desperate flippers start burning things down, hoping the problem just goes away...
Here's a recent report on fraud and desperation:
The idea that lenders are doing things they may not have done in "normal conditions" may have some merit for some lenders, but when 40% of the loans sold in California before the bust were either stated income loans or pay-option ARMs, I think the idea is more fiction than fact.
Anything and everything was done to keep the bubble booming, and that was, as I said, happening well before the bust.
With every bubble comes fraud. The two go hand in hand, and housing is not unique in this respect. We are only beginning to scratch the surface of the fraud that supported this bubble.
“Who will the housing crash affect? Everyone. Real estate agents will be first. As a group, they’ve made a ton of money during the housing boom, and they’ve spent millions on new cars, vacations, restaurants, clothes, and everything else that comes with excessive discretionary income. That’s over now. Agents are not buying the luxury items that helped feed the economic boom, and they are cutting back on business spending like advertising and marketing. That hits the vendors and newspapers revenues.
October 19, 2006
Will fraud spin even more out of control during the housing downfall?
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9 comments:
Kieth,
Didn't you use this picture before? I think that the new bankruptcy laws will motivate many of the borrowers that are in way over their heads to get "creative".
My guess is that people will get insurance to cover the mortgage and then have a fire or some other version of that. Or if they are low wage and got in with a liars loan, whats to stop them from not just walking away but running and hiding while changing ID's. If illegals can buy a house and get illegal Soc Sec ID #s what is to stop an American who wants to hide from a bank that he or she owes a half a million dollars to.
Nope. The horse it out of the barn. Fraud going forward will decline. Now is the time to lock the barn door on fraud and thus even legitimate transactions will decline placing further pressure on past illegal deals. Classic govt regulation pattern in play. Too much, too late to punsih the too slow and too honest.
yes but according to fractional reserve banking, not inflation adjusted for inflation, both the lender and the borrower have the same amount of money,only the banker can loan 10 times more on it!!??
The consumer debt implosion has taken longer than I expected. The Fed might be able to fool everyone for a while longer at the rate.
I wonder in the Dow is being manipulated by the Fed or the PPT? How in the world does the stock market increase when earnings are decreasing and business' lower expectations. It makes no sense.
The market can stay irrational longer than you can remain solvent.
Sounds like a Fraudian Slip.
But seriously - did anyone see the article on the dramatic drop in bankruptcies owing to the changing rules? From 600,000 a couple of years ago to about 200,000 now, IIRC. It's not like those 400,000 people are better off. Apparently they can still file the chapter that offers less protection and forces some good faith payments - but a lot of people don't realize this. Either way, the new BK rules are designed to help credit card co's.
The biggest fraud by far is in the area of RE appraisals. It has been going strong since the mid-'90s, and nowadays it's rare to see any appraisal come in that doesn't allow the deal to "work".
Will anyone go to prison because of it? Hell no.
Creampuff, Didn't you see credit card companies weren't being helped as much as thought? It's the auto finance industry that's liking the new bankruptcy rule.
CNN Story
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