This classic SW residence just went back to the bank for about $1,471,000 (a guess based on the transfer tax - the full document hasn’t posted yet). It was purchased in April 1998 for $1,750,000. The first transactions I can trace are a HELOC for $300,000 in December 2001 that was bumped up to $400,000 in February 2002 (was there really a lender called Major Mortgage?). There was a refi in March 2002 for $1,625,000. The next refi was in August 2006 for $1,500,000 (110% Option ARM) with a $210,000 HELOC.
In April 2008, the owner’s closely held company sold a lot next to their plant for $525,000. On August 26 2008, the owner bought 2286 Hedge wood for $740,000 with 20% down. Six days later, no joke - less than a week, the first payment was missed on the Mount Rose property
I am losing my patience with the lenders who are not pursuing legal remedies against these sort of transactions. Dudes, I’m a amateur blogger with 20 minutes of time on my hands for research, and can put the picture together - why can’t the lenders with their staff of CPAs? Lenders need to act on the fraudulent loans in their portfolio before I will have any sympathy for their plight.
43 comments
Mike, good work and I agree with you!
Some time ago I posted the name and location of a United States Attorney who purportedly was going after lawbreakers such as the ones you describe. I didn’t keep the contact info but hope you can retrieve it [I think it was under one of your posts where you cataloged a series of similar horror stories] and share your findings with this person.
While you’re at it, why don’t you ask for a finder’s fee? Or better yet, suggest that bounties be placed upon lawbreakers such as these so we’re all compensated for our efforts to uncover defrauders?
Or how about writing to President Obama with some of your findings asking him if this is his idea of “sharing the wealth?”
I’ve run into a couple of similar deals as this. They buy a new house, get settled, homestead it and just let the first house go…..
Also, I’ve noticed an usually high number of transactions where the husband quick claims the deed to the wife. Then lets the wife go through the foreclosure proceedings. I assume this is to protect the husbands credit, so they can do the same thing as above.
What ever happened to due diligence? I sure don’t feel sorry for the banks that are taken in by these fraudsters.
Mike-
Is that the old RGJ columnist, and now deceased, Rollan Melton’s old house? If so, it’s a beauty. What in the world is someone doing defaulting on that? This is just bizarre.
At any rate, I am as angry as you. This whole thing just f***ing reeks. I want prosecutions, from leatherface Mozillo all the way down to the lowly flippers who lied to obtain multiple mortgages. I am so sick and tired of the lack of accountability. Of course, it’s easy for the banks to be complacent when the government just makes them whole. Grrrr…
Yep chase after the street crims but leave the Wall Street institutions intact, they had nothing to do with the ponzi scheme right? Let the people who decimated the nation’s already *iss poor financial laws get away with it (Ds & Rs both) but lets nail the liar loan people because they are our neighbors and are easy targets…
Yep, while we are at it, lets just ignore the gutting of financial system regulations while they shutdown personal bankruptcy protection because that evil borrower who got Parkinson’s is just exploiting the system…
The only way to successfully rob a bank is to own it, or by being the banker’s best friend.
Because the banks where just as greedy as the homeowners..If the bank didn’t fund the loan the borrower just went to the next bank and they funded it.
Fund it collect the fees then sell it to the next guy..Out of sight out of mind
To BB,
Looks like it is the Melton house, but you can’t pull up the old recordings on EagleWeb. The document listing does show a transfer from the Melton Family Trust to the current owner, but the Assessor’s site shows the current owner as the only purchaser.
And to Sully,
My ex and I did the quit claim thing, but in reverse. She quit-claimed her interest to me after she moved out, so that I wouldn’t have to pay alimony. (For the record, I did a cash-out refinance to pay her out, but it was a full-doc deal. I lost my job shortly after closing, and that’s why I ended up losing the place.)
Oh well. Best not to get attached to things like houses.
Oh, puh-leeeeeeze, Horacio, spare us all the ‘poor innocent homeowner who maliciously got raped by the lenders on wall street’ garbage. Quick to point an index finger but slow to realize the other 3 are aimed right back at you.
Every player up and down the line had culpability in this, the lenders, investors, homeowners, brokers, agents, appraisers, etc. The only innocent were the people along the way who did not overleverage, did not over lend, over sell, over appraise, etc., as a subset of their class of players who had culpability. I’m so sick of both arguments that certain classes (as in people, lenders, realtors) were victims en masse and certain classes were villians.
I’m with BB, go after them all with justice that is supposed to be blind.
Most of these people find themselves in Bankruptcy and they are sued by the lender in an advesary proceeding. (Advesary proceedings are lawsuits against a debtor that challenges the dischargeability of the debt. If a lender wins in an advesary proceeding the debtor cannot discharge the debt through bankruptcy)
Bankruptcy records are much harder for the public to obtain so these lawsuits are not always transparent. (What a world of fun you would have Mike if you had access to the bankrupty records)
I am currently litigating a number of advesary proceedings where the lenders have asserted fraud in obtaining the loans. Will these people ever face criminal prosecution? My guess is probably not.
p.s. Sully you can quitclaim a house to a spouse but that does not stop the liability on the original loan. The deed of trust/mortgage are mutually exclusive from the title or deed of the home.
B.A. can you think of any other reason there are so many of these quit claims?
I asked my escrow officer (when I was closing) about this, and she said they have a ton of these going through. Basically, it was for a credit problem. Still it didn’t make sense to me, as you said the deed of trust is exclusive from the title/deed.
BA,
Out of interest,what could happen to the above mentioned individual should the lender pursue an adversary proceeding? Could he be forced to repay the lender?
I guess the larger question is, what possible recourse is there towards individuals who simply walk away from their houses?
Is there any downside at all?
Otto, You ask what recourse is there with respect to people who “simply walk away” from their mortgages. Your choice of words is accurate, for in Nevada the lender has recourse against the borrower for a deficiency.
The lender has the right to pursue a deficiency judgment against the borrower within six months following the date of the foreclosure.
However, while the right exists, I am not aware that lenders are routinely pursuing deficiency judgments. And if the deficiency action is not instituted within the six months period, the right to a deficiency is forfeited by the lender. The strategy of most borrowers, therefore, seems to be to get foreclosed, and then hope, usually successfully, that the lender does not institute a deficiency action within the six months period.
Perhaps BA can share his/her experience?
Bankruptcy records are much harder for the public to obtain so these lawsuits are not always transparent. (What a world of fun you would have Mike if you had access to the bankrupty records)
It’s called Pacer..I use the program all the time..
http://pacer.psc.uscourts.gov/
Why don’t lenders pursue deficiency judgments?
@ CommercialLender… pure and utter BS.
On the scale of the scam it is the banks and the financial racketeers that are the ones that inflated their credit out 30-50+ times over. Show me the buyers who earned 30K but walked around claiming 900K+ income!
Most homeowners who exaggerated their income were encouraged by the “financial racketeers” and their “Little Eichman” collaborators yet you conveniently declare we should all “share” the blame! The small-fry loose their homes while the bankers loose only that they haven’t shipped offshore in diversification schemes or outrageous bonuses.
Your comments are typical of the cheating classes: always socializing the blame/cost but never the profit. Follow the dollars not the chump change.
It is time the unscrupulous money changers should be made to pay up.
Capital punishment—a 62% marginal tax rate on this class instead of shoring up the confidence tricksters with our money
Horcio -
Your comments remind me of the famous former Governor from the great State of Louisiana following the Great Depression; Huey P. Long.
“Don’t tax me, tax the guy behind the tree.”
IMO it’s time people like you start taking responsibility for yourselves. It’s always someone else’s fault, don’t you think?
“IMO it’s time people like you start taking responsibility for yourselves”
I agree, the first thing is to take back that which has been stolen by going after those that benefitted the most instead of going after the ones that were distracted, foolish, stupid, cheated, or even a little crooked. Is the simple notion of going after the big fish first lost on you?
It is people like you who are in denial about the structural origins of the crisis and instead want to socialize the blame. Taking responsibility means taking off those ideological blinders and pointing the fingers.
Lets be clear, I’m being being very specific about the causes and not just blaming “someone else”. It is people like you who are effectively deflecting/denying the blame by evoking the majestic plural when it comes to blame.
FYI Try FDR
To Horacio,
You sound extremely bitter, and that’s a shame.
Horcio -
I’m not in denial. If you’ve read my past posts on this subject, you will see that IMO, the underlying root cause of this country’s financial whoes is Wall Street [and to a lesser extent, Congress’ actions which allowed it to roam w/o regulation]. Their creation of sophisticated mortgage derivative instruments that few knew about, let alone understood, goes to the heart of everything [I’ll never forget a summer ski trip my wife and I took to Chile (Valle Nevado for you snowriders out there) 3 years ago this August. We met visitors there from all over the world and one of them was a 20 something kid form the U.K. who worked for an investment banker packaging and selling financial derivatives. I had never heard of the product before and was given a quick tutorial. Funny how it took 2 additional years for me to fully understand the impact of what this kid was selling when the times were good]. Like BB, I would have preferred the Governement did nothing and let everything collapse even if it meant we collapsing with it.
But this has nothing to do with dishonest borrowers who were playing the system; and as far as I am concerned, that means every single one of those borrowers who got into the mortgage mess that they did [but for innocent borrowers who couldn’t pay their mortgages because of personal tragedy, health issues or the loss of employment]. I will never, never, never buy into the notion that people like these were really innocent and duped by mortgage and/or real estate salespeople. They ALL knew the potential risks involved because those risks were disclosed in writing before they signed on the dotted line. And they are presumed to know of the potential for a deficiency judgment given that’s the law in Nevada. If they couldn’t read English; or didn’t understand what they read; or chose to not read the risks involved; or chose not to consult with a legal professional; tough cookies!
Mike’s post WASN’T about Wall Street. It was about dishonest borrowers. So stick with the subject matter Horcio rather than trying to divert the outrage and blame which rightfully exists on these borrowers by blaming others. I’m denying nothing!
To smarten,
Thanks for your post. There was greed, and duplicity, and lies, and enough Kool-aid drinking for the entire industry. Now, we’re seeing the aftermath of a bubble induced by Wall Street and its counterparts in the UK, Norway, Ireland, Japan, China and everywhere else someone thought that investing in a AAA rated derivative contract was a riskless endeavor.
As I’ve posted before, high leverage is a wealth multiplier when prices rise, but a wealth destroyer when prices fall.
IMO, we should have let the Citigroups and Bank of Americas of the world fail like Lehman did. True, it would have been devastating to many people, but it would have cleansed the system quickly, rather than the current situation, where it seems that the top echelons walk away blameless, while Joe and Jane six-pack are ruined.
As long as evil is allowed to continue unabated, I fear that more pain is inevitable.
Idiots down in Carson override Gvnr’s veto…Say goodbye to housing and the economy in Nevada. Notice the take that will extricated from Clark and Washoe counites…$150 Million per annum from property taxes. 9 cents on every $100 assessed. This will be another negative on housing prices in Washoe on top of the sudden spike in interest rates in the last week or two and increased foreclosures to 2012 from option arms.
Horacio,
Wow, so much to say. This will be fun. For starters, re-read my post as you clearly did not or did not understand it. I said all players/classes up and down the line (realtors, buyers/borrowers, appraisers, lenders, investors of those notes, the govt) work together to make the transaction happen. Some within each of those players were dishonest, cheats, frauds, etc. But your posts chap my hide because instead of recognizing the reality that there are bad apples in each class which BB, IJ and others do, you implied that entire classes of players, in your case mean ol’ Wall Street Tycoons (”little Eichmanns”), are at fault to the exclusion of other players, like poor old borrowers (”small fry”). Do you honestly believe that garbage?
You can’t say capitalist society (here I mean both Wall Street exclusively, and also the whole supply chain identified above) was exclusively to blame any more than it would be correct to say all borrowers are greedy irresponsible bastards, which of course is not true. You might want to rethink the crap you’ve been fed for apparently a good portion of your formative years.
****
As for cause of this whole mess, let’s take it up a notch to the root causes of all the bad apples across the entire player/class spectrum I identified: greed. Realtors wanted to make money, so SOME of them pushed clients to buy at ever inflated prices. Buyers/borrowers wanted what was billed as ‘the American dream’ to own a home, so SOME of them streched to buy, including lying about income, throwing caution to the wind, and now want to simply walk away from their obligations. Appraisers were in high demand and were being paid by lenders (ultimately borrowers), so SOME of them inflated values to get more business. Lenders were also in high demand and aggressive lenders get more deals while conservative lenders get fewer, so SOME pushed ever risky loans on clients. Investors (wall street and others) wanted to make money too, but importantly provided capital in the supply chain because the borrowers demanded more capital, so SOME threw underwriting standards out the window and created sub-prime and alt-a programs. My favorite, our good ol’ government/politicians wanted votes/power, so SOME pushed this American dream crap on the populous, on the industry, on Fannie/Freddie, laxed regulations, etc. so they themselves could remain in power (and now they are trying to bail out people and some choice institutions so they can look like saviours and get reelected).
Your comments have either at their root or at their extension socialist/communist theory - which I’m calling back on you: “pure and utter BS”. Further, your line of argument is one I’ve seen so many times before. It comes straight from the Marxist playbook, yes, good old Karl. If your argument doesn’t make sense, denigrate your debater and use rediculous claims. “$30K income … stating $900+K income”? WTF are you talking about? Such an example didn’t happen and your claim is bogus. And Parkinson’s disease?! Get real, how many defaulted borrowers are being foreclosed on because of their unfortunate Parkinson’s condition? Better yet, why don’t you attempt your own arguments on your own merits instead of employing disabled persons to do your bidding?
As for your attempt at leverage math trying to show banking institutions are somehow evil for employing the concept of leverage (uh, its a bank, therefore their very business plan is leverage, BTW). Try this: FHA loans to a buyer/borrower with 3% down are leveraged how many times? Yup, 33x. So by your logic, any borrower who takes an FHA loan out is somehow to blame? Uh, no. Now try adding a tax credit of $8K or one of the many downpayment assistance programs out there to the math and what does that do to the leverage? So, your argument against banking institutional leverage is totally bunk, and neither would it be correct to say anyone taking an FHA loan or getting a tax credit is somehow evil in your logic. Finally, an FHA with 33x leverage that goes into default leaves the taxpayer with any loss in a neat little concept called socialized risk, which apparently you know so many talking points about. Had that same home gone up in value over time, sold, and paid off the FHA loan, how much upside would the taxpayer have recieved in socialized profit? Uh, that’s right, zero. I get it now: socialized risk but private profit! So, should you call the entire class of players who use FHA loans little Eichmanns? In your logic, you already have already insulted them so.
While we are at it, nice work on your choice of comparisons, Horacio, where you compare ’small fry’ against horrific Nazis murderers. You are one giant talking-point who has clearly been fed this rubbish for an extended period of time.
Finally, I abhor the government bailouts of TARP, the stimuli programs, et.al. Find a post of mine where I was supportive of them. I in no way ever implied that socializing blame was my bag or something I thought was a good idea. In fact, had you read more carefully my first post to you, you’d see I said “go after [all the bad apples in each class] with justice that is supposed to be blind.”
Nothing personal, but think for yourself.
To CL,
Thank you for your erudite and lucid response to the drivel that Horacio has inflicted on all of us.
I wonder how many people out there think like Horacio? If there are more than a few, I’m terrified of our future.
How many Citizens in Nevada might literally starve thanks to the increased taxation out of Carson today?…How about we call ‘em Little Engels’?
Check out 620 Nixon. It appears the “Buy and Bail” syndrome is alive and well in Reno.
What are you referring to, Dolor? I see the property recently sold late last year. Is it in default already? The sale is quite questionable, BTW, as the property was purchased for well above market value. I smell fraud.
Casa-
Are you talking about the default on 602 Fremont subsequent to the purchase of 620 Nixon? I’m just trying to understand what you’re referring to. These people grotesquely overpaid for Nixon, and will probably bail from that when they realize they’re upside down by more than $200k. I’d like to see the lenders go after them with both barrels.
BB good job, you found the other half of the equation. It appears to have gone like this:
2-14-06: Purchase 602 John Fremont First, 620,000 Second, 76,725
8-21-08: Purchase 620 Nixon 400,000 First 381,000
($400 Sq.ft.)(very nice place)
12-12-08: NOD on 602 Fremont (NOD’s usually come about 90 days after last payment)
4-27-09: 620 Nixon into family trust
5-19-09: NOS 602 Fremont Sale date June 11, 2009
Casa
620 Nixon looks like they “right sized” before walking away from 602 John Fremont. They missed the 1 Sept 2008 payment on Fremont and closed on Nixon a couple week later with 10% down. Thanks for the due diligence JP Morgan Chase. Gotta agree with BB that they WAY over paid on Nixon, and the cycle will repeat its self in short order.
Max out the HELOC, get resettled in the neighborhood, then bag the old house at taxpayer’s cost. Thanks.
Casa-
602 Fremont was purchased 2/19/04 for $505,000. You must be looking at a refi and HELOC. At any rate, these geniuses spent away the phantom equity, overpaid in grotesque fashion for yet another house, then stopped making payments on the previous one.
BTW, $400 psf is absolutely ludicrous, especially in late 2008 Reno. This doesn’t pass the sniff test. I wouldn’t be surprised if it was a cash back on closing scam. I want to know who that appraiser was. While all homes in the 89509 zip code have depreciated 25% in the last year, 620 Nixon has, according to this appraiser, appreciated 20%. That’s a 45% swing, funded by JPMorgan Chase, recipient of $25 billion in bailout money. Disgusting.
You beat me to it, Lurch. I wanted to see who funded this garbage and, sure enough, it was one of these evil megabanks who are feeding at the public trough. Do you think they learned their lesson? Hell no. This is outrageous.
And, I’d love to see some TV reporters show up at these people’s door, and ask them about all of this. Think they’d appreciate that?
Hey Bear, I like the idea of a TV reporter. However, one of our local “television personalities” has received a NOD and another one has a NOS on a lien for $3900 in unpaid HOA dues.
Every day, this just gets deeper and deeper.
I have a question. Is it an invasion of privacy for people here on the blog to identify by name the owners/borrowers of these properties? Their identity is surely not a secret, as it is available on public websites. Can anybody have an expectation of privacy in information that the anybody in the world with a computer and internet access can discover?
Now I understand that it would be inappropriate to attribute dishonorable motives to these people, but I’m talking simply about identifying them by name.
Just curious.
Yep BB, this one is just like those 2 or 3 Palladio condos that went UP in value while everything else in the world went down. Does not pass the smell test. But how does one get access to the appraiser’s identity? How does one get access to the appraisal so the comps the appraiser relied upon can be analyzed? Besides the buyer and the bank, who would have access to the appraisal?
Hi, RI. Yes, after somebody mentioned it, I found out that Reno channel 2’s Neda Iranpour received an NOD. Interestingly enough, on a recent visit, I saw who I thought to be her on a commercial plugging for a loan resolution company, talking about “greedy banks”. I’d like to ask her about greedy borrowers. I haven’t heard about the NOS for homeowners dues. Who might that be?
Bear, I believe that Doc. # 3763465 is a public record. I believe it can be viewed at the County Recorder’s website.
Thanks, RI. I’ve never heard of that name before in my life, but I’ve not been in the local loop for years. I even Googled the name to no avail.
KOLO News.
To Martin,
While it’s true that the data is in the public domain, it seems to me that decorum would suggest we refrain from naming names here. There is a liability issue with respect to publishing on a forum (while I’m not familiar with the specifics), and I pledge to keep my comments generic as far they apply to specific individuals (except mine).
My old next door neighbors are still in the house they bought at the peak. A wonderful young couple; I hope they can stay.
As an aside, the most recent auction list I received had 340 NOS on it. 10% were commercial properties.
PollyP said, in May 28th, 2009 at 5:56 pm Why don’t lenders pursue deficiency judgments?
Honestly, cause what can the bank get out of them? Most borrowers after foreclosure have little left and Ca & NV the lenders can not collect a deficiency judgment unless they bring a lawsuit and do a judicial foreclosure..which most of the time never happens..Unless there is a very strange situation..
I have seen a few on Commerical property but most of the time the lender sues the borrower and puts in a receive to run the property and collect the rents
I was just browsing listings in the old SW, and 602 John Fremont is listed as Short Sale/Pending. So, apparently these people have somehow convinced the bank to accept the loss on their old house even though they just bought a new one? I don’t see how this would pass muster with the banks. Something weird is going on in this market.
I AM IN LOVE WITH THIS PROPERTY, AND I AM GOING TO PUT AN OFFER. IT IS GORGEOUS.
FWIW,
My agent tells me that the house has an offer on it. It was recently reduced to just below $800k. Taxes are over $15k/year, though.
So, although it could be the best value in the greater Reno area, those taxes price me out. Not willing to pay $1300/month in property tax.
I just hope the prospective buyer put in a nice low offer, so I can get a place in the neighborhood, using the lower comp. Someone (who can afford it) will be very happy in this home.