Real estate scams

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Stephen Holben, Denver

Monday, May 12, 2008

The recent article about how Mr. DeGrande pulled off his version of a real estate scam made me feel ...old! Am I the only person who remembers Bill Riley and his Income Realty and Mortgage (circa early 80’s)? Their shtick was to use installment land contracts (since made illegal in Colorado) to sell apartment buildings to (mostly) naive investors. It wasn’t uncommon to have several closings in one day on the same apartment to different investors; each paying more than the prior buyer and using an installment land contract as the debt instrument. As long as the last buyer made his payment on his contract to his seller and that continued all the way back to the first seller things went fine, but of course, the required payments always became larger than the (often inflated) rental income, and BOOM!!! defaults and foreclosures. Of course, as today, all the players got their commissions and fees and the buyers and sellers and banks were left holding the bag. Today’s housing-mortgage-credit-etc. “Crisis’ “ ain’t nothin’ new. I’ve seen this all before in one iteration or another, and we will see it again in the future. No amount of caution or certainly government regulation ( read interference) can overcome the eternal optimism that can lead to greed that lurks within the human spirit.