Do I think Lenders have changed their stripes? Not yet if this is an example of what is going on. I checked on a condo sale I found in the Miami Herald today. Manuel paid $490,000 ($385 per square foot) in January ‘08 for a condo on the 5th floor. He financed $465,500 with a 30 year mortgage from HSBC Mortgage Corp.
There are at least 13 foreclosures in the building (condos owned by various banks). I only checked on about 84 properties out of 352. I am sure there are more. I did find one property that went for $325 a square foot but the price our buyer paid does seem to be somewhat in the ballpark price of what is selling in this particular building (the low floor of Manuel's unit is a concern). Note this high-rise does a have a very bad view corridor on one side, overlooking an overpass, so I would expect fluctuations depending on view.
The seller bought this 1,271 square foot, 2/2 in ‘06 (it appears to be pre-construction) for $369,000. So the seller did really good in a bad market: A $121,000 profit by selling to Manuel at $490,000.
What disturbs me about my research, Manuel only put $25,000 down, a bit more than 5%. I would say the banks/lenders are still rolling the dice. This condo property could easily drop another 5% to 20% in this market and it wasn't exactly a bargain.
Also it appears Manuel also owns an additional property, purchased in 10/06 for which he paid $178,525. He holds two mortgages on that property totaling $178,505. Just about 100% financing. Thus, this owner is holding a debt of about $644,000 with the 3 mortgages. I compared signatures, and all 3 mortgages are to the same person. I wonder if HSBC checked?
15 comments:
This deal sounds like the lender is nuts to have financed this. More of the same. You would think they would have learned a lesson.
And the band played on...
copacabana-
When I read this blog, bikini's ain't in the picture. Corruption, yes. Incompetent government oversight, you bet. Greed exposed? Absolutely! Bikinis? Not so much.
Maybe you should post something compelling about bikinis in your own blog,instead of trolling popular blogs to get traffic to yours.
I'm just sayin'.
If she drops her bikini I will look at her picture. Back to facts. I have taken all my money out of HSBC bank. They are either very! stupid are very dishonest. The deal as described is bad from the start.
Monica is a paid poster. She gets paid for driving traffic to a site.
i removed the bikini post if any of you are wondering where it went. We don't take ads on EonM
Thanks, GoD... I can read the Miami Herald Sports pages if I want to read girlie ads!
A drop of 5-20%? You're pretty optimistic. I would say 50+% easily. This whole deal smells like fraud. Nobody in their right mind would pay that kind of money in that kind of market.
This smells of mortgage fraud. Sure, it LOOKS like the seller made over $100K in profit selling to Manuel, but the truth is, they sold it for much LESS - Manuel CASHED OUT the $100K+ and won't pay a cent back to the back (this obviously makes the "mortage loan amount" seem high like it is) Sure it forecloses, but who cares? Manuel got his $100K... and the seller probably got his money back or only at a slight loss. Odds is, the seller doesn't even know it.
Of course, this is all just speculation - but you got to wonder WHY Manuel would have paid that much money to a condo that you know will continue to lose value? it makes no sense whatsoever. What else are we to assume? The Manuel is filthy rich and like to throw away money? YEAH RIGHT.
With all the billions going down the drain, early last year, you would have thought that the message would have gotten out through the lending/ banking industry to prevent loans that are such clear indications of fraud from happening, in November.
What are the bankers doing, anyhow? Are there any banking regulators left, or, are they all checking luggage at the security gates of our airports?
My concern, writing this post --
When I saw the sale in the paper, my internal red flags went up. That is why I did some digging.
Why don't the lenders -- who are trained -- do a little digging. They are still writing loans that seem questionable at best to the average Joe (me).
And what about the appraisal? I would love to see the appraisal on this condo.
When you eliminate the impossible, the improbable must be true.. and therefore this does seem like fraud. The question is do we try to flag this to someone who can track this - or just leave this to the stellar HSBC bank authorities or let our the smooth running anti corruption task forces at the FBI or perhaps bring in Home Land Security. Please note that some of this comment is rhetorical
"Why don't the lenders -- who are trained -- do a little digging. They are still writing loans that seem questionable at best to the average Joe (me)."
Same reason builders keep building. Banks have enormous overhead in staff, facilities and debt that they have to pay for with servicing fees and loan interest. If they aren't making loans they go out of business. Sure this is probably a bad loan, but they have to take a risk to get some cash flow.
People always wonder why all the big banks jump together into crazy schemes. They have to! If they're not in, all the money flows to those who are, and they'll be forced out of business.
Big booms, nutty risk taking and big busts are always the end game of unregulated capitalism. But if you know how to game the system, you can make a killing.
Countrywide is still offering no doc loans with 5% down for those with decent FICO scores. This thing will never end. Properties will continue to depreciate for years to come.
Thanks for this post. This is actually something that surprise me everytime I see a new example.
This is purely mortgage fraud. Period.
How come the lenders can't spot that? Where do you see anybody making a profit in today's market with a pre-construction. And that much profit ?
Why the lender doesn't contact right away the authorities, with the names of the appraisr, the mortgage broker, the buyer and the seller, and the buyer's real estate agent. I am not sure of the seller's real estate agent, but the buyer's real estate agent is part of the scheme. I will not let my buyer buy a place at this price when I know that you have better opportunities in the same building.
Mortgage fraud, and I hope that someday there will be a class action against the lenders because they could have spot that very easily.
FD @ Condo Hotel South Beach
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