Timothy 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.
SAN 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.
Other agents say pocket listings are never a good idea.
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.”
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!
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.
Hat tip to daytrip for sending this in fromwww.wfaa.com:
PLANO — Jeff Nunn and Melissa Nunn still can’t quite understand what’s happened to the home they worked so hard to build nine years ago.
“It’s awful, awful,” Melissa said in her driveway Thursday afternoon.
They are victims of a wild squatting scheme that Plano police are now trying to unravel, too.
Jeff and Melissa recently divorced and put their home in the Kings Ridge subdivision up for sale. Jeff moved out first. Melissa moved out in March, but they left many of their personal belongings behind.
Tuesday, neighbors called the Nunns to tell them strangers were in and out of the house. When Melissa arrived, she found men painting her home.
“They were moving in! They brought flowers! They put a clock on the wall! I couldn’t believe it,” she said. “There was a man — he was painting the room and painting a cross on the wall!”
Those strangers were claiming Jeff and Melissa Nunn’s home was theirs. They taped a piece of paper in the window announcing the home was abandoned and they were taking it over.
Plano police arrested Jack Brewer, 74, because he was wanted in Denton County. He remains in the Collin County Jail on a $50,000 bond.
This may be just the beginning. When Jeff Nunn went in to see the damage, he says he found a calendar full of plans and a binder full of confidential information on other potential victims.
“I mean, the files they had on people were so amazing and so thick,” he said. “The book was full of Social Security numbers, full of drivers license numbers, student ID’s, ID numbers on it, e-mail accounts, user names, passwords — all that kind of stuff.”
“They were stealing our mail, probably going back two-to-three months,” Jeff Nunn continued. “They had Social Security statements for Melissa. They had bank statements, utility statements. They turned the electricity back on. How, I don’t know, because you have to have a Social Security number to do that.”
“They had our divorce decree, my paycheck stubs,” Melissa added. “It is very scary.”
Jeff saw Brewer’s wife pulling out of the driveway to his home Thursday morning. He followed her and called police. She was taken into custody because in her vehicle, she had one of Melissa’s purses filled with her own personal belongings. She also had photos of the Nunn’s children.
“It’s so upsetting,” Melissa said. “These people violated us. Came into our home, destroyed our home, destroyed our privacy.”
Plano police say an intense investigation is in its earliest stages.
This is the second time someone has taken my photos and placed rental ads hoping to dupe tenant prospects into sending $1,000 by FedEx with the promise of sending keys later.
The use of third parties to help Fannie Mae sell its REO properties is coming to an end.
Fannie Mae notified remaining vendors that the government-sponsored enterprise will transition all REO sales work completely to Fannie Mae’s in-house teams over the course of the next several months.
In the past, Fannie Mae used in-house sales teams and external vendors to dispose of REO properties.
“We have reduced our REO inventory from 162,489 properties at the start of 2011 to 109,266 as of June 30, 2012,” said an email from Fannie Mae to HousingWire. “With a reduced inventory of properties, Fannie Mae’s in-house teams now have sufficient capacity to manage our REO properties without the assistance of third party asset management providers.”
Fannie Mae said the third party vendors, firms such as Vendor Resource Management and 24 Asset Management were notified of the move with enough time to make any necessary adjustments.
Some aspects of REO sales will remain the same.
“We will continue to engage local real estate professionals to market our properties,” Fannie Mae said. “Fannie Mae’s goal is to help neighborhoods recover by selling as many properties as possible to owner occupants at competitive prices.”
They deliberately brought the REO operation in-house because of “reduced inventory”. But now it’s revealed that in the same month, September, 2012, they had 8x that number which were 90 days late?
Keeping their current staff busy with a limited supply of REOs allows the defaulters to skate longer – how can Fannie keep processing the defaulters if they scaled back their REO operation?
This smells bad.
Letting deadbeats skate for months and years erodes what is left of the moral fiber of this country.
These are the short-sale scams mentioned in yesterday’s comments that deserve their own post as a resource for people to use to protect themselves. If you have seen other tricks, include them in the comments so we stay aware!
The most common packages:
1. The listing agent spoons his lowball short-sale listing to an investor to start the lender-approval process. Agent then finds the retail buyer, and once the investor closes at the lowball price, they sell it to retail buyer and pocket the difference.
Once a SS investor chimed in here that this is legit because he discloses to the lender that he is buying for the purpose of immediate re-sale for profit. I’m not sure why a bank would agree to that, but we do know that some banks’ short-sale departments are so busy that they will approve sales just to move product, and may not care as much about getting top dollar.
2. The listing agent can’t close the lowball deal so he tacks on a five-figure processing fee or lien-release charge instead. The short-sale processor is complicit though usually paid by buyer so fiduciary conflict there too, though they will claim to be a neutral 3rd party.
3. The investor approcahes the listing agent and agrees to have the LA represent them on the purchase so agent makes 6%. But the investor gets to negotiate the deal with the bank, and they go in ultra-low with or without the agent’s knowledge. If the investor gets it approved, hooray, they put in the standard $15,000 flipper package and make $100,000+ by selling it to the retail buyer they find later. If not, the seller has to start over on a short-sale process before he gets foreclosed.
4. Listing agent appears to expose property to the open market, and fields several offers. Short-sale closes months later for far-under your offer price, and an insider represented the eventual buyer – usually an agent in the same office.
Tell-tale evidence, usually left all over the MLS:
A. The five-second listing, where once the listing is inputted, it is immediately marked pending or contingent.
B. List-price reductions after marked pending/contingent, usually several smaller reductions over months of time.
C. Listing office represents both buyer and seller (listing agent gets a buddy in the office to help diffuse the obvious).
D. None or one photo, or a few terrible photos meant to throw people off the trail.
E. We saw in the news the idea of ‘negative staging’ where they beat up the house prior to appraisal.
F. Widespread abuse of fiduciary duty being inflicted by new and experienced agents, many of whom work at big-name legitimate firms whose managers look the other way.
REDDING, Calif. — A man accused of cheating North Coast residents out of hundreds of millions of dollars in what prosecutors characterized as one of the largest real estate Ponzi schemes in California history has been convicted by a Shasta County jury.
James Stanley Koenig, of Redding, shook his head and rubbed his forehead as the verdicts against him were read on Monday, the Record Searchlight of Redding reported (http://bit.ly/16zpZTZ).
Prosecutors said Koenig and two accomplices bilked 2,000 investors out of $250 million. Many of the victims were retirees who lost much of their life savings.
Koenig, 60, accused of being the architect of the Ponzi scheme, was convicted on 35 of 36 felony counts, including securities fraud and two counts of first-degree burglary. He faces about 50 years in prison and is scheduled to be sentenced on June 11.
Gary Armitage, 62, was sentenced to 10 years in prison earlier this year after pleading no contest to conspiracy to commit a crime, fraud and sale by false statement. Jeffrey Guidi pleaded guilty to lesser charges and avoided prison time.
Prosecutors said the three men sold real estate investments, promising low-risk returns. But many of the projects faltered or were never finished. Still, the men continued to raise money from investors, using it to pay off earlier investors, according to prosecutors.
Koenig did not disclose that the company had defaulted on loans for some of the properties in its portfolio and also did not disclose his 1986 federal fraud conviction, prosecutors said.
The men were arrested after a 17-month investigation.
Timothy 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.
