phil.rice

I stumbled on this blog by Casey Serin – the blog url is “I am facing foreclosure” .com.  I encourage you to read thru what he has to say – and then read the comments.  There are 100’s of comments.

Casey is a real estate investor / tycoon wanna-be.  Right now, he is a complete and dismal failure.  However, hope springs eternal.

If he had started a year or 2 sooner, he would have looked like a genius – because market appreciation (inflation) would have solved all his problems.  But sadly, he got in too late, and now he is wondering if he will go to jail.

IMHO – Casey’s comments, and all of the reader comments demonstrate the huge disconnect between perception and reality.  This entire blog is the blind leading the blind.

I give him credit for this much – high rating on entertainment value.  Well worth reading.  One hilarious comment after another.

I wrote a blog entry once that said – they don’t ring a bell.  Maybe this Casey Serin blog is the bell.  When it comes to this – it means the end is near.

tags

casey+serin mortgage+fraud

Quoting the Jim Spencer column:

lenders are starting to review the process

and

The risky-lending boom of the early 21st century was a Ponzi scheme

My comments:  In particular, I question the use of the word “was” – as in past tense.  These 2 statements make it sound like the lenders now have a clue, and problem is well on its way to being solved.  Why would anyone think this?

As long as FHA and the good people at HUD are desperately trying to make more loans – it means that anyone can buy nearly any home with nearly zero down payment.

For example – On 02/21/07 I pulled a CMA on Aurora South (AUS) for the most recent 11 days.  It shows 37 sales.  The range is $137,200 to $440,000 with $224,900 the median sold price.

Per MLS (not 100% reliable) – 15 of these sales involved $zero seller concession, which means 22 reported some amount of seller concession.  To be fair (and to understand the data), some of the reported seller concessions are small dollar amount.  The largest reported seller concession is $45,983 (a builder sale) and the next largest is $8,300.  But try to keep an open mind – because there is more to the story.  Many times the real estate agent (for whatever reason) does not accurately report the hocus pocus.

Let’s have a closer look at 2 of the sales.  I picked one from near the top of the list, and one from the bottom.

Near the top – 5949 Valdai Way, Aurora, CO  80015 in Saddle Rock Ridge.  Per MLS pg1 and MLS listing history, sold 02/16/07 as follows:  contract price = $279,500, seller concession = $3,500, FHA mortgage of $275,181 @ 6.9%.  I could be wrong, but I interpret this to mean the buyer moved in with a down payment of $zero.  Anyone who thinks of FHA as a government program to help disadvantaged people get started with a modest home – please note the stats on this home – 5 years old, 4 bedrooms, 2.5 baths, 2,500 sq ft with 2 car attached garage.  This home is way better than (about) 3/4’s of the homes in Aurora.  The monthly payment (PITI) is about $2,000.

Here is a quote from the HUD Webpage:

HUD’s $35.2 billion Budget for FY 2008 – an increase of $1.6 billion over last year’s request – ensures that our Department can continue to accomplish its goals, perform effectively and produce impressive results by targeting limited resources where they are most needed on programs that work.

As long as FHA and the good people at HUD are “in business” why would anyone think:

lenders are going to require borrowers to put some money into their property

The 2nd property is from the bottom of the list – 1581 S Biscay Ct, Aurora, CO  80017 in Stone Ridge.  Per MLS pg1 and MLS listing history, sold 02/12/07 as follows:  after 100 days on market, with the asking price $129,900 – the buyer and seller cooked up a contract of $145,000.  Rob McClure (the listing agent) increased the asking price by $15,000 and reported a seller concession of $7,800.  The Arapahoe Public Trustee page shows this property, and many others on the 1500 block have been in foreclosure.  I have formed an opinion that 1581 Biscay is high risk for another foreclosure within 6 – 18 months.  It will be about 2 weeks before the loan info (lender and $amt) is available on public records.

Quoting the Jim Spencer column:

lenders believed appreciation would make up for negative equity

My comments:  Why would anyone believe this?  Lenders routinely lied (and continue to) about negative equity.  Everyone involved in the transaction (2 real estate agents, buyer, seller, mortgage broker, appraiser, title company) does their part to produce a contract and then an appraisal report that make it look like a 100% loan.

In some cases the “investor” (Wall Street) made some kind of attempt at forcing the “lender” to “repurchase” the bad loan(s).  Many “lenders” avoided this unpleasant problem by going out of business.  Two good examples are found on the Tieskotter list – Ownit and Sebring – both kaput.  Both relatively small players.  New Century is not (yet?) kaput, but the New Century common stock was recently hammered on Wall Street.  What is going to happen when Countrywide and/or National City has to face the music?  If they go kaput – it’s going to be a very big deal.  And there won’t be any columns in the newspaper with statements like:

Stabilizing home values is what this is all about

In my opinion, if (when?) the ‘nothing down’ loan goes away, the immediate (short term) impact on the local real estate market is going to be a large decrease in the number of people who can buy a house.  And therefore, a large decrease in the $amount homes sell for.  I am not talking about a 3% – 5% correction.  There will be no polite way to describe it.  I use the term “train wreck”.  I’m thinking it’s going to be dramatic decreases all over town – including Parker and Douglas County.

I have lots of questions, few answers.  Nothing about this looks “right”, but it could be me.  Maybe there is nothing wrong here.

MLS01a.  MLS01b.  MLS01c.  MLS02.  Deed.

5560 Helena, Denver, CO  80239.  This property located in Montbello – sort of.  This is not beautiful downtown Montbello, more like the suburbs of Montbello.  This property went on the market in July of 2005 with an asking price of $229,900.  Hope springs eternal.  The property was marketed as a “short sale”.  The listing agent is named Kirill Merkulov.  309 days later, with the price reduced to $219,00, the listing was “withdrawn”, i.e., they gave up.

In mid 2006, the lender (Deutsche Bank) got short on patience, and took possession of the property.  5 months later, they hired the Teamwerk Pros and put the property on the market with an asking price of $175,900.  In 2 weeks time, the property sold for $190,000 – that’s $14,000 over asking price.  The listing agent (Teamwerk) reported a seller concession of $zero.  This would be correct if there was a bidding war, and the buyer really paid $190,000.  Raise your hand if you believe the buyer paid $14,000 over asking price.

This property was purchased by a fellow named Jack G Schatz, a licensed real estate agent.  Mr. Schatz obtained a $171,000 mortgage loan from the good people at Countrywide.  If we take this at face value, it means Mr. Schatz paid $190,000 to buy the house, got a $171,000 loan – which means he made a down payment of $19,000.  How many people think there was an appraisal done that showed a value of (at least) $190,000?

Raise your hand if you believe Mr. Schatz made a $19,000 down payment.

I took the above picture on January 1st, 2007 (New Year’s Day) at about 9:30am.  I knew something didn’t look “right” about this property, but it took a minute to register.  Click on the image to see a larger photo, and see if you can spot it.  The temperature was about 5 degrees.  And 2 of the windows (above the garage) are wide open.  The house is vacant, with a path shoveled to the front door.

This was not the first time I had seen this.  Very cold day, vacant house, and 1 or more upstairs windows wide open.  I want to be clear about this – I don’t claim to know anything more than what I saw with my own eyes – and even that could be wrong.  Having said that – I wonder if the reason windows are open on a cold day in a (more or less) vacant house is Meth Lab.

I did a Google search on “Jack G Schatz” – the licensed real estate agent and (investor) owner of this property.  It turns out Mr. Schatz was a Plaintiff in a civil suit (legal action) in Denver District Court, and an appeal.  The other party is a person named Feerouz Jafari.

No. 99CA1431 NOT SELECTED FOR PUBLICATION
Jack G. Schatz,
Plaintiff-Appellee,
v.
Feerouz Jafari,
Defendant-Appellant.

Appeal from the District Court of the City and County of Denver
Honorable John W. Coughlin, Judge
No. 99CV1317
Division IV JUDGMENT REVERSED
Opinion by CHIEF JUDGE HUME AND CAUSE REMANDED
Marquez and Dailey, JJ., concur WITH DIRECTIONS

This property is now on the market, with an asking price of $229,900.  Hope springs eternal.  New carpet, interior paint, and new counter in the kitchen.  No indication of a bidding war this time.

What are the chances of Jack Schatz selling his investment at a reasonable profit?

Just to get a rough idea, I looked at a quick and dirty CMA.  It shows 9 sales in the past 12 months from $158,000 to $191,900.  Let’s have a closer look at the highest sale.  5583 Hannibal, the MLS listing shows this is a short sale.  Asking price of $255,000 (hope springs eternal) and an actual sold price of $191,900.  The deeds report shows the price was $191,000 – for a difference of $900.  My guess is the deeds report is right, and the MLS listing is wrong – but in any event, the difference is only $900.  The listing history show the property on the market for 85 days.

The listing agent (Esdrel Peinado of Top Producers) reported a seller concession of $zero.  Sold date is 1/12/07.  This property was purchased by Camilo Ochoa, who obtained a mortgage loan of $191,000 from the good people at Lenders Direct Capital Corp – one of the Tieskotter lenders.

Presumably they looked at the sale when Jack Schatz bought 5560 Helena – a very similar property, and similar situation (lender owned).  And who knows, maybe the real estate agent told Camilo that Jack paid $190K, so that’s the market value.  Right?  How many people believe Jack paid $190?

How many people believe there was no seller concession included in the purchase price when Camilo Ochoa bought her house?

How many people believe the lenders, real estate agents, appraisers, mortgage brokers, title companies, continue to do the same thing that got Montbello into this mess?  How many people believe the $190,000 mortgage loan to Camilo Ochoa is headed for the same end result as Shawn/Richard/Darlene Tieskotter (make payments for 6-12 months, and then foreclosure)?  How many people believe Camilo Ochoa moved into the house and actually lives there?

Want more?

Let’s have a look at 5556 Helena – more or less the next door neighbor of Jack Schatz.  The MLS listing shows this property is now (02/18/07) under contract, with a listing price of $174,900.  Described as lender owned, good condition.  The listing history shows a failed attempt in June of 2006 at $185,000, and now a quick (pending) sale at $174,900.  How many people think this property will sell with 100% financing?  How many think that whoever buys this house will move in and live there?

Picture

mortgage fraud real+estate Montbello Kirill+Merkulov Deutsche+Bank Teamwerk Jack+G+Schatz Feerouz+Jafari Meth+Lab Esdrel+Peinado Top+Producers Camilo+Ochoa Lenders+Direct+Capital Countrywide Tieskotter

technorati ping / blog phil.rice / Real Estate Yard Signs / fraud / mortgage / real+estate / Montbello / Kirill+Merkulov / Deutsche+Bank / Teamwerk / Jack+G+Schatz / Feerouz+Jafari / Meth+Lab / Esdrel+Peinado / Top+Producers / Camilo+Ochoa / Lenders+Direct+Capital / Countrywide / Tieskotter /

February 15, 2007

Colorado Division of Real Estate
1560 Broadway #925
Denver, CO 80202
Attn: Erin Toll

Complaint

This is a complaint against the real estate and/or appraisal license of: Gregory S. Woods (CR1315440), Joshua David Toerpe (FA100008390), Infinity Mortgage Inc, Glen Cary (EA271011) and his employing broker at Re/Max Professionals, Michael Allen Burns (ER1285245). I would also like to include in this complaint the selling real estate agent and his/her employing broker. The identity of this person and company should be available from Darren Hayden and/or Josh Toerpe.

Discipline History

On May 3rd, 2006, I spoke with Jim Kipp at BOREA 303-894-2133. Per BOREA: Glen Cary’s real estate license was suspended 4.5 months in 1984 – case #266. In 1994 there was a settlement – case number 9400023. There have been at least 9 complaints filed – Glen Cary has been accused of being unworthy and incompetent. The most recent complaint came in 2005.

Documents:

Subject Appraisal: 12933 Silver Elk Lane, Littleton, CO 80127. Appraised for a purchase mortgage at a smooth $2.5 million as of 03/18/06 (report signed 03/21/06).

• Appraisal Report
  1. Invoice – $1,000
  2. URAR pg1
  3. Sales Grid
  4. URAR Comments
  5. Signature
  6. Comps 4-5
  7. Check Box Addendum
  8. Sketch
  9. Map
  10. Qualifications/Experience
• Subject – MLS Listing
• Subject – listing history
• Subject Deeds Report – now (i.e., after the sale)
• Subject Deeds Report – at the time of the appraisal
• comp 1 MLS listing
• comp 1 listing history
• comp 2 MLS listing
• comp 2 listing history
• comp 3 MLS listing
• comp 3 listing history
• comp 4 MLS listing
• comp 4 listing history
• comp 5 MLS listing
• comp 5 listing history
• CMA
• better comp – MLS Listing
• better comp – Listing History
• better comp 02 – MLS Listing
• better comp 02 – Listing History

The Players:

• Appraiser: Gregory S. Woods
• Mortgage Broker/Client: Infinity Mortgage, Inc.
• Borrower: Joshua David Toerpe (FA100008390)
• Mortgage Lender: Shasta Financial Services Inc, a/k/a First Capital Mortgage
• Listing Agent – Glen Cary (EA271011)
• Selling Office – Unknown – this information will be available on Darren Haden’s copy of the purchase contract.

Factual Details of the Complaint

My investigation leads me to believe that:

This appraisal and an appraisal by Darren Hayden were submitted to a local lender in support of an application for a $2.5M mortgage loan.

Technical Issues

Appraisal report page #19 headed “APPRAISER’S QUALIFICATIONS AND EXPERIENCE” says that (presumably on the date of the appraisal, March of 2006) Gregory S Woods was an “SRA Candidate Member of the Appraisal Institute”. I searched the AI webpage in February 2007, and I could find no evidence of any association with the AI. This could be a timing issue – i.e., maybe he was then but is not now.

Comp #2 date of sale is listed in the report as “11/04″. Per MLS listing, the actual date of sale is 10/29/04.

My review of the neighborhood market data leads me to believe that Greg Woods simply made up the numbers. On URAR page #1, the report says neighborhood “one unit housing” stats are low=400, high=3.5M, Pred.=1,700. These numbers are not consistent with the top of URAR page 2, which says there are currently (March 2006) 7 comparables offered for sale from $1.5M to $3.0M and 6 sales within the past 12 months from $1.5M to $3.0M.

I ran a CMA for 12 months sales in sub area ‘White Deer’ or ‘Deer Creek’. It shows 8 sales from $216,000 to $1,575,000 with $337,475 the median. I don’t claim my CMA is the one and only right answer, but it points to a very large discrepancy.

In my opinion, these numbers are important. An important part of understanding these numbers is to understand (exactly?) how the appraiser defines the neighborhood. In this report, Mr. Woods defines the neighborhood with this statement:

NEIGHBORHOOD BOUNDARIES CAN BE SEEN ON THE ATTACHED MAP

I looked at the attached map, and I don’t see neighborhood boundaries. In my opinion, Mr. Wood’s statement indicates he was unable and/or unwilling to answer the question.

The sketch addendum in the Greg Woods appraisal report (page 17) is an exact duplicate of the sketch that shows up in the appraisal report done by Darren Hayden (CR40030346). And to be clear, when I say “exact duplicate” I mean these 2 appraisers both use Alamode software, and one of them passed the computer sketch file to the other, who simply uploaded it into the appraisal report. For the appraiser who used the other guys sketch file, the whole thing took about 10 seconds.

My estimate is about 45 minutes to accurately measure a house of this size and complexity, and then another 20 minutes to input data from the field notes into the sketch software program (i.e., into the report). Therefore, measuring and sketching the subject property is covered by Cert #19, which says “If I relied on significant professional assistance from any individual in the performance of the appraisal or preparation of the appraisal report, I have named such individuals…”

I don’t have a problem (per se) with 2 appraisers sharing the same sketch file, provided it is properly disclosed in the report. No other names of individuals are mentioned in the appraisal report by Greg Woods or the appraisal report by Darren Hayden. There is no disclosure (direct or indirect) of professional assistance from any other individual.

The appraisal report presents 5 comps. Comp #4 and #5 are active listing. With the benefit of hind-sight, we can see that comp #4 was a reasonable choice, and maybe not comp #5.

Comp #1 is a sale from December 2004 (15 months ago), 9650 S Cougar Rd. It’s difficult to justify not using the sale at 9590 S Cougar Rd, a sale from Jan 2006 (3 months ago).

Comp #2 is a sale from October 2004 (17 months ago), 12558 Grizzly Drive. It’s difficult to justify not using the sale at 12963 Silver Elk, a sale from Feb 2006 (3 weeks ago).

Comp #3 is a sale from out of the neighborhood, also more than 12 months old, with GLA 3,600 sq ft more than the subject.

I don’t necessarily have a problem with comp #1 being included in the report – it provides an upper bracket for GLA. Comp #3 is a stretch, and there is no way to justify leaving out the 2 recent sales from the same neighborhood.

It’s obvious that Mr. Woods selected (and rejected) comps using $price as the primary criteria.

Subject Listing & Contract

USPAP says the appraiser must consider the subject contract and marketing history.

Pursuant to USPAP Std 1-5(a) and 2-2(b)(ix), if a copy of the contract was unobtainable, a statement on the efforts undertaken by the appraiser to obtain a copy of the contract is required. If the contract is irrelevant, a statement acknowledging the existence of the information and citing its lack of relevance is required. The subject appraisal report URAR page 1 says:

THE CONTRACT WAS NOT SUBMITTED FOR REVIEW

The required “statement on the efforts undertaken” is not in the report.

The URAR asks if the subject property is currently offered for sale, and the report correctly checks the box that says “yes”. Then the URAR asks the appraiser to report the data sources used, offering price(s), and date(s). The appraisal report (URAR pg1) says:

THE SUBJECT IS CURRENTLY LISTED FOR $2,500,000

This is factually incorrect, and all things considered, it is intentionally misleading.

The listing history shows the property has been on the market 545 days – since September of 2004. On the effective date of the appraisal, the asking price was $1,695,000. On March 20th, 2006, the listing agent changed the asking price to $2,500,000. I believe (I could be wrong) this price change is a violation of the MLS rules. I also believe this new price would have showed up (i.e., available to the appraiser) the next day – March 21st, 2006 – the same day Greg Woods signed the report.

If we bend over backwards, we can maybe justify the statement that the current asking price was $2.5M. However, there is no way to justify omitting the pertinent data (dates and $ amt) from the listing history.

Gregory S. Woods knew (or should have known) this contract was a blatant attempt at mortgage fraud. The buyer (a licensed real estate agent) intended to obtain a $2.5M loan, pay $1.7M to the seller. the plan was for some combination of the buyer, seller, 2 real estate agents, mortgage broker(s), title company, and 2 appraisers to then divvy up the $800,000 surplus cash. Each of the participants knew what needed to be done, and each did their part.

Call to Action

This complaint presents a brazen example of appraisal fraud – to the tune of $800,000.

By copy of this letter, I am asking the Colorado Attorney General, CBI, and FBI to consider criminal action against Infinity Mortgage Inc., and anyone else involved in the attempted mortgage fraud.

With the benefit of hindsight, we know that David Toerpe (FA100008390) did purchase this property for $1.7M on June 28th, 2006. Public records indicates he was able to obtain financing of $1,819,000.

The market data clearly indicates this property has a market value (as defined) of no more than $1.7M. It is not a slam dunk that the June 2006 transaction was free of fraud. It’s not 100% clear what this property might sell for without the mortgage fraud — maybe significantly less than $1.7M. I have formed an opinion that the current mortgage loan(s) is/are high risk for a bad ending.

It is a violation of USPAP for an appraiser to accept compensation for performing an assignment when it is contingent upon:

1. the reporting of a predetermined result (e.g., opinion of value);
2. a direction in assignment results that favor the cause of the client;
3. the amount of a value opinion;
4. the attainment of a stipulated result; or
5. the occurrence of a subsequent event (i.e., loan approval)

Does anyone think that is not what happened here? This is not rocket science – it’s right there in plain sight. All you have to do is read the report. It is readily apparent that Gregory S. Woods violated the above cited portions of the USPAP Ethics Rule.

During the past 6 years, the Colorado enforcement program for appraisers and real estate agents has been pathetically ineffective.

Nobody whose livelihood depends on getting deals done is going to believe things have changed until there is clear and compelling evidence that things have changed. A stern warning and a slap on the wrist is not going to get it done. At some point, the State of Colorado needs to demonstrate the resolve and the resources to revoke the licenses of those who played along. The longer it takes, the worse the problem is going to be.

Certification:

I certify that the statements and information supplied by me in this complaint including the attachments are true and correct to the best of my knowledge and belief.
Philip G Rice
11268 E Linvale Dr
Aurora, CO 80014
720-282-3376
phil.rice@mkgappraisal.com

cc:
Distribution List

Attachments sent to Erin Toll:

I have included a complete copy of the appraisal, deeds report, MLS listing for the subject and each of the comps. A complete copy of this letter, including all attachments and extensive additional documents and photos is/are available at:

http://www.mkgappraisal.com
/images/Skippy/woods_hayden/woods.htm

– End of Letter –

tags

Gregory S. Woods

appraisal appraiser mortgage fraud real+estate Erin+Toll seller+concession significant+professional+assistance gregory+s+woods darren+j+hayden infinity+mortgage onyx+financial+group Joshua+David+Toerpe Glen+Cary EA271011 Re/Max+Professionals Michael+Allen+Burns 12933+Silver+Elk Shasta+Financial First+Capital+Mortgage SRA Appraisal+Institute USPAP

technorati ping / blog phil.rice / fraud / mortgage / real+estate / Erin+Toll / appraisal / appraiser / seller+concession / significant+professional+assistance / gregory+s+woods / darren+j+hayden / infinity+mortgage / onyx+financial+group / Joshua+David+Toerpe / Glen+Cary / EA271011 / Re/Max+Professionals / Michael+Allen+Burns / 12933+Silver+Elk / Shasta+Financial / First+Capital+Mortgage / SRA / Appraisal+Institute / USPAP /

2545 Pemberly Ave, Highlands Ranch, CO 80126

• Buyer/Borrower = Eric M Orr (licensed appraiser)
• Seller = Robert A Coy
• Amount Paid to Seller = $530,000
• Loan Amount = $585,000
• Lender = Greenpoint Mortgage Funding
• MLS pg1 – Purchase 12/22/05
• MLS pg2 – listing history
• Deeds Report
• Mortgage Fraud = $55,000
• Listing Agent = Brad Smith, Re/Max Professionals
• Selling Office = SPACE = Kimberly White & Gillian E Stott

Comments: This item was originally published August 16th, 2006. Updated now to indicate the Buyer (Eric M Orr) is a licensed real estate appraiser. I found 2 other purchases by Eric M Orr – (12/14/05) at 6792 Bronzite Way in Castle Rock for a smooth $995,000 and (04/11/05) at 10565 Pearlwood Cir in Highlands Ranch for $336,000. The Bronzite property is now on the market with Kimberly White the listing agent.

2 real estate agents, the buyer/borrower, a mortgage broker, appraiser, and a lender all knew what needed to be done – and each did their part. IMHO, it’s likely Greenpoint sold this mortgage to a sucker.

Eric M Orr

mortgage fraud real+estate eric+m+orr brad+smith kimberly+white remax gillian+e+scott greenpoint robert+a+coy
technorati ping / blog phil.rice / Real Estate Yard Signs / fraud / mortgage / real+estate / eric+m+orr / brad+smith / kimberly+white / remax / gillian+e+scott / greenpoint / robert+a+coy /