I’m sick of the scammers. Forget the buyers who somehow swallowed the mortgage broker’s whopper about how they could afford a home loan payment equivalent to their monthly take-home pay—all of it. Shrug off the builders that managed to notch impossibly high home sales figures while steadfastly maintaining they didn’t sell to investors. Ignore—for now—the lenders whose fancy underwriting software somehow made homeownership possible to people barely clinging to the financial fringes.
But all of us in the housing industry, from builders to reporters to lenders to agents, should give the evil eye and more to the scammers across the country that have caused so much financial and psychological pain in their appallingly successful pursuit of easy, stolen home loan money. Here’s just one scheme recently covered by the Washington Post:
“Prosecutors said Metropolitan Money Store preyed on homeowners facing foreclosure. The company would allegedly use a ‘straw buyer’ to purchase a home and tell the owners that they could continue living there and then buy it back after a year. But Metropolitan would allegedly borrow as much as possible against the value of the home, siphoning off the equity and making it impossible for the former owners to buy it back.”
In such schemes, the financially strapped homeowners typically end up losing not only their home, but whateverequity they have amassed.
Meanwhile, the scammers always appear to live luxuriously large on their fraudulently obtained largesse. Just listen to these details, also from thePost article: “In a 25-count indictment unsealed yesterday, prosecutors allege that Jackson and Fordham, both of Fort Washington, and six other defendants used money from the elaborate scheme to pay for a lavish lifestyle that included luxury cars, houses, jewelry, fur coats and travel. The indictment also mentions Jackson and Fordham's wedding at the Mayflower Hotel, where Patti LaBelle sang and 360 guests ate lobster and shrimp and drank Cristal champagne. Jackson told friends that the wedding cost nearly $800,000.”
Too bad it’s the financially vulnerable homeowner—and no doubt, the American taxpayer—being left with themassive hangover that just won't end.
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As a kid, I used to look forward to Saturday mornings when I’d make the shopping rounds with my father. While there were always things he had to pick up, what he really liked to do was shop for sales. A broker, he could “unit” price in his head, long before grocery store signs assisted the math-impaired. He loved a bargain, especially on generic merchandise or bulk goods. Needless to say, we had a freezer in the garage. The one thing we never saw, though, was a buy-one-home-get-a-second-one-free deal, which definitely would have warranted a visit. …
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Learn more about markets featured in this article: Los Angeles, CA.