| During the heyday of the housing bubble, while it was | | | | course all of this was fueled by the mortgage industry |
| still in its hyper inflating stage, people were buying and | | | | which was lowering standards and down payment |
| selling real estate to make quick profits. This became | | | | requirements to milk the market for every last dime. |
| known as house flipping and was rampant just up until | | | | Regarding the mortgage market, what went on was |
| the eventual burst of the bubble. Apparently, to the | | | | no doubt criminal. Unscrupulous lenders and brokers |
| perpetrators of this tactic, it is totally understandable | | | | pushed buyers into loans they had no business being in. |
| and makes perfect sense that one can buy a piece of | | | | This was done by lying on applications, lying about |
| real estate, hold it for three months (or less in some | | | | incomes, and strong arming appraisers to validate |
| cases) then turn around and sell it for a twenty | | | | higher and higher prices on homes. It got to the point |
| percent profit. As they say, if it sounds too good to be | | | | where appraisers were looked at as a joke and a |
| true, it probably is. | | | | mere formality, a rubber stamp to help close the deal |
| House flipping just plain got out of control. Ultimately, | | | | on loans that were backed by houses that, of course, |
| when the bubble burst, hundreds of thousands of | | | | were going to appreciate forever. |
| homeowners were left holding the bag. This wreaked | | | | Now the high rates of foreclosure are negatively |
| havoc not only on the balance sheets of the nation's | | | | affecting literally thousands of neighborhoods. People |
| financial institutions but it destabilized normal middle | | | | are losing their homes because they cannot pay the |
| class neighborhoods as well. The spectacular bank | | | | increased payments on the adjustable rate mortgages |
| failures and subsequent government bailout made | | | | they took out. Empty houses are now having the |
| headlines. Not so much for the victims and ignorant | | | | opposite effect on their neighbors. Now the values are |
| people who bought houses at ridiculously inflated levels. | | | | sinking and only the passage of time will stop the |
| The speculation became a vicious cycle where each | | | | bleeding. We should be wary the next time people |
| time house values went up, bidding wars on houses | | | | start flipping houses for a quick buck since we know it |
| currently for sale drove prices up that much further. Of | | | | doesn't end well. |