August 26, 2009

Heard about the new real estate scam? (hint - realtors ain't done yet)

Everyone heard about the new realtor/homedebtor scam?

I'll sum it up as quick as I can.

1) F*cked homedebtor owes $500,000 on a place now worth $250,000. But they're still employed, can still borrow from a stupid bank (who sells the paper to Fannie)

2) Encouraged by realtors and mortgage brokers, the upside down homedebtor buys the similar place across the street for $250,000.

3) F*cked homedebtor then stops paying on their original home, as they move into their new home. They rent out the old home and earn $2,000 a month cash

4) A year goes by, the homedebtor is finally foreclosed, up $24,000 in cash, and has a $250,000 mortgage instead of a $500,000 one.

America. What a country.

Read the Time magazine cover story on the scam in Vegas. You'll hurl. Here's a snippet.

Boemio specializes in short selling, in a particularly Vegas way. Basically, she finds clients who owe more on their house than the house is worth (and that's about 60% of homeowners in Las Vegas) and sells them a new house similar to the one they've been living in at half the price they paid for their old house.

Then she tells them to stop paying the mortgage on their old place until the bank becomes so fed up that it's willing to let the owner sell the house at a huge loss rather than dragging everyone through foreclosure. Since that takes about nine months, many of the owners even rent out their old house in the interim, pocketing a profit.


casey said...

I think a lot of people are doing this and have been.FHA only requires 3.5% down and you can use part of the 8k tax crdit for your down.So basically the govt is back to encourage gambleing.who cares if your credit is shot if you still have a house and new car.America is sinking.

Angry Leprechaun said...

Wait, by the looks of this, you must be admitting we are still in a crash. Maybe not in crash mode, but still teaterig on the brink of disaster and that nothing has really changed?

Angry Leprechaun said...

Common Keith. You must be back from your vacation. Knowing you you need to make money to invest it and hoard it because you love it so much. Get back to posting 20 times a day. There is so much to talk about. I know your back.

Anonymous said...

I'm glad you posted this. Just this morning a friend told me about 2 different borrowers who have stopped paying their mortgage. One is in Southern CA and hasn't paid for 5 or 6 months. The other is in NJ and hasn't paid for 9 months.

There is a slight variation to your story. The NJ guy claims that they don't HAVE to pay because the banks were stupid for loaning them the money that they clearly couldn't repay. In CA, they didn't earn much. In NJ the borrower was unemployed.

Barring fraud on either side of the deal, it seems absurd that the borrower shouldn't have to pay. It would seem that any legal case to that effect would be laughed out of court. I would think that even if a bank makes a stupid loan, the borrower is on the hook.

At any rate, the bank might take a hit, like in a foreclosure sale or debt forgiveness, but the borrower is still on the hook, right? Right?

I'm just shocked that there is no tale of foreclosure steps. Maybe they're keeping that quiet for now. And Maybe the moratorium in CA has a role. What could be going on?

Anonymous said...

You forgot the kicker - as all bank losses are covered by the taxpayer 9too big to fail), they don't care about the scam. The only losers, yet again, are the taxpayers.

Professor Ichiro Vader said...
This comment has been removed by the author.
Anonymous said...

FL - I know someone who did this, and told their son to go live in the place, where he has been payment free for 1.5 years. The bank just this week filed f/c.

The sickest part - there has been a realtor sign in the yard all this time, and the few times an interested buyer has requested a showing... Well the squatting "renter" is too busy, and needs more notice.








Psycho said...

We can not have a bottom until the greed is purged from the system. This Greater Depression is really going to suck!

les said...

It's the American way.

We are a 2nd world, corrupt nation.

Fraud has become so pervasive in our economy at all levels that enforcement has become futile.

A relative of mine works for a company which is profitable, but they're declaring bankruptcy. The company is hiding its money and falsifying financial documents for the BK proceedings. They simply want to break the real estate contracts and reorganize their debt at more favorable levels.

Don't be surprised if more companies pull the same shenanigans

keith said...

Reading that Time Vegas cover story on the scam and the realtor gladly talking to the press about her role in it made me want to come back - even if just for a bit.

Think about it. What's to stop nearly all homedebtors in the US from doing this?

Result? You'll see an uptick in new and existing home sales, as upside down homedebtors buy new ones while they stop paying on the old one.

The realtors, mortgage brokers and banksters get paid (again).

And the taxpayer (again) bails out the banks.


You just know every realtor in the US is promoting this scam right now to anyone who'll listen.

new bull market? said...

It's different this time.Buy high so you can sell low.this rally is a total scam.Better have stop loss orders on all your stocks.Wall street will suck every last dime out of your ass and then kick to to the curb to rot.

Anonymous said...


I've been thinking...Let's bring back Housing Panic.

The plot is only getting thicker,
and I hear DOPES is looking to remodify his loan.


Anonymous said...

As far as I am concerned, Time magazine has Zero credibilty when it comes to anything concerning real estate, after largly ignoring the crash.


confused ho said...

Are we in a new bull market?

Anonymous said...

Have heard about this for a while on some real blogs. It's hard to rise from the ashes when the fucking scum of this country are still up to no good.

BuyerWillEPB said...

Wow - regular people making 'business' decisions just like the government and big business has been doing for decades.

Who woulda thunk it?

LoL said...

My only question is

How can I make money off this too.

ContraryRiches said...

Keith, if it is any consolation, here's some proof that you reap what ya sow in this world:

Our Fed Chair, Mr. Bernanke who has disregarded the identity of the US to inflate the economy, has had his OWN identity stolen and the money was used to inflate other bank accounts! And best of all, he was banking with Wachovia! You cannot make this stuff up!

science teacher said...

hey keith - finally arrived in argentina after cashing out as per your advice.

thanks - glad you're back.

ps. how low will oil go?

Lady Di said...

Yeah, my sister's loser friend pulled this stunt, only she collected rent on multiple properties (that she bought with no money down), then they all went into FC around the same time.

She had the nerve to ask me to represent her in her bankruptcy case now that the IRS is hounding her for the "forgiven debt" 1099 income.

In the name of all that remains good in this world, I told her to F off. I can't stand people like her. They helped turn America into the banana republic that it has become.

P.S. Good to see you back Keith.

Guberville Smack said...

Go ahead and buy my stucco P.O.S. I left behind in Vegas. They'll give it to you for 50% off!
Left the town after living 8 months rent free and have happily resettled in a much nicer area. Still enjoy daily hiking and volleyball over this beautiful summer.
Funny, while relocating I spent a week in a slut motel waiting to move to my new apartment. After moving in and getting online, I get to my favorite blog. And what do I see?
The heading "Walking Away" and some cowboy riding in the sunset.
Keith, you couldn't have timed it better Cowboy!

Dogcrap Green said...

How's your Obama doing?

Anonymous said...

Massive Cover Up Going On!

Banks not foreclosing on houses! Some living there for 2 years and haven't paid a dime! That is why the National Savings Rate is Up!!

Was checking on Yahoo for SRS etf stock chat and discovered many who are doing it or have people they know that are doing it.

Keith, you should start a separate post on this subject. What are the repercussions of this besides losing your credit score?

People are not walking away, they are living there for free. Plus, some are not living there and are renting the homes collecting the cash!

One guy has 6 investment houses in Vegas and has not paid on any of them in 9 months. But, he is still collecting the rent payments!

Anonymous said...

The biggest employer in the Real Estate market are the movers who clear out the foreclosed house for the bank.

Guess who are running those businesses.

Anonymous said...

Anyone following the Greenwich Financial Services Fund case.

Greenwich Financial Services Fund won a round against Countrywide Financial Corp. in the hedge fund firm’s lawsuit to make Countrywide, rather than investors, eat the losses the mortgage lender incurred when it settled state predatory lending charges.

Anonymous said...

Looking at the slope of the home price trend line in Case-Shiller chart, when do you think the home price curve going curve back up.

Are economists reading the chart correctly.

Following yesterday's news that the Case-Shiller Index showed the second-straight month of home price gains in June, analyst Mark Hanson, of Mark Hanson Mortgage Advisors is out calling the numbers the "ultimate false bottom."

Anonymous said...

14.8% increase in defense goods. More change we can believe in?

casey said...

I am going to buy some real estate today so I can feel like I'm somebody.I miss stated income loans.

Anonymous said...

Keith, you got to come back full time, its just keeps getting better and better. I mean the downfall of america. Its all about greed and passing the buck to the next sucker. Please come back and run this site.

Mark in San Diego said...

The real question we should all ask is, "how long can the government keep propping up the FHA, FDIC, and the entire economy by printing money?" Months? Years? Decades?. . .if years or decades, then I guess we should invest and play along with the fiction. . .sooner or later the whole thing will collapse, but even our Chinese Landlords don't want that type of mess. . .guess "more of the same". . .just a slow sinking into the tar pits.

Anonymous said...


Anonymous said...

You just know Greg Swann is trying to cash in on this scam


JAWS said...

I do believe Nevada is a recourse state.

There's no walking away.

The bank will haul the debtor into court, sue them for the deficiency and/or attach their wages. It will happen. The realtor will have eased on down the road by that time and the debtor is attached to the banks hip till the debt is paid.

This realtor is a moron and probably going to land in jail real soon.

yoski said...

Good to have you back Keith. Great article. It's called free market. If there're enough dumb suckers willing to loan money why not take advantage of them?
The only downside of course is that the taxpayer will be funding the bailouts of the suckers/banks making the retarded descision to lend to every deadbeat that comes knocking on their door
There's also a lot of sheople using the $8K tax credit as downpayment. So the no money down mortgage is back in style along with multiple bids on properties. Better hurry otherwise you miss out on the $8K tax credit.
We've learned absolutely nothing from the last 12 month, amazing!

Anonymous said...

Las Vegas Sun has a story on that crazy real estate agent!

The comments on the article are great!

Mike Hunt said...


Do you feel that the Obama administration should be raising this up and forcing the fraud out of the system?

Or is it just safer to sit back and say nothing, for the "greater good" of the country?


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