Thousands hit by buy-to-let fraud

Generali

dopester wrote: »

Love that one. "The market is always right."

A free market is almost always right by definition as it contains free agents buying and selling at whatever price they are willing to pay.

The biggest exception is where there is asymmetry of information - where one party to the deal know more than the other. The second hand car market springs to mind. The seller knows how reliable the car is, the buyer does not.

FraudBuster

FSA/PN/154/2008
19 December 2008
The Financial Services Authority (FSA) has today launched a discussion paper on consumer responsibility to explore what steps the regulator or others could take to help consumers understand and protect their own best interests more effectively.


http://www.fsa.gov.uk/pages/Library/Communication/PR/2008/154.shtml

tuggy12

Gorgeous_George wrote: »

Flats were built by crooked developers to provide properties for stupid investors. These flats had a real value of, let's say, £80K.

An investor could get a mortgage for 80% of the value. But they had no money for the 20% deposit. Along comes the crooked valuer and values the flat at £150K. The investor takes an 80% mortgage of £120K and pays £100K to the crooked developer. Hey presto! The investor has £20K, the crooked developer has £20K (minus brown envelope money - no tax, for the crooked valuer). A crooked mortgage salesperson makes their percentage and ensures their bonuses based on meeting lending targets, as does the crooked Estate Agent and the crooked solicitor.

Anybody spotted the problem yet?

The problem is your simplistic scenario couldn't work in practice.

MissMoneypenny

neverdespairgirl wrote: »

If this was a scam, then it only worked because there were greedy muppets aching to fall for it.

In their greed to get rich quick, they never asked themselves why the developers didn't keep the properties for themselves, if there was so much money to made from them.

Gorgeous_George

tuggy12 wrote: »

The problem is your simplistic scenario couldn't work in practice.

Are you a valuer? Or have the schools closed for Christmas?

Why could a scenario similar to that described not work in practice?

GG

boyse7en

MissMoneypenny wrote: »

In their greed to get rich quick, they never asked themselves why the developers didn't keep the properties for themselves, if there was so much money to made from them.

I can never understand why they didn't look at it that way. It's the same as those "Win at Horserace Betting" books. If you found a system to make £ms wouldn't you keep quiet and get on with it, rather than sell the method?

tuggy12

Gorgeous_George wrote: »

Are you a valuer? Or have the schools closed for Christmas?
Why could a scenario similar to that described not work in practice?
GG

Don't be silly and childlike; think about it and you WILL understand why your simplistic scenario is foolish.:think:

Gorgeous_George

neverdespairgirl wrote: »

If this was a scam, then it only worked because there were greedy muppets aching to fall for it.

I agree with that and the same can be applied with those who saved their money in Icelandic banks. However, the latter greedy muppets were bailed out by the taxpayer.

GG

RomansProperties

Here is an example of what they did hundreds of times over

http://www.rightmove.co.uk/property-...-20121724.html

Bought by Morris Developments
17 Dec 20048 Oban Terrace, Leeds, West Yorkshire LS12 3JUTerracedFreehold£50,000

Sold By Morris Developments
27 Jun 20058 Oban Terrace, Leeds, West Yorkshire LS12 3JUTerracedFreehold£179,995

As far as I know it has just sold for £50K

Thats a lot of profit in 6 months and now back on the market as a repo
There is lots of them all over the Leeds area

I posted this before but it must be impossible to add that kind of value to a property in such a short space of time.
The valuers will have had access to the price information on how much he had paid for the property.

dopester

RomansProperties wrote: »

The valuers will have had access to the price information on how much he had paid for the property.

We bought a Hewlett Packard calculator for 20p last year. Listed it on ebay, and it got bid up to £118. Turned out there is a collectors market for calculators. Posted it out to a collector in Denmark. It was worth that to him, so he paid it.

Freaking hell - whoever paid £179,995 for that 2-bed Leeds house deserves everything they get.

It doesn't matter what the person before bought it for... a market participant paid the asking price. Perhaps the buyer should have done some research of what that sort of money would buy in other locations, or sought a second valuation.