Mortgage Fraud, Housing Bubble, and You
By Däna Wilkinson, Attorney at Law on Apr 11, 2007 in General Bankruptcy Information, South Carolina
This article in the Washington Post notes the connection between the rampant mortgage fraud, lax lending practices, and the housing bubble.
Many experts have concluded that the nation’s real estate boom of recent years was fueled in part by weakened lending standards that sparked excessive demand and drove up prices. Now, some are worried that the looser standards may have permitted a boom of another kind — a big expansion of mortgage fraud.
[snip]
Initially, these schemes pumped up housing values for everyone as artificially high appraisals helped the swindlers get inflated loans. Legitimate home buyers rushed in to get a piece of what they thought was a soaring real estate market. Now as the fraud is being exposed, their home values are taking a hit.
Many people not directly affected by these practices will also pay a price, because they bought when home prices were artificially high, or will be forced to sell when prices have dropped. Much like the savings and loan bust of the 1980s, we are all going to be paying for this one, for a long time.
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