As the real estate market softens in certain areas of the country and in certain markets within those geographic area, there are more stories coming out about speculators. Here is one article which relates to the Houston Condo market and points out the number of speculators who have gotten burned by the down turning market. Here is a quote from the Houston Chronicle:

“Last year, nearly 400 people who owned more than one home in the Houston area accounted for more than 1,000 foreclosures, an analysis of local data shows.

That’s up from about 150 investors who were responsible for about 350 foreclosures two years earlier, according to a Houston Chronicle analysis of data provided by The Woodlands-based Foreclosure Information & Listing Service.

Although it’s unclear how big a factor the novice investor is in the current market, it is clear that defaults among multiple homeowners contributed to a 44 percent increase in foreclosures in Harris, Montgomery and Fort Bend counties. Foreclosures shot up to 11,983 in 2006 from 8,300 in 2004.

“Unsophisticated investors always make mistakes because they speculate instead of buying something that’s a good investment,” said Del Walmsley, president of Lifestyles Unlimited, a real estate investor and mentor group in Houston. “They go out and buy anything.”
…
Many first-time investors lost their properties after getting entangled in questionable deals.

The problem has become so pervasive in Houston that the FBI has created a special unit here to crack down on mortgage fraud.

In January, the Harris County District Attorney’s Office indicted eight people, from real estate agents to loan officers, in connection with alleged mortgage fraud that entangled 300 homes worth more than $40 million. About 70 of those homes were in ZIP code 77004 just south of downtown. Others were concentrated in Missouri City.

Chris Robison, 39, said she recently filed a complaint with the FBI claiming she got lured into buying a house in Pearland and a condo downtown that were doomed investments from the start.

“I signed the loans. I didn’t know what I was doing,” she said. “Now my credit is ruined.”

She said she agreed to buy two properties that others had promised to manage, rent and eventually sell for a profit that they would split. They would even make her mortgage payments.

All Robison had to do was sign the loan papers, she said. So she did.

But eventually she began to get default notices in the mail, the homes were foreclosed, and her credit score of 667 had plummeted. The homes she bought for a total of $942,500 were 100 percent financed, leaving her with thousands in monthly payments she couldn’t afford.

And here is a link to the full article from the Houston Chronicle:
http://www.chron.com/disp/story.mpl/business/4658167.html

Mike