EOM Investigative Report: Lynda Bell's Husband's Mortgage ties to John DuBois's Business Partner. By Geniusofdespair

The question in my mind after writing this:  Why would a guy form a mortgage corporation a few days before a closing, write just one mortgage, that mortgage to Lynda Bell's husband...What would be a reasonable explanation?

Miami Dade County Commissioner Lynda Bell's husband Mark, bought a historical hotel in Homestead at 5 South Flagler Avenue. Wendy Lobos (a former Homestead Commissioner) registered a corporation for him on February 16th to buy it. A minister told me he thought the deal was his. He had plans drawn up and was checking with government entities when he heard Mark Bell got the Hotel. The Minister gave Bell the plans he had drawn up. He was disappointed.  Bell quickly got a balloon mortgage from Redinn Mortgage, LLC February 23rd. The mortgage was for $225,000, Bell put 10% down on the $250,000 hotel. The details of the financing ARE NOT in the mortgage papers. The interest rate is in a note that is not included in filed papers. In theory, the Bells could be paying 3%, 9% or even 0% interest. The Bells could have a very favorable deal with Redinn, even a sweetheart deal. This does involve the husband of County Commissioner Lynda Bell. Some Realtors I spoke with said that giving a mortgage for 10% down on a commercial property was a very good deal in itself.

Clause I found in the mortgage written by Reddin. Is this common in today's market?

I looked at the Mortgage Company. It was formed Feb. 15, 2012 the day before Mark Bell formed his corporation. That was only 8 days BEFORE the mortgage was written! WHAT?? The thought crossed my mind: Was this mortgage company formed only to write Lynda Bell's husband's mortgage? I looked for other mortgages written by this mortgage company and found none.  I looked up the mortgage company.

The only name associated with the mortgage company, Redinn, was Suhail Nanji. I looked up other corporations associated with Suhail Nanji and found the name John DuBois with Nanji on a couple of corporations, including a second mortgage company. That mortgage company, J&S 8360 Mortgage LLC, had DuBois's name (unlike Redinn that didn't). More on that later.*

This second mortgage company also appeared to write only one mortgage.

Eyecast executive team: John DuBois and Suhail Nanji (who is on Bell's Mortgage documents).

DuBois's Letter

I looked up John DuBois's Corporation, Eyecast. I was surprised to find this photo of he and Suhail Nanji on Eyecast's website.

John DuBois, running for Vice Mayor in Palmetto Bay, held Lynda Bell's victory party at his palatial Bayfront home and is a big supporter of Bell. He, and coincidentally, Lynda too, are in a battle with the County environmental department (formerly known as DERM). Lynda Bell held a town hall meeting about DERM March 3, 2011 and John DuBois was the main speaker at the hearing bashing DERM (see letter for his beef).

Lynda Bell also appointed John DuBois to the county International Trade Advisory Board October 2011. Bell's campaign manager Jose Luis-Castillo (Seijas supporter) is running John DuBois' campaign for Vice Mayor in Palmetto Bay. Castillo also is Vice Chair of the International Trade Advisory Board, the same board Lynda put DuBois on.

Bell's Chief of Staff approached Assistant County Mayor Osterholt the end of January 2012 to discuss John DuBois' problems. A meeting was set up and held March 1st with DERM. This is all going on around the time of the Bell mortgage.

Below is photo of John DuBois and Lynda Bell at a Christian Family Coalition (anti-gay group) event that he hosted at his home.  Did I mention that John DuBois is extremely wealthy? Most of his beef with DERM started about rules he faced building his waterfront home in Palmetto Bay.  He then got involved in his neighbor's problems. There was illegal wetland filling suspected on the property of the 90 year old neighbor (who is/was represented pro-bono by John Shubin).  Why would a man 90 years old be doing filling?

John DuBois and Commissioner Lynda Bell in his Palmetto Bay home.

*Remember that second mortgage company,  J&S 8360 Mortgage LLC, linked to Dubois (Mgr.) and Nanji (Registering Agent) that also curiously wrote only one mortgage that I mentioned? The one mortgage written by this other mortgage company was for an office building in Broward. It appears that both DuBois and Nanji are officers in a Corporation that also owns this office building.

DuBois' Mortgage Company wrote the mortgage for a building in Broward

.

Corporation that owns building in Broward.

Going in a giant loop, the address of Lynda Bell's Husband's mortgage company - Reddin (that might/might not have given Bell a sweetheart deal on his financing) - is the building in Broward owned by John DuBois and Suhail Nanji. You remember the name Suhail Nanji by now I hope. 

  Hit read more for Lynda Bell's Most Recent Financial Disclosure Report.

US Century Bank: barely floating with $1.6 billion in deposits ... by gimleteye

In a just world there would be a trial of US Century Bank and its founders in Miami, Florida, who were just slapped with what might be one of the harshest, if not the harshest, consent orders in US banking history. And if there were a trial the insiders who used US Century as their piggy bank would also be called to account for turning a federally chartered institution into a political apparatus to control the local levers of power governing zoning and permitting in farming and wetlands. But it is not a just world, is it?

The closest view the public may ever have of justice is the federal Consent Order slapped on US Century, its officers and directors by the FDIC (Federal Deposit Insurance Corporation) with its pale disclaimer: "(US Century Bank) has consented, without admitting or denying any charges of unsafe or unsound banking practices or violations of law or regulation related to weaknesses in asset quality, management, earnings, capital, liquidity, and sensitivity to market risk, to the issuance of this Consent order by the FDIC and OFR (Florida Office of Financial Regulation)."

US Century Bank was the late manifestation of the empire, now vastly reduced, of uber lobbyist Sergio Pino. It started as a simple plumbing supply business and leap-frogged to vertical integration with mass produced housing; a local aspirant to Lennar, one of the nation's largest homebuilders whose fortunes were built from mass production housing in the former Everglades. Pino's chief lieutenants, Ramon Rasco, Rodney Barreto, Jose Cancela, Armando Guerra, and others; built fortunes from the ring suburbs, growing like a toxic culture in a petri dish. For the model to work, the builders required minimum friction and speed in execution; that meant quick zoning to provide housing and supermarkets and strip malls, and then financing and connections to off-load commercial and residential mortgages. Unlike Jorge Mas Canosa, whose corporate empire was built on county road contracts and a highly public persona, the growth of US Century Bank started in the chamber and hallways of the county commission but the main operators retreated from view and hid within boards of lobbyist associations like the Latin Builders and South Florida Builders. They erected legislative turnstiles and gates barring the public from seeing how the worst economic bust since the Great Depression was built into the model.

Unless there is a forensic audit of US Century Bank that reaches the public, we will never know the exact details (and The Miami Herald, whose leadership was complicit in its own way with the downtown power structure, lawyers, and lobbyists for the housing boom will not be of much help except to provide facts without context or commentary.) But we can imagine both the just world and the trial.

The deposed witnesses would include every elected official who counted on the builders and developers in South Florida for campaign contributions that tie back to US Century Bank. Their votes on the Urban Development Boundary and infrastructure serving the bleak suburbs of Miami-Dade County (like those surrounding Tamiami Airport or Homestead Air Force Base) were oaths of allegiance to the speculators and thieves who claimed to be delivering "what the market wants" while fattening their bank accounts. Their defense: "there is no crime playing the system better than our opposition."

The witness list would include former Miami-Dade Mayors and their county managers; Alex Penelas, Armando Vidal, and Steve Shiver, Carlos Alvarez, former county commissioners Barbara Carey Shuler and Carrie Meek, Miguel Diaz de la Portilla, Jimmy Morales, recalled commissioner Natacha Seijas, her ex chief-of-staff Terry Murphy, sitting commissioners Joe Martinez, Javier Souto, Pepe Diaz and Dennis Moss, Barbara Jordan and Audrey Edmunson and the phalanx of political consultants who serve them including Armando Guttierez. It would also include past and county department heads; John Renfrow, Miami Dade Water and Sewer, Bill Brandt, and former DERM chief Carlos Espinosa. By taking apart the insider dealing and political operations of US Century Bank, the trial would expose how $7 billion in infrastructure deficits accumulated; how those deficits served the business of bankers and developers and how Chamber of Commerce values ("Growth pays its own way") eroded our quality of life, water quality and our Everglades and dimmed our economic prospects by setting South Florida on a course where only more growth and development could bail us out. The disclosures would paint the picture of corporate politics disguised as democracy; from county commission races to presidential campaigns like the one that delivered the United States to George W. Bush through the halted recount in downtown Miami and its legacy, FreedomWorks. (for more, you will have to read our archives).

One has to read between the lines of the FDIC Consent Order with US Century to understand just how suspicious and mistrustful federal regulators are. Over this week, we will focus on a few of the highlights. For example on Page 3:

The implication is that official records of the Board of US Century Bank or incomplete or maybe in a storage box that can't be found. Complaints to the Florida Bar Association and to the Division of Professional Regulation would be in order. If only it were a just world.

Sifting through the cinders of the housing crash ... by gimleteye

In the run up to the biggest collapse of construction, development and housing in South Florida history, I often railed that The Miami Herald was failing its responsibility to readers by deliberately avoiding the extent of the growing bubble. My point of view was informed by the lopsided battle to protect the Everglades from predators. It was also informed by awareness that Herald executives had killed important stories: like the massive conversion of farmland in Homestead and South Dade to tract housing. It seemed possible, at the time, that an informed electorate might make other choices and that the Herald could play an important role. But the more I learned about the Herald, the more clear it was that the Herald had a very, very limited interest in any exposure of the fraudulent underpinnings of the South Florida real estate conflagration.

It was obvious at the time that Miami real estate had run so far out of control that the aftermath would bestow a number of dismal "firsts" on our region, including the latest; that Miami leads the nation in homeowners with mortgages under water. What we know today is that an economic recovery will take a very long time, during which-- as economist Robert Shiller noted recently-- "bouncing along the bottom" is the best we can expect. But we might have known yesterday and exercised precaution, had we been better informed. If there had been comprehensive reporting by the Herald, Miami Dade taxpayers might not be saddled with such a sad sack cast of elected leaders at county hall.

Today, the extent to which banks and mortgage companies made outrageous loans to financially unqualified individuals is coming out in dribs and drabs: hairdressers, policemen, and even "the highest ranking female firefighter" in Miami, recently charged with four others by a federal grand jury with taking part in an $11 million mortgage fraud scheme. But the latest news that caught my attention was in Miami Today and it was about the Miami Herald parking lot fiasco; a story EOM can't let go. "McClatchy Co., owner of the publication The Miami Herald, reported that 10 acres west of the newspaper building it had been under negotiation to sell for five years for $190 million is now valued at $49.6 million."

There is a bigger story that EOM can't write because we aren't paid journalists and research is expensive, but if any journalists are reading, this story goes along the following line: that the Herald's intense interest in land speculation at the time, put the paper on the same side as the fraudsters and elements of the Growth Machine who drove the economy into the ground. That's why readers weren't getting fair and accurate news about the housing bubble in Miami. The paper's executives were protecting their own pensions and compensation packages.

As Knight Ridder was marketing itself to McClatchy in 2005, the question arises: what role did inflated real estate values play in the compensation formula of top executives at the Herald when the transaction closed. Wikipedia offers of McClatchy: "The company's biggest acquisition occurred on June 27, 2006 when McClatchy purchased Knight Ridder. Because McClatchy was so much smaller than Knight Ridder at the time, one observer equated the deal as "a dolphin swallowing a small whale."[3] The purchase price of $40 per share and 0.5118 shares of McClatchy Class A stock was valued at about $4 billion in cash and stock. The company also assumed $2 billion in debt."

One can't blame former newspaper executives at Knight Ridder from over-selling its properties or blame them for earning tens of millions in compensation for embracing the dictum of PT Barnum, but a good forensic exploration should be able to determine the extent to which the collaboration between the Herald and downtown land use lawyers like Greenberg Traurig overvalued the parking lot and contributed to the sales price of the Herald to McClatchy. Readers, then, could have an assessment of how well they were served by subscribing to The Miami Herald during the biggest looting of the economy since the Great Depression.

One Woman's Turn for the Worse Because of the Housing Crash. By Geniusofdespair

I was doing public searches in buildings and happened upon this condo which sold for $702,000 in in November 2007. The buildings condo's are now selling in the high $300,000 range. So I thought: "Hmmm, something is wrong here, I need to take a closer look." I went to public records and looked up the woman's history. She is listed as owning 4 properties, 2 in the same building. Appears she had a $596,700 mortgage on the $702,000 condo - putting 20% down. She oddly also had two quit claim deeds, she deeded a property to her attorney and he deeded it back to her a year later (no sales price on quit claim). She bought two additional condos: one in 4/2006 for $460,000 ($322,000 Mortgage) and another a month later for $455,000 (she got $455,000 in 2 mortgages 5/30). She got two additional mortgage for $138,000 5/31 and $91,000 6/12. So the woman had more than a million and half in real estate holdings and many mortgages during the rash days before the crash. Out of all the deeds listed in the graphic the only property she sold was on 7/28/05.

As you can see by the graphic (hit it to enlarge) of her actual county records, things took a turn for the worse on her wheeling and dealing, in early 2009. Lis pendens, liens, foreclosures and judgments have plagued her ever since. I couldn't make sense of her mortgage history as the quit claim deed threw everything off.

The last entry is a foreclosure granted for $277,087 principal due. With fees the principal due climbed to $302,882. Sad. But, think of what a mess this is for collecting property taxes.

Key: AMO - Assignment of mortgage, SMO - Satisfaction of Mortgage. REL - Release of lien. LIS - Written notice a lawsuit has been filed. CVP - Civil Court Papers.

Miami-Dade Mortgage Foreclosure Filings 2008: More Than Double 2007. By Geniusofdespair

The total mortgage foreclosure filings in 2008 in Miami Dade County, according to County records, is 56,530. That is more than 7 times the amount of filings in 2005. The good news is, I meant to say 'bad' news, they are going up not down. In January 2008 there were 3,544 and in December 2008 there were 5,582.

Mortgage Fraud Taskforce Arrests. By Geniusofdespair

Hit on images to enlarge them. Newer arrests is image at left.

You can report suspected Mortgage Fraud to Mayor Alvarez's Task Force: (305) 994-1000. Fraud leads to foreclosures and lowers the price of homes in your neighborhood. Don't let your suspicions go unreported. Here are public records for one person listed:

.

Any readers, on Palmetto Towers? by gimleteye

Who can tell us about Hector Hernandez, Great Country Mortgage, and Palmetto Towers near Dadeland (9001 SW 77th Street and 9143 SW 77th Avenue) ? Readers, condo owners: write us anonymously or not, to geniusofdespair@yahoo.com Here is the Original Post. Tell us your experiences.

Type the rest of the post here

Home sales in Miami: the brave new world of disaster capitalism. By Geniusofdespair & Gimleteye

Keys Cove is a sprawl development in the City of Homestead, formerly a sub-tropical farming community, in Florida. Tucked in between the Lis Pendens, Civil Court Papers and Releases (the various legal documents that have replaced massive deed transfers), Production Home Builder Shoma Homes records only 7 deed transfers. These 7 were in Keys Cove, a PUD (planned unit development) and were the only sales for Shoma in public records from 8/1/2008 through 9/30/2008 (two months). The previous month, July 2008, Shoma did a bulk sale of about 400 unbuilt condo units in this development to a Delaware Corporation for $1,018,883. In comparison: In 2005 during the same two month period, Shoma had about 90 deed transfers.

The finished units on the right of the red area in the aerial view (there are 575 units in this first phase) give an idea of prices before the housing market crash. (hit on image to enlarge it).

A 1,060 square foot unit owned by Citibank NA Trs., went for $190,000 4/2006. U.S Bank NA owns one which sold for $205,000 (1,182 square feet) 8/2006. Smaller units (930 Square Feet) went for $134,990 in 6/2006 and 11/2006 one (930 square foot) unit went for $143,990.

Now we are going to show you the seven sales, recorded at a 40 to 50 percent discount from the values before the crash, one recorded just two weeks ago.

No. 1
Shoma sold Unit 396 at Keys Cove for $100,000, 8/5/08 to Graciela. Folio 1079290133960. She got a first mortgage for $91,248 from J.P. Morgan Chase. She also has a Florida Housing Finance Corporation Florida Assist Program Subordinate Mortgage. This mortgage was for the same amount as the other mortgage...doesn’t make sense unless she was withdrawing cash for a property selling at a fraction of the value of surrounding properties.

No. 2
On 8/21/08 Ivan and Lizzet bought unit 348 for $100,000. They got a mortgage from J.P. Morgan Chase for $95,164. They also have a Florida Housing Finance Corporation Florida Assist Program Subordinate Mortgage for $4,200. Folio 1079290133810.

No. 3
Shoma Sold Unit 963 to Angelica for $90,000 on 8/29/08. She got a mortgage from Wells Fargo Bank for $88,817. Folio 1079290145650.

No. 4
Alberto on 8/29/08 paid $100,000 for Unit 89. He got a mortgage from Wells Fargo Bank for $98,612. Folio 1079290130890.

No. 5
Jose Alfredo and Gloria purchased Unit 133 for $100,000 on 9/4/08. He got a mortgage from Wells Fargo Bank for $98,202. Folio 1079290131330.

No. 6
Edward bought Unit No. 965 and paid $90,000 on 9/10/08. He got a mortgage from Wells Fargo Bank for $88,817. Folio 1079290145670.

No. 7
Jeanette paid $90,000 9/17/08 for Unit 957. She got a mortgage from Wells Fargo Bank for $88,381. Folio 1079290145590.

We know the markets in Miami are in a steep decline, but these numbers are mystifying: are we back to the days of 95 percent financing, or, is there some accounting slight of hand at work? It has to be the latter.

Someone is taking a loss and booking it as a profitable transaction, or, one party-- the builder-- is washing hands with the other party-- the banker-- in order to avoid Chapter 11, bankruptcy or worse. Builders are hemorrhaging cash, so it makes sense that they would make a deal with banks-- now that the meaning of contracts is anyone's guess.

It sounds foolish that this would be legal but we are fools to begin with: as the housing markets imploded we actually wondered aloud how the courts could handle all the foreclosures. Duh: they can't! So who cares how the values are re-assigned, when a very big part of our economy now obeys the rules of barter; fur pelts for tobacco or sheet metal except, now, it's houses that no one wants or can afford or can get loans to buy.

Is it possible that builders are making deals with lenders: any deal! After all, Merrill Lynch set the floor, selling troubled mortgage derivatives for pennies on the dollar. If Merrill can bust someone else's equity like that, why can't the borrower of a construction loan? Or of mezzanine financing?

So if the builders can't recoup their costs-- including land bought at speculative value-- they could be selling retail housing stock at a loss, with agreement of the banks who hold the "wholesale" business of developers like Shoma, in a transaction that allows the buyer to give cash back to the builder or to the bank, to increase their respective capital base even while declaring losses?

I had this insight today, talking with a mortgage finance entrepreneur: everything outside looks normal, people are driving on US 1 in their cars, employers are paying payrolls, the stores seem to be filled with college students filling up their cups at Starbucks-- but there is an alternate reality where debt is being sold for whatever anyone will pay.

As trillions of dollars of housing assets are being re-priced at whatever any agreement can be worked out by insiders, don't you think that investors in the derivative debt-- those MBS, and CDo's and CDS-- are gagging? So let's just pay everyone off: the foreign banks, the holders of derivatives, everyone gets a pass except the poor suckers who lived within their means and paid off their debt one month at a time.

Let me put it to you this way: we are not bankers, we are not developers, and we are not lawyers; but we do know that the credit crisis ($700 billion is just a start) has obliterated contracts. It has created a new concept of lawful ownership that would make our grandfathers cringe.

It used to be you could look at the public record of real estate transactions and more or less understand who owed who: but at this point with finance markets in total disarray, with financial regulations so eviscerated -- all we can say is that it is a complete clusterfuck out there and if we are even within eyesight of the truth, it is not long before we experience something quite unique in economic history: asset deflation combined with price inflation. In other words, a world of shit.

Where is the Department of Justice or the FBI to explain these deed transfers to the public; it is not an unreasonable request since the Wall Street bailout makes us all shareholders of these transactions? The mainstream media doesn't seem to have a clue as to what is going on.

Miami Herald: "Bad Mortgage Brokers Ran Wild" by Geniusofdespair

Matt Haggman reports: Bad mortgage brokers ran wild, Florida admits. He wrote:

"In a stinging critique of the state's oversight of the mortgage industry, top Florida investigators found that state regulators failed to alert police agencies to crooked mortgage brokerages, ignored citizen complaints and allowed hundreds of people with criminal histories to peddle loans."

Does this mean people can sue the State of Florida for incompetence?

"The newspaper found that convicted criminals went on to steal at least $85 million from consumers and lenders."

Miami Herald Uncovers Massive Mortgage Broker Scandal. By Geniusofdespair

This Miami Herald video will break your heart.Scam Mortgage Brokers. Also see the 3 part series Borrowers Betrayed. According the Herald, the State of Florida gave Mortgage Broker Licenses to over 1,000 convicted felons.

To Jeb Bush: Thanks for nothing.

Can you get a mortgage with a 480 Credit Score and What is with "Nehemiah"? By geniusofdespair

I was curious to see what I could get with a 480 credit score. I saw in Lennar’s ad that they were requiring a 600 score on a new home. More interesting, the ad said you can put “0” down but it requires the buyer to qualify to obtain down payment from a "non-profit down payment assistance program." I decided that was worth a call to Lennar, to get the skinny on the program.

It is called the "Nehemiah Assistance Program" You can read about it on GetDownpayment.com. They also have a Christian Ministry component. Boy, the website was pretty odd. You had to take an online course to qualify for no down payment. Nehemiah tells developers on their website:

“As a builder, your success depends on getting more qualified people to visit your homes. Putting together the most attractive home package available will drive more people to your communities. The Nehemiah Program® understands this. When you partner with Nehemiah, you can advertise your homes as having downpayment assistance available. Nehemiah will partner with you to create just the right marketing campaign for your homes.”

That is a non profit? This Nehemiah Program is a story in itself, however, I am writing about credit scores.

I decided to call around to see what was up. I claimed my credit score was pretty bad: 480. I called "------" (btw, beware of phone shopping, this guy had some kind of ID reader on his phone...the guy read me back my name and address). They said their minimum score was 580. When I said mine was 480, they weren’t that disappointed. (I have since heard from this guy so I am leaving out the name of his company -- remember to watch out for that ID reader).

I then called "Chase" which also required 580. When I said my score was 480 the guy said “We have programs that don’t require credit scores, assets or salary disclosure.” They are called Hard Money or Hard Equity loans. They lend money based on equity: you need 35 to 40 percent down for these loans. They can only lend you up to 65% of the value of the property. "Choice One Mortgage" had the same story — 580 required -- for my 480 credit score, 35% down and they would give me an 11 or 12 percent adjustable mortgage.

Still seems risky for the lenders/banks. With value still dropping in South Florida, they still could still lose. Apparently a credit score of 480 doesn’t scare mortgage lenders.

P.S. The Nehemiah Mission:

"Nehemiah transforms lives by increasing homeownership and asset development opportunities for diverse populations, while maintaining our commitment to successful, responsible homeownership.

Nehemiah transforms communities by expanding our faith-based, charitable and community development initiatives into underserved neighborhoods across America."

Also see today’s post: Bank Failures

Looks Like Recent Condo Sales are Posting Massive Losses for Lender-Owners. By Geniusofdespair

These are all recent sales in Miami Dade County, data is from the Property Appraiser Website and the Miami Herald, I compared last recorded sales price to current sales price:

Indymac Bank c/o Florida Default Law Group, sold condo unit 1205 at 3300 NE 192 Street for $173,000. On County Records it shows them acquiring the property for 3/2006 for $388,900. Morgan Stanley Trust sold condo unit 2410 at 19501 W. Country Club Drive for $271,900. Another lender, Deutsche Bank, took possession of it 3/2005 for $480,000. Accredited Home Lenders sold unit 2510 at 19501 W. Country Club Drive for $265,000. They took possession of it for $370,000 2/2005.

South Star III, LLC. sold unit 802 at 3340 NE 190th Street for $296,000. A lender, Freemont Investment and Loan had taken possession of the same property 9/2007 for $499,800. Deutsche Bank National Trust sold condo unit 315 at 2174 NE 170th Street for $100,000. They took possession of it 6/2006 for $189,000. Deutsche Bank National 2006-1 sold condo unit 23 at 11840 NE 19th Drive for $93,330. They took possession of it 1/2006 for $325,000. Finally, Emc Mortgage sold Unit 13 at 10 SW South River Dr. for $265,000 in 12/2007. The previous price: was $410,000 in 6/2005.

I am assuming these are foreclosures getting sold at massive losses after years of sitting idle.

Mortage Fraud in South Florida by Geniusofdespair

Finally some arrest according to the Palm Beach Post: 3 charged in mortgage scam called 'economic parasites'. As reported by Jeff Ostrowski:

In a wide-ranging mortgage scam, two real estate investors and a mortgage broker used inflated appraisals, straw borrowers and phony loan applications to fleece big-name lenders of millions, federal prosecutors say.

The collateral for the ambitious fraud? McMansions throughout Palm Beach County, including several in posh gated communities in Wellington and Boca Raton.

An assistant U.S. attorney calls the alleged scammers "economic parasites" whose ilk have played a little-noticed role in the mortgage meltdown that has roiled financial markets worldwide.

I like this part:

Louidort and Michel used straw borrowers to qualify for the fraudulent loans, federal officials say. The bogus borrowers purported to make big salaries from Florida All Insurance in Delray Beach.

There was the Publix cashier whose $13,000 paycheck ballooned to $344,000. In another instance, a borrower making $25,000 a year as a hotel worker claimed to make $594,120 a year at Florida All Insurance. That borrower, identified as "W.M." in court records and as William J. Muller in property records, landed $1.8 million in loans for a home at 10581 Versailles Blvd. in Wellington.

In the article it says about one of the scammers:

There's Michel - a native of Haiti who, according to his attorney, can't read or write well enough to pass a U.S. citizenship test - collecting "assignment fees" of $650,000 and $600,000 on side-by-side homes in the Versailles development in Wellington.

What the hell is wrong with the banks that they would take these loans. Thanks reader, Woof, for the article.

Abysmal Down-payments on Recent Production Home Sales in Miami-Dade. By Geniusofdespair

The Wall Street Journal reported April 24th that 8.4% of South Florida’s loan payments are overdue which is the highest percentage in all of the major cities in the U.S.

Imagine our surprise when we saw this ad (left) in the April 28th Miami Herald, saying that “Ocean Bank” is incredibly offering 5% down-payments when they have one of the worst bad loan rates of any South Florida bank. According to Bauer Financial, Ocean Bank was at 5.2% as of Dec. 31, 2007. In contrast, in the same ad, Third Federal Savings and other lenders were responsibly offering loans at 20%.

We, at Eye on Miami were wondering if production homebuilders had tightened up on mortgage loans, which they traditionally arrange for their buyers, by requiring larger down-payments. We also wanted to see if lenders were taking the crisis seriously by requiring higher down-payments for these homes to help avoid foreclosures and to increase their capital reserves.

By researching current records for 4 production homebuilders in the county real estate transaction database we found these recent sales, mostly with less than expected down-payments:

Shoma Homes

1. Richard 3/18/2008 paid $200,000. His mortgage was for $179,910 from American Banc Shares. Down-payment was $20,000 (10%).
2. Barbara 3/06/2008 paid $227,000. Her mortgage was for $215,600 from Wells Fargo. Down-payment was $11,350 (5%).
3. Joel 3/06/2008 paid $225,000. His mortgage was for $213,750 from Flagstar Bank. Down-payment was $11,700 (5%).
4. Guissella 2/06/2008 paid $232,100. Her mortgage was for $220,400 from Olympia Funding. Down-payment was $11,700 (5%).
5. Guiovanny 1/15/2008 paid $220,000. His mortgage was for $220,000 from JP Morgan Chase. Down-payment was $0 (0%).

Horton Homes

1. Emilio 2/2008 paid $371,300. His mortgage was for $371,250 from JP Morgan Chase. Down-payment was $50 (0%).
2. Davis 10/04/2007 paid $315,700. His mortgage was for $315,600 from JP Morgan Chase. Down-payment was $100 (0%).
3. Cirenia 4/11/2008 paid $292,800. Her mortgage mortgage was for $288,210. from Wells Fargo. Down-payment was $4,590 (about 1.5%).
4. Ivan 3/12/2008 paid $189,900. His mortgage was for $187,054 from Countrywide Bank. Down-payment was $2,936 (less than 2%).
5. Isiah 9/2007 paid $295,900. His mortgage was for $295,895 from Homecoming Financial Network Mortgage. Down-payment was $5 (0%).

Lennar Homes

1. William 4/15/2008 paid $291,000. His mortgage was for $286,483 from Universal American Mortgage. Down-payment was $4,517 (about 1.5%).
2. Michael 4/15/2008 paid $307,166. His mortgage was for $313,753 (VA Rider) from Universal American Mortgage. Down-payment was -$6.587 (less than 0%).
3. Sylvan 4/16/2008 paid $283,500. His mortgage was for $289,646 (VA Rider) from Universal American Mortgage. Down-payment was -$6,146 (less than 0%).
4. Bernardo 4/03/2008 paid $292,000. His mortgage was for $266,742 from Universal American Mortgage. Down-payment was $25,258 (less than 10%).
5. Rodolfo 4/02/2008 paid $265,000. His mortgage was for $262,922 from JP Morgan Chase. Down-payment was $3,000 (less than 1.5 %).

Caribe Homes

1. Michael 1/08/2008 paid $282,500. His mortgage was for $226,000 from HSBC Mortgage. Down-payment was $56,500 (20%).
2. Maribel 11/06/2007 paid $322,833. Her mortgage was for $306,650 from JP Morgan Chase. Down-payment was $16,183 (5%).
3. Jose 11/06/2007 paid $328,000. His mortgage was for $327,000 from JP Morgan Chase. Down-payment was $1,000 (less than 1%).
4. Mark 11/06/2007 paid $209,000. His mortgage was for $188,100 (2nd Home Rider) from JP Morgan Chase. Down-payment was $20,900 (10%).
5. Nelson 1/29/2008 paid $227,800. His mortgage was for $216,350 from JP Morgan Chase. Down-payment was $11,550 (5%)

There weren't a heck of a lot of recent sales in 2008 for any of the production homebuilders.

Look at an insane mortgage written this month in Miami-Dade! By Geniusofdespair

Another Stupid Mortgage in April 2008?? I am flabbergasted! I was looking at public records in Miami-Dade and I found a Horton Homes sale of a PUD home to Cirenia (last name also unusual) on April 11, 2008 for $292,800 to a woman with an outstanding judgment of $6,651. Somehow she got a mortgage from Wells Fargo Bank for $288,210. That means she put $4,590 down!! That's not a respectable down-payment anymore, that is a trip to Bermuda.

These banks are just nuts, have they learned nothing? If we start bailing banks out I will pound my fists into something. (Pictured is an aerial view of the Homestead neighborhood where the home is located).

Mortgage Lender Scum: See What You Have Done – The Aftermath of Foreclosure By Geniusofdespair

The Story Began May, 2007. At that time I reported that relatives in their mid 80’s were facing a mortgage they couldn’t possibly pay. Here is what happened in that year, the human side -- the aftermath of a foreclosure.

Since I wrote the post in May, my aunt died in November '07 (maybe it was partly the financial stress) and took her pension with her. The husband, Paul, was left holding the bag on the impossible to pay for mortgage (even with the pension it was more than they could afford).

I was wondering what had happened to this uncle by marriage so I searched the Public Records of Hernando County, Florida.

In a hearing on February 27, 2008 all hell broke loose for Paul. He was foreclosed on prior because he was appointed a Guardian on that February date. There was also a petition granted for emergency shelter for him. All fees were ordered deferred as he was declared indigent by the court. Indigent in an emergency shelter!

I hope you are happy mortgage lenders scum for giving people in their mid 80’s almost 100% financing and a balloon to boot. One bright side: The foreclosure hurts the bank that did this bad loan. This man Paul is destitute, not even left the dignity to die in his home of 20 years. The mortgage broker should be shot for taking advantage of very old people. Granted, I didn’t like this uncle by marriage, but he didn’t deserve this.

In case it is too much trouble to press the link to read the first companion post, here it is below:

Saturday, May 19, 2007

Mortgage Lender Scum. by Geniusofdespair

This is a very sad tale indeed.

An aunt and her husband lives on the West Coast of Florida in a house valued at about $146,000 or less (they bought it for about $40,000).

In February ‘05 she got an interest only adjustable rate mortgage prepared by American Lending Corp. from MERS (Mortgage Electronic Registration System) for $140,000. Lender is Greenpoint Mortgage Funding, Inc. of Novato, Ca. The loan's interest rate goes up to 7.850% in January 2008. The interest will never be greater than 14% and never less than 7.850%. She also signed a waiver of escrow account.

My aunt was also given a balloon mortgage prepared by the same American Lending doing business as U.S. Guarantee Mortgage Corp. This balloon is in the amount of $35,000. So she has 2 mortgages for probably more than the house is worth and she can't afford the payments.

HERE IS THE BAD PART:
She is 85 years old and lives on a pension of $25,000 a year and gets a few thousand from social security. she has no savings. She also has a car payment of $457 a month (looks like the car guy saw her coming).

How could someone write such risky mortgages to an 85 year old woman without an income? She isn't the sharpest tack. They should have sent her home and told her to write a tight budget.

She is now pretty much destitute and will probably lose her home and car in short order as she asked me for a $25,000 loan (which is not going to happen because I am blogging too much). She wouldn’t tell me what was going on but I found all of this information on line much to her dismay.

How many more retirees in Florida were exploited like this poor X kindergarten teacher?

More on Rubio and US Century Bank by Geniusofdespair

I took a look at public records on the property appraisers website on mortgages given under the name US Century Bank. Didn't find Foreclosures surprisingly. I did find that most of their loans appeared to go to developers or corporations. They did less than half of their Mortgages to individuals and, at least during 2006, most were either "future advance clauses," like the Rubio mortgage, what we know as "home equity loans" and "Florida Real Estate Mortgage Assignment of Leases and Rents and Securtiy Agreement" (what ever that is). They wrote one of these to Pedro Robau, who, if I remember correctly, owns land on the other side of the UDB in South Dade. They also had "Mortgage Modification and Spreader Agreements." Again, I don't have a clue. Surprisingly, over the years, a lot of mortgages they wrote went to members of their Board of Directors and their business partners. I wish I could see the terms.

Will have to give this some more time, but with all these loans to developers, what is going to happen to this bank?

Lenders: Are you nuts? By Geniusofdespair

I was screwing around in the public records of a sprawl community in Homestead (formerly an open land/agriculture area) just looking for something to jump out at me and something did! Jean Claude bought a 1,360 sq. ft. townhouse in June 2007 For $260,000 ($191 a square foot). In July 2004 his neighbor paid $131,386 for the same unit. At the height of the real estate frenzy, in February 2005 a unit a few doors down sold for $208,000 and in June 2005 another sold for $210,856.

I said to myself, why in mid 2007, well into the real estate downturn (there was a foreclosure on the next block in October 2007), would Jean Claude pay such a high price? And even more surprising then the price paid, was the financing he was able to get:

Jean Claude actually got 100% of his purchase price financed, this is in June 2007 mind you! Incredibly, buyers in South Florida were still getting 100% loans months after all the bad press on foreclosures!

His mortgage was at 8.375%, prepared by Aurora Mortgage out of Vienna, Virginia. His adjustable rate would cap at 14.375%. By December 2007 Keys Gate Community Association slapped a lien on his property. A Lis pendens was filed by Aurora Mortgage in March 2008. Like we couldn't have predicted that was going to happen!!

I found another sale in June 2007 to Angielee for $260,000 for a larger 1,498 sq. ft. townhouse ($173 a square foot). Angielee got a mortgage for $208,000 dated June 2007 and a secondary lien (ballooon rider) for $52,000. Both were from First Franklin Financial Corp. out of San Jose, California. Again, this is 100% financed! Her interest rate for the first mortgage was 8.25% and could not go higher than 14.25%. Angielee is not in foreclosure according to public records, but I would bet a foreclosure could be coming.

A few months earlier, in March 2007, Antonio purchased a 1,498 sq. ft. home in the same development for $335,000 (a whopping $223 a square foot). Remember Angielee paid $173 a sq. ft. for the same unit and another similar unit sold January 2007 at $170 a sq. ft. In 2005 near the top of the market, this unit was selling for about $133 a sq. ft.

Antonio got a mortgage for $268,000 in April 2007 from Sunshine Financial Group out of Miami and it was immediately signed over to JP Morgan Chase Custody Services. He also got a home equity line of credit mortgage from JP Morgan Chase Bank for $67,000 in November 2007. Again that adds up to 100% financing! His adjustable initial interest rate is 6.375%, capped at 12.275%.

So, in an hour of searching public records on a few blocks in one neighborhood, I found three 100% financed loans on what I would consider three above market value properties which is a recipe for foreclosure. Eye on Miami had been reporting foreclosure abuses in early 2007-- with every other news outlet in the United States. Lenders certainly should have known better as 2007 marched on! And, what is wrong with the appraisers? That is another post.
More from: Eye On Miami's Housing Crash File

Real Estate Crash Translated into Small Talk by Geniusofdespair

You go to a cocktail party and the conversation drifts to real estate and you think to yourself “Bummer, I don’t know beans about this.” You must learn Housing Crash small talk if you want to remain popular. I am here to help by defining some of the most common terms that you can drop to seem knowledgeable and, just maybe, you can even understand what people are talking about. Remember, cocktail parties are teeming with realtors who are suffering financially, anxious to vent.

Statistic to impress: According to the Miami Herald, Miami Dade County has an inventory of 24,316 condos for sale (up 19% from 2007) and 16,446 houses for sale (up 45% from 2007). Sales of both are down close to 50% from January of last year.

In 2007 there were 26,391 foreclosure in Miami Dade County, almost 3 times the 2006 total. In January this year there were 3,434 foreclosures (County Clerk Records). If this trend continues, we will have 41,000 by year's end.

Liar Loans (Very good defintion in the Sunday Miami Herald): “Some borrowers obtained ''stated income'' loans. This is where the customer says what he earns -- but doesn't prove it. A similar product was the ''low doc'' mortgage. Here, people might prove their income but keep other financial details like debt levels to themselves.” This "easy money" was ripe for fraud according to the Miami Herald.

Subprime Mortgages (as defined by Bankrate.com): “Generally, subprime mortgages are for borrowers with credit scores under 620. Credit scores range from about 300 to about 900, with most consumers landing in the 600s and 700s. Someone who is habitually late in paying bills, and especially someone who falls behind on debts by 30 or 60 or 90 days or more, will suffer from a plummeting credit score. If it falls below 620, that consumer is in subprime territory. Few lenders will use the term "subprime" to describe you or your loan, because it's considered bad salesmanship. You might hear the word "non-prime" or, more likely, an adjective won't be used to describe the mortgage at all.” and:

"By 2006, subprime loans were 13 percent of the homelending market, up from 8.5 percent in 2001" (Miami Herald). According to the Federal Reserve of St. Louis, the default rate for these subprime loans is 6 times higher and foreclosures 10 times more frequent.

Subprime Lenders (The Herald says): “They are lenders to people with impaired credit."

“See-Through Condos” - A nickname for mostly unoccupied new condos buildings, where you can see through from one side of the building to the other. Lewis B. Freeman, Certified Fraud Examiner warns: “If you’re the only person closing a unit on the floor, are you going to want to live there? What about the association fees not being paid?"

Hedge Fund (finance and investment encyclopedia): “The term hedge fund is used to indicate a 'hedge' against investment deterioration. Hedge fund can be defined as a managed portfolio that has targeted a specific return goal regardless of market conditions. Hedge funds specialize in gaining maximum returns for minimum risk. Hedge funds use a wide variety of different investing strategies to achieve this goal and generally these strategies are managed and executed by a portfolio manager.”

My Suggestion: When the conversation gets to “Hedge Funds,” if you are not Gimleteye, excuse yourself and go to the bathroom – never to return to that conversation. You are out of your league.

Miami Herald’s Gregg Fields sums up subprime loan problems:

THE OTHER SHOE DROPS

Think about the Titanic. Before it sank, it took on water. Similarly, subprime's problems were papered over for years by rivers of new money. Wall Street sold hundreds of billions of dollars of bonds back by subprime mortgages to investors around the world. So long as new money arrived, the old money looked sound.

In subprime centers like South Florida, these flows of private capital pushed home prices literally out of reach for people living here. Between 2000 and 2006, the median home price more than doubled in Miami-Dade. But household incomes rose just 15 percent.

Higher home prices opened subprime's throttle. Even if a home fell into foreclosure, the lender could sell it without a loss. And continuing low rates from the Fed meant an unending parade of buyers -- at any price.

Worried investors in subprime bonds were reassured by credit agencies, which routinely issued the kind of sparkling ratings not seen since Enron was at its zenith.

''Subprime probably would have never been a problem as long as interest rates were low and housing prices went up,'' said Ken Thomas, the Miami banking analyst. In 2005, as the Fed began raising rates, ``it was like taking away the punch bowl.''

With easy money no longer oiling the industry, the subprime machine began to freeze up. Housing prices stagnated. Buyers disappeared.

''The perfect storm moved in on them,'' said Hancock, the attorney.

Investment houses bloated with subprime debt were out tens of billions of dollars. As the bubble burst, the entire U.S. economy wobbled.

Why had no one seen that the economic emperor was largely unclothed?

''The system evolved beyond natural controls that had existed before,'' said McCain, the Key Bank economist. ``Previously, banks would take applications, and a lot were turned down. But in recent years, the incentives were to pump up the volume on loans.''

Those incentives included billions of dollars in fees for making, packaging and servicing subprime loans. The rewards were too big to ignore.

''People cast a willfully blind eye,'' says McCain.

Predatory Lending: Why it is President Bush’s Fault. By Geniusofdespair

It seems someone agrees with Gimleteye: The Governor of New York.

Gimleteye always heads for the top of the food chain when reporting. I report from the bottom up. I don’t always agree but I am eager to hear the point of view from the top down.

The opinion article in the Miami Herald today confirms what Gimleteye has been saying all along. If ever there was a must-read, this is it: PREDATORY LENDING: Partners in crime.

Author, New York Governor, Eliot Spitzer (wish he were running for President) said:

"Even though predatory lending was becoming a national problem, the Bush administration looked the other way and did nothing to protect American homeowners. In fact, the government chose instead to align itself with the banks that were victimizing consumers."

Spitzer also said:

"Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye. Let me explain:"

"The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.

In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions pre-empting all state predatory lending laws, thereby rendering them inoperative against national banks.

The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.

But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation in 2005 of possible discrimination in mortgage lending by a number of banks, including national banks, the OCC filed a federal lawsuit to stop the investigation against the national banks." (hit the link to the Herald to read the entire article – you should read it Bushites).