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.
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..
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."
"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."
