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October 23, 2008

Today's Housing Bubble Post -- Rental Scams

-- by Dave Johnson

Here's a scam I'm hearing about. Some people used the easy loan situation to buy multiple houses. They rented them out. They had tons of cash coming in, maybe not enough to cover the payments and taxes, etc. but they figured they would sell the properties after a while for much more than they paid.

Lately they have stopped making payments on the mortgages, but are still charging the rent. So lots of money still comes in, but none goes out. This goes on and on.

Maybe eventually things catch up, and they are foreclosed. The tenants are evicted - often with no notice at all, with the rent and deposit already paid in advance. The scammer ends up with six months, maybe a year of rent money. Or maybe they haven't been foreclosed yet and the scam continues.

Will the scammers be eligible for government help to "keep them in their homes" because they haven't been making their payments?

What about the people who HAVE been making their payments? They won't be eligible for help? This whole idea of helping people with their mortgages is a dangerous path to go down...

Posted by Dave Johnson at October 23, 2008 9:28 AM


Comments

If the former owner demands or accepts rent for the period of time AFTER the foreclosure sale, it is fraud and should be reported to the local DA/PD. The date of sale is usually on the bank's new deed that is recorded in the local recorder's office. Keep in mind that this sale is months after the first "Notice of Default". Also how about redistributing wealth to the mortgage cos without even requiring them to modify mortgages. That's what Paulson just did to the tune of $7.7 Billion with PNC who was balking at modifying mortgages, just like all the other good
corporate citizens. What they fear is a "bottom up" strategy (helping homeowners), rather than their usual "top-down". Did you know that Bancruptcy judges already have the power to modify second, vacation, or investment home loans (and luxury boat loans)? It is not socialism to ask that the same rules be applied to primary residences. Check it out:
http://seekingalpha.com/article/101965-hedge
-funds-threaten-to-block-mortgage-modifications

Posted by: RichardfromHB [TypeKey Profile Page] at October 27, 2008 1:32 PM

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