- This topic has 31 replies, 16 voices, and was last updated 17 years, 11 months ago by
greekfire.
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December 30, 2006 at 8:54 PM #42464December 31, 2006 at 12:08 AM #42468
CardiffBaseball
ParticipantThe Fraud Detective post I made a week or two ago was linking to a poster on Ben’s Blog who not only traced this but helped report it to the authorities.
SD Realtor take a look at this link, from my old posting and read about how this guy tracked sales that seemed suspicious. Apparently the FBI can even get interested in these cases.
December 31, 2006 at 6:38 AM #42469lostkitty
ParticipantWe should start reporting every last one of these we see. Otherwise, the market will never turn around and be based on “fundamentals”.
Could someone please start a new website “ReportMortgagefraud.com”
That would help move things a long a bit faster for the average Joe saving and waiting for a return to a normal market …. i dont have the time or know-how to do so.December 31, 2006 at 6:42 AM #42470Participanthttp://www.fbi.gov/publications/financial/fcs_report052005/fcs_report052005.htm#d1
Check out the map with mortgage fraud ‘hotspots’.
December 31, 2006 at 9:11 AM #42473Steve Beebo
ParticipantSD Realtor said: “I think we all lose… This now becomes a comp that will be used by others.”
That is not usually true. For example, let’s say I’m doing an appraisal of a house for a refinance, and I have four recent closed sales nearby, one pending sale, and three listings, that all make me think the subject property is worth around $800,000, and lets say I see a record of one sale on the same street that sold for $975,000. I might see it on the MLS, but it’s more likely that it wasn’t reported as a sale on the MLS, and I noticed the sale while researching sales on public records. After I investigate this higher sale, I find that it was listed on the MLS for $825,000 a couple of months ago, then the listing was cancelled. At that point I’m 99% sure that it was not a fair market sale, and there is no way that I will use it as a comparable sale in my appraisal. I see these kinds of situations frequently, and the high sales almost always have an 80% first and a 20% second, so you know that it’s just a matter of time until it becomes a bank REO.
December 31, 2006 at 11:09 AM #42474Participant“At that point I’m 99% sure that it was not a fair market sale, and there is no way that I will use it as a comparable sale in my appraisal. I see these kinds of situations frequently”
FREQUENTLY?! Do you report them? What else would account for the higher price besides fraud?
December 31, 2006 at 11:11 AM #42475TheBreeze
ParticipantSteve, what you do and what “usually” happens are two different things entirely. Stop trying to put lipstick on this pig. The appraisal in this instance was fraudulent and whoever did it should end up in jail.
December 31, 2006 at 11:28 AM #42477ParticipanttheBreeze – if there was an appraisal in this instance it was almost certainly fraudulent, and someone should go to jail, (appraiser / realtor / etc.), but it seems to me that this type of white collar fraud is rarely prosecuted, at least so far. Hopefully that will change.
Some lenders are doing loans using electronic appraisals, without an appraiser ever being involved, though, which is an open invitation for fraud.
lostkitty – I have seen several recent sales like this, but they are not reported as sales on the MLS, so I would have no idea who the realtor or appraiser was, if any. The only thing I would know is the purchase price, loan amount, and lender. I saw one sale last summer for a condo in University Heights where the sale price on public records was $400,000+, the true market value at that time was something like $270,000, (with other sales and a listing in the complex to prove it), and there was a 100% loan by Argent Mortgage. I did send a letter to the Chief Appraiser at Argent Mortgage, informing them of what I found, but I never heard back from them. They’ll probably be bankrupt some time in the next year or two anyway.
December 31, 2006 at 11:32 AM #42478no_such_reality
ParticipantI’m 99% sure that it was not a fair
No offense to the realtors on the board whom appear to do good researcg, but less face facts, the average RE licensee out there is neither that bright nor that motivated to determine what the ‘right’ price is for a home.
The majority are simply focused on getting their “client” into a property. I can walk into 10 open houses next weekend and 8 or 9 of the agents argue with me that the market isn’t that soft, that prices are holding, that renting is throwing my money away and that at $899,999 the 3bd 2 ba cracker box needing work is a steal…
December 31, 2006 at 12:23 PM #42480Bugs
ParticipantThere are some distinct limitations on what happens when such deals are reported to the authorities. There are only so many resources available, and most of the agencies aren’t going to chase a single deal unless they’re provided with some or most of the evidence that demonstrates a criminal act.
In other words, unless we had a (substandard) appraisal in hand or some other document that would serve as evidence the reality is that most of the law enforcement agencies aren’t going to use their resources to chase the case.
December 31, 2006 at 1:21 PM #42481powayseller
ParticipantThe lender makes the loan because he’s more interested in the short term profit than the long term profit. Investors are to blame – we all want high profits today, an easy life today, rather than sacrificing today for a better life tomorrow. (Another example is the entitlement program, which officially has made the US into a bankrupt country, because it is impossible to meet the promised obligations, so they will either print money like mad or default on the promises – bankruptcy.) So the lender makes the loan just to have another loan on the books, sells it to the MBS buyer (your Aunt Margie’s pension fund, the police officers’ pension fund, the San Diego County pension fund).
So if we want to chase this all the way to the source, it is the high returns desired by pension funds, is it not, that allows this to go on? SD County is an example: in their quest to eke out the highest returns for the least amount of money put into the fund, they take on unethical amounts of risk by investing in hedge funds, MBS, and all kinds of stuff. Do we even know what they are invested in? That would be an interesting topic.
Fixed income funds hold MBS too. Check out the prospectus of any fixed income fund, and you’ll likely find MBS (mortgage backed securities).
Ultimately, the investors are to blame for having given up the risk premium.
The government should be protecting the public from this kind of stuff, but they failed.
If the lender sells the loan off anyway, they don’t care if the loan performs. CA needs to hurry and implement the new lending guidelines. So far, only 20 states have done so.
lostkitty – I’ve been encouraged to have a section on my website for fraud. I can certainly include examples of fraud like this, but there is the risk of being sued by the people I’m discussing. So I’m not sure of the best way to handle it.
December 31, 2006 at 1:54 PM #42483ParticipantIf the lender knew that their 100% loan was in reality a 110% or 120% loan, due to a fraudulent transaction, they wouldn’t make the loan. If they sell the loan, and it goes bad in the first year, they are most likely going to have to buy back the loan, and they’ll have to deal with the property as an REO.
December 31, 2006 at 2:53 PM #42485ParticipantFrom comments in Ben’s Blog
“New Century has made three loans in Lincoln, CA(Sacramento MSA) in the last 8 weeks. All three loans are at $200,000 over market value and all are at 100% of the purchase price. Three loans on one street? How much more is there in this area and throughout California? I believe these were “cash back acquisition” loans, where the buyer put the extra $200,000 in his pocket, or perhaps split the $’s with the sellers.
I have just notified the RMBS rating divisions of Fitch, Moody’s and Standard & Poors, with copies to the COB, CEO, & CFO.”
Steve, Are you saying the lenders have IQs of a turnip? Or are they poor victims of appraisal fraud? Doesn’t the lender have to review the appraisal to ensure it makes sense? Or are they so happy to have a borrower, that all common sense and scrutiny is laid aside?
We’re hearing enough of this now to know that mortgage fraud is occurring with some regularity, and lenders are participating. The participating lenders either know they are acting fraudulently, or they are stupid (lacking the intelligence to discern the loan is over market value). Now, which is more likely: 1)a lender is knowingly allowing a loan above market value to get badly needed sales revenue and prevent going out of business this month and to meet sales goals and to get the commission and avoid having to foreclose on their own homes, or 2)a lender lacks the ability to disccern an obvious lie about of sales price and appraisal.
December 31, 2006 at 5:37 PM #42489SD Realtor
ParticipantSteve it does hurt everyone involved. Just because you do more research then other appraisers doesn’t matter. The fact is, it is a sale, and it is marked as sold, and it gets logged by dataquick as a data point and will support are favorite stat the median price.
December 31, 2006 at 5:57 PM #42490LookoutBelow
ParticipantActually this is WONDERFUL !!! Towards the end of any bubble/hyped mania, crazy shit like this is allowed to happen cuz no ones really looking….its WONDERFUL ! the lender is going to get creamed and rightfully so ! Lack of due dilligence is inexcusable and I wish the schmoe's who dreamed this scam up the best of luck….unfotunately for them the law is only a foot and a half behind them…they just dont know it yet..
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