Just a short note on this. Think about it. Why would he have taken the money and used it for a condo when he had to cover bank losses on mortgage loans that were in default?
Answer: the bank had no losses, so there was nothing to account for.
This money wasn’t income. It couldn’t be booked as capital contribution, but his use of it to buy a condo didn’t harm the bank one bit. Their balance sheet is unchanged.
My guess is that if he asked an attorney familiar with accounting for banks, he would have suggested that the bank use the money to buy something that can be capitalized on the balance sheet.
Otherwise the financial statements look cooked by the receipt of “bailout” money when there were no losses to bailout. There were no losses to bailout because his bank never assumed the risk of loss on the subject securitized loans.
His bank never advanced any funds for the loans. His bank never used its credit to fund the loans. His bank was most probably an originator who was paid for services rendered. What services? The service of acting as though they were the lender when they were not. My guess is that unless they get him on some technicality his prosecution and sentence, if any, will be light.
Banker Used Bailout Money To Buy Luxury Condo
http://breakingnewsusa.com/2013/08/banker-bailout-money-buy-luxury-condo/
Filed under: CDO, CORRUPTION, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: accounting for banks, bailout, banker, Condo, FASB, gaap, securitized loan | 13 Comments »
Before a property goes into foreclosure, many owners stop paying their monthly HOA dues. In fact, HOA fees are generally among the first bills struggling homeowners quit paying. If they can’t afford their mortgage, then they aren’t going to pay their HOA fees. Adding to the problem, some banks aren’t paying HOA fees on properties they have foreclosed on and now own. As a result, association fees rise and the property may be less desirable to buyers.
When looking at the balance sheet of a homeowners association, a buyer should look at their reserves. Buyers want to make sure there is enough cash on hand to take care of maintenance and other services. If there is no reserve fund, the association may have to impose special assessments when major projects become necessary. If HOA’s don’t have reserves, they may be forced to close community amenities like parks, pools and community centers, because they can no longer afford to build and maintain them.
Insider Confirms Builder Complicity in Appraisal Fraud
From Comment on Blog: May 8. 2010
Neidermeyer finds it hard to believe that Builders participated in the mortgage fraud because he has not seen it first hand like I have.
I have been in the real estate business since 1993 during that time I was a loan officer for various independent loan brokers. ( no I did not fund ANY preditory loans, option arms, 3 year pre-pay penalties..etc. and my clients were forced to read their paperwork because I was at the closing table with them)
The first fraud I was witness to was borrower steering. The builder would offer incentives to buyers for financing if only the borrower would use the builders in-house lender directly. The incentives on average would be around $3000.00 toward closing costs. At the beginning of the application buyers would be quoted a rate about 1/8 below market so it appeared that the Builders lender would give them a good deal. When the home was finished 6 months later, 9 times out of 10 the rate had risen and the rate at closing was actually 1/8 to 1/4 percent higher than the buyer could have gotten with their original broker.. So the incentive for closing costs was a sham to steer clients to in house banks.. aka Countrywide on many occasions..So new home buyers check the comparative rates the day you closed and you will see the builders lender saved you no money.
2. Appraisal fraud was rampant. New homes always cost more than comparable resale because the prices for upgrades are added into the loan at retail..
What has to be investigated are the first 3-4 sales in the development or nearby developments..who are those parties and what is their relation to the builder? And how was the comparable property purchased? Cash? Deed Transfer of some sort etc.. often employees or relatives of the builder would” buy”” a home and close on it to create a comp.. perhaps 2 and then the appraiser could go outside the development for 3rd comparable sale at another builders development.
Voila they now have comps and they just turned $200k houses into $300k houses!
Condo Developments/ condo conversions: the HOA and property management company will often still be owned by the developer under another LLC.. look for the same officers..the hoa will be asked to certify certain information about the development on the appraisal..such as owner occupancy ratios, number sold etc. And the HOA cert will lie about the ratios to get the appraisal approved in underwriting.
I just had a client win a settlement due to my research..The appraisal was one of the worst I had seen and ordered the Landsafe and Countrywide in house..The comps used were 5 miles away and 2 times the sq ft and bedrooms.. completely uncomparible properties to start with and the adjustments down for sq ft and bedrooms was laughably small..the HOA cert( by the developers other llc) stated 175 owner occupied when there were only 3 mailing addresses in the development in public records for owners that were not in another state! I also found that one of the signatories for the builder had her own LLC’s and one of her business addresses was the one comparable sale within the development included on my clients appraisal and “owned by an entirely different individual!
And the worst thing I found on this appraisal was the appraiser’s comments section where he admitted the unit had not yet been renovated and that the builder intended to do so after the next tenant changeover..NOT RENOVATED YET! and yet still he appraised the unit as/if it was renovated..the targeted client lived out of state and never saw the property he purchased..
I also looked at the early transfers..of course there were 2 that were sold at 160K when nothing prior had sold over 64k..interestingly after the initial inflated transfers there were several deeds recorded by the officers of the builder llc and friends for the same units at 48-68K done quietly so as not to hurt their comparable sales.
Check the upgrade sheets and what you were charged for certain upgrades… a client of mine was charged over $30,000 for paint upgrades! I am not talking murals here.. a sponged hallway and 2 tones for moldings and walls..
So yes the builders are more than responsible for the inflated values..the partnered with the banks to create this market..It is all in the research!
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Filed under: bubble, CASES, CORRUPTION, Eviction, expert witness, foreclosure, foreclosure mill, GTC | Honor, HERS, MODIFICATION, Mortgage, Motion Practice and Discovery, STATUTES | Tagged: Appraisal, appraisal fraud, appraiser’s comments section, builders, comparable property, comparable sales, Condo, countrywide, early transfers, fraud, HERS, HOA, incentives, independent loan brokers, inflated values, Landsafe, loan officer, mortgage fraud, occupancy ratios, property management company, upgrade sheet, upgrades | 4 Comments »