An Eye on Miami Investigative Report: Lennar and Shoma New Homes can be purchased with less than 2% down! I looked at Lennar Corp’s Miami Dade County records for deed transfers for a one month period from September 15 to October 15th. In 2005 there were 216 records, in 2006 there were 245, in 2007 there were 77 and, finally, in 2008 there were 25 recorded. Did that low volume make them desperate enough to sweeten the deal with little down, to the detriment of good business practices that they should have developed in light of the housing market crash? Lennar said, September 23rd, that its sales in the third quarter plunged more than 50 percent.
Out of the 25 sales Lennar recorded, 5 didn’t appear to have a mortgage. Out of the 20 left, Lennar’s Mortgage Company, Universal American Mortgage, LLC, wrote 16 of the loans and 4 were financed through other lenders. Out of the 25, 14 put less than 3% down. In fact, 12 put less than 2% down and one, with a VA rider, put down zero according to County records.
I also found the same low down payments at Shoma Homes. I researched home sales for two months, August and September ‘08. I found that of the 7 deed transfers, almost all had downpayments below 2%.
There were women buyers that were buying by themselves but they got the mortgages with their husbands. Was that because they needed to be “First Time Homebuyers” to get perks towards downpayments because their husbands had owned homes before?
Additionally, in our investigative report on low credit scores still getting you a mortgage, we noted that a recent call to Lennar had yielded news that they used the Nehemiah Assistance Program. Nehemiah is a non-profit which Lennar uses to assist homeowners with downpayments. The Nehemiah website states: “When you partner with Nehemiah, you can advertise your homes as having downpayment assistance available.” Loan Guy said of the program on our blog: “It is essentially the developer "granting" the "charity" funds which are then turned over to the buyer to make a downpayment. It's legal, but grey in it's ethics.” The Columbus Dispatch said of this practice in 2006:
“Federal law prohibits home builders from helping customers directly with down payments. For years, however, builders have partnered with charities to funnel money to buyers. The IRS is examining 185 such charities, which have helped hundreds of thousands of people buy homes with government-backed mortgages.” And this Dispatch quote is the crux of our argument:
“Buyers receiving seller-funded assistance default at a higher rate on FHA mortgages and expose the government insurance fund to unsustainable risk, according to studies by the U.S. Department of Housing and Urban Development and the Government Accountability Office.”
It is bad enough to see 2% down in this market with massive foreclosures (Florida is ranked second highest in the nation) but one has to wonder how many of Lennar’s 20 buyers, and Shoma’s 7 buyers, got their downpayments through one of these Nehemiah type non-profits, and actually didn't put anything down at all. Have we not seen enough foreclosures? Why are we inviting still more in late 2008 with either meager downpayments or wacky ways to skirt downpayments altogether?
Following is background info, if you need to see my research on the 20 loans:
1. 1.5% down - Sandra and Maria on October 7th 2008 paid $283,000. They got a mortgage for $279,303.00 from Universal American Mortgage. $3,697 down.
2. 1.8% down. Yury bought on October 7th 2008 for $217,166. He got a mortgage for $213,232 from Universal American Mortgage Company, LLC, Secondary Marketing Ops. $3,934 down.
3. 1.8% down. Luis and wife Carla on October 7th 2008, paid $259,000 and got a mortgage from Universal American Mortgage Company, LLC for $254,289. They put $4,711 down.
4. 19.4% down. Vivian on Nov. 7th 2008, paid $270,166 and got a mortgage from Universal American Mortgage Company, LLC $226,243 mortgage. They put $43,923 down.
5. 0.82% down. Alina et al on October 2nd 2008, paid $217,166 and got a mortgage for $215,379 Universal again. They put $1,787 down.
6. 2.34% down. Charles on October 2nd 2008, paid $285,000 and got a mortgage for $279,905 from Universal. He put $5,095 down.
7. .53% down. Enrique and Nicanor on October 2nd 2008, paid $261,166 and got a mortgage for $259,760 from Q lending Inc. Mers and put $1,406 down. In Nov. 2002 Nicanor was granted a chapter 13 Bankruptcy to strip his homestead of a lien by Household Finance Corporation, III. It was recorded 6/25/07. He signed an affidavit stating he did not file for bankruptcy but the signature appeared to match.
8. “0” down. Gerardo on October 1st 2008 paid $240,000 and got a mortgage for $245,160 from J.P Morgan Chase. VA rider.
9. 8.8% down. Henri on September 30th 2008 paid $225,000 and got a mortgage from Mers. Q Lending Inc. $205,031. $20,000 down.
10. 1% down. James E. on September 30th paid $264,233 and got a mortgage from Universal for $261,477. $2,856 down.
11. 1.5% down. Emmanuil on September 26th 2008 paid $272,000 and got a mortgage for $267,757 from Universal Mortgage. $4,243 down.
12. 19.99% down. Dave in September 2008 paid $261,666 and got a mortgage for $209,350 from Universal American Mortgage. $52.316 down.
13. 10% down. Diana in September 2008 paid $285,000 and got a mortgage from Universal for $256,500, $28,500 down.
14. 1.3% down. Zuriak on September 25th paid $252,333 and got a mortgage for $249,033 from Universal. $3,300 down.
15. 1.3% down. Ana in September 2008 paid $231,500 and got a mortgage for $228,479 from Universal. $3,021 down.
16. .53% down. Ahmed on September 23rd 2008 paid $280,000 and got a mortgage from JP Morgan for $278,489. $1,511 down.
17. 2.07% down. Victor in September 2008 paid $346,000 and got a mortgage for $338,833 Universal. $7,167 down
18 1.29% down. Merci (Roberto) in September 2008 paid $226,333 got a mortgage for $223,392 from Universal. $2,941 down.
19 .83% down. Ronnie and Suanne in September 2008 paid $285,400 and got a mortgage from Universal for $283,028. $2,372 down.
20. 19.99% down. Gradany in September 2008 paid $322,166 and got a mortgage from Universal for $257,750. $64,416 down.
Note: This information is from Miami Dade County public records. Disclaimer: I do not have a fact checker.
3 comments:
This is crazy! Why would they give loans like this...
This is crazy. We are going to bail out people foreclosed on. And here we are creating a situation where we will have MORE people headed for foreclosure. This is an outrage! We can't bail out people forever. These builders have to do what's right for the country instead of their bottom line.
I am speechless. Nope other readers who left comments, it is not "crazy." It is criminal.
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