Combatting Home Loan Fraud

Hi Folks,
   Hope you had a good weekend, and as always, glad to have you back here today.

   In the wake of the mortgage crisis, today we pose the question, "Is enough being done to combat home loan fraud?".

   Linda Fleischmann, a Certified Mortgage Consultant, who is a mortgage broker that has been doing mortgage loans for over 12 years, says that she has, "seen fraud and I have seen the industries turning a blind eye to it when it was convenient". Currently, however, Fleischmann says that they are verifying more information now because of the previous fraud. and that, "There is an executed 4506T which gives the lender a copy of the taxpayers transcript of their tax return even for those borrowers who are not self employed and are W-2 employees. There are background reports such as Lexis/nexis that is pulled on all borrowers to make sure that they have all of their information, disclosed or not. There is much more investigation into fraud and all I's are dotted and T's crossed with lending today, even now to the extreme".

   Greg Cook, a Mortgage Professional, says that he thinks that lenders are using every tool at their disposal to combat house loan fraud, and he gives such examples as the fact that, "All income documentation is verified through the IRS (form 4506-T), Credit reports now have social security discrepancy warnings, which have to be investigated prior to closing, and All deposits in bank accounts, other than direct deposit paychecks have to be sourced and verified."

   One homeowner that fell victim to the crisis was Chris Moyer, who says that, "I lost a home to foreclosure some years ago. I had PMI and always wondered why it did not cover the outstanding balance on the mortgage. I received a form where I needed to claim the difference in the amount the house sold for and what I owed on the mortgage to claim on my income taxes that year. Could never figure that out?"

   Despite all of the measures, Cook says that, "Occupancy fraud is still the biggest problem, but the "buy and bail" guidelines make it more difficult to do it more than once."

   Is enough truly being done? What are your thoughts on this topic?

Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com


TAGS: #homeloan #foreclosure

A Funny Thing Happened on The Way to a Real Estate Deal...

Good Morning,

   Friday is upon us once again, and I hope that you've exceeded all of the goals you set this past week.

   They say that "Laughter is the Best Medicine", and I definitely agree with that. If you look at things with the proper perspective, you can always find some funny things, and Real Estate deals are no exception to this rule. In the spirit of the joy of an upcoming weekend, we're going to look at some funny stories from the Professional perspective (Realtors, Commercial Real Estate, Loans), and also from the home buyer's perspective.

   Jennifer De Vivo, a Realtor with Charles Rutenburg Realty, provides us with what she refers to as, "funny and awkward situations when showing homes.". One example was about a homeowner that was a single male, and in the home he was selling, he had a special room..."a room completely done with Wonder woman paraphernalia...(Figurines, curtains, bed sheets you name it)". De Vivo says that he was very proud and, "made sure to point out his vintage Wonder Woman boots and asked us if he wanted to twirl for us. All we could do was smile and kindly decline. In the end our clients were able to see past the superhero customization, put in an offer on the home and closed 45 days later."

   De Vivo points to another time when she was showing homes in a community with several elderly residents, and in one of the homes that appeared to be empty, they found a man sleeping so still that he appeared to be deceased, at which point, De Vivo and her buyer raced out of the house !

   "Four years ago I was taking a loan application for an unmarried couple that was purchasing their first home.", says Matt Perillie of TheRenovationLoanGuy.com. Perillie says that when he got to the point of the application where he asked if the husband pays child support, "the man says yes and she (the wife) gives him a long look and then proceeds to yell at him for about ten minutes asking how could he have a child and not tell her. It was a bit uncomfortable and the application ended right there."

   Changing gears, there are also funny stories that come from people looking for homes. Sarah Anderson of Millersville, MD describes one specific day where her and her husband visited, "half a dozen houses one Sunday morning, and returned" to an open house in the afternoon. As Anderson describes it, there were, "toddlers running around in bathing suits", which indicated that perhaps there was no open house. However, as she says, they went in. "Fortunately, the homeowner happened to be the agent, so he wasn't too terribly jangled by our random appearance", says Anderson, but it was still "pretty awkward" since he had an open house months ago...but certainly not that day.

   Another home buyer received the, "Bomb Shelter Option". Sherri Gomez said that when they were doing their final walk-through of the home, the owner was very evasive in terms of where he would let them walk in the backyard. Afterwards, Gomez asked the man what the metal sticking up out of the ground was, and he said, "That's your bomb shelter", and, "too bad - you signed the papers !". Gomez said that she sued him for the cost of filling it in and she won. She also found out that the development, "was built in the late 50's and that was an option when you bought the property. You could choose an above ground or underground bomb shelter.", and says that, "this has become a joke in our family whenever we look at houses!"

   Well, as the saying goes...all in a days work !

   Do you have any great stories to share. Please add them here, since we all could us a good laugh !

Have a Great Weekend, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com

Does Subprime Still Exist ?

Hi Folks,

   Hope you've had a great week, and that you've been able to keep warm !

   A few days ago, a colleague of mine asked me if subprime loans still exist, and I realized that I have not heard the term, "subprime", for quite a while, and I also realized that before responding to him, I had better gather a consensus from some mortgage professionals with knowledge on this topic. At the same time, I figured that this might be something to share with all of you good folks out there, as well.

   We spoke with a few sources, one of which is Fred Glick, a mortgage broker and banker, who says that, "Fannie Mae and Freddie Mac now have minimum credit score standards based on loan to value.", and that the, "new subprime lenders are private ones that charge a lot in rates because they are limited to what they charge in points by many different state and federal laws, including but not limited to what is coming out under the Merkely Amendment of Dodd-Frank", that, "limits compensation to a maximum of 3% of the loan amount and does not allow for both front end points and back end compensation from lender to broker in the same transaction."

   Steven Bote, Mortgage Planner, says that the "very short answer" is, "no, subprime lending does not exist.", and he continues to say that, "for me, the defining characteristic of all subprime loans is the absence of "documented income necessary to support the ability to reasonably repay.". Bote says that today, residential financing is on the "complete opposite extreme of the lending spectrum from where it was three years ago during the height of the subprime era, and as such, everything is fully documented (pay stubs, W2s, tax returns, schedules, etcetera)."

   Any discussion on lending would not be complete without looking at the impact of FHA and VA loans, of which Bote calls, "Government-based loans that allow for higher LTV-based financing, such as FHA and VA". Bote says, that for example, "FHA allows a person to buy an owner-occupied 4-unit property with as little 3.5% down of the purchase price, and VA financing of the same property type allows for 0% down payment (and with as low as a 620 middle FICO)", and says, "To put things into perspective, conventional financing requires all buyers to put down a minimum of 20% of the purchase price." Glick says on a similar note that the, "VA has gotten tougher and FHA claims not to have a minimum, but the GNMA market is moving up to 620 to 640 as a minimum. So, for the people with the scores in the 5's, it's a problem unless you have lots and lots of equity."

   Greg Cook, a Mortgage Professional, agrees that a, "certain segment of the subprime market is being served by FHA financing", and also says that, "Most subprime (hard money) lenders have gotten out of owner occupied loans because federal and state legislation limit the total fees that can be charged. These limitations do not apply to commercial, business or investor loans, so hard money lenders have evolved back to these types, which were their staples before the rise of subprime."

   So, with all of this information in hand, I have duly advised my colleague that the subprime market does still exist (well, kind of), and as Cook said, he has seen, "subprime mortgages start out as hard money, morph into subprime for homeowners, and back to hard money.".

   Do you have anything to add to this discussion? We welcome your comments and insights.

Have a Great Weekend, and Happy Rent-to-Owning !
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com

TAGS: #mortgage #loans #hardmoney

Toxic Asset Fraud...Does it Upset You?

Good Morning Everyone,


   I hope you're having a great week ! Thank you for your comments on our 3-part series on the home-building process, and to those of you who have asked about turning a pre-built home into a Rent to Own arrangement, we mentioned in our last part of the series that, "...there are many builders who build homes and will then Rent them with an Option to Buy (Rent to Own Homes), so it requires a little bit of homework on your end to find these builders." It will be on a hit and miss basis, but for those builders that read our Blog, please feel free to raise your hand if you would be amenable to a Rent to Own on your properties.

   The other day, I heard an insane story on NPR (Public Radio), about an investigation that was done by the Sarasota Herald-Tribune, where they looked at 19 Million Real Estate Transactions in Florida and found that, "...more than 50,000 Florida properties flipped under suspicious circumstances from 2000 through 2008", and they commented that, "Those flips artificially drove up housing prices and tax bills and contributed to the crush of foreclosures".

   NPR took a closer look at this investigation and purchased a piece of the bonds that are backed by these "toxic assets", and with the help of the Herald-Tribune (and reporter Michael Braga), they were able to see some of the people behind their toxic purchase (as part of those 50,000+ suspicious deals). This massive amount of suspicious deals included one attorney who defaulted on 5 loans totaling 3.6 Million dollars! Additionally, some of the other loans were tied into a group of investors who lied to banks to get loans. Overall, it was a frightening glimpse of what was going on under our noses.

   Can this happen again? We certainly hope not. But mankind is funny; there is good and bad. The bad are always finding new loopholes and ways to get around the rules. So it takes diligence and we need to always keep fresh in our memory the disaster these people have caused, the homes that have been lost, the livelihoods that have been lost. This has changed the Socio-Economic landscape for everyone for a long time to come. OK, time for the punishment to be be handed out ! We welcome your comments and thoughts, since this is a hot-button topic that irritates a lot of people (like myself)...

   Side Note: The full copy of our past few months of Blog Posts is available to download for Free ! You can use the following link (CLICK HERE) to download and save your copy today (it is in .pdf format). Enjoy !

Have a Great Day, and Happy Rent-to-Owning !