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March, 2007 Blog

Forensic Appraisal Aurora Colorado

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

Denver Post, article ran 03/28/07, xx

High-risk mortgages a low blow

by: Jim Spencer

Utah financial entrepreneur Rich Ferguson considers it a kick-start to the American Dream of homeownership and a boon to the whole U.S. economy.

Boulder lawyer Bill Robinson calls it a "kick-forward" that, like a kickback, creates artificially high real estate prices and contributes to foreclosures.

Companies that give financially strapped buyers tens of thousands of dollars before they buy houses they might not otherwise afford are a blessing or a curse. It depends on whom you talk to.

That's because home sellers - not homebuyers - pay back the front money, along with commissions to the companies providing it. Meanwhile, investors backing the resulting risky mortgages usually remain clueless.

It's complicated, and it has grave consequences. Last month, foreclosures of high-risk mortgages helped cause the largest percentage single-day stock market drop in four years.

Programs such as Ferguson's Payout One and Falcon Marketing Group give prospective homebuyers large sums of money before loans close. The funds come with almost no strings.

Buyers don't have to repay the cash so long as they purchase homes from specified sellers for specified prices. Sellers pay off the front money at closing, along with commissions.

Amounts can be significant. A recent Denver-area house sale showed a seller transferring $49,995 to PayoutOne to repay $45,450 in pre-closing buyer's cash, plus a $4,545 commission.

PayoutOne founder Ferguson said his company operates within rules governing high-risk and other "nonconventional" loans. Mortgages for which his product is used have "no sourcing or seasoning required," Ferguson said.

Sourcing means disclosing where money comes from. Seasoning means holding money for a specified time.

"We only fit on some loans," Ferguson said. "We require that it be shown on the closing statement."

But only as an account payable for the seller. The recent Denver home sale never showed that the buyer got $45,450 from the seller through PayoutOne. The disclosure is critical, Robinson said. It shows a home's value may be artificial.

Upfront cash that inflates prices, combined with no-money-down mortgages, makes it easy for properties to slip into foreclosure, said Greg Fortune of Capital Access Mortgage. Meanwhile, he added, "the guy who bought the house next door sees his property value go down."

Falcon Marketing's Robert Allen was recovering from surgery. He referred me to the company's website. Falcon's program is similar to PayoutOne's: "What if through existing lender guidelines, the right property and our program you could pay off credit-card debt and get into the home you have been looking for?" the Falcon website asks buyers.

The whole idea is for buyers to pay prices that are higher than what the current market will bear, Robinson said.

One buyer-subsidy program, DpFunder, hires would-be homebuyers to enroll prospective sellers in an "Owner's Alliance." Buyers collect a taxable "commission" for convincing sellers to join the alliance. The alliance then charges the sellers membership fees to cover the commission, plus profits. John Wyatt of DpFunder said the buyer's commission is a fee-for-service that differs from PayoutOne, which Wyatt calls "hiding money."

However they organize, these programs let folks buy homes they might not otherwise afford. It may be too good to be true. Legally, said attorney Robert Reed, no one can make payments on behalf of a homebuyer without disclosing.

Wyatt says he's paying contractors. Ferguson says his disclosures meet the rules.

"We are at the highest rates of homeownership," Ferguson said. "When you look at the impact, a strong real estate market has done more than a temporary 5 percent drop in the Dow Jones."

Try telling that to people losing homes to foreclosure.

Try telling it to people living next to dilapidating, unoccupied properties.

Try telling it to everyone if the country slips into a recession as it did in the housing slump in the 1990s.

Jim Spencer's column appears Monday, Wednesday and Friday. Reach him at 303-954-1771, jspencer@denverpost.com or blogs.denverpost.com/spencer.

More Form Letters

Josh Toerpe, Greg Woods, Glen Cary, Michael Burns - form letter dated 02/27/07

Dennis Danek - result for complaint filed in September of 2005 (18 months ago).

Jill Orr - Complaint No. 80357299.  Form Letter dated 03/13/07, post mark 03/22/07, received 03/23/07.

Complaint 80357195, form letter response for Ashley Deal, Melissa Velez and Jamie Hansen.

Complaint dated 02/08/07, Results for: Karen Coffman, Robert Edgin, Amy Ell, George Cronk.

Complaint dated 01/26/07, result for Brad Brooks

Complaint dated 01/31/07.  Jennifer McNally (Form Letter), and Paul Smola (Form Letter), at Allstars Real Estate.  Kimberly White Form Letter.  Patrick J McNally form letter.

Complaint against Steve Kittel.  Form Letter.

March 24, 2007

Biscay Update

1581 Biscay Ct, Aurora, CO  80017 --  this item originally posted in February, 2007.  The deeds report now shows a 100% mortgage loan made by the good people at Universal Lending.  The listing history tells the story.  Is this one of the last mortgage fraud loans?  Or not?

tags

rex02 realty+executives+of+aurora robert+c+mcclure EI278911 rob+mcclure mb+mcclure wells+fargo universal+lending richard+andrew+higgins

March 14th, 2007

Colorado Division of Real Estate
1560 Broadway, #925
Denver, CO  80202
Attn:  Cary Whitaker

This is a complaint against Joseph Harmes III and Mason-Financial, see below for contact info.  My investigation leads me to believe this person and/or company are acting as a mortgage broker without a license.  See attached comp check form.

Mr Harmes wants a comp check on 3278 S Evanston St, Aurora, CO  80014. He is hoping for a value of $230,000 to make his deal work.  Mr Harmes called me on 3/13/07 and claimed to already have one bid from a local appraiser at $215,000 with a 7 day turn around.  He was hoping I could do better.  Mr Harmes told me that once he finds a "good" (his word) appraiser, he keeps that name and phone number and from then on, that "lucky" (my word) appraiser gets all of Mr Harmes business in that area.

All things considered, I have formed an opinion that Mr Harmes statements have "less than perfect" (my words) credibility.

Joseph R. Harmes III
Loan Officer, Mason-Financial inc..
619.829.2222 cell
619.660.3400 fax
888.660.3401 toll free
JHarmes@mason-financial.com

Thank you




Phil Rice
11268 E Linvale Dr
Aurora, CO  80014
720-282-3376
phil.rice@mkgappraisal.com

Tags: Joseph Harmes

mortgage fraud real+estate joseph+harmes mason+financial comp+check atenafu+tige

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This article/column appeared in the Sunday Denver Post (03/11/07).

Cry Not For Mortgage Lenders

They gambled with other people's money

By: Al Lewis
Denver Post Staff Columnist

Glenn Puller and Cindy Ingram are on their way to federal prisons for mortgage fraud.

At a sentencing hearing last week, Puller received one year and Ingram received two years in prison for their separate roles as straw buyers in a massive mortgage fraud scheme in Aurora. "I apologize to the lenders," Ingram told the court. Puller said the same.

I [Al Lewis] wanted to laugh out loud in the courtroom. Lenders make money lending, even when borrowers never pay it back. The industry runs on loan volume, not loan quality. Mortgage companies sell the loans they make to Wall Street investment banks, which sell them to investors.

This is why Puller and Ingram were able to get loans to acquire multiple homes at inflated selling prices of around $600,000 apiece. Puller and Ingram are among seven defendants accused of taking $2.1 million out of 17 phony home sales, mostly in the Villas at Cherry Creek, a gated community bordering Cherry Creek State Park.

The scheme began with Ronald Fontenot and Torrence James, who met in federal prison and became mortgage brokers once released. Puller and Ingram were among their dupes paid to pose as buyers and sign bogus documents. Among the lenders they defrauded was New Century Financial, whose stock has been in a free fall.

As the Irvine, Calif.-based company cranked out loans across the country, its stock hit $66 a share in December 2004. On Friday, New Century's stock closed at $3.21. The previous Friday, New Century disclosed that federal prosecutors and securities regulators were investigating accounting errors and stock sales at the company. New Century's three founders made more than $40.5 million selling stock from 2004 to 2006, according to a report in The New York Times last week.

New Century had big bets in the subprime lending market. That's financial-speak for making loans to people with less-than-stellar credit histories. Last year, lenders made $600 billion in subprime mortgages, comprising 20 percent of all mortgages made, according to a trade publication, Inside Mortgage Finance. More than half of these loans have adjustable rates. That means borrowers with shoddy credit histories have increasingly received loans whose monthly payments are steadily rising with interest rates.

This is why foreclosures are on the rise in Colorado and across the nation. "The market deals with this in a very merciless way," said Guy Cecala, publisher of Inside Mortgage Finance, noting the plunging stocks of subprime lenders. "New Century is going to be put out of business. ... Investors are talking with their feet." The founders, who sold millions worth of their stock, do not seem punished to me. Meanwhile, the real losers are shareholders who didn't sell their stock, and homeowners, whose home values rise and fall in a mortgage market with lax underwriting standards.

Former federal prosecutor Anthony Accetta, now a Denver-based fraud investigator, has helped shut down several mortgage companies for fraud over the years. "The guys at the top know exactly what's going on," Accetta said of his experience. "They want the lending standards reduced so they can make as many loans and collect as many fees as they can. ... They are the ultimate beneficiaries of the crime. And the crime is making false statements to get a mortgage loan."

Another subprime market leader, Countrywide Financial, recently reported that 19 percent of its subprime loans were more than 30 days delinquent. That's nearly one out of five going bad. The company also said it made $41 billion worth of subprime mortgages last year and $46 billion in 2005. Before news of Countrywide's widening subprime delinquencies broke, its CEO, Angelo Mozilo, sold $140 million in stock over the past 14 months, The Wall Street Journal reported last week. Mozilo, who co-founded the company 38 years ago, defended a 19 percent delinquency rate. "That means 81 percent of these subprime borrowers are making their payments on time," he told the Journal. "That 81 percent never would have had the opportunity to own a home." Countrywide also was among lenders Puller and Ingram apologized to in court.

Al Lewis' column appears Sundays, Tuesdays and Fridays. Respond to Lewis at denverpostbloghouse.com /lewis, 303-954-1967 or alewis@denverpost.com.

Kimberly K White

Screen Shot

A Google search on "Kimberly K White" returns this headline:  Kimberly K White - A Denver Colorado (CO) Real Estate Lawyer.  There is a link to this page, which identifies the law firm as Wolf & Slatkin at 44 Cook St in Denver. 303.355.2999.

Further research leads to this interesting page of info about Wolf & Slatkin.  I have my doubts about the person who posted this page - he/she seems to dislike the Bush family.  If you dig far enough, the page mentions HUD Fraud in Oklahoma.

Kimberly K White may be (or was?) an assistant district attorney in Oklahoma - although I wonder why this would show up on a normanhomes url.

When I do an attorney search on the Colorado Supreme court website, I am unable to confirm that Kimberly White is properly licensed to practice law in the state of Colorado.

Kimberly K White may be (or was?) an assistant vice president at First Interstate Bank of Texas, N.A (now Wells Fargo).

My comments:  The info presented above is all very questionable - I have not made any effort to confirm (or deny) any of it.  My conclusion - if the Colorado Board of Real Estate (or anyone else) tries to take Kimberly White to court - they will be up against a worthy opponent.  Anyone who under-estimates Kimberly White is making a mistake.

Tags: Kimberly K White

mortgage fraud real+estate kimberly+k+white cash+back+at+closing

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March 06th, 2007

Colorado Division of Real Estate
1560 Broadway, #925
Denver, CO  80202
Attn:  Cary Whitaker

This is a complaint against Craig C. Michael and Berkshire Capital, see below for contact info.  This person and/or company are acting as a mortgage broker without a license.  Please listen to the audio clip.

Audio message dated 03/05/07, available at:
http://www.mkgappraisal.com/images/blog_2007mar/michael.wav

Mr Michael wants a comp check on 17785 E Ohio Cir, Aurora, CO  80017.  Mr Michael is somewhat address impaired - he left off the city and added "Camel Back".  Mr Michael reports this property sold for $166,000 2 years ago, and he is now hoping for a value of $200,000 to make his deal work.

MLS listing, history, and deeds report tell the story.  Brian Wilcox bought the property as an REO sale in December of 2005 (about 14 months ago).  He paid about $150,000 and got a loan of $160,000 from the good people at Sebring (a Tieskotter lender).  Sebring has since gone kaput.  The deeds report shows another loan 7 months later in the amount of $60,900 (maybe an equity line) by the good people at Sterns Lending.

This email received 03/05/07, with "Value Check Order Form" attached.

Hello, I was hoping you could do a value check on this home for me please. I appreciate it.  Thanks,
Craig C. Michael
Berkshire Capital®
3290 W. Big Beaver Rd., Suite 503
Troy, MI 48084

Phone: 248.822.7121 Ext. 1265
Fax: 248.822.7136
Cell: 586-634-8794
E-mail: cmichael@berkshirecapital.com
Site: www.berkshirecapital.com
Berkshire Capital your mortgage banking partner

P.S. My business is 100% referrals. Who do you know that needs to be pre-approved to purchase a home? Can you think of anyone that needs to refinance to lower their monthly payments, consolidate debt, or take money out for home improvements? I appreciate your support!

+ + + + + + + + + + + + + + + + + + + + + + + + + + + +

This Internet message may contain information that is privileged, confidential, and exempt from disclosure. It is intended for use only by the person to whom it is addressed. If you have received this in error, please (1) do not forward or use this information in any way; and (2) contact me immediately. Neither this information block, the typed name of the sender, nor anything else in this message is intended to constitute an electronic signature unless a specific statement to the contrary is included in this message. BERKSHIRE CAPITAL LLC

Thank you




Phil Rice
11268 E Linvale Dr
Aurora, CO  80014
720-282-3376
phil.rice@mkgappraisal.com

Tags: Craig C Michael

mortgage fraud real+estate craig+c+michael berkshire+capital comp+check brian+wilcox

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Train Wreck

For several months beginning (about) August 2005, I tried really hard to notify Fremont and New Century of the mortgage fraud.  At first, I thought they were a victim.  I thought if they just knew what was going on, surely they would want to stop it.  I was wrong about that.  It took a few weeks/months for me to "get it", but eventually I realized they were not a victim, they were actively involved.  I described their business plan as - "act dumb and repeat the process as often as possible".

I tried telephone, email, snail mail.  I sent letters to upper management, and in the case of NEW, I exchanged emails with a major stockholder.  Did they listen?  Did they take me serious?  Maybe - but one thing is for sure, they didn't do anything to stop the mortgage fraud.  They continued to act dumb and repeat the process as often as possible.

I notified "the authorities" - basically everyone I could think of that might be in a position to make a positive difference.  See for example - letter #2 dated Sept 26th, 2005, and the distribution list.

New Century (NEW)

NEW YORK (MarketWatch) -- Several analysts agreed Monday [03/05/07] that New Century Financial Corp., one of the nation's largest subprime mortgage lenders, likely faces liquidation or bankruptcy following revelations that it's under criminal investigation and in violation of debt covenants with several lenders.

My comments:  About 2 months ago, NEW was trading at $35 per share.  Now they are facing possible bankruptcy and possible criminal charges.  As I write this - NEW is trading at $6.25 per share, down $8.50 for the day.  And the news about Fremont is even worse (see below).

I reported 2/15/07 (3 weeks ago) the common stock of New Century got hammered on wall street.  I wrote:

New Century was one of the original Shawn Tieskotter lenders.  The common stock got hammered last week.  I expect to see this get much worse.  It’s going to be ugly.

I reported 2/22/07 (2 weeks ago), I wrote:

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

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”.

Fremont (FMT)

My comment:  The item printed below is copied from an unconfirmed site on the Internet - it could be legit, it could be bogus.  All things considered, I tend to believe it and accept it at face value.

: Brian Daily
Sent: Sun 3/4/2007 4:22 AM
To: *Tampa 2 Office; *Tampa 1 Office; *ResRe Tampa 1 AE
Subject: Fremont ceasing doing business.

Teams,

It is with great regret that I must inform you that Fremont Investment and Loan will cease funding loans and doing business.

At 12:35 (pst) Saturday, Fremont General received notice from the FDIC that they are not permitting any more loans to be funded by Fremont. In short, our funding available was terminated by the Federal Home bank.

The suddenness of the change and the shift from our communication literally less then 24 hours previously simply perplexes me. However, this simply validates the volatility on our business. None of us in Hawaii realized or appreciated the gravity of the situation we were facing.

There are many questions that many of you have. There is a conference call that will be conducted on Monday that will answer many of these questions that you will have.

Jerry Casanova will be able to communicate with you more specifics on Monday morning. Please show up for work to receive these instructions. I will be leaving the meeting here in Hawaii early and attempting to return to the office sometime on Monday.

In order to assist our clients with some instructions- I have listed some Q and A's to assist you in your communications:

Q: Do I continue to solicit loans?
A: No. As of the 3rd, we are no longer sourcing new business.

Q: Will I close what is in the pipeline?
A: This will be clarified on Monday. I would suggest to sent back all loans to the broker

Q: What do I tell the brokers?
A: Fremont Investment and loan is no longer conducting business. Any files that are pending or have been submitted will be returned to you.

Q: Will I get paid for the loans closed?
A: Yes.

Q: Does termination take effect immediately?
A: Clarification on this item will be determined on Monday.

Q: What about benefits and severance?
A: This will all be clarified on Monday or the early part of the week.

Everyone, I cannot tell you how sadly I am disappointed this industry has trended so deeply in this direction. You all have accepted me so warmly upon my arrival at Fremont and I will always cherish those relationships forever. At this point, I wish I had more information to share with all of you but I simply do not. My travel logistics are extremely complicated right now and hopefully I will have more information in the next 24 hours.

So I do not lose valuable contact with any of you, please forward to Jo Haynes your cell phone, home phone and home address. I would like to keep this information as we begin to search for alternative strategies to consider

3 More From Letters

Kimberly White complaint - dated 01/31/07.  Patricia Erickson 303.894.2343 is assigned to investigate (examine?) this complaint.  Form letters dated 03/01/07 for Kimberly White, Lyn Drake, and James Wanzeck.

tags - Kimberly K White

Patricia+Erickson 303.894.2343 complaint+80357300 mortgage fraud real+estate Colorado Kimberly+K+White Lyn+Drake James+Wanzech cash+back+at+closing scott+reed jenny+a+stone

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4 Form Letters

I got 4 form letters in response to my complaint about/against: Dan Grant (CR40026749), Karen Fleith (a/k/a Karen Coffman / FA40038194) of Hope Reality in Colorado Springs, Robert F Edgin (ER40017778) the employing broker at Hope Realty, LLC, listing agent Amy Ell (FA40009247), and George Cronk (EL40043279).

Form letter #1, Karen Fleith and/or Karen Coffman
Form letter #2, Robert Edgin
Form letter #3, Amy Ell
Form letter #4, George Cronk

tags - Daniel A Grant

gail+shaloy 303.894.2337 complaint+80357249 mortgage fraud real+estate Colorado Aaron+Huebner Erin+Toll Dan+Grant Daniel+A+Grant Karen+Fleith Karen+Coffman Hope+Reality Robert+F+Edgin Amy+Ell George+Cronk Loan+Lenders+of+America Lending+Source+Direct Benchmark+Mortgage First+Source+Financial Encore+Credit ECR Christopher+Stiebler Ray+A+Muller flip USPAP Freedom+Appraisal Steven+G+Holder Shabi+S+Asghar Douglas+S+Ingram

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Form Letter

This form letter response to my complaint about/against Gregory Woods, Joshua Toerpe, Glen Cary, and Michael Burns.  My complaint dated 02/15/07, form letter dated 02/27/07.

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

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