After the terrorist attacks of September 11, 2001 many New Yorkers and New Jerseyians were looking for a safe haven away from the turmoil of the aftermath. Many sought this refuge in the Pocono Mountains in Pennsylvania. Touting a short drive to New York City, many local home construction companies saw this as an opportunity to sell houses and turn a profit. Many of these companies were reputable and upstanding businesses that produced a quality product at a market ready price. However, some of these companies were not so upstanding and as a result many unsuspecting homeowners were scammed out of thousands of dollars and just as many ended up in foreclosure. It became very clear early on that something was not right with many of the new home transactions involving a company called Rain Tree Homes, and so the Y-Rent scam slowly unfolded.
Rain Tree Homes was a real estate construction company located in Mount Pocono, Pennsylvania. After September 11, 2001, Rain Tree Homes and Y-Rent began advertising heavily to the New York/New Jersey lower income market. Enticing advertisements claimed you could purchase “a new home in the beautiful Pocono Mountains for only $1,000 and $685 per month. Prospective buyers flocked to the area; local builders almost could not keep up with the demand. However, many of the reputable builders and mortgage companies would turn these buyers away, but Rain Tree Homes accepted them with open arms.
Rain Tree Homes and Chase Manhattan Mortgage structured deals with low income and those with poor credit histories enabling them to purchase $175,000 (plus) homes with very little money down. While most of this case is considered fraud, which is “the intentional misstatement or nondisclosure of a mate...
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...ancial positions of the borrowers, their lack of knowledge as well as the superior bargaining power of the lender to get the borrowers to agree to these loans. The lenders should bear the major responsibility of these loans, as they are aware of the ramifications of such transactions. The borrowers are also responsible, as they should not enter into contracts without adequately understanding the consequences of such actions. In many cases, the lenders do not provide the information that would assist the borrower in making rational decisions. There are instances when the borrower does not care about the increased penalties, they just want to get their hands on the money, and worry about the consequences later. Some borrowers just live beyond their means but once they get sucked into a predatory loan, they begin a cycle of debt that they just cannot get out of.
In recent years, it seems as if there is a new financial fraud being reported any given day. One could even say that fraud has become almost a much a surety as taxes. Given the opportunities and pressures, many will businesses will fall victim to human natures and suffer losses through fraudulent activities. This case study will follow one such fraud, following the crimes of Terry Scott Welch in his pursuit for happiness by indulging his passion of landscaping.
Adair v. U.S. and Coppage v. Kansas became two defining cases in the Lochner era, a period defined after the Supreme Court’s decision in Lochner v New York, where the court adopted a broad understanding of the due process clause of the Fifth and Fourteenth Amendment. In these cases the court used the substantive due process principle to determine whether a state statute or state’s policing power violated an individual’s freedom of contract. To gain a better understanding of the court’s reasoning it is essential to understand what they disregarded and how the rulings relate to the rulings in Plessy v. Ferguson, Lochner v. New York and Muller v. Oregon.
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