Disappearing now: $6 trillion in housing wealth

[waiting hawk]

“She was building-up your inheritance, you ingrate son!”

HAHAHAHAHAA

[34f3f3f]

I suppose debt becomes a liability and can be written off as losses, but how much tangible wealth is actually being lost here? If lunacy had a price on it, you’d be able to buy it in Walmart. But it’s not just houses values that are baffling, the whole securitisation (horrible word) of debt that seems to be causing concern. Valuing mortgage backed securities is one thing but their schizophrenic cousin CDO’s, dreamed up by researchers with PHDs in maths, confounded everyone. I think we may have seen the last of them.

[34f3f3f]

I suppose debt becomes a liability and can be written off as losses, but how much tangible wealth is actually being lost here? If lunacy had a price on it, you’d be able to buy it in Walmart. But it’s not just houses values that are baffling, the whole securitisation (horrible word) of debt that seems to be causing concern. Valuing mortgage backed securities is one thing but their schizophrenic cousin CDO’s, dreamed up by researchers with PHDs in maths, confounded everyone. I think we may have seen the last of them.

[34f3f3f]

I suppose debt becomes a liability and can be written off as losses, but how much tangible wealth is actually being lost here? If lunacy had a price on it, you’d be able to buy it in Walmart. But it’s not just houses values that are baffling, the whole securitisation (horrible word) of debt that seems to be causing concern. Valuing mortgage backed securities is one thing but their schizophrenic cousin CDO’s, dreamed up by researchers with PHDs in maths, confounded everyone. I think we may have seen the last of them.

[34f3f3f]

I suppose debt becomes a liability and can be written off as losses, but how much tangible wealth is actually being lost here? If lunacy had a price on it, you’d be able to buy it in Walmart. But it’s not just houses values that are baffling, the whole securitisation (horrible word) of debt that seems to be causing concern. Valuing mortgage backed securities is one thing but their schizophrenic cousin CDO’s, dreamed up by researchers with PHDs in maths, confounded everyone. I think we may have seen the last of them.

[34f3f3f]

I suppose debt becomes a liability and can be written off as losses, but how much tangible wealth is actually being lost here? If lunacy had a price on it, you’d be able to buy it in Walmart. But it’s not just houses values that are baffling, the whole securitisation (horrible word) of debt that seems to be causing concern. Valuing mortgage backed securities is one thing but their schizophrenic cousin CDO’s, dreamed up by researchers with PHDs in maths, confounded everyone. I think we may have seen the last of them.

[Ex-SD]

The story continues in the L.A. Times:
by Peter Viles

Yesterday’s post about the possible loss of $6 trillion in housing wealth brought me a small flood of e-mail. One of the most provocative notes came from an old friend in suburban Phoenix who poses the question: How much of that $6-trillion bubble was created by outright fraud?

He writes, “I haven’t seen articles surrounding the common fraudulent scheme where mortgage brokers worked with a home appraiser to overvalue homes, then direct owner to sell home to a pre-identified buyer at hundreds of thousands over market value with large kick-back from seller to buyer at closing.

“This happened with great frequency in my former neighborhood just north of Phoenix. In fact, three homes out of six homes on my former street are in foreclosure due to this scheme. An example: I sold my house in Dec. of 06 for $815K (legitimate sale and value at the time at height of price boom). Five months later the same house sold for $1.2 million. The people who bought it from me sold it to an “investor” at the $1.2MM price.

“We bought from builder in ’03 for $493K then sold in Dec. ’06 for $815K. My buyers never moved in but did remove expensive window coverings, outside landscaping fountain and custom-made iron entrance gate then did the kick-back sale scheme for $1.2MM. Their buyer never moved in either.

“The house is now in foreclosure but was recently listed (while in foreclosure) for $534K. It is now set to go to auction. What I wonder is, do the banks who hold the mortgages know the last buyer received the kick-back? Are they going after the money and prosecuting? This happened all over our community. The buyers would never even move in to the properties. They’ve been sitting empty for a year and a half with no landscaping and other maintenance being done on these upscale, gated golf community homes. Much of the sky-high valuations in the Phoenix and Scottsdale areas were an illusion as this scheme was rampant.”

“What angers me most is that innocent buyers in the neighborhood would have been shown these phony sales as ‘comparables’ by their Realtor and may have overpaid for a home in a legitimate sale but have now lost a great deal of value as these ‘comps’ weren’t real. I would imagine it took place in California and Nevada as well.”

Fascinating note — and frustrating, too. I’ve seen no evidence that prosecutors are going after this kind of fraud in any meaningful, systematic way.

[Ex-SD]

The story continues in the L.A. Times:
by Peter Viles

Yesterday’s post about the possible loss of $6 trillion in housing wealth brought me a small flood of e-mail. One of the most provocative notes came from an old friend in suburban Phoenix who poses the question: How much of that $6-trillion bubble was created by outright fraud?

He writes, “I haven’t seen articles surrounding the common fraudulent scheme where mortgage brokers worked with a home appraiser to overvalue homes, then direct owner to sell home to a pre-identified buyer at hundreds of thousands over market value with large kick-back from seller to buyer at closing.

“This happened with great frequency in my former neighborhood just north of Phoenix. In fact, three homes out of six homes on my former street are in foreclosure due to this scheme. An example: I sold my house in Dec. of 06 for $815K (legitimate sale and value at the time at height of price boom). Five months later the same house sold for $1.2 million. The people who bought it from me sold it to an “investor” at the $1.2MM price.

“We bought from builder in ’03 for $493K then sold in Dec. ’06 for $815K. My buyers never moved in but did remove expensive window coverings, outside landscaping fountain and custom-made iron entrance gate then did the kick-back sale scheme for $1.2MM. Their buyer never moved in either.

“The house is now in foreclosure but was recently listed (while in foreclosure) for $534K. It is now set to go to auction. What I wonder is, do the banks who hold the mortgages know the last buyer received the kick-back? Are they going after the money and prosecuting? This happened all over our community. The buyers would never even move in to the properties. They’ve been sitting empty for a year and a half with no landscaping and other maintenance being done on these upscale, gated golf community homes. Much of the sky-high valuations in the Phoenix and Scottsdale areas were an illusion as this scheme was rampant.”

“What angers me most is that innocent buyers in the neighborhood would have been shown these phony sales as ‘comparables’ by their Realtor and may have overpaid for a home in a legitimate sale but have now lost a great deal of value as these ‘comps’ weren’t real. I would imagine it took place in California and Nevada as well.”

Fascinating note — and frustrating, too. I’ve seen no evidence that prosecutors are going after this kind of fraud in any meaningful, systematic way.

[Ex-SD]

The story continues in the L.A. Times:
by Peter Viles

Yesterday’s post about the possible loss of $6 trillion in housing wealth brought me a small flood of e-mail. One of the most provocative notes came from an old friend in suburban Phoenix who poses the question: How much of that $6-trillion bubble was created by outright fraud?

He writes, “I haven’t seen articles surrounding the common fraudulent scheme where mortgage brokers worked with a home appraiser to overvalue homes, then direct owner to sell home to a pre-identified buyer at hundreds of thousands over market value with large kick-back from seller to buyer at closing.

“This happened with great frequency in my former neighborhood just north of Phoenix. In fact, three homes out of six homes on my former street are in foreclosure due to this scheme. An example: I sold my house in Dec. of 06 for $815K (legitimate sale and value at the time at height of price boom). Five months later the same house sold for $1.2 million. The people who bought it from me sold it to an “investor” at the $1.2MM price.

“We bought from builder in ’03 for $493K then sold in Dec. ’06 for $815K. My buyers never moved in but did remove expensive window coverings, outside landscaping fountain and custom-made iron entrance gate then did the kick-back sale scheme for $1.2MM. Their buyer never moved in either.

“The house is now in foreclosure but was recently listed (while in foreclosure) for $534K. It is now set to go to auction. What I wonder is, do the banks who hold the mortgages know the last buyer received the kick-back? Are they going after the money and prosecuting? This happened all over our community. The buyers would never even move in to the properties. They’ve been sitting empty for a year and a half with no landscaping and other maintenance being done on these upscale, gated golf community homes. Much of the sky-high valuations in the Phoenix and Scottsdale areas were an illusion as this scheme was rampant.”

“What angers me most is that innocent buyers in the neighborhood would have been shown these phony sales as ‘comparables’ by their Realtor and may have overpaid for a home in a legitimate sale but have now lost a great deal of value as these ‘comps’ weren’t real. I would imagine it took place in California and Nevada as well.”

Fascinating note — and frustrating, too. I’ve seen no evidence that prosecutors are going after this kind of fraud in any meaningful, systematic way.

[Ex-SD]

The story continues in the L.A. Times:
by Peter Viles

Yesterday’s post about the possible loss of $6 trillion in housing wealth brought me a small flood of e-mail. One of the most provocative notes came from an old friend in suburban Phoenix who poses the question: How much of that $6-trillion bubble was created by outright fraud?

He writes, “I haven’t seen articles surrounding the common fraudulent scheme where mortgage brokers worked with a home appraiser to overvalue homes, then direct owner to sell home to a pre-identified buyer at hundreds of thousands over market value with large kick-back from seller to buyer at closing.

“This happened with great frequency in my former neighborhood just north of Phoenix. In fact, three homes out of six homes on my former street are in foreclosure due to this scheme. An example: I sold my house in Dec. of 06 for $815K (legitimate sale and value at the time at height of price boom). Five months later the same house sold for $1.2 million. The people who bought it from me sold it to an “investor” at the $1.2MM price.

“We bought from builder in ’03 for $493K then sold in Dec. ’06 for $815K. My buyers never moved in but did remove expensive window coverings, outside landscaping fountain and custom-made iron entrance gate then did the kick-back sale scheme for $1.2MM. Their buyer never moved in either.

“The house is now in foreclosure but was recently listed (while in foreclosure) for $534K. It is now set to go to auction. What I wonder is, do the banks who hold the mortgages know the last buyer received the kick-back? Are they going after the money and prosecuting? This happened all over our community. The buyers would never even move in to the properties. They’ve been sitting empty for a year and a half with no landscaping and other maintenance being done on these upscale, gated golf community homes. Much of the sky-high valuations in the Phoenix and Scottsdale areas were an illusion as this scheme was rampant.”

“What angers me most is that innocent buyers in the neighborhood would have been shown these phony sales as ‘comparables’ by their Realtor and may have overpaid for a home in a legitimate sale but have now lost a great deal of value as these ‘comps’ weren’t real. I would imagine it took place in California and Nevada as well.”

Fascinating note — and frustrating, too. I’ve seen no evidence that prosecutors are going after this kind of fraud in any meaningful, systematic way.

[Ex-SD]

The story continues in the L.A. Times:
by Peter Viles

Yesterday’s post about the possible loss of $6 trillion in housing wealth brought me a small flood of e-mail. One of the most provocative notes came from an old friend in suburban Phoenix who poses the question: How much of that $6-trillion bubble was created by outright fraud?

He writes, “I haven’t seen articles surrounding the common fraudulent scheme where mortgage brokers worked with a home appraiser to overvalue homes, then direct owner to sell home to a pre-identified buyer at hundreds of thousands over market value with large kick-back from seller to buyer at closing.

“This happened with great frequency in my former neighborhood just north of Phoenix. In fact, three homes out of six homes on my former street are in foreclosure due to this scheme. An example: I sold my house in Dec. of 06 for $815K (legitimate sale and value at the time at height of price boom). Five months later the same house sold for $1.2 million. The people who bought it from me sold it to an “investor” at the $1.2MM price.

“We bought from builder in ’03 for $493K then sold in Dec. ’06 for $815K. My buyers never moved in but did remove expensive window coverings, outside landscaping fountain and custom-made iron entrance gate then did the kick-back sale scheme for $1.2MM. Their buyer never moved in either.

“The house is now in foreclosure but was recently listed (while in foreclosure) for $534K. It is now set to go to auction. What I wonder is, do the banks who hold the mortgages know the last buyer received the kick-back? Are they going after the money and prosecuting? This happened all over our community. The buyers would never even move in to the properties. They’ve been sitting empty for a year and a half with no landscaping and other maintenance being done on these upscale, gated golf community homes. Much of the sky-high valuations in the Phoenix and Scottsdale areas were an illusion as this scheme was rampant.”

“What angers me most is that innocent buyers in the neighborhood would have been shown these phony sales as ‘comparables’ by their Realtor and may have overpaid for a home in a legitimate sale but have now lost a great deal of value as these ‘comps’ weren’t real. I would imagine it took place in California and Nevada as well.”

Fascinating note — and frustrating, too. I’ve seen no evidence that prosecutors are going after this kind of fraud in any meaningful, systematic way.

[briansd1]

[quote=Ex-SD]L.A. Land: latimes.com
by Peter Viles

In real terms, the rate of price decline in the 20-city index would imply a loss of almost $6 trillion in real housing wealth over the course of the year, an average of $85,000 per homeowner.”

I’m a so-so student of economic history, but I’d have to bet that, even adjusted for inflation, the only time that many Americans have lost that much wealth in a short period of time would have been during the Great Depression. I’m not even sure it happened during the Depression. (I understand: This hasn’t happened yet; it’s only a prediction.)

[/quote]

The prediction has been pretty correct. Recently, I heard President Obama say $5 trillion in wealth.

The middle and high ends still have a some way to drop.

[briansd1]

[quote=Ex-SD]L.A. Land: latimes.com
by Peter Viles

In real terms, the rate of price decline in the 20-city index would imply a loss of almost $6 trillion in real housing wealth over the course of the year, an average of $85,000 per homeowner.”

I’m a so-so student of economic history, but I’d have to bet that, even adjusted for inflation, the only time that many Americans have lost that much wealth in a short period of time would have been during the Great Depression. I’m not even sure it happened during the Depression. (I understand: This hasn’t happened yet; it’s only a prediction.)

[/quote]

The prediction has been pretty correct. Recently, I heard President Obama say $5 trillion in wealth.

The middle and high ends still have a some way to drop.

[briansd1]

[quote=Ex-SD]L.A. Land: latimes.com
by Peter Viles

In real terms, the rate of price decline in the 20-city index would imply a loss of almost $6 trillion in real housing wealth over the course of the year, an average of $85,000 per homeowner.”

I’m a so-so student of economic history, but I’d have to bet that, even adjusted for inflation, the only time that many Americans have lost that much wealth in a short period of time would have been during the Great Depression. I’m not even sure it happened during the Depression. (I understand: This hasn’t happened yet; it’s only a prediction.)

[/quote]

The prediction has been pretty correct. Recently, I heard President Obama say $5 trillion in wealth.

The middle and high ends still have a some way to drop.

[briansd1]

[quote=Ex-SD]L.A. Land: latimes.com
by Peter Viles

In real terms, the rate of price decline in the 20-city index would imply a loss of almost $6 trillion in real housing wealth over the course of the year, an average of $85,000 per homeowner.”

I’m a so-so student of economic history, but I’d have to bet that, even adjusted for inflation, the only time that many Americans have lost that much wealth in a short period of time would have been during the Great Depression. I’m not even sure it happened during the Depression. (I understand: This hasn’t happened yet; it’s only a prediction.)

[/quote]

The prediction has been pretty correct. Recently, I heard President Obama say $5 trillion in wealth.

The middle and high ends still have a some way to drop.

[Author]

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