Fraud in Foreclosed Homes Sales

HUD.gov

 Issues - what is fraud and what is fair rules? 

1) HUD - investors are bidding on these houses, swearing they will be owner occupant.  paying cash 5,000 to 10,000 over list price and HUD holds bids until they get the price they want. Some RE agents will not allow peopel to do this, others do a wink and nod to get buyers to bid. AT any rate, legally, HUD cannot sell to those that are investors until the house has been listed for over 15 days.  To my mind this is a mini-auction.

2) HUD has low cost home program geared to help low income.  originally if you were low income and a house had sat on market for over 6 months it could be bought for $1.00 -  those homes are sold to cities, and NON PROFITS for $1.00. Each $1 home is then either restored or sold "as is" - ----- when was the last time you saw a house for $1.00????? or $100  it isn't happening.  Those homes I am betting are going to governments to make money - like the 18,000 one in buckeye sold AS IS. 

3) Selling Banks (listings that use terms, REO, Bank owned, or Bank Repossed) are often, upon inquiry, sold to FHA/HUD/ and no longer handled by the bank.   FHA /HUD then may hold them for several months or one year not selling them, while they determine structural damage or title issues. 

3.5)  Example:  we heard of property for sale and checked it on Zillow and a Real Estate site.  since we could not locate the multiple listing number readily the first time - we checked with county records and determined BAC home loans owned the property via trust deed.  WE then called BAC who indicated that they are only servicing the property for the investor.  The investor is FHA - What the heck?  Upon a call to FHA (who was very helpful) it was determined it was not on their listings for sale, and being held for indetermine time.  We could check back periodically. We have been told the banks sell it back to FHA to get money back to cover their loss that FHA is taking them back as the insurer. (oh so they fraud people and give to the government - no wonder government doesn't seem to be effective in dealing with foreclosure fraud.)                                                                

4) HUD Money: While I think it is important to help people, why not get the money to them directly INSTEAD of announcments like this: 

HUD announced $15 million in grants to more than 200 local housing authorities through its Public and Indian Housing Family Self-Sufficiency Program last week. Communities in Chicago, Chillicothe, Ohio,Vineland, N.J., and San Antonio will receive grants to help connect families with important agencies and services. - HUD news June 7, 2011

Gotta love the banks and the government.  Helping low income?  NAH just improving communication! Let's just create more  hoops to jump through. 

photo: HUD.gov

AT this point in home hunting it is getting weary.  We are tired of several things 1) hearing one price and then finding out that a home has 5 bids within hours of a  listing   2) Finding HUD homes listed then sold for up to 10K more than listed price by investors 3) Finding home listed and discovering that it is not for sale because the banks aren't selling.

If we dont' find something soon, never fear - there is another foreclosure wave coming and it may be the worst drop foreclosures that we have seen to date.

A 203(K) loan can save that deal of a foreclosure » Knoxville News Sentinel

NOTE;  I think it is risky to buy any foreclosure given all the fraud. That is just the practicality - make sure you have clear title and even that won't guarantee anything if it turns out that the banks fraud actions keep titles unclear for past 50 years.  On the ETHICAL side, while I once wanted to flip houses, I despise that anyone is benefitting from other people's problems... go find a short sale and help people prevent financial choas.  If you are not buying as an investment then that could be another thing so the following is offered for those that are without choices financially. It is available for your primary residence.

A 203(K) loan can save that deal of a foreclosure » Knoxville News Sentinel: "That’s where the FHA 203(K) loan comes into play if you’re buying a primary residence. Because it’s an FHA loan, you have a low down payment and premium pricing available with only a 640 credit score. Typically, FHA’s standards regarding the condition of the property are pretty sound and unwavering. Did I mention you have to be able to actually live in the home and have running water and a working roof when you close? Well, FHA is extremely particular on these matters, ensuring its customers live in a safe, affordable home. That’s the focus of their business. FHA guidelines also limit loan size.

What makes a 203(K) loan special is it allows the buyer to make some of the necessary repairs or desired upgrades by financing the costs into one loan amount. The 203(K) loan will also work on a refinance, in case you want to bust out a wall and create a bigger closet. Whatever the need, this loan may be a solution."

Foreclosures Are Making People Sick - New America Media

Foreclosures Are Making People Sick - New America Media: "The foreclosure crisis is affecting tenants and homeowners, according to the public health agency. When banks repossess a home, they seldom bother to maintain it before putting it on the auction block, and the consequences can affect residents’ health, according to a study by Just Cause last summer that was funded by The California Endowment.

The study looked at how the high rate of foreclosures in select East and West Oakland neighborhoods had affected the health of their residents. A survey of 388 residents concluded that “foreclosures make us sick.”

Between 2006 and 2009, one in four mortgages in Oakland, affecting 14,941 property owners, began to enter into foreclosure, according to the report, titled, Rebuilding Neighborhoods, Restoring Health.”

Alameda County Health Department Deputy Director Dr. Sandra Witt highlighted the report’s findings.

Among them were:

� Almost one-third of tenants in foreclosed properties said they were living in sub-standard conditions with health risks due to mold, pests and utility shut-offs.
� Rates of stress, depression and anxiety were more than two times higher among foreclosed residents.
� Nearly 90 percent of foreclosed residents were struggling to make ends meet. Many have to choose w>>>KEEP READING"


UPDATE NOTE:  Just heard on the news that drinking increases as stress mounts during foreclosures...afterwards unable to afford the booze, people go through withdrawals. DT's prompt emergency room visits.  Alcohol withdrawal is the only drug withdrawal that can cause death according to the televised report.

Check also this report: http://www.cbsnews.com/stories/2010/02/16/national/main6213988.shtml
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