phil.rice

This transaction reminded me of a joke I heard 20 years ago – when the Aurora real estate market was in the toilet.

Q – What’s the difference between venereal disease and a condo in Aurora?
A – You can get rid of venereal disease

With that introduction, let’s have a look at 3874 S Fraser St #P-1, Aurora, CO  80014.

The listing history for this condo is a cold dose of reality.  After 175 days on market, the price was reduced from $63,000 to $43,500, and the essay portion of the listing says:

Price dirt cheap.  No more discounts.

Don’t you just love it?  The listing agent  – John V Davis – is selling his own property.  Almost for sure an investment property he had rented out for a year or 2 and then decided to sell.

The listing shows a final status of “withdrawn” on 03/16/06.  The deeds report shows that John V Davis sold the property to Sam Mahnke on 03/16/06.  Why didn’t Mr Davis report the sale in MLS?  In my opinion (IMHO) this is not a oversight – it’s an intentional deception.

Meritage Mortgage made a $50,000 mortgage loan at 9.99% interest rate, and they called it a 100% LTV.  Any idiot can see this property is not worth $50,000.  There is a whole lot of lying going on.

tags

No Discounts – Fraud OK

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Roman Kazaryan
E-Z Mortgage
somewhere in Minnesota
763-383-0850 or cell 763-843-4442

Roman wants to do a loan for Robert Crigger. Address is 770 Iola St, Aurora, CO 80010. At first, Roman has the address wrong – he tells me 770 Lola St. It takes 3 phone calls, but we get that worked out. Roman says that Mr Crigger bought the house for $150,000 in 2002, and thinks it’s worth about $165,000 now. The only problem is that he owes $172,000 on the house – M&T Mortgage (maybe this is a modular home?). Roman can put together a deal (he say he has everything he needs), but only if the value of the house is about $190,000.

Roman tells me he could not find out anything about the value of the house, and I am the first appraiser he has called. He just wants a “rough idea” of the market value.

Zillow has the property at $129,000. MLS shows 3 active listings on the 700 block of Iola. 705 Iola is asking $87,000 – 766 Iola is asking $129,000 – 780 Iola is asking $114,000.

You may be thinking there must be a mistake on the price of 705 Iola. Check out the MLS listing – listing history. It’s an FHA repo, the loan amount is $123,000.

Summary: 770 Iola St – Roman Kazaryan at E-Z Mortgage needs a value of about $190,000. The existing loan balance is $172,000. The actual value of the property is about $125,000. Colorado is leading the nation in foreclosure – we are number 1. And the 700 block of Iola may very well be ground zero.

Tags:

mkg appraisal philip+g+rice aurora colorado 80014 mortgage fraud foreclosure REO HUD FHA short+sale real+estate less+than+perfect alphonso+jackson ez roman+kazaryan comp+check zillow M&T m+t

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November 10th, 2005

President George W. Bush
The White House
1600 Pennsylvania Ave, NW
Washington, DC 20500

cc:  distribution list /with attachments

This is letter #5 in a series.  The first 4 are dated 09/02/05, 09/26/05, 10/07/05 and 11/10/05.

Bankruptcy

Shawn Tieskotter filed chapter 7 bankruptcy 12/11/02 (case # 12-30128HRT).

The Shawn Tieskotter summary has been updated with the 14th purchase.  It’s a million dollar (more or less) property.  The address is 4700 S Clarkson, Cherry Hills, Colorado.  Shawn owned this house for about 2 weeks — just long enough to obtain a $947,750 loan from American Home Loans.  This loan is not going to end well.

Richard & Darlene Tieskotter purchased a million dollar (more or less) property on 9/30/05.  The address is 780 Sapphire Dr, Castle Rock, Colorado.  This transaction looks suspiciously similar to the modus operandi of Shawn and the Dream Team.  The Tieskotters obtained a $1,192,500 loan from Countrywide.  My best guess is the real estate agent (Richard Berst) did not accurately report the seller concession and/or the contract price in the MLS listing.  The listing history indicates the seller concession could have been $325,000 which would be a whopper.  This loan is not going to end well.

Angelo R Mozilo – please clean up your act.

Need Help From HUD

Alphonso Jackson at HUD – please take a close look at the listing history of 780 Sapphire Dr.  The contract price on this transaction is a lie – a big lie.  After 8 months on the market, any idiot can see this property is not worth $1.3M.  The listing agent increased the “asking price” on MLS by $325,000 after the contract was signed.  The sole purpose of the price increase is to request an inflated appraisal, so Countywide can sell the loan to a sucker.

Calling this loan 75% LTV is a lie, a big lie.  It is the same dishonesty as the FHA loans on Florence St (note 1), except the dollar amount is larger.

This market needs strong positive leadership from the Federal Government.  Alphonso Jackson — like it or not, the mortgage industry is following your lead.

Alphonso:  You are a big part of the problem.

Stupid Lender Tricks

Example #1:  In August of 2005, Ben Dorland used an inflated appraisal to obtain a $299,000 loan from American Home Mortgage.  Ben paid $244,900 to buy the house at 1551 Krameria St, Denver, Colorado, and pocketed the difference ($54,100).  Details attached.  This loan is not going to end well.

Michael Strauss – please clean up your act.

Example #2:  In May of 2004, Myong Hee An decided to sell her house at 2470 S Oswego St in Aurora.  She had two options. She could hire a real estate agent and sell for about $270,000 — if she did $5,000 fix up and paid $15,000 real estate sales commission, for net proceeds of about $250,000.

Myong Hee An chose the other option.  With the help of New Century Mortgage, she used an inflated appraisal and refinanced for $306,000.  The refinance option resulted in $56,000 more cash.  With cash in hand, she promptly walked away (note 2).

The sucker who bought the loan from New Century is now trying to sell the property, hoping to recover the $306,000.  After 136 days on market, the asking price is $270,000 with no takers and no reason to be optimistic.  The sucker is going to get stuck for about $25,000 of carrying cost, real estate commission, and legal fees.

Two doors down at 2430 S Oswego, this property sold as a HUD REO for $260,000 on 6/03/05 (note 4).  Three months later in September of 2005, Greenpoint made a $279,300 mortgage loan on this property.  This loan is not going to end well.  The property now has a homemade FSBO sign in the front yard.

Foreclosures have a adverse impact on crime rate, maintenance, and overall market appeal.  It affects everyone in the neighborhood.  It affects the way people live, and it affects their property value.

The house across the street at 2469 S Oswego is up for sale.  The asking price is $294,999 after 130 days on market, and there is no reason to be optimistic.  The loan balance is about $260,000 (note 3).  It’s 50/50 they can sell for enough to pay off the loan and break even.  The “for sale” sign on their front yard indicates their sense of desperation.

The people who own 2469 Oswego should be mad as hell.  The same thing that happened on the 1300 block of Florence St is happening here on the 2400 Block of Oswego.  Everyone in this neighborhood should be mad as hell.

If At First You Do Succeed….

Christopher Thomas bought 3 properties this summer (2 on the same day), and managed to put $100,000 cash in his pocket.  Summary attached.  Details available on request.

My Conclusion

I have presented a real life example of what happens when the system provides a $56,000 incentive to walk away.  Shawn Tieskotter has a $700,000 incentive, what do you think he’s going to do?

We are headed for a repeat of the Ronald Reagan savings and loan debacle.  Mr. President Bush, I know you have other things on your mind, but this is going to leave a stain on your legacy.  It’s going to be national in scope, it’s going to be ugly, and it’s going to play out long before the next presidential election.

Sincerely,

Philip G Rice
11268 E Linvale Dr.
Aurora, CO  80014
720-282-3376

End Notes:

Note 1:  Summary of my letter dated 11/10/05:  There are 19 houses on the 1300 block of Florence.  HUD currently owns 5 of these as REO.  Property values on this block have dropped from $155,000 to $125,000 in the past year.

Note 2:  The phrase “walked away” is used figuratively, not literally.  It could be Ms. An ran away, drove away, boogied, got sick, needed surgery, was struck by lightening and died, etc, etc.  The point is, she promptly stopped making the monthly payment.

Note 3:  Even if they get an offer with a contract price of $295,000 (the current asking price), it will likely include a $10,000 seller concession (rebate to the buyer) – which would mean $285,000 to the seller.  If we assume 5% real estate commission, that leaves $271,000.  They have some wiggle room to pay off a $260,000 loan, but this is by no means a sure thing.  The bad news – it is very difficult to sell anything between Thanksgiving and the Superbowl.  If something doesn’t happen in the next 2 weeks, they are looking at a significant price reduction or a Feb 2006 close.  The current status on MLS is “withdrawn” which does not bode well.

Note 4:  2430 Oswego is a representative example of a typical HUD listing.  The listing price of $275,000 is based on an appraisal done for Michaelson, Connor and Boul (MCB).  They missed by $15,000.  There is no excuse for an MLS listing with no photo – it is sloppy marketing.  The American taxpayer is getting screwed.

– End of Letter –

tags

mkg appraisal philip+g+rice aurora colorado 80014 mortgage+fraud foreclosure REO short+sale real+estate less+than+perfect hud alphonso+jackson shawn+tieskotter richard+tieskotter darlene+tieskotter american+home+loan richard+berst angelo+r+mozilo countrywide fha american+home+mortgage michael+strauss myong+hee+an new+century+mortgage greenpoint

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HUD
451 7th St S.W.
Washington DC 20410
Attn: Alphonso Jackson

cc:  distribution list /with attachments

This is letter #4 in a series.  The first 3 are dated 09/02/05, 09/26/05 and 10/07/05.

I invite you to take a walk with me down the 1300 block of Florence Street in beautiful downtown Aurora, Colorado.  There are 19 properties on this block.  Every house on the block is a small ranch (single story) with no basement.  I researched MLS and foreclosure records.  Here is a brief summary of the market activity in the past 4 years:

1300 Florence:  FHA loan dated Feb 2001 in the amount of $145,938.  There is no MLS info on this property.  The homeowner refinanced with a conventional loan in May 2003.  There was a recent foreclosure started and then withdrawn.  The market indication for current value of this property is about $120,000.

1301 Florence:  FHA loan dated Sept 2002 in the amount of $146,924.  Asking price at the time was $145,000 after 97 days on market.  On Nov 29th, 2004, listed on MLS with asking price of $139,000.  After 129 days on market, the price had been reduced to $126,000.  The listing expired unsold.  The house is in foreclosure and is now vacant.  In a few months, HUD will take possession and try to sell the house, they will be lucky to get $120,000.

1308 Florence:  FHA loan dated March 2004 in the amount of $145,698.  Property last sold April 2002 – asking price was $139,500 with a “contract” amount of $142,500.  Listed on MLS March 2005 with asking price of $155,000.  After 184 days on market, the asking price had been reduced to $149,900.  The listing expired unsold.  This property is not in foreclosure, and the house is not vacant.  The market indication for current value of this property is about $120,000.

1309 Florence:  FHA loan dated June of 2004 in the amount of $162,701.  Asking price at the time was $159,900 after 180 days on market.  8 months later, the property was listed on MLS with asking price of $149,900.  After 106 days on market, the asking price had been reduced to $125,000.  The listing expired unsold.  The property is in foreclosure.  In a few months, HUD will take possession and try to sell the house, they will be lucky to get $120,000.

1316 Florence:  FHA loan dated Dec 2003 in the amount of $157,000.  Asking price at the time was $147,500 after 34 days on market.  Eleven months later, in Nov 2004, the property is listed on MLS with asking price of $114,000.  Listing agent is Sean Searle (note 1).  The property sold for $101,900 after 8 days on market on Jan 31, 2005.  3 months later, the property was back on the market.  The listing agent is Ron D Searle (note 1) and the asking price was $154,451.  The property sold with a $160,000 conventional mortgage after 29 days on market.  My best guess is FMF Capital (the lender) sold the loan to a sucker.  The market indication for current value of this property is about $120,000.  I could be wrong, but I think the Searles made a $60,000 profit and HUD got screwed for about $85,000.

1325 Florence:  FHA loan dated Sept 1999 in the amount of $118,817.  Property listed in MLS May 2005 with asking price of $145,000.  2 days later, the property was taken off the market, and now sits vacant.  It’s hard to tell what is going to happen to this property, but the current market indication is about $120,000.

1365 Florence:  FHA loan dated Dec 2002 in the amount of $152,605, courtesy of National City Mortgage.  Asking price at the time was $149,900 after 18 days on market.  In August 2004, the property was listed on MLS for $152,600.  After 171 days on market, the listing expired unsold.  The property went into foreclosure, and in July 2005, HUD put it on the market with an asking price of $141,000 (wishful thinking).  On 9/10/05 (73 days on market), it went under contract with an asking price of $126,900.  On 10/30/05, it was still vacant waiting to close.  It remains to be seen how much HUD can get for this property – a likely scenario is a contract price of $127,000 with a $7,000 rebate to the buyer.  Estimated cost to the taxpayer on this fiasco is $55,000 (and counting).  A copy of the December 2002 purchase contract and appraisal by Matthew E George, SRA (license AL01317099) and is attached.

1373 Florence:  FHA loan dated March 2002 in the amount of $153,974.  Asking price at the time was $150,000.  In Nov 2003, the property was listed on MLS for $174,900 (wishful thinking).  After 22 months, the asking price had been reduced to $135,000, and the listed expired unsold.  The house is now vacant and in foreclosure, waiting to be sold by the lender.  The market indication for current value of this property is about $120,000.

HUD

HUD is the not-so-proud owner of 5 of the 19 homes (26%) on the block, with one property already thru the foreclosure process.  As you can see, HUD has been involved in basically 100% of the market activity on the block.  Of the 5 homes currently owned by HUD, the median HUD purchase price (loan amount) is $152,605.  HUD will be lucky to average $120,000 when they sell these 5 homes.  HUD has already taken an estimated loss of $85,000 on 1316 Florence.  I estimate a total cost of $355,000 for the 6 HUD foreclosures on the block.

What Happened?

How do I explain the fact that in mid 2004 HUD was willing to finance every home on the block for about $155,000, and now they are worth about $120,000?  There is no easy answer.  Any time a whole block experiences a 23% decrease in market value, it raises eyebrows.

As an appraiser, I know that changes in value are always a result of:

1)  Changes to the property (for example a remodel), and/or
2)  Change in the market.

It must be one or both of these reasons, it can’t be anything else.

Everyone is accustomed to seeing markets go up in value, no one expects a market to go down.  In this case, all indications are the market has been flat or slowly (4% per year) increasing.

I know from personal observation that all of the properties on the 1300 block of Florence have been mostly consistent in overall condition and level of maintenance.  You cannot explain the change in value by changes in the property.

If we know that current values are about $120,000, what does that leave?  It means all of the HUD loans were inflated by thousands of dollars.  It is obvious that every HUD loan was for more than 100% of the amount paid to buy the house.  I am confident that HUD pretended every one of the loans was 100% LTV, which is a lie.  A knowing lie.  The dishonesty had a harmful effect on the process.  On this block, HUD is the market, so the dishonesty had a harmful effect on the market.

I have the benefit of hindsight – but the crystal ball is not the real story here.  Any competent and ethical appraiser could have determined the market value of 1365 Florence in December of 2002.  I have included a copy of the contract, and a copy of the appraisal.  I urge you to read them and come to your own conclusions.  Ask yourself, with the benefit of hindsight, did this appraisal miss the value?  Was this house worth $9,350 more than the amount paid to the seller?  A good appraisal report is ethical and competent.  In my opinion, this appraisal was competently done.  As you read the appraisal, ask yourself if it was ethically done.

Ken Lay School of Ethics

Alphonso Jackson asked for cooperation from the real estate community with a nod and a wink.  The appraisers, real estate agents, lenders, and HUD employees all knew what to do, and they worked together as a team.  HUD got the desired transaction count (i.e., quota), and the following people got screwed:

1)  The American taxpayer got screwed,
2)  Everyone on the 1300 block of Florence got screwed, and
3)  Every homeowner in Aurora got screwed.

When nearly every transaction on a block results in foreclosure, it has a negative effect on the crime rate and the market appeal of the entire block.  It affects how people live.

The people who bought these houses with FHA loans lasted only a few months.  I see no evidence that any of them filed for bankruptcy.  Apparently they walked away with the tacit approval of HUD.  Alphonso Jackson, are you trying to encourage or discourage this behavior?  Does anyone think “we” are doing them a favor by pushing them into this situation?  Does anyone think they didn’t get pushed?

Mr. Alphonso Jackson, I urge you to clean up your act.  Stop telling lies, and stop selling lies.  You are stinking up the 1300 block of Florence, and your organization is stinking up the real estate market for the entire city of Aurora, CO.  Like it or not, you are leading the way – and your leadership has been negative.  I know from personal experience that nearly every HUD employee understands what is going on.  They all know you are a dishonest leader – your lies have tinkled down thru the entire organization.

I urge you to step up and be part of the solution.  There are plenty of good people in your organization.  If you need help, all you have to do is ask.

Sincerely,

Philip G Rice
11268 E Linvale Dr.
Aurora, CO  80014
720-282-3376

End Notes

Note 1:  The name Searle is infamous and a big red flag in the Denver real estate community.   Ryan Searle got run out of Colorado in 2003, and headed for Texas.  From a June 2005 report by the National Consumer Law Center:

Ryan Searle is facing a criminal charge of aggravated assault with a deadly weapon in Texas.  The charge stems from allegations that Searle pulled a gun and tried to run over the president of a homeowners’ association who was trying to flag him down after he snuck into a gated community before the gate closed.

– End of Letter –

tags

matthew+e+george sra mkg+appraisal philip+g+rice aurora colorado 80014 appraisal mortgage+fraud foreclosure REO short+sale National+City+Mortgage real+estate real+estate+appraisal less+than+perfect alphonso+jackson florence+street ryan+searle ron+d+searle fmf+capital

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October 7th, 2005

Governor Bill Owens
136 State Capitol
Denver, CO 80203

cc:  distribution list /with attachments

Letter #3

This is letter #3 in a series.  The first 2 are dated 09/02/05 and 09/26/05.

The common thread (theme) in this letter is dishonest loan sales which lead to foreclosure.  For those who are familiar with the Dream Team – this letter provides guidance and insight about where they will be 12 months from now.

Aurora, Colorado (population 300,000) has more foreclosure than the entire state of California.  How is this possible?  Here in Aurora, foreclosure is the result of teamwork.  A dishonest mortgage broker teams up with a dishonest appraiser, they help a dishonest borrower apply for an inflated loan from a dishonest loan sales company (for example Countrywide or National City).  The dishonest people (for example Stanford Kurland and Dave Wurfel) at the loan sales company then sell the dishonest loan package to a sucker.  The dishonest people make money and the sucker gets screwed.

My dictionary says:  Fraud = Intentional deception to cause a person to give up money.  Something said or done to deceive.

This letter presents two examples:

Curtis Duff

In February 2005, Long Beach Mortgage (a/k/a Washington Mutual) made a $380,000 loan on a property worth about $310,000.  Long Beach promptly sold the loan to a sucker.

The borrower (Curtis Duff), the lender (Long Beach Mortgage), and the appraiser worked as a team – they created a deception for the purpose of selling the loan.  It worked.  Whoever it was that bought this loan got screwed.

Curtis Duff bought 7 seven houses in 2004 (see attached 1 page summary).

Curtis Duff filed for bankruptcy in July, 2005.

In July 2004, Aegis made a $243,000 loan to Curtis Duff.  The $243,000 loan was secured by a $219,000 property – 21862 Berry Lane, Centennial, CO  80015.  After 385 days on market any idiot could see this property was not worth $243,000 – not even close.  The MLS listing and listing history tell the story.  Aegis promptly sold this loan to a sucker.

About a year later, the loan is now worthless (literally), and the sucker owns the house.  21862 Berry Lane is on the market for $229,900.  This is wishful thinking – the sucker still doesn’t “get it”.

In July 2004, America’s Wholesale Lender (a/k/a Countrywide) made a $253,000 loan to Curtis Duff.  The $253,000 loan was secured by a $217,000 property – 19836 Dickenson Pl.  Countrywide promptly sold this loan to a sucker.

About a year later, the loan is now worthless (literally), and the sucker owns the house.  19836 Dickenson Pl. is on the market for $224,900.  They wish they overpaid only $28,000 – they still don’t “get it”.

Curtis Duff borrowed $2,013,000 from 7 different “lenders”, who sold the loans to 7 different suckers.  Mr. Duff put a cool quarter million dollars ($251,000) in his pocket.

I expect the 7 mortgage “lenders” to keep a low profile, act dumb, and repeat the process every chance they get.

Shame on Countrywide.  Shame on you Stanford Kurland, clean up your act.

Shame on Aegis Mortgage.  Shame on you Rick Thompson, clean up your act.

Shame on Washington Mutual.  Shame on you Kerry Killinger, clean up your act.

National City Mortgage

On 7/26/04, Dave Wurfel of National City Mortgage called and asked me to do an appraisal on 15567 E Radcliff Pl, Aurora, CO  80015.  He said it was a rush order and I would get paid out of closing.  I told him I needed to get paid whether the loan closed or not.  He faxed me an order with a “target” value of $290K, and faxed me a written promise to pay my bill.

My appraisal report disclosed “deferred maintenance” of the exterior trim paint on the windows. Every window had this problem.  My report included an example photo.

Dave Wurfel called me on 8/9/04.  He “asked” me to remove the photo from my report.

He asked me to remove the words “deferred maintenance”.  He said it was just a minor problem and I should ignore it.  My reply:  If the problem is minor, then go ahead and make the loan.  He said National City intended to sell the loan to Fannie Mae and they can’t sell the loan with the picture in the appraisal report.  He assured me the homeowner was going to paint the windows next month.  I offered to re-inspect the property after the window problem had been fixed.

He checked with his boss, and called me back.  I held my ground.  He checked with Underwriting, and called me back.  I held my ground.  He told stories, he joked, he whined (note 2), he lied.  He made a diligent and determined effort to convince me to remove the photo.  He threatened that if he had to get another appraiser, the loan might not close on time.  When he ran out of stories and realized I was not going to remove the picture, he quit calling me.

I called Dave Wurfel on 8/18/04.  The first words out of his mouth were that he got another appraisal done and the loan had closed.

I asked about paying my bill.  He said he would check on that and call me back.  He promised to call me within a week.  Can you guess how this part turns out?  He never called me back, never returned my calls, and most importantly, he never paid my bill (note 1).

My conclusion:  Dave Wurfel is a dishonest person.

In August 2004, National City Mortgage refinanced 15567 E Radcliff Pl to the tune of $275,000.  National City promptly sold the loan to a sucker.  Whoever put up the money for this loan got screwed.  About a year later, the borrower filed bankruptcy (case number 05-36543-SBB) and the property is now in foreclosure.

It remains to be seen what the house will sell for, but it will not bring $275,000 because those windows never did get painted.  [update 08/26/06 - asking price is now $264,900]

Shame on National City.  Shame on you David Daberko.  Clean up your act.

Sincerely,

Philip G Rice
11268 E Linvale Dr.
Aurora, CO  80014
720-282-3376

– End of Letter –

End Notes

Note 1:   This is not a collection letter – I did get paid – in spite of Dave Wurfel’s best effort to stop the check – as if my fee would come out of his commission check.

Note 2:  My dictionary says whine = complain or beg in a childishly undignified way.