Archive for the ‘real estate fraud’ Category
1. Underwater homeowner refinancing to include non-Fannie and Freddie backed loans? Many people are aware that the new version of HARP will reach out to help homeowners who are underwater (see the previous blog), but still many more have been asking whether they will be able to seek similar refinancing possibilities if they do NOT have a loan backed by Fannie and Freddie. There have been rumblings about this, and last week I saw a few articles on this topic. HARP2, which is expected to roll out in a few weeks, is expected to open up the refinancing option to many homeowners who are underwater. Once that ball gets rolling, look for more information on applying similar relief to those who are underwater but do not have loans backed by Fannie and Freddie. This could change the housing situation and prevent many future foreclosures.
2. Home purchasing is the most affordable in decades. According to an article published last week by CNN, the National Association of Home Builders/Wells Fargo Housing Opportunity Index, housing price declines and low mortgage rates have created a rare opportunity for those who earn national median salaries – 75.9% of all new and existing homes for sale fell within that affordability range during the last quarter of 2011. The number has not been this high in the 20 year history of the index. Of course, whether one can afford a home versus whether one can actually buy one are not one and the same – obtaining loans are still tricky for many borrowers.
3. Distressed inventory is keeping California home prices low. Despite the increase in housing inventory last month, prices in California remain low due to the number of distressed inventory on the market, according to the California Association of Realtors. The Association reported that the median price of a single family detached home dropped 6.7% in January from December, and that compared to January of 2011, the median dropped 3.9%. With inventory rising and heading into the Spring sales season, it will be interesting to see what happens to prices, as some areas seem to be on the upswing.
4. Delinquency rate is dropping (but is that telling?). The rate of delinquencies has been dropping, as reported by the Mortgage Bankers Association, and is currently at only 7.6% of all mortgages. Still, about 44% of all homes in the U.S. are currently in foreclosure proceedings, which doesn’t really make the first figure sound too promising. Although California is ahead in clearing it’s backlog of distressed inventory quicker than many other states, now that the robo signing lawsuits have been settled we may see more properties go into foreclosure – a large percentage of these were waiting in the wings while the settlements were being negotiated. Also, we need to factor in HARP2, which will come into play in a few weeks – this could also have a big effect on preventing foreclosures, especially if the administration extends it to non-Fannie and Freddie backed loans, as planned. So, stay tuned – it will be an interesting year for distressed inventory.
5. Property valuation fraud increases. The recently released Mortgage Fraud Risk Report indicated that property valuation fraud increased 8% in the fourth quarter of 2011. Arizona was ranked the riskiest state for fraud, with Nevada in close second. California ranked fourth. The report studies four specific types of fraud risk: property valuation, occupancy, identity and employment/income.
When you come across a “red flag” on a property–something that tells you there may be something fishy going on– you need to make certain you understand the meaning before proceeding with a real estate transaction, as it could mean fraud or forgery. Your Realtor or Broker can investigate, but if you are doing so yourself you need to know what questions to ask to make certain there are no real problems. It is imperative to connect with the title company to verify anything you feel is suspicious before proceeding with any property transaction. Here are the important things that should cause you to do so:
1. Is the property free and clear? If there are no liens showing on the property you need to find out why. Some property is free and clear of liens, but most property is not. This is where your title company comes in handy.
2. Title was obtained by uninsured deed. An uninsured transfer is usually ok if it was from the grantor to the grantor’s family trust, or from one grantor to himself and his spouse as joint tenants. If one of these is not the case in an uninsured deed in the chain of title, you need to contact your title company for further investigation.
3. Customer is a new escrow company or broker you do not know. Make sure to know with whom you are doing business.
4. Third party disbursement of funds. Beware of a seller’s instructions to pay a third party who does not hold a secured lien.
5. Buyer walking away with money, or substantial buyer credits made outside of closing. If a buyer is walking away with money instead of paying money this is a red flag for loan fraud. This is not to be confused with credits to the buyer for things agreed upon under contract, such as repair issues.
6. Reconveyance is not accompanied by a transaction that could have paid off the deed of trust. Most people do not pay off a deed of trust with cash instead of with a new loan. Although it can happen it is rare, so be aware if this is the case, as it could be fraudulent.
7. Proceeds are being wired offshore. This is a big red flag, which could place you at the helm of money laundering on behalf of the bad guys.
8. No documents are executed in the escrow office. Often paperwork is NOT signed in the escrow office, with mobile notaries out of area buyers, for example. But if this is combined with other flags of forgery–beware!
9. Absentee owner. Obviously there are many out of area owners, but forgers prefer to prey on property where the owners are not around, so beware. This also brings up another (off topic) issue relating to rentals: if you are renting property and the owner is out of area you have to use extreme caution before sending any money to the owner…but that is a subject for another blog. I did post a blog on this topic relating to Craigslist scams).
10. Trust you instincts! Even if none of the above scenarios are in place, if you feel that something is not right then trust your instincts. If you feel a red flag is waving then address it with your Realtor, Broker or management.