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  • December 9, 2006 at 2:33 PM #8037
    FormerOwner
    Participant

    I’ve found out about a number of cases where “investors” have bought multiple (2 or more) new homes all within a couple of months. I guess they were planning to flip them or something. In some cases, the “investors” now seem to be sitting on the houses and not trying to sell or rent them. They must be paying the mortgages/taxes otherwise they’d foreclose. I don’t think a lot of these people have enough income to qualify for all of that debt, especially with no rental income coming in. My questions are:
    1) How does someone of roughly median income purchase, say, 2-3 houses and finance all of them 80-100%? Doesn’t the bank look at public records to see if they own other property? How can they possibly qualify for the loans? Even with stated income, how can the banks be that dumb?
    2) What are these “investors” planning on doing? Are these properties all going to come on the market in the spring? Are they all going to foreclose? Is it some kind of scam?

    December 9, 2006 at 7:35 PM #41412
    Anonymous
    Guest

    I’ve wondered about this same thing myself. There have been several cases I’ve read about that seem as though multiple homes were purchased with highly leveraged financial vehicles within a very short time horizon. I can’t say if this is something that has been advocated by some promoter, some real estate agent(s) and/or a (sneaky) originator(s). It would seem as though multiple parties are involved in some type of collusion in order to make these things happen – I can’t believe that so many individuals came up with such similar ideas at the same time. What is the old saying? “Something is rotten in the state of Denmark”……..

    I can not but help think that such schemes have been advanced by “gurus” and/or promoters but I can not back this up with any hard evidence. In the end, someone is going to do some time – that is what I believe.

    December 10, 2006 at 7:15 AM #41416
    ocrenter
    Participant

    easy. they buy the homes roughly around the same time. lenders do not check whether you are going thru escrow with another property.

    my landlord pulled this off in March/April. purchased 4 homes all zero down/100% financed using various subprime lenders at 9% interest rate with a total purchase value of $2.2 million. He is foreclosing on all 4 properties after not making a single payment on any of them.

    December 10, 2006 at 9:33 AM #41418
    Nancy_s soothsayer
    Participant

    With internet access, I don’t remember how I came up with the following published public data from Zillow and a local journal. An example of the topic of this thread is as follows:

    A couple, worked as regular employees (not CEO’s) at local government, bought the following houses (dates given):

    1. Bought 10/27/1999 for $368,000 – 9×0 Palencia Pl, Chula Vista, CA 91910. Remained unsold, 2005 property tax was $6,203.

    2. Bought 06/10/04 for $798,000 – 7×0 Crooked Path Pl, Chula Vista, CA 91914.

    3. Bought 07/28/04 for $1,027,500 – 2×79 Sutter Ridge Dr, Chula Vista, CA 91914. Remained unsold, 2005 property tax was $14,945.82

    4. Sold 02/11/05 for $1.25 million (Gross profit of $452,000) -house number 2

    5. Bought 10/28/05 for $501,000 – 2×64 Huntington Point Rd, Unit 106, Chula Vista, CA 91914. Remained unsold. 2006-07 property tax is $8,575.

    Within a space of 2 months, two loans with combined value of over $1.8 million were given by lenders. Whether the buyers won the lottery, came upon inheritance money, found a million$ out of the blue, or stretched and fudged to the max, just to secure the loans, I don’t know.

    To feed the remaining “alligators” requires close to $30,000 of property taxes per year alone. What more for interest costs?

    December 10, 2006 at 9:38 AM #41421
    trex
    Participant

    Blame the brokers (mortgage, that is).

    In 2003 I bought a 4plex AND refinanced my house. All was going well until the lender called and asked why I had two loan applications with them for principal residence on two properties. Unbeknownest to me, my mortgage broker had made both applications principal residence to get a cheaper loan, and made the mistake of sending both to the same lender. Needless to say, I switched brokers.

    December 10, 2006 at 5:31 PM #41428
    SD Realtor
    Participant

    I do know of a client who owns several properties and she is purchasing two more REO properties that close next week. I do not do financing but know the mortgage broker. She is doing it above the board though. Her loans are NOT for primary residential, they are for income properties.

    SD Realtor

    December 11, 2006 at 3:26 PM #41466
    guitar187
    Participant

    There are several programs that go 100% Stated NOO. Usual requirement is 12+ months reserves. You would need to know how much this individual can show in liquid assets.

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