Something Stinks on Franklin Avenue
Does this house at 293 Franklin Avenue in Bed Stuy look to you like it’s worth $1,900,000? We didn’t think so. That’s why we decided to dig a little deeper when you saw it appear on the list of foreclosure auctions last week with a lien in the amount of $1,546,580. That’s when we discovered…
Does this house at 293 Franklin Avenue in Bed Stuy look to you like it’s worth $1,900,000? We didn’t think so. That’s why we decided to dig a little deeper when you saw it appear on the list of foreclosure auctions last week with a lien in the amount of $1,546,580. That’s when we discovered the property’s sales track record. It first sold for $400,000 in 2005, then $950,000 in 2006 and finally $1,900,000 in 2007. At that rate, why not $3,800,000 in 2008! Insanity! GMAP
I’ll pay 25 cents.
Oh, wait, on the dollar. Nevermind.
I am not aware of the legislation you are citing. I doubt any bank will lend anyone any money on this property for a while. It will be sold at 25 cents on the dollar to a cash investor.
Maly, well thankfully 2008 legislation will now allow Fannie to backstop it near the last selling price! Otherwise we’d be in danger of popping the bubble. Bet they provided a backstop on all the other sales except the 2007 $1.9mm.
At 1.5M, it didn’t end up with FannieMae, probably private investors. Either way, it shows what happens once you remove the moral hazard.
Bank was probably willing to lend against this because it knew it could sell it to Fannie/Freddie who would slap a gov’t guarantee on it and bundle it and sell it to investors. Thank you gov’t for Fannie/Freddie.
perusing the records it was American Home mortgage that was the originator. Slimey outfit.
Doubtful the bank or primary lender did anything on the front end; its more efficient to use third party mortgage origination for the loan processing.
After all, it’s not like they were entering into a long-term relationship with a homeowner. It’s just a commodity they hold onto for a couple weeks (or days) until it can be repackaged.
Besides, why should they care who owns your mortgage or who handles the loan servicing? Its not like they’re people in the neighborhood – your local bank sold out long ago and became another faceless nameless branch of BoA, Citi, Wells Fargo, et al.
Willie Sutton would be proud of today’s banking system.
Totally agree Grand Pa. I find it hard to believe that a bank would blindly give a loan for a 1.5mil home in Bed Stuy, unless there was something in it for them on the back end. The banks needed these fraudsters to rip-off the next investors.
A quick internet search would have been able to provide enough information that the house was about 1mil overvalued. Until ‘we’ force banks to keep loans on their books for at least 12 months before selling them off, this sort of fraud will continue.
Wrong, wrong, wrong. Sure there is mortgage fraud, but the real problem is the BANK. The Bank entered into a stupid business transaction and just got burned. If the Bank had done basic diligence on the buyers, obtained a reasonable deposit and checked if the price was reasonable, then this would not have happened.
But likely, the Bank does not care as it can package this scam loan and sell it off to the next chump. This is what is known as financial “innovation”. For all we know, this wonderful loan has been transferred off the Bank balance sheet as a MBS and is likely now in a State Pension Fund or more likely the Fed Balance sheet.
The fraud by the little guys is nothing compared to the massive mortgage fraud of the banks.