March 04, 2007

Swann-Dive: Phoenix and Las Vegas housing ponzi schemes and REIC fraud will now crash the world financial system


Combine massive mortgage fraud, incredible leverage, and a corrupt REIC and you get Phoenix and Vegas, the epicenters of the Late Great Housing Ponzi Scheme, and now the leading cause of the worldwide financial meltdown.

Thank you Phoenix. Thank you Las Vegas. Historic housing bubbles followed by devastating meltdowns. Couldn't have scripted it any better.

Millions will now go unemployed in Phoenix and Vegas. The local homebuilding-based economies will be destroyed. Housing prices will plummet. The illegal immigrant labor force used to build the homes will either go home or go on a crime spree. And hopefully Phoenix and Vegas will go a generation without another bout of stupidity and greed as seen in 2005.

First this note in my International Herald Tribune today:

Off the Charts: U.S. house price pain may be just starting
In the autumn of 2005, the biggest boom in home prices in the United States was in Phoenix. People stood in line just to get on lists to buy new homes. It was possible to make lots of money selling a place on a list well before the house was actually built.

At the peak of momentum in that market, according to the Standard & Poor's/Case-Shiller home prices index, house prices in Phoenix rose 49 percent in one 12-month period.

That was then. When S&P issued its final 2006 price numbers this week, it reported that Phoenix home prices rose just 0.3 percent in 2006. And it said that home prices peaked in June and fell 2.6 percent in the final six months of the year..

Las Vegas, with a 53 percent year-over-year rise in the autumn of 2004, set the mark for best annual performance. In 2006, prices there rose just 0.9 percent.

Then this word from the Arizona Republic today (thanks swift). Will Greg Swann go to jail?

Lawsuits targeting mortgage schemes

Big lenders and Wall Street investors are going after Arizona mortgage brokers, appraisers, real estate agents, title firms and home buyers for fraud.

Dozens of civil lawsuits alleging the gamut of mortgage fraud, from cash-back deals to lying about income on loan documents, have been filed against Valley firms and individuals during the past few months.

Fraud experts and regulators say the lawsuits are only the beginning as the fallout from mortgage fraud starts to hit the Valley.

Cash-back scams involve getting a mortgage for more than a home is worth and pocketing the extra money. The deals inflate home values and leave lenders with losses from loans worth far more than the house itself.

"Banks are going to force mortgage brokers to buy back bad loans, and mortgage brokers don't have the money so they are going to go under," said Richard Hagar, a national mortgage and real estate fraud expert with American Home Appraisals based in the Seattle area. "This is the beginning of the wave of lawsuits, lost licenses and criminal indictments in Arizona."

25 comments:

Anonymous said...

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Oh you just know none of this will be covered on bloodhound!

Greg Swan is gonna high tail it to Mexico I'm sure

And what's up with Catherine Reagor? Rolodex of Realtors is now on the mortgage fraud beat? Someone found Housing Crash Jesus!

Anonymous said...

Ooops.

Just because you're British, doesn't mean you're smart:

http://tinyurl.com/2aq2hf

Anonymous said...

"Greg Swan is gonna high tail it to Mexico I'm sure..."

That's the funny thing, these criminal masterminds think they can scam their ways out of indictments and convictions with the illicit gains they've made.

Of course, they're only confused in thinking they're on the same level as the banking elite that have LEGALLY rape, pillaged and plundered for centuries now...

Anonymous said...

I think you'll see Screwed Homedebtors sue the Greg Swans of the world for false representation and malice, and they'll win

Realtors take an oath to look out for the interests of their clients and they did the exact opposite

Anonymous said...

"Realtors take an oath to look out for the interests of their clients and they did the exact opposite"

It's not just the realtors, it's the American system of economics in general...

There's a spirit of desperation manifested in "I'm gonna get mine" that has became frantic as it appears that the party is almost over in America and that we've almost picked the bones of a once great dead industrial giant clean.

"Debt is good, fire-up the printing presses and dump money from helicopters" - Creed of the District of Criminals in Washington

Anonymous said...

More bad news on HSBC ,chk Times article:
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article1465662.ece

Pitsa

Frank said...

One thing about Phoenix is the realtors here are the most unprofessional and shady quick-buck artists of any market in the U.S. (well, except possibly Las Vegas). I'd love to see them start getting arrested for the blatant lies and breach of fiduciary duty they pulled on their clients over the past several years.

If they blame it on the NAR brainwashing, hopefully the judge will say "ignorance of the law is not a defense."

Anonymous said...

Hey, someone find Swann's ex-wife so we can get her to spill the beans.

Anonymous said...

it was a sad and tragic mistake for greg.. to take on hp

re is dead said...

The great thing is that even flat RE prices will cause a huge surge in foreclosures due to ARM's going off like ticking timebombs. When that $800/mo mortgage suddenly jumps to $2500/mo - OUCH!!!

Anonymous said...

HSBC is probably into this mess for over $200 bil so the writeoff is just the first 5%. It's ugly, damn ugly. And lots of the realtors were flippers too so there ain't gonna be much blood from them stones.

Anonymous said...

al-qweefer,

I don't know or care much about Greg Swan or any other realtor. They're all the same, morons and liars and should always be ignored.

I do know that commercial and road construction in Las Vegas is on a tear right now. Nobody's going hungry just yet in the construction biz. Quite the opposite actually.

Here's a story from last month about a shortgae of construction workers - and the looming labor shortage in general - in Las Vegas.

http://tinyurl.com/yqg5l3

And if you think it's just more MSM lies, fine think what you will. Within 3 miles of my home there are 2 freeway interchanges being built and a 3rd was completed this past October. Hwy 160, a major east--west road is being upgraded from 2 lanes to 8 lanes. A big box mall just opened and about 1/3 is still being built. The shopping center center most near me is being expanded, yet again. That thing has been under construction ever since it opened with new stores opening every 2 to 3 months. 2 gas stations are under construction, an Albertson's (grocery store) just borke ground. Two casinos are being built accross the street from each other and a 3rd which was opened in 2005 is expanding with another 600 rooms.

And this is not something unique to my area. Everywhere in the city it's the same story, construction as far as the eye can see.

Add to that a new terminal at McCarran Airport being built and the construction of a brand new airport starting in 2010 and there will be enough cosntruction activity to more than make up for the residential housing slowdown.

I also know that in my neighborhhod homes are selling for the same price as a year ago which is 100% more than than what they were purchased for initially in 2001. The volume of sales is down, no doubt about that, but homes are still selling. Jan and Feb his year there were 123 sales in my zip code. Last year for Jan and Feb there were 142. Not exactly the end of the world.

Here is the data.
http://tinyurl.com/2qyzru

Oh I'm sure someone will chime in with the comment that the median income in Las Vegas is $4 an hour or whatever the BLS numbers say and the ratio os income to housing is too high, bla blah blah. Of course those numbers are base pay and forget to take into account that 2/3 of the jobs here are tip based which are not included in the BLS numbers. And those numbers also don't take into account that most of those jobs are cash based meaning no tax is paid.

Every 10 years or so the pessimists write off Las Vegas. Every 10 years or so they shake their heads in dibelief at how wrong they were as another 250,000 people move here. And every 10 years a new crop of pessimists thinks this time it's different. Looks like Keith and Co. are this decade's Las Vegas poopers. And no, this time it's not any different.

Anonymous said...

And where is Vegas getting all the water for these projects ?

Anonymous said...

The thing that will kill the Southwest is water--or lack of it. Vegas has very little rights to the Colorado River. Vegas is doomed by demographics too. Have you noticed who is doing the gambling in these behemoth casinos? Look around next time you go. It's people in there 50s, 60s, and 70s. Yeah there are some Gen Xers, but you don't see a lot of gamblers in their 20s. The younger generation gambles online now, and is more interested in games like poker. They know all the other gambling games, especially slots, are rigged. Once the Boomers die off, Vegas will lose a huge chunk of its clientele, and the easy profits that come from gambling. To survive it will have to morph into some Disney-esque and Broadway-esque type town.

Anonymous said...

ahh yes the no water argument....yaaaaawwwnn. So 1991. Like the powers that be at MGM Mirage or Boyd will allow Las Vegas to go dry and throw their billions of investment dollars down the toilet. Harry Reid the Senate majority leader is from Nevada. The other Senator from Nevada Jon Ensgin used to be CEO of Mandalay Bay. The Clark County Commisioner is Harry Reid's son. The current governor was a US Congressman for 10 years. As corrupt as politics is here, one thing is always for sure..casino money buys anything it needs. If you think between all of those politicans, their connections and the hundreds of billions of dollars sloshing around Las Vegas, the city will be allowed to go dry then you are all very stupid and/or naive.

And people people in their 60s and 70s. OK if you say so. Reality as usual and what is said on HP are two separate things. 60% of visitors are under 50.

http://www.insidervlv.com/
visitorstatistics2.2005.html

And despite what the HP crowd thinks, gaming revenue is less than 30% of revenue these days county wide.

Sounds like you people are talking about a Las Vegas of 1985. A Las Vegas of $1.99 buffets and $29 rooms and 70 year old visitors playing the 5 cent slots. Get with the times folks those days are looooong gone and replaced by $300 rooms, $30 entrees, $150 shows and $25 table minimums.

None of you would know this. After all spending $300 on a hotel room goes against everything you stand for...living a life on the cheap.

Anonymous said...

To borrow from Jim Kunstler - Las Vegas - Utopia of Clowns

JAFO said...

Since you mentioned Greg Swan in your post I thought it was time to check in with the bloodhound gang. Sad to report that he appears to be down to 2 listings, both of which are crap, especially the SFH on N 57th Dr. For a laugh, check on the link and view all the photos. The place is a complete dump and the photos chosen to market it are a riot. The place is listed at 200K and wouldn't be worth more than 85-90K in a normal, sane market. The lead post on his blog, as of right now, is his weight-loss contest with other fat realtors. Don't worry Swanny, after the market is done with you, you and all your ilk will be a lot thinner.

JAFO

trashwacker said...

You have no self-esttem if you call Las Vegas your home...that and shopping at Wal-Mart brands you a permanent member of the underclass.

Anonymous said...

As much as I don't like lawyers they will I hope go after these bastards. That is the only thing companies understand - I don't know why - what ever happen to the golden rule?

Anonymous said...

Hope the fraud guy from Seattle gets going on the fraud in his own backyard soon.

We need your attention up here sir!

Anonymous said...

Frank-

the Seattle realtors are lying scum too. Probably every way-too-bubbly city has their fair share.

It's been the only way to play the game for the past 10 years. Or at least they seemed to think so.

Telling people there were other bidders even when there were not

Insisting that people stretch "just a bit farther" to buy their "dream home".

Constantly yapping about "building equity", it's foolish not to buy, etc.

Total, lying, stupid scum. Blech. Good Riddance.

Frank said...

Mr. Las Vegas,

I lived in Las Vegas for five years before escaping.

What you fail to realize is that *every* city has never-ending road construction. Vegas is no different in that respect, and because it's such a small city, it has far less construction than most others.

However, the issue with Vegas isn't the housing crash, or the fact that a big chunk of the population is old and about to keel over and die. The problem with Vegas is that it's become a scum town and no money or class wants to live there anymore.

I left Vegas for plain-vanilla, soul-less Phoenix and even that is miles ahead of Vegas. The restaurants are better, it's 4 times bigger, there are actually real neighborhoods, people are friendlier and classier, there's a whole lot more money, and there's a real economy outside of gaming.

In Vegas you have 5 square miles in Scummerlin and 5 square miles in Green Valley that are liveable, and the rest of it is gangland scum. That's why it's finished. 10 years ago it was a nice place to live and work. Now it's a cesspool of gangs, drugs, violent crime, traffic and smog. Essentially the worst of LA packed into a tiny 8 mile x 10 mile town.

And with government land surrounding it on all sides, it has nowhere else to grow, making it even more crowded and dirty.

Sorry dude but Vegas is done.

Anonymous said...

Come Monday MSM will be on this like white on rice. THe markets will force the issue.

Anonymous said...

frank,

Las Vegas has more than its fair share of shitty areas, crime and gangs. No argument there. Show me a city of 2 million that doesn't. It's all about where you live.

The use of the Scummerlin is a dead giveaway of the typical 10th grade dropout resident of the city who could never in his wildest dreams afford to live in Summerlin. I would guess you lived around Tropicana and Rainbow. And yes that is a gang infested area. If that is all I could afford I'd leave too, believe me.

I moved to Las Vegas in 2001 and lived in Summerlin for 2 years, then moved to Seven Hills in 2003. In the 6 years I've been here, I've had no gang issues and no crime dude. Unlike you I don't live in the ghetto, hence I am not exposed to the ghetto element. Unike you I don't live among the Mexican casino working population. My neighbors are 95% white and preofessionals for the most part, just like any other suburb in the country.

I don't work for a casino, never have. This whole notion that everyone who lives here is a card dealer is just plain wrong.
I can't think of anyone who works in a casino that lives by me. My immediate neighbors are a dentist, a middle school principal, a Southwest pilot and a UNLV administrator. Most women in the neighborhhod don't work. My wife hasn't worked since our baby was born and probably won't go back for a few years. In other words, an upper middle class neighborhood that could be found anywhere.

As for Phoenix...

every 2nd post here is about Phoenix and the awful traffic, awful pollution and most often how there is no money there and everyone's faking it. Now you come on here and say you moved to Phoenix to escape traffic, escape pollution and to live in a city where there's real money? Make up your minds people.

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