The Housing Market Rife with Fraud

[@falsificationism]

This bears repeating. Hope I can summarize adequately. "1/3rd of the effective investor population is committing mortgage fraud," meaning people are taking out loans stating they intend to live in the home, but instead they're renting out the home within one year of taking out the mortgage. This is occupancy fraud, which changes the risk profile of the tranches of federally backed loan products. In other words, the loans are based on rental property investors underwriting rather than their state income history and creditworthiness. This means that about 1/3rd of these loans bundled up and sold by creditors are RISKIER than what's on the label. In the event of a shock in the underlying asset class (i.e., a sudden fall in rental income, a sudden collapse in home prices, a sudden increase in property taxes or insurance costs), investors may not be able to make their mortgage payments. As of right now, most homeowners (including investors) are sitting on quite a bit of equity, which probably blunts the impact of the risk discrepancy. But for how long?

[@cloudyskies5497]

In our city there are beautiful Victorians 100+ years old made from materials that don't exist at the same quality today. We are surrounded by rental houses where the landlords don't care that these historic structures are being run into the ground. These landlords don't pay to maintain their rental properties the way an owner would if they were living in the home. I think it's tragic.

[@citystuff7184]

The problem is also that the older neighborhoods tend to subsidize the newer ones with property taxes. So people with the financial flexibility to move tend to move out to the newer further out neighborhoods because the houses are bigger and cheaper. This leaves less wealth in the older neighborhoods, property values decrease, infrastructure maintenance comes due, and the houses deteriorate.

[@definitelynotacrab7651]

Until housing isnt seen as a major investment strategy, im afraid that these types of fraud will continue

[@nunyabidness3075]

I have a lot of thoughts on this, but the primary one is that because we subsidize (in sooo many ways) one type of buyer, we are begging people to lie. Then, we are not doing a good job preventing the lies from harming others. Since I think it can be shown the subsidies are causing more harm than good, wouldn’t it be smart to start unwinding the subsidy schemes in a slow and deliberate fashion? Also, how much of this is worse today because the old way of a local loan officer who knew the customer making the loan the loan for the bank who he worked for, and planned to work for most of his life, is now gone? Why is it gone? Was that worth it in hindsight? Can we bring back elements of that today?

[@Larimerst]

I'm shocked, shocked I say - To learn that there is widespread fraud in investment property mortgages!

[@howwitty]

I was scammed no less than 5 times this summer relating to housing and/or moving. There is so much fraud. I keep falling for this shit because they keep making up new scams. I'd rather not be homeless.

[@sillyhead5]

I like how you start the video with you walking out of a house. Feels like a news segment.

[@JohnFromAccounting]

In Australia, property is used for money laundering. There are some large organisations that operate from China and Singapore that abuse the zero taxation on primary residences to legitimise their ill-gotten gains. This is different to the kind of fraud you're talking about in this video, but it absolutely contributes to the problem.

[@dmike3507]

IMO investing in residential property should be flat-out illegal. Residences are for living in. If you want to make more money, get a higher paying job or work more hours. Don't enrich yourself at the expense of other people.

[@JohnFromAccounting]

I agree. Commercial real estate is great for investing. Residential real estate should be de-financialised because housing is a need, not a way to make a quick buck.

[@quantarrow]

Fear and uncertainty create major wealth. It's those who take the risk and have strong gut to endure the bloody days. When i notice extreme dips i tend to actually move more money to Bitcoin .

[@IshrakHossain-rt8is]

I feel sympathy for our country, low income people are now suffering to survive yet inflation and recession keep increasing daily, many families can't even enhance the good cost of living anymore. You've helped me a lot Sir Brian! Imagine I invested $50,000 and received $190,500 after 14 days

[@faysdt414]

Very possible! especially at this moment. Profits can be made in many different ways, but such intricate transactions should only be handled by seasoned market professionals.

[@whitefearlytales]

Finding yourself a good broker is as same as finding a good wife, which you go less stress, you get just enough with so much little effort at things

[@BigNate82]

Brian demonstrates an excellent understanding of market trends, making well informed decisions that leads to consistent profit

[@vanillatgif]

I'm surprised that you just mentioned and recommend Mr Brian Nelson. I met him at a conference in 2018 and we have been working together ever since.

[@natehunter2961]

A coworker of mine lives near one of the highest value neighborhoods in his city and he’s convinced many of the homes aren’t occupied, not sure if he’s fully correct but snowbirds and air bnbs are common here and these are all 1mil plus houses. Seems likely that the owners would take advantage of owner occupied housing loans.

[@melevan15]

The next video is sure to be riveting. Can't wait.

[@timursalikov5911]

Hold on. You are only required to occupy the house for one year, then it’s perfectly legal to move out. Therefore if that type of fraud exists, the bankers are only taking on that extra risk in the 1st year.

[@TheTapeandscissors]

I'm looking at this paper and it looks like the fraudulent share is going down from 2008 to 2017. I'd have to see more to say anything about the current market.

[@livingbeings]

Historians will point to this video series as the inciting incident of this real estate bubble bursting.

[@gregorynuttall]

How do we spot occupancy fraud in our communities?