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Homeownership

Closing in on nasty foreclosure scams

(HOMEOWNERSHIP) The FBI is cracking down on foreclosure scams that are potentially happening in your backyard.

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FBI is cracking down on foreclosure scams

It’s no secret that the housing market has been riddled with foreclosures. It’s also no secret that where there are vulnerable people, there are unconscionable, scheming individuals ready and willing to exploit the situation. However, for some, the promise of a “rescue” was a last effort to attempt to hold on to their home.

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Unfortunately, for many of these individuals it wound up costing more than they thought it would. The Federal Bureau of Investigation recently posted another con-artist would be facing federal time for running illegal “mortgage foreclosure rescue” services.

The latest con artist crackdown

Karl Robinson, a church pastor, offered mortgage rescue services under his name, as well as, through several other companies such as Stay in Your Home Today, 21st Century Development, and Genesis Ventures Corporation. Robinson’s services were aimed at worried, anxious, distressed homeowners who were facing foreclosure or eviction. These services promised to delay these events and would keep them in their homes for an affordable rate.

Instead, many people lost more than just their homes, they lost their savings.

The old adage is certainly true: if it sounds too good to be true, it probably is. In all fairness, Robinson and his crew were preying on individuals who were vulnerable and desperate after enduring the Great Recession in 2008. Robinson promised affordable refinancing, lower monthly payments, low-interest deals, and delinquent mortgage pay-offs which all sound like salvation when you are faced with losing your home.

What’s the FBI’s take on this?

FBI Special Agent, Kevin Danford, stated, “Robinson joined a growing number of con artists surfacing throughout the country during the subprime mortgage crisis, focused on lining their own pockets instead of actually helping clients.”

Basically, Robinson was engaging in a partial-interest bankruptcy scam.

Another side of Robinson’s scam, dealt with evictions. According to the FBI, “[Robinson delayed evictions for Robinson’s clients] whose homes had been sold in foreclosure proceedings. Robinson falsely claimed in state court eviction actions that his clients still had tenants in those homes. Robinson would then file bankruptcies for the fictional tenants, postponing the evictions.”

Robinson’s sentence

For nearly six years, Robinson ran his scam until the FBI started investigating in 2013. This investigation revealed an external hard drive containing fake driver’s licenses, identities, and incomplete bankruptcy petition drafts (which led the FBI to uncover the steps he used to carry out the fraud scheme).

Following his arrest, Robinson confessed to knowingly defrauding his clients, the state of California, and federal courts.Click To Tweet Robinson pleaded guilty in August 2016 to the role he played in running the multi-year foreclosure rescue scheme (aka nasty foreclosure scams). He is currently serving four years in federal prison.

Let this be a warning to all other foreclosure rescue scammers: preying on the vulnerable can land you in federal jail. Also, let this be a warning to those seeking to refinance: please, seek out a reputable representative (read: bank, credit union, mortgage company.

#ForeclosureScams

Jennifer Walpole is a Senior Staff Writer at The American Genius and holds a Master's degree in English from the University of Oklahoma. She is a science fiction fanatic and enjoys writing way more than she should. She dreams of being a screenwriter and seeing her work on the big screen in Hollywood one day.

Homeownership

How buyers are competing in a tight home buyers market

(HOMEOWNERSHIP) It’s a seller’s market with housing supply at an all-time low. Here’s what buyers are doing to increase their chances of buying a home.

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Family unloading boxes inside of a home, previous home buyers.

Home inventory is at an all-time low in most places around the country. Most people believe that the COVID-19 pandemic is responsible. Families are staying put in their homes, rather than looking for a new place to live. The National Association of Realtors reports that in March there were almost 5 offers for every home sold in the United States. Utah Realtors reported an average of 7 offers per home. Sellers and realtors are winning in this highly competitive market, making us wonder how buyers are faring. The latest REALTORS® Confidence Index Survey gives us some indication of what buyers are doing to boost their real estate transaction success.

Cash is king

According to the NAR, cash sales are up by an average of 21%. Buyers are hoping that cash makes their offer more attractive. Closing without a loan has a lot of benefits to the seller. The sale is more likely to close, as it isn’t dependent on a loan. Plus, there are less costs involved in closing. Since 2013, cash sales haven’t been trending upward, so this is an interesting turn for sellers. Buyers who make cash offers reduce the risk of getting rejected by the seller.

Buyers making larger down payments

Sellers also benefit when buyers make a 20% down payment or more. A higher down payment increases the chance of getting a loan. According to the NAR, almost 50% of buyers are making a down payment of at least 20%, which is up from 40% of buyers in 2011. Buyers avoid mortgage insurance premiums, which makes it a win-win for everyone.

Buyers aren’t even offering or negotiating

The third way buyers are coping in this market is to back off and not even make an offer when they know a home already has competition. Why get your hopes up, only to have them dashed when you can’t negotiate?

Will supply return?

The good news is that the housing supply outlook is on the increase. As vaccinations roll out and people feel safer to show their home, more homes should come on the market. Housing permits are up, too. This should help even out the market and give buyers a better chance to find a home.

 

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Homeownership

Home sales dip 10%, inventory levels continue to plague the market

(HOMEOWNERSHIP) While demand for home sales has remained high, a lack of inventory means that numbers have continued to dip, according to the NAR.

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Home interior with gray couch, cactus pillows, and succulents on the coffee table in front of the couch.

In February, all regions experienced a decrease in pending home sales (contracts penned), according to the National Association of Realtors (NAR). Compared to January, sales fell 10.6%, and fell 0.5% from February 2020.

As with every real estate news story you’ve read here in recent years, NAR continues to point to tight inventory levels as the continuing plague on the market.

“The demand for a home purchase is widespread, multiple offers are prevalent, and days-on-market are swift but contracts are not clicking due to record-low inventory,” said NAR’s Chief Economist, Dr. Lawrence Yun.

He observes that overall demand does not appear to be impacted by mortgage rates trending upwards, expected to remain low at no more than 3.5% this calendar year.

It is interesting to note, however, that more expensive homes had increased sales activity because of “reasonable supply,” per Dr. Yun, adding that homes above the $250,000 mark have driven home sales in recent months.

That said, Dr. Yun indicates that even homes priced above $500,000 to less than $1 million are subject to the tight inventory challenges.

“Potential buyers may have to enlarge their geographic search areas, given the current tight market,” Dr. Yun noted. “If there were a larger pool of inventory to select from – ideally a five- or a six-month supply – then more buyers would be able to purchase properties at an affordable price.”

In past months, NAR has repeatedly pointed to the same solution to the inventory challenge – new home builders. If supply were increased and housing starts improved, demand would be more readily satiated and fewer people would be priced out of the market.

Economic conditions typically shift under any new President, and with an ongoing pandemic, we are watching for any signs of hope in a dark time. With building material costs continuing to increase, labor conditions in the sector remaining difficult, mortgage rates are rising (albeit slowly), inventory levels are not expected to immediately improve.

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Homeownership

Why realtors shouldn’t use the term ‘Starter Home’

(HOMEOWNERSHIP) You see the term in the MLS for fixer uppers, you hear it when Realtors are working with first time buyers. But the term “starter home” shouldn’t be in anyone’s vocabulary. Here’s why.

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Just words

Collins English Dictionary defines a starter home as a “small, new house which is cheap enough for people who are buying their first home to afford.” You won’t find the phrase too often outside of the real estate industry.

There isn’t much about the etymology of the phrase, but most likely, it’s a marketing ploy to get people to buy into the idea of purchasing another home in a few years.

Grind your gears

Mark Greutman, husband to Lauren Greutman, believes that the term “starter home” should bother people. The phrase implies that you will upgrade later.

Your starter home isn’t good enough for the rest of your life. And not to get into how well Americans have it, what about people who will never be able to afford anything more? Is it an insult to them?

Do you really need two living rooms?

Older generations bought one home and lived in it until they could no longer be independent. In today’s world, we buy a starter home, then upgrade to have more space, to live farther away from our neighbors, to have rooms that are only used once or twice a year, and to make sure you have a 2 or 3 car garage to hold your vehicles and more stuff, some of which isn’t taken out very often.

But consider this: You could pay off your starter home in 15 to 20 years, if you budget right.

You could be out from under a mortgage and have money to travel, send the kids to college, or even retire early. When you think about what led to the financial crisis in 2008, isn’t it better to have a smaller house where you can make the payments than worry about losing your house?

Be content where you are

Realtors are motivated to make sure that they have customers. If people buy one home with the intent to stay, will the market dry up? Probably not, because people move and a new generation will be ready to purchase homes for their own family.

Let’s think about that phrase, “starter home.” It fuels consumerism and discontentment. Don’t call cheaper houses starter homes, but just a home.

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