Foreclosure Roundup

There were a number of submissions to the Foreclosure Central roundup. I can only assume that most people were tied up with taxes, as very few of the submissions had anything at all to do with foreclosure.

The most insightful blog author regarding foreclosure was Andrea Dickson at Wise Bread. In her article "How to Avoid Foreclosure" she gives homeowners who might be facing foreclosure some real tools and steps to follow.

I also like that Andrea touches on the community impact of foreclosures, stating "At least 4 properties (all rentals, all owned by the same person) on my street alone are being auctioned off within the next month, and that kind of activity is going to affect my property values..." Scary stuff.

Each state's foreclosure process is somewhat different. To see an overview of each state's foreclosure process, go to Foreclosure Basics - By State.

Meanwhile, as more investors shift from residential to the more stable commercial side, Craig S. Higdon at Investment Property Insider explains some basics with Commercial Real Estate Credit, and urges potential investors to "Weigh your risks carefully"

Subprime mortgages and foreclosure statistics continue to dominate real estate-related news stories.

Nationwide, CNN Money shows that foreclosures are up 7% from March to February of 2007, a whopping 47% increase from last year at this time.

For the third straight month, Nevada leads the nation in foreclosures. Las Vegas has the second-highest foreclosure rate among cities monitored by RealtyTrac. The article reports that "Nevada reported 4,738 foreclosure filings, more than triple the number in March 2006. Its foreclosure rate showed 1 filing for every 183 households, more than four times the national rate of 1 per 775 households"

More bad news for Florida. RealtyTrac says that Florida ranks second in the nation for foreclosures with an increase of 33% from February to March of 2007.

The San Francisco Chronicle reports Foreclosures, default notices hit 10-year high. "The number of California homeowners who defaulted on their mortgage payments jumped to its highest level in almost 10 years, exacerbated by slowing home sales and adjustable-mortgage resets."

But Washington State's real estate market remains strong. The Seattle Times shows Foreclosures in state fall, bucking national trend, while the Atlanta Business Chronicle points to a bounce in that state's foreclosure rates as well.

Financial Services Chariman Barney Frank is calling for a quick pass of legislation that would set national protections for all mortgage borrowers and clearer disclosure statements.

Thankfully, not everyone is jumping on the bandwagon for a legislative bailout. The Cincinnati Enquirer reports Go slow on foreclosures, Congress told. "Federal regulators and mortgage lenders this morning warned congressional lawmakers against moving too aggressively to regulate the mortgage industry in response to a soaring number of home foreclosures."

Senator Chris Dodd was one of the earliest and most vocal proponents of legislating the nation out of the subprime debacle. Today it seems he has made a quick about-face. He is quoted as saying "I'm not overly anxious to legislate," he said. "We think there may be enough laws on the books."

Fannie Mae and Freddie Mac are developing new types of loans to help distressed borrowers with high-risk mortgages, including a possible 40-year mortgage.

Lowest Common Denominator LawsAnd the Subprime Lending Market

In the United States, laws are typically written for and around the very small percentage of the population who, for some reason, need to be told very basic things. It’s truly unfortunate that some in our society do need laws and penalties to prevent or punish them for things the rest of us would simply never think of doing. And I truly think that the majority should not accept this any longer.

In the small California town where I grew up, the Fourth of July parade used to be a thing of wonder for children. Not for the parade itself, but because all of the families in town used to pitch tents in the wide grassy medians that separated the north and south-bound lanes of the town’s main road.

Everyone would bring their picnic baskets, sundries, and toys. Children ran around playing tag during this town-wide slumber party, and adults would discreetly sip wine or beer from plastic cups. These July 3rd evenings were so uneventful that there was rarely even any good gossip to talk about the next day.

As time went on, folks from other towns started crossing over into the community to participate. They too brought their tents and sleeping bags, but their foreign presence changed the environment. The first evidence of this was that ‘stranger danger’ at the campout meant that parents felt the need to always have their kids in sight.

The newcomer adults inevitably took the lax police enforcement of open containers to mean that this was more Mardi Gras than town social. For the first time, there were fights and arrests for disorderly conduct. I’m sure you can figure out what happened next. Alcohol was quickly banned, a decision that the town of course supported. Within a few years, camping on the median was also a thing of the past.

I wanted to share this example because, as you can see, when the town had to shift their standard operating procedure for July 3rd and 4th, it wasn’t a reflection of the town itself. It became necessary because of the small percentage of folks who came into town and couldn’t or wouldn’t behave within the established codes.

I like to call these kinds of shifts “Lowest-Common Denominator Laws.” They’re created in response to the small but powerful number of folks who throw a wrench into the works. And by extension, the rest of us get locked into this new norm, even when we can and always have handled the extra burden of responsibility like good citizens and intelligent adults.

The L.A. Times this week points out that the same trend is happening with mortgages. The article points out that the more relaxed lending standards are responsible for allowing a record number of Americans the opportunity to own their homes.

As the “Lowest Common Denominator” rule goes, not everyone is living up to the responsibility. And now Congressmen and Presidential candidates alike want to legislate their way out of the problem.

I’ve got several problems with that. The first is that private industries gauged their risk tolerance and (one would think) moved forward with due diligence. It is worth noting that not all subprime lenders are in the same boat. Obviously, some managed their risks better than others. But because some firms jumped in head-first, this is another instance of “Lowest Common Denominator” thinking.

My second problem with legislating our way out of the subprime mortgage downtick is that fully NINE out of TEN subprime borrowers are paying their notes.
So why should it be acceptable that the 10% who either cannot or will not meet their obligations now become the standard for lending?

Future borrowers will no doubt be held to a standard that is designed to protect against 10% of the population. The 90% of marginal borrowers who own their homes are not even factored into the equation. And thanks to this, 100% of future borrowers will be disallowed the opportunity that 90% of previous borrowers have lived up to, but 10% have ruined for everyone.

FBI Issues Mortgage Fraud Warning

Last week, the FBI issued a strong statement regarding mortgage fraud. The announcement confirmed that the agency is working with the Mortgage Bankers Association to prevent and prosecute mortgage fraud.

The action is reminiscent of the early whistleblower channels that were established in order to more effectively prosecute corporate misdeeds. It also sounds like the warning shot to offenders that mortgage fraud will be the high-priority, high-profile topic for 2007.

And with 2008 being an election year, I expect this will become at least a minor topic on the campaign circuit. A Congressional action similar to Sarbanes-Oxley cannot be too far behind.


FBI ISSUES MORTGAGE FRAUD NOTICE IN CONJUNCTION WITH MORTGAGE BANKERS ASSOCIATION

Washington, D.C. – Today the FBI and the Mortgage Bankers Association (MBA) entered into an agreement to combat Mortgage Fraud. The FBI and the MBA will make available a Mortgage Fraud Warning Notice as a proactive means of educating consumers and mortgage-lending professionals of the penalties and consequences of this criminal activity.

“Mortgage Fraud is clearly becoming a problem that requires the unified efforts of law enforcement, regulators, and industry,” said Karen Spangenberg, Section Chief of the Financial Crimes Section, Criminal Investigative Division, who signed on behalf of the FBI. “The FBI is pleased to have worked with the Mortgage Bankers Association in the development and distribution of this advisory as we continue to strengthen our relationship with such key organizations to combat Mortgage Fraud.”

Mortgage Fraud Suspicious Activity Reports (SARs) referred to law enforcement by financial institutions increased from 17,127 SARs in Fiscal Year 2004 to 35,617 SARs in Fiscal Year 2006, reflecting estimated losses of $946 million. FBI Mortgage Fraud investigations have focused on large-scale frauds perpetrated by organized crime and industry insiders, including attorneys, brokers, appraisers, and realtors. Since September 2002, the number and types of investigations have increased from 436 to 1,036. Of these current cases, 51% involve expected losses in excess of $1 million, and 57% involve our federally insured financial institutions as victims.

Combatting significant fraud in this area is a priority, because mortgage lending and the housing market have a significant overall effect on the nation’s economy. The FBI works closely with national associations such as the MBA, as well as with individual lenders, in a continual effort to define and combat the growing Mortgage Fraud problem. The newly developed Mortgage Fraud Warning Notice enhances the FBI’s endeavors to do so by putting potential perpetrators on notice in an effort to stop potential crime before it is committed.

“We wish to thank the FBI for working with us to provide mortgage lenders another item in the toolbox to help combat fraud against lenders,” said John M. Robbins, CMB, Chairman of the Mortgage Bankers Association. “Fraud against lenders costs the mortgage industry billions of dollars each year, affecting everyone in the mortgage process, including consumers and the communities we are trying to help build.”

The Media's Mishandling of the Casey Serin Story

If you missed our previous primer on Casey and Galina Serin, I would encourage you to go back and read "Mortgage Fraud: Why Lenders Need to Know Casey Serin." My friend Aspeth and I are trading off blog posts on this story, and she picked up today's meme. I've cleaned up the content a tad, as Aspeth has been known to make sailors blush. For this portion of the thread, Aspeth wanted to focus on how the so-called "Old Media" has covered this debacle.


Traditional media's handling of the Casey Serin story has been grim, and it certainly lends credence to folks getting their information from alternative sources. At the very least, the Old Media folks should have cross-referenced their stories by speaking to law enforcement officials to give readers a full picture of the scope and potential punishment of Casey and Galina Serin's crimes.

It's lazy journalism, plain and simple. Anyone who has spent a brief amount of time actaully reading and researching Casey Serin's story is immediately struck by the extenxive chain of fraud that occurred. But print and glossy media has persisted in portraying Casey Serin (and by extension, his wife Galina Serin) as poor victims of the real estate bubble, predatory lending, or any other real estate buzzword of the day.

I find this particularly offensive. Casey and Galina Serin are not innocent victims of the real estate industry. They are the perpetrators of multiple crimes against various banks, lenders, and creditors!!!!

Bloggers have gone out of their way to alert government agencies and creditors alike to Casey Serin's illegal activities. This includes tracking the complicity of his wife Galina Serin and other 'known associates'.

The rage in these posts, and in the comments, is palpable. But it's easy to understand why. People who have followed Casey Serin's story for any length of time are not just content to see him arrested. Nothing short of a ridiculously long prison term and FULL REPAYMENT of "every dirty penny" will suffice.

Whether writing about the complexity of mortgage fraud, deconstructing Casey's attempts to dodge responsibility, or pointing out Galina's complicity, the blogosphere is just the beginning of the impending public response to Casey Serin.

So CHEERS to the bloggers. And a big "Boo! Hiss!" to the Old Guard. Here's our list of media sources that totally dropped the ball in fully informing the public about Casey Serin. In chronological order, here is the Casey Serin Media Hall of Shame:

San Francisco Chronicle
On October 6, 2006, the SF Gate posts a laughably optimistic story about Casey Serin's role in the real estate bubble. His ill intent is glossed over; instead, he is held up as some sort of poster-boy for failing markets and dodgy lenders.

"But by offering himself up as a penitent whipping boy of real estate, Serin has unwittingly offered us a glimpse into the fast-approaching future in which those high-flying real estate trade secrets come home to roost."

Wow. We surely cannot be referencing the same Casey Serin. Casey Serin is anything but "penitent."


USA Today
This is the one that brought Casey Serin into the national spotlight. In the October 22, 2006 edition, Noelle Knox writes If there's a poster child for everything that went wrong in the real estate boom, it just might be Casey Serin.

Rather than paying attention to Casey Serin's extensive mortgage fraud, much less say what else might lie beneath the surface, Noelle Knox writes basically that 'a lot of things can go wrong in real estate.' For a nationally syndicated newspaper, this certainly falls short of breaking the story wide open.


Inman News
Matt Carter writes that Casey Serin bought eight homes in six states using 100 percent stated income loans, getting $15,000 to $50,000 cash back on every loan. First, this is the only time I've seen mention of six states. Judging from the depth of fraud committed, that could very well be true.

But since it has not come up anywhere else in print or online media, I question the voracity. Secondly, I would expect that the highbrow, real estate-only news bureau Inman would delve much more deeply into the casually typed phrase "15,000 to $50,000 cash back on every loan."


New York Magazine
As recently as February 12, 2007, Emily Nussbaum had evidently done enough research into Casey Serin to include him in her piece on twentysomethings revealing their lives on the internet. But she paints a plucky portrait of young Casey, merely writing a few paragraphs about his online confessional.

That he is confessing to multiple felonies doesn't seem to faze Ms. Nussbaum. In fact, that element is never mentioned. Perhaps she never got past the title of Casey Serin's blog to actually read one of the numerous instances where he details his crimes. That's quite a shame, because she, too, missed the story entirely.


CBS 5 San Francisco
The most recent incident of a no-research fluff piece on Casey Serin occurred on March 7, 2007. John Lobertini presented yet another piece of Casey-Serin-as-victim-of-big-real-estate. Lobertini's piece is similar to the other 'Casery Serin-lite' pieces, where journalists follow right down the path that Casey leads them.


And while this is far from 'old media', it is worth noting that mortgage broker Niles Swaby has put out several press releases, positing himself as the authoritative source on Casey Serin. Niles Swaby chose the self-important headline Aspiring Web Journalist Lands Real Estate Story of the Year.

Well, that's really stretching it, isn't it? As you can tell from the timeline above, two major news outlets had already "landed" the story when he issued this press release on Halloween of 2006. (And regarding the timing, it's just too easy...I'm leaving that one alone.)


One last thing....I stumbled across an old blog of Casey Serin's. It was interesting in that was supposedly written on his 25th birthday. This was news, in a sense, since everyone thinks he's 24. But what really struck me was this:



Wait a minute....am I reading that correctly?!?!

Casey Serin was born on SEPTEMBER 11 ?!?!?!?

Talk about your 'day that will live in infamy'......

Mortgage Fraud Why Lenders Need to Know the Name"Casey Serin"

Real estate practitioners are often slow in adapting to new technologies. I understand why--most successful real estate professionals spend very little time in an office, much less say in front of a computer.

But this is a compelling reason why you should keep up to date with basic technologies: SAFETY. Real estate practitioners have often been encouraged to follow safety guidelines when dealing with a potential client, such as making a copy of their drivers' licenses before driving them around.

Allow me to offer another step. GOOGLE ANY POTENTIAL CLIENT.

This is certainly something that Casey Serin's lenders, realtors, and other lien-holders should have done. Because some of them may have just been 'doing their jobs', but that will be a hard row to hoe when the authorities sort the difference between them and the co-conspirators.

I am loath to give this guy any more publicity. But suffice to say that we at The RE Forum have joined the list of folks who have contacted law enforcement agencies about this con artist. We have forwarded information to the U.S. Attorney's Office, FBI, the District Attorney and Police Departments of each relevant property. We know that others have already contacted the IRS.

Unfortunately, if you're a real estate professional and haven't heard of Casey Serin, you're doing yourself a great disservice.

In short, Casey's story goes like this: In 2006, at the age of 24, Casey Serin acquired at least 8 (known) properties in 4 states. He committed mortgage fraud to obtain the loans by lying about owner-occupancy, lying about his income (he had quit his job), inflating the value of the properties, and getting cash back at close. By his own admission, the banks were not aware of his cash-back schemes, where he received anywhere from $15,000-$50,000 per closing.

The properties that Casey Serin has admitted to owning (there may be more) are:
??? Calla Way, Sacramento, CA SOLD
6842 Burdett Way, Sacramento, CA 95823 FACING FORECLOSURE
6021 Guadalajara Dr NE, Rio Rancho, NM 87144 FACING FORECLOSURE
??? Sonora Ave, Albuquerque, NM SOLD
1910 Muncy Drive, Modesto, CA 95350 FACING FORECLOSURE
6656 W 10250 N, Highland, UT 84003 MULTIPLE ATTEMPTS TO WRAP
6500 Larchmont Dr, North Highlands, CA 95660 FORECLOSED
9524 Angleridge Rd, Dallas TX 75238 FORECLOSED

Those "cash back" monies were used in a classic pyramid scheme. Each closing brought more money to keep loans current on his existing properties. They also allowed Casey Serin and his wife Galina Serin to live an extravagant lifestyle. Casey and Galina Serin blew through the money quickly, and within months he was facing foreclosure on all 8 properties.

With deflating markets in many of the areas where Casey Serin bought homes, he has been unable to "flip" them as he intended and is now $2.2 million in debt. Serin hopes to file for bankruptcy to avoid paying his debts, but has been advised that the fraudulent manner in which they were acquired means that he will almost certainly be prosecuted for felony fraud.

While this is all interesting, this is why you should be very aware of this story. Casey Serin is today still trying to make real estate deals. As he is a multi-state offender, Casey Serin may appear in your office in some form.

Casey Serin repeatedly makes reference in his blog to making offers on other homes, and is reportedly even shopping for an apartment complex. So he may be contacting residential and commercial brokerages.

Watchful observers have pointed out that Casey Serin has used several aliases and known associates. Some of these may be straw buyers; others may be simply a front to hide his own identity. He and his wife have also registered two known DBA's.

It is also known that Casey used the name Alesky Serin in 1997 to run his first pyramid scheme--at the ripe old age of 14!!!

Per Casey Serin's own admissions through his blog, here are some other names you should know:

KNOWN ALIASES, POTENTIAL CO-CONSPIRATORS, POTENTIAL STRAW BUYERS:
Casey Konstantin Serin, Casey Serin's full name.
Galina Serin, Casey's wife, maiden name Suprun.
Finch Properties, Owned by Casey Serin and Galina Serin
Able Buyer, Owned by Casey Serin and Galina Serin
Alesky Serin (Casey's father. Casey has reportedly bought and/or transferred properties to this name) Sacramento, CA. Other known cities: Fair Oaks CA, Rancho Cordova CA
Anna Serin (Casey's monther. Casey has reportedly bought and/or transferred properties to this name) Sacramento, CA. Other known cities: Fair Oaks CA, Rancho Cordova CA

KNOWN ASSOCIATES:
Nigel Swaby, Mortgage Broker, Integrity First Financial, Salt Lake City, UT. Other known cities: Sandy UT, Salem OR, Portland OR, Beaverton OR
Duane LeGate, President, House Buyer Network, Atlanta, GA. Other known cities: Marietta GA, Midland GA, Columbus GA, Orange Park FL, Cedar Grove WV
Paul Prestwich, Secure Tomorrow - Asset Protection, Sacramento, CA

One of these associates has said that Casey Serin has recently partnered with a California "investor" referred to as simply "G". They traveled to Salt Lake City together, and it is unclear if the duo were reconciling Casey's existing properties or searching for new ones.

Casey Serin typically used smaller, independent lenders. No doubt he thought that his approach might be caught by larger, nationwide lenders. If you have had any real estate dealings with Casey Serin, we encourage you to contact authorities immediately.

As con artist Casey Serin continues to weave a web of deceipt and leave a trail of debt in his wake, you will not only be saving other potentailly defrauded lenders. At this point, a proactive call to police will also help authorities separate those who unknowingly assisted Casey from his willing co-conspirators.