Posts Tagged ‘sacramento’

The statistics in Washington, Sacramento and the Inland Empire is grim with one out of 43 residences stained with foreclosure. Officials are scrambling with funds, legal steps and plans to help the house owners stay in their homes and snub predatory lending methods leading to foreclosures. But the clock is ticking.

Speaker Nunez is pressing for a special Legislative session to deal with the increasing foreclosure crisis. Democrats have joined in proposing remedial packages. Washington remained concerned with the national fall out. Paulson, the Treasury Secretary conferred with bank representatives and lenders to find out ways to keep interest rates at bay. He wants more positive action that shows quick results. At-risk borrowers need to be identified quickly.

Governor Schwarzenegger of California saw to the sanctioning of a $1.2 million education awareness programme to help both lenders and borrowers wiggle out of the stigma of foreclosures. The forthcoming four to six years will see thousands of California’s residents threatened by a scheduled jump in interest rates.

The government fears that if foreclosures are allowed to go unchecked there will be a further slump in the real estate market causing increasing loss – a vicious circle of no return. So the plan has to be such that people can stay in their own homes and yet the mortgage industry will continue to be active and healthy.

One idea is to encourage lenders to continue with the low ‘teaser’ rates for some more time. It will allow the market to get back on its rails and consequently the borrower will get a chance to refinance with the house price stabilizing. Then it will be a smooth entry from the floating into the fixed prime mortgage zone before defaults start off. Schwarzenegger had made similar suggestions after talking with four lending giants in California. California tops the offenders in the foreclosure crisis with a ratio of 1:88.

The stumbling blocks the new plans are coming up with is that the traumatized borrowers are reluctant to even talk to the lenders although the latter have sent out signals that they are willing to be amenable. In more than half the foreclosure cases the loan officials have failed to reach the borrowers. But soon it will be too late.

In Sacramento the Democrats have funded $10 million for counseling purposes. Bans will be imposed on bonus incentives for agents and also on penalty charges.

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Desperate house owners about to be disposed and thrown out on the streets will clutch at any straw. There was quite a stir and talk about ways and means out of the foreclosure mess. It seemed all that one had to do was to seek help. But the victim’s state of mind was such that the helper’s bona fides were not property checked. Fortunately in this one instance this person extending the helping hand to people under the cloud of foreclosures was pinned and accused. Last Thursday the fellow was sentenced to serve a five-year term in federal prison for swindling borrowers and duping lenders.

On Thursday 35-year-old Christopher Craig was ordered by USA District Court Judge, Morrison England to a five-year stint in jail. This was to be followed by another five years of supervised release in addition to payment of $1 million as compensation.
Craig had seen the end of the road when on 10th May he had pleaded guilty in USA District Court at Sacramento. He was charged for falsely helping himself to $1.2 million on home equity loans from Washington Mutual Bank. The houses involved were scattered over Auburn, Lincoln, Stockton, Elk Grove, Sacramento and Manteca.

Craig went about his scheme with a purpose. First he found out details of those properties that were about to be foreclosed and then came smilingly forward with an extended hand of help. His trick was to offer assistance by forwarding them loans. But in reality he prepared documents to give their property to a straw buyer who would in his turn apply for home equity loans.

The straw owner in his turn lied to the lenders by stating that they were the one and only owners of the said units. This meant that the units were free from mortgage restraints. In this way Craig pulled into his net $1.2 million into this account. From this haul he paid up only one loan due to Washington Mutual. The loan was for $974,452.

From Craig the focus has now turned to the straw buyers. Donald Edgecomb and Jacob Esteves are both in their mid thirties and came from Auburn. They too pleaded guilty to misprison of a felony – that is they failed to report a crime connected with the Craig affair. Their case will be taken up the following month.

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It seemed as if a big party on. Cars rolled in on a foggy Sunday April morning in downtown Riverside. Men in tuxedos guided the traffic. Now that was unusual! People shopping for real estate bargains tumbled out in dockers, sandals and shorts. Don’t let the casual dress code divert your attention. These were all serious shoppers with pockets bursting with cash and checks – perhaps to the tune of millions of dollars.

Who were they? There were investors from San Diego on the look out for an inexpensive property to rent out. Some were novices from Fontana hoping to save a whopping $200,000 on a family unit. Many others came in droves for auction sales of foreclosed houses. California has not seen the likes of this type in decades. On this particular day, two lenders had put 100 properties on the dock. 93 had been sold off before the end of the day. Most of the properties were in fast growing ex-urban and desert areas on Riverside and San Bernardino Counties lying to the east of Los Angeles.

Till the other day the company holding the auction had been a nonentity in the field. Bu during the last few months when mortgages fell and foreclosures rose many lenders brought them back to business from hibernation. It was well worth it. They sold 265 properties in San Diego, Los Angeles and Riverside during only two May weekends. Upbeat, they are planning a repeat performance in Sacramento, Modesto, Atlanta and the Bay region, this summer. The spokesperson of this company described this as ‘counter-cyclical business’ but he refused to disclose the names of the banks involved. He admitted that in some cases the properties were sold for less than what were due in terms of loan. It was a gathering of rain and shine for what was one man’s meat was poison for another. The losers were none to happy but they would rather face losses quickly than linger on it with no hope in sight.

The tuxedo boys were not only outside conducting traffic but also inside the convention answering and guiding people around. In the opposite hall there were 41 loan and 25 escrow officers. Speakers were loud on the soundtrack. Extra chairs were wheeled in. From the bonhomie at the party it did not seem that the process of auctioning foreclosures in California is usually painstaking and time consuming.

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