Editor's note: Seattle area opinion leaders have been invited by the seattlepi.com to participate in Seattle Views. Written by Richard Hagar April 8, 2009 3:59 p.m.
Consider a pebble dropped in a glass smooth pond. Close to where the pebble enters the water, the ripples are big. The farther the ripples move away from the pebble, smaller they are. If the pond is large enough, by the time the ripples reach the edge, they're unnoticeable. They are still there, just small.
Real estate and mortgage fraud acts in the same way, close to the event the waves and impact on people are large, however at the other end of the pond, maybe the impact is small and unnoticeable.
Our real estate problems are not over yet. There is a bigger wave coming. More news about real estate and mortgage fraud is going to fill you little pond. Many people think:
Well I didn't do anything wrong or it didn't involve my purchase, so ...... what's on the sports page?
Fraud is a pebble dropped in the pond at the other side of town however the waves are moving your way and are reaching everybody, including you, the reader of the sports page.
How/Why? First it starts with a home selling on the other side of town for more than its really worth. The buyer needed a down payment, so the buyer and seller agree to raise the sales price of the house by the amount the buyer needs for the down payment. Somehow the money makes its way from the seller to the buyer and the buyer produces the "down payment" at closing.
Yea, so what, who's ahead in the AL west?
Here comes the first small ripple: The increased sales price is reported to the county assessor who thinks "values" are increasing faster than normal. He rubs his hands at the thought of increasing property taxes for everybody in the pond. This way he can pay for all of the services you are asking of the government. A newspaper article is developed and the reporter states "property values are up 10% above normal."
Investors read the news and determine that they what to buy a home in your pond but they want even more. Since they read some investment book about how to get "cash back at closing" they tell the agent to write up an offer with "$50,000 cash back-back-deal. The agent complies, not knowing it's wrong, the seller listens to his agent and the deal is signed. The mortgage broker, being uneducated about the law, thinks this deal is fine and brings the package together for submittal to the lender. The lender is so busy they don't pay attention.... and the loan is funded. That small pebble dropping in the pond at the other side of town is about to become larger.
An investor in California, reads about prices increasing in your town so they drive over and buy a house or two. Of course they want their closing costs paid, the down payment given to them by the builder and what the heck, why don't you throw in that brand new car. Of course the sales price of the house is raised to compensate and the buyer doesn't mind because he's getting this smokin' teaser rate mortgage. That small pebble dropping in the pond is now up to boulder size and the pond is rocking with waves moving from the other side..... running right at you like a tidal wave. Hope you know how to swim because thousands of investors want to start jumping into your pond.
Organized crime loves to make profit, so they want the cash back deal and new car as well. So they organize their little "affinity group" and turn buying homes in to a production line. They have dozens of people at their disposal and they know how to use ID-theft, straw buyers, push real estate agents around and God help the appraiser if he comes in under value. If the appraiser doesn't come in at "the value," no problem, threaten ‘em, say you won't pay, find another appraiser who doesn't know better, or better yet... burn his car (Thisactually happened in Arizona, 30 days ago). Now you have a hurricane in your little pond and that thing on the other side of town is now rocking your boat and you are about to feel the impact and pay a price:
· higher sales prices
· higher property taxes
· higher insurance rates
· demand increases interest rates
· nice people can no longer afford a home so they move out
· vacant house multiply
· neighborhood start to look bad, because nobody lives in 20% of the homes
· property taxes go unpaid, so everybody else has to raise theirs
· foreclosures multiply
· property values drop
• your economy slows down and your friends lose their jobs
Boats over turn (mortgage brokers), people drown (home owners), the Coast Guard (government, police, licensing agencies) can't keep up with the phone calls and, some people are left to drown because the problem is so big and their resources so small, people are abandon.
Welcome to hell........ and we created it, stuck our heads in the sand and said I didn't do anything wrong, it must be the other guy that wrote up that cash back offer. Yea... that guy on the other side of the pond he caused the problem. Can't be me, I'm a good person.
This storm, with people drowning and the chests of gold sinking to the bottom of the ocean, could have been prevented..... if only you understood that an illegal deal on the other side of town does impact you and everybody else in your little pond. A shame you didn't reach out for better education, when it was offered.
How's that Excel or basket weaving class working for you now?
Wouldn't it have been better if you and your boss had the legal knowledge about fraud, property flipping, straw buyers and foreclosure rescue scams before the storm hit?
So now is the time to get your education, so the next storm can be prevented and fraud can be sent elsewhere...... or are you going to wait... again... until the next storm hits?
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