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Possible real estate scam needs legislation

TheAnk

By TheAnk
in Providence

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TheAnk Hamlet

TheAnk

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Home Seller X sells home to Buyer Y for inflated price. For example sake, lets say house is worth 250k, but this transaction goes for 325k.

Buyer Y signs on to a large loan, with no intent of ever paying. Seller X walks with $75k in profit minus fees.. Buyer Y collects rent, never pays mortgage, forecloses in one year, using our liberal state for 12 months in court action delay tactics.. They collect rent in the amount of $2000 per month, for a total of 24k.

Buyer and Seller are partners, boyfriend and girlfriend (or friends). They leave the US (credit ruined for Buyer Y), to their country of original residence, with 100k in tow. Bank is left with the house and paper debt that is now fully realized.. Maybe for good measure they pour cement down the toilets and sell all the heating systems, maybe the copper piping too.. Net another 10k..

Perfect scam, right? Also, perfectly legit to do. I'm no lawyer, but other than like conspiracy and fraud, this whole interaction would appear completely legitimate without viewing this as a plan from start to finish..

And my guess is this has happened many times.. Just with my crack research I suspect a few of these.. Looking to pick up a foreclosure, there seems to be an eire pattern to how these houses are left and the timeframe in which foreclosure action has taken place from sale date.. I don't think it is a coincidence..

So get working Segal.. Do something worthwhile for our tax dollar.. I have given you a nugget to run with.. A legitimate criminal to target.. Make us proud.. This nugget is free.. You run with it, elected official.. Or will you ignore this because it runs against your liberal agenda?

Sincerely,

The Ank you love to hate

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brick Burg

brick

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I think that if it were easy for people who do this to get the loans in the first place, then there would be a problem. As it stands, with the credit contraction that is happening, it will be increasingly difficult for people to get the big loans in the first place. I guess the real issue is if there are a lot of government programs (there are) that help these people secure financing. But, I suspect that even those programs are going to demand more rigorous assessments.

The problem with anecdotal stories like this is that they can make it sound like an epidemic when it is an isolated incident. I would like to know how often these kinds of things happen before demanding legislation.

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TheAnk Hamlet

TheAnk

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Do you folks really not follow this? It IS house flipping, but not the inflation of paper value segal talked about.. Basically its the equivalent of you listing something on ebay valued at $50, and having your friend bid up some poor schmoe who put in a very high max bid to $75.. you sell something valued at 50 for 75. And in this housing case, the bank is buyer, and holding the net debit.. It really is sort of genius, and maybe I am giving too much credit to people, but the way I see them scam the government for section 8 wic and wellie I DO give them a lot of credit..

To pete11 or whoever that sky is falling foreclosure guy's handle was's credit, it does seem like foreclosures are rolling along and supply is at intermediate highs.. It will be interesting to see how this affects the national and local economies.. I think if these foreclosees keep destroying the houses on the way out, it will be good for landlords in the short term, as these houses must be vacated and shut down, increasing renter supply..

Someone has to buy these rehabs eventually, and those values will plummet as 1. there just are not many people willing or able to take on the restoration work and 2. banks will knee jerk react and not offer financing for these houses.. Kind of an interesting catch-22 for them.. They wont finance buyers for the houses they now own, dropping the value of the portfolio they dont want to keep.. I say lie in the bed you made, banks..

Eventually prices for these will fall enough that the sharks will see arbitrage and buy these even at terrible investor rates.. THEN, it could negatively affect rents (positively if you are a renter) because the outlay for these houses will be so low that the rehabbers can charge bottom rents to make their bottom line..

Very enticing if you are interested in buying a rehab..

Anyway, I'll pop in again in like six months to rant for a day or so.. See you in 2008.. ;)

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nick rivers Unincorporated Area

nick rivers

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Do you folks really not follow this? It IS house flipping, but not the inflation of paper value segal talked about.. Basically its the equivalent of you listing something on ebay valued at $50, and having your friend bid up some poor schmoe who put in a very high max bid to $75.. you sell something valued at 50 for 75. And in this housing case, the bank is buyer, and holding the net debit.. It really is sort of genius, and maybe I am giving too much credit to people, but the way I see them scam the government for section 8 wic and wellie I DO give them a lot of credit..
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TheAnk Hamlet

TheAnk

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http://www.reuters.com/article/newsOne/idUSN1246626320071113

"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.

The decoy buyer is paid off -- often with just $5,000 -- and the property is quickly abandoned to foreclosure, said Theobald, a senior official with the Miami-Dade Police Department.

"It's an epidemic," said Nancy Hogan, a veteran realtor and former head of the Florida Real Estate Commission.

"The cash back, the fraud for profit, is what has been so rampant," she 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."

I posted this exact scenario on this board months ago, and asked Mr Segal to look into it.. Perhaps now that it is in print on REUTERS people will see that its not some pie in the sky conspirancy by the generally disagreeable TheAnk, but a legitimate concern..

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Pseudo_Work Hamlet

Pseudo_Work

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http://www.reuters.com/article/newsOne/idUSN1246626320071113

"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.

The decoy buyer is paid off -- often with just $5,000 -- and the property is quickly abandoned to foreclosure, said Theobald, a senior official with the Miami-Dade Police Department.

"It's an epidemic," said Nancy Hogan, a veteran realtor and former head of the Florida Real Estate Commission.

"The cash back, the fraud for profit, is what has been so rampant," she 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."

I posted this exact scenario on this board months ago, and asked Mr Segal to look into it.. Perhaps now that it is in print on REUTERS people will see that its not some pie in the sky conspirancy by the generally disagreeable TheAnk, but a legitimate concern..

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