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Real estate agent's warnings of housing bubble unheeded

GREG GORDON MCCLATCHY NEWSPAPERS
Real estate agent's warnings of housing bubble unheeded - real estate agents - property bubble - United States


WASHINGTON -- Former Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and other top government officials have said they didn't notice the dangers that Michael Blomquist saw in the runaway California housing market until five years after he did.



As home prices and loan amounts in California's Silicon Valley, one of the nation's hottest markets, began mushrooming in late 2003, Blomquist said, lying, scheming and recklessness were becoming everyday occurrences.

Blomquist, a San Jose real estate and mortgage broker, was sure that the inflated incomes on loan applications and the tricky loans would lead to a housing bubble with disastrous consequences.

Refusing to commit "felony mortgage fraud," he closed his offices in January 2004, long before the housing meltdown, and began a sort of one-man crusade to expose what he calls "a criminal conspiracy to turn the housing market into a giant Ponzi scheme."

Over the next four years, Blomquist futilely tried to dissuade clients and friends from putting their life savings into pricey homes. He wrote letters warning federal regulators and members of Congress that mortgage fraud was creating "a perfect storm" in the housing industry.





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