Monday, August 13, 2007

LA Times front page

When the front page of the Sunday Los Angeles Times features, "Foreclosures may spur price drops", you know it's unraveling. Like last time. It begins with the scenario many of us remember (the whole article is worth a read):

Major lenders are repossessing homes in Southern California much faster than they can sell them, a development that could set off a downward spiral of price cuts and more foreclosures.

At some point -- maybe this fall, maybe in 2008 -- the lenders' inventories will grow so large that they will have no choice but to start aggressively cutting prices, many agents and analysts predict.

That, in turn, will put more pressure on individual sellers, who will have to reduce their own prices if they want to find a buyer.

As values fall, more people could lose their homes, which would swell the lenders' inventories anew. ...

But the problem is most acute in Riverside and San Bernardino counties, where the market has been enlarged by a building boom. Many recent buyers are first-time owners who made small down payments and have little equity in their homes. ...

The pace is glacial. While it normally takes a few weeks or even months to prepare a foreclosed house for resale, agents say homes are remaining in foreclosure longer than they would otherwise because their prices are too high and lenders have been unwilling to reduce them.

In Apple Valley, according to the First American data, lenders foreclosed on 95 homes in the second quarter but only sold eight. In Palmdale, they repossessed 228 and sold 31. Pomona had 66 foreclosures but only 10 sales. ...

A wild card in this gloomy scenario is the liquidity worries that are gripping Wall Street.

When money becomes scarce, it gets more expensive. Interest rates on so-called jumbo mortgage loans -- those of more than $417,000 -- have risen steeply in recent weeks. At all levels, marginal buyers are being eliminated.

It's got to get worse before it gets better, said Michael Davin, executive vice president of Catalist Homes in Hermosa Beach, echoing the new mantra of the real estate business.

"We need a shakeout to stabilize the market," he said. "Lenders are going to have to start cutting prices big time."

9 comments:

Anonymous said...

Did you see the two full pages devoted to the victims of the housing bubble (it was in either Saturday's or Sunday's front section). I know I shed a few tears for the realtors, appraisers and tile setters who are no longer making well into the six figure incomes. Boo hoo.

Bubblewatcher said...

The thing that annoyed me about this particular LA Times piece was the implication that there's something called an "impact zone" (i.e., the Inland Empire) where all of this foreclosure carnage will take place. Kind of reminds me of 1992, when everybody seemed to think the housing bust would be confined to defense industry 'burbs like Lakewood. And then once the whole thing had rotted up from the bottom, over the course of a couple of years, prices were "suddenly" dropping as much as 40% in Santa Monica and Beverly Hills.

Yeah. Good luck with containing your "impact zone".

Anonymous said...

bubblewatcher,

I fully agree/second what you are saying. Everyone at my work that I talk to thinks that the "high end" areas will be fine and that places "far out east" will be hammered. Certain areas may suffer more than others once this is all over, but to think that some areas are isolated is just more of the same wishful thinking that got us into this mess. Lots of denial from folks who live in Pasadena and west LA/Santa Monica.

felix said...

The lower prices will creep west to west LA. The same thing is already happening in the SF Bay. LA is just a year or so behind. Around the summer 2006, I was hearing about rising inventories and falling prices 40 mile east of San Francisco at the edge of the suburbs. I checked my old neighborhood about 25 miles east of SF recently and a house that sold for 599k a little over a year ago is for sale as a short sale for 500k. This is in a nice low crime city with no buildable land. So those outer suburban areas with new building would be affected first because there is the completion from builders and a bigger percentage of people who bought in the last 3 years.

I sold in summer 2006 luckily and would like to buy in Los Angeles sometime, but not till I can find a small (800-1200 sq ft) house in a decent central area (not santa monica) for 450k or less. Does a 30% drop in prices seem reasonable to expect by 2009?

Here's how the numbers would work to conservatively be able to afford a 450k house with 20% down.
360k loan at 7% 30 yr fixed
$2395 p&i
$450 tax & insurace
$2845 total monthly

This would take an 95k a year income with 20% down and a 36% debt ratio assuming credit cards, cars etc are paid off.

Anyway, once banks are forced to sell a large inventory of foreclosed homes in the next year or two, does 400k or less homes prices seam reasonable given that LA has about a 60k average household income?

Where are the buyers going to come from unless prices are a lot lower? Not from interest only loans and not from people who are worried that they will get priced out forever if they wait.

Anonymous said...

Titan Organization/Mark Abrams/Gary Wafel ALERT. Los Angeles, CA

MARK ABRAMS is up to his old tricks, this time scamming people with his new company TITAN ORGANIZATION, located at: 633 W. 5th Street, 56th Floor, LA, CA 90049 www.titanorganization.com

MARK ABRAMS is up to his old tricks, this time scamming people with his new company TITAN ORGANIZATION, located at: 633 W. 5th Street, 56th Floor, LA, CA 90049 www.titanorganization.com MARK ABRAMS is now a partner in that company which recently purchased the land on the corner of Olympic and Grand in Downtown LA under the name of The Olympic on Grand, LLC for $30 Million of SCAMMED MONEY!!!

MARK ABRAMS has been soliciting investments from investors to the tune of over $3M to date for his dream of building The Olympic and The City House buildings. Don't let the fact that his name is not on any documents fool you….he OWNS his interest in the LLC under a TRUST he created just for the purpose to hide his ownership…THE JAMES GRACE IRREVOCABLE TRUST EFFECTIVE NOVEMBER 1, 2005 and the company just recently closed escrow on the land in October, 2006:

http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/11-06-2006/0004468099&EDATE=

HOW IS HE NOT IN JAIL NOW? HOW IS HE ON THE STREET SCAMMING MORE PEOPLE? HOW CAN HE SELL SECURITIES/MEMBERSHIP IN AN LLC TO INVESTORS AFTER PLEADING GUILTY TO: CONSPIRACY TO COMMIT BANK FRAUD AND LOAN FRAUD, BANK FRAUD, MAKING A FALSE STATEMENT ON A TAX RETURN AND OBSTRUCTION OF JUSTICE???????

READ WHAT OTHERS ARE SAYING ABOUT HIM:

http://www.flippingfrenzy.com/admin/mortgage-fraud/samoa-deports-fugitive-wanted-in-the-us-in-50-million-real-estate-fraud-scam/

1. I owe this guy a SERIOUS beat-down from when he used my friends' dads' name and literally almost ruined him. My friends' dad had a severe heart attack because Mark Abrams defrauded him and my friends family back in 1989-1990. My friends' dad trusted Mark and he drove my friends' dad to almost ruins health wise. Listen up chump, if I ever find you Mark, I will, with my own bare hands rip your throat out and piss in your neck.

Comment by Mark Abrams Hater — April 4, 2007 @ 6:31 pm

2. Hey Mark, remember the white BMW you "sold" me? Remember me making payments to you that you never paid the lien holder to the car? Remember disappearing on me and sending my credit to the toilet because of this and the BMW you "sold" me was repossessed? I swear if I find you or if I find out where you are jailed, I will make sure the rest of your life is misrable. If I do find you before you go to jail, I will stuff every bill you left me with up your ass. You will pay for what you did to me and my family. I GUARANTEE that you crooked ass loser.

Comment by Mark Abrams Hater — April 5, 2007 @ 3:45 pm

THIS GUY AND HIS PARTNERS AT TITAN ARE A BUNCH OF SCAMMERS. THEY SENT OUT INVESTMENT MATERIAL LAST YEAR IN 2006 AND RAISED A FEW MILLION...MUCH OF WENT WAS PUT INTO MARK ABRAMS' POCKET SO THAT HE COULD RENT A NEW HOUSE IN BEL AIR WITH HIS WIFE PEGGY.

THEY SENT OUT MORE INVESTMENT MATERIALS IN OCTOBER CHANGING THE NAME OF THE COMPANY FROM RODMARK TO TITAN. WHY ISN'T MARK ABRAMS AND HIS NEW PARTNERS IN JAIL?

HAVE YOU NOTICED THEY HAVE BEEN SPONSORING EVENTS LIKE AT THE YWCA AND DONATING TO EVENTS IN DOWNTOWN....ITS BECAUSE THEY NEED AIR RIGHTS FOR THEIR BUILDINGS.

THE TERMINATED THE LEASE WITH THE OPERATOR OF THE CLUB ON THE LAND THEY BOUGHT AND ARE GOING TO BE SUED BY THOSE GUYS...HOW IS MARK ABRAMS AND HIS GROUP NOT IN JAIL? HOW CAN HE AFFORD LUNCH AT SMITH AND WOLINSKY'S EVERY DAY? ISN'T HE FAT ENOUGH? WHO'S CREDIT CARD IS HE USING?

August 14, 2007 1:44 AM


Anonymous said...
Titan Organization is owned by Mark Abrams, Gary Warfel and Richard Robinson. Gary Warfel is the President of the company and they have to go in front of the CRA for their FAR approvals. No one wants to see those eye sore building built.

Gary Warfel is a crook too just like his buddies and partners Mark Abrams!!!!!

August 14, 2007 3:07 PM


Anonymous said...
GARY WARFEL is the head of Titan Organization now. This company and group has so much baggage it's amazing they're still paying rent in their offices in Downtown.

They went to market for their financing for "The Olympic" and "City House" buildings through Ackman Ziff in New York. When Citibank found out about Mark Abrams' criminal record and guilty pleas, they backed out of the deal.

Mark Abrams and Gary Warfel think they're cute by disguising their ownership in Titan in a Trust but bankers see through that.

Gary Warfel and Mark Abrams are LA's WORST businesmen. In fact, I might work to get a group together to picket their development and inform the CRA and City Ethics Board about the criminal activity of GARY WARFEL AND MARK ABRAMS.

August 14, 2007 3:11 PM

Samoa Deports Fugitive Wanted in the U.S. in $50 Million Real Estate Fraud Scam
A former Los Angeles-based real estate developer charged with running a $50 million mortgage fraud scheme arrived in the United States yesterday afternoon to face criminal charges. Charles Fitzgerald was arrested and deported by authorities in the Independent State of Samoa, a Pacific island nation where he fled to in June 2003 after he was sued for fraud by Lehman Brothers Bank.

Samoan law enforcement officials, responding to a request from the United States, arrested the 46-year-old Fitzgerald in the Samoan capital of Apia on Monday. Fitzgerald was deported by Samoa because his United States passport had been revoked after the criminal charges were filed, which in turn subjected him to immediate deportation under Samoan law.

Fitzgerald arrived at Los Angeles International Airport yesterday afternoon, and was immediately transported to the Metropolitan Detention Center in downtown Los Angeles. He is expected to make a court appearance in U.S. District Court this afternoon, where he’ll answer to charges of conspiracy to commit bank fraud and loan fraud, four counts of bank fraud, one count of loan fraud, five counts of money laundering, and one count of obstruction of justice. In addition to Fitzgerald, the following people were previously charged with working alongside the former real estate developer to defraud Lehman Brothers Bank:

Mark Abrams, 45, of Long Beach, CA
Nicole LaViolette, 37, of Palm Springs, CA
Jamieson Matykowski, 33, of Laguna Niguel, CA
Timothy Holland, 35, of Santa Ana, CA
Abrams previously pleaded guilty to charges of conspiracy to commit bank fraud and loan fraud, bank fraud, making a false statement on a tax return and obstruction of justice. LaViolette, Matykowski and Holland previously pleaded guilty to charges of conspiracy to commit bank fraud and loan fraud, as well as wire fraud. All four are scheduled to be sentenced next year by United States District Judge Dean D. Pregerson.

Fitzgerald and the others were involved in a wide-ranging and sophisticated conspiracy to defraud federally insured mortgage lenders out of tens of millions of dollars. As part of the scam, they obtained inflated mortgage loans on homes in some of California’s most exclusive neighborhoods, including Beverly Hills, Bel Air, Holmby Hills, Malibu, Carmel, Mill Valley, Pebble Beach and La Jolla. According to the recently unsealed charges, the conspiracy was spearheaded by Fitzgerald and Abrams.

In the charges filed against the others, in late-1999/early-2000, Fitzgerald went into business with Abrams in a mortgage brokering company called Desert Pacific Financial, Inc. (DPF). The company sent mortgage loan applications to lenders for review and funding, and received commissions from those lenders when the loans closed. In late 2001, Fitzgerald and Abrams renamed the company Beverly Hills Estates Funding, Inc. (BHEF).

LaViolette was a loan processor at DPF/BHEF, and Matykowski was a property scout who helped locate homes for potential purchase. Fitzgerald and Abrams also had several in-house escrow companies, in which Holland was the escrow officer.

Fitzgerald and Abrams, working with Matykowski and real estate agents, located homes for sale. According to court documents, they primarily looked for homes with purchase prices they could inflate, which generally meant they used homes with good views in expensive neighborhoods throughout California. As part of the scheme, Fitzgerald and Abrams purchased homes at their real market values. For example, the case against Abrams details the purchase of a home in Bel Air, which Fitzgerald and Abrams bought for $735,000 in the name of “Matykowski or his assignee,” even though they were at all times in actual control of the home.

Fitzgerald, Abrams and their associates then recruited straw borrowers to obtain inflated loans on the properties. The straw borrowers, some of whom received payments, allowed Fitzgerald and Abrams to use their names and credit to obtain mortgages as part of a property flipping process. After obtaining inflated appraisals and other false documents that were submitted with loan applications, Fitzgerald and Abrams obtained mortgages in the names of the straw borrowers for double or triple the actual values of the homes. For example, when they flipped the Bel Air property, they sold the residence to the straw borrower for $2,370,000. Abrams’ charges allege that a bogus loan application package went to Lehman Brothers Bank seeking a loan of $1,422,000, nearly double the true $735,000 purchase price, and that Lehman Brothers Bank unwittingly funded a loan of more than $1.4 million on the property, almost all of which ended up in one of the in-house escrow companies controlled by Fitzgerald and Abrams.

The victim lenders, having been deceived by the false documentation supplied by Fitzgerald, Abrams, and others, unwittingly funded the inflated loans. According to Abrams’ charges, Lehman Brothers Bank alone was deceived into funding about 80 such inflated loans from March 2000 through March 2003. These 80 loans were more than $50 million over the true prices of the homes. Fitzgerald and Abrams received millions of dollars of these excess loan proceeds, and their associates received kickbacks, inflated appraisal fees, and large commissions.

Lehman Brothers Bank sued Fitzgerald, Abrams and others in federal court in Los Angeles in 2003 and obtained a receivership, temporary restraining orders, and preliminary injunctions against them. If he is convicted of the 12 counts in the criminal complaint, Fitzgerald faces a possible sentence of 265 years in federal prison.

Anonymous said...

READ MORE: www.ReportMortgageFraud.org.

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Anonymous said...

It's interesting to see just how pervasive memory has become in our lives. It's like everytime I turn my head, I see something with a card slot or USB port, lol. I guess it makes sense though, considering how much cheaper memory has become lately...

Ahhh, I shouldn't be moaning and groaning. I can't make it through a single day without using my R4 / R4i!

(Posted using KwZa for R4i Nintendo DS.)