Greedy Wall Street bankers are buying homes across the country and re-selling them at ridiculous markups, creating a housing bubble that could pop very soon. Mike Papantonio & Farron Cousins discuss more.

Transcript:

*This transcript was generated by a third-party transcription software company, so please excuse any typos.

Mike Papantonio:             Greedy Wall Street bankers well, they’re at it again. They’re buying up homes across the country and reselling them at ridiculous markups, creating a housing bubble and that bubble could pop anytime. Haven’t we seen this before.

Farron Cousins:                  Yep.

Mike Papantonio:             I mean, and this is the same story. Pick, pick up, pick this story up. It’s, it’s, it’s crazy.

Farron Cousins:                  Yeah. What we’re starting to see and it’s getting worse every financial quarter is the percentage of new homes being purchased by big banks, hedge fund investment firms, whatever they are, keeps increasing to the point where you’ve got some cities, you know, big cities, Florida and Las Vegas and Georgia and North Carolina, where 30% of the market is going to these big investment banks. JP Morgan just spent $45 million on an entire neighborhood over in Florida, they bought all the houses. They bought the whole development. And what they’re gonna do is they buy ’em for, you know, X amount of dollars. They multiply that times two and sell it back to people at the inflated price because they, they’ve cornered the market.

Mike Papantonio:             And in the process they have all of these tax benefits. They have regulatory benefits that for some reason we won’t change. It’s very easy to change these tax giveaways. That’s why they’re doing this. They’re doing it because as you point out, it’s a, it’s a double your money investment, but it’s triple your money when you add in the tax benefits that they get. The, the regulatory loopholes that they are forgiven. They’re forgiven if you go in and do this, it’s okay if you’re. You know, it got so crazy, they, they put together, most of these big banks put together these hit teams and the hit teams would go door to door in neighborhoods. They would call you on the phone. Can we buy your house? They would email you. They would write letters to you. We wanna buy your house. It was this massive influx of these hit, you know, these hit men that just wanted to buy up everything they could. Right?

Farron Cousins:                  Well, and the, the problem is a lot of people felt like, oh, you’re offering me, you know, 20% more than what my house is worth.

Mike Papantonio:             Yeah, yeah.

Farron Cousins:                  So I’ll make out like a bandit. They sell their home, then go to buy another one only to realize what I just got for my house, I can’t, I can’t afford to live here anymore now.

Mike Papantonio:             Yeah. And you can’t go anywhere else.

Farron Cousins:                  Right. Because I didn’t, I didn’t bother to look to see if things were available when I sold.

Mike Papantonio:             Yeah.

Farron Cousins:                  And so they get trapped in these. Okay. Well now you’ve gotta rent this house from the same bank you just sold your house to.

Mike Papantonio:             Yeah, yeah.

Farron Cousins:                  For twice what you were paying in your mortgage, and this is a real crisis and, and Florida is actually statistically the worst in the country right now.

Mike Papantonio:             Oh, Florida is the worst in the country. But it’s so easily solved. It’s just so easily solved. They can solve it in Washington in an afternoon. Take away these benefits. Take away these tax loopholes. That, that, that would make this.

Farron Cousins:                  Well, the city of New, well, the state of New Jersey has done that.

Mike Papantonio:             Oh, that’s right. You’re right.

Farron Cousins:                  They have now taken the lead and they said, we’re, we’re not gonna let you do this. We’re not gonna let you over inflate the values of these homes. They’re cracking down on it in New Jersey because they see what it does to their people.

Mike Papantonio:             How does a young couple trying to start a life afford what’s out there right now? They can’t. And that’s, that’s part of, that’s part of what New Jersey realized.

Farron Cousins:                  Well, they’re gonna do what I had to do, which was you wait for the market to crash. We found a foreclosure in a nice neighborhood, snatched it up at the time. And that’s where we’re headed because eventually you’re gonna have all these homes that will not sell. So you’ve got a glut on the market and that’s when the crash comes.

Mike Papantonio:             Stick around. It’s gonna happen. Right?

Farron Cousins:                  Yeah.

Mike Papantonio is an American attorney and television and radio talk show host. He is past president of The National Trial Lawyers, the most prestigious trial lawyer association in America; and is one of the few living attorneys inducted into the Trial Lawyer Hall of Fame. He hosts the international television show "America's Lawyer"; and co-hosts Ring of Fire Radio, a nationally syndicated weekly radio program, with Robert F. Kennedy, Jr. and Sam Seder.