Austin Real Estate Blog

Getting a divorce is a trying time for all involved. Of course you, the spouses, suffer enormously as living and financial arrangements undergo an earthquake of changes all geared toward that final split of the legal marriage bond and all that it entails. But remember that family and friends suffer too. And often mistrust and increasing hostility pervades the relationship to its Court Ordered end.

I know it is a hard thing to accomplish, but if there is any way possible, you should make every effort ( and I mean every self effacing, deprecating, conciliatory effort known to mankind) to part as friends. Why??? The reasons are numerous.

One: for your own well being. Hate, revenge, retribution, disgust, despair and general enmity are as destructive to your physical and mental state as fast growing brain cancer cells. Whatever caused the divorce, whoever is at fault, whether you wanted it to happen or not, once the decision is made, even if it is not a joint decision, try to accept that this is an unexpected and unpleasant curve in the roadway of your life, but that your life will go on. And going down life’s path happy and reconciled with the past is way better than being sad, bitter, remorseful and angry. Also life is just easier when you’ve chosen dignity and respect over negativity.

Two: for your family (and I include friends in the definition of family here). While a marriage between two people can be dissolved and the finances and property split, a family created by the birth of children can never be split. The blood tie and usually the emotional connection are forever. So, remain friends with your ex because it is the best thing you can do for the betterment of the lives of your family - children, parents, grandparents, friends, pets, etc. Since a family unit cannot be split, don’t make people choose. And remember, you two can be an extraordinary example to your children of how to manage difficulties in life, if you remain strong, co-responsible, cooperating, loving parents to your children.

Three: for your business and financial aspects of life. Bank accounts, pension funds, investments, stocks, bonds, 401Ks, insurance, taxes, title to personal and real property. Rarely are all of these things effectively split or paid for and all paperwork resolved before the divorce is finalized. Therefore, some ongoing contact between former spouses is inevitable and cooperation between them absolutely necessary to tie up loose ends and protect the best interests of the finances of each.

Let’s focus on real estate. That is usually the largest investment people have in life, generally in the context of home ownership. A well handled divorce in Texas will result in a clear Divorce Decree or Property Settlement Agreement appended to the Decree that sets forth the legal description of the real estate and precise wording of awarding and vesting the title in one party and divesting the other of the title. Or the Decree or Agreement may leave them both in title, require a deed between the parties, or it may make requirements of sale with division of proceeds etc.

Unfortunately many divorces are not “well handled” when it comes to real estate. Some are incomplete and don’t cover all the property or make requirements for the future that are soon unrealistic because of change in market conditions or the health and circumstances of family members, etc. So having the cooperation of a former spouse to obtain a deed, or their signature on transaction documents, even many years after a divorce is a great benefit to facilitating real estate transactions.

Also the more acrimonious a divorce is, the more likely that mistakes will be made in proper submission of all necessary property or investments to the attorneys and/or the court, which of course won’t come up until one of the spouses is trying to sell or borrow money on the property in the future. Keeping it friendly during and after the divorce process is completed will result in a better outcome for everyone.

The real estate industry has long been susceptible to price inflation, fraud, and other unsavory practices. Making it illegal to coerce an appraiser would be a good thing, but I hope that most appraisers wouldn’t see that as a way out of talking and reviewing agent recommendations when there is an issue with an appraisal.

I’ve not had any problems with an appraiser doing that, but I’ve heard stories about appraisers not taking input. Lenders seem to be the culprit in most cases of coercion that I’ve heard of.

You can read the summary of the Federal Reserve Proposal below in the first quoted area.

Additionally, in the news recently, is an appraiser that is suing WaMu for breach of contract, unfair business practices, interference with her ability to earn a living, fraud, conspiracy and slander. The bank is accused of pulling business from an appraiser who refused to make the appraisals favorably to the bank. Man, o, man. That’s bad news for the bank. What do you think about inflated appraisal? Send us a comment and let us know.

Federal Reserve Proposal Addresses Appraisal Coercion
Excerpt from Appraisal Institute’s Appraiser News Online Vol. 9, No. 1, January 15, 2008

The Federal Reserve Board recently proposed prohibiting creditors and mortgage brokers from coercing real estate appraisers to misstate a home’s value on all mortgages. The announcement was part of the Fed’s December 18 proposed changes to Regulation Z (Truth in Lending), which would restrict certain practices and require certain mortgage disclosures to be provided earlier in the transaction.

…

In addition to prohibiting creditors and mortgage brokers from coercing appraisers, the Board also proposes to prohibit creditors from extending credit when creditors know or have reason to know, at or before loan consummation, that an appraiser has misstated a dwelling’s value. The regulation would apply to all consumer credit transactions secured by a consumer’s principal dwelling.

In its discussion on the topic, the Board said, “Pressuring an appraiser to overstate, or understate, the value of a consumer’s dwelling distorts the lending process and harms consumers… Inflated appraisals of homes concentrated in a neighborhood may affect other appraisals, since appraisers factor the value of comparable properties into their property valuation. For the same reason, understated appraisals may affect appraisals of neighboring properties. Thus, inflated or understated appraisals can harm consumers other than those who are party to the transaction with the inflated appraisal. Moreover, these consumers are not in a position to know of the practice or avoid it.”

The proposed regulation defines the term “appraiser” as a person who engages in the business of providing - or offering to provide - assessments of the value of dwellings.

The commentary to the proposed regulation gives examples of acts that would violate the regulation: implying to an appraiser that retention of the appraiser depends on the amount at which the appraiser values a consumer’s principal dwelling; failing to compensate an appraiser or to retain the appraiser in the future because the appraiser does not value a consumer’s principal dwelling at or above a certain amount; and conditioning an appraiser’s compensation on loan consummation.

The commentary also lists examples of acts that would not violate the regulation: requesting that an appraiser consider additional information for, provide additional information about, or correct factual errors in a valuation; obtaining multiple appraisals of a dwelling (provided that the creditor or mortgage broker selects appraisals based on reliability rather than on the value stated); withholding compensation from an appraiser for breach of contract or substandard performance of services or terminating a relationship for violation of legal or ethical standards; and taking action permitted or required by applicable federal or state statute, regulation, or agency guidance.

…

The Nation’s Housing

Appraiser’s Lawsuit Puts Lenders on Notice

By Kenneth R. Harney
Saturday, January 26, 2008; Page F01

Real estate appraisers have complained for years about demands from loan officers that they fudge and inflate numbers to allow mortgage deals to close.

Now a California appraiser has sued the country’s largest thrift institution, Washington Mutual Bank, charging that she was blacklisted for refusing to provide favorable appraised values despite declining market conditions.

The lawsuit, by Jennifer Wertz, comes just two months after the state of New York sued an appraisal management company, First American eAppraiseIT, for allegedly giving in to pressure from Washington Mutual to inflate property values for loan applications — contributing to mortgage-market losses. EAppraiseIT and LSI, a unit of Fidelity National Information Services, were also cited in Wertz’s suit as contractors to Washington Mutual.

Wertz said in her complaint that she began performing appraisals for Washington Mutual in 2001 and earned “in excess of $100,000 a year” from her work for the bank. But last May, according to the suit, a Washington Mutual manager upbraided her for describing local property values in an appraisal as “declining.” The manager “insisted that [Wertz] change her report to indicate ’stable’ conditions so that the loan could be approved.”

All the relevant data suggested otherwise, however, and Wertz refused. The manager then allegedly told Wertz that she would be banned from all further assignments from Washington Mutual if she did not cooperate. Wertz declined to do so — citing federal, state and professional rules requiring her to provide objective and accurate reports free of outside influence. According to the lawsuit, Wertz was then cut off from Washington Mutual business through the appraisal management companies.

Wertz’s lawsuit, filed in California Superior Court in Sacramento, charges breach of contract, unfair business practices, interference with her ability to earn a living, fraud, conspiracy and slander, among other alleged violations.

…

Here’s another possible case of someone with money and power (and in this case a whole lotta time) filing a lawsuit against someone because they don’t like what that person thinks. Yep, the excerpt below from the Miami Herald, summarizes the lawsuit that a developer filed against a real estate agent who blogged about his opinion of a development. The broker, in typical broker fashion, immediately dumped the agent and said they only want to show the positive news. If I were a client at that broker, I’d be out the door faster than (something really fast).

I for one hope the EFF or some other similar entity helps this poor agent out. He doesn’t deserve a guy using the American legal system as a weapon. See how others have abused our legal system for their own twisted often narcissistic purposes at www.iamlawsuitabuse.org. Suppor the Electronic Frontier Foundation and bloggers’ rights.

Realtor fired over Hollo blog post
BY PATRICK DANNER

Developer Tibor Hollo has filed a $25 million defamation lawsuit against a Miami real estate agent who blogged that the octogenarian went bankrupt in the 1980s and is headed for a fall with the upheaval in the condo market.

Hollo last week sued agent Lucas Lechuga and the Coral Gables brokerage Esslinger-Wooten-Maxwell alleging they have engaged in a smear campaign against him and his Opera Tower condo development on Lechuga’s Miami Condo Investments blog.

On Monday, the postings cost Lechuga his job.

”We just don’t condone making statements, especially negative statements, about anyone, so we have terminated our relationship with our associate,” said EWM President Ron Shuffield. Its agents are independent contractors, not employees.

Lechuga, 29, predicted on the blog that at least half of the buyers in the 635-unit Opera Tower at 1750 Bayshore Drive would default and the units would be taken over the project’s lender.

”My opinion is that this development is doomed,” he wrote on Jan. 10.

That followed this Nov. 25 post: “This developer went bankrupt in the 1980’s and I think we’ll see a repeat performance within the next 6 months. What do I know, though? I’m no real estate oracle.”

An angry Hollo said neither he nor any of his companies ever filed for bankruptcy.

”I guess when you’re running a blog [you] think [you] can say anything about anybody, and that’s just not true,” Hollo said. He called the postings “plain, unadulterated lies.”

The suit was filed in Miami-Dade Circuit Court. Hollo declined to say how he arrived at the $25 million damage claim.

Lechuga said he was exercising his constitutional rights in musing about Opera Tower.

”Like any other blog out there, it’s a collection of my unbiased opinions and thoughts,” he said. “I have buyers all over the world who go to my blog. They know I’m not going to sugarcoat the market.”

Lechuga removed the Nov. 25 post after learning of the lawsuit, but later reposted it without the reference to Hollo going ”bankrupt.” He said he would have removed it sooner had he known it was wrong. He said a few people who told him about it may not have meant Hollo literally filed for bankruptcy, rather that Hollo had financial troubles of some kind.

…
”Courts understand [blogs] are written in unedited, unvetted fashion,” Jarvis said. “There’s a lot of hyperbole. That’s why it’s so difficult to win defamation lawsuits.”

Plus, Jarvis said Lechuga could argue Hollo is a ”limited public figure” — making it harder for Hollo to claim he was defamed.

…

Well sometimes everyone makes a mistake… But to misrepresent the school district that your new home is being built in is either evidence of a very slimy representative or an extremely incompetent one. Either way it’s not something that you’ll want to add to your resume.

Kathryn points out some great tips at the end of the snippet below. Mainly, make sure that you have an agent working in your best interest. In Austin and the surrounding areas, buyer agents are typically paid for by the seller, but represent YOU. It’s also hugely important that if a salesman looks like the guy in the photo above that you seriously reconsider signing at that time!!!

One item that’s not in the list below that is always a good idea is including the builder’s representations in the contract. If they won’t allow that, then it would be best to have the builder’s representative sign the documents so that you have a copy of the papers that confirm the representations. In Texas we have a very strong (well it seems strong to me, but I’m no lawyer) Deceptive Trade Practices law. Think treble damages and lots of other scary things that could happen to people who are found guilty of deception.

Excerpt from Charlotte Observer.

Homebuyers say builder misstated school district

2 Pecan Hills buyers released from contract

KATHRYN THIER

kthier@charlotteobserver.com

Alisa Frady put down $20,000 in earnest money for a new home in Mooresville in the Iredell-Statesville Schools, the same district her children now attend.

But it turns out that the Pecan Hills subdivision is in the Mooresville Graded School District.

Frady and others say Ryan Homes, builder of Pecan Hills, gave them wrong information.

…

Tips for homebuyers

• Call the school district to confirm which district serves the home you intend to buy. You must provide an accurate address.

• Remember that individual school attendance zones may change. But district boundaries rarely change.

• Engage a real estate agent to represent you. Don’t rely on the seller’s agent to represent you.

It amazes me that no matter how many people get caught doing these mortgage fraud schemes, people still do them. Why would you think that you could run 30 scams over a 9 year period and that no one would eventually catch up to you? I guess if you scammed for 5 years and then went to some place in Bosnia you could “get away” with it, but short of that you’re going to get caught. Anyway, take a look at some of the folks involved. The vast majority are from Austin and several are licensed agents or lenders. What a shame on the industry they are. I’m glad their gone. Know of any other good stories? Send them my way and I’m happy to post them.

This article is an excerpt from The Mortgage Fraud Blog about the case.

A federal grand jury returned an indictment charging sixteen individuals with conspiracy to commit fraud and conspiracy to commit money laundering for their roles in a multi-million dollar mortgage fraud scheme. Those charged include:
Cornelius Robinson, 47, Austin, Texas, leader and organizer of the conspiracy;
Silvia Seelig, 45, Austin, during the conspiracy was a licensed real estate agent and an alleged straw buyer;
George H. Watson, 55, Austin, a licensed attorney specializing in real estate transactions. Watson served as the closing attorney on numerous real estate transactions associated described in the Indictment;
James Douglas Atwood, 51, Austin, Cornelius Robinson‘s uncle and an alleged straw buyer;
Michael Breon, 39, Austin, an associate of Cornelius Robinson and an alleged straw buyer. Breon, a licensed loan officer and mortgage broker, was employed by several different loan origination and mortgage companies during the conspiracy;
Sindu Sukumaran, 36, wife of Michael Breon and an alleged straw buyer;
Doris Ann Hill, 40, Austin, a personal banker employed at Wells Fargo Bank. For a fee, Hill allegedly agreed to provide a false verification of deposit to loan underwriters in relation to real estate transactions.
Julius Meyers Lofton, 45, Austin, licensed real estate agent and an alleged straw buyer;
Roy Rivers, age 52 of Austin, friend of Cornelius Robinson and James Atwood and an alleged straw buyer;
Danielle Guice Rosas, 40, Austin, an alleged straw buyer;
Stanley Ma, 27, Honolulu, Hawaii area and an alleged straw buyer;
Leonard Brown, 38, Houston, Texas, and an alleged straw buyer who also allegedly provided a false verification of employment in association with Onyx Consulting and defendant Ma;
Russell Snead, 43, Seattle, Washington area, an associate of Cornelius Robinson and an alleged straw buyer;
Marlon Nathan Torres, 45, Hutto, Texas, an associate of Cornelius Robinson;
Jeffrey Andre Wilkins, 46, Austin, a friend of Cornelius Robinson and an alleged straw buyer; and,
Leroy Williams, 46, Austin, an alleged straw buyer.

The austin mortgage fraud indictment alleges that from September 1999 to present, the defendants participated in a scheme to defraud mortgage lenders, including federally insured financial institutions, with regard to loans acquired to purchase 25 properties in the Austin and San Antonio, Texas area. The scheme centered upon the use of real estate flips. That is, the defendants purchased property at one price and would immediately sell, or flip, the property to a straw buyer at a higher price. In doing so, the mortgage lenders were deceived as to the true nature of the transaction and the financial status of the straw buyer. The straw buyers did not make the subsequent monthly mortgage payments and all of the loans have gone into default. All of loans have been either foreclosed upon or are the subject of current foreclosure proceedings.

Each defendant faces up to 30 years in federal prison upon conviction of the fraud conspiracy charge; up to 20 years in federal prison upon conviction of the money laundering conspiracy charge. In addition to the conspiracy charges, the indictment contains several substantive charges including wife fraud, false statements and receipt of commission or gift for procuring loans.
It is important to note that an indictment is merely a charge and should not be considered as evidence of guilt. The defendants are presumed innocent until proven guilty in a court of law.

The properties involved include:

10920 Preston Trails, Austin;
3306 Pennsylvania, Austin;
4708 Heflin Lane, Austin;
5403 Pendleton, Austin;
3109 Val Drive, Austin;
1174 Graham, Austin;
5200 Meadow Field; San Antonio;
5205 Meadow Field; San Antonio;
5216 Meadow Field; San Antonio;
5221 Meadow Field; San Antonio;
5228 Meadow Field; San Antonio;
301 Lightsey, Austin;
5100 Woodmoor, Austin;
1207 Harvey, Austin;
3700 Govalle, Austin;
5011 Nixon, Austin;
3303 Hickory Creek Cove, Austin;
7412 Albert Lane, Austin;
3900 Pawnee Pass, Austin;
2507 Givens Avenue, Austin;
2904 Cherrywood, Austin;
10415 James Ryan Way, Austin;
3513 Josh Lane, Austin;
1709 Enfield, Austin;
601 Explorer, Lakeway;
12605 Lyndon, Austin;
27013 Masters Parkway, Spicewood;
4412 City Park Road, Austin;
1345 Upper ELgin River Road, Elgin;

This case was investigated by the Federal Bureau of Investigation. It is being prosecuted for the government by Assistant United States Attorney Mark Lane.