Monday, May 26, 2008

Money Crocks II


A couple of days ago I took a shot at the notion that there is big money, some of it Canadian, to be made by speculators who swoop in now and buy-up huge swaths of foreclosed family homes South of the 49th.

And commenters tended to agree.

As for readers in general, well, that's difficult to know for sure.

But, all joking aside, this stuff has really hurt a whole lot of people.

In places like, say, Cleveland Ohio:

Since 2000, Cuyahoga County, which encompasses Cleveland, has recorded 80,000 foreclosures — the most per capita in the country. Nearly 19 percent of those foreclosures occurred last year, according to city statistics.

So, how has this happened?

Well, of course, a lot of it has to do with sub-prime loans chased by a bad economy.

But just as much of it has to do with Money Crockheads who were aided and abetted by Pushers in the Home Selling/Financing business.

Crockheads like this:

Often, a single speculator would buy up multiple homes, hoping to cash in at the close, (Cuyahoga County Treasurer Jim) Rokakis says. He cites one speculator who bought up at least five homes in Cleveland.

She "probably received cash back on each of those properties at the close, the mortgage broker was probably a friend of hers, the appraiser was probably working in concert with them," Rokakis says. "The mortgage banker … really didn't care because he knew or she knew that she was going to take these mortgages and sell them to Wall Street.

"And until the bubble burst in sometime around October of 2006, it was a wondrous operation," he says.

But here's the real thing.

The crash is killing entire neighbourhoods:

On one street in (Cleveland City Councilman Zack) Reed's (3rd) ward, 25 homes stand abandoned. Many have been taken over by drug dealers and prostitutes. In Brancatelli's 12th Ward, 200 homes were demolished last year. Brancatelli says about 1,000 should come down, which would cost the city around $5 million — money that would not be spent on roads, schools or police protection.

"It's a crime because when you look at this house, it was occupied not too long ago when it was an affordable roof over somebody's head. Now we have to push it into the ground," Brancatelli says of the home stripped by vandals.



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