The NY Daily News has a story on house flipping, the real estate scam that has defrauded often poor New Yorkers out of hundreds of millions of dollars and destroyed their lives and dreams, and the scammers, including haredim, who commit the crime…
It usually works this way. A criminal buys a distressed property for its current market value – say $250,000. He then "sells" it to a friend or a front company for an artificially inflated price. That "owner" then "sells" the property again, to another friend of front company, for an even more inflated price. After that, the home is sold to an unsuspecting buyer, usually an immigrant or other minority, for, you guessed it, an even higher price. Corrupt mortgage brokers participate in these scams by overvaluing properties and getting inflated mortgage amounts for them.
What normally happens to such properties afterward? The duped home buyers default:
A group of 11 real estate sellers, mortgage brokers, lawyers and appraisers bought dozens of distressed properties in Brooklyn and resold them at inflated prices to unsuspecting minority homebuyers, authorities charged.
The ring deceived lenders into believing buyers had put down substantial down payments. As a result, banks issued mortgages worth more than the actual sale prices.
Ringleaders Isaac Katz and Yoel Silberstein used a front man to recruit unsuspecting buyers and peddled the deals as "investment opportunities" with no money down.
Authorities say Silberstein and Katz bought a home at 686 Cleveland St. in East New York for $205,000 and sold it later the same day for $370,000. The duped buyer defaulted on the loan.
Katz and Silberstein were sued by victims and payed a $1.8 million in restitution.
[Hat Tip: Dr. Rofeh-Filosof.]