So who's the bag holder?
It looks like this rip-off was a "conforming loan", so it likely was packaged into a Fannie/Freddie MBS. Does that mean that F&F (we taxpayers) are the bagholder?
That is just unbelievable. All these people think Wells Fargo is the best of the banks. They were bragging a couple weeks ago of how they've gained market share. They didn't say it was the market for nonsense loans...
But without continued access to 109% loans, how can we stop RE prices from falling? (ducks, runs away) But this points out just how COMPLETLY worthless and compromised the appraisel business has become. I suspect that there just aren't that many honest appraisers out there. I'd bet that they've been driven out of business by the "hit the number guys." How anyone expects "hope now" to work with the pervasive appraisal fraud that we have now is beyond me.
what will it take to scare people into doing their jobs?
Everyone who ever had anything to do with Casey Serin's adventures put in orange jumpsuits would be a good first step.
Good to see my predictions of Wells Fargo not being above the mess are proving correct. The real answer is "Follow the money." Everyone in this transaction made money except the ultimate bagholder. Who is that? We don't know and therein lies the problem. These kinds of retail fruads only occur in a system of secondary markets that permit it. If a few secondary MBS holders can successfully cramback to Wells Fargo you can bet Wells Fargo will be a lot more careful before cutting the next check.
Does that mean that F&F (we taxpayers) are the bagholder?
Not hardly.
If this loan went to one of the Fs, it will be coming right back to Wells Fargo.
Fannie and Freddie have clear and unambiguous rules about appraisals and down payments that this loan violates six ways to Sunday. If Wells Fargo sold it to one of them and repped that it followed guidelines, they'll be buying it back.
Just to remind you civilians: this is Mortgage 101 stuff. Sellers can't make down payments. Funds must be sourced. Sales prices must be adjusted for excessive contributions by interested parties. Appraisals must address the most recent 3-year sales history of the property and the terms of the current sales contract.
These rules have been there for a long, long time. The GSEs have never relaxed them and aren't going to start now.
Aren't any of these people liable, criminally, or at least in civil court, for levels of ineptitude or malfeasance this staggering?
I have no idea about that. But every last damned one of them is in a profession licensed by the state of CA, and every last damned one of them needs to lose that license PDQ.
I think that appraiser's phone is ringing off the hook right now with calls from every lender in CA... to get those 85% marks off their books into FNM/FRE.
it's come to the point where the brink of disaster for all these people is not reason to retrench and exercize care but reason to become even more reckless.
this is what happens when moral hazard takes a back seat to pavlovian reflation repeatedly over the course of decades.
i agree with ken rogoff -- it is well past time to take the consequences of our collective irresponsibility. and if that means hazarding a systemic banking disaster that destroys all these people and me too, SO BE IT. there's likely no avoiding it now anyway -- and if a succcessful reflation does manage to round the iceberg, we only consign ourselves to hitting a bigger one in a few years with a yet-more-overlevered-and-fragile financial system.
bring on the liquidation! destroy these reckless banks!
Drove the length of the DelMarVa penninsula (Route 13) yesterday on my way back to Boston from NoVa. Lots of rural farmland being turned into housing "settlements". One that caught my eye just outside of Dover DE is offering a free car with the purchase of a home.
The "buyers" have an ace up their sleeves here: foreign citizenship.
As an American citizen, my choices are basically 1) live in the USA or 2) apply for a visa to live in another country. Option #2 requires me to prove to another government that I have sufficient financial resources to stay there, which would be impossible if I were over my head in debt.
Yet another competitive advantage that noncitizens have.
Tanta, the thing that shocks me most is the attitude of the escrow agent. She can function as the bottleneck, as the person who says, "Whoa!" and stops the transaction when there's ample evidence of shadiness. And this transaction was as shady as a rainforest. I doubt this sale would have gone through in an attorney closing state such as New York. Or am I dreaming?
Further south in DE you go, the cheaper the land becomes, relatively speaking. Below the Prince George Canal, DE is known as (or was known as when I lived in DE) Slower Delaware.
Lots of Ag but if gas prices stay up, then the model is broken since folks living down there are most likely commuting to Wilmington or Phila.
That's just perverse. They say the burned hand learns best, but apparently some of us go back to re-singe the flesh. Well scar tissue usually doesn't have nerves...
However, isn't this because the OCR reporter has sleuthed this fraud? Would the GSEs have uncovered this rip-off on their own?
They may or may not have uncovered such a thing on their own. They only do up front full file Quality Control reviews on a fraction of the loans they buy. Certainly I do not believe this loan would ever have made it past a GSE quality control audit.
But it doesn't matter, actually. The GSEs don't have to catch it. If the loan ever goes bad, they'll look at it then, and once they do they'll shove it back. There is no "statute of limitations" on that.
So what do you suppose everyone else is doing to beef up due diligence?
My first thought was "hiring more legal staff to combat the coming wave of buyback demands."
Then I wondered if there were sufficient numbers of lawyers available that could work with their noses plugged to avoid the stench coming from their employer (hoping as I do that some number of lawyers out there have the same high standards as Lawyerliz.)
"Natives of Guatemala, the Gomezes said Sanchez spoke Spanish when they first met, but pretended to know only English when they later called to ask about the
extra cost of insurance and taxes."
The US allows DUAL citizenship, so even if they applied for citizenship, they could retain the right to return to Guatemala if Guatemala also allows dual citizenship (which Mexico allows).
More to the point, shouldn't someone have asked "how the hell do garment workers who don't speak English earn enough to qualify for a $500k mortgage?" I was a National Merit Scholar and have an engineering degree and still don't make enough to qualify for that kind of a mortgage.
I just did a loan closing where property owners had recently purchased a property from the bank after a foreclosure for $150,000. (The original bank loan that was foreclosed was about $165,000). They refi-ed into a fixed rate, fully amortized, fifteen year loan, without PMI, of $186,000.
This implies an appraisal of $230,000 or so. That's an $80,000 (53%) bump in price (from $150,000) in six months. There were no repairs done to the property, except just cleaning it up.
No, this ain't over by a long shot, and now that the money is explicitly free from the fed, it will continue apace, even--here's the kicker--getting more fraudulent than before.
When it all does really crash, we'll be burning dollars to stay warm.
I doubt this sale would have gone through in an attorney closing state such as New York. Or am I dreaming?
There may be plenty of crooked attorneys, but there can't be many who have passed the bar and practice in real estate who don't know that down payments cannot be made by property sellers.
My problem is that I cannot tell if this escrow agent is crooked or just dumber than a box of rocks.
OT - It's true that robbery and burglary increase as the economy declines. From today's A.M. Report:
"2100 hours: Officers F---- and W----- conducted a traffic stop at H------ & H-------- that resulted in the seizure of bolt cutters and other burg tools along with a few suitcases/duffle bags of high-end alcohol. Suspects arrested for PC459 and they are likely responsible for a series commercial burgs targeting alcohol. No confirmed burg tonight, but its likely a victim will be found."
There is no "statute of limitations" on that. Except for the bankrupcy of the bank. Can they force whoever ends up picking over the bones of Well Fargo to take back loans?
Engineering such a sale is to convince other prospective buyers that the market is coming back up. Of course, they are going to need a fresh supply of people who aren't already saddled with debt/bad credit, so non-citizens will become their next marks.
Hubbert, the phrase "natives of Guatemala" means "born in Guatemala." If they were currently citizens of Guatemala, I would have expected the reporter to say "citizens of Guatemala."
Why would they clean up their act? All of the sauce still flows freely. Speculators are still in the market taking GSE mortgages. I know many. Hope now Pain later...
What an outrage! Where is Gretchen Morgenson when you need her? Oh wait a minute--on second thought all she would comment about it the exploitation of minorities by predatory mortgage banks.
I live in the heart of OC. And one way to know the beats in the community is through casual conversation with my barber per my monthly visit. One tid bid from our last chat was his revelation that most of his realtors/brokers clients have recently disappeared and he wondered whatever has happened to his once-best tippers. Having seen the housing excess firsthand, the disappearances and all the consequences and implications are entirely understandable.
If Fannie and Freddie get a pass with no accountability. If the political class of the last 30 years that aided and abetted at every step gets a pass with no accountability. Why is Tanta bitchin' out the the bank, the appraiser, the escrow agent, and the mortgage broker who participated in a crummy $625,000 residential real estate transaction?
Why? Because she has the intellect and the guts to consistently shed light and moral outrage on this outrageous corruption of America's financial system and standards. Once again, Good on Tanta. Thank you Tanta.
Many of you seem to be under the impression that the same people who never learned/forgot how to underwrite or appraise have gone to class and learned how, or that the stupid staff has been replaced by competent people.
What on earth gave you that impression? With banks bleeding money from mortgages, the best you can actually hope for from most of them is that they disproportionately laid off the incompetent and the dishonest, or that the people buying these loans have brought THEIR standards and supervision way up.
Oh yeah, the people buying the loans are probably Fannie or Freddie. Their standards keep changing and their volume is way up.
With all of the turbulence, I keep wondering, why aren't the shareholders of these firms mad as hell and passing shareholder resolutions to fire management without a bonus if they can't get good underwriting standards and diligence to stick?
Here's the heart of the matter. Yes to all the great points above specific to the piece by Tanta, but looks at the banks this morning, yesterday and the day before when it became clear that the financial regulators, political class don't GIVE A DAMN about reports such as what Tanta wrote about, and will throw even the kitchen sink at preserving them, no matter how corrupt or what the moral hazard implications are. You hear Paulson, Bernanke and the rest. "Preserving stability is our goal". That's code for status quo. Their real constituents and their only constituents are the financial establishments we are all realizing were corrupt from the start, including Wells Fargo. They're most upset at the fact that alot of people are starting to clue into this. Transparency is their enemy, hence the delay at implement the FASB off balance sheet rules. Banks can't handle the truth. As much as cases such as what Tanta wrote about are indeed fundamentally important and relevant, as evidence in the action of these same bank stocks the past few days, those pushing the $$$ and doing the buying, don't care and won't care knowing the Financial elite and political elite don't care.
Stuart - I totally agree with you and it is depressing me greatly as if this continues this way I only see a final outcome of some kind of chaos and potential revolution.
I would suggest everyone here who wants to know the story going on to put up a wanted ad in "real estate for sale" on Craigslist.org. Ask for 100% LTV, cashback at closing, a TV, car or whatever you think would be outrageous. I guarantee you will not beileve the realtors promising they can fulfill your wishes. Fraud is still very rampant.
It is not generally the duty of the closing agent to investigate where funds come from, except as between buyer and seller. In other words, if the seller is providing down payment funds, then the agent must be informed of that and duly note it on the settlement statement, FOR ALL PARTIES TO SEE. To protect himself, he should get the statement approved in writing by everyone involved, including mortgage brokers and lenders, before closing.
If the closing agent is asked to show on the settlement statement a down payment from the buyer that the seller has received, and it is a significant amount (more than the nominal $500-$1,000) he should investigate further. He should ask for canceled checks or bank statements showing the funds were transfered. If he fails to do so, he is aiding and abetting the fraud. Intentional ignorance is not a defense.
"I'd sure like to have a conversation with the underwriter of this loan to find out what s/he was (or wasn't) thinking."
That is where this would get interested. I'm betting this was viewed as an 80/20 seller carry where the seller carry was a silent 2nd. The 20% carryback would have passed the underwriting sniff test. It doesn't explain the appraisal though.
My guesses:
The buyer does not care because they risked no money of theirs and get a free house for the time being.
The seller does not care because he made money on the flipping
The appraiser does not care because he/she gets paid.
Well Fargo does not care because when the house gets foreclosure again the end loss will be either Fani/Fred and the tax payer
Moral hazard anyone?
where did this idea that it's a "conforming loan" come from? it looks like it's a $500K 10/1 originated in January. i wouldn't assume that went to an F.
I believe France issued a 100yr bond not too long ago. I think it would be a good move. These people in power - you have to wonder if the bad choices are part of the corruption or if they are actually this stupid. Short-term funding, which the gov't already does heavily - how has that worked out for banks throughout history? Not well, so why are we doing it???
Maybe they don't want to issue a 50 year bond because there won't be enough interest and they're worried about how that would be perceived???
Reuter's reports that Treasury should add a 50-yr bond to their repertoire as the govt's need to borrow ratchets up. The advice comes from an "advisory committee" which likely stemmed in part from the survey put to primary dealers mid-month and meetings with dealers. The idea was also called "unnecessary at this point" but "members see an uncertain future in which the Treasury will face pressure from waning tax receipts in a slowing economy and huge new spending needs...in view of current volatile' credit market conditions, they expect tax receipts from both corporations and individuals to come under pressure."
Just how tight are mortgage criterion these days, compared to historical standards? Fraud aside, is it easier to get loans in the summer of 2008 than the summer of 1997, or 1987?
I have heard a lot of moaning about how much stingier lenders have gotten but it's hard for me to tell how the current lending environment really differs from the long-term historical trends. Everyone's view of what is "normal" got so warped from the bubble years that I fear we have lost all perspective.
Are there any industry professionals out there who can offer some long term perspective?
Didn't Wells Fargo document source of funds? If Wells Fargo had a P&S in the file for $625k and a mortgage for $500k, didn't they have bank statements documenting the source of the down payment? Don't the funds need to be seasoned or from the proceeds of a refinance of their current home?
What about seasoning of title? I thought there were guidelines in place to thwart flipping.
On Dec. 3, Castro transferred title of the house to Asset Disposition Venture Capital LLC...On Jan. 15, Praslin signed the deed selling the property to the Gomezes.
In '95 when I bought my first house, had a $4000 gift from a parent for help with the down payment, and the lender looked at me like I was a drug smuggler. Had to have a letter signed by the parent verifying the gift. I also had some cash that I, being a native skinflint, had stashed at home, towards the closing costs. I just came away with the feeling I was a criminal. Is having a relatively small stash of cash under the mattress a crime? I guess I was just ahead of my times. Now it appears they could care less where the d.p. comes from.
What I am most shocked about is why anyone would be shocked over a continuation of fraud as a driver in the CA RE business. If fraud somehow declined I would be shocked. There is no more corrupt enterprise in CA than real estate.
that story is un-flippin' believable--what a scam.
Question: can just anybody file an ethics violation with any of the player's respective licensing or certification boards? Or must one be a party to the transaction in question, in order to have standing to file a complaint?
I can't help but wonder, of the apparently distrssingly small number of RE's, brokers, appraisers, etc. who do deplore much of the crap that's gone on in their fields, do many of them actually report it to the appropriate boards?
It's like, very few people self-police at all any more, & then there's no reliance on professional standards & consequences and/or the condemnation of their actions by their peers to dissuade bad behavior.
I didn't say they were NOT also US citizens, merely that they very likely have the legal right to return to Guatemala.
i can see the noses in the air sniffing for racist prejudice, but hubbert has an age-old point here does he not? when the mississippi scheme went up in smoke, it was certainly advantageous for debtor participants to have a right to residency somewhere other than france.
I'm amazed at the lack of checks and balances. Using Zillow as a cheap and cheesy avm, the appraisal must have came in at least 50% higher than what an avm would say. That must be really nice faux marble to justify the difference; although it doesn't seem the bank asked any questions about the appraisal.
I'm surprised the downpayment didn't raise eyebrows either. We bought in OC with a WF loan 10 years ago. They wanted bank statements showing we had the down payment and first 2 months payments in the bank 15 days before closing. I can't imagine anyone would approve 20% seller financed loans at the same time the FHA is trying to ban seller financed down payments.
No, this ain't over by a long shot, and now that the money is explicitly free from the fed, it will continue apace, even--here's the kicker--getting more fraudulent than before.
When it all does really crash, we'll be burning dollars to stay warm.
DonKei
Yeah, I agree. Anyone doubting the danger of moral hazard after reading that doesn't understand the meaning of the term.
The world cannot grow its way out of this slowdown, says Rogoff, professor of economics at Harvard and former IMF chief economist. Todays mess was many years in the making and there is no easy, painless exit strategy. But the need to introduce more banking discipline is yet another reason why policymakers must now refrain from excessively expansionary macroeconomic policy and accept the slowdown that must inevitably come at the end of such an incredible boom.
The financial system needs a cathartic enema, and instead we're givng it an all-you-can-eat buffet.
I said it before, if I had kids, I'd be on my way out of this country. It's really difficult to see a positive outcome to all this.
Here you have several people making a paycheck and paying taxes. This sure beats relying on a government rebate check.
Meanwhile Wells Fargo just unloaded a home from their distressed inventory and turned a non-performing asset it to a much larger performing loan.
Two people are now homeowners and are enjoying the American Dream.
I guess you all would rather all these people start refusing these type of loans, thereby either reducing their income or costing their jobs altogether. This would increase unemployment, lower the tax rolls, prevent Americans from becoming homeowners, requiring more tax rebates, possibly causing a govt. bailout of Wells Fargo, sparking a recession, further credit crunch, and hurting stockholders who rely on them for their retirement.
I frankly see these moves by the individuals involved as their own efforts to do what Bernanke, Paulson, Bush et al are trying to do: Stave off a recession and prevent the collapse of the American way of life.
A return to lending standards of old would mean alot of pain, a recession, and lower homeownership rates. This is something that we must avoid.
Aside from nitpicks on citizenship, the payments were $2760, the taxes&insurance were $7k/year, making a monthly nut of $3343.
To keep below 33% of income, the Sanchez would need to pull down $120,360/year.
Wikipedia's article on household income uses from 2005: the median US household income was $44,389. Only 16% made over $100k. Fewer still made > $120k.
Political correctness aside, how many of those top 10% or top 15% families, are garment workers with poor command of English?
And look at the big picture of Camille stret: don't you think it's a little fishy that virtually ALL these houses are bought at prices that require income in the top 10% or top 15% of the population, but the buyers generally displayed very low educational and other socioeconomic status indicators?
Note that your last Gretchen article concerned a former housekeeper.
And don't forget all these Alt-A loans that are coming: "I make $700k per year in my job as a janitor but I can't document it because of my immigration status."
Although your original point may still be valid: many countries don't neccessarily pay attention to the fact that naturalized U.S. citizens must ...absolutely and entirely renounce and abjure all allegiance and fidelity to any foreign prince, potentate, state, or sovereignty of whom or which I have heretofore been a subject or citizen; ... We can insist opon that as part of the naturalization process, but we have no power over whether other countries continue to consider naturalized U.S. citizens as their citizens as well.
Who cares whether the buyers are citizens are not? What possible difference does it make? Does anybody think there would be ANY problem finding people of any nationality to buy a house for nothing down that they can walk away from with minimal consequences if they get 30,000, 3 months free rent and a big screen TV? The buyers are not the problem.
No more free Friday pizzas...these FDIC pay-out estimates are too low in the extreme..
Reuters
US FDIC may pay out almost $12 bln through 2010
"The White House's mid-year budget review, issued on Monday estimates the FDIC's insurance fund will pay out $2.54 billion in fiscal year 2008, which ends Sept. 30, another $9.21 billion in 2009 and $150 million in 2010..." US FDIC may pay out almost $12 bln through 2010
| Deals
| Regulatory News
| Reuters
The relevant question, of course, is not whether fraud is still happening. Fraud is always happening. The question is the rate of fraud now compared to the rate during the bubble, and compared to historical averages.
A single anecdote conveys zero information about this question. It does make for a nice "Outrage du Jour", if that is your thing.
Joe, the problem is that, on its face, this transaction doesnt make any sense. The downpayment should have been sourced. The escrow agent's claims don't make sense. No way she did this without knowing where the 20% came from. Funds would have had to be deposited, or a 2nd would have had to be drawn up.
The reporter should have asked the buyers for a copy of their escrow instructions. That would clear a few things up.
If the broker had to explain the terms of the loan in Spanish, then RESPA requires that the docs be drawn in Spanish. Violate RESPA and this now involves the Feds. The RESPA guys are the only ones who really scare people in the industry because of their ability to levy serious
FFDIC,
Thanks. I saw you post that in another thread. The purpose isn't to be honest, the purpose is to "provide stability and confidence to the financial sector".
So basically they are expecting one more IndyMac-size failure in the next 2.5 years.... hah!
OK, so:
1. "natives of Guatemala,"
2. Guatemala observes jus soli, QED. So these FB's can always "just go home" if it hits the fan. Unlike Joe Citizen Taxpayer.
And look at my income numbers again: I'm not loaning $500k to anyone, whatever nationality, who lists their occupation as "garment worker" and can't speak the national language (Calvin Klein or Yves Saint Laurent, maybe, but they speak/spoke the majority language). Let alone an entire street of those similarly situated.
This just shows how bad the bubble was, and how far it has to fall before families with a realistic income can realistically afford a realistic house.
"issued on Monday estimates the FDIC's insurance fund will pay out $2.54 "
Funny. I read that earlier. They already owe in the $8b range on IMB alone. Either inflation is running especially hot or the government report release process lacks the funding to include any quality control.
... and anyway, I think if I had $100k to invest it might be worth throwing it at a low-ball housing offer. I should just figure it'll take the seller around a year before he realizes I'm the only one biting...
Average Joe, I am now calling you Joe de Nostredame...
"...people start refusing these type of loans, thereby either reducing their income or costing their jobs altogether. This would increase unemployment, lower the tax rolls, prevent Americans from becoming homeowners, requiring more tax rebates, possibly causing a govt. bailout of Wells Fargo, sparking a recession, further credit crunch, and hurting stockholders who rely on them for their retirement."
barely writes:
"issued on Monday estimates the FDIC's insurance fund will pay out $2.54 "
Funny. I read that earlier. They already owe in the $8b range on IMB alone. Either inflation is running especially hot or the government report release process lacks the funding to include any quality control.
greatest low ball estimate since out "25 billion" Iraqi excursion...
YLSP writes:
... and anyway, I think if I had $100k to invest it might be worth throwing it at a low-ball housing offer. I should just figure it'll take the seller around a year before he realizes I'm the only one biting...
PBS
FDIC Chief: Most Banks Will Survive Credit Crunch
Poor lending and underwriting caused two more banks in the U.S. to close over the weekend, yet regulators and the Federal Deposit Insurance Corporation, or FDIC, are helping banks remain stable as the economy struggles. Sheila Bair,the chair of FDIC, explains the process to Judy Woodruff... FDIC Chief: Most Banks Will Survive Credit Crunch | Online NewsHour | July 28, 2008 | PBS
"You simply assumed that a couple of Spanish-speaking immigrants are not US citizens. On no basis whatsoever."
The basis is that in southern California, if someone (1) is from Guatemala, (2) speaks little to no English, and (3) works in a garment factory, there is a higher chance that person is not a US citizen than if those factors did not exist.
Everyone who lives here sees illegal aliens virtually every day and after a while, fair or not, when certain factors are present, the assumption that someone is not a US citizen is easy to make.
But you know what they say about assumptions...
(I realize that not being a US citizen does not necessarily make one an illegal alien, but I think you get my point.)
"If this is the level of elementary due diligence we can expect after the most atrocious mortgage blowup in history, what will it take to scare people into doing their jobs?"
Awesome post, Tanta. The banks need to do the originating themselves, no more brokers and wholesale lending. Also, they need to keep a substantive slice (20%?) of the loan, so they won't just throw it over the fence.
...The GSEs don't have to catch it. If the loan ever goes bad, they'll look at it then, and once they do they'll shove it back.
And Wells will buy the loan back. At least Wells is capitalized enough to buy back their mistakes. You can't say the same for any sketchy agency loans IMB originated over the last year or so.
"FDIC Chief: Most Banks Will Survive Credit Crunch
Poor lending and underwriting caused two more banks in the U.S. to close over the weekend, yet regulators and the Federal Deposit Insurance Corporation, or FDIC, are helping banks remain stable as the economy struggles. Sheila Bair,the chair of FDIC, explains the process to Judy Woodruff..."
"The problem is that there are no comparable sales of any kind that are a reliable measure of market value if they all involved transactions in which nobody ever actually bothered to verify and analyze the terms of the sale."
Kinda like using Merrill Lynch's 22 cents on the dollar self-financed "sale" of moribund CDOs to mark other banks' holdings to market?
"The problem is that there are no comparable sales of any kind that are a reliable measure of market value if they all involved transactions in which nobody ever actually bothered to verify and analyze the terms of the sale."
You don't think that was done on purpose do you???
I don't see how their citizenship matters. I can guarantee that "returning to Guatemala" is not something the Gomezes are interested in, even if they were able to do so.
For those of you unfamiliar with the situation there, these two are lucky to be literate in any language. Guatemala has far and away the highest illiteracy rates of any Latin American country. As much as we bitch about how the US economy is "going to hell in a handbasket", the Guatemalan economy's helldwelling handbasket has really and truly been baked to a crisp. These are people who consider illegally jumping the border into Mexico to be a very desirable option.
Look, people here have been complaining about that sellers have some delusional idea of worth and frequently use the phrase "a house is worth what someone will pay!"
Well, here you have two hardworking people that we are required to assume are U.S. citizens unless specifically informed otherwise, who have made a purchase of an improved home. The house is worth what people are willing to pay for it. Yes there are some "creative" issue with this loan, but so what, we have been employing all kinds of "creative" efforts to keep things rollin.
As I said before, I see two new homeowners who have created economic activity and kept people off the unemployment payrolls. Meanwhile they have propped up the county tax rolls which is good for schools. They have raised the value of the other houses on the street afterall. Just as a forclosure unduly hurts the value of its neighbors and must be prevented, here you have an improved home that beefs up the comps and protects the value of the other homeonwers on the street.
I frankly think that the creativity of those involved have done more to prevent the must-be-prevented housing crash than all the efforts by Congress.
Yes, there is a dilemma with the appraisal process when 86% of the comparables are REO and distressed. A really big dilemma considering that the 14% of sales that are left are probably fraud! good grief.
Usually your on top of your game..
Today you threw up in air ball..
Give me a break, they can't afford the home and it will default...This is why were in the mess..You want it to keep going? I make more than both of them combined and can't get that loan..This is fraud, greed and more of the bubble mentality.
I posted this article over the weekend in here..It reeks, it smells like tacoma without a wind, it's messing with my kids future..f$$k that
And when you do that..I get pissed...
I'm doing everything I can to bring the finance industry down..legal or illegal..Should be a hell of a game..
If you think that this is bad, try multiplying it by millions across California, Nevada, Arizona, and Florida. The non-English-speaking people in my neighborhood in northern-California were driving around Escalades with 5k custom wheels for years. The custom wheel shop was the busiest business in town. I'd like to see the Feds collect unpaid taxes on all of the under-the-table money paid to illegals who built most of the houses during the boom in 2000-2005. I'd like to see the Feds go after illegals who bought houses, refinanced to put in pools and fancy landscaping and buy Escalades. Believe me- I'm almost downplaying how bad it was. No, instead the Feds give unprecedented power to "former" CEOs of investment banks to "fix" the housing crisis. It looks like a bunch of blank-check bailouts for these criminals, who should be thrown in prison. The entire power-structure of the investment-bank-goverment complex needs to be toppled soon, or else the US will fall more into a 2nd world nation status that we already are. When it costs me 3x what it did 7 years ago to buy an ounce of gold or a gallon of gas, that means that the value of my dollar is 1/3rd. 500 billion-dollar deficits means that the price of commodities is not going down anytime soon. The US is going bankrupt. I wish that China would sell everything off right now, so that it would expose all of these crooks once and for all.
What this says to me is that the issue, unfortunately, is with the staff at the underwriting at the originating bank. I have never had a mortgage given to me in my life where I didn't feel like i needed a shower afterwards for feeling so violated. Every piece of financial info was documented, copied, verified, and calls made.
Now, I know appraisals are "flexible" and it's funny how they always come out to what you need them to be. So I have no thoughts one way or the other about the honesty here. I've always assumed appraisers played to the market or else they wouldn't get any work. That means that they always know where it has to be, and magically make it so.
What I'm thinking is no bank is going to get out of this if they don't totally re-train their staff or, frankly, just clean house and get rid of the lot of them and re-train from scratch. Or if they outsource bring it back in house in a controlled way. If I were at Wells Fargo and I read this, heads would be rolling right now.
It appears to be fraud. Any escrow agent worth their license knows full well that any funds exchanging hands,per side agreements between seller and borrowers, not disclosed, is fraud.
Stuff like this... if we knew of a side agreement, we would have shut the transaction down prior to closing or notified the authorities, let the transaction progress and the parties at signing would have been greeted by police.
The point is new immigrants are the easiest preys: they want to belong to their adopted country more than anything and they are very likely too busy working 16 + hour days, and perhaps do not have the education background to understand the credit crisis. And even those who are highly educated usually are not inclined to pay a lot of attention to financial markets unless it is their area of expertise.
This begs for some volunteer work for some of the "experts" here.
So it looks like F&F will send ~$2 trillion worth of loans back to the banks. But wait a second! F.D(derivative). Raines (ex CEO of Fannie) was very keen on derivatives, and other weird things that only he could understand. So what exactly are the banks going to find in those envelopes sent by F&F?
I think there are a larger number of Israeli citizens wishing to become naturalized citizens of Iran than there are American citizens wishing to become naturalized citizens of Guatemala.
It was a great article. Some items of note: Wells requires the appraiser to review the purchase contract. Wells Automated Underwriting system must have made this a "fast and easy" (thanks CW for the name) loan - NINA - based on the 1003. AU systems have allowed crafty participants to fudge a transaction so it stays in the grey and not the "shi**y brown" and close. From my estimation the seller made about $75-80k net net, while the buyer of course becomes a lifetime homedebtor if they don't default in short order. Full doc, no AU, and consequences for actions taken during a transaction will be the only way to stop these shenanigans. My .02
I frankly think that the creativity of those involved have done more to prevent the must-be-prevented housing crash than all the efforts by Congress.
if by "creativity" you mean "reckless disregard for established law", then i agree that this is creative.
either you respect law or you don't. a lot of people use distress as an excuse to disobey the law and do whatever the hell suits their ends. they are called "lawless", and that word has its connotation for a reason.
Look, damnit, if they don't keep approving loans like these, upon WHAT will the new covered bonds be based? Payday loans?
As for Phony or Fraudy sending this loan right back... are you sure? Any way to track this? As long as documents are forged properly and the underwriters can rubber stamp like crazed little monkeys, who's to say this won't end up in the keeper pile?
You want to have some fun with Wells Fargo? Check out the loans they just did for 21747 Erwin St. in Woodland Hills, CA 90%. Old, empty building. Looks like from the few comps that sales price was twice the market. Probably SBA deal. SBA going to go down too??
Instead of one-offs on craigs list, how bout Tanta hosts a new "To Catch A Predator" show. They could process dozens of these criminals every day.
You all are just jealous (as I am) that you don't have the guts to feed at the Wells Fargo trough. I mean, I've got the lack of morality, but I'm just afraid of the consequences.
BTW-for those of you who don't remember, Average Joe is a police officer and a conservative, so it should be easy to pick up on the sarcasm.
Average Joe: "How many of you care what your credit score in Mexico is?"
Speed: "do garment workers make $60,000/yr"
Yay! I thought for a while I was on a David Lerah blog or something..."Housing fundamentals are strong and justified by the strong economy, immigration, blah blah."
"China executed a drug regulator who had accepted bribes..."
Many years ago, while working at the headquarters of an army division in Germany, I met an old guy who swept the floors there. That's what he had always done since the building was put up by the Wehrmacht in the 1930s. He avoided the war due to a gimpy leg.
Anyway, he told me about a visit from a Gestapo agent shortly after the building opened. He said a black Mercedes pulled up one afternoon, discharging an agent clad in the legendary black leather trench coat.
The agent asked the floor sweeper the location of the post engineer's office and the sweeper pointed the way.
Ten minutes later, through a window, the floor sweeper saw the Gestapo agent and the post engineer standing in the courtyard behind the building. The agent's pistol came out and the engineer took one in the head.
On walking out, the Gestapo man said to the janitor, "There's a mess out back. Clean it up." He then left the building.
It turned out that the engineer, who was responsible for constructing that very building, had substituted molded bricks for the more expensive wire-cut bricks, and had pocketed the difference.
That's how the nazis dealt with it.
I'm not advocating the same, but the profligacy in this country must stop. It's always been around, but we can't afford it anymore.
I'm an attorney with a client who recently sold a house with assistance from a mortgage broker who could have been this broker's brother. Almost the exact same thing: Contract sales price was $230k, but actual seller proceeds after kickbacks to the buyer and broker was only $185. My client tells me the mortgage broker told him how he did it: he "prepackages" the mortgage application and documentation and submits it to the lender's retail storefront rather than as a broker submission. He was told the retail salespersons appreciate having the work done for them and they submit the applications as if they did them (I suppose to receive credit and perhaps bonuses?) The underwriters apparently approve the retail applications with less due diligence than they would exert on a broker-originated application. Tanta, does this sound plausible?
BW- I know you're trying to be funny, but the article says they work for St. John, which makes high-end womens apparel. I would assume that pays better than average. But then again, so (supposedly) does American Apparel, which per their <a href="http://www.americanapparel.net/contact/ourworkers.html>career info page, an "experienced sewer" makes $25k/yr. At least American Apparel would provide them with free ESL classes. Although they'd have to contend with a CEO who is a raging misogynist horndog nutjob.
I'm not advocating the same, but the profligacy in this country must stop. It's always been around, but we can't afford it anymore."
so you are saying that not standing for anything else but easy money is worse than being a nazi, you may be right, as it may be more destructive when reaching a scale as large as it does now
cd, my bait was too small to expect a big fish like you, must of gilled you when you weren't payin attention.
To expand on my accountability comment.
Especially here in San Diego, near Mexico, the traffic is very fluid back and forth accross the border. People, with exceptions, who come here aren't so much migrating permanently as they are communiting long distance.
Many of them have good intentions, but like buyers with no down payment, they have no skin in the game here. If things don't work out they can just walkaway. They have somewhere to go where problems can't follow them.
The cross border fraud is pervasive and a natural consequence of having open borders for people but not for civil and criminal laws.
The San Diego area has almost as many vehicles stolen from Mexico as does Mexico have U.S. stolens. There are plenty of homes in Mexico bought and paid for by defaulted U.S. home equity extraction.
Again, it's a natural and expected consequence of the circumstances.
And right on cue, as if in answer to Tanta's post, we get this from CNN:
/snark Whew! Good to know our top law enforcers are on the job, protecting us from terrorists and the axis of ev-- Oops! Sorry. Wrong crisis. That's right, I forgot. We solved that one by following our Commander in Chief's orders to invade the shopping malls of America. Well, really, I begin to see Average Joe's point. How are we supposed to pay for it the next time the President asks us to defend freedom with our shopping carts if they take away our HELOCs and cash back at closing? /end snark
(By the way, Joe, you really need to master EML-- emotive mark-up language. The intergnats can't interpret your posts without it. Then we get a lot of buzzing about that instead of the topic at hand-- the perfidiousness of Spanish speaking type creatures who may not even be US citizens and the need to ignore everything Tanta says until she acknowledges the justiness of the all American fight against non-American job stealing, house-buying types.)
--
When would it get into your think skulls of the American People that we are dealing with an econo-political system controlled by Crooks? There is no free market in America, only a market of Crooks.
In order to get support for the criminalized economic system, run by Crooks and for the benefit of the Crooks, it became necessary to breed Americans to be morally blind dopes. And it shows!
What the housing problems have exposed is that America is a nation of born-and-bred dopes led by Crooks. I get daily confirmations of this fact and this blogs documents them without focusing on the root cause the doped American People and their crooked economic and political leaders. The future of America is not in doubt widespread misery followed by collapse.
My problem is that I cannot tell if this escrow agent is crooked or just dumber than a box of rocks.
Tanta | Homepage | 07.30.08 - 10:52 am | #
That about sums it up.
It used to be that if you wanted to do a deal like this, somebody had to commit fraud: forge some documents, lie about the source of the funds, something. But Wells's due diligence was so poor nobody even had to do anything illegal to get the loan through.
(Regulatory violations aplenty, to be sure, and some licenses should be lost. But no fraud, as far as I can tell from the article.)
so you are saying that not standing for anything else but easy money is worse than being a nazi
I think it is just an example of low tolerance for for dishonesty to the state which, in fact, all these examples are. Can you imagine if a car pulled up outside the mortgage office, the clerk was ushered out into the street and shot with a "this is the story of why, this is what we do" afterwards? lol...goes with my "i wish we still put people's heads on poles" line. How many people that knew the guy got shot at work ever pulled what he pulled? Probably none. They knew the police meant business.
Of course in the civilized society we think we're in, the analogy would be the perp walk instead of the shooting. But it doesn't have the same force when they post bail or play golf for three to five. At least I would ask that all assets be seized and the family tossed to the street. And no bail. If mid-level managers who rubber stamped these things and took their bonuses home got rounded up and paraded off to the slammer while their family got tossed into the street, how many do you think wouldn't rubber stamp these items anymore?
I would like to know who you'd like to hold up as an example though.
Everytime I start thinking of how bad things may be here, the complete lack of better alternatives keeps me from being unpleasant to be around (at least I hope it does .
Actually we don't...its just tolerated for reasons I don't understand. A person cannot take the oath of US citizenship and hold dual citizenship. But oaths don't mean much anymore...
"I hereby declare, on oath, that I absolutely and entirely renounce and abjure all allegiance and fidelity to any foreign prince, potentate, state, or sovereignty of whom or which I have heretofore been a subject or citizen; that I will support and defend the Constitution and laws of the United States of America against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I will bear arms on behalf of the United States when required by the law; that I will perform noncombatant service in the Armed Forces of the United States when required by the law; that I will perform work of national importance under civilian direction when required by the law; and that I take this obligation freely without any mental reservation or purpose of evasion; so help me God."
Sometimes even fish with simple tastes get caught! If fishing was easy it would be called catching!
they once found my forerunner in Ensenada, stolen in bay area. 3 months later, believe it or not the insurance co wanted me to take it back and were trying to rescind check for payoff. I called ca ins comm and I heard nothing more from them.
would you take a truck back thats been in mexico for 3 mos? No.....
I used to cross that border a lot to surf k-38, k-55, san miguel etc..
too many crazy incidents going on down there now...
Yes, this is the point where we really begin to worry. Economy dumps, people get angry, confused, and malleable, father figure rises to take care of us all with a willing army of leather-clad efficiency experts. Next thing we know people aren't so opposed to summary shots in the head to maintain order.
Still can't help thinking it was the floor sweeper that squealed on the engineer.
The whole RE bubble was perpetrated by Mortgage Fraud. Yet, it was up to the banks to watch themselves. Now that was a great idea.... Unfortunately, we (taxpayers) get to pay the bill as the banks get bailed out. We should be calling these "officials" for what they really are, CROOKS.
We will continue you to see more of the "blame game" among financial companies trying not to be held liable for their cheating. Our only hope is that prices crash fast enough, where the govt won't have time to react.
The Westside of Los Angeles is now showing significant declines in the areas of:
I wonder how many times this deal will appear as a comp on other appraisals? I'm still chuckling over the interfamily sale that showed up as a comp on this one. Can't have distressed sale driving down appraised values, but arms length transactions between family members are fair game.
I also find myself wondering how many of the comps were also properties Villalobos appraised--I can imagine her keeping a file of these deals for use when she needs an outrageous comparison.
cd: K-38 has been nuts for the past couple of years. Every couple of months an army truck pulls up and guys in black uniforms with machine guns shoo everyone away. Supposedly this was in preparation for construction of new condo. Have you heard similar?
Who really thought that the cogs in the wheel of the late great home-buying industry were going to clean up their acts? No way. It's desperate times now for the cogs - business is off a cliff - and you all know what desperate times call for...
Gotta do whatever it takes to get your hands on the greenbacks. Transactions, we need more transactions!
I'm still chuckling over the interfamily sale that showed up as a comp on this one.
I was amazed that she actually did enough research on her comps to know that one of them (at least) was non-arm's-length. I guess even a blind squirrel occasionally finds a nut . . . not that that fact seems to have gotten any attention from Wells Fargo.
The problem, of course, is that it really doesn't matter what appraised value this idiot came up with. Anybody who 1) read the sales contract and 2) got through third grade math should have calculated the sales price as $460K. As purchases use the lesser of sales price or appraised value, Wells should have approved a loan for $368K for what was submitted as a 20% down loan.
Which is probably still at least 100% of any realistic market value, but it's a whole lot better than the LTV Wells did approve, which is 109%.
Mp-Father told me when I was young if a guy is happy being a janitor and likes his job, he's living a good life..The problem of today is there are thier are only a few janitors and to many ponzi scheme managers..
Anonymous: Fantastic surf spot in Baja California just south of Rosarito that has become "problematic" due to a combination of drug wars, american "squatters," and condo development.
No doubt, Tanta. I was just looking at things from the appraiser's perspective for a moment.
What amazes me about this story is that everyone involved is doing things that used to be the hallmark of a strawman fraud ring, but there doesn't appear to have been any collusion (or for that matter, even any fraud). It's just business as usual for all concerned, at this point, enabled by some astonishingly bad underwriting at the bank.
Something interesting from the original article ... very shrewd of them to have the seller cover the first three mortgage payments so it doesn't show up as an early payment default.
Online Shrink writes:
Something interesting from the original article ... very shrewd of them to have the seller cover the first three mortgage payments so it doesn't show up as an early payment default.
LOL. Another lesson learned from the old days of fraud rings--you keep making payments on the earlier loans until your escape is prepared and you're ready to pull the plug on the whole scam.
If you guys want to do something about this, the Senate Finance committee has been sitting on a bill by Obama to end this outrageous mortgage fraud with clear definitions of fraud, serious jail time for fraudsters, funding and planning for enforcement, and disclosure requirements for toxic loans. You can read the bill here. Give 'em a holler and get something done. Obama proposed this in 2006 - a year before this fraud business hit the media.
Re: Villalobos said she excluded distressed property sales in her appraisal of 920 W. Camile, because they are not comparable to traditional sales. Most foreclosed homes fetch a lower price because they are bought with cash rather than financed over time. Also, foreclosed homes are typically in bad shape compared to conventional sales.
"It might look weird on paper, but there's a logical explanation for it," she said. "I have to justify the information and the bank has to approve it. It's really on them."
Wells Fargo allows appraisers to consider distressed sales as part of property value calculations, but has no problem with appraisers who exclude them. In fact, said Green Rommel, the Wells Fargo spokeswoman, appraisals should never be based exclusively on foreclosed properties.
Anonymous: We are not issuing ratings on existing companies -- only on new ones whose executives have been thoroughly vetted and who have the requisite cash.
Everyone, and Average Joe and other law enforcement in particular:
It seems to me that mortgage fraud like the incident reported in the OC Register is treated as ad hoc mortgage fraud by "buyers" like the Gomezes and their opportunistic co-conspirator realtors, appraisers etc.
Have you thought of/looked into the MS-13 (or similar) systematic front scenario?
It may not be near the same amount an organization like that can make in its core business, but it can be a nice chuck of change for a very low risk (white-collar punishment, ha!).
Also, the connection with the "mainline" business provides a very convincing way to keep wannabe imitators out of one's turf.
I don't know whether it applies to the particular case, but consider the situation of undocumented immigrants: Vulnerable in the US due to their status, living in neighborhoods where gangs with deep connections to the "old country" are de facto semi-rulers. Even the relatives back home are within easy reach of the gang if reprisals are necessary.
If "asked" whether you wanted to be a front for a mortgage scheme, perhaps with a nice cut thrown in, would you seriously dare to say no?
OT? Residents in neighborhoods hit hard by foreclosures shouldn't expect appraisers to factor in those fire-sale prices when they set tax values.
That's because county auditors in Ohio are required to factor foreclosure prices out of the tax mix, even if more houses are lost to lenders than sold through the normal market.
Foreclosures "don't tap the pulse of the market," said Shelley Wilson, executive administrator for property taxes at the Ohio Department of Taxation. "It can't be the market when you have a situation that involves compulsion or distress." Tax appraisals factor out foreclosures | The Columbus Dispatch
UB- Haven't surfed k-38 in long time, did surf k-36 and calafia a little while back..Used to camp at k-38...good times..
I just go to cabo now and surf spots like shipwrecks, 9 palms..Also a little secret spot above east cape that goes off on s.e hurricane swell, tip secluded fishing resort nearby...cerravalo island directly offshore...
This country is at extreme risk of going that route.
Man, and I was looking forward to being able to fly again soon with my mouthwash, toothpaste, and shampoo in economically friendly sizes in my carry on instead of paying 10x as much for the mandated sizes. A boy can dream. I guess keeping my shoes on won't happen soon either, and I should be aware that my phone company is illegally telling the administration what I talk about into the foreseeable future. Hey I wasn't really using my civil rights anyhow.
these guys are clever. put up $304,500 to buy house, $125,000 downpayment and $30,000 = $469,500
walk away with $500,000 mortgage proceeds and make a net of $30,500
Meanwhile wells fargo is holding a $500,000 non recourse mortgage which will likely go into default and only realize say $225,000 (maybe) after that all plays out. A loss of $275,000.
Everyone else involved in the transaction is standing around saying not me.
Organized or un-disorganized criminals, sure. Why not. But then again all you need to do is supply the crack (easy money and houses) and everyone else falls in line pretty easily without coercion.
Whoever said that 99.9% of countries in the world allow people born there to become citizens is a complete lie. In fact, Canada is one nation where a newborn can be a citizen only if one of his/her parents are a citizen. GOOD LUCK becoming a citizen of most countries in the world- Switzerland, Austria, Denmark, nope. Illegal immigrants are targets because THEY ARE HERE ILLEGALLY! THEY BOUGHT HOMES WITH NO SS NUMBERS! THEY WERE GIVEN BLANK CHECKS! THEIR KIDS START SCHOOL WITH ZERO ENGLISH! THEY ARE GIVEN FREE MEDICAL CARE IN MOST STATES! MY GRANDFATHERS WORKED THEIR ASSES OFF FOR WHAT WE HAVE TODAY! THEY FOUGHT WARS AGAINST FASCISM, COMMUNISM, AND SOCIALISM. MILLIONS DIED! NOW YOU LIBERALS WANT TO BRING IT ALL BACK WITH THE HELP OF GLOBAL CORPORATIONS AND FOREIGN SPECIAL INTERESTS. ROT IN HELL!
oh wait that's right they didn't really spend $125,000, they just put it on the table for a second then put it back in their pocket therefore net profit is now $155,500. Wells fargo is still most likely out around $275,000.
ipodius said: and I should be aware that my phone company is illegally telling the administration what I talk about into the foreseeable future.
ipodius, I think you meant, "my phone company is [il]legally telling the administration what I talk about." The mortgage guys aren't the only folks to get bailed out, you know.
You didn't want your civil rights to prevent People Who Know Best from keeping you safe, did yo---
The comp problem is a real one for honest appraisers. My honest appraiser buddy is being hounded for not appraising a house high enough. He refuses to raise it, despite financial problems.
I've seen people given Ninja loans, and it was with no fraud at all. The banks did this to themselves, and now the support structure created to do all these loans is falling/has fallen appart. All these people are financially desperate. I would be out of business right now if I didn't do other stuff. But it would be ok, because we have a paid off house and the hub has a Federal gov't pension and a 401k equivalent. Oops. . . .
These people literally do not know that what they are doing is dishonest. Indeed, they DO NOT KNOW what honesty is. People from South American countries know how to survive day to day. It's all most can do. That doesn't mean the are "bad" people. If the alternative is starvation of myself and my family, I'd do what I had to do too. These people could have bought something extremely modest or rented.
But their mentality is a we are staring morality. Also, remember, there are the rules and then there are the real rules which you really have to follow. Hard to tell the difference when you are an immigrant.
If this loan went to one of the Fs, it will be coming right back to Wells Fargo.
Fannie and Freddie have clear and unambiguous rules about appraisals and down payments that this loan violates six ways to Sunday. If Wells Fargo sold it to one of them and repped that it followed guidelines, they'll be buying it back.
Just to remind you civilians: this is Mortgage 101 stuff. Sellers can't make down payments. Funds must be sourced. Sales prices must be adjusted for excessive contributions by interested parties. Appraisals must address the most recent 3-year sales history of the property and the terms of the current sales contract.
These rules have been there for a long, long time. The GSEs have never relaxed them and aren't going to start now.
As much as I want to believe the above, I realize we live in the United States of Privatize Profits, Socialize Losses.
Circumventing rules and regulations (or outright bribing Congress to change the damned things if that fails) is a favorite pasttime of the banksters. Why should this suddenly change?
Let's recap a few recent victories for the REIC:
--GSE conforming loan limits are now $729K, up from $417k.
--GSEs can now borrow directly from the Treasury.
--GSE debt now has a semi-explicit taxpayer backstop from Congress.
Yeah... no way this type of dodgy loan could 'slip by' our vigilant 'regulators' watchful eyes!
Actually we don't...its just tolerated for reasons I don't understand. A person cannot take the oath of US citizenship and hold dual citizenship. But oaths don't mean much anymore..."
if your original citizenship is from birth, then the oaths trump all, and you are "morally" OK. But what if your previous non US citizenship was thru naturalization also?
and how about if you already have 2 citizenships: for example by birth in a foreign country and thru your parents who were immigrants in that country at the time... do you now have triple citizenship? some people might have citizenships they don't even know about...
Ms Villalobos is a shining example of a true number hitter and incompetent appraiser. They blew in with the bubble and remain, in large number, deep seated within the appraisal profession. They have not clue to what they are doing other than to hit the number. Mortgage originators love them.
Unfortunately, competency is not a prerequisite. The OC article clearly outlines how dumb down the mortgage business have become..
The broker made the loan. Wells did a summary (read thin) QC review and closed. This did not fall through cracks, but fell through a canyon of opportunity presented by Automated Underwriting Engines. Anyone with time and guile could pull this off. I agree that the first 3 payments being made by the seller will keep WF at bay for a 1st payment default but once these St. John Knits employees have to make their first real payment, stuff will hit the fan. Don't believe for a moment that the buyers did not understand what was going on. Think about it: you're being told that a $125k down payment is being made on your behalf and you don't ask questions? Dumb as a box of rocks? No, crafty as a fox is more like it. Everyone will claim "igornance" or "i forget..." and pretend to be innocent when in fact they re not.
One bright spot in this that the OCR reporter, John Gillelson, knows he has a good storyline. I expect to see an update within six months. (If I were the President of Wells Fargo, I would make the monthly payments for the Gomez family out of my own paycheck.)
They keep telling me it's all about leadership and vision but as they keep walking into closed doors in broad daylight, I have my doubts. Must be because I'm one of those dull-witted, blind and aimless pawns called "employees". But, given they have SS#, they can apparently do no wrong.
The US doesn't even require people who gain dual citizenship to relinquish their US citizenship through an oath of allegiance to a foreign state as intention to preserve US Citizenship is presumed.
I love the lack of accountability. It really comes down to the buyer and the lender. I can't imagine seeing a final PSA with the price increased by $125k and continuing with the transaction. And if I did complete it, I would deserve no sympathy whatsoever.
The other is Wells Fargo--and their shareholders/board. If they continue these lending practices, it's no one's fault but their own. They should be the one's reviewing the BS appraisal and automatically pulling the appraiser from their "approved appraiser list"; they should be requiring the transaction to go through a competent escrow agent. For everyone else, their incompetence and fraudulent activities should send them to the unemployment line.
The sad/scary thing is that Wells knows it is "too big to fail" and the US Gov just passed a bill to help these bozo homebuyers at the expense of the 95% of the US who were rational, mature and used at least some common sense over the last few years.
Don't mean to single you out, sorry, but something you said inadvertently touched a nerve.
"These people could have bought something extremely modest..."
No. That's wrong. This is what people who aren't from SoCal don't understand.
There ISN'T anything "modest" here. The house featured in the article model is in a horrible ghetto. IT IS THE BOTTOM OF THE BARREL. There is nothing more "modest" to buy. The cheapest SFH in all of Los Angeles and/or Orange counties probably can't be had for less than $300,000. And I'm talking about a house in a neighborhood where the bullets are flying.
A lot of people seem to think that the bubble just affected the speculators and the stupid, and that responsible people had to "buy something more modest," add an extra 20 minutes to their daily commute, or buy a less expensive 3/2 "starter" home (or maybe a townhouse) instead of a 4/3 "family" home, etc.
That's not what has happened at all. Responsible people are SCREWED here. A decent house in a decent neighborhood costs around $600,000 - $800,000. If you can't afford that, there is no other option open to you. You are priced out of the market, period. Renting is an option, but while it's much cheaper than buying it's still very expensive. If you have a family houses and/or apartments suitable for children are not that easy to find.
People really don't understand what it is like here. For example, prices are down @26% in LA county YOY. So what? They are still unaffordable.
People really don't understand what it is like here. For example, prices are down @26% in LA county YOY. So what? They are still unaffordable.
Joe Schmoe
Joe,
I have to second Shnaps on the 'why are you still there?' point. I just moved to the Bay Area and discovered (to my surprise) that it was actually more affordable than SCAL. That should give everyone here an idea of how batshit crazy prices were/are there.
CA in general is on crack, but SCAL is in a league of it own. You get total unaffordability, plus perma-gridlock, high crime, pollution, 110 degree summers, plus millions of "guest workers" all demanding their "rights" to your hard-earned money.
The banks did this to themselves,... Well really they did it to the people who bought the mortgages or MBSs.
OT re dual citizenship. The idea that the U.S. "allows" dual citizenship is a bit of a misconception IMHO. As others have pointed out, to be naturalized one MUST renounce foreign citizenship. Whether other countries pay any attention to said renounciation really is completely beyond our control. Now if you are BORN a U.S. citizen, you are born a U.S. citizen, and any other nation's claim upon your allegience is again between you and them, and has no bearing upon your birthright citizenship in the U.S. There used to be State Department circulars warning about visiting some countries if one of your parents was from them. eg. if yor father was Turkish and you visited the "old country" you risked being drafted into their army, or worse, imprisoned for trying to avoid the draft. Most nations ,including the U.S., are slow to give up claims on the allegience/taxes/citizenship obligations of those who would leave.
Can someone explain to me again why CEO's of major financial institution are worth $20,000,000 to $100,000,000/year.
I'm a little hazy on the rational.
It's because they work so incredibly hard. Much harder than any of us so-called 'workers' can imagine working! And because they add so much value to their companies. Without them earnings would go negative, companies would collapse, and stock prices would fall through the floor. And of course, because you have to pay for all that talent. No one would be willing or able to do the job for a measly 5 or 6m.
And it has nothing, absolutely nothing, I tell you! to do with the fact that all the CEOs sit on each others compensation committees and are afraid that their own compensation might be cut if they did anything other than rubber stamp the CEO's own ideas for how he should be compensated.
A few old, broke, blowhards like Warren Buffet may inveigh against the practice, but he's probably just jealous. And the shareholders -- at least the ones that matter (fellow CEOs, pension fund managers, mutual fund managers, etc.) must be fine with it, since they regularly shoot down the little guys that try to protest.
So what's the problem? You got some beef with the Miracle of Markets or the Wonders of Modern Capitalism?
If this is the level of elementary due diligence we can expect after the most atrocious mortgage blowup in history, what will it take to scare people into doing their jobs?
I wish the GSEs were as diligent as Tanta claims regarding repurchases. In fact, I'm shocked how pathetically few repurchases there are, even on "rotten fish" files. While GSE contract rights are strong, their follow-through and collection rates are pathetic. For example, Countrywide flat-out refused to repurchase most loans. Many lenders play hardball and wear down the good guys. Being tough on collections is all too often deemed to be damaging to prospective business relationships. Plus, many of the lenders have gone out of business, so GSE claims are worthless. The GSEs are also not staffed to handle the kind of EPD and PFR volume they're experiencing now. The GSE's are leaving 100's of millions on the table through lack of diligence and other reasons. Their regulator should focus on this--it would give the GSEs the backbone they need and save the taxpayers some big bucks. I'll even bet that some lenders have collected "rep/warrant/make-whole" claims from their correspondents and wholesalers and STILL denied GSE claims on the same files! I'm also advised that MI companies are equally ineffective at exercising their strong contract rights.
No offense taken--but I repeat what some up the thread said. Why are these people living there? There are plenty of very nice places much cheaper in other parts of the U.S.
These people weren't high tech workers who have to work where the high tech is.
I rather think the gang pressure thing is a likely hypothesis.
At least in Miami Dade County, if you're gonna live in a crappy, bullet ridden area, you pay a crappy, bullet riden area price. Yeah, we got totally bubblicious, but you could still find a reasonably priced pos somewhere.
"I would love to watch scumbag realtors and appraisers getting tackled by police. Actually, please ask Mr. Hansen to equip them with Tasers."
Speaker73 | 07.30.08 - 5:00 pm | #
Wouldn't we all??
The probability of local law enforcement getting involved is slim to none. There are few detectives with the time and expertise needed to slog through the fine print on loan docs in order to build a case. Meanwhile, they have are bigger (in victims, not $$) and easier fish to fry (ID theft, counterfeiting, etc.).
The large cases will be brought by D.A.s and A.G.s who have their own investigators. The onesy-twosy cases are unlikely ever to be criminally prosecuted. Civil cases will predominate.
Tanta, Are you confident the loan officer, the underwriter and the appraiser even saw the addendum to the P&S?
Isn't it possible it was withheld from them and from the escrow agent?
Wouldn't an underwriter have conditioned for a statement from the borrower at closing that the terms of the P&S Contract had been met, namely that the 52" television had been delivered and that it held no value.
Joe Schmoe, you are so right..the buyers of this home siad "We focused on the monthly payment...."
They feel they can make the payment and now they will own Baltic and Meditaraqnnean!!!
they can put renters in several of the rooms and mkae SF, Schnaps, because they don't know anyone who will get them a loan...nor do they have support people....
their family lives inOrange county....these people own their own home (making payments on the home they ive in) and this was a second home for them....
should they have been allowed to buy this house...probably not...should the appraiser, lender escrow officer be "Shot at Dawn"..You Bet!
But, these folks felt they could afford $2700.00 per month...and if they rent 4 beds at $400.00 per month cash...Well, maybe they can make it....
Jolie, you're probably right. 10 to 1 the addendum was never seen, but that doesn't let the Escrow Officer, the Loan Officer/Broker, or Wells Underwriter off the hook. Downstrokes are to be verified and sourced. And wasn't this a second property for the Buyers? Owner occupancy wasn't questioned? The deal doesn't smell right from jump street. These little special transactions usually require the collusion of Seller/Buyer/LO/Mortgage Broker/Appraiser/Escrow Officer. I would not be surprised if there are false documents in the file showing the buyer had sufficient cash to make the $125K down and the addendum never made the Underwriter's desk. Not so with the other players in the game. They all had to know that the deal was queer.
Jas
Good to see you're back!! After the revelation that CIA agents were vetting all TV news about the Iraq war etc, ALL Americans should have unplugged their TV's. Instead-nothing...Born, bred and conditioned. I just thought that TV news was misleading because money talks, but I guess the pentagon was taking no chances. Maybe they also pointed out the fine print in a secret law(WTF) to the media exectutives. Just wait till the war on bloggerists begins. Oh wait!!! What was that Sheila???
People really don't understand what it is like here. For example, prices are down @26% in LA county YOY. So what? They are still unaffordable.
There were a lot of stock-market "bottom-fishers" whose eyes were bigger than their heads in early 2001, too, scooping up the QCOM's and JNPR's of the market for no other reason than that they were 50% off their highs.
The market didn't bottom until these guys threw in the towel and got out, a year or two later.
The same thing will happen with this bubble. When the first round of "value hunters" buys in, watches prices continue to fall, gives up hope, and gets out ... that's when the RE market will bottom. Not before.
The assumption that the buyers were not US Citizens is about as valid as the assumption that the appraiser did not ask if there were sales concessions involved in the transaction. To imply that the appraiser blatantly disregarded USPAP in the preparation of this apprasial assignment is conjectural at best.
To imply that the appraiser violated USPAP without full knowlegde of what was disclosed in the appraisal report is likin to the assumption that the buyers were undocumented citizens. If you read through the article again you will note that the seller concessions were not documented.
If you read through the article again you will note that the seller concessions were not documented.
The broker remembers that there were "incentives." How can he remember this if he never saw an agreement involving "incentives"?
The borrower pulled that P&S addendum "from his envelope of loan papers." The "concessions" were indeed documented, and it sounds to me like the first time someone asked about them was when the reporter did, and the buyer obediently produced the document.
Look, aren't we all getting just a touch tired of the idea that fraudsters always spell out their frauds clearly on the documents they hand you? That if they don't give you a document, it doesn't exist?
"Due diligence" does not mean "nobody told me anything and it isn't my job to ask or to submit this to the smell test."
Anyone who wishes to imply that after the tsunami of "cash back purchases" and various frauds we've now uncovered over the last several years, it is acceptable for an appraiser to simply not consider that there might be something wrong with that contract, given the recent sales history of the property, is implying that when USPAP says you have to "analyze" the sales history and current contract, it just means "look at the top line number on what you are handed and then go find comps."
I wanted to let you know that Wells Fargo is following the conversation this post has sparked. I can tell you that we're investigating this particular transaction, but because our customer relationships are confidential, I can't go into detail on the specifics related to this loan.
For Wells Fargo, making a mortgage loan is not just a transaction - it's part of building a strong and full relationship with our customers so we can help them, through home ownership, to achieve financial success. The last thing we want to do is approve a loan we don't believe the borrower has the ability to repay. It's ultimately bad for the borrower, bad for the community, and bad for Wells Fargo. We do not tolerate any lending practices that are abusive, misleading or fraudulent, period.
Thanks for the opportunity to weigh in. We appreciate all the comments and perspectives on this story, and well continue to follow this dialog.
I wanted to let you know that Wells Fargo is following the conversation this post has sparked. I can tell you that we're investigating this particular transaction, but because our customer relationships are confidential, I can't go into detail on the specifics related to this loan.
For Wells Fargo, making a mortgage loan is not just a transaction - it's part of building a relationship with our customers so we can help them, through home ownership, to achieve financial success. The last thing we want to do is approve a loan we don't believe the borrower has the ability to repay. It's ultimately bad for the borrower, bad for the community, and bad for Wells Fargo. We do not tolerate any lending practices that are abusive, misleading or fraudulent, period.
Thanks for the opportunity to weigh in. We appreciate all the comments and perspectives on this story, and well continue to follow this coversation.
As on Appraiser's Forum, posters on CR should always be aware the subject of the thread is or could be monitoring the thread. For whatever reason.
Following this most embarassing situation, I believe it would be in Wells Fargo's collective corporate interest going forward to rock the boat with pink slips, pruned approved appraiser lists and pruned mortage broker and correspondent broker lists. Send a message in advance of the changes in regulations for lenders, brokers and appraisers coming soon (not soon enough, of course). There are still sufficient numbers of truthful people for Wells Fargo to employ and/or do business with, now's the time to reward them for not going to the "dark side". Please seek them out.
From my little corner of the world perspective, Wells Fargo has a good opportunity to be among the last few majors lenders standing and thus reap the rewards when banking industry recovery begins.
Thanks for stopping by and all, but honestly - I'm sure we all (conjure bag in particular) would rather listen to a dissertation about your pet Schnauzer's latest tricks than that steaming pile of PR glurge ("we at Wells Fargo believe a mortgage is not just a mere transaction...wocka, wocka, wocka")
Beyond all the technicalities, even a child can see a HUGE RED FLAG with:
Loan amount: $500k.
Occupation: Garment Worker
I mean no ill will to garment workers, but no "rational man" could honestly believe that a pair of unskilled laborers in a slum would pay a $500k mortgage. At least not without an EXTREME degree of skeptical scrutiny, far beyond routine "due dilligence," which apparently didn't even occur here.
Real Estate author John T. Reed (West Point 1968, Harvard Business School MBA 1977) describes a form of traditional mortgage lender due dilligence:
"As late as my late thirties, mortgage lenders were still asking me what college education and other training I had that qualified me to be the owner-manager of an apartment complex."
Another thought, Wells Fargo: Your underwriters should watch Judge Judy.
She is capable of asking obvious questions like "How do you support yourself" and saying "I DON'T BUY IT" over a $500 mock court case, while your your employees fail to do this before handing over $500,000 of real money.
Can't you at least hold yourselves to the standards of daytime TV?
I am a Wells Fargo retiree and am embarassed at their involvement in this loan fraud. If anyone involved in re lending with Wells had seen the original article re Camille st back in Dec 2006 in the OCR they would know this was a toxic street and should have stayed away from this area. I'm contacting Wells Fargo CEO John Stumpf and asking him to personally walk thru the Camille street area and then tell me this loan is ok.If not he should immd fire anone connected with this loan at WFB. PS:I'm no relation to the
appraiser.
Maybe I'm a little slow, but is this how the transaction worked?
Buy distressed property:$300000
Sell to straw man: $625,000
Take mortgage of: $500000
Pay off old mortgage: $300,000
Pay down payment: $125,000
Give straw buyer: $30000
Skim off: $45,000
Leave straw buyer with $500,000 mortgage, bank gets $125,000. So the bank's liability is $375,000 ($500 - $125) and the borrower's liability is
$470,000 ($500 - $30).
Wells Fargo is in fact making a 100% financed $375000 loan on a $300000 property, but if it wasn't a foreclosure sale, maybe the property is worth $375,000. It's not clear to me that Wells Fargo is necessarily taking a huge risk here.
"...your underwriters should watch Judge Judy. She is capable of asking obvious questions like "How do you support yourself? and saying "I DON'T BUY IT" over a $500 mock court case, while your employees fail to do this before handing over $500,000 of real money.
Can't you at least hold yourselves to the standards of daytime TV?"
---ROTFL! Call it like it is, bud-- well done and neatly put.
Q.: Is it the general consensus of the regulars here that the gentleman identifying himself with Wells Fargo, Mr. Menke I believe, is genuinely a Mr. Menke from WF? (I don't know that he isn't, but is it accepted here that in fact he is?)
I would like to get a copy of the appraisal and proceed with filing a claim against the appraisers E & O policy. This is a way for the lender to help recover some of their losses. Be glad to help.
Gary W-- we simul-posted & I just read yours-- does the MAI mean you are an appraser? If so, would you share some clarifying information please?
My understanding is that the appraiser is required to keep copies of his or her appraisals for a specified time period-- how long is that?
Though the borrower generally pays for the appraisal, the lender orders and authorizes it, & it then "belongs" to the lender, (tho the borrower may receive a copy)-- is that true?
So who exactly is allowed access to old appraisals? They wouldn't be part of any public record, would they?
MAI is an appraiser designation offered by the Appraisal Institute. An appraiser must retain the workfile for a period of at least five (5) years after preparation or at least two (2) years after final disposition of any judicial proceeding in which the appraiser provided testimony related to the assignment, whichever period expires last. The lender/or broker has to order the appraisal and therefore is the owner and yes the borrower in entitled to a copy. The appraisal remains with the loan file along with the application, etc and is not public record.
Gary W - you are already prepared to file a claim against the appraiser's E&O policy and have not even read through the appraisal report yet?? Do you actually believe that you have all the facts necessary to take such action simply based upon what you've read in the papers? I would have thought that an MAI would hold himself to a higher standard than that.
Even CR and Tanta real identities are not known on this blog, nor are yours and mine, Menke taken at stated name and stated purpose, but could of course be anyone.
Personally, I beware of any apparent agents provocateurs who rant/rave/incite to violence on this or any blog. There are a very few of those here however note in other threads the concept that the blog is monitored by TPTB, SEC, FNMA, etc.
bjk writes:
...
Wells Fargo is in fact making a 100% financed $375000 loan on a $300000 property, but if it wasn't a foreclosure sale, maybe the property is worth $375,000. It's not clear to me that Wells Fargo is necessarily taking a huge risk here.
No, it was a 100% financed $500,000 loan (or an 80% financed $625,000 loan, depending on how you look at it). The $125,000 is subtracted from $625,000 to give you $500,000.
So yeah, Wells is taking a pretty big risk with a $500,000 loan on a property possibly worth $300,000.
Anyway, the million dollar question for me now is, are these types of loans being sold to the GSEs these days, and how rigirous are the GSEs really in shoving back bad loans?
Tanta's and RacerX's replies above give me some hope, but then 76S's reply is, well, discouraging.
One question I have for Tanta if it's not too late (or RacerX or 76S or anyone else who knows) --
A couple of mortgages were originated by a lender (WaMu) in my neighborhood in mid-2007. They were pretty clearly cases of appraisal fraud, and they both foreclosed with a Sheriff's Deed in less than 9 months (EPDs). The foreclosing bank on the Sheriff's Deed is actually Freddie Mac. Does this mean that Freddie Mac did not shove the loans back to WaMu? (Or can I not necessarily determine that by the party on the Sheriff's Deed?)
Gary W; Thank you very much for your reply-- may I ask a few more questions then?(sorry!)
So, Copy 1 of appraisal goes into the loan file, kept by the lender (forever?-- till the loan's paid off?). Copy 2 is kept by the appraiser for at least 5 years. 3rd copy goes to borrower. None of the above is public record.
I'm trying to get the order & terminology of things here straight. An appraisal is a certified appraiser's valuation of a property, based on the specifics of that property relative to other similar nearby properties recently sold. So it'd seem, any appraiser is allowed to access any other appraisers' appraisals, in order to do the new appraisal?
Cuz appraisers can't just work from, like, old MLS listings as "comps", can you? A "comp" is the final selling price of a property, as recorded in the assessor's office, right?-- but the assessor's office doesn't have any access to the actual appraisal, so they don't know specific details, e.g., if the home has the infamous "granite countertops", etc. do they? And a "BPO" is sort of an "informed estimate" just based on a broker's personal opinion after she's looked at-- what exactly??-- old MLS listing descriptions?--Which of course only describe the property, but do not say "Oh yeah & in the end the seller had to throw in a new car to get this deal done, so hey everybody, be aware you should subtract 20K from the end sales price first, to get a real comp".
Sorry for so many Q's, Gary, but am trying to figure out firstly, who actually has standing to complain about bad practices-- (engaged in by an appraiser, RE agents, brokers, or any of the players)-- so if one of the key doc's-- the appraisal-- is not public record, then seemingly it would follow that only the direct parties to a transaction can issue a complaint. Do I have that right?
Sorry for length-- but am realizing that what I thought I "knew", I really don't!
Thank you, if you're still around & willin' to answer!
C Mack, thank you & I take your point. When somebody first suggested to me that "others" do monitor internet chatboards, I just roared laughing, like "O yeah like who in their right mind would ever take THAT job!"-- spending all day reading anonymous rants/raves etc
But I do know now that it's quite true, upon occasion. (So I hope if "They" are monitoring this site-- they go 'way and monitor someplace really juicy, like Broker's Outpost. (I can't believe some of the "how-to-scam" posts I've read over there--)
Anyway, thanks for tip! (but am secretly crushed... so you're really not Connie Mack?)
Thanks for the thanks. Yes, B.O. can really stink; it's usually all about the commission and yield spread premium over at B.O. and greed is good. There are appraisers who like to go to B.O. and set up an argument.
A "comp" is a property as similar to and as proximate to the subject, which also has been sold or listed in as recent a time frame as possible. A really good comp would be the identical home next door that closed yesterday for cash; after being openly on market for exposure enough time for maybe 3 to 5 buyers or more to see it and consider it; sold without added incentives such as a car in the garage or trip to Hawaii; obviously going to be very few of these found in current slow market of fewer sales.
A "comp" is not just any house in a neighborhood which has sold, such as the list you see on Zillow, even though the B.O. people would like to think the $600,000 house five blocks away in an entirely different subdivision among other $600,000 homes is a good comp for the subject, a $400,000 house among other $400,000
houses.
To answer for Gary, appraisers in full disclosure states usually have at least most of these data sources:
MLS and the posted listings, accurate or not
County assessor records, accurate or not, including public record and recoded deed, photos, floor plans, aerial photos, etc. hopefully online
Possibly a county search engine for all sales (deeds recorded)
Past personal files of properties similar to the subject that have sold or listed recently
Past or present personal walk-through observations of nearby similar properties i.e. going through an open house and picking up the flyer
Maybe another appraiser you know has a past file on a similar house nearby that sold
The lender has a past appraisal on a similar property in the area
Hearsay from a neighbor of the subject property or the seller
Realtors/agents who work the location
Advertising
The opinion of value is a subjective judgment using objective facts as best they can be determined and using information obtained from the parties
by questions in confirming the sale (what condition were the carpets, really? etc)
Appraisers in non-disclosure states like Utah may have few of these resources available. Preparing a reasonable opinion takes more time in the sale and fact confirmation process in N-D states.
Also, there are inconsistencies in MLS rules, requirements and application nationwide. So what is good data provided by the broker in one MLS may be not of much value coming from a different MLS.
For the most part, there is no advantage in being misleading in writing a listing for publishing in an MLS; the other Realtors/agents will most often get really pissed by puffery and certainly by false statements that lead them and their buyers on such as "Great well" when the well is 2 gpm and too close to the septic system to pass conventional financing.
No, county won't have access to the appraisal though occasionally an owner will correct square footage figures using the appraiser's figures if county has that wrong.
Lender almost never issues a complaint against an appraiser; usually it is a harmed party but mere valuation dispute complaints are usually not investigated; reason, subjective opinion. Burden is to show where appraiser broke the law i.e. did not follow USPAP.
Or another appraiser who reviewed an appraisal and found USPAP violations
(not just nit picky errors) will file a complaint.
The effect of all past complaints to state appraisal regulatory agencies has not, unfortunately, been adequate. Coming soon (01-01-09) is the obligation of the lender and lender's representatives (employees, brokers, loan "advisors") to follow the USPAP law regarding NOT pressuring an appraiser by witholding future work or payment for past work.
Like I say, never soon enough. USPAP has been on the books since about 1991, all that time there has been little recourse for appraisers who are pressured by make the deal no matter what lenders.
Hence, for "appraisers" like the one in this Wells fargo deal, it has been far easier to get more work and money by being more of a hit the number whore. See, greed is good.
C Mack-- thank you so much for all of that info-- I've been fascinated by "comps" & appraisals ever since 2003 when the first house in the neighborhood I was renting in (& had hoped to buy in) broke the 200K sales price & busted all former comps. Tho that house was a beautiful great big ole Victorian, totally re-habbed, by the next summer, every house in the neighborhood was priced at, and selling for, over 200K, even the teeny little bungalows that hadn't seen a lick of new paint since 1945!
I'd go to open houses, & get in big debates with the RE agents-- they'd say "this house is worth 250K cuz the yellow house on the next block just sold for that" & I'd say "BS-- I've been in the yellow house also, & it had brand new everything, as opposed to this pokey little relic" & the agents would just shrug & say, "hey lady, the comps are the comps!"
But if I'm putting together what you've just so kindly shared with me-- it's not like there's some "Appraisal Database Central!" wherein all appraisals are filed, & can be accessed by other appraisers. So each appraiser must rely on his/her own personal file of old appraisals s/he's done, files from other appraiser friends, the MLS, tax records,input from RE agents, & you mentioned 'a lender's other appraisals'?
On the last,- so is that why some shady developers insist a borrower must use a certain lender-- because that lender has reams of older inflated appraisals in their other loan files, that can be used to justify new inflated appraisals? (I'm not knocking all appraisers here-- just wondering how the bad 'uns manage to keep their bad practice so "private".)
So how do all these deceptive practices, like sellers contributing new cars, vacations, plasma TV's, etc., come into this?-- are those seller contributions not noted on the appraisal form? IS there one type of appraisal form, that all appraisers must use?
Sorry for allthe Q's, but you clearly know what you are talking about-- thanks!
PS: "See, greed is good." Isn't it awful that so many people actually believe that? Enlightened self-interest is "good"; greed is just, well... greed.
where you can be a guest and even ask questions, though use the search function first please.
Go ahead and sign up to AF it's free.
Developer and lender are in cahoots
to (usually, not always) inflate values for various financing and
"efficiency" reasons.
Sometimes the buyer/borrower actually
benefits from reduced loan fees, easire closings, lower costs, faster service from a "preferred lender".
Frequently one or two preferred appraisers are also in on this espeditied service model. Does not mean or imply things are crooked.
But they can be crooked easier.
The files of old appraisals would not be worth much, usually. The comps and market change daily.
The "bad un's" don't keep their bad practices private for very long, all other appraisers that compete for business against these rule benders or breakers know soon who is fudging.
It's getting the regualtory agenices to follow through on revoking licenses that has been the problem.
Lots of rules and not much enforcement, overall, state to state. Some state much better than others but all states have had many stinky fish swim through the net and keep on stinking up the appraisal biz.
Well I quote Gordon Gecko simply because it is appropriate to the last 5 - 6 years of mortgage madness.
Plenty of people made lots of money any way they could and the appraisers who got rewarded were the ones who kept hitting the number. That made them "good" appraisers. They might have been good, just biased and inaccurate.
As i noted, January 1 some rules are going into play for the lenders. We shall see what happens the
C Mack, Thanks for following up on this thread. Zuzu's questions reminds us that the majority of the population think we still work with a crystal ball and don't realize that a significant amount of research is required including confirming and verifying info from the MLS, etc. That means picking up the phone and asking specific questions to the listing/selling broker and referencing this in the URAR. Nothing better when reviewing an appraisal than seeing names and phone #'s of people that were contacted in the research process, albeit I don't see it very often. The State agencies overseeing the licensing of the appraisers are sorely under funded and therefore understaffed. Their primary function becomes receiving checks and sending out licenses. I send out complaints on a regular basis and in the past 5 years have heard back from 1 which was confirming that my letter had been received. Players in the industry are aware of this and exploit the situation.
C Mack and Gary-- thank you both for explaining & sharing knowledgeable info. I appreciate it.
I will check out Appraiser's Forum. I visited there once in the past & my general sense of the discussions I read was that ethical appraisers like you guys do prefer more regulatory interventions, to weed out the Gecko's, but apparently it's been a very contentious issue within the appraiser community.
I do recall reading there many times the hope that once (if?) the big lenders really apply the new changes in the rules as of Jan., it may create a more level playing field. I hope so.
Seems to me the "little guy" appraisers sorta got stuck in the middle of the housing bubble-- & I think it's sorta ludicrous for some people to play "just blame the appraisers". Every bloody big bank in America was jumping on the gravy train, & to my mind these lenders held & had a much larger ethical & fiduciary responsibility to safeguard their own investors' money, than some appraiser they could coerce, much farther down the food chain.
Anyway, I wish you both well, & thanks again for your patience!
You are welcome and I appreciate Gary's knowledge also.
It is a tough position to hold, trying to be honest. Lies are so much easier to sell down the line because. . . well, you know why.
Really difficult to actually blame the appraisers and make it stick after all the publicity of the duplicity of large banks and the series of MBS, CDO's that have gone awry in their own pockets and pockets of their overseas customers.
Who generated that crap? Wasn't the appraisers, even if the appraiser
co-conspirators helped out.
OK, the market is getting spanked for all its wrong doings. Why is it that some people will never get it. If the broker didn't know his responsibilities or care then he shouldn't be in this business. I do wonder if the broker had put up his own money if he would have a different view of the situation. The broker could have stopped this transaction from comming together in this way if the broker would have taken action.
No one wants to take accountability for their own actions. They're all finger-pointers. The best thing to do is to keep investigating these frauds and punish the guilty with prison and/or fines. That's the biggest deterrant for anyone contemplating mortgage fraud. There are still honest LO's, appraisers and escrow officers; hopefully the threat of loosing their livelyhood will promote them to think twice if documents and contracts don't seem quite right. Trust your instincts!
Worst of the first. To be sure.
It's always good to see it's still business as usual.
jo6pac
And isn't Wells Fargo supposed to be one of the big banks that kept its nose pretty much clean?
All things being relative, that is.
Reporter John gittelson deserves a Gold Star...he's the anti-Gretchen...
even though the OCRegister is cutting staff, Gittelson took the time to investigate and give us a thourough report....
when I read the story yesterday, I thought of all I have learned from Tanta and I thought this guy did a darned good job...
Orange suits all around will do it for sure, for this time.
"I didn't do it"
"It wasn't my fault"
"It wasn't my business to inquire"
"Free markets"
When the borrowers figured out how ripped off they have been, expect lawsuits followed by "early retirements" for most or all of those involved.
I do hope the "appraiser" (rubber stamper) is but one of several of "them".
So who's the bag holder?
It looks like this rip-off was a "conforming loan", so it likely was packaged into a Fannie/Freddie MBS. Does that mean that F&F (we taxpayers) are the bagholder?
Nobody cares. Government's got their back covered. My children hate this government.
And isn't Wells Fargo supposed to be one of the big banks that kept its nose pretty much clean?
Yes, it is.
So what do you suppose everyone else is doing to beef up due diligence?
That is just unbelievable. All these people think Wells Fargo is the best of the banks. They were bragging a couple weeks ago of how they've gained market share. They didn't say it was the market for nonsense loans...
I hope the $625,000 TV fits in their shopping cart.
When comps aren't comps, it is a bad day. It has been a bad day for several years now. These people need to go to jail.
Aren't any of these people liable, criminally, or at least in civil court, for levels of ineptitude or malfeasance this staggering?
I mean book makers run a great racket too, but they usually don't go talk to the press about it.
But without continued access to 109% loans, how can we stop RE prices from falling? (ducks, runs away) But this points out just how COMPLETLY worthless and compromised the appraisel business has become. I suspect that there just aren't that many honest appraisers out there. I'd bet that they've been driven out of business by the "hit the number guys." How anyone expects "hope now" to work with the pervasive appraisal fraud that we have now is beyond me.
invisible hand writes:
So who's the bag holder?
It looks like this rip-off was a "conforming loan"...
Good point. Can't the FHA even do loans this high now?
Some are predicting that the FHA is going to get whacked soon.
I can't believe the guy didn't come through with the TV. That is just wrong.
If I move to Orange County, can I get a pony.
I'd sure like to have a conversation with the underwriter of this loan to find out what s/he was (or wasn't) thinking.
what will it take to scare people into doing their jobs?
Everyone who ever had anything to do with Casey Serin's adventures put in orange jumpsuits would be a good first step.
Good to see my predictions of Wells Fargo not being above the mess are proving correct. The real answer is "Follow the money." Everyone in this transaction made money except the ultimate bagholder. Who is that? We don't know and therein lies the problem. These kinds of retail fruads only occur in a system of secondary markets that permit it. If a few secondary MBS holders can successfully cramback to Wells Fargo you can bet Wells Fargo will be a lot more careful before cutting the next check.
Does that mean that F&F (we taxpayers) are the bagholder?
Not hardly.
If this loan went to one of the Fs, it will be coming right back to Wells Fargo.
Fannie and Freddie have clear and unambiguous rules about appraisals and down payments that this loan violates six ways to Sunday. If Wells Fargo sold it to one of them and repped that it followed guidelines, they'll be buying it back.
Just to remind you civilians: this is Mortgage 101 stuff. Sellers can't make down payments. Funds must be sourced. Sales prices must be adjusted for excessive contributions by interested parties. Appraisals must address the most recent 3-year sales history of the property and the terms of the current sales contract.
These rules have been there for a long, long time. The GSEs have never relaxed them and aren't going to start now.
Hangtown, haven't you heard, Big Screen TV is the new pony.
I just noticed that Wells Fargo issued BOTH mortgages, the one that got it at auction, and the $210k larger one to the next buyer.
You know... you kind of assume banks have computer systems that flag that kind of thing.
Aren't any of these people liable, criminally, or at least in civil court, for levels of ineptitude or malfeasance this staggering?
I have no idea about that. But every last damned one of them is in a profession licensed by the state of CA, and every last damned one of them needs to lose that license PDQ.
I think that appraiser's phone is ringing off the hook right now with calls from every lender in CA... to get those 85% marks off their books into FNM/FRE.
it's come to the point where the brink of disaster for all these people is not reason to retrench and exercize care but reason to become even more reckless.
this is what happens when moral hazard takes a back seat to pavlovian reflation repeatedly over the course of decades.
i agree with ken rogoff -- it is well past time to take the consequences of our collective irresponsibility. and if that means hazarding a systemic banking disaster that destroys all these people and me too, SO BE IT. there's likely no avoiding it now anyway -- and if a succcessful reflation does manage to round the iceberg, we only consign ourselves to hitting a bigger one in a few years with a yet-more-overlevered-and-fragile financial system.
bring on the liquidation! destroy these reckless banks!
And the beat goes on?!
Drove the length of the DelMarVa penninsula (Route 13) yesterday on my way back to Boston from NoVa. Lots of rural farmland being turned into housing "settlements". One that caught my eye just outside of Dover DE is offering a free car with the purchase of a home.
Website:
Garrison Homes
Note the bank that is financing these homes.
There's more. Right next door is a brand new strip mall. It's completely empty.
52 inch flat screen TV? Wow!
That would get my attention if I wanted to buy an overpriced home.
typical straw man deal, except the straw man in this case did not speak english and had no idea he was the straw man.
I just noticed that Wells Fargo issued BOTH mortgages, the one that got it at auction, and the $210k larger one to the next buyer.
That's just perverse. They say the burned hand learns best, but apparently some of us go back to re-singe the flesh.
I am baffled as to why--if you did--you expected anything different?
The "buyers" have an ace up their sleeves here: foreign citizenship.
As an American citizen, my choices are basically 1) live in the USA or 2) apply for a visa to live in another country. Option #2 requires me to prove to another government that I have sufficient financial resources to stay there, which would be impossible if I were over my head in debt.
Yet another competitive advantage that noncitizens have.
in a profession licensed by the state of CA
a bunch of minimum wage enforcers are about to have there wonderpowers revoked by the terminator
Tanta, the thing that shocks me most is the attitude of the escrow agent. She can function as the bottleneck, as the person who says, "Whoa!" and stops the transaction when there's ample evidence of shadiness. And this transaction was as shady as a rainforest. I doubt this sale would have gone through in an attorney closing state such as New York. Or am I dreaming?
Tanta,
I'm glad to know that the GSEs will probably send this mortgage back to Wells Fargo, if it has been packaged into an MBS.
However, isn't this because the OCR reporter has sleuthed this fraud? Would the GSEs have uncovered this rip-off on their own?
There are 8 fraud investigators working for the appraisal licensing board in california.8.I could keep 20 busy in sonoma county.
The "buyers" have an ace up their sleeves here: foreign citizenship.
How the hell do you know that? Nowhere in the article does it say the buyers are not citizens.
Ransom41:
Further south in DE you go, the cheaper the land becomes, relatively speaking. Below the Prince George Canal, DE is known as (or was known as when I lived in DE) Slower Delaware.
Lots of Ag but if gas prices stay up, then the model is broken since folks living down there are most likely commuting to Wilmington or Phila.
Nice racetrack there, though.
So is the (larger) scam simply based on volume, putting soon-to-be-non-performing loans into the GSE's faster than they're able to spit them back out?
Another patented Slam Dunk by Tanta!
Ethics are so yesterday.
That's just perverse. They say the burned hand learns best, but apparently some of us go back to re-singe the flesh. Well scar tissue usually doesn't have nerves...
However, isn't this because the OCR reporter has sleuthed this fraud? Would the GSEs have uncovered this rip-off on their own?
They may or may not have uncovered such a thing on their own. They only do up front full file Quality Control reviews on a fraction of the loans they buy. Certainly I do not believe this loan would ever have made it past a GSE quality control audit.
But it doesn't matter, actually. The GSEs don't have to catch it. If the loan ever goes bad, they'll look at it then, and once they do they'll shove it back. There is no "statute of limitations" on that.
So what do you suppose everyone else is doing to beef up due diligence?
My first thought was "hiring more legal staff to combat the coming wave of buyback demands."
Then I wondered if there were sufficient numbers of lawyers available that could work with their noses plugged to avoid the stench coming from their employer (hoping as I do that some number of lawyers out there have the same high standards as Lawyerliz.)
No problem, they'll take these over at the Fed, right?
Tanta: How the hell do you know that?
"Natives of Guatemala, the Gomezes said Sanchez spoke Spanish when they first met, but pretended to know only English when they later called to ask about the
extra cost of insurance and taxes."
The US allows DUAL citizenship, so even if they applied for citizenship, they could retain the right to return to Guatemala if Guatemala also allows dual citizenship (which Mexico allows).
More to the point, shouldn't someone have asked "how the hell do garment workers who don't speak English earn enough to qualify for a $500k mortgage?" I was a National Merit Scholar and have an engineering degree and still don't make enough to qualify for that kind of a mortgage.
It's pretty naive, Tanta, to think our recent disaster will revive honesty in America. That is pretty much dead as the proverbial doornail.
I just did a loan closing where property owners had recently purchased a property from the bank after a foreclosure for $150,000. (The original bank loan that was foreclosed was about $165,000). They refi-ed into a fixed rate, fully amortized, fifteen year loan, without PMI, of $186,000.
This implies an appraisal of $230,000 or so. That's an $80,000 (53%) bump in price (from $150,000) in six months. There were no repairs done to the property, except just cleaning it up.
No, this ain't over by a long shot, and now that the money is explicitly free from the fed, it will continue apace, even--here's the kicker--getting more fraudulent than before.
When it all does really crash, we'll be burning dollars to stay warm.
I doubt this sale would have gone through in an attorney closing state such as New York. Or am I dreaming?
There may be plenty of crooked attorneys, but there can't be many who have passed the bar and practice in real estate who don't know that down payments cannot be made by property sellers.
My problem is that I cannot tell if this escrow agent is crooked or just dumber than a box of rocks.
OT - It's true that robbery and burglary increase as the economy declines. From today's A.M. Report:
"2100 hours: Officers F---- and W----- conducted a traffic stop at H------ & H-------- that resulted in the seizure of bolt cutters and other burg tools along with a few suitcases/duffle bags of high-end alcohol. Suspects arrested for PC459 and they are likely responsible for a series commercial burgs targeting alcohol. No confirmed burg tonight, but its likely a victim will be found."
Not to worry, Lefty. We're on it!
There is no "statute of limitations" on that. Except for the bankrupcy of the bank. Can they force whoever ends up picking over the bones of Well Fargo to take back loans?
My problem is that I cannot tell if this escrow agent is crooked or just dumber than a box of rocks. ---"I'm not a moron, but I play one in court."
Engineering such a sale is to convince other prospective buyers that the market is coming back up. Of course, they are going to need a fresh supply of people who aren't already saddled with debt/bad credit, so non-citizens will become their next marks.
Is there a conclusive test for senility? If so CNBC should check Mr L Kudlow and put all the speculation to rest.
Hubbert, the phrase "natives of Guatemala" means "born in Guatemala." If they were currently citizens of Guatemala, I would have expected the reporter to say "citizens of Guatemala."
Why would they clean up their act? All of the sauce still flows freely. Speculators are still in the market taking GSE mortgages. I know many. Hope now Pain later...
What an outrage! Where is Gretchen Morgenson when you need her? Oh wait a minute--on second thought all she would comment about it the exploitation of minorities by predatory mortgage banks.
I live in the heart of OC. And one way to know the beats in the community is through casual conversation with my barber per my monthly visit. One tid bid from our last chat was his revelation that most of his realtors/brokers clients have recently disappeared and he wondered whatever has happened to his once-best tippers. Having seen the housing excess firsthand, the disappearances and all the consequences and implications are entirely understandable.
If Fannie and Freddie get a pass with no accountability. If the political class of the last 30 years that aided and abetted at every step gets a pass with no accountability. Why is Tanta bitchin' out the the bank, the appraiser, the escrow agent, and the mortgage broker who participated in a crummy $625,000 residential real estate transaction?
Why? Because she has the intellect and the guts to consistently shed light and moral outrage on this outrageous corruption of America's financial system and standards. Once again, Good on Tanta. Thank you Tanta.
Many of you seem to be under the impression that the same people who never learned/forgot how to underwrite or appraise have gone to class and learned how, or that the stupid staff has been replaced by competent people.
What on earth gave you that impression? With banks bleeding money from mortgages, the best you can actually hope for from most of them is that they disproportionately laid off the incompetent and the dishonest, or that the people buying these loans have brought THEIR standards and supervision way up.
Oh yeah, the people buying the loans are probably Fannie or Freddie. Their standards keep changing and their volume is way up.
With all of the turbulence, I keep wondering, why aren't the shareholders of these firms mad as hell and passing shareholder resolutions to fire management without a bonus if they can't get good underwriting standards and diligence to stick?
Here's the heart of the matter. Yes to all the great points above specific to the piece by Tanta, but looks at the banks this morning, yesterday and the day before when it became clear that the financial regulators, political class don't GIVE A DAMN about reports such as what Tanta wrote about, and will throw even the kitchen sink at preserving them, no matter how corrupt or what the moral hazard implications are. You hear Paulson, Bernanke and the rest. "Preserving stability is our goal". That's code for status quo. Their real constituents and their only constituents are the financial establishments we are all realizing were corrupt from the start, including Wells Fargo. They're most upset at the fact that alot of people are starting to clue into this. Transparency is their enemy, hence the delay at implement the FASB off balance sheet rules. Banks can't handle the truth. As much as cases such as what Tanta wrote about are indeed fundamentally important and relevant, as evidence in the action of these same bank stocks the past few days, those pushing the $$$ and doing the buying, don't care and won't care knowing the Financial elite and political elite don't care.
Tanta, if Guatemala is like 99.99% of countries on earth, a person born there is automatically given citizenship in that country.
The reporter's use of the word "native" instead of "citizen" is a stylistic choice only. Birthplace legally implies citizenship 99% of the time.
Tanta, if Guatemala is like 99.99% of countries on earth, a person born there is automatically given citizenship in that country.
So what? That doesn't mean they are not now citizens of the US.
You simply assumed that a couple of Spanish-speaking immigrants are not US citizens. On no basis whatsoever.
Stuart - I totally agree with you and it is depressing me greatly as if this continues this way I only see a final outcome of some kind of chaos and potential revolution.
My problem is that I cannot tell if this escrow agent is crooked or just dumber than a box of rocks.
For my experience,this past housing boom had brought out the dumbest, most unemployable people into the mortgage/real estate business.
I would suggest everyone here who wants to know the story going on to put up a wanted ad in "real estate for sale" on Craigslist.org. Ask for 100% LTV, cashback at closing, a TV, car or whatever you think would be outrageous. I guarantee you will not beileve the realtors promising they can fulfill your wishes. Fraud is still very rampant.
On the closing agent's duties:
It is not generally the duty of the closing agent to investigate where funds come from, except as between buyer and seller. In other words, if the seller is providing down payment funds, then the agent must be informed of that and duly note it on the settlement statement, FOR ALL PARTIES TO SEE. To protect himself, he should get the statement approved in writing by everyone involved, including mortgage brokers and lenders, before closing.
If the closing agent is asked to show on the settlement statement a down payment from the buyer that the seller has received, and it is a significant amount (more than the nominal $500-$1,000) he should investigate further. He should ask for canceled checks or bank statements showing the funds were transfered. If he fails to do so, he is aiding and abetting the fraud. Intentional ignorance is not a defense.
"I'd sure like to have a conversation with the underwriter of this loan to find out what s/he was (or wasn't) thinking."
That is where this would get interested. I'm betting this was viewed as an 80/20 seller carry where the seller carry was a silent 2nd. The 20% carryback would have passed the underwriting sniff test. It doesn't explain the appraisal though.
My guesses:
The buyer does not care because they risked no money of theirs and get a free house for the time being.
The seller does not care because he made money on the flipping
The appraiser does not care because he/she gets paid.
Well Fargo does not care because when the house gets foreclosure again the end loss will be either Fani/Fred and the tax payer
Moral hazard anyone?
where did this idea that it's a "conforming loan" come from? it looks like it's a $500K 10/1 originated in January. i wouldn't assume that went to an F.
I believe France issued a 100yr bond not too long ago. I think it would be a good move. These people in power - you have to wonder if the bad choices are part of the corruption or if they are actually this stupid. Short-term funding, which the gov't already does heavily - how has that worked out for banks throughout history? Not well, so why are we doing it???
Maybe they don't want to issue a 50 year bond because there won't be enough interest and they're worried about how that would be perceived???
Reuter's reports that Treasury should add a 50-yr bond to their repertoire as the govt's need to borrow ratchets up. The advice comes from an "advisory committee" which likely stemmed in part from the survey put to primary dealers mid-month and meetings with dealers. The idea was also called "unnecessary at this point" but "members see an uncertain future in which the Treasury will face pressure from waning tax receipts in a slowing economy and huge new spending needs...in view of current volatile' credit market conditions, they expect tax receipts from both corporations and individuals to come under pressure."
Just how tight are mortgage criterion these days, compared to historical standards? Fraud aside, is it easier to get loans in the summer of 2008 than the summer of 1997, or 1987?
I have heard a lot of moaning about how much stingier lenders have gotten but it's hard for me to tell how the current lending environment really differs from the long-term historical trends. Everyone's view of what is "normal" got so warped from the bubble years that I fear we have lost all perspective.
Are there any industry professionals out there who can offer some long term perspective?
"You simply assumed that a couple of Spanish-speaking immigrants are not US citizens."
I didn't say they were NOT also US citizens, merely that they very likely have the legal right to return to Guatemala.
The 20% carryback would have passed the underwriting sniff test.
REALLY?? Sniffing what?
I'm confused.
Didn't Wells Fargo document source of funds? If Wells Fargo had a P&S in the file for $625k and a mortgage for $500k, didn't they have bank statements documenting the source of the down payment? Don't the funds need to be seasoned or from the proceeds of a refinance of their current home?
What about seasoning of title? I thought there were guidelines in place to thwart flipping.
On Dec. 3, Castro transferred title of the house to Asset Disposition Venture Capital LLC...On Jan. 15, Praslin signed the deed selling the property to the Gomezes.
This is sickening . It really make my stomach turn .
Funny how things have changed.
In '95 when I bought my first house, had a $4000 gift from a parent for help with the down payment, and the lender looked at me like I was a drug smuggler. Had to have a letter signed by the parent verifying the gift. I also had some cash that I, being a native skinflint, had stashed at home, towards the closing costs. I just came away with the feeling I was a criminal. Is having a relatively small stash of cash under the mattress a crime? I guess I was just ahead of my times. Now it appears they could care less where the d.p. comes from.
What I am most shocked about is why anyone would be shocked over a continuation of fraud as a driver in the CA RE business. If fraud somehow declined I would be shocked. There is no more corrupt enterprise in CA than real estate.
Question: Can anything be done to embarrass the regulators to revoke licenses here?
I was wondering cómo Mario Gomez has been en Los Estados Unidos since at least 1998 and still hasn't bothered to aprendido Inglés in all that time.
"Natives of Guatemala".
/nevermind.
that story is un-flippin' believable--what a scam.
Question: can just anybody file an ethics violation with any of the player's respective licensing or certification boards? Or must one be a party to the transaction in question, in order to have standing to file a complaint?
I can't help but wonder, of the apparently distrssingly small number of RE's, brokers, appraisers, etc. who do deplore much of the crap that's gone on in their fields, do many of them actually report it to the appropriate boards?
It's like, very few people self-police at all any more, & then there's no reliance on professional standards & consequences and/or the condemnation of their actions by their peers to dissuade bad behavior.
I didn't say they were NOT also US citizens, merely that they very likely have the legal right to return to Guatemala.
i can see the noses in the air sniffing for racist prejudice, but hubbert has an age-old point here does he not? when the mississippi scheme went up in smoke, it was certainly advantageous for debtor participants to have a right to residency somewhere other than france.
oh sorry -- perhaps hubbert is a 'she'. pardon my presmuption -- don't want to fall afoul!
I'm amazed at the lack of checks and balances. Using Zillow as a cheap and cheesy avm, the appraisal must have came in at least 50% higher than what an avm would say. That must be really nice faux marble to justify the difference; although it doesn't seem the bank asked any questions about the appraisal.
I'm surprised the downpayment didn't raise eyebrows either. We bought in OC with a WF loan 10 years ago. They wanted bank statements showing we had the down payment and first 2 months payments in the bank 15 days before closing. I can't imagine anyone would approve 20% seller financed loans at the same time the FHA is trying to ban seller financed down payments.
No, this ain't over by a long shot, and now that the money is explicitly free from the fed, it will continue apace, even--here's the kicker--getting more fraudulent than before.
When it all does really crash, we'll be burning dollars to stay warm.
DonKei
Yeah, I agree. Anyone doubting the danger of moral hazard after reading that doesn't understand the meaning of the term.
There's a good piece at the FT today, Ken Rogoff: Discipline demanded, which Alphaville summed up:
The world cannot grow its way out of this slowdown, says Rogoff, professor of economics at Harvard and former IMF chief economist. Todays mess was many years in the making and there is no easy, painless exit strategy. But the need to introduce more banking discipline is yet another reason why policymakers must now refrain from excessively expansionary macroeconomic policy and accept the slowdown that must inevitably come at the end of such an incredible boom.
The financial system needs a cathartic enema, and instead we're givng it an all-you-can-eat buffet.
I said it before, if I had kids, I'd be on my way out of this country. It's really difficult to see a positive outcome to all this.
I don't see the problem.
Here you have several people making a paycheck and paying taxes. This sure beats relying on a government rebate check.
Meanwhile Wells Fargo just unloaded a home from their distressed inventory and turned a non-performing asset it to a much larger performing loan.
Two people are now homeowners and are enjoying the American Dream.
I guess you all would rather all these people start refusing these type of loans, thereby either reducing their income or costing their jobs altogether. This would increase unemployment, lower the tax rolls, prevent Americans from becoming homeowners, requiring more tax rebates, possibly causing a govt. bailout of Wells Fargo, sparking a recession, further credit crunch, and hurting stockholders who rely on them for their retirement.
I frankly see these moves by the individuals involved as their own efforts to do what Bernanke, Paulson, Bush et al are trying to do: Stave off a recession and prevent the collapse of the American way of life.
A return to lending standards of old would mean alot of pain, a recession, and lower homeownership rates. This is something that we must avoid.
Aside from nitpicks on citizenship, the payments were $2760, the taxes&insurance were $7k/year, making a monthly nut of $3343.
To keep below 33% of income, the Sanchez would need to pull down $120,360/year.
Wikipedia's article on household income uses from 2005: the median US household income was $44,389. Only 16% made over $100k. Fewer still made > $120k.
Political correctness aside, how many of those top 10% or top 15% families, are garment workers with poor command of English?
And look at the big picture of Camille stret: don't you think it's a little fishy that virtually ALL these houses are bought at prices that require income in the top 10% or top 15% of the population, but the buyers generally displayed very low educational and other socioeconomic status indicators?
Note that your last Gretchen article concerned a former housekeeper.
And don't forget all these Alt-A loans that are coming: "I make $700k per year in my job as a janitor but I can't document it because of my immigration status."
Hubert, FYI Jus soli - Wikipedia, the free encyclopedia
Although your original point may still be valid: many countries don't neccessarily pay attention to the fact that naturalized U.S. citizens must ...absolutely and entirely renounce and abjure all allegiance and fidelity to any foreign prince, potentate, state, or sovereignty of whom or which I have heretofore been a subject or citizen; ... We can insist opon that as part of the naturalization process, but we have no power over whether other countries continue to consider naturalized U.S. citizens as their citizens as well.
Who cares whether the buyers are citizens are not? What possible difference does it make? Does anybody think there would be ANY problem finding people of any nationality to buy a house for nothing down that they can walk away from with minimal consequences if they get 30,000, 3 months free rent and a big screen TV? The buyers are not the problem.
bacon - Freddie was doing 10/1 I/O's, I don't know if they did superconforming, tho. If so, the limit in Santa Ana is $729k., so why not?
No more free Friday pizzas...these FDIC pay-out estimates are too low in the extreme..
Reuters
US FDIC may pay out almost $12 bln through 2010
"The White House's mid-year budget review, issued on Monday estimates the FDIC's insurance fund will pay out $2.54 billion in fiscal year 2008, which ends Sept. 30, another $9.21 billion in 2009 and $150 million in 2010..."
US FDIC may pay out almost $12 bln through 2010
| Deals
| Regulatory News
| Reuters
Assuming it's not an agency loan I'm suprised they didn't have to pull an AVM. Seems like that would have shot it dow
Of course they can afford the loan, if they do just one of these deals a year they'll soon be millionaires!
The relevant question, of course, is not whether fraud is still happening. Fraud is always happening. The question is the rate of fraud now compared to the rate during the bubble, and compared to historical averages.
A single anecdote conveys zero information about this question. It does make for a nice "Outrage du Jour", if that is your thing.
Joe, the problem is that, on its face, this transaction doesnt make any sense. The downpayment should have been sourced. The escrow agent's claims don't make sense. No way she did this without knowing where the 20% came from. Funds would have had to be deposited, or a 2nd would have had to be drawn up.
The reporter should have asked the buyers for a copy of their escrow instructions. That would clear a few things up.
If the broker had to explain the terms of the loan in Spanish, then RESPA requires that the docs be drawn in Spanish. Violate RESPA and this now involves the Feds. The RESPA guys are the only ones who really scare people in the industry because of their ability to levy serious
Ministry of Truth--
WOW!-- what a great, subversive, worthy-of-the-Abby Hoffman-"Steal This Book" Award idea you had (the bogus Craigslist ad)
I'm gonna do that, here in Norfolk, & see what I can troll up locally on Craigslist, & then try & talk the local newspaper into doing a story on it.
Bravo, MOT!
FFDIC,
Thanks. I saw you post that in another thread. The purpose isn't to be honest, the purpose is to "provide stability and confidence to the financial sector".
So basically they are expecting one more IndyMac-size failure in the next 2.5 years.... hah!
OK, so:
1. "natives of Guatemala,"
2. Guatemala observes jus soli, QED. So these FB's can always "just go home" if it hits the fan. Unlike Joe Citizen Taxpayer.
And look at my income numbers again: I'm not loaning $500k to anyone, whatever nationality, who lists their occupation as "garment worker" and can't speak the national language (Calvin Klein or Yves Saint Laurent, maybe, but they speak/spoke the majority language). Let alone an entire street of those similarly situated.
This just shows how bad the bubble was, and how far it has to fall before families with a realistic income can realistically afford a realistic house.
"issued on Monday estimates the FDIC's insurance fund will pay out $2.54 "
Funny. I read that earlier. They already owe in the $8b range on IMB alone. Either inflation is running especially hot or the government report release process lacks the funding to include any quality control.
Freddie was doing 10/1 I/O's, I don't know if they did superconforming, tho. If so, the limit in Santa Ana is $729k., so why not?
i don't think Freddie does 10/1 jumbos, Shnapsterissimo.
... and anyway, I think if I had $100k to invest it might be worth throwing it at a low-ball housing offer. I should just figure it'll take the seller around a year before he realizes I'm the only one biting...
UN-F%$KING-BELIEVABLE. How is this STILL happening?
Time for me to commit a bunch o' mortgage fraud and move to some place with no extradition agreement.
Average Joe, I am now calling you Joe de Nostredame...
"...people start refusing these type of loans, thereby either reducing their income or costing their jobs altogether. This would increase unemployment, lower the tax rolls, prevent Americans from becoming homeowners, requiring more tax rebates, possibly causing a govt. bailout of Wells Fargo, sparking a recession, further credit crunch, and hurting stockholders who rely on them for their retirement."
Let me gaze into your crystal ball my friend.
barely writes:
"issued on Monday estimates the FDIC's insurance fund will pay out $2.54 "
Funny. I read that earlier. They already owe in the $8b range on IMB alone. Either inflation is running especially hot or the government report release process lacks the funding to include any quality control.
greatest low ball estimate since out "25 billion" Iraqi excursion...
YLSP writes:
... and anyway, I think if I had $100k to invest it might be worth throwing it at a low-ball housing offer. I should just figure it'll take the seller around a year before he realizes I'm the only one biting...
Nope I'd be there with 101k...
PBS
FDIC Chief: Most Banks Will Survive Credit Crunch
Poor lending and underwriting caused two more banks in the U.S. to close over the weekend, yet regulators and the Federal Deposit Insurance Corporation, or FDIC, are helping banks remain stable as the economy struggles. Sheila Bair,the chair of FDIC, explains the process to Judy Woodruff...
FDIC Chief: Most Banks Will Survive Credit Crunch | Online NewsHour | July 28, 2008 | PBS
Tanta writes:
Hubbert, the phrase "natives of Guatemala" means "born in Guatemala." If they were currently citizens of Guatemala, I would have expected the reporter to say "citizens of Guatemala."
Guatemala allows retention of dual citizenship:
Page Not Found : US Immigration & Citizenship, Green Cards, Immigration forms and Visas
On another wavelength, watch that move of XLF relative to crude oil price, a thing of beauty, with small intraday time frame precision even...
"You simply assumed that a couple of Spanish-speaking immigrants are not US citizens. On no basis whatsoever."
The basis is that in southern California, if someone (1) is from Guatemala, (2) speaks little to no English, and (3) works in a garment factory, there is a higher chance that person is not a US citizen than if those factors did not exist.
Everyone who lives here sees illegal aliens virtually every day and after a while, fair or not, when certain factors are present, the assumption that someone is not a US citizen is easy to make.
But you know what they say about assumptions...
(I realize that not being a US citizen does not necessarily make one an illegal alien, but I think you get my point.)
I guess you all would rather all these people start refusing these type of loans
if by that you mean the illegal ones, then yes, ag. this loan is illegal, and i think that's tanta's point.
Tanta,
can I be unsympathetic now?
...although it looks like Fannie does 10/1s. there's still no reason to assume they bought it, though.
"If this is the level of elementary due diligence we can expect after the most atrocious mortgage blowup in history, what will it take to scare people into doing their jobs?"
Awesome post, Tanta. The banks need to do the originating themselves, no more brokers and wholesale lending. Also, they need to keep a substantive slice (20%?) of the loan, so they won't just throw it over the fence.
DonKei, thank you very very much for explaining the closing agent's duties.
...The GSEs don't have to catch it. If the loan ever goes bad, they'll look at it then, and once they do they'll shove it back.
And Wells will buy the loan back. At least Wells is capitalized enough to buy back their mistakes. You can't say the same for any sketchy agency loans IMB originated over the last year or so.
"FDIC Chief: Most Banks Will Survive Credit Crunch
Poor lending and underwriting caused two more banks in the U.S. to close over the weekend, yet regulators and the Federal Deposit Insurance Corporation, or FDIC, are helping banks remain stable as the economy struggles. Sheila Bair,the chair of FDIC, explains the process to Judy Woodruff..."
We're effed for sure.
"The problem is that there are no comparable sales of any kind that are a reliable measure of market value if they all involved transactions in which nobody ever actually bothered to verify and analyze the terms of the sale."
Kinda like using Merrill Lynch's 22 cents on the dollar self-financed "sale" of moribund CDOs to mark other banks' holdings to market?
"The problem is that there are no comparable sales of any kind that are a reliable measure of market value if they all involved transactions in which nobody ever actually bothered to verify and analyze the terms of the sale."
You don't think that was done on purpose do you???
I don't see how their citizenship matters. I can guarantee that "returning to Guatemala" is not something the Gomezes are interested in, even if they were able to do so.
For those of you unfamiliar with the situation there, these two are lucky to be literate in any language. Guatemala has far and away the highest illiteracy rates of any Latin American country. As much as we bitch about how the US economy is "going to hell in a handbasket", the Guatemalan economy's helldwelling handbasket has really and truly been baked to a crisp. These are people who consider illegally jumping the border into Mexico to be a very desirable option.
Look, people here have been complaining about that sellers have some delusional idea of worth and frequently use the phrase "a house is worth what someone will pay!"
Well, here you have two hardworking people that we are required to assume are U.S. citizens unless specifically informed otherwise, who have made a purchase of an improved home. The house is worth what people are willing to pay for it. Yes there are some "creative" issue with this loan, but so what, we have been employing all kinds of "creative" efforts to keep things rollin.
As I said before, I see two new homeowners who have created economic activity and kept people off the unemployment payrolls. Meanwhile they have propped up the county tax rolls which is good for schools. They have raised the value of the other houses on the street afterall. Just as a forclosure unduly hurts the value of its neighbors and must be prevented, here you have an improved home that beefs up the comps and protects the value of the other homeonwers on the street.
I frankly think that the creativity of those involved have done more to prevent the must-be-prevented housing crash than all the efforts by Congress.
As Bush 1 said...."a thousand points of light".
Yes, there is a dilemma with the appraisal process when 86% of the comparables are REO and distressed. A really big dilemma considering that the 14% of sales that are left are probably fraud! good grief.
Average Joe,
Usually your on top of your game..
Today you threw up in air ball..
Give me a break, they can't afford the home and it will default...This is why were in the mess..You want it to keep going? I make more than both of them combined and can't get that loan..This is fraud, greed and more of the bubble mentality.
I posted this article over the weekend in here..It reeks, it smells like tacoma without a wind, it's messing with my kids future..f$$k that
And when you do that..I get pissed...
I'm doing everything I can to bring the finance industry down..legal or illegal..Should be a hell of a game..
Get back in the game AJ
cd - Average Joe's post, to me, smelled like hot sarcasm with no wind.
If you think that this is bad, try multiplying it by millions across California, Nevada, Arizona, and Florida. The non-English-speaking people in my neighborhood in northern-California were driving around Escalades with 5k custom wheels for years. The custom wheel shop was the busiest business in town. I'd like to see the Feds collect unpaid taxes on all of the under-the-table money paid to illegals who built most of the houses during the boom in 2000-2005. I'd like to see the Feds go after illegals who bought houses, refinanced to put in pools and fancy landscaping and buy Escalades. Believe me- I'm almost downplaying how bad it was. No, instead the Feds give unprecedented power to "former" CEOs of investment banks to "fix" the housing crisis. It looks like a bunch of blank-check bailouts for these criminals, who should be thrown in prison. The entire power-structure of the investment-bank-goverment complex needs to be toppled soon, or else the US will fall more into a 2nd world nation status that we already are. When it costs me 3x what it did 7 years ago to buy an ounce of gold or a gallon of gas, that means that the value of my dollar is 1/3rd. 500 billion-dollar deficits means that the price of commodities is not going down anytime soon. The US is going bankrupt. I wish that China would sell everything off right now, so that it would expose all of these crooks once and for all.
What this says to me is that the issue, unfortunately, is with the staff at the underwriting at the originating bank. I have never had a mortgage given to me in my life where I didn't feel like i needed a shower afterwards for feeling so violated. Every piece of financial info was documented, copied, verified, and calls made.
Now, I know appraisals are "flexible" and it's funny how they always come out to what you need them to be. So I have no thoughts one way or the other about the honesty here. I've always assumed appraisers played to the market or else they wouldn't get any work. That means that they always know where it has to be, and magically make it so.
What I'm thinking is no bank is going to get out of this if they don't totally re-train their staff or, frankly, just clean house and get rid of the lot of them and re-train from scratch. Or if they outsource bring it back in house in a controlled way. If I were at Wells Fargo and I read this, heads would be rolling right now.
If the "non-distressed" comps are fraud, then you are just perpetuating a new fraud by using those comps. That isn't a market price.
OT: new stuff from Hope Now:
http://hopenow.com/upload/press_release/files/June%202008%20Data%20Release.pdf
http://hopenow.com/upload/data/files/June%202008%20Industry%20Extrapolations.pdf
CR-
It appears to be fraud. Any escrow agent worth their license knows full well that any funds exchanging hands,per side agreements between seller and borrowers, not disclosed, is fraud.
Stuff like this... if we knew of a side agreement, we would have shut the transaction down prior to closing or notified the authorities, let the transaction progress and the parties at signing would have been greeted by police.
Nemo writes:
A single anecdote conveys zero information about this question.
The ease with which this went through provides some information,i.e., it doesn't take much to see that without any impediment this will be widespread.
As Bush 1 said...."a thousand points of light".
Average Joe
What a coincidence! That's what Nero said as he fiddled!
Hubbert writes:
"Tanta, if Guatemala is like 99.99% of countries on earth, a person born there is automatically given citizenship in that country."
People can become naturalized citizens, you know. Many do.
The point is new immigrants are the easiest preys: they want to belong to their adopted country more than anything and they are very likely too busy working 16 + hour days, and perhaps do not have the education background to understand the credit crisis. And even those who are highly educated usually are not inclined to pay a lot of attention to financial markets unless it is their area of expertise.
This begs for some volunteer work for some of the "experts" here.
cd, now I KNOW I got game if I got you.
As for being illegal. It's not about racism, or stupidity, or anything else.
It's about accountability.
Let me ask you all something. How many of you care what your credit score in Mexico is?
Don't assume they all come here, leave everything and everyone behind, planning never to return again.
So it looks like F&F will send ~$2 trillion worth of loans back to the banks. But wait a second! F.D(derivative). Raines (ex CEO of Fannie) was very keen on derivatives, and other weird things that only he could understand. So what exactly are the banks going to find in those envelopes sent by F&F?
Tanta- "...what will it take to scare people into doing their jobs?"
I have a pretty good idea of what it will take, but doubt that many here would have the stomach for it.
As long as the money was cheap--never underestimate the power of cheap money--everyone went along.
Now we're seeing what really drives the California economy and it isn't so pretty. Kind of like Argentina.
what will it take to scare people into doing their jobs?
China executed a drug regulator who had accepted bribes...
"To keep below 33% of income, the Sanchez would need to pull down $120,360/year."
I was wondering the same thing - do garment workers make $60,000/yr?
I think there are a larger number of Israeli citizens wishing to become naturalized citizens of Iran than there are American citizens wishing to become naturalized citizens of Guatemala.
It was a great article. Some items of note: Wells requires the appraiser to review the purchase contract. Wells Automated Underwriting system must have made this a "fast and easy" (thanks CW for the name) loan - NINA - based on the 1003. AU systems have allowed crafty participants to fudge a transaction so it stays in the grey and not the "shi**y brown" and close. From my estimation the seller made about $75-80k net net, while the buyer of course becomes a lifetime homedebtor if they don't default in short order. Full doc, no AU, and consequences for actions taken during a transaction will be the only way to stop these shenanigans. My .02
That, or his real name is Average Ben Stein.
OT: CR/Tanta, is it possible to fix the comments stylesheet so that <blockquote> tags don't mess up the margins?
I frankly think that the creativity of those involved have done more to prevent the must-be-prevented housing crash than all the efforts by Congress.
if by "creativity" you mean "reckless disregard for established law", then i agree that this is creative.
either you respect law or you don't. a lot of people use distress as an excuse to disobey the law and do whatever the hell suits their ends. they are called "lawless", and that word has its connotation for a reason.
Look, damnit, if they don't keep approving loans like these, upon WHAT will the new covered bonds be based? Payday loans?
As for Phony or Fraudy sending this loan right back... are you sure? Any way to track this? As long as documents are forged properly and the underwriters can rubber stamp like crazed little monkeys, who's to say this won't end up in the keeper pile?
You want to have some fun with Wells Fargo? Check out the loans they just did for 21747 Erwin St. in Woodland Hills, CA 90%. Old, empty building. Looks like from the few comps that sales price was twice the market. Probably SBA deal. SBA going to go down too??
Instead of one-offs on craigs list, how bout Tanta hosts a new "To Catch A Predator" show. They could process dozens of these criminals every day.
No way !!! WFC is backed by Saint Warren - they would never be involved in fradulent deals !!!
This country is rapidly swirling down the toilet, including the Saint himself.
As Bush 1 said...."a thousand points of light".
lol -- sorry -- i'm slow on the uptake. brilliant as farce.
"do garment workers make $60,000/yr"
Not if they work for a company that supplies Mervyns.
You all are just jealous (as I am) that you don't have the guts to feed at the Wells Fargo trough. I mean, I've got the lack of morality, but I'm just afraid of the consequences.
BTW-for those of you who don't remember, Average Joe is a police officer and a conservative, so it should be easy to pick up on the sarcasm.
Hubbert, not only can they go home, they can bring the TV as well. They are not the losers here.
Average Joe: "How many of you care what your credit score in Mexico is?"
Speed: "do garment workers make $60,000/yr"
Yay! I thought for a while I was on a David Lerah blog or something..."Housing fundamentals are strong and justified by the strong economy, immigration, blah blah."
Average Joe-
Damn! I was like was like that marlin the old man of the sea caught!
hook, line and sinker..Good one..
Schnaps-thanks, AJ usually chimes in with good insight or comments so it thru me off
bacon dreamz,
That pdf is ugly because it shows the rot really beginning to eat into prime..foreclosures doubled in prime yoy, slowing in sub...
"China executed a drug regulator who had accepted bribes..."
Many years ago, while working at the headquarters of an army division in Germany, I met an old guy who swept the floors there. That's what he had always done since the building was put up by the Wehrmacht in the 1930s. He avoided the war due to a gimpy leg.
Anyway, he told me about a visit from a Gestapo agent shortly after the building opened. He said a black Mercedes pulled up one afternoon, discharging an agent clad in the legendary black leather trench coat.
The agent asked the floor sweeper the location of the post engineer's office and the sweeper pointed the way.
Ten minutes later, through a window, the floor sweeper saw the Gestapo agent and the post engineer standing in the courtyard behind the building. The agent's pistol came out and the engineer took one in the head.
On walking out, the Gestapo man said to the janitor, "There's a mess out back. Clean it up." He then left the building.
It turned out that the engineer, who was responsible for constructing that very building, had substituted molded bricks for the more expensive wire-cut bricks, and had pocketed the difference.
That's how the nazis dealt with it.
I'm not advocating the same, but the profligacy in this country must stop. It's always been around, but we can't afford it anymore.
Tanta:
I'm an attorney with a client who recently sold a house with assistance from a mortgage broker who could have been this broker's brother. Almost the exact same thing: Contract sales price was $230k, but actual seller proceeds after kickbacks to the buyer and broker was only $185. My client tells me the mortgage broker told him how he did it: he "prepackages" the mortgage application and documentation and submits it to the lender's retail storefront rather than as a broker submission. He was told the retail salespersons appreciate having the work done for them and they submit the applications as if they did them (I suppose to receive credit and perhaps bonuses?) The underwriters apparently approve the retail applications with less due diligence than they would exert on a broker-originated application. Tanta, does this sound plausible?
Moral of the story: Don't piss off the floor sweeper?
BW- I know you're trying to be funny, but the article says they work for St. John, which makes high-end womens apparel. I would assume that pays better than average. But then again, so (supposedly) does American Apparel, which per their <a href="http://www.americanapparel.net/contact/ourworkers.html>career info page, an "experienced sewer" makes $25k/yr. At least American Apparel would provide them with free ESL classes. Although they'd have to contend with a CEO who is a raging misogynist horndog nutjob.
I forgot to mention F.D(derivative). Raines is now an advisor to B. H. Obama on housing.
mp writes:
"That's how the nazis dealt with it.
I'm not advocating the same, but the profligacy in this country must stop. It's always been around, but we can't afford it anymore."
so you are saying that not standing for anything else but easy money is worse than being a nazi, you may be right, as it may be more destructive when reaching a scale as large as it does now
cd, my bait was too small to expect a big fish like you, must of gilled you when you weren't payin attention.
To expand on my accountability comment.
Especially here in San Diego, near Mexico, the traffic is very fluid back and forth accross the border. People, with exceptions, who come here aren't so much migrating permanently as they are communiting long distance.
Many of them have good intentions, but like buyers with no down payment, they have no skin in the game here. If things don't work out they can just walkaway. They have somewhere to go where problems can't follow them.
The cross border fraud is pervasive and a natural consequence of having open borders for people but not for civil and criminal laws.
The San Diego area has almost as many vehicles stolen from Mexico as does Mexico have U.S. stolens. There are plenty of homes in Mexico bought and paid for by defaulted U.S. home equity extraction.
Again, it's a natural and expected consequence of the circumstances.
And right on cue, as if in answer to Tanta's post, we get this from CNN:
/snark
Whew! Good to know our top law enforcers are on the job, protecting us from terrorists and the axis of ev-- Oops! Sorry. Wrong crisis. That's right, I forgot. We solved that one by following our Commander in Chief's orders to invade the shopping malls of America. Well, really, I begin to see Average Joe's point. How are we supposed to pay for it the next time the President asks us to defend freedom with our shopping carts if they take away our HELOCs and cash back at closing? /end snark
(By the way, Joe, you really need to master EML-- emotive mark-up language. The intergnats can't interpret your posts without it. Then we get a lot of buzzing about that instead of the topic at hand-- the perfidiousness of Spanish speaking type creatures who may not even be US citizens and the need to ignore everything Tanta says until she acknowledges the justiness of the all American fight against non-American job stealing, house-buying types.)
--
When would it get into your think skulls of the American People that we are dealing with an econo-political system controlled by Crooks? There is no free market in America, only a market of Crooks.
In order to get support for the criminalized economic system, run by Crooks and for the benefit of the Crooks, it became necessary to breed Americans to be morally blind dopes. And it shows!
What the housing problems have exposed is that America is a nation of born-and-bred dopes led by Crooks. I get daily confirmations of this fact and this blogs documents them without focusing on the root cause the doped American People and their crooked economic and political leaders. The future of America is not in doubt widespread misery followed by collapse.
Jas
Can someone explain how Wells Fargo managed to make a billion dollar profit this quarter, while other major banks lost billions??
I was just thinking of transfering my checking from Wamu to Wells Fargo, but now I'm not sure.
My problem is that I cannot tell if this escrow agent is crooked or just dumber than a box of rocks.
Tanta | Homepage | 07.30.08 - 10:52 am | #
That about sums it up.
It used to be that if you wanted to do a deal like this, somebody had to commit fraud: forge some documents, lie about the source of the funds, something. But Wells's due diligence was so poor nobody even had to do anything illegal to get the loan through.
(Regulatory violations aplenty, to be sure, and some licenses should be lost. But no fraud, as far as I can tell from the article.)
"The intergnats can't interpret your posts without it."
Not to mention Chinese intelligence analysts.
so you are saying that not standing for anything else but easy money is worse than being a nazi
I think it is just an example of low tolerance for for dishonesty to the state which, in fact, all these examples are. Can you imagine if a car pulled up outside the mortgage office, the clerk was ushered out into the street and shot with a "this is the story of why, this is what we do" afterwards? lol...goes with my "i wish we still put people's heads on poles" line. How many people that knew the guy got shot at work ever pulled what he pulled? Probably none. They knew the police meant business.
Of course in the civilized society we think we're in, the analogy would be the perp walk instead of the shooting. But it doesn't have the same force when they post bail or play golf for three to five. At least I would ask that all assets be seized and the family tossed to the street. And no bail. If mid-level managers who rubber stamped these things and took their bonuses home got rounded up and paraded off to the slammer while their family got tossed into the street, how many do you think wouldn't rubber stamp these items anymore?
Jas!
Glad to hear from you.
I would like to know who you'd like to hold up as an example though.
Everytime I start thinking of how bad things may be here, the complete lack of better alternatives keeps me from being unpleasant to be around (at least I hope it does
.
You know, I'm thinking that I've been reading these comment sections for too long when I start agreeing with Jas' posts....
The US allows DUAL citizenship
Actually we don't...its just tolerated for reasons I don't understand. A person cannot take the oath of US citizenship and hold dual citizenship. But oaths don't mean much anymore...
"I hereby declare, on oath, that I absolutely and entirely renounce and abjure all allegiance and fidelity to any foreign prince, potentate, state, or sovereignty of whom or which I have heretofore been a subject or citizen; that I will support and defend the Constitution and laws of the United States of America against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I will bear arms on behalf of the United States when required by the law; that I will perform noncombatant service in the Armed Forces of the United States when required by the law; that I will perform work of national importance under civilian direction when required by the law; and that I take this obligation freely without any mental reservation or purpose of evasion; so help me God."
AJ-
Sometimes even fish with simple tastes get caught! If fishing was easy it would be called catching!
they once found my forerunner in Ensenada, stolen in bay area. 3 months later, believe it or not the insurance co wanted me to take it back and were trying to rescind check for payoff. I called ca ins comm and I heard nothing more from them.
would you take a truck back thats been in mexico for 3 mos? No.....
I used to cross that border a lot to surf k-38, k-55, san miguel etc..
too many crazy incidents going on down there now...
Yes, this is the point where we really begin to worry. Economy dumps, people get angry, confused, and malleable, father figure rises to take care of us all with a willing army of leather-clad efficiency experts. Next thing we know people aren't so opposed to summary shots in the head to maintain order.
Still can't help thinking it was the floor sweeper that squealed on the engineer.
My concern is that, if the situation continues to deteriorate at its current rate, you may very well see the implementation of extreme solutions.
This country is at extreme risk of going that route.
The whole RE bubble was perpetrated by Mortgage Fraud. Yet, it was up to the banks to watch themselves. Now that was a great idea.... Unfortunately, we (taxpayers) get to pay the bill as the banks get bailed out. We should be calling these "officials" for what they really are, CROOKS.
We will continue you to see more of the "blame game" among financial companies trying not to be held liable for their cheating. Our only hope is that prices crash fast enough, where the govt won't have time to react.
The Westside of Los Angeles is now showing significant declines in the areas of:
1) Beverly Hills
2) Malibu
3) Santa Monica
4) Pacific Palisades
5) Venice
6) Brentwood
Up to 40% off year over year (YOY). Just wait until the next shoe drops Alt-A loans (Liar loans)
WestsideREmeltdown
I wonder how many times this deal will appear as a comp on other appraisals? I'm still chuckling over the interfamily sale that showed up as a comp on this one. Can't have distressed sale driving down appraised values, but arms length transactions between family members are fair game.
I also find myself wondering how many of the comps were also properties Villalobos appraised--I can imagine her keeping a file of these deals for use when she needs an outrageous comparison.
cd: K-38 has been nuts for the past couple of years. Every couple of months an army truck pulls up and guys in black uniforms with machine guns shoo everyone away. Supposedly this was in preparation for construction of new condo. Have you heard similar?
Who really thought that the cogs in the wheel of the late great home-buying industry were going to clean up their acts? No way. It's desperate times now for the cogs - business is off a cliff - and you all know what desperate times call for...
Gotta do whatever it takes to get your hands on the greenbacks. Transactions, we need more transactions!
"Still can't help thinking it was the floor sweeper that squealed "
I think of that guy often. His job put him at the center of a historical vortex. He had some amazing stories and was totally jaded.
He saw the likes of Hitler, Himmler, Patton, Eisenhower walk through the front door and there he was, standing in the corner, leaning on his broom.
They say an alcoholic needs to hit bottom first....I guess the market hasn't hit bottom.
I'm still chuckling over the interfamily sale that showed up as a comp on this one.
I was amazed that she actually did enough research on her comps to know that one of them (at least) was non-arm's-length. I guess even a blind squirrel occasionally finds a nut . . . not that that fact seems to have gotten any attention from Wells Fargo.
The problem, of course, is that it really doesn't matter what appraised value this idiot came up with. Anybody who 1) read the sales contract and 2) got through third grade math should have calculated the sales price as $460K. As purchases use the lesser of sales price or appraised value, Wells should have approved a loan for $368K for what was submitted as a 20% down loan.
Which is probably still at least 100% of any realistic market value, but it's a whole lot better than the LTV Wells did approve, which is 109%.
K-38?
Re: showed up as a comp
Very astute master!
Mp-Father told me when I was young if a guy is happy being a janitor and likes his job, he's living a good life..The problem of today is there are thier are only a few janitors and to many ponzi scheme managers..
Anonymous: Fantastic surf spot in Baja California just south of Rosarito that has become "problematic" due to a combination of drug wars, american "squatters," and condo development.
No doubt, Tanta. I was just looking at things from the appraiser's perspective for a moment.
What amazes me about this story is that everyone involved is doing things that used to be the hallmark of a strawman fraud ring, but there doesn't appear to have been any collusion (or for that matter, even any fraud). It's just business as usual for all concerned, at this point, enabled by some astonishingly bad underwriting at the bank.
Something interesting from the original article ... very shrewd of them to have the seller cover the first three mortgage payments so it doesn't show up as an early payment default.
UB,
Many thanks! How many stars do you rate this?
Also, what about the appraisal on this property -- who did it, or is that private, i.e, did Wells do it?
Wells would have ordered the appraisal themselves.
Online Shrink writes:
Something interesting from the original article ... very shrewd of them to have the seller cover the first three mortgage payments so it doesn't show up as an early payment default.
LOL. Another lesson learned from the old days of fraud rings--you keep making payments on the earlier loans until your escape is prepared and you're ready to pull the plug on the whole scam.
If you guys want to do something about this, the Senate Finance committee has been sitting on a bill by Obama to end this outrageous mortgage fraud with clear definitions of fraud, serious jail time for fraudsters, funding and planning for enforcement, and disclosure requirements for toxic loans. You can read the bill here. Give 'em a holler and get something done. Obama proposed this in 2006 - a year before this fraud business hit the media.
Re: Villalobos said she excluded distressed property sales in her appraisal of 920 W. Camile, because they are not comparable to traditional sales. Most foreclosed homes fetch a lower price because they are bought with cash rather than financed over time. Also, foreclosed homes are typically in bad shape compared to conventional sales.
"It might look weird on paper, but there's a logical explanation for it," she said. "I have to justify the information and the bank has to approve it. It's really on them."
Wells Fargo allows appraisers to consider distressed sales as part of property value calculations, but has no problem with appraisers who exclude them. In fact, said Green Rommel, the Wells Fargo spokeswoman, appraisals should never be based exclusively on foreclosed properties.
Anonymous: We are not issuing ratings on existing companies -- only on new ones whose executives have been thoroughly vetted and who have the requisite cash.
Everyone, and Average Joe and other law enforcement in particular:
It seems to me that mortgage fraud like the incident reported in the OC Register is treated as ad hoc mortgage fraud by "buyers" like the Gomezes and their opportunistic co-conspirator realtors, appraisers etc.
Have you thought of/looked into the MS-13 (or similar) systematic front scenario?
It may not be near the same amount an organization like that can make in its core business, but it can be a nice chuck of change for a very low risk (white-collar punishment, ha!).
Also, the connection with the "mainline" business provides a very convincing way to keep wannabe imitators out of one's turf.
I don't know whether it applies to the particular case, but consider the situation of undocumented immigrants: Vulnerable in the US due to their status, living in neighborhoods where gangs with deep connections to the "old country" are de facto semi-rulers. Even the relatives back home are within easy reach of the gang if reprisals are necessary.
If "asked" whether you wanted to be a front for a mortgage scheme, perhaps with a nice cut thrown in, would you seriously dare to say no?
OT? Residents in neighborhoods hit hard by foreclosures shouldn't expect appraisers to factor in those fire-sale prices when they set tax values.
That's because county auditors in Ohio are required to factor foreclosure prices out of the tax mix, even if more houses are lost to lenders than sold through the normal market.
Foreclosures "don't tap the pulse of the market," said Shelley Wilson, executive administrator for property taxes at the Ohio Department of Taxation. "It can't be the market when you have a situation that involves compulsion or distress."
Tax appraisals factor out foreclosures | The Columbus Dispatch
UB- Haven't surfed k-38 in long time, did surf k-36 and calafia a little while back..Used to camp at k-38...good times..
I just go to cabo now and surf spots like shipwrecks, 9 palms..Also a little secret spot above east cape that goes off on s.e hurricane swell, tip secluded fishing resort nearby...cerravalo island directly offshore...
ot-looks like skf found legs...
This country is at extreme risk of going that route.
Man, and I was looking forward to being able to fly again soon with my mouthwash, toothpaste, and shampoo in economically friendly sizes in my carry on instead of paying 10x as much for the mandated sizes. A boy can dream. I guess keeping my shoes on won't happen soon either, and I should be aware that my phone company is illegally telling the administration what I talk about into the foreseeable future. Hey I wasn't really using my civil rights anyhow.
UB,
Thanks for memo, I guess I was getting greedy?
these guys are clever. put up $304,500 to buy house, $125,000 downpayment and $30,000 = $469,500
walk away with $500,000 mortgage proceeds and make a net of $30,500
Meanwhile wells fargo is holding a $500,000 non recourse mortgage which will likely go into default and only realize say $225,000 (maybe) after that all plays out. A loss of $275,000.
Everyone else involved in the transaction is standing around saying not me.
Genius!!!!
cd: sounds prudent. Travelling anywhere between the border San Quintin has become pretty dangerous.
Don't worry, your secret is safe!
You simply assumed that a couple of Spanish-speaking immigrants are not US citizens. On no basis whatsoever.
Tanta, have you ever been to SoCal?
Just asking...
MS-13? Are they smart enough to do this?
Organized or un-disorganized criminals, sure. Why not. But then again all you need to do is supply the crack (easy money and houses) and everyone else falls in line pretty easily without coercion.
Tanta said: If the loan ever goes bad, they'll look at it then, and once they do they'll shove it back. There is no "statute of limitations" on that.
But who do they shove it to if the FDIC is in charge? I think I know.
Whoever said that 99.9% of countries in the world allow people born there to become citizens is a complete lie. In fact, Canada is one nation where a newborn can be a citizen only if one of his/her parents are a citizen. GOOD LUCK becoming a citizen of most countries in the world- Switzerland, Austria, Denmark, nope. Illegal immigrants are targets because THEY ARE HERE ILLEGALLY! THEY BOUGHT HOMES WITH NO SS NUMBERS! THEY WERE GIVEN BLANK CHECKS! THEIR KIDS START SCHOOL WITH ZERO ENGLISH! THEY ARE GIVEN FREE MEDICAL CARE IN MOST STATES! MY GRANDFATHERS WORKED THEIR ASSES OFF FOR WHAT WE HAVE TODAY! THEY FOUGHT WARS AGAINST FASCISM, COMMUNISM, AND SOCIALISM. MILLIONS DIED! NOW YOU LIBERALS WANT TO BRING IT ALL BACK WITH THE HELP OF GLOBAL CORPORATIONS AND FOREIGN SPECIAL INTERESTS. ROT IN HELL!
oh wait that's right they didn't really spend $125,000, they just put it on the table for a second then put it back in their pocket therefore net profit is now $155,500. Wells fargo is still most likely out around $275,000.
Not Wells Fargo, joe. Us.
ipodius said:
and I should be aware that my phone company is illegally telling the administration what I talk about into the foreseeable future.
ipodius, I think you meant, "my phone company is [il]legally telling the administration what I talk about." The mortgage guys aren't the only folks to get bailed out, you know.
You didn't want your civil rights to prevent People Who Know Best from keeping you safe, did yo---
152326.000 > LISTEN_REQ
152326.000 1a000000 05808000
152326.000 > DISCONNECT_B1_RSP
152326.000 0c002340 23452500 0101000
152326.000 > NO CARRIER
152326.000 > CONNECTION FAILURE
Thanks, other Jim.
The comp problem is a real one for honest appraisers. My honest appraiser buddy is being hounded for not appraising a house high enough. He refuses to raise it, despite financial problems.
I've seen people given Ninja loans, and it was with no fraud at all. The banks did this to themselves, and now the support structure created to do all these loans is falling/has fallen appart. All these people are financially desperate. I would be out of business right now if I didn't do other stuff. But it would be ok, because we have a paid off house and the hub has a Federal gov't pension and a 401k equivalent. Oops. . . .
These people literally do not know that what they are doing is dishonest. Indeed, they DO NOT KNOW what honesty is. People from South American countries know how to survive day to day. It's all most can do. That doesn't mean the are "bad" people. If the alternative is starvation of myself and my family, I'd do what I had to do too. These people could have bought something extremely modest or rented.
But their mentality is a we are staring morality. Also, remember, there are the rules and then there are the real rules which you really have to follow. Hard to tell the difference when you are an immigrant.
If this loan went to one of the Fs, it will be coming right back to Wells Fargo.
Fannie and Freddie have clear and unambiguous rules about appraisals and down payments that this loan violates six ways to Sunday. If Wells Fargo sold it to one of them and repped that it followed guidelines, they'll be buying it back.
Just to remind you civilians: this is Mortgage 101 stuff. Sellers can't make down payments. Funds must be sourced. Sales prices must be adjusted for excessive contributions by interested parties. Appraisals must address the most recent 3-year sales history of the property and the terms of the current sales contract.
These rules have been there for a long, long time. The GSEs have never relaxed them and aren't going to start now.
As much as I want to believe the above, I realize we live in the United States of Privatize Profits, Socialize Losses.
Circumventing rules and regulations (or outright bribing Congress to change the damned things if that fails) is a favorite pasttime of the banksters. Why should this suddenly change?
Let's recap a few recent victories for the REIC:
--GSE conforming loan limits are now $729K, up from $417k.
--GSEs can now borrow directly from the Treasury.
--GSE debt now has a semi-explicit taxpayer backstop from Congress.
Yeah... no way this type of dodgy loan could 'slip by' our vigilant 'regulators' watchful eyes!
LOL!!
Cthulu, Cthulu, why do I know that name? Why does it give me visions of rituals in the forest?
Chris writes:
"The US allows DUAL citizenship
Actually we don't...its just tolerated for reasons I don't understand. A person cannot take the oath of US citizenship and hold dual citizenship. But oaths don't mean much anymore..."
if your original citizenship is from birth, then the oaths trump all, and you are "morally" OK. But what if your previous non US citizenship was thru naturalization also?
and how about if you already have 2 citizenships: for example by birth in a foreign country and thru your parents who were immigrants in that country at the time... do you now have triple citizenship? some people might have citizenships they don't even know about...
un-disorganized criminals.
I thought that was us?
Ms Villalobos is a shining example of a true number hitter and incompetent appraiser. They blew in with the bubble and remain, in large number, deep seated within the appraisal profession. They have not clue to what they are doing other than to hit the number. Mortgage originators love them.
Unfortunately, competency is not a prerequisite. The OC article clearly outlines how dumb down the mortgage business have become..
Yeh probably us. Can someone explain to me again why CEO's of major financial institution are worth $20,000,000 to $100,000,000/year.
I'm a little hazy on the rational.
The broker made the loan. Wells did a summary (read thin) QC review and closed. This did not fall through cracks, but fell through a canyon of opportunity presented by Automated Underwriting Engines. Anyone with time and guile could pull this off. I agree that the first 3 payments being made by the seller will keep WF at bay for a 1st payment default but once these St. John Knits employees have to make their first real payment, stuff will hit the fan. Don't believe for a moment that the buyers did not understand what was going on. Think about it: you're being told that a $125k down payment is being made on your behalf and you don't ask questions? Dumb as a box of rocks? No, crafty as a fox is more like it. Everyone will claim "igornance" or "i forget..." and pretend to be innocent when in fact they re not.
One bright spot in this that the OCR reporter, John Gillelson, knows he has a good storyline. I expect to see an update within six months. (If I were the President of Wells Fargo, I would make the monthly payments for the Gomez family out of my own paycheck.)
They keep telling me it's all about leadership and vision but as they keep walking into closed doors in broad daylight, I have my doubts. Must be because I'm one of those dull-witted, blind and aimless pawns called "employees". But, given they have SS#, they can apparently do no wrong.
The US doesn't even require people who gain dual citizenship to relinquish their US citizenship through an oath of allegiance to a foreign state as intention to preserve US Citizenship is presumed.
Advice about Possible Loss of U.S. Citizenship and Dual Nationality
Similarly, "a person naturalized as a U.S. citizen may not lose the citizenship of the country of birth"
US State Department Services Dual Nationality
I hope the State Department is an adequate source
Great article.
I love the lack of accountability. It really comes down to the buyer and the lender. I can't imagine seeing a final PSA with the price increased by $125k and continuing with the transaction. And if I did complete it, I would deserve no sympathy whatsoever.
The other is Wells Fargo--and their shareholders/board. If they continue these lending practices, it's no one's fault but their own. They should be the one's reviewing the BS appraisal and automatically pulling the appraiser from their "approved appraiser list"; they should be requiring the transaction to go through a competent escrow agent. For everyone else, their incompetence and fraudulent activities should send them to the unemployment line.
The sad/scary thing is that Wells knows it is "too big to fail" and the US Gov just passed a bill to help these bozo homebuyers at the expense of the 95% of the US who were rational, mature and used at least some common sense over the last few years.
This all sets up for 3Q 2010 to be the Kitchen Sink quarter.
All is well.
Lawyerliz,
Don't mean to single you out, sorry, but something you said inadvertently touched a nerve.
"These people could have bought something extremely modest..."
No. That's wrong. This is what people who aren't from SoCal don't understand.
There ISN'T anything "modest" here. The house featured in the article model is in a horrible ghetto. IT IS THE BOTTOM OF THE BARREL. There is nothing more "modest" to buy. The cheapest SFH in all of Los Angeles and/or Orange counties probably can't be had for less than $300,000. And I'm talking about a house in a neighborhood where the bullets are flying.
A lot of people seem to think that the bubble just affected the speculators and the stupid, and that responsible people had to "buy something more modest," add an extra 20 minutes to their daily commute, or buy a less expensive 3/2 "starter" home (or maybe a townhouse) instead of a 4/3 "family" home, etc.
That's not what has happened at all. Responsible people are SCREWED here. A decent house in a decent neighborhood costs around $600,000 - $800,000. If you can't afford that, there is no other option open to you. You are priced out of the market, period. Renting is an option, but while it's much cheaper than buying it's still very expensive. If you have a family houses and/or apartments suitable for children are not that easy to find.
People really don't understand what it is like here. For example, prices are down @26% in LA county YOY. So what? They are still unaffordable.
Joe Schmoe,
"People really don't understand what it is like here. For example, prices are down @26% in LA county YOY. So what? They are still unaffordable."
that's why I'm still on the sidelines here in Fullerton. Sanity will return, at catch-a-falling knifepoint.
Unless Paulson can come up with another sleight-of-hand to forestall the obvious another 6 months.
Mr.Schmoe - I don't dispute your assessment, but the question I have for you is...exactly why do you live there again?
What I can't square is the same $800k USD that it takes one to get a 'decent' home in LAla land buys your typical a 4000+ sqft McMansion on something like 5 acres in a great school district in my neck of the woods.
People really don't understand what it is like here. For example, prices are down @26% in LA county YOY. So what? They are still unaffordable.
Joe Schmoe
Joe,
I have to second Shnaps on the 'why are you still there?' point. I just moved to the Bay Area and discovered (to my surprise) that it was actually more affordable than SCAL. That should give everyone here an idea of how batshit crazy prices were/are there.
CA in general is on crack, but SCAL is in a league of it own. You get total unaffordability, plus perma-gridlock, high crime, pollution, 110 degree summers, plus millions of "guest workers" all demanding their "rights" to your hard-earned money.
Uhh... thanks, but no thanks.
The banks did this to themselves,... Well really they did it to the people who bought the mortgages or MBSs.
OT re dual citizenship. The idea that the U.S. "allows" dual citizenship is a bit of a misconception IMHO. As others have pointed out, to be naturalized one MUST renounce foreign citizenship. Whether other countries pay any attention to said renounciation really is completely beyond our control. Now if you are BORN a U.S. citizen, you are born a U.S. citizen, and any other nation's claim upon your allegience is again between you and them, and has no bearing upon your birthright citizenship in the U.S. There used to be State Department circulars warning about visiting some countries if one of your parents was from them. eg. if yor father was Turkish and you visited the "old country" you risked being drafted into their army, or worse, imprisoned for trying to avoid the draft. Most nations ,including the U.S., are slow to give up claims on the allegience/taxes/citizenship obligations of those who would leave.
Feeding frenzy at every available trough.
Can someone explain to me again why CEO's of major financial institution are worth $20,000,000 to $100,000,000/year.
I'm a little hazy on the rational.
It's because they work so incredibly hard. Much harder than any of us so-called 'workers' can imagine working! And because they add so much value to their companies. Without them earnings would go negative, companies would collapse, and stock prices would fall through the floor. And of course, because you have to pay for all that talent. No one would be willing or able to do the job for a measly 5 or 6m.
And it has nothing, absolutely nothing, I tell you! to do with the fact that all the CEOs sit on each others compensation committees and are afraid that their own compensation might be cut if they did anything other than rubber stamp the CEO's own ideas for how he should be compensated.
A few old, broke, blowhards like Warren Buffet may inveigh against the practice, but he's probably just jealous. And the shareholders -- at least the ones that matter (fellow CEOs, pension fund managers, mutual fund managers, etc.) must be fine with it, since they regularly shoot down the little guys that try to protest.
So what's the problem? You got some beef with the Miracle of Markets or the Wonders of Modern Capitalism?
Oops! Almost forgot... /snark off
Instead of one-offs on craigs list, how bout Tanta hosts a new "To Catch A Predator" show. They could process dozens of these criminals every day.
This I like. Email this to Chris Hansen. I would love to watch scumbag realtors and appraisers getting tackled by police.
Actually, please ask Mr. Hansen to equip them with Tasers.
If this is the level of elementary due diligence we can expect after the most atrocious mortgage blowup in history, what will it take to scare people into doing their jobs?
A morality play written as a zany, hip sitcom?
I wish the GSEs were as diligent as Tanta claims regarding repurchases. In fact, I'm shocked how pathetically few repurchases there are, even on "rotten fish" files. While GSE contract rights are strong, their follow-through and collection rates are pathetic. For example, Countrywide flat-out refused to repurchase most loans. Many lenders play hardball and wear down the good guys. Being tough on collections is all too often deemed to be damaging to prospective business relationships. Plus, many of the lenders have gone out of business, so GSE claims are worthless. The GSEs are also not staffed to handle the kind of EPD and PFR volume they're experiencing now. The GSE's are leaving 100's of millions on the table through lack of diligence and other reasons. Their regulator should focus on this--it would give the GSEs the backbone they need and save the taxpayers some big bucks. I'll even bet that some lenders have collected "rep/warrant/make-whole" claims from their correspondents and wholesalers and STILL denied GSE claims on the same files! I'm also advised that MI companies are equally ineffective at exercising their strong contract rights.
No offense taken--but I repeat what some up the thread said. Why are these people living there? There are plenty of very nice places much cheaper in other parts of the U.S.
These people weren't high tech workers who have to work where the high tech is.
I rather think the gang pressure thing is a likely hypothesis.
At least in Miami Dade County, if you're gonna live in a crappy, bullet ridden area, you pay a crappy, bullet riden area price. Yeah, we got totally bubblicious, but you could still find a reasonably priced pos somewhere.
Yes CR and Tanta - your "friends" in the business are all corrupt beyond your wildest imagination.
"I would love to watch scumbag realtors and appraisers getting tackled by police. Actually, please ask Mr. Hansen to equip them with Tasers."
Speaker73 | 07.30.08 - 5:00 pm | #
Wouldn't we all??
The probability of local law enforcement getting involved is slim to none. There are few detectives with the time and expertise needed to slog through the fine print on loan docs in order to build a case. Meanwhile, they have are bigger (in victims, not $$) and easier fish to fry (ID theft, counterfeiting, etc.).
The large cases will be brought by D.A.s and A.G.s who have their own investigators. The onesy-twosy cases are unlikely ever to be criminally prosecuted. Civil cases will predominate.
The next bubble: civil litigators.
Anybody who 1) read the sales contract
Tanta, Are you confident the loan officer, the underwriter and the appraiser even saw the addendum to the P&S?
Isn't it possible it was withheld from them and from the escrow agent?
Wouldn't an underwriter have conditioned for a statement from the borrower at closing that the terms of the P&S Contract had been met, namely that the 52" television had been delivered and that it held no value.
Good question Tanta...Perhaps when the government removes the backstops and the incompetent investors go out of business, sanity will return.
Joe Schmoe, you are so right..the buyers of this home siad "We focused on the monthly payment...."
They feel they can make the payment and now they will own Baltic and Meditaraqnnean!!!
they can put renters in several of the rooms and mkae SF, Schnaps, because they don't know anyone who will get them a loan...nor do they have support people....
their family lives inOrange county....these people own their own home (making payments on the home they ive in) and this was a second home for them....
should they have been allowed to buy this house...probably not...should the appraiser, lender escrow officer be "Shot at Dawn"..You Bet!
But, these folks felt they could afford $2700.00 per month...and if they rent 4 beds at $400.00 per month cash...Well, maybe they can make it....
Beaver......
Jolie, you're probably right. 10 to 1 the addendum was never seen, but that doesn't let the Escrow Officer, the Loan Officer/Broker, or Wells Underwriter off the hook. Downstrokes are to be verified and sourced. And wasn't this a second property for the Buyers? Owner occupancy wasn't questioned? The deal doesn't smell right from jump street. These little special transactions usually require the collusion of Seller/Buyer/LO/Mortgage Broker/Appraiser/Escrow Officer. I would not be surprised if there are false documents in the file showing the buyer had sufficient cash to make the $125K down and the addendum never made the Underwriter's desk. Not so with the other players in the game. They all had to know that the deal was queer.
Jas
Good to see you're back!! After the revelation that CIA agents were vetting all TV news about the Iraq war etc, ALL Americans should have unplugged their TV's. Instead-nothing...Born, bred and conditioned. I just thought that TV news was misleading because money talks, but I guess the pentagon was taking no chances. Maybe they also pointed out the fine print in a secret law(WTF) to the media exectutives. Just wait till the war on bloggerists begins. Oh wait!!! What was that Sheila???
where are the prosecutions?
People really don't understand what it is like here. For example, prices are down @26% in LA county YOY. So what? They are still unaffordable.
There were a lot of stock-market "bottom-fishers" whose eyes were bigger than their heads in early 2001, too, scooping up the QCOM's and JNPR's of the market for no other reason than that they were 50% off their highs.
The market didn't bottom until these guys threw in the towel and got out, a year or two later.
The same thing will happen with this bubble. When the first round of "value hunters" buys in, watches prices continue to fall, gives up hope, and gets out ... that's when the RE market will bottom. Not before.
The assumption that the buyers were not US Citizens is about as valid as the assumption that the appraiser did not ask if there were sales concessions involved in the transaction. To imply that the appraiser blatantly disregarded USPAP in the preparation of this apprasial assignment is conjectural at best.
To imply that the appraiser violated USPAP without full knowlegde of what was disclosed in the appraisal report is likin to the assumption that the buyers were undocumented citizens. If you read through the article again you will note that the seller concessions were not documented.
If you read through the article again you will note that the seller concessions were not documented.
The broker remembers that there were "incentives." How can he remember this if he never saw an agreement involving "incentives"?
The borrower pulled that P&S addendum "from his envelope of loan papers." The "concessions" were indeed documented, and it sounds to me like the first time someone asked about them was when the reporter did, and the buyer obediently produced the document.
Look, aren't we all getting just a touch tired of the idea that fraudsters always spell out their frauds clearly on the documents they hand you? That if they don't give you a document, it doesn't exist?
"Due diligence" does not mean "nobody told me anything and it isn't my job to ask or to submit this to the smell test."
Anyone who wishes to imply that after the tsunami of "cash back purchases" and various frauds we've now uncovered over the last several years, it is acceptable for an appraiser to simply not consider that there might be something wrong with that contract, given the recent sales history of the property, is implying that when USPAP says you have to "analyze" the sales history and current contract, it just means "look at the top line number on what you are handed and then go find comps."
All -
I wanted to let you know that Wells Fargo is following the conversation this post has sparked. I can tell you that we're investigating this particular transaction, but because our customer relationships are confidential, I can't go into detail on the specifics related to this loan.
For Wells Fargo, making a mortgage loan is not just a transaction - it's part of building a strong and full relationship with our customers so we can help them, through home ownership, to achieve financial success. The last thing we want to do is approve a loan we don't believe the borrower has the ability to repay. It's ultimately bad for the borrower, bad for the community, and bad for Wells Fargo. We do not tolerate any lending practices that are abusive, misleading or fraudulent, period.
Thanks for the opportunity to weigh in. We appreciate all the comments and perspectives on this story, and well continue to follow this dialog.
-- Jason Menke, Wells Fargo
I wanted to let you know that Wells Fargo is following the conversation this post has sparked. I can tell you that we're investigating this particular transaction, but because our customer relationships are confidential, I can't go into detail on the specifics related to this loan.
For Wells Fargo, making a mortgage loan is not just a transaction - it's part of building a relationship with our customers so we can help them, through home ownership, to achieve financial success. The last thing we want to do is approve a loan we don't believe the borrower has the ability to repay. It's ultimately bad for the borrower, bad for the community, and bad for Wells Fargo. We do not tolerate any lending practices that are abusive, misleading or fraudulent, period.
Thanks for the opportunity to weigh in. We appreciate all the comments and perspectives on this story, and well continue to follow this coversation.
Mr. Menke,
Thanks for posting.
As on Appraiser's Forum, posters on CR should always be aware the subject of the thread is or could be monitoring the thread. For whatever reason.
Following this most embarassing situation, I believe it would be in Wells Fargo's collective corporate interest going forward to rock the boat with pink slips, pruned approved appraiser lists and pruned mortage broker and correspondent broker lists. Send a message in advance of the changes in regulations for lenders, brokers and appraisers coming soon (not soon enough, of course). There are still sufficient numbers of truthful people for Wells Fargo to employ and/or do business with, now's the time to reward them for not going to the "dark side". Please seek them out.
From my little corner of the world perspective, Wells Fargo has a good opportunity to be among the last few majors lenders standing and thus reap the rewards when banking industry recovery begins.
Yours for Truth in Lending,
C Mack
Jason -
Thanks for stopping by and all, but honestly - I'm sure we all (conjure bag in particular) would rather listen to a dissertation about your pet Schnauzer's latest tricks than that steaming pile of PR glurge ("we at Wells Fargo believe a mortgage is not just a mere transaction...wocka, wocka, wocka")
ZzZZZZzzzzzzzzz
Wells Fargo,
Beyond all the technicalities, even a child can see a HUGE RED FLAG with:
Loan amount: $500k.
Occupation: Garment Worker
I mean no ill will to garment workers, but no "rational man" could honestly believe that a pair of unskilled laborers in a slum would pay a $500k mortgage. At least not without an EXTREME degree of skeptical scrutiny, far beyond routine "due dilligence," which apparently didn't even occur here.
Real Estate author John T. Reed (West Point 1968, Harvard Business School MBA 1977) describes a form of traditional mortgage lender due dilligence:
"As late as my late thirties, mortgage lenders were still asking me what college education and other training I had that qualified me to be the owner-manager of an apartment complex."
Real estate artist B.S. Detection checklist
Another thought, Wells Fargo: Your underwriters should watch Judge Judy.
She is capable of asking obvious questions like "How do you support yourself" and saying "I DON'T BUY IT" over a $500 mock court case, while your your employees fail to do this before handing over $500,000 of real money.
Can't you at least hold yourselves to the standards of daytime TV?
I am a Wells Fargo retiree and am embarassed at their involvement in this loan fraud. If anyone involved in re lending with Wells had seen the original article re Camille st back in Dec 2006 in the OCR they would know this was a toxic street and should have stayed away from this area. I'm contacting Wells Fargo CEO John Stumpf and asking him to personally walk thru the Camille street area and then tell me this loan is ok.If not he should immd fire anone connected with this loan at WFB. PS:I'm no relation to the
appraiser.
correction to my post re
"should immd fire anyone connected with this loan".
Maybe I'm a little slow, but is this how the transaction worked?
Buy distressed property:$300000
Sell to straw man: $625,000
Take mortgage of: $500000
Pay off old mortgage: $300,000
Pay down payment: $125,000
Give straw buyer: $30000
Skim off: $45,000
Leave straw buyer with $500,000 mortgage, bank gets $125,000. So the bank's liability is $375,000 ($500 - $125) and the borrower's liability is
$470,000 ($500 - $30).
Wells Fargo is in fact making a 100% financed $375000 loan on a $300000 property, but if it wasn't a foreclosure sale, maybe the property is worth $375,000. It's not clear to me that Wells Fargo is necessarily taking a huge risk here.
Hubbert--
God love ya!
On your comment:
"...your underwriters should watch Judge Judy. She is capable of asking obvious questions like "How do you support yourself? and saying "I DON'T BUY IT" over a $500 mock court case, while your employees fail to do this before handing over $500,000 of real money.
Can't you at least hold yourselves to the standards of daytime TV?"
---ROTFL! Call it like it is, bud-- well done and neatly put.
Q.: Is it the general consensus of the regulars here that the gentleman identifying himself with Wells Fargo, Mr. Menke I believe, is genuinely a Mr. Menke from WF? (I don't know that he isn't, but is it accepted here that in fact he is?)
I would like to get a copy of the appraisal and proceed with filing a claim against the appraisers E & O policy. This is a way for the lender to help recover some of their losses. Be glad to help.
Gary W-- we simul-posted & I just read yours-- does the MAI mean you are an appraser? If so, would you share some clarifying information please?
My understanding is that the appraiser is required to keep copies of his or her appraisals for a specified time period-- how long is that?
Though the borrower generally pays for the appraisal, the lender orders and authorizes it, & it then "belongs" to the lender, (tho the borrower may receive a copy)-- is that true?
So who exactly is allowed access to old appraisals? They wouldn't be part of any public record, would they?
Thank you for any info you may have.
MAI is an appraiser designation offered by the Appraisal Institute. An appraiser must retain the workfile for a period of at least five (5) years after preparation or at least two (2) years after final disposition of any judicial proceeding in which the appraiser provided testimony related to the assignment, whichever period expires last. The lender/or broker has to order the appraisal and therefore is the owner and yes the borrower in entitled to a copy. The appraisal remains with the loan file along with the application, etc and is not public record.
Gary W - you are already prepared to file a claim against the appraiser's E&O policy and have not even read through the appraisal report yet?? Do you actually believe that you have all the facts necessary to take such action simply based upon what you've read in the papers? I would have thought that an MAI would hold himself to a higher standard than that.
Of course a claim is not filed until the appraisal is carefully reviewed and suffient groungs have been found to do so.
Zuzu,
Even CR and Tanta real identities are not known on this blog, nor are yours and mine, Menke taken at stated name and stated purpose, but could of course be anyone.
Personally, I beware of any apparent agents provocateurs who rant/rave/incite to violence on this or any blog. There are a very few of those here however note in other threads the concept that the blog is monitored by TPTB, SEC, FNMA, etc.
bjk writes:
...
Wells Fargo is in fact making a 100% financed $375000 loan on a $300000 property, but if it wasn't a foreclosure sale, maybe the property is worth $375,000. It's not clear to me that Wells Fargo is necessarily taking a huge risk here.
No, it was a 100% financed $500,000 loan (or an 80% financed $625,000 loan, depending on how you look at it). The $125,000 is subtracted from $625,000 to give you $500,000.
So yeah, Wells is taking a pretty big risk with a $500,000 loan on a property possibly worth $300,000.
Anyway, the million dollar question for me now is, are these types of loans being sold to the GSEs these days, and how rigirous are the GSEs really in shoving back bad loans?
Tanta's and RacerX's replies above give me some hope, but then 76S's reply is, well, discouraging.
One question I have for Tanta if it's not too late (or RacerX or 76S or anyone else who knows) --
A couple of mortgages were originated by a lender (WaMu) in my neighborhood in mid-2007. They were pretty clearly cases of appraisal fraud, and they both foreclosed with a Sheriff's Deed in less than 9 months (EPDs). The foreclosing bank on the Sheriff's Deed is actually Freddie Mac. Does this mean that Freddie Mac did not shove the loans back to WaMu? (Or can I not necessarily determine that by the party on the Sheriff's Deed?)
Thanks much for any info you can provide.
Gary W; Thank you very much for your reply-- may I ask a few more questions then?(sorry!)
So, Copy 1 of appraisal goes into the loan file, kept by the lender (forever?-- till the loan's paid off?). Copy 2 is kept by the appraiser for at least 5 years. 3rd copy goes to borrower. None of the above is public record.
I'm trying to get the order & terminology of things here straight. An appraisal is a certified appraiser's valuation of a property, based on the specifics of that property relative to other similar nearby properties recently sold. So it'd seem, any appraiser is allowed to access any other appraisers' appraisals, in order to do the new appraisal?
Cuz appraisers can't just work from, like, old MLS listings as "comps", can you? A "comp" is the final selling price of a property, as recorded in the assessor's office, right?-- but the assessor's office doesn't have any access to the actual appraisal, so they don't know specific details, e.g., if the home has the infamous "granite countertops", etc. do they? And a "BPO" is sort of an "informed estimate" just based on a broker's personal opinion after she's looked at-- what exactly??-- old MLS listing descriptions?--Which of course only describe the property, but do not say "Oh yeah & in the end the seller had to throw in a new car to get this deal done, so hey everybody, be aware you should subtract 20K from the end sales price first, to get a real comp".
Sorry for so many Q's, Gary, but am trying to figure out firstly, who actually has standing to complain about bad practices-- (engaged in by an appraiser, RE agents, brokers, or any of the players)-- so if one of the key doc's-- the appraisal-- is not public record, then seemingly it would follow that only the direct parties to a transaction can issue a complaint. Do I have that right?
Sorry for length-- but am realizing that what I thought I "knew", I really don't!
Thank you, if you're still around & willin' to answer!
C Mack, thank you & I take your point. When somebody first suggested to me that "others" do monitor internet chatboards, I just roared laughing, like "O yeah like who in their right mind would ever take THAT job!"-- spending all day reading anonymous rants/raves etc
But I do know now that it's quite true, upon occasion. (So I hope if "They" are monitoring this site-- they go 'way and monitor someplace really juicy, like Broker's Outpost. (I can't believe some of the "how-to-scam" posts I've read over there--)
Anyway, thanks for tip! (but am secretly crushed... so you're really not Connie Mack?)
Zuzu,
Thanks for the thanks. Yes, B.O. can really stink; it's usually all about the commission and yield spread premium over at B.O. and greed is good. There are appraisers who like to go to B.O. and set up an argument.
A "comp" is a property as similar to and as proximate to the subject, which also has been sold or listed in as recent a time frame as possible. A really good comp would be the identical home next door that closed yesterday for cash; after being openly on market for exposure enough time for maybe 3 to 5 buyers or more to see it and consider it; sold without added incentives such as a car in the garage or trip to Hawaii; obviously going to be very few of these found in current slow market of fewer sales.
A "comp" is not just any house in a neighborhood which has sold, such as the list you see on Zillow, even though the B.O. people would like to think the $600,000 house five blocks away in an entirely different subdivision among other $600,000 homes is a good comp for the subject, a $400,000 house among other $400,000
houses.
To answer for Gary, appraisers in full disclosure states usually have at least most of these data sources:
MLS and the posted listings, accurate or not
County assessor records, accurate or not, including public record and recoded deed, photos, floor plans, aerial photos, etc. hopefully online
Possibly a county search engine for all sales (deeds recorded)
Past personal files of properties similar to the subject that have sold or listed recently
Past or present personal walk-through observations of nearby similar properties i.e. going through an open house and picking up the flyer
Maybe another appraiser you know has a past file on a similar house nearby that sold
The lender has a past appraisal on a similar property in the area
Hearsay from a neighbor of the subject property or the seller
Realtors/agents who work the location
Advertising
The opinion of value is a subjective judgment using objective facts as best they can be determined and using information obtained from the parties
by questions in confirming the sale (what condition were the carpets, really? etc)
Appraisers in non-disclosure states like Utah may have few of these resources available. Preparing a reasonable opinion takes more time in the sale and fact confirmation process in N-D states.
Also, there are inconsistencies in MLS rules, requirements and application nationwide. So what is good data provided by the broker in one MLS may be not of much value coming from a different MLS.
For the most part, there is no advantage in being misleading in writing a listing for publishing in an MLS; the other Realtors/agents will most often get really pissed by puffery and certainly by false statements that lead them and their buyers on such as "Great well" when the well is 2 gpm and too close to the septic system to pass conventional financing.
I speak from 31 years experience.
Nope C Mack just a nickname.
Though I do enjoy baseball
Zuzu's Petals,
No, county won't have access to the appraisal though occasionally an owner will correct square footage figures using the appraiser's figures if county has that wrong.
Lender almost never issues a complaint against an appraiser; usually it is a harmed party but mere valuation dispute complaints are usually not investigated; reason, subjective opinion. Burden is to show where appraiser broke the law i.e. did not follow USPAP.
Or another appraiser who reviewed an appraisal and found USPAP violations
(not just nit picky errors) will file a complaint.
The effect of all past complaints to state appraisal regulatory agencies has not, unfortunately, been adequate. Coming soon (01-01-09) is the obligation of the lender and lender's representatives (employees, brokers, loan "advisors") to follow the USPAP law regarding NOT pressuring an appraiser by witholding future work or payment for past work.
Like I say, never soon enough. USPAP has been on the books since about 1991, all that time there has been little recourse for appraisers who are pressured by make the deal no matter what lenders.
Hence, for "appraisers" like the one in this Wells fargo deal, it has been far easier to get more work and money by being more of a hit the number whore. See, greed is good.
C Mack-- thank you so much for all of that info-- I've been fascinated by "comps" & appraisals ever since 2003 when the first house in the neighborhood I was renting in (& had hoped to buy in) broke the 200K sales price & busted all former comps. Tho that house was a beautiful great big ole Victorian, totally re-habbed, by the next summer, every house in the neighborhood was priced at, and selling for, over 200K, even the teeny little bungalows that hadn't seen a lick of new paint since 1945!
I'd go to open houses, & get in big debates with the RE agents-- they'd say "this house is worth 250K cuz the yellow house on the next block just sold for that" & I'd say "BS-- I've been in the yellow house also, & it had brand new everything, as opposed to this pokey little relic" & the agents would just shrug & say, "hey lady, the comps are the comps!"
But if I'm putting together what you've just so kindly shared with me-- it's not like there's some "Appraisal Database Central!" wherein all appraisals are filed, & can be accessed by other appraisers. So each appraiser must rely on his/her own personal file of old appraisals s/he's done, files from other appraiser friends, the MLS, tax records,input from RE agents, & you mentioned 'a lender's other appraisals'?
On the last,- so is that why some shady developers insist a borrower must use a certain lender-- because that lender has reams of older inflated appraisals in their other loan files, that can be used to justify new inflated appraisals? (I'm not knocking all appraisers here-- just wondering how the bad 'uns manage to keep their bad practice so "private".)
So how do all these deceptive practices, like sellers contributing new cars, vacations, plasma TV's, etc., come into this?-- are those seller contributions not noted on the appraisal form? IS there one type of appraisal form, that all appraisers must use?
Sorry for allthe Q's, but you clearly know what you are talking about-- thanks!
PS: "See, greed is good." Isn't it awful that so many people actually believe that? Enlightened self-interest is "good"; greed is just, well... greed.
Zuzu,
Since we are keeping this thread going double handedly,
let me direct you to
Appraisers Forum - Real Estate Appraisal Forums
where you can be a guest and even ask questions, though use the search function first please.
Go ahead and sign up to AF it's free.
Developer and lender are in cahoots
to (usually, not always) inflate values for various financing and
"efficiency" reasons.
Sometimes the buyer/borrower actually
benefits from reduced loan fees, easire closings, lower costs, faster service from a "preferred lender".
Frequently one or two preferred appraisers are also in on this espeditied service model. Does not mean or imply things are crooked.
But they can be crooked easier.
The files of old appraisals would not be worth much, usually. The comps and market change daily.
The "bad un's" don't keep their bad practices private for very long, all other appraisers that compete for business against these rule benders or breakers know soon who is fudging.
It's getting the regualtory agenices to follow through on revoking licenses that has been the problem.
Lots of rules and not much enforcement, overall, state to state. Some state much better than others but all states have had many stinky fish swim through the net and keep on stinking up the appraisal biz.
Well I quote Gordon Gecko simply because it is appropriate to the last 5 - 6 years of mortgage madness.
Plenty of people made lots of money any way they could and the appraisers who got rewarded were the ones who kept hitting the number. That made them "good" appraisers. They might have been good, just biased and inaccurate.
As i noted, January 1 some rules are going into play for the lenders. We shall see what happens the
C Mack, Thanks for following up on this thread. Zuzu's questions reminds us that the majority of the population think we still work with a crystal ball and don't realize that a significant amount of research is required including confirming and verifying info from the MLS, etc. That means picking up the phone and asking specific questions to the listing/selling broker and referencing this in the URAR. Nothing better when reviewing an appraisal than seeing names and phone #'s of people that were contacted in the research process, albeit I don't see it very often. The State agencies overseeing the licensing of the appraisers are sorely under funded and therefore understaffed. Their primary function becomes receiving checks and sending out licenses. I send out complaints on a regular basis and in the past 5 years have heard back from 1 which was confirming that my letter had been received. Players in the industry are aware of this and exploit the situation.
C Mack and Gary-- thank you both for explaining & sharing knowledgeable info. I appreciate it.
I will check out Appraiser's Forum. I visited there once in the past & my general sense of the discussions I read was that ethical appraisers like you guys do prefer more regulatory interventions, to weed out the Gecko's, but apparently it's been a very contentious issue within the appraiser community.
I do recall reading there many times the hope that once (if?) the big lenders really apply the new changes in the rules as of Jan., it may create a more level playing field. I hope so.
Seems to me the "little guy" appraisers sorta got stuck in the middle of the housing bubble-- & I think it's sorta ludicrous for some people to play "just blame the appraisers". Every bloody big bank in America was jumping on the gravy train, & to my mind these lenders held & had a much larger ethical & fiduciary responsibility to safeguard their own investors' money, than some appraiser they could coerce, much farther down the food chain.
Anyway, I wish you both well, & thanks again for your patience!
Zuzu,
You are welcome and I appreciate Gary's knowledge also.
It is a tough position to hold, trying to be honest. Lies are so much easier to sell down the line because. . . well, you know why.
Really difficult to actually blame the appraisers and make it stick after all the publicity of the duplicity of large banks and the series of MBS, CDO's that have gone awry in their own pockets and pockets of their overseas customers.
Who generated that crap? Wasn't the appraisers, even if the appraiser
co-conspirators helped out.
Tnx
OK, the market is getting spanked for all its wrong doings. Why is it that some people will never get it. If the broker didn't know his responsibilities or care then he shouldn't be in this business. I do wonder if the broker had put up his own money if he would have a different view of the situation. The broker could have stopped this transaction from comming together in this way if the broker would have taken action.
No one wants to take accountability for their own actions. They're all finger-pointers. The best thing to do is to keep investigating these frauds and punish the guilty with prison and/or fines. That's the biggest deterrant for anyone contemplating mortgage fraud. There are still honest LO's, appraisers and escrow officers; hopefully the threat of loosing their livelyhood will promote them to think twice if documents and contracts don't seem quite right. Trust your instincts!