Builder-Bailout - Condominium Conversion
During the housing boom, many apartment complexes were purchased by developers and contractors. They purchased these apartment complexes and converted them into condominiums. When the housing market began to decline, developers had excess inventory of units that they couldn’t sell.
A couple of ways builders will try to encourage investors to purchase their units is by offering cash-back at closing and paying their HOA dues. Since buyers purchased the condos as investment properties developers and contractors claimed that they would find renters and manage the property including collecting rent from the tenants.
The value of the condominium is usually inflated to obtain a larger sales price to offset the cost of the incentives.
Pump and Pay
Builders throughout the United States are working with fraudulent appraisers and perpetrators to inflate the appraised value of their properties. This false equity is distributed to the perpetrators and disguised as set-asides for future maintenance, insurances, and tax payments on the property.
Information for this series was gathered from mortgage fraud blog, the FBI 2008 fraud report and the IRS.
Home loans since 1977
First Priority Financial is licensed by the California DRE # 654852 Nevin's California DRE license 016552
The opinions expressed in this blog are not necessarily those of First Priority Financial.
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You hear of these types of "promotions" every day....
Hi Aaron - Yep! I didn't see it in Folsom when I lived there but North Highlands, 95841 and Antelope had a lot of these.
With no doubt these incentives were offered to many a homebuyer to entice them to buy! Is this still happening Nevin?
And thus HVCC was born.....Great job with this series Nevin.
Looking forward to part 6 in the very near future.