Long article published in the Sarasota Herald-Tribune yesterday about flipping short sales.
The article also comes with a map where you can look up specific properties in the Sarasota and Tampa areas that have flipped quickly for a profit. These properties involve the dealings of 3 individuals: Joe Wright (listing agent), Kevin Byrne (owner of Florida Home Deals LLC), and Chris Rodriguez (title agent).
Since September 2008, Tampa real estate agent Joe Wright and accountant Kevin Byrne have worked together to buy more than 30 pre-foreclosure houses and condos, with Wright's brokerage as the listing agent and Byrne's company as the buyer.
In each case, the men arranged a short sale and quickly resold the property at a higher price. Of their 33 deals, 22 properties resold within 24 hours of purchase. The median one-day price increase was $25,000.
Byrne and Wright did not return repeated calls seeking comment.
Yeah, no shit. Maybe they're too busy doing sweet deals.
Of course, the banks in many instances are screwing themselves with how they value a property:
Instead of hiring appraisers to value distressed real estate, banks often use computer programs to estimate values or turn to Realtors who provide what are known as "broker price opinions," or BPOs, at a relatively inexpensive $60 each.
The Realtors hired to estimate a property's value sometimes end up as the listing agent on the house, said Chrissi Rhea, a Tennessee mortgage banker and outspoken critic of short sale flips.
The article then goes on to say that these listing agents often will give a lowball value of the property to the bank. Meanwhile, one of the agent's friends or business partners will offer to buy the property at the lowball price while the agent ignores higher offers.
Too bad Chrissi Rhea wasn't involved when Casey Serin bought his properties. Check out this story:
In one deal uncovered by Rhea's mortgage company this year, a distressed homeowner was about to walk away from a Maryville, Tenn., house for $231,000 less than he owed.
The short sale consultant representing the owner planned to buy the house at the discounted amount then resell it to an outside buyer 30 minutes later for a $100,000 profit, Rhea said.
Rhea's company discovered the flip deal when that outside buyer applied for a mortgage on the house. Rhea refused to approve the mortgage. She contacted GMAC and CitiBank, the original lenders, and warned them that they were about to lose more than $100,000 if they allowed the deal to go through. Then she contacted the FBI and asked agents to investigate.
Rhea said she told the buyer she would approve the mortgage only if he arranged a sale directly from the distressed property owner. Instead, he asked to have his mortgage application forwarded to another lender.
Rhea said she asked the second buyer why he wanted to work through the short sale consultant. The second buyer "admitted he was getting a kickback as part of the $100,000 short sale profit."
That's another version of what Casey Serin would call "sweet cash-back-at-close".
Joe Wright, Kevin Byrne and Chris Rodriguez are basically asking themselves to be investigated further by the FBI. They might as well have coffee and donuts ready for the FBI agents so they’ll feel right at home.
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It could be argued that these guys are providing a service to the bank. It's one thing if there are other offers on the table that are ignored, that's criminal. If, on the other hand, they're going out and finding buyers that wouldn't normally be aware of the short sale they're playing middle man and should get a cut. If they're willing to give that buyer a kick back (sweet cash back) and that's disclosed I don't see anything wrong with the deal. The bank gets the house off their books, the final purchaser gets a nice house, and the middle men make something for their efforts. Win win win baby.
ReplyDeletebasically asking themselves to be investigated further by the FBI.
ReplyDeleteMeh, the FBI seemingly couldn't catch a cold on a winter's night.
Serin all but gift-wrapped his own conviction to the feds, and they couldn't care less. I've always thought there might have been some legal action going on behind the scenes that resulted in a plea deal, but I doubt it. His name has never appeared in a court docket, and even a plea would probably result in jail time in his case (maybe 1 felony count of mortgage fraud instead of the 10+ counts he potentially faces).
No, while the FBI chases terrorist bogeymen and bulk drug sellers -- really important crimes :rolleyes: -- the people who have actually helped to destroy the U.S., like Casey Serin, go scot free.