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Started By
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U.S. Director of FHFA: There is way more criminal mortgage fraud than I even thought
Posted on 4/25/25 at 7:43 am
Posted on 4/25/25 at 7:43 am
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If tweet fails to load, click here. All of you "but home values keep climbing" bros keep ignoring what he is saying and the fact that FHA and VA halted foreclosures for years using taxpayer money. Values would not still be rising without the rampant fraud and Government intervention in the markets. Much of the value push was by speculators, both by individuals and by hedge funds.
FYI, the mortgage fraud he’s talking about is that many Airbnb bros lied to FNMA to purchase homes much like Letitia James. They claimed the homes they were buying would be their primary residence so they could put only 3% down and get favorable rates. They did this with multiple properties.
Those same people also pulled what I call the "TikTok course special," because people on TikTok were selling courses telling others how to do it. They’d buy a house, slap a little lipstick on it, then appraiser shop to push the value up. After that, they’d do a cash-out refi to get their down payment back and use the extra money above that as "income." To do this, they had to lie and say the home was their primary residence otherwise, there was no way to cash out 100% of the value.
In areas where STRs are oversaturated, and a slowing overall market, it's going to be really hard for some of these people to dump the homes and payoff their mortgage. That matters because last week Pulte said that FHFA is considering ways to "recall loans" that have been obtained fraudulently.
Recalling loans will create a lot of panic selling and really hurt a lot of the AIRBNB/STR speculation.
Some more tweets from Pulte over the past week
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Posted on 4/25/25 at 7:46 am to stout
What do you mean appraisal shop?
When they go to sell the home? Or refi it?
When they go to sell the home? Or refi it?
Posted on 4/25/25 at 7:46 am to stout
Not sure if this is a result of mortgage fraud application crack down and a crack down on cash out refis but refinancing applications are being denied at record rates
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If tweet fails to load, click here.Posted on 4/25/25 at 7:47 am to stout
Should be a large supply of cheaply remodeled STR houses on the market soon.
So much gray LVP.
Mortgage brokers are slime.
So much gray LVP.
Mortgage brokers are slime.
Posted on 4/25/25 at 7:47 am to stout
quote:
it's going to be really hard for some of these people to dump the homes and payoff their mortgage.
You mean it's going to be really hard for the bank to dump the homes and attempt to recoup some of their losses. You're describing people who will just walk away if the balance sheet is bad enough.
Posted on 4/25/25 at 7:48 am to SDVTiger
When they refi it
I know about it because I used an exclusive appraiser myself prior to 2008 on my flips and spec builds. He would always get me the value I "needed". It was stupid of me, but no one can tell me it doesn't happen because I know firsthand it does.
I know about it because I used an exclusive appraiser myself prior to 2008 on my flips and spec builds. He would always get me the value I "needed". It was stupid of me, but no one can tell me it doesn't happen because I know firsthand it does.
Posted on 4/25/25 at 7:49 am to stout
How is that possible when it has to go through an AMC?
And how can anyone cash out to 100%?
And how can anyone cash out to 100%?
Posted on 4/25/25 at 7:50 am to Flats
quote:
You mean it's going to be really hard for the bank to dump the homes and attempt to recoup some of their losses.
Depends on how many are conventional loans. Any loans financed under HUD backed loans will be conveyed to HUD by the bank and the banks will be made whole. The loans will become taxpayers burdens.
Posted on 4/25/25 at 7:50 am to stout
I doubt anything is done as most of this is done in a gray area. A guy I know runs a large military group investing and working the va laws house hacking. Easiest thing would be to change the requirements.
Posted on 4/25/25 at 7:52 am to SDVTiger
quote:
How is that possible when it has to go through an AMC?
And how can anyone cash out to 100%?
Some of this was done through conventional loans with local banks.
He is referencing FNMA and Freddie obviously but its silly to think it ended there and banks aren't exposed.
When I was building specs I had one bank I used. Even now I deal with a local Louisiana bank and banker if I want to buy an investment property.
Posted on 4/25/25 at 7:53 am to stout
Is this Pulte of Pulte Homes fame?
Posted on 4/25/25 at 7:55 am to idlewatcher
Yes. His grandfather started Pulte Homes
Posted on 4/25/25 at 7:55 am to stout
Nothing to see here libs, is that the right talking point?
Posted on 4/25/25 at 7:58 am to stout
quote:
I know about it because I used an exclusive appraiser myself prior to 2008 on my flips and spec builds. He would always get me the value I "needed". It was stupid of me, but no one can tell me it doesn't happen because I know firsthand it does.
“Stated income” loans were all the rage in the aughts. Clearly these people didn’t learn their lesson and are up to the same tricks.
Posted on 4/25/25 at 7:59 am to stout
quote:
Some of this was done through conventional loans with local banks.
He is referencing FNMA and Freddie obviously but its silly to think it ended there and banks aren't exposed.
Unless its private or a Heloc which can use an avm they all need the air cert via an AMC
You cant appraiser shop like its 2008 anymore
Posted on 4/25/25 at 8:03 am to SDVTiger
Yes I know about AIR and AMC
Its naive to think that has stopped all fraud and created the separation it desires.
Especially in small markets where everyone knows everyone
Its naive to think that has stopped all fraud and created the separation it desires.
Especially in small markets where everyone knows everyone
This post was edited on 4/25/25 at 8:06 am
Posted on 4/25/25 at 8:05 am to stout
Probably but you cant appraiser shop
Posted on 4/25/25 at 8:08 am to SDVTiger
quote:
Probably but you cant appraiser shop
I didn't go into a lot of detail but since you are hung up on that what the TikTok courses were instructing people to do is get their own appraisal prior to or after the refi appraisal to argue and ask for a review of the appraisal to squeeze as much value out. They are using the appraisal from their preferred appraiser as the basis for the review.
I am not sure if that works as I have no interest in cash out refis and carrying huge debt on rentals with no equity. All of my rentals are paid for or have equity. I could finance them all and cash out a lot tomorrow but it just doesn't make sense to me vs growing my portfolio slow and healthy.
This post was edited on 4/25/25 at 8:10 am
Posted on 4/25/25 at 8:11 am to stout
People lie on forms. Must be a new thing.
Posted on 4/25/25 at 8:13 am to theballguy
Well, just like the people currently being arrested for lying about PPP loans, these people should also face criminal charges.
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