Tuesday, May 29, 2007

Loan Fraud, Foreclosures, Personal Responsibility Rant

I came across this post on a community forum I read and thought I'd share it with you. It's from a local Elk Grove realtor...


Ok, 1st this is my Opinion and not the opinion of the company I work for or any organizations I belong to.....

While I believe the Media is focusing on the impact of the foreclosure market in Elk Grove and the region, they need to look at a different view of it:

Here's the rant portion:

1. California needs to seperate the real estate licenses and mortgage broker licenses and not allow an agent to do both unless they have experience and/or training outside of a mail order program. I am tired of seeing these companies that change their names every 6 months damage our property values because of the quick buck. They are creating such a huge amount of loss both in the life's they are affecting and the neighbors of that house that is being purchased and then foreclosed on. This is not a popular position but I believe has weakened our market more than any Subprime general label being thrown around. Who do you think originated those Subprime loans? Mostly the brand new licensee who before they even learned how to sell a house, were doing loans and selling tommorrow's foreclosures.

2. Buyers: You are signing the loan papers. Stop complaining about your screwy loan officer creating jobs for you on your application or lying about your income etc. The minute you signed that application or documents, you became just as liable as that fly by night loan officer who you will not see again after they get their commission. Take some self responsibility. Don't buy that house. The neighbors around that house will be thankful because you won't destroy their values. If you bought 5 houses on a fast food income and lied on your application, you belong in jail for fraud. Why show your face on TV? FBI: Why didnt you step up and investigate that buyer for fraud? I bet you lied about living in the house as your primary residence as well.

3. Sellers: Stop blaming the market on Realtors "lowering the prices". You should not have refinanced 4 times to pay for that Harley, the trip to Hawaii or the Implants. If you were conservative, you would not be a short sale situation right now. The market is where it is and will continue to get worse before it hints at getting better. Even then, please be realistic, its not going up 40%, be conservative in your planning and protect your investment and your neighbors. Rent your house out, turn your paperwork into the FBI if you were defrauded and insist on an investigation. If you were involved in getting money outside of escrow that wasnt reported to the IRS or your end lender who is now going to eat it, ask for an agreement for your testimony, it will come out eventually.

4. Sellers/Buyers: Start interviewing the companies you are looking to hire. Ask them about their history in Elk Grove, have they changed their names 4 times in 4 years, what is their reputation in the local Realtor community, are they involved in their association (ie code of ethics).

5. *Realtors* - When you get an offer from a company that has a bad reputation or the lender letter is misspelled etc. , ask that that buyer be preqaulified through a name brand lender locally for your clients sake. Use someone who is reputable and won't try to steal that agents business from the buyer but someone who will tell you whether their credit report or income won't qualify for anything on the market. This will prevent an unreputable loan officer from padding that buyers income or jobs on the application and lead to a more honest transaction which the neighborhood they are moving into will appreciate because the house won't be on the market in 6 months with the lawn overgrown because they defaulted.

6. Media - Find the real story. There is sensationalism out there but your not looking close enough. Investigate the companies that are changing their names every few months but staying in the same location with the same ownership, investigate why. Investigate the impact of the agents who are also doing loans for thier clients and follow those transactions through the foreclosure process. There are agents who can do both with great results but they are an exception to the rule. Investigate the companies that are still sending offers asking for 50K+ to be given to the buyer from the seller "outside" of escrow. Investigate the HUD 1 statements that have 6 points being charged to the B paper client who doesnt speak english and doesnt know better but is relying on their "loan officer" to protect them. You owe it to the consumer to get it right. You need to also realize the difference between a REALTOR and a real estate agent, they are not the same.

7. FBI: Open an office in Sacramento devoted to Real Estate Fraud. Lower the focus on Senior Fraud (this is being handled locally by Law Enforcement). Have a streamlines process for complaints. Follow the paper trails. Look at the MLS when the house was listed for 525K for 6 months and then sold for $625K and the agent also did the loan. Go back and grab the records for these transactions. Make an example of these companies. Get the IRS involved. Until you make an example, it will continue to happen and you are creating a drain on the economy with the increase of foreclosures due to loan fraud and artificial price inflation.

I see some negative things coming to Elk Grove soon in terms of these shady loan operations trickling down and resulting in foreclosed home affecting the good people who bought their homes in the correct way and process. Everyone needs to take a stand whether it is the REALTORS, the City Council, Our Governor (make DRE an enforcement agency NOT just a licensing agency), our congressmen and women and above all the buyers and sellers. Insist on professionalism even if you have to force it to happen. We need to take the focus of "Passion for Professsionalism" to a new level and make change happen.

A note on the Governor remark: Department of Real Estate in CA is a licensing department and does not have enforcement ability unless it can be tied back to the license basically. We need to redraft the DRE to be along the lines of Alchohol and Tabacco department etc and adapt enforcement actions so these offers asking for money outside of escrow illegally are prosecuted.

Again all of this is my opinion and I am just frustrated with the impact untrained and greedy real estate licensees ( not always REALTORS) are having not only on our profession but on our local economy and citizens.

I will not apologize if I have offended anyone, if you are an exception to the rule, I applaud you but I don't think it is the norm.

After all of that, Have a Great Day!

Bruce

Sunday, May 27, 2007

Sacramento Regional Real Estate Trends for May 27, 2007

Got a lot going on this weekend, so just the graphs. Inventory is up to 16,628! Looks like a record in July...







Sunday, May 20, 2007

Sacramento Regional Real Estate Trends for May 19, 2007

Inventory growth slowed slightly in the four-county Sacramento region this week, with a 1.3% increase over last week's total of 16,126. There was a huge inventory spike last year at this time, so the year-over-year increase has also slowed to +10.5%:


At this rate of growth, four-county inventory will exceed 18,000 units by July 15th.

The slowing in inventory growth was mainly due to anemia in Placer and Yolo counties, which saw a 0.9% gain and a 1% drop respectively.

As for inventory price levels, Sacramento County continued to be inundated with houses in the $200K-$300K price range, and El Dorado saw a continued increase in the stratospheric $900K+ range:


Keeping with the trend, asking prices set new lows almost all-around this week:


Pricing remained somewhat flexible in most counties this week, with price drops occurring in about 10% of listings in Sacramento, Placer, and Yolo, and about 7.5% in El Dorado:



On the flipper front, it looks like something new might be happening:



After riding below the 20% line for most of 2006, total flipper inventory in Sacramento County has stayed at or above 20% of all inventory for the last 7 weeks. An astounding 65% of all flippers are now flippers in trouble. If the data from Countrywide is of any indication, there is a large backlog of REO inventory waiting to be unleashed onto this market, most of it selling at a loss. If the banks do start dumping, it will show up here first.

Friday, May 18, 2007

One Year!

Wow, I can't believe it's already been a year! I would like to thank everyone who has supported this site through your posts, comments, and visits. I would also like to personally thank Agent Bubble. Besides his incredible data and insight, he has brought a level of credibility to this site that wouldn't be here otherwise.

Of course, this wouldn't be a statistics blog without some data, so here you go:

Number of unique visitors: 57,172
Number of page views: 115,380
Average visitors per day: 156
Average page views per day: 316


Thanks again everyone. Here's to another year!

Spin the Pricing Wheel at the Ranch

JTS has a 2+ year old development called The Ranch in Wilton. The homes are all 2900+ sq ft and come on 2-6 acre lots, although they just started building a 2500 sf model a few weeks back. HOA fees are $158 a month and include someone that mows the grass between the road and your fence a couple times a year. Before you can plant a tree, you must submit an application to the HOA ($300 per app) and provide them with considerable documentation as to your plans. If you complete your landscaping and decide you want a few more plants or trees, it's another $300 app. We rented there for about 6 months and went through this process with the owner and the HOA. The first two submittals for landscaping by the owner were rejected (no, they did not get their $600 back either). It took 3 months from the time they first submitted their plans to the time they were approved. And no, the plans were not written on a bar napkin. They were professionally done the very first time, but were sent back for "clarification" and another check for $300. But, I digress.

The place we rented was purchased for $700,000 in May of 2005. It was about as bare bones as possible. The owners bought it as an investment and were losing about $2,700 a month when we were renting it from them. At present approximately 35% of the 2900 sq ft model homes are investor owned.

Below, you'll see an MLS list of all the active and sold homes at the Ranch that were the same 2900 sq ft model. I've broken them down by homes sold by JTS and homes sold by private parties. The only structural difference between the homes is that some offer a 4 car garage. As you can see, there is a significant pricing disparity. The 4 homes for sale range from $729,000 to $910,000. The homes that have sold range from $699,900 to $870,000. The high and low extremes on the sold end are both directly from JTS. Take a closer look at the three bolded sold properties by JTS. The house with "Over 78K in upgrades" sold for $124,100 less than the house with "Over 55K in upgrades."

Looks like JTS is sticking it to the resellers with those two recent $699K sales. I'm still trying to figure out why the one listed for $775 sold for $824K. The tax record isn't up yet, so I can't tell what sort of financing arrangement took place.

Active

12901 S Rimfire Dr - $729,000

12921 Furlong Dr - $750,000

9660 Show Jumper Ct - $819,900

12820 Rimfire Dr - $910,000

Sold

12801 Riding Trail Dr - $699,900 – 5/15/07
List price - $795,000
Seller – JTS
From listing – “Over 78K in upgrades”


9660 Livery Ct - $699,900 – 5/11/07
Seller – JTS
List price – $1,008,658
From listing – “Many upgrades included”


9580 Stablegate Rd - $824,000 – 5/9/07
Seller – JTS
List price - $775,000 (started at $890,000)
Sold for $49K more than list
From listing “Over 55K in upgrades”


9136 Meadow Ln - $769,000 – 6/3/05
Seller – Private

9690 Stablegate Rd - $790,000 – 4/17/05
Seller – Private

9421 Barrel Racer Ct - $870,000 – 10/16/06
Seller – JTS
List price - $955,990
No mention of upgrades

Monday, May 14, 2007

Elk Grove - 1 Year Later

I started tracking Elk Grove stats about the same time we sold our house there in May of 2006. I've put together some numbers that look at the big picture for the last year. I could go on and on, but I'll let the numbers do the talking...

Sunday, May 13, 2007

Sacramento Regional Real Estate Trends for May 13, 2007

Happy Mothers Day! Going to make this one short and sweet as well, since I've got Mom stuff to do.

Please note that I've decided to remove from the graphs the data affected by my undercounting of higher-priced houses. The period is between March 31, 2007 and April 22, 2007. All my older graphs are available in the archives of the blog if anyone is interested. Going forward, I want to stop reporting the bad data.

Well, we made it to the 16,000 club. Inventory shot up 1.8% to 16,126 from 15,845 last week. That is 14.5% higher than last year at this time:


Price level inventory is keeping with previous trends. The $200K-$300K price range in Sacramento County is over 25% of all listings:


It appears that asking prices are still trending downward everywhere except El Dorado County. Median asking price in Sacramento hit a new one year low of $340K:


Flipper inventory seems to be leveling out once again, which means the overall flipper ratio is decreasing slightly:



Unfortunately, I acquired the mid-April sales data after I ran these stats, so there might be a jump in the flipper numbers next week. Consider that fair warning. :)

The weekly change data speaks for itself. Nothing really remarkable except the huge influx of new listings in El Dorado and Placer counties:


Sunday, May 06, 2007

Sacramento Regional Real Estate Trends for May 6, 2007

I just got back from going out of town this weekend, and seeing as how dead tired I am, I'm not going to torture you all with a poorly worded analysis. So, enjoy the pretty graphs, and I'll be back to my more verbose self next week. Enjoy!





Thursday, May 03, 2007

Agent Bubble Sales Data Graphs: April 2007

We are only onfour months into 2007, and it's shaping up to be the strangest year in Real Estate History in this town. I mean, when was the last time February was the peak month for sales volume, price, and y-o-y change? Could the subprime meltdown have anything to do with this? We at Sacramento Real Estate Statistics are not foolish enough to call an annual peak a third of the way through the year, but we are keeping our eye on it.

**Edit**

An astute reader was too polite to write put this in comments:

Max-

You said: "when was the last time February was the peak month for sales volume, price, and y-o-y change?"

Actually, according to AB's data, sales volume peaked in March:

Jan: 806
Feb: 807
Mar: 1057
Apr: 874

Am I missing something here? The pattern of sales volume in 2007 is looking a lot like 2006, when volume peaked in March and declined the rest of the year (see last month's SAR graph).


He is right, of course. I misinterpreted my own graph. That's what I get for posting before 5AM.

Wow, two screw-ups in a week. I think that's a record.