FBI Investigates Home Loan Incentives
The Wall Street Journal is reporting the Federal Bureau of Investigation is scrutinizing the Las Vegas housing market in an effort to determine the extent of possible fraud with home mortgage lenders.
Although the FBI is not naming names or companies it is widely known that Dallas based home building giant, Centex Corporation is heavily involved in the Las Vegas housing market and has employed creative schemes to avoid cutting home prices while continuing to sell homes. Home buyers would receive incentives that included large sums of cash and even payments toward cars, tuition, previous mortgages and credit cards. Buyers receiving the money could use it however they saw fit as long as they agreed to use the Centex in-house mortgage group to originate the loan. The builder got their profit out of the house and the buyer got a loan for more than the the value of the property. The incentive money could add six figures to the price and was not revealed to the lender.
Analysts are saying the incentive schemes allowed builders to retain their profit margins by artificially propping up the failing housing market in Las Vegas. The collective results of the over burden created by the incentives added a much higher degree of severity when the Las Vegas housing market collapsed.
