No quick recovery for metro housing market (avg price down 55k)
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This, as well as your other posts in this thread, have been really great stuff, researchnerd. I'd never even heard of this book. Would you mind summarizing some of the most Atlanta-relevant issues you remember in this thread? (Not to sound lazy. I'm just being realistic that I may not get around to acquiring this book any time soon.)
I've just been so confused about some aspects of the Atlanta market. I know we overbuilt, but our housing prices weren't nearly as bubblicious as those in other cities. So I've been surprised how much we've dipped since the recession started. It seems like the ATL is getting more severely punished than other cities that also didn't have huge bubble spikes. So maybe some of the specifics on fraud that you mention explain some of the stuff that I'm seeing as "overcorrection" in housing prices here.
Some of the mortgage fraud in Atlanta began with the fancy-schmancy subdivisions in Alpharetta around 2000-2001. People would borrow $400k -$750k+ using fake income, and sign contracts to buy homes, but never lived there. Some of these "zombie houses" were used for prostitution and drug deals, others were rented to "families" of 15 people, and yet others were just left empty. Crime rose in these areas -- but was quickly covered up by developers and HOAs who didn't want anyone to know their dirty little secrets.
Then came the repeat deals. One foreclosure went from $580k to $780k to $960k to $1.2M in just six weeks - all in refis, not sales. This was so lucrative that it attracted serious mortgage fraudsters -- organizations that would match fake buyers with complicit brokers, submit fake paperwork, get a false appraisal, use attorneys and banks that didn't question anything -- and everyone involved would get kickbacks from the deals. Sometimes the "buyers" would repeat the process and get second and third mortgages on these homes that they never intended to repay, cashing out $20k or so every time. The finders, the mortgage brokers, the lenders, the bankers, the lawyers, the appraisers, the securities firms -- all made money on the deals, so nobody objected. The HOAs started to get scared and report empty houses to the local sheriff, the FBI, and even the IRS -- but except for the drugs and such, there weren't outright laws being broken. They couldn't do anything about the fraud itself.
More soon, including Buckhead condos and in-town homes...
Some of the mortgage fraud in Atlanta began with the fancy-schmancy subdivisions in Alpharetta around 2000-2001. People would borrow $400k -$750k+ using fake income, and sign contracts to buy homes, but never lived there. Some of these "zombie houses" were used for prostitution and drug deals, others were rented to "families" of 15 people, and yet others were just left empty. Crime rose in these areas -- but was quickly covered up by developers and HOAs who didn't want anyone to know their dirty little secrets.
Then came the repeat deals. One foreclosure went from $580k to $780k to $960k to $1.2M in just six weeks - all in refis, not sales. This was so lucrative that it attracted serious mortgage fraudsters -- organizations that would match fake buyers with complicit brokers, submit fake paperwork, get a false appraisal, use attorneys and banks that didn't question anything -- and everyone involved would get kickbacks from the deals. Sometimes the "buyers" would repeat the process and get second and third mortgages on these homes that they never intended to repay, cashing out $20k or so every time. The finders, the mortgage brokers, the lenders, the bankers, the lawyers, the appraisers, the securities firms -- all made money on the deals, so nobody objected. The HOAs started to get scared and report empty houses to the local sheriff, the FBI, and even the IRS -- but except for the drugs and such, there weren't outright laws being broken. They couldn't do anything about the fraud itself.
More soon, including Buckhead condos and in-town homes...
Wow! That's sort of insane--the level of fraud, I mean. And very interesting that a lot of it started in Alpharetta.
Are our mortgage laws much improved even now? It seems like so few criminals have been prosecuted for mortgage-related crimes.
Some of the mortgage fraud in Atlanta began with the fancy-schmancy subdivisions in Alpharetta around 2000-2001. People would borrow $400k -$750k+ using fake income, and sign contracts to buy homes, but never lived there. Some of these "zombie houses" were used for prostitution and drug deals, others were rented to "families" of 15 people, and yet others were just left empty. Crime rose in these areas -- but was quickly covered up by developers and HOAs who didn't want anyone to know their dirty little secrets.
Then came the repeat deals. One foreclosure went from $580k to $780k to $960k to $1.2M in just six weeks - all in refis, not sales. This was so lucrative that it attracted serious mortgage fraudsters -- organizations that would match fake buyers with complicit brokers, submit fake paperwork, get a false appraisal, use attorneys and banks that didn't question anything -- and everyone involved would get kickbacks from the deals. Sometimes the "buyers" would repeat the process and get second and third mortgages on these homes that they never intended to repay, cashing out $20k or so every time. The finders, the mortgage brokers, the lenders, the bankers, the lawyers, the appraisers, the securities firms -- all made money on the deals, so nobody objected. The HOAs started to get scared and report empty houses to the local sheriff, the FBI, and even the IRS -- but except for the drugs and such, there weren't outright laws being broken. They couldn't do anything about the fraud itself.
More soon, including Buckhead condos and in-town homes...
but we iz told all the bad people ride Marta and live ITP
Some of the mortgage fraud in Atlanta began with the fancy-schmancy subdivisions in Alpharetta around 2000-2001. People would borrow $400k -$750k+ using fake income, and sign contracts to buy homes, but never lived there. Some of these "zombie houses" were used for prostitution and drug deals, others were rented to "families" of 15 people, and yet others were just left empty. Crime rose in these areas -- but was quickly covered up by developers and HOAs who didn't want anyone to know their dirty little secrets.
Then came the repeat deals. One foreclosure went from $580k to $780k to $960k to $1.2M in just six weeks - all in refis, not sales. This was so lucrative that it attracted serious mortgage fraudsters -- organizations that would match fake buyers with complicit brokers, submit fake paperwork, get a false appraisal, use attorneys and banks that didn't question anything -- and everyone involved would get kickbacks from the deals. Sometimes the "buyers" would repeat the process and get second and third mortgages on these homes that they never intended to repay, cashing out $20k or so every time. The finders, the mortgage brokers, the lenders, the bankers, the lawyers, the appraisers, the securities firms -- all made money on the deals, so nobody objected. The HOAs started to get scared and report empty houses to the local sheriff, the FBI, and even the IRS -- but except for the drugs and such, there weren't outright laws being broken. They couldn't do anything about the fraud itself.
More soon, including Buckhead condos and in-town homes...
^It happened in my parents neighborhood in the late '90's in Snellville near Stone Mountain. A home was sold/resold using straw buyers and an inflated valuation to rip the bank off w/o ever making a mortgage payment. In the meantime they let a drug dealer "rent" the place while the banks were still in the dark about the scam. The neighborhood is fairly upscale w/ houses between 3.5k-10k sq ft and cost from the mid 200-1M+.
The only visible change that anything was wrong was the half dozen flashy luxury cars that would clog up the street at all hours. A Hummer H1 is not designed for street parking in a neighborhood. They were just your avg crappy neighbors until one day I came home and saw six squad cars surrounding the "homeowner's" S600 as police tore it apart in front of the neighborhood. The next day a large moving truck was there and none of the cars ever returned. I just always figured the guy got arrested for something and evicted until I read in the AJC a few years later where they interviewed my next door neighbor that there had been a gun battle in front of the house after a deal had gone bad which led to the arrest/eviction. Not too sure if they ever got the mortgage scammers though. Wish I could still find the article.
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They couldn't do anything about the fraud itself.
