The Sail on Brickell Penthouse 2 Bedroom/2 Bath Foreclosure – $299,900
March 21, 2008 by Lucas Lechuga
In September of last year, I revealed a very compelling piece about the apparent mortgage fraud at The Sail on Brickell. At the time, a 2 bedroom/2 bath at The Sail on Brickell had recently sold for $670,000!!! Now, there's a bank-owned 2 bedroom/2 bath Penthouse condo at The Sail on Brickell that is listed at $299,900. Was I right about the apparent mortgage fraud or was I right?
I urge everyone to read my post in September. It will provide much insight as to how prevalent the mortgage fraud was back then in Miami. I actually reread my post and I was like "Damn! That was a great post". Back then I didn't have many readers. My readership was made up of just around one hundred people.
Currently, there are two 2 bedroom/2 bath short-sales at The Sail on Brickell listed for $599,000. Both short-sales are the condos that I discussed in my July and September posts that had recently closed. This makes it apparent to me that the buyers never had the intention to hold these condos but rather defraud our U.S. banking system. Our banking system in this country has enough problems. I'm very upset about my findings. Very!
Here are the two condos that were sold at The Sail on Brickell in July and September:
- Unit 2504 was listed at $670,000 and sold for $670,000
- Unit 2204 was listed at $670,000 and sold for $670,000
Both were sold by the same broker. <<<<<<<<<<<<<
Where is the mortgage fraud task force when you need them?
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?