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Category Archive: ‘Fraud’

Mortgage Fraud

FBI-logoLast summer I met with an FBI agent to discuss a local realtor. I submitted 32 pages of conclusive evidence that implicated the realtor in committing 19 cases of short-sale fraud.

Though the agent said he would pursue it, I never heard from the FBI again.

Hat tip to daytrip for sending in this article from the nytimes.com:

http://www.nytimes.com/2014/03/16/business/a-loan-fraud-war-thats-short-on-combat.html?ref=business&_r=0

Two excerpts:

“The I.G. report confirmed what’s been clear for quite a while — that the D.O.J. has never taken mortgage fraud seriously,” Professor Levitin said. “There is going to be no comeuppance for crimes committed during the financial crisis. This sets a really bad precedent for future crises because we’re seeing that there is going to be no deterrent effect of criminal law.”

“The report fits a pattern that is scary for a democracy, that there really are two levels of justice in this country, one for the people with power and money and one for everyone else. And that eats at the heart of what I think makes this country great.”

Posted by on Mar 17, 2014 in Fraud, Market Conditions, Mortgage News, Scams | 7 comments

Short Sale Fraud is Illegal

Hat tip to Booty Juice!  From calcoastnews.com:

timbTimothy William Barnes, 37, pleaded guilty Monday to committing bank fraud. Barnes, a San Francisco resident, owned and operated Apex Properties Real Estate Brokerage in San Luis Obispo. Barnes is accused of orchestrating a property-flipping scheme in San Luis Obispo, Paso Robles, Pismo Beach and other Central Coast cities that netted him more than $500,000 in profits between January 2010 and September 2012.

Barnes understated the value of homes in documents he submitted to banks that he was asking to approve short sales. He then sold the houses at higher prices. Often Barnes concealed higher offers he had already received and simultaneously negotiated the short sale and resale of the houses.

Short sales can occur when the value of a property drops below the amount of money owed on the mortgage. In that instance, a bank can agree to a short sale, in which it accepts less than the total owed on the loan.

The FBI and the Federal Housing Finance Agency’s Office of Inspector General investigated the Barnes’s property-flipping scheme. FBI agents raided his downtown San Luis Obispo office in September 2012.

Barnes is scheduled for sentencing on June 16. He faces a maximum of 30 years in federal prison.

http://calcoastnews.com/2014/03/former-slo-broker-charged-federal-bank-fraud/

Posted by on Mar 5, 2014 in Fraud, Jim's Take on the Market, Scams, Short Sales, Short Selling | 6 comments

$15 Million in Kickbacks

The Wolf of Ramona! From Channel 6:

thatsallSAN DIEGO – A Ramona real estate agent who admitted taking part in an investment and mortgage fraud scheme that generated tens of millions of dollars in phony loans and illegal kickbacks was sentenced Friday to serve 15 months in federal custody.

During a hearing in downtown San Diego, U.S. District Judge John Houston also ordered Teresa Rose, 58, to pay more than half a million dollars in restitution to victims of the offenses.

Read More

Posted by on Jan 4, 2014 in Fraud, Mortgage Lawsuits, Scams | 3 comments

More Pocket Scum

Realtors will put a twisted spin on any new gadget in order to justify hoarding commissions.  In this article, one manager convinces himself that because he gets ’300 emails a day and four actually apply’, it’s good to use a separate system that enables pocket listings:

http://www.latimes.com/business/realestate/la-fi-lew-20131020,0,7268732.story

An excerpt:

That means agents no longer have to fool with emails selling Viagra, unwanted notices about office pools, and other non-work-related messages. That frees them up to spend more time listing houses, showing and selling properties, and attending closings. Agents found that the software allowed them to “preview” possible listings with their fellow agents and market them internally before they hit the open market.

That’s a form of so-called pocket listings, which are somewhat controversial in and of themselves.

With a pocket listing, a property for sale is held out of the local Multiple Listing Service while the seller’s agent shops it among his list of clients and friends. If the agent finds a buyer, he gets to keep the entire commission rather than share it with a buyer’s agent.

But while a house is in the agent’s pocket, so to speak, it is not exposed to the entire market, as it would be if it was on the MLS. And in theory at least, if the house was listed, the seller might have been able to secure a higher price.

Under the rules of most MLS systems, a property must be listed within 48 hours of receiving a signed listing agreement. So a true pocket listing is only a short-term ploy at best.

But the Yapmo software makes the process more efficient. Agents are able to automatically shop the property in-house directly to buyers and other agents who have expressed an interest in that kind of house, that price range or perhaps that area.

It isn’t intended to limit exposure to keep the deal in-house, Van Eck said. Rather, it is intended to maximize exposure during the “downtime” between when a listing is taken and the house is ready to show.

“Nothing in the MLS defines what people are looking for,” says Boehmig, the Atlanta broker. “But with this tool, a conversation can ensue while a house is getting ready to come on the market. Our agents can say, ‘I want to hear about that kind of stuff but not that kind of stuff.’”

Yapmo also works well for sellers who don’t know what their homes are worth, or for those who value their privacy and don’t want to tell the world that they are getting ready to put their properties on the market or what price they are asking.

“One of our agents just took a listing but was concerned about the price,” Boehmig says. “He was able to email other agents in the company saying, ‘Here’s what the seller is thinking. What do you think?’ And when the house actually came on the market, it was positioned properly to sell.”

They can dress it up all they want, but when they prominently mention that they have closed 275 pocket sales, you know their objective.  Realtors won’t police themselves – sellers need to insist on their home being placed on the open market!

Posted by on Oct 21, 2013 in Fraud | 5 comments

Short-Sale Bribes

Hat tip to bode for sending this in from the latimes.com:

A Bank of America Corp. employee assigned to deal with delinquent mortgages has been arrested on federal charges of accepting more than $1 million in bribes to allow homes to be sold far below their market value.

Kevin Lauricella worked at a BofA facility in Simi Valley where he focused on short sales, said Ariel Neuman, an assistant U.S. attorney in Los Angeles. Short sales are transactions that allow borrowers in default to satisfy their mortgage debts by selling the property for less than they owe.

A 28-count grand jury indictment, unsealed Tuesday, listed 18 properties allegedly sold in late 2010 and early 2011 at prices below those the bank would have approved. Lauricella is accused of enabling the sales by improperly approving short sales and falsifying bank records.

Most of the homes were in the San Fernando Valley, but others were in Corona, Coto de Caza, Beverly Hills and Bel Air.

“The buyers would either resell the homes at the actual property values or in some cases would refinance the property at the actual value, thereby extracting profits on the deals,” Newman said.

Lauricella, 28, of Thousand Oaks, entered a not guilty plea Tuesday before a federal magistrate and was released on a $100,000 property bond, said his attorney, Ronald D. Hedding. Hedding said he had not yet had time to study the evidence against Lauricella and could not comment.

Documents filed with the indictment indicated the government seized Lauricella’s Chevrolet Suburban on grounds it had been purchased with criminal proceeds and intended to try to take away his home.

http://www.latimes.com/business/money/la-fi-mo-bofa-short-sales-bribes-20131016,0,2008694.story

Posted by on Oct 16, 2013 in Fraud, Short Sales, Short Selling | 5 comments

More on Pocket Listings

My contribution to a big article on pocket listings in the OC Register:

http://www.ocregister.com/articles/mls-529529-pocket-home.html

Other agents say pocket listings are never a good idea.

kobe“If being on the open market is good enough for Kobe Bryant, arguably the biggest celebrity in the O.C., then it’s good enough for everyone,” said Jim Klinge, a Carlsbad Realtor. Bryant’s 8,471-square-foot home in Newport Coast’s gated Pelican Ridge, with a shark tank, hair salon and “extra deep” swimming pool, went on the MLS in August for $8.59 million. The home is still for sale.

Often, homes start out as de facto pocket listings without the sellers’ knowledge, Klinge said, as many agents ask sellers to sign a form allowing them to exclude a home from the MLS for longer than a 48-hour period.

“Agents will tell you it’s because they need time to develop their marketing, but in reality they are shopping around the listing first to their own buyers, then among agents in their office and their waiting buyers, and then if all else fails, the listing gets inputted onto the MLS,” he said. “This practice happens in virtually every office, big and small, and among the most successful agents to the rookies.”

His advice? “Sellers should check the Internet themselves to verify their home has been properly listed on the MLS for sale, and advertised to the open market, before negotiating an offer.”

Klinge thinks that off-MLS listings hurt not only sellers, but buyers, too.

“If a seller has found a buyer, and wants to dupe him into paying too much, he might try to tantalize the buyer with an ‘off-market opportunity,” Klinge said. “It is the reason why buyers should insist on buying only those homes on the open market.”

Read the full article here:

http://www.ocregister.com/articles/mls-529529-pocket-home.html

Posted by on Oct 14, 2013 in Fraud, Listing Agent Practices, Scams | 5 comments

Summer Distressed Pricing

The impact of the short-sale fraud is becoming more obvious. It was at its worst in 2012, and though there has been some rebound this year, the short-sale average pricing is still well below the rest:

NSDCC detached homes sold between June 1-to-August 31:

Year
REOs
SS
Non-Dist
All Avg $/sf
All % chg YOY
2009
$272
$310
$393
$380
-13%
2010
$311
$296
$385
$371
-2%
2011
$296
$296
$393
$378
+2%
2012
$299
$269
$390
$371
-2%
2013
$347
$287
$445
$437
+18%

Fewer distressed properties selling for below-market prices this year has contributed to the spectacular rise in the cost-per-sf statistics – without them the year-over-year comparisions are going to flatten out.

Posted by on Sep 14, 2013 in Fraud, Listing Agent Practices, Short Sales, Short Selling | 0 comments

Short-Sale Fraud Enforcement

This is a typical bank form that all parties are required to sign in order to close a short sale:

BofA short-sale addendum-broker cert

The form requires that the deal is an arm’s length transaction – and now we have some enforcement, at least in Nevada:

A Henderson couple could face up to 30 years in prison and a $1 million fine if convicted of bank fraud allegations in the short sale of their home.

Cynthia Hosbrook, 41, a licensed realtor, and her husband, Robert Hosbrook, 51, were indicted in U.S. District Court on Wednesday after authorities alleged they made false statements to Wells Fargo Bank to obtain approval of the short sale on their house.

They were charged with one count of conspiracy to commit bank fraud and one count of bank fraud.

According to the indictment, the couple asked a relative to act as a straw buyer for the purchase of their home in the 2700 block of Mallard Landing in Henderson in March 2010. The couple then submitted paperwork to Wells Fargo indicating that the sale would be between unrelated parties.

The Hosbrooks also allegedly asked the straw buyer to sign paperwork indicating that the buyer would be living in the property, which was untrue.

The form also tries to impose broker-agency (on page two) by having the agent agent certify that the property was:

‘….listed on the local Multiple Listing Service at fair market value to provide open market competitive bids to present to seller as per terms of the seller/agent listing agreement and that the marketing is in fact and “in spirit” seeking to maximize the selling price of the property.’

Hopefully there will be more convictions that draw attention to the crime - I’m not sure that all realtors recognize that they are committing felonies!

Posted by on Aug 13, 2013 in Fraud, Scams, Short Sales, Short Selling | 5 comments

Credit Repair Rip-Off


SAN DIEGO – Mark Ramirez said he hired the Georggin Law Firm to help repair his credit after he sold his home through a short sale.

“It was my first home. So you know I did work hard for that and unfortunately I lost it and I trusted these individuals to help me out with my credit,” said Ramirez.

Rameriz said he was referred to the Georggin Law Firm by his real estate agent who attended a session run by the firm’s vice president Eric Phillips.

He said the sales pitch Phillips gave him over the phone sold him on the firm.

“Yeah, and that they would represent you if they did have to go to court,” said Ramirez.

Former employee Lindsey Esser explained the program to Team 10. Esser said she worked for the firm for one month and then quit.

“Clients would sell their home through a short sale and the banks would report the missed payments on their credit report. The clients would then take the banks to small claims court for erroneously or inaccurately reporting their short sale leaving the client with open liabilities on their credit report. If the banks were found negligent-they would have to delete the entire account,” said Esser.

Ramirez said he paid the firm nearly $3,000 in October of 2011.

“And part of the deal was if you go to court and you lose in court it’s a 100 percent back guarantee. There’s no questions asked,” said Ramirez.

Phillips is on YouTube videos talking about the guarantee.

“Unheard of for a law firm … you will see our refund policy. If I don’t get the judgment for your client, I hand them a 100 percent refund on the spot. On right there, on the guarantee is my bar number,” he said.

Read the full story here (or watch video):

http://www.10news.com/news/clients-oceanside-firm-took-thousands-of-dollars-didnt-do-work-and-closed-07152013

Posted by on Jul 16, 2013 in Fraud, Scams | 2 comments

Pocket Listings Undisclosed

The C.A.R. published more information on pocket listings, summarized here:

http://www.mercurynews.com/saratoga/ci_23531360/realtors-share-info-off-mls-listings

The real problem isn’t getting addressed.

The “pocket” realtors usually don’t tell the sellers they are going to pocket the listing – and if the sellers aren’t paying attention, they will never know.

Seller will see the sign pop up in the front yard, and think that their agent is doing the job.  Even if sellers verify that their home is listed in the MLS, they don’t know exactly what goes on behind the scenes unless they are really paying attention:

  • The listing agent can input the listing, but then shut down the showings.  Once they get an offer or two, some will start telling other agents that it’s too late, even though they haven’t accepted anything.
  • Listing agents can also throw away offers.  I submitted a cash offer that was $40,000 over the list price on an REO listing on the first day it hit the MLS.  The listing agent said that the bank wasn’t taking any more offers, which I told him was hard to believe.  Sure enough, 30 days later it closed for full price, and he represented the buyer too.
  • Brokers and managers promote in-house sales, and some pay bonuses too.  They have weekly office meetings where they discuss new listings to see if they can match sellers with buyers prior to MLS input.
  • You would think that the primary motivation is for the listing agent to represent the buyer too and get both commissions.  But you’ll see several of these completed where the buyer is represented by a different agent.  Either the listing agent is going to extreme measures to hide the facts, or it was a pre-arranged deal.

Some of these sales close for what appears to be top dollar, but you will never know for sure unless the property is exposed to the open market.

There is no enforcement of any laws, rules, or ethics – realtors are expected to treat their own clients honestly.  But you’d be surprised at how many of the highly successful and well-known realtors participate – and the president of the association of realtors confirmed it on our talk show.

It is old-school to look the other way, and by now it is deeply embedded throughout the industry as new agents see the old veterans rip off their own clients regularly in order to score a bigger payday.

Posted by on Jun 29, 2013 in Fraud, Listing Agent Practices, Why You Should List With Jim | 9 comments