This Was A Sure Winner
The Cheiftain reports from Colorado. “A former real estate appraiser has agreed to help federal authorities in an ongoing investigation of large-scale residential real estate fraud in Pueblo. James L. Esters, of Osage Beach, Mo., who previously lived in Parker, near Denver, is obligated to cooperate with authorities as part of a deal in which he pleaded guilty Friday to lying to federal agents. The investigation involves allegedly inflated real estate appraisals and allegedly phony mortgage applications in 2004.”
“Two other men also are accused of using appraisals and applications to defraud lending companies of about $1 million in 22 real estate transactions involving Pueblo houses. Esters’ written agreement states he ‘had altered a number of these appraisals to falsely indicate that his supervisor had approved them.’ One of the men, former Pueblo resident Danny DeGrande, has been a fugitive ever since his federal indictment in June. Authorities believe they’ve ‘identified a foreign country in which DeGrande is currently located (but) his exact whereabouts are unknown,’ Assistant U.S. Attorney Matthew Kirsch said in a court filing.”
From KTAR in Arizona. “Arizona’s housing market is not in recovery mode, according to a new Arizona State University report. Real Estate Professor Jay Butler said the report shows more than two-thirds of the housing market is being driven by home foreclosures and sales of foreclosed homes. The median home price still is very low, at $140,000. That was about $40,000 below what it was in September 2008.”
“‘It’s not in a free-fall any more, but for many households, it may be a while before they get to the value of what they paid for their home,’ Butler said.”
The Phoenix News Times in Arizona. “The lofty Centerpoint Condominium towers broke ground in 2005 and were supposed to give downtown Tempe its own slice of Manhattan. Four years later, they’ve delivered just that — except the slice resembles something out of the film Escape from New York. Not so long ago, condominium agents were taking prospective residents into the towers to pitch the units. Prices started at about $300,000 and soared to more than a million for the spacious penthouses. The lowest-priced units were just 600 square feet or less. Nowadays, a different kind of visitor is enjoying the scenic vista. People like . . . We’ll call him Dave.”
“On a warm evening in May, head buzzing from numerous rounds of alcohol consumed while barhopping on Mill Avenue, the young man prepared to relieve himself from the roof of the tallest building in the East Valley. To fulfill his ill-considered plan, he realized he’d need the help of two friends — and they agreed to hold his arms tightly while he hung his butt over the side of the low, concrete wall.”
“‘We were pretty drunk,’ says Dave.”
“The Valley’s condo market has tanked, along with the rest of the state’s economy. A project similar to Centerpoint, though smaller, opened last year in downtown Phoenix. The 44 Monroe condo tower is 34 stories with an eighth-floor pool and spa. As of late August, a reported 10 of the 196 units had been sold.”
“David Hansen has no faith that he’ll see more than a fraction of his original investment. A retired school principal and real estate dabbler from Nevada, Hansen wrote checks for 10 years to Radical Bunny, which in recent years put most of his money — about $1.4 million from his pension plan, personal savings, and 401(k) — into the condo towers.”
“He recalls a dinner at the Orange Table in Scottsdale a few years ago for investors in Radical Bunny (now also in bankruptcy), when advisers at the company touted the Centerpoint project. ‘They showed the new rail line was going right there in Tempe [and] said it was prime property because Tempe was landlocked,’ he says. ‘They were saying this was a sure winner.’”
“Hansen says bitterly, ‘If they only get 50 cents on the dollar, we’ll be wiped out.’”
“Why did he put his money into Radical Bunny? Easy, he says; it promised a solid 11 percent interest, while most everyone else offered 6 or 7 percent. ‘Hundreds’ of people took out second mortgages on their homes and plunked money into Radical Bunny. Many will likely lose those homes, he predicts.”
The Yuma Sun in Arizona. “Arizona’s jobless rate remained virtually unchanged for the second month in a row. The same can’t be said for Yuma County, where the unemployment rate rose to 20.7 percent for September, according to the latest report. John Morales, executive director of Yuma Private Industry Council, said he fears Yuma County hasn’t seen the bottom yet. Morales said he’s heard three things are slowing down the economic recovery: the number of jobless, people not spending money because they’re worried about losing their job and the real estate market slump.”
“‘The scary part,’ he said, ‘is that we’re hoping there will be some pick-up of hiring for the holidays. But we’re just not sure people will be spending.’”
“Lisa Danka, an assistant deputy director of the Department of Commerce, said Thursday the 10,600 jobs added in September over the prior month is the weakest gain for this time of year seen in two decades. And when the anticipated seasonal increase in employment of staff at public schools is factored out, the rest of the economy actually was weaker.”
“Construction employment shed another 900 jobs in September, bringing the year-over-year losses to 45,800. And that sector of the economy is operating at only 55 percent of what it was at its peak in June 2006. The weakness is showing up elsewhere. While the number of people working in public schools is up from August, as would be expected this time of year, there are still 5,700 fewer people with jobs in that sector of the economy. Danka said the overall state economy is a factor here, too.”
“She said people continue to be thrown out of their homes as they can’t keep up with the mortgage payments. ‘People are no longer in those houses,’ Danka said. ‘Therefore, children are no longer in those schools.”’
The Las Vegas Sun In Nevada. “As developers of the bankrupt Fontainebleau Las Vegas resort attempt to sell the unfinished project, the company continues to trim its staff and most recently revealed the departure of its top local executive. Audrey Oswel is among seven executives who have seen their employment contracts terminated since May 15, Fontainebleau said in court papers Thursday.”
“Fontainebleau, which has been working to sell the 70-percent-finished resort to Penn National Gaming or another party, also filed a motion Thursday for approval to cancel contracts for numerous meetings and conventions scheduled at the resort for between May 2010 and October 2011. With the project in limbo, Fontainebleau said it’s unlikely it can accommodate those meetings.”
“Once billed as a $2.9 billion project, construction was halted on the resort on Las Vegas Boulevard this spring after B of A and other lenders halted funding due to cost overruns and other problems including a lack of condominium sales that would have covered substantial construction costs.”
“The eyes of Las Vegas are on the scheduled December opening of CityCenter and its 12,000 employees, but the debut isn’t expected to reverse the climbing unemployment rate, now at 13.4 percent, and economists predict there will be little to cheer about in the region through the end of the year. The latest data from UNLV economist Keith Schwer show no sign the recession is ending here.”
“This recession proves that Las Vegas’ tourism and growth-based economy isn’t insulated from the national business cycle, he said. ‘We have gotten ourselves whipped into a frenzy that we were decoupled from the national economy, but it couldn’t be further from the truth,’ Schwer said. ‘Hopefully, we learned from this recession and won’t be dumb like that again.’”
“The recession has forced local businesses to cut the money they spend at Southern Nevada’s stop on the PGA Tour, but it hasn’t stopped them or the Las Vegas Convention and Visitors Authority from entertaining clients. The tournament is offering lower-priced packages to make it more affordable for companies that want to entertain clients, but be more frugal, said Jan Leone, tournament director of sales. Last year the smallest package the tournament offered at its champion’s club tent was $10,000 for 10 people. This year the packages are as small as $2,500 for four people, but the food has changed from upscale buffet to barbecue and hot dogs.”
“‘Some companies don’t want to spend $10,000 on a private table,’ Leone said. ‘People don’t have as much to spend to this year.’”
The Las Vegas Business Press in Nevada. “The Nevada Supreme Court passed tougher rules to force lenders to work with homeowners in foreclosure, but some lenders are worried that they may be unfairly sanctioned. Mediators working with homeowners have the power to find that a lender acted ‘in bad faith’ during a mediation and to halt a foreclosure. The state high court passed its new rules on Sept. 28, in response to a request by state Assembly Speaker Barbara Buckley.”
“Nevada Bankers Association President Bill Uffelman was concerned about how mediators could apply the rule change. He worries that in a worst-case scenario, lenders may feel pressured into an agreement with homeowners even when the situation is unworkable. ‘I’m standing there with a baseball bat over your head, so as lender, what are you going to do?’ he said. ‘Sure (an agreement will be reached).’”
“Uffelman also argues that the bad-faith standard isn’t clear, unless it is only interpreted to mean failing to bring necessary documents to mediation or sending representatives who lack negotiating authority.”
“‘Without knowing what the bad faith standard is, it is hard to tell,’ he said. ‘If (a lender) has done all these things and the homeowner (still) doesn’t qualify, is that bad faith?’”
