LET ME KNOW IF YOU CAN REFUTE THIS! — ANOTHER EMAIL YARN: UPDATE

moneytree

See UPDATE at the bottom.

Because he knows I amuse myself by investigating silly emails, I got the following from a friend.  He just added this line in front: “Let me know if you can refute this!”

Short Sale Deal

We felt like this was the perfect time to share this IMPORTANT story with you. Recently, our good friend Michael (a local realtor) shared his experience with Leisa and I about an “Obama supporter” he encountered while showing homes to a low income, working family in Pontiac, MI.. We asked him to please write it down so we could share it with you. YOU SHOULD BE SITTING DOWN WHILE READING THIS:

As a Realtor for the past 28 years I thought I’d seen or heard it all… Until now.

I was showing homes in Pontiac, MI. one afternoon recently and showed up at a home at the 4:00 pm time my appointment was scheduled for. After I woke up the homeowner, she let us in and then proceeded to tell my buyers and I that she has already entered into a contract to sell the home on a short-sale. (A short-sale is a sale where the banks accepts less money than is owed on the home). After some chit-chat, she proceeded to tell us that she and her sister (who also lived in the area) were buying each other’s homes via the short-sale process. I mentioned to her that I thought relatives could not be involved in those transactions. She smiled and said “We have two different last names so no one knows the difference”.

She went on to tell us that each of them owed over 100K on their homes and were in the process of buying each other’s homes for about 10-15K cash. To top it off, they were each receiving $3,000.00 in government provided relocation assistance at the closing.

My buyers and I were amazed that she was outright admitting to fraud and yet, she continued. She began to tell us that the best part of her scheme was that because they currently were not working that they (both) are now receiving Section 8 Vouchers. I said I thought those were for renters and she said “That’s the best part; me and my sister are going to be renting each other’s homes so we don’t even have to move, and Obama is going to give us each $800.00 a month to pay the rent!” She then picked up a picture she had framed of Obama and did a little happy dance around her living room and while she kissed the picture she was singing “Thank you Obama…. thank you Obama.”

So here is the bottom line… Both of these scammers got at least $80,000.00 in debt forgiven, $3,000.00 in cash for relocation (when in fact they did not relocate) and to boot, you and I will now be paying (through our taxes) $1,600.00 in rent for each them each and every month…. perhaps forever!

Is it any wonder why so many people have decided that all they have to do is VOTE for the Democrats and they will be taken care of for life at the expense of the taxpayers? I would not be at all surprised if they are receiving food stamps and whatever other programs are available for anyone who is willing to lie to get assistance.

These women went from working and paying about $900.00 each in mortgage payments to staying home and getting paid $800.00 each per month to live in the same home they had been living in and all they had to do was lie on a few papers. This craziness has to stop! I’m sure this kind of fraud is going on each and every day all across the country and no one wants to touch the subject of entitlements because they might OFFEND someone or lose a vote or two.

By the way… she had an almost new SUV in the driveway, three flat screen TV’s and a very nice computer set up in her living room which was furnished entirely with nice leather furniture.

I’TS THE NEW ‘AMERICAN WAY’…..

For all of the “do-gooder’s” who voted for Obama to help the “less fortunate”, CHEERS!

Here is a link to some of the government assistance programs available

today:

http://www.usa.gov/Citizen/Topics/Benefits.shtml#Homes_and_Housing_Assistance

So what should we make of this? The link at the end hardly constitutes “proof” that this account is true, and we should not take it that way. Instead, we should begin by observing that proving something is not true can be so difficult it is usually not practical.  What matters is whether those who want to believe the story can prove this story is true. Search the Internet, and I doubt you will find such proof. People just repeat the story.

Is this tale possible? To some degree it is. Consider why a lender would accept a short sale. Banks profit by making loans, not by selling houses worth less than the cost of their loan. That’s why foreclosures do not help banks make a profit. Thus, if a house is severely underwater, lenders will generally prefer to accept whatever they think they can get without the added hassle of a foreclosure.

In some areas, some in Michigan in particular, housing values have plummeted, many houses are worth less than what their owners owe on them.  In 2009, the housing market in Detroit got so bad people believed this story, Average Home Price in Detroit Falls to $11,533; Yours for $50 Per Month. How bad Detroit’s housing market got I don’t know, but in December 2012 realtor.com gave the median list price of a house in Detroit region as $89,000. That’s low, but not in the 10-15K range.

So what is government assistance suppose to do? Here are some stories on how this is suppose to work.

What the stories say is that the taxpayers covered the losses of the government sponsored agencies such as Fannie Mae and Freddie Mac.

Since there are so many foreclosures and short sales in some area, I suspect the government and the banks are overwhelmed with red tape. So I suppose it is possible relatives are buying each other’s properties. Whether that is illegal I don’t know or don’t much care. The buyer will still have to pay what the property is worth. That’s the problem solved by a short sale. Even though the loan remains the same, the value of the property has gone down.

The rental voucher could also be possible.  Here are some government websites that describe it.

What would those two “ladies” be able to get out of the government for rental assistance? I don’t know. Since I don’t think the government should stealing money from the rich and giving money to the poor, I don’t care to get into the details. Since I think stealing is wrong, I already don’t think the government should be redistributing the wealth. I also think that when government does redistribute the wealth we can depend upon any such programs to become rife with fraud.

So do I believe the story? No. The part about the lady singing Obama’s praises is just too silly. Obviously, whoever wrote this tale was just playing to the disgust many feel for what that man has done.

What I do believe is that the mortgage lending industry is broken, and I blame our government. Government created the housing bubble. Government sponsored agencies such Fannie Mae and Freddie Mac put taxpayers into the mortgage lending business, and government officials bought risky loans, loans the borrowers could not be counted upon to pay back. Then, when the bubble burst, taxpayers and home buyers took the losses, not the lenders. That’s because the lenders sold the loans to Fannie Mae, Freddie Mac, and other suckers.

So it is that when the system was making money, lenders and realty companies raked in the profits. Then, when the system started losing money, taxpayers covered the losses.

We should not trust politicians to take money from some people and give money to other people. That’s stealing. Nonetheless, it is futile to blame gullible home buyers for the housing bubble. Middle men, bankers and realty companies, not home buyers, were the principal beneficiaries of this theft.

You a taxpayer? You know anything about mortgage lending? You think politicians can be trusted to invest our money wisely? No and no? Nevertheless, we are in the mortgage lending business, and we are trusting politicians to invest our money. That’s why politicians have lost so much of our money.

We have seen how this racket works, and its name is Socialism. It is time to shut it down.

UPDATE

A commenter, Anti-propaganda (here), has provided a couple of links I think worth sharing.

Snopes.com has an article, Short Sale, that deals with the Short Sale Deal email. What I found interesting is that Snopes.com could only rate the email as probably false. Although the transaction would have been illegal and absurdly risky as described, they still did not regard it as totally outside the realm of possibility. That suggests that with some work the scheme could be made to work.

Anti-propaganda also provided a link to the Pontiac Housing Commission, observing: “The Pontiac Housing commission isn’t even accepting section 8 applicants.” Here’s why.

The Pontiac Housing Commission Housing Choice Voucher section 8 waiting list is now closed. We have received 500 requests for applications and no additional request will be accepted.  Please do not continue to call or leave emails.  Thank you for your interest in our program.

The folks at the Pontiac Housing Commission have more work than they can handle.

Snopes.com exonerates President Obama, pointing out that the legislation involved predates him. That part of their analysis glosses over the fact that Obama was a Senator before he became President, and that he has done absolutely nothing to fix the problems that created the housing bubble.

As I noted before, it serves little purpose to blame people like the two sisters in the Short Sale Deal email. Would such people be idiot supporters of politicians like Obama? I suppose so. Are there idiot supporters of politicians like Obama? Apparently. Nonetheless, the enemy is a bad idea. We call it Socialism. The solution is to get our government out of the business of wealth redistribution. When government redistributes the wealth, that only empowers politicians and their wealthy benefactors. Everyone else suffers.

19 thoughts on “LET ME KNOW IF YOU CAN REFUTE THIS! — ANOTHER EMAIL YARN: UPDATE

  1. It is just as you say… probably the actual example is not a true event, but the principle of the email still remains the same…. things are out of control! Thanks for sharing.

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  2. Point well taken. Jesus’s parables would be another example of how allegory can be an effective conveyance of truth. Nonetheless, the story above does not seem to be presenting itself as either fable or parable. It is clothed in detail that makes it appear to the weaker minds as possibly being literal truth. Because it is not, it can be a misleading element in clear citizen discussion of important policy issues. A Grasshopper and the Ant, or the Crow and the Fox are generally appreciated for what they are.

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  3. I have heard of them. Were they involved in this Pontiac, Michigan housing scam? I read right past that, somehow.

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  4. If you see a story on your local newscast where the source of all information comes from one witness, does that automatically make the story true? Or can we assume because there is no corroboration with other facts and witnesses that it is false? Shall we trust in the story simply because it comes from the mouthpiece of a television station? (Because they never embellish or get it wrong…) If a story is false because we have no proof, we will never again be able to believe 95 percent of the stories passed down from our elders and retold by friends.

    I think the importance in this ‘story’ is how the government is being used to defraud the banks and taxpayers of this country, and to highlight the mindset of what is becoming the voting majority (based on the election outcomes) – those who value cheating, thievery and idleness at the expense of others. If for nothing else than a fabled warning, the links Citizen Tom provides and the discussion this story provokes make it worth sharing. I have also known people like these ‘sisters’ which lends this story more credence in my eyes.

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  5. Well, if PETA somehow got caught up in this, I can see the humour in it. However, I still can’t figure out their connection.

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  6. I don’t think that the gov. will let you buy an investment home in this way. These kinds of programs are generally for primary residence. But they could falsify that too, I guess.

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  7. I’ve read several of them (perhaps not all). Some as a schoolboy when I was learning Latin and French (apparently it was thought that there was pedagogical value in having us wade through stories like that as a way to learn a language) and then again as a Dad when I read them to by children (in English). I didn’t remember the PETA one, and couldn’t find it in you link. There are many things I don’t remember as I get older.

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  8. I’m a volume REO broker (300+ transactions in the last 2 years) and have also done many short sales… while it’s true that people take advantage of the system, this story is pretty exaggerated and pepperd with half truths, the most glaring is the suggestion that the relo assistance is coming straight from the government, that’s really not the case, banks and mortgage servicers offer that and pay for that themselves.. and while I guess you could make the case that the gov bailed out a few of the biggest banks, it’s still a pretty tough claim to make.

    It’s also noteworthy that whatever difference there is in the sale price and outstanding mortgage balance (the amount forgiven) the former borrower(s) will pay taxes on that. That prevents absurd cases like this one where the home was supposedly sold for much less. It should be even more obvious that the servicer will get a few independant valuations before approving the short sale, so they aren’t going to leave money on the table…

    It’s tough to play devils advocate for the mortgage industry (which I agree, needs some fixing) but this particular tale seems a bit exaggerated.

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    1. CJ – Thank you for your comment. Since I doubt most people know what a REO Broker is, here is a link to a description. http://en.wikipedia.org/wiki/Real_estate_owned

      I did not comment or the relocation assistance. Seemed pretty obvious that is a stretch, but it is good to have confirmation.

      I have a question. According to the IRS (http://www.irs.gov/Individuals/The-Mortgage-Forgiveness-Debt-Relief-Act-and-Debt-Cancellation-), because of the Mortgage Forgiveness Debt Relief Act of 2007 folks can exclude income from the discharge of debt on their principal residence if it is due to mortgage restructuring. Why wouldn’t those two old ladies qualify?

      I also have an observation. When I blame government for the housing bubble, I have given the matter some thought (https://citizentom.com/2010/08/02/reviewing-the-financial-collapse/ for example). However, I don’t consider myself an expert in this area. I also don’t think the voters have sufficient expertise or time to keep track of what the people we elect are doing. So I welcome your thoughts.

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  9. Well none of this had anything to do with Obama. Not only are they committing fraud but many of those rules have been around for decades. And no bank would short sale for that much. Its a story trying to make democrats look like thieves and idiots. The Pontiac Housing commission isn’t even accepting section 8 applicants.

    http://www.snopes.com/politics/business/shortsale.asp

    http://www.pontiachousing.com/index.php

    http://message.snopes.com/showthread.php?t=84183

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    1. Anti-propaganda – Thank you for the link. I had missed the one to Snope.com, and that particularly informative.

      What is most interesting about Snopes.com analysis is that they can only label it “probably false.” That suggests that with a little modification the scheme could be made to work.

      Your reference to Pontiac Housing is actually kind of sad. It seems that with 500 requests for applications that cannot handle any more.

      So what does this all have to do with Obama? Frankly, I don’t spend much time blaming Obama. It is the people who vote for politicians like him that worry me.

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