‘It’s Gone From Great To Nothing’ In Florida
The housing bubble is a hot topic in Florida. “Following articles such as ‘Home flippers’ investments flop,’ Sunday, May 21, a reader sometimes comments along the lines of the one who said: ‘The same bad housing news does not have to be reported every Sunday. I am not questioning your statistics, just the frequency, which seems to be every Sunday.’”
‘”If real estate prices go up, we write about it,’ Managing Editor Bill Rose said. ‘And, conversely, when real-estate prices go down, we write about it. If they go down a lot and for a long time, we write about it a lot.’”
“‘Nor do I think our stories are driving down the prices. The prices actually go down before we write our stories. No one complained when we wrote a whole bunch of front-page stories on the hot real-estate market.’”
“Who got rich in the recent real estate boom? Some sellers, certainly, especially investors who got in and out of the market fast. One group who didn’t will surprise you: real estate agents.”
“From 2002 to 2004, the height of the hottest boom in recent real estate history, the annual median income of Realtors actually fell, to $49,300 from $52,200, according to the National Association of Realtors. Most agents earned less than the median income for Palm Beach County.”
“That means real estate agents could sell the median-priced home in Palm Beach County, but they certainly couldn’t afford to buy it.”
The St. Petersburg Times. “Jill Jackson is not your average real estate investor. Jackson takes home about $24,000 a year from her job at a credit services company. She rents an apartment in St. Petersburg and, until this year, her assets totaled about $8,000 and her financial statement showed a negative net worth.”
“She had zero experience in real estate acquisition, until Feb. 28. That day she bought three Tampa homes for $560,000. In the next few weeks, she bought seven more properties. She used 10 different mortgage lenders and managed to borrow 100 percent of the cash she needed for every deal.”
“The grand total for this greenhorn investor: 10 weeks, 10 purchases totaling $1.84-million, not a single penny down.”
“Jackson won’t say much about her sudden foray into real estate. She won’t discuss why she paid a huge premium for a handful of lower-value homes in Tampa or reveal how her financial statement and meager income qualified her for almost $2-million in mortgage loans.”
From the Panhandle. “Real estate experts in Panama City Beach say the condo bubble may have finally burst. Real estate developers, managers and agents throughout Bay County say in the last six months they’ve experienced a major decline in the number of new condominium buyers.”
“The new condos continue to go up, but the number of prospective buyers doesn’t.”
“Jeff Mynard has been selling condos for 20 years and says 2004 and 2005 were his best years ever. ‘So together that’s about 80 units, or a third of the property turning over in two years,’ said Mynard of Panama. ‘In contrast this year, we’ve sold two units. Actually, only one of them has closed. It’s gone from great to nothing.”
Thanks to the readers who sent in or posted these links. Don’t miss the video of the TV report from the last link. It’s on the right sidebar.
funny.
After the entire clip reporting the steep falloff in condo sales in 06, the news anchor at the end says she ‘hopes’ the housing market comes back soon, as her house is up for sale.
There is so much vested interest on both sides of this bubble…
Tampa story = FRAUD! Anyone out there??? I would bet this is going on everywhere!!
my b-in-law has done the same thing!! brags about how he’s “worth” over a million. I explained to my husband that he is LEVERAGED to the tune of 1M, and by no means does he have a net worth of 1M. That’s how ill-informed the “experts” are in this game. I tried to explain the laws of physics, micro/macro economics, etc., it was lost on him. He bought all of these ratty houses, fixed them up and plans/rents them out. Problem is, he’s bought in places my hubby says we wouldn’t be caught driving through!!! Go figure….
my b-in-law has done the same thing!! brags about how he’s “worth” over a million. I explained to my husband that he is LEVERAGED to the tune of 1M, and by no means does he have a net worth of 1M. That’s how ill-informed the “experts” are in this game. I tried to explain the laws of physics, micro/macro economics, etc., it was lost on him. He bought all of these ratty houses, fixed them up and plans/rents them out. Problem is, he’s bought in places my hubby says we wouldn’t be caught driving through!!! Go figure….
I think all the fraud is going to help this mess to unravel. There is tons of fraud out there. Anytime you can get money cheap and easy, the fraudsters catch on and push it to the limits.
So the things in Tony Soprano are not a fiction. Yeah the good old american way à la Al Capone. Is Fannie Mae involved?
A reader posted this link on the Bits thread. Scroll down and check out the for-sale signs in Tampa.
‘You can follow the signs of the housing bust right down the chain to local markets. Heck, right here in my zip code (33458), there were recently 574 properties with at least two bedrooms and two bathrooms for sale between $100,000 and $500,000. When I started tracking almost a year ago, only 150 fit that description. That’s a 283% increase. Almost four times as many houses, condos, and town homes are piling up, still unsold.’
‘In one nearby community, called Chasewood, the same listings have been sitting on the market month after month. The lowest priced unit used to be listed at around $210,000. Now, you can score one for just under $175,000. That’s almost a 17% drop in just the past several months!’
Y’ou think these kinds of price declines are over? No freaking way! That’s because so much of the surging demand for houses in the past couple of years was ‘false’ demand from wild-eyed speculators.’
False Demand - Where have I heard that before??
Ohh I remember
RIGHT HERE LAST YEAR! At least 500 times!
it is easy to qualify for a million dollars or two in loans,have good credit,commit fraud.oh,then go under,go to jail.easy.
Jill Jackson has commited fraud. She has conveyed money to the firts buyer that is way over the value and price paid for the home. Thanks to St Petersberg Times for exposing this.
Hope you enjoy your time in jail.
Unfortunately, to prove fraud, you have to prove intent. That is where the problems usually come in because a lot of fraudsters claim “I didn’t intend to defraud anyone! I’m just a bad businessperson!” When the SHTF, these people will all make promises to repay — then, of course, they will never repay — but simply promising to repay proves you aren’t a fraudster.
I think our legal system could use a good overhaul.
Most loan applications have a perjury clause don’t they ?
It’s not likely this gal will go to jail, but she will be pushing a shopping cart singing the Great Depression classic, “Once I Built a Railroad.” To be prosecuted for perjury in Nevada and probably other states one has to be making a false sworn statement i.e., a statement under oath. Aint no oath taking in mortgage broker’s office.
Sure there is. There is usually an affidavit in the loan docs, at least in California. The most common one used here is the mortgagers affidavit, where the borrower swears in front of a notary, that the information provided in order to obtain the loan is true to the best of their knowledge.
Of course the verse from that song that resonates here is “once I bulit a tower” I guess we know that it was a condo tower.
Mortgage fraud is a federal offense since it affects interstate commerce in a big way. The only way she qualified for these loans is she did “no-doc” loans and lied about her income for the first few. Once she had those assets, she asserted a much higher value for them than she paid for them, thereby showing significant equity “assets” for the next set of houses. In six months when she can no longer carry them, she will either a) embezzle money from her company or b) file for bankruptcy. Well done!
I believe this is known as “fraud for property”, the property itself is intent.
grim
My first speculation was that maybe she is bailing out a bunch of underwater “investors” and being paid under the table to do it. With her income, no one will ever bother trying to collect from her after she goes bankrupt. I think this proves I’m even more cynical than the rest of you
Very interesting theory, especially considering the new bankruptcy law! Debtors with income below the median for that state (clearly the case for this person) can still easily declare bankruptcy, and thus could serve as an escape vehicle for other folks who are underwater, yet happen to have incomes above the median.
However, see Section 523(a) of the bankruptcy code regarding dischargeability of debt incurred via false representations made to the lender.
TXChick - what does it say, in a nutshell?
if if can be proved that a debt which normall would be dischargeable was obtained under false pretenses (lying on a loan application, etc.), the judge can rule that it it is nondischargeable and thus survives the bankruptcy. It’s not super easy to do but it is done all the time.
This kind of thing is similar to what drug dealers and traffickers do, they send under age kids to sell the dope and collect the money. The kid brings the money back to the dealer and gets paid a percentage.
if the kid gets caught, they get a slap on the wrist, maybe do some time in Juvenille hall, then go back out and work for the dealers again.
The dealers escape direct connection with possessing or selling illegal drugs, whom if they were caught doing so would be prosecuted for multiple felonies and would be spending a long time in prison, and have most of their assets confiscated by the government authorities.
So, they get poor kids to the the dirty work for them.
Some of those kids, if they survive and have the brains and ambition may take over for the dealers turf.
I read a very interesting study done by a grad student from MIT or Harvard, whom hung out with a drug dealing gang in Chicago area, I believe. It was very interesting and informative on the dynamics of drug trafficing in urban blighted areas.
I suppose we will see more of that as the RE Bubble deflates.
I think that someone, presumably the investors who conspired with that lady, could be prosecuted for conspiracy to commit fraud, and be liable for repayment to those that were harmed as a result of the fruad.
Los Angeles Friends In Deed
My thoughts exactly.
Ten deals in ten weeks with various lenders is a bit too much for someone with Jackson’s background. Seems like a ten deal exit strategy was put in place and someone got Jackson to sign the papers. The seller(s) get their cash and Jackson declares bankruptcy at the worst with the debt written off.
Can anybody determine how many ultimate counter parties were dealing with Jackson? Smells like fraud to me but could be a case of somebody finding the “last sucker in the pipe”.
“Hey little girl, do you want to be a real estate magnate? Just sign these papers and you are the proud owner of more than a million dollars of property! You go girl!
If you follows these type of stories closely, there was one a few months ago about an unemployed drunk who died in one of these crappy houses in TAMPA. Same type of scam. When they found his body and investigated, they discovered he had something like 450K in mortage loans and “owned” three houses, even though he hadn’t worked in like 10 years and absoultely no income or assets. Same exact MO, with him overpaying on dilapidated houses and obviously being assisted with the fraudulent loans.
Works for a credit services company? Sounds way fishy to me.
Underwater investors or underworld investors?
ANSWER: Probably both.
You see somebody is even more cynical than you.
What a dumb-fuck this lady is. Will they be showing her picture when she gets hauled off to jail/prison/ or whatever? Even the ‘average’ investor can’t be this STUPID, or can they? There was a similiar story about some idiot lady in Las Vegas that bought $1.4M for 14 houses and then the builder dropped the price, leaving her way upsidedown. Is she is prison too? Wish we had her update.
The St. Petersburg Times. “Jill Jackson is not your average real estate investor. Jackson takes home about $24,000 a year from her job at a credit services company. She rents an apartment in St. Petersburg and, until this year, her assets totaled about $8,000 and her financial statement showed a negative net worth.”
“She had zero experience in real estate acquisition, until Feb. 28. That day she bought three Tampa homes for $560,000. In the next few weeks, she bought seven more properties. She used 10 different mortgage lenders and managed to borrow 100 percent of the cash she needed for every deal.”
“The grand total for this greenhorn investor: 10 weeks, 10 purchases totaling $1.84-million, not a single penny down.”
“Jackson won’t say much about her sudden foray into real estate. She won’t discuss why she paid a huge premium for a handful of lower-value homes in Tampa or reveal how her financial statement and meager income qualified her for almost $2-million in mortgage loans.”
how much heloc did she take out
Believe me…they are in the prison that is called their mind. Their punishment is just starting….time for a good a$$ whipping! Even if they don’t ever go to jail….they WILL be tortured!
She is not an investor. She is a speculator, and a stupid one at that.
Well it was the same thing with the internet bubble. That’s what happens when you have an even dumber fuck called Alan Greenspan. I hate that bastard. He is as the source of the excess of the last 10 years. Him and the other stupid fuck in the Japan Central Bank.
Jill Jackson makes 24k? That is hardly better than minimum wage. Those banks deserve the bag they are going to hold with this one.
Oh, btw, only a complete moron would do such a thing and not be clued in to where the RE cycle was…. but I guess that goes without saying.
Isn’t it obvious she did a “stated income” and bought all the houses before the mortgages could show up on the credit report.
Oh yeah!!! I make 3 billion a year! That is my “stated income”!!!
That anyone would loan on “stated income” is ridiculous! Yes, it can happen, but is is abysmal business practice. I blame the lender on this one, not the pathetic morons/fraudsters taking advantage of a loophole…. Yes Jill - go to jail. Yes bank- eat it.
M.B.A. — until you wrote that I forgot that I, too, make $1 billion a year! Maybe that calls for a bottle of Blue label or a nice old Margeaux. But … ahhh … I’m still going to rent and ride it out.
wow. i can’t hang with you guys. i only make $100M. I can only qualify for 15 properties. i feel like such a failure.
LOL!!!! Yeah, we all have greated stated incomes, don’t we? We hang w/Bill Gates.
Maybe we should start a charity for flippers!!!!
That is it, exactly, I believe — she screwed the lenders while her FICO was in limbo re # of hits in x days.
Reason #2, that she was pimped to do the deals, is plausible.
I can’t see how it could be otherwise — how could she possibly pull off 3 real estate transactions in ONE DAY with NO EXPERIENCE unless she had a “pimp?” It’s hard enough to close on one property in a reasonable amount of time.
I’m thinking some con people who owned these properties contacted this jerk Jill Jackson and used her as a straw buyer so they could take the money and run from dog properties . Have you noticed those ads on telephone poles where a investor is looking for people wanting to invest in real estate ? I would just say ,go back to finding out who the sellers were on the deals and you might find out it was a greater fraud than what Jill Jackson did to get the loans .
I think you’re right, Housing Wizard. I, too, think this Jill idiot got conned into using her name and credit report to front for someone else - and she’ll almost certainly be left holding the bag.
I’ve seen this strategy discussed on some of the ‘real estate investors’ forums, and to my shock, they didn’t denounce it. They thought it was a good idea under certain circumstances. Are they crazy?! There’s no way I’d stick my neck in the guillotine on someone else’s assurance that they’ll make it worth my while - and they promise they won’t pull the lever.
Additionally, under standard contract law, if the contract is to commit an illegal act, it is a void contract and not enforceable, so that lady will not be able to sue if those guys decide to bail on their end of the agreement.
Los Angeles Friends In Deed
You are not going to find those sellers. They are long gone, probably in Costa Rica with forged passport and a new identity.
Jill Jackson may be a patsy, but I doubt it. Maybe she has diminished mental capacity and that will be her defense… but there is no way that she signed those mortgage apps non-fraudulently. I expect she was at least promissed a kickback of some kind.
Wiz — that one smack of organized crime, to me. Maybe the RICO guys will saddle up.
Yea I’m thinking organized crime also .
Her agent made around $50K in gross commissions, & mortgage broker probably made $20-30K.
There had to be kickbacks.
In addition to fighting terrorism, the FBI will probably have to increase their budget for investigating real estate fraud over the next couple years.
Los Angeles Friends In Deed
This subject reminds me of a recent document by CNN, titled “How to Rob A Bank”.
It discusses many of the issues presented here, including some Nigerian crime rings, identity theft schemes, and other things people are doing to defraud people and banks.
The info in this documentary is valuable to give people how to be aware of how people can defraud you and how to defend yourself.
Los Angeles Friends In Deed
and these type of idiots who will go into debt for $1M are the ones that are trying to save $1 at the grocery store in order to say they are savvy shoppers, or spend 10 days looking at cars to save $200.
EXACTLY!!! You hit the nail on the head!!! Cheap everywhere but where it counts! AND in the b-i-law case, cheap houses too but fixed up in a “questionable” neighborhood!
need 2 leave — good one — I’ll bet a lot of these same people DO spend 10 days trying to save $200 on a car.
Now, one can see how the credit bubble can push up prices. Is there really demand for homes in Tampa or is it just speculators using borrowed money like Jill Jackson? She does not seem to care about prices, her mortgage payments, rental rates. While her timing is off, she is putting herself on the roulette wheel. If prices increase, she will make a fortunate compared to her $26,000 yearly income and if they fall, she will just file bankruptcy. Hopefully, she did not engage is fraud here.
Hopefully she didn’t engage in fraud?!? There most certainly has to be fraud here or a complicit Mortgage Broker. Even with the laxed standards the way they currently are, I can’t believe this would be possible. Are we sure this story is true!!???
JWM — another good observation — maybe the story is phony.
Great thread — as close as we get to “action-packed.”
I haven’t finished scrolling down through all the comments yet, but I have to ask, who were Ms. Jackson’s lenders in all these transactions? And what were their motivations? These are the key questions, and the St. Petersburg article didn’t seem to answer them.
OT, I went to an open house this weekend in Orlando….The car in the driveway was a Corolla.
A young realtor waved us in while talking on his cell phone. The house was empty, no funiture.
It was small, smelled like urine(from animals), the carpet wasnasty, I could see discolored spackle on the walls and around the shower.
2018 square feet. It was in the Carrillon area,
which is a nice middle class neighborhood. They
were asking 340k…The realtor waved goodbye
as we left…I would not pay 150k for that house.
And now we’ve got the first tropical storm of the season due to land on Florida by Tuesday. You can pretty much kiss this season off. If you’re a seller and you’re not already in escrow, better just board up the house and try again next year. Of course, next year won’t be any better…
Superbowl 2008 Rally is looking promising!??!?!
Perfect. Super Bowl 2008 will be in bubble central, Phoenix (Glendale).
By my rough calculation, given the scaled-down prediction of just 16 named storms this year, that is one every 11 days or so until the end of November. The Weather Channel must be loving it. Local news her in central Florida is loving it. Real estate agents in Florida or coastal areas are not loving it.
Will all of these FL floppers with boarded up houses stay current with their ARM payments? I highly doubt it. Bring on the storms.
Makes a good paraphrase of a ’60s song:
Flip-flop, I was watchin’ the drop,
long about a Saturday night…
The drug dealers, I mean real estate investors, in the St Pete story are lurking around in every major city in this country. The real estate scams going on at this moment are sure to boggle the mind once the pyramid scheme comes crashing down. Fraud touches so many transactions from Fannie all the way down to Ms. Jackson that the American taxpayer is going to have to cough up billions to bail out the bankers with their eyes wide shut. Thousands better go to jail this time around and for a significant period of time.
And don’t you know that Dallas is big time involved in it.
I recently read about a rash of that Jill Jackson kind of thing in North Dallas and McKinney. Foreigners involved of course.
I’ve got a group of “investors” living in my loft building downtown. The loft where they are living currently is about to be foreclosed, yet they drive around in their new BMW 745iL and Range Rover with the ever changing temporary license plates, etc. These guys are deeply involved in all sorts of fraud, yet they dress in expensive clothes, drive high dollar rides and go on living the good life with impunity. I just don’t get it - perhaps the police are so busy attempting to chase down people that are shooting each other the care about the financial crimes that are so rampant.
It’s just like the St Pete story. Those houses will eventually go into foreclosure, but the ill-gotten gains have already been spent by these criminals, many of whom hide behind the “we’re all just doing the lord’s work,” bullshit.
I’ve got a group of “investers” living in my building downtown. Their loft is about to be foreclosed, yet they drive around in late model BMWs and Range Rovers each with a newly minted temporary tag attached as the previous one expires. They are involved in the same type of real estate scams noted in the St Pete story, with the same “we’re doing the lord’s work,” B.S. They run around in expensive, tacky clothing and look down their nose at me, probably because I have a real job. It’s hilarious, and these criminals do all of this with impunity. There aren’t enough cops, jails, prosecutors, etc., to put these criminals in prison. Sometimes, it almost makes you think that being a law abiding, tax paying citizen really doesn’t pay.
No kidding! I used to live in Plano and I also remember the 80’s in Texas real estate…what goes up….
And I sold insurance policies the last few yrs in CA. These same people that paid ungodly amount for crappy houses (with toxic mortgages and high payments) would often make a big issue about deciding how much they could spend on something really important (and they were usually cheap). So I would think, how could you spend $800K on this without thinking, but worry about $50 that can be cancelled if you wanted. GO FIGURE.
We don’t have enough prisons for all of the folks that deserve to go to jail. I have a good idea. Set them all in some useless, totally isolated desert (hotter than hell). Give them just enough food/water daily to keep em alive. And tent shade covering. Would be a hell of a lot cheaper than keeping them in country club resorts that are called prisons. They really can’t escape because it would mean death (not bad either). The area by Needles CA would be a great place.
you describe las vegas rather well
Send them to Sheriff Arpaio in Phoenix.
Go Sheriff Joe!
Go rent “Escape from New York” Same idea. (btw, I agree)…
Give them shovels and let them build cat 5 levees for New Orleans.
You could start with George W. Bush, Dick Cheney and Alan Greenspan in prison.
She paid 700K more than they were worth, total. She bought them from her boyfriend.
The houses get foreclosed; they think they’ll keep the 700K.
Is that it?
Right , that’s what I was thinking and I posted that thought above before I saw your post . it seems to me that’s its a bigger fraud because of the type of properties she bought and how she overpaid .Some con artists got to her,(Jill) and used her to unload swamp properties . The appraiser had to be in on it to .
Yeah, the article itself makes it very clear that a con-artist recruited this woman into his scam. She seems extraordinarily naive and not very bright.
She’s probably very bright and probably getting a cut of the action. These are scams that are targeting the banks. She’s in on the whole thing with the straw company that bought the homes right before her.
Oh, I just figured out how to get the whole article ,thanks .
I think we have here the makings of “Ben’s Most Wanted.”
What floors me is that all you ever hear about is the evils of interest only and neg-am arm products that are going to wind up sinking real estate, but reduced doc never gets mentioned in this whole debacle. How did this woman come to purchase so may properties on $24,000/yr? It’s because the lenders never bothered to ask for a bank statement or paystub showing how much she really made. Is if fraud? it will be hard to prove. Chances are, she did no-ratio deals where they ask her who she works for but not how much she makes.
I was an underwriter from 2001 to 2004. I finally got fed up with the b.s. we had to deal with and got out. Risk mangement and lending guidelines were an absolute joke. I knew they were wrong but we were told to do them so we did. We used to sit there shaking our heads while signing off on these loans but there was nothing we could do.
In the end, it will not be the interest only loans that sink the banks, it will be the ones where the borrower had six purchase contracts going at one time and nobody bothered to check and see if she really did make $75k/year as a greeter at Wal Mart with over $100,000 in deposit money and reserves to spare.
Amen.
Ditto.
X-underwriter …..You bring up good points .Doesn’t the recent years underwriting standards make you sick ? It does me . The current underwriting just sets the stage for massive fraud . I’m just waiting for the kinds of stories that we are going to hear 2 years from now . My hat off to you for walking away . I have walked away a couple times in my lifetime also .
What pisses me off is that the banks are deeply involved in these scams, either because someone at the bank is getting kickbacks or through complete negligence. Either way, the taxpayer is going to be footing the bill for this mess.
i once read that the banks don’t really care that much because they package and sell these loans pretty quickly and so is practically risk free for them. they earn fees from providing the services.
Once I thought I was out, they pulled me back in!!!
Just kidding. I did underwriting from around 1990 to 1997 and then left for a career in Information Technology. 9/11 hit and I was employed by a small company that had over half of it’s revenue tied to a contract with United Airlines. U.A.L canceled the contract so I was let go with half the company. After sitting around for a month and going crazy, I went back into mortgages because the refi boom was heating up and it was a quick job.
In four years I couldnt believe how the industry went from full doc with back ratios of not over 42% to no documentation required at all…the absence of bad credit was the only qualifying factor
I’m back in I.T now thankfully but at a company that does software for the mortgage industry. I’m beginning to wonder if even that place is safe now
Thanks for your ground-level confirmation of what many of us have been posting about for the past year — the complete abandonment of mortgage underwriting standards which has taken place over the past few years.
I’m with you. Just Jill and the lady who reportedly bought 14 properties created what the stats showed as “demand” for 24 houses.
I would bet the number crunchers at the NAR calculated these as two investments and not 24.
You must be refering to our friend Dena Webster of Wellington, FL. I have a theory on why she bought so many properties (she bought 11 properties for about $6 million from 12/04 - 5/05). I don’t think it was necessarily to buy and flip right away, although that is possible. She is also a realtor and mortgage broker.
I think she bought all those homes in order to use as sales comps for appraisals so they would “hit the number” for her deals. I would love to examine the appraisals for every mortgage transaction during that period of time she was involved. I wonder how many of those sales found their way onto the appraisals for every transaction she was involved in as a realtor, mortgage broker, or both? Remember, September or October 2005 is when the bubble started deflating. This is the only logical explanation of why someone would buy so much property for so much money. It couldn’t have all been greed or stupidity, I think panic explains it. I wonder how much appreciation is due to fraudulent buyers in these bubble areas? If I was a competing end user buyer for one of these home purchased by a Dena or Jill or a fake buyer like them, I would be p#ssed and would consider a lawsuit for artificially jacking up property values.
Subsonic — do we have any evidence that she paid that much for those properties, or even that she bought them in the time period stated? I recall thinking, while reading the initial post, that she paid far less than she claimed to have paid, in order to make her phony, hyped “markdowns” sucker bait for buyers. She just looks/sounds too sharky to have paid too-high prices, regardless the outcome.
Chip,
She really did pay those prices. I went to the Palm Beach Co appraiser’s website (www.propertyappraiser.com) and verified it. Two of the properties she had quit claim deeded to her for $10, but I’m quite sure she ended up paying full price. Here are the other nine she bought according to the county records in terms of date and sales price.
1-05 $495k
1-05 $495k
2-05 $480k
6-05 $420k
12-04 $500k
11-04 $625k
4-05 $525k
4-05 $594k
1-05 $679k
Doing quick math, I count 9 properties for roughly $5 million. The article stated she was having a very hard time making the mortgage payments, which means she likely got financing for all the properties. If she told the truth on the loan application (disclosing all the mortgage loans and their corresponding properties), she would not have been approved because of her debt obligations. Why would you take on at least $4 - 5 million (or more) in debt, regardless of the potential profit you could make on a re-sale? There had to be another reason besides flipping, IMO. Hence, my theory. I could be wrong. (won’t be the first time, won’t be the last :O)
Chip,
She really did buy all those homes at those prices. I gathered this information from the Palm Beach County appraiser’s website (www.propertyappraiser.com). Two of the homes she had quit claim deeded to her for $10, but something tells me she paid full price for them. Here are the other nine in terms of when she bought them and what she paid.
1-05 $495k
1-05 $495k
2-05 $480k
6-05 $420k
12-04 $500k
11-04 $625k
4-05 $525k
4-05 $594k
1-05 $679k (this deal makes even less sense, the same property sold for $552k in 9-04)
Using quick math, I count $5 million for these 9 homes purchased in a 7 month period ($6 million for 11 if you assume the other two averaged $500k per). According to the article, she was having a hard time with mortgage payments, which means she probably financed all of these homes. She also stated she only rented out 4 of them. She would have a hard time making PITI payments even if she successfully rented them all out. She also would have had turned down by most mortgage companies if she told the truth on her loan applications (in regard to the number of properties and respective mortgages). There has to be another reason besides greed to buy all these properties at once. I think it has to do with inventing comps for her other deals.
How do those deals all work out when prices are falling? How many more serial investors are walking around with this kind of history hanging over them as the bubble undwinds?
I’ve been following this blog for a few weeks. This is worse than I thought! I never imagined people owing millions. I knew the realtors owned investment properties, but not the numbers shown here! This is just insanity!
I hate to say it but this thing we call capitalism is little more than organized corruption. It’s like half the people in the county spend all their time trying to screw the other half.
And people say we need less regulation!
lol
The “invisible hand” of the market will punish these people far more swiftly than new regulations or laws. IMHO
And the whole point was to avoid it in the first place.
When the government does nothing it gives credibility to these bubbles, especially when everyone is cheerleading all the way up.
At least regulation would control some of it.
Anyone who sees any government as a source of credibility is in quite a bit of trouble to begin with or without regulation.
Joe Momma-
You have it exactly backwards. Misguided government programs/policies (mortgage interest tax deductibility, Fannie Mae, Freddie Mac) are important drivers of this bubble.
Lax lending standards will ultimately get their just desserts., and the banks thast made these irresponsible loans should be allowed to fail.
The invisible hand will certainly create an avalanche of foreclosures that will drive this foolishness from the debt market. It is not always true that people well be crushed in proportion to their culpability/stupidity.
As legitimate, taxpaying, play by the rules citizens there is nothing we can do about this kind of thing. It is a sign of the times. If you conduct yourself according to a set of principles you are going to be victimized by this society time and time again. The system is totally corrupt from side to side and top to bottom. If you are going to steal, steal a lot, that way you can afford to buy lots of lawyers. To these people anyone who does an honest job working for someone else for wages is a chump. You know what? They are right. getting off soapbox now…
I notice that Ken Lay and Franklin Raynes aren’t exactly sitting in jail or prison…
Ken Lay was convvicted but hasn’t been sentenced yet. He’s looking at a lot of jail time.
Joe –I love your screen name, but respectfully disagree with you about regulation. The only government action I think we need(ed) in this arena is a big, widespread warning akin to the one about smoking being bad for your health. And it should be directed to investors in MBSs so that they can’t believably cry “foul” when they are screwed by the outcome of their risky behavior.
As opposed to the government which is disorganized corruption.
Example 1: The income tax code.
Actually, the tax code is highly organized corruption, with extensive documentation. As of 2003, there were 54,846 pages of code, regulations, and rulings in the CCH tax book. There were 526 different federal tax froms in 2002. All of it thoroughly laced with special exemptions, targeted tax breaks, and exceptions bought and paid for through organized corruption on a massive scale through the political system.
This thing we have that we may call capitalism really does not resemble actual capitalism very much at all.
Well, the ulimate buyers of these sub-prime MBS’s, the Chinese workers, should be regulating these motgages. But they can’t because their Communist Government won’t let them! Go figure!
Maybe it is all a clever plan to rip off the Chinese. If so, it is a pretty good one.
At least we could be satisfied that there is rationality behind it all.
Tulkinghorn - there have been times that I’ve wondered the same thing. Slick move, but it’s hard to believe Leviathan is capable of pulling it off.
Never ascribe to malice that which is adequately explained by incompetence.
Napoleon Bonaparte
You know what the problem with this country is in my opnion?
The whole friggin’ thing is run by sales people. Wall Street is, Capitol Hill certainly is, and so is the banking industry.
What I saw and learned from the whole dot.com bubble is that whenever you give the sales people total control over the wheel of the ship, they will run it into the rocks every time. Forget all the warnings from the people in the engine room. If the ship is bringing in more money than last week, then they must be doing something right.
So, here we are stuck with 24 year olds that don’t know their ass from a hole in the ground about investing, real estate, or anything else on the hook for $1.84 million in bad real estate loans. The people in charge of sales put here there and when the $hit hits the fan, they will be the first to point the finger at underwriting and say, “hey you guys approved this’.
This is just one more example of the degradation of our money. The dollar is going down hard when nobody wants to work for their money anymore.
Again ,X-underwriter good points .
X-underwriter …good thing you got out because when the shit hits the fan they will try to blame the underwriters . Its the salespeople that usually micky up loan packages ,not the underwriters .
Yeah, and you can have an awesome second career as an expert witness for the prosecutions and civil suits.
Most salespeople are a step to a step and a half away from con men.
I know I was one (salesperson). I got out of it.
If you actually looked after your customers, that was time taken away from finding new business.
Salespeople should be pre-qualified with operational experience first.
This is a good example of a salesman run amok. Here are some links to articles about Kenny Rushing, the 32-year old pitchman who seems to have organized this scam:
http://www.sptimes.com/2006/05/20/Tampabay/The__house_hustler_.shtml
and http://www.sptimes.com/2006/05/21/Tampabay/House_hustler.shtml
Interesting. These articles make it look like he’s a talker but a shrewd businessperson. Technically, there is nothing illegal about making a lot of money off a property just because you know something the current owner doesn’t.
ur comments are spot on
It has bust in N Atlanta!!
A few weeks ago an article in Forsyth County, GA paper talked about housing sales leveling off - of course an actual 30% decline was in RE speak leveling off. The RE guy was quick too reassure everyone that no one was going to lose aany money - Hahahahahaha
Today my wife and I looked at a Ryland SubDiv in Windemere - a really hot location in Forsyth county - found a house with a flyer on the kitchen island saying discount if we closed tight away!
Wow - we went to the sales office expecting a teaser - but no - how about $40K off on a $410K house - wow and plus 3K for closing - sure feel sorry for the owners who paid FULL price. Even N Atlanta is coming donw to earth?
Don’t blame capitalism. Blame the Federal Reserve. In no sane capitalist system would a sane lender lend that kind of money to the Jill Jacksons of the world. The Fed actively encouraged and nurtured a credit bubble, where “lenders” could securitize their loans and get out, and the hedge funds and foreign central banks who bought those loans were playing with other people’s money [or in case of hedgies, borrowed at 1% from the self-same Fed]. So no one in the system had any incentive to worry about old-fashioned things like borrowing capacity …
What upsets me is that honest taxpayers are going to be forced to pick up the tab, while the hedgies have taken their billions off the table, and the FBs walk away.
Folks, Read the rest of the Jill Jackson story. Fraud is written all over it …
As I read the posts I am still amazed at all those on the outside that can’t wait to jump right into the market on a little downturn. The best of all worlds is the previous home owner who sold this past year and is renting. Come on people, all you renters are in the catbird seat. By this I mean that you have more degrees of freedom then your peers. When the housing market devastates an area many jobs may disappear but you as a renter can just pick up like a gypsy and follow the market.Look around in the company you work for and see how many can take that transfer. One person up here was offered a position in OC,CA but was given two hours to accept or reject the offer before the administrator (OC administrator was desperate) was going to move on to another possible candidate. The beautiful part is that you’ll probably keep the same pay or go up if you work for a national company and they’ll move you at their expense.
there’s probably not many of them to have any impact in the overall trend we are witnessing.
Now I know why housing prices in Tampa have doubled during the last few years–that woman, and hundreds of people like her, many of whom don’t even live here and never intend to, financed by standardless mortgage lenders ignorant of the damage they’re doing to the community and our very social fabric. Has there ever been a time when so many clueless people blithely handled such large sums of money?
As for Panama City, I spent several college spring breaks there in the 1980s. The beach area is fun for a drunk nineteen-year-old–which I admittedly was–but it’s not the place I’d ever want to buy a condominium. Plus, the panhandle has been a hurricane landing strip of late. Developers might not care about that, but insurers do.
I guess what I am saying is sometimes people need to be protected from the sharks. When the government does nothing (i.e. no regulation) while this bubble inflates, it adds credibility to the whole thing. Add to it the fact that everyone in the industry is cheerleading, and there is nobody looking out for joe.
I’m not saying regulation is always the answer, but this devastation could have been avoided, and watching the government do nothing about it so a few assholes can fleece the masses is outrageous.
Even in China the government is doing SOMETHING.
Bottom line: our brand of capitalism, with so little regulation, is a fleecing machine.
Sometimes people need to be protected themselves (i.e. from human nature), and that is what regulation is suppose to do.
Our government handled this bubble as well as they did Katrina.
The whole system is corrupt. Period.
The more government protects people, the more people EXPECT government to protect them, and the less they will feel responsible to protect themselves. At some point, people need to be resposible for their own lives and actions.
The govenment planted bombs in the twin towers and paid middle easterns to fly planes into the buildings as a cover-up so I do not think bankrupting millions of homeowners is going to bother them either.
http://www.infowars.com
http://www.realestatedecline.com
Hey Conspiracy Boy, if you tilt your tinfoil hat a little to the left, the signals from the Mother Ship will come in much more clearly. They might even drown out the voices or those mind-control signals from the microwave tower.
Idiot….
Amen. Predatory capitalism is running amok and eventually will have to be reined in. Don’t expect reform to come from the Republicrats, however — both parties are on the make and on the take, and they won’t dare to offend their primary (and increasingly ONLY) contributors.
Quick question. How is the system going to freeze up? I know that FNM is the facilitator, and that the lendors don’t hold the loans long enough to give a crap about lending standards. So does Wall Street and the people buying FNM’s garbage finally say enough is enough, pressuring the lenders into better lending standards?
What forces will bring this thing back under control?
These loans almost had to be nonconforming. I can’t possibly see how they would pass as a conforming mortgage. Don’t think either Fannie or Freddie would touch them.
That’s what baffles me about this market, it sure looks like there was no risk premium for some really scary non-conforming paper. Why anyone would pay dearly for Ameriquest or Countrywide sub-prime (probably NINA, stated too) is utterly baffling to me.
And regarding regulation, as you read scandal after scandal ask yourself if regulation could have done anything to stop it.
I say yes, in most cases.
Regulation isn’t this evil thing. We are talking about minimal safeguards. But if there are none, the greedy side of people is going to take over and the result is going to be massive corruption.
Every time.
Like most scandals in this country the last 50 years, my money says it will involve Wall Street big time.
I don’t know exactly how, but where there is theft Wall Street is usually in the middle.
Yup
It will also involve China and their willingness to waste around 10% to 15% or so of their GDP per year buying our currency and then parking it in treasury bonds and agency debt, thereby lowering longterm interest rates.
Right now, the fed controls short term rates, but the Chinese central bank, and others in Asia and the middle east control the long term rates due to their stupid currency pegs.
BTW, China ended their currency peg to the $US last summer…
Still a very tightly managed float, though.
Or they’ figure that it’s cheap to destroy us this way than to wage war in the conventional (or nuclear) manner. I seem to recall a quote from Stalin that goes something like this: “a capitalist will sell you the rope that you use to hang him”. Read Sun Tzu, the Chinese are a lot of things, stupid is not one of them.
they would not want to destroy us. they will just buy enough of our t-bills until one day they can live off from the interest earned from their loans.
And if you saved 5 dollars at the time of Jesus birth, you could have a ball of pure gold larger than the earth.
Not everyone can be in the living off the rent class.
That was Lenin, not Stalin.
By the way, the middle eastern countries are not big buyers of US$ debt, because they have no interest in propping up the US$. If the US$ declines, the US$ price of oil just goes up (as it has recently of course). They are interested in US equities however (e.g. the Dubia Ports affair).
What was it in the New York Times Magazine yesterday: Some economist has calculated that on February 9, 2012, the Chinese government will purchase the last available US government security, increasing their holdings to 100% of the US Treasury debt.
There were regulations. FNM and FRE were created to faciliate the mortgage market. The OFHEO was supposed to monitor them. It did nothing. The Fed Bank was supposed to monitor the money supply. It expanded it tremendously and dangerously at every opportunity.
What inevitably happens is that once government regulation is implemented, it then becomes the tool for far greater corruption than would have previously been possible. FNM and FRE can borrow cheaply precisely because they have a government affiliation.
This bubble was not caused by greed and lack of regulations. It was caused by greed and regulations.
I don’t quite agree, because financial panics and banking collapses have been far less frequent after the creation of the Fed. True, the Fed and other regulators dropped the ball on this. But RE and other Booms and Busts were far larger one hundred years ago. I think the Fed is doing something right. But I agree that they looked the other way with this housing bubble.
If you’re referring to the Jill Jackson story, I don’t know what additional regulation would help. The mortgage and title people were no doubt licensed, and it appears that a number of existing laws were broken.
What’s needed here is some enforcement. It appears that this operation was being run by ex-cons, so where were their parole officers? The titles were apparantly fraudulently conveyed, will anyone be calling on the people involved?
It doesn’t do any good to make more regulations if the ones we have are not being enforced.
From the famous book THE ART OF WAR , I remember a famous general said something like ,
” Without proper reward and punishment ,you have lost the troops ,and than the battle .”
Its late , I don’t know why I brought this up .
Joe-
First, we have oodles of regulation in this country. What do you think the Departments of Energy, Commerce, Transportation, Labor, et al. do all day? Think about ways to come up with LESS rules?
Second, governement intervention in the economy and financial disaster are hardly mutually exclusive. In fact, they usually go hand-in-hand. Hitler (another big fan of regulation) presided over a fast growing, totalitarian economy, but it didn’t last long and didn’t end well. Communism (which embraces regulation of every aspect of the economy) has a tough track record, too. Countries like China have only started to show solid growth AFTER they adopted market-oriented reforms that opened up its economy to the world.
Finally, if you’re such of fan of China, try living there for a while. The system is rife with human rights violations that would make your head spin.
Did anybody read the St Pete Times story re Jill Jackson? She didn’t “buy” anything. Her name just winds up on the title. She is a “straw” buyer. Here’s a direct quote from the story:
Two years ago, Bello Properties paid $40,000 for the two-bedroom, two-bath home at 3120 N Woodrow Ave. in Tampa Heights. After extensive renovations, Bello got a contract to sell it for $140,000 in March.
The buyer, according to Bello president Tony Muniz, was Investors Outlet. The signature on the contract was Joel’s.
At closing, however, the property was conveyed to Jill Jackson for $205,000, a markup of $65,000.
Could this have been one of those double closings?
Yep , its a sit up to pull out false equity ,and than leave the bank holding the bag .
The tax paying public will not be picking up the bill for this mess. By the time you add up the multi-trillion dollar cost to clean it up, the whole house of cards will have already imploded. Worthless tax dollars will not do the trick. Fasten Your seat belts. Its going to be a bumpy ride.
…..My old friends here . This surprises you??? Of course, of course she is a straw buyer. That’s how it works. You have to be living in some naive stupor. We the logical, practical will take it up the &%#@ again. Remember LTCM ? Same deal. Remember Neil Bush?, everyone made out like fat rats…Promises were made it will never happen again, and yet here we are again. I was in oakland last year and talked to several immigrant friends then. They were all buying several houses ,and taking out the equity as it rose. Every one told me why not?if it stops then they will just retire down South ,and just walk away..I’m not bashing ,it’s just what was happenening when I was there. Now multiply that times a million …everyone involved is getting their cut (Agents, loans,brokers),and passsing the buck. Whos’ gonna hold the bag? Who cares…Everyone smart has their nest egg, tracks erased. Let it burn they have theirs, they would say….It is truly infuriating to sit aside and not jump in because the fundamentals were insane…Now as payback I’m the fool ,and will watch as the economy tanks,and taxes go up. I’m preaching to the choir here, but we all know howthe game works. Crime pays, and very well…just don’t get caught, or have little to lose. Of course this time they will enact laws to “keep this from happening ever again” until next time after we have become forgetful again.
Eastofwest — nice to “see” you again — it’s been along time since you’ve posted.
This is just plain fraud. You can see all the traces of late night get quick rich schemes. Putting properties in land trust, changing beneficiaries and all sort of stretching the law till somebody comes after you. I wonder who bought the loans and who did the appraisals for these loans. The investor who purchases these loans has a good incentive to come after all these parties.
Lots of so-called investors will give you $10,000 if you have good credit so that they can get loans in your name and cash out with high appraisals. As this bubble is winding down, the amount of illegal activity being done seems to be picking up.
Right on point…also, we probably don’t even have enough resources to prosecute all these cases or room in prisons. How about public stonings.
I am amazed at the complete and total ignorance of you people. This is a scam plain and simple. But no one will be punished because all of the participants are Black….and if anyone was to try and stop the “loans” they would be accused of “discrimination’.
So even if the loans are BOGUS, the fake appraisals will not be scrutinized.
I am from Tampa. All of these houses are in the ghetto.
Rehabber’s Superstore is a black owned enterprise, and the leader of the pack of these “investments” is a black preacher. It will all be written off as poor judgement, although they have pocketed hundreds of thousands of dollars of other people’s money.
Do you think MR. RAINES, the thief in from FANNIE MAE will be forced to pay back the MILLIONS he stole.
Don’t count on it.
I wonder if we’ll be able to get reparations on all … oh, what?
Yes, Franklin Raines will go to jail.
BTW Lay and Skilling aren’t in jail yet and Enron blew up in Dec 2001.
Sunset –
Is this your personal opinion, or do you know this on good information?
No but the racist implication that black white collar criminals will get away with their mis-deeds must be countered.
Just as the govt took 4+ plus years to get Skilling and Lay they will get Raines.
There is a particular type of scam that is run on eBay on a pretty regular basis. The most recent scammer actually took nearly $1 million in. Will this person be caught and put behind bars? Well, based on all the other scammers before this one — the answer is no.
Since I’ve followed these things for over 4 years now, I can honestly report that no one ever gets caught and goes to trial, no one ever pays the money back, nothing ever happens. If enough money is taken, the FBI gets involved. If eBay loses a lot of money (Paypal transactions) eBay might get more heavily involved but it seems like most of the time they just write it off. eBay lost nothing with the $1 million scam except for seller fees. The scammed aren’t even upset because the seller “promises to pay the money back.”
Ho hum.
It seems so easy to pull off these scams we should all be doing it. (Unfortunately, my moral values just won’t let me — but I guess others aren’t hampered by morals.)
i read he is returning all the bonus’ he get due to the fraud. all the 52 million. he will still be keeping the rest (until he pays the punitive damages).
Yep, and what makes it really interesting is that the black scam artists are preying on the easist prey, uneducated elderly black people. Why would anyone trust a flim-flam convicted drug dealer. I am amazed everyday by real life events.
No because Fannie Mae has protection. The mafiosiz politicians from Washington. Crony capitalism at it’s best.
I’ve been reading the posts avidly. But now I have a different experience. This discussion of apparent fraud activity, and the one earlier, on false appraisels, make everyone involved in RE look like crooks. I wonder how widespread that really is.
My experience when selling my house last year (in Silicon Valley, CA) was that my agent warned me not too price too high, because there would be a problem if the appraisel didn’t support it (even if someone would be willing to pay). I priced my house “fairly” and got an offer $60K over. I had another offer but my agent advised me not to attempt to negotiate higher because the appraisel could come in lower and I might lose the big fish.
I never felt there was any kind of fraud going on…except when I went to sign the final papers and a bunch of charges appeared that I had never been advised about. I was told all of the charges were fixed by the state (of CA) and I just had to pay them without any recourse.
I also just sold another house in Riverside County and did not detect any fraud except that the real estate agent tried to take 3% even though we had a written agreement on 2.5%. Nickel and dime stuff by an amateur, nothing serious.
Anyway, there may be fraud out there but it’s not everywhere. At least not on the scale described in this article about Jill.
Speaking of Riverside county, look at what brokerbrian has to say here:
http://www.websitetoolbox.com/tool/post/sdcia/vpost?id=1074749&trail=30
“Alex I agree with the Riverside County comment also about the educational level being low and fraud being high here and it also seems to be increasing very rapidly as the market is slowing down. I have had two deals fall apart due to buyers LO’s coaching their clients on fraud with social security numbers. Both of buyers were using a fake social security number from a deceased person.”
You never know how much appreciation in the hot areas was caused by fraudulent behaviour which would at the very least overstate real demand. Fraudulent appraisals/sales probably also made the prices rise higher than they would have by providing higher comps.
One of the main reasons for appraisals and underwriting is to prevent fraud . When it comes to money the crooks get creative .
So no question ,during this cheap money , easy underwriting ,no down payment real estate cycle ,the greedy con artist criminals come out in droves to get in on the action .
Now with the prices going down on property ,the Lenders have to be on the look-out for crooks along with desperate sellers now who might be looking for a way out .
I agree that fraud isn’t everywhere ,but it might be at a higher % than we would like because of people with a greed that knew no bounds .
Tampa real estate is dead.
So is Sarasotas.
I’ve been following Sarasota and Bradenton’s real estate for over a year. WHen do you expect the prices to start falling? I see the same houses month after month with minimal or no price reductions. We are considering moving to Bradenton as it’s a lovely place for families, but the houses are ridiculously priced.
I’m in Bradenton and median is down 15% from last August but you won’t hear any Realtor’s bringing that up. I think the dominoes will start falling soon here with inventory up by 300-400% from last summer. I’ve been tracking houses in the $300-$400k range and it has gone from about 250 houses in July ‘05 to now nearly 2000 houses. Sellers are still in denial for the most part because they still believe all the baby-boomers are on I-95 south coming to buy up all these vacant houses. I’ve been through about 10 new home communities in the area and they are ghost-towns. For-Sale signs just littering the streets because most were bought by “investors”. A lot of the signs have a sign next to them that say ‘ or For Rent’. You literally will see 4-5 houses in a row for sale. Not sure where you’re from but I’ve been here for almost 3 years and I think think the area is OK but the home prices now do not make it a desirable place to live right now. Median prices are 10x median income. Too much speculation here and there will be some carnage.
I was wondering how many of the dump’s in Tampa were being priced higher than Naples, fraud explains it. Tampa really has no economy other than scam artists.
And strippers
I’ve lived in Tampa for twenty years. We moved away on many occassions for work. Each time we came back. It is unfair to say there is no economy other than scam artists. The scam artists ruined all of Florida, not just Tampa. Prior to all the New Yawkers moving here and the doubing/tripling of real estate, there were plenty of hard working middle and upper middle class folks! My neighbors and friends are doctors, bankers, dentists, business people working for fortune 500 companies…..
Please don’t trash my town! And yes, the area of Tampa in this article is strictly ghetto! To be honest, it’s about time that area was bulldozed and refurbished. It’s been an eyesore for the city far too long. The poor people who live there have been living in horrid conditions for years. I just hope the developers are helping with the relocation and building of new housing for these folks. Believe me there is more to Tampa than meets the eyes.
FYI job transfers have placed us in Homestead, Fl, Dallas, Tx, Phoenix, AZ, St. Louis, MO, Atlanta, GA, and Boston, MA. We chose to come back to Tampa. Maybe to an outsider, it’s not a desirable place, but to us that live here, there’s no other place.
looks ghetto to me:
h**p://www.rehabberssuperstore.com/
I hope this link will take, I think Ben has some spam protection that keeps some links from posting:
http://www.rehabberssuperstore.com/
“Don’t let those other guys steal your house”
http://www.rehabberssuperstore.com/rehab_loans.asp
A jewel from the above website:
The Rehabber’s Superstore does not at this time make direct loans nor does it hold a mortgage broker’s license. However, there are several hard money lenders in the Rehabber’s Superstore network with whom I can help you make contact. Working through our network may help you obtain better loan terms. Nevertheless, it is still expensive borrowed money and you must know what you’re doing.
For example, instead of paying 5 points and 15% annual interest you may only have to pay 4 points and 15% interest. Or, my referral may help you get funding in situations where you might not normally be able. The hard money lenders in the Rehabber’s Superstore network know I can help you prepare a successful plan from the initial acquisition through to the successful sale and “cash out”. I stake my reputation on your ability to meet the terms of the loan and be successful.
Yeah! Give me some of that 15% money with four points! I need a hit!
Ummmm…. seriously, these sound like corner loan sharks. The last people I heard mention loan terms like these were some gentlemen from Jersey City.
Illiterate loan sharks. How very, very Tampa.
Tampa or Russia. No difference. Bunch of phoneys who think themselves superior to the rest of the world. US crony capitalism is more and more the same the one present in the rest of the world.
As far as I am concerned the banks should have done a better job verifying that the house is worth what Jill Jackson paid for it. When I applied for a home loan they wanted pay checks and bank statements, so even if she only bought one property whey did they give a loan for $205K to a woman that makes $24K a year with negative net worth. That is a loan of 8X here income, WTF. The bank is making a stupid move here and I hope they get caught hold the bag of crap at the end. The banks have been contributing to the real estate bubble with lax lending standards and pushing appraisals higher and higher. Now it is time for some of the banks to reap what they sow.
SOMD,
The banks don’t hold/book any of the toxic loans they purchase –they unload them as quickly as possibly to sucke– er, investors. If the loans qualify as “conforming” loans, they get bundled & sold off to FNM or FRE. If not, they get sold to REITs and bundled and re-sold as private MBS/CMOs.
I am concerned the banks should have done a better job verifying that the house is worth what Jill Jackson paid for it.
Uh, she didn’t pay for it. Investor’s Outlet did.
Well the bank paid for it and the sold the loan to Fannie Mae, who will be backed by the taxpayer when she defaults. So really we paid for it.
I doubt Fannie or Freddie bought the paper. Either this was purchased through subprime lenders, or more likely a correspondent lender who funded this crap with their own funds, who will try and pool this deal with legitimate ones and hope that the sucker who bought them runs out of time when the recourse period ends. My guess is she is a straw buyer, she “buys” the property from the investors who most likely paid for these dumps with cash or their own lines of credit. They get a huge profit from the sale to Jill. Jill gets a cut. The investors get their cut. The end lender holds the bag when the loan goes into FC.
Don’t bet on it
If the loan was sold to Freddie or Fannie, it would have been run through their respective automated underwriting systems. When you submit a loan through DU or LP, you have to enter the address you are purchasing. I’m pretty sure either system would have caught her. Whether you sell directly or indirectly to Fannie Mae, the file has to be underwritten by their AU system, otherwise they won’t purchase it.
If I had to bet (and I have been known to place a bet every now and then :o), I would bet that they used some subprime lender to fund these loans. To quote Joe Namath, “I guarantee it.”
What does the subprime lender do with the loan, I wouldn’t think they hold it?
They package and sell MBS bonds just like Freddie and Fannie do. Most of these places keep their servicing rights. It seems the buyers of these junk mortgages have realized what they are purchasing and are now asking for larger compensation for the risk they are taking (high LTV/bad credit/limited income verification/inflated appraisal values/etc). You are seeing a lot of subprime companies go out of business because they are in a box. They can’t get the deals if they charge too high of a price to the brokers who they buy their loans from or they lose money when they go to sell their paper because there isn’t enough of a profit built in. This happens every few years or so. The companies that go away won’t be missed.
SOMD Guy,
8X income is no big deal. How do you think everyone is buying those $800-900K houses out there? In ‘04 when I bought in NoVA the nedian income was around $55K and the median house price was $520K Just under 10X. No difference here.
But, yes it obvious there is lot’s of fraud involved and I bet no one goes to jail, the little fish declare bankruptcy, and the bank ends up withthe (empty) bag.
If you go to any of the REI investment boards, you’ll see people trying to pull this type of thing at least once a week. “Hey! How can I buy 6 houses and not have them show up on my credit? Do I need to buy them all in one day? I’m a pizza delivery boy and my income isn’t going to qualify me for 6 houses.” Then other people will explain to them how to do it. It’s not like this is some sort of secret. It’s something that a lot of people are doing now. Maybe they are teaching this stuff in some of those seminars?
These are great get rich quick schemes!
The sellers are richer, all the RE agents, loan officers, appraisers,
contractors are richer. The final buyer gets cheap rent, and
just walk away after a few more months of free rent.
The states and counties get their tax surplus too.
The renters just have to wait a little longer, they may even get
a better deal when the market is oversold.
No one is hurted, except the Chinese, whom the banks dumped
these loans to. To the Chinese, it’s just a little less profit.
Why do we have to stop this great money making machine?