“You Know, Hey, Bad Investment”
The Capitol Times reports from Wisconsin. “Wisconsin ranked 29th nationally in foreclosure rates in November, after ranking 35th in October and 37th in September, RealtyTrac reported.”
“The state had 881 properties in some state of foreclosure in November, one for every 2,614 households. In October, the state had 679 such properties, or one for every 3,391 households. In September, the state had such 498 properties, or one for every 4,624 households.”
The Kansas City Business Journal from Missouri. “A Kansas City man was sentenced Monday to two years in federal prison and ordered to pay more than $6 million in restitution for his role in a mortgage fraud conspiracy.”
“Phillip Thomas was a real estate appraiser doing business in Kansas City and Lee’s Summit, U.S. Attorney Bradley Schlozman said. Thomas performed appraisals for Ameriquest Mortgage in Gladstone and Countrywide Home Loans, which also did business as America’s Wholesale Lender, as well as other mortgage companies, lenders and brokers.”
“Thomas pleaded guilty April 27, 2005, to three charges, including conspiring to fraudulently obtain about 177 loans on properties connected to co-conspirators in the amount of more than $12 million in Kansas City and Lee’s Summit.”
“The loans were obtained by preparing fraudulent loan applications and supporting documentation for submission to the mortgage companies in the names of the victims. The fraudulent information included false and inflated appraisals. That false information was submitted to the mortgage companies, which would, as a result, approve the respective loans.”
St Louis Today from Missouri. “Ten months ago Floyd Irons bought three houses over five days in January. Total cost: About $1.5 million. The purchases have puzzled real estate agents and neighbors alike. Why did the homes cost so much? And how could a public school coach making $90,000 a year afford roughly $120,000 in yearly mortgage payments?”
“It turns out he can’t. All three houses have gone into foreclosure. Irons says the bank has taken them back. Two sit vacant. Residents of the third are preparing to be evicted.”
“He said he had bought the homes to pad his retirement but referred more detailed questions to a man he called his business partner. Mike Noll, a local real estate investor, said he had advised Irons on these purchases, and, in the end, they simply had turned out to be bad business decisions.”
“On Jan. 31, Irons bought 11 Arundel Place in St. Louis, on the border with Clayton, for $830,000. Thomas Kowalsky said he hadn’t asked for that sum, the mortgage brokers came to him with the price. He bought it for $240,000 in 1998, according to city records.”
“It was this last house that caught the attention of neighbors and real estate brokers. Many privately pointed out the cracking stairs, the rusting railings and the broken windows. They said Irons had paid double what he should have.”
“Noll agreed that Irons may have paid too much for the house on Arundel. Noll said he simply didn’t know the residential market, despite directing the city of St. Louis’ residential development program in the ’80s, and trusted the brokerage. Now he blames them.”
“Pete Esson and Matt McClure, who run Midwest Mortgage Consultants as well as related real estate and closing companies, said they didn’t remember ever calling Noll. They acknowledged that Irons had used their companies to close the deals, but said they didn’t do the appraisals of the homes, don’t have a personal involvement in the transactions, and don’t know Noll or Irons.”
“But housing deeds show Esson’s and McClure’s companies have worked with Irons and Noll on several other occasions.”
“Irons borrowed almost 100 percent of the money he needed to buy the buildings, and Noll said he ‘legitimately’ qualified for the loans.”
“Irons tried to sell the houses on Arundel and Woodland Meadows. But Noll said buyers weren’t interested. Now the homes sit in disarray. Broken windows and rusting railings greet potential buyers on Arundel. Leaves pile up in doors and walkways at the home in Wildwood.”
“The four-plex on Michigan is still occupied. Linda Greco says the house is falling apart. The bank that bought the house at auction now has filed suit against Irons and his former tenants. It wants them out.”
“Irons said that maybe, he just didn’t scrutinize his investments as well as he should have. ‘I got into a situation, that, you know, hey, bad investment,’ he said. ‘I have to deal with that. I’m a big boy.’”
‘Why did the homes cost so much? And how could a public school coach making $90,000 a year afford roughly $120,000 in yearly mortgage payments?’
If these kind of things can be pulled off in the mid-west, imagine what could be done in really booming markets. Notice all the parties just play it off.
How could a “public school coach” make $90,000 a year, in Missouri????
Probably coaches football. At my high school (rural Missouri), the football coach was treated like Jesus Christ Himself. Of course, he led the team to the state championship like 3 times of the 4 years I was in school, but still, seemed to be a lot of hero worship for being a coach in a podunk town.
Our football coach in Iowa was also the history teacher. He lamented frequently that he was paid way more to teach football than history. Great teacher either way.
how about this headline:”Coach skips math classes, undergoes character building exercies in jail”?
how about this headline:”Coach skips math classes, undergoes character building exercises in jail”?
Wow –good question. I worked as a SoCal public school teacher back in the mid-90’s and never broke $35,000. The highest paid union teacher I knew then (30 years + PhD) was only making around $75,000. Salaries have gone up a bit due to inflation, but that’s still extremely high for a MO coach –unless he’s moonlighting on the side.
You know something is very wrong with a country’s educational system when high school football coaches make more than the math teacher.
It’s what brings in the bucks for the school
.Another sad comment on the system where schools have to perform Vaudeville to make ends meet. The future looks bright.
You know, people always complain about footbal coaches making more than math teachers, but when was the last time you saw a math teacher instructing a student how to overcome adversity and win in the face of long odds. If you’ll note, my nick is “math guy”, and I am actually a big fan of math. And yeah, you really need it to get by out in the real world. But you also need teamwork, enthusiasm, some “hard knock” lessons, and lots of other things that football or other team sports provide. And in terms of coaching, when was the last time you saw a math teacher coordinating the actions of ALL of his students at once, rather than just giving assignments for each student to complete individually? When math teachers do all that and start getting their students as excited about the “math meet” as the coaches do about the big game, then maybe they will start getting equal pay.
Good points. But only a few students get to make the team. THe math teacher has to teach all his students.
The discrepancy is even worse when you realize that not all public school students, but only an elite few, benefit from the coach’s actual character building skills.
…and a lot more people pay for lack of math/analytical skills, current housing bubble being one case in point.
Yup, but keep in mind that the housing bubble madness has also been occurring in a lot of nations where math is actually TAUGHT in schools, or at least, nations whose teenagers consistently outperform ours on math tests.
the coach is perpetuating fraud and contributing to the largest housing bubble in the history of the world, and you guys are talking about coaches deserving higher pay than math teachers because of their “character-building skills”? LMAO
Maybe the coach should have been taking math?
…you also need teamwork, enthusiasm, some “hard knock” lessons, and lots of other things that football or other team sports provide. And in terms of coaching, when was the last time you saw a math teacher coordinating the actions of ALL of his students at once, rather than just giving assignments for each student to complete individually?…
Must be why I see all the former football stars from my high school days digging ditches while the math team is going to grad/law/medical school. But maybe that was just where I went to school…
It seems the coach wasn’t very good about remitting receipts for athlethic fundraisers.
http://www.riverfronttimes.com/Issues/2005-11-16/news/news.html
“According to Bowers, her predecessor, the legendary basketball coach Floyd Irons, never filed a single financial record with the district for the entire 2003-04 school year.”
“Floyd Irons failed to make full and accurate disclosures and passed off blame to subordinates. In one instance, Irons told Linda McKnight that an expense report for a basketball players’ reception, dated December 2003, was authorized by Dorothy Ludgood — deceased nine months by that time.”
“Irons maintains he’s done nothing illegal. “I don’t see why my name is being associated with anything. I was only the principal for one year.”
I grew up in St. Louis. Floyd Irons is the head basketball coach at Vashon HS (I believe), one of the powerhouse basketball programs in the area. He is relatively well known in the area.
Yikes, sorry, Ben, for hijacking this comment thread with a simple question!
To “Math Guy,” sports offer important lessons in teamwork, pride, etc., yes, but for Goodness sake, short changing the math teacher because his stuff is not as immediately gratifying, “fun,” as sports, is a little nuts, don’t you think? In my day, if academics were not tended to (grades were not made) you got kicked off the ball team. No ifs, ands or buts about it. The stuff that was “hard” had to come first. There was and still is a very important lesson there. And if a math teacher can get kids excited about math he’s worth twice the ball coach’s salary - any idiot can take a group of kids outside and wind ‘em up with a pigskin!
Irons isn’t the head of anything anymore - the St. Louis Public School board fired him a couple of months ago. The local press have been probing his activities while at Vashon for some time now - almost every week there’s a new revelation, and this is just the latest.
So does anyone wonder if there will be real estate fraud gangs in prison, where they all trade secrets and tricks of the trade? Then in 3-5-10 years when they all get out — we’ll have a new wave of super criminals to screw the public.
Watch out in 3 to 10 years…
Don’t become a real estate investor apprentice…
Yep -
Next year’s Reality Show: Mortgage Brokers of Cell Block “H”
Hmm…
When did our last Housing bubble pop?
* Lets see… Around 1990.
What fueled it fire?
* Junk Bonds
Who created the Mess?
* Savings and Loan banks
What was Ameriquest called before is current name?
* Long Beach Savings and Loan
Yes,
But they obviously learned their lesson.
Smells like hidden cash back at close deal.
Probably hundred’s of these things around the country, each adding to inflated future appraisals and excessive housing costs. Chain ‘em to a granite countertop and let them rot. This thing has more and more the feel of 1920’s style Florida land-scams, spread into every nook and cranny of the US. 2007 thru 2010 - all down all the time.
You mean ‘hundreds of thousands’ of these deals across the country?
Hard to say how many since most are reasonable (less than 50k cash back) but the pure fraud one go to foreclosure asap. Even lenders will allow 3% or something I forget how much, for repairs?
All this going on in the era of family values, honesty, personal integrity and fiscal discipline.
What happened to all the cheap a$$ed moralizing harped on by our wonderfulful leadership since this mess began, say ummmm…. since 2001?
get back and read the community bankin bill -yo
“Captain”,
Do you imagine the “family values, honesty, personal integrity and fiscal discipline” were better or worse in 1929?
Were they better or worse in 1974?
And what were the “morals” that were representative of that wonderful era between 1992 and 2000? What were the morals of Franklin Raines at Fannie Mae? The morals of the Enron and MCI crowd? Did those crimes NOT blossom under some “wonderful” leadership back then?
If you want to blame Bush for something specific, fine. Make the case. But this blanket whining that somehow everything changed upon Bush’s election is really tiresome.
Bush didn’t change “values” much more than Clinton, Carter or Reagan did (or tried). Values begin at home. Unfortunately, all too many parents in the last generation or so decided to let someone else take that responsibility. That will prove to be an unfortunate mistake but if you want to make the case that a president is responsible for “values” in the US society, by all means; enlighten us to which presidents were successful in that regard and how they managed the feat.
I agree this real estate debacle is born of a crisis of values but I have lived long enough to see those values generally ignored in society for the last forty years. This lesson will be painful but it is a lesson that any political leadership is woefully ill equiped to teach to a populace that has been enraptured with the notion of riskless gains for an awfully long time.
Captain Credit,
I don’t want to get into the blame game of one administration over the other but by post 9/11 all of the mechanisms for the bubble were well in place. It wasn’t until they took the overnight to 1% that folks re-fi’ing found just how easy (and generous) things had gotten! That’s when things became, “Hey, why not buy 2 or even 3 homes!” (Like our esteemed coach above)
jag,
Well said. The lure of easy money is powerful indeed. I really like the fact that you focused on “riskless” investment. And yes, I’ve had clients in their 80’s “want their money back” on a bond fund that while paying 6% had lost 1.5% of it’s NAV! No seriously. Called up the bank manager and DEMANDED “they be made whole”. My buddy’s bank manager buckled and paid the old dude his money b/c they figured it wasn’t worth arbitration. My pal was relieved but when I explained the whole concept of ‘riskless investment’ he got angry all over again!
Look, if you can’t stomach a 1.5% downside stay in freaking CD’s for crissakes.
Sorry Jag but it wasn’t Clinton and the dems who squawked empty hypocritical platitudes.
Nice try though.
D in Or -
Funny. The poor old guy stressing over a 1.5% loss on NAV…how long do you think it will take for his heirs to pi$$ it all away?
Captain Credit:
George W. Bush = BAD
Clinton and Democrats = GOOD
We get it.
Really.
jag, I agree. Much as I dislike W and his overseas “adventures”, the crises goes deeper than one administration’s follies. What I find hard to forgive is he had his chance and only made things worse. It’s kind of incredible that someone could have so much power and make things so much more difficult and scary and dangerous for everyone. It makes you think of the ring of power in The Lord of the RIngs….
Maybe that is what you imagined but clearly not what I said.
This whole this is caused by too much government. If gov didnt back the damn loans no one would make them. Abolish fannie/freddie/gnma.
All RE boom busts since the 70’s have been caused in great measure by gov intervention. Gov needs to get its hands off the free market. I’m a libertarian mostly - I highly recommend it as a philosophy. You get to hate/bash both parties and yet have no real solutions except no/limited government which is nice and simple!
“it wasn’t Clinton and the dems who squawked empty hypocritical platitudes. ”
You’re right Captain. The Dems haven’t “sqawked” empty platitudes….like “it takes a village” or “its the economy stupid” or “private affairs are no one’s business” or “It isn’t perjury if the girl is white trash”….you get the idea.
No, you’re right “Captain”. It makes perfect sense for society to ignore “hypocritical” mouthings of traditional values while it accepts and absorbs the non-traditional “values” the Clinton’s shared with us.
Why, I now give liberally my used underwear (for tax deductions of course). And, I too made $100,000 trading futures in less than a year….and then I just stopped. Don’t know why.
Just stopped.
I learned a lot from the Clintons’ values. Honestly, I did.
Nice try though.
I’m with you. Gas all of the politicians (maybe throw in the attorneys too).
Unfortunately Jag, you still don’t have your thinking right. Clinton had nothing to do with the hypocritical spewing of “family values” and “personal responsibility”.
Let’s get it right my man.
jag,
There’s a natural inclination these days (along w/riskless investment) to say “everything really IS that simple”. Even when it comes to measuring the girth and origins of the bubble. Where most of us are concerned the quickest, easiest and simplest answer is the best answer. I don’t take nearly the exception to the Captain’s assigning bubble blame to the current administration as I do to saying it ALL started in 2001! That really bugs me.
The other day SoCalMortGuy wanted loose lending to take ALL the blame. Big part, sure but again it’s really NOT that simple. The “seeds” were sown in 1997 when we changed the tax code! Everything after that was like banana peels in clown’s skit! For it to be funny, you gotta have a clown first!
I agree with phillygal, enough already captain credit. We know you hate W, you don’t have to prove it again and again. It’s boring, annoying, and basically spam on a bubble blog.
Now back to ripping on DL…
I have to agree with DinOr. The change in the tax code was tailor-made to turn something like basic shelter into an “investment” commodity.
“The change in the tax code was tailor-made to turn something like basic shelter into an “investment” commodity.”
But without loose lending standards,theparty would never have gotten started. SoCalMgtGuy is right on this one. Given
the negative savings rate and stagnant wages, how many Americans would have been able to jump in this game–relatively few. Without the easy money, no-standards lending, you would not have had the unwashed hordes unleashed to drive this market nuts.
Now that the Democrats have taken over Congress, Barney Frank wants to give Fannie Mae and Freddie Mac more power and bring lending standards even lower in order to “help” the minorities into homes.
Get a clue, they are all idiots and/or corrupt.
Yes Fannie Mae will be soon taking over the US government. You haven’t heard the news. The USA has beenn abolished. A new country is born. United Fannie Mae States of Globalia now rules. And the only have to offer “blood, sweat and tears” in the form of a new 300 years mortgage.
Here’s what I don’t get: with the amount of publicity this stuff is getting now, how can the banks STILL be making stated income and option ARM loans? And 100% financing? Each bank has to have some person who heads their mortgage division and makes these kinds of decisions. Don’t they read the papers?
Sfer,
Good point. I happen to think that the lenders have spent a ton of money on those ad campaigns and have tailored the public toward accepting this as a “perfectly normal” way to finance a home. They’re just using that momentum to steer volume their way and once they get you in the door then they bait and switch you to something a little more sensible. I’ve actually called Quicken and others advertising “1% Loans” and even by early 2005 they were backing down on them.
It’s disturbing that people so easily go ahead and do something like this.
It reminds me of something else. When I was first out of college and working in NYC one of my co-workers was a part-timer during the summer while she attended NYU Law. She told me how her boyfriend and roommate furnished and decked out their pad: they ordered everything on one of their credit cards and then claimed that they didn’t purchase the stuff and it was fraud.
It’s not exactly the same thing but the attitude is. No problem with trying to get what is wanted no matter how it is gotten.
It is that attitude, that seems to be getting more and more pervasive, that makes me really believe we are headed down as a country.
Don’t worry. Someday they’ll be one big database online of such people, who then won’t be able to get a loan, a job, insurance, or a data. And the unlucky will end up on it by accident.
WT Economist,
A few years they started a service like this for the securities industry. In the past there had been plenty of “free riders” and welchers but the firms never liked to admit they’d been ripped off. Now that they can report it to a central service these practices have been greatly minimized. Should have happened years ago.
DinOR,
What I can’t figure out is why the banks have been tolerating this behavior until now. I have represented a couple of banks, and they know EVERYTHING about the markets in which they do business.
These guys were fully aware of the fraud, yet they made the loans anyway.
My best guess is that they were hoping to make enoguh money during the upswing to offset any losses they incurred when the music stopped. This strikes me as a fairly sound strategy, frankly.
Hey Joe!
Good to see you “makin’ the rounds”!
Joe, in a word it’s called “survivor’s bias”. When we encounter certain situations and see the same outcome we begin to interpret this as a “law”. It isn’t.
Here’s where my problem comes in; if someone wants to pay OVER FMV that’s fine. Either come up w/the difference in let’s see…… the form of CASH or be damned prepared to justify the abberation in the appraisal!
NS,
Look at the bright side. The main loan was way too big to be bought by Fannie Mae or Freddie Mac. Some lender out there gets to take this one on the chin!
These banks have got to be smarter. Who are the banks getting their money from? The Chinese? How can they afford to be so reckless?
They can afford to be so reckless due to the Federal Reserve monetizing the bad loan at taxpayer expense through some form of bailout if the loan losses get big enough, ultimately at taxpayer expense.
The solution, if it can be called that, is for the taxpayer(s) to wake up to the fact that a hidden tax via inflation is being levied upon their hard work and demand that such actions stop through their State Representative or Senator. As the old saying goes a snowball has a better chance in hell than this “solution” occurring.
Oh, I was hoping it would only be the Chinese who get screwed. But I guess it will only be the Baby boomers who save. It can’t be me because I spent all my money on Chinese furniture.
As an NYU Law alum, I can vouch for the truth of that story. Everyone there was brilliant and hardworking, but a lot of people were also more than willing to lie, cheat, and steal in order to get ahead.
I am a litigator, but most of my classmates went into corporate. I don’t keep in touch with most of my classmates — even the memory of them is distasteful — but I’m sure they’ve been packaging MBS instruments and advising hedge funds for the past several years.
I avoid the Wall Street institutions staffed by my former classmates like the plague. I would never dream of investing my own money in a hedge fund or with some stock brokerage. I’d sooner keep it under the mattress.
How about naming the stock brokerages to avoid? That will help a bit, so we can all be more careful with.
This will help us all to go with our eyes opened and be ready for anything.
all of them!
Tin foil,
I guess in principal, I HAVE TO AGREE!
I’ve worked for several and invariably they are basically just “sales organizations” with an agenda. I’ve since gone independent and can honestly say that much smart money is leaving the “wire houses” toward independents. (We don’t have a sales manager pacing back and forth behind us!) We have no quotas and no proprietary products to peddle! Survey after survey has shown that investors that work w/independents outperform “the majors” year in and year out. Many of the posters here are well capable of doing their own but they can also have have a pretty narrow focus. Meaning they only have to worry about what would affect their holdings. Most are pretty open about their mistakes and for that matter….so am I.
That totally makes sense. Your description reminds me of an episode of the Soprano’s where they took over a brokerage shop and this young sales guy gets beat up cuz he refuses to sell the ’stock of the week’.
He’s like ‘That company is crap and its been stock of the week for a month now’ the goons tell him the ‘yeah well its stock of the week this week too!’ then they beat him up good. I’m sure Merril and big guys don’t beat you up but they highly incentivise people.
BTW Tony Soprano was also involved in mortgage fraud, especially HUD scams and they beat up an appraiser for not hitting the number this one time. No wonder the show was so popular WE ARE THE SHOW - the show is us.
Tinfoil_Hat, colomountains
Yep. Pretty much all of them. From what I can see as a casual observer, The Wall Street brokerages/”investment banks” are all basically sales operations. So are most of the hedge funds.
There are surprisingly few financial institutions that acutally make a living investing their own money, or managing the money of others.
I personally trust two different types of financial institutions and advisors. The first is the Northern Trust Bank. It is an old-school Midwestern bank that serves as the trustee for a lot of very large, very old family fortunes. Their fees are high — you don’t really want to open up a checking account for your monthly bills there — but their advice is generally sound. They don’t promise handsome returns on your money, but the money you invest with them will probably be safe. They do not steal, and they do not engage in hucksterism. Their real specialty is keeping family fortunes intact, and most people aren’t rich enough to need that particular service. But in order to do this, they need to give sound investment advice.
The second group of people I trust is people who trade their own money. I know a couple of traders who have made millions by investing thier own money. These people know what they are doing, and I trust them. I paid one trader a flat fee for his advice, specifically investments for my kids’ college fund. I don’t pay him a commission or allow him to trade my account, I simply pay him for his objective, unbiased advice. It is hard to find these people. Every trader claims to be a hugely successful millionaire, but few are. And the really successful traders generally aren’t interested in small investors. I was lucky enough to find the guy I use becuase I have a friend who works in the hedge fund industry designing computerized trading software. He knows the successful traders — and how much they are actually worth — and referred me to this guy. Along these same lines, I trust financial advisors and accountants who can explain things to me. You need to make sure they are not actually salesmen, but a good financial advisor is really worth having.
I wouldn’t touch most of the Wall Street places with a 10 foot pole. They are basically sales operations with armies of lawyers (like my classmates) for cover. No, thanks.
Joe:
Best post yet on this blog.
Novasold
‘I got into a situation, that, you know, hey, bad jail time.’
It’s very odd when people quickly own up to poor investment decisions. There is no denial, anger, acceptance, and so on. It seems premeditated. Poor investment decision seems like an alibi.
One of the hallmarks of savvy investors is, in fact, the ability to recognize poor decisions and move on. Learn from it, but don’t waste a bunch of time in the grief process.
However, I don’t think this high school coach qualifies as a “savvy” investor.
‘I got into a situation, that, you know, hey, bad investment,’ he said. ‘I have to deal with that. I’m a big boy.’
Problem is, he won’t have to deal with it. His creditors will. If he overpaid by 50%, that’s $750,000 down the drain. Let’s see him make good on that kind of debt.
Max,
Isn’t it incredible though. Guy makes 90k a year (not too bad for the midwest) and probably has benefits most of us can only dream of. Because it will be IMPOSSIBLE to fire this thief and lenders will likely just write it off it really was a no risk deal for him and his drinking buddies (oh that’s right they barely know each other).
What I take exception to is the characterizing of this as an “investment” gone bad. Sounds to me like he had very little if any skin in the game and got his money out up front! (Again, no risk) well….other than “possible” prosecution. It’s an “investment” when you put YOUR money down, take the risk and hope for the best, no I’m sorry this is just fraud. Don’t worry though, “We’ll get ‘em next year coach!”
Our good ‘ol boy coach probably walked with a cool 1/2 mil in cash kickbacks on these deals. He deserves to do hard time.
Looks likely from here. The guy is so quick to point out his own stupidity, it’s hard to believe it’s for real.
Not a bad trade if you can get away with it. Would you sell your credit score and financial reputation for $750,000? Most people would.
I wonder how many of the sellers participated in the fraud?
The old coach still will be getting one last coaching in a year or two. After the banks write off the loan and notify the IRS of their $750k loss, that coach is going to be ebnt over backwards with a $200k+ tax bill that no BK court will erase. Jail would be best, but the revenge of the IRS isn’t a bad second choice.
‘I got into a situation, that, you know, hey, bad investment,’ he said. ‘I have to deal with that. I’m a big boy.’
Wow, is this guy related to Casey Serin? Oh wait, never mind. At least this guy has a job coaching, instead of spending the work day at seminars and watching movies. But they both intend to “deal” with the consequences, apparently neither of them being good enough at math to figure out that paying back debts like that is probably an impossible task.
“The fraudulent information included false and inflated appraisals.”
This kind of fraud is very widesread. Even when the feds or local authorities crack down and file charges the published home prices or mediams are never corrected. Needless to say all the comps are really screwed up in all the areas.
You cannot trust the comps or what ever the realtor or seller tells you.
This is exactly like the Accounting fraud we all know about after the Dot.com bust. You cannot trust the numbers!
Apparently there is no way to outsource mortgage fraud off shore.
Its our last great American industry! Patriotic Americans will start banks, lend $ to friends/accomplices, then let the bank fail and the govt will bail it out. Repeat.
Its really a subsidiary of the ‘Screw The Taxpayer’ industry of which Iraq war is latest episode.
We’re going to have to stop insulting banana republics,since our citizenry and government are setting new standards in fraud,dishonesty,fiscal irresponsibility and outright contempt for honesty.
As for that coach, tenured or not, the school board might be able to throw him out based on “moral turpitude”–His actions make him a danger to impressionable youths. That’s assuming the members of the school board weren’t in on the scheme with him.
Amen, tinfoil, amen…
Oh Yes there is! You haven’t heard about the straw buyers who in fact were illegal aliens or foreign nationals? There are many cases of this. There is no requirement that you even be here legally to qualify a mortgage. My illegal nanny from Bolivia, who literally walked across the desert via Mexico 3 years ago, has mortgages on 3 seperate houses in Northern Virginia. Seriously, I’m not joking. How can she pay the mortgages? She rents every room in the house out to other illegals and/or families. These houses are crammed pack. Of course, this is becoming a major political issue in Northern Virginia as some neighborhoods are suffering from this and as you can imagine some of the long-time residents don’t appreciate it.
So why are you knowingly employing an illegal alien?
” Of course, this is becoming a major political issue in Northern Virginia as some neighborhoods are suffering from this and as you can imagine some of the long-time residents don’t appreciate it.”
But you wouldn’t mind if she bought the house next door to yours and stuffed it with illegals, right? After all, you’re underwriting this whole scheme.
Of course mortgage fraud has been exported off shore! Who is the primary buyer of MBS. Do you really believe that the lending institutions did not know that their NINA loans were going to be paid back?
yes there are some ’suckers’ from offshore. but most ‘players’ are here.
Also the illegals/foreigners are at least living here (for now) whilst they fleece the system. Most will stay here since they wont ever be caught (too small time).
Imagine yourself going to Mexico and getting loans from banks there and doing this. Never happen. They have rational banking system, but also extreme poverty, no government subsidies/guarantee for anything. Thus mortgage fraud is ‘our’ industry,( byproduct of big government? )
it’s like the S&L failed gov insurance program( as if all gov programs don’t fail) but when the market goes down then it becomes a crime.
Meanwhile in Santa Fe, builders are adding their 2006 carrying costs to their unsold spec home prices and hoping no one notices!
Looks like the HBB just noticed! (Anyone want to buy an overpriced Santa Fe house?)
Ben:
You left out the best part of the story:
“Pete Esson and Matt McClure, who run Midwest Mortgage Consultants as well as related real estate and closing companies, said they didn’t remember ever calling Noll. They acknowledged that Irons had used their companies to close the deals, but said they didn’t do the appraisals of the homes, don’t have a personal involvement in the transactions, and don’t know Noll or Irons.
“We’re honest, hard-working people,” Esson said.
But housing deeds show Esson’s and McClure’s companies have worked with Irons and Noll on several other occasions:
Noll and his son, Richard, 24, used them last year to secure six loans totaling almost $1 million on four separate homes.
And Irons himself has used Midwest or its sister companies to secure two loans for more than $160,000 on the house he lives in — 7439 Augusta Avenue, in Normandy — just months before he signed for the three houses.
Yet, despite numerous requests, neither Esson and McClure nor Noll and Irons would produce the appraisals from Irons’ purchases this year.
Midwest said it could release them only to Irons. Noll said Midwest wouldn’t give them up. The banks holding the mortgages would not comment on the purchases. ”
It doesn’t appear to me that the report was accusing them off any wrong doing, just asking for information. Why would he suggest that they are “honest, hard-working people”? No one was asking if they were…classic non-denial denial.
We are so screwed!
What’s interesting is the way most of the local mass media in St. Louis are seemingly avoiding drawing attention to the clear implications of fraud in this case. Most of the outlets have basically presented the story as if they accept the involved parties’ lame explanations at face value, and the typical response from the man on the street seems to be no more than a touch of amusement at Irons’ (supposed) goof. This would be an ideal opportunity for the media to educate their viewers and readers regarding the problem and pervasiveness of fraudulent appraisals, etc., but no one wants to touch it. I suppose they may be worried about being sued for defamation if they point fingers before anyone actually gets convicted.
“It turns out he can’t. All three houses have gone into foreclosure. Irons says the bank has taken them back. Two sit vacant. Residents of the third are preparing to be evicted.”
I know a lot of you here rent houses. I’m not sure I could handle the constant threat of having a house foreclosed out from under me. What would you guys do, just move on to the next rental house? And I guess when you run out of houses to rent, then prices would be low enough to buy, lol.
There’s very little risk from the tenant’s side. Let’s just say we’re not losing any sleep over it.
Having once rented a house from a FB who wasn’t local and not through an agency, I was more worried about the individual than loosing the house. The guy was a moron, I did a few favors for him (he wasn’t handy at all), then cut him off. He got pretty ticked when I told him I wouldn’t sit around all day for the furnace repairman unless he paid me, and then he had the nerve to ask if I could front him the money for the repair. Hah! Moved out shortly after…
I’d have a real hard time renting directly from the owner now. I only rent from management companies now. Much easier to deal with.
I’ve been a renter for quite a while now, since the late 90’s. I was very close to buying in 2001, but I let my parents and everyone else talk me out of it. “You’re young, you’ve got plenty of time to buy later…” sigh. Now people are all telling me to buy (except my parents, who are always telling me not to buy).
Anyway, out of, I dunno, 7 or 8 rentals (2 condos, the rest SFH), I’ve almost always left of my own accord. The only time I didn’t was because the condo owner was retiring and selling his home, and he wanted his condo back. He was a nice old guy though, and gave us at least 4 months notice that he wouldn’t renew the lease.
In any case, as a tenant, the hassle and cost of being forced to move is pretty minor: a weekend or two; a few hundred bucks to rent a truck & clean up the old place; pizza & beer for the family/friends you con into helping you move. I’m sure it’s more hassle on short notice or if you have kids, but really, it’s NOTHING compared to the hit you’ll take if you have to sell your house in a declining market.
I just checked out the quality of the landlord. High-level job, one other rental investment property, logical reason for owning the one I rented, “relatively” reasonable investment in the property compared to market prices — meaning likely reasonable mortgage payments.
One rental outfit I contacted, I asked for financial background of the landlord and they dropped the correspondence. You can learn a lot from tax records, to start with.
WTF???? How does the dow hit a record ALL TIME HIGH on a day when the PPI is at a thirteen year record high and Thailand blows a major gasket, oh, and piss-poor housing start data? This joke of a stock market is going to crash so hard when the puppeteers lose control…
Oh, they’re just adding to the suspense - don’t you love it? Another reason to look forward to 2007 the way I see it. It’s so great that this bust is being so well documented, every painful and confusing step of the way.
Let’s say you run a mutual fund that HAS to be invested in x percentage of stock all of the time. You think the markets are going to tank yet you’ll be measured by your performance relative to the top indexes.
Where would you allocate your funds? In smaller stocks or the biggest, “blue chip”, stocks you could find? In a weak market you rotate to strength and size. Bull markets start with strength in the small caps, not large caps.
Small caps have rallied but should a recession begin, they’ll get hammered a lot more than the big names.
http://www.forbes.com/home/business/2006/12/19/mortgage-lenders-bust-biz-cz_ms_1219bust.html
“The Mortgage Bust Goes On
A record-high 19% of high-cost mortgages originated during the past two years will end in foreclosure, a consequence of the growth in risky mortgage products, according to new data compiled by an industry group.
The nonpartisan Center for Responsible Lending predicts 2.2 million households in this mortgage segment, known as subprime borrowers, either have lost their homes or hold mortgages doomed for foreclosure in the next few years. This estimate comes a week after a grim survey from Fitch Ratings, which studies residential mortgage securities, showing a 16-fold increase in past-due subprime loans in the third quarter of 2006, compared with 1998.
Subprime borrowers, who typically pay interest rates 2% to 3% higher than those with good credit, currently account for a quarter of all mortgage originations.
“This is the largest rash of mortgage foreclosures in the modern mortgage market,” says Michael Calhoun, president of the Center for Responsible Lending.
The worst-hit areas for rising foreclosures include cities in California, Nevada, New York, New Jersey and the greater Washington, D.C., area that recorded steep housing price appreciation in the past few years. As the market cools, homeowners will find it harder to tap their homes for bigger lines of credit or to take cash out in refinancing.
Here comes the pinch: To manage household debt, Americans have used such moves to pull over $2 trillion out of their homes in the past five years. In the first six months of 2006, consumers extracted over $500 billion.
The sharp increase in foreclosures poses “a serious threat to neighborhood stability,” said Pat Vredevoogd, president-elect of the National Association of Realtors, in a conference call with reporters on Tuesday. “It can cause all homes in the neighborhood to lose value.”"
“It can cause all homes in the neighborhood to lose value.””
There goes your upgrade market. These sub prime loans are going to rock the economy. I’m not building any fortress; but the popcorn and wine are stocked up for the crisis.
Neil
“A Kansas City man was sentenced Monday to two years in federal prison and ordered to pay more than $6 million in restitution for his role in a mortgage fraud conspiracy.”
Amazing. Rob a bank with a gun and you get 20 years in jail. If you’re lucky you might get a few thousand $$$’s
Rob a bank with a pen for $6,000,000 and you get 2 years in jail.
Brilliant.
Good work guys. I’m sure you really taught this guy a lesson.
Because it will be IMPOSSIBLE to fire this thief
If you read the post further up by St Louis Blues, you will see that he has already been fired.
Peter Esson, an owner of Midwest Consulting, had his first house, a modest starter home, on Edwin in Glendale foreclosure on a few years ago. He and his wife have 5 kids and live way above their means. They bought a 4000 sq ft $700k mansion on Gray Ave. in Webster Groves that was originally the home of the Straub grocer family. This house has been in and out of foreclosure proceedings the last few years. Oh and he and his wife have already filed for bankruptcy protection. Their suffering has been delayed but they are suffering as well. His partner Matthew McClure is in financial ruins as well.