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| It's all about the Benjamin's, baby. |
In this week's feature story, "
The Dispossessed," several real estate investors who attended a foreclosure auction declined to give their names. Real estate investors who buy foreclosed property after all, don't have the best public reputation -- one homeowner interviewed for the story called them "vultures." To the investors, though, they are simply business people playing the market. But as in many sectors of society, all it takes is a handful of deviants to ruin the credibility for all.
Last week, two Bay Area real estate investors
pleaded guilty to participating in a bid-rigging conspiracy at foreclosure auctions around Northern California, including San Francisco. These kind of crimes have
popped up a lot here recently. In February,
three men pleaded guilty to bid rigging in Contra Costa county.
Six more in
San Joaquin County since December. In November, eight more around the Bay Area. In all of these cases, the conspiracies took place for months or years between 2008 and 2012-- the years after the foreclosure crisis hit and property values appeared to bottom out.
These conspiracies played out pretty much the way you would guess: Instead of several investors driving up the prices of properties, the investors would essentially divvy up the properties beforehand and not bid against each other. What makes this practice particularly vile is that the money the investors save is money that would go to the distressed former-homeowners: The proceeds pay off the rest of the mortgage, with the surplus going into the former homeowner's pocket.
There is relevant context to the practice, though. Of the investors and Realtors who spoke with SF Weekly -- both on and off the record -- for the feature, a handful were willing to talk on background about the pervasiveness of the bid rigging culture. The following information comes from those descriptions:
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