New Housing Scam Making Headlines Around the Country

(I-Newswire) September 5, 2010 - It seems there is always some new housing scam drawing attention in the financial industry, and the latest to hit the headlines is ‘buy and bail.’ According to noted financial advisor Dennis Tubbergen, this process involves obtaining a new house and telling the lender they will be renting their current residence. Once the loan is approved and the closing papers are signed, the owners walk away from the old home because it is ‘underwater,’ or worth less than the mortgage.

Tubbergen, who is CEO of USA Wealth Management LLC, a federally registered investment advisory company, notes that the value of U.S. homes fell by a third from 2006 to 2009 according to the S&P/Case-Shiller Index. Prices in some communities dropped even more, with Miami chalking up a 49 percent drop and Las Vegas showing a staggering 56 percent drop in home values.

According to an August 10, 2010 article on Bloomberg Businessweek, Fannie Mae and Freddie Mac, the largest mortgage finance companies in the U.S., beefed up standards to help prevent buy and bail. The article goes on to state: “Whether driven by greed or desperation, the persistency of buy and bail underscores the lingering impact of the worst housing crash since the Great Depression.”

Tubbergen notes the Mortgage Bankers Association in Washington issued the following statement regarding ‘buy and bail’ through their chief economist, Jay Brinkmann. “Making it possible to pursue people who do this particular kind of default would go a long way to addressing the buy-and-bail problem.”

Tubbergen’s problem with that statement: it appears the MBA did something similar in 2008.

This from the Wall Street Journal: “On Friday, CoStar Group, Inc., a provider of commercial real estate data, said it had agreed to buy the MBA’s 10-story headquarters building in Washington, D.C., for $41.3 million. That is well below the $79 million the trade group agreed to pay for the glass-walled building in 2007, near the top of the property bubble, while it was still under construction. The price also falls short of the $75 million of financing that the MBA got from a group of banks led by PNC Financial Services Group, Inc. for the purchase.”

At the time, the CEO of the trade group refused to say whether the MBA would pay off the full loan amount for the building.

Dennis Tubbergen comments, “Guess where this group practicing ‘buy and bail’ might have learned the strategy?”

For more information on Dennis Tubbergen’s views, visit www.dennistubbergen.com.

The opinions expressed herein are those of the writer and not necessarily those of USA Wealth Management, LLC. This update may contain forward-looking statements, including, but not limited to, statements as to future events that involve various risks and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual events or results to differ materially from those that were forecasted. Therefore, no forecast should be construed as a guarantee. Prior to making any investment decision, individuals should consult a professional to determine the risks, costs, benefits and fees associated with a particular investment. Information obtained from third party resources is believed to be reliable but the accuracy cannot be guaranteed.

About USA Wealth Management, LLC:
Wealth management, financial advisors.

Company Contact Information
USA Wealth Management, LLC
Joy VanOeffelen
50 Louis St. NW
Grand Rapids, MI
49503
Phone : 888-515-8078, Ext. 3