This is reprint of an open letter, originally published January 3rd, 2006, and distributed to the Who’s Who mailing list.
The Denver Post, 12/28/05 front page story says Denver real estate went up 4.4% in 2005. The local real estate agents have been singing this song for 3 years now, and the media plays along. I say the market has been flat since mid 2002. How do I explain the difference of opinion? Take a look at MLS Listing History 13544 W Virginia Dr. This property went on the market in mid 2002, and 6 months later it sold for $268,000. A year and a half later, the same property went back on the market, and after 104 days (normal marketing period), it sold for $276,500. This looks like about 3% increase in value. However, a closer look reveals the 2005 “sold price” included $10,500 of pretend money (seller concession). The normal reason for the pretend money is to allow a mortgage loan in excess of the amount paid to the seller. In this case, the FHA loan was for $265,533. Perhaps there was a desire to influence the terms of the loan. But any way you slice it, this house actually went down (slightly) in value.
This is just one example. It does not prove the overall market has been flat. But I see enough of these that I am convinced – the MLS “sold price” figures are skewed just enough to make a flat market look like 4.4% increase (a/k/a “normal”).
Is there a problem here? No problem as long as the borrower makes the payments. Right?
I ask you to keep the above example in mind as we look at the MLS Listing History of 2245 S Oakland Way, in Aurora, Colorado. This property went on the market 7/6/02 asking $179,950. 3.5 months later – with the asking price $174,950, the property sold for a contract price of $184,500. In this case, the contract included $10,239 of pretend money (seller concession – see lower part of the MLS). The FHA loan was reported as $181,649. The seller agreed to accept about $172,000 – a small ($3K) discount from the asking price of $174,950. This transaction closed on 10/28/02 and the listing agent (Joe Peterson) properly reported the seller concession and the loan details in MLS (#734247).
Is there a problem here? No problem as long as Rivera Barrera Maria Elena (the buyer/borrower) makes the payments. Right?
In July 2004 (21 months later), the same property goes back on the market, with an asking price of $199,000 – an increase of about 5%.
After 140 days on market and another $10,000 of pretend money, the house sells for $209,000. The listing agent (Maria Lyons) somehow did not record the $10,000 seller concession on MLS, but we can all see what happened. In order to make this transaction possible, an appraiser (Skippy) successfully justified a mortgage value of $209,000. Any idiot can see this property was not worth $209,000 – it had been on the market for 5 months with an asking price of $199,000. Argent Mortgage made the loan of $209,000.
Does anyone see a problem here? No problem as long as Manuel Meza-Chavez (the buyer/borrower) makes the payments. Right?
The borrower never moved in and never made a payment. This property has been vacant for over a year and is now in foreclosure. The current MLS listing shows status of “withdrawn” – the sucker (owner) is desperately seeking a “Plan B“. Maybe they will try again after the holidays, or maybe they will find a new real estate agent. The market value of the property is about the same as it was in 2002 – $174,000. And unlike California, waiting a few months does not make the value of the house go up.
The amount of the Argent loan was $35,000 more than the market value of the property. To make matters worse, add another $25,000 for legal fees, real estate commissions, and carrying costs, and somebody is getting screwed to the tune of $60,000 on a $209,000 loan.
2245 Oakland was the second house Manuel Meza-Chavez purchased that week in December of 2004. On December 15th, 2004, he bought 2082 S Moline in Aurora – about 1/2 mile away from 2245 Oakland. He paid $243,000, and obtained 100% financing from Long Beach Mortgage, a subsidiary of Washington Mutual. This property (2082 Moline) was in foreclosure at the time, an REO property owned by Fannie Mae. At the end of December 2005 (about a year later) 2082 S Moline is vacant and in foreclosure again. Manuel Meza-Chavez never moved in and never made a payment.
About a year ago, Manuel Meza-Chavez bought 2 houses in a week, and never paid a dollar. The name Manuel Meza-Chavez shows up on page 19 of the Denver Police list of registered sex offenders. I don’t know if it is the same person.
2214 Oakland St has a ‘For Sale’ sign in the yard. This property has a $226,500 loan from Guaranty Bank & Trust and a current asking price of $199,900. Does anyone see a problem here?
The 2200 block of Oakland St has more recent foreclosure activity.
In the past 3 years, 2219 Oakland Way has been in foreclosure twice. The MLS listing history shows it sold for $184,500 on 10/20/00 (it was a hot market in 2000). The MLS listing shows an FHA loan in the amount of $182,991 which was $2,991 more than the asking price. The MLS shows zero seller concession, but this is probably wrong. Terry A Jemison (the buyer/borrower) defaulted on the FHA loan. HUD foreclosed and sold for $170,000 with a reported concession of $2,500 (estimated net cost to the American taxpayer = $40,000). Notice that over a 5 year period the price went down $14,500. Chris and Pat Page bought the home from HUD on 2/4/05 with 100% financing provided by Steward Financial. As near as I can tell, the Pages never made a payment because this property is now in foreclosure again. The house now sits vacant with another distress sale (by GMAC Mortgage) in the immediate future.
Does anyone see a problem here?
Does anyone think I am exaggerating? Across Iliff – 2 blocks south, there are 3 more houses in distress sale situation – 2430 Oswego, 2469 Oswego, and 2470 Oswego. Refer to my letter #5 (11/14/05) for the details on the 2400 block of Oswego.
The Argent Website says:
Commonsense UnderwritingThe most important ideal behind our underwriting approach is an optimistic outlook. Instead of looking for reasons to reject a loan, we look for reasons to approve it.
The above statement pretty well sums it up. Look at what Argent loaned $209,000 on – and then look at who they loaned it to – a registered sex offender.
If I owned a house in the neighborhood, I would be mad as hell about Argent Mortgage Company giving a house to convicted sex offender – for free – as in $zero $dollars. Maybe the fact that he never moved in is a good thing.
—- End of Letter —-
tags
argent washington+mutual foreclosure registered+sex+offender mortgage+fraud
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