Fraud Grove (continued)
The investigation exposed how Jim Martin and his business partners at VFM Investment Group falsified loan applications and listed investors as employees of the company in an attempt to defraud lenders out of millions of dollars.And this response in the comments of the prior post:
KCRA has learned that all 20 of the Elk Grove homes at the center of the investigation are now for sale. They're hitting the market for tens of thousands of dollars less than the investors paid.
The problem of loan defaults is widespread, said Tracey Saizan, president of the Sacramento Association of Realtors. In Sacramento County, more than 7,000 people have defaulted on their loans, leaving thousands of homes in foreclosure.
With many houses hitting the market under value, homeowners such as Jared Cronroth say their property values are dropping dramatically. His four-bedroom, two-bath house is listed at $419,000. Yet, just two blocks away, a larger home for sale because of foreclosure is listed for $50,000 less. Because so many of the houses in the area are on short sale, Cronroth said he is having to take a loss.
The president of the Sacramento Association of Realtors on Wednesday called for a criminal investigation after a KCRA 3 series earlier this week uncovered allegations of fraud in the local mortgage industry. Tracey Saizan, head of the association, said she feels bad for those investors who appeared to have been duped. She also said she hopes law enforcement officials prosecute those responsible.
Jim here.
These properties were called 100% financing the sellers aded 3% for the purchase price to cover the buyers closing cost.The bank approved the purchase contract These investors came to us and wanted houses and wanted money and they even wanted more houses and we said no. We did the loans and the market turned bad and now the blame game comes into play. We did not falsify anything on loan documents. These people signed the loan documents and some even made money from there loans and got credit cards paid off. I am so mad that KCRA 3 has made them out to be victims. I have witnesses that know the truth. We did all we could and we did not give up we wanted to help but the blame game started. I know all of you will post your opinion and bad or good I would love to here.
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I am visiting with my lawyer today at 1pm. I will be writing a comment in the afternoon. I have contected the sacbee to tell our side of the story. Hopefully this will come out soon.
30 comments:
At a minimum, this guy needs to learn how to spell ...
Perfect Storm has the right name for all this.
You get a good Nor'Easter, a full load of fish in the hold, and you are a little to far out to sea.... all the critical factors combine to make a fatal event.
I believe this is a big part of what happened in this market. No one was paying attention: Lenders, regulators, borrowers, brokers....no one. They are all paying a price and so are the rest of us.
Some people are criminals and will go to jail. Others will pay a different kind of price. Some, who kept their head up and saw it coming will get unprecidented opportunities to buy.....in 2010 when the dust begins to settle.
We need to keep in mind that "victims" are the lenders, not the straw buyers. It doesn't matter if the straw buyers knew their income was falsified. Jim had to know if the people worked for him or not!
Please, Jim. Enlighten us further. If they didn't work for you, why did they put that on their loan app?
"Tracey Saizan, head of the association, said she feels bad for those investors who appeared to have been duped."
Since when do we call -3% down real estate speculators "investors"? These folks were flipper/speculators and if they didn't understand the risks associated with such a venture, then it was their mistake. There must be laws against deception, but one thing that anyone with any common sense knows that is near impossible to come up with legislation to protect dumb people from themselves. It’s not possible.
"With many houses hitting the market under value, homeowners such as Jared Cronroth say their property values are dropping dramatically"
A quick comment on this - Forclosures often demonstrate that the original sale price of the home was above market value, thus the failure to resell the home before it went into forclosure. So, it's not the forclosures that are initially driving down property values, its decreasing property values that are driving forclosures!
Apologies to the homeowners in this story, but you can't blame forclosures exclusively for your woes.
Sittin' Out This One...I believe you really summed it up. Typical end of the bubble cycle. Those late to the party get there heads handed to them, those depending on the market to continue their newfound lifestyle find ways to suck the last drop out, and stupidity is the soup of the day.
Max is right about the lenders being the victims, however, aren't there supposed to be checks and balances, like an appraisal report to keep them out of trouble? I would think you'd have to drag in the appraisors and grill them about fair market value in a time of falling prices, and why they appraised those properties as high as they did.
Looking...lol I thought the same thing. No brain scientists in the RE industry. I seriously doubt his attorney will let him post any statements at this point, if he in fact is talking to an attorney, which he needs to do. I also doubt that there are any innocent people involved, let me on that jury! :)
Max is right about the lenders being the victims, however, aren't there supposed to be checks and balances, like an appraisal report to keep them out of trouble?
You're absolutely right. I think it's clear that everybody involved is either guilty of outright fraud, or some kind of negligence.
From an enforcement perspective, they could take action against any of the parties involved. However, the participants that had the most to gain, and the participants that had the most control, should be the targets.
"The president of the Sacramento Association of Realtors on Wednesday called for a criminal investigation after a KCRA 3 series earlier this week uncovered allegations of fraud in the local mortgage industry. Tracey Saizan, head of the association, said she feels bad for those investors who appeared to have been duped. She also said she hopes law enforcement officials prosecute those responsible."
YES!!!
Deflect that blame!
Throw them mortgage jerks under the bus! Lockemup!
Realtors can do no wrong!
LOL
Fingerpointing at its best!
The more stories I read the more I realize how MOST of the individuals involved are guilty in one way or another. There are few real victims as compared to those who played the game and LOST.
And of course, those who lost now become poor (in both ways) losers.
I think it's ironic that so many people wanted to "help" buyers into homes that they should never have been qualified to buy, like they're such humanitarians.
Well, what about the way they "helped" all of the rest of us? You know, the fiscally responsible potential buyers who didn't care to spend a half mil on a home that was only worth 200k in 2000?
Thanks for all that "help". It is going to take years for those of us who can actually qualify for home loans and who earn enough to pay them back, to re-enter the marketplace. We aren't stupid, we aren't desperate, and we aren't going to pay for your Porsche.
"Those who cannot learn from history are doomed to repeat it." - Santayana
In the 1920's the free market was king. And so was easy credit. Herbert Hoover said, "Let me remind you that credit is the lifeblood of business, the lifeblood of prices and jobs." In 1929, stock brokers were unregulated by the government and eagerly gave out loans to people to buy stock with 25% down. As the stock bubble popped, people sold stock to cover the loans, driving prices down. The market crashed.
And here we are in 2007, the free market and easy credit are king again. Everybody thinks unregulated markets are the key to prosperity. It was wrong in 1929 and it's wrong now.
Learn from history, folks. There needs to be at least some government regulation on lenders to stop the excesses. All it takes is a federal law mandating 5% minimum down payment, no negative amortization, etc. And maybe we need a law that requires originators to hold the mortgage at least three years before they sell them. Maybe then they will actually read the loan applications.
This is just the tip of the iceberg. Just think of the millions of real estate transactions that are just borderline fraud. A little increase in false salary here, a little increase in false appraisal there, a little minipulation of loan documents, just a tweek nothing big.
Housing/Mortgage Doom 2007
Were right on track for a 50% decline by 2009.
Wimpy,
Your observations and recommendations are the most astute answer to solving the mortgage problems going forward. Would Jim at VFM done the 20 loans if he had to bear personal responsibility for their quality and repayment over the next 3 years? Not a chance.
The other part of the equation is appraisals. All appraisals should be ordered out of a state agency, with double blind factors. The appraiser does not no the purchase price, the lender does not know the appraiser and the borrower won't get hosed.
Until that happens, the system will continue to get scammed. If fact, it still is getting scammed today. Lenders are still getting appraisers to state values 20% over yesterday's purchase price and getting new loans with cash out. Idiots all.
Norcaljeff was correct when he stated "I also doubt that there are any innocent people involved".
The buyers were using "liar loans" to purchase homes they could not afford, and apparently signed fraudulent documents to facilitate the deal. But, what about the other parties to this transaction?
Contrary to his claims of innocence, Jim appears to be the primary culprit, for none of this could have occurred had he not "facilitated" the deal. The R.E. agent obviously knew what was going on too, so apparently she was complicit in the scheme. The appraiser(s) may or may not have been a willing participant, but I am suspicious. It may have been a case of incompetence? And, the lender (bank?) has a degree responsibility too, for how ineffective is their underwriting process that they were unable to see the signs of this fraud, 20 times?
So, who are the real victims of this greed based fraud scheme, we, the American public. The deregulation of the banking industry caused a cancer, and we are seeing the effects of it. We really need to do to clean up this industry, by taking the mortgage brokers out of the equation, for they really add nothing, and are a primary source of fraud. At the least, the mortgage brokers should be held accountable for their actions. Banks are not typically willing participants in such schemes, but many Mortgage Brokers (not all) will do anything to make a deal work, it is the nature of their industry. And it seems there is an endless supply of accomplices to help them "facilitate the deal".
Jim, the stuff with the renters isn't so important. I think you're skirting around the primary issues, which are:
Who filled out the "stated income" information? Who filled out the false employer information? If it was the homeowners, how did this income and employment information get past you without you noticing, particularly since some of the employment information named your company? Also, who arranged for the appraisals and how did they get past you if they were in fact, clearly over market value (as KCRA claims)?
"the investors told me there income"
If this is true, you obviously didn't put any effort into verifying any of their income. I find it unlikely though, being that they each bought multiple houses through you. How did they all know how much income to lie about in order to qualify for all of the loans?
"the lender Account reps had us Put VFM down it was a stated stated loan program and the lender said it did not matter put it down."
Since it's the lender's money at risk, I have a hard time believing they told you to lie on the application. Regardless, you should know better. By writing false information on the application, you broke the law. Saying the lender told you to do it is not only unlikely, but it's not a good enough excuse.
"and the appraised value was done right or the lender wouldn't approved it. All apprasails go through a review."
Just because the lender reviews the appraisal, doesn't mean it isn't fraudulent. The lender trusts the appraisal. If a simple review of appraisals could prevent fraud then there would be no such thing as appraisal fruad, which obviously isn't the case.
"The investors signed there loan apps. And new about it"
I should probably add one more comment... Just because I'm being hard on you doesn't mean I think the buyers were completely innocent. Even if the buyers were not the ones who initially lied about their incomes, I find it very unlikely that they could buy multiple homes on modest incomes and not know that they were breaking some rules in the process.
KCRA 3 IS AIRING ANOTHER BIG MORTGAGE FRAUD INVESTIGATION TONIGHT (( THURSDAY )) AT 11.
I HEAR THE PAST PRESIDENT OF THE CAL ASSOC OF MORTGAGE BROKERS IS CALLING FOR A FEDERAL INVESTIGATION.
THESE GUYS ARE NOW DOING BUSINESS AS ESNIAN MORTGAGE AND REALTY NETWORK.
IF YOU MISSED THE FIRST THREE PARTS TO THE INVESTIGATION I POSTED LINKS BELOW.
PART 1 http://www.kcra.com/kcrainvestigates/13226878/detail.html
PART 2 http://www.kcra.com/kcrainvestigates/13237304/detail.html
PART 3
http://www.kcra.com/kcrainvestigates/13248473/detail.html
Hey Josh Bernstein my former high school teacher wants an interview too...why are all these people Formers on the news...
I have been a Private Investigator for over 20 years now and the 1 thing I can ad is that there are 3 sides to every story.In this case you have the borrowers,the loan officer`s and the truth I have done some research on this story and came up with a lot of interesting facts that this so called investigative reporter continues to ignore.I have sent numerous e-mails to him about some of these interesting findings, but I believe it is to late for him to back-peddle and look into some of my findings.So I think he will continue his witch-hunt because he would have to admit he made some mistakes and that maybe there are some lies on the borrowers side.So I will share some of my findings with all of you.
1.Mrs.Romano states on the news segment that a friend told her of this investment opportunity,the friend happens to be sitting in the front row of same segment and when I obtained a copy of the summons it states that this same friend told her that there are 70 potential renters,but yet on the news segment she states that VFM group told her that there are 70 potential renters.Now if she said that a fellow investor told her this it would not seem as corrupt or scandalous and would make for boring news now.
2.On the application that they show for Mr.McDaniel that states he works for VFM the purchase price on the application is for $373,600,but when I did some further research Mr.McDaniel never purchased a home for that amount.He bought a home for $450,000 and his girlfriend bought a home for over $600.000 and the home he paid $450,000 for was done as an investment home and the application says he was a owner of a landscaping company and that is his current job status.on the other home that his girlfriend bought for over $600,000 and he is claiming that was an investment property but yet when I spoke to the realtor she said it was very clear it was a home for them to live in as they had to move out of the home they were living in A.S.A.P was her words.The other interesting thing here is that Mr.McDaniel is not suing her but is seeking compensation from everyone else in this whole mess.Will be very interesting if she shows up in court and Mr.McDaniel claims it is an investment property he probably will wished he would have sued her.going back to the application they show on the segment does this app even truth to it since there is no loan attached to it.Hummm!!!.
3.there are several witnesses her over heard Mrs.Romano tell the loan officer to do what ever it takes to make this happen but yet she states that she did not know how the application was filled out.I have bought 3 houses in my 56 years I have been on this earth and not once did the notary throw the paperwork at me and say just sign it,as a matter of fact when they go to the part about my job history they said look it over make sure everything is accurate and true.She is claiming they just threw the paperwork at her and said sign it.Hummm!!!.
4.They claim the house price are inflated,but yet when I spoke to some of the appraisers who appraised the homes they said it is pretty hard to inflate the prices on these homes since the banks go over the appraisals with a fine toothe comb and will not lend the money unless the appraised value is true.So it is a good thing that the FBI agent who appeared on the segment is a retired agent,because he states this is fraud when the truth is that it is ok to give a loan for a higher amount then the house was listed for as long as it appraises for that amount.Hummm!!!.
I urge all of you to call this young reporter and urge him to look into these and other contradictions I have compiled he continues to ignore what I send him as I said before it is to late for him to go back and look into both sides of the story as he would have to swallow his pride and admit he might have been wrong.I have a list of contradictions as long as my arm,and might I ad I have long arms as I stand 6`5.Remember innocent until proven guilty but that is never the way the press views it.If you would like to here some of my other findings let me know please.
BATMAN.
"4.They claim the house price are inflated,but yet when I spoke to some of the appraisers who appraised the homes they said it is pretty hard to inflate the prices on these homes since the banks go over the appraisals with a fine toothe comb and will not lend the money unless the appraised value is true"
Batman, I have to take issue with this. As I said above, if the lender's review of an appraisal were good enough to stop fraud, then there would probably be no such thing as appraisal fraud. This obviously isn't the case. Bad appraisals can and do make it past lenders.
Bad appraisals 20 times I find this hard to beleive,since there are at least 7 different appraisers involved on this whole nightmare.That would implicate them as well and if you look all of them up they are all clean as far as any warnings or citations of wrong doing go.I am trying to get the story in the Sac Bee to show all of the stones that this young over-zealous reporter is failing to look under.I beleive in the truth and so far I am finding a lot of non-truth on the borrowers side too.Stay tuned as I will post more findings and I will even hand over my findings to the young man Jim`s attorney.As I said before there are always 3 sides to every story.
After watching the news segment from last night and I here this young over zealous reporter claim that millions of dollars were made I did some math.If these homes each made maybe $10,000 per transaction judging by the selling price of the homes,by my math calculations $10,000 x 20 =$200,000 yes that`s a lot but it does not equal millions of dollars.Just another example of a witch-hunt without true facts.As I said I urge all of you to contact channel 3 and ask for fair justice as we are entitled to in this fine country of ours.More facts to come.
From The Sacramento Bee (May 15, 2007)
Media Savvy: Exclusive! TV news has good stories for sweeps!
By Sam McManis - Bee Staff Writer
Watching local TV news during sweeps typically provides must-see, TiVo-worthy moments that can bring hours (OK, minutes) of viewing enjoyment.
Well, at the very least, it makes for a good college drinking game: Down a shot every time an anchor uses the word "exclusive" or the phrase "special report."
But something truly shocking has occurred in the first two weeks of the May ratings period: Some of these splashy news packages aren't half bad. In fact, one or two are actually pretty darn good.
Of course, many of the subjects seem like sweeps-period standbys: pedophiles, teen sex, real estate scams, Internet scams, assorted other scams. But it's the new way some of the stations presented the material that impressed us.
Sheesh! What's a snarky media critic to do?
Hand out a few laurels to our local TV stations, as well as, once again, pierce them with thorns.
THE GOOD:
• Channel 3's Josh Bernstein spent three months investigating a lease-to-own real estate racket in Elk Grove that has resulted in 20 homes in foreclosure, the credit ratings of some homeowners being destroyed, and banks absorbing thousands of dollars in losses.
How do we know it took Bernstein three months to do the three-part series? Because Channel 3 told us, like, every five minutes. Still, Bernstein's solid reporting backed up the hype.
He provided documents, experts and defrauded home-owners and, on the flip side, made several attempts to get the three accused business partners to talk.
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Way to go Channel 3!!!!
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Hmmm... I'm still waiting for the Sacramento Bee's interview with the 3 accused, as are many others. Gentlemen... we're all anxiously waiting on the edge of our seats. We certainly know that opportunity is knocking. Prove to everyone you're not crooks. Don't just write all this stuff out here and blow smoke up everyone's A**. Con game is over.
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Looks as though their silence tells it all!
May 17, 2007
To the allegations of the KCRA 3 Real Estate fraud investigation,
These allegations are false and incorrect. I at no time have fraudulently engaged in any real estate scam. I have commented to the KCRA3 several times that these allegations are false an inaccurate. I will let the courts solve this dispute and determine its legitimacy. I am confident that my lawyer Dennis Hay of Willbanks, Hay & Wood, LLP, will resolve this matter and the facts will come out.
Respectfully,
James Martin
Well James We will be watching and waiting to see what happens.
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