American dream needs wakeup call
By Howie Carr | Sunday, October 5, 2008 | http://www.bostonherald.com | Columnists
Forget predatory lending for a moment, let’s talk about predatory borrowing.
You know the old saying, you can’t cheat an honest man. It takes two to tango.
This $700 billion-plus bailout means honest taxpayers will have to pick up the tab for all the tangoing that’s been going on. Let’s consider one example this morning, down in Hyannis. It was brought to my attention by a Cape Cod real estate broker.
I won’t use the previous owners’ names, because I can’t find them. Perhaps they’ve moved back to Brazil. I wonder what the Portuguese word for “flip” is, because these people surely did a lot of it during the go-go years.
They slip into the country and a few months later, these “undocumented workers” are pulling stunts with flipped property that Whitey Bulger and Stevie Flemmi didn’t figure out until they were 50 years old. But hey, how could a lender say no to an illegal alien - they’re only committing the bank fraud Americans won’t do.
I first realized what a massive flim-flam this was when I began to see “community organizers” leading marches against “predatory lending.” And then I recalled that these were the same left-wing grifters who 20 years earlier had been clamoring against “redlining.” What a racket: You get to shake down the banks to loan money to people who can’t pay it back, then when the banks do what you ordered them to do, you shake ’em down again . . . for “predatory lending” to deadbeats.
Then, of course, there’s the Barney Frank angle. Remember Barney’s ex-live-in-heartthrob, Herbie Moses, whom Barney hooked up with on the rebound from Hot Bottom? Herbie worked for Fannie Mae - another nationwide search! Just remember, the louder Barney yells, the guiltier he is.
Anyway, the Hyannis house in question is a tiny (1,104 square feet) three-bedroom, one-bathroom ranch in “average minus” condition - meaning it’s a dump.
The house was first sold in May 2003 to someone we’ll call Mr. Cruz. The price was $229,500. Two years later, Mr. Cruz decided to sell to another gentleman who, by an amazing coincidence, had the same last name.
Price in March 2005: $309,500.
Do you suppose the first Mr. Cruz paid capital-gains tax on his windfall? Did the second Mr. Cruz have to show a valid driver’s license at the closing, the way you or I would?
Now the pace quickens. Theoretically, somebody had to be paying monthly on that higher mortgage. I’ll bet you can guess what happened next.
Ten months later, they sold the house again.
Price in January 2006: $347,000. The buyer: a third Mr. Cruz. Look, they were making improvements: They illegally installed an in-law apartment, complete with uninspected plumbing.
The mortgages were issued by an outfit out of California, which, if you Google the name, the first or second listing is from a law firm seeking clients for a class-action suit. The FDIC issued a cease-and-desist order against the company last year for its practices of “paying mortgage brokers big commissions to find customers for its expensive mortgages, which (it) would then resell to investors for hefty profits.”
The bigger-fool theory. Just keep passing that bad paper around. And now the taxpayers have proven to be the biggest fools of all.
“These banks,” said the real estate agent, “were giving mortgages without even going into the house (drive-by appraisals, I heard) and on homes that never ever were worth the amount they ‘sold’ for.”
By the way, the town appraised the property at $308,000 - the 2005 sale price. What the hell, the higher the appraisal, the heftier the tax bill. It’s for the children.
Well, guess what happened next? The last of the Cruzes defaulted and the “bank” to whom the note had been sold foreclosed. My friend drove her client by the property and the price - the real price - seemed right. It was $205,000.
I used to say, there is nothing as expensive as cheap labor. My new corollary is, there is nothing as unaffordable as affordable housing.
Barney Frank’s dream, the taxpayer’s nightmare.
Article URL: http://www.bostonherald.com/news/opinion/columnists//view.bg?articleid=1123480