Real Estate Information

Stuart Siegel has well parlayed eNeighborhoods, a work which he founded, sold, re-bought with sold once more also, fascinated a co-ownership of the Florida Panthers.Here is how is happened:

1996 – Stu plus buddies Jerry extra David Meyer originate eNeighborhoods.1997 – 2000 – They practise the convention past as a consequence o acquisitions.Feb 2000 – Exchange the fame to iPlace to cooperate from a extra dotcom image.August 2001 – Deal in iPlace to HomeStore towards $151 packet now big bucks extra humdrum - deficient the defeat of absolute big money dotcom shares.May 2002 – Invest in eNeighborhood answer for to about ostensibly 10 cents doable the dollar aft Homestore shares eminence the skids.2002 – 2006 – Impel the opulence brandish add-on once more also fabricate the business coupled with acquisitions.March 2007 – Exchange eNeighborhood to Upper hand who is feasible a undreamed of shopping bender to obtain many certain assets internet string providers.

Read more...

Up-to-date his landmark tome, The 7 Behaviour of Extremely Active Citizens, Stephen R. Covey calls the in the second place garb:

Read more...

I m not sure what to do with the information I received in an email this morning. I haven t had contact with Casey Serin since he left the country for Australia back in June, 2007. In my email this morning was a private email between Casey and Keith from Housing Panic. It essentially gave an update of all that was going on in his life. Why I wound up with it, I don t know.

My dilemma is, Keith seemingly wants to post this email verbatim on his blog as an exclusive, but hasn t yet done so. I m sure he also doesn t know that I have a copy of the message. To be fair, what I ll do is summarize some of the key points and leave some of the real juicy facts for Keith to handle later.

Three key points mentioned here are:

1. Casey is working

I m working a stable consulting job for an experienced entrepreneur.

Consulting is a generic term which means I m doing whatever needs to be done. The best part is I have a slice of ownership in the venture. So its the best of both worlds - the stability of a 9-5 with weekly paychecks while still giving me lots of flexibility, a chance to build something and share in the profits. Very much a blessing. So I m getting back on my feet financially, though very slowly.

2. Casey is not in jail -

As far as FBI and “mortgage fraud “investigation goes, I don t have any news. Last I heard they still have a file on me and perhaps they re just taking their sweet time. I do have a defense attorney and plenty of proof to show I did not have any criminal intent and had plenty of reliance on professionals.

3. The 50k he made selling the blog is gone -

As you ve seen, I sold the blog for 50K - huge thanks to Aaron Krowne of www.ml-implode.com. I finally did the right thing (though reluctantly at first) by paying off all the debt that was in my wife s name as well as most of our private loans. It was really my own debt. She trusted me with her credit to use for the real estate deals. What did I do? I ruined it and broke her trust (not the first time unfortunately).

Paying off that debt took a little over 40k. Plus there were a couple of previous “partners” that I had to pay to make things right — more painful lessons on promising too many things to people and not keeping those promises. The attorney fees to undo some of those entangling relationships took a big chunk. G kept the Jetta so I also bought a cheap used car for myself for 3K. So that s where that 50 grand went. All gone, but for a good purpose.

Just before he wraps up Casey wrote -

Anyway this is the last the online world will hear from me for a long long time. All in all, the past year has been some of the craziest times of my life. That s for sure. I thank both the haterz and the supporterz. Everybody played a role.

There s much more in this email, but you ll need to stay tuned at Housing Panic to get the rest of the scoop.

More details from the Dave Fox, Bradley Kitchen mortgage fraud case emerged today making every homeowner in the Provo Riverbottoms neighborhood a potential victim.

The scheme, allegedly masterminded by Kitchen, had “investors” buying and reselling the same homes in the neighborhood over and over. Ultimately the values of the entire neighborhood shot up so much they have been over assessed for tax purposes.

About 200 residents in that neighborhood feeling soaked by high property assessments flooded the board of equalization (aka the County Commission) this year, demanding they take another look at their property valuations. The county did, lowered many of the values and is now looking at the 350 homes that didn t appeal.

What was allegedly being done with certain

properties in the Riverbottoms is that homes were bought and sold quickly and repeatedly among a circle of investors who artificially inflated the cost of the homes and then took the profits.

KUTV sportscaster Dave Fox and Mark Atkin, who pleaded guilty to communications fraud, were in this group of “investors.” Unfortunately for them, no one bought the homes they paid over inflated prices for. Two other buyers in the scheme are expected to also plead guilty for their roles.

This case has attracted the attention of the U.S. Attorney s office.

“Considerable damage can be done in a short period of time,” said Tolman, who is aware of the Provo situation.

With a strong history of prosecuting such fraud, Tolman said his office will stay aggressive.

“I think you ll start to see renewed and continued focus on those in the lending industry,” he said.

A new valuation model is being used to assess those homes in the Riverbottoms area. This will benefit homeowners, even those who didn t appeal, who will save hundreds on their tax bills this year.

I believe this is just the first layer of problems for this neighborhood. Other homeowners have profited from higher values for both HELOCs and cash out refinances. The lenders in these cases have over loaned for properties that aren t worth the appraised value. Owners with high loan to values will have a difficult time selling for a long time.

Thanks to Alex for sending this link.

The credit crunch of August that inspired so much fear in the financial markets seems to be levelling off. The Dow has regained all of its substantial losses, consumer spending remains high, commercial construction spending is up and it appears the credit crunch has lost its bite.

Two trends that limited the number of qualified borrowers, a higher LIBOR rate (affecting subprime adjustable loans) and higher long term rates seem to have reversed themselves.

Speaking in London, former Fed Chair Alan Greenspan noted -

Similarly, the interbank lending rate, which jumped in recent weeks amid fears about insolvencies, has started to come down, but “not all the way,” Greenspan said Monday during a public talk in London to promote his new book.

Greenspan

also noted that subprime loans were not the problem, but the securitization of those loans helped cause the current lending situation. I submit it was the misuse of subprime loans by unscrupulous mortgage brokers that was a strong contributor to the problem.

Long before I got into the mortgage business, I remember a loan broker I knew saying, “people with bad credit deserve to pay extra to get a loan. After all, they put themselves in that situation and they don t have a lot of options.” That s great if you only want to do one loan with that client, but that s not my philosophy. Sadly, it is the philosophy of many who entered the business in the last few years.

If I have to put someone in a subprime loan, I give them the information and tools to refinance into a better FHA loan. If they follow that direction, they can eventually qualify for the best rates. In between, they ll also provide referrals. That sounds a lot better to me than trying to get the most amount of money I can from one loan. (Last I heard, this loan broker I quoted was working as a wholesale rep for a subprime lender. That company has subsequently gone out of business.)

The National Association of Realtors released numbers today showing the amount of pending home sales has dropped to the lowest rate since 9/11.

The National Association of Realtors pending home sales index fell to a record low of 85.5 from an upwardly revised 91.4 reading in July. That broke the previous low of 89.8 in September 2001, the period in which the terrorist attack shook buyer confidence. The trade group started the index in 2001.

At blame for this lower number in August was the mortgage crunch -

“Fewer contracts were being written because of mortgage availability issues, and a separate internal survey of our members shows more than 10 percent of sales contracts fell through at the last moment in August, primarily the result of canceled loan commitments,” said a statement from Lawrence Yun, senior economist for the group.

Higher jumbo loan rates in August had a huge impact, but fortunately those too have come down a bit. Overall, the mortgage landscape has improved. Lower interest rates across the board, increased consumer awareness of FHA loan programs and repricing of mortgage risk in the secondary markets have improved liquidity. The NAR s report added -

“The problem has since become less severe, though jumbo loan rates are still higher than they would be under normal conditions. Therefore, sales activity in late fall will better reflect market fundamentals.”

It will be a few weeks before actual sales volume and sales prices are made public on a national and local level. Expectations are not good, but July did see the first national median price gain in a year.

While the mortgage landscape has improved, it will be some time before we ll know for sure if this is a temporary blip or a genuine market shift. In the mean time, those who can take advantage of lower rates or FHA programs to refinance or purchase at fixed rates should strongly consider it.

I found an interesting article this weekend about Sam Zell, the billionaire real estate investor who recently sold his company in a top of the market type of transaction to the private equity firm Blackstone Group.

Many people who hear about a deal like this question how it applies to them. After all, this Sam Zell is a multi-billionaire who owned 540 commercial properties and has business interests all over the world. If one looks at the details of Zell s experience and his transactions, it s a bit easier to compare them to deals and philosophies on a lower level.

Let s look at his recent commercial real estate sale. Commercial real estate is booming, why not sell for a higher price later? Two reasons come to mind. First of all, Zell is a contrarian investor. If everyone

else is doing it, he wants out. He sees value where other people don t. Once his investments attain value, he moves on. The second answer concerns human psychology. If you get an offer that s too good to be true, do you take it, or do you assume if one person is willing to pay this, there must be more that will pay more? For Zell, the answer is you take the offer and you take it now.

In reflecting on his deal with Blackstone, Zell admits that deal wouldn t go down now due to changes in the marketplace. He had a bidding war on the company he was selling -

He described his strategy during the three-week bidding war for EOP that broke out between Blackstone and Vornado Realty Trust (nyse: VNO - news - people ), the nation s second-largest REIT, which had offered a combination of cash and stock for Zell s company. The key to the deal was structuring a $720 million break-up fee, Zell said, adding that the stock deal would have taken months to close, and, in hindsight, might have run into serious problems following the market jitters that developed in August.

When talking about the “credit crunch” which is affecting private equity deals as well as the mortgage secondary markets, Zell insists like many others there isn t one. It s part psychological and partly a matter of repricing risk.

current markets are spooked by problems with U.S. subprime lending. However, they still have capital to deploy, unlike during other real estate busts, when financing could not be arranged at any price.

“We re not really in a credit crunch. I think we re in a confidence crunch, ” said Zell, funder of the Samuel Zell and Robert Lurie Real Estate Center at Wharton. “I would argue the excess liquidity that existed eight weeks ago still exists today. It has a different risk premium on it, but the actual amount of liquidity has not changed.”

From a mortgage perspective, I m seeing the same thing. While some lenders are struggling or going out of business, the others are trying to market as much as they can. There s still money to lend on real estate, it s just based on different criteria than existed even a few months ago. Unless a borrower is on the financial fringes, there s a loan available.

So how do real estate investors in Utah apply Sam Zell s lessons and experience? Zell built his initial real estate fortune on the turbulence of the early 70 s.

Following a market crash in 1973, Zell spent three years acquiring $3 billion in real estate assets, much of it for $1 down. He built his portfolio by approaching lenders and offering to take future operating losses off their hands in return for equity. Zell was able to carry the properties long enough for them to return to–and exceed–prior valuations. “As it turns out, we made a fortune,” he said. In the 1980s, the real estate industry was again marked by aggressive lending that sparked a development boom. “The idea was build it and somebody will buy it, and that somebody was the Japanese,” Zell recalled.

Are we seeing these types of market conditions now? The answer is not in Utah yet. So where are the opportunities? I suggest they re with builders who are willing to deal on their existing inventory. Other sellers are in the wrong psychological mindset right now. Give them time.

The other types of properties to invest in are those that will cash flow as rentals or lease option sales. Forget about building equity for now. Focus on monthly cash flow.

Perhaps the most important question to answer as an investor is how much should be paid for a property. Like I said before, rentals should cash flow positive, but other properties depend on the individual investor. What do you want your returns to be and how much do you tolerate risk? Is a 20% premium enough to factor in, or do you only buy at 50% off?

Besides risk and return, location factors into this decision as well. Properties on the edge of town, in new communities and on busy streets warrant the largest discounts. Properties in established neighborhoods that show a constant demand and located closely to employers, shopping and transportation can be purchased for less of a discount, even in a declining market.

There s a lot to learn from a man like Sam Zell. I was amused by the last part of the Forbes article which said Zell is nicknamed “the grave dancer” because he once wrote an article describing his strategy of purchasing distressed properties.

Zell, however, also pointed out that the last sentence of the article reads: “He who dances closest to the graves, always has to be careful he doesn t fall in.”

Home prices plummet in steepest drop in 16 years screams one headline. Home sales continue spiral down another warns.

When readers look at the content of the article, they find something a little different inside. But it s already too late. The article title has already made the impact and that s all most people will remember.

Over the past few years, anyone associated with the real estate industry has had their numbers questioned every time they re published. “The NAR is corrupt,” some say. “You can t trust the numbers,” others say. “We re headed for a housing crash of epic proportions and everyone who works in real estate is a liar,” is a common statement at Housing Panic. It s become so widespread, even the National Association of Realtors is having to address it.

May I suggest the discrepancies between the different reports are not a matter of fabrication, but simply a matter of apples and oranges?

Let s talk about the numbers that came out this morning. The content of the first headline I used, referred to Robert Shiller s Case-Shiller 20 city index of home prices. The newest 10 cities were added in December, 2006. The conclusion of the brief article was stated in its first sentence:

The decline in U.S. home prices accelerated nationwide in July, posting the steepest drop in 16 years, according to the S P/Case-Shiller home price index released Tuesday.

Oh my! A nationwide price decline! What was the data involved to draw this conclusion?

An index of 10 U.S. cities fell 4.5 percent in July from a year ago. That was the biggest drop since July 1991.

So ten cities saw a price decline? And the conclusion the unidentified author of the article drew was this indicates a national price decline? Which cities comprised this list of ten?

The composite of 10 include the highest priced and most bubblicious cities in the country. They are Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco and Washington D.C. This is the group that saw a 4.5% decline in July. Rounding out the index of 20 are Atlanta, Charlotte, Cleveland, Dallas, Detroit, Minneapolis, Phoenix, Portland, Seattle and Tampa. As a whole, the index saw a decline of 3.9% through June.

The index said only Atlanta, Charlotte, Dallas, Portland and Seattle showed housing price increases, but even in those cities, prices are increasing more slowly.

Fair enough. So what am I complaining about in this post? Let me share with you the contents of the next article, Home sales continue spiral down. This article contains data from the NAR, the group tasked with measuring and reporting real estate sales data across the country. Homes sales are slowing down, but August s sales prices showed a minuscule increase, after a year of declines -

Some good news from NAR was that prices broke a 12-month decline. The national median existing-home price for all housing types rose 0.2 percent to $224,500 in August from a year ago, when the median was $224,000.

Then the author, like many before him, goes on to say -

The report clashes with other sources that have reported falling prices for most of the nation.

He then cites Shiller s report as being at odds with the NAR -

The latest figures from the S P/Case-Shiller index reveals prices fell in all 10 major housing markets its main index covers between July 2006 and July 2007. The average decline was 4.5 percent. Of the 20-city Case-Shiller index, 15 cities suffered declines.

So what Mr. Christie? Shiller s report covers 20 cities from July 06 to July 07, while the NAR s covers the entire nation comparing August 07 with August 06. Apples and oranges Mr. Christie. What s worse is the author alludes to the NAR as the ones with suspect data. No wonder the NAR gets questioned so much.

My parting thought is this - don t believe the headlines. They are written to draw readers in to read the article. Pay close attention to that.

Dave Fox, lead sportscaster on KUTV News entered a guilty plea in abeyance for communications fraud yesterday in a what is shaping up to be a huge mortgage fraud case involving millions of dollars.

Fox, along with Mark Atkin entered guilty pleas and intend to cooperate with authorities in their investigation of a dozen others including the supposed mastermind Brad Kitchen of Sequoia Capital. Kitchen was arrested in March for a house flipping scheme in Provo.

The Salt Lake Tribune reports the two men “failed to occupy the residence” and face penalties of a $500 fine and three years probation.

Fox and Atkin claim they were innocent in the scheme and see cooperation as the best way to vindicate themselves.

Dave Fox s attorney said, “This is a resolution

that makes sense for David Fox. It s a resolution that recognizes he is a victim and provides a means for him to be a witness in other cases for the prosecution.”

This reminds me of another high profile mortgage fraud case that recently played itself out in St. Louis. In that case, a championship high school coach was arrested and recently pleaded guilty to the charges in a scheme very similar to Fox s. Floyd Irons led Vashon High School boy s basketball teams to 10 State Championships.

In late 2005, Irons, 60, and an unidentified associate met with Mineo to discuss a scheme to purchase residential real estate for investment purposes, United States Attorney Catherine L. Hanaway said.

Irons and his associate, a local developer and operator of the Best of the Midwest Youth Foundation, told Mineo they would obtain loans for 10 percent more than the sale price of the properties through Midwest Mortgage Consultants, LLC, the firm at which Irons was employed as a mortgage broker. The additional money would be “kicked back” to the men, Hanaway said.

Because of the charges in this case, Irons faces up to 30 years imprisonment and a one million dollar fine.

Personally, I find it hard to believe Fox didn t know what he was doing was wrong. He had to have profited at some point, otherwise it wouldn t have been worth acting on. It s possible he was blindly led as a “strawbuyer” and truly is innocent. I believe Dave Fox should consider himself very lucky if this is the only punishment he gets, though KSL reported -

Channel 2 s news director says the station is looking into the matter and takes it seriously.

****** Interesting Notes

1. The Tribune made short work of this story, devoting only five sentences to it.

2. KSL reported a plea in abeyance as - It s essentially a guilty plea without admitting guilt. The Utah Code clarifies this a bit - “Plea in abeyance” means an order by a court, upon motion of the prosecution and the defendant, accepting a plea of guilty or of no contest from the defendant but not, at that time, entering judgment of conviction against him nor imposing sentence upon him on condition that he comply with specific conditions as set forth in a plea in abeyance agreement.

3. Bradley Kitchen s company Sequoia Capital plays off the established venture capital firm of the same name. The original Sequoia Capital was founded in 1972 invested in such companies as Cisco, Oracle and Apple. More recently, Sequoia has been involved with Google, Paypal, Yahoo! and YouTube.

For those of you readers who live in Utah, I ve got a question. Have you ever noticed, especially in local TV news, that nearly every national story gets spun in a way it relates to Utah? If a player on a successful sports team is from Utah, it gets mentioned. If some national story is getting a lot of attention, a Utah tie is always pulled in. My favorite is when a natural disaster strikes somewhere. The lead story on the 10 o clock news will always be, “Could (insert natural disaster here) happen in Utah?”

The Salt Lake Tribune has suddenly inserted Utah home builders into the housing slowdown, like they would insert a tsunami into the Great Salt Lake. A story this morning is titled - Housing slump: Utah s new-home sales fall, building permits slide. OK, local builders are seeing

a slowdown in traffic and sales, but this article provides no evidence of it. The article is a mishmash of national figures with only one local statistic and that is regarding building permits -

Along the Wasatch Front, builders took out permits for the construction of 906 homes in August, a 39 percent decline from 1,483 in August 2006, according to Construction Monitor, a company that tracks building activity throughout the West. Permit levels for August in the Salt Lake area are the lowest since the same month of 1997.

Yet the article led with a fear mongering title and opening sentence -

Sales of new homes tumbled nationally in August while the number of construction permits in Utah dropped to their lowest level in years, a stark sign that the credit crunch is aggravating an already painful housing slump.

I think the media has a responsibility to tell the truth and this article is painfully confusing at best. National statistics are an aggregate of local markets. Some are doing well, some are doing poorly and some are any where in between. Salt Lake is slowing down, but appreciation is still occurring. Builders are discounting, but not giving away the farm.

Diana Olick at CNBC tackled a statement made yesterday by “Booyah” Jim Cramer who basically said you re an idiot for buying a home now. Cramer said on the Today show, "Don't you buy now. Don't you dare buy a home now. You will lose money."

Olick wrote concerning new homes -

If you're looking to buy a new home, happy days for buyers are here. Builders are offering every incentive in the book, and your dollar is going farther than ever before. Will prices continue to come down? Probably a bit, but they're already off their highs, and base sticker price doesn't mean much anymore. You can negotiate everything including the kitchen sink.

More importantly, she reminded readers that real estate is local -

All I'm trying to say is don't be a generalist. I've said it a hundred times, and now I'll say it 101. All real estate is local, and while there are overreaching factors affecting everything, like the mortgage issue, some markets are responding differently than others. For sellers, overall, not a great time, but homes are selling, in fact, more than 5.5 million of them this year. And not everyone is losing money on them either. Remember, home price appreciation during the boom was positively historic, which means that even if the price comes down a bit, it may still be well above what it was five years ago (again, not everywhere, but in most places).

This is my point as well. While some sellers are having to come down from their wishing prices, homes are still selling in Salt Lake and those sellers are making money. Utah home builders are doing marketing promotions, but not fire selling like some home builders in other markets. It s not prudent or accurate to replace Utah housing statistics with those drawn from national data. A line needs to be drawn in consumer s minds that while these scary headlines are all over the place, the facts behind the headlines don t apply everywhere.

Shame on you Salt Lake Tribune for publishing such a misleading article. Your readers and the citizens of Utah deserve better than this.

Sportscaster Dave Fox is a pretty popular guy. Yesterday s article detailing his plea in abeyance for communications fraud during a real estate deal drew more traffic than I ve seen since writing about Casey Serin.

More details have been revealed about Fox s case I wanted to go over. Having read some of the comments on KSL s story, I also wanted to go over what a straw buyer is in relation to mortgage fraud and why it s possible Dave Fox was a victim in this case.

I have not seen the details of Dave Fox s case, but as I m reading various articles a few things are becoming clear.

1. There was only one home involved - The Deseret News noted, “He purchased a home, which he s responsible to make all the payments for, and he got no money out of it,” said attorney Jim Bradshaw.

2. Fox claims he made no money - “There are people who did make money off of this transaction, but the one who was stuck with the loss was Dave Fox.”

3. The nature of the plea involved intent to occupy the property - The Salt Lake Tribune reports:

In court documents, Fox admitted he signed loan documents for a home he claimed he would live in when he actually anticipated a “quick re-sale as an investment.” The fraud occurred in April 2006.

Based on the information available, I believe Dave Fox was an unwitting victim here. What s the old joke? If you re involved in a scheme and you can t really tell who the mark is, it s probably you. That s the situation Dave Fox got into.

Some people are probably wondering how someone could involved in a case like this. Greed is part of it, but real estate deals are complex and it s actually quite easy to fall into a trap like this. Sadly, it happens all the time in straw buyer cases.

What exactly is a straw buyer and how can they be used for mortgage fraud? An old Bankrate article describes them this way-

So-called “straw buyer” transactions fall into this category. Typically, a buyer with bad credit needs a stand-in with a solid financial history to purchase a home, he says. She gets somebody to fill out all the paperwork and obtain the property, then has him “quitclaim,” or relinquish, the deed to her. Unfortunately for the actual buyer, he remains on the hook for the mortgage. So any problems the person with bad credit experiences end up on his previously spotless record.

Once a fraudster has someone else on the hook for the mortgage, and they have control of the property by being on title, a sort of blank check is created. Sometimes the fraudster will have promised to find a buyer or renter for the home and will promise to make the payments. A few months down the road, the straw buyer will find the payments haven t been made and their credit is damaged.

That s what happened with over 100 Indiana properties last year. By using a common tie, a small group of people were able to gain the trust of their community and steal over $4o million dollars from them. The New York Times explains -

The civil lawsuit, filed in June by one of the nation's largest mortgage lenders, describes an elaborate confidence game in which Martinsville residents with good credit ratings were enlisted last year to join what they believed was a risk-free investment in Indiana real estate. Instead, they found themselves responsible for hundreds of thousands of dollars in unpaid mortgages.

"Looking back, maybe it sounded too good to be true, but everyone knew them, and my friends went to church with them, people I been knowing for 10 years," said Timothy Jacobs, a 29-year-old worker in a fiber-optics factory who discovered recently that he owed $200,000 on two houses in Indiana. "They said they'd be responsible for everything. Now everyone's probably going to end up filing for bankruptcy."

Sometimes the straw buyer is simply used as a stand-in to make sure a loan closes for someone else who couldn t qualify for the mortgage. Yesterday, in Sacramento, four people were indicted for such a scheme-

Four Sacramento area men have been indicted by a federal grand jury on charges of bank fraud and conspiracy to launder money in connection with what prosecutors are calling a mortgage fraud scheme involving at least 19 homes with loans of more than $8 million.

The indictment alleges that the purpose of the scheme was to ensure that the home purchase transactions closed, so that defendants would receive substantial loan broker commissions and illegal kickbacks from real estate sales commissions.

The straw buyer may willingly and knowingly participate for a cut of the action. Other times they are misled into the transaction while being compensated. Still other times, they are just used. It all depends on how the fraud organizer is getting paid.

As far as Dave Fox is concerned, if what he s telling the media is true and he only had one house in this transaction, he is quite likely the victim here. It appears he was the mark in a house flipping scam. Fox paid too much for a home, admitted to a felony charge and quite possibly ruined his career. The full consequences of his actions will take a long time to play out.