Makarov asked what I thought about the latest fraud bust in Carlsbad detailed below.
1. I’m glad to see realtors and mortgage brokers going to jail – they deserve it. Hopefully it will also prevent others from committing crimes in the future.
2. These people were greedy. They could have sent these buyers to Countrywide who was funding home purchases with 10% down payments, 700+ FICOs, and no questions asked. But instead, these realtors had to make commissions on the loans too, so they dummied up documents to send to alternative lenders – and now they are going to jail. Was the 1-2% extra they made in loan commissions worth it?
3. This story is an example of the widespread abuse during the peak era – Spanish-speaking agents taking advantage of Spanish-speaking clients. Zach Fox at the North County Times investigated it here:
From theUT – check the link at bottom for details on other big fraud cases:
A Carlsbad real estate agent and her attorney son have been convicted in an $8 million mortgage scam that zeroed in on Spanish-speaking borrowers who obtained homes they were not qualified to obtain, authorities said.
Aida Agusti Castro, 67, and her son, Stephen Kenneth Chrysler, 46, will be in federal custody until their scheduled sentencing on July 30.
Chrysler, of Orange County, had licenses to practice law and real estate in California and owned Carlsbad-based SKC Real Estate. Castro, his mother, who also was licensed to practice real estate in the state, was an agent at that company.
Records show that the pair created 30 fake mortgage applications and other documents to get more than $8 million in home loans for Spanish-speaking home buyers who were unqualified for mortgages. Authorities said the mother-and-son duo inflated borrowers’ incomes and bank-account balances, among other things.
Those who were victimized said Castro and Chrysler failed to translate the mortgage documents and told them to sign on the dotted line without disclosing their deceptive tactics, authorities said. Many of the borrowers in the case received notices of default and eventually faced foreclosure.
The scam has been linked to 16 homes in different parts of the county, from San Marcos to Lakeside, court documents show.
Charges brought upon Castro and Chrysler were part of a larger probe in which defendants in San Diego and the Bay Area were accused of generating fraudulent loans estimated at $55 million, authorities said.
All buyers are sitting on the hotsheet, waiting for new listings – and when they hit, there is an early rush to check them out. It happens a lot these days that when you come across a hot new listing, there will be other people will be there looking at it too. What do you do?
If there is an agent buried deep inside the house who is showing buyers around, as a courtesy, I stay outside and wait for them to conclude.
But if they are lingering near the door or outside the house, and they see me – I’m going to walk into the middle of it to diffuse. The more interest they have in the house, the more they are going to freeze up and panic over the incoming threat, and they won’t want to leave.
I want to gauge their interest, because I might be in a bidding war with them later.
Instead of fumbling around with fake handshakes, I’ll just hit them right between the eyes with the old reliable, “How do you guys like this one?” Usually they are taken by such surprise that they answer honestly, or you can tell by their reaction how they really feel.
When the shoe is on the other foot, and I’m showing people around when another agent arrives – I want to leave immediately without saying a word, and go talk in the street.
Here is the listing for this one, they just paid $300,000 last month.
The current vice president of the Hells Angels’ Sonoma (CA) Chapter has to serve a year in jail and pay $130,000 in restitution to SunTrust Mortgage for his role in a mortgage fraud scheme.
Josh Johnson pleaded guilty in December 2011 to wire fraud. According to his plea agreement, Johnson admitted that from 2006 until 2007, he was involved in a conspiracy with others to fraudulently obtain mortgage loans.
In May 2007, the defendant signed loan applications containing false statements for real property in Healdsburg, Calif. These inaccurate statements caused interstate wire transfers of loan funds from mortgage lenders directly to Johnson’s account.
Some examples of the false statements contained in the loan applications included that Johnson was the owner of a fictitious company for several years and making a large and recurring salary.
The documents supporting the loan applications also contained altered bank statements in Johnson’s name to reflect a series of inflated balances in his bank account.
The loan applications Johnson submitted ultimately resulted in a loss to the lender of approximately $135,000, though the amount of loss in the overall conspiracy is at least several million dollars.
Beginning June 15, real estate agents working with distressed homeowners whose loans are backed by Fannie Mae and Freddie Mac should expect to receive a decision on a short sale offer within 30-60 days.
The GSEs issued new guidelines Tuesday that fall under the Servicing Alignment Initiative rolled out last fall and aim to bring greater transparency to the short sale process and expedite decisions related to these pre-foreclosure sales.
Not only is a short sale an effective foreclosure alternative when home retention is no longer an option, but it keeps homes occupied and helps to maintain stable communities, according to the Federal Housing Finance Agency (FHFA).
“I applaud Fannie and Freddie for finally coming out with real guidance with real world timelines for their servicers,” commented Anthony Lamacchia, broker/owner of McGeough Lamacchia Realty Inc., which specializes in short sales. “There is no question that this will help short sales and the market as a whole.”
Yesterday Ocrenter (who I appreciate for continued contributions!), left this question:
So what is the theory behind the dried up inventory?
–the foreclosure pipeline finally drying up
–short sales tying up most of the distressed properties
–homeowners are avoiding listings due to the low median price
–ability to refi to historic low interest rates allowing homeowners to stay put
–inability to obtain profit at sales is preventing move ups
All of the above?
I think it is all of the above, with some qualifiers.
1. The foreclosure/short-sale pipeline.
The selling of distressed properties has slowed down, and could grind to a halt. Banks seem to have converted to using short sales as their primary disposal device, but they haven’t figured out how to get borrowers to give up the free-rent program.
The servicers are telling borrowers to short sell, but are they? It doesn’t look like it – both REO and short-sale listings for the county are down:
Qtr.
REO New Listings
SS New Listings
1Q10
2,212
3,634
1Q11
2,058
3,481
1Q12
1,481
2,945
We are in this funky purgatory – where defaulters are being coddled further. Servicers are taking their foot off the foreclosure gas, which is counter-productive – it removes the pressure on defaulters to either short-sell their house, or be foreclosed. Without the threat of foreclosure, they will enjoy the free-rent program indefinitely.
2. Sellers are waiting for something.
Elective sellers are certainly committed to stay on the sidelines, but here is the reality:
Their motivation to sell isn’t strong enough.
Their reluctance to sell can’t be based solely on selling for a higher price. If that was all they wanted, they could have sold anytime during the last 5-7 years and gotten more money – but they didn’t.
They just don’t feel like selling, for whatever reason. They don’t need the money bad enough yet, they don’t have anywhere else to go that’s better, or the grandkids are here, so phooey on you.
Without strong motivation, all sellers will list too high and not sell – every year, every market.
3. The move-ups aren’t moving up.
I think we are in the midst of a substantial societal shift in culture, where we are getting used to having less, and liking it.
My rule-of-thumb is that you have to spend 50% more than you are getting for your old house, to make it worth it to move up. You can’t sell for $700,000 and buy for $800,000 in the same area – you don’t get enough extra.
It turns out that staying put isn’t so bad – whether the cause is the unwillingness to pay more, can’t qualify for more, or just being stuck with the over-encumbered housing handcuffs.
You would think that the lack of move-up buyers would inhibit the upper-end market. But there are three other categories of high-end buyers – those that sold at the peak and have waited, the out-of-towners (out-of-country in particular), and first-timers – who have been picking up the slack, apparently. We just had first-timers pay $1.75 million for their first, and probably last, house.
The deadline to ask for a property value reassessment is April 30th, San Diego County Assessor Ernie Dronenberg noted Monday.
Property owners who believe the value of their holdings has dropped below the current assessment can have the county conduct a review by applying online:
Those without online access can call (858) 505-6262 and have a form mailed, but they need to act quickly, Dronenberg said.
He said the form is self-explanatory and does not require legal knowledge.
More than 200,000 taxpayers were granted a reduction in assessed value last year, he said. They do not need to re-apply because their property value will be reviewed automatically. Property owners who disagree with their reassessment are allowed to file an appeal.
The deadline gives county staff time to conduct the review before the 2012-13 property tax bills are mailed out.
(You are required to include recent comparable sales – I’m happy to help!)
1. Inventory is so thin I am having trouble finding houses to capture.
2. Alomost every single video here has something to do with my on-going business – you can figure that JtR probably has something cooking nearby every house seen here.
3. After the survey, I’m trying to be both a tad more positive, and video a little lower down the price scale. I don’t think anyone would consider buying this particular house, but it gives you a perspective of what this money will buy around the La Jolla/PB/UTC corridor:
A Carlsbad real estate agent and her attorney son have been convicted in an $8 million mortgage scam that zeroed in on Spanish-speaking borrowers who obtained homes they were not qualified to obtain, authorities said.
