Flipping for Mortgage Felonies
The mortgage meltdown was brought on by fraud and corruption at all levels.
At the grassroots in Cleveland, Ohio we see real estate “flippers” who buy bank-owned and other low price property, often at less than $10,000. Then without doing much to improve the properties, and via appraisal voodoo, they turn around and sell the houses for $50,000 – $100,000 to those desperate to get into home ownership. These unsophisticated buyers often end up in foreclosure and the hunt for a new set of suckers starts the process once more.
The blue nodes on the left are the owners of various Slavic Village properties in the early 2000s — most are banks and other financial institutions. The flippers are the green nodes in the middle. The new home owners are the magenta colored nodes on the right. The flow of sales go left to right — following the light gray links. A sells to B : A –> B.
From initial sale to foreclosure usually takes anywhere from 12 to 36 months. This process was repeated again and again with blinding speed during the period of 2003 to 2007. Most of the flippers and their collaborators have now been indicted by the Cuyahoga County Prosecutor and will face trial in October 2009.
All data was gathered from public records of real estate sales in the Slavic Village neighborhood in Cleveland and from indictments on the prosecutor’s web site.