Tag Archives: Thomas Haskert

Real Estate

Hard Money Lender Tom Hastert Demands Jury Trial

Thomas Hastert
Thomas Hastert

It’s hard for me to imagine a man like Thomas Hastert a man who worked so hard to get ahead in this world becoming a felon. Hastert worked for the Nevada County Sheriff’s office, studied to become an attorney, then got his real estate broker’s license.

Once he got his broker’s license he proceed to engage in hard money lending in direct conflict with the law, making construction loans without fully funding them, a felony.

In addition, Hastert pleaded no contest to 62 counts of embezzlement, offering and selling unregistered and unqualified securities by false and incomplete communications. According to the Attorney General of California amounting to $20 million lost by his clients. That’s a lot of money to handle and lose. A standard fee for the mortgage broker Hastert is to charge is about 3 percent of the loan amount which means Hastert would have pocketed about $600,000.

Hastert’s attorneys and the California Deputy Attorney General Keith Lyon had reached a plea bargain that would have given Hastert five years in state prison. Normally that type of sentence means two and one-half years and he’s out of prison.

However, at the sentencing Judge Sean Dowling rejected the plea agreement and came back with his own sentencing of eight years and four months. Hastert’s attorney refused the new sentencing and demanded a jury trial.

I met Thomas Hastert some time ago, while he was an attorney. I did some investigations (as a civil engineer) for Hastert regarding building code violations for some of the real estate cases that he had. My impression of him at that time was that he was a nice person and I had no idea that he would resort to what he did. What does a person like that think? We have the Bernard Madoff, the Sir Walter Stanford’s who look you in the eye with a smile and steal your pocket book at the same time.

What do you think?

Real Estate

Hard Money Loans and Some Pitfalls

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.