They call them Flippers, Flippers Kings of the loan fraud..


I am sure you remember when the housing bubble burst, and a lot of

English: Showing how the rapid rise in in mort...
English: Showing how the rapid rise in in mortgage credit distress is being led by subprime ARMs. Conventional loans past due 90+ days and Conventional loans in foreclosure. (Photo credit: Wikipedia)

the mortgage papers that banks sold to investors turned out to not be worth the paper they were printed on, and the subsequent recession?

There were all kinds of reports about how Flippers would form little clubs and buy properties, which they got loans on, then they sold the property to other club members, who also got loans on them.  At the time when they started this it was no problem.  Credit was cheap and, since houses were selling like hotcakes, the banks were more interested in pulling in money than trying to decide if either the property was worth the loan or the people could pay it back…

Normally you might have thought it was no big deal..  Club Member A get inflated value placed on a property.  Goes to Big Bank(BB) for a load that reflects the new appraisal.  BB give him the money(mortgage) and sells the paper to an investment fund..  Where the money might come from funds that hold people’s pensions…  Other people buy that paper and soon it is scattered among many investors.   Member A gets and inflated value and sells to Member B, who does the same thing Member A did…  The property changes hands and double, or triples, in price, NOT VALUE.

When the bubble burst on the housing market there a whole bunch of bans that discovered that because they had not bothered to do any research on the property, or buyer, they had paid out more than they could ever hope to get back…  They lost money on worthless paper..  The problem was that, while the banks were able to get Uncle Sam to give them your tax money, in order to keep them from going under and putting their employees out of work, the various pension funds that put money into these papers were NOT able to get anything and so more companies crashed, more people lost jobs, and some people watched their life saving out out the window but, the banks made out, with bail outs, like the bandits they were…

So, you might ask “Joe Guy, where are you going with this?”  In a very simple direction…  Depending on which results you read the housing market is getting better, or not, the supply of money is rising, or not, and then the Flippers seem to be starting up again.

I recently got an invitation to a seminars about how to make thousands of Dollars in the housing market by learning to Flip using other people’s money..  That seem to be the way they do it so they don’t lose anything.

Don’t get me wrong..  There are Flippers and there are Flippers.  Some Flipper buy a house, fix it up, to increase its actual value, and then sell the house..  One guy I listened to, some years ago, told about how he had a drawer full of credit cars..  When he wanted to buy a house he got a $1,000 advance on each card, he said he had about 200 of them, and used that money to buy the house..    He then worked out some deal with the seller so that he paid less for the house, with the cash, than the mortgage that he took out, pocketed the extra money, and the sold the house to pay off the mortgage..

The thing is..  The Flippers are starting again and I wonder if the Big Bank has learned it lesson or, are they thinking we will bail them out again?

If not then maybe we should just let them fail this time..

 

Thanks,

That Joe Guy.

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Honest Banks are as hard to find as a Sasquatch.


Bank
Bank (Photo credit: 401(K) 2013)

In the last couple of years, since the financial crash of 2008, I keep coming to the conclusion that, yes it was the bankers.

Sure the Flippers were making money by inflating the value of property, so they could resell it at the inflated prices.  Sure there were appraisers who verified that the inflated prices were normal while getting money from both sides.  Sure the banks knew, for some time, that this was going on but, the housing market was flush so, who would suspect that all these worthless mortgages, the ones that the banks bundled up and sold to other financial organizations, would one day deflate and cause a vacuum that would reach around the world.

Not the bankers, who had made money hand over fist.  They tied to get all of their loans back by upping the rates on other people’s loans, and in some cases causing the failure of more mortgages.  As the tremor spread, and the bankers found their landscape riddles with sinkhole mortgages, the wanted to get the holes filled.  They could not, of course, go the the very people they were now foreclosing on so, they went to the people they had helped put into office…  The Politicians.  The controllers of the Federal money mill.

There was an argument about whether to give them a bailout, or not.  It soon became apparent that to deny them the money would only hurt the people who worked for these organizations, and not the people who made the disaster.  It was then decided to give the money to those institutions that were “too big to fail”.  This did not mean that they could not fail, as the were indeed falling on their faces, it only meant that their failure would create even more havoc on the financial world.

A couple of months after this all started to come apart there was an article in the Sarasota Herald, the same paper that had warned us about flipping, and some the the people who had been doing it, telling about an interview with a woman who worked for the banks.  It seemed that her job was to give seminars to local law enforcement and train them about how to detect people who were trying to defraud the banks.  Yes, they already knew there was fraud afoot but, since they were making money off of this fraud, they did not care.  It was only when it became apparent that this fraudulent inflating of the property prices was now jabbing them in the butt that they took notice..

They got some of the holes filled in, with the bailout money, but that was not quite all of the holes.  They then started mass foreclosures as there were more people now, having lost their jobs as their companies went out of business due to the collapse cause by the banks, who could not pay their mortgages…

One of the results was that they could not foreclose fast enough, some people said that the faster the homes were seized and resold the faster the market would recover, so the banks, and their agents, started what has been called “robo signers” where the NUMEROUS Vice-Presidents at the bank, some of whom just started working there, were verifying large numbers of foreclose documents.  Document they indicated were correct, and accurate.  This in spit of the admissions, by some of the signers, that they signed so many of them that the had little, or not chance, to either verify the information or even understand it.

These foreclosures, and the fraudulent filings, got so bad that some of the Judges began to notice, and some even reacted by slowing the rate of foreclosures.  Since then the Sarasota Harald has written that those caught with fraudulent information, instead of getting censured and their case dismissed with prejudice, were told to go back and refill.  Lets say to student, the banker and the student, both got caught cheating on a test…  They both swore that their answers were accurate and their own but, the teacher discovered that they had both made up their answers, in the hope the teacher would have so many test that he would not pay attention to theirs.  The regular student gets a failure grade and a trip to the office while the banker gets told to re-write his test minus the false answers.

Back to the falsified information inserted into court documents…  Some of the banks have gotten fines for this… though probably not many…  So what do the do?  They list the fines as “expense of doing business” and take it off the taxes, so the taxpayer is now bailing them out AGAIN.

Is there any surprise that Jesus tossed the “money changers” out of the church, or that he would feel that way about them?  NO..

Most of us have to take responsibility for out actions but, if you are a banker, who gives large campaign contributions, not so much..

If the average person where to do what the bankers have done he would be hounded into jail.  If anything happens to the average banker, such as a fine, he just gets the taxpayer to cover it when he takes it off his taxes as an “expense of doing business”.

The small business man who drives his company into the ground loses everything while the banker just gets the taxpayers to bail him out and his company gives him a big bonus…

Why is it only the small guy who has to be responsible?

Thanks,

That Joe Guy.