These people along with thousands, probably millions, of others have been swindled, legally, by low life builders.

It’s legal and disgraceful. The mechanics of it are to get people to buy by holding the earnst money hostage. It is a nausiatingly cheap trick to hook people into bad buildings.

Legitimate builders don’t need to resort to ripping off the public, but hey, this is how the game is played.

Key: subtractions, additions:

In 2000, he emigrated to the U.S., settled in Redmond and became a limousine driver, earning little more than minimum wage, but enough to buy a condominium in Redmond four years later.
…
Two years ago, a real-estate agent suggested he consider purchasing a condominium at the luxurious Bellevue Towers. To Kasimov, it seemed his vision of America was unfolding with the ease of the touch-screen showing eventual views from his dream condo on the 32nd floor. and he picked one on the 32nd floor. About the same time, he also started the purchase of a house in Bellevue and another in Redmond.
…
“I normally wouldn’t think I could afford this,” Kasimov said. “But there was all this excitement … Hollywood all over the place.” He says he was told there were only a few units left, and the real-estate agent, knowing what Kasimov did for a living and that it was his first purchase, said, “Let’s see if they’ll approve you.”

Left in the article: the references to English being a “language they didn’t understand,” as well as the claim that he is merely a “limousine driver.”

We’re only talking about the low life builder. What are you talking about?

You retard.

Is that necessary? I’ve noticed people on this blog are starting to get personal/nasty when they disagree with someone. Lighten up.

http://www.ritholtz.com/blog/wp-content/uploads/2009/02/bear-markets-comparison-xlrg.gif

The podcast schtick was funny the first 35 times…

I am glad I stopped at 35 then. :)

Seriously though, it is just not practical to keep repeating the same points again and again as they come up in discussions, that’s why I decided to make podcasts (or blog entries) that cover key issues and then just point people to them.

Sniglet’s post was a bit ambiguous referring to 100% interest loans. At first I thought he meant zero down, but perhaps he meant interest only loans.

Yes, I meant interest only loans. Sorry for the confusion.

I’ve seen this a lot. The agent may have been some one who spoke the native language and was in awe of the doing business with Chase bank and a big time builder. Most of the people I deal with speak Spanish and I have seen this same dodge run on lawyers, more than one.

I’ve seen it a lot. It’s gut wrenching cheap, tawdry, and the absolute worst of the business, any business. it’s little scams like this that give the United States a bad name.

What about the low life builder? Why is it OK for this guy to do this kind of swindle? Why is it every body elses fault that this builder, with the collusion of Chase Bank, the home of 30% consumer credit rates, that this scam was committed?

It makes me sick that any one can think this is OK in a business.

The podcast schtick was funny the first 35 times…

Things are starting to get tense out there, that’s for sure.

The “33% IO and option ARM” figure is from Ivy Zellmans February 2007 report on the housing market for Credit Suisse. It is for all loan originations in 2006, both purchase and re-fi. The report is titled “Mortgage Liquidity du Jour: Underestimated No More”. The document itself is linked in ths post on Calculated Risk.

http://www.calculatedriskblog.com/2007/03/tanta-credit-suisse-not-drinking-kool.html

I have not seen any stats for 2005 or 2007.

Sniglet’s post was a bit ambiguous referring to 100% interest loans. At first I thought he meant zero down, but perhaps he meant interest only loans. That would fit better with negative amortization.

Anyway, Clinton somehow managed to erase the deficit with not too much pain for the average taxpayer, so it can be done.

A booming stock market, with lots of trades and gains, helped out a great deal.

No one is doubting the situation you are describing as scam by builder/lender, which is the reason why any sensible agent would advise client to avoid condos in pre-sale phase.

This story is something else, with borrowers playing dumb when they were obviously gambling on the potential pre-sale profit. All those pre-sale condo stories that struck gold during 04-06 would entice most idiots to follow the same path.

We are talking about these borrowers and their frivolous lawsuit, let’s not argue for the sake of arguing.

Of course you touched on the simplistic idea that a lender is generating loans. The lender is looking for a large supply of loans from a builder. They are making attractive loans with fees to match. One stop shopping in your Real Estate purchase.

Of course I have heard the argument that lenders are not trying to grab earnest money. It’s an old, tired, worn out, dodge. Lenders can string a sucker along while the builder sets the hook.

That seems to be OK. It’s OK for a lender like Chase to tell a buyer they qualify for a loan long enough to get the earnest money. Then it becomes the buyer’s problem to get the loan closed or lose the earnst money.

Some buyers have had relatives cosign for them. Others have brought in even bigger down payments.

It’s all a part of the game. You set the hook and reel them in.

As a big time investor you should know how it works rather then quote from the hand book.

Sniglet mentioned- “The Seattle area subprime loans never exceeded 20% of the total..”

I have no data on hand other than what our office was closing and am too darn tired to get data from Metroscan or my favorite title company, but there is no way in hell only 20% of the Seattle AREA (whatever that means) loans were subprime. My gut tells me it was much more. When over 70% of all purchase transactions our office closed in all of 2006 were 100% financed (and more than 20% for crying out loud were clearly from sub-prime famous implode-o-meter lenders, it leads me to believe the number is much higher.) And I’ve said it a million times before but our office is but a tiny fragment of dust compared to what the title companies were closing in terms of volume. They have been excruciatingly quiet (other than their own scandals and massive layoffs/office closures and consolidation) during this whole debacle, but the data on home sales and lending they have is beyond huge. They have the Holy Grail of data.

Thank you once again for clarification.

The bubble, the housing market, real estate bubble, comes down to a credit bubble. Loans far exceeding the value of the properties is the problem.

It’s always interesting that people want to blame the buyer or borrower. They should have known better, or they were trying to make money, oh my goodness!!!!!

No, this article clearly demonstrates that there was a orchestrated swindle of a person or persons. That seems to be OK with the people here. It’s OK that these people lost earnest money on a real estate transaction that was unable to be closed.

The mechanism exists to allow this to be done legally. That’s why the attorney went to the press.

It makes no difference if these people were trying to speculate. The earnst money is in the hands of the builder with the help of Chase Financial. That’s not OK. It’s wrong.

It is a micro example of the greed the builders and banks have had in the collusion of boosting prices, for higher loan amounts.

sorry, I am in a bad mood today

No problem. I tend to have that effect on people (i.e. putting them in bad moods).

sorry, I am in a bad mood today

go back and read the report. It does not say this at all. Exh 29 shows 23% of mortgages were IO/Negam on a nationwide basis, and says this was disproportionately weighted to Calif, Fla, and AZ.

So where does the claim come from. How is Seattle 10% higher? It is BS…

This chart clearly shows Seattle as having 10% more negative amortization and interest only loans than the nation as a whole. Are you questioning the data used in the report?

http://www.recharts.com/reports/CSHB031207/e31.GIF

People refinanced too…not just purchased. Some perspective please

These numbers don’t include re-financings, just the mortgages used for home purchases. This would include both existing and new home sales. I would hate to see how bad things would look if the re-financings/equity extraction deals were included.

The “33% IO and option ARM” figure is from Ivy Zellmans February 2007 report on the housing market for Credit Suisse. It is for all loan originations in 2006, both purchase and re-fi. The report is titled “Mortgage Liquidity du Jour: Underestimated No More”. The document itself is linked in ths post on Calculated Risk.

http://www.calculatedriskblog.com/2007/03/tanta-credit-suisse-not-drinking-kool.html

I have not seen any stats for 2005 or 2007.

go back and read the report. It does not say this at all. Exh 29 shows 23% of mortgages were IO/Negam in ‘06 on a nationwide basis, and says this was disproportionately weighted to Calif, Fla, and AZ.

So where does the claim come from. How is Seattle 10% higher? It is BS… Refinances or not.

PIROOMA

I’d like to know where I can look this bit of information up, is there an easy way to do so? What was the percentage of Seattle home loans that were not paying any principle in 2005? 2007?

This data was posted on SeattleBubble forums a while back (see the link below). Unfortunately, I don’t know what the numbers were for other years, neither do I know where to find it.

By the way, I should stress that this data clearly demonstrates how the real-estate bubble was NOT a subprime issue. The Seattle area subprime loans never exceeded 20% of the total at the peak, so clearly a lot of these negative amortization and no interest payment loans were Prime and Alt-A. Keep in mind that not every subprime loans was of a negative amortization variety (some actually had downpayments).

http://seattlebubble.com/forum/viewtopic.php?f=1&t=466&hilit=scariest&sid=547fd91d5dadc59f8cad935d3caf9bb0

By Lanny Poffo @ 34:

RE: Sniget @ 29 –

“The stastics of the percentage of homes bought with loans that weren�t paying off any principant (e.g. negative amortization, 100% interest) were just astrononmical (33% of all new Seattle area homes were purchased this way in 2006 alone).”

I’d like to know where I can look this bit of information up, is there an easy way to do so? What was the percentage of Seattle home loans that were not paying any principle in 2005? 2007?

Lanny

“33% of all new” – does that mean new construction only?

So if there were 15k homes built/sold in King county in 2006 (a reasonable estimate based on building permits) does this mean a whole 5000 of them had IO/neg-am loans?

Some perspective please

People refinanced too…not just purchased.

Some perspective please

The mainstream media is good for only one thing – letting you know when a trend has topped.

The blogs actually give you a chance in hell of getting in at the beginning of one.

http://www.calculatedriskblog.com/2007/03/tanta-credit-suisse-not-drinking-kool.html

I have not seen any stats for 2005 or 2007.

RE: Sniget @ 29 –

“The stastics of the percentage of homes bought with loans that werenâ��t paying off any principant (e.g. negative amortization, 100% interest) were just astrononmical (33% of all new Seattle area homes were purchased this way in 2006 alone).”

I’d like to know where I can look this bit of information up, is there an easy way to do so? What was the percentage of Seattle home loans that were not paying any principle in 2005? 2007?

Lanny

“33% of all new” – does that mean new construction only?

So if there were 15k homes built/sold in King county in 2006 (a reasonable estimate based on building permits) does this mean a whole 5000 of them had IO/neg-am loans?

Some perspective please

By jon @ 33:

RE: Ubersalad @ 32 –

Yes, but the Democrats’ specialty is to create entitlements that grow like weeds long after they have left office.

Well Iraqi war II will bleed money and benefits for the wounded and sick veterans for 30 years to come (can’t say i begrudge them that) and military will be so stretched and weakened, that it will end up resembling mexican army instead of US army. Go Bush, blame dems that. You retard.

note: the house I bought was in IL so maybe the rules are different there? otherwise I don’t get it.

Thanks for taking the time to follow up on this story. Dori on Kiro 97.3FM did a segment on the hot dog/limo driver-owner this past Friday and it was very entertaining. I’m going to forward your post to him.

“The stastics of the percentage of homes bought with loans that weren’t paying off any principant (e.g. negative amortization, 100% interest) were just astrononmical (33% of all new Seattle area homes were purchased this way in 2006 alone).”

I’d like to know where I can look this bit of information up, is there an easy way to do so? What was the percentage of Seattle home loans that were not paying any principle in 2005? 2007?

Lanny

Yes, but the Democrats’ specialty is to create entitlements that grow like weeds long after they have left office.

I say over the next hundred years.

You’re just jealous that for all the talk, republicans create deficits and dems eliminate them ;-)