Buyers Want In Quickly
Bethesda Now reports on Maryland. “The luxury housing boom delayed by the Great Recession is in full swing in Bethesda. At the annual Greater Bethesda-Chevy Chase Chamber of Commerce’s Real Estate Update on Friday morning, realtor Jane Fairweather said the first wave of resales in Bethesda’s existing luxury condo buildings has produced less than stellar results. Fairweather said two of downtown Bethesda’s newer luxury condos — Lionsgate and the Adagio — sold out a little less than a year ago. There have been six resales at the Lionsgate and two at the Adgaio. Sellers got less money than they paid for the units in five of those eight cases. The person who bought the first unit in the Lionsgate lost about half-a-million dollars on the resale, Fairweather said.”
“The average resale price for a luxury condo in Bethesda is $579 a square foot. The new condos coming in are asking for anywhere from $750 to $1,500 a square foot, including The Lauren, which is listing condos for $2.1 million to $7.5 million. ‘I think that’s audacious,’ Fairweather said.”
“Still, Fairweather told the audience she doesn’t think the so-called Bethesda Metro housing boom is a bubble because inventory is very low. The bigger issue for the Bethesda-area housing market could be affordability. Fairweather cited a Montgomery County report that estimated a household income of $120,000 would not be enough to buy a house by 2030. Some one bedroom rental properties include income requirements at $65,000. Larger one-bedroom units can include income requirements of $86,000.”
The Baltimore Sun in Maryland. “After a flat April, the median home sales price in metro Baltimore increased in May from a year earlier, according to data released Monday by the region’s multiple-listing service. ‘There’s still room to grow,’ Corey Hart, senior product manager for RBI, said of Baltimore-area home prices. ‘It appears to be sustainable. We wouldn’t consider this the beginning of a new bubble.’”
“Lynn Mauk, branch VP in Ellicott City for Coldwell Banker Residential Brokerage, said some agents in her office have been out canvassing neighborhoods, asking homeowners whether they’re thinking of selling, because buyers are clamoring for properties. At least one property sold through her office last month was under contract in less than a day, she said. ‘Buyers want in and they want in quickly,’ she said.”
The Gazette. “Ten Fairfax County residents have pleaded guilty in federal court to mortgage fraud and other fraud charges that involved “overages” or illegitimate, inflated costs added to real estate transactions that induced lenders to provide funds above and beyond what was actually approved to fund the transaction. According to court documents, eleven conspirators—10 from Fairfax County and one from Potomac, Md.— provided lenders, buyers, and sellers falsified real estate documents to mask their falsified overages.”
“‘These defendants have admitted to bilking millions of dollars from our financial institutions by falsely inflating costs of doing business while processing short sales, keeping payoffs from mortgages thought to have been refinanced, and illegally borrowing against escrow accounts of homeowners in Northern Virginia,’ said Valerie Parlave, assistant director in charge of the FBI’s Washington Field Office.”
“Court documents state the defendants’ conspiracies lasted from approximately 2009 to 2012, and involved the owners, operators, employees, and affiliates of several real estate-related businesses located in Annandale and other nearby Northern Virginia towns.”
The Charlotte Observer in North Carolina. “Six years after a scandal enveloped Beazer Homes USA over its reckless loan practices, costing millions of dollars and forcing hundreds of foreclosures, Janette Parker is the only employee from the company’s mortgage unit to be charged with a crime. To put that in perspective: Parker, a mother of two with a high school education, was the only person criminally charged with mishandling loans for one of the Fortune 500 companies at the heart of the nation’s financial crisis. Out of the dozens of executives and thousands of employees, Parker wants to know: ‘Why me? How me?’”
“Parker managed the Beazer Mortgage office in Charlotte, N.C., for seven years. She understands what Beazer did was wrong. What she did was wrong. She pleaded guilty to three counts of mortgage fraud and was sentenced in October to five years of probation and a year of house arrest and ordered to repay $837,025 in restitution. She is not contesting her guilt. But with the government’s investigation now closed, Parker and her attorney question why she was singled out to become the public face of mortgage fraud while more powerful, higher-paid executives avoided criminal prosecution. Even a federal judge asked why.”
“Beazer Homes and two top executives escaped prosecution by paying back millions of dollars. A third executive was convicted of securities fraud, but has asked for a new trial. In the subsidiary loan operation, where most of the irregularities occurred, only Janette Parker was indicted. Prosecuting Parker, said attorney Tricia Derr, is comparable to charging a clerk at Target because the sales tax was computed wrong: Parker did what her bosses trained her to do.”
“‘She’s so far down the chain,’ Derr said. ‘She’s a nobody. She’s not the CEO. She didn’t come up with the idea. … The person who came up with the plan to go around (federal) guidelines, that’s the person responsible.’”
“Like other companies, Beazer was taking advantage of loan guarantees provided by the federal government to promote home ownership to first-time and lower-income buyers. In the past, many of those applicants had been considered too risky. But the Federal Housing Administration guaranteed that if a borrower defaulted, it would cover the mortgage payment - and it was increasingly willing to gamble on risky borrowers. Lenders and home builders had little to lose.”
“In the Charlotte area, Beazer began experimenting with building low-cost homes. Prices were so affordable in the Southern Chase subdivision in Cabarrus County - starting at less than $80,000 - that people camped outside the sales office the night before lots went on sale in 1997. Parker said she was taught how to process government-backed mortgages during a PowerPoint presentation in Miami: ‘If the buyer needed additional money - say the sales price was $105,000 and they needed a $3,000 down payment - then you would add that to the sales price … . Anybody that did government loans did it the same way.’”
“Her motive, prosecutors suggested, was greed. The more homes she sold, the higher the prices, the greater her commissions. Between 2002 and 2007, a prosecutor said, Parker earned $1.3 million from Beazer. Prosecutors said Parker was too well-versed in the mortgage industry to be unaware that what she was doing was wrong, and they cited emails as evidence that she knew Beazer was circumventing federal regulations.”
“Ian McCarthy, former CEO of Beazer Homes, repaid $6.5 million in bonuses and stock profits, but admitted no wrongdoing. Three months later, in June 2011, Beazer’s board ousted McCarthy and gave him a $5.2 million exit package. James O’Leary, chief financial officer of Beazer Homes, reimbursed more than $1.4 million. He left Beazer in March 2007 for a job with Kaydon Corp., where he is chairman, president and chief executive.”
“Michael Rand, Beazer Homes’s former chief accounting officer, was convicted of falsifying profits in publicly reported financial statements and - after being notified about the federal investigation - of trying to cover up the fraud by deleting nearly 10,000 emails. He faces 125 years in prison and has asked for a new trial. Ron Kuhn, president of Beazer Mortgage, who hired Parker, is a mortgage broker in Arizona. ‘It’s probably not in anybody’s best interest to dig that one back up,’ Kuhn said when contacted by the Charlotte Observer. ‘Janette did some wrong things and got punished for it, and that’s the bad news. … Frankly, what I know is exactly what you know, which is what was published in the newspaper.’”
