Archive for December, 2007
December 26th, 2007
This from the AP.
“US home prices fall by a record in October for 23rd straight month of deceleration”
BY STEPHEN BERNARD
AP Business Writer
NEW YORK — U.S. home prices fell in October for the 10th consecutive month, posting their largest drop since early 1991, according to a key index released Wednesday.
The record 6.7 percent slide in the Standard & Poor’s/Case-Shiller home price index also marked the 23rd consecutive month that prices either fell or grew more slowly than the month prior.
“No matter how you look at these data, it is obvious that the current state of the single-family housing market remains grim,” said Robert Shiller, who helped create the index, in a statement.
The previous record decline was 6.3 percent, recorded in April 1991. The index tracks prices of existing single-family homes in 10 metropolitan areas. It is considered a strong measure of home prices because it examines price changes of the same property over time, instead of calculating a median price of homes sold during the month.”
December 21st, 2007
The Associated Press picked its top 10 business stories and the crumbling housing market was No. 1.
Here are the top 10 stories of the year in business.
1. HOUSING CONTAGION
2. RECORD OIL PRICES
3. TOY RECALLS
4. FED MOVES
5. DOW 14,000
6. DOLLAR FALLS
7. CHINA AND INDIA ECONOMIES ROAR
8. ETHANOL BOOM
9. BANK CEO EXITS
10: UAW HEALTH DEALS
December 20th, 2007
It’s been a tough year in the real estate industry. Sales are down, fraud cases are up, real estate agents are dropping out.
It’s a tough year to be a real estate reporter. There’s almost too much out there to try to chase down and, of course, you can’t make everyone happy.
Last week, the heads of several real estate companies came in to the paper for a chat. Among the points, the Register Star has been too negative in its coverage. They even had a list of positive news that we may have missed. Fair enough.
On the other hand, I occasionally get emails from readers who complain times are much worse than the statistics from the Rockford Area Association of Realtors indicate. The most persistent has been Russ Milano of Rockford who believes we need to dig deeper into the average price of houses in the area. He believes it paints an incomplete picture.
Shortly after the new year, RAAR releases a final year end report that breaks down real estate sales by area. It also includes average price, days on market and what percentage of list price sellers received.
That last statistic may be the key to answering Milano’s question. With so many subprime buyers out of the market, the reason the average price may have remained flat could be that a larger number of houses that in the past would have moved for above the average price were being sold at a discount.
December 19th, 2007
A Rockford Realtor was sentenced to 20 months in prison Wednesday afternoon for his role in falsifying documents to help Hispanic families qualify for loans backed by the United States Federal Housing Authority.
Cesar Arenas was the fourth person sentenced in the five-person mortgage fraud ring that operated from 2001 through 2003 and the second to receive prison time. Rhonda Torossian, the loan officer in the scheme was sentenced Monday to 20 months in federal prison.
The Arenas sentencing took place just a few hours after the U.S. District Attorney’s office announced three more people were indicted for mortgage fraud in a separate scheme that ran from 2002 through 2004.
At Arenas’ sentencing, Assistant U.S. Attorney Scott Verseman argued the native of Colombia deserved prison time rather than probation, which two people in the ring received, as a deterrant because “the number of cases we’re prosecuting shows mortgage fraud is widespread in this community.”
Arenas’ attorney, Christopher Taylor, argued that Arenas should receive probation or, at the very least, less prison time than Torossian. Whitehead Inc. Realtors, the real estate company that holds Arenas’ license, even submitted a letter saying it would give Arenas a job other than selling real estate so that he could pay restitution.
“He didn’t do this to enrich himself. If you look at the amount he received in commissions, it was something like $17,000,” Taylor said. “That was less than 10 percent of what he made in those years. He genuinely felt he was doing this to help people. It just wasn’t very well thought out.”
Arenas pleaded guilty in September to recruiting two owners of a local business to sign false employment verification forms and bogus credit letters to make it appear his clients had income to make payments and a good credit history.
Instead of helping, though, of the 19 loans Arenas helped provide false documentation for, 14 of the families already have lost the houses through foreclosure and a 15th is in default. All of the loans were to Latin American custormers. Versemann estimated the U.S. Housing and Urban Development has lost more than $330,000 on the loans, including attorneys fees.
U.S. District Court Judge Phillip G. Reinhard said instead of helping, Arenas benefitted from the commissions he received and hurt the families involved and the neighborhoods where the houses were sold. He also said he considered Arenas as culpable as Torossian because he recruited business owners to take part in the scheme and all they received “was a felony conviction.
“I do give (Arenas) some benefit of the doubt that he was trying to help Latinos,” Reinhard said in the hearing. “In fact he was placing them in a position they couldn’t win.”
December 19th, 2007
A Rockford loan officer and two others were charged today with generating thousands of dollars in commissions by faking documents to get unqualified families loans backed by the Federal Housing Authority.
Mitchel A. Fuchs, 40, also known as Mike Fox, was charged with mortgage fraud in a 14-count indictment. Also charged were 25-year-old Jessica L. Gibson of Loves Park, who was Fuchs’ mortgage loan processor, and Frank G. Anast, 58, of Rockford, who was self-employed in computer work.
The indictment alleges the fraud ring operated from at least 2002 through October 2005 at both Mortgage Solutions, where Fuchs worked from 2002 through 2004 and then at Leader Mortgage.
The announcement by the United States Attorney for the Northern District of Illinois is just the latest in a series of federal mortgage fraud cases in Rockford that shows at least a small part of the real estate boom of the 2000s was based on shady business practices. The number of homes sold locally and nationally set records from 2002 through 2006, but 2007 has been defined by the record number of foreclosures resulting from lower lending standards of the past few years.
Realtor Cesar Arenas is being sentenced today for his part in a five-person mortgage fraud ring where all involved have pleaded guilty. So far, two have received probation and Rhonda Torossian, the loan officer in the ring, was sentenced to 20 months in federal prison and fined nearly $500,000.
In May, Rockford’s Frank Mazzarese was sentenced to four years probation and ordered to pay more than restitution for mortgage fraud. Marie Caltagerone, a Rockford accountant who pleaded guilty to providing Mazzarese fraudulent employment verification forms has yet to be sentenced in this case.
In July, Roscoe’s James L. Boyle pleaded guilty to making false statements to ensure the United States Housing and Urban Development department ensured a loan. Boyle will be sentenced next March.
Also in July, Raymond S. Talan of Caledonia was charged in a 10-count indictment alleging fraudulent documents to qualify borrowers for FHA loans.
In the Fuchs case, which was announced this morning, the U.S. District Attorney alleges:
* Fuchs created fictitious cashier’s checks and bank checks to give the appearance his customers had invested their own funds in the properties they were buying.
* Fuchs paid Anast to create fictitious pay stubs and W-2s for Fuchs’ loan customers.
* Fuchs and Gibson altered pay stubs and W-2s for other customers, changed credit reports and created fake investment statements.
According to the indictment, the scheme puts several commercial lenders at risk of losing hundreds of thousands of dollars.
Fuchs faces thirteen counts of wire fraud and one count of interstate carrier fraud. Anast faces eight counts of wire fraud and one of interstate carrier fraud. Gibson is charged with four counts of wire fraud and one of interstate carrier fraud.
Each count of wire fraud and interstate carrier fraud carries a maximum penalty of up to 30 years in prison and a fine of $1 million.
December 18th, 2007
A former Rockford loan officer was sentenced to 20 months in federal prison and fined nearly $500,000 for her part in a five-person mortgage fraud ring that ran from 2001 to 2003.
Rhonda Torossian, 46, of Rockford was sentenced today in federal court. She was the third of the five to be sentenced and the first to receive prison time in the scheme where the group falsified Social Security numbers, created fraudulent employment verifications, bank checks and credit letters so families could receive mortgage loans insured by the Federal Housing Authority.
The FHA-insured loan program helps low and moderate income families receive mortgages by promising lenders that the U.S. Department of Housing and Urban Development will reimburse the lenders if the borrowers default on the loans.
The final two in the ring, Realtor Cesar Arenas and Torossian’s assistant, Nancy Rodriguez, will be sentenced Wednesday and Friday.
The group was charged with 35 counts in August. Torossian was a loan officer for Prism Mortgage, which was changed to RBC Mortgage, at 4960 E. State St. She pleaded guilty Sept. 4 and admitted to putting fraudulent Social Security numbers on documents sent to the U.S. Department of Housing and Urban Development, directing Rodriguez to create fake bank checks so it appeared as if buyers could pay the 3 percent equity required.
She also admitted to knowing that Arenas had asked small-business owners, including Raul Raygoza and Israel Quintero, who owned a small furniture store, to sign false credit letters and fake letters of employment for prospective buyers.
Torossian’s 20-month prison sentence does not have the possibility of parole and she will have to serve three years of supervised release after her stay in prison. She was fined $476,257.71 and ordered to pay restitution.
December 17th, 2007
OK that’s overstating it, but I received notice that my hearing challenging my home assessment is Jan. 7.
If you’ve never been through the process — and I haven’t — you receive a pretty purple pamphlet giving you rules and deadlines. I have to turn in my new evidence that Rockford Township over-assessed our house five business days before the hearing. I also can ask for the township’s evidence that the house was assessed correctly.
I like to argue but apparently won’t have much time for it. Each hearing is scheduled for just 15 minutes.
December 7th, 2007
ROCKFORD — A Rockford Realtor and two others are scheduled to be sentenced the week of Dec. 19-21 for their roles in a mortgage-fraud ring that ran from January 2000 through September 2002.
Cesar Arenas, 43, pleaded guilty in federal court Sept. 21 and faces a maximum sentence of five years in prison, up to $250,000 in fines and restitution for his part in generating real estate fees by falsifying records so unqualified buyers could receive Federal Housing Administration — FHA — insured loans.
Arenas was the last five people in the ring to plead guilty. Raul Raygoza, 37, and Israel Quintero, 40, both were sentenced to five years probation. Raygoza was ordered to pay $149,227.49 to the U.S. Department of Housing and Urban Development and Quintero was ordered to repay $121,346.62.
Rhonda Torossian, 45, is scheduled to be sentenced Dec. 17 and Nancy Rodriguez, 35, will be sentenced Dec. 21.
To receive an FHA insured loan, buyers must have a valid Social Security number, sufficient income to make payments, meet a minimum credit level and invest 3 percent equity into the house.
In his plea, Arenas admitted:
* He created fraudulent check copies to give the impression his clients could make the 3 percent down payment.
* He asked Raygoza and Quintero, who owned a small Rockford furniture store, to sign bogus “Verifications of Employment.”
* He submitted, thanks to documents from Raygoza and Quintero, false pay stubs, W-2s and credit letters.
Torossian was the loan officer for the transactions and Rodriguez was her assistant.
December 5th, 2007
Tax time is coming and the Illinois Real Estate Lawyers Association sent out a news release to remind homeowners not to forget to file for available exemptions.
The most common is the homeowner’s exemption. If you live in the house you own, it generally lowers the equalized assessed value by $5,000.
Those 65 and older are eligible for a senior citizen exemption, which drops the EAV by $2,000 to $3,500, depending on the county you live in.
Seniors who make less than $45,000 and meet other qualifications may qualify to have their assessment frozen. You have to file a form every year for this one.
The last one interests me. Homeowners who make improvements on their home may qualify them from having their home being assessed for four years on the first $45,000 in improvements. Again, I’m spending about $40,000 to repair damage from the August 7 flood. Some of it is basic repair, some of it is improving the furnace, putting in a new door and a new ceramic tile floor rather than carpet — to protect against the inevitable next flood.
If you are unsure whether you qualify for any of these exemptions, the IRELA offfers a free lawyer locator service on its site at www.irela.org. If you don’t have access to a computer you can call 847-593-5750.
December 3rd, 2007
Sales of homes and condos by Rock River Valley Realtors hit the lowest total for a November since 1991.
Last month, area Realtors sold 368 homes. That was down 33 percent from the 550 sold in November 2006 and more than 40 percent off the November record of 617 in 2004.
It marked the first time Realtors sold fewer than 400 houses in a November since 1998, when they sold 388 homes and condos. It was the lowest total for a November since 1991, when Realtors sold 308 houses.
After several years of record sales fueled by lowered lending standards, the nation is in the grip of a sales slump that threatens to push the economy into a recession. Lenders, burned by a record number of foreclosures nationally, have significantly raised credit standards, keeping many families out of the market.
What’s hurting the market locally, says Tony D’Agostino, president of CMF Mortgage Co. in Rockford, is the perception that the housing market is down more than the fact that prospective buyers aren’t qualifying for loans.
“People are just laying low, holding off,” he said. “It’s not like we have a lot more people trying for loans and having problems getting them. We just aren’t getting very many people even applying for loans.”
D’Agostino, who has been in the lending business since 1958, said this is the most abrupt downturn in the housing industry in his career: “It is from the sense that it happened so fast.”
Although locally the highs weren’t as dramatic and therefore the pullback not as severe, November’s sales figure was perhaps the weakest in 2007, a year in which home sales are running more than 18 percent behind 2006’s.
With so few houses selling, the average time houses are sitting on the market was 90 days in November. That’s nearly two weeks longer than it took to sell homes in November 2006 and 29 days longer than in November 2005.
Some frustrated sellers responded by pulling houses off the market for winter. The current listings fell to 3,371 at the end of November, down from 3,462 in October. It marked the first time in 2007 that the number of listings didn’t increase from the previous month.
The only positive out of November’s home sales reports was average price. The 368 houses and condominiums sold for $150,249, up nearly 2 percent from last November’s average of $147,474. Interestingly, the higher average price didn’t receive much of a boost from new construction. Many builders, hoping to clear out unsold properties, are offering discounts or incentives. In November, builders sold 81 finished units for an average of $182,358. That was the lowest monthly average for new construction in 2007.
On the other hand, the average sale price for previously owned homes was $141,188, which was nearly 6.5 percent above last November and is an all-time monthly high in terms of average price for existing homes.
