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Thread: Fraud Reported in Program to Help New Homebuyers

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    Fraud Reported in Program to Help New Homebuyers

    http://www.nytimes.com/2009/10/23/us...ousing.html?hp

    Just as Congressional leaders are calling to extend a popular $8,000 tax credit for first-time homebuyers, or even to expand it to all home purchasers, government investigators are reporting new findings that point to widespread abuse and errors in the program.

    A new report from the Treasury Department’s inspector general said that as of Sept. 30 the Internal Revenue Service had identified 167 suspected criminal schemes and opened nearly 107,000 examinations of potential civil violations. In late July, the I.R.S. announced its first successful prosecution, of a tax preparer.

    While government officials said many suspected abuses could turn out to be simple errors, the Treasury investigation found examples of claimants who pretended to be first-time buyers when they already owned homes, or had not yet purchased one. Some claims were filed for children as young as 4 years old.
    Massive social program hemorrhages money due to fraud - there's a shocker. At least we've learned our lesson from this and aren't discussing an expansion of another massive social program any time soon.

    In all seriousness though, I'm glad that Obama isn't supporting an expansion of this, and hope that this article gives him the push he needs to end it altogether.


    Of 1.4 million claimants to nearly $10 billion in credits, 60 percent had incomes below $50,000, raising questions about whether some of them could afford a home.

    The $8,000 credit is available to individuals earning up to $75,000 a year and couples with income up to $150,000; people above those limits can get smaller benefits but the credit phases out at $95,000 for individuals and $170,000 for couples. It is a refundable credit, so taxpayers get a check for any amount beyond their tax liability.
    This might sound bad, but why on earth was this program open to people with incomes below a certain level? $50k is enough to buy a home in many places, but you'd think they'd refuse to offer the credit to people making less than, say, $30k.

    If we have a housing crisis created by people buying houses that they couldn't afford, it seems kind of stupid to try to fix it by incentivizing people to buy houses that they can't afford.
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    Re: Fraud Reported in Program to Help New Homebuyers

    I agree. The program should have been harnessed (hindsight though) as an incentive. The logic of the program was to shift demand via taxation, which i can rightfully agree with. But in the end, it is essentially the banks who make final lending decisions, and to a lesser extent quasi government underwriters.

    You would think proper risk management practices such as denying loans to someone who's monthly payments would have eclipsed greater than 25% of their income would emerge.

    I have no problem with someone getting a $100,000 fixed 30yr loan under 6% when their income is around $30k.
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    Re: Fraud Reported in Program to Help New Homebuyers

    I'm really glad this got caught quickly. And I'm surprised it got caught quickly.

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    Re: Fraud Reported in Program to Help New Homebuyers

    I find it sad how people rush to abuse programs to help people. I had some friends who did several months volunteer work in New Orleans, and some of the stories they told are just insane the fraud and abuse of programs to help those who need it.
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    Re: Fraud Reported in Program to Help New Homebuyers

    Quote Originally Posted by Redress View Post
    I find it sad how people rush to abuse programs to help people. I had some friends who did several months volunteer work in New Orleans, and some of the stories they told are just insane the fraud and abuse of programs to help those who need it.
    The people that these programs are designed to help are usually the folks that abuse them the most.
    Quote Originally Posted by Top Cat View Post
    At least Bill saved his transgressions for grown women. Not suggesting what he did was OK. But he didn't chase 14 year olds.

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    Re: Fraud Reported in Program to Help New Homebuyers

    Quote Originally Posted by Redress View Post
    I find it sad how people rush to abuse programs to help people. I had some friends who did several months volunteer work in New Orleans, and some of the stories they told are just insane the fraud and abuse of programs to help those who need it.
    I had a friend who quit Americorps for this exact reason. He said that the process of getting reimbursements for nearly anything was so easy that it amounted to free money. People were getting reimbursed for trips to vegas, booze, etc. without the slightest bit of oversight.
    People sleep peaceably in their beds at night only because rough men stand ready to do violence on their behalf.

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    Re: Fraud Reported in Program to Help New Homebuyers

    Quote Originally Posted by apdst View Post
    The people that these programs are designed to help are usually the folks that abuse them the most.
    Not entirely, but close enough. I can't imagine doing something like this, I just don't understand the mindset.
    We became a great nation not because we are a nation of cynics. We became a great nation because we are a nation of believers - Lindsey Graham

    Quote Originally Posted by Fiddytree View Post
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    Re: Fraud Reported in Program to Help New Homebuyers

    Quote Originally Posted by Redress View Post
    Not entirely, but close enough. I can't imagine doing something like this, I just don't understand the mindset.
    It's the welfare class. They can rationalize anything, no matter how wrong it is.
    Quote Originally Posted by Top Cat View Post
    At least Bill saved his transgressions for grown women. Not suggesting what he did was OK. But he didn't chase 14 year olds.

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    Re: Fraud Reported in Program to Help New Homebuyers

    Quote Originally Posted by apdst View Post
    It's the welfare class. They can rationalize anything, no matter how wrong it is.
    Sigh...you remind me sometimes of how some one on this board described Rush. He would say something rational, then say something a little more out there, and then say something totally outrageous. This comment is that end part of the process. Really, get out and meet some of that "welfare class". While there are some who would take advantage of any opportunity, there are others who are trying to get their life together in difficult situations, frequently with everything against them. That single mother who got pregnant in high school because she was stupid(and every one is stupid in some ways in high school), desperately trying to raise her child or children as best she can in a neighborhood where there is nightly gunfire and other kids are out there selling crack, but who is not selling drugs, or herself, or robbing people is not some one who deserves to be part of a blanket condemnation.

    Further, for every poor person taking advantage of the system, there is a rich guy doing it as well.
    We became a great nation not because we are a nation of cynics. We became a great nation because we are a nation of believers - Lindsey Graham

    Quote Originally Posted by Fiddytree View Post
    Uh oh Megyn...your vagina witchcraft is about ready to be exposed.

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    Re: Fraud Reported in Program to Help New Homebuyers

    Quote Originally Posted by Redress View Post
    Sigh...you remind me sometimes of how some one on this board described Rush. He would say something rational, then say something a little more out there, and then say something totally outrageous. This comment is that end part of the process. Really, get out and meet some of that "welfare class". While there are some who would take advantage of any opportunity, there are others who are trying to get their life together in difficult situations, frequently with everything against them. That single mother who got pregnant in high school because she was stupid(and every one is stupid in some ways in high school), desperately trying to raise her child or children as best she can in a neighborhood where there is nightly gunfire and other kids are out there selling crack, but who is not selling drugs, or herself, or robbing people is not some one who deserves to be part of a blanket condemnation.

    Further, for every poor person taking advantage of the system, there is a rich guy doing it as well.
    Amen, Redress. Fraud is wrong, whether it's done by someone rich or poor. Striped down, the Wall Street fall can be blamed on greed, just like the idiots in this story that are ruining a good program.
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