The Chickens Come Home To Roost & When The Dust Settles-Lender Discovers Mortgage Fraud
Things were going great. Work was great. The economy was smoking and people reportedly making a killing in real estate. "Flipping" this property, buying this one, selling that one and just living the "American Dream" to the fullest.
It was the best of times.
At best investments tend to be cyclic in nature with tops and bottoms. Like many investors following the maddening crowd many buy at the top only to watch the value of the investment drop. Suddenly, the market slowed. "Flips" were stalled. Many investor sellers had difficulty moving their property and their bloated equities began to shrink.
Turning the clock back a year, Chris and Delores got the fever to get in on the action. They wanted to get into real estate and called an out of state broker who had helped their friends find a deal and finance it. Their friends were gushing about what a great deal they had found. The local real estate market in their small Wisconsin town was still static so Chris and Delores were looking south in a red hot market in Florida close to the water. Chris and Delores had fully intended to buy a home in a resort area that they could rent out on a weekly or monthly basis to offset the mortgage payments and use the rest of the time for their family when vacation time became available.
The broker called and indicated a unit had come up in the same building that their friends from the same hometown had purchased a few months before. The negotiations ensued and because of the red-hot market the seller had no interest in helping with any closing costs or prepaid expenses. In fact there were three offers on this one unit and the broker explained that if they were serious about owning this unit they would have to pay $20,000 over the listed price. After a brief discussion among themselves and a call to their friends who urged them on, Chris and Delores decided to go ahead with the deal. With the market really smoking in the area, the seller would not fix anything and would only sell the unit "As-Is, Where-As" with the right to inspect.
Chris and Delores accepted the terms which included 10 days to get a home inspection and five days to make application with a lender and secure a required mortgage commitment within fifteen days of the acceptance date of the contract. The home inspection revealed that the air conditioning might at best last a year or a little more with good care and maintenance. The air conditioner was fifteen years old and was used a lot in the humid and hot climate.
The electrical system was going to need some upgrades and the carpet and paint was definitely need of upgrades. All this added up to out of pocket money if not right away certainly soon.
However, with the euphoria of the investment climate at the moment, Chris and Delores again pressed forward and waived the inspections and accepted the condo unit "As-Is, Where-As".
Now that was all left to do was to set up the financing.
The broker called and started gathering information on income, debts, assets and personal financial information to complete a loan application with all the disclosures. Chris and Delores were doing ok with good jobs but did not have a lot of financial depth, but had excellent credit with a few credit cards and two car loans and an outstanding student loan.
The broker came back with a Good Faith Estimate and Truth-In-Lending Statement with 10% down plus closing costs and prepaids. The sales price was $275,000.
The GFE showed $27,500.00 down payment plus $5,852 in closing cost and $2.950 in prepaid expenses which included tax escrows and prepaid interest. This would require $36,302 cash investment with the provision of two months of payment reserves of approximately $5,000.00 in provable assets. Chris and Delores were stunned; they had no idea that it would take this kind of cash. In a panic, they called the broker and shared that there was no way they could come up with that kind of investment. They further shared that their friends had bought their unit with a 100% loan.
The broker shared, "yes but they bought it as a second home".
"Well could we do that?" The broker said,
"well?it would need to be a legitimate second home." Chris and Delores discussed and called the broker back and said, " Well, we would like to buy it as a second home." The broker says, "Well from what I can see?you don't make enough money to full document on a second home and carry all your other debts."
Chris and Delores hung up and called their friend.
He shared his strategy. By checking one little box on the mortgage application (Form 1003) and signing their name, Chris and Delores applied for a second home with stated W-2 income. Second home, by implication, means you will not be renting the property.
A year passes, market slows, air conditioner breaks, rentals slow, job layoff, foreclosure is started.
The file is picked through, fraud is discovered. Criminal action is started.
Dale Rogers
www.brokencredit.com
.
The BCB is a free website created to assist the general public with information about credit repair and responsible mortgage lending. www.BrokenCredit.com
Why Bad Credit People Pay Higher Rates
Why Bad Credit People Pay Higher RatesbyLet's face it. People with credit problems pay higher rates for the same reason people pay higher auto insurance premiums - risk. Virtually everyone knows if you receive a traffic ticket, you get points on your driving record and an increase in your insurance premium. Why? Because the traffic ticket has created an emerging pattern of risk. If you got one traffic ticket, the chances of receiving another one are now greater than when you had no tickets.
Therefore, there is a greater likelihood of you filing a claim in the future. A speeding ticket can lead to accidents, property damage or even vehicular manslaughter. All of which pose a real risk of the insurance company paying a claim. The more claims the company pays, the less money they have to pay other claims and make sound investments to pay future claims.The credit world is similar. If you pay your bills late, your credit score decreases and the interest rate on your next financing...
Why Bad Credit People Pay Higher Rates
Mortgage > Why Bad Credit People Pay Higher Rates
Mortgage sales hit problems
The housing market has been buoyant over the past few years, but mortgage providers and first-time buyers are both now facing a tough time. Following announcements from the Bank of England that there has been an overall decline in the total number of UK home-buyers, and a declaration from the Financial Ombudsman Service (FOS) that the number of disputes concerning mis-sold mortgage endowments has now hit record levels, it seems that mortgage lenders are facing a bleak time. Add to this the results of a new survey, by the Edinburgh Solicitors Property Centre, which shows potential first-time buyers fear that they may never get onto the property market, and you start to see a worrying picture of the housing market emerge.The problem with the mis-selling of endowment mortgage products has recently made the headlines in the world of personal finance. The FOS admitted receiving 70,000 new complaints about endowment mortgages, the equivalent of 1,300 a week, compared to just 300 a week three...
Mortgage sales hit problems
Mortgage > Mortgage sales hit problems
How I Became a Hard Money Lender
Unlike other investors, my venture into real estate was a natural extension of my secondary business as the IP Ware software developer. However, opportunity and perseverance beget wealth, or at least a decent side income. Aside from my ventures into lease optioning residential property, I and my partner have managed to acquire a number of properties with our own credit. However, when looking at our finances and the return we were getting for the amount of effort involved, we both decided there must be a better way. That is when it occurred to me.
Instead of trying to leverage our existing assets for a diminishing return, perhaps we could be the bank.Here is the scenario as it has played out. First of all, we control a decent number of properties with our own credit. Most were purchased with 100% financing using multiple capital sources. However, each contains only a primary lean and is financed using standard mortgage terms. Subsequently, there is a 20% secondary credit position...
How I Became a Hard Money Lender
Mortgage > How I Became a Hard Money Lender
Search Engine Promotion - your options explained
Most people have limited knowledge when it comes to search engine ranking and the varioustypes of services on offer. We all know that having top 10 positions on some of the leadingengines can bring all the traffic we can handle, and then some. But how do we get those top10 listings and what should we expect to pay to get them? A simple way to approach this is to look at your competition. Do a quick search on one of theleading engines like Google or AltaVista, using a search phrase that people might use whenlooking for your products or services, and see what comes back. As a basic 'rule of thumb' guide - Between 100 and 5000 puts you in a 'low competition' category.
Between 5001 and 25000 puts you in a 'medium competition' category. Between 25001 and 250,000 puts you in a 'high competition' category. Over 250,000 puts you in a 'Extremely high competition' category.
Here are some examples we found on AltaVista:- "detroit real estate" - 2.7M"curtain fixtures" - 817,000"auto...
Mortgage > Search Engine Promotion - your options explained
Financing Your Business Venture
Many small businesses were born during the recession of 2001. One key reason is that during a recession period overhead costs tend to be lower. Still the time comes when a business needs to ascend to higher ground and reach a larger group of consumers. This presents the challenge of finding money to finance your marketing plan. As with any major financing transaction one needs to be prepared with the appropriate documentation at hand as well knowing the methods of finding the best bargain small business loans available.
So where do you start?FIRST STEPS IN SHOPPING FOR BARGAIN LOANS.
1. Calculate what you can affordRemember to include rates, points and fees. 2.If purchasing a home include insurance and taxes.3. Get your credit report4.
Put your financial papers in orderThese would include:Bank statements Mortgage papers Insurance papers Car loan papers Tax IDBusiness expense receiptsTaxes overdueOther loan documentation Credit reports Other out-standing debt.FINDING...
Financing Your Business Venture
Mortgage > Financing Your Business Venture
Access Business Technologies Obtains SAS 70 Type II Audit Report
Sacramento, CA (ContentDesk) July 26, 2006 -- Access Business Technologies, the Mortgage Technology Experts, announced today that it has received the Statement on Auditing Standards No. 70 (SAS-70) Type II Service Auditors' Report on its Hosting, Integration & Web Services operations. By receiving this award, ABT sets itself apart from the competition by ensuring the enterprises security and risk controls are appropriately designed and operational. The Statement on Auditing Standards (SAS) No. 70, is an internationally recognized auditing standard developed by the American Institute of Certified Public Accountants (AICPA).
A SAS 70 audit or service auditor's examination is widely recognized, because it represents that a service organization has been through an in-depth audit of their control activities, which generally include controls over information technology and related processes.
In today's global economy, service organizations or service providers must demonstrate...
Mortgage > Access Business Technologies Obtains SAS 70 Type II Audit Report
Real Estate Expo/Miami Supercedes Expectations in Both Quantity and Quality of Attendance, Miamia, FL (Jan. 31 & Feb. 1, 2004)
Miami, FL (ContentDesk) February 4, 2004 -- The Real Estate Expo/Miami, which took place this past weekend at the James L. Knight Center in downtown Miami, was considered an overall success by exhibitors and attendees alike.
The highly anticipated, two-day event concluded with approximately 1,000 individuals in attendance.
More important than quantity, however, exhibitors raved about the quality of the traffic, stating that the attendees at this year's Expo were serious customers interested in purchasing real estate and genuinely seeking the expertise of exhibitors. "Attendees were very target marketed, whether they were brokers or potential buyers.
We generated a number of leads from the event."-Jerry Krystoff, Colonial Development
As the only real estate convention of this type in the nation, the Expo served as a forum for potential real estate buyers and investors to access the industry's leading developers, real estate agencies, title companies,...
Mortgage > Real Estate Expo/Miami Supercedes Expectations in Both Quantity and Quality of Attendance, Miamia, FL (Jan. 31 & Feb. 1, 2004)
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