Manipulation Of Hud And Marginal Properties
I really hesitate to expose to all of you clean living above board Investor types here on TCI. The semi seemy side of Real Estate,
Inasmuch as we have just finished one of the longest most argumentative 12 pages of posting this site has ever seen. My God, it took the Rev. Locke to interceed and the highly efficient no noncense Nancy to research it. All of which I read, cogitated over, then went out and bought mints as per some of the posters instruction.
I think it was when the assessors office actualy reduced a tax valuation on a property that it all fell into place. So I called an acquaintence of mine who has sold out for money and become a burocrat in Washington D.C. (courtesy of Telsa). I woke him up. Yes it was about 11 AM but remember sleep is a traditional perk of his job. I asked if he had information re: the area which was under discussion so long here on TCI. Yes, it was known and identified as an area in which four gang signs are not enough to enter a Seven/Eleven. The varied languages were not necessary but the dialect in common use was indeed picturesque and those of the Real Estate Profession who officed, dwelt or hung out in the area were dealing primarily with HUD, as Huddy baby was the prime conduit for negotiating the Buy/Sell of properties. Indeed without Hud there would be no market at all. Values would approach zero and all Real Estate Activity would cease.
Let me explain. An owner does not pay his mortgage payments. The property goes into foreclosure. If it is in an area where no right thinking Lending Institution would lend without an FHA guarantee to bail the lender out on any default. Well Hud is the organization assigned to handle the problem. They take it over after foreclosure and they examine the property, board it up if necessary and it is assigned to them. They offer it for sale and take as a starting point the total monies lent plus the cost of the foreclosure and maybe a little on top for management. Local Brokers check it out. Realize that the true value is below the listed amount and they start to bid into the property. If the bids are too low they are rejected, but guess what. Hud reconsiders and the price drops until smarty broker fronting for a trust who may in fact be them, gets an acceptance and they buy. Listed at $43,000, sells for $11,300. Looks like a winner. It is a winner as long as Hud stays active and makes a market. Real property value unsupported by our employees in Washington probably true value about $4,500.
Now the Broker, who is also a Mortgage Broker,then arranges a sale to a new buyer. . Not at what the Broker er excuse me Trust paid for it but at this crazy supported high market price at which price it went into foreclosure. So it is sold for $47,000. Broker makes a commission and of course arranges the financing based on prior sale before foreclosure. Broker gives a little help to the new buyer, arranges to cover costs of all fees etc. Buyer gets property probably with no money down. The Trust helps with costs and it is a winner. Broker oops Trust bought at $11,300 sold for $47,000 looks great. Right? The Buyer got in at nothing down. Win/win for everybody well everybody but the taxpayer.
Of course the crowining insult. Say the Broker wants to keep the property wants to have an office there, is into wino's drugs and an occasional sound of gunfire. Ah I love the sound of a firefight between gangs in the early morn. Apocalapse revisited. So what does the broker do? She goes down and has the property reappraised by a local appraiser and down comes the tax rate to the lower amount. Smart lady. It does expose the true value of the property.
See the figures can all be adjusted. Yes you can make a great many deals a month. You can also make money. Just as long as dear old Hud stays active. On each new sale the price has to go higher to cover the Brokers commission and the sums advanced to the New Buyer cause he may be new to property but he does know he cannot make the payments. He is just going to get enough money out of the deal to make a few payments then default all over again. Takes Hud time to get him out. He fights the eviction and if he does a really good job he stays a year. He is rent free. In some parts of our society that is a big plus even better if it can be repeated several times. You take a family of 8 members, 4 adults, they take turns going into ownership of these properties. Say a year of free rent per ownership. 8 members in the family Yip 8 years free rent. Not bad, beats working steady.
The pivot in all this is the Broker/Trust Owner.
Should be qualified as a Real Estate Broker and a Mortgage Broker. Each transactioin produces a portion of a commission and each mortgage placed does also produce a portion of a commission.
Now do not point the fingure at Philli, we have it here in the South part of town. So do most major cities who have created slums.
Do not fault the Broker, if you are limited in your outlooks you go to the area in which you can operate. They are merely symptomatic of the major problem. The Slum is the real problem.
Most of you who are familiar with slums realize they breed unrest and rebellion. Look at Los Angeles. The Watts Riots, we have had two biggies. Detroit, they had a goody.
Lets see how can we change all this? I am working on it.
Cheers, The Container King. Lucius
Pope Lucius,
As always....your a great read.
Da Kruger Rand
Congratulations Lufos. You busted Tinman AKA Lori's HUD scheme at list 100% accurately. Can you tell if FBI is on the way? You and Omega Lucius are the biggest scam busters on TCI. But of course, that's my 2¢!!!!
CREIPAP, I think you missed the point of Lucius' article.
Omega is far from a scam buster. I say no more.
Creipap
I'm sure you're much more knowledgable than me on many things but Omega was banned from this board so he's not here anymore and hasn't been for quite some time. How do you figure he's a big scam buster if he's not here?
Creipap,
What HUD scheme did I preform? Talking about scams have you gotton your $2000.00 back fromTCI you PM'ed me about. Did you tell anyone else about this? I think if you are telling the truth you should let everyone know.
Lori
I have no AKA's nor have I ever used one.
Lufos, you've done it again man! My dear god, you are fantastic. Your articles fly like a new 1944 Spitfire and should be framed and posted in the TCI headquarters in Washington, DC. When you move them there, hopefully soon enough. West Coast brunch should be on Beverly Hills and the mainland one in Dallas, TX, the center of the universe. Our friend WheelerDealer should be advanced to a position in charge of door locking checkup and security, bouncing back and forth between predawn and dusk. Get them tiger. Don't let anyone slips. If all go as planed, I should be able to provide the lease on the local building and first cl***** land. ( using OPM of course) And as new young secretary of The New Container Homes Based HUD you'll have to do all you sad, even make me want to move in one of the nicer red ones. In-fill the empty lots throughout the states shod be therefore blazing fast; watch how fast the trend move.
I can even picture Michael Jackson coming out of the state pen on the shaded window buss and getting into his stretch limo, rushing on his way to his new mention on Beverly Hills built from heavy duty caliber II, 35-45 footers ISO containers. I can see it man. Hurry up, make your moves fast because da time flies.
Once you take the supreme position, I am convinced you'd expose all the RE crooks to the last. Like you've sad, that Realtor from Pennsylvania is just the beginning. ( wonder how did you drill through the HUD chain of buyers scam). We need more people in politics like you. The only think I am afraid is if you would in deed accept the cheef of THE HUD post with all those millions you already have to care about. Being mega-rich is not a joke. But listen to me, I forgot I am talking about the, The Container King! What's your favorite color? I love red. It makes it easiest for one to paint the white cross. Swiss Models are still the best. They are hermetic. Neither rein nor the wind can get in there. Love the ultra wide open floor plan. You got my full vote!
"Inasmuch as we have just finished one of the longest most argumentative 12 pages of posting this site has ever seen. My God, it took the Rev. Locke to interceed and the highly efficient no noncense Nancy to research it. All of which I read, cogitated over, then went out and bought mints as per some of the posters instruction."
Mr Lucius, what posts did you mean? I can't find them and I'd like to read them as an intro to your article, please.
Thank you
Interesting article, Lucius,
I've gotten the impression from some of your previous posts that you're definately an advocate for HUD change. Also that you believe people can make a difference in the "war zones" and not so spiffy neighborhoods. I agree with you. Long time ago, when i was first married and very young, my hubby and i bought our first home and it was a HUD. I loved that home. Paid $6720.00 for it 2 years later, after investing alot of elbow grease and maybe $1000.00, we sold it for $19,900.00 and used that money to make our move to a little country farm on 20 acres.
The city where I'm investing now is just north of me, Saginaw. There are several old (1890s) neighbor- hoods there that are still solid enough to warrant investment and could be or are starter home or long term rental areas. The fun we're having fixing up the $13k repo we bought is unreal. (retirement from the real world is a wonderful thing). The satisfaction of hearing the neighbors say how happy they are someone's fixing it up is great. When it's all said and done, comps suggest the house will be worth anywhere from $40 to 45k but i plan to sell it for a bit less, we'll have approx 8k into it and i believe in making a profit but also believe in not being too greedy.
Seeing older neighborhoods be reborn is something that pleases me. I doubt i'd consider dealing with HUD, it seems to have become a racket of sorts and leaves a bad taste in my mouth.
Thanks for pointing out how they contribute to the housing situation.
becki
Lucius,
This is a rather interesting article. I can see how most of what you said would work. But would it really be worth it to the Real Estate Agent or the Mortgage Broker to lose their licenses over properties that are worth $47k. You can do the math: $3290.00 split in two for the agents $1645 and any loan under $50k in PA would be in section 32 If the fees were over $1,200.00 broker fee and $400.00 Processing fee. That totals $1600.00 gross fee.
I am wondering why these two people or maybe one (if that is the case it could not happen, we have strict laws) would risk their businesses for someone else to make 25K. Now they could be a silent partner with the seller.
I personally will not even do the loans for my Financee. I will make sure he gets a good price, and make sure everything is Kosher, but I won't even put them through my company. (bad mistake)
Mostly what you are talking about in your article seems to be what happened to people in Pa in the last several years because of Home Improvement Loans.
Of course you may not know about different types of financing. I'll do some research on different types of loans and let you know about some of these programs tomorrow. Maybe you could have the FBI investigate the banks.
When I buy a house I like to get a conservative appraiser. Many ask me for business and tell me all types of stories. I have been using the same man for over 16 years. I have never had to get an extra comp or had any kind of problem with him with any of the banks.
You don't have to get an appraisal to get your taxes lowered in my area. You don't have to complain about the area.
Well I'll look up some programs and maybe you can have your friend investigate
I do have to say very nicely done. But you could have pulled up tons of articles on these scams all throughout Pa. There is a big trial going on as I type.
Have a very nice evening
Lori
Wow Lufos, Lori doesn't seem to like your article nor I think she'd like to have certain enforcement agencies spoil her retirement plan for Caimans, the biggest tax money hideaway. Can you fix it up so she doesn't feel exposed? Please do it for us girls. I hate to se the FBI brakes in to the joint and close it up. That would not be fun.
Lucius,
I am going to give you 10 Programs that are currently used by people that are buying houses from investors in the Pgh area. This bank does not care if the house was bought yesterday and put under contract today.
1) 107% Purchase (up to $650K) score 680
2) 107% purchase Vacation or 2nd home (680 score)
3)103% purchase (600 score)
4)2 unit purchase 103% (620 score)
5)sfr purchase 100% (580 score)
6) stated self employed (680 score) 100%
7)stated w2 and 1st homebuyer 100%
8)lease purchase, land contract 100% (580 score)
9)Rural properties (580 score) 100%
10) private party VOR, lives with parents, recent grads 100%
Those are just from one bank, I deal with 1000's of programs. That is what brokers get paid for finding programs that allow flexibility. I personally like to take a thorough application to determine the needs of the customer. I have found people do not know what is best for their situation. I get my 95% of my business from Referrals.
But remember flexibility doesn't mean fraud. As I have stated before there are guidelines that we have to follow. The deal has to make sense.
Lucius,
I am going to end with what was told to me several years ago by a real estate agent.
I went to look at a house it must have been the "White House" of Pgh in it's day. (I grew up in a suburb of Pgh,Pa) By the time I made it to the driveway, I had passed Several businesses with big black bars on all windows, houses that were burned out, roofs were missing, windows had boards on them. I even seen a hand painted sign that said "call me to rent an apt. or house in this neighborhood". When I was finally leaving the house this is what an old wise man from the Getto told me: "Lori, Your standard of living is not the same as these people. They may have family and friends here. Our job is not to decide what is best for them our job is to make sure they can afford the house and they want the house."
That is what Real Estate Agents and Brokers should be doing making sure this is what the customer wants and that they are getting the best program.
I don't know why Dealer Jo thought I didn't like this article. I think it is something to think about before we act.
Lori
I can see how everything can be seen as "fishy" but really can we believe that the FBI is investigating an investor who has kept all of the properties according to the posts over the last couple of months. There was only one property sold. And there are only two mortgages that are recorded on all of the properties that were in question. I think that investor is doing one hell of a job, finding properties, paying cash, fixing them, and renting them out. I wish I had enough money to be able to do that. Maybe we should be looking at ways to be more like that than trying to bash someone because they have done what most people wish they could do.