When Fraud Becomes Worth It

When Fraud becomes Worth It - Commentary on a real-estate blog

During my browsing today I was shocked to find that there was something quite interesting going on in the world of real estate blogging. According to this ‘fool’ish article, one young man, if the blog is to be believed, claims that he is in over his head by over two million dollars and about to be forclosed upon. Of course, anyone reading the blog with a critical eye immediately asks at least three questions:

1. How in the world did he get two million dollars worth of loans in the first place
2. Is this site for real?
3. Why is he talking about it on the net?

This blogger claims to be completely altruistic and repeatedly claims that he accepts full responsibility for his actions. Those statements, like any on his blog, may or may not be true. What does seem true and clear to me, however, is that this person lacks the desire to do real 40-hour-per-week work to earn a paycheck.

I think that for most people, that is the way that it has to be done, at least for a significant portion of your life. Sure we would all love to make tons of money off blogging and advertising, but given the changes in the personal finance blogging and online advertising arenas, it is not likely that this is a sustainable model.

That was the lynchpin of this particular man’s failure. He assumed that he would be able to continue as he was, just flipping houses and that they would sell when he wanted, for the amount he wanted. This is the true lesson to be learned from this man. No matter what your financial situation, something can always go wrong. There can always be a downturn in the economy, your boss could change, the market shifts, etc. All of these are things that you don’t want to think about because they can be stressful, but it is important to consider them.

The Difference Between Fair Guessing and Lying

There is a difference. Here is a quote from him as an example. “Most of the time my mortgage brokers would just go ahead and fill in the income amount without asking. In fact I like it when they insist on filling out the whole application for me. I just sign it. This way I am not worried about what figures to use.” I won’t drone on about this, but could you imagine what would happen if you did this on your taxes? You would go to jail! Its like letting your two-year-old fill them out.

Read and Agree with Anything you Sign

Sure he claims responsibility. But he shouldn’t have to. He knew that something was wrong. And he signed anyway. Now he is accountable. Do yourself a favor and never sign anything unless you’ve read all the details. And I mean that even for that ugly ream of papers at the closing of your house/condo. Have your agent and/or broker get them to you in advance a day or two so you can read them. Sure it will take a couple hours, but when you are taking about hundreds of thousands of dollars, its worth it.

Why this might mean its time to PUT out the trash

The implications for what this means are huge. If everyone is doing these kinds of deals, it won’t be long until it starts to hurt financial institutions and lenders. A comment from a poster named HungryBear here said it best. “I believe there are a lot of guys like you out there. This is the reason why I own puts (options to sell stock at a certain price in the future) on Countrywide.” His strategy is clear. Bet against the lenders because once these loans start defaulting, he will be able to sell get ahead of the market and make a killing if the price moves enough in the correct direction.

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This article should not be considered investment and/or legal commentary. The views expressed herein are solely the opinions of the author.