Tag Archives: real estate scams

Jon Stewart Blasts CNBC

March 9, 2009 jd 1 Comment

: Another picture of a professional dog walker. Possible new occupation for some of the people on CNBC (I’m still in Buenos Aires and I love dogs)

I love comedy. Comedy takes a complex situation and makes it so easy to understand. This was so much so with the Comedy Central’s skid by Jon Stewart taking on the high and mighty prognosticators of stock market trends on CNBC. Those advisors on CNBC are always full of advice of which stocks to buy, interviewing CEO’s of large companies and glowing about their potential outcome. Jon Stewart shows several of these interviews by them. He then shows the outcome shortly afterwards where for all of their wisdom the companies fail. I love the interview shown of Sir Allen Stanford, a billionaire at the time of the interview on CNBC. Shortly after the interview, the FBI stated that they think Sir Stanford is running a Ponzi scheme.

But the most telling part of the program was when they showed Rick Santelli ranting and raving at the Obama Administration for giving a small portion of the bailout money to homeowners facing foreclosure. Wow, what a rant. (By the way, Santelli was supposed to appear on the show, but didn’t show) But Jon Stewart puts it all in perspective when he proceeded to show that these icons of prognosticators had no problem with the present and past Administrations giving billions of bailout funds to banks, General Motors, Chrysler, AGI and other large companies.

You know it’s easy to place the blame on people facing foreclosure because they should have known what they were getting into when they took out a loan to buy a house. But who set the standards for these loans? It wasn’t the Realtors or the mortgage brokers or the homeowners. Yep, it was the banks setting the lending standards, enticing people into buying a home with low interest rates. Once people bought a home, the loan was set to trigger into a higher interest rate. Don’t you think the banks knew some people could not afford the mortgage? In the old days they called that bait and switch. Now who is getting the majority of the bailout funds, hummm, of course, the banks.

I don’t know what CNBC’s qualifications are to hire Rick Stanletlli or any of the other interviewers. Is it that they are highly educated to help people lose their money, or are they poorly trained psychics? So Rick and his cohorts are hired by CNBC to advise people of the best stocks to buy, and they are almost always 100 percent wrong, so why are they picking on people who are losing their homes? Is it because the homeowners are not as educated in financial matters as they are and should have never bought a home? (Or their stock recommendations)

Like Jon Stewart said, “If I had listened to them, I would be a millionaire, that is, if I had started out with $100 million.” Their coding is screwed up so here’s the best i could do here’s the link to the video.

Real Estate

Hard Money Loans and Some Pitfalls

February 25, 2009 jd

money
First a brief definition of what a hard money loan is from Wikpedia:

Many hard money mortgages are made by private investors, generally in their local areas. Usually the credit score of the borrower is not important, as the loan is secured by the value of the collateral property. Typically, the maximum loan to value ratio is 65-70%. That is, if the property is worth $100,000, the lender would advance $65,000-70,000 against it. This low LTV provides added security for the lender, in case the borrower does not pay and they have to foreclose on the property.

By now we have all heard about Thomas Hastert, 53, who now faces 73 counts of embezzlement, securities fraud, conspiracy and filing false documents . He is alleged to have misused funds taken from private investors that were supposed to be invested in real estate properties or construction of new homes.

I don’t know all of the various schemes that he is supposed to have perpetrated, but I am familiar with at least one. I was approached by a mortgage broker and asked if I knew any good hard money lenders because her friend had started building a home with a loan from Thomas Haskert . As the conversation continued, it was explained to me that Haskert had made the loan with insufficient money in her friends construction account.

I am not a lawyer, but I believe this is a felony. Prior to allowing the homeowner to sign papers for the construction loan, the loan must be fully funded by the hard money lender, the money must be placed in a trust fund independent of the lender after the papers are signed and a third party must inspect the construction phases prior to releasing any money. This protects both the investors and the borrower.

What Haskert apparently did was to have the borrower sign papers prior to having the loan fully funded, putting his investors and borrower at great risk. For example, if you borrow $500,000 to build a home, then during the course of construction you incur costs of $150,000 in materials and subcontractors bills. At that point you are ready for a draw of $150,000. However, if Haskert has not fully funded the loan and there is insufficient funds to give you $150,000, you are in a lot trouble.

Now your property is subject to construction liens, you have a note against your property for $500,000 (the money you borrowed that is not there) and you are going to have some real problems getting out of this mess.

So remember, if you do borrow from a hard money lender for a construction loan, be sure all of the money is there, be sure that the money is put in a trust fund and that someone comes out and inspects your progress. If you invest your money with a hard money lender, check out how long they have been in business, which may or not mean anything (think Bernard Madoff), look at the property you are going to invest in, and determine that you have a safe loan to value ratio.

Real Estate

What, I was Just Having a Drink?

February 24, 2009 jd 1 Comment

You might have heard of the real estate agent in Hillsboro, Oregon who used his lock box key to enter into homes and burglarize them. A homeowner returning from a business trip, walked into his house to find Michael Troy Messmer drinking a White Russian. It seemed obvious that Messmer had been in his liquor cabinet.

The homeowner asked Messmer what he was doing and Messmer replys, “I’m a Realtor” with that, him and his girlfriend walk out with a box full of the homeowner’s personal property worth about $260. That was on February 1.

On February 5, this genius was found to have taken some minor items, toiletry and liqueur from a Cornelius home. The items were worth about $250. In both cases, he used his lock box key to enter the homes.

Of course Messner was caught in short order. This is because every time a Realtor uses his lock box key to open a lock box, (where the key to enter the house is located), a code is entered into the lock box leaving behind the agent’s name and the time that the house was entered. It’s too bad that in every profession there is always somebody who is dishonest. Not only was this guy dishonest, but I think he makes the grade for the dumbest criminal of the year.

I don’t know if they do a background check on real estate agents in Oregon, but in California every licensed real estate agent and broker has to have background check prior to obtaining their license, giving assurances that people with criminal records do not get a license.

Real Estate

Angel & I on Real Estate

February 19, 2009 jd 2 Comments

Angel, she hates to have her picture taken.

If Angel and I could talk to each other, the conversation might go something like this.

Angel to me, why are people so upset because the government might save their neighbors house who is facing foreclosure. After all, they’re saying I make my payments on time, I don’t want or need a government handout, why should they get one?

Well, Angel, it’s not that simple. I remember when I took a law class, the instructor (who was an attorney) said, there is right and wrong, then there’s the law. Now I say, in these times there is right and wrong and then there is real estate. Real estate needs help now, and it may not be exactly the right or wrong way to do it, but something has to be done.

Helping our neighbor to avoid foreclosure helps all of us. It keeps housing inventory from increasing, it helps prevent our home values from dropping and it keeps the neighborhood from deteriorating. There are vast neighborhoods that have just fallen apart, one home after another being foreclose on, vandals tearing the house apart, or homeowners selling parts of their home before they move. (See my previous blog “Rip off a House, Go to Jail”)

Now some people have further said, what kind of an example are we giving our children? Are we teaching them that if they get in trouble the government will bail them out. I don’t think so; I think you need to educate your children as to the realities of the times. Sometimes, government just has to get involved for the good of the Nation.

What do you think Angel? I think that makes a lot of sense, can I have a cookie now?

Real Estate

Rip off a House, go to Jail

February 12, 2009 jd

Just as we get a high when we purchase a new home, it must be an equal low when you are losing your home to foreclosure and for some people it brings out their dark side.

For example, browsing on the Internet, I read where someone was having a “Demolition Sale” on their soon-to-be foreclosed home. According to the article anything and everything in the house was for sale!

Here’s another one from a house that once sold for $630,000 that was published on Voice of Sandiego.org

“The kitchen cabinets were gone from the yellow, 1960s-era four-bedroom, two-bathroom house. So were ceiling fans, blinds, light switches, outlet covers, interior doors, closet doors, the toilet, a vanity, the stove and marble counters. The kitchen walls had jagged lines of marble tile, marking the perimeter where the cabinets once were. Gaps showed in the paint, inside and out, the job stopped in mid-refurbishment. The former owner had stripped the house and taken nearly everything with her.”

According to an article from the California Association of Realtor®

“The report said, in summary, damages intentionally caused by the mortgage holder can be subject to criminal and civil penalties. In fact, removal of fixtures valued more than $100 constitutes a felony in the State of California and can result in a state prison sentence for a year or more.

“Even fixtures totaling less than $100 can result in a misdemeanor and could include county jail up to one year and/or a fine up to $1,000.”

The problem of course is that the foreclosed owner of the house has no assets. So pursuing them would not get the banks any money. However, I think they should pursue them. Why? Because twenty percent of the people foreclosed on do just that, rip the house apart. This hurts you and I, because it reduces the value of the home when it goes back on the market and it lowers the value of your home and everyone else’s too.

Real Estate

Property Tax Assessment Another Scam

February 6, 2009 jd

warning-signw3

Now we have a company in Los Angles taking peoples money for something they can do with a simple call to their local tax assessors office. An official looking letter from a firm calling themselves Property Tax Assessment, with a PO Box wants you to send them $179.00 by February 27, 2009 for them to do what you can do with a simple call.

If you don’t send them the money by the 27^th you will have to pay them an additional $30.00. Wow, how to word a scam letter to the hilt! In a specific example, one letter which I read states they can save the home owner $1,005.22. Notice the twenty two cents. Now they must have done some kind of research to come up with that close a figure, don’t you think?

But wait, in the letter they state “upon receipt of your service fee, Property Tax Reassessment will thoroughly review your individual property value” Now just a minute, if you send a letter out with a value to the penny, didn’t you do some research before you sent the letter?

Here’s an excerpt from the Examiner which also has a copy of the front and back of the form if you hadn’t gotten one of these scam letters and want to see what it looks like.

“The cunning company takes advantage of the fact that parcel numbers are a matter of public record to create a devious come on that may not be illegal but is certainly deceptive.

You can choose to pay someone to help you with your property tax assessment appeal, but why would you if it’s free? Trickery could induce you to pony up.

The single-page, double-sided mailing (front) (back) from “Property Tax Reassessment, P.O. Box 25519, Los Angeles, CA 90025” comes with the home owner’s address, the correct parcel number and a claim that the property may be over assessed”

When you get mailings like this, report it to your assessor, tax collector and your local district attorney. Offers to reduce your property tax with a fee attached is a warning sign, so call the county officials and do not respond to the letter.

Real Estate

Only a $500,000 Salary?

February 6, 2009 jd

John Thain after leaving Bank of America

Geez, I can’t get by with $500,000 if I have to run a big corporation like GM, or Bank of America into bankruptcy, woops, I mean run these companies!

Here is what some of the CEO‘s of these large companies made as they ran their companies into the ground according to The New Times

First a little update.

“Executives at companies that have already received money from the Treasury Department would not have to make any changes. But analysts and administration officials are bracing for a huge wave of new losses, largely because of the deepening recession, and many companies that have already received federal money may well be coming back”

Crucial details remained unclear on Tuesday night, including whether the restrictions would apply to all companies that receive money under the so-called Troubled Asset Relief Program, or TARP, or whether they would apply only to the “exceptional” companies that were being rescued from collapse.”

The Times went on to list some executives from severely troubled companies and their current salaries.

The chief executive of Bank of America Kenneth D. Lewis, , took home more than $20 million in 2007. Of that, $5.75 million was in salary and bonuses.

Vikram Pandit, who became chief executive of Citigroup in December of 2007 and previously held other senior positions at the bank, made $3.1 million.

The chief executive of General Motors, Richard Wagoner, made $14.4 million, much of it in stock, options and other non-cash benefits. He earned a $1.6 million salary.

Then there’s John Thain CEO of Merrill Lynch who gave billions of dollars to his employees just before his company went under and was taken over by Bank of America. He spent 1.2 million remodeling his office including a $1,450 parchment waste basket.

Darn, at $500,000 a year, the top dogs will not be able to buy parchment waste baskets for $1,450. How about they use a paper bag from the grocery store instead, that’s parchment, sort of.

By the way, in 2004, Bill Gates of Microsoft received a pay raise and with bonus made $901,667. The rest of his wealth came from the company making money and receiving his wealth from stock growth and dividends. What a concept, company makes money, CEO makes money.

Real Estate

Now What? Who Owns This House?

February 4, 2009 jd 2 Comments

So what do you think about people renting out a home that is not theirs? Seems like one way to make money in this economy if you’re looking for free room and board at the local jail house.

Yet this is what happened in West Natomas, in a gated neighborhood that has million dollar homes and such neighbors as the owners of the Sacramento Kings, former Kings star Mike Bibby and other such people with fame and money.

At issue is a 3,361 square foot, 4 bedroom, 3.5 bathroom home that has been vacant for some time. Police investigating the case found that the home had been purchased at auction last Thursday by Aurora Loan Services Inc. of Littleton, Colo, and that Aurora did not know who Phillis Powers was or why someone was living in their home.

However, when police approached the people living in the house, the couple produced a contract allowing them to rent the home for $1,500 a month. The contract had the name of Sacramento real estate broker Phillis Powers. (Hopefully she wouldn’t be a broker much longer.)

To make matters more bizarre, there were two printed signs in the front window claiming the home was the “Private Property of sovereign Woman of republic of California” and that federal and state employees could not access the property.

The sign also mentioned “freeman” which may be a reference to the radical anti-government group that gained fame in 1996 during an 81 day standoff with federal authorities in Montana.

So now, along with everything else that’s happening, we have to watch out for scammers renting homes that they don’t own. Don’t tell the politicians in Sacramento about this, they might use this technique to balance the budget.

For some more of this bizarre story
Sacramento Bee

Real Estate

Beware of Foreclosure Scams

January 27, 2009 jd

It seems when people are distressed, there is always someone to help out and someone to take advantage of them. Now there are a lot of swindlers out there trying to take advantage of people who are on the verge of losing their home. If you are like me, I tend to trust people which is a good thing, but can also be bad, so be careful.

If you happen to fall into their trap, you can lose your money, ruin your credit and in most cases have no hope to avoid foreclosure. If you think you are facing foreclosure, be careful and be sure to read the following article from the Los Angeles Times. Here is part of the article.

“The scams typically work like this: Swindlers target homeowners who are behind on their payments, promising to help them renegotiate their mortgages and avoid foreclosure in exchange for a fee. Then, typically, the swindlers take the money and disappear leaving the homeowners in worse straits than when they begun.

The scammers have popped up everywhere in the last year as the real estate market has spiraled down.

From the ubiquitous orange signs on freeway off-ramps that blare “Modify Your Payment” to men impersonating bank executives going door to door, homeowners in trouble are being targeted relentlessly.”