(More) Market Manipulation?
In my last post, “Banks Price Low to Elicit Multiple Offers,” I discussed the increasingly popular tactic of foreclosure Sellers pricing low to precipitate bidding wars.
What I left out was the identity of the banks who appear to be behind many of them: notorious, sub-prime lenders such as Countrywide and Indymac.
Just to refresh your memory, these are the same folks at the epicenter of the real estate market melt-down in places like Southern California and Florida.
While credit was free-flowing, they handed out such exotic fare as option-ARM’s (the borrower decides how much to pay, with any interest shortfall added to the principal); mortgages with initial teaser rates on loans that later “explode”; and various other, negative amortizing products.
When people refer to “Liar Loans” (no documentation of any kind required), these are the lenders who handed them out. Big surprise: such lenders made their money originating such loans and re-selling them.
So nice to see how far we’ve come . . . not.