The American Housing Market...

[joshwa]

It all seems a complete mess... does this kind of thing go on in the UK?

Homeowners entangled in loan scheme -- Newsday.com

First, Wider bought it for $475,000, Nassau County property records show. Then he transferred the property to a real estate trust, with a trustee who was Wider's personal lawyer.

The same day, the trust sold the house to a one-time account executive at Wider's bank for $750,000. At the same time, HTFC issued the account executive two loans totalling $700,000.

In less than 24 hours, the pricetag of the home went from $475,000 to $750,000 -- at a time when similar homes in the neighborhood were selling for just more than $500,000.

Real Estate agent / Mortgage seller buys house, for 475,000, sells it to an "associate", then sells it on later that day for 800,000, apparently this is "legal" in America? Then sells the loans to some other bank?!

So in America - the Real Estate owns the property and then sells it to you? Surely the Real Estate agent would have a slight "Conflict of interest" ? regarding pricing...

Surely all this would be illegal in the UK?

Did you also see on the news the Tent cities that have sprung up outside LA? YouTube - Tent cities spring up in LA

Josh

[iranu]

If the allegations are true, it suggests that Wider and his associates turned a profit on the real-estate deals by selling homes at inflated prices; issuing loans to cover those higher prices; and selling off the loans to other banks, thereby eliminating his responsibility for the loans if the borrowers stopped paying their mortgage.

Which is my understanding of what he was doing. I doubt that it would happen in the UK because of regulations and the way in which the market works.

I have read that sub-prime mortgage loans made up 3% of the American market in 1997. In 2006-2008 that had risen to 20%. There has also been a significant rise in interest only mortgages for first time buyers in the UK to around 20% of first time buyers.

Banks allowing people to gorge themselves on cheap credit was always going to be a disaster but the politicos love a good boom and were certainly not prepared to produce some rationality in the markets with higher interest rates, even Greenspan got it wrong. I think we are seeing the beginnings of a recession in the US and that will spread to the rest of the western world. How severe it will be I could not speculate but things are not looking good, especially when you consider the borrowing figures of HMG and our rising taxes.

[badass]

"I trusted him, I felt like he was an honest person," said Robin Fitzgerald, who negotiated with Wider to pay $805,000 for a home in North Massapequa in 2005 that a later appraisal valued at $545,000. Fitzgerald is now facing foreclosure. "I wasn't familiar with the prices of houses here. I'm a first-time homeowner."

Prick deserves to get ripped off if he bought a house without even doing any research to see if it was worth that.
Lets face it, if this rip off merchant wouldn't have conned him, someone else would

[Rave]

Of course it goes on over here Josh. We've had a much bigger housing bubble than the US, so it stands to reason that, if anything, the problem is probably worse over here.

Mortgage Fraud - Great Britain

Police launch inquiry into suspected mortgage fraud gangs - Times Online

Organised crime turning to mortgage fraud - Business News, Business - Independent.co.uk

....etc., a quick google threw up loads. Even outside of organised crime, "Self-certification" mortgages- aka 'lie-to-buy" mortgages- have been a big part of allowing a lot of people to borrow far more than they should have. Fine when house prices are going up and the economy is doing O.K., but in a house price crash and a recession a lot of people are going to get into difficulty, and then the banks might start asking questions. They should have asked them when they lent the money, of course.....

even Greenspan got it wrong.

Greenspan bloody started it FFS. The man is a class A chump, how the hell he ever got a reputation for competence I'll never know. Any moron can blow a bubble.