In the same building I reported on yesterday, February 10th, I found another deal that has me wondering: What the hell are the banks/lenders thinking? In light of liar loans, and massive foreclosures, you would think lenders would have changed their spots.This time we have Salvador who bought two condo’s in a building (reported on yesterday) in the condo canyon area of Aventura, Florida with many foreclosures. Salvador bought a 910 square foot condo on the 10th floor, directly from the developer for $438,666, He bought it in October ‘07 and got a mortgage from Wells Fargo Bank 11/14/2007 for $416,693. He put $22,000 down (about 5%).
For the second condo, on the 18th floor, he paid $535,000 on 1/9/08, again it is 910 square feet! It previously sold 12/10/07 for $350,900. That is a tidy profit of $184,100. Since these two sales were so close in date, you might think the first sale should serve as a comp by appraisers for the second sale. Didn’t happen did it? Salvador got a loan for $417,000 from Mortgage Company Q Financial Direct out of Coral Gables, Florida. The mortgage is for $67,000 more than it sold for the previous month. Salvador put $118,000 down (about 20%). It seems like he paid top dollar for this small unit, $540 a square foot.
I hope Salvador makes a big salary. He has $833,693 in mortgages to pay. I also hope the market doesn’t drop considerably because the lenders will soon have massive 2008 foreclosures to contend with! They should know by now to keep a tight grip on loans, checking them with diligence in this new year.
17 comments:
Sheer stupidity by both parties involved.
Just out of curiosity---how is this the fault of the Bush administration, as other posts on the blog have stated, and how can our Government, short of policing our nation's banks lending and underwriting policies avoid this type of disaster in the making.
Serious question...what is the answer?
I did not blame Bush, that is Gimleteye territory. I just post the facts. You can make your own conclusions. that said -- It does seem pretty obvious that the savings and loan problems and this massive foreclosure problem happened when the same party was in power-- the same party that also increased the national debt by epic proportions (not mentioning which party that is)
Genius
No one is blaming you or gimleteye about blaming Bush, I said posts in general which includes readers. Come on there is plenty of Bush bashing that goes on here. My question is still unanswered. Who has the solution??? What is the solution???
We need some arrests to stop the bad behavior:
Perhaps Loan officers, appraisers, and lying scum people, etc.
If there are no consequences, they won't stop.
How about for once a buyer who fraudulently fills outs his loan application declaring various lies about income, other loans, etc. be prosecuted??? How about some people doing bogus appraisals?
How about public stonings, castrations, cutting off hands, among others. We need some real serious and get tough action here.
I like that: public stoning should do the trick.
Actually it is the realators who set up all the fake info.
How about forced labor camps so they can make good on the damage they caused. Chain gang should do the trick.
Seriously, the above deal smells of fraud. The government could force Fannie & Freddy only to accept loans that involve a 20% or 30% downpayment and zero other debt on the property. As part of the transaction the property would be marked ineligible for other debt except judgements. That would keep the HELOCs an other chenanigans at bay. The way appraisals are done needs to be changed. There's a pool of state certified appraisers. Once an appraisal is ordered one of the appraisers gets the job. Nobody knows ahead of time who gets the job. The bank could also do their job by having their own in-house appraiser.
I am sure they wouldn't be in a position to loan $417K on a 910 sqft condo.
In 1992 I had a no income check loan in Miami. I had to be working, they just didn't check it. But I had to put down 30%. The more you put down, the more lenient they were back then. But even with 30% down, they checked everything back then.
The answer is easy. The government should pass a law that does not let people get a mortgage for any more than 3x their income. Problems solved.
The answer is even easier than that. The government should do nothing and let every person involved take the financial hit directly. Nothing hurts so much as a sharp punch to the wallet. Have banks take some big losses and they'll change their tune pretty quickly about loaning to those who can't afford them.
These industries said "Let capitalism work--keep big govt out of our lives," when they were riding high on their schemes. But when the PREDICTED crash came, the industry cried louder than any consumers for a bailout by the Nanny Govt. I say let anyone except those who can prove they were victims of fraud suffer the consequences. That goes for everyone from buyers to lenders, to home builders and investors, etc. I blame the industry MOST because they had the knowledge and ability to stop the insanity in its early stages, and certainly KNEW what the end result could be. Consumers may have sometimes been stupid but for the most part it was the industry that knowingly committed fraud.
Anonymous,
No, not regulate. Just narrow the contracts that the government is obliged to enforce.
The government is already not bound to enforce all contracts. If you sign a contact to sell your kid's labor to me for $100 a month, or charge me 100% interest, or make me sign something under duress, the government will not enforce the contract.
Similarly there needs to be a narrower role of government in enforcing mortgage contracts that don't meet criteria that are good for a society.
e.g. Sure you can lend that guy $1M dollars to buy a house, but unless you can demonstrate good faith effort to validate income of $200K, and required 10% down, we will not be bound to enforce terms of foreclosure.
This is an obvious scam. The bank, the real estate agent and the buyer and all in on it folks !Salvador is an illegal immigrant involved in an equity striping/cash back scheme. The first house he bought as a straw buyer using a fake social and then, with the magic of an inflated appraisal, the bank, the real estate agent, the appraiser and the straw buyer get cash back and the bank gets the stink loan off the books. Notice how he paid $66,000 more than the same unit which sold for $350,900 a month later? The next condo he bought was the same scam all over again. I woulb bet huge $$ that Mr. Salvador is long gone and both condos will soon be forclosed on.
Wake up Miami !
What a joke !
I want to see Bush & Chaney in orange jumpsuits!
hyperion 380 --- it sold for $350,900 a month EARLIER not later. A month later it was $535,000
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