Archive for December, 2010

Anyone lose a wolf?

Running around by the VAR offices. Hopefully he’ll (she’ll?) stay by the woods and not I-95.

Not bad for a rushed shot at a distance.

(And yes, I know it’s not a wolf. But when I saw it trotting beneath my window, that’s the first reaction I had. Consider it evolution in action.)

Big, messy mortgage fraud case moves along

The Total Realty Management fraud case is almost mesmerizing to read about. It’s got everything about the housing crisis in one oozing bundle.

According to the feds and the civil plaintiffs, here’s what happened:

Back around 2006, Virginia mortgage broker Mark Dain and partner Mark Jalajel bought lots of undeveloped land in North Carolina for about $150,000 each.

Dain then recruited his formal high school football coach — now a school principal in Fairfax — to recruit investors, mostly school employees, to buy these parcels for $300,000 or more apiece. (The principal’s brother, an assistant principal at a different Virginia school, also joined in the recruitment.)

The pitch was that these new buyers’ loans would allow them to pay nothing up front or for two years. In the meantime they could flip the land for big profits.

Two problems: In some cases, the buyers couldn’t qualify for a $300,000 mortgage. In other cases, the land didn’t appraise for nearly enough.

According to the suits and the case, Dain and company solved the first problem by falsifying mortgage applications on behalf of their buyers.

They solved the second with banks’ help in getting high enough appraisals.

In one case, plaintiffs lawyer Martin C. Conway said Friday, TRM wanted to sell a lot to a Northern Virginia woman for $380,000. But the e-mails showed that Bank of America’s first appraiser valued the lot at only $210,000. A second appraisal came in at $220,000. Finally, a third appraisal for the same lot came in at $385,000, and the loan was approved.

(The judge in the case, Gerald Bruce Lee, also noted that the insurance companies who were covering the mortgages for the lenders canceled many of the policies because of bank "misrepresentation.")

Of course, the properties weren’t worth nearly as much as the buyers paid, and only dropped in value; today they’re worth (depending on which paper you read) around $16,000 to $20,000 each.

Lawsuits against the the principal and his brother were dropped because they’re deep in bankruptcy. Three TRM employees are going to prison for between two and five years. Mark Jalajel appears to be cooperating with the investigation. Mark Dain … well, that remains to be seen.

So you’ve got everything: shady real estate deals, banks lending more than customers could afford, questionable appraisals, and people thinking they could flip real estate — sight unseen! — and make a bundle. (Although, to be fair, this was 2006 and maybe the concept of "If it sounds too good to be true, it probably is" hadn’t sunk in yet.)

Oh, and — at least according to everything I’ve read — at no point in this process was a Realtor involved. I’d like to think that if any were, at least one would have looked into things, called shenanigans, and saved a lot of people a lot of trouble.

Here, read more about it:

Near the beginning — Fairfax Times story (10/2009)

Latest Washington Post story (12/19)

WaPo on Bank of America (10/9)

Tuesday afternoon eye-roll

Ah, there’s nothing like a little real estate humor.

When Whole Foods recalled pre-fab gingerbread houses in 23 states, the Daily Feed’s headline was "Staph Bacteria Squatting in Whole Foods’ Gingerbread Houses," while New Hampshire Public Radio reported that "Staph Forecloses On Gingerbread Houses At Whole Foods." Ha ha.

No tax breaks, but maybe it’s the thought that counts

Architecture firm HOK designed these Green Dream "LEED platinum" gingerbread house. The one pictured here features licorice rainwater barrels, chocolate solar panels, a jelly bean green roof and gumdrop wind turbines.

Other masterfully crafted, environmentally-friendly pastry delights include models of Michelle Kaufmann’s Solaire and Lotus pre-fab house designs.

See them all on Fast Company…

Realtor helps feed the hungry

Although a drive to your local shopping center (or a peek through the ads in your paper) may make you think otherwise, this is supposed to be more than a season of giving stuff. Among many other things, it’s a time to remember that our job — all of our jobs — to take care of the people who need.

The USDA reports that more than 49 million Americans live in “food insecure households” and more than 17 million Americans lived in a home where “one or more people in the household were hungry over the course of the year because of the inability to afford enough food.”

Let that sink in: Sometime this year, more than 17 million people in the United States of America couldn’t eat because they couldn’t afford to buy food.

Feeding America, the country’s largest hunger-relief charity, feeds 37 million individuals a year, including 14 million children. (That’s individuals. Some of them obviously turned to Feeding America’s food banks more than once.)

Maybe it’s just me, but the idea that in this country we have people going hungry is unconscionable.

“Business! Mankind was my business. The common welfare was my business; charity, mercy, forbearance, and benevolence, were, all, my business!” –Jacob Marley, A Christmas Carol

imageNow, meet Realtor® and farmer Darin Greear of Riner (just outside Virginia Tech). This year, working with the Virginia Gleaning Network, he and his wife Tabitha gave away 101,174 pounds of turnips, 16,681 pounds of winter squash and pumpkins, and 4,916 pounds of other produce (corn, tomatoes, beans, peppers, etc.) That’s more than 60 tons of food getting into the hands and stomachs of Southwest Virginia’s poor.Loading vegetables from Greear's farm to feed the hungry.

So, as you’re opening your gifts this year, or thinking about what new car to buy, or eating in a restaurant with your friends, or wondering if it’s time to replace your iPhone — remember that there are literally millions of Americans who don’t have those things to think about.

Darin Greear is doing something about it. And you?

Happy Chanukah, Merry Christmas, Joyous Kwanza, Happy New Year, and all those tidings. Now, how about making them mean something?

Donate to Feeding America.

Who’s got tainted drywall

A neat and useful data mashup comes courtesy of the folks at ProPublica ("Journalism in the public interest"): Google Maps meets a database of homes with Chinese tainted drywall.

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You gotta love real journalism (which some of us remember). While "about 3,500 homes" is what you’ll commonly hear when reading about the effects of the drywall (it comes from the Consumer Product Safety Commission)…

ProPublica and the Sarasota Herald-Tribune compiled a list of addresses from county property appraiser data and records in consolidated lawsuits filed in New Orleans federal court and found nearly twice that number: around 6,900 homes.

They took the CPSC’s data plus their own, popped it into Google Maps, and presto — a simple tool for finding affected homes.

zipForm introduces Mobile Web Edition

zipForm has introduced a Mobile Web Application as a companion application to zipForm 6 Professional (online version). Smartphone users you can now keep important transaction information readly available at your fingertips. Current zipForm users can order the new application in their zipForm 6 Professional account. New users can order both the Web and Mobile Web applications here. The new application allows you to:

  • Create a new transaction
  • Add and list forms in a transaction
  • List and modify transactions
  • Much more!

For more information on zipLogix, check out the VAR Member Service Partner page: www.VARealtor.com/ZipForm.

Zebra named to Inman’s Top 100

(EDIT: This is what I get for skimming too quickly. Congrats, too, to David Charron, late of the Charlottesville Association of Realtors and now president and CEO of MRIS, who also made the list.)

A hearty “Congrats!” to our own* Daniel Rothamel of Palmyra — a/k/a The Real Estate Zebra™ — who made Inman’s Top 100 list as one of the most influential real estate folks in the world!

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* He’s in Virginia, so we’re comfortable calling him “ours.”

Inman’s Top 100 (easy to read version)

The good folks at Inman News have published their list of the "100 Most Influential Real Estate Leaders: 2010." It includes brokerages, economists, government, media, and, well, lots more.

But for reasons I cannot fathom, the list is published so that you have to view it one at a time, although for a moment as the page loads you can see the entire thing.

For those of you who would prefer to browse the whole list rather than page through 100 separate pages, check out our page-free version of the Inman 100 list. (The pics get out of sync partway through, but it’s still easier to browse.)

100 Most Influential Real Estate Leaders

Is Homeownership For Everyone?

Several decades ago (and earlier) home buyers would wait to purchase a home until they had at least 20% of the purchase price saved up in their bank account, and they would only buy if they were going to stay in the same home and town for many years.  At the time, the percentage of homes that were owner-occupied hovered between 40% and 50% (U.S. Census Bureau).

Just a few short years ago, home buyers were buying with no down payment at all (or less), even if they planned to stay in the house for only a year or two.  This led to an ever increasing homeownership rate, which peaked at 69.2% of families owning their home in the early 2000′s (U.S. Census Bureau).

Why the sudden change of pace?  And what is a buyer to do today?

Many of today’s first time buyers are still buying with a very small down payment, and that can be o.k.  Many loan programs are available with a small down payment, such as the FHA loan program which only requires a 3.5% down payment.  The risk here is that a buyer doesn’t have too much built-in equity in case they need to sell sooner than they think.  Purchasing a $100,000 house with a 96.5% FHA loan results in a $96,500 loan, which has only been paid down to $95,000 one year later.  With such a small down payment, it can be difficult to re-sell the home in a short time frame without bringing cash to closing.

As becomes evident, the down payment and the length of ownership are quite intertwined.   As shown above, a small down payment with a small length of ownership can be financially difficult.  A small down payment with a longer length of ownership can work just fine.  Conversely, a larger down payment provides security and makes even a small length of ownership feasible.

What may become clear here is that homeownership is not for everyone.  Even if a buyer is making great money in their current job, if there is a strong chance they will need or want to leave the area in 12 or so months, it may not make sense for them to buy.  But for those with good credit, a down payment of some sort, and a solid job that will keep them employed and in the same geographic area for the next 3, 4, 5, 6, 7 years – homeownership may be a very exciting option right now.  With low interest rates, lots of homes on the market, and many sellers ready to negotiate, this can be a most opportune time for buyers to act.

Owning a home is a passive savings account of sorts, with money accruing as the principal of the mortgage is paid down each month.  Owning a home also provides the ability to establish oneself in a neighborhood that may be a buyer’s home for years to come.  Finally, owning a home provides the ability to invest time, energy and money into the place that you live that will provide a future resale benefit – as opposed to painting, re-modeling or otherwise improving a property when leasing it.

Now being excited about buying and thus owning a home, many might look around and realize that most local real estate markets aren’t booming right now.  Is it wise to invest in real estate when the market, and prices are down?  Many think that it is wise, given that buyers can fix their housing costs when prices are potentially the lowest that they’ll ever be, and when interest rates are potentially the lowest that they’ll ever be.  In many ways, housing costs compared to what a buyer is purchasing couldn’t be much lower than they are right now.

Buying a home isn’t for everyone, but excellent housing opportunities abound for those who plan to stay in the same geographic area for the years to come.