Friday, August 27, 2010

Condo conversions, straw buyers and mortgage fraud!

What a great mix!  During the peak of the real estate bubble we experienced a trend where real estate investors would buy up multi unit rental buildings or townhouses and then convert them to condominiums which they then resold at huge profits.  Nothing wrong with that.  I personally watched a few friends make hundreds of millions of dollars doing these condo conversions, things were going along swimmingly until the real estate bubble started to deflate, that's when things started to get really interesting.  Investors that purchased these types of properties after the market peaked found themselves with units that they paid way too much for and quickly found that there was no legitimate buyers for their grossly overpriced units.  The saving grace for these property owners?  FRAUD!  

Here's a story from California that sums up one such situation to a t.

There were tons of these rental communities that were converted into "condos" all over Florida netting the converters hundreds if not billions of dollars and now most of these projects are busted out and in ruins with the lenders left holding the bag for properties that are worth a fraction of what's owed on them.  So here's the question that begs to be asked, considering the massive amounts of fraud that went on and the dollar amounts involved with these condo conversions, why are the people in law enforcement playing around with bullshit nickle and dime cases like the Barrera mortgage fraud case?  Are the mortgage fraud cases that are touted in the local media just window dressing for the masses while the guys who made off with the big money go unnoticed or are these cases too tough for law enforcement to tackle? 

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