Macro patience = long-term success (and staying out of jail)
Have you ever watched American Greed on CNBC? How about the newer show on Netflix called Dirty Money? If you’re not aware of the general premise, they document real life individuals who get caught in the act of various schemes, strategies, and tactics that defraud and cheat other individuals, companies, and industries. These schemes come in all shapes and sizes ranging from a couple million bucks to affecting an entire billion-dollar industry (check out the Volkswagen episode of Dirty Money… it’s truly fascinating). Well this week, the mortgage & real estate industries gave those shows more potential content.
Let's start in NJ, where the owner of a title company is facing 12 years in prison and over $2M in fines because he defrauded mortgage lenders. Here’s how this guy pulled it off (before getting caught): in 2010, he applied to refinance his own house. When it came time, he used his own title company to handle the settlement but when the lender wired the $625,000, he pocketed the money and never paid off his existing loan. And he didn’t stop there… a year later, he pulled the same move, but instead of his house, he teamed up with an attorney to “refinance” the attorney’s house and then split the $480,000 with him.
Next, we go to California, where a man ran a massive real estate Ponzi scheme that cost investors over $24M, and he’s now facing a 30-year prison sentence. Here’s how he did it: he would market to real estate investors to give him money to buy residential properties in high occupancy areas (which he lied about using fake documents) and in turn, he would pay them back through rental income and money he made from filling houses. But you guessed it… he didn’t use the money to actually buy those houses and instead, he would payoff previous investors that gave him money under the same assumptions and would skim off the top to fund his own lifestyle.
Now here’s the reason why I chose to talk about this topic and bring more light to these types of stories. It seems that no matter what regulations & rules are in place, people try and cheat the system. I’m not saying that the rules are always right or always fair, but what they do is try and keep the playing field level for everyone in the game which is a big part of keeping the free market truly free. The people in these stories don’t learn from past and they try to come up with the next best ploy to make a quick buck, thinking they’ll never get caught. But one thing is evident with these situations… people are focused on the short-term. I’m a firm believer that there’s no such thing as easy money that is sustainable the long term. Yeah sure, you can hit the lottery or maybe you got into Bitcoin when it was at $5,000, but long-term, it all evens out. It’s unnatural for us as human beings to think 5, 10, 20 years down the road when we see an opportunity to make a short-term impact, but those that can figure it out will be the ones who leave a legacy well beyond their years. Be honest & be patient and if you put in the hard work, it will pay off.
Photo by Robert Hickerson on Unsplash
The opinions expressed in this post are the sole view of the writer and do not reflect the opinion of Princeton Mortgage Corporation.