Thursday, October 1, 2009

Ending Foreclosure Profiteering

During the real estate bubble, older urban neighborhoods across the nation, from Atlanta to Baltimore to Cleveland to Sacramento and countless communities in between fell victim to a devastating plague of predatory lending and mortgage fraud.

This was enabled by Wall Street’s bottomless appetite for financing home loans, lenders’ lax standards, and corruption among mortgage brokers and appraisers. Brokers set up borrowers with subprime mortgages knowing they were too big to pay, while organized mortgage fraud rings convinced lenders to issue mortgages for far more than homes were worth, pocketed the proceeds, and left boarded-up foreclosed houses behind.

But the bursting bubble has not brought relief to suffering neighborhoods. On the contrary, communities already hard-hit by mortgage fraud and subprime foreclosures are now enduring the next wave of profiteering: the selling of vacant and foreclosed real estate to speculators.

A few of the purchasers are doing a service by fixing foreclosures up and renting them out. But far too often the foreclosed homes stay vacant and derelict as they’re flipped from one buyer to another.

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