Amerika

Real estate agents typically do the least amount of work, and yet make the most amount of money in a real estate transaction. In fact, many real estate agents only do the job part time. This is just another way society rewards the “face” of the operation; the smile that has to actually (gasp!) deal with people for a living.

Is it any surprise, then, that in today’s economic climate, despite all the government is doing to, as they say, help people, that fraud only increases?

So, here’s the scam:

1. Get behind in your bills, so you can prove that you can’t keep the house that has depreciated below to loan amount.

2. Make a case for a short sale with your lender.

3. Go through the motions of selling on the open market with a crooked agent. Have the agent send only the low Offer of your confederate to the lender.

4. Once you sell to your not-arm’s-length partner, rent it back from him/her or buy it back at a later date.

(I have, in the past, run into agents who don’t present Offers. But, I can’t prove it is happening now, or for this reason, based on my experience in the marketplace. I am experiencing the inability to see properties, which may be a symptom of the same disease.)

[+]|Boston Real Estate Now blog

People see short sales and foreclosures as a way out of a mortgage obligation they signed up for when things were good. Instead of realizing that the mortgage is the first thing one must pay for each month, they continued to buy toys and rack up debt for things like car payments. Since the idea of entitlement tells these leeches that whatever they happen to “own” at the moment is theirs, forget letting these toys go or just giving them back to the bank to help cancel that discretionary debt. They’d rather play around with the system ($8,000 down payment courtesy of the government, anyone?) to do crooked buy and leaseback deals.

This is loosely related to the idea in economics known as moral hazard. Where there’s a way for someone to make profits or avoid losses through loopholes (or even fraud), it happens, just like people will act differently (read: not follow the rules) if there’s no risk involved for not following the rules. This is exactly why most economists – not the policymakers in Washington, D.C. who are driven entirely by politics, but the academics – would never support most of the recent transition from capitalist republic to nanny-state. The most government loopholes you create for parasites to work the system, the more you’re subsidizing parasitic activity instead of actually helping.

This is the result of shelling out eight thousand dollars to anyone who wants to buy a home, and then injecting banks with billions in cash to keep credit flowing while also allowing the banks to be less conservative with short sales and foreclosures. To blanket the economy with funny money only gives people ideas (How do I get mine??).

Sane people choose to live a sustainable lifestyle and wait until they’re sure they can afford a house regardless of who is fronting the cash. One can only hope the idea of saving gets back in vogue as funds dry up and the government runs out of stopgap solutions.

Tags: barack obama, consumerism, debt