Back in 2006-2007 when you could borrow 100% of the purchase price up to $1.5 million with only a 700+ FICO score, there was a team of scammers working the Carlsbad area. They hosted seminars where they offered to help unsuspecting marks get a piece of the booming-real-estate pie.
John was the lead guy, and Jenae was the broker who arranged for them to purchase Carlsbad homes at prices inflated by $100,000 over the list price. Then they promised to rent out the homes, and when sold in a few years, everyone would split profits. The extra $100,000 was laundered into their own accounts, and they told the buyers that the money would be used for property management.
Jenae claimed she was duped too, and that no one bothered to verify that they could rent out the homes for enough to cover the payments.
I filed a 20+ page report with the FBI office in Carlsbad that detailed the whole account, and four years later, it looks like it may have helped. Here are some of the details:
A Carlsbad-based real estate consultant was sentenced to five years in prison for a multimillion dollar mortgage fraud scheme involving properties in Georgia, Florida and California, according to the U.S. Attorney’s office.
John J. Borzellino was also ordered by U.S. District Court Judge Janis Sammartino to pay $4.1 million in restitution, federal prosecutors said on Friday.
Borzellino, 53, arranged to purchase homes by offering more than the seller’s asking price with the understanding that the money above the asking price would be funneled to an account under his control, according to court documents.
Prosecutors said Borzellino disguised the funds diverted to him by falsely claiming them as “commission” or “consulting fees” to be paid by the sellers at closing, according to prosecutors. He also assumed several false identities to disguise his role in the transactions. He defrauded lenders into making more than $8 million in mortgage loans to purchase properties in the name of his wife and others, prosecutors said.
Borzellino also admitted that he failed to declare almost $1 million in income to the Internal Revenue Service, prosecutors said.
It was 18 years ago today that I started writing this blog.
It was a Saturday morning. I set up a free account at squarespace to get it started, and it was solely because I expected every other realtor to do a blog too. Funny how that turned out!
Donna said, “Yeah well fine, just don’t spend too much time on it.”
I’ve been a part-time blogger ever since!
It was in August, 2005 when our escrow officer called me to say the buyer of one of our listings was objecting to signing the loan documents. Their realtor/lender beat me over there, and I heard her telling the buyer, “No worries, we will refinance”. It was one of many things that were happening then that led me to start the blog (the home got foreclosed 22 months later).
This is my first blog post, and it still resonates somewhat today:
Housing blogs were becoming popular and I commented regularly elsewhere. It caused more people to discover what I was doing – and to slam me just because I was a realtor, even though I was being pretty gloomy. By 2009, I had picked up quite an audience, and enough attention that the LATimes picked up on the blog, which led to this piece by ABC News Nightline:
The ABC TV spot ran in April, 2009, which coincidentally was the trough of the San Diego Case-Shiller Index. The audience here exploded, and at the same time the bank-owned listings being sent to us increased substantially. We sold 72 homes in 2009, our all-time high!
All kinds of crazy things have happened.
For example, we monitored the Jenae scandal in Bressi Ranch and La Costa Valley where she and co-conspirators were doing seminars and selling homes to unsuspecting suckers who financed their purchases 100%. Jenae promised to rent them out but they were adding $100,000 to each purchase price that was kicked back to her partner John as a tenant-acquisition slush fund. He finally went to jail but Jenae claimed she was duped too and she is still selling homes around the county today.
My life was threatened a couple of times, I’ve evicted dozens of people, I’ve been in a movie, and on CNBC TV (twice), plus I’ve been on ReasonTV, and in Grant’s Interest Rate Observer (on October 3, 2008 for those who have access). I’ve been on industry panels, I’ve been an expert witness in court, I made a citizen’s arrest of squatters, and I’ve met with the FBI to turn in scamming realtors…..among other things!
I’ve had 12,101 blog posts here with 68,179 comments and 3,000+ Youtubes with 2,341,000+ views, plus 14,200+ tweets. It has been one heck of a ride – let’s keep it going!
Thanks to readers everywhere, and a special acknowledgement of those who have utilized our real estate services over the years. It is why I do this blog, and I appreciate your support!
When we followed Jenae and her scammers during the last foreclosure crisis, they had convinced amateur investors in Bressi Ranch to borrow most or all of the sales price – Countrywide was willing to finance 100% to virtually anyone in 2007 – and then rent out the homes until they go up in value.
We thought it was far-fetched because the monthly payment was well above the market rents, but they were bumping the purchase prices to include up to $100,000 kickbacks from the sellers for a slush fund to cover the negative cash flow (but went into the scammers’ pockets instead). They paid $1,100,000 to $1,300,000 for houses like this one, but as prices started to weaken, they all bailed out.
If they would have just hung in there until now, the idea would have worked!
We saw this happen in Bressi Ranch when Jenae and Company went on their 100% financing spree. Her victims weren’t deadbeats – instead, they had good credit scores and other assets, and they were just duped into the get-rich-quick scheme. When it didn’t pan out, they dumped everything.
The grim tale of America’s “subprime mortgage crisis” delivers one of those stinging moral slaps that Americans seem to favor in their histories. Poor people were reckless and stupid, banks got greedy. Layer in some Wall Street dark arts, and there you have it: a global financial crisis.
Dark arts notwithstanding, that’s not what really happened, though.
Mounting evidence suggests that the notion that the 2007 crash happened because people with shoddy credit borrowed to buy houses they couldn’t afford is just plain wrong. The latest comes in a new NBER working paper arguing that it was wealthy or middle-class house-flipping speculators who blew up the bubble to cataclysmic proportions, and then wrecked local housing markets when they defaulted en masse.
Analyzing a huge dataset of anonymous credit scores from Equifax, a credit reporting bureau, the economists—Stefania Albanesi of the University of Pittsburgh, the University of Geneva’s Giacomo De Giorgi, and Jaromir Nosal of Boston College—found that the biggest growth of mortgage debt during the housing boom came from those with credit scores in the middle and top of the credit score distribution—and that these borrowers accounted for a disproportionate share of defaults.
As for those with low credit scores—the “subprime” borrowers who supposedly caused the crisis—their borrowing stayed virtually constant throughout the boom. And while it’s true that these types of borrowers usually default at relatively higher rates, they didn’tafter the 2007 housing collapse. The lowest quartile in the credit score distribution accounted for 70% of foreclosures during the boom years, falling to just 35% during the crisis.
So why were relatively wealthier folks borrowing so much?
Recall that back then the mantra was that housing prices would keep rising forever. Since owning a home is one of the best ways to build wealth in America, most of those with sterling credit already did. Low rates encouraged some of them to parlay their credit pedigree and growing existing home value into mortgages for additional homes. Some of these were long-term purchases (e.g. vacation homes, homes held for rental income). But as a Federal Reserve Bank of New York report from 2011 reveals (pdf, p.26), an increasing share bought with the aim to “flip” the home a few months or years later for a tidy profit.
Hat tip to AL for sending in more on the story in Escondido.
The tenant of this house has been arrested for having created a bomb factory in his residence, and now the sheriff has decided to burn the house down. The owner of the house paid $479,000 in 2005, and refinanced it since, with loan balances around $500,000, so this will be the bank’s problem now.
But check this out – Jenae’s flipper client just bought the house next door for $221,000 at a trustee sale, and is trying to flip it for mid-$300,000s. You’ll see her sign in the video:
If you are Jan Terry, owner of this house at 2872 Vista Acedera in La Costa Valley and Jenae’s co-conspirator, you pull out all the stops.
First it was to try their lease-option program, hoping to find a renter willing to cover her roughly $9,000/month obligation. But no takers.
Then she tried the typical short sale strategy, starting with a list price of $1,100,000, which was slightly under her purchase price of $1.25 million, which she financed 100% in April, 2007. She eventually lowered it down to $890,000, but then cancelled the listing.
Now she has reverted to the last resort. We think she must have sent in a short-sale offer to the bank to postpone the trustee sale, which was scheduled for July 17th.
In the meantime, she has rented the house to 14 surly individuals who come and go at all hours, night and day!
The HOA says they can’t do anything. Carlsbad P.D. says they might tow this car that they park around the corner, but that’s about all they can do.
The neighborhood has already suffered from this inflated sale, which contributed to others paying too much – now the impending foreclosure of a house that is surely in disrepair will help tank values further. Thanks Jenae!!!
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Jim & Donna Klinge helped us sell our home of 30 years in Ocean Hills. We were very happy with their service and would HIGHLY recommend them to anyone looking for an Honest, Knowledgeable, Skilled, Informed Efficient realty team. Both Jim & Donna were so helpful in different ways and complemented each others skills. Please refer to a more detailed review that we wrote on YELP. Thank You Both for all your help!!!
Jesse O'Hara
June 12, 2025
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A+ thank you
Lisa Tuomi
June 11, 2025
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Many years ago, we purchased a home in Carlsbad, using a realtor that was recommended to us - Jim Klinge. Fast forward to 2025, we recently had the privilege of selling 2 homes in Carlsbad, CA and didn't hesitate to reach out to Jim and Donna Klinge of Klinge Realty Group to guide us through the sales. The transactions were very different, each with its own unique situation, opportunities and challenges. From start to finish, Donna and Jim helped navigate the pre-sale preparation, the listing, showing of the house, buyer negotiations, the final close and all of the paperwork and decisions in between. What stands out with both transactions is the professionalism of Jim and Donna (and their team), wonderful communication (timely, relevant, concise), their deep understanding of market dynamics (setting realistic expectations), their access to top-notch contractors, and last, their ability to guide us across the finish line successfully. We wouldn't hesitate to use Jim and Donna in the future and highly recommend them for anyone looking to buy or sell a property in North San Diego County.
Jerry Meyer
March 28, 2025
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We sold a home with Jim and Donna and from beginning to end they were consummate professionals. Their initial walk through the property resulted in a list of items to be repaired or updated. They supplied a list of vendors and job quotes to do the repairs and updates. We originally wanted to sell ‘as is’ and just get it over with. They gave us a selling price for ‘as is’ and options for doing a few updates/repairs to doing it all with the selling price for each option. We agreed to do all they suggested and we sold for the exact price they predicted. For every dollar spent we got back more than $2 back in the selling price. And they got that price in a rising interest rate environment! Donna and Jim are extremely detailed and guide you through ever aspect of the sale. There were no surprises thanks to their guidance. We couldn’t be more pleased with their representation.
Thank you Donna and Jim,
Jerry and Mary
Heather Quejada
March 27, 2025
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We have known Jim & Donna Klinge for over a dozen years, having met them in Carlsbad where our children went to the same school. As long time North County residents, it was a no- brainer for us to have the Klinges be our eyes and ears for San Diego real estate in general and North County in particular. As my military career caused our family to move all over the country and overseas to Asia, Europe and the Pacific, we trusted Jim and Donna to help keep our house in Carlsbad rented with reliable and respectful tenants for over 10 years.
Naturally, when the time came to sell our beloved Carlsbad home to pursue a rural lifestyle in retirement out of California, we could think of no better team to represent us than Jim and Donna. They immediately went to work to update our house built in 2004 to current-day standards and trends — in 2 short months they transformed it into a literal modern-day masterpiece. We trusted their judgement implicitly and followed 100% of their recommended changes. When our house finally came on the market, there was a blizzard of serious interest, we had multiple offers by the third day and it sold in just 5 days after a frenzied bidding war for 20% above our asking price! The investment we made in upgrades recommended by Jim and Donna yielded a 4-fold return, in the process setting a new high water mark for a house sold in our community.
In our view, there are no better real estate professionals in all of San Diego than Jim and Donna Klinge. Buying or selling, you must run and beg Jim and Donna Klinge to represent you! Our family will never forget Jim, Donna, and their whole team at Compass — we are forever grateful to them.
Lou F
March 27, 2025
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WeI had the pleasure of working with Klinge Realty Group to sell our home in Carmel Valley, and I cannot recommend them highly enough!
Jim and Donna demonstrated exceptional professionalism, offering expert guidance on market conditions and pricing strategy, which resulted in a quick and successful sale.
Communication was prompt and we were well-informed throughout the entire process.
For anyone looking for a dedicated and knowledgeable real estate team, look no further!
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William Sams
March 25, 2025
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Donna and Jim Klinge of Klinge Realty Group have our highest possible recommendation. From Donna and Jim’s first visit to our house through closing their advice and counsel was candid and honest in all dealings. They kept us fully informed throughout the process. The house sold less than three days after listing with a two-week closing. My wife and I have sold several houses during our lives. This was by far the best experience. Klinge Reality is a premium service realtor. You can’t make a better choice for someone to sell your home fast and for top dollar.
Emily Hernandez
December 29, 2024
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Donna and Jim provided exceptional support and professionalism throughout the entire process. We couldn't have been happier with their efforts. They made our house shine, and thanks to their expertise, it sold above the listing price in the very first weekend! Truly a fantastic experience from start to finish.
Jesus Adrian Sahagun
November 11, 2024
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This year has been difficult on our family, mainly due to having to sell our home. Thankfully we knew God had a plan for us and working with the Klinge team was a key part of it. It was an obvious decision to work with them again after such an amazing experience when purchasing the same home we needed to sell. The challenge was, how will we do this in so little time with so much going on? Jim and Donna held our hand every step of the way. Whenever an unexpected issue arose they found and provided a solution. Never once did we feel pressured to make a decision and the Klinges were always reassuring after providing the information that the decision was ours to make. Despite the curve balls, they never panicked and exemplified the “can do” attitude, making us feel optimistic and taken care of. Their expertise and professionalism was superb. But of all the reasons to work with the Klinges, the most impactful and valuable is their compassion and genuine care for their clients. We pray that we can one day purchase our forever home and you better believe that Jim and Donna will be representing us - as long as they will have us of course. Thank you again Klinge team! Your execution, experience, and care are unmatched.
SABIHA PASHA
July 23, 2024
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Jim and Donna were fantastic! Jim understanding my needs, recommending potential places, pointing out the pros and cons of each property was invaluable. Then when the offer was accepted Donna’s organized guidance through the inspections, paperwork etc made the whole process seem effortless.
So grateful that I had them on my side!
