The next bubble?

I'm certainly not the first to fear that policies in the aftermath of this bubble will create another one. Today's LA Times "Conditions are ripe for reprise of real estate schemes and fraud" (Kenneth R. Harney, Washington Post Writers Group) documents it's heading that way.

Could today's seductive conditions in the housing market — severely marked-down prices, record low interest rates and hundreds of thousands of foreclosures waiting to be resold — be breeding new generations of the very practices that led to the crash?

In an ironic twist, there are signs that the wreckage left over from the housing bust may be reigniting dubious real estate schemes and fraud. According to researchers:

• Property flippers are back in action in places like south Florida and Las Vegas ...

• So-called floppers are defrauding banks by hijacking short sales at prices below what legitimate buyers are willing to pay. ...

• Creative "credit enhancement" companies are "renting" investors the bank account balances they need to demonstrate to lenders that they have the financial wherewithal to qualify for a mortgage. ...

• Investors are hoodwinking lenders into giving them low down payments and rock-bottom interest rates by lying about their intentions to occupy the property they plan to buy as a principal residence. ...

How about some timely enforcement this time?

Added: "Treat foreclosure as a crime scene" in Politico