A Front Row Seat to a Real Life Changing Experience - PowerTeamHomes.com

By Piero Orsi RE/MAX Showcase

About 18 months ago an employee of a law firm, let’s call her Jane Doe, manage to steal over $1.2 million from my company Republic Title; my underwriter, Fidelity National Insurance, gave me the customary 24 hours to replace the money and so I did. Business went on as usual, no disruptions to our clients of any kind.

Months went by, legal proceedings and court appearances followed each other until on June 11, 2010 the U.S Attorney General indicated 485 individuals in a national operation called “Operation Stolen Dreams” and Jane was among 47 in the Chicagoland area who had taken money from loan pay-offs and other fraudulent mortgage activities via a very complicated scheme.

United States of America vs. Jane Doe was the complaint filed by the Justice Department and it made me realize that we were navigating in very serious waters; nobody wants a lawsuit but can you imagine having the U.S.A chasing you down? The majority of the others entered a no guilty plea and went back home after placing a bond. My evidence against Jane was so solid and well coordinated, thanks to my attorney Mark Belongia, that left her no choice but to pursue a guilty plea hoping for a reduced jail sentence.

August 31, 2010 in federal court, Jane is in the court room with her mom. The judge enters: Jane her attorney and her case worker approach the bench. For the next 50minutes or so the judges goes over the 19 page guilty plea agreement making sure that everything was in fact what had been agreed to by both sides prior to signatures.

“Ms. Jane” the judge said, “you are fully aware that the minute I accept this signed guilty plea from you I will take your passport, you will no longer be a free U.S citizen and you will lose all your right as a free U.S citizen. Based on the crimes you committed I can sentence you up to 20 years in prison and to $750,000 in fines…” the list went on.

It hit me that what I was witnessing, while great for my case to recover the money, was actually the end of a free human being. The end of what we have and so take for granted on a daily basis. Jane had committed crimes and should pay for them, we see it and hear it on the news every day but I guarantee you that until you see it live in front of your very eyes, until you feel it happening, right there it may not fully register in your mind.

As the judge was talking I could not help but look at Jane’s mom and try to understand how she felt deep inside; about the two teenage daughters from Jane’s first marriage and her 6 yr old son from her second marriage? A real life changing experience was taking place right before me and Jane’s life, along with that of her family, will never be the same from the minute she said: “I wish to enter a guilty plea on all counts.”

Why did I write about it? Knowing all the consequences, today, right now, many people are doing the same thing that Jane did thinking it’s no big deal; whatever their motive is, it’s justified to them. Then you end up in front of a judge, the whole world as you have known it comes crashing down on you: no reverse and no re-write of your life story.

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Real Estate Scams You Need to Know About - PowerTeamHomes.com

Foreclosure Rescue Scam

“Rescuers” promise home owners who are in financial trouble that they can save their home from foreclosure.

Their goal is to make a quick profit through fees or mortgage payments they collect.

Red Flags:

• The “rescuer” guarantees to stop the foreclosure process – no matter what the

circumstance.

• The borrower is instructed not to contact his/her lender or lawyer.

• The “rescuer” collects a fee before providing any service.

• The borrower is encouraged to deed the property over to the “rescuer,” lease it, and

buy it back over time.

• The “rescuer” tells the borrower to make the mortgage payments directly to it instead

of the lender.

How to prevent this type of fraud:

• Remember that there is no quick fix for someone who has defaulted on their mortgage

payments for a long period of time.

• Borrowers should NEVER send their mortgage payments to anyone other than the

lender or per the lender’s direction.

Short Sale Flipping Scams

Borrowers owe more than the current value of their home so they fake financial hardship and no longer make

their mortgage payments. An accomplice of the borrower then submits a low offer to purchase the property

via short sale. The lender agrees to the short sale, unaware that it was premeditated. The property is then

resold at the home’s actual value for profit.

Red Flags:

• The borrower suddenly defaults on the mortgage with no workout discussions with

the lender.

• An immediate offer is made to the lender at a short sale price.

• Cash back is offered at closing to the seller (disguised as repairs or other payouts).

How to prevent this type of fraud:

• DISCLOSE!! If the property is going to be resold, the short sale lender should be

informed of this in writing by both parties and must agree to it.

• If the property is to be resold, the sales must be 2 separate, arms-length transactions.

IRS also looks into that.

• Most short sale lenders require buyers and sellers to sign statements affirming that

the transactions are arms length and there are no agreements in place to resell the

property.

• If you are the listing agent on a short sale, do your due diligence to make sure you are

getting the best offer.

• Watch out for cash back to the seller on short sales. Most short sale lenders do not

allow the sellers to receive any money back.

• Under HAFA, the buyer agrees not to sell the property within 90 days of closing.

Straw Buyer Scam

A straw buyer allows someone else to use their credit profile to obtain a mortgage they are unable to secure

on their own. The lender then qualifies the straw buyer and the loan closes in the straw buyer’s name, but he

never makes a mortgage payment and the property goes into foreclosure. In other words, the money

disappears, leaving the lender with a huge loss.

Red Flags:

• A quit claim deed is recorded right before the loan closing.

• Investment property is represented as owner-occupied.

• Someone signed on the borrower’s behalf.

• Names were added to the purchase contract.

• Sale involves a relative or a related party.

How to prevent this type of fraud:

• Know your clients, always verify their identity.

• Check with the title company to see if any quit claim deeds were recorded right before

closing.

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Power Team Homes Market Update

INFO THAT HITS US WHERE WE LIVE

Housing starts were UP 1.7% for July to a 546,000 annual pace, but this was below expectations and all the gain came from a big boost in multi-family starts. Single-family starts were off 4.2%, declining for the third straight month. Looking at the market further out, we saw new building permits down 3.1% for July to a 565,000 annual rate. Foreclosures and Short Sales were at a rise this quarter.There is no denying that these reports reflect a softness in the home building market. But some experts see the data as part of a temporary housing market hangover following the expiration of the tax credits. You may remember how the government cash-for-clunkers program pushed a ton of auto sales into July and August last year. This resulted in a dip in sales immediately afterwards. But that was followed by a pretty nice recovery, with auto sales now up 20% from the first half of 2009. Stay tuned for housing.The Mortgage Bankers Association's weekly survey showed purchase loan applications down from the week before, but refinance applications soared, equaling their May 2009 level. Mortgage rates, of course, continue at historically low levels.
>> Review of Last Week
NOT SO BAD... Really???!!! Listening to the pundits who were fixated on last week's negative economic news, you might think things were awful. But as usual, the situation actually wasn't so bad, with the markets closing Friday with mixed results. The Dow and the S&P 500 dropped for the week, but far less than the week before. And the third major index, the Nasdaq, was UP 0.3%, so there are plenty of investors not paying that much attention to fretful pundits.Make no mistake, the week did have its disappointments. The housing starts and building permits covered above were not cheered on Wall Street. Then, initial weekly jobless claims came in at 500,000, a bit over estimates and higher than they've been for a while. On top of that, the Philadelphia Fed index of manufacturing was down for the month, instead of up as expected, indicating a souring of the outlook in that region. But wait just a minute. Mortgage refinancings took off, helping consumers and lenders. The Empire State index showed manufacturing in the New York region UP to 7.1 in August from 5.1 in July and suggesting more rapid growth to come. July Industrial Production and Capacity Utilization moved up nicely. Corporations continued to deliver strong profits and we even had renewed M&A action, with Intel buying McAfee for a cool $7.7 billion in cash. None of these are bad economic signs.Yet for the week, the Dow ended down 0.9%, to 10213.62; the S&P 500 was down 0.7%, to 1071.69; but the Nasdaq was UP 0.3%, to 2179.76.The bond market had a generally decent time of it, with the less encouraging economic data bringing in safe haven investors. Treasuries did well, while the FNMA 30-year 4.0% bond we watch ended down 13 basis points on Friday, closing at $102.15. Freddie Mac's weekly survey of conforming mortgage rates showed national average rates at historically low levels for yet another week.
>> This Week’s Forecast
JULY HOME SALES, ANOTHER LOOK AT Q2 GDP...This is the week for July housing. Tuesday's Existing Home Sales are expected to be down from June, coming off the end of the home buyer tax credits. But Wednesday's July New Home Sales could be a tick above June. Friday we get the Q2 GDP Second Estimate. This should reflect the economic soft patch we're going through, as growth is expected to slow to the 1.5% territory.
>> The Week’s Economic Indicator CalendarWeaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.Search for homes for sale in Lake Zurich,Gurnee, Grayslake,Long Grove and all Illinois Suburbs - Click Here

Feds announced a significant increase in the amount of Mortgage Backed Securities that they intend to buy!

3/18/09 Feds announced a significant increase in the amount of Mortgage Backed Securities that they intend to buy. In addition to the earlier pledge to buy $500 billion between now and June, they indicated that they are intending to purchase an additional $750 billion in MBS. Moreover, the Feds also indicated their plan to buy $300 Billion in Long Term Government Treasuries (something that they have been hinting at for 2 months)

On the news, MBS prices improved 125 basis points. Given this improved pricing, watch for improved rates this afternoon and tomorrow. In my opinion, once this action has been fully priced in during the next couple of days, you or your clients will want to seek your rate and have me lock it in. I believe this is the final push that we have been hoping for.

Of EQUAL importance is this caution...

This will totally overwhelm all areas of the mortgage industry. Please take this into consideration when establishing closing dates and financing commitment dates.

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From The IRS: The First Time Home Buyer Tax Credit Form!

As part of the American Recovery and Reinvestment Act of 2009, the IRS has officially released Form 5405 -- better known as the First-Time Homebuyer Credit Form.

True to tax code standards, the 10-field form is accompanied by 3 pages of instructions.

Form 5405 is a helpful, go-to resource for home buyers with questions about the tax credit.

For example, the form distinguishes tax consequences for homes bought in 2008 versus 2009, and clearly defines the term "first-time home buyer".

In addition, Form 5405 highlights the math behind the tax credit. In general, the First-Time Homebuyer Credit is equal to the lesser of:

• $8,000 for homes bought in 2009
• 10 percent of the home's purchase price

Married couples filing separately are entitled to half of the expected credit, and homes sold within 3 years are subject to a credit repayment in the year the home ceases to be the "main home".

Form 5405 is a comprehensive reference. However, be sure to check with your accountant for specific questions about your personal returns and how the First-Time Homebuyer Credit may impact your finances. There is no substitute for professional, paid advice.

The Truth on the New Home Buyer Tax Credit (Part 2)

With Congress reaching agreement on a $789 billion stimulus package for Americans, the clock is ticking for this year's home buyers and homeowners.

The package contains important benefits related to housing.

One provision gives first-time home buyers an $8,000 tax credit provided they purchase a home between January 1, 2009 and December 1, 2009.

IMPORTANTLY, THE FINE PRINT CONTAINS THE FOLLOWING FEATURES THAT COULD MAKE A BIG DIFFERENCE WITH YOUR FIRST TIME BUYERS!!

1. Is there any way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2009 tax return?
Yes. Qualified prospective home buyers who believe they are going to purchase are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the downpayment when they eventually buy within the time period allowed.

Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.

2. If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?
Yes. The law allows taxpayers to choose ("elect") to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.

Taxpayers buying a home who wish to claim it on their 2008 tax return, but who have already submitted their 2008 return to the IRS, may file an amended 2008 return claiming the tax credit. You should consult with a tax professional to determine how to arrange this.

3. For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest?
Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in 2009 and a larger credit would be available using the 2008 MAGI amounts, then you can choose the year that yields the largest credit amount.

Be sure to discuss your plans with a qualified accountant before committing to a plan.

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Improve your credit score quickly !

If you are looking to improve your credit score quickly, now is the time to get started. Here are some great strategies you can utilize right away to give your score a little boost.

Create Some Balance: While paying down installment debt (car, school, mortgage, etc.) will definitely boost your credit score, paying down or paying off revolving debt, such as credit cards, can cause a quick jump in your credit score. The trick is to get and keep your balances below 30% of your credit limit on each card. For faster results, attack those cards with balances closer to their respective credit limits first, as opposed to those cards with simply the highest debt. Remember, if you pay off any credit cards completely, do not close your accounts without discussing it with your mortgage professional first. Cancelling those cards may inadvertently undo all of your hard work.

Know Your Limits: Make sure that your credit card issuers are reporting the correct limits on your accounts to the three major credit bureaus. Without an available limit, your account will appear to be maxed out at its highest reported balance each month. This could cost you up to 80 points in certain instances. Some creditors, such as American Express® and certain cards issued by Capital One®, actually have a policy of not reporting available credit. However, most companies will report your credit limits if you ask them in writing.

Take Some Credit: If you have a credit card account in very good standing, make sure that all three credit bureaus know about it. Just like your credit limits, some creditors don’t report your information to all three credit companies - this is why credit scores often vary between bureaus. If this is the case, give them a call to find out why. Correcting this oversight could provide a significant boost to your score. Also, if you’re in very good standing, ask your creditor for a lower rate or higher credit limit. This will increase the gap in the debt you owe versus the credit you have available. Sometimes hinting about closing an account can suddenly bring out the generous spirit of certain card issuers. Give it a try. The worst they can say is no.

Protect Your Interests: Your credit is calculated based solely on the information available to your creditors. If you have a HELOC, make sure it’s listed as a mortgage or an installment account on your credit reports and not a revolving debt. If you had a bankruptcy, be sure that all items associated with the bankruptcy are being reported correctly, that is with a zero balance. This action could increase your score by 50-100 points. Because simple mistakes like these can wreak havoc on your credit score, it’s important to monitor your credit every four to six months.

Even the Score: If you find information on your credit report that you believe is inaccurate or incomplete, then you have the right to dispute it free of charge. For the fastest results, visit the appropriate credit bureau’s website and file a complaint online. If supporting documents are necessary, you have to file your dispute by mail.