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Tuesday, March 17, 2009

Mortgage Backed Securites, Foreclosures and Shady Real Estate Practices

Regarding mortgage backed securities, foreclosures and shady real estate practices, most reputable or successful Realtors in New York County, who are members of the Real Estate Board of New York (www.rebny.com) refer to the outer boroughs of New York City as the "Wild Wild West".

What do they mean? Well, if you look at some of the real estate offices in for example, Brooklyn and in particular, traveling up Nostrand Avenue from Crown Heights to Flatbush, you will see storefronts with awnings titled, "Real Estate Broker, Houses for Sale, We Pay Cash, No Money Down and in smaller lettering on the windows of the same storefront you will see, Notary Public, Immigration, Fax/Copies, Insurance, Mortgages". If you look in the office, there are perhaps two desks and one person sitting at that desk and is usually on the phone.

Maybe I'm wrong but if I am going to consummate a financial transaction with a stranger who seems to do it all, I would be wary that my interests are not going to be the prime driving force in this transaction. The shady real estate brokers in the outer boroughs would bring in a buyer, do a "credit check" and say that the credit is either not good or use the ole' gotcha, "we will work with you". If someones credit is not good, has little or no money to put down on a major real estate transaction, how do you "work with them?". It's really quite simple. Real Estate Brothers (fictitious) opens up a mortgage business separate from the real estate sales business--but only on paper. Real Estate Brothers will then share office space with a so-called new and separate entity titled "Real Estate Brothers Mortgage and Financial Services".

Now, when someone who needs to be "worked with" needs a favorable loan approval, are they sent elsewhere to secure their own loan? That makes no sense because the two separate entities are going to "work with" this home buyer (usually a first time home buyer). It should really be that they are going to "work over" this first time home buyer by securing a huge loan that the homeowner cannot possibly afford, with some sort of rate adjustment in the coming months, putting this home buyer on the fast track to foreclosure. But wait, our real estate broker even gets this home buyer to use an honest lawyer to assist with closing costs, etc. It doesn't stop there: appraisers, title insurance, building inspectors may all be in for the take.

About foreclosures: I have personally been approached by so-called reputable real estate brokers telling me that if they give me a foreclosure list and I go to the owners of these properties that are in danger of foreclosure and convince them to sell their homes to save their good credit, "I would get $5000 tax-free". Now, I don't know a very whole lot about financials, the stock market and such but $5000 tax free is knowing income tax evasion, which if brought into the mix of these large financial transactions, can lead to absolutely no good.

Well, what is one to do? I am very pleased that the US Federal Government has decided to bail out certain companies and homeowners who meet certain criteria. Why is that? Well, if the federal government put in one cent, they will look to re-coup their investment and they have thousands of kennels of law enforcement attack dogs who can now go after those who engaged in fraudulent and criminal behavior. I would dread having the FBI, IRS and US Postal Inspectors looking at me or my finances. Their money and resources are long and once the financial sector solidifies and settles down, I will be sitting in front of the US Court House with popcorn, watching the procession of shady people who brought this financial mess on.

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