Is this fraud or simply a bubble?

[cantlogin]

Here’s an instance of the real estate bubble is being prosecuted as fraud.

Home fraud case to proceed - poconorecord.com - The Pocono Record

Is there anything about this situation that's different than the national bubble?

[Want2retire]

Originally Posted by cantlogin

Here’s an instance of the real estate bubble is being prosecuted as fraud.

Home fraud case to proceed - poconorecord.com - The Pocono Record

Is there anything about this situation that's different than the national bubble?

Guess it's a matter of intent. If the intent was to artificially raise the going rate for real estate in that area by intentionally taking a loss on these homes, in order to take a much larger gain on other real estate as a consequence, then there is something fishy there and racketeering charges might be appropriate.

Also, they didn't mention it but sometimes way over-priced real estate transactions are used as a way to transfer (excess) money without gift taxes. Doesn't sound like this is what they think happened, though. Prosecutors in this case probably have considerable information that should come out (or else their case is toast).

[ziggy29]

It sounds to me like the "fraud" was in the use of appraisers who provided inflated appraisals, perhaps at the behest of the builders, in order to justify obtaining financing for homes selling for well above-market rates.

This could rise to "fraud" or racketeering, IMO, if the builders were in collusion with theses appraisers -- lots of easy business with our financing arm in exchange for "padding" your appraisals to justify the asking price to lenders.