Las Vegas Was Mortgage Fraud Capital Of The World According To NPR Report
They make it sound like it’s new loans being originated, but the problem was back in 2005 and 2006. Builders were selling homes to straw buyers, multiple buyers, and in some cases, the builders own in house lenders were doing “owner occupied loans” on more than one home to the same buyer.
Today’s version of loan fraud looks more like the “cash back to buyer at closing” scheme. I’m not talking about sellers helping with closing costs. This scheme involves thousands or tens of thousands of dollars being handed to the buyer in cash based on over inflated appraisals. Yep, it’s still going on.
The FBI has had a team in town for over a year, and is about to make some major indictments according to the NPR report from this morning
February 5, 2008 · The FBI is cracking down on improper sub prime lending. But there’s a new worry as turmoil in the real estate market spreads: mortgage fraud. In Las Vegas, the number of fraud cases is rising, and the city is gaining a reputation as the mortgage fraud capital of the U.S.
What Does The Suburban Foreclosure Situation Have To Do With Vintage Las Vegas?
The bulk of the fraud, and the bulk of the non-fraudulent investor speculation was out in the suburbs. When we do a head count of the listings in the suburbs, we find about 40% of the listings being short sale or already bank owned.
When I do the same count in the historic neighborhoods, I find it to be about 7 per cent of the listings. And among those, I’m seeing that most of them were actually owner occupied. They hadn’t been rentals or speculators.
The vast majority of the homes for sale in Vintage Las Vegas are normal everyday sellers who have career changes, or family size changes, or some other reason that doesn’t involve being in financial trouble.
There’s some good bargains for sure in vintage vegas but usually they’re the crappiest of the homes. The well loved, well maintained, functionally updated, unique homes just aren’t going to sell at the same kind of price as the bank owned properties. Granted many of the normal sellers are stubbornly holding to their list price. But many of them are willing to make some great concessions. That combined with the new FHA programs, many buyers can get into a home for little or no money, and still have the peace of mind of a fixed rate mortgage.
Every ! buyer I’ve ever met wants the best POSSIBLE deal they can get. The investors with money to spend on the homes after acquiring them will often end up at the same amount invested as a buyer negotiating the best possible price for the best home that best fits their needs. Those screaming deals on crappy houses aren’t eligible for great financing options. The banks just won’t lend on homes that aren’t livable.
A great example is the bank owned golf course home we talked about last week in Paradise Palms. We had several buyers who could have qualified for the 250k price, but the banks wouldn’t loan them on that house. The pool was green, the windows were broken, there were holes in walls and door were smashed in. The house was not eligible for a loan, even though the buyer was.
We’re seeing multiple offers now on lots of new bank owned properties. So that’s starting to create a bottom. By the time they put on the new roof, or change the AC or update the windows, as well as paint carpet and landscape, I think they’d have been better off buying a well maintained property from a regular seller.
So would you. Give me a call, or start poking around in the MLS yourself and you’ll see what I mean.