NotDeadYet

http://www.reuters.com/article/inDep...rpc=22&sp=true

Miami condo at ground zero in mortgage fraud

Tue Nov 13, 2007 12:41pm EST
By Tom Brown
MIAMI (Reuters) - At first glance, the 43-story building in Miami's international banking district seems little different from other high-rise condominiums overlooking the turquoise waters of Biscayne Bay.
But the 643-unit condo known as the Club at Brickell is a leader in mortgage foreclosures and it appears also to stand at ground zero in a blizzard of fraud that may lie behind many of the failed loans threatening to bury the U.S. property market.
America's subprime mortgage crisis is partly due to predatory, or aggressive, lenders, hard-sell tactics by mortgage brokers and an easing of underwriting standards in the $10 trillion home-loan industry.
But fraud accounts for a sizable share of the bad bets on mortgages, according to many industry experts, and lenders may have been victimized as much as anyone else.
"The lenders are holding the bag now, that's what we're finding out," said Glenn Theobald, head of a mortgage fraud task force formed in south Florida's Miami-Dade County in September.
Mortgage scams involve a cartel of inside players -- colluding property appraisers, real-estate brokers and accountants willing to draw up fake income statements and tax returns -- who recruit people with good credit histories to serve as a decoy or "straw buyer" in a real-estate deal.
The conspirators inflate the price of the property, to get the biggest loan possible, pay the sellers the original price and then pocket the excess loan money as "cash back" at the closing of the deal.
The decoy buyer is paid off -- often with just $5,000 -- and the property is quickly abandoned to foreclosure, said Theobald, a senior official with the Miami-Dade Police Department.
'EPIDEMIC'
"It's an epidemic," said Nancy Hogan, a veteran realtor and former head of the Florida Real Estate Commission.
"The cash back, the fraud for profit, is what has been so rampant," she said.
The Club at Brickell has the highest current number of foreclosure proceedings involving any single south Florida property.
There may be other properties in the United States that hold the distinction of being riddled with more cases of apparent mortgage fraud than the Club.
But Doug Dewitt, a real estate broker contracted to work with several lenders on the valuation and disposal of foreclosed properties, said nearly 70 percent of the sales or closings at the Club over the last 18 months were questionable.
That works out to more than 200 possibly shady deals in a single building, he said.
The dubious transactions all fit a pattern that Theobald said should trigger "bells and whistles" for law enforcement anywhere -- time and time again properties that failed to sell for months when listed at around $450,000 were pulled from the market and then suddenly sold for more than $800,000.
Florida leads the nation when it comes to mortgage fraud, according to the Virginia-based Mortgage Asset Research Institute, a group that works closely with the U.S. Mortgage Bankers Association.
Many apartments could wind up being sold at auctions like one held last month for bank-owned properties in Fort Lauderdale, further depressing prices in a market suffering its biggest condo glut in decades.
"You've seen some of it already. They are actually having auctions to try and sell units," said Theobald, when asked about discount sales involving recently foreclosed properties.
"I don't know where it's going to end up," Theobald said. "I don't know when the bottom is going to be."
Ken Thomas, a Miami-based banking expert and lecturer at the Wharton School at the University of Pennsylvania in Philadelphia, said there was little surprise Florida led the country in mortgage fraud.
It stems, at least in part, in the way lenders plowed "easy money" into the local condo market before Florida's recent housing boom turned to bust, Thomas told Reuters.
"We're going to see a lot more of this fraud being exposed, especially as these units go into foreclosure," Thomas said.
"We were the poster child of the housing bubble ... maybe we should have expected more of this."

Capricious

Duh





But what really chaps my butt is this:

https://www.naca.com/press/pressRelease20071024.jsp

Allowing people to refinance their "predatory" loans @ .05375
(although that is up from .05250 from yesterday)


No PMI required.


Unbelievable.


Not much incentive out there for being financially responsible.

Pirate

This is only the first inning.

SHELLY

You've been out for snacks.

...they haven't even played the National Anthem yet--it will begin with the first "Perp Walk."





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But hey...Top Ramen tastes a whole lot better when you eat it off of a Granite Countertop. (Mr & Mrs Too Much Homebuyer)

Florida State Flower

Miss Kitty

Didn't we already go through this in the 80's with the Savings and Loans?

__________________
The mind is like a parachute, it works best when it is open.

NotDeadYet

Well, sort of. Actually, that is how we got Topsail and the Pt Washington Forest - the would-be developers went broke (and some of them went to jail) and that land ended up being auctioned off by the RTC, remember them?

But I think this is on a larger scale. Much larger.

Smiling JOe

This story sounds juicy. I've never heard about this. Please tell us more.



All of this mortgage fraud might start a new fashion trend for people in the upper class -- orange jump suits and flip flops.

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goodwitch58

.Oh, it is... Those of you who think things are "screwy" in local politics now, should have been around then...

Here4Good

You should read the book "Green Empire" - the entire Topsail story is in there.

All of PW State Forest has only been state forest since 1992.

Busta Hustle

didn't the first perp walk already? Aquaterra ring any alarms?
perhaps now we should be taking bets on the first major development to fall back to the banks...maybe not because of fraud but the lack of sales...tick, tick, tick, when will the dominoes fall? talk about your absolute auctions!!

elgordoboy

Naturewalk?

__________________

Haters gonna hate, Ballers gonna ball

NotDeadYet

Okay, you asked for it. And this is the short version.

The Green Empire is a good book – it’s been a while since I read it though and if I remember correctly it is primarily about St Joe and their metamorphosis from paper company to "place builder." I’ve always been interested in the local fallout from the Topsail and Pt Washington forest purchases.
Most of the land was purchased in 1986 from St Joe, which was just a paper company back then, by an outfit called Emerald Coast Joint Venture. ECJV announced plans for homes, hotels, golf courses and even an airport. But before anything was built ECJV’s finances collapsed, taking down two savings and loans along with it, one of which was in Texas and another in Pennsylvania. In 1991 the Federal court indicted 14 people associated with ECJV on charges of conspiracy, bank fraud, mail fraud, and money laundering. There were some convictions and jail terms and some later appeals. The trial was long and confusing, with complicated documents, side deals, related corporations, multiple loans, allegations of threats, supposed involvement of Kuwaiti businessmen and so forth. It would have made a good movie, I think, lots of drama and shady characters. So when the S&L’s failed, the land ended up in the hands of the RTC and was eventually auctioned off on the Walton County courthouse steps. The Nature Conservancy bought it, really at the literal eleventh hour, and held it in trust while the state got its act together. A few tracts adjacent to Topsail had ended up in private ownership after originally being included in the ECJV sale. The state attorney general tried to confiscate them as having been part of the alleged fraudulent dealings of ECJV, and the state had to file condemnation suits and pay for those in order to acquire them for Topsail. All of this dragged on for a long time.
The state had wanted the Topsail property for quite a while, and I think some of that story is in the Green Empire. What a lot of people don’t remember or never knew is that the state also wanted the Pt Washington land. At one time there was even a phase two plan to acquire an additional ten thousand acres to create a greenway all the way from Georgia to the gulf in the eastern end of Walton County. But the local political climate was unfavorable. In fact, the county lobbied for years for a selloff of portions of what is now the state forest, including the Cassine nature trail. That is how the government center over on 331 came to be – it was a compromise deal after a group of locals opposed attempts to remove portions of the forest from conservation. And all of this became intertwined with planning and growth management in Walton County. The state’s growth management act was passed in 1985 and it mandated that every county in the state have a comprehensive plan. When all that land was acquired by the state in 1992, Walton County still did not have a plan that complied with the 1985 act. The state legislature coughed up a bunch of money for the South Walton Conservation and Development Trust, which was an effort to finally produce a growth management plan for the county, and one of the reasons they did that was because of all the now state owned conservation land in the county. A lot of people think the plan, which was eventually passed in 1996, was something of a failure. I think compromise and politics played a big part in all of that. A lot of locals wanted one thing, low density and “green” developments, and the county and the developers wanted something else. And the county was never on board about the whole thing anyway – they looked at the purchase of all that land for conservation as a loss – the loss of future tax revenues, development opportunities, and so forth. You can still see the fallout from all of that operating today. Personally I think there has been an undercurrent of “give the developers whatever they want because there is limited land in SoWal available for private development” operating under the surface all these years. And I also think we are really lucky that the forest is intact and not littered with empty subdivisions, and that the beach at Topsail is unquestionably public.

Busta Hustle

So far...but as has been duly noted in this and other threads the abuse of the comp plan and the allowance of higher densities shows the struggle continues...sooner not later more small portions of the conservation lands will revert...