The Golden Rule is Good Business - Posted by PatrickMD

Posted by Bill K. (AZ) on March 31, 2000 at 22:31:01:


I have no doubt that this is happening in Baltimore, and that it has repercussions for all of us. I’ve seen the lender’s distrust in some of my flips here in Phoenix.

I’m a firm believer that every business has it’s group of scammers. However, I’m also a firm believer that scams work because the people duped WANT to believe that it works the way the scammers advertise. These same people also want to believe that they have a good chance of winning millions in the lottery simply because they don’t understand “odds”. You can explain it to them six ways from Sunday, and they won’t understand because they don’t want to understand it. Are they victims of the lottery? Sure. But, only because they WANT to be.

So, while I’m not excusing the scammers, they are most certainly primarily at fault, blame runs right down the line up to, and including, the buyers.

I know that these folks aren’t necessarily sophisticated. However, even the most basic “due diligence” doesn’t require one to be very educated. Of course, this assumes that the buyer WANTS to learn about what is probably the largest purchase in their lives. It’s that assumption which is causing me the consternation on this issue. Nonetheless, if they don’t even try to learn the most basic things about purchasing a home, shame on them too!

Bill K. (AZ)

The Golden Rule is Good Business - Posted by PatrickMD

Posted by PatrickMD on March 31, 2000 at 15:00:17:

In Baltimore, we’re cursed with a few heartless individuals who thought it a good idea to rip off the undereducated urban poor by buying literally hundreds of distressed properties, doctoring the appraisals by four times the FMV, then flipping them. They sold them to the poor schmucks for a low down payment, leaving them to face monthly payments they could never afford in the first place and the loss of what little money they had. There is no excuse for such gross predatory behavior. Those creeps have destroyed peoples dreams, trashed what little credit they had, put the local banking community at risk, and wrecked the flipping concept for us legitimate investors for miles around! Thank God they will have their day in court. Their behavior has so incensed the population that the United States Senate is looking into the situation, with the goal of regulating flipping. There is no honor among thieves.

Ok,ok,k… - Posted by David Alexander

Posted by David Alexander on March 31, 2000 at 16:20:59:


I’m probably going to get flamed for this. I agree it is a problem if they doctored appraisals and led the banks to believe the property was worth more than it was. That’s fraud at best and would require crooked appraisers, possibly mortgage brokers etc.

But, I disagree with the thought that you can put someone in a house for more than they can afford. After all it is them who are signing on the dotted line. They know what they can afford and accomplish. In Fact the Investors probably gave them help toward their dream of owning their own home. If the people defaulted that’s a different situation entirely. I dont believe people default on houses because they feel they paid too much, they no that going in, it’s a big descision. Likely they default on houses because of situations they feel are out of their control.

David Alexander

Here comes the flaming! - Posted by SCook85

Posted by SCook85 on March 31, 2000 at 21:29:37:


Seriously, what Patrick is mentioning is completely different then what you or Bill could imagine.

These buyers have no idea what they are getting into. This is what you need to picture:

Baltimore- Average home price is $120k. We have neighborhoods that on a good day are worth $20-30k. The only people who will live in those neighborhoods are people who just don’t have any other way (in other words they don’t have a clue). These buyers, most of whom have absolutely no credit are duped into buying these homes. Patrick is exaggerating a bit about ruining everything for them because most of them have nothing anyway and couldn’t care less about he foreclosure (although a few do). These buyers are promised the world and told not to worry, the seller (investor) will take care of everything. They sure do take care of everything. In most case the appraisals are pushed to about $80k and the buyer gets a 65% LTV mortgagea. Puts a lot of cash in the investors pocket when they only paid $5-10k for the home.

The buyers are victims in this case. They don’t even know what due diligence is. They are unsuspecting and trust the man who says “YOU CAN OWN YOUR OWN HOME”. I would venture to guess that a good portion of the people who are being taken can’t even read, so the documents are just put in front of them and they are told where to sign (the title companies are in on the scam also).

Believe Patrick when he says it is the investors- it is!!! And I’m happy to see them go down. Whether or not you want to believe it even though they are in Baltimore they are making life difficult for all of you.

In one of the neighborhoods that these investors deal in, 193 FHA loans were granted since 1996, of those 69 have already been foreclosed on, and over 30 more have been petitioned for foreclosure so far. My guess is that at least 75% of them will have been foreclosed on within the next year or two.

I know it seems hard to believe from elsewhere but it really is a BIG TIME SCAM here. They say that it would be better if these investors just robbed the banks, the banks would come out better.


Thank Goodness, I’m Not Alone… - Posted by Bill K. (AZ)

Posted by Bill K. (AZ) on March 31, 2000 at 18:09:48:


No flaming here. I couldn’t agree with you more. I could NEVER get an unqualified buyer into a home for 1.5, 2, or 4 times it’s FMV regardless of the appraisal. Also, it’s the buyer’s responsibility to perform a little “due diligence” as well. I mean, how much effort does it take to find out that similar homes in the neighborhood sold for half of what these investors are looking to get for their over-inflated homes?

Bill K. (AZ)