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Finally Got it!!!! Where’s is my Free Lunch?
Though you might be 100% correct in your assessments, publicly accusing someone of fraud is dangerous. You of all people know the dangers of blog postings. Let’s be careful out there.
That said, your service to the community through this blog is very much appreciated.
One day, through trial and a hell of a lot of “come to jesus” moments, the sellers in Brickell will come to their senses, and prices will be affordable again. Look for $150 square foot in some buildings in the not-to-distant future.
Cheers.
Is this really a good price? The sail is not such a great building.
damn, if only i had 300k. come on guys, say what you want but 300k for a fully finished unit with a big balcony that has views of the bay for 300k? thats a good deal no matter how you look at it. i wonder what you guys think a good deal would be? maybe a 5bed. penthouse south of fifth for 200k? haha come on, this is a good deal and if i had the money I’d buy it.
This is just one of the FIRST of many many many SUPER GOOD DEAL’S that will be available over the next few month’s.Raffi….you may only need a 150K to buy this unit soon…so keep saving.I also agree with MORETROOPS.a $150 a sq. ft. will be the norm shortly.
let me tell you that seeing this building the photo just makes me wana go to the bath.
i guess it should be a prision in brickell.
buy i will buy there anyways if it gets to 200’s LOL.
I wonder what makes a building have a high mortgage fraud rate and the who actually decided all this. Is there a Fraudulent Buyers Convention and they decided they were going to do it on the Sail, Clubt at Brickell and Jade since they are all across the Street from each other? Maybe they wanted tobe all in Walking distance so they could go out to lunch together.
When will MLS listings reflect the market? In particular I see a unit at Ten Museum 2808 listed for 560K 1 bed, 1.5 bath. Is this not ridiculous?
The way the mortgage system functioned during the boom, fraud was almost guaranteed.
Underwriting standards literally disappeared. The fallout from this mess will be far worse than the S&L crisis. Back then, at least they had SOME standards.
Shame that the US taxpayers are going to have to foot the bill for all these fraudsters’ gains, and bail out all these Wall Street investment banker douchebags who collected billions of dollars in bonuses scamming just about anyone they could.
If justice were to prevail, there would be thousands and thousands of people going to jail over this. Instead, we’re going to spend taxpayer money to pay for what these people did and look the other way.
Funny that if you rob a bank of $10k, you go to jail for a long time. But if you take $370k from a bank (or the investors that were sold the CDOs) through mortgage fraud, it’s no big deal.
It wasn’t just these small-time condo mortgage fraudsters – the Wall Street investment banks were the ones re-packaging and selling this garbage to anyone they could, collecting gigantic fees for it. They are the biggest offenders, in my opinion. Without them, this fraud pyramid would never have been possible. Not one of them deserves a bailout – not one. I honestly think that lots and lots of banks (especially investment banks) deserve to fail because of this system of fraud that they created.
Everyone,
As a realtor in South Beach, I know first hand of all the fraud that went on. I unfortunately had to witness it because no one listened to me in the buildings where I work and because both local and Federal authorities turned a blind eye. I saw so many transactions go on where properties were listed on MLS let’s say at $550K. The fraud buyer would pay full price and would tell the seller he is going to get it appraised at let’s say $800K. Seller agrees because all they want to do is sell the apartment and get out. Now the buyer get 100% financing at $800K, gives seller $550K and the fraud buyer just walked away with $250K. In addition, the realtor representing each side made out, even though they knew what was going on.
Now the fraud buyer sticks a tenant in the unit at a discount price. So now the fraud buyer stops paying his mortgage and maintenance on the building while collecting rent and pocketing the profit on the spread. This went on over and over and over in so many building everywhere.
What frustrates me more than anything is that Federal authorities and local either said it was not there jurisdiction and never did anything. I have a lot of evidence yet no one has done anything.
Generalagic,
Thanks for making the mortgage scam as simple to understand, but if you would look from a different perspective, the fingers should be pointing directly at the financial institutions that mortgaged these properties in the first place. Who hired these appraisers that came up with these inflated evaluations? These people (appraisers and fraud buyers) should be prosecuted and jailed. The loan officers who approved these loans need to answer some tough questions to the proper authorities. The point is there will always be criminals and the system will always have cracks. Like the old saying goes….When it’s too good to be true then it must be bull- – -.
Billy,
I agree. I think what I really want is accountability. People should have been arrested and been on the nightly news. Than people would scared to get involved in fraudelent activities. The fact that nothing was done two years later bothers me. I have evidence yet no one returns my calls. That is what is upsetting.
Generalagic – You should photocopy what you have and forward that to the local FBI field office and your federal congressman and senators….and to Rep. Barney Frank who is the chairman. You could also send a copy 60 Minutes and Fox News. Just a thought.
moretroops,
You are right that me of all people should know better than to publicly accuse someone. I never named names though. I merely presented the evidence that I discovered. I may be slightly out of line but this type of apparent fraudulent activity simply angers me. I just wanted to bring it to everyone’s attention.
Lucas,
I with you man! Fraud is Fraud! It si so obvious when you are a realtor and you know your product.
A dude,
I wish it was that easy. People need to be arrested! That is all I ask! No one cares! Unless t makes head lines. During the two years I contacted everybody to no avail.
Generalmagic,
I have also collected a ton of evidence on this and have emailed it to the FBI and several members of the MF Task Force. I finally got some traction on a couple of the “cases” I put together from a detective at the Miami Dade Police Economic Crimes Unit. She recently told me that the larger cases are getting picked up by the U.S. Attorney’s Office.
The sad thing is that the authorities are totally swamped. They got caught completely behind the curve on this. They get constant calls from people reporting sham transactions. And these sorts of cases take a lot of time to put together. I think right now they are working on a triage basis. If they were not systematic fraudsters (I’ve seen groups that flipped over 60 properties financing in excess of $35MM), they are probably going to get away with it.
The filpping has been going on for years, but there were no collaterla losses as long as we were in the up market. Times were so crazy that the market actually caught up to the 200% financing these guys were taking out.
I am actually a forensic accountant and thought this was going to be an opportunity for some work, but no one wants to pay for it. The money has either gone off shore or towards leased Bentleys, so the banks are not interested in pursuing.
Generamagic, If you’d like, we can discuss off line. I can also introduce you to some of the folks at the MDPD. After all, it never hurts to have a couple of cops on your side.
Lucas, You mind being a go between on this? I’d rather not post anything personal while discussing this. Criminal records are in the same database as property records…and some of these have done some not-so-nice things in the past.
Alejandro,
Does one need consent from an association to sell a condo? Sometimes I see these filed in public records. If that is the case, perhaps a complicit condo board may be the common thread?
Generalmagic, just saw your last post. Surprisingly, I think you’re off on the headlines thing. I don’t think anyof the political players have any interest in the really big frauds hitting the news wires. If and when that comes out it is going to send two messages:
1. We were really asleep at the wheel there for a while.
2. Boy, fraud may have been a pretty big driver of that bubble that eventually went on to pop…and it was a driver pretty early on. The bottom may be lower than we thought.
Mortgage Fraud,
I wouldn’t mind putting you in touch with each other. However, I doubt your email address is accurate. Leave a new comment with your true email address and I’ll forward it to Generalagic.
Lucas,
You have my email and it is accurate and you can give mortgage fraud my email adress. No problem. I just want accountabiltity because my company gave up a lot of money not to get involved yet these people made off with a ton of money.
Mortage Fraud,
Yo are right, however I tried to prevent mortgage fraud of happening in one bilding and no one listened. Now look where we are at! Feel free to contact me and hopefully we can make something happen. I am passsionate as I really think this has affected the miami real estate market!
Thank you, Lucas. I just sent you an email.
Just forwarded Generalagic your email.
Don’t get me started..
I have posted on this blog in the past but on this matter I must post under a different name to protect the innocent and so I don’t end up with a horse head in my bed.
The fact of the matter is that hundreds of millions were fraudulently borrowed in Miami alone. The rings are very organized and very connected. Like Billy K said the financial institution have a responsibility in this and now they are experiencing the fallout. They would not admit it when it was happening and they still refuse to be clear about what is happening. Just like Generalagic I too experienced fraud activity first hand. I personally received about thirty contracts from these crooks and had my sellers refuse them. Yes, most were very standard with no evidence of fraud but we knew they units would be flipped at the closing or they would have two contracts, one for the bank at $850K and one at the closing table at $550K. Unfortunately early in the game (mid 2006) we were duped and a couple deals closed with my Sellers. Later public records show the sale was close at the fraud price. It was then that I contacted the FBI who did work with me, meeting often and still talking as of this week. It had been my hopes that the FBI would have stepped in to stop the activity but unfortunately they state their position as investigative, building a case and they presenting to district attorney for indictment. In the mean time these crooks are having a field day, using the properties at there personal ATM and pocketing on average $250K for each property plus renting out and collecting another $20 to $30K until the unit is foreclosed on.
All of this activity burns be up but the worst part will be to the honest, hardworking homeowner. The first hit we had was in early November when tax bills arrived. Taxes went up for 2007 while market prices had been declining for over a year. On average property tax bills were about 15% of where they should have been. With many sales at $850K it created a false high for the Miami Dade Tax collector.
Now the homeowner is experiencing assessments for shortfalls in budgets due to those fraud units with unpaid maintenance. Also with many of those units now in foreclosure process the liens and maintenance delinquency is causing lender caution and decline of legit loans in the same buildings.
As we all know the market is in a decline for several reason but the matter of fraud alone could cause values in some buildings to decline by 30-40% very fast.
Back to the Lenders responsibility in this matter. I learned of one unit that was clear fraud and I also knew Countrywide was funding the deal. I called Countrywide and spoke to two managers. Both told me the amount they were funding was none of my business and Countrywide had there own standards on lending and they were not mine. Only weeks late the unit I called them on closed at close to $800K.. The same unit I had sold one year earlier for $499K.
Fraud hurt the average homeowner as the market shot up and now I think there is a new scam that will hurt them on the way down.
Yesterday I learned about a unit that was a “short sale” yet the unit was never offered on the open market.
Last month is was offered at $505,000 now all of a sudden the unit is showing close at $330,000. The Agent who represents the unit says it was a short sale. Hummm? I have never heard of a Lender approving a sale at over $100K below the lowest possible price they might have gotten. As of today that sale unit is now listed for sale on the MLS at $445,000.. Wow, amazing that the unit is being offered by flipping.
After doing some research we see that the property was quit claimed to Resurrection Equities. This is the part that makes no sense, the quit claim was dated in May 2007 and it was then recorded in September 2007. When I looked up this same property in early November 2007 there was no record of Resurrection Equities involved with this property. Furthermore the same person who owned that unit mentioned also owned units at the Icon, Mirrador and The Loft of South Beach. Guess what? All properties were transferred to Resurrection Equities on the same date in May.
Damage to the homeowners on the way up and now on the way down. This unit now posting at $330,000 (about 30% below the average in building) will cause appraised values down. Great for the tax rolls but awful for the homeowner who is trying to sell there unit and now the appraised value is hammered by a $330K sale price.
Homeowners need to stand up and demand protection and soon a bailout. Government Agencies that are in place to protect the consumer have failed.. That includes the Miami Dade Task Force who I have tried to contact several times, leaving voice mails and even sending documents, never to have one response.
All of this totally pi$$e$ me off.
Mortgage Fraud,
Whenever you’re ready to have me blow the lid off this story let me know. Your research is fantastic! We need to let the general public know about this.
Correction.. Tax bills were 15% ABOVE where they should have been for 2007.
Lucas,, you are 100% correct, the public does need to know about this. When I spoke to the FBI this week about the recent unit closing a short sale they said they would work on it. I also asked who to contact to get millions to cover the average homeowners losses. To that I heard laughter. Homeowners need to take this into their own hands to protect their values.
123,
Great point about appraised values, and thus property taxes going up, as a result of the prevalent mortgage fraud. The people living in buildings that were riddled with mortgage fraud likely paid too much in their property taxes. I’m sure owners of condos in neighboring buildings were also victims. You do have the right to question the appraised value of your property. Contact your county appraisal department. I do know of two people who questioned their bill and actually had their appraised value lowered.
The best solution to avoid this problem in the future is to make each party involved in the loan process accountable for their actions.
The reason fraud was so rampant during the boom was that the system was basically set up so that each step of the way through the process, the risk of the loan was passed on to someone else.
A mortgage broker gets his or her commission, and passes the loan onto the lender. The appraiser (the biggest B.S. job in real estate), who is supposed to verify the value, will not get much work if he kills deals, so he simply writes down the number that is on the sales contract to make the deal work, and satisfy the lender. The lender loans the money and then passes the loan onto Wall Street. Wall Street packages these loans together into securities and then sells them to investors, who have no clue what is backing up these securities, but trust the fraudulent bond rating agencies (in collusion with the investment banks) who put a AAA rating on this junk.
There is little incentive for any of these parties to really care about the underlying collateral. That’s the biggest reason why so many people were able to get away with fraud. The people involved in the process simply didn’t care, as long as they could keep making lots of money feeding the mortgage-hungry Wall Street bankers who then dumped this crap on investors.
We need to go back to old school underwriting and lending standards, and put extra safeguards in place to make each party liable for their actions.
I am pretty sure what I sent you is being worked by the Feds…Unfortunately, I have a pretty good hunch that you will probably not see the folks involved (or there $) in the U.S. for many many years.
What eats at me, though, is that you get a group of people with the right backgrounds and training, and prosecuting this should be like shooting fish in a barrel. The crime has to be recorded in the public record in order for the money to go from the bank to the straw buyer. It is just a massive amount of data…and you need investigators who know how to aggregate and query the data. Unfortunately, there is not a lot of that type of training available to local police departments.
As an aside, interesting to note how often the plaintiff in the foreclosure proceedings is a trustee for a WaMu or Long Beach Mortgate (also WaMu) asset backed security.
unfortunately, this type of rampant fraud further goes to show how corruptly run Miami is.
it’s run by criminals for criminals. local gvmt is a joke. this has always happened…and the ONLY time the fraudelent cycle ends is when the federal gvmt has to step in – this has gone on since 1980 when the drug wars started.
LUCAS, unfortunately this kind of fraud can been seen in tons of newer bldgs that have gone up and are going up.
NO othe major city in american has this kind of rampant fraud – it’s reflective of the crooks that live here…now that the flip game is over, these ciminals are back in south amercia. so we (taxpayers)..will once again have to flip the bill. the entire system is a joke…i’m sure, as always, they’ll take one guy and punish him as an example to others as what not to do. pathetic.
Most condominium boards could care less about the Florida Statutes that govern condominiums, Fraudulent sales will boost their own unit price. A board member can use the position for financial gain.
Mortgage Fraud, WaMu and Long Beach are name that I saw again and again for these fraud deals. I in fact spoke to fraud departments at both lenders and sent many documents supporting my findings.
Lucas, you are right about the appeal process for tax bills and we did have many homeowners submit request for hearings which most attending over that last month.
We all know the crooks will most likely walk away with the money in the end but what accountability do Lenders have? Lenders like Countrywide who turned a blind eye and clear evidence that I presented before they funded should be held accountable to millions homeowners will lose in values, over payment in taxes and finally unable to sell their property due to Lenders unwilling to fund in buildings where fraud was prevalent.
Wild Bill, Boards did care less but not for personal gain, they just did not understand the scope of the matter or the fallout that will soon be upon them. Had the BOD wanted the gain they would have taken the money and ran last year. Now they are faced with huge delinquency of maintenance, mounting liens and foreclosure that soon will soon be felt in a freefall of values.
Long Beach Mortgage is WaMu…they acquired them (not sure when, 2 yrs ago?)
Lenders will face the music, too:
http://www.nytimes.com/2008/03/22/business/22subprime.html?_r=1&ref=business&oref=slogin
Lenders are already getting punished, look at Countrywides financials over the past year, the only reason they are in business is because the government didnt want Americas Largest Home Lender to go down.
Short Sales are great in my opinion becuase they in a way forgive part of the debt (You sell the property for less than the outstanding debt on it) and if a person is facing financial hardships and can no longer pay the loan they should be helped in my opinion. Most Realtors do not want to show short sales because sometimes no commision is paid on the deal. The commision and short sale price are pending lenders approval. The biggest problem right now is that the banks are overwhelmed with the inventory they have as well as the courts in Miami Dade. Some foreclosures are taking a year and a half because the courts are so backed up with all these new liens coming every day.
I am on the side that it is the lenders(Mortgage Brokers) fault for giving out $400k loans to Custodians without full documentation when they knew they clearly couldn’t afford them. I actually got really worried when I saw some banks started giving out Ninja Loans and thdn I wanted to buy a condo in Brickell about 2 years ago and I could no longer afford anything nice because the prices had gone up so much. I then started looking at the concentration of ARM’s in buildings in Brickell and I realized just how hyperinflated the market was. After that I decided to go into Foreclosures but I didnt think it was going to get this bad this fast.
The people in this blog are very realistic although they can sometimes be a way too negative in my opinion but the truth is that most people are in denial, I kept hearing a year ago the prices already dropped 15%-20%, how much more can they drop? While I dont think they will get to the point where you have a positive Net Opertating Income if you rent it, It will get close to that.
I find deals here and there that are actually priced at a point I would buy them but they do move within a week, so theres buyers out there at the right price. Last time Lucas posted a 3 bedroom in the Floridian and a couple of days later it sold. I had an appointment to go see it on the weekend and before we got to the weekend they cancelled on us because the unit was Pending Sale.
Alejandro, the only reason Countrywide is in business is because Bank America took on too much of the stock at $22…that when it dropped to $5, it was forced to buy the rest so they didn’t look like the biggest morons on wall st.
today’s WALL ST JOURNAL’s cover has a big article on the expanding inventory in the condo markets around the country … and how it will force pricing down in sales and the rental mkts…specifically names ONYX and QUANTUM in the article. funny thing is…again when metioning the condo debacle, miami once again is at the forefront.
Cyrus I disagree on that I think that there is probably some bill or some sort of government aid to help countrywide that needs tobe announced. I followed the stock when it was at $15 and then shot up to $23 when bank of america put 2Billion in it. Bank of America bought it at 7.70 which was way too high for that sifilis of a stock it makes no sense for B of A to buy it that high unless there is some bill on parlieamnet or they got some other sort of assurance to buy it.
I have heard on many of the new buildings when the people that bought pre construction are trying to close the apts are not appraising so they cant get the loan. Im off to go get a copy of the WSJ
The WSj article is online http://online.wsj.com/article/SB120614027637056019.html?mod=hpp_us_whats_news
the boa/countrywide deal is not nearly as bad as you guys think. yeah, countrywide is in the crapper right now…long term, though it gives boa one of the largest and strongest mortgage lenders in this country. countrywide’s servicing business alone is worth the current merger price.
Alejandro,
I’ve heard from two contract holders at Avenue at Brickell who have had problems with appraisals. One of them had 2 appraisals that came in $50K too short. She was waiting on a third appraisal to come back when I last spoke to her.
btw, alejandro, what do you mean by “because the government didnt want Americas Largest Home Lender to go down.” what bailout are you talking about? the fhlb lending? i don’t think that constitutes a “bailout.”
Check out PHII-20 at Neo Vertika. Clear fraud involved on that one.
Generalagic,
If you need to reach Mortgage Fraud Department and they are not returning your call, I understand they can be reached Monday-Friday’s during lunch time at Capital Grill. Look for a large table with on the right as you enter. As the head waiter Raul.
Good luck.
jcrimes, I am just expressing my opinion, sorry if I explained it the wrong way. It is my opinion that while it hasnt been released my guess is that the CFC buy/merger came with some sort of backing or some sort of new bill that is going to pass that is going to help out Lenders and thus make it a logical move for Bank of America to buy it at almost 8 dollars when the timing was at the brink of the recession and it is my opinion they could have waited and gotten it cheaper. All of these are my opinions on what happened and if I was right all the time I wouldnt be working so much and would just play the market.
Lucas I have heard of various people that put 20% down 2 years ago, they have good credit and are approved but the apartments are appraising well below their purchase price.
What I feel we havent adressed that much (although Lucas did a great job adressing the fact hat if part of the buulding doesnt move in the association is going to have problems running the bilding like Villa Regina did in the 80’s) is the possibility that with the pressure appraisers are getting for appraising all this fraud they are starting to appraise more realistically. So when these 10,005 units get delivered over the next year on brickell (we have to subtract the apt that have closed on Plaza as well as other closings) they might not appraise forthe preconstruction price, so this will force more [people to be forced to walk away from their deposits.
If I was borderline between deciding whether to loose my deposit or close and I decide to close, then when I go get my mortgage my apartment doenst appraise I start thinking twice about closing. Furthermore if they dont appraise I might not have the funds or want to put more of my funds into the apartment so I can get the LTV my mortgage broker is asking for. Just a thought
jcrimes you said:
“the boa/countrywide deal is not nearly as bad as you guys think. yeah, countrywide is in the crapper right now…long term, though it gives boa one of the largest and strongest mortgage lenders in this country. countrywide’s servicing business alone is worth the current merger price.”
I agree with this Countrywide is great at closing a ton of loans in a month, they are good the best at pushing volume. They are also the best at getting anyone aproved. I have seen them approve Janitors with 2 pay stubs, stated income and no documentation into 500K condos on the water at Brickell with Ocean Views!
I don’t know why anyone would be upset that the greedy banks were robbed. They are the most to blame, just ahead of greedy uneducated realtors for the housing bubble.
Also, $150 per sq foot is an “ok” deal not a great deal as I’ve said before the smart money is waiting for $125.00 or less per foot.
What?….”$125 or less per square foot”…on which planet did you live in ? The most basic generic condo with nearly zero amenities and 90 minutes from civilization would be your best chance of finding something around $200 per ft.
Please inform me if I am the only one that feels this way.
$125-150 a sq. ft. will be the going rate very soon.Just watch….look at the price drop’s in the last 2-3 month’s already.
When I bought my South Beach Condo in 2002 & sold in 2006 I incurred suprisingly large fees frim the city that ran in to thousands for stamping deeds & confirming ownership.
Should’t these type of agencies be in a position to monitor mortgage fraud or at least make the process at least a little tougher for these thieves?
We’re talking about the sametype of units being
sold many times over in the same buildings. Seems the city was just happy to keep clipping coupons while shirking any goverment focus that could easily highlight these persistent valuation irregularities & scams. Miami Beach has mountains of data on all these buy/sells that were greatly inflating the city’s tax rolls during the middle part of this decade. Too bad a simple spread sheet that would include some of these hughly divergent spreads between closing price & appraisals aparently wasn’t initiated. Shouldn’t the city codes include codes that protect the rest of us owners as they are the ones who end up paying.
I suspect that one of the biggest problems in the market right now is the natural desire of the government to keep the tax rolls high in order not to lose tax revenues. Over the last 6 years the county has benefitted from the inflated values of properties occasioned in no small part by the fraudulent schemes delineated in your comments. As several of you have said, you can appeal tax valuations but you can only do it on a case by case basis that is highly inefficient. Consequently, the overvaluation of properties on the tax rolls will last much longer than the rapid descent in prices. This will result in a “vicious cycle” of further and deeper price deflation. If prices are to stabilize, the county needs to realistically reassess all properties downwards, but I suspect ther is no desire or willingness do do so.
The debate on how much cost per sq ft will go down seems hollow without any linkage to the type of product. Property location, unit location, old building, converted, or new creates quite a range for what would be considered valued pricing. Bold statements on price should be backed up with an example property in mind. And in 6 months we can then determine who had the best view of the market. The Ace, Billy K and Insider Info, what is your prediction?
VERY VALID point NJ…I will compile a list later today and give my prediction on certain building’s.Off the top of my head ..I would say 20%-35% off today’s price’s in the next 6 month’s.
Anyone knows how AVENUE AT BRICKELL is doing ????????? how many units closed so far?
will it go to $125 ppsf in this building too??
Finishes are low end in this building, the price does not surprise me. The price should be much lower in my opinion. Besides what is the advantage of buying (at any price) in a building with issues as described by Lucas, mortage fraud, defaults, declining property values, association issues of not being fully funded. Oximoran financial mistake. Looks good on the outside, a disaster on the inside based on Lucas prior postings about mortage fraud, etc.
Hey why don’t you guys pass off your fraud info to the Miami Herald? I think they’d be very interested… and if they put out a story, it might push the legal side to act.
Also, does this have to be an FBI thing… how about the State Attorney for Miami, Kathy Rundle’s Office?
Hi, I am looking to buy a few condos in Miami. Could you direct me to a real estate person who can find me forclosed or a really good deal on a few condos.
Thanks
Why would you want to buy now James Brooks….all the experts on this site are basically saying to wait.Who do you plan on selling or renting to????PRICE’S ARE DROPPINGGGGG….BIG TIME any honest real estate agent will tell you that.
Excellent Blog Lucas.I was wondering when the real fact’s of sale’s will be posted for the last month’s sales.And what price was paid per square foot.Do you post that at all?? Thank you and looking forward to seeing real info. like that.Juan
I am looking to buy a condo on the beachside sometime in the next 6-12 months. Can someone direct me to the best building. Price $500k.
Hey SQUID why don’t you get in touch with LUCAS on his personal e mail or call his office he will steer you in the right direction for sure.
will we see $125-150 a sq. ft for condos? Absolutely yes. Will these condos be in sobe south of 5th? Unfortunately no.
All the condos that were built away from the water are in a tail spin now. I goto publix near Coral way and SW 27th and there are two condo buildings that came up in the last year. I am sure they are going for below $200 and will surely drop in the future.
The Dadeland mall town center area where the builder went bankrupt, I am sure prices are dropping there. Who is going to pay a premium to live around the dadeland area? Only people who live and work in that area will probaly pay a premium. Now factor in the fact that a small percentage of people who work in miami can afford to buy in miami and available pool of buyers is next to zero.
I know a lot of people who got 5 year interest only loands in 2005-2006 and those people can afford to pay loans now, but in 2010-2011, their rates will reset. The supply of housing coming on the market is accelerating and will continue to grow for atleast 2-3 years go come.
Slightly offtopics, but does anyone know what is going on with Continuum II? I saw some emails from zilbert group, but nothing as far as sales are concerned.
LUCAS,
THE SAME THING IS HAPPENING IN NEW YORK I KEEP SAYING “HEADS WILL ROLL”,
OR WILL THEY REALLY GET AWAY WITH IT ?
I’M NOT SO SURE ANYMORE.
I’m curious about whether any of you guys have had experience bidding on a short sale of a property that has a history of mortgage fraud? I kind of think the lender might be anxious to get the whole thing closed out and back off their books. I can also see a contrary incentive, however, so I’m curious.
Brautigan it really varies in a case by case basis, becuase usually the properties where we see the motgage fraud they got a loan for the actual value that they paid and then appraised it formuch higher and got a second mortgage or a home equity line of credit, sometimes multiple mortgages at the same time on the property and even flipped it to themselves. So these are the most complicated short sales since I have to call the loss mitigator and there are 4 liens on the property and the HOA and property tax liens have to be paid plus the I then the people with the HELOC call me trying to get $1,000 back from the 400K loan they are loosing, and they tend to be so complicated they are harder to close
Deja vu all over again, as Yogi Berra says. In the mid 80’s, people were buying condo futures, like pork bellies or orange juice futures that trade on the Chicago exchange. Pre-construction sales office goes up in a trailer on the vacant lot, and on the first day, all the best units are sold. 5% down. $200K bought a pretty nice unit, back then, and buyers would plunk down $50K (5 units) to put $1MM of condo futures under agreement.
Theory was that the units were going to appreciate 25% or so before they were built. Then, all the guy with the 5 best units under agreement has to do is sell his contracts for $60k each. He has the best floors, the best views, etc, so he gets a 500% profit and his happy buyers pay market value, $250K, for a terrific unit. Everybody wins!
Meanwhile, the developer goes to the lender with agreements for 100% of the units. Lender believes that there is no risk because all the units are already “sold.” Construction loan is disbursed, builder gets paid his profit as construction management fees, and the units are ready to be sold. But something funny has happened. The condos haven’t appreciated. There’s a condo glut, and the buyers walk away from their deposits. The MLC “Standard Condo P&S” as modified by any buyer with a lawyer, provides that “(retaining the deposit) shall be Seller’s sole recourse at law or in equity.” No specific performance. No action at law for breach of contract. In effect, the buyer has paid $10K for an option to buy the $200,000 unit.
In some cases, the Buyers would close, believing that the Unit would appreciate later. They would take their five contracts to Dime Savings bank, and apply for FNMA/FHLMC guaranteed loans on five “owner occupied” units. They then went to a large, “white shoe” Boston law firm where a partner closed the loans, all five of them at one sitting. Each loan package had the standard FNMA/FHLMC Borrower’s Affidavit in which the Buyer would swear, on the pains and penalties of perjury, then he/she intended to use the unit as their principal residence, upon or shortly after closing. The real estate partner, also a notary, asked and was told that the affidavit was true, and then signed as an officer of the court. Loan originator, Broker, Buyer, and lawyer all knew that this was a lie, since someone can have just one “principal residence” at a time.
It took a while, but the Feds got around to seeking justice, because the condo shenanigans were in large part responsible for the Savings and Loan Crisis of the late 80’s and early 90’s. Heads rolled, bankers were fired, banks failed. Brokers lost licenses. Some Brokers and Bankers went to jail, and were forced into personal bankruptcy. The Boston real estate partner, a colleague of mine (but not from my firm) was ruined. She was convicted of mail fraud, perjury and suborning perjury, and defrauding FNMA. She went to jail, was (and still is) disbarred, and lost everything she owned. The law firm went into bankruptcy, where all partners were held individually liable for the real estate partners’ fraud. There were 100 or so partners, but the liability was in the billions. They were picked pretty clean, but not totally wiped out as the partners who participated in the fraud were. The same thing happened to bigger firms in New York, Washington, Chicago. WSJ reported an incident in which an associate thanked profusely a partner who had blackballed her. If he had let her become a partner, she would have joined him in the crapper.
Roughly the same thing happened in the early 70’s, when the condo bubble burst. I represented a developer in bankruptcy in that one. 20 years later, I was representing lenders trying to survive. I foreclosed luxury condos at 10 cents on the dollar, twenty or so in an afternoon. I retired too soon to be in the ring for this round.
The main point of this all is that the worst coundrels probably will get whacked. If the Federal Gov’t has to spend billions to bail out the mess, they are going to look for blood and money.
The subsidiary point is that this fiasco has happened three times now, that I know of, twenty years apart. If I come out of retirement, it will be to foreclose at $.10 on the $1.00. And then we’ll have a bottom you can believe in. Or, as my late father in law said, beware the sucker rallies.
Stu
Stu,
thx for the historical writeup. any financial mkts history shows the same old stuff over and over…as time goes on, the same repeats itself as people forget what happened previously.
i will say that this time it seems that the gvmt is not run properly (as in the mid 80’s-late 90’s). and they have so many fires to put out right now…that i’m not sure if they’ll be able to go after all the crooks. their 1% fed funds rate and piss poor policies (administration’s veto of several predatory lending bills in 2001 and 2004, etc) are what LED to this mess – i think if they go after crooks…all he clues will lead right back to themselves!
stu,
that was a long post……………..
Big expensive homes are getting hit too:
http://money.cnn.com/galleries/2008/real_estate/0803/gallery.multi_million_dollar_homes_on_auction/index.html
Stu – thanks for the historical perspective. People have very short memories when it comes to this stuff.
That’s why I am skeptical about any kind of quick recovery for this market. It didn’t happen in the past busts, and given the fact that this recent bubble was far bigger, I don’t see any reason why people are looking for a bottom right now. And even when we do reach bottom, appreciation will probably not even keep up with inflation for many years – maybe a decade or longer.
My grandmother bought an investment townhome in Florida during the 80’s boom. She ended up selling it for the same price she originally paid for it 17 years later. And that bubble wasn’t as big as this one. We might not see 2005’s prices again for 15 years or longer. When Japan’s real estate bubble burst, prices actually went down for 14 years. They may not get back to their boom level prices for 30 years or more after their bubble popped. And so far, the US seems to be taking the 90’s Japanese recession path. Many people here still don’t seem to get it.
I don’t understand why people think that real estate is supposed to appreciate double digits every year.
Not sure if that qualifies for scam – but MLS# M1214386 is interesting case:
Bought in 1990 for $129,800
2006 evaluation: $222,640
2007 evaluation: $280,530
Now listed as bank owned at $109,900 with 40K price drop (shitty 2br unit without windows in 4 ambassadors – you could call it “utility closet”)
Margus – what makes you think there is something suspicious about that unit? It was last purchased in 1990. Looks like a normal foreclosure to me. Must have refi’d out too much equity.
Is there anyone in this blog that is a contract holder on a preconstruction condo that hasnt appraised? I would really like to hear a comment about the experience of what is going on at closing first hand from someone who is experiencing this.
BFG
I do not think in any way this will be like the real estate market of japan like you mentioned previously, wile I think it was a similar case the transparency in the US is greater so it is very hide by GAAP standards to just hide all those losses. Furthermore we would not see the write downs of $195 Billlion Dollars over the past 6 months by Financial Instutions due to the Housing Market and Credit Crunch. In Japan they wrote down these losses for years thats why when american companies came in to buy banks at cents on the dollar, they got to see the books and realize the amount of losses they really had.
Alejandro:
Yes, I was prepared to close a one bedroom loft in Avenue. I went through three appraisals. Each one was about $40-50k less than the purchase price. I asked the developer to lower my price so that I could receive a mortgage (with my excellent credit score). He refused. Now my options are walking away or paying $50k cash out of my pocket (which I don’t want). I’m afraid that my low appraisals will make it harder for me to sell this condo in the future. Possible buyers (already hard to find) will face the same problem as I – being financed in 80% of the APPRAISED value, the rest to be paid in cash. I’m very likely to end up not taking this property. Any advice?
CONTRACT HOLDER…..hate to say this….but If I was you….I’D WALK.Pay now or pay later.In 6 month’s the same unit will appraise for 100K less.RUN RUN RUN.
More common scenario now is that appraisal comes for the full price but banks are ready to provide financing only for 70% of appraisal value even with an excellent credit score.
To Contract Holder: you should evaluate your own situation. If you pay $50,000 from your pocket in order to close will your unit be breakeven when you rent? If it is still going to be negative then you should see if you can handle it at least for the next several years. If you have a pretty decent income then it is probably makes sense to walk away and deduct your losses from taxes. If in fact you are in breakeven situation then I would say to close and wait.
It is just an opinion.
Alejandro – they sure seem determined to sweep the crap under the carpet. That was the main purpose behind saving Bear Stearns – so we wouldn’t get to see what the crap on their books is really worth, and force all the other banks to mark to market. The writedowns we’ve seen are the tip of the iceberg. Not saying we’re in for an exact repeat of Japan’s recession, but either way, we won’t see 2005’s prices for a long, long time (at least 10 years from now – likely much longer).
RENTER TOM WHERE ARE YOU???????I MISS YOUR NO B.S. COMMENT’S.
Hey Lucas, whats the deal, you dont talk to me anymore = (
Check out the lastest price reduction in paradise:
2 BED DIRECT BAY VIEW @ FLAMINGO SOUTH BEACH.. only 340K
Even Mr BFG can agree that is a truly an amazing deal!!
I recently attended my 14 Hour CE course at Gold Coast. The instructor mentioned to call Nancy Hogan about mortgage fraud. She gave us her number but I don’t have it on me. She is a former FREC board member that has made mortgage fraud her #1 priority. One realtor said that she has had people arrested at the closing table. I would try her out, she has great connections. I think she works for Coldwell.
alejandro,
i don’t agree w/your measure of transparency. there is no transparency – and it’s meant to stay that way because if the truth comes out from some of these companies, it will cause a panic to the tune of runs on the banks.
last yr after bear stearns opened their mouth…the stock and overall mkts got so punished that no a single company opened their mouths about the reality of what was going on. it was amazing how shut all the mouths were…where’s the truth from wachovia, wash mutual, bank of america, wells fargo, etc etc…
not a single word…they don’t say squat…then 3 months later they just come out and cut the dividend and spill some of the beans. the other part of it is that they have no idea how much more they are in for…product of the crap they securitized and sent overseas as AAA paper. offspring of full blown capitalism…and now that they’re in the crapper, you see socialism trying to step in to fix/help the crooked firms that caused the entire mortgage mess. it’s really amazing what we’re seeing…history is being made here…
Mr. Flamingo,
It could be a good deal. I guess it all depends on the rent the unit get on an annual basis. Let me ask you this. According to the tax roll he paid $615K for the unit and now sems like a short sale. Plus, it looks like the original developer sales agent is handling the transaction. So she most likely, or the her company Fortune, sold the unit and is now handling the short sale. HMMMM…..so she made a commission on the original sale and is now short selling it. Isn’t that nice!!!
to Contract holder,
i have a contract in avenue too for a unit that didnt close yet.
would like to get in touch with you and see the updates that you have vs mines.
send me an email to:
[email protected]
thank you.
Jonathan.
Antonio
I have spoke with Nancy Hogen about a year ago. I also spoke with her brother Richard Davis who (if I recall correctly) works for City of Miami Beach Police Dept. Nancy has made mortgage fraud her cause and profession.
Did she help us? While I was in contact with the FBI I contacted Nancy to see if she could further assist us with the rise of activity. I suggested she come to our office to speak with me and fellow Agents. She made it very clear that she would visit for a fee. I wasnt asking for a paid speech, I was asking for her help to protect homeowners.
General Magic
It’s not the same sales agent, but yes I agree they all got screwed. Most Developer Sales agents only want to hit their numbers and let’s just say I wouldn’t leave them baby siting my kids. (if I had kids, that is)
Anyway back to the Sail, looks like LUCAS was dead on with this prediction. I can’t see any reasonable person believing those condos where worth what they sold for. So why haven’t they arrested the scum bag broker?
if you guys want to reveal mortgage fraud—you don’t go to the feds (they always say the don’t have enough personnel,etc)and you certainly don’t go to the banks (each manager always tries to cover up bad decision making—it’s human nature)
YOU GO TO THE MEDIA AND SHOW THEM WHAT YOU’VE GOT. THEY LOVE THIS STUFF—MAKES THE RATINGS GO THRU THE ROOF.
you’ll be airing out the dirty laundry in no time.
once it is on TV–then everyone comes clean–and starts doing something about it.
COntract Holder 1 & 2 would like to hear more about what is going on with the appraisal coming in much lower and how the developer is/ is not helping out with units that do not appraise. It is my opinion that if you have to put 40% down since the apartment doesnt appraise reselling it is going to be a problem becuase its going to be very hard to convince a potential buyer that the apartment is worth more than the appraisal value. I would really like to hear more details, shoot me an email at [email protected]
I think this mortgage fraud task force is working given that there are units that are not appraising anymore would indicate that appraisers are being really cautious and more realistic when they are appraising.
Cyrus & BFG
I never said this was over but for the brokerages and financial instutions that use point to mark or mark to market accounting it should be close to over at least. As far as the Wachovias, Wells Fargo and other regular banks that use accrual accounting they will be writing off the blood of this for at least 2 years since they report it by quarter based on when the REO is in their books and they dont report the salvage value until that REO is sold (New GAAP standards after Enron). So we will see these banks blled little by little over the next 2 years but I dont think we will see Citi Group down at $13 a share because theres more writedowns (although I really hope Im wrong becuase I was so negative about the market I didnt load up on stock of Citi at $18 last week)
Mr. Flamingo,
Just been super busy lately. That 2 bedroom at Flamingo does sound like a spectacular deal though.
Lucas which building out of the Buildings that are coming to the Brickell Area do you think is in the most toruble?
500 Brickell Avenue 633 units
Brickell on the River North 384 units
Brickell on the River South 319 units
The Avenue 570 units
Solaris 138 units
Plaza on Brickell (One) 440 units
Plaza on Brickell (Two) 500 units
The Sail on Brickell 152 units
Lattitude 427 units
Met One 447 units
Wind 489 units
Ivy 498 units
Mint 602 units
Cima 471 units
Capital 832 units
Axis on Brickell 718 units
Emerald 120 units Asia Brickell Key 123 units
Icon Brickell 1,800 units
Epic 342 units
We should also add those buildings in S Miami AV like Imperial at Brickell, Infinty, Coastal
Lets come up with an updated list and do a poll on which building do we think will face troubles come closing time
Nevermind on Coastal, I was thinking of Axis since it has the logo of Coastal Construction I got the names misunderstood. I am on
http://skyscraperpage.com/cities/?cityID=134&statusID=2
Looking at everything that is under construction and its pretty shocking to see it building by building
As reported in the Wall Street Journal today, the Case-Schiller index shows a 19.3% drop in Miami housing prices from last January, and 2.6% decline in the month of January alone. This was the worst housing market in the US (again); tied with Vegas. The knife is definitely still falling………….http://online.wsj.com/article/SB120644795755362177.html?mod=rss_whats_news_us
So, we’re looking at almost 10,000 new units just for Brickell?
How many are we looking at for the entire downtown area?
I think that Miami situation is much worse than in Las Vegas or Phoenix. Employment!!! I heard a report that oversupply of houses in Las Vegas is just 2 years. Once it is absorbed considering very high employment the situation there is going to be much better except probably condo hotels and very expensive condos.
That two bedroom at the Flamingo is already under contract.
Anyone hear about the crane that fell at Paramount Bay? 2 dead, 4 injured and the house that appeared in “Something About Mary” was damaged.
Yes, getting out and into Cite and Quantum was a bit difficult today. On my way to Hollywood to pickup a client I noticed Fire Rescue rushing to the area. Soon after I received a call from an AP reporter asking about a crane collapse near Paramount – A portion of the crane looks like it fell into the backside of the Mary house. Can you imagine if that fell onto Cite? I feel sad for all families affected by this today. They need to pass some type of legislation affecting operation of these things.
Alejandro –
Does anyone remember when the dot-com bust was happening they created a dot-com dead pool? It was based on the Dead Pool from the Dirty Harry film. What if there was a condo dead pool? Put in $20 and the winner that gets the most number of failed buildings wins the jackpot.
Amazing that everyone is now just starting to realize all of the fraud thats been going on for a very long time. Look the usual brokers (we all know who they are) that usualy chime in and sugarcoat everthing, decided to stay away from this thread
Good visual on what’s happened with the Case-Shiller, inflation adjusted:
http://bp0.blogger.com/_pMscxxELHEg/R-k6W9DCIVI/AAAAAAAABwo/HTSDDSu1vKk/s1600-h/CaseShillerRealJan2008.jpg
And it appears that good guys are actually getting some things done behind the scenes:
http://www.bizjournals.com/orlando/stories/2008/03/24/daily19.html
To me the most interesting thing in that article is that two of the individuals charged worked for Argent Mortgage (one was a VP). This scam was actually run with the comlicity of an agent of the lender– meaning that someone will likely be taking a much closer look at the loans originated by Argent and where they ended up.
@Alejandro
Citi owns Argent. Not that this one scam is even a blip on the behemoth that is Citi’s radar…but it opens up a window to the exposure all these guys are still facing. I wouldn’t be kicking myself too hard for not picking up that stock. I’m still short on the financial sector. We are probably still in the third or fourth inning of this whole thing.
And Grandpa Stu,
Excellent post. I’m sure you have some great perspective on this thing, seeing it unfold in front of your eyes twice. I disagree with you on one point, though. The worst scoundrels don’t get nailed.
Pigs get fat and hogs get slaughtered. The amteur hogs got nailed then and will get nailed now. The pigs who got fat in the eighties lived long enough to let memories fade and run the scam on our community again…those are the real scoundrels.
Mr. Contract Holder you are screw.. RUN AWAY it’s better to lose 50k now than 100k+ interest, bank & legal fees in the near future.
Mr. Flamingo: What great deal are you talking about. Comparing markets to 2002 the price of that 2/2 condo should be 180K. Get real!! All prices were inflated when Crescent Heights speculated with the Mirador sales in 2004.
To get a good idea of where prices might fall to look at the Case Schiller Index in that WSJ article I posted. Miami is at 225, which means prices are still 125% higher than in 2000. Denver, by way of example, is at 130. This suggests to me that prices in Miami could easily fall another 50% on average, whereas prices in Denver would fall about 30%, on average, if prices return to a prespeculation 2000 level. Condos will be the hardest hit of course. But 125% above 2000 prices is still no bargain…just wait.
TT,
How are you getting to your 180K price on the 2/2 in the Flamingo?
There was just an article in the Herald today about the State slashing local prosecutors’ budgets (hope everyone loves those tax cuts) and Fernandez-Rundel saying how the County is now going to have to really pick and choose which cases they decide to prosecute. Don’t hold your breath on any of the fraudsters getting arrested anymore since these cases are lenghtly and require a lot of research yet bring small sentences. In other words it wont be a priority.
Does anyone have any recent info on Bentley Bay condos. I know balconys are almost done. Question for Jeremy, if condo market is crashing what would be a good price for a purchase on a condo in Bentley Bay where pre-sale price 3/4 yrs. ago was $300k plus.
joanie,
what was the approximate psf price for bay view units in the bentley bay 3 to 4 years ago?
Back to the Sail, I visited it and it is really a dump.
For me, this is one of the buildings which will help to ease the affordable housing crisis we have in Miami.
I think it is the worst building I ever visited. I really don’t see why somebody will buy there, especially now.
As of the reader who wants the Flamingo 2/2 at $180K, please let us know when you get a price like that. You forgot that we cannot even talk about Miami real estate market. A building in Dadeland or Little Havana will never have the same prospects as a building in South Beach per say.
Just because many foreign buyers and New-Yorkers want to stay in South Beach and are willing to pay a premium for that. So when you see a 2/2 in the Sail for $220K, I can tell you I am not even sure it is a good deal. And when you see a 2/2 at the Flamingo for $340K, it is an incredible deal. Proof is it was sold immediately.
So please get real and stop spreading wrong numbers. There is a bottom in this real estate market.
Best regards.
Condo-Hotel writes, “So please get real and stop spreading wrong numbers. There is a bottom in this real estate market. ”
must be a testy real estate agent with no sales now, and lots of upset prior clients?
Mayor Carlos Alvarez’s Mortgage Fraud Task Force can be reached at 305-994-1000. The phone number is to the Miami-Dade Police Department Economic Crimes Bureau. Ask to speak to a mortgage fraud investigator.
I read about this a couple of years ago and wanted to see if anything became of the fraud in The Sail.
It was blatant fraud.
Has there ever been any arrests?
The same broker made several deals at The Sail and I have never heard of any arrests.
It seems that if you are on a Mortgage Fraud Task Force, this would be a slam dunk.