Massive Mortgage/Real Estate Fraud in Temecula

[The-Shoveler]

Nor_LA-Temcu-SD-Guy

On a related subject,

Driving in this morning I heard a radio commercial for a law firm, Basically it was if you got one of these option arm loans, don’t go down in flames, Sue the guy who signed you up for the loan.

Should be an interesting year, courts will be busy !!

[no_such_reality]

The scale of this is incredible: $1.2 billion worth of property

The scale makes me think they actually thought they were legit. Most crooks and almost everybody in the money business knows when you smack it that large, they will come and find you.

As others said, there’s no feeling sorry for anybody in this story. Not even the banks, they’ve known for years that appraisals are largely formalities.

I wonder if one of the changes we’ll see after the credit bubble bursts is banks insisting on using their own appraiser.

[no_such_reality]

The scale of this is incredible: $1.2 billion worth of property

The scale makes me think they actually thought they were legit. Most crooks and almost everybody in the money business knows when you smack it that large, they will come and find you.

As others said, there’s no feeling sorry for anybody in this story. Not even the banks, they’ve known for years that appraisals are largely formalities.

I wonder if one of the changes we’ll see after the credit bubble bursts is banks insisting on using their own appraiser.

[4runner]

No_such_reality (realty??),

Isn’t the lack of a real appraisal a big part of the problem? Why would a bank insist on using their own appraiser when the loans are just going ot get securitized and sold?

The originators are just short-term holders of the debt…

[PerryChase]

The lenders are in it for the revenue/profit growth. If they did it the old fashioned way, the capital would be secure but the business would be stagnant and no one will get rich. Now that lenders can off-load the risk, their have even more incentives to focus on the the origination, servicing and securitizing business that brings in big bucks.

It’s not going to get better. It’ll get worse until consumers can no longer afford any more debt.

The mortgage is just an extension of the credit card. It used to be that only the best customers could get credit cards. But now, it’s much more profitable to give credit cards to everyone. So what if a big portion default? You can charge more fees to make up for it.

Think about it. If you make $10 per loan and make 10 prime loans, you have $100. You make 100 subprime loans at $15 each so now you have $1500. 25 might default 2 or 3 years down the road, but by that time it’ll be someone else’s problem.

This is an interesting PBS Frontline report on the history of credit card. Extend that to subprime mortgages and HELOCs and you have the situation today.
http://www.pbs.org/wgbh/pages/frontline/shows/credit/

[no_such_reality]

4runner, I see a couple reasons why:

1. If the loans default too soon or the ratios in the MBS bundle gets out of whack, they come back to the originator. Hence, the OwnIt implosion.

2. Many of the larger banks (BofA, Wells, etc.) keep a portion of their loans and service the loans in the MBS after securitization.

3. Perceived lack of quality in the MBS bundles will drive the required interest rate up, either through coupon rate or discounting to increase the yield to recover capital losses. The banks can’t sell “$100M” of loans and only get $90M, the shareholder don’t like the impact on the balance sheet.

[aztecnology]

Massive fraud in my own backyard, this is great! I hope this unravels fast, and puts a stooper on any hopes of an ’07 spring rally in the valley. This is potentially well over 2,000 houses in the area, and I think this is the tip of the iceberg in SoCal housing fraud…

[4runner]

No_such,

I agree with you that all of these are likely to occur without a meaningful appraisal process.

I only question whether these are sufficient to outweigh the temptation for short term, easy profits. There is a fundamentally different paradigm between a lender who gets paid to originate loans with OPM and a lender who gets paid based on the rate of return on his/her own capital.

Yes, some banks do keep mortgage loans on their books. However, I can’t imagine that originating a loan with them is much more difficult than originating a loan that is to be securitized, as postulated. From a consumer’s perspective, they are equivalent. To be competitive, the banks who keep loans on their books have to adopt comparably shoddy lending practices.

As for changes in interest rate, people who buy MBS’s “know” that the rate of default is “X,” based on historical records. This is the same way that people who invest in stocks “know” that stocks return 10% per year on average. It takes time for the information regarding higher rates of default/lack of meaningful appraisals to work its way into people’s consciousness.

[Anonymous]

You want to learn more about this scam or are a victim please check out this site for the latest news stories or details.
http://www.coreclient.110mb.com

[23109VC]

i should find one of these houses and buy it.. 😉

i hope this also adds fuel to the housing market that is going down in flames.

Temecula is a great area if you work there. you are 45 min from san diego, there is a plentiful supply of nice houses….and once the prices come back down to reality, you will be able to get a VERY nice house at a very modest price…

i live/work in temecula…currently renting…and wanting to buy but ONLY when it makes sense to do it. right now, you can rent a nice house a lot cheaper than you can buy the same house for…

I’ve seen 3000 sq ft. HIGHLY upgraded homes renting out at 1800-2000. lots of them are vacant… i bet you could “offer’ less than asking and they’d take it just to get some cash flow… try buying that same home and you’ll pay $5000/month in mortgage payments, taxes, HOAs,…

i rent. i’ve got neighbors who bought…and I see the cars they drive, and I know what they do for a living, and I KNOW they can’t afford their lifestyle. big house, big cars, small income….

[ocrenter]

http://www.nctimes.com/news/local/swcounty/article_0f79902e-997f-59df-82e4-38e0fd47077b.html

http://www.pe.com/business/local/stories/PE_News_Local_S_web-fraud.1899989.html

3 years later, the criminals behind the massive Temecula fraud ring are finally locked up.

thanks to Chris Bagley for the update

[ocrenter]

http://www.nctimes.com/news/local/swcounty/article_0f79902e-997f-59df-82e4-38e0fd47077b.html

http://www.pe.com/business/local/stories/PE_News_Local_S_web-fraud.1899989.html

3 years later, the criminals behind the massive Temecula fraud ring are finally locked up.

thanks to Chris Bagley for the update

[ocrenter]

http://www.nctimes.com/news/local/swcounty/article_0f79902e-997f-59df-82e4-38e0fd47077b.html

http://www.pe.com/business/local/stories/PE_News_Local_S_web-fraud.1899989.html

3 years later, the criminals behind the massive Temecula fraud ring are finally locked up.

thanks to Chris Bagley for the update

[ocrenter]

http://www.nctimes.com/news/local/swcounty/article_0f79902e-997f-59df-82e4-38e0fd47077b.html

http://www.pe.com/business/local/stories/PE_News_Local_S_web-fraud.1899989.html

3 years later, the criminals behind the massive Temecula fraud ring are finally locked up.

thanks to Chris Bagley for the update

[ocrenter]

http://www.nctimes.com/news/local/swcounty/article_0f79902e-997f-59df-82e4-38e0fd47077b.html

http://www.pe.com/business/local/stories/PE_News_Local_S_web-fraud.1899989.html

3 years later, the criminals behind the massive Temecula fraud ring are finally locked up.

thanks to Chris Bagley for the update

[Author]

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