American Dream

washingtonpost.com
Hot Housing Market Opens Doors for Fraud
Dream of Homeownership Is Preyed Upon

By Michael Powell
Washington Post Staff Writer
Friday, July 29, 2005; A01

Quotes:

NEW YORK -- For mortgage scammers, deed thieves and property
flippers, this is the Golden Age.

The chatter in New York, as it is in Washington, Las Vegas, San Francisco and Miami, is of housing riches quickly realized. Prices have tripled in those cities, and 70 percent of Americans now own a home. But for thousands of working-class and poor Americans, the venture into homeownership has brought misery at the hands of the unscrupulous.

"We've never seen so many schemes and such complexity to the fraud," said Sarah Ludwig of the Neighborhood Economic Development Advocacy Project, which has helped lead investigations into predatory lending in New York. "Everyone works to defraud: the broker, the appraiser, the attorney and the inspector. Before a homeowner knows it, they are in way over their heads."

Now I don't claim to have the answer to this, but I have to wonder how much of this fraud is connected (in some way) to federal government housing subsidy programs? While this Post article does not mention it (for some reason), Washington's neighbor to the north on I-95, Baltimore City, has had a long-running and severe problem with "flipping" of properties in the city and this did catch the attention of local and federal officials, as can be seen from these press releases:

Mayor O'Malley Testifies Against Predatory Lending; City Gets $5 Million to Fight Flipping (HTML);
Walter Hammond Sentenced to 37 Months in Mortgage Flipping Scheme (Adobe Acrobat .pdf, 135K); and
Three Defendants Sentenced in Mortgage Flipping Scheme (Adobe Acrobat .pdf, 60K)