Builder Buyout Fraud Is Back Again

Monday, March 31, 2008 2:32 p.m. EDT

A desperate real estate market is pushing some desperate builders to increasingly turn to builder buyout schemes to dump unsold homes.

In this type of fraud, builders use inflated appraisals, hidden incentives, and straw buyers to sell — or at least create the appearance of selling — homes. The end results are often empty, unmaintained homes that head to foreclosure and hurt real estate values.

Plus, because sales and high prices are recorded, the crime distorts true real estate values. Getting a handle on accurate property values becomes more difficult in areas ravished by the schemes.

"A builder bailout is not new, it's just back,â€