Posted on 11/18/2007 6:22:45 AM PST by DogByte6RER
From dreams to debt
Investors say they expected to cash in on the hot real estate market when they entrusted money to a company in Murrieta. Instead, many are losing their homes and facing bankruptcy.
03:08 PM PST on Saturday, November 17, 2007
By LESLIE BERKMAN The Press-Enterprise
Video: Anna Richter talks about losing money in the investment scheme
Residents of Copper Canyon in Murrieta watched in astonishment as a group of investors snapped up homes in their middle-income community last year, paying $50,000 to $100,000 more than the sellers wanted.
Today, the front yards are browning, overgrown with weeds. Many of the houses are empty. Owners have put up for-sale signs to lure buyers before the houses are auctioned on the courthouse steps or seized by lenders. Many are in foreclosure.
Such properties, strewn across southwestern Riverside County, are the most visible fallout from a real estate scheme that recruited hundreds of investors in at least six states who wanted to cash in on the hot housing market. Many of those investors instead find themselves facing foreclosure or bankruptcy. Some have lost their family homes.
The U.S. Securities and Exchange Commission and the Riverside County district attorney's office are investigating Pacific Wealth and the men behind it. Investors said they also have been interviewed by agents of the FBI, the Secret Service and the California Department of Corporations, but those agencies declined to explain their role in any probe. No criminal charges have been filed.
Investors who have lost an estimated $200 million in cash and equity have joined in five lawsuits that allege fraud and unfair business practices.
The trust that was a cornerstone of the scheme is broken.
(Excerpt) Read more at pe.com ...
——the “investors” obviously never heard of Carlo Ponzi-—
We have one in Bakersfield: Crisp and Cole.
Its bottom fell out a couple of months ago, with the FBI apparently at the helm of the round-up.
Related news reports on this mortgage fraud case:
“The man in the center” - http://www.pe.com/reports/2007/wealth/stories/PE_SR_20071118_duncan.d5cf6f1.html
“Early warning explained away” - http://www.pe.com/reports/2007/wealth/stories/PE_SR_20071118_lanuzo.d5e5918.html
“Key players: Among the people named in lawsuits filed by investors” - http://www.pe.com/reports/2007/wealth/stories/PE_SR_20071118_bios.d5a1ef6.html
“Companies named in investor lawsuits” - http://www.pe.com/reports/2007/wealth/stories/PE_SR_20071118_firms.d5db12e.html
“E-mail exchange: How crisis grew for one clergyman” - http://www.pe.com/reports/2007/wealth/stories/PE_SR_20071118_emails.d5f15c5.html
The cornerstone was greed, pure and simple. I have absolutely no sympathy for the speculators. They drove the price up on us all.
The FBI in Chicago has predicted that mortgage fraud is the coming tsunami that will engulf the nation in a wave of fraud within the next two years.
www.chicagotribune.com/news/specials/chi-mortgage-1-story,0,5744461.story
chicagotribune.com
‘If you are still making money selling drugs, you are an informant or about to be busted.
Mortgage fraud is the thing to do now.’
By David Jackson
Tribune staff reporter
November 5, 2005
A white-collar crime wave is raking Chicago’s poorest communities, robbing vulnerable families of their homes and draining billions of dollars from the U.S. economy.
During the last five years, as home loans became easier than ever to get and identity theft blossomed, mortgage fraud surged.
FBI officials say it now threatens to become a national financial epidemic. Gang members call it “the new street hustle.”
I wonder what these people think when they see a get rich quick on real estate info-mercial now?
The problem with taking that cash kick back on that over inflated appraised value when they short term financed those “investment properties” is that all it really was, was a second mortgage.
Greedy people that never thought this scheme through properly is what this is. It will sort itself out if the government would just leave it alone.
I have no sympathy for the greedy.
That’s a great article...
While the housing market may be in a downturn because of this, I predict there will be a new “housing” boom in the form of prison construction.
We shouldn't. And those banks who were all too willing to participate in this scam, when they should have known better, should eat those loses as well. They make billions in profits every year,so they can well afford it.
But, they will raise interest rates to recover loses instead. That is the other shoe everyone is waiting to drop.
I like easy loans... I like them quite a bit. I don’t like people ruining them for everyone else. If I want to go big, these easy loans were there. In the future, these easy loans are more difficult to get, effectively removing one of my power tools... all because a bunch of drunk jackasses chopping off their little fingers.
“But, they will raise interest rates to recover loses instead.”
.....hmm....when they do that, could that trigger another tsumami?: credit card debt.
......the mountain of unsecured credit card debt worries me more than real estate....at least with real estate the creditor can sieze the house....what do you sieze from a Gold Card pauper?
Wow. I live in the area, this is big and bad.
They may be a little more expensive that’s for sure, but there will still be plenty of money to borrow if you are the right person. High risk loans? Forget it. They will still be around, but at much higher interest rates and “the lender can’t loose” situations.
Or you can just use some of that cash (Canadian bucks?) you have sitting around.
Yeah, I’m in Temecula and there are a couple of foreclosed homes on my street.
I don't know if credit card debt will cause another separate "tsumami" however. Look what happen 2 years ago when everyone was speculting the exact same thing. American simply paid off their debt at unprecidented rates and spent right through a predicted recession. It just didn't happen. As always, the one unpredictable factor- the strength of consumerism in America- is what determines the economic health of the nation. It's just too hard to kill. There is always an opportunity to make money no matter what the situation is.
Potential opportunity. :o)
I am just east of Temecula in Anza.
We live in an HOA, 1050 lots half with homes. I am on the board and we have 10 lots / 30 homes in foreclosure.
Of course they are the ones with 100% financing, so they could not even sell to get their mortgages paid off. Most of the people are mortified that this has happened, and many are furious that they could have been so stupid. However, we have a few that blame everyone else.
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