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August 4, 2008 · Filed Under Credit Information, Credit Repair scams, Foreclosure-Short Sale Information, Interesting Real Estate blogs, Keeping an Eye on the Market, Mortgage - Loan Information, Predatory - Subprime Advertisement, Real Estate & Mortgage FRAUD, Real Estate Information, UnReal Estate posts, Uncategorized

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President Bush signs New Permanent Loan Limits & Foreclosure Relief with H.R. 3221

You can read the complete post about this topic in my new website “San Jose – Santa Clara County Real Estate Uncensored.”

July 30, 2008 · Filed Under Foreclosure-Short Sale Information, Mortgage - Loan Information, Real Estate Information

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What is Wrong with Buying One Today and Losing One Tomorrow?

Illustration by: Matt Mahurin

Some of the distressed emails I get from homeowners facing foreclosure ask me what I think about buying a home before losing their current one. To answer that question I will give you my personal opinion at the end of this post.

First let’s look at the case of Michelle Augustine from Sacramento, California. Ms. Augustine runs a child-care service out of her home but is now looking to walk away from the four-bedroom home she bought two years ago. She plans to walk away because she will be unable to afford her monthly payments, which will jump to $4,000 from $3,300 in August, and because her home is now worth $200,000 less than what she paid for in 2006.

Michelle Augustine is not planning to renter again; she plans to lock in the purchase of another home nearby before she loses her current one.

Lenders see this “buy and bail” scheme as fraudulent. In some states and depending on the type of loan, lenders can sue for assets including a new house. Although, non-deficiency states such as California and Arizona make it more difficult for a lender to sue consumers who walk away from their mortgages, borrowers who bought with a line of credit or refinanced (see: recourse loans) could be facing a lawsuit.

Borrowers could also be sued if the lender can show that the homeowner committed fraud by misrepresenting themselves on their loan application.

Yet some homeowners are opting to take on that risk because they believe lenders are too swamped. “So many people are foreclosing, is it cost effective for lenders to go after all of these people?” said Steve Hawks, a Las Vegas real estate agent who handles lender-owned properties also known as REO’s.

In a “buy and bail” scheme, homeowners with good credit and are currently underwater with their mortgage opt to qualify for a second home. They are able to qualify by providing a rental agreement proposing to rent out their existing residence. Using the rental income to cover the mortgage payments on this property allows homeowners to secure the purchase of a second home. However, once they have been approved for a new loan they walk away from the first home instead of renting it out.

In some cases, the coaching-through the “buy and bail” scheme/process comes from some real estate agents and brokers who see nothing wrong with it.

Linda Caoili, Augustine’s agent, told the WSJ “It’s just a business decision…If you’re upside-down $250,000, why would you keep it? It just doesn’t make sense.”

However, Caoili previously told RISMedia that she doesn’t encourage her clients to seek foreclosures. Rather she tells them of options from refinancing to selling an upside-down home as a short sale.

Isn’t she contradicting herself here?

Caoili is currently the broker of record for Tradewinds Mortgage in Sacramento and affiliated licensed officer for Envirian of Sacramento. Caoili also is a “certified loss mitigator” (source of certification is unknown) and offers seminars at local bookstores.

If a real estate professionals knowingly collaborate with anyone to acquire and maintain ownership of a house under false pretense, both borrowers and professionals possibly could face federal charges as explained by the FBI about “Fraud for Housing”.

Some lenders are trying to fight back by imposing new underwriting guidelines. Borrowers purchasing new homes while retaining their existing home as a rental, would be required to prove that they could make full payments on both homes to qualify for a loan.

Of course, not everyone that is in financial trouble with their homes is opting for this new scheme. John Ristuccia from Arizona is trying to complete a short sale for $425,000 on his five-bedroom home. He might be able to qualify for a second loan but he says he wouldn’t consider doing it. “Just personally I’ve got a problem with that,” he says. “I really can’t put it in terms other than it feels wrong.”

Lenders, of course, could be doing a better job to prevent all this. The number one complaint by homeowners is that the banks are not cooperating with them.

Most homeowners want to keep their homes but if lenders keep bouncing around phone calls from one department to the next like a ping pong ball, if they don’t become more customer friendly and cooperative, if they don’t streamline their resolution process, they will end up loosing more money than accepting a loan modification or a short sale.

While walking away from a home may not be illegal in certain situations, purchasing a home under false pretenses is. Lenders are not all stupid and they will look that much closer to these types of transactions. And when they do homeowners could end up losing a lot more than their credit if they buy a home today and lose one tomorrow.

You think lenders won’t figure out what happened after you move into your new home and they are left holding your previous home? I would not dare try to find out!

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July 17, 2008 · Filed Under Foreclosure-Short Sale Information, Real Estate & Mortgage FRAUD

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Community Affair: For the Love of Music

If you are in the San Jose area this weekend and would like to enjoy a day full of good music with your family, come listen to the talented Bay Area protégé Jonah Johnson who has been featured in the reality show called “Waiting 2B Discovered” (Warner Bros).

Jonah, with his group of talented young artists from Timeless Entertainment (Jonah, Mid-One, Lonnye, Alexis), doesn’t follow today’s music standards that he calls “escapisms.” They stay away from profanity and the recycled “bling-bling, big pimpin” mentality that many artist feel they need to use in order to get recognition and radio play.

Jonah’s music is not stereotypical; it is “conscious music.”

Mid-One, a Timeless artist, defined conscious music as “Being aware of what you’re representing, being mindful of the message you are sharing with people”

Jonah signs about what is really important to him, making real music. Music that can be heard and enjoyed from kids, teens to adults so come Saturday to The Brit, relax and enjoy his music.

This will be an all day celebration (music, food, games, prices, art, dancing, etc) this Saturday July 19th. This family affair will take place inside The Brittania Arms at 173 West Santa Clara St, San Jose (Downtown). The cost is very modest at only $10 (FREE admission for kids 5yrs old and under).
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Door will open at 1pm and the show will feature a talented list of Bay Area artists like:

  • Jonah Johnson (myspace.com/jonahandtimeless)
  • Tracy Cruz Ross (myspace.com/tracycruzmusic)
  • Alexis Rose Johnson (myspace.com/freshlex)
  • Mid-One (myspace.com/mcmidone)
  • Lonnye Dotson (myspace.com/lonnye)
  • Lou Evans (myspace.com/lousual)
  • Sam Seven (myspace.com/samsevenonline)
  • Tri-Plex (myspace.com/triplex3030)
  • Philtered Soul (myspace.com/philteredsoul)
  • Basement (myspace.com/bassment5)
    Showcase Artist:

  • Tha Fiends (myspace.com/thafiends)
  • Traffic (myspace.com/trafficfunk)
  • Laura Rae (myspace.com/lauraraemusic)
  • Poker Face Protest (myspace.com/pokerfaceprotest)

For more questions email jonahtimeless-at-yahoo.com and please remember at the door to them know who you are there to see.

Of course I will be there so just ask for Ney.

**This is NOT a paid advertisement**

July 16, 2008 · Filed Under UnReal Estate posts

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Sixteen (Former) Su Casa Agents Face State Disciplinary Action & Possible Loss of License

Although “straw buyer” schemes are illegal but very lucrative for the parties involved, some agents and brokers have put their freedom, reputation and license on the line.

The California Department of Real Estate (DRE) has filed an extensive accusation and investigation against broker Bic Pho, his company Vision Quest 21 which operated Century 21 Su Casa and Mariposa Mortgage in the East Side of San Jose and sixteen former Su Casa agents.

The DRE accusations state that straw buyers were used to obtain 26 loans amounting to more than $7 million in five separate schemes.

The DRE accusations against the former sixteen Su Casa agents are: (Source: SJ Mercury news)

Felipe Arturo Neri (license record), Natrian Bernard Maxwell (license record), Geraldine Kathleen Nunez (license record) and Julissa I. Gill (license record)

Neri and Maxwell are accused of using Kulwinder Singh, 20, as a straw buyer in the purchase of a half-million condo in San Jose.

In May 2006, Singh bought the condo located on Saddle Rack St in San Jose while working as an assistant at the Su Casa Fremont office under Neri and Maxwell. Singh reported in a written complaint to the San Jose Police Department that he had agreed to accept $2,500 for signing. This is a typical straw buyer scheme.

The application, prepared by Mariposa Mortgage, showed Singh working for Neri Transportation (do you see the relation here?) as a “co-owner/manager” earning $12,000 a month. The transaction yielded $20,000 that would be disbursed to “a bona fide third party named Arvi Salting.”

Arvi Salting was Natrian Bernard Maxwell’s wife.

According to Burbed.com, the purchase price of the condo was $30,000 over the asking price.

Also named in the accusations are former Su Casa agents Geraldine Nunez who represented the seller and Julissa Gill, whose signature appears on the falsified loan application used to purchase the condo.

Natrian Bernard Maxwell, Milton C. McLaurin (license record) and Mark Dwelle (license record)

Maxwell, McLaurin and Dwelle are accused of assisting a Stockton area woman in obtaining mortgages for more than $2 million from four different lenders for four houses. The woman’s occupation and income were falsified. Also the transaction claimed the woman would be using each house as her residence.

In a comment by a reader named Mark Dwelle (email markdwelle@net) made on a previous post, he stated the following:

“Let me explain…My particular case has to do with a friend who was and investor and bought multiple properties. At this time in my real estate career I was pretty green and definitely working with the wrong company (that I know now)!…I made a mistake in not being more educated in my profession at the time of the situation and not making a wiser choice on who my dealings were with. I was only at the company for less than 6 months and I have prided myself on giving great customer service to every client I’ve worked with and have never yielded a single customer complaint in my career….Please look in the public records where you found these articles and see if I have ever had a single customer complaint.“

Gloria M. Alvarez (license record) and Ruth Mabel Mejorado (license record)

Alvarez and Mejorado are charged with three straw buyer schemes in which loans of more than $2 million were obtained from three lenders.

Alvarez, who had been living in Mexico (with Felipe Neri according to some comments) was arrested last month in San Jose and now could be facing 14 years in prison if convicted.

John Trung Nguyen (license record) and Robert Paul Atencio Jr. (license record)

Nguyen and Atencio are accused of scheming for their own benefit by using a straw buyer to obtain $685,000 in loans for a home in San Jose.

Robert Warden (license record), Robert Sean Villegas (license record), Eddie Burnias (license record), Peter G. Sanchez (license record), Minerva Sanchez (license record), Ruth Mabel Mejorado and Rushawn T. Jones (license record)

These agents are accused of using a straw buyer and falsifying loan applications to obtain more than $2 million in loans for houses in San Jose, Redwood City, Oakland and Modesto.

 **If anybody has an update to this story, please feel free to leave a comment with the source of the information**

July 10, 2008 · Filed Under Real Estate & Mortgage FRAUD

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Mortgage Fraud: How a “Straw Buyer” Scheme Works

Mortgage fraud is an epidemic that continues to be around and it can take form in many different ways (foreclosure rescue schemes, illegal flipping, etc). One form of mortgage fraud is a “straw buyer” scheme. This is how it works:

The participants

The most important piece to this scheme is the buyer. We’ll call him “Mr. A” who, although having good credit, normally would not be able to qualify for a mortgage loan because of insufficient income.

Next you have agent “X” who is looking to make a big commission and begins to make false promises to the buyer, “Mr. A.”

Alongside the agent, is mortgage broker “Y” who will go to any extent to qualify the buyer, even if it means falsifying documents.

Many times other parties will also be involved in a “straw buyer” scheme. These others culprits could be the agent’s assistant, the notary public, the appraiser, the title/escrow company, the insurance company, the lender’s underwriter and others.

Last but not least is the seller, “Mr. S,” who is looking to sell the house fast and at the highest price possible.

Putting the scheme into action

Agent “X” convinces the buyer, “Mr. A,” to buy a home and offers him thousands of dollars as compensation for the use of their name and credit. According to the victim’s stories, the going rate seems to be between $2,500 and as high as $5,000.

The promises normally made by agent “X” are that he will resell the property at a much higher price and the profits would be spit 50-50 with the buyer or that the buyer will be removed from the mortgage in less than six months. Perhaps one of the most common ways to convince a buyer has been to offer them monetary compensation for helping a “poor soul” with bad credit buy a home. Sometimes the “poor soul” happens to be the buyer’s family member, the agent’s assistant and even the agent’s own family member.

Buyers involved accept because they see a monetary compensation and because they are led to believe that they won’t have to pay the mortgage.

After “Mr. A” accepts the deal, mortgage broker “Y” will gladly step in and qualify the buyer by falsifying loan and income documents. Once the buyer is qualified, agent “X” is able to convince “Mr. S” to sell the home by presenting them with the opportunity of a lifetime.

Often times the agent will present the seller an offer much higher than the listing price and ask the seller to kickback the overage in order to make repairs to the home. The repairs are never done and the agents or third parties end up keeping the money.

Once the seller, “Mr. S,” accepts the purchase offer and mortgage broker “Y” has approved the loan with the help of his/her friendly underwriter, the next step is signing the documents.

At the document signing, buyers make a fatal mistake of not paying attention to several important documents like the final closing statement among others. The final closing statement details all the costs and disbursement of monies involved in the transaction.

Agent “X” and mortgage broker “Y” with the help of the notary, who often times is a friend or relative to the agent/mortgage broker, play a game I call “shuffle-the-papers” to prevent suspicions.

The end result

The buyer sings the documents, agent “X” along with mortgage broker “Y” walk away with fat commissions on top of the kickback from the seller, everyone else gets paid and they are all one big happy family. The happiness, however, ends when the lender begins to foreclose on the property because no payments have been made as originally promised by agent “X.”

During the foreclosure process is when another set of scam artist most likely will appear. These scam artists will claim to be “foreclosure experts” and that they can stop foreclosure. The reality is that the only way to stop foreclosure is to get caught up with the mortgage payments or repay the loan in full (ie: selling or refinancing the home).

At the end, the buyer’s credit is ruined and the property being foreclosed upon has a negative ripple effect on the neighbors and the community around it.

If you have been a victim follow these instructions to report mortgage fraud.

**If anybody has a story about mortgage or real estate fraud, please feel free to leave a comment with your experience**

July 10, 2008 · Filed Under Foreclosure-Short Sale Information, Real Estate & Mortgage FRAUD

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New California Law Will Only Delay Foreclosure - S.B. 1137

Photo courtesy of the California Governor’s office

Tuesday, in another effort to protect homeowners facing foreclosure, California Gov. Arnold Schwarzenegger signed bill S.B. 1137 into law. This law would only delay the foreclosure process in hopes that lenders will talk with homeowners before taking a final decision to foreclose on the property.

This new law has certain restrictions just like previous other efforts made by the Gov. Schwarzenegger and President Bush to prevent foreclosures.

Previously, Gov. Schwarzenegger reached a deal with four major subprime lenders to freeze adjustable interest rates for troubled homeowners and the U.S. President introduced a program with six of the largest mortgage lenders to delay the foreclosure process for an additional 30-days giving homeowners extra needed time to work out a repayment plan.

With the Gov. Schwarzenegger’s signature, this law will require lenders to do the following:

  1. Contact troubled borrowers with loans obtained between 2003 through 2007 and explore various options to avoid foreclosure. Lenders will have to contact them at least a month before they begin the foreclosure process marked by the recording of a “notice of default.” It is never advisable for homeowners to ignore phone calls and/or notices coming from your current lender and with the passing of this law, homeowners will have the responsibility not to ignore them. “Don’t run away when someone reaches out to you. This is a great opportunity, take advantage of this opportunity,” said the Governor.
  2. Notify, in six different languages, tenants currently residing in foreclosed properties once a notice of sale has been posted on the property. Tenants will have 60-days (before it was only 30-days) to vacate the property before they are evicted.
  3. Maintain the physical appearance of vacant properties to prevent crime and neighborhood blight. Cities will be allowed to impose $1,000 fines each day the upkeep of a vacant home has been neglected that will include for excessive foliage growth, trespassers/squatters or prevention of mosquito breeding. This will help prevent vacant homes from affecting negatively the neighborhoods property values.

“Many factors contribute to the mortgage crisis, so there’s no single solution, but this bipartisan legislation gives struggling homeowners one more tool,” said Schwarzenegger.

Senate President Pro Tem Don Perata, D-Oakland, who authored SB 1137, said “What we needed is to make sure that the people who were being foreclosed upon had a shot at talking to the people holding the note. This allows for a conversation, requires a conversation between the two parties of interest. And hopefully they can work something out.”

Quotes from the San Francisco Chronicle “Law Helps Struggling Homeowners”

View a Video Blog where Rosario Marin, Secretary State and Consumer Services Agency, briefly explains about the signing of S.B. 1137

July 9, 2008 · Filed Under Foreclosure-Short Sale Information

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The Arrests of Major (former) Su Casa Agents Begins!!

Many victims of real estate and mortgage fraud get frustrated because in many instances there has been little progress in the investigations process. One of the reasons for this is because the designated authorities have to investigate and make sure that all the accusations are true. They must also obtain evidence and make sure that it is strong enough to put these people in jail.

One company in San Jose under investigation for complaints and accusations of fraud is the Century 21 Su Casa brokerage, its many affiliated companies and agents as reported in 2007. But the first top agent, from the now closed Su Casa brokerage, to get arrested was Gloria Alvarez (Booking mug for Gloria Madrigal Alvarez-SJ Mercury News)

The arrest occurred on last Wednesday as she was leaving the Santa Clara County superior courtroom where she was appearing for a settlement on a civil suit as reported by the San Jose Mercury News last Thursday (thanks to this comment for the update).
 
During the “hot and booming” days of the real estate market, Alvarez was one of the top agents at the San Jose brokerage Su Casa. But according to the accusations, Gloria Alvarez along with her sister, Patricia Alvarez, and Gloria’s son, Ricardo Alvarez, participated in an alleged mortgage fraud scheme.

According to the Distric Attorney’s office Ricardo Alvarez, a licensed notary, was arrested that same day but Patricia Alvarez (aka Carmen Alvarez Madrigal) has not been arrested yet, both are from San Jose. Ricardo Alvarez (aka Felix Alvarez, Ricardo Pedraza, Ricardo Alvarez Pedraza, Felix Ricardo, Pedraza Alvarez, & Ricardo Rios) faces 7 felony counts.

Gloria Alvarez faces 11 felony counts, including grand theft. Both mother and son could be looking at over 14 years in state prison if convicted.

The complaint alleges that both sisters recruited a man and paid him $5,000 to act as a “straw buyer” and defrauded Comerica Bank, Fremont Investment and Loan and Countrywide Savings and Loans in transactions valued just over $2 million. Gloria acting as the representing agent/loan officer, prepared false documentation and presented them to the lenders while her sister, Patricia, forged names on checks.

Contrary to what many may think, this was not an uncommon way of practice by several unethical real estate agents from Su Casa. According to some past clients from other Su Casa affiliated companies, they have told me about a few other agents that have performed the same schemes here in San Jose but have not been found guilty yet.

According to the district attorney, the Santa Clara District Attorney’s office Real Estate Fraud Unit has received more complaints against Gloria Alvarez than any other individual real estate agent.

Anyone who has filed a complaint against Gloria Alvarez (or against any other agent that has recieved this type of complaint) is encouraged to update his or her contact information with the Real Estate Fraud Unit’s Paralegal, Carol Vega (408) 792-2639. This request is made because many of the complaining victims have lost their home to foreclosure and investigators are having difficulty locating the victims.

The California Department of Real Estate is currently holding an investigation of two  California corporations linked to Su Casa, and several other agents and brokers including Bic Pho, Gloria Alvarez, Felipe Arturo Neri, Mark Dwelle and others as noted on their license comments with code H-10082F.

Although the Department of Real Estate cannot act as a court of law, give legal advice or representation, order that monies be refunded, contracts be canceled, damages be awarded, etc, they can investigate complaints against real estate brokers and salespersons accused of misleading or defrauding consumers. If found guilty they will suspend or revoke their license.

**If anybody has an update to this story, please feel free to leave a comment with the source of the information**

June 24, 2008 · Filed Under Real Estate & Mortgage FRAUD

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Learning from Our Mistakes: Co-Signing Could Lead You into Financial Trouble!

Perhaps in the past you were in a situation where a close friend, a relative or even your own son asked for help in obtaining a mortgage loan, a credit card, a private loan, a student loan, a car loan, etc, etc by co-signing for them. And because of your good relationship with them or because you felt obligated to help them out, after all they are your family members, you agreed and put your financial future in jeopardy.

Statistically speaking, co-signers have a very high chance of hurting their relationships and trust because of friends and family members defaulting on loans and co-signers are left behind legally and financially responsible for the repayment of such loans.

I am not talking about cases where husband and wife committed themselves to buying a home so they both agree to get a mortgage loan or where a father and son together buy a car so that the dad could use the car for work and the son on the weekends.

I am talking about the cases where a family member asks you to help them qualify for a home by co-signing for them or where you are asked to help them qualify for a car, also by co-signing. The reason why they didn’t qualify in the first place is because of their past irresponsible financial history, aka low FICO score. And in many worst cases you are asked to sign as the primary applicant thinking that in a few months or a year you will transfer the financial responsibility back to your family member.

What they don’t tell you or what the loan broker does not tell you is that there are high costs and a high risks involved in trying to refinance and transfer the property from one person to another, and not to mention that lying on a loan application is illegal.

If your family member and their mortgage broker promise you that in about six months or less than one year you will be able to refinance the home and take yourself out of the loan the deed the property back to your family member, run for the hills and don’t listen to anything else that they tell you.

We all know that it is very hard to break bad habits, specially bad financial habits, so when you are in a similar situation ask yourself these questions, what guarantees that in six months or a year your family member won’t have more credit card debt? What guarantees that they will have a better fico score? What guarantees that they won’t loose their job and not be able to afford the home any longer? What guarantees that they won’t get hurt and not be able to afford the payments while they recover? What guarantees that they simply won’t decide to walk away from the deal? And in today’s market, what guarantees that the property will appreciate enough in value to refinance the property?

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You have to remember that when you co-sign on ANYTHING you are in a contract and agree to accept legal and financial responsibility if the main account holder defaults on the loan. You not only run the risk of ruining your credit if they miss one payment or two but if they default on the loan all together, the lender will most definitely go after you because they know you have more assets and are more financially responsible since the main singer needed you to qualify for the loan. Lenders could garnish your wages and make you pay for legal fees on top of all the late fees the account may have already accumulated and in the case of a mortgage loan the consequences are even greater.

Learn from your mistakes and from others, don’t co-sign on the dotted line simply to help someone else qualify for a loan.

June 12, 2008 · Filed Under Mortgage - Loan Information

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Remembering & Honoring those that Served in the Military

This past weekend I hope everyone enjoyed the long weekend with their families but always remembering and honoring those family members and friends that served in the military.

FYI: for those of you that have been emailing me, I just want to let you know that I am currently working on some projects and soon will be back to blogging.

May 27, 2008 · Filed Under UnReal Estate posts

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