Saturday, October 3, 2009

Fraud with a View.

More Poster Child of the Boom/Bust. An article in the Atlantic Monthly. Correspondents. Recession Road Trip column. 10/2/09.

Below, since I'm not sure anyone else will be posting this...

Not much more to say about it, except I think this kind of thing will keep a'comin...



ROBUST OREGON REAL ESTATE MARKET POISONED BY FRAUD

"People have tried to bribe me. I've been threatened, both verbally and with a gun," real estate appraiser Richard Hagar tells me, recounting the heady days of the Pacific Northwest's housing boom, when unscrupulous loan originators in places like Bend, Oregon would aggressively demand his work confirm a dictated appraisal value, often many tens of thousands above the actual market value. In Hagar's view, "This recession we're in was triggered by loan fraud. That's the end of it."


NOTE: Originally, I posted the whole article, but decided to post mostly the first and last of it instead. There's more...


Blog postings and chain emails trying to discredit his work circulated through real estate industry networks. One time in late 2006 or early 2007, a Bend real estate agent reached him on his cellphone, launching into a full-throated tirade as soon as he answered. "She yelled, 'There's no fraud in Bend. You can't say that. We're not scammers. We wouldn't do that. You'll destroy our real estate market,'" Hagar recounts, adding his own response: "Hmmm, actually, you're destroying your market."

That real estate agent, it later turned out, was representing a major housing developer (now bankrupt), which had begun offering illegal incentives to help close deals with prospective buyers--not an uncommon practice, but also, technically, a form of fraud. Hagar guesses the woman didn't even realize she was personally engaged in fraudulent practices, ignorance being one of the primary causes for the crime's prevalence.

Off the top of his head, Hagar can think of at least 30 Bend residents who would deserve to be indicted, tried, and convicted for their role in the fraudulent activities that artificially inflated the local community's housing bubble. However, he says, "The reality is only about 5% will ever be caught."

4 comments:

SCH said...

Wow. Little disappointed they passed on naming names, and I'd have to guess there are more than a few "major housing developer(s)" that have gone bankrupt.

No Fall Festival commentary today? I suppose that's a positive.

blackdog said...

"Below, since I'm not sure anyone else will be posting this..."

I put an item on The Wandering Eye earlier. The Bulletin has not written anything about these allegations as yet. But I'm sure they have a major investigative series in the works and will bring the wrongdoers to light (cough, cough).

Broofa said...

@blackdog: After defending professional journalists, it's a little surprising to see you express skepticism of the Bulletin's journalism. I get why you're skeptical, it's just an interesting contradiction.

(P.S. I hope there's no hard feelings over our discussion on Dunc's "Whither Goest" post. I appreciated many of the points and insights you had. 'Might be fun to continue that discussion over coffee some time.)

blackdog said...

"After defending professional journalists, it's a little surprising to see you express skepticism of the Bulletin's journalism."

I never said all professional journalists, or all newspapers, were equal.

The Bully does an okay job in most areas. In others, such as real estate ... well, 'nuf said.

"I hope there's no hard feelings over our discussion on Dunc's "Whither Goest" post."

None whatsoever.

"Might be fun to continue that discussion over coffee some time."

Absolutely. Name the time and place.