Possible Fraud? - 92602

NEW -> Contingent Buyer Assistance Program
brealiving,





Do you live in Brea? I work in Brea.





There's plenty of college dropout success stories. Bill Gates, Steve Jobs, Larry Ellison, Michael Dell, Ted Turner, Steven Spielberg, etc. I think CSULB finally gave Spielberg an honorary BA degree in 2002. But those are exceptions with ambitious, self-motivated people.





Thing about most people who commit fraud is, they gradually acquire the mentality that they'd never get caught, until they leave too many paper trails or get careless and get caught. The smart ones cash out and bail early & quietly.
 
Momompi....lets also remember that these guys provide a tangible good and were are the cutting edge of computer technology, well except Turner and Spielberg. Although, I do know Dell went to the University of Texas just not sure if he ever finished.
 
Traditionally sales jobs do not require college degree. I did not want to be in sales so off to college I went. Let's give the RE and Loan agents a break and not expecting a lot from them.
 
GrewUpInIrvine - So what do these price depreciation analysis tell you? I do not see anyone reporting price crashing down yet; which should occur by now, right? The short sales are selling quickly with multiple offers (I made a few attempts with decent offers and did not win any bid)
 
<p>IrvineMom - For what ever it is worth, I am not an economist... but the whole conversation about college degrees (and advanced degrees) weighing people down while others seemingly fell into the bull housing market (taking jobs as mortgage brokers, real estate agents, etc.) without any education - and now drive fancy cars, well let's just say I found it a little amusing. It reminded me of the point that I think my professor was trying to make - sometimes it has a lot less to do with brains than luck.</p>

<p>As for my take on housing. It is all very relative. I've previously discussed making an offer on a 952K home in Irvine... only to be stopped (in retrospective "saved") by a contingency clause (relating to the timely sale of my own home). No bull, 6 weeks later the home I was pulling my hair out trying to buy was being sold in the "next phase" of a new development for about 85K less. To me, a 9% drop in price in less than two months seemed (and still seems) very significant. Moreover, I saw the builder starting the marketing of the next phases in "sub-phases," a builders ploy to reduce housing inventory on the market - but a ploy that probably doesn't change their view point - since they are already committed to the development.</p>

<p>Where will prices go? Hard to tell. I suppose that market psychology has a lot to do with it. If everyone begins to feel that the housing will leave them behind... you could see a rush to buy... which just accelerates the speculation and increasing home prices. A little like tonights lottery. Most people don't pay a lot of attention to a 50 million jackpot.... but now that its up to 300 million, everyone is racing to buy tickets at the last second... which will make the final lottery pot even larger... there is an air of "last chance" that gets people all worked up... and two years ago, that psychology contributed to buyers making offers tens of thousands of dollars over asking on the first day a house was listed...</p>

<p>I know that in reality, a lottery ticket is far more affordable, but the psychology is similiar (and no, I am not a psychologist). At the end of the day however, I think (and hope) that prices will relax, mitigate, solidify (choose your favorite economic terms) simply because too few households make in excess of 200K per year. And for those of us that do, even then, a 950K home is a real stretch if you haven't been in the game for a number of years (read: if you don't have lots of equity and need a super jumbo loan).</p>

<p>Until then, I'll stay tuned for the next installment of "Irvine Renter and the Irvine Housing Market." But for now, I'll stop hijacking this "fraud" post and let others get back to topic.</p>

<p> </p>

<p> </p>
 
I don't mean to be obtuse, but really don't understand the meaning of the term "fraud" here: is it due to a speculator buying multiple homes with no money down and eventually leaving the banks holding unpaid loans, or is it referring to banks lending to someone who has no business getting multiple loans who will only destroy his credit history soon? Can someone please explain? Thank you.
 
<strong>Current Fraud Headlines







Last Updated

<csobj w="119" format="LongDate" locale="00000409" region="0" h="14" t="DateTime"></csobj>Tuesday, March 06, 2007

<csobj w="47" format="ShortTime" locale="00000409" region="0" h="14" t="DateTime"></csobj>03:31 PM

Texas Time










</strong>







<strong><a title="2006 Financial Crimes Report to the Public" target="_self" href="http://www.mortgagedaily.com/FraudFbi030607.asp">FBI Mortgage Fraud Report</a>


</strong>Mortgage fraud is worst in the Western region of the country, according to a new report from the Federal Bureau of Investigation. The report said mortgage industry insiders are involved in four out of five cases.







<p> </p>

<p>Does anyone have a full report for this Headline?</p>
 
almon,<em>





"I don't mean to be obtuse, but really don't understand the meaning of the term "fraud" here... Can someone please explain? Thank you."





</em>A brief fraud primer: Real estate fraud generally requires 3 complicit parties; a buyer, a mortgage broker or lender, and an appraiser. Lets say there is a property available for sale for $500,000. The appraiser values the property at $700,000, the mortgage broker processes the loan based on the appraisal, and the buyer goes through with the transaction. At the closing table, they buyer is cashing out $200,000 which gets split between the three parties in some way. The buyer then walks from the property without making any payments letting the property go into foreclosure. Because this harms the credit of the buyer, straw buyers are often brought into the scheme (illegal aliens, homeless people, identity theft, etc.) Ordinarily this is very hard to get away with because everything would be scrutinized closely. However, with the flood of new buyers from sub-prime lending and the widespread use of stated income (liar) loans, this kind of fraud became much easier to do.<em></em>
 
<p>almon, IrvineRenter's example fit a refinancing scenario; however, new purchase homes would have to involve 4 more parties: Listing agents, Buying agents, seller, and title insurance for the loan. Several defaulted loans in the 92602 zip listed in Foreclosures.com were purchased above list price for up to $100K, in a down market</p>

<p>Does anyone know if tiltle insurance cover a fraud transaction? When I purchased my house many years ago, they said I had to buy title insurance for the loan amount!!!</p>
 
Thank you IrvineRenter and IrvineMom, you've opened my eyes...





By the way, IrvineRenter, thank you for the excellent first articles, I've saved them for re-reading later. Please keep them coming, I will use them as reminder that up markets never keep going up and vice versa.
 
A warranty deed is a quitclaim deed with certain warranties explicitly listed on the deed itself. This type of deed is almost never used in real estate transactions anymore since the Trust Deed already has the generally accepted warranties built in. Also, a trust deed is required for the three party transaction that is standard in California Real Estate transactions (Buyer, Seller, Trustee).



I did see a guy in Kinko’s earlier this year getting a notary done on a Warranty Deed and I was curious enough to ask him about it, due to their rarity. Sure enough, he told me that he was basically in the game of buying large parcels of land in the boondocks through tax lien auctions, partitioning them into smaller properties (basically illegal without going through a GREAT DEAL of paperwork since this type of activity requires all of the steps of a subdivision... but probably not looked at too carefully in Victorville) and then finally selling the lots on EBay.



Thus, a Warranty Deed is no guarantee of illicit activities, but it certainly would make me take notice. Also, the fact that the property is in the name of a revocable trust is another bad sign. The name that you saw is actually the name of the trust, and certainly does not have to be the name of the person who owns it. Revocable trusts and LLCs are often set up in Nevada to serve many purposes. Firstly, they can reduce liability to personal litigation. However, trusts and LLCs can also be used to disguise ownership, which may well be the case here. Most owners of Single Family Residences would NEVER choose to deed their properties to LLCs or Trusts since that would prevent them from gaining the benefits of the tax write off for their interest expense on their mortgages. However, since investors don't get this benefit anyway, they have no such squabbles. So there is one thing that you CAN conclude then, is that if the property is in the name of a trust, the property is NOT home owner occupied.
 
<p>Also, Title Insurance only insure that the Chain of Title on the property is correct. This is required by lenders to cover themselves just in case there were some liens on the property or other encumbrances that did not go in the initial Title Report that can detrimentally affect the value of the property. To the best of my knowledge, it does not cover a fraudulent appraisal. </p>
 
<p>The CLTA (California Land Title Association) Policy is standardly required to be purchased by the buyer in a Deed of Trust Sale. It is usually referred to as a Standard Policy. It extends protection against matters of record and many non-recorded types of risks, depending on the type of policy purchased.</p>

<p>It protects against:</p>

<p>- Forgery, impersonation, or failure of a party to be legally competent</p>

<p>- The possibility that a deed of record was not in fact delivered with intent to convey title</p>

<p>- The loss which might arise from the lien of federal estate taxes, which is effective without notice upon death</p>

<p>- The expense incurred in defending the title</p>

<p>A Standard Policy DOES NOT protect against:</p>

<p>- Defects in the title known to the holder to exist at the date of the policy, but not previously disclosed to the title insurance company</p>

<p>- Easements and liens which are not shown by the public records</p>

<p>- Rights or claims of persons in physical possession of the land, but whose claims are not shown by the public records</p>

<p>- Rights or claims not shown by public records, yet which could be delivered by physical inspection of the land</p>

<p>- Mining claims</p>

<p>- Reservations in patents or water rights</p>

<p>- Zoning ordinances</p>

<p> </p>

<p>Often the lender will purchase an Extended Policy for an additional cost. This Extended Policy, also referred to as an ALTA (American Land Title Association) Policy, offers the same coverage as the CLTA policy with the following additions:</p>

<p>- Protection against claims of parties in physical possession of th property, but no recorded interest.</p>

<p>- Reservations in patents</p>

<p>- Unmarketability of title.</p>

<p> </p>

<p>**** Note that fraud is not covered in either policy</p>

<p>Source: Price, Sherry Shindler, California Real Estate Principles, 7th Edition, 2003, Ashley Crown Systems, Inc., pp 78-79.</p>
 
NickStone - Thank you for the info. Under standard policy, forgery is covered. Say if a straw buyer is involved and the real buyer forged his signature, then will this be covered by title insurance? Thank you again.
 
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