The other day, I heard an insane story on NPR (Public Radio), about an investigation that was done by the Sarasota Herald-Tribune, where they looked at 19 Million Real Estate Transactions in Florida and found that, “…more than 50,000 Florida properties flipped under suspicious circumstances from 2000 through 2008”, and they commented that, “Those flips artificially drove up housing prices and tax bills and contributed to the crush of foreclosures”.
NPR took a closer look at this investigation and purchased a piece of the bonds that are backed by these “toxic assets”, and with the help of the Herald-Tribune (and reporter Michael Braga), they were able to see some of the people behind their toxic purchase (as part of those 50,000+ suspicious deals). This massive amount of suspicious deals included one attorney who defaulted on 5 loans totaling 3.6 Million dollars! Additionally, some of the other loans were tied into a group of investors who lied to banks to get loans. Overall, it was a frightening glimpse of what was going on under our noses.
Can this happen again?
We certainly hope not. But mankind is funny; there is good and bad. The bad are always finding new loopholes and ways to get around the rules. So it takes diligence and we need to always keep fresh in our memory the disaster these people have caused, the homes that have been lost, the livelihoods that have been lost. This has changed the Socio-Economic landscape for everyone for a long time to come. OK, time for the punishment to be be handed out!
We welcome your comments and thoughts, since this is a hot-button topic that irritates a lot of people (like myself)…
50,000 sounds like a big number but 50,000/19,000,000 is about 1/4 of 1%. Now some, like Captain Renault in Casablanca may be ‘Shocked, shocked to discover’ that during a real estate bubble where many who originated loans had no financial risk tied to those loans, about 1 in every 380 loans was not completely legit but those 50,000 shady loans did not bring the global economic system to the brink of collapse. That was brought about (as usual) by our forgetting the lessons of the past.
As you correctly point out keeping the memory of disasters fresh in our mind is the key to prevent reoccurring episodes. Harry Truman said the only thing new in the world is the history you don’t know and 60 years is about as long as we seem to be able to remember anything useful; remember how quaint the old people carrying their Depression mentalities around seemed? Turns out they remembered a few things the rest of us forgot… or never learned. See my Nov ’08 post entitled “Those who fail to learn from history…” for what we ‘unlearned’ http://ashworthpartners.com/those-who-fail-to-learn-from-history/
of course it does upset people . It can also happen again and some people have to suffer the consequences. The NRp has to be more careful regarding the investment. It also has to look at the various investment property and options.