Category Archives: Real Estate

Real Estate

Donald Trump’s Ex-Partner Indicted

donald-trump- hair

Donald Trump has interesting ways of valuing his holdings, including his own net worth.   Mr. Trump, with his apparent combed over hair, seems to have an ego greater than the City of New York.

So when Trump sued his Hong Kong real estate partners four years ago for not getting a good price on a major Manhattan development and evading taxes, it seemed like sour grapes, as the New York Times puts it.

Today, we find out Trump had good reason to quibble with the $1.76 billion valuation: the Manhattan District Attorney is going after a former partner for grand larceny and tax evasion

The defendant, BARRY D. GROSS, 45, has been indicted on charges of grand larceny, falsifying business records, offering a false instrument for filing, filing a false personal tax return, and failure to file unincorporated business taxes. The crimes charged in the indictment occurred between February 2006 and September 2008.

Back in 2005, it was the biggest residential land deal in the history of the city—Hudson Waterfront Associates, the Hong Kong-based consortium that worked with Donald Trump to develop and market the massive Trump Place development on the West Side, sold a 77 acre parcel of land to Extell for $1.76 billion. Now the Manhattan DA’s office revealed it just arrested the project director for tax evasion and are looking into whether Hudson Waterfront evaded taxes on a $17 million portion of deal.

According to the Post, “Prosecutors say [Barry] Gross hid $1 million that he earned on the deal by shifting the money to a shell company the next year, then filing amended tax returns to hide his fraud.” Gross’s lawyer—Benjamin Brafman—”downplayed the DA’s grand-larceny and fraud case against his client as an overblown tax dispute that should have been settled in civil court.”

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But, Manhattan DA Robert Morgenthau says that Hudson Water paid a $17 million “finder’s fee” to a British Virgin Island company, Fineview, which is believed to be just a shell company. The NY Times Reports, “Mr. Morgenthau said investigators were able to track the flow of the money, which was transferred to from the Channel Islands and to London, before ending up in Hong Kong in the hands of someone associated with the investors. By routing the $17 million through Fineview, Mr. Morgenthau said, the investors were able to avoid paying income taxes on it as part of the purchase.”

Morgenthau said more arrests are coming. And now it looks like Donald Trump, who had complained Hudson Waterfront could have gotten more than $1.76 billion, is a victim in this, too, since some of that $17 million should have gone to him! The Donald told the Times, “I greatly commend the district attorney for his work and feel certain it will continue.”

Source New York Times.

Real Estate

Madoff’s Beach Home Sells for More Than $8.75 Millon

madoffs beach home

Bernard Madoff’s Montauk, New York, beach house sold for more than the asking price of $8.75 million, two weeks after it was listed for sale.

Corcoran Group broker Joan Hegner confirmed the sale and didn’t disclose the buyer or the purchase price.

The home is the first of three once owned by Madoff that the government is selling to pay restitution to victims of Madoff’s Ponzi scheme, the largest in history. The 3,000 square- foot home on Old Montauk Highway, on the east end of New York’s Long Island, was seized July 1 by U.S. Marshals.

The Montauk property Madoff shared with his wife, Ruth, has a panoramic view of the Atlantic from every room, said Roland Ubaldo, a deputy U.S. Marshal in New York. It was built in 1982 and the Madoffs were the first and only occupants, Hegner said.

The house, with 182 feet of beachfront, is 50 feet from a sand dune, so close that environmental regulations would no longer permit building there, Hegner said.

Minkoff said there have been 15 showings of the property, which is priced at $8.49 million. An open house for brokers on Sept. 15 brought 120 agents, he said in an interview. The Palm Beach house still has most of the furniture and artwork, which are being sold separately

Source Bloomberg

Real Estate

A Large Down Payment On Your Home Might Give You a Higher Interest Rate on Your Mortgage

sold-sign-held-in-arms

You would think that putting more money down when buying a home would entitle you to a lower interest rate. Not so according to an article in the New York Times.

Take, for instance, borrowers who want to buy a $400,000 home, and who have a credit score of 720, which is considered very good.
In late August, such borrowers who had $80,000 saved for a 20 percent down payment would have qualified for a 4.875 percent rate on a 30-year fixed-rate loan, according to Regina Mincey-Garlin, an owner of RCG Mortgage in Montclair, N.J.

But that was also the rate offered to borrowers putting down only 5 percent, and therefore required to have private mortgage insurance.
Oddly, those who put down 25 percent, or $100,000, were saddled with a higher interest rate, 5.375 percent, Ms. Mincey-Garlin said.
The underwriting rules from Fannie Mae and Freddie Mac consider borrowers in the 20 to 25 percent down payment category to be the riskiest, in part because they are not required to carry private mortgage insurance. At higher down payments, however, rates begin to fall.

Amy Bonitatibus, a spokeswoman for Fannie Mae, said that the policy wasn’t meant to encourage lower down payments, which some have seen as the main culprit in the home foreclosure crisis.     ad-2-short-sale

“It’s just a less risky loan from our point of view,” Ms. Bonitatibus said, because the lender’s exposure to foreclosure losses is largely eliminated by mortgage insurance.

While borrowers who take out mortgage insurance can indeed enjoy lower interest rates, their monthly payments will be larger than those who made the larger down payments, because the loan itself is bigger
.
A borrower who put down 25 percent for a $400,000 home would make a monthly mortgage payment of $1,680, while the borrower who put 15 percent down would pay $1,906 — or $1,799 in principal and interest, plus another $107 monthly in mortgage insurance. (The mortgage insurance is tax deductible, however, so depending on a borrower’s financial circumstances, the net mortgage liability would probably be less.)

Ms. Mincey-Garlin of RCG Mortgage says she still advises borrowers to make a down payment as large as they can, because the increased equity will help them in the long term.

Read the entire article in the New York Times
This article was posted for educational purposes.

Real Estate

Nevada, Florida, California Post top State Foreclosure Rates

forecloused-home

With one in every 62 housing units receiving a foreclosure filing in August, Nevada continued to document the nation’s highest state foreclosure rate despite an 8 percent decrease in foreclosure activity from the previous month.

A total of 17,902 Nevada properties received a foreclosure filing during the month, still an increase of 53 percent from August 2008.

Florida documented the nation’s second highest state foreclosure rate, with one in every 140 housing units receiving a foreclosure filing, and California documented the nation’s third highest state foreclosure rate, with one in every 144 housing units receiving a foreclosure filing.

A 10 percent month-to-month decrease in foreclosure activity helped lower Arizona’s foreclosure rate from the nation’s third highest in July to fourth highest in August.

One in every 150 Arizona housing units received a foreclosure filing in August — still more than twice the national average.

Other states with foreclosure rates ranking among the nation’s 10 highest were Michigan, Idaho, Utah, Colorado, Georgia and Illinois.

Source Real Estate Channel

Are you facing foreclosure? Call me today for a free consultation on doing a short sale instead.  John O’Dell 530-263-1091

Real Estate

Police Consider Baiting Houses

httpv://www.youtube.com/watch?v=4WGxpQx2L6k

After seeing some homes that have been foreclosed on, I think this is a great idea. Bait the homes so if thieves want to vandalize a home, they’ll get caught. The biggest problem seems to be that some owners of foreclosed homes are the guilty ones. They trash the place, taking dishwashers, stoves, microwaves, cabinets and even the plumbing fixtures and wiring.

So it’s nice that the police in St. Louis are contemplating what they are calling “bait” houses – gussying up empty homes with steal-able stuff like flat-screen TVs and new computers in order to woo crooks to the scene.

The bait will all be wired, so when the thieves make off with it, the cops will be right behind. Hidden cameras will confirm that they got the bad guys.

The police say the program has other advantages as well. “I hope that for every person that we arrest out of a bait house, there’s another 20 who don’t decide to break into a house because they think it might be a bait house,” police department spokesman Rick Eckhard says.

However, how do you punish the former owners of foreclosed homes that strip their homes before they leave? Any ideas?

Real Estate

More Sellers are Turning to Rentals

rent sign

More people are becoming landlords in an economy where selling a home can be challenging.

The nation’s second-largest home insurer, Allstate Corp., says the number of homeowners converting their homeowners insurance to landlord policies rose 27 percent in the first quarter of 2009.

Jim Bass of Jim Bass Real Estate Group in Frederick, Md., says he has begun offering property-management services for absent owners, many of whom are convinced it will be easier to sell in a couple of years.

Holding on probably isn’t the best answer, says economist Edward Leamer, director of the UCLA Anderson Forecast. Leamer suggests negotiating a short sale instead. “Better to take your losses and move on.”

Another factor to consider is whether renting will reduce or eliminate the value of the capital-gains tax exclusion. Federal tax law requires living in the home at least two of the previous five years to qualify for the full capital-gains tax exclusion when the house is sold. Of course, if there is no profit to be had, then this isn’t a problem.

Source: The Wall Street Journal, M.P. McQueen

We have also started offering property management services. If you have a home that you would like to rent, call us at 530-272-2613.

Real Estate

Foreclosure Filings May be Decreasing

foreclosures

Statistics suggest some improvement in the housing market, but the good news for homeowners might be just a temporary setback for real estate investors searching for a good deal.

Decreases in the number of foreclosure filings in each state and increases in
prices in many of those same states seem to suggest good news, although the
news is still mixed in some parts of the country. In five of the top markets,
filings have decreased: California (down by nearly 5%), Michigan (down by just
over 4%), Florida (down by 8.5%), Arizona (down by 9%), and Texas (down by
more than 7%). However, Colorado has seen the largest drop in foreclosures
with a decrease of more than 13%. Unfortunately, the statistics are not so
promising for all states. West Virginia, for example, saw an increase in
foreclosures of more than 17%.

Within these and other key states, the changes in foreclosure filings in major
cities also seem to be showing improvement with only a few exceptions. In
Phoenix, the number of foreclosures dropped by over 8%, the rates in Memphis
fell by nearly 12%, the filings in Miami toppled by just over 14%. Other
states also saw a decrease: Atlanta (2%) and Houston (3.7%). However, both
Chicago and Detroit saw their rates of foreclosure increase by less than 1%
and by just over 5%, respectively.

Although fewer foreclosures can help reduce the supply of available homes on
the market, the prices are also important. In four out of the five top real
estate markets, prices have increased. In both California and Florida, the
price increase is less than 1% bringing the average costs to $347,878 and
$222,950, respectively. Michigan’s home prices went up by 1.4% to $91,614
while the prices in Texas increased by 4.8% to $116,016. Prices actually
decreased in Georgia: falling 2.6% to $126,914. The lowest average price for
homes, according to ForeclosureListings.com, is $60,940 in Ohio.

Real Estate

Mini-Madoff, Used Investors Money for Real Estate and Porn

Ponzi scheme chart, why Ponzi schemes don't work
Ponzi scheme chart, why Ponzi schemes don't work

How about this, a man in New York has been operating a $40 million Ponzi scheme for 31 years. This is a mini-Madoff except that Madoff only lasted 20 years, and Philip Barry, 52, ran the scam without detection for 31 years. He invested the money in real estate and a mail order porn business.

What’s interesting, in both Madoff and Barry’s downfall was the economy. Even more interesting if you can call it that, both were never caught by SEC, but turned themselves in. In both cases, the downfall of the economy led to the downfall of their Ponzi schemes. Money started to run out, so they turned themselves in. What, no money, they develop a conscience?

Prosecutors said that Mr. Barry started his scam in 1978. Bernard Madoff’s $65 billion scam ran for at least 20 years. He was jailed in June for 150 years.

Investigators said they learned of the scheme when Barry turned up at the U.S. Attorney’s office in Manhattan in August of 2008 and asked to speak to a prosecutor. They said Barry acknowledged that, for years, he had been paying off his guaranteed profits by taking money from some customers to cover withdrawals made by others.

Working from a small office in the Brooklyn neighborhood of Bay Ridge, far from the city’s financial center, Barry claimed to be investing in stock options and guaranteed his neighborhood clients solid returns.
But in reality, investigators said, Barry was using much of the money to speculate on real estate. He bought an office building in Brooklyn and big tracts of undeveloped land upstate.

Authorities said he hid the scheme by feeding his customers financial statements boasting of hefty profits that didn’t exist. Sounds familiar, Madoff used the same tactics.

Some of the cash was used to pay for Mr. Barry’s own expenses at restaurants and petrol stations and to maintain the approximately 60 properties he had bought, prosecutors said.

Other funds were diverted to a mail-order business called Barry Publications, which sold pornographic materials

“It’s all in real estate,” Barry said. “I’m going to keep on working to make sure everyone gets the profit they are entitled to.”

Investors have sued Mr. Barry for the return of their cash but are unlikely to receive the bulk of it back. The properties owned by Leverage Group are thought to be worth slightly over $1 million in total. At least 19 of the properties are in foreclosure.

How did this all happen? A promise of high returns on investment, promising 12% to 20% return on money invested. If it’s too good to be true, it’s not true. People’s greed gets them every time.

Real Estate

Ex-Cowboy Linebacker Eugene Lockhart Arrested in Mortgage Scam

eugene-lockhart

Former Dallas Cowboys linebacker Eugene “The Hitting Machine” Lockhart was arrested by FBI agents at his Carrollton home Thursday morning after being indicted on mortgage fraud charges, the U.S. Attorney’s office said.

Lockhart, 48, and eight others were indicted by a federal grand jury on various charges, including conspiracy, bank fraud and wire fraud. The alleged scheme involved approximately 54 fraudulent residential property loan closings resulting in the funding of $20.5 million in fraudulent loans.

Lockhart, who played for the Cowboys from 1984-90, and co-conspirator Lendell Beacham, 50, of DeSoto, were scheduled to appear before a federal magistrate at 1 p.m. If convicted, they could face up to 30 years in prison and a $1 million fine.

The indictment alleges that Lockhart and the others ran a scheme in which they located single-family residences for sale in the Dallas area, including distressed and pre-foreclosure properties, and negotiated a sales price with the seller. They allegedly created surplus loan proceeds by inflating the sales price to an arbitrary amount substantially more than the fair market value of the residence.

The statement from the U.S. Attorney’s office added that the group recruited individuals to submit false financial information and act as “straw purchasers” or “straw borrowers,” promising to pay them a bonus or commission for their participation.

Source: The Dallas Morning News

Real Estate

California Association of Realtors – California Sales up 12% in July

sales up

Existing, single-family home sales increased 12 percent in July to a seasonally adjusted rate of 553,910 on an annualized basis.

The statewide median price of an existing single-family home increased 3.9 percent in July to
$285,480, compared with June 2009.

Unsold Inventory Index fell to 3.9 months in July, compared with 6.9 months in July 2008.

Home sales increased 12 percent in July in California compared with the same period a year ago, while the median price of an existing home declined 19.6 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.

“The federal tax credit for first-time buyers played a critical role in the purchase decision of many buyers,” said C.A.R. President James Liptak. “Nearly 40 percent of first-time buyers said they would not have purchased a home if the tax credit was not offered.

“Because the tax credit has helped so many first-time buyers become homeowners, it is critical that Congress extends the credit beyond the Dec. 1 deadline, and includes all buyers, not just first-timers.”

Closed escrow sales of existing, single-family detached homes in California totaled 553,910 in July at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide. Statewide home resale activity increased 12 percent from the revised 494,390 sales pace recorded in July 2008. Sales in July 2009 increased 8.1 percent compared with the previous month.

The statewide sales figure represents what the total number of homes sold during 2009 would be if sales maintained the July pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

The median price of an existing, single-family detached home in California during July 2009 was $285,480, a 19.6 percent decrease from the revised $355,000 median for July 2008, C.A.R. reported. The July 2009 median price rose 3.9 percent compared with June’s $274,740 median price.

“July marked the fifth consecutive month of month-to-month increases in the median price,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “This was the largest increase on record for the month of July based on statistics dating back to 1979. The yearly decline in July also was the smallest in the past 19 months.
Source C.A.R.