The Deed is the Key

Here's a brand new video from Freddie Mac explaining just one version of the many different Foreclosure Rescue Scams.

 

 

If you read some of my other blogs you'll know I'm not overly optimistic on either the California / Schwarzenegger version or the Bush / Paulson version of Subprime Bail Out plans.  However, no matter how lame the bail out plans are - it's far worse to throw everything away to a Foreclosure Rescue Fraudster. 

The Key Point?   Your DEED is the KEY.  Keep your Deed, keep your Home. 

  

Scary Thoughts - It's not even Halloween yet

When a company goes out of business what is left after they close the doors is often times a shell of what once was.  Ask anyone trying to arrange a short sale with a sub prime lender these days.  They leave only a skeleton crew of employees to mop up the ruins.

I came into this business many years ago working for a small lender.  One day, the word came down that we had been bought by a bigger lender.  That lender then decided that we had too many employees and called for massive layoffs. 

We occupied almost the entire floor of the building.  Overnight the cubicle farm I had been inhabiting went barren.  95% of the work force were handed their pink slips including all of the management staff.  Not me.  They said I could stay!

Shades of The Omega Man

I worked for a week inside my cubicle.  For what reason, I don't know.  Then I realized something.  I was almost all alone.  My boss wasn't coming back.  None of them were coming back.  So, I moved from the smallest cubicle nearest the supply room to the posh corner office overlooking the fountain!  Why not?

Jimmy did too.  He was also left behind.  Here's something nobody knows.  Sometimes when we were bored we'd toss the Frisbee across from my office to his.  Try that two weeks prior and we would have been canned on the spot!  Now?  Who's to say no?

The truth is that while they downsized most of the staff, they left a select crew to answer the phones while they were busy finagling the dismantling and destruction of the rest of the company.  So when I read this story about numerous Ameriquest files being found in a dumpster I wasn't surprised.  I know first hand what happens when a company goes dark. 

Improper Assumptions

Why would anyone possibly think that the last person out has anywhere near the same moral integrity, the same business ethics, as a responsible business leader?  Why would they and why should they?  It costs money to properly store and dispose of documents like the loan files they found.

I have news for you.  Ameriquest is only the first to hit the media.  Think about every one of the 172 Lenders that have appeared on the Implode-o-Meter.  Wow that's a lot of personal, private paperwork floating around out there.

But wait there's more!  Now think about every single mortgage broker office that also has closed it's doors.  They too have files - many many files.  How are these files being stored?  Who's paying to shred them when the time comes? 

Nobody ever would have thought a large lender would dump confidential paperwork in a dumpster would they?  Nobody ever thought Jimmy would ever be tossing a Frisbee across the office in the middle of the business day to me either. 

  

Technorati Tags: mortgage fraud, identity theft

From the H.E.T.R. site

I just read this in my daily scan of the news. Auburn is only a couple hours drive from me but did you notice where the straw buyers were from? One was probably a business associate in Auburn but the other? Back in Wisconsin.

Fraud and in particular Foreclosure fraud is big business. It's not a local guy, it's nationwide ring. In this case they used a pretty big bank WAMU. Other times they'll use several banks. It doesn't matter, the damage is still done and there was no "Foreclosure Rescue".

---

The Sacramento Business Journal reports that Christopher Craig, 35, of Auburn, California was sentenced in a Sacramento Federal Court yesterday to five years incarceration, followed by five years supervised release, and ordered to pay nearly $1 million in restitution. Craig pleaded guilty to fraudulently collecting $1.2 million in home equity loans from Washington Mutual Bank that were obtained in the course of an equity stripping, foreclosure rescue operation in which he bilked homeowners of their home equity and defrauded WaMu of almost $1 million.

The straw buyers who participated with Craig, Donald Edgecomb, 35 of Trevor, Wisconsin., and Jacob Esteves, 35 of Auburn, also pleaded guilty to misprision of a felony (failing to report a crime) and are scheduled for sentencing next month. For more, see 'Foreclosure help' leads to prison term, (or go here to view the same story on MSNBC).

For copy of grand jury charges, see Indictment - U.S.A. vs. Christopher Craig, et al. Go here for other posts on this story.

Go here for other Criminal Prosecutions Of Foreclosure Rescue Operators.

Real Estate "GURU" Caught Skimming

Here's a trail of stories to read dealing with Equity Skimming.

I started at this article in BusinessWeek by Dean Foust about Foreclosure Rescue Scams.

It's a good article and worth the read.

"... in which unscrupulous individuals or groups approach homeowners facing foreclosure and promise to help them save their homes. In many instances, they convince the troubled homeowner--who is desperate to save their homes--to transfer the deed over to them with the promise that the investor will make the mortgage payments going forward, and the previous owner can rent while they try to rebuild their savings and repair their credit."

In the comment section I saw a link that led me to this page:

"The Home Equity Theft Reporter"

"a blog dedicated to informing the consumer public and the legal profession about Home Equity Theft issues. This blog will consist of information describing the various forms of Home Equity Theft and links to news reports & other informational sources from throughout the country about the victims of Home Equity Theft and what government authorities and others are doing about it"

Which then led to to an article in The Kansas City Star entitled

"Real estate's market crash ensnares guru"

Of course that grabbed my interest. Just to help decipher the quote below, Smolec was the homeowner, Ledman was the Real Estate Guru, and Sargent the Buyer.

"Smolec was about $35,000 in arrears on her mortgage, and the bank was bearing down. Smolec said she thought she was signing a lease with Ledman that would allow her to stay in the house for two years while she made arrangements to pay off what she owed using a pension that was due her.

Asked whether she understood she was signing away all her rights to her house, Smolec testified, "No, I did not... I didn't understand because I was told differently."

Smolec said Ledman never explained the complex papers she signed.

"He said I was too old and he would take care of me like a grandma," she said.

Instead, Ledman sold the house to real estate agent Susan Sargent for $500,000, said Tom Gottschalk, a former investigator who testified at the court hearing. Gottschalk said that in signing away all her rights, Smolec lost the equity she still held in her house. He said that after expenses, Ledman would make a $130,000 profit.

Sargent said at the hearing that when she told Smolec she was the home's new owner, "She broke down." Sargent said Smolec was never aware until then that her house was sold.

Sargent said because of problems with the deal, she got Ledman to buy the house back. The house was remodeled and sold last year, this time for $600,000."

Please, please - read all three sites and if you are in trouble - DO NOT sign your Deed over to Anyone - Don't allow yourself to be "Smolec'd"

Share this post :

Loss Mitigation and the Service Provider

Loss Mitigation and the Service Provider
by John Occhi, Hemet - San Jacinto Valley REALTOR
Hemet - San Jacinto CA Real Estate

The times are definitely changing for mortgage lenders and investors as they realize that they have a very real potential for a flood of REO properties to deal with. In order to prevent the foreclosure and pending inventory of REO properties, the industry is starting to grasp and focus more on loss mitigation techniques to creatively avoid the whole foreclosure mess.

The Center for Responsible Lending recently released a study predicting that 2.2 million American households are going to lose their homes. This study predicts that over 20% of all subprime loans originated in the 2005 -2006 period will fail amassing up to $164 Billion in foreclosures - just in the subprime market.

It has been reported over and over again that subprime borrowers received risky loans or ARM products and that many of the borrowers just do not understand the implications of their loans. Many sources will agree that 80% of all the subprime loans issued in this period were issued under risky conditions.As the ARMs reset, homeowners just won't be able to make their higher payments. I think when history looks back, this will be known as the decade of loss mitigation. Right now people are doing whatever they can to avoid foreclosure, utilizing many creative means.

There has recently been news that homeowners are not even keeping current with their home loans in the first 3 to 6 months. This is a bad sign that is costing the market and the overall economy a lot of money.

Perhaps the biggest cause for this slide is that mortgage brokers are more often than not selling loan products to borrowers that are beyond their means. There is also much fraud on this side of the industry - most of the time it is on a very small scale and then there are those who just want to drive a Mac Truck through the loopholes to take advantage of every single opportunity, to their fullest capability.

A popular product that has gotten more homeowners in trouble, than any other is the No Doc - Stated Income. Mortgage brokers thought this was their license to lie - however every document they fudged is an act of fraud - a fraud that lined their pockets and is now having a ripple effect through our national economy.

Certainly the mortgage lenders have to take their share of responsibility for making such an easy loan to get available to so many with bad to poor credit histories.

Hello, what were they thinking? Better yet, were they thinking?

Today, mortgage servicers are looking to technology to help manage the analysis of the foreclosure process. The key to a successful loss mitigation department is to work directly with the homeowner early on in the process. They need to profile the borrower, the home, the local market and score the loan accordingly.

Month to month fluctuations in the market make it necessary for the lenders to stay on top of the slow pay loans, as much of their success will depend on market knowledge. They have to use the available technology to help them keep track and understand the weight each property inspection carries and how valuations can change with the changes with the statistical data of the local marketplace for the very specific neighborhood as well as the overall region.

Mortgage loan servicers need to know the cost of foreclosure and what they stand to lose if the property goes REO. Today, with the help of technology, service providers can eliminate many foreclosures by either accepting a deed-in-lieu, approving a short sale or other loss mitigation methods that are available.

In order for a lender to really grasp what they stand to lose if a property is foreclosed on the lender must weigh and score the borrower's past delinquency history, analyze their credit history, understand the quirks of the geographical location of the subject property as well as understanding the local laws where the property is located - after all they need to know if they are working in a judicial or non-judicial foreclosure state. (California is a non-judicial foreclosure state.)

It seems as if the emphasizes that lenders have traditionally had is the volume of loans they can generate. This attitude has to do a reversal. It does no one any good if a loan made today cannot be kept current for the next three months. Lending should not be a game of volume but a game of quality. Non-performing loans are a drain on resources - both to the lender, the borrower and the national economy.

As a Realtor, working primarily in the Hemet - San Jacinto Valley, CA I regularly see the effect that loans in default cause local homeowners. I know the problem extends throughout Riverside County, the Inland Empire and the rest of California and most of the country as well.

I recognize that loss mitigation is an incredible tool for the homeowner in trouble who wants to and can afford to keep their home. Unfortunately, it doesn't always work for everyone - but those it can help think of it as a God send. In an effort to best service my local real estate market in Hemet CA I have recently aligned myself with a well respected national company that I believe in - Freedom Foreclosure Prevention Services (FFPS).

Freedom Foreclosure Prevention Services may be able to help if it is your desire to stay in your home. They guarantee their services and never charge a dime until they know what they should be able to do.

The new economy is producing many fraudulent investors that will try and take advantage of stressed homeowners when they are facing foreclosure. I can only warn for you to be careful with whom you are working with and do your own diligence before you ever commit to anyone and sign any documents that may put your home and your equity in jeopardy.

If FFPS cannot help you, then your choice is to sell the home outright to an investor or to market it through a REALTOR and try for the short sale option. This is where I come in and hope to be able to help. Please look through the links at the bottom of this page for more information on this important topic, before making any decision.

Now Have a Blessed Day,

John Occhi, Hemet CA REALTOR

Mission Grove Realty

Loss Mitigation Consultant

Other Articles of Interest by John Occhi, Hemet REALTOR:

How do Short Sales Affect the Economy?

What Is A Short Sale?

Why would a Lender Consider a "Short Sale"?

What Should a Homeowner Do When They are Behind?

How Foreclosure are Effecting the Market

Mortgage Fraud Can Have a Negative Ripple Effect

Please don't forget to add your comments below.