David Saks: October 2014

David Saks - Real Estate Broker - The Real Estate Mart of Tennessee, Inc. - 4040 North Watkins-Suite #4 - Memphis, Tennessee 38127 - Phone (901) 357-4663

Weekly Newsletter From Jim Gibbs' "Career Institute" October 13, 2014

WEEKLY  NEWSLETTER     

Monday, October 13, 2014

Real Estate Agent Charged in Short Sale Fraud

Danville California real estate agent Anthony Keslinke was charge in a scheme involving short sale mortgage fraud, announced U.S. Attorney Melinda Haag, Drug Enforcement Administration Special Agent in Charge Jay Fitzpatrick, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.

According to the superseding indictment, Keslinke used straw buyers to purchase real estate throughout Northern California. Keslinke identified properties, including his own properties, that were potential candidates for a “short sale.” A “short sale” is a sale of real estate in which the sale proceeds are less than the balance owed on the mortgage loan pertaining to the property and often occurs when a borrower cannot pay the mortgage loan. In furtherance of the scheme, Keslinke allegedly submitted offers to the financial institutions on behalf of straw buyers. In order to induce a bank to accept a short sale offer, Keslinke would draft fraudulent financial hardship letters and submit them on behalf of the seller of a property. In addition, Keslinke often altered engineering and pest reports associated with the properties in order to give the appearance to the financial institutions that the properties were worth significantly less than true fair market value. Additionally, according to the superseding indictment, Keslinke often altered bank account documents to create the appearance that the straw buyers had sufficient funds to purchase the properties in cash. Once a financial institution accepted a particular property for a short sale, Keslinke used his own funds to purchase the property in the name of the straw buyer. After a short sale was completed on a particular property, Keslinke maintained control of the property and often sold the property for a significant financial gain. Keslinke is charged in the superseding indictment with using this mortgage fraud scheme to orchestrate the short sale of properties in Danville, California; Walnut Creek, California; and Kings Beach, California.

The indictment also alleges that between August of 2013 and February of 2014, Keslinke met with an undercover agent purporting to be a drug dealer on multiple occasions. On five separate occasions, Keslinke accepted a total of $550,000 from the undercover agent. In an attempt to conceal the true source of the funds, Keslinke repeatedly deposited the money received from the undercover agent into business bank accounts under Keslinke's control. Keslinke then attempted to launder the money by wiring it from his business bank accounts to an account controlled by the undercover agent. During the investigation, Keslinke routinely kept 8-10% of the money provided to him from the undercover agent as a fee for his services.

Upon a conviction on any of the bank fraud or wire fraud charges, alleged in counts one through six, Keslinke shall forfeit any property, real or personal, which constitutes or is derived from proceeds traceable to the offense.

Upon a conviction of any of the money laundering charges, alleged in counts seven through twelve, Keslinke shall forfeit $320,000 cash seized from Keslinke’s residence, approximately $1.4 million from bank accounts, 500 American Silver Eagle coin, and a Tiffany diamond solitaire ring, all of which allegedly constitutes or is derived from the proceeds traceable to the offenses.

The maximum statutory penalty for each count of Conspiracy to Commit Bank Fraud and Bank Fraud, in violation of 18 U.S.C. § 1349 and 18 U.S.C. §§ 1344, is 30 years in prison and a $1,000,000 fine. The maximum statutory penalty for each count of Wire Fraud, in violation of 18 U.S.C. §§ 1343, is 20 years in prison and a $250,000 fine. The maximum statutory penalty for each count of Conspiracy to Commit Money Laundering and Money Laundering, in violation of 18 U.S.C. § 1956(h) and 18 U.S.C. § 1956(a)(3)(B), is 20 years in prison and a $250,000 fine.


Brown Recluse Spiders at Center of Home Dispute
A home with prime views of the third and fourth holes at Whitmoor Country Club has been vacant for two years because of a creepy crawly problem.

The home was infested with between 4,500 and 6,000 brown recluse spiders, according to one estimate.

The previous homeowners abandoned the 2,400-square-foot atrium ranch after years of pesticide treatments couldn’t curb the invasion.

The home went into foreclosure and hasn’t sold, apparently because no one wanted to live with its history.

Blue-and-orange striped tarps covered the house this week as an exterminator blasted the spiders and eggs with 200 pounds of sulfuryl fluoride gas, pumped in at 67 degrees below zero.

The spider problem started in October 2007, shortly after Brian and Susan Trost bought the home at 84 Gillette Field Close, according to testimony at a civil trial. The Trosts had purchased the home, built in 1988, for $450,000.

Susan Trost testified she was walking through her new home, exploring it on her first day there, when she noticed a large, stringy web wrapped around one of the light fixtures.

It hadn’t been there on the walk-through date.

Neither had the webs in the bar area in the basement. In the kitchen, she tugged on a piece of loose wallpaper, and a spider skittered behind it.

She thought the home probably just needed a thorough cleaning, so she got to work.

In the following days, she saw spiders and their webs every day. They were in the mini blinds, the air registers, the pantry ceiling, the fireplace. Their exoskeletons were falling from the can lights. Once when she was showering, she dodged a spider as it fell from the ceiling and washed down the drain.

A month after living in the home, her 4-year-old son screamed frantically from the basement, and Trost saw a spider, about the size of a half dollar, inches from his foot.

Instead of smashing it, Trost trapped it in a plastic bag and looked it up on the Internet. It was a brown recluse.

Trost testified she contacted a pest control company that came in on a weekly basis, spraying the interior and exterior and setting down sticky traps.

Since brown recluse spiders often live behind walls, she hired someone to come in and remove drywall so the exterminator could spray behind it.

She hired another company to remove the insulation from the attic and put down a pesticide powder.

“After the attic treatment, it seemed to help for quite a while, although we were still capturing them,” she testifiedd. “It just was a decline; they weren’t gone.”

CLAIMS DENIED

In 2008, the Trosts filed a claim with their insurance company, State Farm, and a civil lawsuit against the home’s previous owners, Tina and David Gault, for allegedly not disclosing the brown recluse and other problems with the home.

At a jury trial in St. Charles County in October 2011, Jamel Sandidge, a biology professor at the University of Kansas, described the brown recluse problem at the Trost home as “immense,” between 4,500 and 6,000 spiders.

Most troubling was the fact, Sandidge testified, that those calculations were made in the wintertime, when the spiders are least active.

Jurors found in the Trosts’ favor and awarded them $472,110, but they have never collected.

The Gaults had their defense provided by their insurers, also State Farm. But when the verdict was entered, State Farm claimed the Gaults’ policy had no coverage and refused to pay, according to the Trosts’ attorney, Thomas J. Magee.

Scott Harper, attorney for State Farm, could not be reached for comment.

State Farm filed an appeal of the judgment, but it was withdrawn in April 2013. The Gaults filed for bankruptcy about the same time. They could not be reached for comment.

The Trosts have since filed another lawsuit, this one against State Farm for failing to pay the claims they initially filed regarding the spider damage.

The couple declined to be interviewed for the story.

Magee said State Farm claims the policy doesn’t cover spiders. However, Magee said the exclusion is for insects, and courts in other states have held that spiders are not insects.

In addition, State Farm is claiming that even though the house has thousands of spiders, that does not amount to “physical damage,” he said.

After the trial, when the spiders got worse, and State Farm refused to make any payment of any kind, the Trosts felt they had no choice but to move out, Magee said.

Today the home at 84 Gillette Field Close is owned by the Federal National Mortgage Association.

A spokesman for Fannie Mae said having an exterminator treat a home is standard procedure before putting it up for sale. Tim McCarthy, president of McCarthy Pest Control, said he was contacted by the agency to take care of the brown recluse spiders.

Consumer Confidence Remains a Hardship on Stabilizing Market

Heading into fall, home price gains continue to drop,” says Dr. Alex Villacorta, vice president of research and analytics at Clear Capital. “September marks the 11th month of moderating gains with home price levels back in line with long run averages. With less fuel stoking investors’ fire and the consumer yet to feel confident in the market, we expect at best either a return to pre-bubble norms or a departure into negative territory.”
 
Nationally, yearly gains decreased from a high of 11.7 percent in October 2013 to just 7.8 percent through September 2014. This trend is amplified in the West, where annual gains are cut nearly in half, from highs of 19.5 percent in October 2013 to 10.9 percent in September 2014. If the ongoing moderation in the West, still the recovery leader, continues at its current pace it will be a foreboding sign of future declines.
 
Metro market trends will continue to keep buyers on their toes, as national and regional recoveries wane at varying velocities. Detroit is a great example. Discounted opportunities helped push prices up 21.9 percent year-over-year in September. Meanwhile the Hartford MSA is experiencing declines, -1.1 percent over the quarter and -0.4 percent over the year, highlighting the type of market performance disparity that characterizes the present market. Each of the lowest performing 15 markets posted less than a 1 percent gain over the last quarter. This group remains subject to short term declines which could eventually turn into yearly losses.
 
Distressed inventory is no longer reinforcing a strong housing market recovery. Discounted distressed deals continue to dry up, down from a national high of 38.4 percent in 2011 to just 16.5 percent in September 2014. While this is generally a positive sign, distressed sales helped drive the investor demand that kick started the recovery. Historically, we’ve observed rising prices as distressed saturation declined. While reduction of distressed saturation is a healthy move for markets long term, over the short term it removes a key demand segment at a time when full buyer momentum has yet to be established. The correlation between drastic declines in price gains and declines in distressed saturation is most visible in the West. Distressed saturation was at an all-time high of 50.5 percent in 2009 falling to just 12.6 percent in September 2014. As distressed saturation fell, so did price gains. Yearly price gains in the West have fallen to 10.9 percent. This nearly 50 percent drop in price gains since October 2013 is in sync with declines in distressed saturation.
 
Perception is reality—for consumer confidence in housing. Future home price gains are more dependent on owner occupied purchases as the rising price floor and dwindling discounted deals leave investors with fewer opportunities. Owner occupied demand is in part driven by consumer sentiment, among other key drivers, like jobs.  While consumer sentiment levels reached a 14-month high in September, according to the University of Michigan’s Consumer Sentiment index, momentum has tempered—like home prices. Consumer sentiment yearly growth rates have softened seven percentage points over the last seven months. Each of the last two times consumer sentiment rates have seen negative yearly changes, prices have declined.  As housing seeks stability, moderating rates of consumer confidence and price gains foreshadow a third potential dip.
 
“Without stronger rates of growth in consumer confidence, price gains could easily fall past the normalized annual rates of growth between 3 percent-5 percent and back into negative territory,” says Villacorta. “This has the risk of invoking a negative feedback loop between falling prices and reduced confidence from potential homebuyers. While the housing market has enjoyed abnormally high rates of growth during the last two and a half years of recovery, prices are back to long run historic levels, signaling an effective end to the correction to the correction. True market growth will be dependent on consumer confidence and re-engagement which will be tested over the next few months.”


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Comment balloon 0 commentsDavid Saks • October 13 2014 09:31PM
Weekly Newsletter From Jim Gibbs' "Career Institute"…
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