Personally I want to hear stories about the folks who were priced out.
The folks who in normal times would have been able to buy a house at 2.5-3 times their yearly income with a 30-year fixed-rate mortgage paying no more than 30% of their monthly income as for housing.
These are folks who go to school, get a job, save their money for that 20% down-payment, only to be blown out of their water by folks "with poor credit" (as described in the article) came in and offered even $5,000 more than an already-inflated asking price.
I'm eagerly awaiting a meltdown which doesn't appear to be coming with all the scheming going on to let the current condition stand (new non-confirming rules, frozen ARM increases, whatever else Congress will think of).
I read that story last night before I went to bed - Heart-breaking and outraged me at first and in many ways still does, but there's a nagging but, but, but... - there's an oughtohavenode quality to all this and something else -
I've done immigrant rights/advice/translation work at not-for-profits work in the past. There are a few oddities here that I'm still musing about. I'll see if I can coherently describe them in a later comment.
I'd like to have seen an Honduran origin reporter in the tagline.
These are folks who go to school, get a job, save their money for that 20% down-payment, only to be blown out of their water by folks "with poor credit" (as described in the article) came in and offered even $5,000 more than an already-inflated asking price.
You are letting your self-satisfaction get in the way of your reading skills. I find this happening a lot.
How can you read this story and be sure you know that Ortiz had "poor credit"? It's possible she just had "no credit." It's possible she had OK credit, but no one explained to her that her FICO wasn't high enough to get a 100% loan at 7.5%.
And it seems obvious to me that she didn't know the price was inflated. I can't believe she even knew she was offering more than list. Who would have told her what the price was? The slimy RE agent who was busy defrauding her?
All you're trying to do is drum up class resentment here, I think. You want to see "good" people like you the victims of "bad" people like Ortiz. It doesn't seem to occur to you that you both might be "victims."
One person's predatory lending is another's idiot borrower, I guess. Personally, I'm sick of stories like this -- don't even bother to read them anymore. I accept that there may be a few sympathetic figures ('victims') out there, and for every one of those doubtless a matching scumbag broker/lender. But I'm not going to reason indcutively from that to conclude that 'predatory lending' was a, certainly not the, major factor in the housing bubble.
One person's predatory lending is another's idiot borrower, I guess.
OK, fine. Assume she's an idiot.
Is it OK to go find an idiot who will make your mortgage payments for you, get none of the upside potential if the thing appreciates, and also get nothing for her trouble if it depreciates?
Does this make Hernandez the "smart borrower"? He got a loan, got on title to RE, and never had to make a payment. He got an signed agreement that says he can't be sued for fraud. It sounds like he got out in a short sale.
Is your only measure of someone's value how "smart" he is?
so this woman and her husband bought a home with a payment way higher than they could afford, with the goal that they refinance later...
but refinancing doesn't bring down the principal... is there any way that would have meaningfully brought down the payment?
was the plan to refinance and take money out and use that to pay the mortgage until you can refinance to pull money out to pay the mortgage, repeat ad infinitum?
or does refinancing work because you have 2 years of payment history and thus could get out of the subprime batch?
I've just never understood the logic of people who get into a house with payments that START at more than they can absorb.
or is the idea with this story that they don't speak English so they had no idea what they were buying?
(FWIW: I'm a little irritated by people who move somewhere for 9 YEARS and don't bother to pick up the language... I'm as liberal as they come, but c'mon, 9 YEARS? NO English?)
"Despite her poor credit, Honduran immigrant Glenda Ortiz easily got a subprime loan for this Alexandria home, bought in 2005 for $430,000. It was foreclosed on last year."
My intention was not to stir up class resentment; Mrs. Ortiz is certainly not better off than she would have been if she had not been involved with this scam.
I admit I'm a bit suspicious of folks who think they may be getting something for nothing, or something for more than they can afford, and are faced with the rather fishy process and proceed anyway. Would you buy a house from someone going door to door? I'm leery of even getting Girl Scout cookies that way. I freely admit that the house-buying process is complicated by lots of players trying to secure their commissions.
I only point out that this article is about folks who were fell for the scam while there are folks who did not are nonetheless operating in an environment where this sort of thing is happening, to their detriment.
This "run-down, one-story duplex" sells for $5,000 more than the asking price and the folks down the block are going to think their house is easily worth just as much (I "zillow'd" it, it must be true!)
I agree with Tanta et al, more details are needed on exactly what went on here.
part of the problem with a lot of these deals/scams was that they occured with bubble mania logic...
I remember perfectly rational people thinking houses would go up 20-25% FOREVER. It doesn't even make sense, but they believed.
So I'm sure it's the same with this story. back when it was proposed, it made "sense" in a bubble logic sort of way?
now it's collapsed (of course) and the fingers start pointing?
and when we try to reconstruct what happened, we can't understand what the heck was going on because
1) most of us never thought that crazily to begin with and
2) the bubble logic is hard to remember even for those who had it.
Does anybody know:
what kind of judgment can happen that would preclude the Ortiz family from suing for fraud. this part was very hastily written in the story... I didn't understand it.
sunsetbeachguy: I think I get Tanta's point: journalists, please do more research, dig deeper, uncover the entire scheme behind the fraud, and warn us of the dirty tricks yet to come.
I reject any tones of anti-immigrant backlash here, intended or otherwise ("9 YEARS? NO English?), having had grandparents (who were US citizens) here for twenty years who didn't see a need for English.
Perhaps it's the process which is part of the problem? Studies show that many of the global poor are poor because of the complexity of acquiring private property.
Tanta, could you comment sometime maybe about whether there is in fact an increase in the number of actors in the home-purchasing process? I'm thinking seller's agent, buyer's agent, appraiser, inspector, mortgage broker, real estate broker, etc. Were those guys always there? Or were the jobs increasingly staffed by newbies who moved into them as the marked boomed?
RE: "poor credit" v. "no credit"---my father-in-law, who weathered the Great Depression and went on to spend 10 years in night school so he could get an engineering degree, never took credit on anything his whole life (except his mortgage). Cash for everything, including his cars. Saved like a crazyman. After he retired he was getting ready for a vacation and discovered he needed a credit card to validate his existence and creditworthiness. When he applied, he was turned down because he had no credit history, although the man never had a late payment on anything in his life.
That said, in PA where I live, predatory lending is closely tied to discriminatory lending, and the PA Human Relations Commission has done ground-breaking work on making inroads against it. Where you find the kind of business practices outlined in Tanta's post, you will often find discriminatory animus behind them. The fact that, in this case, it was Latinos preying on a Latina, doesn't invalidate the likelihood.
so this woman and her husband bought a home with a payment way higher than they could afford
No. You're confused already.
Ortiz's real husband was apparently not involved in this at all.
Ortiz was talked to "buying" a house with someone who she had never met, who was the brother of the relitter's "sales assistant." She was asked to sign a statement that she was the brother's wife only because that's how you scam the lender into accepting this transaction. It wouldn't have been so suspicious to the lender if a husband and wife were both on the deed, but only the husband was on the note. Back in the bad old days, that was common (married women rarely got credit in their own names). But the lender is always suspicious in a situation where two unrelated people are on the deed, but only one is on the note.
Former Treasury Secretary Robert Rubin called Friday for quick government action to tackle the rising level of U.S. home foreclosures and he indicated that taxpayer money would have to be used.
"There is a strong need for urgent action," Rubin, who is chairman of Citigroup's executive committee, said. "I would be very, very seriously considering the possibility of using public funds in one form or another."
The Federal Housing Administration should be involved in any stepped-up government effort to help homeowners facing the loss of their houses, Rubin said during an interview on Bloomberg Television's "Political Capital with Al Hunt."
"The piece that's missing now," he said, "at least in my judgment, is addressing all of these mortgages that face foreclosure."
I'd love to see stories about "predatory real estate selling" but, as a layman, I'm not sure I would recognize it until after it became a widespread problem so I don't have much hope of reporters getting wind of it until it becomes commonplace.
so this woman and her husband bought a home with a payment way higher than they could afford
No. You're confused already
Ortiz's real husband was apparently not involved in this at all.
Sorry, it's hard to talk about this story due to the story itself
Ortiz got a straw-buyer (fake hubby) to help with her "credit", but she and her true husband moved into that house and made the payments. It was she and her real husband I was talking about. I consider them as having "bought" the house even though neither were on title.
Tanta, could you comment sometime maybe about whether there is in fact an increase in the number of actors in the home-purchasing process? I'm thinking seller's agent, buyer's agent, appraiser, inspector, mortgage broker, real estate broker, etc. Were those guys always there? Or were the jobs increasingly staffed by newbies who moved into them as the marked boomed?
Well, you know, there are a lot of people involved. The theory, of course, is that it's harder to run scams with that many "independent" participants.
I would never be nostalgic for a world in which the RE agent, the lender, and the appraiser were all the same party, or in which the same RE agent "represented" both buyer and seller. It's awfully easy to have a "conspiracy" when you get to play several different roles in the same transaction--it's like "conspiring" with yourself.
There were not just too many newbies, there were too many operators looking to shake a few bucks out of the rubes. They were therefore not hard to recruit into the conspiracy.
In our case, we seem to have the mortgage broker and/or title agent married to the RE agent, and the RE agent's "assistant" being the brother of the "co-buyer." So it's not that there were "too many" parties; it's that in reality there was so much incest here that there were too few.
y... I can tell you that story. Working like a dog, driving a 1987 car (which I love)not remembering the last time we had steak? Sitting on the couch with a revolver because... well don't go out after dark. Being called doom and gloom by friends, because 'smart' people know it's a great time to buy a house. Our senator had a town hall meeting yesterday morning regarding a housing bill that he is proposing, involving a 15,000 tax credit for anyone who buys a home in or approaching foreclosure, and within 3 minutes of sitting down a reporter was asking me what I was doing there! Something stumbled out of my mouth about being a taxpayer and registered voter, if I'm not mistaken though, some would question my right to vote... not being a landowner and all!
Tanta's post was to serve two purposes; one, to highlight (typical) journalistic sloppiness; and the other, to point out an even more (apparently) blatant example of RE purdify.
Anyone imputing stupidity regarding this "buyer" Ortiz, should consider that there are a lot of people who trust those whom they believe to be professionals because they believe in the inherent idealism of professionals; and, they acknowledge that they're not experts themselves. They're not necessarily stupid, just not as cynical as most of us have become.
One needn't be stupid or greedy to be taken in by con men. The "con" is a recent contraction of confidence. These criminals gain people's confidence.
BTW - I have now heard of three people who are buying new homes now and "renting out" their property which is underwater. The intent is to let the rental go back to the bank.
We should read about these scum bags in a year or two if they fail. If they succeed and they bought down their mortgage they will be hailed a real estate experts.
I consider them as having "bought" the house even though neither were on title.
Ortiz was, in fact, on title.
She was not a borrower for the loan.
At the end of the day, all she did was rent the house from her "helpful" co-buyer, who was planning on taking half the appreciation when she cashed-out someday without having ever made a payment on the loan.
While there's this confusion over "bad credit" and "no credit," please notice that for all the months that Ortiz did make the payments, before finally running out of options, she never got "credit" for that on her credit report or her FICO, because she was not the mortgage account holder and it was not reported in her name.
Ortiz sought out lawyer Howard Woodson for help. In October, he urged her to sign an agreement to gift the house to Hernandez. Although she refused and asked for a hearing, a Circuit Court judge ordered Ortiz to gift the home to Hernandez. It includes a clause prohibiting Ortiz from suing Salgado and Hernandez for fraud, according to court records.
1) why must Ortiz gift the house to Hernandez if Ortiz isn't on the deed (and Hernandez is). why couldn't hernandez just sell the house out from under Ortiz?
2) why would a judge say that Ortiz can't sue Salgado and Hernandez?
I recall a realtor here in my city who was responsible for selling half of an entire phase of condos (talked to the site supervisor). Apparently he would bring up people from Mexico and get them to buy new condos from the builder. They are mostly empty and bank owned now but the builder got theirs and I think everyone new it. The builders were predatory sellers here.
People have been getting suckered by bubbles since forever. That is why institutions such as lenders and builders have a greater responsibility. This is the reason you have standards developed over time, immune from emotion and greed, that will act as a buffer against understandable greed, ignorance, and deceipt. The fact that these institutions ignored and/or changed the standards is inexcusable. Everyone's to blame, but the banks and lenders knew better. Unlike individuals, who tend to draw on their own history, the institutions have the benefit of generations of mistakes.
OK - from a recent immigrant minority angle I muse about these things in the article:
There are a variety of gradations here. The really poor and completely uneducated ( the Sylhetis of the world - ok I'll take the brickbats from Sylhetis here) just wouldn't figure in these stories - they wouldn't even HAVE $4200 monthly incomes, so we are looking for people a step up from that with some of the things it implies - some understanding of things financial, some understanding of the ways of the world, the middle-class in this context of gradations.
Where is the husband in the story - All we read is that he is a air-conditioner installer. In macho cultures( please send stereotyping responses to USDA reg 404) its not credible to me that he wasn't involved in the negotiations. Similarly to say you are married to somebody else in the docs ??? I know of how people brought up in highly government regs and bureaucratic and corrupt and bribery filled environments find ducking and diving to avoid the predations of government perfectly acceptable but marriage to somebody else ? Its an oddity.
Where are the relatives in all this - we know she has a niece, is that it ? And traditionally you'd borrow from them, you'd buy and sell from them, its a network of trust - so are Ortiz and Salgado related ?
Of the 4200 monthly income, a proportion hmmmm at least 420 would be sent "home", with kid, perhaps more ( or is that a tax-kid ) - surely 3720 into 3000 monthly mortgage doesn't go - anybody can see that no ?
But the underlying story of predation is quite intact and both outrageous and heartbreaking.
this goes to show how convoluted the game is. "normal" people (like me, and possibly Ms. Ortiz) don't think about the possibility that the mortgage could be in one name, and the deed in another.
I wonder why the lending bank allows this? or is it something they never check?
I honestly wouldn't be able to understand anything without you.
I agree with your criticisms. But I think her emphasis on the monthly payment as a percentage of the couple's income instead of the actual mortgage interest rate made sense. The interest rate was probably quite reasonable for the borrower in question. But the fact that anyone would have made such an unconscionable loan that was doomed to forclosure was the galling part that she felt needed emphasis. But still, it only would have taken, what, five characters [x.xx%] for her to tell us the interest rate? You get the feeling it was deliberately left out because it might not contribute to the readers outrage. I hate that manipulative shit.
Once again (and again, and again) Tanta is absolutely right about the underlying story behind the story. The Post Watergate "President's Men" era of modern journalism is by and large abysmal when it comes to real news stories. Sure, the NYT magazine still produces nifty and interesting cultural pieces. But the prevailing template for the hard news stories of our times i.e. credit, housing, fiscal, and monetary implosions is broken. Broken by lazyness, herd psychology and foggy J. School brains. Excellent journalism currently looks like a lot more like what appears daily in Calculated Risk and not the mainstream outlets. Viva bloggers in pajamas. Viva Calculated Risk. Viva Tanta.
why must Ortiz gift the house to Hernandez if Ortiz isn't on the deed (and Hernandez is). why couldn't hernandez just sell the house out from under Ortiz?
ORTIZ IS ON THE DEED.
I told you guys that these scams are hard to follow.
ORTIZ and HERNANDEZ are both on the deed, jointly vested in title to the house.
ORTIZ and HERNANDEZ both then had to sign the mortgage document, because only owners of real estate can pledge it as collateral for a loan.
But only HERNANDEZ was a "borrower." The note was signed only by HERNANDEZ, who was the only party the lender could collect from.
My guess is that the judge thought the current noteholder (not the original broker) had been defrauded, because ORTIZ' ownership interest in the property was getting in the way of the lender foreclosing against/suing for non-payment HERNANDEZ.
The judge probably thought ORTIZ was getting out without an FC on her record--by deeding over the house to HERNANDEZ only (that's a deed given from O and H to H only), she's out the picture. She was never on the loan, so no FC will ever appear on her credit report.
The agreement not to sue is probably because the judge thought she should have known better.
the more I think about it, the Ortiz family knowing English wouldn't have helped in this case anyway.
the reason: most of these stories we've heard to date are convoluted strategies, and are only printed in fine print on page 397 of the loan documents...
then later the loan docs are sometimes changed anyway.
So I doubt English had much to do about anything.
same story could've happened with an anglo-saxon catholic grandma who teaches English at the local High School being approached by a "nice christian man" who helped get her into a house until it all falls apart later.
I just feel like there must be a better story out there somewhere than this one.
Good catch. That makes me think the victim was more complicit in the scam than the article leads us to believe, and maybe this was a case of "no honor among thieves".
Yes, even very bright people who are not RE/mortgage experts can get sucked into confusion vortices about the note/mortgage distinction and the owner/borrower distinction.
Similarly to say you are married to somebody else in the docs ???
You are assuming she knew that's what the paper she was signing said. I am not. I suspect she found out about that part later.
As far as the rest of your comment goes, I haven't got the unmitigated gall to claim I "know" all about what all those immigrants all do in all cases because, you know, they're all alike. So I will remain an ignorant white citizen who assumes that the immigrant community is just as diverse as my own community, full of good and bad, naive and informed, "macho" and rational, etc.
Thanks for clearing that up Tanta. But I think the judge's ordering her to waive her right to sue is very strange. If she was really wronged, a decent judge wouldn't have done that to her. And if the judge didn't know enough of the facts involved, I can't see how they would arrogate to him/herself the presumption to preclude her from suing the malefactors. I suspect there's a significant part of the story there, and the reporter missed it.
I just feel like there must be a better story out there somewhere than this one.
"Better" for what? On the assumption that it's true, what's better than the truth?
You mean the "better" story is one where the "victim" is 100% sinless ivory-pure white-hatted, and the "perps" are 100% evil black hats?
Why the hell do educated, informed people require Sunday school tracts and treacly one-dimensional fables before they find these stories satisfying?
Why is it that nobody can be both foolish and a little dumb and still a victim?
Why is it that we can't see this as a problem with financing and real estate transfer practices, instead of a tear-jerker?
Look, people, the world's a complicated place and people are complicated people. No story of predation and profiteering is ever going to make anyone happy if your requirement is that the "victim" be Mother Theresa.
The classic excuse of every con man is that the idiot mark had it coming. Jeebus.
Are you interested in a "Chief-Executive of Helping YTL" job?
it comes with a company pony.
I have to say, as always I'm not sure if the victims in this story are really victims or if they were accomplices that turned victim when it all went down.
if this family was the victim of a predatory ring, then my heart goes out to them. They wasted 10's of thousands of dollars on overpriced RE.
if instead they were speculators who understood what was going on originally, but now feel bad because it went wrong, then they get no sympathy.
there is no way to tell.
and I get these sneaking suspicions that the WaPo purposefully chooses these types of stories so that we can blame the possible-victims more (non English speaking people, so silly immigrants, etc etc etc)
there are unequivocal examples of predatory lending. off the top of my head:
in the movie "Maxed Out" (worth seeing IMO) there is an obviously retarded African American man. mortgage folk had him refinance his home (out of low rate govt mortgage), taking huge fees and leaving him with nothing. They had to help him sign the papers (he couldn't read or write) then they foreclosed on him and took the home.
(on YouTube it is at the 30:00 mark, he signs at 31:55)
I haven't read the comments here, but I do have one beef about stories like this. Forgive me if this is a misperception.
It appears these journalists are taking situations from the skinny ends of the bell curve. They are picking out stories that are not mainstream, and sensationalizing them to sell papers. People will and have always been taken advantage of, and that will always continue to be so. However, that doesn't mean this has anything to do with the predicament we're in now.
I'm not saying it isn't true, and I'm not saying it doesn't happen. I'm not saying nothing should be done about it.
But I am a little tired of out-of-the-mainstream, peculiar situations that are treated as run of the mill situations that are happening across the board.
"(FWIW: I'm a little irritated by people who move somewhere for 9 YEARS and don't bother to pick up the language... I'm as liberal as they come, but c'mon, 9 YEARS? NO English?)
Yearning to Learn | 03.22.08 - 10:38 am | # "
Ditto on that one.
I was perusing the NYS Retirement System Website and noticed that they now provide all services in Spanish.
You need to work for ten years to vest in the retirement system.
The last suckers in the game end up as viticms, meanwhile the early entrants are perceived as genuises.
Exactly. Here we are, in another thread, going to "dissect" the last sucker over and over, without any mention of what I tried to get at in my post: who were those "early entrants"? What kind of human being sold that home in the first place?
"What's so "innocent" about taking advantage of a naive, uninformed, and unrepresented buyer to profiteer off real estate?"
Chalk that up as 10X worse when the buyer is represented by an attorney who sees a gigundous cut from the title fee.
Saw this not too many months ago vis-a-vis an attorney in our own firm (who, I'm happy to say, is no longer with us after we booted him out).
What a terrible deal. Attorney's friend came into a windfall (measured in the millions), and seemingly out of nowhere came a Florida developer who offered to build the guy a house (as an investmnet), and, in exchange for this developer's generosity, client would agree to split, 50-50, whatever gain was later realized. If the house was ultimately sold at a loss -- tough stuff, client eats the entire loss.
This was in Florida ...
In 2007 ...
I repeatedly told the attorney involved -- "Are you crazy? You may as well just go ahead and draft the malpractice suit that will be filed against us."
He didn't care. Big, BIG title fee, and he has his own overbloated mortgage payment to make.
In the end, we (I) wrote the best CYA letter I could fashion under the circumstances, and we booted the lawyer out the door several weeks later.
My point -- If you're the buyer, never trust counsel who's on the title company's "approved attorneys" list.
Tanta,
I understand your ire, but I'll try to explain where I'm coming from.
A story like this WaPo one leaves us thinking that EVERYBODY is to blame. and perhaps everybody is.
but by saying this, then the Financial firms get off the hook.
we look at this victim, and don't know if she is really a victim or not. maybe she was, maybe not.
Maybe she got a raw deal and this was a tale of predatory lending, or maybe all parties were involved and knew what was going on and the deal just fell appart and karma was served (the lender took a loss on short sale, Hernandez gets credit blemish, Ortiz loses lots of money)
in fact, I distrust this story from WaPo, as it may be one of those "look at the silly immigrant" stories disguised as a "poor homeowner loses house" story.
just read the comments over there. 99% of them are "she's a stupid illegal" variety. (nowhere do I see that she is illegal)
I feel that we need to look at the NEFARIOUS deals that were done, where the victim is an unequivocal victim. This leaves the financial houses naked.
they can't say "well, we all had a little blame here".
instead, they would be in the spotlight. WHY did they loan this way, WHY did they allow this to happen, WHY did they cheat these people so.
The WaPo leaves us with "wow, everybody sure got what's coming to them."
if they used the story from Maxed Out, people would be aghast that a respected financial firm (Citi) went to a retarded man on a gov't mortgage and refinanced him into a high interest rate mortgage extracting tons of fees and putting him in a higher mortgage, and giving him NOTHING.
there would be no "everybody has a little blame here"
it would be "the financial firms are out of control"
of course this story won't run, because then it would be harder to bail out these firms "in our interest"
Sorry to keep harping on a point, but it's an important point that gets no traction.
The point:
This. Is. A. Law. Enforcement. Issue.
Period.
Only law enforcement, backed by sufficient CPA brainpower, can stop the scam. Efforts to bail-out or provide assistance to any part of the enterprise is to play into the hands of the scam artists (and the scam artists exist at every level).
We continue to be robbed, while we fret over the collapse of the "system".
Too late.
We are holding the door while the looters steal the silver, furniture, fixtures, and anything else of value, on the premise that a crime has not been committed until it has been committed to the fullest. We can always call the police later.
A few harsh jail sentences - spread equally among the various levels of participants - will stop the crime dead in its tracks.
Tanta, I don't think you are being nasty enough. The conclusive statements in the article don't match the facts.
Such as In fact, to understand the housing crisis that has swept the country, one need only listen to the tale of the Ortiz family.
...
She agreed to a high-interest loan that would cost her more than $3,000 a month, more than 70 percent of the $4,200 that she and her husband brought home monthly.
...
Gutierrez blames the government for allowing so many subprime loans, such as Ortiz's, which required no proof of income.
...
"This is emblematic of people preying on their own and emblematic of bad brokers, but also emblematic of legitimate financial institutions either helping this happen or ignoring some facts so they can make a lot of money," said Alys Cohen, an attorney with the National Consumer Law Center.
This is such bullshit! Mortgage fraud is a problem, but it isn't the main driver of the mortgage problem, so this story does not help anyone understand the housing crisis. Ortiz never got a loan. The straw buyer did. The financial institution involved granted a loan to a completely different applicant, and federal law mandates that they couldn't require Ortiz (purportedly the wife of the borrower) to be a co-applicant.
Just try refusing to write such loans because the spouse isn't on the app even if the applicant qualifies. You'll get your a$$ handed to you! Those ECOA lawsuits can be extremely expensive. Punitive damages!
This is a completely demented, wildly misleading piece of godforsaken "trained journalism" that makes me want to slap a "trained journalist" silly. If you want to write a story about people getting stated income loans they can't possibly repay, find someone who did. It's not even relevant that the mortgage payment was 70% of Ortiz and her real husband's income. The creditor didn't know what that income was, or who Ortiz' real husband was. The creditor didn't even have Ortiz' income on the app, because otherwise she'd have been on the freakin' loan.
This is a story about a mortgage fraud ring ripping off both banks and would-be homeowners while specializing in ethnic targeting, not a story about bad lending standards. The mortgage fraud ring's actions were vile, but you cannot blame the creditor!
This is not a good article. It's a bizarre exercise in misleading the reader.
You are assuming she knew that's what the paper she was signing said. I am not. I suspect she found out about that part later.
Point taken on that but it goes with my underlying question on where is the husband in all these negotiations ?
As far as the rest of your comment goes, I haven't got the unmitigated gall to claim I "know" all about what all those immigrants all do in all cases because, you know, they're all alike.
Well, I made the same point, that the people are diverse, they aren't ALL totally poor and uneducated, nor they all 7-11 owners, nor doctors or programmers or gardeners or social workers or whatever and they are definitely not all alike.
YTL, I am in no doubt that the WaPo is getting tons of racist rants about "them illegals." I will not go over there to look; I'll take your word for it.
But you seem to want us all to play into their hands. If you can't write about corruption in the immigrant community--and that's what this story is about, a Latina screwing another Latina--for fear it'll fire up the Klan, then you can't write about corruption in the immigrant community. The ones who suffer are--those immigrants who do not know that the fellow immigrants they trust are looking to victimize them, and/or do not really understand the rules of U.S. finance/RE like they claim to.
There's an assumption lurking here that "those people" don't read the Washington Post. Just "us people" who need to hear about an "innocent" white person who got stiffed by a "faceless" bank in order to be made to feel sympathy.
Tanta asked incredulously: Why is it that nobody can be both foolish and a little dumb and still a victim?
The classic excuse of every con man is that the idiot mark had it coming. Jeebus.
And the predominant tone of the commentary seems to resemble blaming a rape victim. Jeebus indeed, T.
Would it help shift the focus toward the predatory RE scum to use a silver-haired librarian at the Smithsonian who was hornswaggled into refying three times in three years mostly to get the SOBs to stop calling on the phone?
It would be interesting to see who paid 380k for and financed this place last December after the crunch began. I can't find the transaction on the WaPo site.
The street address is apparently 106 from the picture but I couldn't find a street name which is required for the Alexandria, VA public records site. Any cyber sleuths out there?
Just try refusing to write such loans because the spouse isn't on the app even if the applicant qualifies. You'll get your a$$ handed to you! Those ECOA lawsuits can be extremely expensive. Punitive damages!
As it happens, I have in the past been the one somebody brought some file to that involved a titled non-borrowing spouse, and I have concluded that it was some rich lawyer with a scam in mind and I have in fact demanded that the deal go no further until we ran a credit report on the non-borrowing spouse, which you can do in a community property state, and I have put my elegant little dinosaur foot down and refused to let the deal go through.
Sorry, but I'm tired of ECOA getting blamed for lenders not exercising basic due diligence. The fact that HERNANDEZ wasn't on the effing SALES CONTRACT woulda been Clue #1. The fact that half the closing costs came from ORTIZ would have been not just Clue #2, but would have violated the non-borrowing co-owner rule: if you are taking money for down payment or closing costs from somebody, you qualify them even if you end up not making them sign the note. 'Tis a rule.
Right on, Tanta!
The fraud involved in the RE bubble has been incredible. And it's disproportionately affecting minorities.. and women, too by the way.
And comments I often hear from middle class folks is that, 'the poor were just stupid and uneducated', but with the caveat that only 'the middle classes' are the victims of fraud.
I find the whole subject of RE fraud just astounding. Maybe it's true that the Fed helped create most of the RE bubble.. but where have the regulators been when it came to the actual loans?
The other topic that this article seems to be overlooking is the absence of the criminal justice system in all of this. Agreements not to sue (especially one's as dubious as this one) are absolutely no use against criminal prosecution. Considering that Virginia and the federal government have their own fraud statutes, it is outrageous that there does not appear to have been any form of prosecution or even an investigation (even in my anti-consumer jurisdiction, I could probably get a felony conviction on these creeps).
It would also be nice if the reporter had looked into the behavior of the judge, but that is too much too hope for.
My blog partner and I did a few reports on houses in the Sacramento area being used as marijuana grows. When it was all said and done, over 50 houses valued between $300k-$600k were being usedby the ring, all bought with 0% down IO loans. The kicker: the buyer's agent was the same for almost all the transactions!
Our local rag (Sacramento Bee) only managed to file a reactionary report, with no digging into the RE transactions or the mortgage fraud that took place. We even posted a series of "suggested" questions the Bee reporters could ask when following up. Never happened.
Overall I have great sympathy for the average newspaper reporter. They're woefully underpaid, seldom very knowledgeable about the subject matter, and constantly stressed by coverage requirements and deadlines.
That being said, I wish they would lose some of the arrogance. (I've had my stories stolen at least three times by local news outlets with no credit given.) Reporters: It's OK if you don't understand the subject matter yet! Dig a little deeper; ask some questions; make them explain it to you; investigate!
my issue with these "heartbreaking stories" is that a significant % of them involve immigrants.
so people start viewing this as an immigrant problem.
keep the immigrant stories, I'm fine with them. but this is not just a problem for immigrants.
so expand it a little bit. Show us why ALL of us are being screwed over.
the longer the stories keep highlighting only a certain demographic, the longer the big financial houses can pretend they're doing us a 'service'.
so I want stories of immigrants being swindled, and also grandmas, and military men, and people in old homes, and senile people and retarded people, and middle class people and so on.
we need to make people realize that it's not "them" that got swindled, it's US. the immigrant stories make Joe-6 (including me) say, "geez, why doesn't this lady speak English. I'm glad that I speak English, so this will never happen to me
it's only later that I realize "huh, those documents sure were confusing when I signed them. maybe I was lucky that Wells Fargo followed through with my loan, because I didn't read every page, there were so many of them" which lead to my EUREKA moment of "hey, this lady speaking spanish likely didn't matter anyway!"
unfortunately, it seems that the average American is neither skilled enough or interested enough to educate themselves as to what is really going on.
so we need "heartbreaking stories" to give them a personal feel for why this stuff matters.
and IMO parading around immigrants every time doesn't do it.
I want MORE.
I want OUTRAGE
and yes, I want a PURE victim
only then can the financial houses be put under the magnifying glass.
the tone would be very different if every week WaPo highlit a retarded person and a senile grandparent in an old home and a military man (yes, some of them white and blue eyed and blonde haired) who were screwed by the lending industry.
In October, I speculated that mortgage fraud was going to get worse.
Yes, we'll see past mortgage fraud exposed now that values are no longer appreciating.
However, I believe NEW fraud throughout the industry will continue on. A different kind of desperation will now take hold.
We have desperate home sellers, relitters who have been eating boxed mac and cheese for the past several months and living off credit cards, we have mortgage brokers who set up lavish lifestyles and they're also desperate for cash.
Many of the mortgage fraud players are still out there holding professional licenses, telling each other that it's not their fault if the seller doesn't read what they're signing.
Is your only measure of someone's value how "smart" he is?
Dear Tanta, I read your work regularly and admire it. A LOT. I have learned much. But really. I said nothing about this woman's "value" -- e.g. as a human being. (Or what exactly do you mean?) In fact, clearly -- CLEARLY -- the right thing to do here is for her to be given a pass on everything -- wipe the slate clean for her.
My one point is and was this: I don't personally care for this sort of anecdotal story anymore. I have seen enough of them by now -- I get the point. I do not have much sympathy for her financial predicament, one her naivete or stupidity -- take your pick -- has gotten her into. And I won't reason inductively from such stories to conclude that borrowers are largely blameless victims.
The realiiter still has a license and is out of jail?
Um, regulatory failure.
Flat out. Wall Street has encouraged outrageous practices to fill paper pipelines, so fraud is what you get. YSP? How about that for undisclosed kickbacks?
What I am tired of is the fraud that had to be complicit in the persons licensed by the state in the process- the Realtor? the Appraiser?
Why is the realtor allowed to keep dime one from this transaction?
Why is the realtor and mortgage broker not blacklisted/fined by the industry and the licensing agency?
Come on, fraud deserves to be actively punished, not have a blind eye turned to it.
As for the folks who got scammed, the community newspapers (uh, geez that crappy univision comes to mind too, should have been telling folks about what could happen to them if they don't watch out!)
Lots o' failure and blame to pass around, but the regulatory sins that enabled the game are at the heart of the matter.
Deregulation has failed, time to call the Reagan fiasco for what it is, a failed experiment.
ARMS are something that should only be offered to folks rich enough to take the payment shock, and most common folks can't hack it. The death of the S&Ls is really being felt in this country.
Minority, schminority. White, black, brown or green. Smart, stupid, or somewhere in between. Male, female or transgendered. When it comes to the housing bubble, you can't swing a dead cat without hitting a criminal.
Mortgage Brokers, banks, shadow banks, appraisers, ratings agencies, settlement officers, buyers, builders - by collusion or not, the entire supply chain (for lack of a better description) is fraught with criminality.
Ours is not to wonder why, ours id to be diligent, smart, pragmatic, and conservative by putting people in prison.
I don't think that exists, YTL - its warts'n'all type of stuff. I want to point up some of the possible ones from one angle of the story.
Ambiguity and tentative conclusions rule ( or gets ruled ? ) - I was about to say this is unlike math ( my field ) or medicine but I know it rules in math ( cf Godel's Theorem ) and looking at PSA testing efficacy, treatment ( and nontreatment ! ) outcomes etc - I'd say it rules in medicine too - Judgment is necessary - so long as its tentative and open to change as additional facts are known.
When immigrants come here, they seldom know the rules (both written and unwritten). Most latin people come from places where under the table payments, bribes and side deals are the norm. This deal would almost seem perfectly straight to someone from So. America.
Imagine coming from a place where you could never imagine owning your own house, never mind having the prospect of getting rich as a real estate mogul. Latin immigrants tend to have limited access to advice outside their own community and are perfect fodder for bad information or downright deception.
I'm guessing that for every story like this one, there's another 10 where the relitter himself has only been in the US long enough to know that real estate goes up 10-30% every year. Why not do anything to get someone in a house?
Why weren't the brokerage names included in this story? Or were they?
The mortgage broker was not mentioned by name, only noted in passing as being "out of business."
I agree that it's a problem that there is this coyness in the article about naming names. I do, however, wonder if the reporter isn't trying to protect Ortiz that way: if she was prohibited from suing for fraud, she might also be vulnerable to accusations of slander.
Tanta - Max gets at some of the problems and stresses that reporters face but nowhere near all.
Reporters do what their editors tell them to do, spend as much time on the story as their editors allow, write the story and then hope (pray) that it will come out of the editing process resembling what they originally wrote and then actually appear in print.
Editors are under enormous pressure to fill the space allotted in the time allowed. Each editor has another editor looking over their shoulder up to the managing editor who has an executive editor and a publisher demanding that everything be done in such a way as to create a profit that will satisfy Wall Street expectations.
Read Jack Shafer on a recent attempt at the WaPo to streamline their Byzantine editing process:
One thing every practicing journalist knows: many of your readers could have and would have done a better job on any story you write, and they will tell you so.
Tanta's critique of this story (and its genre) is on the mark as usual. I suspect I'll be making my own modest contributions to this genre in the months ahead, and I'll have a miniature Tanta perched on my shoulder like the little conscience in the cartoons.
I would think the motivation for a reporter to focus on minority or unsympathetic "victims" is clear; it's the same reason we never see middle class criminals on cops.
The last comment is not in relation to this case, particularly. In the scheme of things, the average seller was not guilty of fraud. If there were undisclosed conflicts of interest on a particular deal, then yes - the seller gets prosecuted.
I think the larger point is that we - everyone who was not complicit in this - are all victims. Some to larger degrees than others, to be sure. Every property-tax payer is affected by having their property taxes increased as a result of these sham prices that lead to higher tax bases for surrounding properties. Even the renters are affected now, as cities are forced to cut services after letting their budgets get too big during the boom.
And for those of us who have been renting the entire time, we sit and wait another day for sanity to return so that we can finally buy a home for ourselves, throwing away another rent payment on the first of every month.
THAT is the unexamined premise in this whole thing.
Suddenly, when it comes to the seller, we're awfully damned legalistic. It's "not fraud" to accept a bid that's even more than your already ridiculously inflated price, and sit there across the closing table (which happens in VA) with a befuddled woman who apparently just met the guy who is "her husband" and who doesn't understand the language spoken or in the printed documents, and just keep your lips zipped because after all, you "deserve" the money and it's the lender's problem, not yours.
Tanta wrote: Is it, like, not allowed to criticize sellers?
If the seller was a related party, there's rules and ethics. If not, however...
Caveat Emptor. The traditional thinking goes that if you've amassed enough money to pay cash for real estate, you're a sophisticated party. If you haven't, your lender is a sophisticated party. Rarely in history have there been times where lenders lent without scrutinizing either the borrower or the security. Traditionally, the bank held the note to maturity and it behooved the banker to ensure you could pay. The recent period where PhD quants figured they could price a loan without examining the house or the borrower was an anomaly not soon to be repeated.
CAN WE IMPRISON EVERYONE--I MEAN EVERYONE--WHO SOLD DURING THE BOOM TO SOMEONE WHO DIDN'T QUALIFY FOR THEIR LOAN? CAN WE? CAN WE?
I thought one of the reasons for intermediaries was to explicitly insulate sellers from needing to make personal judgement calls as to the suitability of the buyer. Any blame you might wish would flow through to the seller stops with the agent who presents the potential buyer in the first place. It is their job to judge the suitability of the buyer and not the owner's job.
Interestingly, the seller has no fiduciary duty to assess the wherewithal if the buyer. That's why the middlemen in these transactions are so highly regulated (I just vomited into my own mouth).
As for Ortiz and the judgment that she cannot sue, it is likely because the judge felt she was - to some degree - complicit in what happened.
Our courts have a doctrine known as "clean hands" - meaning that those seeking equity remedies (as opposed to money damages) must have been innocent of any wrongdoing. Even if you're a victim, if you do not have clean hands, you cannot receive relief for getting the worse end of your scam.
Interestingly, the seller has no fiduciary duty to assess the wherewithal if the buyer.
In law, or in basic ethics?
Fifteen years ago I sold a old junker car that wouldn't run to a 17-year old who wanted to fix it up. He offered me $200.
The thing had thrown a U-joint; the repair bill would have been many, many multiples the value of the car. It might well have been worth $200 for scrap parts and the battery.
I called the kid's parents and grilled them about it: did they know the true condition of the car? Did they understand that it did not run at all? Did they really think the kid could fix it? Was this really a wise use of the kid's babysitting money?
Only when the parents assured me that they were involved and in fact the kid's dad and uncle were going to help him fix it up, not just so he'd have a car but to teach him about auto repair, did I agree to sign over title and take the kid's money.
There was nothing in state law that required me to do that. I just like sleeping at night.
W I'm not talkin' fair or unfair - I'm talkin' legality.
If there is a law on the books, and that law has been broken, a crime has been committed. No such law - no crime.
I don't give a damn who the criminal party was, or what drove them to their criminal act(s). Every criminal that ever lived had a reason for committing their crime.
We need to stop the crime, and we need to stop it now.
Well, to address one of your concerns, I have sold houses twice in my life and never once had a moments concern about the ability of the buyer to pay the mortgage. Both of those transactions were back in the day of underwriters looking at documents, licensed RE agents (separate ones for each party of the transaction, mine looking out for my interests) dealing with the mountain of paperwork. I worried about my ability to pay on the new house, I assumed the buyer of my old house was doing the same. When I sold, I trusted the agent to come up with a reasonable asking price, and took his word about the reasonableness of the offered price. As it happened, we used an agent my father-in-law had used and trusted over a long period of years.
This particular story of Ortiz and her husband being taken in by a confidence man has been repeated with variations over the ages, this one takes advantage of the current mess in housing.
I understand that people can live in a country where they don't speak the primary language but I still cannot understand why they would want to put themselves at such a disadvantage. One advantage of learning the local language is a greater understanding of the local culture and customs. There are lots of people at my workplace fluent in both English and their native language. When some situation comes up that they don't understand, they have the ability to ask the local natives (me among others) for an opinion.
"This is a story about a mortgage fraud ring ripping off both banks and would-be homeowners while specializing in ethnic targeting, not a story about bad lending standards. The mortgage fraud ring's actions were vile, but you cannot blame the creditor!
This is not a good article. It's a bizarre exercise in misleading the reader."
We need to stop the crime, and we need to stop it now.
I hear all the time that con games can't work without a willing victim.
I am observing that some of them can't work without a seller willing to look the other way, a seller who believes that it is his right to get a bubble price.
Sauce for the goose is, famously, sauce for the gander. Yet most people are incredibly resistant to finding fault with the seller.
I think that's because a lot of folks sold at the height of the boom, and don't want to look back and wonder what happened to the buyer. "Not my fault."
Now, if you had financed the purchase, based on fraudulent claims as to the quality and road-worthiness of the vehicle, and if you had then securitized the loan and spread it like cancer around your community, this would be a better analogy.
BTW: The people involved sleep perfectly well knowing what they did (in many cases, they sleep in the lap of luxury). That's why they should be on the rock pile for a few years.
Reporters do what their editors tell them to do, spend as much time on the story as their editors allow, write the story and then hope (pray) that it will come out of the editing process resembling what they originally wrote and then actually appear in print.
Editors are under enormous pressure to fill the space allotted in the time allowed. Each editor has another editor looking over their shoulder up to the managing editor who has an executive editor and a publisher demanding that everything be done in such a way as to create a profit that will satisfy Wall Street expectations.
All true. But we get a "do over" every day, and on our good days we remember that and try to do it better than yesterday. We do try to learn from our own experience and from the feedback we get from readers and bloggers.
The feedback is a great thing. When I started in this business, it was minimal--a few letters to the editor, maybe a phone call. Now the online comments and emails pour in, and a significant part of my day is spent responding to that. If I missed some important point, somebody is going to call it to my attention and I won't miss that point the next time--and there usually is a next time.
Especially with houses and mortgages. I'm guessing I could wind up spending half my time on stories directly or indirectly related to this issue in the months (years?) ahead.
On the other hand, I've got this mental image and it's just cracking me up:
I'm sitting across the closing table from the buyer, the buyer's RE agent, lawyer and banker, and I bellow out "I cannot in good conscience sell you this house at this price, because SOME OF YOU ARE CHEATS AND THE REST OF YOU ARE FRICKIN MORONS!!"
Fifteen years ago I sold a old junker car that wouldn't run to a 17-year old who wanted to fix it up. He offered me $200....
I called the kid's parents and grilled them about it: did they know the true condition of the car?
Now we are talking ethics.. I didn't sell my high CoG gravity Kawasaki Concours to anybody under 5'9" ( my height ) - their feet would barely touch the ground and at 730 lbs and high CoG keeping it upright would be hard. They had to have full motorbike licenses of course and while I wouldn't discriminate by age, I was really leery about selling to someone under 30 - luckily I found a 35 year old buyer..
But that's because I didn't want blood on my hands, literally.
If the seller knew that the property was worth less than what they sold it for and/or knew about the dubious nature of this transaction (the former at least seems likely) than they may very well be guilty of at least being an accessory to the fraud. If they had any sort of prior understanding or dealings with the other crooks in this transaction to find a buyer, then they are liable for all of the crimes involved as co-conspirators (that's what I would try if they were here in Alabama).
Clean hands" is an equitable doctrine and does not generally govern common law tort and property cases. That the judge would decide that someone deserves to get screwed and behave like this is outrageous that a judge would run around and misue it in a case like this.
Outside conspiratorial collusion between the seller and the party providing financing, I can't see where the seller has any duty here (I'm not just trying to argue a point - I really can't see it).
Only when the parents assured me that they were involved and in fact the kid's dad and uncle were going to help him fix it up, not just so he'd have a car but to teach him about auto repair, did I agree to sign over title and take the kid's money.
There was nothing in state law that required me to do that. I just like sleeping at night.
Tanta
The problem is we have too many people who can pick other peoples' pockets and then go home and sleep the sleep of the just.
Another problem is we have no way of legislating people like Tanta into existence.
The basic rule is that any person whose income or assets are used to "qualify" for the loan must be a borrower.
You can't have a situation in which Joe and Jane's joint funds are used to make the down payment and pay the loan, but only Joe is on the note, unless you can verify that Joe's income and assets could be enough for him to qualify by himself.
In this situation, it would have taken a real underwriter a couple of minutes to notice that there are no joint accounts on the "husband's" credit report, and that funds to close were coming from an account belonging to Ortiz only. Only an idiot relies on some piece of paper stating that they're married to justify not ordering a credit report for Ortiz and putting her on the loan.
It appears that the loan was done as a NINA--exactly so that this confusion about whose money was involved would be obscured. But NOBODY I know who is any kind of reputable EVER does a NINA that involves a non-borrowing spouse. Holy shit, every about-to-be-bad divorce in the country would start out that way.
I realize the rest of you aren't up on this kind of thing, but I'm here to tell you that it makes no sense to me to let the creditor off the hook.
Sure the seller may have been involved, but there is no evidence of that. Sellers generally don't have access to the buyers financial details, so wouldn't even be in a position to evaluate the buyer. That is the job of the lender and the job of escrow/title to see that the sums balance out. While there probably are sellers involved with this, it is not as sellers they are predatory. Sellers can't be predatory. They are just the other half of the transaction, looking out for their interests. This is just more lenders trying to shift the blame from themselves.
Another problem is we have no way of legislating people like Tanta into existence.
Well, you wouldn't want to do that even if it were possible. You'd get the whole package, and I'm not sure the world needs more people who like ABBA videos.
Of course we can't legislate morality. What we can do is call a spade a spade to shame people into it. What I'm reacting to is the assumption that since it's legal, it must be morally peachy.
Um, did anyone else read the surnames of these people - Ortiz, Selgado, Hernandez, Aguilar - and basically feel like they knew everything they needed to know about the story? Sounds like corrupt Mexicans cheating another Mexican. What's new about that? Nothing - the only difference is that it happened in Washington D.C. instead of Oaxaca or Mexico City. This is the kind of stuff we're going to see when we allow millions of latinos from corrupt cultures to emigrate here.
Sounds "racist"? Maybe. Sounds true? Absolutely.
If these are the kinds of people that make up the bulk of the pity cases we're supposed to shed tears over because they let themselves be suckered by a real estate deal, then I don't think it's as big a problem as the Post wants to make it seem. That kind of stuff is just par for the course south of the border.
Lenders. sellers, and real estate agents engaged in fraud, theft, felony syndicalism, and racketeering are evil and must be dealt with. How are we supposed to maintain any kind of society if we adopt a "they deserved to be screwed, so it's okay attitude?"
I too am getting a little tired of the "poor immigrant" mortgage/RE fraud stories in the MSM. This is not because I am unsympathetic towards ANYONE losing their home. It is more that I feel these stories are being used to hide the elephant in the room. The truth is that people all across the economic and racial spectrum have lost and are going to lose their homes because our government did not do, and is not doing it's job of regulating mortgage lenders and prosecuting those lenders who broke lending laws. These laws are already in place, there is just no enforcement.
The focus on the "poor immigrants" by the MSM helps keep the middle class from demanding that our government do it's job. Because the housing bubble is a slow unwind, the middle class people who are being gradually foreclosed on are not objecting because foreclosure is being mythically portrayed as something that only happens to the "poor & the dumb".
Gosh, I'd better post now or will never get to the bottom of the thread.
First of all, English is a very hard language to learn. Since it has a romance language superstructure on a germanic base, with a total weird method of spelling, a romance language speaker might be bewildered. Spanish has rational spelling and is mostly a romance language. Since English has 2 sources, there are 2 words for nearly everything, a simple old English/Germanic one and a fancy romance language one. (Say $hit vs feces). These have different connotaions usually, and are used in different contexts.
Since I work off in the foreign county of Miami-Dade, I have made dissultory efforts to learn Spanish. I got up to being able to read the Harry Potter books in Spanish, but I will, I regret to say, will never be able to understand spoken Cuban, which is a truly awful version of Spanish, which is, like English, a distinguished world language.
Therefore, I am very sympathetic to people who find it difficult to learn English.
Secondly, NOBODY reads the papers thrust before them. Except me. My grandma told me to never sign anything without reading it, and I thought that was good advice. I real very fast, so that is usually ok.
Some people when I do (did) a closing don't even want to listen to my canned explanations. The worst was a
non-ethnic white litigation atty who was actually annoyed with me when I tried to explain the papers. I assure you he didn't understand them.
The smartest people do listen to my explanations, want to understand the closing statement, and want to have it pointed out on the note, where it says what the interest rate is, and that it is a fixed rate. I am happy to comply. At the end, I hand (used to hand) over the package and say they should read it if they ever have insomnia. Lots of laughs.
If the very smart posters here went to a foreign country, they might get taken too, because in all countries, there are the rules, and then there are the real rules, which are not written down anywhere.
Everything you say is true as well, at least for the good ones (as you appear to be).
I suppose my larger point is that Tanta and others should be more careful in their use of the term "reporter" since these are institutional failures. Perhaps the terms newspaper or media or more specifically in this case WaPo would be better and help to spread the blame around for the problems that she raises. And lets not forget to heap on the readers their share of the blame for if they have not gotten out of the newspaper habit altogether probably rarely read a story past the jump.
jalrin - While you generally wouldn't use equitable doctrines for tort or property issues, this - at its core - is more of contract dispute. Neither of us knows exactly what the facts were here, but if I were a judge (rather, when I become a judge), and was convinced that two people were trying to use me to settle their scam-gone-wrong, I wouldn't hesitate to ban them from the courts.
Many tend to look at this through the broken pieces of the popped bubble. In other words, we have the benefit of hindsight and perhaps at the time the seller, who was told that there was no bubble by none other than the entire banking industry, every NAR rep alive, Greenspan, Bernanke, et al., was hesitant to let the place go so cheap....afterall the buyer was gonna make 70G off of it in no time. The realtor may have thought they were helping an immigrant make easy money and any fraud was simply a way to get around rules written for white people or as the saying goes...banks only lend to those who don't need it.
Is it possible that rules were broken not to screw someone, but to help everyone get a peice of the American pie. Afterall, part of the elemant of a bubble is that no one really knows it exists until it pops. It's hard to put nefarious motives on people who couldn't have been expected to expect the unexpected.
I'm not saying it's ok that they are screwing one another. I'm pointing out that it is no surprise that they are screwing one another, and that is what we get. And you know what? You all, including Tanta, know it, too. You just can't admit it.
Um, did anyone else read the surnames of these people - Ortiz, Selgado, Hernandez, Aguilar...Sounds like corrupt Mexicans cheating another Mexican.
And it starts. I suppose you want your people of Hispanic origin to be named Richardson, huh ?
And my 3rd generation Hispanic telecomms specialist called Lopez was a cheatin' Mexican ? Or my pattern recognition math colleague Hernandez was a cheatin' Mexican..
No doubt you think my VP, a Mr. Meier was a money-grubbing, vile Jew ?
Sheesh..
For the record, Ortiz was from Honduras - as I watched with great amusement as a colleague asked to server at the cafetaria - "Serve it as hot as it would be in Mexico" and she replied - "But I'm from Guatamala"..
Then there was the time that Bridge WORLD champion the Brazilian Chagas was asked to say something in Spanish..
While the details in this WaPo story no doubt lack the precision and clarity one might wish for, those details are going to be lost on the average reader anyhow. I think it does convey the big simple messages: Be careful who you deal with. Beware of complexity. Don't assume they wouldn't be doing this if it wasn't legal. Don't assume anyone besides you is looking out for your interests. Etc.
You would think just about everyone would understand this stuff by now, but no. You can't repeat it enough.
It's in the second paragraph of the article though it's easy to miss because of the way it's worded.
She looked at only one house and paid too much for it: $430,000 for a run-down, one-story duplex in Alexandria, triple what the house had sold for the year before, and $5,000 more than the asking price, according to real estate records.
Marcus--these frauds are not going to be prosecuted. There was a forgery case I knew about where the relatives really tried to get the police interested and it went nowhere.
Nothing done. Nada. Heard about another one Friday. Police said go prosecute your civil suit. If you want these prosecuted, then vote to pay taxes to hire 50% more judges, prosecuters and support staff, as well as renting extra space for the courtrooms and offices, and prison. Well, maybe we could let the dopers out because they do less harm. . . and fill the space with real estate fraudsters.
Looking at the story, I think the agreement not to sue Salgado and Hernandez is reasonable. They seem to have been defrauded too. The fraud ring is Aguilar and his wife, who handled the mortgage. That's pretty blatant. Salgado was kind of involved, but she was probably basically suckered into it.
Of course. I mean, I wouldn't tell them I was going to have the DA start investigating their scam, but I wouldn't let them waste the court's time dividing the spoils of their scam.
And to be clear, I'm not saying there clearly was collusion with the buyer, only that it is a possible explanation for the otherwise odd-seeming outcome.
It's in the second paragraph of the article though it's easy to miss because of the way it's worded.
Sorry, I thought you meant the house had been sold in 2005 again and then flipped to Ortiz.
As I said in my post, I figured the appraisal was "overpriced" because you have to get an "expensive" appraisal to justify tripling of price in a year with a "run down" (i.e., not improved) property.
I was just interested in whether people would be willing to assume that the seller in this case was "innocent."
I live in the DC area and read the article in the dead-tree edition.
This part I didn't understand:
"Is [what they did] illegal? I don't think it's illegal," Woodson said. "But you've knowingly induced people to enter a bad agreement."
I would assume that falsifying mortgage documents (and the other shenanigans described) rise to the level of criminal (rather than just civil) fraud, but IANAL.
Tanta: 'I have no problem really with your point there. But in that case, why doesn't it also apply to the hapless buyer?"
I agree...greed and ignorance applies to both sides and everyone in-between.
Greenspan said that bubbles are impossible to spot so it's hard to ask more of even the most fluent english speaking natives.
That is why you have institutional standards based upon unemotional lending practices.
Ironically,
I suppose people's presumption of racism allowed those institutions to abandon those standards since everyone assumed they were meant not to protect the banks from losing money, but to protect white people from having hispanic neighbors.
And you know what? You all, including Tanta, know it, too. You just can't admit it.
Mark
Here's what I know. There are crooks and corrupt subcultures on both sides of the Rio Grande. A lot of the people who emigrate here (with or without their paperwork) are looking to get away from corrupt systems...and yes, I know that the political systems in these countries make our system (with ALL its flaws) look pretty good.
I just love that argument: You're all racists like me but you're too afraid of THEM to say what you believe. Actually no, Mark. We just disagree with you, because we have enough life experience to know you're wrong.
triple what the house had sold for the year before
Oooh, I missed that. Irony of ironies, if the 430,000 price produced a payment 70% of her income she could actually have afforded the house had it been fairly priced. Not a good business decision to buy in 2005, but she could have made it.
Looking at the story, I think the agreement not to sue Salgado and Hernandez is reasonable. They seem to have been defrauded too.
OK, now I'm worried.
You think those two were defrauded?
I have to ask: if your sister asked you, as a favor, to "invest" in RE by pretending to be the wife of a stranger, with the deal being you'd get any upside and if the worst happened you could take the house away from the stranger, would you do it?
Hernandez is guilty of mortgage fraud. No question about that. He signed a 1003 (uniform residential loan application) over verbiage that makes it a crime to lie.
Signing a paper that says you're married to another party, when you aren't, in order to receive financial benefit, is a crime, independent of race, creed, color, country of origin, language, sexual preference, income or educational level.
I'm not picking on the buyer, here, as there was apparently beaucoup criminality involved.
As Joe Friday was known to say, "Just the facts, ma'am."
Lord writes:
Sure the seller may have been involved, but there is no evidence of that. Sellers generally don't have access to the buyers financial details, so wouldn't even be in a position to evaluate the buyer. That is the job of the lender and the job of escrow/title to see that the sums balance out. While there probably are sellers involved with this, it is not as sellers they are predatory. Sellers can't be predatory. They are just the other half of the transaction, looking out for their interests. This is just more lenders trying to shift the blame from themselves.
Lord | 03.22.08 - 12:40 pm | #
What Lord said, plus....
In my experience as a seller, we are in a position to trust that the buyer, buyer's agent, lender and title, etc, etc, are doing their do dilly and everything is honest and legal. I couldn't begin to know how to verify the work of those others...
What comes to my mind is that the sellers have to be very careful with regards to Fair Housing Laws...What are your thoughts, Tanta, on how the Fair Housing issues come in to play in a situation like this?...assuming the seller is not involved.
The underlying, overarching fraud started with lending vast sums of money to... anyone... no questions asked. Not just lending but badgering the entire country to come into the bank to pick up large sacks of dough to become real estate millionaires.
Gangs of people didn't spontaneously assemble in front of banks, pounding on the doors, demanding large wads of cash because they said so.
Banks and mortgage companies force-fed the no-questions-asked concept on the doltish public for years.
Still, this would all be small potatoes if the pass-the-hand-grenade game (the derivatives market,) hadn't expanded like a cancer.
Prison time. Rock breaking. Leg irons. And not just a few examples pour décourager les autres. Whoever mentioned RICO recently had the right idea.
Real Estate hasn't been "fairly priced" for 5 or 6 years now where most people live (which constitute most of the bubble countries). Even with all of the ideas floated by the FED, etc.... it's still not going to solve the underlying problem of the bubble, right? So they can do something like keep the house prices inflated (which more state/local govts will clamor for as they lose tax money... who are the crooks again?)... but they can't do anything to entice buyers. Even a $15k incentive is pennies when you are talking about a $400k 50 year old 2 bedroom condo in an area where median income is $65k.
Frauds/cheats come in all different skin colors, surnames and ethnic backgrounds.... as do honest people.
Tanta - agreed that the seller should be investigated. It's hard to believe that Aguilar, his wife, and the appraiser would engage in fraud of this magnitude - probably overstating the cost of the house by twofold - for just the ordinary commissions.
"If you want these prosecuted, then vote to pay taxes to hire 50% more judges, prosecuters and support staff, as well as renting extra space for the courtrooms and offices, and prison."
lawyerliz | 03.22.08 - 12:59 pm | #
The cost of rewarding the criminality, in terms of both tax dollars and social mores will make the costs associated with prosecution look like a bargain.
I agree that the authorities will look the other way.
Yes, but Tanta, this is not on my list of community real property states, and we don't know that the docs the banks saw were in Ortiz' name. I bet they faked them, or booked the deposit in as cash. In the Hispanic community, this isn't that rare. A lot of non-banked people.
It seems to me that a lot of recent immigrant Hispanics did get targeted for fraud. Some Asians too.
Also, since the 2004 Reg B modification, this is a hot point of enforcement. EVERY bank lawyer I have ever consulted agrees that under FCRA you may not run a credit report on a non-applicant spouse when you are legally prohibited from requiring their signature on the app under Reg. B. EVERY regulator says the same. See, for example, page 6 of Nelson Mullin's FCRA summary. It's the kiss of death to do this.
It's ironic, because if they had been able to, I bet she would have saved a lot of money!
I couldn't begin to know how to verify the work of those others...
You guys are making this too hard.
If you sign the sales contract without ever meeting the borrower, well, then, you may not realize that she is signing a document she apparently can't read because it's written in a language she doesn't know.
If you were in an escrow closing state, you might never see the buyer.
But dammit, in many states--like VA--there are good old-fashioned round-the-table in person loan closings where you see your buyer face-to-face.
As I said, I can't quite imagine not noticing that the buyer seems to have just met her "husband" today. Let's say maybe it was kinda clear to the seller that something weird was going on. I ask you: does the seller have at least a moral obligation to say "wait a minute"?
And no, it's not a "fair housing issue," just as it isn't an ECOA issue. I am not suggesting that you refuse to sell your house to someone who can't read the contract because they speak Spanish. I'm suggesting that you have a civic interest, just as I do, in seeing that the person is represented by someone who doesn't have a financial interest in the transaction who can read.
My point is, I guess, that I have to wonder whether someone didn't see a non-English speaker coming, and therefore immediately jacked up the price on the theory that she probably wouldn't know any better.
I brought up my example of selling my junk car to a 17-year-old for that reason: it would have been easy to ask that kid for $300 and get it--he really wanted a "sports car."
Alot of talk about knowingly overstating the house's worth.
I recall many during the bubble saying that things were "worth" what people would pay...period.
If everyone including the bank thought the house was worth what it sold for.....and there were plans by some to sell it for 70k more in a year...than I suppose it's hard to say in hindsight that everyone involved KNEW it wasn't worth what they said it was.
I mean really....did everyone who sold GOOGLE at 750 absolutely know it wouldn't go to 900? Is it possible that they sold with some apprehension? I have no doubt the seller, no matter the motivation, may have wondered if the house in this story might actually be "worth" more later.
YLSP writes:
Real Estate hasn't been "fairly priced" for 5 or 6 years now where most people live (which constitute most of the bubble countries). Even with all of the ideas floated by the FED, etc.... it's still not going to solve the underlying problem of the bubble, right?
Re: Fraud prosecution
Is it possible we "taxpayers" can benefit? ie... there's no room in prisons for the fraudsters but if prosecuted they lose all of their ill-gotten gains, are convicted of a felony and their credit is ruined? Shouldn't this be like shooting fish in a barrel?
Yes, Hernandez technically committed mortgage fraud with the documents. But he and his sister apparently lost tens of thousands of dollars. I don't think they knew what they were doing. Hernadez' involvement in this is about the same as Ortiz - he was promised something great (a chance at appreciation) that didn't exist (because the house was fraudulently appraised) and told to do a bunch of stuff (including committing mortgage fraud) by people he trusted, albeit foolishly.
You are not required to make the spouse apply in general.
On the other hand, you are required to assure that the applicant is using his own funds to qualify. I've run into this before: you dig a little, and you find out that the applicant is using the non-applicant spouse's money for down payment and relying on the non-applicant's income for repayment. That means you do, as a lender, have to right to force the spouse to be an applicant.
We went through this quite a while ago when I caught The Mortgage Professor recommending the stated income approach to married borrowers, one of whom had lousy credit. The Prof recommended that the good-credit spouse "claim" all income, so that the loan could be approved with only one borrower.
That's fraud. And lenders have the right to refuse to play along.
But NOBODY I know who is any kind of reputable EVER does a NINA that involves a non-borrowing spouse. Holy shit, every about-to-be-bad divorce in the country would start out that way.
I realize the rest of you aren't up on this kind of thing, but I'm here to tell you that it makes no sense to me to let the creditor off the hook.
Tanta | 03.22.08 - 12:38 pm
The creditor is obviously in on it. Sounds like a loan from Ownit or First Franklin(lol). However, I do not think it was a NINA. I do not remember that program ever going to 100%. It was probably stated income/ stated asset which doesn't have the 4506 signed until close.
Stated/stated works just like a NINA in that employment is verified by a phone call or a CPA letter for the self employed but income is not verified. The rep from the lender would literally tell these loan officers what to "write in" or "state" for the income and assets and all was good.
Tanta's point about missing information on the seller is key. In my paper copy of the article it has this key point: Ortiz's $430k purchase price was TRIPLE what the seller paid for it in 2004. In other words that anonymous seller bought the house for about $140k and a year later listed it for three times as much. And somehow a naive buyer was steered directly to that property. What appraiser did an appraisal showing a "run-down duplex" had appreciated 300% in one year? What lender accepted such an appraisal? If the realtor was not somehow tightly connected to the seller or even was the seller, I would be very surprised. And I doubt the buyer at $380k got a good deal either.....
"You guys are making this too hard."
Tanta | 03.22.08 - 1:16 pm | #
Sorry, not trying to add to the difficulty here. And yes, I am in CA, an escrow state, where yes, we sometimes never see the buyer, their agent, or anyone else in the transaction.
"My point is, I guess, that I have to wonder whether someone didn't see a non-English speaker coming, and therefore immediately jacked up the price on the theory that she probably wouldn't know any better."
Tanta, that is a pretty harsh assumption. Do you have any way to verify the listing? To see if it had been on the market, listed at the amount specified in the article? That statement does seem a bit speculative...and unfair to a possibly innocent seller...Unless I missed something...like it had not been listed in the MLS, or something.
"Stated/stated works just like a NINA in that employment is verified by a phone call or a CPA letter for the self employed but income is not verified. The rep from the lender would literally tell these loan officers what to "write in" or "state" for the income and assets and all was good."
LJ,
This is the type of stuff that ticks me off. It's unbelievable. I still can't get over NINAs. Is it any wonder we're in trouble? And now, we all pay for this nonsense.
As you will recall from your early homeschool experiences, your fellow public school classmates were running around with not only attention deficit issues, but sadly they grew up to be key components in a world of nepotism and inefficiency. Thus, birds of a feather on the flip side of that coin need to flock together.
Re: Origins
Nit: the egg of a parasitic insect
Pic: to detach or remove piece by piece with the fingers: She picked the meat from the bones
Also See: antsy
1.\tunable to sit or stand still; fidgety: The children were bored and antsy.
2.\tapprehensive, uneasy, or nervous: I'm a little antsy since hearing those storm warnings.
The U.S. Federal Reserve is not engaged in talks with other central banks about the possibility of purchasing large amounts of mortgage-backed securities to stem the credit crisis, a senior Fed official said on Saturday.
"The Federal Reserve is not involved in discussions with foreign central banks for coordinated buying of MBS," the official said, disputing an account in the Financial Times that central banks were "actively engaged" in discussions on that possibility.
crispy&cole wrote, We had an administration that pushed the "ownership society" and many people bought into it hook line and sinker.
Apropos that, here's a quote from Greenspan: But the former Fed chairman said that the subprime boom would boost home ownership and was "worth the risk." Greenspan said that "protection of property rights, so critical to a market economy, requires a critical mass of owners to sustain political support."
I'm beginning to wonder if you can produce quality of life for people without inculcating them with strategic ethics from the time they are young.
I am tired of having lunch with friends who bring up business for ten minutes so they can claim it as a business expense. Or watching another friend charge nearly every normal and necessary home expense to her gov't grant because she works at home as well as the university.
These individuals don't even have any inner compass that nudges them for a second that what they are doing is wrong.
well, as someone who has been the seller of real estate to buyers who may not be able to make the payments,...I don't know how to tell someone not to buy it when everyone on their side of the table is saying it's okay. Were the properties overpriced? Well, I believe so, but everything around was selling for that price and they came to us with the price. Could they make the payment? I don't know, I'm not privy to their incomes, but one offer came from somone who believed they were going to be able to double the rental rates (I believe those people didn't end up buying our property for a different reason)
Would you have been as scrupulous if the buyer of your car offered more than you asked and was an adult? Well, I guess you'd still have the scruples but fewer ethical problems.
Yeah, I have problems sleeping at night, but not for those reasons.
Yeah, up around the Atlanta-Marietta it seemed bodacious. Darned near as popular as NASCAR and boiled peanuts.
The point I'm trying to get at is that I believe a lot of people have gotten pretty good at mortgage fraud during the glory days of RE appreciation and innovative lending. It seems as if they've learned how to slide it through. However it is far easier to set someone up like this who doesn't speak English. Most crackers sorta do.
There really aren't enough federal personnel to investigate, so GA ended up passing its own laws to make it easier for the local and state authorities.
But of course you'd never catch a deal like this if it worked as planned. I wondered from reading the article if this particular home hadn't been used the same way twice before.
People sneer at FHA loans because they are much more tightly underwritten. Borrowers don't like them. However it does protect the borrower. All of these innovations (not checking) seems to leave the door wide open to exploitation of the naive or easily gulled.
Of course, this particular woman may be a lot less innocent than it appears. Maybe she just wanted to get in on a flip. We'll never know.
Maria Salgado said she borrowed $21,000 from a friend to bring the mortgage payments up to date because she didn't want to ruin her brother's credit.
Granted, she could be lying. But the judge involved apparently believed her, based on the order to gift the property and the no-lawsuit stipulation. So I'm giving her the benefit of the doubt.
y wrote,Studies show that many of the global poor are poor because of the complexity of acquiring private property.
No, people in the world are poor because they have to hand over land rent to landowners who, as Adam Smith, John Stuart Mill, Henry George, and countless others understood, do nothing except leech off of others.
Would you have been as scrupulous if the buyer of your car offered more than you asked and was an adult?
I still would have tried to make sure the person understood, before we got around to signing titles and writing checks, that the thing DID NOT RUN and wasn't going to without expensive repairs. Some people don't get what a "U-joint" problem is on a 10-year-old car. It's a BIG PROBLEM. I don't think it gets any worse unless the problem is "missing engine."
I also wouldn't have felt comfortable calling an adult's parents.
I don't mean to infantilize immigrants by comparing them to children. I'm pointing out that they have one thing in common: they're vulnerable. Bending over backwards to make sure they're following along in key places doesn't seem too much to ask, to me. Same thing with the elderly.
We should just have a care for the vulnerable among us. I call it "civilization."
This is the type of stuff that ticks me off. It's unbelievable. I still can't get over NINAs. Is it any wonder we're in trouble? And now, we all pay for this nonsense.
Prufrock | 03.22.08 - 1:26 pm
NINAs and NINANEs were originally credit score driven (700 or 720 FICO and above) and had to have a low loan to value like 65% OR under. Starting in late 2004 thru 2006-7, credit standards dropped dramatically (lower FICOs and higher LTVs). Then came the stated/stated programs to 100% via JP Morgan Chase for FICO's 700 and above to $1.1 million. It worked so well credit standards started dropping on this too.
It got out of hand when the First Franklins of the world started offering 100% stated/stated to 650k with credit scores of 575 and above. Truly pathetic...and now we are here!
"corrupt Mexicans cheating another Mexican". Well, Venesula changed the laws to allow for foreclosure. The idea is to have actual property rights that allow someone to commit the property as collateral for a loan. Lenders are still very wary because it's a political decision that might not stick the first time "loses" their house. In 20 years they might gain confidence in the new fangled "mortgage" thing. Until then the informal economy is the real economy and a Honduran immigrant might have no idea there is a formal economy.
Wikipedia: Hernando_de_Soto_(economist)a Peruvian economist known for his work on the informal economy and on the importance of property rights - where I found out about the undergound economy stuff.
The sellers were very likely involved, but price alone does not make this certain.
It is every owners fantasy that someone knocks on their door and offers them double what their home is worth. Only sometimes it happens.
Once a Buddist temple acquired some land to build on and neighboring homes doubled in price overnight. Buyers had no duty to share this information with the sellers. Was it unethical for them not to do so? I don't really think so. An offer for more than they thought it was worth should be enough reason to investigate its true value. Yet some may have had the misfortune to have sold just prior to this occurring. That's life.
"I still would have tried to make sure the person understood, before we got around to signing titles and writing checks, that the thing DID NOT RUN and wasn't going to without expensive repairs. "
Tanta, you are forgetting that these were HOUSES people were buying. Ortiz wasn't buying bricks and morter, she was buying the American Story.
If your car that didn't run was the same car that Britney Spears threw up in after an all-night bender, well then it's probably worth as much or more....see that car wouldn't be for driving....and as we know houses weren't for living in...they were vessels to bliss, wealth, and the universal dream of security, family, and acceptance.
I don't blame the NINA loans for the problems. I blame the people making them and the clearly fraudulent nature of repackaging and selling them as AAA securities. I'm still not clear on how you could expect them not to impair the pools of loans, and how you can get financially savvy people to accept that,.... Unless you factor in criminal behavior.
not sure I can agree with your statement that the seller has a responsibility to the buyer in this instance.
what could the seller have done in this situation? (assuming they're not in on this)
you may have an English speaking seller, a bunch of English speaking "professionals" and then a Spanish couple as well as Spanish speaking professionals.
there may have been a commotion, but I doubt it. Even if the Spanish speaking woman was surprised about her fake husband, how would the English speaking seller know?
It would go like this
Honduran woman: (speaking in Spanish, looking concerned)
Honduran man: (speaking in Spanish, consolling her)
Spanish professinal (speaking in Spainsh, consolling her)
Hunduran woman: seems to calm, signs her name
English seller: "Uh, is something the matter?"
Spanish professionals and Spanish speaking male: "No, it's all ok, we just had to translate a few of these words for her"
English seller: "you sure, she looks concerned"
Professional: "don't worry, this happens all the time"
English seller: "ok".
(or do you imagine they say
"STOP THE PRESSES, I REFUSE TO SIGN TITLE OVER TO THIS WOMAN UNTIL WE HAVE A SPANISH SPEAKING LAW ENFORCEMENT PERSON HERE IMMEDIATELY!!!!")
If the very smart posters here went to a foreign country, they might get taken too, because in all countries, there are the rules, and then there are the real rules, which are not written down anywhere.
Absolutely true. I taught at a university in Europe for a few years, and I learned to speak the local language well enough for normal daily-life stuff. But when it came to legal things, like property or taxes, I was completely lost. Not only is it a completely different form of the language, the subject matter is so complex I probably wouldn't have understood it in English either. So I would ask people for advice, and mostly I would go to others in the ex-pat community who had been there longer than me.
Sure, a local lawyer might have been better, but I wouldn't know how to find one I could trust, and they wouldn't know how to explain the differences between local rules and what I was used to. Besides, I'd probably have to sit through 20 minutes of their favorite fat-stupid-American jokes before we got down to business. Given the choice between that and an American friend-of-a-friend who seemed nice and trustworthy, I know who I'd pick. I can only imagine how much worse it would be if I was an uneducated Honduran living in the US.
How espectacular would that be if she showed up, that would make like three now.
Tanta - I think you are making MUCHO assumptions about the seller. Let me play 'abogado del diablo' for a second here - let's say the seller truly didn't know any of these people from Adam, didn't speak Spanish better than I speak Japanese, and couldn't tell what they were saying at the other side of the closing table?
Can you really protect yourself from a fraud suit by getting the person that you defrauded to sign a paper saying that they can't sue you for fraud?
Some loan documents in the past have contained this kind of language as part of the legal boilerplate.
A few years ago, when Household International was doing some pioneering work in subprime lending, the loan documents contained a mediation provision, so when people signed for the loan they were in theory signing away any right to sue. I'm guessing hardly anyone understood or even read this part.
When the borrowers' class action suit hit the federal court in Seattle, a judge who was otherwise unsympathetic to the borrowers threw out the mediation provision in a heartbeat and allowed the suit to go forward.
sdrenter writes:
If the very smart posters here went to a foreign country, they might get taken too, because in all countries, there are the rules, and then there are the real rules, which are not written down anywhere.
Which is exactly the problem with parachute journalism, even it takes place in your own country (i.e., a white upper middle class reporter from Wapo doesn't know what they don't know.)
quartz writes:
Tanta's point about missing information on the seller is key. In my paper copy of the article it has this key point: Ortiz's $430k purchase price was TRIPLE what the seller paid for it in 2004. In other words that anonymous seller bought the house for about $140k and a year later listed it for three times as much. And somehow a naive buyer was steered directly to that property. What appraiser did an appraisal showing a "run-down duplex" had appreciated 300% in one year?
Exactly. Bubble appreciation was 15% or so a year, maybe 25% in particularly bubblicious areas. 300% for a run-down place like that? In what universe?
Something is very fishy here. I agree that there must have been some kind of appraisal corruption.
If these are the kinds of people that make up the bulk of the pity cases we're supposed to shed tears over because they let themselves be suckered by a real estate deal, then I don't think it's as big a problem as the Post wants to make it seem. That kind of stuff is just par for the course south of the border.
Our country is rapidly descending into a third world economy with a criminal corrupt govt. and we're still proudly scorning and sneering about latin american government and culture?
I appreciate this post, Tanta. I hope you'll put more efforts like this online as you're truly a valuable source of information and someone I respect immensely.
What appraiser did an appraisal showing a "run-down duplex" had appreciated 300% in one year? What lender accepted such an appraisal? If the realtor was not somehow tightly connected to the seller or even was the seller, I would be very surprised. And I doubt the buyer at $380k got a good deal either.
I hear ya. But appraisals are based on comparables--the market. So if some other fool paid that kind of money for a rundown duplex in that neighborhood, then the appraisal had some validity on that basis. And once Mrs. Ortiz's place sold for that kind of money--well, all the other dumps around there suddenly were "worth" that much too, right? That's what a bubble is all about.
I certainly would be hard pressed justify selling it to another who plans to resell it later for a profit.
I'd want as much of that profit for my family rather than the next buyer's.
Even if you know you are in a bubble, why give the profits to the next person?
Why not jack up the price as high as possible, get as much for yours as you can, and do your part to pop that bubble ASAP with your overpriced moneypit...doing your part to end the madness quickly and ensnare as few others as possible, while at the same time helping to put your daughter through college.
Sales code V means "alteration/addition/renovation, or other change in physical condition since last assessed", so that 'triple bagger' may very well reflect nothing more nefarious than a substantial rehab on the part of Mr. Eubanks, the seller in question.
(FWIW: I'm a little irritated by people who move somewhere for 9 YEARS and don't bother to pick up the language... I'm as liberal as they come, but c'mon, 9 YEARS? NO English?)
Ditto. I spent 2 weeks in Costa Rica a few years ago. Arrived knowing very little Spanish, left knowing enough for basic interactions with merchants, waitresses, etc. It isn't that hard to pick up a new language when you are immersed in it 24/7 (esp for 9 years!)
Tanta - I think you are making MUCHO assumptions about the seller.
Well, see, my original purpose was to point out that a kind of "silent" assumption was being made about the seller in the story.
I mean, when I read that Ortiz paid $5k over list, and list was 3X last year's price, and no improvements had been done, I instantly assumed the seller was at bare minimum a greedy pig.
I have also seen enough "cash back purchase" scams to have wondered if the $5K over list didn't find its way into Salgado's pocket (she's already employed as a recipient of illegal kickbacks, why not one more?), from whence it emerged as the "half" of the "down payment." I mean, how effing greedy can you get? How could someone represented by a buyer's agent offer $5K over that price?
I did not think those questions would occur to people, because I believe it is ingrained in some of us to think that sellers who receive atrocious profits--who are "profiteers"--are "innocent."
And if you keep confusing me with Spanish, I'll call you a bricoleur.
shnapster
just looking at the transaction. the post had a question about who the seller was, that was the answer. i didn't mean to imply impropriety, just information.
If you KNEW you were in a bubble market....why sell for less?
All your gonna due is increase the profits of your buyer.
Im mean really, suppose you are an honest seller and no one wants to pay what it's "worth" since although you think its worth slightly more than you paid a few years back, the irrationaly market says its now worth at least double or perhaps triple what you paid.
I guess you could insist on selling for a number than is less than "outrageously overpriced" and insist that they only pay an amount that is only "seriously overpriced."
But why?
I mean your in a bubble that you can't convince others that it exists.
You are selling and your family gets the money.
Why increase the profit of the flipper buying it.
If you are forced to sell it for more than it's worth...why not get as much as you can for it?
It would be relevant to know what the comps were in '04 when it sold:
04/29/2004 $160,000
Was it sold under market then, or way over market in '05 at $430k.
I have seen situations where a buyer gets a property in a private sale for way under market, then turns around and puts it on the market at current market value for a huge profit in a matter of mos. (Pasadena, San Marino, Ca)
Immigrants in an immigrant community are NOT immersed in English. They talk to other people who speak their language. They are often embarrassed by their lack of knowledge.
My best friend from high school was Lithuanian and came here when she was 4 or 5. Her parents spoke Lithuanian, Russian and Polish, but never did learn English. All the Lithuanians lived in a small area of Balto, had a newspaper, a hall, and Saturday School, to pass on the language and heritage.
My sec'y's hub is Columbian and doesn't speak English. He has an excellent job.
Secondly, NOBODY reads the papers thrust before them. Except me. My grandma told me to never sign anything without reading it, and I thought that was good advice. I real very fast, so that is usually ok.
I skimmed our closing papers.
And I spoke up when I looked at a survey document that showed a house with a brick facade and a deck, because the house we were buying had neither. It was one of those in-face closings and the seller (who was in the process of eating every single cookie on the huge our lawyers had set out) was able to confirm that the wrong house had been surveyed.
I work for a title company and have been in this business for 34 years. The "learning curve" on being able to unravel these kinds of things is very steep. Our local fraud detectives, Bankruptcy Trustees etc. all call for help in interpreting who did what to whom.
All that I can tell you is there are victims out there...many of them...most often the elderly, people not fully conversant with the English language, the naive, the handicapped and the fearful.
And, trust me, there are bad guys...liars, cheaters, deceivers and the greedy.
Sales code V means "alteration/addition/renovation, or other change in physical condition since last assessed", so that 'triple bagger' may very well reflect nothing more nefarious than a substantial rehab on the part of Mr. Eubanks, the seller in question.
Interesting. The reporter calls it "run down."
What I'd really like to see is the MLS info from 2005.
Not only was this story front page - but an above the fold one at that for the Washington Post. You know the one published in the Nation's capital. And you can count on one thing in DC. EVERY politician is going to look at the front page of the WP.
A few months ago this story would have been buried in the RE or metro section of the paper.
A story like this with a sympathetic figure on the front page set off my 'greasing the wheels for a bailout' sensor.
Im mean really, suppose you are an honest seller and no one wants to pay what it's "worth" since although you think its worth slightly more than you paid a few years back, the irrationaly market says its now worth at least double or perhaps triple what you paid.
I guess the ethical problems here are kind of like the stock market a little. If I short sell a stock successfully, I am essentially taking value (for nothing) from people who took the long side of the trade.
I bought and own a few shares of SRS, the anti-real-estate ETF, and SKF, the anti-financials ETF. But SRS doesn't actually generate any real value, it doesn't manufacture anything, it doesn't do any services, its sole purpose is to capture wealth from the counterparties to the trade. BUT, it does have the (dubious) economic value of helping to smooth out the market and set proper economic prices.
Is investing in either of these funds a morally dubious activity? Is selling real estate into a bubble market at a profit a morally dubious activity?
Oh, and another thing, when someone talks a naive seller into agreeing to a higher than list price for whatever reason (most of them bad) the documentation which title companies are required to report to IRS shows that higher "sales price", I don't know what happens to those sellers when they file their next tax return.
As a footnote we did receive a corrected survey within a week with apology. I suppose it's possible we busted a scam-in-process; I prefer to think not.
Yearning to Learn writes:
Tanta or lawyers: did you understand this:
Ortiz sought out lawyer Howard Woodson for help. In October, he urged her to sign an agreement to gift the house to Hernandez. Although she refused and asked for a hearing, a Circuit Court judge ordered Ortiz to gift the home to Hernandez. It includes a clause prohibiting Ortiz from suing Salgado and Hernandez for fraud, according to court records.
1) why must Ortiz gift the house to Hernandez if Ortiz isn't on the deed (and Hernandez is). why couldn't hernandez just sell the house out from under Ortiz?
2) why would a judge say that Ortiz can't sue Salgado and Hernandez?
All of you QUIT BLAMING THE JUDGE!
THe house was going into foreclosure. The optins were (1) foreclosure or (2) a short sale.
It ended up being a short sale in Dec. (Owed aound $430,000, sold $380ish as I recall.)
(1) To sell it, the one on the loan had to get a court order quieting title.
Court orders her to sign over any claim on the property to the one on the loan so it can be sold in a short sale. (Keep in mind NO ONE was walking away with money.) Perfectly rational and perfectly reasonable.
(If the property had been being sold for more than was owed, the court would have ordered the sale to proceed and any profits split. She would have STILL been out of the house unless she got a loan on her own and met the price offerred by the other prospective purchaser.)
(2) She is barred from suing her co-owner and his assoicated for fraud in a seperate case because SHE HAD TO RAISE THAT CLAIM IN THE CASE TO QUIET TITLE!
It is called 'joinder of claims'. If the same parties are involved in a lawsuit over the same thing (here house) or incident (car accident) all claims arising from that transaction have to be raised in the SAME CASE. No coming back and filing a separate case. Period.
Guy on the loan sues her to quiet title. Shegoes in an wails 'but but but ...I can't pay for it but Iwan to keep it but but I can't get a loan on my own but but....." Court says 'co-owner wants to sell, he is on the loan, no one is making any money from the sale, it is going to be sold. You won't get anything from the sale so sign over the deed and go away."
Then she starts the 'but but but they tricked me into paying 1/2 the closing costs and I paid the mortgage for awhile' Court says (1) has this been filed as a counter-claim (answer: NO) and (2) if it was a counter-claim, would she get anything (Answer would seem to be no.)
What is the harm to her? She paid the mortgage payment for a few months and lived there for several months without paying anything. Probably if what she paid was added up, it would be close to the amount of rent.
Most probably she was barred from filing a suit for fraud or whatever becasue she did NOT RAISE it as a counter-claim in a timely manner.
Joy, you probably were just the unfortunate recipient of a mistake.
Having been in the business for a long time, I can testify that we do sometimes make them. I have been the one to take the call from some furious borrower who is being charged 75.00% interest. Ooops. We fix the note to show 7.50%.
That is another good reason to read the docs. No court would find that 75% enforceable, but if you were supposed to get 7.00% and someone mistyped and gave you 7.50%, you could be stuck having to pay that.
It could, of course, be fraud. With something like a survey, you never know. It is always best to read and to ask.
fwiw, the seller, Richard Eubanks, had other property on Reed Avenue that also sold in 2005. link REED AVE. E., 40-Richard D. Eubanks to Yenis M. Rivera and Jose C. Diaz, $225,000.
Whatever the complexities of this scam, and there are plenty, Ortiz herself knew that she was not married to Hernandez, knew it and choose to lie about it anyways. Whether she's an immigrant, a confused or underinformed buyer, or whatever excuses one might try to make for her, the fact is this lie is so blatant, that it fails the smell test. In any language, she knew she wasn't married to the guy, and she lied anyways.
She wasn't pushed into the shark tank, she lied and jumped in.
What is the harm to her? She paid the mortgage payment for a few months and lived there for several months without paying anything. Probably if what she paid was added up, it would be close to the amount of rent.
If $3000/month is the going rent for a run-down duplex in Alexandria I'll eat my hat.
Whatever the complexities of this scam, and there are plenty, Ortiz herself knew that she was not married to Hernandez, knew it and choose to lie about it anyways. Whether she's an immigrant, a confused or underinformed buyer, or whatever excuses one might try to make for her, the fact is this lie is so blatant, that it fails the smell test. In any language, she knew she wasn't married to the guy, and she lied anyways.
The claim in the article is that the claim was only written down in the document she could not read, and she did not discover it later.
Did anyone besides 2 or 3 of us here and Tanta actually READ this article???
In my case the buyer was shown property different from what was actually sold him, according to the legal description. Addresses in the area were confusing and the house he was sold had one (crucial) number missing from the mailbox.
calc risk pointed out that sales fraud should be not be over looked. how can one prove sales fraud if buyer motivated to own the property? are we supposed to babysit people caught up in a bit of tulip hysteria? greedy buyer, ms ortiz. greedy broker, mr. aguilar. greedy re investor. sounds like capitalism working well.
Similar euphoria is gripping Wall Street now. The rally of the past few days is unlikely to have any steam in it as the corrective power of the priest is open to question. No one believes that the financial crisis is over. Nor do people accept the word of the priest anymore. We have reached 'bailout fatigue.'
The last time we witnessed anything like bailout fatigue from the financial markets was in July 1998, when the International Monetary Fund (IMF) issued a $10 billion loan to Russia to assist the delinquent Yeltsin government, as a result of an economic crisis that had been building for months. Gullible market players took this loan as a sign that the corner had been turned. They contended that such intervention could only stabilize things.
In contrast, I got a call that morning from an old market hand who had seen it all before and who told me: "Sell everything; this is your last chance." He was on the money -- Russia defaulted three weeks later.
"But the prevailing template for the hard news stories of our times i.e. credit, housing, fiscal, and monetary implosions is broken. Broken by lazyness, herd psychology and foggy J. School brains."
You're shooting the messenger. Yes, much bad or superficial reporting is done. In part because newspaper staffs have been routinely slashed over the last 30 years as corporate chains buy up newspapers. Must keep the profit margin up; and the lower circulation goes, the more they slash. Vicious cycle.
BTW- the foreign language is a bit of a red herring. Ms Ortiz admits she didn't really ask anyone else. Possibly she would have gotten more bad advice, but not even asking within your community? Not even the pretense of due diligence.
Back in a few hours, kitchen drain and a washer/dryer hook-up.
In my case the buyer was shown property different from what was actually sold him, according to the legal description. Addresses in the area were confusing and the house he was sold had one (crucial) number missing from the mailbox.
Ok, I'm again 99.95% certain that the survey problem was a mistake. The possibility that it could have been something else didn't even occur to me until today. An older townhouse going for market price in an established neighborhood in a non-bubble market with an FHA 30-year fixed rate loan isn't really prime fraud fodder.
This looks a lot broader than a joinder of claims issue. You are right that compulsory counterclaims would normally have to be raised. The order in this case however also applies to permissive counterclaims which as the name implies do not have to be brought in the original action (although they can be). It is this added feature that makes the judge's ruling totally outside the pale of what is allowed in our legal system.
our economy is in sh#t and Buffett has the time to to a tv soap. what a guy. Is he that squeaky clean? I wonder sometimes.
Oracle of Omaha to play himself on daytime drama
By MarketWatch
Last update: 1:46 p.m. EDT March 22, 2008Print E-mail RSS Disable Live Quotes
NEW YORK (MarketWatch) -- Warren Buffett will be lured into a fictional insider-trading scandal during an upcoming television appearance, Reuters news agency reported.
The 77-year-old billionaire financer is scheduled to portray himself on the ABC soap opera "All My Children" during the May "sweeps" rating period, marking his second guest run on the daytime drama, the report said.
Buffett, said to be a fan of the show and a friend of its creator, Agnes Nixon, first appeared on the long-running program in 1992
"But on the day of the closing in August 2005, Salgado's brother Saul Salgado Hernandez showed up to sign the papers. Ortiz said that she was surprised but that she figured Salgado knew what she was doing. She said she did not understand any of the papers in the thick stack of documents that she signed, not even the one that said she and Hernandez were married. "I signed the papers," she said. "I didn't notice."
So she sat at the closing, and just kept signing. She didn't ask why Hernandez was there, why he was signing her documents as well. She asked Salgado no questions, like say, what's going on?
Why is this person, Hernandez, signing my documents? I posit that anyone who has lived in the US for 9 years, and been working, has a clue that legal paperwork means something, that signing said documents in change for a house valued at hundreds of thousands of dollars is not this clueless. She's now in a rental apt. ..did she not sign a lease, understanding that she is liable for the rent, due on a specified date for a specified length of time. Also understanding that with her name on the lease she is entitled to occupy said apartment as long as she upholds her rental agreement? Would she have sat in the landlord's office, and let the brother of a friend start signing the lease without asking a few questions?
And yes, I did read the article, so skip the snark.
I make the assumption that immigrants, whether English-speaking or not, are possessed of common sense and the ability to ask some simple questions about what is happening. Ortiz has navigated in this country for nine years--
are you assuming she has learned nothing in those nine years?
For a macro view of the credit pileup, I rely on Calculated Risk, a blog written anonymously by "a senior executive, retired from a public company, with a background in investing, finance and economics" and "a former bank officer and mortgage lending specialist who is currently on extended medical leave." The blog distills the news (most of it bad) from the credit world and includes occasionally acid dissections of mainstream financial journalists. Trademark line: "We're all subprime now."
Well, the whole point of getting a survey is to make sure, among other things, you don't have encroachments or easements or something that are going to cause you problems down the road.
So the fear would be that your real survey found a problem, the seller/closing agent didn't want to deal with it, so they "swapped" a "clean" survey into your package.
Unfortunately there are only about a couple million ways to defraud people in real estate transactions.
"one-story duplex in Alexandria, triple what the house had sold for the year before, and $5,000 more than the asking price, according to real estate records"
Tanta,
If I could sell a house for triple what I paid for it does that make me unethical or just lucky? The lender was stupid to believe an appraisal for 3x of the previous value. Don't the automatic lending systems raise a flag on such a discrepancy?
Also, FWIW, that specific neighborhood she bought(East Reed Ave) has the potential to undergo rapid 'gentrification'. Adjacent neighborhoods already have. It used to be a slum, but since Potomac Yards redeveloped from an old rail switching depot to med-high retail, that is becoming a prime neighborhood esp if you rip and rebuild. And with a non-trivial potential of installing a metro stop there, even more so.
Not saying that the 3x increase to 430 was not a scam, because it was. But the subsequent sale even in the high $300's has the potential of being a speculative but 'reasonable' RE investment - of course depending on the buyer; if it's another Senora Ortiz, it's another scam.
I hear you man ! My radar twitches too and I question the data - there are aspects that don't gel - You just have to accept the snark though - there is an aspect in many liberal traditions, and I'm proudly liberal ( in the old style now dead British Liberal party style ), where critical analysis, informed speculation and scepticism must be one-sided.
So it goes. just accept the snark, make the case and continue on - you'll get your reward; NOT ! but do it anyway.
If I could sell a house for triple what I paid for it does that make me unethical or just lucky? The lender was stupid to believe an appraisal for 3x of the previous value. Don't the automatic lending systems raise a flag on such a discrepancy?
I don't know. I bet I could find an elderly Alzheimer's sufferer who could be induced to pay you four times what you paid for it. Why stop with three?
My point is that I think there's a bad purpose being served by assuming that any talk about seller fraud is strictly "off limits" because of this "that's what got offered" business. There have to be limits, conceptually, to what you can accept before you become a profiteer.
Actually one of the biggest problems with automated valuations is that they do not take into account the actual buyer and seller in question in the proposed transaction. An ethical appraiser--and it seems questionable that we had one here--would have reviewed the contract, discovered that it involved the RE agent paying closing costs and would have possibly marked down the subject vis-a-vis the comps because clearly it took "creative financing" to get this thing to move at that price. Some computer wouldn't take that into account.
Of course an AVM might have been a reality check on that appraisal, but I have to conclude that the lender who funded the loan was highly interested in looking the other way.
Articl says:
"She looked at only one house and paid too much for it: $430,000 for a run-down, one-story duplex in Alexandria, triple what the house had sold for the year before, and $5,000 more than the asking price, according to real estate records."
But it also says:
"Hernandez, who sold the home in December for $380,000, according to Alexandria property records, did not return several phone calls seeking comment."
I wrote Brigid to ask if she checked into the possibility of seller fraud but the selling price last December makes me wonder.
Still, there is something in the first quote that doesn't jibe.
It seems to me that just about everyone here is a bad actor. The buyer was sleazy at best, Agular, Salgado and Hernandez were con artists who were a good deal smarter than Ortiz. On the whole, I can't say that I'm sorry she lost her assets and got kicked to the curb - it couldn't have happened to a more deserving person. It's just a shame that the other three aren't in free housing provided by Virginia's fine penal system.
I live about a mile from this house. I can't connect the dots here. I share Tanta's suspicion about the seller being in cahoots with the RE agent and/or mortgage broker. This is the sketchiest street in the area, full of eyesores, and other places were available nearby for comparable prices. Yet it's the only place Ms. Ortiz looks at. Hmmm.
Moreover, I'm baffled that Ms. Ortiz's niece would pay over list for a house in Springfield in late 2006. By that time, the days of bidding wars in that area had ended.
In addition to my suspicion about kickbacks from the sellers of these homes, I also suspect that Ms. Ortiz and her niece were more aware of the scam than they are letting on in the article. I think that the agent or brokers offered them something more than mere home ownership.
The other part of the story that confused me is, didn't the wife talk to her (real) husband about the deal? I know in my family if I came home and said something to the effect, "honey, I found a great deal on a bucket truck, the only catch is I have to pretend to have a different wife just for the financing. My real wife would probably say something to the effect, snip for family blog rating, "emphatic no!"
I agree with a previous comment that we don't have to swing the cat very hard to find more than one criminal in this transaction.
I've known people who pulled similar scams to what Ms. Ortiz was involved in and they knew what they were doing. They often didn't think it through fully, but they always knew they were doing something shady.
I too would be in more than slightly serious trouble with my wife if I bought a house claiming to have another wife. In fact, I don't know if I'd survive making the suggestion.
"In addition to my suspicion about kickbacks from the sellers of these homes, I also suspect that Ms. Ortiz and her niece were more aware of the scam than they are letting on in the article. I think that the agent or brokers offered them something more than mere home ownership."
Terminator-X
IMO, you are right on the money. During the RRE bubble there was so much "free money", "fruit hanging low", that I am sure billions of dollars of subprime mortgages went to criminals that went well beyond just laying in an application, tinkering with an appraisal, charging excess fees...
I bet I could find an elderly Alzheimer's sufferer who could be induced to pay you four times what you paid for it.
Frankly, I doubt it. Alzheimer's tend to have poor or no recall of recent events, but reasonable memories from decades ago. So asking one to pay $400k for a house might elicit "Hah, it isn't worth more than $30k!" It's much easier to get them to sell you their house for less than market, because the thought that you'd pay $200k for their house sounds great, compared to their decades old comps.
Actually one of the biggest problems with automated valuations is that they do not take into account the actual buyer and seller in question in the proposed transaction. An ethical appraiser--and it seems questionable that we had one here--would have reviewed the contract, discovered that it involved the RE agent paying closing costs...
Really? I always thought the AVM was for loss recovery in case of default. Who cares what's motivating this buyer or seller; it's the price of the rational buyer that the bank will have to wait for after FC that the AVM tries to predict. Ditto with the human appraiser who, in my view, has no business seeing the number that the RE agent is aiming for before he comes back with his "fair market" number.
Ortiz and probably Salgado are criminals. Ortiz is almost certainly a illegal migrant. The intent to cash out refi under false premises shows conspiracy to commit mortgage fraud.
They should be prosecuted and if found to be here illegally deported.
Lenders use AVMs all the time to "reality check" appraisals.
But you just used the phrase "rational buyer."
If the appraiser determines that only an irrational buyer would have signed that contract at that price, in his or her professional estimation, he or she is supposed to say so.
Then the deal doesn't go down, or not at that price it doesn't.
Then that price doesn't get into the public records.
Then the AVMs don't pick that price up.
But if appraisers let "irrational deals" go without comment, your AVM is going to spit out irrational values.
dissident, if you weren't such a pig I'd be cracking up over "intent to cash out." First you assume that all Spanish-speaking immigrants are here illegally, then you make up new crimes.
You say Salgado is "probably" a criminal, even while both she and Aguilar admitted to the Post that they were engaging in illegal referral fees (payment by a licensed RE agent to an unlicensed person for referring business).
But you know Ortiz was a criminal, even when there is the possiblity that she was merely a mule.
Also factually incorrect is stating that the house was resold for 350k and not 380k in 12/07. Obviously trying to downplay the initial appraisal fraud.
It isn't a stretch to assume some form of immigration issue mixed up in the mess. The code for these stories in Southern California is to state legal immigrant status if it exists and stay silent otherwise. It might even be part of the way Ortiz was forced out. Veiled threats that legal action could bring her or her family to the attention of the INS can be a powerful tactic.
Ortiz and Hernandez committed mortgage fraud. It simply does not matter whether she understood at the time or even ever understood. Those are issues for the sentencing phase of the trials.
Oh, and a brief public service announcement. There is a person presumed to be in Oxnard, CA who's partner in a recent border crossing just died of rabies in a Santa Barbara hospital. This person needs to find medical treatment immediately and arrange to pay the medical bills his friend has incurred.
Just like criminal behavior in the real estate world there are innocent victims pretty much wherever laws are selectively pursued.
You people are telling me that nine years ago we weren't giving legal entrance to Hondurans? You telling me she sneaked across the border from Mexico? How'd she get into Mexico?
What would you all do if you ever met a Spanish-speaking person from Madrid? Assume they swam across the ocean illegally and call the cops?
" Ortiz said they had planned to take out $70,000 in equity, half of which she would pay Salgado for her share of the down payment and for allowing Ortiz to use her credit."
Ortiz had an established financial plan and was well aware of what she was doing. There is no need to make this story into one of immigrant subprime exploitation.
OT, but just saw a commercial on cable from 877-860-CASH, where you can get a $2600 loan, with 42 payments of $216.55 and a $75 origination fee. They plainly state that the APR is 99.25%! So, at least their honest! Wonder if it's affiliated with a credit card company?
The Immigration and Customs Enforcement Agency estimates that 70 percent of the roughly 1 million Hondurans in the United States are here illegally, making them the second-largest illegal population behind Mexicans. Federal statistics indicate that a Honduran national tries to slip into the country illegally about every 15 minutes.
Immigrants in an immigrant community are NOT immersed in English.
My point was: Immigrants living in Arlington and Alexandria Virginia can easily immerse themselves in English speaking culture and learn English if they choose to do so.
Borrow $5,500, and pay back $35,000 a year later? Is a "financial plan"?
The newspaper reports it as:
In a year, when the house had increased in value, as they assumed it would in the hot market, Ortiz would refinance. Ortiz said they had planned to take out $70,000 in equity, half of which she would pay Salgado for her share of the down payment and for allowing Ortiz to use her credit. Salgado would remove her name from the title, and Ortiz would own the house outright, according to the court documents.
So the financial plan should be presented as she makes a future gain of $35K, and a solely owned mortgaged-house, for giving up $5K now and a future $35K and for access to a someone with a credit rating.
It IS a plan; all it needed was for house prices to keep going up. A LOT of people, umm, including Wall St., Bernanke et al reckoned the same.
If you say this is evidence that Ms. Ortiz does not understand finance then you have to tar BB, a lot of Wall St. with the same brush.
"Borrow $5,500, and pay back $35,000 a year later? Is a "financial plan"?"
"Borrow $5,500, and pay back $35,000 a year later? Is a "financial plan"?"
The plan was she was going to pay it back out of the "appreciation" from the house along with taking out her share of $35,000. From her point of view she was going to leverage that 5,500 for a gain of 7x. No deceit here, just bad risk taking ..
So that's how we run the courts these days? If "the odds are" you're guilty, then you're guilty?
Actually that is how we run certain aspects of the civil courts but no, I was talking about the chances of someone's immigration status being mixed up in this mess in one form or another. Perhaps Ortiz is here legally but her husband isn't and that's why she and not they were involved. Predatory deals are easier to execute when there is blackmail or an existing history of flaunting the laws of this nation.
Out of approx. 75 bidders, very few (6?) appeared to be born in the US. Lots of turbans, hispanic folks, and head scarves. A few people slowed down the auction by asking questions that couldn't be understood.
There were 6 homes on the block, ranging from fairly nice SFH (in a not so great location), to a dog of a townhouse condo (needed at least 30K of renovations to be livable). The auction was for "the right to choose" between the 6 homes. H bidder announces which of the 6 homes they wanted for their high bid. It seemed very scammy from the outset.
Mortgage brokers were present.
One dude (a fellow who spoke broken English) purchased a home for 265K, and then chose one of the least valuable houses on the list. I felt for him when the assembled groaned at his choice.
My 12 y.o. son thought it was a hoot. He said that the people who got caught up in the bidding were tools (I only corrected him for his choice of words- not the sentiment).
Any of these houses could have been purchased on the open market at or near the auction price - but at auction, the benefit of inspections, etc., was unavailable.
Predatory deals are easier to execute when there is blackmail or an existing history of flaunting the laws of this nation.
It certainly seems true that immigrants without documentation are more likely to be preyed on, because they can't go to the authorities without getting nailed on their immigration status.
Did you assume that Aguilar, who has a VA RE license, is illegal? How about Salgado? How did Hernandez get a Circuit Court decision in his favor if he were deportation material? Do the "odds" only support Ortiz being "illegal"?
All I'm asking for is full enforcement of existing law. It was upsetting to see a nice looking Playboy model deported, but such are the breaks.
Read the article, it mentions that she fled some hurricane and the time line does not support waiting for a immigrant visa. Cooks that don't speak English don't come in on H1B's.
I did forget though that perhaps the perp should be looked at by the IRS to see where the funds came from. They should be stripped of assets before deportation if found guilty.
You claim to be good at smelling out BS and I believe you are. Putting lipstick on these minority fraud rings just confuses the issue.
I went both ways on the question of whether this post would be impolitely off-topic or not. I decided that if a poster here isn't banned or getting his posts deleted on a charge of racism, an informational housing-related post like mine wasn't so bad.
Here's my line of thought, along with data sources to recreate the chart I'm looking at.
Premise: When the economy is strong (low unemployment rate) and mortgage interest rates are relatively high in comparison (indicating restrictive credit conditions), that's a sign that the economic expansion is nearing its end and recession will soon begin.
Premise Two: When the economy is in recession (high unemployment) and mortgage rates are relatively low (indicating stimulative credit policy), the recession is nearly over and/or the expansion has begun.
For this exercise you'll need a spreadsheet program and some data. Here are the sources for the data:
(The mortgage rate data goes back to 1971, so you'll need to adjust the "output options" on the BLS data-page to get unemployment rate data back to 1971.)
What you'll need to do first is get the unemployment rate data and conventional mortgage rate data into your spreadsheet, line up the dates, then adjust/format the two pieces so they both properly reflect % rates in the cells of your spreadsheet.
Now, divide the unemployment rate by the mortgage rate for the same month(s), all the way through the array (February, 2008 is the most-recent data available).
Chart this result.
Now you'll need to use the NBER recession dates to create the recession bars, like CR does with a lot of his charts.
Here's what you should see when you're finished.
First, that extremely low ratios indicate an economy nearing/in recession, with extremely high ratios indicating economic expansion.
Second, at some point before each of the last 5 recessions (typically within a few months, with the notable exception of the 1990-91 recession with a lead-time of a couple of years) the ratio of unemployment rate/30-year conventional mortgage rate drops down into the mid-50% area or lower.
The third thing you should see is that either near the tail-end of a recession or at the beginning of the post-recession expansion, the ratio rises at least into the mid- to high-70% area.
Finally, you should see that the most-recent lows in this ratio (approx. July, 2006-July 2007) didn't get any lower than about the 69% before it bounced up into the +80% area, a favorable level indicating an expanding economy.
The unemployment rate never got so low as to cause the economy to grow at an unsustainable, inflationary rate that would cause the Fed to slam-down hard on the brakes and sharply restrict credit. Just the opposite, actually.
So, no recession, only slower growth, and be skeptical of prophets who are making assumptions about recession based on data from a single economic sector, ignoring all other variables regardless of their importance.
dissident, "fraud rings" are illegal, immoral, and the sort of thing I will expose if ever I get the chance.
Not a one of them is "worse" if it's perpetrated by a "minority" than a similar fraud ring perpetrated by native-born English-speaking white cretins. Fraud's fraud.
You give yourself away by calling it a "minority fraud ring."
sk, she doesn't "gain" $35K. She's deeper in debt by $70K. She would have had to borrow the $35K to pay off the $5,500 loan from Salgado.
Tanta
You mean that the refi would increase the loan amount so she's actually further in hock to the tune of 70K of which 35K goes to payoff Ms. Salgado - I know that and you know that - we didn't get the memo that houses magically produce money out of their wazoo - but apparently Bernanke didn't know that, Mozillo didn't know that - the refi embed in the MBS tranches didn't know that.
Quotes available if needed to back the above. I'll give a BB quote:
With regard to household consumption, perhaps the most significant effect of recent developments in mortgage finance is that home equity, which was once a highly illiquid asset, has become instead quite liquid, the result of the development of home equity lines of credit and the relatively low cost of cash-out refinancing. Economic theory suggests that the greater liquidity of home equity should allow households to better smooth consumption over time. This smoothing in turn should reduce the dependence of their spending on current income,
Aug 31st
So, who are you gonna believe has the correct finance theory - you and me or Ms. Ortiz, Mr. BB and Angelo Mozillo amongst others ?
I said "states", as did you. It's plural. I'm sure you can find more, then I'll find the "conservative" states that have done the same. Then we can start the name-calling.
"Salgado would remove her name from the title, and Ortiz would own the house outright, according to the court documents....
Her own credit was not good enough to help Ortiz, but that of her brother, a construction worker, was, she said."
Look at it another way, Ortiz was willing to pay $35000 for the use of another's good credit score. How much that would have saved her in interest, we don't know but if the loan was around 7.50%, as Tanta guessed, that might have been cheaper in the long run than paying a true subprime mortgage rate...
When I sold my house in VA in 2004 a couple of weird things happened at settlement that gave me pause, but at that point I was clueless about the easy credit environment. I met my buyer for the first time at settlement. I remember the attorney stating the terms of his loan several times in this ominous tone before he gave the buyer his papers to sign. At this point, I had already signed mine. If I remember, it was a 100% interest only loan and, being a 30-year-fixed sort of gal, I was shocked. Silly me.
After we finished the buyer gloated to me - "you didn't ask enough for your house". I got twice what I paid for it, though that appreciation all came in the last 3 years of the 12 years I owned the house. Then he asked if he could bring his architect by because he had not come in the house yet. He had to ask since I was renting back for a month. It was only then that I figured out he was a speculator and trying to flip the house.
My point is that back then I think few people outside of the housing industry really understood what sorts of things were going on except for those trying to take advantage of the bubble and the easy credit. Of course, there is little excuse now.
This discussion about the seller's moral responsibility is interesting, but I think it would be the rare situation where an honest seller (not one who is conspiring with the other parties to defraud someone else in the transaction) would find themselves in a position to save a buyer at the settlement table. But I will say that after that experience, I was very uncomfortable with the anonymous transaction that occurs in my current state of Oregon where the escrow process is used. It was too weird to buy a house without ever meeting the seller so I made a point of asking mine for a walkthrough before the sale was final. We talked about why we liked the house and I bought a piece of her art (ok, it is Oregon).
For me the WaPo story illustrates the same disturbing trend in our society that jingle mail represents. And that is a loss of values that started with our businesses and has now "trickled down" to individuals. It's all about the money I can get today and little about building a company or product or life that sustains us and those around us.
Marcus Aurelius writes:
I said "states", as did you. It's plural. I'm sure you can find more, then I'll find the "conservative" states that have done the same. Then we can start the name-calling.
I didn't say States and am perfectly comfortable with presenting one egregious example rather than a litany of opportunities to find fault with some minor aspect. Neither I nor the other poster you have confused me with said anything at all about other states only that left wing states have a problem of their own making because of selective law enforcement.
Any state that does have sanctuary cities. Any state that does not require verification of immigration status before issuing driver licenses or personal ID that can be used to vote.
Any state that does not check and report immigration status for criminals. Any state that does not check immigration status before providing any social service. Etc, Etc.
As for states that enforce the law start with ID and AZ.
Massive monetary fines to employers of illegals as well as revocation of business licenses for second offenses. No benefits of any kind without proof of immigration status.
Works like a charm. They self deport.
I read this twice, and of all the scams I'm aware of, this is one of the silliest and I think something rather large was missed, first by the parties to the transaction, and then by the reporter.
The focus on the realtor is distracting from what I see as the basic transaction: seller sells to Hernandez and Ortiz, and "Ortiz got suckered into making [Hernandez's] mortgage payments."
Ortiz went into title (a benefit) and presumably got a place to live (another benefit). What did Hernandez get? Although he was on title (a benefit), he was the sole mortgagor (a burden). It's not clear he had any ability to evict Ortiz for not making his mortgage payments. As a co-grantee on the deed Ortiz got the deal, and the alleged fraud is irrelevant to that.
Now, I'm at a loss to figure out why these folks did things this way. Ortiz was functionally a renter. She shouldn't have been in title if your Hernandez.
I trust Tanta' ability to recap the story, and share frustration about the absense of information on the seller side. But, I have to conclude, unlike her, that that is where the real story is and that this a fatally flawed reporting job.
Hernandez is the one who's really getting the beating here.
My guess is that a large amount of cash disappeared somewhere at the point of sale (an undisclosed double closing?), and that Hernandez is on the hook for it, and that he got at least some of it [illegally].
Well...I'm black, so let's get that out of the way...
Next, I stopped going to HousingBubbleBlog because I simply got extremely fed up with the racist immigrant bashing. Lordy, but does that many mommas neglect to tell their sons (and it's mostly boys) that whining is unbecoming?
Mark, dissident, you guys are more or less loser whiners, just like that bizarre japanese guy who went on his own antiimmigrant rant on another thread.
anyways, Tanta's suspicion about the seller are quite appropriate.
And yes, it's quite annoying that there is still a preference to report on such rings when they are about immigrants or minorities, and not whites. Fraud rings like that exists everywheres, and most victims are white.
I wish I were as smart, savvy, and secure as some of the people in this thread, such that I could never fall victim to a snake oil salesman. (Particularly when everyone from Alan Greenspan to Time Magazine -- not to mention eight variations on Flip This House all over the tube -- was sending the same message as the realtors.)
Clearly only the greedy and the stupid get taken, right?
Salon.com did a piece on this stuff last August. The following, signed Anonymous, was posted in the comments:
Will someone help people who have been targeted by predatory lenders? Please?
I went through the process of buying a house during the height of the boom, and I think it is unfair to label many of the victims (the people losing their homes) as greedy or stupid. When I started looking (with no chance of putting together a down payment for 5 years or so) for houses, I stepped into a strange and surreal world of extremely friendly people who gave me, even then, a sense of doom. The day I walked into a real estate agent's office, she told me that I could get a loan with 0% down, and then she took me to her friend, a lender. He looked at my assets (I owned nothing except a 25 year old car--I had just left grad school) and said that I could buy a house in a range that left me breathless. I mentioned that I was not a US citizen nor a resident alien (I was in the US on a legal working permit), and they told me that in the US anyone can buy a house. I mentioned that I was single and that I had no guarantees that the job that brought me to the area would last, and they assured me that I could sell in a year if needed. In tandem with the lender, the agent took me to houses that were palatial (in my opinion)--they were gorgeous homes with numbers of bedrooms that a single woman with two cats would have no need for. When I mentioned that I did not feel comfortable buying a home that would lock in 60-70% of my monthly income, they offered ARMs and 40, even 50, year mortgages. The way these offers and alternatives was offered to me, it was almost impossible to NOT dream of owning one of the palatial homes. These lenders (and agent and the entire system) did not give me facts, they offered expertise (they were experts and I didn't even know what equity really meant), knowledge, and, worst of all, the possibility of security. To a single woman, the security of making a sure bet investment (this is the day and age of Enron) was intoxicating.
However, perversely, after living in a 420 sq. feet studio for several years during my grad years and after experiencing poverty (as a foreign student I couldn't get loans, which made me very wary of these easy housing mortgages), I felt that something wasn't right. I settled on a modest house (40% of my income)--to the absolute horror of the agent and the lender (horror expressed to me many times and once the lender even got annoyed with me and told me that I could get more equity with a more expensive home, which didn't make sense, as I pointed out to him because i would be spending more in interest--with a fixed interest rate.
My point is that unless you bought a home during the housing boom and unless you are one of "those people" these bastards targeted (single, young, foreign, poor, uneducated about finances--anyone who has been marginalized), you cannot throw stones at us. I had my experiences as a grad student to rely on as well as a sense of insecurity after 9/11 when so many foreigners were targeted. If I had not been told by the business offices where I did my studies that foreign students are not eligible for loans, period, and if I had not felt that my time in the US may be impermanent, I very well would have gone for the palatial home, NOT because I am stupid, but because the system these used car salesmen had created.
These lenders need to be targeted. And someone needs to step in HELP the people who are in danger of foreclosure. I am in a good place, and even with house prices plummeting, I can still make a bit of a profit if I decide to/can sell. However, around me, in my subdivision, there are houses that are foreclosing and my heart goes out to them. This is not about money and the market. This is about human beings.
I reread that piece from time to time, and try to remember all the stupid mistakes I made when "I should have known better" but the circumstances of my life were such that desperate hope trumped inherent suspicion.
Doesn't it bother anyone that the seller Richard Eubanks sold an almost identical house 15 doors down the street for considerably less 10 months prior? The only difference I can see is the one bought by Ortiz had a finished basement. Is a finished basement really worth an additional $205,000?
106 E REED AV
08/25/2005 house is sold by Richard Eubanks for $430,000
04/29/2004 house is bought by Richard Eubanks for $160,000 Link
40 E REED AV
10/15/2004 house is sold by Richard Eubanks for $225,000 to Yenis M. Rivera and Jose C. Diaz
11/18/1999 house is bought by Richard Eubanks for $40,000 Link
Ortiz was induced to sign a statement that she was Hernandez' wife, although she seems to have met him for the first time at closing and she's already married to someone else.
Ortiz is as dumb as a rock.
2 questions:
Where was the husband during all of this? And why does he leave his disablingly stupid wife home alone?
Doing a transaction you don't understand, in a language you don't understand, with no lawyer, and that requires you to sign false documents - how could anybody smarter than a rock have expected this to do anything other than go south?
A man named Walter Salgado bought the house next door. Coincidence? Any relation to Maria Esperanza Salgado or her brother, Saul Salgado Hernandez? 104 E Reed Avenue
12/17/2007 $277,978 SALGADO WALTER
05/01/2006 $380,000 JOHNSON LARRY L
The seller, Richard Eubanks, owns 42, 48 E Reed Avenue. And I'm curious who EAST REED AVENUE LLC is. The estate of Lois C Neebe is listed on a number of the properties.
Per Birdseyse's comment: The Hernandez angle is tough. If he weren't Salgado's brother I'd say he would be a victim to. Because by my math he's netted:
($430,000) note + $380,000 sale + ($6500)? in 'downpayment'/closing costs = -$50,000 - -$56,600
So I wouldn't describe it as a 'one year cheaper than free option' because he could have taken a loss in this whole mess
Now, he probably would have gotten a piece of the $35K of the $70K appreciation, so he had an upside. And with the $21,000 payback, and whatever else isn't in the story, he probably didn't do any worse than break even.
And of course, since everyone is related to everyone else in this story, there are undoubtly unmentioned considerations and cash flows that makes him complicit.
Morning Music
?
Now to read the post.
Personally I want to hear stories about the folks who were priced out.
The folks who in normal times would have been able to buy a house at 2.5-3 times their yearly income with a 30-year fixed-rate mortgage paying no more than 30% of their monthly income as for housing.
These are folks who go to school, get a job, save their money for that 20% down-payment, only to be blown out of their water by folks "with poor credit" (as described in the article) came in and offered even $5,000 more than an already-inflated asking price.
I'm eagerly awaiting a meltdown which doesn't appear to be coming with all the scheming going on to let the current condition stand (new non-confirming rules, frozen ARM increases, whatever else Congress will think of).
--
y.
First ?
I read that story last night before I went to bed - Heart-breaking and outraged me at first and in many ways still does, but there's a nagging but, but, but... - there's an oughtohavenode quality to all this and something else -
I've done immigrant rights/advice/translation work at not-for-profits work in the past. There are a few oddities here that I'm still musing about. I'll see if I can coherently describe them in a later comment.
I'd like to have seen an Honduran origin reporter in the tagline.
-K
These are folks who go to school, get a job, save their money for that 20% down-payment, only to be blown out of their water by folks "with poor credit" (as described in the article) came in and offered even $5,000 more than an already-inflated asking price.
You are letting your self-satisfaction get in the way of your reading skills. I find this happening a lot.
How can you read this story and be sure you know that Ortiz had "poor credit"? It's possible she just had "no credit." It's possible she had OK credit, but no one explained to her that her FICO wasn't high enough to get a 100% loan at 7.5%.
And it seems obvious to me that she didn't know the price was inflated. I can't believe she even knew she was offering more than list. Who would have told her what the price was? The slimy RE agent who was busy defrauding her?
All you're trying to do is drum up class resentment here, I think. You want to see "good" people like you the victims of "bad" people like Ortiz. It doesn't seem to occur to you that you both might be "victims."
Why is that?
One person's predatory lending is another's idiot borrower, I guess. Personally, I'm sick of stories like this -- don't even bother to read them anymore. I accept that there may be a few sympathetic figures ('victims') out there, and for every one of those doubtless a matching scumbag broker/lender. But I'm not going to reason indcutively from that to conclude that 'predatory lending' was a, certainly not the, major factor in the housing bubble.
One person's predatory lending is another's idiot borrower, I guess.
OK, fine. Assume she's an idiot.
Is it OK to go find an idiot who will make your mortgage payments for you, get none of the upside potential if the thing appreciates, and also get nothing for her trouble if it depreciates?
Does this make Hernandez the "smart borrower"? He got a loan, got on title to RE, and never had to make a payment. He got an signed agreement that says he can't be sued for fraud. It sounds like he got out in a short sale.
Is your only measure of someone's value how "smart" he is?
All the non-Tanta comments yet miss the point.
I read Tanta's post as an exhortation to the journalists to do a better job
So far, the bulk of the mortgage sob stories have been canned and trite and woefully missing in important factual details.
This particular story was no different.
I don't understand this part:
so this woman and her husband bought a home with a payment way higher than they could afford, with the goal that they refinance later...
but refinancing doesn't bring down the principal... is there any way that would have meaningfully brought down the payment?
was the plan to refinance and take money out and use that to pay the mortgage until you can refinance to pull money out to pay the mortgage, repeat ad infinitum?
or does refinancing work because you have 2 years of payment history and thus could get out of the subprime batch?
I've just never understood the logic of people who get into a house with payments that START at more than they can absorb.
or is the idea with this story that they don't speak English so they had no idea what they were buying?
(FWIW: I'm a little irritated by people who move somewhere for 9 YEARS and don't bother to pick up the language... I'm as liberal as they come, but c'mon, 9 YEARS? NO English?)
Tanta, I was just reading the article:
"Despite her poor credit, Honduran immigrant Glenda Ortiz easily got a subprime loan for this Alexandria home, bought in 2005 for $430,000. It was foreclosed on last year."
My intention was not to stir up class resentment; Mrs. Ortiz is certainly not better off than she would have been if she had not been involved with this scam.
I admit I'm a bit suspicious of folks who think they may be getting something for nothing, or something for more than they can afford, and are faced with the rather fishy process and proceed anyway. Would you buy a house from someone going door to door? I'm leery of even getting Girl Scout cookies that way. I freely admit that the house-buying process is complicated by lots of players trying to secure their commissions.
I only point out that this article is about folks who were fell for the scam while there are folks who did not are nonetheless operating in an environment where this sort of thing is happening, to their detriment.
This "run-down, one-story duplex" sells for $5,000 more than the asking price and the folks down the block are going to think their house is easily worth just as much (I "zillow'd" it, it must be true!)
I agree with Tanta et al, more details are needed on exactly what went on here.
part of the problem with a lot of these deals/scams was that they occured with bubble mania logic...
I remember perfectly rational people thinking houses would go up 20-25% FOREVER. It doesn't even make sense, but they believed.
So I'm sure it's the same with this story. back when it was proposed, it made "sense" in a bubble logic sort of way?
now it's collapsed (of course) and the fingers start pointing?
and when we try to reconstruct what happened, we can't understand what the heck was going on because
1) most of us never thought that crazily to begin with and
2) the bubble logic is hard to remember even for those who had it.
Does anybody know:
what kind of judgment can happen that would preclude the Ortiz family from suing for fraud. this part was very hastily written in the story... I didn't understand it.
Every speculative mania is the same.
The last suckers in the game end up as viticms, meanwhile the early entrants are perceived as genuises. The greater fool theory wins again!
We had an administration that pushed the "ownership society" and many people bought into it hook line and sinker.
sunsetbeachguy: I think I get Tanta's point: journalists, please do more research, dig deeper, uncover the entire scheme behind the fraud, and warn us of the dirty tricks yet to come.
I reject any tones of anti-immigrant backlash here, intended or otherwise ("9 YEARS? NO English?), having had grandparents (who were US citizens) here for twenty years who didn't see a need for English.
Perhaps it's the process which is part of the problem? Studies show that many of the global poor are poor because of the complexity of acquiring private property.
Tanta, could you comment sometime maybe about whether there is in fact an increase in the number of actors in the home-purchasing process? I'm thinking seller's agent, buyer's agent, appraiser, inspector, mortgage broker, real estate broker, etc. Were those guys always there? Or were the jobs increasingly staffed by newbies who moved into them as the marked boomed?
RE: "poor credit" v. "no credit"---my father-in-law, who weathered the Great Depression and went on to spend 10 years in night school so he could get an engineering degree, never took credit on anything his whole life (except his mortgage). Cash for everything, including his cars. Saved like a crazyman. After he retired he was getting ready for a vacation and discovered he needed a credit card to validate his existence and creditworthiness. When he applied, he was turned down because he had no credit history, although the man never had a late payment on anything in his life.
That said, in PA where I live, predatory lending is closely tied to discriminatory lending, and the PA Human Relations Commission has done ground-breaking work on making inroads against it. Where you find the kind of business practices outlined in Tanta's post, you will often find discriminatory animus behind them. The fact that, in this case, it was Latinos preying on a Latina, doesn't invalidate the likelihood.
so this woman and her husband bought a home with a payment way higher than they could afford
No. You're confused already.
Ortiz's real husband was apparently not involved in this at all.
Ortiz was talked to "buying" a house with someone who she had never met, who was the brother of the relitter's "sales assistant." She was asked to sign a statement that she was the brother's wife only because that's how you scam the lender into accepting this transaction. It wouldn't have been so suspicious to the lender if a husband and wife were both on the deed, but only the husband was on the note. Back in the bad old days, that was common (married women rarely got credit in their own names). But the lender is always suspicious in a situation where two unrelated people are on the deed, but only one is on the note.
Rubin demands a taxpayer bailout:
Former Treasury Secretary Robert Rubin called Friday for quick government action to tackle the rising level of U.S. home foreclosures and he indicated that taxpayer money would have to be used.
"There is a strong need for urgent action," Rubin, who is chairman of Citigroup's executive committee, said. "I would be very, very seriously considering the possibility of using public funds in one form or another."
The Federal Housing Administration should be involved in any stepped-up government effort to help homeowners facing the loss of their houses, Rubin said during an interview on Bloomberg Television's "Political Capital with Al Hunt."
"The piece that's missing now," he said, "at least in my judgment, is addressing all of these mortgages that face foreclosure."
Search - Global Edition - The New York Times
Remembering poor Richard:
frontline: the wall street fix: mr. weill goes to washington: the long demise of glass-steagall | PBS
You commented that she had received a good rate. I dont think so. I dont care if it was 0%, she still could never afford this dump (home).
This scam is right out of the REIC's playbook.
Tanta,
I'd love to see stories about "predatory real estate selling" but, as a layman, I'm not sure I would recognize it until after it became a widespread problem so I don't have much hope of reporters getting wind of it until it becomes commonplace.
so this woman and her husband bought a home with a payment way higher than they could afford
No. You're confused already
Ortiz's real husband was apparently not involved in this at all.
Sorry, it's hard to talk about this story due to the story itself
Ortiz got a straw-buyer (fake hubby) to help with her "credit", but she and her true husband moved into that house and made the payments. It was she and her real husband I was talking about. I consider them as having "bought" the house even though neither were on title.
Tanta, could you comment sometime maybe about whether there is in fact an increase in the number of actors in the home-purchasing process? I'm thinking seller's agent, buyer's agent, appraiser, inspector, mortgage broker, real estate broker, etc. Were those guys always there? Or were the jobs increasingly staffed by newbies who moved into them as the marked boomed?
Well, you know, there are a lot of people involved. The theory, of course, is that it's harder to run scams with that many "independent" participants.
I would never be nostalgic for a world in which the RE agent, the lender, and the appraiser were all the same party, or in which the same RE agent "represented" both buyer and seller. It's awfully easy to have a "conspiracy" when you get to play several different roles in the same transaction--it's like "conspiring" with yourself.
There were not just too many newbies, there were too many operators looking to shake a few bucks out of the rubes. They were therefore not hard to recruit into the conspiracy.
In our case, we seem to have the mortgage broker and/or title agent married to the RE agent, and the RE agent's "assistant" being the brother of the "co-buyer." So it's not that there were "too many" parties; it's that in reality there was so much incest here that there were too few.
y... I can tell you that story. Working like a dog, driving a 1987 car (which I love)not remembering the last time we had steak? Sitting on the couch with a revolver because... well don't go out after dark. Being called doom and gloom by friends, because 'smart' people know it's a great time to buy a house. Our senator had a town hall meeting yesterday morning regarding a housing bill that he is proposing, involving a 15,000 tax credit for anyone who buys a home in or approaching foreclosure, and within 3 minutes of sitting down a reporter was asking me what I was doing there! Something stumbled out of my mouth about being a taxpayer and registered voter, if I'm not mistaken though, some would question my right to vote... not being a landowner and all!
have a great weekend, Martha. :>)
Tanta's post was to serve two purposes; one, to highlight (typical) journalistic sloppiness; and the other, to point out an even more (apparently) blatant example of RE purdify.
Anyone imputing stupidity regarding this "buyer" Ortiz, should consider that there are a lot of people who trust those whom they believe to be professionals because they believe in the inherent idealism of professionals; and, they acknowledge that they're not experts themselves. They're not necessarily stupid, just not as cynical as most of us have become.
One needn't be stupid or greedy to be taken in by con men. The "con" is a recent contraction of confidence. These criminals gain people's confidence.
...the judge's order corrected the "erroneous" housing document to clarify that Hernandez and Ortiz are not married.
Add the judge to the list of perps.
BTW - I have now heard of three people who are buying new homes now and "renting out" their property which is underwater. The intent is to let the rental go back to the bank.
We should read about these scum bags in a year or two if they fail. If they succeed and they bought down their mortgage they will be hailed a real estate experts.
I consider them as having "bought" the house even though neither were on title.
Ortiz was, in fact, on title.
She was not a borrower for the loan.
At the end of the day, all she did was rent the house from her "helpful" co-buyer, who was planning on taking half the appreciation when she cashed-out someday without having ever made a payment on the loan.
While there's this confusion over "bad credit" and "no credit," please notice that for all the months that Ortiz did make the payments, before finally running out of options, she never got "credit" for that on her credit report or her FICO, because she was not the mortgage account holder and it was not reported in her name.
Tanta or lawyers: did you understand this:
Ortiz sought out lawyer Howard Woodson for help. In October, he urged her to sign an agreement to gift the house to Hernandez. Although she refused and asked for a hearing, a Circuit Court judge ordered Ortiz to gift the home to Hernandez. It includes a clause prohibiting Ortiz from suing Salgado and Hernandez for fraud, according to court records.
1) why must Ortiz gift the house to Hernandez if Ortiz isn't on the deed (and Hernandez is). why couldn't hernandez just sell the house out from under Ortiz?
2) why would a judge say that Ortiz can't sue Salgado and Hernandez?
Great disection Tanta,
I recall a realtor here in my city who was responsible for selling half of an entire phase of condos (talked to the site supervisor). Apparently he would bring up people from Mexico and get them to buy new condos from the builder. They are mostly empty and bank owned now but the builder got theirs and I think everyone new it. The builders were predatory sellers here.
People have been getting suckered by bubbles since forever. That is why institutions such as lenders and builders have a greater responsibility. This is the reason you have standards developed over time, immune from emotion and greed, that will act as a buffer against understandable greed, ignorance, and deceipt. The fact that these institutions ignored and/or changed the standards is inexcusable. Everyone's to blame, but the banks and lenders knew better. Unlike individuals, who tend to draw on their own history, the institutions have the benefit of generations of mistakes.
OK - from a recent immigrant minority angle I muse about these things in the article:
But the underlying story of predation is quite intact and both outrageous and heartbreaking.
-K
Oh tanta,
now it makes total sense.
this goes to show how convoluted the game is. "normal" people (like me, and possibly Ms. Ortiz) don't think about the possibility that the mortgage could be in one name, and the deed in another.
I wonder why the lending bank allows this? or is it something they never check?
I honestly wouldn't be able to understand anything without you.
gosh.
I agree with your criticisms. But I think her emphasis on the monthly payment as a percentage of the couple's income instead of the actual mortgage interest rate made sense. The interest rate was probably quite reasonable for the borrower in question. But the fact that anyone would have made such an unconscionable loan that was doomed to forclosure was the galling part that she felt needed emphasis. But still, it only would have taken, what, five characters [x.xx%] for her to tell us the interest rate? You get the feeling it was deliberately left out because it might not contribute to the readers outrage. I hate that manipulative shit.
Once again (and again, and again) Tanta is absolutely right about the underlying story behind the story. The Post Watergate "President's Men" era of modern journalism is by and large abysmal when it comes to real news stories. Sure, the NYT magazine still produces nifty and interesting cultural pieces. But the prevailing template for the hard news stories of our times i.e. credit, housing, fiscal, and monetary implosions is broken. Broken by lazyness, herd psychology and foggy J. School brains. Excellent journalism currently looks like a lot more like what appears daily in Calculated Risk and not the mainstream outlets. Viva bloggers in pajamas. Viva Calculated Risk. Viva Tanta.
why must Ortiz gift the house to Hernandez if Ortiz isn't on the deed (and Hernandez is). why couldn't hernandez just sell the house out from under Ortiz?
ORTIZ IS ON THE DEED.
I told you guys that these scams are hard to follow.
ORTIZ and HERNANDEZ are both on the deed, jointly vested in title to the house.
ORTIZ and HERNANDEZ both then had to sign the mortgage document, because only owners of real estate can pledge it as collateral for a loan.
But only HERNANDEZ was a "borrower." The note was signed only by HERNANDEZ, who was the only party the lender could collect from.
My guess is that the judge thought the current noteholder (not the original broker) had been defrauded, because ORTIZ' ownership interest in the property was getting in the way of the lender foreclosing against/suing for non-payment HERNANDEZ.
The judge probably thought ORTIZ was getting out without an FC on her record--by deeding over the house to HERNANDEZ only (that's a deed given from O and H to H only), she's out the picture. She was never on the loan, so no FC will ever appear on her credit report.
The agreement not to sue is probably because the judge thought she should have known better.
the more I think about it, the Ortiz family knowing English wouldn't have helped in this case anyway.
the reason: most of these stories we've heard to date are convoluted strategies, and are only printed in fine print on page 397 of the loan documents...
then later the loan docs are sometimes changed anyway.
So I doubt English had much to do about anything.
same story could've happened with an anglo-saxon catholic grandma who teaches English at the local High School being approached by a "nice christian man" who helped get her into a house until it all falls apart later.
I just feel like there must be a better story out there somewhere than this one.
Yearning to Learn,
Good catch. That makes me think the victim was more complicit in the scam than the article leads us to believe, and maybe this was a case of "no honor among thieves".
Sorry, YTL, we crossed comments there.
Yes, even very bright people who are not RE/mortgage experts can get sucked into confusion vortices about the note/mortgage distinction and the owner/borrower distinction.
Similarly to say you are married to somebody else in the docs ???
You are assuming she knew that's what the paper she was signing said. I am not. I suspect she found out about that part later.
As far as the rest of your comment goes, I haven't got the unmitigated gall to claim I "know" all about what all those immigrants all do in all cases because, you know, they're all alike. So I will remain an ignorant white citizen who assumes that the immigrant community is just as diverse as my own community, full of good and bad, naive and informed, "macho" and rational, etc.
Thanks for clearing that up Tanta. But I think the judge's ordering her to waive her right to sue is very strange. If she was really wronged, a decent judge wouldn't have done that to her. And if the judge didn't know enough of the facts involved, I can't see how they would arrogate to him/herself the presumption to preclude her from suing the malefactors. I suspect there's a significant part of the story there, and the reporter missed it.
I wonder if the rainbow coaltion (or some other group) would have held a march if this woman was not allowed to get a loan in the first place?
I just feel like there must be a better story out there somewhere than this one.
"Better" for what? On the assumption that it's true, what's better than the truth?
You mean the "better" story is one where the "victim" is 100% sinless ivory-pure white-hatted, and the "perps" are 100% evil black hats?
Why the hell do educated, informed people require Sunday school tracts and treacly one-dimensional fables before they find these stories satisfying?
Why is it that nobody can be both foolish and a little dumb and still a victim?
Why is it that we can't see this as a problem with financing and real estate transfer practices, instead of a tear-jerker?
Look, people, the world's a complicated place and people are complicated people. No story of predation and profiteering is ever going to make anyone happy if your requirement is that the "victim" be Mother Theresa.
The classic excuse of every con man is that the idiot mark had it coming. Jeebus.
Like I said Tanta:
I can't understand anything without you.
Are you interested in a "Chief-Executive of Helping YTL" job?
it comes with a company pony.
I have to say, as always I'm not sure if the victims in this story are really victims or if they were accomplices that turned victim when it all went down.
if this family was the victim of a predatory ring, then my heart goes out to them. They wasted 10's of thousands of dollars on overpriced RE.
if instead they were speculators who understood what was going on originally, but now feel bad because it went wrong, then they get no sympathy.
there is no way to tell.
and I get these sneaking suspicions that the WaPo purposefully chooses these types of stories so that we can blame the possible-victims more (non English speaking people, so silly immigrants, etc etc etc)
there are unequivocal examples of predatory lending. off the top of my head:
in the movie "Maxed Out" (worth seeing IMO) there is an obviously retarded African American man. mortgage folk had him refinance his home (out of low rate govt mortgage), taking huge fees and leaving him with nothing. They had to help him sign the papers (he couldn't read or write) then they foreclosed on him and took the home.
(on YouTube it is at the 30:00 mark, he signs at 31:55)
I haven't read the comments here, but I do have one beef about stories like this. Forgive me if this is a misperception.
It appears these journalists are taking situations from the skinny ends of the bell curve. They are picking out stories that are not mainstream, and sensationalizing them to sell papers. People will and have always been taken advantage of, and that will always continue to be so. However, that doesn't mean this has anything to do with the predicament we're in now.
I'm not saying it isn't true, and I'm not saying it doesn't happen. I'm not saying nothing should be done about it.
But I am a little tired of out-of-the-mainstream, peculiar situations that are treated as run of the mill situations that are happening across the board.
That's all.
ORTIZ should never have made a payment and lived in the place for free since they were never the borrower.
"(FWIW: I'm a little irritated by people who move somewhere for 9 YEARS and don't bother to pick up the language... I'm as liberal as they come, but c'mon, 9 YEARS? NO English?)
Yearning to Learn | 03.22.08 - 10:38 am | # "
Ditto on that one.
I was perusing the NYS Retirement System Website and noticed that they now provide all services in Spanish.
You need to work for ten years to vest in the retirement system.
The last suckers in the game end up as viticms, meanwhile the early entrants are perceived as genuises.
Exactly. Here we are, in another thread, going to "dissect" the last sucker over and over, without any mention of what I tried to get at in my post: who were those "early entrants"? What kind of human being sold that home in the first place?
Is it, like, not allowed to criticize sellers?
"What's so "innocent" about taking advantage of a naive, uninformed, and unrepresented buyer to profiteer off real estate?"
Chalk that up as 10X worse when the buyer is represented by an attorney who sees a gigundous cut from the title fee.
Saw this not too many months ago vis-a-vis an attorney in our own firm (who, I'm happy to say, is no longer with us after we booted him out).
What a terrible deal. Attorney's friend came into a windfall (measured in the millions), and seemingly out of nowhere came a Florida developer who offered to build the guy a house (as an investmnet), and, in exchange for this developer's generosity, client would agree to split, 50-50, whatever gain was later realized. If the house was ultimately sold at a loss -- tough stuff, client eats the entire loss.
This was in Florida ...
In 2007 ...
I repeatedly told the attorney involved -- "Are you crazy? You may as well just go ahead and draft the malpractice suit that will be filed against us."
He didn't care. Big, BIG title fee, and he has his own overbloated mortgage payment to make.
In the end, we (I) wrote the best CYA letter I could fashion under the circumstances, and we booted the lawyer out the door several weeks later.
My point -- If you're the buyer, never trust counsel who's on the title company's "approved attorneys" list.
Most reporters were, I believe, born after 1996.
Consequently, a high interest rate to them is anything more than 6%.
Apparently, they never heard of an era where banks routinely paid interest of 6 or 7% on bank accounts...
Tanta,
I understand your ire, but I'll try to explain where I'm coming from.
A story like this WaPo one leaves us thinking that EVERYBODY is to blame. and perhaps everybody is.
but by saying this, then the Financial firms get off the hook.
we look at this victim, and don't know if she is really a victim or not. maybe she was, maybe not.
Maybe she got a raw deal and this was a tale of predatory lending, or maybe all parties were involved and knew what was going on and the deal just fell appart and karma was served (the lender took a loss on short sale, Hernandez gets credit blemish, Ortiz loses lots of money)
in fact, I distrust this story from WaPo, as it may be one of those "look at the silly immigrant" stories disguised as a "poor homeowner loses house" story.
just read the comments over there. 99% of them are "she's a stupid illegal" variety. (nowhere do I see that she is illegal)
I feel that we need to look at the NEFARIOUS deals that were done, where the victim is an unequivocal victim. This leaves the financial houses naked.
they can't say "well, we all had a little blame here".
instead, they would be in the spotlight. WHY did they loan this way, WHY did they allow this to happen, WHY did they cheat these people so.
The WaPo leaves us with "wow, everybody sure got what's coming to them."
if they used the story from Maxed Out, people would be aghast that a respected financial firm (Citi) went to a retarded man on a gov't mortgage and refinanced him into a high interest rate mortgage extracting tons of fees and putting him in a higher mortgage, and giving him NOTHING.
there would be no "everybody has a little blame here"
it would be "the financial firms are out of control"
of course this story won't run, because then it would be harder to bail out these firms "in our interest"
Sorry to keep harping on a point, but it's an important point that gets no traction.
The point:
This. Is. A. Law. Enforcement. Issue.
Period.
Only law enforcement, backed by sufficient CPA brainpower, can stop the scam. Efforts to bail-out or provide assistance to any part of the enterprise is to play into the hands of the scam artists (and the scam artists exist at every level).
We continue to be robbed, while we fret over the collapse of the "system".
Too late.
We are holding the door while the looters steal the silver, furniture, fixtures, and anything else of value, on the premise that a crime has not been committed until it has been committed to the fullest. We can always call the police later.
A few harsh jail sentences - spread equally among the various levels of participants - will stop the crime dead in its tracks.
Until then, we are all feckless fools.
"What kind of human being sold that home in the first place?"
The one's who live by the motto: "get them before they get you."
Tanta, I don't think you are being nasty enough. The conclusive statements in the article don't match the facts.
Such as In fact, to understand the housing crisis that has swept the country, one need only listen to the tale of the Ortiz family.
...
She agreed to a high-interest loan that would cost her more than $3,000 a month, more than 70 percent of the $4,200 that she and her husband brought home monthly.
...
Gutierrez blames the government for allowing so many subprime loans, such as Ortiz's, which required no proof of income.
...
"This is emblematic of people preying on their own and emblematic of bad brokers, but also emblematic of legitimate financial institutions either helping this happen or ignoring some facts so they can make a lot of money," said Alys Cohen, an attorney with the National Consumer Law Center.
This is such bullshit! Mortgage fraud is a problem, but it isn't the main driver of the mortgage problem, so this story does not help anyone understand the housing crisis. Ortiz never got a loan. The straw buyer did. The financial institution involved granted a loan to a completely different applicant, and federal law mandates that they couldn't require Ortiz (purportedly the wife of the borrower) to be a co-applicant.
Just try refusing to write such loans because the spouse isn't on the app even if the applicant qualifies. You'll get your a$$ handed to you! Those ECOA lawsuits can be extremely expensive. Punitive damages!
This is a completely demented, wildly misleading piece of godforsaken "trained journalism" that makes me want to slap a "trained journalist" silly. If you want to write a story about people getting stated income loans they can't possibly repay, find someone who did. It's not even relevant that the mortgage payment was 70% of Ortiz and her real husband's income. The creditor didn't know what that income was, or who Ortiz' real husband was. The creditor didn't even have Ortiz' income on the app, because otherwise she'd have been on the freakin' loan.
This is a story about a mortgage fraud ring ripping off both banks and would-be homeowners while specializing in ethnic targeting, not a story about bad lending standards. The mortgage fraud ring's actions were vile, but you cannot blame the creditor!
This is not a good article. It's a bizarre exercise in misleading the reader.
In 1998 I had a 3 year ARM at 7.25%. Oh the horror in those rates, how did anyone survive?
You are assuming she knew that's what the paper she was signing said. I am not. I suspect she found out about that part later.
Point taken on that but it goes with my underlying question on where is the husband in all these negotiations ?
As far as the rest of your comment goes, I haven't got the unmitigated gall to claim I "know" all about what all those immigrants all do in all cases because, you know, they're all alike.
Well, I made the same point, that the people are diverse, they aren't ALL totally poor and uneducated, nor they all 7-11 owners, nor doctors or programmers or gardeners or social workers or whatever and they are definitely not all alike.
We seem to be in splendid harmony there.
-K
1988 I had a 30 year fixed at 11%.
But the solid little house was only 75K.
This point seems lost on people who love low rates.
YTL, I am in no doubt that the WaPo is getting tons of racist rants about "them illegals." I will not go over there to look; I'll take your word for it.
But you seem to want us all to play into their hands. If you can't write about corruption in the immigrant community--and that's what this story is about, a Latina screwing another Latina--for fear it'll fire up the Klan, then you can't write about corruption in the immigrant community. The ones who suffer are--those immigrants who do not know that the fellow immigrants they trust are looking to victimize them, and/or do not really understand the rules of U.S. finance/RE like they claim to.
There's an assumption lurking here that "those people" don't read the Washington Post. Just "us people" who need to hear about an "innocent" white person who got stiffed by a "faceless" bank in order to be made to feel sympathy.
Just doing the job (of sucker) that Americans won't do. We need hordes more of these.
Tanta asked incredulously: Why is it that nobody can be both foolish and a little dumb and still a victim?
The classic excuse of every con man is that the idiot mark had it coming. Jeebus.
And the predominant tone of the commentary seems to resemble blaming a rape victim. Jeebus indeed, T.
Would it help shift the focus toward the predatory RE scum to use a silver-haired librarian at the Smithsonian who was hornswaggled into refying three times in three years mostly to get the SOBs to stop calling on the phone?
It would be interesting to see who paid 380k for and financed this place last December after the crunch began. I can't find the transaction on the WaPo site.
The street address is apparently 106 from the picture but I couldn't find a street name which is required for the Alexandria, VA public records site. Any cyber sleuths out there?
Just try refusing to write such loans because the spouse isn't on the app even if the applicant qualifies. You'll get your a$$ handed to you! Those ECOA lawsuits can be extremely expensive. Punitive damages!
As it happens, I have in the past been the one somebody brought some file to that involved a titled non-borrowing spouse, and I have concluded that it was some rich lawyer with a scam in mind and I have in fact demanded that the deal go no further until we ran a credit report on the non-borrowing spouse, which you can do in a community property state, and I have put my elegant little dinosaur foot down and refused to let the deal go through.
Sorry, but I'm tired of ECOA getting blamed for lenders not exercising basic due diligence. The fact that HERNANDEZ wasn't on the effing SALES CONTRACT woulda been Clue #1. The fact that half the closing costs came from ORTIZ would have been not just Clue #2, but would have violated the non-borrowing co-owner rule: if you are taking money for down payment or closing costs from somebody, you qualify them even if you end up not making them sign the note. 'Tis a rule.
Right on, Tanta!
The fraud involved in the RE bubble has been incredible. And it's disproportionately affecting minorities.. and women, too by the way.
And comments I often hear from middle class folks is that, 'the poor were just stupid and uneducated', but with the caveat that only 'the middle classes' are the victims of fraud.
I find the whole subject of RE fraud just astounding. Maybe it's true that the Fed helped create most of the RE bubble.. but where have the regulators been when it came to the actual loans?
The other topic that this article seems to be overlooking is the absence of the criminal justice system in all of this. Agreements not to sue (especially one's as dubious as this one) are absolutely no use against criminal prosecution. Considering that Virginia and the federal government have their own fraud statutes, it is outrageous that there does not appear to have been any form of prosecution or even an investigation (even in my anti-consumer jurisdiction, I could probably get a felony conviction on these creeps).
It would also be nice if the reporter had looked into the behavior of the judge, but that is too much too hope for.
My blog partner and I did a few reports on houses in the Sacramento area being used as marijuana grows. When it was all said and done, over 50 houses valued between $300k-$600k were being usedby the ring, all bought with 0% down IO loans. The kicker: the buyer's agent was the same for almost all the transactions!
Our local rag (Sacramento Bee) only managed to file a reactionary report, with no digging into the RE transactions or the mortgage fraud that took place. We even posted a series of "suggested" questions the Bee reporters could ask when following up. Never happened.
Overall I have great sympathy for the average newspaper reporter. They're woefully underpaid, seldom very knowledgeable about the subject matter, and constantly stressed by coverage requirements and deadlines.
That being said, I wish they would lose some of the arrogance. (I've had my stories stolen at least three times by local news outlets with no credit given.) Reporters: It's OK if you don't understand the subject matter yet! Dig a little deeper; ask some questions; make them explain it to you; investigate!
I agree with you Tanta to a point.
my issue with these "heartbreaking stories" is that a significant % of them involve immigrants.
so people start viewing this as an immigrant problem.
keep the immigrant stories, I'm fine with them. but this is not just a problem for immigrants.
so expand it a little bit. Show us why ALL of us are being screwed over.
the longer the stories keep highlighting only a certain demographic, the longer the big financial houses can pretend they're doing us a 'service'.
so I want stories of immigrants being swindled, and also grandmas, and military men, and people in old homes, and senile people and retarded people, and middle class people and so on.
we need to make people realize that it's not "them" that got swindled, it's US. the immigrant stories make Joe-6 (including me) say, "geez, why doesn't this lady speak English. I'm glad that I speak English, so this will never happen to me
it's only later that I realize "huh, those documents sure were confusing when I signed them. maybe I was lucky that Wells Fargo followed through with my loan, because I didn't read every page, there were so many of them" which lead to my EUREKA moment of "hey, this lady speaking spanish likely didn't matter anyway!"
unfortunately, it seems that the average American is neither skilled enough or interested enough to educate themselves as to what is really going on.
so we need "heartbreaking stories" to give them a personal feel for why this stuff matters.
and IMO parading around immigrants every time doesn't do it.
I want MORE.
I want OUTRAGE
and yes, I want a PURE victim
only then can the financial houses be put under the magnifying glass.
the tone would be very different if every week WaPo highlit a retarded person and a senile grandparent in an old home and a military man (yes, some of them white and blue eyed and blonde haired) who were screwed by the lending industry.
In October, I speculated that mortgage fraud was going to get worse.
Yes, we'll see past mortgage fraud exposed now that values are no longer appreciating.
However, I believe NEW fraud throughout the industry will continue on. A different kind of desperation will now take hold.
We have desperate home sellers, relitters who have been eating boxed mac and cheese for the past several months and living off credit cards, we have mortgage brokers who set up lavish lifestyles and they're also desperate for cash.
Many of the mortgage fraud players are still out there holding professional licenses, telling each other that it's not their fault if the seller doesn't read what they're signing.
Is your only measure of someone's value how "smart" he is?
Dear Tanta, I read your work regularly and admire it. A LOT. I have learned much. But really. I said nothing about this woman's "value" -- e.g. as a human being. (Or what exactly do you mean?) In fact, clearly -- CLEARLY -- the right thing to do here is for her to be given a pass on everything -- wipe the slate clean for her.
My one point is and was this: I don't personally care for this sort of anecdotal story anymore. I have seen enough of them by now -- I get the point. I do not have much sympathy for her financial predicament, one her naivete or stupidity -- take your pick -- has gotten her into. And I won't reason inductively from such stories to conclude that borrowers are largely blameless victims.
The realiiter still has a license and is out of jail?
Um, regulatory failure.
Flat out. Wall Street has encouraged outrageous practices to fill paper pipelines, so fraud is what you get. YSP? How about that for undisclosed kickbacks?
What I am tired of is the fraud that had to be complicit in the persons licensed by the state in the process- the Realtor? the Appraiser?
Why is the realtor allowed to keep dime one from this transaction?
Why is the realtor and mortgage broker not blacklisted/fined by the industry and the licensing agency?
Come on, fraud deserves to be actively punished, not have a blind eye turned to it.
As for the folks who got scammed, the community newspapers (uh, geez that crappy univision comes to mind too, should have been telling folks about what could happen to them if they don't watch out!)
Lots o' failure and blame to pass around, but the regulatory sins that enabled the game are at the heart of the matter.
Deregulation has failed, time to call the Reagan fiasco for what it is, a failed experiment.
ARMS are something that should only be offered to folks rich enough to take the payment shock, and most common folks can't hack it. The death of the S&Ls is really being felt in this country.
Someday this war's gonna end...
Why weren't the brokerage names included in this story? Or were they?
Minority, schminority. White, black, brown or green. Smart, stupid, or somewhere in between. Male, female or transgendered. When it comes to the housing bubble, you can't swing a dead cat without hitting a criminal.
Mortgage Brokers, banks, shadow banks, appraisers, ratings agencies, settlement officers, buyers, builders - by collusion or not, the entire supply chain (for lack of a better description) is fraught with criminality.
Ours is not to wonder why, ours id to be diligent, smart, pragmatic, and conservative by putting people in prison.
Otherwise, we will only be able to wish we had.
and yes, I want a PURE victim
Yearning to Learn
I don't think that exists, YTL - its warts'n'all type of stuff. I want to point up some of the possible ones from one angle of the story.
Ambiguity and tentative conclusions rule ( or gets ruled ? ) - I was about to say this is unlike math ( my field ) or medicine but I know it rules in math ( cf Godel's Theorem ) and looking at PSA testing efficacy, treatment ( and nontreatment ! ) outcomes etc - I'd say it rules in medicine too - Judgment is necessary - so long as its tentative and open to change as additional facts are known.
-K
When immigrants come here, they seldom know the rules (both written and unwritten). Most latin people come from places where under the table payments, bribes and side deals are the norm. This deal would almost seem perfectly straight to someone from So. America.
Imagine coming from a place where you could never imagine owning your own house, never mind having the prospect of getting rich as a real estate mogul. Latin immigrants tend to have limited access to advice outside their own community and are perfect fodder for bad information or downright deception.
I'm guessing that for every story like this one, there's another 10 where the relitter himself has only been in the US long enough to know that real estate goes up 10-30% every year. Why not do anything to get someone in a house?
Why weren't the brokerage names included in this story? Or were they?
The mortgage broker was not mentioned by name, only noted in passing as being "out of business."
I agree that it's a problem that there is this coyness in the article about naming names. I do, however, wonder if the reporter isn't trying to protect Ortiz that way: if she was prohibited from suing for fraud, she might also be vulnerable to accusations of slander.
Off topic but this is a great site with media quotes before during and after the great depression.
1927-1933 Chart of Pompous Prognosticators
I think we are somewhere been #15-19 ... can't wait until 20... yikes.
Ours is not to wonder why, ours id to be diligent, smart, pragmatic, and conservative by putting people in prison.
Fine. Fine.
CAN WE START WITH THE PROPERTY SELLER?
CAN WE IMPRISON EVERYONE--I MEAN EVERYONE--WHO SOLD DURING THE BOOM TO SOMEONE WHO DIDN'T QUALIFY FOR THEIR LOAN? CAN WE? CAN WE?
Tanta - Max gets at some of the problems and stresses that reporters face but nowhere near all.
Reporters do what their editors tell them to do, spend as much time on the story as their editors allow, write the story and then hope (pray) that it will come out of the editing process resembling what they originally wrote and then actually appear in print.
Editors are under enormous pressure to fill the space allotted in the time allowed. Each editor has another editor looking over their shoulder up to the managing editor who has an executive editor and a publisher demanding that everything be done in such a way as to create a profit that will satisfy Wall Street expectations.
Read Jack Shafer on a recent attempt at the WaPo to streamline their Byzantine editing process:
The Washington Post's plan to drag the editing process into the 21st century. - By Jack Shafer - Slate Magazine
Tanta:
We can prosecute anyone who committed the crime of fraud.
One thing every practicing journalist knows: many of your readers could have and would have done a better job on any story you write, and they will tell you so.
Tanta's critique of this story (and its genre) is on the mark as usual. I suspect I'll be making my own modest contributions to this genre in the months ahead, and I'll have a miniature Tanta perched on my shoulder like the little conscience in the cartoons.
Thanks again to you and CR for what you do.
Why is the realtor allowed to keep dime one from this transaction?
Why is THE SELLER allowed to keep one dime from this transaction?
Oh, yes: and imprison those fount guilty.
To ask a related question:
WHAT IS THE ALTERNATIVE? TO SUBBORN CRIMINALITY AS A CULTURE?
CAN WE?
CAN WE?
Here's my question: Was Aguilar the seller's agent on the $380k transaction? If yes, you know you've got a fraud ring.
The seller committed no fraud. If they did, they should go to jail.
I would think the motivation for a reporter to focus on minority or unsympathetic "victims" is clear; it's the same reason we never see middle class criminals on cops.
The last comment is not in relation to this case, particularly. In the scheme of things, the average seller was not guilty of fraud. If there were undisclosed conflicts of interest on a particular deal, then yes - the seller gets prosecuted.
I think the larger point is that we - everyone who was not complicit in this - are all victims. Some to larger degrees than others, to be sure. Every property-tax payer is affected by having their property taxes increased as a result of these sham prices that lead to higher tax bases for surrounding properties. Even the renters are affected now, as cities are forced to cut services after letting their budgets get too big during the boom.
And for those of us who have been renting the entire time, we sit and wait another day for sanity to return so that we can finally buy a home for ourselves, throwing away another rent payment on the first of every month.
The seller committed no fraud.
THAT is the unexamined premise in this whole thing.
Suddenly, when it comes to the seller, we're awfully damned legalistic. It's "not fraud" to accept a bid that's even more than your already ridiculously inflated price, and sit there across the closing table (which happens in VA) with a befuddled woman who apparently just met the guy who is "her husband" and who doesn't understand the language spoken or in the printed documents, and just keep your lips zipped because after all, you "deserve" the money and it's the lender's problem, not yours.
I find that revolting.
Tanta wrote: Is it, like, not allowed to criticize sellers?
If the seller was a related party, there's rules and ethics. If not, however...
Caveat Emptor. The traditional thinking goes that if you've amassed enough money to pay cash for real estate, you're a sophisticated party. If you haven't, your lender is a sophisticated party. Rarely in history have there been times where lenders lent without scrutinizing either the borrower or the security. Traditionally, the bank held the note to maturity and it behooved the banker to ensure you could pay. The recent period where PhD quants figured they could price a loan without examining the house or the borrower was an anomaly not soon to be repeated.
CAN WE START WITH THE PROPERTY SELLER?
CAN WE IMPRISON EVERYONE--I MEAN EVERYONE--WHO SOLD DURING THE BOOM TO SOMEONE WHO DIDN'T QUALIFY FOR THEIR LOAN? CAN WE? CAN WE?
I thought one of the reasons for intermediaries was to explicitly insulate sellers from needing to make personal judgement calls as to the suitability of the buyer. Any blame you might wish would flow through to the seller stops with the agent who presents the potential buyer in the first place. It is their job to judge the suitability of the buyer and not the owner's job.
"The last suckers in the game end up as viticms, meanwhile the early entrants are perceived as genuises. "
I believe this is called the Greater Fool Theory": The last buyer is the greatest fool of all.
Interestingly, the seller has no fiduciary duty to assess the wherewithal if the buyer. That's why the middlemen in these transactions are so highly regulated (I just vomited into my own mouth).
As for Ortiz and the judgment that she cannot sue, it is likely because the judge felt she was - to some degree - complicit in what happened.
Our courts have a doctrine known as "clean hands" - meaning that those seeking equity remedies (as opposed to money damages) must have been innocent of any wrongdoing. Even if you're a victim, if you do not have clean hands, you cannot receive relief for getting the worse end of your scam.
Interestingly, the seller has no fiduciary duty to assess the wherewithal if the buyer.
In law, or in basic ethics?
Fifteen years ago I sold a old junker car that wouldn't run to a 17-year old who wanted to fix it up. He offered me $200.
The thing had thrown a U-joint; the repair bill would have been many, many multiples the value of the car. It might well have been worth $200 for scrap parts and the battery.
I called the kid's parents and grilled them about it: did they know the true condition of the car? Did they understand that it did not run at all? Did they really think the kid could fix it? Was this really a wise use of the kid's babysitting money?
Only when the parents assured me that they were involved and in fact the kid's dad and uncle were going to help him fix it up, not just so he'd have a car but to teach him about auto repair, did I agree to sign over title and take the kid's money.
There was nothing in state law that required me to do that. I just like sleeping at night.
Tanta:
W I'm not talkin' fair or unfair - I'm talkin' legality.
If there is a law on the books, and that law has been broken, a crime has been committed. No such law - no crime.
I don't give a damn who the criminal party was, or what drove them to their criminal act(s). Every criminal that ever lived had a reason for committing their crime.
We need to stop the crime, and we need to stop it now.
Well, to address one of your concerns, I have sold houses twice in my life and never once had a moments concern about the ability of the buyer to pay the mortgage. Both of those transactions were back in the day of underwriters looking at documents, licensed RE agents (separate ones for each party of the transaction, mine looking out for my interests) dealing with the mountain of paperwork. I worried about my ability to pay on the new house, I assumed the buyer of my old house was doing the same. When I sold, I trusted the agent to come up with a reasonable asking price, and took his word about the reasonableness of the offered price. As it happened, we used an agent my father-in-law had used and trusted over a long period of years.
This particular story of Ortiz and her husband being taken in by a confidence man has been repeated with variations over the ages, this one takes advantage of the current mess in housing.
I understand that people can live in a country where they don't speak the primary language but I still cannot understand why they would want to put themselves at such a disadvantage. One advantage of learning the local language is a greater understanding of the local culture and customs. There are lots of people at my workplace fluent in both English and their native language. When some situation comes up that they don't understand, they have the ability to ask the local natives (me among others) for an opinion.
"This is a story about a mortgage fraud ring ripping off both banks and would-be homeowners while specializing in ethnic targeting, not a story about bad lending standards. The mortgage fraud ring's actions were vile, but you cannot blame the creditor!
This is not a good article. It's a bizarre exercise in misleading the reader."
Maxed Out Mama,
Totally agree.
We need to stop the crime, and we need to stop it now.
I hear all the time that con games can't work without a willing victim.
I am observing that some of them can't work without a seller willing to look the other way, a seller who believes that it is his right to get a bubble price.
Sauce for the goose is, famously, sauce for the gander. Yet most people are incredibly resistant to finding fault with the seller.
I think that's because a lot of folks sold at the height of the boom, and don't want to look back and wonder what happened to the buyer. "Not my fault."
Tanta | 03.22.08 - 12:26 pm
That's a bit simplistic.
Now, if you had financed the purchase, based on fraudulent claims as to the quality and road-worthiness of the vehicle, and if you had then securitized the loan and spread it like cancer around your community, this would be a better analogy.
BTW: The people involved sleep perfectly well knowing what they did (in many cases, they sleep in the lap of luxury). That's why they should be on the rock pile for a few years.
Reporters do what their editors tell them to do, spend as much time on the story as their editors allow, write the story and then hope (pray) that it will come out of the editing process resembling what they originally wrote and then actually appear in print.
Editors are under enormous pressure to fill the space allotted in the time allowed. Each editor has another editor looking over their shoulder up to the managing editor who has an executive editor and a publisher demanding that everything be done in such a way as to create a profit that will satisfy Wall Street expectations.
All true. But we get a "do over" every day, and on our good days we remember that and try to do it better than yesterday. We do try to learn from our own experience and from the feedback we get from readers and bloggers.
The feedback is a great thing. When I started in this business, it was minimal--a few letters to the editor, maybe a phone call. Now the online comments and emails pour in, and a significant part of my day is spent responding to that. If I missed some important point, somebody is going to call it to my attention and I won't miss that point the next time--and there usually is a next time.
Especially with houses and mortgages. I'm guessing I could wind up spending half my time on stories directly or indirectly related to this issue in the months (years?) ahead.
On the other hand, I've got this mental image and it's just cracking me up:
I'm sitting across the closing table from the buyer, the buyer's RE agent, lawyer and banker, and I bellow out "I cannot in good conscience sell you this house at this price, because SOME OF YOU ARE CHEATS AND THE REST OF YOU ARE FRICKIN MORONS!!"
Fifteen years ago I sold a old junker car that wouldn't run to a 17-year old who wanted to fix it up. He offered me $200....
I called the kid's parents and grilled them about it: did they know the true condition of the car?
Now we are talking ethics.. I didn't sell my high CoG gravity Kawasaki Concours to anybody under 5'9" ( my height ) - their feet would barely touch the ground and at 730 lbs and high CoG keeping it upright would be hard. They had to have full motorbike licenses of course and while I wouldn't discriminate by age, I was really leery about selling to someone under 30 - luckily I found a 35 year old buyer..
But that's because I didn't want blood on my hands, literally.
In these real estate cases, its only money ?
-K
If the seller knew that the property was worth less than what they sold it for and/or knew about the dubious nature of this transaction (the former at least seems likely) than they may very well be guilty of at least being an accessory to the fraud. If they had any sort of prior understanding or dealings with the other crooks in this transaction to find a buyer, then they are liable for all of the crimes involved as co-conspirators (that's what I would try if they were here in Alabama).
Clean hands" is an equitable doctrine and does not generally govern common law tort and property cases. That the judge would decide that someone deserves to get screwed and behave like this is outrageous that a judge would run around and misue it in a case like this.
Tanta:
Outside conspiratorial collusion between the seller and the party providing financing, I can't see where the seller has any duty here (I'm not just trying to argue a point - I really can't see it).
Only when the parents assured me that they were involved and in fact the kid's dad and uncle were going to help him fix it up, not just so he'd have a car but to teach him about auto repair, did I agree to sign over title and take the kid's money.
There was nothing in state law that required me to do that. I just like sleeping at night.
Tanta
The problem is we have too many people who can pick other peoples' pockets and then go home and sleep the sleep of the just.
Another problem is we have no way of legislating people like Tanta into existence.
OK, some mortgage lending trivia for y'all.
The basic rule is that any person whose income or assets are used to "qualify" for the loan must be a borrower.
You can't have a situation in which Joe and Jane's joint funds are used to make the down payment and pay the loan, but only Joe is on the note, unless you can verify that Joe's income and assets could be enough for him to qualify by himself.
In this situation, it would have taken a real underwriter a couple of minutes to notice that there are no joint accounts on the "husband's" credit report, and that funds to close were coming from an account belonging to Ortiz only. Only an idiot relies on some piece of paper stating that they're married to justify not ordering a credit report for Ortiz and putting her on the loan.
It appears that the loan was done as a NINA--exactly so that this confusion about whose money was involved would be obscured. But NOBODY I know who is any kind of reputable EVER does a NINA that involves a non-borrowing spouse. Holy shit, every about-to-be-bad divorce in the country would start out that way.
I realize the rest of you aren't up on this kind of thing, but I'm here to tell you that it makes no sense to me to let the creditor off the hook.
Fascinating information about the 'clean hands' doctrine. Thank you.
I'm curious who the last two sellers were. The house sold in 2004 and then sold again in 2005 to Ortiz.
Sure the seller may have been involved, but there is no evidence of that. Sellers generally don't have access to the buyers financial details, so wouldn't even be in a position to evaluate the buyer. That is the job of the lender and the job of escrow/title to see that the sums balance out. While there probably are sellers involved with this, it is not as sellers they are predatory. Sellers can't be predatory. They are just the other half of the transaction, looking out for their interests. This is just more lenders trying to shift the blame from themselves.
Another problem is we have no way of legislating people like Tanta into existence.
Well, you wouldn't want to do that even if it were possible. You'd get the whole package, and I'm not sure the world needs more people who like ABBA videos.
Of course we can't legislate morality. What we can do is call a spade a spade to shame people into it. What I'm reacting to is the assumption that since it's legal, it must be morally peachy.
Um, did anyone else read the surnames of these people - Ortiz, Selgado, Hernandez, Aguilar - and basically feel like they knew everything they needed to know about the story? Sounds like corrupt Mexicans cheating another Mexican. What's new about that? Nothing - the only difference is that it happened in Washington D.C. instead of Oaxaca or Mexico City. This is the kind of stuff we're going to see when we allow millions of latinos from corrupt cultures to emigrate here.
Sounds "racist"? Maybe. Sounds true? Absolutely.
If these are the kinds of people that make up the bulk of the pity cases we're supposed to shed tears over because they let themselves be suckered by a real estate deal, then I don't think it's as big a problem as the Post wants to make it seem. That kind of stuff is just par for the course south of the border.
We had an administration that pushed the "ownership society" and many people bought into it hook line and sinker.
crispy&cole, Not to forget the infamous "Just go shopping to support the war effort!" line. Now we're tres bad for having credit card debt. Can't win!
Apparently, the crime is too big to prosecute.
We're all criminals now.
Mark, go deface someone else's website with your racism, please.
If you can't even read a story that says "Honduras" without substituting "Mexico" so that it feeds into your prejudices, you're also a stupid racist.
Mark,
Lenders. sellers, and real estate agents engaged in fraud, theft, felony syndicalism, and racketeering are evil and must be dealt with. How are we supposed to maintain any kind of society if we adopt a "they deserved to be screwed, so it's okay attitude?"
I didn't read the story, just your summary. Honduras, Mexico - what's the difference? Corrupt latin nations, like all of them are.
I too am getting a little tired of the "poor immigrant" mortgage/RE fraud stories in the MSM. This is not because I am unsympathetic towards ANYONE losing their home. It is more that I feel these stories are being used to hide the elephant in the room. The truth is that people all across the economic and racial spectrum have lost and are going to lose their homes because our government did not do, and is not doing it's job of regulating mortgage lenders and prosecuting those lenders who broke lending laws. These laws are already in place, there is just no enforcement.
The focus on the "poor immigrants" by the MSM helps keep the middle class from demanding that our government do it's job. Because the housing bubble is a slow unwind, the middle class people who are being gradually foreclosed on are not objecting because foreclosure is being mythically portrayed as something that only happens to the "poor & the dumb".
Gosh, I'd better post now or will never get to the bottom of the thread.
First of all, English is a very hard language to learn. Since it has a romance language superstructure on a germanic base, with a total weird method of spelling, a romance language speaker might be bewildered. Spanish has rational spelling and is mostly a romance language. Since English has 2 sources, there are 2 words for nearly everything, a simple old English/Germanic one and a fancy romance language one. (Say $hit vs feces). These have different connotaions usually, and are used in different contexts.
Since I work off in the foreign county of Miami-Dade, I have made dissultory efforts to learn Spanish. I got up to being able to read the Harry Potter books in Spanish, but I will, I regret to say, will never be able to understand spoken Cuban, which is a truly awful version of Spanish, which is, like English, a distinguished world language.
Therefore, I am very sympathetic to people who find it difficult to learn English.
Secondly, NOBODY reads the papers thrust before them. Except me. My grandma told me to never sign anything without reading it, and I thought that was good advice. I real very fast, so that is usually ok.
Some people when I do (did) a closing don't even want to listen to my canned explanations. The worst was a
non-ethnic white litigation atty who was actually annoyed with me when I tried to explain the papers. I assure you he didn't understand them.
The smartest people do listen to my explanations, want to understand the closing statement, and want to have it pointed out on the note, where it says what the interest rate is, and that it is a fixed rate. I am happy to comply. At the end, I hand (used to hand) over the package and say they should read it if they ever have insomnia. Lots of laughs.
If the very smart posters here went to a foreign country, they might get taken too, because in all countries, there are the rules, and then there are the real rules, which are not written down anywhere.
John Stark:
Everything you say is true as well, at least for the good ones (as you appear to be).
I suppose my larger point is that Tanta and others should be more careful in their use of the term "reporter" since these are institutional failures. Perhaps the terms newspaper or media or more specifically in this case WaPo would be better and help to spread the blame around for the problems that she raises. And lets not forget to heap on the readers their share of the blame for if they have not gotten out of the newspaper habit altogether probably rarely read a story past the jump.
jalrin - While you generally wouldn't use equitable doctrines for tort or property issues, this - at its core - is more of contract dispute. Neither of us knows exactly what the facts were here, but if I were a judge (rather, when I become a judge), and was convinced that two people were trying to use me to settle their scam-gone-wrong, I wouldn't hesitate to ban them from the courts.
Reminder!
Many tend to look at this through the broken pieces of the popped bubble. In other words, we have the benefit of hindsight and perhaps at the time the seller, who was told that there was no bubble by none other than the entire banking industry, every NAR rep alive, Greenspan, Bernanke, et al., was hesitant to let the place go so cheap....afterall the buyer was gonna make 70G off of it in no time. The realtor may have thought they were helping an immigrant make easy money and any fraud was simply a way to get around rules written for white people or as the saying goes...banks only lend to those who don't need it.
Is it possible that rules were broken not to screw someone, but to help everyone get a peice of the American pie. Afterall, part of the elemant of a bubble is that no one really knows it exists until it pops. It's hard to put nefarious motives on people who couldn't have been expected to expect the unexpected.
I'm not saying it's ok that they are screwing one another. I'm pointing out that it is no surprise that they are screwing one another, and that is what we get. And you know what? You all, including Tanta, know it, too. You just can't admit it.
Um, did anyone else read the surnames of these people - Ortiz, Selgado, Hernandez, Aguilar...Sounds like corrupt Mexicans cheating another Mexican.
And it starts. I suppose you want your people of Hispanic origin to be named Richardson, huh ?
And my 3rd generation Hispanic telecomms specialist called Lopez was a cheatin' Mexican ? Or my pattern recognition math colleague Hernandez was a cheatin' Mexican..
No doubt you think my VP, a Mr. Meier was a money-grubbing, vile Jew ?
Sheesh..
For the record, Ortiz was from Honduras - as I watched with great amusement as a colleague asked to server at the cafetaria - "Serve it as hot as it would be in Mexico" and she replied - "But I'm from Guatamala"..
Then there was the time that Bridge WORLD champion the Brazilian Chagas was asked to say something in Spanish..
F*cking ignoramus...
-K
Average Joe, I have no problem really with your point there. But in that case, why doesn't it also apply to the hapless buyer?
If the seller was caught up in a media-enabled bubble that made "greed" acceptable, the buyer was too.
This is really all I'm asking: that the same explanations and excuses and rules apply to everyone.
Maybe I should change my blog name to "Tia" instead of "Tanta."
Then Mark would know right away I was not to be trusted.
I wouldn't hesitate to ban them from the courts.
js | 03.22.08 - 12:50 pm
But would you recommend an investigation based on your knowledge that there was a criminal scam being perpetrated?
Criminality exposed in a civil matter must be prosecuted by the state.
Tanta, there were two sellers.
One in 2004 and again in 2005 to Oritz. Under the circumstances, both sellers warrant looking into.
FT Woods, how do you know?
I don't know how to find Alexandria RE records without a property address.
One more thing--
While the details in this WaPo story no doubt lack the precision and clarity one might wish for, those details are going to be lost on the average reader anyhow. I think it does convey the big simple messages: Be careful who you deal with. Beware of complexity. Don't assume they wouldn't be doing this if it wasn't legal. Don't assume anyone besides you is looking out for your interests. Etc.
You would think just about everyone would understand this stuff by now, but no. You can't repeat it enough.
It's in the second paragraph of the article though it's easy to miss because of the way it's worded.
She looked at only one house and paid too much for it: $430,000 for a run-down, one-story duplex in Alexandria, triple what the house had sold for the year before, and $5,000 more than the asking price, according to real estate records.
John Stark, that's why I basically said I thought it was a pretty good article.
I wanted to complicate matters just to keep eggin' you all on, you know.
That and I do want us to get ahead of the title transfer scams that are on the way.
Marcus--these frauds are not going to be prosecuted. There was a forgery case I knew about where the relatives really tried to get the police interested and it went nowhere.
Nothing done. Nada. Heard about another one Friday. Police said go prosecute your civil suit. If you want these prosecuted, then vote to pay taxes to hire 50% more judges, prosecuters and support staff, as well as renting extra space for the courtrooms and offices, and prison. Well, maybe we could let the dopers out because they do less harm. . . and fill the space with real estate fraudsters.
Looking at the story, I think the agreement not to sue Salgado and Hernandez is reasonable. They seem to have been defrauded too. The fraud ring is Aguilar and his wife, who handled the mortgage. That's pretty blatant. Salgado was kind of involved, but she was probably basically suckered into it.
Marcus Aurelius -
Of course. I mean, I wouldn't tell them I was going to have the DA start investigating their scam, but I wouldn't let them waste the court's time dividing the spoils of their scam.
And to be clear, I'm not saying there clearly was collusion with the buyer, only that it is a possible explanation for the otherwise odd-seeming outcome.
It's in the second paragraph of the article though it's easy to miss because of the way it's worded.
Sorry, I thought you meant the house had been sold in 2005 again and then flipped to Ortiz.
As I said in my post, I figured the appraisal was "overpriced" because you have to get an "expensive" appraisal to justify tripling of price in a year with a "run down" (i.e., not improved) property.
I was just interested in whether people would be willing to assume that the seller in this case was "innocent."
I live in the DC area and read the article in the dead-tree edition.
This part I didn't understand:
I would assume that falsifying mortgage documents (and the other shenanigans described) rise to the level of criminal (rather than just civil) fraud, but IANAL.
Tanta: 'I have no problem really with your point there. But in that case, why doesn't it also apply to the hapless buyer?"
I agree...greed and ignorance applies to both sides and everyone in-between.
Greenspan said that bubbles are impossible to spot so it's hard to ask more of even the most fluent english speaking natives.
That is why you have institutional standards based upon unemotional lending practices.
Ironically,
I suppose people's presumption of racism allowed those institutions to abandon those standards since everyone assumed they were meant not to protect the banks from losing money, but to protect white people from having hispanic neighbors.
And you know what? You all, including Tanta, know it, too. You just can't admit it.
Mark
Here's what I know. There are crooks and corrupt subcultures on both sides of the Rio Grande. A lot of the people who emigrate here (with or without their paperwork) are looking to get away from corrupt systems...and yes, I know that the political systems in these countries make our system (with ALL its flaws) look pretty good.
I just love that argument: You're all racists like me but you're too afraid of THEM to say what you believe. Actually no, Mark. We just disagree with you, because we have enough life experience to know you're wrong.
triple what the house had sold for the year before
Oooh, I missed that. Irony of ironies, if the 430,000 price produced a payment 70% of her income she could actually have afforded the house had it been fairly priced. Not a good business decision to buy in 2005, but she could have made it.
Looking at the story, I think the agreement not to sue Salgado and Hernandez is reasonable. They seem to have been defrauded too.
OK, now I'm worried.
You think those two were defrauded?
I have to ask: if your sister asked you, as a favor, to "invest" in RE by pretending to be the wife of a stranger, with the deal being you'd get any upside and if the worst happened you could take the house away from the stranger, would you do it?
Hernandez is guilty of mortgage fraud. No question about that. He signed a 1003 (uniform residential loan application) over verbiage that makes it a crime to lie.
Signing a paper that says you're married to another party, when you aren't, in order to receive financial benefit, is a crime, independent of race, creed, color, country of origin, language, sexual preference, income or educational level.
I'm not picking on the buyer, here, as there was apparently beaucoup criminality involved.
As Joe Friday was known to say, "Just the facts, ma'am."
liberal, I think he's talking specifically about the RE transfer/co-titling thing, not the mortgage part.
There's no question someone lied to a lender.
Lord writes:
Sure the seller may have been involved, but there is no evidence of that. Sellers generally don't have access to the buyers financial details, so wouldn't even be in a position to evaluate the buyer. That is the job of the lender and the job of escrow/title to see that the sums balance out. While there probably are sellers involved with this, it is not as sellers they are predatory. Sellers can't be predatory. They are just the other half of the transaction, looking out for their interests. This is just more lenders trying to shift the blame from themselves.
Lord | 03.22.08 - 12:40 pm | #
What Lord said, plus....
In my experience as a seller, we are in a position to trust that the buyer, buyer's agent, lender and title, etc, etc, are doing their do dilly and everything is honest and legal. I couldn't begin to know how to verify the work of those others...
What comes to my mind is that the sellers have to be very careful with regards to Fair Housing Laws...What are your thoughts, Tanta, on how the Fair Housing issues come in to play in a situation like this?...assuming the seller is not involved.
What you said, Marcus.
The underlying, overarching fraud started with lending vast sums of money to... anyone... no questions asked. Not just lending but badgering the entire country to come into the bank to pick up large sacks of dough to become real estate millionaires.
Gangs of people didn't spontaneously assemble in front of banks, pounding on the doors, demanding large wads of cash because they said so.
Banks and mortgage companies force-fed the no-questions-asked concept on the doltish public for years.
Still, this would all be small potatoes if the pass-the-hand-grenade game (the derivatives market,) hadn't expanded like a cancer.
Prison time. Rock breaking. Leg irons. And not just a few examples pour décourager les autres. Whoever mentioned RICO recently had the right idea.
Real Estate hasn't been "fairly priced" for 5 or 6 years now where most people live (which constitute most of the bubble countries). Even with all of the ideas floated by the FED, etc.... it's still not going to solve the underlying problem of the bubble, right? So they can do something like keep the house prices inflated (which more state/local govts will clamor for as they lose tax money... who are the crooks again?)... but they can't do anything to entice buyers. Even a $15k incentive is pennies when you are talking about a $400k 50 year old 2 bedroom condo in an area where median income is $65k.
Frauds/cheats come in all different skin colors, surnames and ethnic backgrounds.... as do honest people.
Here's my favorite quote from the WaPo
story:
"The problem is the system and that no one cares until Wall Street stops making money. And that's what's happening now."
Tanta - agreed that the seller should be investigated. It's hard to believe that Aguilar, his wife, and the appraiser would engage in fraud of this magnitude - probably overstating the cost of the house by twofold - for just the ordinary commissions.
"If you want these prosecuted, then vote to pay taxes to hire 50% more judges, prosecuters and support staff, as well as renting extra space for the courtrooms and offices, and prison."
lawyerliz | 03.22.08 - 12:59 pm | #
The cost of rewarding the criminality, in terms of both tax dollars and social mores will make the costs associated with prosecution look like a bargain.
I agree that the authorities will look the other way.
Why?
'Cause we're ALL criminals now.
Yes, but Tanta, this is not on my list of community real property states, and we don't know that the docs the banks saw were in Ortiz' name. I bet they faked them, or booked the deposit in as cash. In the Hispanic community, this isn't that rare. A lot of non-banked people.
It seems to me that a lot of recent immigrant Hispanics did get targeted for fraud. Some Asians too.
Also, since the 2004 Reg B modification, this is a hot point of enforcement. EVERY bank lawyer I have ever consulted agrees that under FCRA you may not run a credit report on a non-applicant spouse when you are legally prohibited from requiring their signature on the app under Reg. B. EVERY regulator says the same. See, for example, page 6 of Nelson Mullin's FCRA summary. It's the kiss of death to do this.
It's ironic, because if they had been able to, I bet she would have saved a lot of money!
I couldn't begin to know how to verify the work of those others...
You guys are making this too hard.
If you sign the sales contract without ever meeting the borrower, well, then, you may not realize that she is signing a document she apparently can't read because it's written in a language she doesn't know.
If you were in an escrow closing state, you might never see the buyer.
But dammit, in many states--like VA--there are good old-fashioned round-the-table in person loan closings where you see your buyer face-to-face.
As I said, I can't quite imagine not noticing that the buyer seems to have just met her "husband" today. Let's say maybe it was kinda clear to the seller that something weird was going on. I ask you: does the seller have at least a moral obligation to say "wait a minute"?
And no, it's not a "fair housing issue," just as it isn't an ECOA issue. I am not suggesting that you refuse to sell your house to someone who can't read the contract because they speak Spanish. I'm suggesting that you have a civic interest, just as I do, in seeing that the person is represented by someone who doesn't have a financial interest in the transaction who can read.
My point is, I guess, that I have to wonder whether someone didn't see a non-English speaker coming, and therefore immediately jacked up the price on the theory that she probably wouldn't know any better.
I brought up my example of selling my junk car to a 17-year-old for that reason: it would have been easy to ask that kid for $300 and get it--he really wanted a "sports car."
Alot of talk about knowingly overstating the house's worth.
I recall many during the bubble saying that things were "worth" what people would pay...period.
If everyone including the bank thought the house was worth what it sold for.....and there were plans by some to sell it for 70k more in a year...than I suppose it's hard to say in hindsight that everyone involved KNEW it wasn't worth what they said it was.
I mean really....did everyone who sold GOOGLE at 750 absolutely know it wouldn't go to 900? Is it possible that they sold with some apprehension? I have no doubt the seller, no matter the motivation, may have wondered if the house in this story might actually be "worth" more later.
Inside bubbles no one "knows".
YLSP writes:
Real Estate hasn't been "fairly priced" for 5 or 6 years now where most people live (which constitute most of the bubble countries). Even with all of the ideas floated by the FED, etc.... it's still not going to solve the underlying problem of the bubble, right?
Right.
"It seems to me that a lot of recent immigrant Hispanics did get targeted for fraud. Some Asians too."
The fraud was colorblind. Plenty o' crackers caught up in it, too.
Re: Fraud prosecution
Is it possible we "taxpayers" can benefit? ie... there's no room in prisons for the fraudsters but if prosecuted they lose all of their ill-gotten gains, are convicted of a felony and their credit is ruined? Shouldn't this be like shooting fish in a barrel?
Yes, Hernandez technically committed mortgage fraud with the documents. But he and his sister apparently lost tens of thousands of dollars. I don't think they knew what they were doing. Hernadez' involvement in this is about the same as Ortiz - he was promised something great (a chance at appreciation) that didn't exist (because the house was fraudulently appraised) and told to do a bunch of stuff (including committing mortgage fraud) by people he trusted, albeit foolishly.
I'm going to start a gibbet-building business.
on a non-applicant spouse
That's the rub, right there.
You are not required to make the spouse apply in general.
On the other hand, you are required to assure that the applicant is using his own funds to qualify. I've run into this before: you dig a little, and you find out that the applicant is using the non-applicant spouse's money for down payment and relying on the non-applicant's income for repayment. That means you do, as a lender, have to right to force the spouse to be an applicant.
We went through this quite a while ago when I caught The Mortgage Professor recommending the stated income approach to married borrowers, one of whom had lousy credit. The Prof recommended that the good-credit spouse "claim" all income, so that the loan could be approved with only one borrower.
That's fraud. And lenders have the right to refuse to play along.
But NOBODY I know who is any kind of reputable EVER does a NINA that involves a non-borrowing spouse. Holy shit, every about-to-be-bad divorce in the country would start out that way.
I realize the rest of you aren't up on this kind of thing, but I'm here to tell you that it makes no sense to me to let the creditor off the hook.
Tanta | 03.22.08 - 12:38 pm
The creditor is obviously in on it. Sounds like a loan from Ownit or First Franklin(lol). However, I do not think it was a NINA. I do not remember that program ever going to 100%. It was probably stated income/ stated asset which doesn't have the 4506 signed until close.
Stated/stated works just like a NINA in that employment is verified by a phone call or a CPA letter for the self employed but income is not verified. The rep from the lender would literally tell these loan officers what to "write in" or "state" for the income and assets and all was good.
That's fraud. And lenders have the right to refuse to play along.
Tanta | 03.22.08 - 1:21 pm
But they did play along, and collected fat fees for doing it.
But he and his sister apparently lost tens of thousands of dollars.
Um, how?
Are you really sure their own money was ever at stake?
Tanta's point about missing information on the seller is key. In my paper copy of the article it has this key point: Ortiz's $430k purchase price was TRIPLE what the seller paid for it in 2004. In other words that anonymous seller bought the house for about $140k and a year later listed it for three times as much. And somehow a naive buyer was steered directly to that property. What appraiser did an appraisal showing a "run-down duplex" had appreciated 300% in one year? What lender accepted such an appraisal? If the realtor was not somehow tightly connected to the seller or even was the seller, I would be very surprised. And I doubt the buyer at $380k got a good deal either.....
quartz | 03.22.08 - 1:24 pm
See? One swing of a dead cat, and you hit at least three probable criminals.
"You guys are making this too hard."
Tanta | 03.22.08 - 1:16 pm | #
Sorry, not trying to add to the difficulty here. And yes, I am in CA, an escrow state, where yes, we sometimes never see the buyer, their agent, or anyone else in the transaction.
"My point is, I guess, that I have to wonder whether someone didn't see a non-English speaker coming, and therefore immediately jacked up the price on the theory that she probably wouldn't know any better."
Tanta, that is a pretty harsh assumption. Do you have any way to verify the listing? To see if it had been on the market, listed at the amount specified in the article? That statement does seem a bit speculative...and unfair to a possibly innocent seller...Unless I missed something...like it had not been listed in the MLS, or something.
"Stated/stated works just like a NINA in that employment is verified by a phone call or a CPA letter for the self employed but income is not verified. The rep from the lender would literally tell these loan officers what to "write in" or "state" for the income and assets and all was good."
LJ,
This is the type of stuff that ticks me off. It's unbelievable. I still can't get over NINAs. Is it any wonder we're in trouble? And now, we all pay for this nonsense.
Tanta:
"Is this nitpicky?"
As you will recall from your early homeschool experiences, your fellow public school classmates were running around with not only attention deficit issues, but sadly they grew up to be key components in a world of nepotism and inefficiency. Thus, birds of a feather on the flip side of that coin need to flock together.
Re: Origins
Nit: the egg of a parasitic insect
Pic: to detach or remove piece by piece with the fingers: She picked the meat from the bones
Also See: antsy
1.\tunable to sit or stand still; fidgety: The children were bored and antsy.
2.\tapprehensive, uneasy, or nervous: I'm a little antsy since hearing those storm warnings.
The U.S. Federal Reserve is not engaged in talks with other central banks about the possibility of purchasing large amounts of mortgage-backed securities to stem the credit crisis, a senior Fed official said on Saturday.
"The Federal Reserve is not involved in discussions with foreign central banks for coordinated buying of MBS," the official said, disputing an account in the Financial Times that central banks were "actively engaged" in discussions on that possibility.
crispy&cole wrote, We had an administration that pushed the "ownership society" and many people bought into it hook line and sinker.
Apropos that, here's a quote from Greenspan: But the former Fed chairman said that the subprime boom would boost home ownership and was "worth the risk." Greenspan said that "protection of property rights, so critical to a market economy, requires a critical mass of owners to sustain political support."
Of course, what would you expect from a Randoid?
I'm beginning to wonder if you can produce quality of life for people without inculcating them with strategic ethics from the time they are young.
I am tired of having lunch with friends who bring up business for ten minutes so they can claim it as a business expense. Or watching another friend charge nearly every normal and necessary home expense to her gov't grant because she works at home as well as the university.
These individuals don't even have any inner compass that nudges them for a second that what they are doing is wrong.
It's unsustainable.
well, as someone who has been the seller of real estate to buyers who may not be able to make the payments,...I don't know how to tell someone not to buy it when everyone on their side of the table is saying it's okay. Were the properties overpriced? Well, I believe so, but everything around was selling for that price and they came to us with the price. Could they make the payment? I don't know, I'm not privy to their incomes, but one offer came from somone who believed they were going to be able to double the rental rates (I believe those people didn't end up buying our property for a different reason)
Would you have been as scrupulous if the buyer of your car offered more than you asked and was an adult? Well, I guess you'd still have the scruples but fewer ethical problems.
Yeah, I have problems sleeping at night, but not for those reasons.
Plenty o' crackers caught up in it, too.
Yeah, up around the Atlanta-Marietta it seemed bodacious. Darned near as popular as NASCAR and boiled peanuts.
The point I'm trying to get at is that I believe a lot of people have gotten pretty good at mortgage fraud during the glory days of RE appreciation and innovative lending. It seems as if they've learned how to slide it through. However it is far easier to set someone up like this who doesn't speak English. Most crackers sorta do.
There really aren't enough federal personnel to investigate, so GA ended up passing its own laws to make it easier for the local and state authorities.
But of course you'd never catch a deal like this if it worked as planned. I wondered from reading the article if this particular home hadn't been used the same way twice before.
People sneer at FHA loans because they are much more tightly underwritten. Borrowers don't like them. However it does protect the borrower. All of these innovations (not checking) seems to leave the door wide open to exploitation of the naive or easily gulled.
Of course, this particular woman may be a lot less innocent than it appears. Maybe she just wanted to get in on a flip. We'll never know.
Can anyone find the sale? I think it is pertinent to the story?
Error - washingtonpost.com
Maria Salgado said she borrowed $21,000 from a friend to bring the mortgage payments up to date because she didn't want to ruin her brother's credit.
Granted, she could be lying. But the judge involved apparently believed her, based on the order to gift the property and the no-lawsuit stipulation. So I'm giving her the benefit of the doubt.
y wrote,Studies show that many of the global poor are poor because of the complexity of acquiring private property.
No, people in the world are poor because they have to hand over land rent to landowners who, as Adam Smith, John Stuart Mill, Henry George, and countless others understood, do nothing except leech off of others.
Would you have been as scrupulous if the buyer of your car offered more than you asked and was an adult?
I still would have tried to make sure the person understood, before we got around to signing titles and writing checks, that the thing DID NOT RUN and wasn't going to without expensive repairs. Some people don't get what a "U-joint" problem is on a 10-year-old car. It's a BIG PROBLEM. I don't think it gets any worse unless the problem is "missing engine."
I also wouldn't have felt comfortable calling an adult's parents.
I don't mean to infantilize immigrants by comparing them to children. I'm pointing out that they have one thing in common: they're vulnerable. Bending over backwards to make sure they're following along in key places doesn't seem too much to ask, to me. Same thing with the elderly.
We should just have a care for the vulnerable among us. I call it "civilization."
And to Mark goes today's Sack De Douche Award.
This is the type of stuff that ticks me off. It's unbelievable. I still can't get over NINAs. Is it any wonder we're in trouble? And now, we all pay for this nonsense.
Prufrock | 03.22.08 - 1:26 pm
NINAs and NINANEs were originally credit score driven (700 or 720 FICO and above) and had to have a low loan to value like 65% OR under. Starting in late 2004 thru 2006-7, credit standards dropped dramatically (lower FICOs and higher LTVs). Then came the stated/stated programs to 100% via JP Morgan Chase for FICO's 700 and above to $1.1 million. It worked so well credit standards started dropping on this too.
It got out of hand when the First Franklins of the world started offering 100% stated/stated to 650k with credit scores of 575 and above. Truly pathetic...and now we are here!
"corrupt Mexicans cheating another Mexican". Well, Venesula changed the laws to allow for foreclosure. The idea is to have actual property rights that allow someone to commit the property as collateral for a loan. Lenders are still very wary because it's a political decision that might not stick the first time "loses" their house. In 20 years they might gain confidence in the new fangled "mortgage" thing. Until then the informal economy is the real economy and a Honduran immigrant might have no idea there is a formal economy.
Wikipedia: Hernando_de_Soto_(economist)a Peruvian economist known for his work on the informal economy and on the importance of property rights - where I found out about the undergound economy stuff.
The sellers were very likely involved, but price alone does not make this certain.
It is every owners fantasy that someone knocks on their door and offers them double what their home is worth. Only sometimes it happens.
Once a Buddist temple acquired some land to build on and neighboring homes doubled in price overnight. Buyers had no duty to share this information with the sellers. Was it unethical for them not to do so? I don't really think so. An offer for more than they thought it was worth should be enough reason to investigate its true value. Yet some may have had the misfortune to have sold just prior to this occurring. That's life.
LJ,
Did you foresee that NINA, NINANE et al, would /could eventually bring down our banking system & economy?
Also, is JP Morgan Chase holding a lot of bad paper?
Tanta:
"I still would have tried to make sure the person understood, before we got around to signing titles and writing checks, that the thing DID NOT RUN and wasn't going to without expensive repairs. "
Tanta, you are forgetting that these were HOUSES people were buying. Ortiz wasn't buying bricks and morter, she was buying the American Story.
If your car that didn't run was the same car that Britney Spears threw up in after an all-night bender, well then it's probably worth as much or more....see that car wouldn't be for driving....and as we know houses weren't for living in...they were vessels to bliss, wealth, and the universal dream of security, family, and acceptance.
Can you really protect yourself from a fraud suit by getting the person that you defrauded to sign a paper saying that they can't sue you for fraud?
Sra. Ortiz, si usted está leyendo esto -- por favor, ¡comentar pronto!
I don't blame the NINA loans for the problems. I blame the people making them and the clearly fraudulent nature of repackaging and selling them as AAA securities. I'm still not clear on how you could expect them not to impair the pools of loans, and how you can get financially savvy people to accept that,.... Unless you factor in criminal behavior.
I got a lot of flack from friends because I gave away my 1989 Toyota to a poor person who stopped to ask if it was for sale.
I had a new car and selling it would have netted me what $500 bucks.
Tanta,
not sure I can agree with your statement that the seller has a responsibility to the buyer in this instance.
what could the seller have done in this situation? (assuming they're not in on this)
you may have an English speaking seller, a bunch of English speaking "professionals" and then a Spanish couple as well as Spanish speaking professionals.
there may have been a commotion, but I doubt it. Even if the Spanish speaking woman was surprised about her fake husband, how would the English speaking seller know?
It would go like this
Honduran woman: (speaking in Spanish, looking concerned)
Honduran man: (speaking in Spanish, consolling her)
Spanish professinal (speaking in Spainsh, consolling her)
Hunduran woman: seems to calm, signs her name
English seller: "Uh, is something the matter?"
Spanish professionals and Spanish speaking male: "No, it's all ok, we just had to translate a few of these words for her"
English seller: "you sure, she looks concerned"
Professional: "don't worry, this happens all the time"
English seller: "ok".
(or do you imagine they say
"STOP THE PRESSES, I REFUSE TO SIGN TITLE OVER TO THIS WOMAN UNTIL WE HAVE A SPANISH SPEAKING LAW ENFORCEMENT PERSON HERE IMMEDIATELY!!!!")
If the very smart posters here went to a foreign country, they might get taken too, because in all countries, there are the rules, and then there are the real rules, which are not written down anywhere.
Absolutely true. I taught at a university in Europe for a few years, and I learned to speak the local language well enough for normal daily-life stuff. But when it came to legal things, like property or taxes, I was completely lost. Not only is it a completely different form of the language, the subject matter is so complex I probably wouldn't have understood it in English either. So I would ask people for advice, and mostly I would go to others in the ex-pat community who had been there longer than me.
Sure, a local lawyer might have been better, but I wouldn't know how to find one I could trust, and they wouldn't know how to explain the differences between local rules and what I was used to. Besides, I'd probably have to sit through 20 minutes of their favorite fat-stupid-American jokes before we got down to business. Given the choice between that and an American friend-of-a-friend who seemed nice and trustworthy, I know who I'd pick. I can only imagine how much worse it would be if I was an uneducated Honduran living in the US.
How espectacular would that be if she showed up, that would make like three now.
Tanta - I think you are making MUCHO assumptions about the seller. Let me play 'abogado del diablo' for a second here - let's say the seller truly didn't know any of these people from Adam, didn't speak Spanish better than I speak Japanese, and couldn't tell what they were saying at the other side of the closing table?
Can you really protect yourself from a fraud suit by getting the person that you defrauded to sign a paper saying that they can't sue you for fraud?
Some loan documents in the past have contained this kind of language as part of the legal boilerplate.
A few years ago, when Household International was doing some pioneering work in subprime lending, the loan documents contained a mediation provision, so when people signed for the loan they were in theory signing away any right to sue. I'm guessing hardly anyone understood or even read this part.
When the borrowers' class action suit hit the federal court in Seattle, a judge who was otherwise unsympathetic to the borrowers threw out the mediation provision in a heartbeat and allowed the suit to go forward.
sdrenter writes:
If the very smart posters here went to a foreign country, they might get taken too, because in all countries, there are the rules, and then there are the real rules, which are not written down anywhere.
Which is exactly the problem with parachute journalism, even it takes place in your own country (i.e., a white upper middle class reporter from Wapo doesn't know what they don't know.)
quartz writes:
Tanta's point about missing information on the seller is key. In my paper copy of the article it has this key point: Ortiz's $430k purchase price was TRIPLE what the seller paid for it in 2004. In other words that anonymous seller bought the house for about $140k and a year later listed it for three times as much. And somehow a naive buyer was steered directly to that property. What appraiser did an appraisal showing a "run-down duplex" had appreciated 300% in one year?
Exactly. Bubble appreciation was 15% or so a year, maybe 25% in particularly bubblicious areas. 300% for a run-down place like that? In what universe?
Something is very fishy here. I agree that there must have been some kind of appraisal corruption.
If these are the kinds of people that make up the bulk of the pity cases we're supposed to shed tears over because they let themselves be suckered by a real estate deal, then I don't think it's as big a problem as the Post wants to make it seem. That kind of stuff is just par for the course south of the border.
Our country is rapidly descending into a third world economy with a criminal corrupt govt. and we're still proudly scorning and sneering about latin american government and culture?
I appreciate this post, Tanta. I hope you'll put more efforts like this online as you're truly a valuable source of information and someone I respect immensely.
What appraiser did an appraisal showing a "run-down duplex" had appreciated 300% in one year? What lender accepted such an appraisal? If the realtor was not somehow tightly connected to the seller or even was the seller, I would be very surprised. And I doubt the buyer at $380k got a good deal either.
I hear ya. But appraisals are based on comparables--the market. So if some other fool paid that kind of money for a rundown duplex in that neighborhood, then the appraisal had some validity on that basis. And once Mrs. Ortiz's place sold for that kind of money--well, all the other dumps around there suddenly were "worth" that much too, right? That's what a bubble is all about.
Alexandria, VA | 106 E REED AV, ALEXANDRIA, VA | Property Details
heres the public info on the prop and the flipper who hit the triple bagger.
Hard to blame sellers,
I certainly would be hard pressed justify selling it to another who plans to resell it later for a profit.
I'd want as much of that profit for my family rather than the next buyer's.
Even if you know you are in a bubble, why give the profits to the next person?
Why not jack up the price as high as possible, get as much for yours as you can, and do your part to pop that bubble ASAP with your overpriced moneypit...doing your part to end the madness quickly and ensnare as few others as possible, while at the same time helping to put your daughter through college.
Tanta writes:
...You'd get the whole package, and I'm not sure the world needs more people who like ABBA videos.
Hey Tanta, ya think ABBA's "The Winner Takes It All" could be the background music for this Tanta blog posting?
Gracias, jp.
flipper who hit the triple bagger.
Sales code V means "alteration/addition/renovation, or other change in physical condition since last assessed", so that 'triple bagger' may very well reflect nothing more nefarious than a substantial rehab on the part of Mr. Eubanks, the seller in question.
(FWIW: I'm a little irritated by people who move somewhere for 9 YEARS and don't bother to pick up the language... I'm as liberal as they come, but c'mon, 9 YEARS? NO English?)
Ditto. I spent 2 weeks in Costa Rica a few years ago. Arrived knowing very little Spanish, left knowing enough for basic interactions with merchants, waitresses, etc. It isn't that hard to pick up a new language when you are immersed in it 24/7 (esp for 9 years!)
Tanta - I think you are making MUCHO assumptions about the seller.
Well, see, my original purpose was to point out that a kind of "silent" assumption was being made about the seller in the story.
I mean, when I read that Ortiz paid $5k over list, and list was 3X last year's price, and no improvements had been done, I instantly assumed the seller was at bare minimum a greedy pig.
I have also seen enough "cash back purchase" scams to have wondered if the $5K over list didn't find its way into Salgado's pocket (she's already employed as a recipient of illegal kickbacks, why not one more?), from whence it emerged as the "half" of the "down payment." I mean, how effing greedy can you get? How could someone represented by a buyer's agent offer $5K over that price?
I did not think those questions would occur to people, because I believe it is ingrained in some of us to think that sellers who receive atrocious profits--who are "profiteers"--are "innocent."
And if you keep confusing me with Spanish, I'll call you a bricoleur.
shnapster
just looking at the transaction. the post had a question about who the seller was, that was the answer. i didn't mean to imply impropriety, just information.
Said another way.
If you KNEW you were in a bubble market....why sell for less?
All your gonna due is increase the profits of your buyer.
Im mean really, suppose you are an honest seller and no one wants to pay what it's "worth" since although you think its worth slightly more than you paid a few years back, the irrationaly market says its now worth at least double or perhaps triple what you paid.
I guess you could insist on selling for a number than is less than "outrageously overpriced" and insist that they only pay an amount that is only "seriously overpriced."
But why?
I mean your in a bubble that you can't convince others that it exists.
You are selling and your family gets the money.
Why increase the profit of the flipper buying it.
If you are forced to sell it for more than it's worth...why not get as much as you can for it?
It would be relevant to know what the comps were in '04 when it sold:
04/29/2004 $160,000
Was it sold under market then, or way over market in '05 at $430k.
I have seen situations where a buyer gets a property in a private sale for way under market, then turns around and puts it on the market at current market value for a huge profit in a matter of mos. (Pasadena, San Marino, Ca)
Just a thought...
Wow.
Mark's racism is really souring this thread otherwise interesting thread.
You are very liberal about comments. I would both ban and delete.
One effective method is to leave the comment with author and replace the text with something like.
[OT - racist rant]
But that might be too labor intensive.
How many people think a baseball hit by a baseball hero is worth $500,000, or a million? or two million?
Once prices are pulled away from fundamentals, what is the true price and what is the seller's responsibility to be "reasonable".
Is it possible to be a reasonable seller in an unreasonable market?
Immigrants in an immigrant community are NOT immersed in English. They talk to other people who speak their language. They are often embarrassed by their lack of knowledge.
My best friend from high school was Lithuanian and came here when she was 4 or 5. Her parents spoke Lithuanian, Russian and Polish, but never did learn English. All the Lithuanians lived in a small area of Balto, had a newspaper, a hall, and Saturday School, to pass on the language and heritage.
My sec'y's hub is Columbian and doesn't speak English. He has an excellent job.
Secondly, NOBODY reads the papers thrust before them. Except me. My grandma told me to never sign anything without reading it, and I thought that was good advice. I real very fast, so that is usually ok.
I skimmed our closing papers.
And I spoke up when I looked at a survey document that showed a house with a brick facade and a deck, because the house we were buying had neither. It was one of those in-face closings and the seller (who was in the process of eating every single cookie on the huge our lawyers had set out) was able to confirm that the wrong house had been surveyed.
I work for a title company and have been in this business for 34 years. The "learning curve" on being able to unravel these kinds of things is very steep. Our local fraud detectives, Bankruptcy Trustees etc. all call for help in interpreting who did what to whom.
All that I can tell you is there are victims out there...many of them...most often the elderly, people not fully conversant with the English language, the naive, the handicapped and the fearful.
And, trust me, there are bad guys...liars, cheaters, deceivers and the greedy.
There is a reason that auctions have reserve prices but not price limits.
Has an auction ever been stopped because the price was too high?
Did you adjourn until later, with a correct survey?
I am the anonymous above with the wrong house surveyed showing up in closing papers.
Sales code V means "alteration/addition/renovation, or other change in physical condition since last assessed", so that 'triple bagger' may very well reflect nothing more nefarious than a substantial rehab on the part of Mr. Eubanks, the seller in question.
Interesting. The reporter calls it "run down."
What I'd really like to see is the MLS info from 2005.
We completed the closing with a commitment for a free new and accurate survey to come in the following week by our very embarrassed lawyer.
There was also a conversation between our realtor and the lawyer that we weren't in on but I would have loved to hear.
I had that happen once Joy. It was part of a scam. I presume yours was mere stupidity on the part of the surveyor.
You are very liberal about comments. I would both ban and delete.
So far, I think we've all handled it right: make it clear that attitude is not shared by this community.
If it turns into troll bait, off it goes.
193rdth.
Thanks you, Tanta, for an excellent post and the ensuing commentary.
Shorter Tanta: It's the ethics, stupid.
Time for me to confer with Winkin and Blinkin. I'm gonna bricole me some rêves.
Bonne nuit, ma cher.
Bona notte, tutti.
It was a mistake--at least as far as I know. The surveyor surveyed the townhouse next door. All the other paperwork was correct and in order.
How would a similar scam have worked?
Everyone is missing the real story to this story.
Not only was this story front page - but an above the fold one at that for the Washington Post. You know the one published in the Nation's capital. And you can count on one thing in DC. EVERY politician is going to look at the front page of the WP.
A few months ago this story would have been buried in the RE or metro section of the paper.
A story like this with a sympathetic figure on the front page set off my 'greasing the wheels for a bailout' sensor.
Im mean really, suppose you are an honest seller and no one wants to pay what it's "worth" since although you think its worth slightly more than you paid a few years back, the irrationaly market says its now worth at least double or perhaps triple what you paid.
I guess the ethical problems here are kind of like the stock market a little. If I short sell a stock successfully, I am essentially taking value (for nothing) from people who took the long side of the trade.
I bought and own a few shares of SRS, the anti-real-estate ETF, and SKF, the anti-financials ETF. But SRS doesn't actually generate any real value, it doesn't manufacture anything, it doesn't do any services, its sole purpose is to capture wealth from the counterparties to the trade. BUT, it does have the (dubious) economic value of helping to smooth out the market and set proper economic prices.
Is investing in either of these funds a morally dubious activity? Is selling real estate into a bubble market at a profit a morally dubious activity?
Oh, and another thing, when someone talks a naive seller into agreeing to a higher than list price for whatever reason (most of them bad) the documentation which title companies are required to report to IRS shows that higher "sales price", I don't know what happens to those sellers when they file their next tax return.
As a footnote we did receive a corrected survey within a week with apology. I suppose it's possible we busted a scam-in-process; I prefer to think not.
Yearning to Learn writes:
Tanta or lawyers: did you understand this:
Ortiz sought out lawyer Howard Woodson for help. In October, he urged her to sign an agreement to gift the house to Hernandez. Although she refused and asked for a hearing, a Circuit Court judge ordered Ortiz to gift the home to Hernandez. It includes a clause prohibiting Ortiz from suing Salgado and Hernandez for fraud, according to court records.
1) why must Ortiz gift the house to Hernandez if Ortiz isn't on the deed (and Hernandez is). why couldn't hernandez just sell the house out from under Ortiz?
2) why would a judge say that Ortiz can't sue Salgado and Hernandez?
All of you QUIT BLAMING THE JUDGE!
THe house was going into foreclosure. The optins were (1) foreclosure or (2) a short sale.
It ended up being a short sale in Dec. (Owed aound $430,000, sold $380ish as I recall.)
(1) To sell it, the one on the loan had to get a court order quieting title.
Court orders her to sign over any claim on the property to the one on the loan so it can be sold in a short sale. (Keep in mind NO ONE was walking away with money.) Perfectly rational and perfectly reasonable.
(If the property had been being sold for more than was owed, the court would have ordered the sale to proceed and any profits split. She would have STILL been out of the house unless she got a loan on her own and met the price offerred by the other prospective purchaser.)
(2) She is barred from suing her co-owner and his assoicated for fraud in a seperate case because SHE HAD TO RAISE THAT CLAIM IN THE CASE TO QUIET TITLE!
It is called 'joinder of claims'. If the same parties are involved in a lawsuit over the same thing (here house) or incident (car accident) all claims arising from that transaction have to be raised in the SAME CASE. No coming back and filing a separate case. Period.
Guy on the loan sues her to quiet title. Shegoes in an wails 'but but but ...I can't pay for it but Iwan to keep it but but I can't get a loan on my own but but....." Court says 'co-owner wants to sell, he is on the loan, no one is making any money from the sale, it is going to be sold. You won't get anything from the sale so sign over the deed and go away."
Then she starts the 'but but but they tricked me into paying 1/2 the closing costs and I paid the mortgage for awhile' Court says (1) has this been filed as a counter-claim (answer: NO) and (2) if it was a counter-claim, would she get anything (Answer would seem to be no.)
What is the harm to her? She paid the mortgage payment for a few months and lived there for several months without paying anything. Probably if what she paid was added up, it would be close to the amount of rent.
Most probably she was barred from filing a suit for fraud or whatever becasue she did NOT RAISE it as a counter-claim in a timely manner.
Joy, you probably were just the unfortunate recipient of a mistake.
Having been in the business for a long time, I can testify that we do sometimes make them. I have been the one to take the call from some furious borrower who is being charged 75.00% interest. Ooops. We fix the note to show 7.50%.
That is another good reason to read the docs. No court would find that 75% enforceable, but if you were supposed to get 7.00% and someone mistyped and gave you 7.50%, you could be stuck having to pay that.
It could, of course, be fraud. With something like a survey, you never know. It is always best to read and to ask.
fwiw, the seller, Richard Eubanks, had other property on Reed Avenue that also sold in 2005. link
REED AVE. E., 40-Richard D. Eubanks to Yenis M. Rivera and Jose C. Diaz, $225,000.
Whatever the complexities of this scam, and there are plenty, Ortiz herself knew that she was not married to Hernandez, knew it and choose to lie about it anyways. Whether she's an immigrant, a confused or underinformed buyer, or whatever excuses one might try to make for her, the fact is this lie is so blatant, that it fails the smell test. In any language, she knew she wasn't married to the guy, and she lied anyways.
She wasn't pushed into the shark tank, she lied and jumped in.
What is the harm to her? She paid the mortgage payment for a few months and lived there for several months without paying anything. Probably if what she paid was added up, it would be close to the amount of rent.
If $3000/month is the going rent for a run-down duplex in Alexandria I'll eat my hat.
Whatever the complexities of this scam, and there are plenty, Ortiz herself knew that she was not married to Hernandez, knew it and choose to lie about it anyways. Whether she's an immigrant, a confused or underinformed buyer, or whatever excuses one might try to make for her, the fact is this lie is so blatant, that it fails the smell test. In any language, she knew she wasn't married to the guy, and she lied anyways.
The claim in the article is that the claim was only written down in the document she could not read, and she did not discover it later.
Did anyone besides 2 or 3 of us here and Tanta actually READ this article???
She did not discover it UNTIL later. What is wrong with this keyboard making me omit crucial words?
Did anyone besides 2 or 3 of us here and Tanta actually READ this article???
Oh I can tell what's in the article just by reading the comments of the other people who didn't read the article.
In my case the buyer was shown property different from what was actually sold him, according to the legal description. Addresses in the area were confusing and the house he was sold had one (crucial) number missing from the mailbox.
calc risk pointed out that sales fraud should be not be over looked. how can one prove sales fraud if buyer motivated to own the property? are we supposed to babysit people caught up in a bit of tulip hysteria? greedy buyer, ms ortiz. greedy broker, mr. aguilar. greedy re investor. sounds like capitalism working well.
OT, but a great article at The Huffington Post:
Similar euphoria is gripping Wall Street now. The rally of the past few days is unlikely to have any steam in it as the corrective power of the priest is open to question. No one believes that the financial crisis is over. Nor do people accept the word of the priest anymore. We have reached 'bailout fatigue.'
The last time we witnessed anything like bailout fatigue from the financial markets was in July 1998, when the International Monetary Fund (IMF) issued a $10 billion loan to Russia to assist the delinquent Yeltsin government, as a result of an economic crisis that had been building for months. Gullible market players took this loan as a sign that the corner had been turned. They contended that such intervention could only stabilize things.
In contrast, I got a call that morning from an old market hand who had seen it all before and who told me: "Sell everything; this is your last chance." He was on the money -- Russia defaulted three weeks later.
David McWilliams: The Most Dramatically Tragic Week
"But the prevailing template for the hard news stories of our times i.e. credit, housing, fiscal, and monetary implosions is broken. Broken by lazyness, herd psychology and foggy J. School brains."
You're shooting the messenger. Yes, much bad or superficial reporting is done. In part because newspaper staffs have been routinely slashed over the last 30 years as corporate chains buy up newspapers. Must keep the profit margin up; and the lower circulation goes, the more they slash. Vicious cycle.
BTW- the foreign language is a bit of a red herring. Ms Ortiz admits she didn't really ask anyone else. Possibly she would have gotten more bad advice, but not even asking within your community? Not even the pretense of due diligence.
Back in a few hours, kitchen drain and a washer/dryer hook-up.
In my case the buyer was shown property different from what was actually sold him, according to the legal description. Addresses in the area were confusing and the house he was sold had one (crucial) number missing from the mailbox.
Ok, I'm again 99.95% certain that the survey problem was a mistake. The possibility that it could have been something else didn't even occur to me until today. An older townhouse going for market price in an established neighborhood in a non-bubble market with an FHA 30-year fixed rate loan isn't really prime fraud fodder.
AnnScott,
This looks a lot broader than a joinder of claims issue. You are right that compulsory counterclaims would normally have to be raised. The order in this case however also applies to permissive counterclaims which as the name implies do not have to be brought in the original action (although they can be). It is this added feature that makes the judge's ruling totally outside the pale of what is allowed in our legal system.
Tanta -
I just e-mailed you some information about the property.
off topic
our economy is in sh#t and Buffett has the time to to a tv soap. what a guy. Is he that squeaky clean? I wonder sometimes.
Oracle of Omaha to play himself on daytime drama
By MarketWatch
Last update: 1:46 p.m. EDT March 22, 2008Print E-mail RSS Disable Live Quotes
NEW YORK (MarketWatch) -- Warren Buffett will be lured into a fictional insider-trading scandal during an upcoming television appearance, Reuters news agency reported.
The 77-year-old billionaire financer is scheduled to portray himself on the ABC soap opera "All My Children" during the May "sweeps" rating period, marking his second guest run on the daytime drama, the report said.
Buffett, said to be a fan of the show and a friend of its creator, Agnes Nixon, first appeared on the long-running program in 1992
I see jp beat me to it!
"But on the day of the closing in August 2005, Salgado's brother Saul Salgado Hernandez showed up to sign the papers. Ortiz said that she was surprised but that she figured Salgado knew what she was doing. She said she did not understand any of the papers in the thick stack of documents that she signed, not even the one that said she and Hernandez were married. "I signed the papers," she said. "I didn't notice."
So she sat at the closing, and just kept signing. She didn't ask why Hernandez was there, why he was signing her documents as well. She asked Salgado no questions, like say, what's going on?
Why is this person, Hernandez, signing my documents? I posit that anyone who has lived in the US for 9 years, and been working, has a clue that legal paperwork means something, that signing said documents in change for a house valued at hundreds of thousands of dollars is not this clueless. She's now in a rental apt. ..did she not sign a lease, understanding that she is liable for the rent, due on a specified date for a specified length of time. Also understanding that with her name on the lease she is entitled to occupy said apartment as long as she upholds her rental agreement? Would she have sat in the landlord's office, and let the brother of a friend start signing the lease without asking a few questions?
And yes, I did read the article, so skip the snark.
I make the assumption that immigrants, whether English-speaking or not, are possessed of common sense and the ability to ask some simple questions about what is happening. Ortiz has navigated in this country for nine years--
are you assuming she has learned nothing in those nine years?
Hat tip from Daniel Gross via Slate.com:
(Regrets if already noted)
For a macro view of the credit pileup, I rely on Calculated Risk, a blog written anonymously by "a senior executive, retired from a public company, with a background in investing, finance and economics" and "a former bank officer and mortgage lending specialist who is currently on extended medical leave." The blog distills the news (most of it bad) from the credit world and includes occasionally acid dissections of mainstream financial journalists. Trademark line: "We're all subprime now."
How would a similar scam have worked?
Well, the whole point of getting a survey is to make sure, among other things, you don't have encroachments or easements or something that are going to cause you problems down the road.
So the fear would be that your real survey found a problem, the seller/closing agent didn't want to deal with it, so they "swapped" a "clean" survey into your package.
Unfortunately there are only about a couple million ways to defraud people in real estate transactions.
Just a nit, somebody probably pointed it out already:
It's "Aguilar" not "Anguilar" as you have in the post.
Which is kinda appropriate because "águila" is 'eagle' as in 'a bird that flies high and swoops down to pick off the carion killed by others.
Did anyone besides 2 or 3 of us here and Tanta actually READ this article???
Who needs to actually READ an article about Mexicans?
/ sarcasm off
Just a nit, somebody probably pointed it out already:
It's "Aguilar" not "Anguilar" as you have in the post.
No, it's not just a nit.
No, nobody else pointed it out yet.
Thank you for doing so. Even slime have a right to have their names spelled correctly.
"one-story duplex in Alexandria, triple what the house had sold for the year before, and $5,000 more than the asking price, according to real estate records"
Tanta,
If I could sell a house for triple what I paid for it does that make me unethical or just lucky? The lender was stupid to believe an appraisal for 3x of the previous value. Don't the automatic lending systems raise a flag on such a discrepancy?
Also, FWIW, that specific neighborhood she bought(East Reed Ave) has the potential to undergo rapid 'gentrification'. Adjacent neighborhoods already have. It used to be a slum, but since Potomac Yards redeveloped from an old rail switching depot to med-high retail, that is becoming a prime neighborhood esp if you rip and rebuild. And with a non-trivial potential of installing a metro stop there, even more so.
Not saying that the 3x increase to 430 was not a scam, because it was. But the subsequent sale even in the high $300's has the potential of being a speculative but 'reasonable' RE investment - of course depending on the buyer; if it's another Senora Ortiz, it's another scam.
re: spike66 writes:
I hear you man ! My radar twitches too and I question the data - there are aspects that don't gel - You just have to accept the snark though - there is an aspect in many liberal traditions, and I'm proudly liberal ( in the old style now dead British Liberal party style ), where critical analysis, informed speculation and scepticism must be one-sided.
So it goes. just accept the snark, make the case and continue on - you'll get your reward; NOT ! but do it anyway.
-K
If I could sell a house for triple what I paid for it does that make me unethical or just lucky? The lender was stupid to believe an appraisal for 3x of the previous value. Don't the automatic lending systems raise a flag on such a discrepancy?
I don't know. I bet I could find an elderly Alzheimer's sufferer who could be induced to pay you four times what you paid for it. Why stop with three?
My point is that I think there's a bad purpose being served by assuming that any talk about seller fraud is strictly "off limits" because of this "that's what got offered" business. There have to be limits, conceptually, to what you can accept before you become a profiteer.
Actually one of the biggest problems with automated valuations is that they do not take into account the actual buyer and seller in question in the proposed transaction. An ethical appraiser--and it seems questionable that we had one here--would have reviewed the contract, discovered that it involved the RE agent paying closing costs and would have possibly marked down the subject vis-a-vis the comps because clearly it took "creative financing" to get this thing to move at that price. Some computer wouldn't take that into account.
Of course an AVM might have been a reality check on that appraisal, but I have to conclude that the lender who funded the loan was highly interested in looking the other way.
Articl says:
"She looked at only one house and paid too much for it: $430,000 for a run-down, one-story duplex in Alexandria, triple what the house had sold for the year before, and $5,000 more than the asking price, according to real estate records."
But it also says:
"Hernandez, who sold the home in December for $380,000, according to Alexandria property records, did not return several phone calls seeking comment."
I wrote Brigid to ask if she checked into the possibility of seller fraud but the selling price last December makes me wonder.
Still, there is something in the first quote that doesn't jibe.
"There's a sucker born every minute"
http://en.wikipedia.org/wiki/There's_a_sucker_born_every_minute
And this has nothing to do with nationality, education, or the language you speak. e.g., Spitzy
It seems to me that just about everyone here is a bad actor. The buyer was sleazy at best, Agular, Salgado and Hernandez were con artists who were a good deal smarter than Ortiz. On the whole, I can't say that I'm sorry she lost her assets and got kicked to the curb - it couldn't have happened to a more deserving person. It's just a shame that the other three aren't in free housing provided by Virginia's fine penal system.
I live about a mile from this house. I can't connect the dots here. I share Tanta's suspicion about the seller being in cahoots with the RE agent and/or mortgage broker. This is the sketchiest street in the area, full of eyesores, and other places were available nearby for comparable prices. Yet it's the only place Ms. Ortiz looks at. Hmmm.
Moreover, I'm baffled that Ms. Ortiz's niece would pay over list for a house in Springfield in late 2006. By that time, the days of bidding wars in that area had ended.
In addition to my suspicion about kickbacks from the sellers of these homes, I also suspect that Ms. Ortiz and her niece were more aware of the scam than they are letting on in the article. I think that the agent or brokers offered them something more than mere home ownership.
The other part of the story that confused me is, didn't the wife talk to her (real) husband about the deal? I know in my family if I came home and said something to the effect, "honey, I found a great deal on a bucket truck, the only catch is I have to pretend to have a different wife just for the financing. My real wife would probably say something to the effect, snip for family blog rating, "emphatic no!"
I agree with a previous comment that we don't have to swing the cat very hard to find more than one criminal in this transaction.
Terminator-X,
I've known people who pulled similar scams to what Ms. Ortiz was involved in and they knew what they were doing. They often didn't think it through fully, but they always knew they were doing something shady.
Other Jim,
I too would be in more than slightly serious trouble with my wife if I bought a house claiming to have another wife. In fact, I don't know if I'd survive making the suggestion.
"In addition to my suspicion about kickbacks from the sellers of these homes, I also suspect that Ms. Ortiz and her niece were more aware of the scam than they are letting on in the article. I think that the agent or brokers offered them something more than mere home ownership."
Terminator-X
IMO, you are right on the money. During the RRE bubble there was so much "free money", "fruit hanging low", that I am sure billions of dollars of subprime mortgages went to criminals that went well beyond just laying in an application, tinkering with an appraisal, charging excess fees...
And now Rubin wants us to pay for it!
I bet I could find an elderly Alzheimer's sufferer who could be induced to pay you four times what you paid for it.
Frankly, I doubt it. Alzheimer's tend to have poor or no recall of recent events, but reasonable memories from decades ago. So asking one to pay $400k for a house might elicit "Hah, it isn't worth more than $30k!" It's much easier to get them to sell you their house for less than market, because the thought that you'd pay $200k for their house sounds great, compared to their decades old comps.
Actually one of the biggest problems with automated valuations is that they do not take into account the actual buyer and seller in question in the proposed transaction. An ethical appraiser--and it seems questionable that we had one here--would have reviewed the contract, discovered that it involved the RE agent paying closing costs...
Really? I always thought the AVM was for loss recovery in case of default. Who cares what's motivating this buyer or seller; it's the price of the rational buyer that the bank will have to wait for after FC that the AVM tries to predict. Ditto with the human appraiser who, in my view, has no business seeing the number that the RE agent is aiming for before he comes back with his "fair market" number.
Ortiz and probably Salgado are criminals. Ortiz is almost certainly a illegal migrant. The intent to cash out refi under false premises shows conspiracy to commit mortgage fraud.
They should be prosecuted and if found to be here illegally deported.
it's the price of the rational buyer
Lenders use AVMs all the time to "reality check" appraisals.
But you just used the phrase "rational buyer."
If the appraiser determines that only an irrational buyer would have signed that contract at that price, in his or her professional estimation, he or she is supposed to say so.
Then the deal doesn't go down, or not at that price it doesn't.
Then that price doesn't get into the public records.
Then the AVMs don't pick that price up.
But if appraisers let "irrational deals" go without comment, your AVM is going to spit out irrational values.
Ortiz is almost certainly a illegal migrant.
Yeah, them illegal migrants is always going to the newspapers to get their names on the front page. Publicity hogs!
dissident, if you weren't such a pig I'd be cracking up over "intent to cash out." First you assume that all Spanish-speaking immigrants are here illegally, then you make up new crimes.
You say Salgado is "probably" a criminal, even while both she and Aguilar admitted to the Post that they were engaging in illegal referral fees (payment by a licensed RE agent to an unlicensed person for referring business).
But you know Ortiz was a criminal, even when there is the possiblity that she was merely a mule.
Also factually incorrect is stating that the house was resold for 350k and not 380k in 12/07. Obviously trying to downplay the initial appraisal fraud.
75k in kickbacks and bribes can go a long way.
It isn't a stretch to assume some form of immigration issue mixed up in the mess. The code for these stories in Southern California is to state legal immigrant status if it exists and stay silent otherwise. It might even be part of the way Ortiz was forced out. Veiled threats that legal action could bring her or her family to the attention of the INS can be a powerful tactic.
Ortiz and Hernandez committed mortgage fraud. It simply does not matter whether she understood at the time or even ever understood. Those are issues for the sentencing phase of the trials.
Oh, and a brief public service announcement. There is a person presumed to be in Oxnard, CA who's partner in a recent border crossing just died of rabies in a Santa Barbara hospital. This person needs to find medical treatment immediately and arrange to pay the medical bills his friend has incurred.
Just like criminal behavior in the real estate world there are innocent victims pretty much wherever laws are selectively pursued.
You people are telling me that nine years ago we weren't giving legal entrance to Hondurans? You telling me she sneaked across the border from Mexico? How'd she get into Mexico?
What would you all do if you ever met a Spanish-speaking person from Madrid? Assume they swam across the ocean illegally and call the cops?
" Ortiz said they had planned to take out $70,000 in equity, half of which she would pay Salgado for her share of the down payment and for allowing Ortiz to use her credit."
Ortiz had an established financial plan and was well aware of what she was doing. There is no need to make this story into one of immigrant subprime exploitation.
OT, but just saw a commercial on cable from 877-860-CASH, where you can get a $2600 loan, with 42 payments of $216.55 and a $75 origination fee. They plainly state that the APR is 99.25%! So, at least their honest! Wonder if it's affiliated with a credit card company?
Ortiz had an established financial plan and was well aware of what she was doing.
You're joking, right?
Borrow $5,500, and pay back $35,000 a year later? Is a "financial plan"?
You don't think that might not be evidence of someone who does not understand finance?
The Immigration and Customs Enforcement Agency estimates that 70 percent of the roughly 1 million Hondurans in the United States are here illegally, making them the second-largest illegal population behind Mexicans. Federal statistics indicate that a Honduran national tries to slip into the country illegally about every 15 minutes.
Tanta, go with the odds.
Immigrants in an immigrant community are NOT immersed in English.
My point was: Immigrants living in Arlington and Alexandria Virginia can easily immerse themselves in English speaking culture and learn English if they choose to do so.
You're joking, right?
Borrow $5,500, and pay back $35,000 a year later? Is a "financial plan"?
The newspaper reports it as:
In a year, when the house had increased in value, as they assumed it would in the hot market, Ortiz would refinance. Ortiz said they had planned to take out $70,000 in equity, half of which she would pay Salgado for her share of the down payment and for allowing Ortiz to use her credit. Salgado would remove her name from the title, and Ortiz would own the house outright, according to the court documents.
So the financial plan should be presented as she makes a future gain of $35K, and a solely owned mortgaged-house, for giving up $5K now and a future $35K and for access to a someone with a credit rating.
It IS a plan; all it needed was for house prices to keep going up. A LOT of people, umm, including Wall St., Bernanke et al reckoned the same.
If you say this is evidence that Ms. Ortiz does not understand finance then you have to tar BB, a lot of Wall St. with the same brush.
Actually, come to think of it....
-K
Tanta said: "You don't think that might not be evidence of someone who does not understand finance?"
It's hard to tell these days,
Bear Stearns...."It's ridiculous, totally ridiculous."
What is rediculous?
BS..."that someone would pay $60 for our stock today when they can buy it next week for $2. Obviously they don't understand finance."
Tanta, go with the odds
So that's how we run the courts these days? If "the odds are" you're guilty, then you're guilty?
"Borrow $5,500, and pay back $35,000 a year later? Is a "financial plan"?"
"Borrow $5,500, and pay back $35,000 a year later? Is a "financial plan"?"
The plan was she was going to pay it back out of the "appreciation" from the house along with taking out her share of $35,000. From her point of view she was going to leverage that 5,500 for a gain of 7x. No deceit here, just bad risk taking ..
sk, she doesn't "gain" $35K. She's deeper in debt by $70K. She would have had to borrow the $35K to pay off the $5,500 loan from Salgado.
Yes, my point is that this is bubble-logic and makes no sense.
Tanta writes:
Tanta, go with the odds
So that's how we run the courts these days? If "the odds are" you're guilty, then you're guilty?
Actually that is how we run certain aspects of the civil courts but no, I was talking about the chances of someone's immigration status being mixed up in this mess in one form or another. Perhaps Ortiz is here legally but her husband isn't and that's why she and not they were involved. Predatory deals are easier to execute when there is blackmail or an existing history of flaunting the laws of this nation.
It sounds like some of you folks are trying to "make sense" out of a confidence trick.
It's like calling someone who falls for a Nigerian e-mail scam someone with a "financial plan."
I never claimed Ortiz was either bright or sensible. People who fall for such things tend to have a tragic flaw.
But that doesn't make the con man's pitch "rational."
I just returned from a RE auction in Herndon, VA.
Did'ja miss me?
Observations on the auction:
Out of approx. 75 bidders, very few (6?) appeared to be born in the US. Lots of turbans, hispanic folks, and head scarves. A few people slowed down the auction by asking questions that couldn't be understood.
There were 6 homes on the block, ranging from fairly nice SFH (in a not so great location), to a dog of a townhouse condo (needed at least 30K of renovations to be livable). The auction was for "the right to choose" between the 6 homes. H bidder announces which of the 6 homes they wanted for their high bid. It seemed very scammy from the outset.
Mortgage brokers were present.
One dude (a fellow who spoke broken English) purchased a home for 265K, and then chose one of the least valuable houses on the list. I felt for him when the assembled groaned at his choice.
My 12 y.o. son thought it was a hoot. He said that the people who got caught up in the bidding were tools (I only corrected him for his choice of words- not the sentiment).
Any of these houses could have been purchased on the open market at or near the auction price - but at auction, the benefit of inspections, etc., was unavailable.
We are all screwed now.
Predatory deals are easier to execute when there is blackmail or an existing history of flaunting the laws of this nation.
It certainly seems true that immigrants without documentation are more likely to be preyed on, because they can't go to the authorities without getting nailed on their immigration status.
Did you assume that Aguilar, who has a VA RE license, is illegal? How about Salgado? How did Hernandez get a Circuit Court decision in his favor if he were deportation material? Do the "odds" only support Ortiz being "illegal"?
Tanta,
Do I get to date Morticia?
All I'm asking for is full enforcement of existing law. It was upsetting to see a nice looking Playboy model deported, but such are the breaks.
Read the article, it mentions that she fled some hurricane and the time line does not support waiting for a immigrant visa. Cooks that don't speak English don't come in on H1B's.
I did forget though that perhaps the perp should be looked at by the IRS to see where the funds came from. They should be stripped of assets before deportation if found guilty.
You claim to be good at smelling out BS and I believe you are. Putting lipstick on these minority fraud rings just confuses the issue.
PS, the 70K cash out refi to be split two ways is right in the article and is also mentioned by you in follow up comment.
I went both ways on the question of whether this post would be impolitely off-topic or not. I decided that if a poster here isn't banned or getting his posts deleted on a charge of racism, an informational housing-related post like mine wasn't so bad.
Here's my line of thought, along with data sources to recreate the chart I'm looking at.
Premise: When the economy is strong (low unemployment rate) and mortgage interest rates are relatively high in comparison (indicating restrictive credit conditions), that's a sign that the economic expansion is nearing its end and recession will soon begin.
Premise Two: When the economy is in recession (high unemployment) and mortgage rates are relatively low (indicating stimulative credit policy), the recession is nearly over and/or the expansion has begun.
For this exercise you'll need a spreadsheet program and some data. Here are the sources for the data:
http://www.federalreserve.gov/RELEASES/h15/data/Monthly/H15_MORTG_NA.txt
NBER lasted 6 months and that happened once
Notice: Data not available: U.S. Bureau of Labor Statistics
(The mortgage rate data goes back to 1971, so you'll need to adjust the "output options" on the BLS data-page to get unemployment rate data back to 1971.)
What you'll need to do first is get the unemployment rate data and conventional mortgage rate data into your spreadsheet, line up the dates, then adjust/format the two pieces so they both properly reflect % rates in the cells of your spreadsheet.
Now, divide the unemployment rate by the mortgage rate for the same month(s), all the way through the array (February, 2008 is the most-recent data available).
Chart this result.
Now you'll need to use the NBER recession dates to create the recession bars, like CR does with a lot of his charts.
Here's what you should see when you're finished.
First, that extremely low ratios indicate an economy nearing/in recession, with extremely high ratios indicating economic expansion.
Second, at some point before each of the last 5 recessions (typically within a few months, with the notable exception of the 1990-91 recession with a lead-time of a couple of years) the ratio of unemployment rate/30-year conventional mortgage rate drops down into the mid-50% area or lower.
The third thing you should see is that either near the tail-end of a recession or at the beginning of the post-recession expansion, the ratio rises at least into the mid- to high-70% area.
Finally, you should see that the most-recent lows in this ratio (approx. July, 2006-July 2007) didn't get any lower than about the 69% before it bounced up into the +80% area, a favorable level indicating an expanding economy.
The unemployment rate never got so low as to cause the economy to grow at an unsustainable, inflationary rate that would cause the Fed to slam-down hard on the brakes and sharply restrict credit. Just the opposite, actually.
So, no recession, only slower growth, and be skeptical of prophets who are making assumptions about recession based on data from a single economic sector, ignoring all other variables regardless of their importance.
Sebastia
The short sales I see advertized remain at inflated asking prices, maybe 20% more down for me to be "moved".
dissident, "fraud rings" are illegal, immoral, and the sort of thing I will expose if ever I get the chance.
Not a one of them is "worse" if it's perpetrated by a "minority" than a similar fraud ring perpetrated by native-born English-speaking white cretins. Fraud's fraud.
You give yourself away by calling it a "minority fraud ring."
Newsflash: it's just a fraud ring.
Yeah, them illegal migrants is always going to the newspapers to get their names on the front page. Publicity hogs!
You see it all the time in left wing states that do not enforce the law of the land.
dissident | 03.22.08 - 5:27 pm
Name the states, and give some examples, or STFU with the "left wing" crap.
You see it all the time in left wing states
Virginia is a left-wing state???
Dear Lord, what do you think a conservative state is?
sk, she doesn't "gain" $35K. She's deeper in debt by $70K. She would have had to borrow the $35K to pay off the $5,500 loan from Salgado.
Tanta
You mean that the refi would increase the loan amount so she's actually further in hock to the tune of 70K of which 35K goes to payoff Ms. Salgado - I know that and you know that - we didn't get the memo that houses magically produce money out of their wazoo - but apparently Bernanke didn't know that, Mozillo didn't know that - the refi embed in the MBS tranches didn't know that.
Quotes available if needed to back the above. I'll give a BB quote:
With regard to household consumption, perhaps the most significant effect of recent developments in mortgage finance is that home equity, which was once a highly illiquid asset, has become instead quite liquid, the result of the development of home equity lines of credit and the relatively low cost of cash-out refinancing. Economic theory suggests that the greater liquidity of home equity should allow households to better smooth consumption over time. This smoothing in turn should reduce the dependence of their spending on current income,
Aug 31st
So, who are you gonna believe has the correct finance theory - you and me or Ms. Ortiz, Mr. BB and Angelo Mozillo amongst others ?
-K
Marcus Aurelius writes:
Name the states, and give some examples,...
California. Google "simi valley sanctuary."
I said "states", as did you. It's plural. I'm sure you can find more, then I'll find the "conservative" states that have done the same. Then we can start the name-calling.
"Salgado would remove her name from the title, and Ortiz would own the house outright, according to the court documents....
Her own credit was not good enough to help Ortiz, but that of her brother, a construction worker, was, she said."
Look at it another way, Ortiz was willing to pay $35000 for the use of another's good credit score. How much that would have saved her in interest, we don't know but if the loan was around 7.50%, as Tanta guessed, that might have been cheaper in the long run than paying a true subprime mortgage rate...
Tanta,
The article we are discussing clearly states that this ring was Hispanic and that they didn't even speak English.
You refer to the Nigerian scams.
Of course they are minorities, it is clearly stated in the discussion leading up to these posts.
Americans committing the same crimes should be prosecuted just the same, but obviously we can not deport them.
When I sold my house in VA in 2004 a couple of weird things happened at settlement that gave me pause, but at that point I was clueless about the easy credit environment. I met my buyer for the first time at settlement. I remember the attorney stating the terms of his loan several times in this ominous tone before he gave the buyer his papers to sign. At this point, I had already signed mine. If I remember, it was a 100% interest only loan and, being a 30-year-fixed sort of gal, I was shocked. Silly me.
After we finished the buyer gloated to me - "you didn't ask enough for your house". I got twice what I paid for it, though that appreciation all came in the last 3 years of the 12 years I owned the house. Then he asked if he could bring his architect by because he had not come in the house yet. He had to ask since I was renting back for a month. It was only then that I figured out he was a speculator and trying to flip the house.
My point is that back then I think few people outside of the housing industry really understood what sorts of things were going on except for those trying to take advantage of the bubble and the easy credit. Of course, there is little excuse now.
This discussion about the seller's moral responsibility is interesting, but I think it would be the rare situation where an honest seller (not one who is conspiring with the other parties to defraud someone else in the transaction) would find themselves in a position to save a buyer at the settlement table. But I will say that after that experience, I was very uncomfortable with the anonymous transaction that occurs in my current state of Oregon where the escrow process is used. It was too weird to buy a house without ever meeting the seller so I made a point of asking mine for a walkthrough before the sale was final. We talked about why we liked the house and I bought a piece of her art (ok, it is Oregon).
For me the WaPo story illustrates the same disturbing trend in our society that jingle mail represents. And that is a loss of values that started with our businesses and has now "trickled down" to individuals. It's all about the money I can get today and little about building a company or product or life that sustains us and those around us.
Stepping down from soapbox now....
Marcus Aurelius writes:
I said "states", as did you. It's plural. I'm sure you can find more, then I'll find the "conservative" states that have done the same. Then we can start the name-calling.
I didn't say States and am perfectly comfortable with presenting one egregious example rather than a litany of opportunities to find fault with some minor aspect. Neither I nor the other poster you have confused me with said anything at all about other states only that left wing states have a problem of their own making because of selective law enforcement.
Name the states, and give some examples
Any state that does have sanctuary cities. Any state that does not require verification of immigration status before issuing driver licenses or personal ID that can be used to vote.
Any state that does not check and report immigration status for criminals. Any state that does not check immigration status before providing any social service. Etc, Etc.
As for states that enforce the law start with ID and AZ.
Massive monetary fines to employers of illegals as well as revocation of business licenses for second offenses. No benefits of any kind without proof of immigration status.
Works like a charm. They self deport.
I read this twice, and of all the scams I'm aware of, this is one of the silliest and I think something rather large was missed, first by the parties to the transaction, and then by the reporter.
The focus on the realtor is distracting from what I see as the basic transaction: seller sells to Hernandez and Ortiz, and "Ortiz got suckered into making [Hernandez's] mortgage payments."
Ortiz went into title (a benefit) and presumably got a place to live (another benefit). What did Hernandez get? Although he was on title (a benefit), he was the sole mortgagor (a burden). It's not clear he had any ability to evict Ortiz for not making his mortgage payments. As a co-grantee on the deed Ortiz got the deal, and the alleged fraud is irrelevant to that.
Now, I'm at a loss to figure out why these folks did things this way. Ortiz was functionally a renter. She shouldn't have been in title if your Hernandez.
I trust Tanta' ability to recap the story, and share frustration about the absense of information on the seller side. But, I have to conclude, unlike her, that that is where the real story is and that this a fatally flawed reporting job.
Hernandez is the one who's really getting the beating here.
My guess is that a large amount of cash disappeared somewhere at the point of sale (an undisclosed double closing?), and that Hernandez is on the hook for it, and that he got at least some of it [illegally].
Well...I'm black, so let's get that out of the way...
Next, I stopped going to HousingBubbleBlog because I simply got extremely fed up with the racist immigrant bashing. Lordy, but does that many mommas neglect to tell their sons (and it's mostly boys) that whining is unbecoming?
Mark, dissident, you guys are more or less loser whiners, just like that bizarre japanese guy who went on his own antiimmigrant rant on another thread.
anyways, Tanta's suspicion about the seller are quite appropriate.
And yes, it's quite annoying that there is still a preference to report on such rings when they are about immigrants or minorities, and not whites. Fraud rings like that exists everywheres, and most victims are white.
Clarification: Hernandez got the cash illegally at the closing. That's the only motivation I see for him doing this deal.
Hernandez also got a cheaper than free one year option on potential appreciation.
I wonder if we would get the same weepy story if it was about my dream to buy a Ferrari Testarossa off my wages as a dishwasher.
I wish I were as smart, savvy, and secure as some of the people in this thread, such that I could never fall victim to a snake oil salesman. (Particularly when everyone from Alan Greenspan to Time Magazine -- not to mention eight variations on Flip This House all over the tube -- was sending the same message as the realtors.)
Clearly only the greedy and the stupid get taken, right?
Salon.com did a piece on this stuff last August. The following, signed Anonymous, was posted in the comments:
Will someone help people who have been targeted by predatory lenders? Please?
I went through the process of buying a house during the height of the boom, and I think it is unfair to label many of the victims (the people losing their homes) as greedy or stupid. When I started looking (with no chance of putting together a down payment for 5 years or so) for houses, I stepped into a strange and surreal world of extremely friendly people who gave me, even then, a sense of doom. The day I walked into a real estate agent's office, she told me that I could get a loan with 0% down, and then she took me to her friend, a lender. He looked at my assets (I owned nothing except a 25 year old car--I had just left grad school) and said that I could buy a house in a range that left me breathless. I mentioned that I was not a US citizen nor a resident alien (I was in the US on a legal working permit), and they told me that in the US anyone can buy a house. I mentioned that I was single and that I had no guarantees that the job that brought me to the area would last, and they assured me that I could sell in a year if needed. In tandem with the lender, the agent took me to houses that were palatial (in my opinion)--they were gorgeous homes with numbers of bedrooms that a single woman with two cats would have no need for. When I mentioned that I did not feel comfortable buying a home that would lock in 60-70% of my monthly income, they offered ARMs and 40, even 50, year mortgages. The way these offers and alternatives was offered to me, it was almost impossible to NOT dream of owning one of the palatial homes. These lenders (and agent and the entire system) did not give me facts, they offered expertise (they were experts and I didn't even know what equity really meant), knowledge, and, worst of all, the possibility of security. To a single woman, the security of making a sure bet investment (this is the day and age of Enron) was intoxicating.
However, perversely, after living in a 420 sq. feet studio for several years during my grad years and after experiencing poverty (as a foreign student I couldn't get loans, which made me very wary of these easy housing mortgages), I felt that something wasn't right. I settled on a modest house (40% of my income)--to the absolute horror of the agent and the lender (horror expressed to me many times and once the lender even got annoyed with me and told me that I could get more equity with a more expensive home, which didn't make sense, as I pointed out to him because i would be spending more in interest--with a fixed interest rate.
My point is that unless you bought a home during the housing boom and unless you are one of "those people" these bastards targeted (single, young, foreign, poor, uneducated about finances--anyone who has been marginalized), you cannot throw stones at us. I had my experiences as a grad student to rely on as well as a sense of insecurity after 9/11 when so many foreigners were targeted. If I had not been told by the business offices where I did my studies that foreign students are not eligible for loans, period, and if I had not felt that my time in the US may be impermanent, I very well would have gone for the palatial home, NOT because I am stupid, but because the system these used car salesmen had created.
These lenders need to be targeted. And someone needs to step in HELP the people who are in danger of foreclosure. I am in a good place, and even with house prices plummeting, I can still make a bit of a profit if I decide to/can sell. However, around me, in my subdivision, there are houses that are foreclosing and my heart goes out to them. This is not about money and the market. This is about human beings.
I reread that piece from time to time, and try to remember all the stupid mistakes I made when "I should have known better" but the circumstances of my life were such that desperate hope trumped inherent suspicion.
Tanta | 03.22.08 - 4:46 pm
" Borrow $5,500, and pay back $35,000 a year later? Is a "financial plan"?
Get into the house; take cash out; pay off co-borrower; spend her share of the take - is that a plan?
seems i've heard it before...
Doesn't it bother anyone that the seller Richard Eubanks sold an almost identical house 15 doors down the street for considerably less 10 months prior? The only difference I can see is the one bought by Ortiz had a finished basement. Is a finished basement really worth an additional $205,000?
106 E REED AV
08/25/2005 house is sold by Richard Eubanks for $430,000
04/29/2004 house is bought by Richard Eubanks for $160,000
Link
40 E REED AV
10/15/2004 house is sold by Richard Eubanks for $225,000 to Yenis M. Rivera and Jose C. Diaz
11/18/1999 house is bought by Richard Eubanks for $40,000
Link
Ortiz was induced to sign a statement that she was Hernandez' wife, although she seems to have met him for the first time at closing and she's already married to someone else.
Ortiz is as dumb as a rock.
2 questions:
Where was the husband during all of this? And why does he leave his disablingly stupid wife home alone?
Doing a transaction you don't understand, in a language you don't understand, with no lawyer, and that requires you to sign false documents - how could anybody smarter than a rock have expected this to do anything other than go south?
A man named Walter Salgado bought the house next door. Coincidence? Any relation to Maria Esperanza Salgado or her brother, Saul Salgado Hernandez?
104 E Reed Avenue
12/17/2007 $277,978 SALGADO WALTER
05/01/2006 $380,000 JOHNSON LARRY L
The seller, Richard Eubanks, owns 42, 48 E Reed Avenue. And I'm curious who EAST REED AVENUE LLC is. The estate of Lois C Neebe is listed on a number of the properties.
Per Birdseyse's comment: The Hernandez angle is tough. If he weren't Salgado's brother I'd say he would be a victim to. Because by my math he's netted:
($430,000) note + $380,000 sale + ($6500)? in 'downpayment'/closing costs = -$50,000 - -$56,600
So I wouldn't describe it as a 'one year cheaper than free option' because he could have taken a loss in this whole mess
Now, he probably would have gotten a piece of the $35K of the $70K appreciation, so he had an upside. And with the $21,000 payback, and whatever else isn't in the story, he probably didn't do any worse than break even.
And of course, since everyone is related to everyone else in this story, there are undoubtly unmentioned considerations and cash flows that makes him complicit.