November 14, 2007

Foreclosures, mortgage fraud and crime - welcome to America, post-housing-disaster


These two stories really sum it all up. Rampant mortgage fraud, cash-back-at-close scams, realtors, mortgage brokers and appraisers on the take, and now cities (and homedebtors) are paying the price.

Prepare to cringe. Post-housing-crash America ain't gonna be too pretty.

Empty Houses Home to Crime As Loans Fail - Neighborhoods Suffer As Crime Follows Foreclosures Into Vacant Houses

Eighty-five bungalows dot the cul-de-sac that joins West Ontario Avenue and East Ontario Avenue in Atlanta. Twenty-two are vacant, victims of mortgage fraud and foreclosure. Now house fires, prostitution, vandals and burglaries terrorize the residents left in this historic neighborhood called Westview Village.

"It's created a safety hazard. And if we have to sell our house tomorrow, we're out of luck," said resident Scott Smith. "Real estate agents say to me 'We're not redlining you, but I tell my clients to think twice about buying here.'"

"They've seen a lot of prostitution in the area, vagrants wandering in and out of the empty houses and drug activity," said Officer Dakarta Richardson of the Atlanta Police Department. "Some people that I talked to are afraid to walk out of their homes at night."

During the boom, the suburb just south of Sacramento sprouted 10,000 homes in four years, attracting investors from the San Francisco area. Now many houses stand empty, weeds overtaking lawns, signs lining the street: "Bank Repo," "For Rent," "No trespassing -- bank owned property." A typical home's value has dropped from about $570,000 to the low $400,000s.

Miami condo at ground zero in mortgage fraud

At first glance, the 43-story building in Miami's international banking district seems little different from other high-rise condominiums overlooking the turquoise waters of Biscayne Bay.

But the 643-unit condo known as the Club at Brickell is a leader in mortgage foreclosures and it appears also to stand at ground zero in a blizzard of fraud that may lie behind many of the failed loans threatening to bury the U.S. property market.

Mortgage scams involve a cartel of inside players -- colluding property appraisers, real-estate brokers and accountants willing to draw up fake income statements and tax returns -- who recruit people with good credit histories to serve as a decoy or "straw buyer" in a real-estate deal.

The conspirators inflate the price of the property, to get the biggest loan possible, pay the sellers the original price and then pocket the excess loan money as "cash back" at the closing of the deal.

Doug Dewitt, a real estate broker contracted to work with several lenders on the valuation and disposal of foreclosed properties, said nearly 70 percent of the sales or closings at the Club over the last 18 months were questionable.

That works out to more than 200 possibly shady deals in a single building, he said.

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.

31 comments:

Anonymous said...

Brickell Avenue has 3-4 other high rise condo in the same boat.

They are all straw buyers. The names and SS #'s are taken from property managers tenant lists in the Miami area. Get a manager to give you his tenent's personal info and you have all the straw buyers you need. . .

I noticed no one mentioned meth labs. . . .

Anonymous said...

Hey Keith-is there a reason why the name of the city South of Sacramento was left out?

strawberry waffles w/toast said...

* BLIZZARD OF FRAUD TOUR 2007 *

with Angelo and the Orange Heads,
Suzzanne and the Liars,
The Texas Dumbya's,
and special guests:
Ben and the Crash Test Dollars.

Tickets now on sale!

.

Anonymous said...

I know personally this was happening down there, but it's not limited to just miami either. The whole south florida is like that from West Palm Beach to Miami(including Fort Lauderdale) then up the other side from miami to tampa(naples,fort myers,sarasota) I was approached by some people to do this type of activity (since i'm an appraiser besides a RE broker)to inflate appraisals to get them the $$$$ I never did it!! I felt like I was selling my soul and also I felt like if I did it once then from that point on this is why I will be called for this point on! I never did it!!! But I know personally it happens especially in the CUBAN corrupt miami. It is the CUBAN way down there!!

Anonymous said...

There is a lot of talk about whether their are any innocent victims of this mess, I think you found one in that first story. I doubt there will be any government bailouts for him.

DC Williams said...

Funny thing though about Atlanta ... it never really participated in the real estate boom. Housing prices rose moderately and steadily since the late 1980's (the time when I moved here) but there's been no big run up in the previous several years like in other areas. The last two homes in my upscale, northern suburbs subdivision($350,000 - $450,000 homes) that went up for sale were on the market less than 21 days each. No one in this area is having a problem selling homes and they are still reasonably priced. The article was about an inner city area which is not representative of Atlanta metro area as a whole. There was a lot of speculation down there.

I'm not a contrarian ... I do see the housing bubble has affected many area such as Destin, FL where I started looking at condos three years ago but found the rental income to mortgage/taxes ratio was WAY unfavorable. Prices of condos in that area have dropped as much as 45% and they are getting close to affordable again.

Frank@Scottsdale-Sucks.com said...

Sounds like South Scottsdale. It was already rampant with crime before the bubble and now it's just getting completely out of control. Especially with corrupt city government and P.D. that refuses to patrol neighborhoods and only ca$h in on traffic enforcement instead.

Anonymous said...

"Mortgage scams involve a cartel of inside players -- colluding property appraisers, real-estate brokers and accountants willing to draw up fake income statements and tax returns -- who recruit people with good credit histories to serve as a decoy or "straw buyer" in a real-estate deal."

82% of mortgage fraud cases involve some kind of no document loan. Most of these loans would never have been made five years ago. Fraud became too easy because of lax lender standards and Wall Streets shell game.

Edgar said...

That is what 90% of America will look like after Bush is done. Run the traitors out of the U.S.!

Anonymous said...

That works out to more than 200 possibly shady deals in a single building, he said.
---

WOW! and nobody noticed until now??

Anonymous said...

WOW - lot's of angles to this story...the scariest thing is the decimated neighborhoods and the other home debtors who planned for the long haul. Squatters etc are ruinous.. and the crime is going to be unstoppable...side note in San Fran: there are a lot of condos still priced too high coming on the market in the Bayview/Hunters Point area - sorry but it's a complete ghetto - un believable crime and no one bats and eye...the property down there - seems like everything is for sale. It would be nice if it were only hookers and passed out druggies, oh no...it's the gangs. Scary, scary people....the cops are completely outmanned and outgunned. Complete anarchy wait til they take those houses over.

westwest888 said...

Yeah, don't worry about it guys. All the way at the top of this pyramid, some analyst on CNBC made a comment that the losses aren't a big deal for banks because they're zero sum. He implied that Bear Stearn's $5B loss is Goldman's $5B gain. Yeah, they're zero sum except for the ones that aren't. When $12 trillion in real estate is worth $8 trillion five years later, there's a lot of instruments that go to hell.

resisting husband said...

Yup. see it every day. the house two doors down from me is in some sort of legal limbo, and has been empty for a year (by empty i mean the owner or paying tenants in it)

Now the windows are all broken, and their are by my estimate 2-4 different bums using it for shelter. The backyard has what appears to be a stripped car that was dumped there. its a great thing to have in the neighborhood.

Andrew Hac said...

Comrades:
See what have happened when McDonald's hamburger flipper, Pizza-Hut deliverer, Circuit-City sale clerk are attempting to pursue the Americano's dream ? Disaster and fiasco are exactly what they get. I repeat again: Purchasing and owning a house is a privilege for the fews, not a right for all human being on Earth at large and all Americano (legal or illegal) at near in the land of the Americano. If a person was born and destined to be a Joe-6-pack or Jane-Zinfandel, then Joe and/or Jane do not have the privilege to buy a house. I t is as a simple as that. Joe + Jane = no house. Houses are meant to be bought and owned by the educated, the intelligent, the white-collar, the upper level of society. No Joe and/or Jane is allowed to be in the hall of the "Home Ownership Society". Yup, it is a tough life so you better get use to the harsh reality.

Anonymous said...

I suggest you all watch this:

http://video.google.com/videoplay?docid=%204675077383139148549

When you see all of the connections between the banksters and those in power in a historical context things start to make much more sense.

For example, why does the private Federal Reserve System even exist and why has the government done nothing to regulate mortgage lenders and has even encouraged the wreckless lending practices that created the bubble?

Anonymous said...

THANK YOU GOP

Anonymous said...

All those greedy Reupblicans ran up the prices in San Francisco and drove the families out.

Anonymous said...

Thanks for the picture of the future White House in the relocated US capital of Cleveland..

You can paint over "crack" and repaint "White". This is all that's left after George and Dick get through. Ben will need to have all the mirrors removed or face mental breakdown. Alan will need to stop taking his ugly and denial pills. Condee back to work as second grade civics teacher in South Philly.

Would you rather have maybe little discharge on an intern's dress and a dubious cigar placement or face possible Armaggedon and a Fiscal Depression of Biblical proportion? I'll take a sex maniac over a stupid dunce any day...

Or, as Ross Perot asked: Would YOU loan ANY one of these people any money?

Sick and Dying USA

Princess Mononoke said...

Andrew Hac said...
Comrades:
November 14, 2007 8:07 PM

Dude, you can't be for real?!?!? You must be looking/fishing for a response. However in case you are serious, I have to say that you are a JOKE!

Princess Mononoke said...

Yep, I've been following MortgageFraudBlog.com for a couple of years now. Thousands have already been caught and have or are being prosecuted. The fraud was not limited to a few areas, it's national!

I don't feel sorry for the straw buys. They knew exactly what they were doing and got paid for their participation.

Princess Mononoke said...

As for the empty houses... Wow, I shudder to think about the 100,000s of homes that will be empty next year!

That's why I don't understand why on earth "The Power's that Be" would intentional delay the correction process. The more we prolong this situation the worse it will get. The more housing supply on the market just means it will tank even further than expected.

I know I know "The Power's that Be" are waiting to receive their year-end bonuses and then bail and leave US with the $h*t to clean up!

Anonymous said...

All those greedy Reupblicans ran up the prices in San Francisco and drove the families out.

November 14, 2007 9:58 PM

1. Learn to spell. It is
R-E-P-U-B-L-I-C-A-N
2. Get over your jealousy. It will eat you up.
3. Sell your video games
4. Get a job. No, I mean a real one.
5. Buy a foreclosed home at incredible discount prices.

Anonymous said...

What I find interesting is that even though there are prostitutes working out of the houses drug addicts and squatters all over the place the story still sights that prices are in the low 400 000. Who would pay that much for such a shit hole. Unbelievable. Lets say 20 thousand with Charles Bronson from Death Wish as my neighbor and then maybe.

Anonymous said...

Yeah...like this only happened in Miami.

Remember...Miami was the first place that they admitted that there was a bubble...then...the rest of the country followed suit.

Fast forward to today and the news stories are stating that fraud was out of control in Miami.

How much you wanna bet that we will see the same gig in every city that built a ton of condos over the next couple years. Las Vegas, Seattle, San Diego and on and on and on.

Miami doesn't have a monopoly on greed...humans do.

Anonymous said...

Abolish the Federal Reserve, and
YOUR living standard WILL GO UP.

No IRS, no Federal taxes.

For those that DO NOT UNDERSTAND this, is a product of the dumbing down of America (ie. 99% of Americans).

You ignorant American sheep should be so proud. You deverse ALL the financial pain and ruin...Then, and ONLY then will you get your head out of your ass.

snicker.

Anonymous said...

.


Hey, where da white wimmin at?



.

Anonymous said...

"Now the windows are all broken, and their are by my estimate 2-4 different bums using it for shelter. The backyard has what appears to be a stripped car that was dumped there. its a great thing to have in the neighborhood."

Nice. So why not burn it down?
Vigilante is not so ugly a word - we the people might just have to take personal responsibility for cleaning up this mess.

-Snow

Anonymous said...

Welcome to America, where you're better off as a criminal than an honest citizen.

It's over. Unfortunately, the same thing already applies to the next world power, namely China. God knows what they'll look like after it's their turn to cross the Rubicon.

Anonymous said...

I was approached by some people to do this type of activity (since i'm an appraiser besides a RE broker)to inflate appraisals to get them the $$$$ I never did it!! I felt like I was selling my soul and also I felt like if I did it once then from that point on this is why I will be called for this point on!

Did you do your civic duty by reporting these crooks to the Feds?

Anonymous said...

God knows what they'll look like after it's their turn to cross the Rubicon.

Great book by Michael Ruppert.

Anonymous said...

My main concern is if the price of pot will go down with so many pot houses all over the place. Man, the baggy of the "punto rojo" is still a rip-off. Talk about hyperinflation!