Over at Time Magazine, Joel Stein has an amusing / troubling article (“Less Vegas: The Casino Town Bets on a Comeback“) about the perils of Las Vegas real estate (ht Anne Canfield).
The juiciest part of the article recounts how real estate agent Brooke Boemio advises clients to exploit the realities of the collapsed housing market:
Boemio specializes in short selling, in a particularly Vegas way. Basically, she finds clients who owe more on their house than the house is worth (and that’s about 60% of homeowners in Las Vegas) and sells them a new house similar to the one they’ve been living in at half the price they paid for their old house. Then she tells them to stop paying the mortgage on their old place until the bank becomes so fed up that it’s willing to let the owner sell the house at a huge loss rather than dragging everyone through foreclosure. Since that takes about nine months, many of the owners even rent out their old house in the interim, pocketing a profit.
In short, homo economicus is again stalking the Vegas housing market.
Stein notes that the renters often suffer from this ploy, since they can be evicted when a foreclosed property finally changes hands. In a nice illustration of how markets work, he then describes how renters are adjusting to this reality:
People are now paying a premium to live [i.e., rent] in apartment buildings, which in Vegas are almost always owned by a corporation.
Klein’s story has lots of other fun anecdotes from the front line of real estate crisis, including this immortal line from casino mogul Sheldon Adelson, whose wealth has reportedly declined by more than $35 billion:
A billion dollars doesn’t buy what it used to. So it’s not as tragic as one would assume.”
It’s unfortunate that the unethical real estate agent is the one portrayed in the article!
I linked to this post on 8-19-09. Thanks.
Natives of Las Vegas have found a new way to beat upside down mortages and bank foreclosures. Donald Marron discusses how some of them have managed to pocket some extra cash in the process, even if the methods used are not what you would discuss with your Sunday School teacher.”
I’m stunned and appalled at Ms. Boemio’s conduct — both her choice to participate in what is arguably fraud and her choice to put it all on display in a national magazine. We’ve all suffered declines in value — that’s not the same thing as being unable to afford your mortgage. Should everybody whose home has lost value get a “do over?”
Gee, what will Ms. Boemio do for an encore — ask for a modification of her new Fannie Mae loan? Pathetic. I wouldn’t want to count her as an employee at my firm.
Helping homeowners “Buy & Bail” is just WRONG! Fannie & Freddie caught on to this last year and quickly tightend credit guidelines in June of 2008 to prevent it from spreading.
In order to qualify for financing on the second home, the borrower must have at least 30% equity in the first home, prove they have enough income to afford the present mortgage & the new one, and have 6 months PITI reserves for both homes. If the first home is turned into a rental there are additional financial requirements to meet. Not something a person who is experiencing a “financial hardship” would be able to pull off. It’s FRAUD!
You reep what you sow Ms. Boemio!
Barbara
Mortgage Planning Advisor
Yes, the “Buy and Bail’ certainly isn’t new. I had put up an article about it last year regarding whether it is considered fraud. As for the ethics, I would think Ms. Boemio would have kept a lower profile. I wonder if the ethics board will be speaking with her.
She has certainly gotten lots of attention. One metric: Her name is the number two search term that’s led people to my blog over the past few weeks. They say all publicity is good publicity, but I have my doubts in this case.
Absolutely unethical. Yeah, it might be . . . wait, it is happening, but you don’t encourage others. Let me see, we know people pillage and plunder, but do we encourage others to do so? I guess that Brooke Boemio does so!! LV Realtors take note.
I read the entire article and read that her “new” husband went along with her . . . apparently, he was trespassing like Brooke. Well, I wondered who this guy was. So, I went to the Clark County Assessors website to look at her so-called property she bought after bailing on her previous one. Her new property is listed under her and a Nicholas Neubauer. I probed further with a search engine only to find out that this guy is a social worker. Don’t they have an ethics board also in Nevada? Take note social workers!!!!
It is crazy how much the legislation have transformed in relation to credit. Very good info below.
It’s ridiculous how significantly the regulations have changed in respect to credit score. Great info the following.
Who was supervising the Agent? In Portland there is a supervising broker watching all the activities
I have found that alot of the agents around vegas are doing shortsales i normally travel back and forth but i think the real estate game has really changed around the 702.
desperate times, desperate measures. Best to contact lender directly, work out plan with lender. They don’t want foreclosure, and most times will help owner
Interesting article. I found some interesting facts about Las Vegas neighborhoods at http://www.homefacts.com/Nevada/Clark-County/Las-Vegas/communityinfo.html Take a look.