Thursday, October 11, 2007

Take the Money and Run?

From KCRA (hat tip paperboy):

On Friday, the FBI and IRS arrested Sennett Swift, a loan officer with First Liberty Financial in Sacramento. He was arrested while boarding a flight at Sacramento International Airport. Agents said at the time, he had thousands of dollars in cash and believe he was trying to flee the state...Swift is a former employee of VFM Investment Group.
From the Sacramento Bee:

Sacramento-based Comstock Mortgage announced its second local merger in five months, adding ATM Mortgage of Sacramento to its home loan operation...As numerous wholesale mortgage lenders close amid the nation's housing slump, it's become harder for small mortgage brokerages, said [ATM's owner Jeff] Tarbell.
From the Wall Street Journal:

As America's mortgage markets began unraveling this year, economists seeking explanations pointed to "subprime" mortgages issued to low-income, minority and urban borrowers. But an analysis of more than 130 million home loans made over the past decade reveals that risky mortgages were made in nearly every corner of the nation, from small towns in the middle of nowhere to inner cities to affluent suburbs.
To examine the surge in subprime lending, the Journal analyzed more than 250 million records on mortgage applications and originations filed by lenders under the federal Home Mortgage Disclosure Act. Subprime mortgages were initially aimed at lower-income consumers with spotty credit. But the data contradict the conventional wisdom that subprime borrowers are overwhelmingly low-income residents of inner cities. Although the concentration of high-rate loans is higher in poorer communities, the numbers show that high-rate lending also rose sharply in middle-class and wealthier communities.
The Journal compared the fastest-growing high-rate loan markets to the rankings compiled by foreclosure-listing providers RealtyTrac Inc. and In Stockton, Calif., for example, high-rate loans accounted for 33% of total home-loan volume last year, up from 13% in 2004.
Subprime Tidal Wave Interactive Map

From the Modesto Bee:

It's a title no one wants, but counties in the Northern San Joaquin Valley keep passing around the undesirable honor of having the nation's highest home foreclosure rate. Merced County is the latest to get that title, pushing Stanislaus County into the No. 2 spot and San Joaquin County into No. 3...The three Northern San Joaquin Valley counties have been at or near the top of the dreaded foreclosure ranking every month for about a year.
Home values in the valley have declined an estimated 15 percent to 30 percent since the 2005 housing market peak, and about half as many homes have sold this year compared with last year.
RealtyTrac said lenders repossessed 921 homes last month in Stanislaus, San Joaquin and Merced counties. In September 2006, by comparison, 14 homes were taken back by lenders.
From CNN Money (hat tip J):

California claimed six cities among the top 10 metro areas for the number of filings. Merced topped the list with one of every 68 households, followed by Modesto, Stockton, Riverside-San Bernardino, Vallejo-Fairfield, and Sacramento.
From the Stockton Record:

Susan Dell'Osso thought she would be overseeing the building of luxury riverside homes by now. But with area home prices dropping, Dell'Osso, the perennial face behind the controversial, superlevee-reinforced River Islands development, announced this week it will be another year before model homes rise out of the Delta soil.
"We're all ready to go. Our levees are certified, our sewer is on standby, but the market's just not there," Dell'Osso said....If home prices go up by April, River Islands will have models up by the end of 2008, Dell'Osso said.
The dipping housing market caused the projected flow of builder fees to be the biggest revenue reduction in the city's most recent annual budget, according to Mayor Kristy Sayles...The city has cut back on the funds it will spend on improvements to Valverde Park and the construction of the new Lathrop teen center, in addition to leaving some staff positions vacant instead of hiring new employees, she said.
In 2005, Lathrop approved 921 building permits for residential units. So far in 2007, there have been 197 permits, according to numbers from the Construction Industry Research Board, which tracks the California building industry.
From the Stockton Record:

Few areas are more vulnerable than new Lathrop neighborhoods west of Interstate 5 that are protected by a levee known as RD17...Speculation is that RD17 won't be certified, forcing property owners to pay more for insurance and Lathrop officials to work with builders in upgrading the levee.
Like San Joaquin County and California, the housing market in Lathrop and areas of southwest Stockton has been slowed by the home-mortgage and foreclosure crisis. Suddenly imposing additional flood insurance costs could force more homeowners out of the market. Where would they go?


Jacob said...

Sub Prime may have started for low income bad credit buyers but many people with good credit and good income used it to buy homes at 10x their earnings as well.

Max said...

"Tell us how to fix the levee," said Lathrop mayor Kristy Sayles. "Tell us, instead of shutting down the city. The development west of I-5 has been 15 years in the planning. There are millions of dollars of infrastructure in the ground."

I love this. Spend millions of dollars on a project with uncertain flood protection, then complain when the Feds won't bail you out of your bad decision.

Who here that has driven through Lathrop on I5 hasn't wondered what the hell those people were thinking building there? Who out of the people who lived here during the floods in 1996 doesn't remember the lake that formed in the very spot they're building in now?

These people are morons.

smf said...

So, the bubble burst and some people are SHOCKED over what happened?


Why didn't you morons express shock when the prices went up so high?

anon1137 said...

ATM Mortgage, that's an appropriate name for a 21st century American mortgage company.

River Islands, take a tip from John Saca and Calpers and start building a nice fence around your underground infrastructure.

Rob Dawg said...

Gee, and the SoCal TV stations have been "flooded" with a "delige" of California Water Crisis commercials at the same time. Coincidence?

SacramentoCrash said...

Sennett Swift:

Not Swift enough baby!

SacramentoCrash said...

ATM Mortgage:

What an appropriate name!


Sittin' Out This One said...

Liberty One Mortgage...Wow...They ran an add in the Sacramento Bee in April. They advertised buying foreclosures and getting $50-$100,000 back at closing.

A friend of mine called me about the add, asking if this was legit. He said Liberty could put him into some JTS homes and get him $150,000 cash back at closing. Liberty offered to broker the house sale, arrange the financings (including an immediate refi with cash out) and , then manage the rentals for him. They wanted some pretty steep fees, but they represented they were a JTS preferred lender!

The adds in the Bee listed Jerry Castano as the branch manger and the broker number was listed as CFL 605-3155. It all seemed very fishy at the time. I think CFL means Consumer Finance License. I think it really means they Can Fleece a Loser!

I suggested he call the FBI and relate the story. I guess he did and now another "reputable lender" gets to be a tenant, instead of a landlord. Of course it will be in a very exclusive gated community……all expenses paid!

Gwynster said...

This is shamelessly reposted from my post on HBB and I'm going to plaster the blogosphere with it >; )
I’m finally seeing a servicers reduce prices in Sacramento. It’s not enough yet but it’s a start. What they haven’t come to grips with is how much we have overbuilt.

Sacramento county 2000 vs 2006
Pop. 1,223,499 - 1,374,724
Median house price 143,851 - 387,000
SFR housing units 474,814 - 542,527

So if I egregiously take the average between
median household size (2.7) and median family size (3.30) and WAG it, the typical house in Sacramento is occupied by 3 people. That means we needed 48,108 new units (MFR & SFR) and we built 67,713. So whoever can sell fastest wins and there will be 20k extra chairs left over.

And this is just Sac county, add in Placer, El Dorado, and Yolo counties and you have a whole world of hurt. This is almost rust-belt worthy hurt too.

As someone on the HBB pointed out, the 20k overbuilding is almost the same number at what's on the MLS. Pretty interesting stuff

Emjoy SMF >; )

Sac_Sol said...

Interesting Gwynster. I think those numbers expose as lies the current claims that rents will soar as a result of people losing their homes. There simply aren't enough families to fill all of these homes, and rents will remain soft as a result. Good news for those of us saving up a down payment for when it is reasonable to buy again in 3 to 5 years

smf said...

"Enjoy SMF >; )"

Yes, indeed!

I saw that a little too late to respond, but it pretty much proves what I have said for a long time.

Imagine the overhang in the entire US, or the world, from all the excess construction.

And of course, you can't easily get rid of housing (unless you demolish it) inventory. It takes a looooong time to create a family.

Thescrounger said...

I guess he wasn't so "Swift" after all.

Gwynster said...
This comment has been removed by the author.
Gwynster said...


Add to that the upcoming decline in population as the boomers retire and pass away.

We currently have a tightening in the rental market as the volume of vacancies related to resale homes increases. This is temporary and should disipate as home prices retreat, mass retirements occur, and outmigration take a huge bite out of demand.

smf said...


Couldn't have said it better.

As I have said, prior to about 2000, I could not find any immigrants in a construction site. Last year, I went to one site where at least 50% of the workers were immigrants.

How many of these workers bought homes during the boom? How many would rather go back with a little money than get saddled with a large equity loss?

(All this info comes either from personal or second person knowledge, but all from my office)

Just take a look at the population figures from the Bay Area. Stagnant population growth but rising house prices?

As to overall US population growth, a quick search for numbers show essentially that population growth in the US is coming solely from immigration.

Noelle said...

We were the idiots who fell for the forecloser ad that Loan Shark Jerry Castano put in the SAC BEE. He and JTS builders took our $18,000.00 alright and then disappeared and we have no house and JTS counsel Ian Craig refuses to give us our money back!

I want to know, is Jerry Castano doing anytime in Jail?

JTS doesn't even want to go through arbitration to spend the lousy $6,000.00 that it will take to arbitrate.

We have a lawyer and I would just like to know if there are others out there that were stolen from and I think a class action law suit is in line.

Tim said...

SACRAMENTO--United States Attorney McGregor W. Scott announced today that SENNETT H. SWIFT, 25, of Sacramento, pleaded guilty today to bank fraud and money laundering. The guilty plea was entered before United States District Judge Lawrence K. Karlton.
This case is the product of a joint investigation by the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation.
According to Assistant United States Attorney Matthew Stegman, who is prosecuting the case, SWIFT defrauded two homeowners and the corresponding lenders by fraudulently refinancing the two homes, the goal of which was to receive the substantial loan broker commissions. To accomplish this fraud, the defendant solicited the two homeowners and falsely told them that they would receive loans with favorable terms, such as a low adjustable rate that would not increase above a certain rate cap. He also falsely led the homeowners to believe that their prepayment penalties on their existing mortgages would be rebated by the defendant. Actually, SWIFT knew that the rate caps were higher than promised, and there would be no rebates. Additionally, in one of the cases, SWIFT submitted a forged loan application with forged documents to the lender without the knowledge or consent of the homeowner. In addition, the loan application contained false statements regarding the eligibility of the homeowner for the loan, such as wages inflated above her true wages.
The defendant is scheduled to be sentenced by the Honorable Lawrence K. Karlton on
March 25, 2008, at 9:30 a.m. The maximum penalty for bank fraud is 30 years in prison and a fine of up to $1 million; for money laundering it is 10 years in prison and a fine of up to $250,000 or twice the value of the money laundered, whichever is greater. However, the actual sentence will be determined at the discretion of the court after consideration of the Federal Sentencing Guidelines, which take into account a number of variables, and any applicable statutory sentencing factors.
The charges are only allegations and the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.