Real Estate Crash of the Century

By Kevin Chiu

The real estate market is under going the crash of the century and there’s no bottom of the market developing in the hardest hit areas of foreclosed home with overgrown yard the U.S. The housing market alone has suffered more than 7-million residential foreclosures since the crisis started, and like a bottomless pit home prices are declining in the majority of the nation.

Those regions that are experiencing low unemployment levels that were mainly out of the creative new mortgage lenders access like North Dakota, Nebraska and isolated communities in Texas and Alaska are faring much better than most. But a wave of mortgage fraud is also hindering the housing recovery.

Mortgage activity that is suspected of being fraudulent grew to 25,485 complaints in the first quarter of 2011, a rise from 19,420 a year ago, according to the Financial Crimes Enforcement Network. Lenders report suspicious activity to the network years after suspicious mortgages are made to borrowers adding to the problems associated with mortgage lending.

Despite the slowdown in mortgage lending, the FBI says that mortgage fraud is still at epidemic levels as homeowners with mortgages who don’t otherwise qualify for home loans to refinance mortgages provide fake documents and other phony paperwork to qualify for mortgages.

Former government prosecutor Michael S. Riley, who now practices real estate law in Southern California, expects a wave “of horrible bank schemes” to become public against the nation’s home builders and commercial realty owners as lawsuits reach courtrooms across the nation.

Deserted Subdivision

“In 2009, we predicted that fraudulent foreclosure practices would be hoisted upon home owners nationwide and the firm filed suit against Bank of America in behalf of aggrieved Californians,” said Riley. “This lawsuit (Ronald v. Bank of America) was the first of its kind to be filed nationwide and has since been the shepherd for the firm’s several other lawsuits against the likes of JP Morgan Chase, Ally Bank (formerly GMAC), Wells Fargo, Onewest (formerly Indymac), U.S. Bank and Citibank.”

Banks and mortgage companies are attempting to manipulate the housing market away from the real estate crash and into a bottom in many regions of the U.S. that have been devastated, holding back foreclosures from the marketplace, and in other cases are being forced back by legal action.

The efforts are an attempt by lenders’ to elevate housing values, and essentially drive up home prices, especially for homes they have in their REO inventories. The nation’s two giant mortgage companies, government-backed Freddie Mac and Fannie Mae have also put on a “full-court press” to sell-off the inventory of homes and other properties they have in their foreclosure inventory.

The government sponsored entities are offering real estate agents incentives to sell their foreclosures and are offering to pay home buyers closing costs up to a limit of 3 1/2% of the homes cost. The efforts are part of the government’s band-aid approach to aid the housing market, which has been troubled by the foreclosure crisis for more than four years.

Leave a comment

Your email address will not be published. Required fields are marked *