Excellent Reporting by the Herald Tribune on Real Estate Fraud (sales, refinance)

[dishing the 9411]

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[Rushmore]

While these guys are not exactly the sort I want over for dinner, I blame the woeful lack of regulation for this mess.

And, of course, where there was regulation, there were loopholes all over the place.

Which, of course, nobody seemed to mind, because as everyone knows, there is an investment in this world that will NEVER depreciate, and it is called Real Estate. Make $30K/year? You get a $300K mortgage. When the ARM adjusts, you can refinance, because, of course, you will have so much equity in your home by then, you're be eating fillet mignon for breakfast.

It's one thing to be hit by a meteor. It's another entirely to build a meteor, lug it out into space, and send it hurtling at Earth.

[dishing the 9411]

I agree that the woeful lack of regulation caused much of this problem. However, it doesn't excuse the illegal activities perpetrated by these real estate 'professionals'. The free market is grounded in a value system and we need to trust that there is a code of ethical conduct in place. Also, this code needs to be enforceable by an independent body; it is meaningless without oversight. We see what happens when greed trumps values.

[Rushmore]

Originally Posted by dishing the 9411

I agree that the woeful lack of regulation caused much of this problem. However, it doesn't excuse the illegal activities perpetrated by these real estate 'professionals'. The free market is grounded in a value system and we need to trust that there is a code of ethical conduct in place. Also, this code needs to be enforceable by an independent body; it is meaningless without oversight. We see what happens when greed trumps values.

Name a single industry anywhere where this has not come apart at the seams without proper oversight, regulation, and tenacious pursuit of accountability.

It's a rhetorical question. Human nature will always trump "values" and "ethical conduct," and there's no reason to pretend it won't. If there are loopholes, less scrupulous people will climb through them.

[dishing the 9411]

I have a more optimistic view of Human Nature. However, I agree that the system in place was ineffective and needs to be overhauled. These 'professionals' who took advantage of the system should be held accountable. This has not happened.

[Rushmore]

Originally Posted by dishing the 9411

I have a more optimistic view of Human Nature. However, I agree that the system in place was ineffective and needs to be overhauled. These 'professionals' who took advantage of the system should be held accountable. This has not happened.

Empirical evidence dictates a less optimistic view of human nature, but that is, I suppose, subjective.

None but the worst of white collar criminals is ever held truly accountable, especially those who are just along for a gravy train ride where the reality of the law is anything but black and white, and where they are permitted to operate under the umbrella of "business," and never really held personally accountable (see: numerous bankruptcy protections and corporation configurations designed precisely to make sure that many in business are NEVER held personally accountable).

[wondermint2]

**** The article said it investigated 19 million real estate transactions and found 50,000 possible suspicious transactions. Yes it is bad and cost victims a lot of money - but it is just about one quarter of one percent of the total transactions that were considered suspicious. ****

[dishing the 9411]

The guidlines used by the Herald Tribune were very strict:

ABOUT THE DATA: The Herald-Tribune defined suspicious flips as properties that sold at least twice in 90 days and increased in value at least 30 percent. The data used for this analysis included nearly 19 million sales from 57 of Florida’s 67 counties. Some county property appraisers could only supply a partial list of sales. For the purpose of this analysis, the Herald-Tribune discarded extremely high and extremely low sales in an effort to remove property transfers that did not reflect the actual[/LEFT]
value of a property. To generate the maps showing flipping density, the Herald-Tribune used the Surfer software application created by Golden Software

Fraud should not be tolerated even if you think 50,000 is a small number. This study was just reporting on the worst of the worst. A strong case could be made for setting the parameters at a 10% increase in a 90 day window. There would be many more cases under this scenario.