bubbleinfo.com

SM keeps them coming, the third installment from Seattle:

The woman who was hauled away for squatting in a $3.3 million house? She has no intention of backing down.  She’s going to keep staking her claim to a house she insists nobody actually owns.

Plus she is staking claims to 10 other houses in the Seattle area that have gone into foreclosure and been passed from bank to bank.

She’s doing it all, she insists, not to make money. But to stick it to the banks.  “Banks do whatever they want and nobody holds them accountable,” Jill Lane said by phone from Disneyland, where she was vacationing after being released by Kirkland police.

“It makes me ill to see what the banks are doing. They aren’t using their bailout money to help anyone. So I’m standing up for the people who are being brutalized by banks every day.”

“This is a national movement,” seconded Jim McClung, a former Bothell real-estate agent and owner of NW Note Elimination, a company he runs with Lane that counsels people in how to “eliminate mortgages” as well as take over empty, foreclosed houses.

“What happened in Kirkland is just the tip of the iceberg.”

It sure is, suggests the FBI. Last week the feds released a report saying housing-related schemes are soaring, including what the agency called “property theft targeting bank-owned properties.”

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One more note on the nomination – Inman News is the sponsor, which publishes an e-newsletter sent twice a day to agents around the country.  Their mission is to help agents, and while I’m a daily reader, I don’t cover realtor-centric topics here.  I figure that they have it down pat.

But with their attention possibly sending a few new readers this way who are realtors, I’d like to take the opportunity to give you something to think about – and comment if you’d like.

Running a real estate blog leaves me wide open for blasts from people who figure I’m like all the other realtors, so they take their shots.  A couple of days ago this post-and-video was re-published on www.calculatedriskblog.com, which drove a few newcomers my way.  Here is a comment left by Robert:

(I worked for two years as a full-time marketing assistant for one of the top 20 agents in Chicago.)

You don’t provide us with an address so we can’t determine whether this property was overpriced at $3.2M. I’ll go out on a limb and guess that was the case with this exceptionally bland joint.

As a result, this post comes across as whining, Mr. Mercedes. Most people have been priced completely out of the market by the bubble, which needs to deflate. In 2010 realtors who prop up prices are the scammers.

On your youtube page you complain that this sort of behavior undermines public confidence in realtors. There is no public confidence in realtors, precisely because you refuse to recognize a)the bubble b)your near-irrelevance in the Internet age.

My girlfriend recently made an offer on a house that was in line with local rents, in line with fiscal responsibility (and she makes 50% more than the zip’s median household), in line with the tax assessor’s value. Her buyer’s agent laughed (literally) at her offer. He declined to write the offer up but agreed to pass it on verbally. He got fired. The listing agent failed to return a phone call for two weeks, and finally had someone else call us back. Result? We looked up the owner in the online tax records and sent him the offer directly.

Realtors are superfluous from a buyer’s perspective. As of now, all the stupid buyers have been squeezed through the system. The rest of us know the only thing we need you for is to open the lockbox. That’s worth $20 I suppose.

My point is that only an idiot would buy at market value at this point. If you’re not an idiot, you’re going to find your way around a system that is currently set up to scam you.

If realtors want to regain some sense of integrity, how about starting with some honesty as to where the market is going. And how about changing your fee schedules to reflect your actual social function in the year 2010: taking photos, uploading listings, opening lockboxes, babysitting inspections, and filing paperwork.

The bank is not being scammed. The bank is a scam. Let me wipe away my tears for Bank of America. Oh wait… I have none.

The neighbors, I have more sympathy for. Not everyone was after unearned bubble cash, and owners have suffered large losses. But owners need to understand they were scammed out of their hard-earned money when they bought the overvalued house, not when a legit buyer makes an offer that reflects reality.

I think there are a lot of consumers that are fed up with the realtor community, and are increasingly frustrated that they don’t see much improvement.  If you are a realtor wondering how you can better serve the consumer, re-read the above.  Then go start a blog and use video to share your expertise – please!

P.S. The video above put the spotlight on a very shady short-sale deal, where the agent deliberately did not expose the property to the open market.  As a result of the exposure on Calculated Risk, I received two phone calls from Bank of America’s upper management. They were very interested in the details, so I sent them my entire case.

Kris Berg mentioned that we got nominated today, while trying to take some time off to enjoy the Laker glory after last night’s Game 7 victory. If there are any newcomers to bubbleinfo.com, know that we are normally a serious review of pertinent real estate topics – except when the Lakers win a championship. Take in one of the funniest moments in sports history, the Ron Artest press conference – other real estate videos can be found in the right-hand column:

Hat tip to MB, from the WSJ:

Fitch Ratings forecasts that most borrowers who get lower mortgage payments under a federal government program will default within 12 months.

Among those with loans that aren’t backed by any federal agency, the redefault rate within a year is likely to be 65% to 75% under the Obama administration’s Home Affordable Modification Program, or HAMP, according to a report to be released Wednesday by Fitch, a New York-based credit-rating firm. Almost all of those who got loan modifications have already defaulted once.

Diane Pendley, a managing director at Fitch, said the failure rate was likely to be high largely because most of these borrowers were mired in credit-card debt, car loans and other obligations.

The Treasury Department has said that among people who have been given loan modifications under HAMP, the median ratio of total debt payments to pretax income is still 64%. That often means little money is left over for food, clothing or such emergency expenses as medical care and car repairs.

“The borrower remains in a very high-risk situation,” Ms. Pendley said in an interview. “The other debts don’t go away.”

A Treasury official said HAMP “is making a real difference in the lives of hundreds of thousands of homeowners.” He said the government has reduced the risk of redefault by offering financial incentives to borrowers who remain current on loan payments.

Fitch based the redefault forecast on the performance of loans that were modified in the first quarter of 2009. Those modifications were done outside of HAMP, which took effect later in the year. But Ms. Pendley doesn’t expect a major difference between the results of HAMP modifications and those made under lenders’ programs.

Even if two-thirds of the loan modifications fail, Ms. Pendley said, that doesn’t mean HAMP is a failure. “If you can save one-third of the borrowers, I think it is worth the exercise,” she said.

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From NMN:

The government announced a massive indictment Wednesday against the former head of Taylor, Bean & Whitaker, alleging a widespread fraud of nearly $2 billion that, officials said, helped trigger the biggest bank failure of 2009.

In a 16-count indictment, the Justice Department alleged Lee Bentley Farkas, the mortgage lender’s founder and former chairman, abused Taylor Bean’s business relationship with the $25-billion-asset Colonial Bank Group, faked loans to help mask problems at both companies and attempted to help Colonial dupe the Troubled Asset Relief Program.

If found guilty of all counts, Farkas, who was arrested Monday, could face a maximum prison term of more than 400 years. The government said it was seeking $22 million in forfeiture.

“The fraud alleged here is truly stunning in its scale and complexity,” Assistant Attorney General Lanny Breuer said at a press conference announcing the charges, which were accompanied by a civil complaint against Farkas by the Securities and Exchange Commission.

Colonial and Taylor Bean had an extensive warehouse credit relationship, in which the bank provided Taylor Bean with continuous liquidity to make loans.  That relationship began to go awry in 2002, the government said, as Taylor Bean began having cash problems. According to court filings, Farkas and others ran overdrafts on Taylor Bean’s accounts at Colonial, compelled the bank to buy over $400 million in fake loans from Taylor Bean and hid distressed Taylor Bean loans that the lender could not sell. Under the arrangement, Colonial, which failed in August 2009, held loans on its books at face value when in reality they were worthless.

The alleged fraud was detected as a result of Colonial’s Tarp application, in which it sought $570 million from the Treasury Department. Regulators agreed to give it the money, but only if raised $300 million in private capital.

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The first half of 2010 is wrapping up in two weeks, how have we been doing?

Here are detached stats for North SD County Coastal region (Carlsbad to Carmel Valley):

2009 (Jan 1 to June 15) vs. 2010 Y-T-D

Even though sales increased 34% year-over-year, the other stats are in a virtual flatline.

How have this year’s sales been financed?

Types of Financing Used

The cash purchases in June have amounted to 23% of the total sales so far (17/74).

How do the sales break down according to days on market?

The sellers of more-expensive homes are a little more stubborn about getting their price.

Who’s living in these homes?

Glad to hear that not many sellers are torturing their tenants.

How many are marked as bank-related sales?

Incredible that only 18% of the sales are bank-related, but there are probably many more that are actually distressed. Will the positive headlines about housing propel the market through the remainder of 2010?

If you’ve been looking west of the I-5 in 92014 and hoping for a deal, you might be in for a long wait.  There have been few offerings, and the sales sure seem retail-ish.  Here’s the latest:

My wife Donna is an invaluable part of the team, so I went all out today:

For those who enjoy the comedy of short sales, here’s a good one.

I’ve had a Tierrasanta condo listed since October, 2009.  The sellers paid $447,000 in March, 2007, and financed 100% (I wasn’t their agent then).

They’ve since broke up, and the hefty payment is too much for just one of them to afford, so we’ve been trying to sell it short.

http://Link to SDLookup listing

We found a buyer within a couple of weeks, and we began the normal process. The short-sale division of Equator.com was just beginning, and once we got the buyer’s package onto their system in January we had approval within 30 days for a $350,000 sale.

They produce the final forms for the sellers’ signatures, and the bank includes the right to pursue a deficiency judgment against them, even though it was purchase money. Their lawyer rightly advises them to have me waive the magic wand and make the bank take it out.

The problem with having bank clerks working off a website is that anytime there is a request that is off the regular chart, it gets buried.  Sixty days of constant but friendly badgering produces no results, so the buyer gets so frustrated that, when this competing listing comes on the market around the corner, she buys it instead, for $390,000 VA:

Link to SDLookup competing listing

As it always happens, right after the buyer bails, the bank comes back with their waiver of deficiency judgment.

Our asset manager tells us to go find another buyer, and we can plug them right into the same package.  Within ten days we do just that, but when we go to upload, our asset manager is gone, and we have to start over.  We re-load the whole kit at $350,000, tell the new buyer to be patient, and hopefully we can still accommodate their need for a 30-day escrow.

Yesterday, and bank comes back with a new price – $371,000, based on a $75 BPO that picks up the previous buyer’s purchase around the corner, and adjusts our value up as a result.

There have been a couple of other sales too, $365,000 in April, and $388,000 closed today for a similar 1,491sf – but ALL of the comps are 3-bedroom models, and my listing is a 2-bedroom.

Will our buyer agree to the $371,000?  We’ll see.

The agent first inputted this listing onto the MLS on October 29th, noting that the list date was 6/30/09 – why do you wait four months to get it on the MLS?

It was immediately marked pending, then withdrawn all within a few minutes.  A couple of weeks ago she changes it from withdrawn to sold in the MLS, noting that it was a short sale that needed work, the contract date was 7/18/09, and that the buyer’s agent was an anonymous out-of-towner:

There are so many of these happening, the banking industry should put a cap on commissions to reduce the temptation – or pay a reward for reporting them.