Ma & Pa Tieskotter

November 14th, 2005

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

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 --

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