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Illegal Alien Labor Helped Burst The Housing Bubble
Human Events ^ | Sept. 26, 2008 | Mac Johnson

Posted on 09/27/2008 8:21:04 AM PDT by AuntB

“Optimism about housing values also led to a boom in home construction. Eventually, the number of new houses exceeded the number of people willing to buy them. And with supply exceeding demand, housing prices fell, and this created a problem.” -- President George W. Bush, explaining the origins if the housing meltdown in his emergency address of September 24, 2008

The now deflated Housing Bubble had many causes. These include promiscuous lending practices, low interest rates, federal policy aimed at turning human credit hazards into homeowners, the baby boomers entering their prime earning years, and HGTV.

The bursting of the bubble also had multiple causes, many of which have been well covered in the media. But in my opinion, one contributing factor has not been covered at all -- because it is politically unpalatable to most reporters and commentators. The huge influx of cheap illegal alien labor during the Bubble years helped fuel a massive nationwide home building spree that resulted in a price-killing oversupply of houses.

In many areas of the country, residential construction and remodeling was transformed during the last decade to be a business based on the easy and open availability of cut-rate illegal labor. New homes have traditionally sold at a steep premium compared to existing homes, in part because of the high cost of trade labor, both skilled and unskilled. With the willful breakdown in immigration and labor laws that marked the Clinton and, more especially, the Bush administrations, this changed.

Suddenly, “McMansions” appeared in huge numbers outside every major city in the United States. A more appropriate term might have been “MexMansions,” because they were made possible by the cheap migrant labor that gathered on every construction site, street corner and Home Depot parking lot in the country.

To be fair, at one point the cheap increase in home building capacity probably acted as a temporary safety valve, keeping prices from peaking earlier. This same mechanism, however, allowed the escalation in housing prices to continue longer and develop into more of a classic psychology-driven mania: years and years of steady home price increases led people to believe that there would be years more of steady increases.

Eventually, however, lax credit funneled into a nearly unlimited work force (measured in hundreds of thousands, if not millions, of low-wage workers), resulted in the obvious outcome: too many houses to sell. Prices peaked, the bubble burst, and we arrived at our current predicament: home inventories that could take over a year to sell at current rates.

And long after the peak, the housing juggernaut kept on borrowing and building until it bankrupted itself though its own relentless “efficiency.” The building binge has now become a housing hangover, and, like all hangovers, it is worse when fueled by overindulgence in cheap stuff.

For years, the open borders lobby touted illegal labor as a panacea for high prices. Unfortunately for homeowners, they were right.


TOPICS: Business/Economy; Culture/Society; Foreign Affairs; Government
KEYWORDS: aliens; economy; housingbubble; humanevents; immigrantlist; immigration; mortgages

1 posted on 09/27/2008 8:21:06 AM PDT by AuntB
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To: gubamyster; Liz; All

Now for a little poem sent to me in an email this morning.

Take down the bird feeder!

I bought a bird feeder. I hung it on my back porch and filled
it with seed. What a beauty of
a bird feeder it is, as I filled it
lovingly with seed. Within a
week we had hundreds of birds
taking advantage of the
continuous flow of free and
easily accessible food.

But then the birds started
building nests in the boards
of the patio, above the table,
and next to the barbecue.

Then came the poop. It was
everywhere: on the patio tile,
the chairs, the table ...
everywhere!

Then some of the birds
turned mean. They would
dive bomb me and try to
peck me even though I had
fed them out of my own
pocket.

And others birds were
boisterous and loud. They
sat on the feeder and
squawked and screamed at
all hours of the day and night
and demanded that I fill it
when it got low on food.

After a while, I couldn’t even
sit on my own back porch
anymore. So I took down the
bird feeder and in three days
the birds were gone. I cleaned
up their mess and took down
the many nests they had built
all over the patio.

Soon, the back yard was like
it used to be.... quiet, serene
and no one demanding their
rights to a free meal.

Now let’s see.
Our government gives out
free food, subsidized housing,
free medical care, and free
education and allows anyone
born here to be an automatic
citizen.

Then the illegals came by the
tens of thousands. Suddenly
our taxes went up to pay for
free services; small apartments
are housing 5 families; you
have to wait 6 hours to be seen
by an emergency room doctor;
your child’s 2nd grade class is
behind other schools because
over half the class doesn’t speak
English.

Corn Flakes now come in a
bilingual box; I have to
‘press one’ to hear my bank
talk to me in English, and
people waving flags other
than ‘Old Glory’ are
squawking and screaming
in the streets, demanding
more rights and free liberties.

Just my opinion, but maybe
it’s time for the government
to take down the bird feeder.
If you agree, pass it on; if not,
continue cleaning up the poop.


2 posted on 09/27/2008 8:23:58 AM PDT by AuntB ( "During times of universal deceit, telling the truth becomes a revolutionary act." - George Orwell)
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To: AuntB
Also, when the illegals are made uncomfortable, and go back to thirdwolrdia, that lowers the demand for housing here.

They make more cheap housing, and then leave to free up even more existing housing.

Supply way up, demand way down, which way do prices move?

3 posted on 09/27/2008 8:33:27 AM PDT by null and void (Good advice is something a man gives when he is too old to set a bad example.-F. de La Rochefoucauld)
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To: AuntB

bump!


4 posted on 09/27/2008 8:34:45 AM PDT by nmh (Intelligent people recognize Intelligent Design (God).)
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To: AuntB

I’d really like to see some of the early threads about illegals getting loans. It would be interesting to see who was calling this a warning sign of serious trouble in the future and who laughed it off as conspiracy theorist racism and alarmism.


5 posted on 09/27/2008 8:35:44 AM PDT by cripplecreek (Paying taxes for bank bailouts is apparently the patriotic thing to do. [/sarc])
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To: AuntB

Just my opinion, but maybe
it’s time for the government
to take down the bird feeder.
If you agree, pass it on; if not,
continue cleaning up the poop.
________________________________

How about if you want the birds to keep coming and keep on being fed, YOU pay for the food and YOU clean up the poop, and the rest of us will just watch...


6 posted on 09/27/2008 8:37:04 AM PDT by Tennessee Nana (McCain/Palin Now that's a ticket that deserves a tagline)
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To: cripplecreek

I’m guessing Lindsey Graham might be one. After all, conservatives are just racist bigots, you know.


7 posted on 09/27/2008 8:37:49 AM PDT by Comparative Advantage
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To: AuntB
Say you have a goat in your living room and a kid comes in your house and pets the goat's head. Right after that the goat poops on your carpet. Do you blame the kid for the poop?

The housing bubble existed because people thought they were getting a free built in ATM machine built in their house, and they did not care what terms they had to agree to to get it.

The free ATM is the goat in the living room. Blaming low wage workers is like blaming the kid who touched the goat. It ignores why the goat is in the living room to begin with.

8 posted on 09/27/2008 8:37:58 AM PDT by Mark was here (The earth is bipolar.)
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To: AuntB

So, let’s see....

1. Illegals enter the USA as Criminals.
2. Government welcomes them.
3. Contractors give them Jobs.
4. Contractors and make lots of money.
5. Government officials makes lots of money.
6. Banks officials make lots of money.
7. Government gives illegals free health care and schooling on our taxes.
8. Illegals sell drugs, murder, rape, rob, scam the banks, make lots of money.
9. The legal community (government) protects the illegal community from locals who’ve had enough, and makes lots of money.
10. Government tries to give them citizenship.
11. The public goes broke having to support them.
12. The financial system crashes and government bails itself out with our money.
13. People clamor for Government to step in and take charge.
14. People choose two pro-illegal alien candidates.

...I guess that about sums it up.


9 posted on 09/27/2008 8:40:08 AM PDT by wgflyer (Liberalism is to society what HIV is to the immune system.)
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To: cripplecreek

I’m not sure I have the name right, but I think it was Texas Conservative that posted hundreds of threads about the real estate market.


10 posted on 09/27/2008 8:41:18 AM PDT by tiki (True Christians will not deliberately slander or misrepresent others or their beliefs)
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To: Tennessee Nana

You’ll appreciate this one, Nana.

[snip]Three North Carolina Hispanics who were arrested after calling 911 to report a burglary at their home face deportation and criminal charges.

Local Spanish-language weekly Que Pasa reported Wednesday that Jose Luis Segura Rios, his brother Jorge Segura, Leandro Carvajal and another unidentified Hispanic man called the emergency telephone number on Sept. 16 after burglars broke into their residence in Raleigh, the state capital.

Segura Rios told the weekly that the sheriff’s deputies who responded to the 911 call mistook him for one of the criminals and, amid an altercation, he was beaten by one of the policeman and arrested for “presenting false documents.”

“They ignored me, they didn’t help us. Because we called 911 we’re in prison. We’re the victims, not the thieves,” Jose Segura said.

According to the official report, Segura gave investigators a false name and it was also discovered that he had an arrest record in another state.

His brother and Carvajal also were turned over to immigration authorities because they presented false identification and were illegal migrants.

The fourth man at the house was not arrested because it was determined that he was in the country legally.

http://www.officer.com/online/article.jsp?siteSection=1&id=43410


11 posted on 09/27/2008 8:41:36 AM PDT by AuntB ( "During times of universal deceit, telling the truth becomes a revolutionary act." - George Orwell)
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To: AuntB

As someone who has been involved with many of the “flip house” people, this writer has it exactly right. My main things was kitchen and bath cabinets and countertops. As far as the cabinets went, it was not likely to involve the use of illegals because of the language problem which didn’t allow for much communication of design and other specifications. The countertops, though, were done (not by me) very much on the cheap. Poorly fabricated, low-quality granite done by illegals. Everything that these flippers could do with illegals, they did - so busy cutting everyone else’s throat in a blind greed, coupled with very poor - in some cases criminal - financial practices. One who owes me money responded to my request for payment by telling me how he’d badmouth me to his “network of investors”. When I responded that these “investors” owe me so much money I don’t want any more of their business, he became offended at my being “unprofessional”. What a freakin’ laugh.


12 posted on 09/27/2008 8:45:34 AM PDT by Emmett McCarthy
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To: All

Here is a good website for immigration news by the Maricopa County Attorney’s office.

http://illegalimmigrationjournal.com/


13 posted on 09/27/2008 8:46:28 AM PDT by AuntB ( "During times of universal deceit, telling the truth becomes a revolutionary act." - George Orwell)
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To: Emmett McCarthy

Emmett, do you think you’ll ever collect what is owed you?


14 posted on 09/27/2008 8:48:06 AM PDT by AuntB ( "During times of universal deceit, telling the truth becomes a revolutionary act." - George Orwell)
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To: Mark was here
The free ATM is the goat in the living room. Blaming low wage workers is like blaming the kid who touched the goat. It ignores why the goat is in the living room to begin with.

Like I've been saying, the illegals aren't the sole cause but they were a warning sign. The kid next door to me is a better explaination of what went wrong. He brags about how he's able to buy 3 houses at 33 years old. The problem is that he doesn't "own" any of them. Now he's discovering that what he owns is nearly 1 million dollars worth of debt.

That said, the illegals don't help.
15 posted on 09/27/2008 8:51:01 AM PDT by cripplecreek (Paying taxes for bank bailouts is apparently the patriotic thing to do. [/sarc])
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To: AuntB

Regardless how we got here, it is this huge over-supply of homes that will keep housing prices down and doom the bailout from the start.......... the bailout counts on a price stabilization, which can’t happen with this over-supply.


16 posted on 09/27/2008 8:52:47 AM PDT by umgud (In a crisis, dump gold, buy lead)
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To: AuntB

Regardless how we got here, it is this huge over-supply of homes that will keep housing prices down and doom the bailout from the start.......... the bailout counts on a price stabilization, which can’t happen with this over-supply.


17 posted on 09/27/2008 8:52:47 AM PDT by umgud (In a crisis, dump gold, buy lead)
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To: AuntB

Some of it will ultimately be collected because of liens on unsold property. Some will not be. Actually, with my one most troublesome account, the guy’s lawyer is of far higher character and integrity than he is and has forced him to make certain payments to me out of escrowed funds which the lawyer controls. This whole “Flip This House” thing is over and 95% of the people in it are looking for their “next racket”. Lots will turn up in areas of natural disasters to do half-assed, over-priced, low-quality insurance work for desperate and unsuspecting homeowners.


18 posted on 09/27/2008 9:13:05 AM PDT by Emmett McCarthy
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To: AuntB

THIS IS A NEW ONE——Latino thieves pose as landscapers-— rob family-—drive off in a black Cadillac Escalade

Police reported $7,700 in jewelry was taken when a group of latino scammers lured a couple outside, saying they were cutting down trees behind the home and did not want to damage the property. When the 70-year-old couple and their grandson were outside, the landscaper began speaking Spanish into a walkie talkie and soon an older man joined him.

The thieves created diversions for around a half hour, and even offered $50 for the noise they would make. Later the homeowners found a dozen pieces of jewelry, mostly rings and bracelets, gone.

The latinos then drove off in a black Cadillac Escalade parked on a side street. They were described as a young, short and thin Hispanic male in his 20s with short dark hair with a blue Yankees cap blue, a collared shirt with blue stripes, long blue jeans and black boots....and an older 40ish Hispanic male, heavyset with a round face, with spiked dark hair, blue sunglasses, a beige collared shirt, blue jeans and black dress shoes.


19 posted on 09/27/2008 9:16:31 AM PDT by Liz (Taxpayer: one who works for the govt but doesn't have to take a civil service test. R. Reagan.)
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To: cripplecreek
It would be interesting to see who was calling this a warning sign of serious trouble in the future and who laughed it off as conspiracy theorist racism and alarmism.

Do you remember "Dane"?

20 posted on 09/27/2008 9:31:45 AM PDT by Graybeard58
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To: AuntB
The invaders are a massive drain on our struggling economy-----when they stay AND when we kick them out. They suckup entitlement programs, strain our law enforcement, and add to the demand for food which drives up prices for real Americans. Their influx has placed demands on housing markets which created massive bank/mortgage meltdown..........(most of the stupid invaders bought houses they could not afford---using phony documents. The latino motto: Screw Americans). Other invaders colluded in massive mortgage frauds. Read on---while multiplying this fraud by the number of sanctuary cities and latino enclaves acroos the US.

06/02/08 Husband And Wife Plead Guilty To Massive Florida Straw Buyer Scheme ("God's children" $15M fraud)

Juan and Rachael Torrens pled guilty to conspiracy charges in connection with their participation in a recent multi-million dollar mortgage fraud scheme in South Florida. The defendants acknowledged as part of their guilty plea that their scheme produced over $15,000,000 in fraudulent loans, and resulted in losses of over $5,000,000 to various lenders. With Juan and Rachael Torrens‘ guilty pleas, 15 of the original 31 defendants charged have pled guilty. As previously reported by Mortgage Fraud Blog, defendants Juan Torrens, the de facto owner of Amsouth Trust & Investment Corp. (”Amsouth”) and president of Countryside Land & Development, Inc., Rachael Torrens, president of 1st Choice Realty of South Florida, Inc. and de facto owner of First United Mortgage USA Corp., Daniel Ramos, Alfonso A. Muxo, a State of Florida certified real estate appraiser and owner of Palm Bay Real Estate Appraisals, Inc., and Katherine Harris, former president and part owner of Floridian Home Title Corporation, were charged with conspiracy to commit wire fraud and/or wire fraud for their participation in this massive mortgage fraud scheme. The scheme involved fraudulent mortgage loans obtained for the purchase of 28 properties located in Miami-Dade and Broward Counties, Florida, and in the City of Marco Island. All except Katherine Harris have already pled guilty, and are awaiting sentence.

The Indictment also charges defendants Mario E. Diaz, Aurelio Pozo, Oscar Barreiro, Lellany Rordriguez, Jose Asensi, Carlos Morales, Damaris Jimenez, Lizabeth Perez, Mario Blanco, Rene Rodriguez, Tamaris Angulo, Alicia Loaiza, Ester Crespo, Jesus Enrique Guevara, Janette Lugo, Priscilla Fleitas, Erick Clavijo, Luis DeJesus Planas, Moises Llorens, Milva Roque, Aurora Ramentol, Gladys Lens, Nancy Fundora, Yanny Cruz Pavon, Roger Rosario and Jacqueline Perez-Castillo ("the straw buyer defendants") with wire fraud for their participation in this mortgage fraud scheme. To date, guilty pleas have been entered by defendants Aurelio Pozo, Oscar Barreiro, Carlos Morales, Damaris Jimenez, Mario Blanco, Jesus Enrique Guevara, Janette Lugo, Priscilla Fleitas, Moises Llorens, Gladys Lens, and Roger Rosario.

According to the Indictment, Juan Torrens would identify sellers of residential properties who were willing to overstate the true selling price of their properties. Daniel Ramos and Juan Torrens would then recruit and pay the straw buyer defendants to pose as buyers and ostensibly participate in the purchase of the selected properties.

Defendants Rachael Torrens and Juan Torrens would prepare fraudulent mortgage loan applications for the straw purchasers that included false employment verifications, pay stubs, income and funds on deposit, and IRS Forms W-2.

Thereafter, to support the overstated sales prices on the properties and the fraudulent mortgage applications, defendant Alonso A. Muxo would prepare fraudulent appraisals attesting to the inflated property values dictated by Juan Torrens. Roger Rosario, an employee of Regions Bank, assisted the fraud by providing, on at least one occasion, a fraudulent verification of deposit in connection with a mortgage loan application for one of the straw buyer defendants. To effectuate the scheme, defendants Juan Torrens and Rachael Torrens, together with the straw buyer defendants, would create and submit to the banks and lending institutions HUD-Settlement Statement Forms, also known as HUD-1s, which falsely stated that the straw buyers brought their own funds to the closings. Once the mortgage applications were approved, the lenders would wire the loan proceeds to the title company, Floridian Home Title, for closing.

At closing, Amsouth, a company owned and controlled by Juan Torrens, would receive a credit for the difference between the inflated price and the actual selling price of the property. Defendants Juan and Rachael Torrens would make the payments on the mortgage loans to maintain the loans afloat until the properties could be resold again, often to another straw buyer. When the Torrenses failed to make payments on the loans, some properties went into foreclosure, resulting in substantial losses to the lending institutions.

SOURCE http://www.mortgagefraudblog.com/index.php/weblog/comments/husband_and_wife_plead_guilty_to_massive_florida_straw_buyer_scheme/

FR POSTED By Liz

21 posted on 09/27/2008 9:32:15 AM PDT by Liz (Taxpayer: one who works for the govt but doesn't have to take a civil service test. R. Reagan.)
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To: Emmett McCarthy
FREEPER DB POSTED: Here's what they did in my area: (Illegal) family member buys house and gets teaser loan. Family member sells house to another illegal family member for $50k more. That illegal family member gets teaser loan. That family member sells house to yet another family member for even more again getting a teaser loan. They repeat this multiple times.

The last family member defaults on the loan and goes back to Mexico. The other family members walk away with a couple hundred thousand dollars of the banks money through all the repeated selling between family members. No one is accountable. Now repeat this on a broad scale and you can get an idea of what was going on...

INVADERS' DEFRAUD---TAXPAYERS PAY Multiply this mortgage scam by millions of invaders squatting on US oil. Better believe the Mexican govt was in on the scam----and profited along with the invaders.

22 posted on 09/27/2008 9:38:22 AM PDT by Liz (Taxpayer: one who works for the govt but doesn't have to take a civil service test. R. Reagan.)
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To: Graybeard58

I try to forget that name.


23 posted on 09/27/2008 9:39:57 AM PDT by cripplecreek (Paying taxes for bank bailouts is apparently the patriotic thing to do. [/sarc])
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To: AuntB; All

“In many areas of the country, residential construction and remodeling was transformed during the last decade to be a business based on the easy and open availability of cut-rate illegal labor. New homes have traditionally sold at a steep premium compared to existing homes, in part because of the high cost of trade labor, both skilled and unskilled. With the willful breakdown in immigration and labor laws that marked the Clinton and, more especially, the Bush administrations, this changed.....”Suddenly, “McMansions” appeared in huge numbers outside every major city in the United States. A more appropriate term might have been “MexMansions,” because they were made possible by the cheap migrant labor that gathered on every construction site, street corner and Home Depot parking lot in the country.”

All true.

BUT!!!!!!!!!!!!

Without the government backed institutional size of Freddie Mac and Fannie Mae, and without the lack of limits on how much borrowing they could do to buy and buy and buy mortgages, repackage, securitize and sell them, and without the lack of prudent limits on the spread in Freddie and Fannie between assets and liabilities; the private mortgage markets alone would not have either built or sustained the real estate boom.

Did many - just like the builders - take advantage of it. Yes, true; but they did not create it.


24 posted on 09/27/2008 9:42:34 AM PDT by Wuli
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To: umgud
over-supply of homes that will keep housing prices down

House prices were going up because all the "smart" money thought they would go up for ever. Like an ATM that spit out free money. The oversupply happened when the ATM fairy took a break. Houses or baseball cards eventually have their prices reflect what they are, once the "smart" money moves on to the next sure thing.

I say let the "smart" investors take the collateral put up for their loans.

To have taxpayers re-inflate the bubble to benefit the "smart" money is rubbish.

25 posted on 09/27/2008 9:47:59 AM PDT by Mark was here (The earth is bipolar.)
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