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Local Fraudsters Sentenced

santafecyn

They nailed these guys for fraud….but only 18 months in jail?  This is more than your standard short-sale fraud, and I’m surprised this doesn’t happen more often.  They just sent in a forged bank reconveyance showing that the mortgage had been paid (when it wasn’t), and then sold the property.

Link to story

A Carlsbad real estate broker and his brother were sentenced Monday to prison terms for their roles in a fraudulent “debt elimination” scheme that purported to eliminate the mortgages on several million-dollar homes in Del Mar, La Jolla and San Diego.

U.S. District Judge John Houston sentenced Adel Afkarian, 43, of Carlsbad, to 18 months in custody and Atef Afkarian, 41, of Slidell, Louisiana, to 13 months. In addition to the time in custody, the brothers were both ordered to pay more than $5.5 million in restitution to the victims of the scheme.

To implement the scheme, the Afkarians identified underwater homeowners — including themselves — and began a process to make it appear as though the homeowners’ debts had been satisfied.

To do so, they recorded fraudulent deeds that purported to extinguish the large mortgage loans encumbering each property.

Working through entities known as The Better Mortgage Company and Elite Coast Realty, the defendants then sold the properties to innocent purchasers, deceiving the buyers into paying the full purchase price to the Afkarians or their co-conspirators. The mortgage lenders, unaware of the fraudulent documents recorded on title or unable to prevent the sale in time, were left unpaid.

With regard to their own underwater home, the Afkarians pretended that $1.4 million in mortgage debt had vanished, prosecutors said.

The defendants used the “debt elimination” method to successfully arrange the fraudulent sale of four properties, generating more than $4.3 million in proceeds which went directly into bank accounts of the brothers and their co-conspirators.

In some cases, the brothers sold the fraudulent “debt elimination” program to existing clients of their mortgage business, according to prosecutors.

In addition to the “debt elimination” scheme, the Afkarians also conspired to arrange fraudulent short sales for underwater clients through a simultaneous “double escrow” scheme.

Rather than selling an underwater home at a pre-approved short sale price, the defendants arranged two simultaneous sales of the same property at two sale prices, using a straw buyer as the intermediary and purported seller in the second transaction.

That way, the short sale lender would believe that the property was being sold for the initial first escrow price, rather than the higher second escrow price. The defendants and their co-conspirators would then pocket the difference, diverting money from the lenders.

The Afkarians each pleaded guilty in September 2013. As part of their pleas, they also agreed to forfeit a home on Santa Fe Canyon Place in Torrey Santa Fe, which they had purchased using about $715,000 in proceeds from the fraud, and an additional $388,000 recovered from bank accounts where they had transferred proceeds.

China Real Estate Update

frantic homebuying

The government lowered the down-payment requirements and cut transaction taxes in half – and the market took off.  Look at the photo above!  Can you imagine a marketplace where bidders are shouting over the counter? I can!

Let’s auction!

P.S. My blog post #5 today. Look out!

http://www.chinadaily.com.cn/business/2016-03/22/content_24006378.htm

An excerpt:

Resale prices have also surged in tandem with the latest housing boom in Beijing, Shanghai and Shenzhen that saw home prices rise 20 to 30 percent since the Chinese Lunar New Year (Feb 8th). In my neighborhood, three-bedroom apartments now cost 6-8 million yuan, or about eight to 10 times more than what they cost when the estate was launched eight years ago.

My cell phone has been ringing now and then with calls from agents who urge me to sell my duplex apartment and upgrade into a luxury home. But I’ve seen too much to budge even with the regulators’ warning to ease the pressure, like acting hard against easy home loans for low-down-payment mortgages.

Probably anyone familiar with the housing market would doubt if developers and agents who assist buyers with the loans, were the main culprit for the unexpected wave of property buying.

For some young buyers, it’s common for their parents to dish out the down payment, assuming they will repay in the future. But many more would offer to pay in installments over several months during which they could sell their current houses and arrange for loans?such as loans from developers and agents?in case of a shortfall. The danger of a looming US-style subprime crisis might have been largely exaggerated.

Instead, a spate of property easing measures, easy credit, concerns about shortages of housing supply and recent stock routs have worked together to unleash some residents’ pent-up demand for nicer and bigger homes in major cities.

For example, to encourage people to buy houses, interest rates have been lowered and transaction tax on bigger flats with a size of at least 140 square meters, has been cut from 3 percent to 1.5 percent, which means steep savings for buyers because such deals usually involve several millions of yuan.

The market’s return back to life has also reinforced the popular belief that housing prices will only go up. Over the years, the government has tried to curb price rises by imposing a series of conditions on purchase. But each time, after a short, slight dip, prices have rebounded with a vengeance, leaving those wishing for big falls cursing their gullibility and slow moves.

After the stock turmoil last year, property proves again to be the best investment vehicle that the wealthy could park their funds in and middle-class urbanites build their nesting eggs with. While many homebuyers laugh their way to the bank, most stock investors have experienced anger and regret after their money evaporated in market meltdowns.

February Fizzled

Realtor Conference Lawrence Yun 007

Larry got his knickers in a bunch today with the news that the national sales dropped 7.1% from January to February:

http://www.realtor.org/news-releases/2016/03/existing-home-sales-fizzle-in-february

Lawrence Yun, NAR chief economist, says existing sales disappointed in February and failed to keep pace with what had been a strong start to the year. “Sales took a considerable step back in most of the country last month, and especially in the Northeast and Midwest,” he said. “The lull in contract signings in January from the large East Coast blizzard, along with the slump in the stock market, may have played a role in February’s lack of closings. However, the main issue continues to be a supply and affordability problem. Finding the right property at an affordable price is burdening many potential buyers.”

Our market seems hot on the lower end, and not so much on the higher end.  Let’s examine our local counts, and differentiate by the price categories too, rather than make broad assumptions like the talking heads.

We covered this on March 3rd, but let’s add in the five late-reporters to give a final tally to the February sales counts:

NSDCC Houses Sold in February

Year
Under-$1,400,000
Over-$1,400,000
Total # of Houses Sold
2012
154
30
184
2013
144
44
188
2014
139
41
180
2015
111
59
170
Jan16
121
47
168
2016
92
46
138

The number of sales is a leading indicator, and a precursor of things to come. It’s doubtful that home sellers will get too concerned about a couple of data points, but it will be interesting to see if the trend of fewer sales continues.

MLS Jeopardy

Agents have been receiving dire warnings about our MLS, with taglines that make it sound like the end is near, and no real solutions in sight:

http://www.nsdcar.com/your-mls-is-in-jeopardy/

There are people at SDAR who are playing a perverse game of chicken with our livelihoods.  The worst part is that they are choosing to battle it out in court, which will take months or years.

What will happen in the meantime?

Agents will stop using the MLS.

The existing MLS is already a dinosaur, and now that it’s running like an old Ford full of sludge, its usefulness will be compromised.

We are probably seeing the results already – today in the MLS, there are only 37 NSDCC active listings under $800,000?  With the slower MLS, won’t listing agents be even more tempted to skip the input and just stick a sign in the yard?

The lower-end market is so hot, does it even need the MLS?  The pocket-listing shenanigans will have a new rallying cry – “we found a buyer faster than we could input the listing!”

It appears that SDAR wants to create their own MLS, and that’s fine – they are creating a perfect disruption, and the opportunity for anyone to build a new mouse-trap.  But the existing system is going to grind to a halt, mostly because there is no leadership in finding a prompt solution.

The only short-term alternative?

Brokers can join the CRMLS – it is a much better platform, they have a quality public-facing website, and it’s run by adults.  Sandicor and the CRMLS have a data-share agreement, but that is only for us to read their data, not to input listings.  Brokers and agents will have to spend the usual few hundred dollars per year to join the Orange County or Temecula associations.

The merger negotiations between CRMLS and Sandicor won’t go too far with SDAR objecting to everything these days, so the only choice is for brokers and agents to break away on their own.  Will they do that?  Probably not until it is too late.

Do you think it is tough today putting a value on a property with the limited comps we have today?  How about with no comps!!

The big problem with jumping to CRMLS is that we won’t have the data history, which means no comps until all agents are at CRMLS and building a new database.  In the meantime, we will have to use Zillow and other outsiders for data…..gggrreat….

What else can we do?  There is no call to action or any solution mentioned by the powers that be.  Agents – prepare to fend for yourself!

More background here:

http://www.sandiegoreader.com/news/2016/jan/21/ticker-realtor-vs-realtor/

Inventory Watch

2016-03-06 15.28.30

Holy Cow – we are down to just 37 houses for sale under $800,000!

Here are the active and pending listings currently between La Jolla and Carlsbad – have we ever had such hot and cold market conditions existing at the same time?

Price Range
# of Active Listings
# of Pending Listings
Under $800,000
37
98
$800K – $1.4M
207
164
$1.4M – $2.4M
261
103
Over $2.4M
424
55

Click on the ‘Read More’ link below for the NSDCC active-inventory data:

(more…)

How Long Have Sellers Owned 2

The first posting in this series was on December 12 – let’s check in occasionally to see how long recent sellers owned their home before they sold it.  This is a review of NSDCC detached-home sales that closed in March, 2016:

Year of Previous Sale
1st Review (12/12/15)
2nd Review (3/19/16)
1900-1999
34 (27%)
28 (25%)
2000 – 2003
18 (14%)
19 (17%)
2004 – 2008
29 (23%)
33 (29%)
2009 – 2011
19 (15%)
12 (11%)
2012 – 2016
22 (18%)
21 (18%)
New Home
3 (2%)
1 (1%)

The long-time owners continue to lead the pack, with 42% having owned their home more than 12 years before selling it recently.

Buyers should be prepared for fixers, and sellers should do what they can to improve their home to sell because nearly half of the sales probably look dated.

Interesting that those who could make the quickest big profits, those who bought in 2009-2001, we’re the least likely to sell.

More stats:

Other Categories
1st Review (12/12/15)
2nd Review (3/19/16)
Number of Sales
125
114
Avg. $$/sf
$505/sf
$552/sf
Median SP
$1,080,000
$1,129,000
Avg DOM
60
38
Sold in First 10 Days
24%
32%
Lost $$
11
3
0 DOM
5
8

Pricing is still strong, and buyers are stepping up – with one-third of sales happening in the first 10 days on the market! (I was checking for relists too).

Tiny!

There has to be more movement towards smaller living quarters, if for no other reason than to just reduce housing costs.  This is really small, but I like the transport-ability:

Kasita is a 270-square foot high-tech home designed so people can afford to live in otherwise expensive city centers. These small sleek box-shape units are also stackable and can move between cities.

Mix of New Listings

2016-03-16 22.16.57

The new-listing totals for the early spring season have been virtually identical over the last five years.

But the mix has changed dramatically – in 2012, 60% of the listings were under $1,000,000, and this year it’s only 35%:

NSDCC New Listings between Feb. 1st – Mar 15th

Year
New Listings Under $1M
Between $1M – $2M
Over $2M
Totals
2012
341
190
39
570
2013
293
202
60
555
2014
230
238
64
532
2015
216
266
64
546
2016
190
286
74
550

If this was going to be the year that the inventory cut loose, we would have been seeing more signs of it by now. For a variety of reasons, people would rather stay put, than cash in!

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