This week I read several articles about scams as a result of the housing crisis. The first concerned itself with people who preyed on distressed homeowners by offering, at a fee, to negotiate with the lender to save the property from foreclosure. In the end, some homeowners either lost the property anyway or were milked for a service which could have been done for free with a simple phone call to the lender. In some cases the scammer actually ended up with the deed.
Likewise I enjoyed an article by Ralph Roberts, a renowned real estate agent and author, who listed a series of new and innovative ways in which sellers were funneling money back to buyers in order put home purchases together without regard to lender disclosure or, in some cases, state regulations. The result was that some people were able to buy homes who otherwise couldn't qualify, but the lender was duped. It is easy to take the high moral ground against such activities in which allegedly innocent parties are duped. Yet, it is worth mentioning, people are continuously taken advantage of legally as well. What is to be said to those people lured by flowery letters offering teaser interest rates on loans, especially on credit cards, and then later shocked when the small print of a subsequent letter revealed that the borrower was now subject to usurious rates? Were these people not also, to some degree, scammed? Of course those with power rationalize that such loan offers are a result of good marketing and included full disclosure. In fact, the product offered even fulfilled a demand in the marketplace. Such actions are viewed as good business, whereas other similar actions outside the legal system are considered sneaky and a scam. These devious ideas can be refined and often become legal once those in power find a way to make a buck on the idea.
It is difficult to sort out the knights from the dragons, the innocent from the guilty, the gullible from the stupid. This economic time is really no different from any other. Perhaps this housing crisis reminds us, in some poignant way, that there have always been those that are fed snake oil and those that feed it. Like the barker at the sideshow says, "Step right up, ladies and gents, see for yourselves." Lee