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October, 2006 Blog

Forensic Appraisal Aurora Colorado

by: Philip G Rice, Certified Residential Appraiser, CPA, MBA

Ronald Daniel Williams, former licensed real estate appraiser in the State of Colorado. His name shows up the Denver Post article - Steal of a Deal. A person with the same name (maybe the same person, maybe not) was arrested in Fort Payne, Alabama in March, 2005. Died in jail on 10/04/06 in Alabama. RIP.

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Ronald Daniel Williams

mortgage fraud real+estate Ronald+Daniel+Williams

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10/26/06

Bails Update

MLS pg1 / MLS pg 2 listing history / Deeds report

Property at 17791 E Bails Pl, Aurora, CO 80017. Current MLS status is under contract - since 07/01/06 - about 4 months ago. The MLS status is wrong - this property sold for $174,900 in August. Carmen Gomez (listing agent) failed to report the sale in MLS. Ardell (real estate agent in Seattle) has a fine rant about MLS updates being a few days late - image how mad she would be if she worked in Aurora.

The buyer is none other than Reuben Droughns, running back for the Cleveland Browns. He played for the Broncos 2002 - 2004. Mr Droughns financed 65% of the purchase price and agreed to a 10% interest rate. The mortgage loan provided by the good people at Mortgage Lenders Network, USA. I wonder if Reuben Droughns knows he bought this house. Is it just me? Does this look like a problem?

Young Kim did OK on this deal. Keep up the good work Carmen!

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Bails Update

mortgage fraud real+estate Young+Kim Carmen+Gomez Ardell Reuben+Droughns Mortgage+Lenders+Network+USA

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10/27/06

Secresha Cooper

3090 Fairfax St, Denver, CO 80207

July, 2006 - MLS pg1, MLS pg2 - listing history, Deed.

Comments: July, 2006 - MLS pg1, MLS pg2 - listing history, Deed. The MLS listing says the property was "agent owned". The Deeds report says the seller was Paddy Q Cox. Sure enough, Paddy Cox is a licensed real estate agent, works at Key - a big office. It strikes me as very unusual that a licensed real estate agent would list and sell the property thru another real estate agency.

The 2 real estate agencies involved in the July transaction are: Listing Agent = John Lindauer with Metro Premiere Properties, a/k/a JGJ Properties & Investments, Inc.

Selling Office = 00510 = Premier Property Brokers, John Bivins – thief , ER201231. For another example of Mr Bivins handywork, check out 15639 Chenango.

So when the dust settled - LaMarcus Jenkins bought the house from Paddy Q Cox on 01/31/06. The contract price was $219,900 with a $6,300 seller concession. Days on market (DOM) = 226. The good people at New Century Mortgage provided a loan of $219,900 with an interest rate of 9.67%.

About 8 months later, in August 2006, LaMarcus Jenkins sold the property to Secresha Cooper for $340,000. That's $120,000 appreciation in 8 months time. Perhaps there was some work done to improve the property. It's hard for me to imagine how they could justify that kind of price increase. There was no MLS listing, which is very unusual. The mortgage loan was provided by First NLC Financial Services, LLC at an interest rate of 7.75%. New Century got their loan paid off and came out of this smelling like a rose.

Gregory Davis, the shrewd investor at 2470 Oswego. Appraiser, Real Estate Agent.

Had some trouble with the law in New Hampshire - is it the same person? Perhaps a different Gregory Davis.

10/27/06

Rapid Rise Update

The Tampa Tribune published at least 3 follow-up stories -

Tip of the cap to Francois Gregoire (I call him Frank because it's easier to spell). His name shows up a few times in these articles - IMHO, every state in the Union should be paying attention to the Florida Appraisal Board and using them as a benchmark. Things are clearly not perfect in Florida - but they are making a good effort to do something about it - and it does make a difference.

A RAPID RISE

This article was published in the Tampa Bay Tribune 10/22/06.

ST. PETERSBURG - A year ago, Dawn L. Molen quit her job as a commercial loan officer and set out to become a real estate agent. The 26-year-old got her license and quickly landed a job at Charles Rutenberg Realty in St. Petersburg.

With three months' experience, the agent who had never listed a home closed her first sale Jan. 27 in a working-class neighborhood. Her buyer paid $45,000 more than the asking price. It stunned her peers.

From then on, Molen brought in contracts by the stack.

Over the next eight months, the agent found buyers for 35 more homes, most of them clustered in St. Petersburg and Pinellas Park. At a time when real estate agents would have been happy to close two sales a month, Molen found buyers willing to consistently pay $50,000 to $70,000 more than the original price, according to documents obtained by The Tampa Tribune. Collectively, the homes sold for at least $2 million more than originally listed.

Her boss thought she was a rising star.

But there was something he said he didn't know: Some of the money wasn't going to the sellers. It was going to a third party with ties to Molen, sometimes without the knowledge of the lenders or the sellers. Federal and state laws require full disclosure to lenders detailing where the money goes.

By late September, real estate professionals noticed the unusual trend. One appraiser alerted a top official at a state board that regulates his industry, and a broker who worked with Molen asked the FBI to check it out.

By then, Molen's fortune had changed. She had been fired by two brokers who had become suspicious and she started a search for a new boss - one who could help her with a new stack of 18 deals.

A month long investigation by The Tampa Tribune found that all but two of the 36 homes were in mostly working-class Pinellas County neighborhoods and sold for an average of $60,000 above the asking price. At the same time, the sellers netted near or below their original listing price. In all of the sales, the same title company and the same buyer's agent were used.

The Tribune's research of Molen's deals reveals:

Settlement documents that do not disclose the seller's net price or do not indicate who received the difference between that figure and the inflated price.

In two cases, different settlement documents were created: one went to the lender and one was filed with Molen's broker. In one instance, the form filed with the broker showed a $120,000 "payoff," but the document received by the lender did not. Misrepresenting where the money is going on closing documents is a federal or state offense, depending on the financial institution involved.

Most listing agents inflated the asking price at Molen's request in the Multiple Listing Service, a database used by real estate agents. The change is a necessary step to get lenders to approve a bigger loan.

Most of the homes sold for $250,000 to $260,000, and the same appraiser was used for most of the homes. In at least four cases, the appraiser valued them at or near the inflated price in neighborhoods in which homes should be worth much less, other appraisers said.

Nearly all of Molen's buyers are from Indiana and belong to an investment group led by two men from Indiana and their Clearwater-based companies.

The difference between the higher price and what the seller received was listed as an "assignment fee," similar to a finder's fee, for the companies in most cases.

Molen's deals have several similarities to cases that have surfaced recently across the nation, some of which have resulted in investigations or prosecution for illegal activity.

As the torrid real estate market has cooled nationwide, more industry professionals may take chances to make a deal, experts say. Lenders say they are bracing for a fallout in which buyers ultimately default on their mortgages.

Experts say transactions such as Molen's can negatively affect lenders, sellers, buyers and people moving into the neighborhood.

Doug Pollock, president of Information Data Services Inc., which investigates problem mortgages for lenders and title companies, said lenders could be on the hook for loans worth more than the value of the home.

Real estate investors also may find they're not able to afford multiple mortgages. Sellers may have to pay taxes on the higher sales price and also may discover they have improperly signed federal documents, Pollock said.

Local real estate agents fear future buyers in the neighborhoods involved in the transactions may not be able to afford homes or higher taxes as a result of inflated prices.

Picky About Offers

People who know Molen professionally said she has a sweet way about her and was quick on her feet in job interviews, answering questions with confidence.

But she could become direct and defensive, too, especially when someone questioned one of her deals.

Several listing agents who met Molen said she insisted her offers be structured a certain way - with an inflated price to help the buyer get money back at closing for repairs. They also said she told them her buyers wouldn't close unless they were allowed to choose the title company.

Molen declined to answer detailed questions about her deals during a brief phone interview and did not reply to numerous attempts to reach her afterward.

In one of the largest transactions that Molen represented, two sets of documents were used to obtain financing from a commercial lender, a potentially fraudulent act. The document on file with the broker shows $120,000 being paid to another entity. In the document the lender received, the figure is absent. Both documents were signed by the buyers, sellers and closing agent, according to documents obtained by the Tribune. It's illegal to "knowingly make false statements" on federal housing forms. The law is cited on the documents.

That deal happened in April, when Molen presented an offer to buy a home at 1389 40th Ave. N.E. in St. Petersburg for $600,000 - $70,000 more than the list price. Documents provided to Molen's broker list a $120,000 "payoff" to one of the local companies that appears in many other deals. It is a company run by an associate of Molen's.

In another transaction, documents filed with the broker showed $65,000 being paid by the seller to an undisclosed entity. Victoria Lowe, a spokeswoman for the lender, Pinnacle Financial Corp., said the settlement statement her company has "did not show these payoffs."

Indiana Investor

Although Molen has been involved in all of the deals, documents show there was another common thread. Chad R. Evans, 33, shows up on some of the original contracts as a buyer who intends to transfer the deal to another person before the closing. Companies he helped form, Shorefront Ventures LLC and Tye Funding LLC, also received assignment fees, documents show.

Evans, who is from Indiana, said he moved to Florida to invest in the state's booming real estate market after profiting from buying and selling homes in Ohio.

He described himself as a lender and investor. "I educate people, help them put deals together," he said.

Evans said he remains the managing member for Tye Funding. His name also shows up on some documents in which Shorefront receives an assignment fee. He said he started the companies to lend money to a group of investors he knows personally. Evans is registered as a mortgage broker, but neither company is a licensed lender in Florida.

That's not necessarily a problem, said Alisa Goldberg, financial administrator with the state Office of Financial Regulation. The companies may have qualified for an exemption, but she said she didn't have enough information to know for certain.

Evans said he works with investors to help them find homes to buy and then lends them the money. The purchase prices are inflated, he said, because he requires his buyers to borrow additional money to set aside in case the home needs repairs. The "speculators," as Evans called them, make their mortgage payments to him.

Evans said he was involved only in deals in which he acted as the lender. But documents show that's not the case. His companies received assignment fees on deals with institutional lenders, and he put many of those deals together, acting as the original buyer, listing agents said. On transactions his company originally funded, the mortgages often were refinanced later with other lenders.

Evans declined to be more specific and after an initial interview did not return repeated phone calls over several weeks or answer letters sent by FedEx to his office and other addresses.

A man whose name does not appear on loan documents reviewed by the Tribune is Chris Y. Malcom, managing director of Shorefront. The 36-year old, also from Indiana, helped Evans start the company, Evans said.

Numerous messages left on his cell and office phones were not returned. He also did not respond to a letter sent by FedEx to his office.

Evans and Malcom are connected to Molen through the deals, although Evans' connection runs deeper.

Evans and Molen are listed as managing members of another real estate company. That company is now inactive, but its business address is listed as a piece of property owned by Molen.

At Any Price

Although Evans, Molen and Malcom set up the deals, it took other professionals and willing sellers to complete them. Investors, listing agents and sellers agreed to their part in the transactions, even though they said they weren't aware of all the details.

"When you make your money based on real estate sales, it's tempting to do whatever you have to do to make sure you keep making sales," said Pollock, the mortgage investigator.

Lee Farkas, chairman of Ocala-based Taylor, Bean & Whitaker Mortgage Corp., said his institution funded four of Molen's deals. He was surprised to discover the assignment fees and did not realize the property had sold for more than it was originally listed. "There's no way we would do a loan structured like that," said Farkas, who plans to look more closely at Molen's deals.

More than a dozen sellers and listing agents interviewed by the Tribune said they felt uneasy about the transactions but went along after employees at the title company assured them they were legal and not unusual.

"As long as I got my $180,000, I didn't care what they were doing," said John Dieumegarde, whose home at 4935 42nd Place N. in St. Petersburg sold for a recorded sales price of $251,000. "Hell if I know what they did with the money."

One listing agent sold two homes to the group. Jennifer Gay of Shirley International Realty in St. Petersburg said her primary responsibility was to represent the sellers and get the price they wanted. "These are the first two deals I've encountered that were structured this way," Gay said. "It was unusual, but my sellers were happy."

One of her sellers, a widow who needed to make a deal fast so she could purchase a low-maintenance condo, was thrilled with the $180,000 price she received. The recorded sales price was $65,000 more.

Sellers weren't the only ones unaware of all the details in Molen's deals.

At least one investor said he was unaware of assignment fees paid to the Shorefront and Tye companies or that prices on homes he was purchasing were inflated by tens of thousands of dollars.

"I don't know why the price would be higher," said Troy Rush, an Indiana investor who said he knows Evans from high school. "They use my name because my credit is good."

Rush has been in the investment group for six months and owns five homes he has never seen. He said he hopes the group will sell his homes and give him a big return on his investment.

One Tampa title company, Ocean Title & Abstract, handled the settlements on all 36 of Molen's completed sales. Molly Boston, managing director for the company, said she couldn't comment on how the settlement papers were structured because they are not public record.

In one case in which two sets of settlement documents were prepared, an Ocean Title employee's signature appears on both.

In September, Molen, Evans and Malcom moved their title work to Linsky & Reiber Real Estate & Title Services Inc. in south Tampa.

J.T. Pelt, company president and chief executive, said the two men told him about their business strategy, and he told them he would work with them "as long as the lender knows and the seller knows and the buyer knows."

Pelt said the company has completed at least one transaction and "everything was on the up and up."

Appraisals Checked

Before a lending institution agrees to fund a residential real estate deal, it typically requires a professional appraisal to ensure the house is worth the sales price.

The Tribune reviewed paperwork from four appraisals that was provided to one of the lending institutions. In each case, the property appraised within a few thousand dollars of the recorded sales price.

Now, other appraisers are stumbling across Molen's deals as they search for comparable home sales to help determine the value of nearby properties.

On paper, the sales appreciation is astonishing, said Doug Nail, an appraiser with Tampa Bay Appraisal Co. "This is not a $250,000 neighborhood," Nail said, referring to one in St. Petersburg.

Nail evaluated one of Molen's sales, at 5244 46th Ave N., for the Tribune, without relying on recent sales represented by Molen. He estimated the house's value at about $145,000. One of Molen's buyers paid $250,000 for the house in September.

Frank Gregoire, a Pinellas County appraiser and chairman of the Florida Real Estate Appraisal Board, said he has been getting phone calls about Molen's sales in recent weeks. Appraisers are unsure how to evaluate property because the inflated sales are skewing their appraisals, he said.

"A competent appraiser would say, 'What in tarnation is going on?'" he said, "particularly in the market we have right now."

'I Don't Think She Realizes It'

Two of Molen's former bosses also began to wonder, and they fired her.

Her first boss, John Rurkowski, the managing broker at Charles Rutenberg Realty in St. Petersburg, said he became suspicious after Molen asked agents in his office to change the list price in the Multiple Listing Service to reflect the higher prices. He signs off on deals for 1,800 agents and said he would have missed the price adjustments if fellow agents had not come forward.

"I don't even think [Molen] realized what she was doing was wrong," Rurkowski said. "I don't think she realizes it today."

Her next boss found out the same way, but delved deeper. He was also troubled that the same title company was used and that the large assignment fees were going to the same companies.

Jim Sweetin of Re/Max ACR Elite Group in south Tampa called the Florida Association of Realtors' legal hot line and asked for advice after Molen walked in one day with 18 more pending sales contracts.

The lawyer at the hot line advised Sweetin to part ways with Molen and withdraw from the transactions, which he did. Then he called the FBI and gave them copies of the contracts.

FBI spokeswoman Carol Michalik said she couldn't confirm or deny whether the agency received the files or was investigating.

Agent's Second Job

While Molen was employed by the two real estate brokers, she quietly worked as a mortgage broker, operating a branch office out of her $450,000 south Tampa condo.

The letters in TLW Mortgage Lending Inc.'s name stands for The Lord's Work, and principal owner Michelle Darby believed in Molen. She said the agent arrived in early 2006 highly recommended by other professionals.

Some real estate agents work as mortgage brokers and the practice is not considered unethical as long it's disclosed to clients and the agent's employer. Darby knew Molen was working both jobs, but Sweetin did not. He said he would have reviewed her files more closely if he had known.

As mortgage broker, Molen communicated with at least one commercial lender on four of her deals. She provided financial statements and other documentation the lender required.

Darby said she and her friend Jennifer Akins started the company because they observed so much fraud in the mortgage industry.

Darby said she was surprised to learn about details of Molen's deals. She said Molen was a genuinely good person who was cheerful and honest. "From everything I know about her, she's a wonderful woman," she said. "But I need to separate myself."

Darby later let her go. She said she contacted all of the lenders Molen had dealt with.

When the last real estate broker fired Molen, her 18 pending sales ground to a halt. Without a broker, she can't collect her commission.

Postponed Transactions

Now Evans has taken over and is trying to close the deals. Brokers say he has rewritten contracts so that Molen's commission would be paid to him or his company. For some reason, he is postponing some of the closings.

One by one, the unsuspecting sellers are figuring out their transactions are stuck.

Korri Prendergast, a broker at Emerald Real Estate and Co. Inc. in St. Petersburg, said the closing on her client's St. Petersburg home was postponed twice. The contract expired Oct. 13, the day of the last planned closing.

Meanwhile, Molen is looking for a broker to hire her. She sought work with Pelt at the Linsky and Reiber title company. He also has a real estate broker's license.

He said she asked him for a job, but he said he told her "under the circumstances, that would be a bad idea."

Word of Molen's deals is spreading throughout Bay area real estate circles, prompting local appraisers such as Caryn Blauser to conduct her own property searches. She was astonished by what she found. Molen's sales are not isolated. She has found many local homes selling for substantially more than the original price.

"There's some weird stuff going on," Blauser said. "The buyers may chalk it up to creative financing, but we may soon see a lot of mortgage foreclosures because everyone wanted to make a quick buck."

Researcher Michael Messano contributed to this report. Reporter Shannon Behnken can be reached at (813)259-7804.

TRIBUNE INVESTIGATION

Findings:

Thirty-six homes, mostly in working-class Pinellas County neighborhoods, sold for an average of $60,000 above the asking price.

The sellers received near or below the original asking price.

The rest of the money - at least $2 million collectively - was paid to investor groups involved in the deals.

In two cases, two sets of settlement documents were created: one for the broker that shows a "payoff" and one for the lender that does not. Federal and state laws prohibit misrepresenting where the money goes in closing documents.

What It Means:

If a buyer defaults, the lender may not be able to recoup the amount of the loan because the property is valued at considerably less than the loan amount.

Sellers may have to pay taxes on the higher sales price.

Selling prices for other homes in the neighborhood may become skewed by the inflated sales prices.

$190,000: Beginning list price. $251,000: Recorded sales price. $180,000: Seller's net price. $71,000: Difference paid to Tye Funding.

$216,000: Beginning list price. $260,000: Recorded sales price. $190,000: Seller's net price. $70,000: Difference paid to Shorefront Ventures.

$174,900: Beginning list price. $250,000: Recorded sales price. $169,900: Seller's net price. $80,100: Difference paid to Tye Funding.

$165,000: Beginning list price. $200,000: Recorded sales price. $135,000: Seller's net price. $65,000: Difference paid to Shorefront Ventures.

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Dawn+L+Molen FBI Shorefront+Ventures Tye+Funding Chad+R+Evans Chris+Y+Malcom Real+Estate Appraisal Mortgage+Fraud

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