These are the crimes and attitude required to actually go to jail for real estate fraud:
A former Fannie Mae employee will spend more than the next six years in prison after being found guilty of accepting more than a million dollars in bribes and kickbacks in exchange for selling Fannie Mae-owned foreclosures for less than market value.
Back in January 2018, Shirene Hernandez was charged with accepting bribes for steering foreclosures to certain brokers and even allegedly buying some foreclosures herself at below market value. And nearly a year ago, Hernandez was found guilty of two wire fraud counts that involved the deprivation of honest services as a result of the scheme.
Hernandez formerly worked at Fannie Mae in California as an REO foreclosure specialist and was tasked with the sale of properties foreclosed on by Fannie Mae.
As a sales representative, a position she held from 2010 through 2015, Hernandez would assign Fannie Mae-owned properties to certain real estate brokers and approve sales of the properties based on offers the brokers submitted.
But, court documents showed that Hernandez demanded and received bribes – mostly in the form of cash – in exchange for brokers getting the listings and commissions those brokers earned on real estate sales in question.
Hernandez also approved sales of Fannie Mae REOs at discounted prices to both herself and to brokers who paid her kickbacks.
As part of the scheme, Hernandez also received bribes for approving below-market sale prices of Fannie Mae properties to the brokers, all of which were violations of Fannie Mae rules and federal law.
Hernandez also helped several family members become Fannie Mae-approved brokers, and then steered nearly $80 million in Fannie Mae listings to them, resulting in nearly $2 million in commissions in less than three years.
According to court documents, Hernandez received more than $1 million in benefits from the scheme, including cash kickbacks and equity in a Fannie Mae property she bought using said kickbacks.
And, according to court documents, Hernandez paid for that property using a duffle bag filled with $286,450 in cash, which she gave to her sister-in-law to bring to the closing.
“The crime that [Hernandez] committed was egregious,” the prosecutors wrote in their sentencing memorandum. “Rather than act in the public’s best interests…she used her position to line her own pockets. [She] is unremorseful and unrepentant, and would seemingly do it all again if she could avoid being caught.”
In addition to the 76-month prison sentence, Hernandez was also ordered her to pay $982,516 in restitution to Fannie Mae.
We featured this bank-owned property earlier as an online auction (which didn’t work out).
They did find a cash buyer – I hope they got in the house to take a look around!
This is a typical example of an REO sale these days. The former owners paid $1,650,000 in 2007, and used a 31% down payment. The original $1,137,500 mortgage was funded by World Savings, and undoubtedly it was a neg-am loan.
It looks like the buyers stopped paying in 2010, but instead of foreclosing and losing a truckload, the bank (Wells Fargo, who bought World Savings) just waited until they knew market value was high enough that they wouldn’t lose money:
The price at the trustee’s sale in November was $1,365,016, and they sold it traditionally for $1,350,000. It means that after paying closing costs, the bank received 100% of the principal back, plus around $150,000 of the neg-am interest that accrued.
These days, banks are only foreclosing once they can make money on them!
This sold for $318,000 in 2004, and I sold it for $140,000 in April, 2008. The same buyer still owns it.
I’ll never forget how the trash-out guy here was so cocky about having so much REO business that he said, “I make more money than you”. He probably did, but I never saw him on the front page of the L.A. Times!
Wells Fargo foreclosed on this Carmel Valley home in November. It had been listed on the MLS for the previous 12 months, and it looked like the agent had been trying to process a short sale (it was marked ‘contingent’).
She had it listed for $1,500,000.
Her clients paid $1,650,000 in 2007, and financed $1,137,500 with World Savings. Times were tough for many, and these folks got their notice of default filed in August, 2010. It doesn’t look like they made any payments since.
Wells Fargo’s amount at the trustee’s sale was $1,365,016, which is typically the amount owed. So the former owners got a couple of hundred thousand dollars in relief, but waved bye-bye to their down payment of $512,500.
Wells Fargo then listed the house for sale in January for $1,499,000, and has now sent it to an online auction. The bidding started yesterday, and will remain open until Tuesday:
The interesting twist is that the house is occupied – probably by the former owners – and no one is allowed to see the house. They also have only one photo of the exterior.
I’ll help them out by providing a link to the previous listing with photos here:
The auction website also notes that it needs to be a cash purchase, though it’s not mentioned in the MLS listing. The buyer has to pay a 5% buyer’s premium on top of the purchase price, and I assume they want you to close escrow with the occupants inside?
What will somebody pay for the home, under those conditions?
The current bid is $1,199,920, though note sure if that is actually a real offer or just the minimum bid.
A good example of today’s market conditions. At first, you would think a bank-owned house in the prime Derby Hill community in Carmel Valley would garner a lot of attention, and sell quickly. But this one isn’t tricked out with extras, and it’s not a canyon lot either.
Like most sellers, they added a little mustard to their list price – but they were on the market for 55 days before finding the buyer:
A rare Bubbleinfo TV trip to the beach area west of Coast Highway in Oceanside to see this very unique custom home that is a three-time loser – it was foreclosed in 1994, 2007, and February, 2017.
A buyer paid $1,500,000 for it in 2005, got foreclosed, then purchased from the bank for $1,012,500 in 2007.
The latest bank had it on the market during the spring selling season last year, but no takers. Their last list price was $934,900:
We should see it back on the market again this year!
September 24, 2017 is the 12th anniversary of this blog! For a little perspective on where we’ve been, here is my most-watched YouTube.
This house originally sold for $927,500 when new in 2005.
I sold it for $485,000 in April, 2009 which was the low point of the San Diego market, as judged by our Case-Shiller Index. This year there have been sales on the street in the mid-$800,000s!
An employee of the Bank of America recently told me that they are not extending any of the loan modifications that have been issued over the years, to which I chuckled.
“What are they going to do, foreclose?”
“Yes” was the response, which got a chortle out of me. After all the taxpayer support and bending of the foreclosure rules, now you’re going to tell people to start making their payments…or else?
Lo and behold, it looks like it, at least for this one example:
This was the house mentioned HERE that had been in foreclosure since 2011. Yesterday, the lender finally foreclosed on the ‘homeowner’ who probably wasn’t making many, if any, payments over the last six years.
Up until now the properties being foreclosed were those that had sufficient equity where the lenders weren’t taking much of a loss. It was good to see the opening bid here come out well below what was owned – though it was all interest accrued from non-payment.
No takers at the trustee sale though, in spite of Property Radar’s guesstimate of value was over $1,600,000, which was way off.
I can’t imagine there being a flood of these after all we’ve been through, and you can bet the eventual list prices of these will be full retail.
But it’s good to see the deadbeats getting challenged.
An online auction to sell real estate? Maybe it will catch on!
Gone are the days of the quick talking auctioneer, paddles and shouted bids. Today, San Diego County Treasurer-Tax Collector Dan McAllister announced he is moving the annual property tax sale auction online.
“With this new system, people sitting at home can browse and bid on more than 1,600 properties currently available, including timeshares starting at $900,” said McAllister. “The online auction aligns with our ‘e-nitiative’ to make it easier and more efficient to do all business with us electronically.”
The online tax sale auction will take place May 5-10. Interested buyers can register as a bidder beginning April 5, and registration will end April 27. Bidders must put up a $1,000 advance and a nonrefundable $35 bid processing fee.
“Moving this tax sale online will cut our operation costs compared to a live auction,” said McAllister. “We also hope to sell more properties as we open the auction up to bidders outside the San Diego region – even around the world.”
All sales are final, so this is a buyer beware sale. Before April, the Treasurer-Tax Collector’s Office (TTC) encourages everyone to research the selection of available properties by clicking here.
Right now, there are about 1,600 parcels available, roughly four times the number we have put up for auction in previous years. The majority – 1,231 – are timeshares, many with minimum bids as low as $900.
The remaining 393 parcels are improved and unimproved properties, 39 of which have owners living in them. Owners of the for-sale properties can redeem them by paying owed taxes and fees until 5 p.m. on May 4. Over the past five years, TTC notices and late bills to these owners have not been responded to. In early April, each of the properties will be personally contacted by TTC staff who will warn them of the impending sale.
The TTC has not held a tax sale auction since 2015, and on average, sales have generated more than $1.1 million each year.
Just one more rerun before Kayla introduces our new listing tomorrow night.
This is the 7th most-watched video on Bubbleinfo TV, and is a greatest-hits tour through the REO-listing days. In April, 2008, the Bank of America had dumped twenty of their REOs in my lap, and over the next 12 months the JtR foreclosure extravaganza ensued.
A month after this video premiered here on the blog (March, 2009), I was on the front page of the L.A. Times, which led to the spot on ABC News Nightline:
