Category Archives: Real Estate

Real Estate

Foreclosure Floodgates Opened?

foreclosed-home

Depending on your perspective on the market, the promised wave of foreclosures may have already hit California—but there’s a huge difference between filing for foreclosure and foreclosing, and that difference may be making all the… difference.

RealtyTrac on Thursday released its U.S. Foreclosure Market Report for the third quarter, which shows that foreclosure filings (default notices, scheduled auctions and bank repossessions) experienced a 5% increase from the previous quarter and an increase of nearly 23% from Q3, 2008. That means one in every 136 U.S. housing units received a foreclosure filing during the quarter. That’s the highest quarterly foreclosure rate since RealtyTrac began issuing its report in 2005, according to the real estate information service.

The news was much worse for California. With 250,054 properties receiving foreclosure filings, California accounted for nearly 27% of the nation’s total, according to RealtyTrac. In fact California, Florida, Arizona, Nevada, Illinois and Michigan accounted for 62% of the nation’s total foreclosure activity in the third quarter, the RealtyTrac report states.

Source LBPost.com

Real Estate

Mother of All Mortgage Frauds

mortgage fraud

Oct 14 2009

The “mother of all mortgage frauds” came to an end Friday when an Indianapolis man has pleaded guilty for his lead role in a massive mortgage fraud scheme believed to the largest of its kind ever.

Though Federal law enforcement authorities are still investigating, to date the scheme may have ripped off more than 100 people for as much as $80 million.

Robert A. Penn pleaded guilty to criminal counts of wire fraud, conspiracy to commit wire fraud and money laundering conspiracy.   Penn faces a maximum possible prison sentence of thirty-five years and a maximum possible fine of $750,000.00. He faces sentencing at a later date.

Operating through a number of companies he had formed, Penn signed purchase agreements on a number of properties in Indiana at highly inflated prices. Family members in Martinsville, Va. convinced friends and parishioners of their church to participate in a “no risk” investment to buy the properties, mostly located in the Indianapolis area. They were told there was no financial investment involved; they merely had to allow use of their names and good credit and sign some documents. Most of these straw purchasers were unwitting participants in the scheme.

Robert Penn then completed purchase of the homes he had under agreement in the names of his Virginia investors. He paid the sellers of the homes only the actual market value while recording highly inflated values on the purchase and loan documents. They prepared fraudulent loan applications, containing false statements, including: that the straw purchasers owned bank accounts, stock (in Penns companies) and other assets which they did not own; that the straw purchasers had income which they did not actually have; and that the straw purchasers were making the down payments on the properties from their own funds. In reality, other participants in the schemes actually provided the down payments for the properties, and were paid a fee of $1,000.00 – $3,000.00 for doing so.

Appraisers were employed by Penn and his co-conspirators to prepare appraisals which vastly overstated the values of the properties, in order to support the sales price which was ultimately shown on the closing documents. The false loan applications, appraisals, and other fraudulent documents were then submitted to the lenders. The lenders, relying upon the false statements in the loan packages, issued the loans. The loans were handled through mortgage companies which were apparently either owned or controlled by Penn.  They were funded via wire transfers of money from the lenders to a title company, which the scheme participants used to assist them in preparing false closing documents and issuing title company checks. At the time the loans closed, the properties sold for the fraudulently inflated sales price, and the fraudulently obtained loan proceeds were shared by scheme participants. The sellers were paid the amount they had negotiated to receive, and the co-conspirators shared the excess proceeds.

Source Real Estate Economy Watch

Real Estate

Overcoming Fear of Foreclosure Critical for Many People to Keep Their Homes

foreclosures

Foreclosure numbers continue to rise and many homeowners are at an increased risk of losing their home. While foreclosure can be prevented, many homeowners remain confused or afraid to confront their mortgage problems and take action to help save their home. “Fear often prevents many consumers from seeking help,” said Michelle Jones, senior vice president of counseling for Consumer Credit Counseling Service (CCCS) of Greater Atlanta, Inc. “Overcoming these fears can mean the difference between staying in your home and losing it.”

CCCS counselors address some of the common fears homeowners have about seeking help:

Fear: Homeowners are afraid to let the mortgage company know they are having a problem because they think it will speed up the foreclosure process.

Contacting your lender is an important first step if you want to save your home from foreclosure. It provides you with an opportunity to explain why you have fallen behind on your payments and what steps you are taking to get back on track. Lenders have a financial interest in keeping you in your home and may be willing to alter the terms of your loan or devise a repayment plan.

Fear: Homeowners believe that if their mortgage company has already turned them down for a loan modification, there is no point in contacting a counseling agency.

Many homeowners are turned down for a loan modification because the information they provide to their lender indicates that their expenses exceed their income or that they have not provided accurate documentation and information about their loan. In other cases, the lender may have made a processing error or the investor who owns the loan will not modify loans in accordance with the Making Home Affordable program.

A housing counselor may be able to suggest alternatives that better suit your current financial situation or help you make adjustments that make you a better candidate for a loan modification with your lender.

Continue reading Overcoming Fear of Foreclosure Critical for Many People to Keep Their Homes →

Real Estate

Banks Making Short Sales Tougher

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short-sale

Banks are backing away from short sales, forcing sellers to pay extra at closing or demanding a promissory note for the amount due. One-third of borrowers owe more on their mortgages than their properties are worth, according First American CoreLogic.

When their situations were really tough, most banks preferred short sales because they were their best opportunity to get the most money back. But with an improving economy, and because the losses on many of these properties have already been written off the books, banks are increasingly reluctant to negotiate a short sale.

Today, banks demand 9.5 weeks to respond to a short-sale request, compared to 4.5 weeks a year ago, according to research firm Campbell Communications. Their reluctance is frequently stymieing sales and frustrating real estate practitioners.

“It drives me up a wall,” says Robert G. Hertzog of Summit Home Consultants in Phoenix. “[The bank is] holding my client hostage.”

Real Estate

C.A.R.’s Predicts Home Prices to Increase in 2010

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button-up
The median home price in California will rise 3.3 percent to $280,000 in 2010 compared with a projected median of $271,000 this year, according to C.A.R.’s “2010 California Housing Market Forecast,” presented today at CALIFORNIA REALTOR® EXPO 2009 in San Jose. Sales for 2010 are projected to decrease 2.3 percent to 527,500 units, compared with 540,000 units (projected) in 2009.

“California’s housing market continued its strong sales rebound this year, resulting from the continued pace of distressed properties coming to market,” said C.A.R. President James Liptak.  “This follows two years of double-digit sales declines in 2006 and 2007.  Looking ahead, we expect sales to moderate to a more sustainable pace.”

“After experiencing its sharpest decline in history, we expect the median price to rise modestly next year,” Liptak added.  “2010 will mark the beginning of the ‘new normal’ for California’s housing market.  This ‘new normal’ likely will feature a steady stream of sales driven by distressed properties in the low end of the market, coupled with moderate home-price appreciation.”

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“With distressed properties accounting for nearly one-third of the sales in 2010, inventory will be relatively lean, under six months during the off-season months, and a roughly four-month supply during the peak season,” said C.A.R. and Vice President Leslie Appleton-Young.  “We expect the median price to decrease slightly through the remainder of 2009 and into next year, then rise before leveling off next summer.  For the year as a whole, home prices are forecast to reach $280,000. The wild cards for 2010 include foreclosures, loan resets, the labor market, and the California budget crisis, as well as the actions of the federal government.”

Real Estate

Bank VP Parties in Foreclosed Home

Kitchen in 3,800 square foot home
Kitchen in 3,800 square foot home

Outraged neighbors ratted on a Wells Fargo & Co. employee who threw lavish parties at a foreclosed home in pricey Malibu, Calif. The bank said Monday that the employee had been fired.
The Los Angeles Times first reported earlier that 39 year old Cheronda Guyton, a Wells Fargo senior vice president responsible for foreclosed commercial properties and a seventeen year veteran of the bank, spent weekends at the house, hosting parties that caught the attention of neighbors.
Wells Fargo took possession last May of a 3,800 square foot beachfront mansion. The previous owner was reportedly wiped out by the Ponzi scheme run by Bernard Madoff. It was valued at $12 million when it was taken back by the bank in May.

Instead of putting the property up for sale or letting it stand empty while the foreclosure was completed, Cheronda Guyton, senior vice president in charge of commercial foreclosed properties for the bank, apparently used the place to entertain friends, including transporting guests from a yacht moored offshore.

After neighbors cried foul, Wells Fargo investigated and identified Guyton as the culprit. Monday, the company said in a statement, “We deeply regret the activities that have taken place as they do not reflect the conduct we expect of our team members.”

Malibu Mayor Andy Stern, who also happens to be a real estate agent, told Reuters that the house could lease for $150,000 a month.

Wells says the house was kept off the market under an agreement with the prior owners. “Our investigation concluded a single team member was responsible for violating our company policies,” Wells said in a statement. “As a result, employment of this individual has been terminated. We deeply regret the activities that have taken place as they do not reflect the conduct we expect of our team members.”

Malibu Colony is one of the city’s first and still most exclusive neighborhoods. It has been the playpen of celebrities going back to Bing Crosby’s days

Real Estate

Bathroom Upgrades Pay Off

bathroom remodel

More than 80 percent of new single-family homes have at least two bathrooms, which occupy an average of 300 square feet of floor space, or 12 percent of the total area, according to a study by the National Association of Home Builders.

The home builder’s study reports a major return on value for extra bathrooms: “When the number of bathrooms is approximately equal to the number of bedrooms, an additional half-bath adds about 10 percent to the home’s value, and one additional bath adds about 19 percent.”

A mid-range bathroom remodel, which costs $10,500 on average nationwide, repays a home buyer at least 100 percent of the outlay when the property is sold, the home buyer study concludes.

Education, Real Estate

Madoff’s Gone But Ponzi Schemes Continue to Flourish

ponzi-snake
Picture from Rebecca Harshbarger

I write a lot of blogs on Ponzi schemes because I know several local people who have been bitten by such a scheme.  I guess it’s kind of easy for some people to fall for a Ponzi scheme so here are some guidelines to watch out for so you don’t become a victim.

What gives Ponzi schemes such appeal to investors? Alabama Securities Commissioner Joe Borg ticks off several draws.

“For the 40- to 50-year-old crowd, there’s the fear that the Social Security umbrella won’t be there,” he says. To make enough to retire, they figure they have to turbocharge their investments — and that plays right into the hands of the Ponzi scammer. “Fear is one hell of a motivator.”

For retirees, the problem is low interest rates. The average one-year bank CD yields just 0.95%, Bankrate.com says. A $100,000 CD gives you just $142 a month in interest.

Retirees find they can’t live off the interest from their savings, and that they have to dip into their principal. “They can’t make any money, and they think they’re going to outlive their savings,” Borg says.

Ponzi scammers can use other methods to get people to invest. Madoff used affinity: He scammed the wealthy. He also used religion: Many of his investors were Jewish.

In the South, many Ponzi scammers use their church affiliations, Borg says. “When you have God on your side, what can go wrong?”

What’s particularly insidious about Ponzi schemes is that many people, particularly the elderly, have a hard time admitting they made a mistake, even when the whole scam starts to unravel.

“There’s this fear that if the kids find out, it’s going to indicate I can’t handle my own affairs,” Borg says. Sometimes, older investors would rather lose the money than lose their independence.

The recent burst of Ponzi schemes has federal and state authorities on alert.

“There’s a significant increase in Ponzi scheme cases this year,” says Scott Friestad, associate director of the SEC’s division of enforcement. “From our perspective, size isn’t important. We’re aggressively pursuing Ponzi schemes regardless of size, because the sad truth is that for those caught up in them, they’re losing most if not all of their money.”

The free-lunch warning sign

How can you keep yourself away from Ponzis? Start by investigating anyone who offers an investment scheme that seems too good to be true. (Be particularly wary of those who offer free lunches while they make their pitches.) The Financial Industry Regulatory Authority’s website, finra.org, has a broker check section so investors can type in a broker’s name or firm and see any complaints that have been lodged.

But don’t stop there. FINRA’s database reported no such problems with Bluestein. It did, however, report problems with the brokerage firms he worked for.

Other steps:

•Check the broker’s record with your state securities administrator. You can find how to contact your state securities administrator at www.nasaa.org. Ask for all materials from the Central Registration Depository (CRD) about your prospective stockbroker. For investment advisers, ask for all materials from the Investment Adviser Registration Depository (IARD).

•Check investment advisory firms with the Securities and Exchange Commission at www.sec.gov. “There’s an online complaint center,” Friestad says. “I’m confident that someone will follow up quickly.”

What victims should do

If you think you’ve been scammed, contact your state securities administrator as soon as possible. They can shut down a scammer quickly: And the sooner they act, the greater chance you have of recouping some of your money. But it’s best to avoid a scam entirely.

It’s easier said than done. Con artists will say anything to part you from your money. And they know exactly what to say: “They’re safe, they’re guaranteed, they’ll make up for everything you didn’t save for the past 30 years,” Borg says. But in the end, the Ponzi always collapses and its investors wind up with nothing.

This article was published for educational purposes.

Source USA Today

Real Estate

LA Firefigher, Real Estate Broker Faces Jail Time

man in jail cell

It seems that people are always trying to make money by illegal means. If they would put as much effort into doing something legally as the schemes they come up with, they would in all probability make more money. At least they wouldn’t end up in jail.

A case in point is the scheme by a Los Angeles City fire firefighter and part time real estate broker who was arrested on September 23 of this year. In a press release by the Deputy DA of Los Angeles, Brent Lamont Mathews is charged with six counts of forgery, thee counts of attempt to file a false or forged instrument and two counts of grand theft.

Of course to falsify deeds and documents, you need a notary. It was handy of Mathews to have a girlfriend who is a notary. So along with Mathews, his girlfriend Joi Rochelle Smith faces the same criminal charges.

Prosecutors allege that Mathews put himself on the title of a Hacienda Heights property without the true owner’s knowledge or consent through a series of forgeries and false filings. Mathews allegedly went on to defraud two investors in 2008 whom he solicited as partners to flip the house. The victims collectively lost $146,000, which the defendant purportedly borrowed by issuing trust deeds on the property and thereafter filing false reconveyances of those trust deeds.

Smith allegedly notarized key documents, enabling the illegal transactions.

Mathews sold the property for $699,000 and netted $203,969, prosecutors said. None of the proceeds from that sale were used to satisfy the trust deeds or to benefit the true owner of the property.

Detectives of the Los Angeles County Sheriff’s Department, Commercial Crimes Bureau, investigated the matter.

The recommended bail for Mathews and Smith is $846,000. If convicted as charged, the defendants face a maximum state prison term of 11 years and four months.

So isn’t that neat, you put your name on someone else’s property, get some trusting souls to invest in a house that isn’t yours, sell it and net over $200,000. Let’s see divide $200,000 by eleven years in jail, you make about $18,000 a year, minus of course attorney’s fees, income tax and other associated expenses. Of course you have free room and board during your jail time.

Real Estate

Foreclosure Rate Drops in California

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Foreclosure sign

The latest figures from ForeclosureRadar show that the number of distressed filings in California, one of the worst hit states in the country, fell in August.

Notices of default in California, which is the first step in the foreclosure process, dropped from July to 36,396 filings, a monthly dip of 19.1% and a 14.2% decrease from August of last year.

In a report the firm says that the government’s Home Affordable Modification Programme which provides cap incentives to servicers for the modification of loans in default or on the verge of default, appears to be having a positive impact.

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But Sean O’Toole, founder and CEO of ForeclosureRadar, said that the programme could be hiding the true picture.

‘In effect the HAMP postpones a large amount of filings,’ he said. If it fails, the market would need further government intervention or there would be a wave of new foreclosures, he warned.
But overall the outlook for recovery is still muted.

According to the latest analysis from Moody’s it will be at least another 10 years before residential property prices return to the peak levels of 2006.

Source Property Wire