I like money. With money I can clothe myself, pay for my grandchildren’s piano lessons, drive a reliable car, eat some great food, and visit friends in faraway places. I don‘t want a barter economy, especially since I have nothing physical to barter for necessities, unless you count the endless reams of paper I can generate. But this American drive to get rich, and get rich now with a minimum of effort, is doing us in.
Some people use the lottery. Lotteries, or gambling in general, do not particularly offend me. I do think they are the resort of people who failed 6th grade math, and I dislike the false advertising claiming the lottery benefits our school systems (the percentage going to education is way too low to make that an advantage of lotteries). But I don’t think they ought to be illegal (funny how they don’t pass laws requiring that we eat our Brussels sprouts, everyone is too busy trying to outlaw the fun things, like alcohol, sex, etc.).
Some people “collect” things, believing that if they buy every coffee mug with a logo on it, someday their ‘collection’ will be worth millions. I think collections are junk that gather dust and requires me to buy shelves or boxes or storage space to put it (think of George Carlin’s monologue on buying so much stuff that you have to buy stuff to put your stuff in or sell some stuff to buy other stuff). That doesn’t seem to be a very quick way of getting rich, and it is a lot of work.
But others lie awake at night thinking of schemes to put themselves on top by taking advantage of others.
This rant is about those real estate scams. The internet is full of them. One was called “How to Collect 5-Figure Paychecks Buying and Selling Houses.” You know how to collect a 5 figure paycheck buying and selling houses? By stealing them from some unsuspecting homeowner and selling them to some other unsuspecting homeowner. TV ads are no different from the internet. Some sleepless night, watch Tony somebody or other tell you how he became a real estate millionaire overnight and how you can do the same.
There are a number of different ways to play the real estate cheat game. You can become a ‘property flipper.’ This system is dependent upon the way we set values for homes: by comparing it to other sales. Let’s say for example, you pick up a condemned shack at a foreclosure sale. You get a couple of ‘friends’ in on the deal. Sometimes they aren’t real people at all, just names you make up. You bought the house for $15,000 because it is uninhabitable. Without spending any money on it (and maybe even leaving the condemnation notice on the door), you ‘sell’ it to your friend for $50,000. Of course, no money actually changes hands, but now you have on the real estate records that the home sold for $50,000. That friend sells it to a different friend for $90,000. Again, maybe no repairs have been done, and certainly no money changes hands. After a few months, maybe a few cosmetic repairs (such as covering holes in sheetrock with duct tape and painting over it), you’re ready to sell to someone who thinks they are buying a home to live in. The home is now sold for $120,000, and even shows that as a value. After all, you have the prior sales to show how the value of the place is rocketing. Even an honest appraiser uses those figures. The appraised value is based largely on square footage of the home and the lot, plus the ‘comparables’ and very little on the condition of the home. Pretty good takings: house bought for $15,000, spend a couple hundred on recording fees, a couple hundred on cosmetics, maybe something for your friends if they really existed, and you get paid in cash from the new homeowner’s mortgage company.
The scam really catching my eye these days is the “foreclosure rescue” scam. This is where some guy (or gal) pretending to help you save your home from foreclosure actually obtains the deed to your home and the real owner gets evicted. Say I have a home, and for whatever reason, I’m behind in payments. Maybe I live in a state that doesn’t even require foreclosures to be handled in court. The mortgage company just tells the trustee they’ve appointed to the deed of trust (called a mortgage in states that require judicial foreclosures) that you are behind on payments. The trustee writes you a letter, says you have X days (20-30 probably, depending on state law) to get caught up. You either get caught up or your house is sold on the courthouse steps in a matter of days.
These ‘rescue’ folks troll the legal notices and when they see your name on it, they do a little research. They find out how much the house is worth, how much is owed on it, maybe how long you’ve lived in it, and so forth. When they see someone that has every reason to want to stay in their home, they strike like a rattlesnake. They come to the homeowners, and tell them how they can save the home from foreclosure. The snakes promise to get the mortgage caught up (or paid off) in exchange for you renting your home from them for some limited period of time (a year or two), after which you can buy your house back. But you’re just renting, so they can evict you anytime (like for not mowing the lawn properly- you think I’m making this stuff up?). Or maybe you pay really high rent payments, believing that you are getting the mortgage arrears paid off in the process, something the mortgage company would not permit. You make the double payments for two years only to discover the terms of repurchase are so high you’ll never get it back. The documents you signed gave away your entire equity, and now you have to borrow the entire cost of the house and can’t get a mortgage that high. In the worst of those schemes, the ‘rescuers’ get you to put your home in a trust, the home is foreclosed on by the first mortgage holder anyway, and the homeowner is left not only without a home, but still owing a now unsecured second mortgage for tens of thousands of dollars.
How’s that for a get rich scheme? Only problem is, decent people will be stuck watching Tony the real estate millionaire at 4 a.m. since they can’t sleep with themselves.