Asking Price: $918,000
Purchase Price: $678,000
Purchase Date: 6/9/2005
Address: 43 Rising Sun, Irvine, CA 92620
Beds: 3
Baths: 2.5
Sq. Ft.*: 1,708
Year Built: 2005
Stories: 2
Type: Single Family Residence
View: Mountain
Neighborhood: Woodbury
$/Sq. Ft.*: $537
MLS: S479901
Status: Active on market
On Redfin: 11 days
Craigslist, Redfin, Zillow
$918000 SELLER NEEDS TO GET OUT !!!
This according to the ad on Craigslist. I call BS on this one. This flipper is so desperate, they only want to make $184,920 in profit (after 6% commission) in less than 2 years? If this flipper is successful, their house will have made them more than the median income in Irvine over the last two years ($83,891 * 2 = $167,782). That is one hard working house!
This seller is not the only one cracking the whip on their house. The neighbors at 32 Rising Sun want $1,139,000 for the Former Woodbury Model Home they bought for $940,500 on 6/29/2006. They are working their house even harder. After a 6% commission, they stand to make a profit of $130,160 after only 9 months.
.
When a prop'ty comes along
You must flip it
Before the home sits out too long
You must flip it
When somethings going wrong
You must flip it
.
Now flip it
Into shape
Shape it up
Get straight
Go forward
Move ahead
Try to detect it
Its not too late
To flip it
Flip it good
Asking Price: $879,500
Purchase Price: $869,000
Purchase Date: unknown
Address: 39 Bamboo, Irvine, CA 92620
Beds: 4
Baths: 4
Sq. Ft.*: 2,492
Year Built: 2004
Stories: 2
Type: Condominium
Neighborhood: Northwood
$/Sq. Ft.*: $353
MLS: S477978
Status: Active on market
On Redfin: 23 days
Redfin, Zillow
Do you get the feeling flippers are getting nervous? There are 46 addresses on Bamboo Street in the Northwood neighborhood adjacent to Woodbury; 7 of them are for sale. 41 Bamboo just sold on 2/13/2007 for $820,000, so there is activity in the area. There are 7 other homedebtors looking for the greater fool to save them. The owners at 39 Bamboo just got nervous and decided to sell even if it is at a loss. Zillow thinks the property is worth over a million dollars. Apparently the market does not agree.
Real estate always goes up, or so buyers are bamboozled into believing by realtors. It only takes a few nervous neighbors to drive down property values in an entire neighborhood. Comps are set at the fringes where the transactions take place. I'm sure the owner at 57 Bamboo would like to make his $211,106, but it is more likely that 39 Bamboo is going to lose his $42,740 first.
Originally posted November 17, 2006
Address: 29 Shade Tree, Irvine, CA 92603 (Turtle Ridge)
Plan: 1993 sq ft - 3/2.5
MLS: U6603755 DOM: 4
Sale History: 5/13/2005: $1,010,000
06/02/2003 — $701,500
Current Price: $1,150,000
Here we have a detached condo in the Canyon's Edge tract built by Standard Pacific in Turtle Ridge. This home was purchased in May 2005 with 5% down.
I don't have much to say on this one yet. If they get their asking price, they stand to make about $71k after 6% in selling costs. Pretty nice return on their $50,500 investment in 18 months.
Has anyone been inside this tract? It's part of Turtle Ridge but it is completely separated from the rest of the homes in Turtle Ridge which are all off Summit Park. Strange location...
UPDATE #1 - March 26, 2007
Thanks to a tip from Owen in the forums, I've come to realize that this home has been relisted (MLS U7000708) and the price has now been reduced to $1,099,000. Assuming 6% in selling costs, their expected profit is now about $23k. Where did the other $48k go?
Today was a beautiful, blue-sky kind of day, the kind of day that reminds me why I love Irvine so much. My little boy and I played for quite a while at "Bob the Builder Park" (aka, Colonel Bill Barber) as well as a small pocket park in Westpark. But first, on our way over to Bob the Builder park, I couldn't resist making a short detour. I pulled into Columbus Grove and saw the line-up of protest signs along the main thoroughfare, Sweet Shade. I pulled up to the curb, put on my blinkers, gave my boy his Clifford Reading game on his Leapster, and chatted for a few minutes with homeowner Bob Spillar. He was sitting in a beach chair with, at the time I was there, two other men whom he identified as neighbors. I told Bob I was a blogger, writing for a blog on the local housing bubble, and Bob didn't quite seem to get what I was referring to. (First clue, right? Too bad Bob hadn't spent some time here, or over on
Ben's housing bubble blog or on Rich's site...) Bob was very eager to share his story with me. Here it is:
This is their second weekend protesting William Lyon Homes, Inc. He and 17 other buyers of Phase I Lantana homes plan on sticking it out for the foreseeable future, until Lyons makes appropriate restitution. They have clearance from the Irvine police to hold this protest; they are on public land and Lyon has no recourse to remove them. Bob said that Lyon has not tried to make them leave.
Mid-2005 Bob decided to buy one of the homes in Phase I. He closed in May 2006. He received lots of assurances from the salespeople that prices would not drop in future phases. He said that he feels "coerced, manipulated." Bob acknowledges that he should not have signed the contract without reading it in its entirety (no kidding!), however he said the sales team promised him he didn't have to do so. After the purchase, he and his 17 neighbors read "Addendum G" in their contracts which apparently states the standard legalese stuff about this written contract being the only legal agreement, that any verbal agreements not included in the contract would not be considered valid, etc.
So now, Lyon has dropped asking prices significantly in newer phases, and he and the neighbors are hoppin' mad. Bob told me that he put 20% down when he purchased this home - he said that it was a requirement and you couldn't buy the house from Lyon unless you put 20% down. (I don't quite believe this could be true, however this is what he told me). He further told me that he took out a 100k second mortgage to pay for landscaping, etc., and that its rate is going to adjust in August and he is going to be forced to refinance in order to afford his payments. He believes that most of his neighbors also took out seconds that will be adjusting and they are all in the same boat. The whole "I put 20% down but took out a 100k second" just didn't quite sit right with me, but I didn't push it since my boy was itching to get going to the park!
He handed me a copy of the protest letter he and his neighbors wrote, letter to Lyons (new information: here's the back of the petition)as well as a one-page flyer they are apparently giving to would-be new homebuyers who come to check out the models. Take a look: Experience the Lies
In their letter to Patrick McCabe, Project Manager for Lyon Homes in Newport Beach, the neighbors have this to say, "The undersigned phase I residents in the Lantana neighborhood are writing to you today to ask for your consideration to make things right...During the selling process, given the real estate market uncertainties, we had numerous conversations with the sale staff (Nancy, Jennifer, etc) about prices and we were reassured that the home purchase prices would remain stable throughout the development of our community. We believed in the community and you. We understand fluctuations and economics, but a $75,000-$200,000 price reduction? What does that say to your phase I buyers?...Given all the startup problems we endured through the first phase of development, we are asking for William Lyon to consider some type of compensation to all of us. Afterall, when we think of the sub-contractors and laborers that completed work; the quality was average at best. We trusted in you and now feel like we were misled and betrayed..."
So I asked Bob what exactly he wanted from Lyon. He stated that he does NOT want a "refund." He wants Lyon to refinance the Phase I owners into lower-rate loans; he wants a "small stipend" and he wants free upgrades, retroactively. He said Lyon had already met with the protestors and informed them that the contracts they signed were completely legal and they had no intention of giving the homeowners anything they were asking for now.
So I thanked him and drove away, not having the heart to tell this poor, sweet guy that the carnage had just begun and his equity evaporation was just going to get worse over the coming several years. Best of luck to you and your Lantana Phase I neighbors, Bob.
I launched into a diatribe on Quiggleme.com on who bears responsibility for the bubble we are now watching deflate. I wanted to share it here. So who is responsible? Borrowers, lenders, investors, the FED: IMO, they are all responsible; it is only a matter of degree.
Irresponsible borrowers are like children, if you offer them something they want, no matter the terms, they will take it. The federal government realized this basic fact years ago when they passed predatory lending laws. Does that make the borrower any less responsible? No, but by definition, sub-prime borrowers are irresponsible. If they took responsibility for their debts, they wouldn't be sub-prime. So if you offer a bunch of money to the most irresponsible among us, what would you expect? I would expect them to spend it irresponsibly and not worry about paying it back. That is their history, is it logical to expect anything different from these people? In my opinion, it shouldn't have taken a rocket scientist to see this sub-prime experiment was going to end badly.
That being said, when will people start being responsible for their actions? Has our entire culture become based on having victim status and not being responsible? These borrowers should not be bailed out by any government program as it would just create more dependence. These fools who paid too much and can't pay it back need to lose their homes, lose all their assets, and file for bankruptcy. Tough $hit. They may live their lives being irresponsible, but it doesn't mean the responsible among us should pay for that. This is one of those instances where they will be made to take responsibility. It will feel like they are getting their noses rubbed in it, but that is what they deserve.
However, the lenders are also responsible in this matter. I have a dim view of the lending industry, particularly of credit cards. Consumer debt lenders are akin to drug dealers in my mind. They serve no function in our society other than to leach off people by taking advantage of their inability to save money. But I digress, at least mortgage lenders provide a service because without them most people would be dead by the time they saved enough money to buy a home for cash; however, when they start handing out HELOC's for consumption, they are as bad as the credit card / drug dealers preying on people's reckless irresponsibility. Once mortgage lenders crossed that line, they ceased to be serving the needs of homebuyers and instead began serving the wants of the credit addicted: Shame on them.
Of course, none of this would have happened without the enablers at the Federal Reserve and on Wall Street. Greenspan lowered rates and then told borrowers to take out adjustable rate mortgages. As one might suspect, he did this so his fellow bankers would not be stuck with low-interest loans for 30 years, but he gave the world of homebuyers the "green light" for taking on high risk loans. Then Wall Street investors flooded with liquidity from cheap money from home and overseas started chasing returns. These high-interest sub-prime loans looked attractive, and as long as house prices went up and nobody defaulted, everything was fine. Who do you blame for that situation? The bank of Japan for creating the carry trade? The federal reserve for lowering rates to avoid a recession? Investors chasing high yields? I don't know. That one is too big for me to ferret out a culprit.
In my opinion, the borrowers are certainly at fault; if for no other reason than they signed the papers and took the money. The lenders are also at fault because they should have known better than to give sub-prime borrowers loans they could not afford. Lenders simply cannot abdicate responsibility in this matter for financial, legal and moral reasons. The Federal Reserve and Wall Street investors are also at fault for creating the situation and enabling this to occur. In the end, all the responsible parties will be ruined: borrowers will lose their houses and go bankrupt, lenders like New Century will go out of business and/or lose billions, Wall Street investors will be sharing in those losses with the lenders, and Alan Greenspan will be remembered by history as the architect of the largest, most painful financial bubble in history.
Asking Price: $2,275,000
Purchase Price: $1,471,500
Purchase Date: 2/24/2005
Address: 35 Tall Hedge, Irvine, CA 92603
Beds: 4
Baths: 4.5
Sq. Ft.*: 2,825
Lot Sq. Ft.*: 6,300
Year Built: 2005
Stories: 2
Type: Single Family Residence
View: Catalina Island, City Lights, Ocean, Panoramic, Water, Other
Neighborhood: Turtle Ridge
$/Sq. Ft.*: $805
MLS: U7000721
Status: Active on market
On Redfin: 31 days
Craigslist, Zillow, Redfin
This one was bought two years ago, so it might be argued it isn't really a flip, but when you believe your house has gone up in value 50% over the last two years (particularly the last two), you are certainly thinking like a flipper. This is a nice home full of the requisite pretentious accouterments one would expect in a Tuscan Villa / Irvine Tract Home. To quote Redfin:
"Tuscan style home in Turtle Ridge offers 4 bdrms. , 4.5 bths. , 3 car ga rage. This highly upgraded home has walnut hardwood floors, 6 crown molding, custom paint and travertine flooring in kitchen & baths. The chef s kitchen has upgraded appliances, granite countertops & walnut cabinets. Custom built balcony off master bdrm has endless city lights & ocean views of Catalina and Pales Verdes. The backyard includes a wood burning fireplace, outdoor B. BQ w/ travertine counter tops & fountain."
It looks like there may be some disagreement in the market as to the value of this property. Zillow thinks the house is worth about $1,850,000. Of course, their neighbors at 25 Sylvan just sold for $2,150,000; I imagine these owners must believe their house is better.
However, it is a nearby house at 20 Highpoint that must have caught these people's attention. 20 Highpoint was purchased on 4/7/2005 from the builder for $1,873,000. It was sold on 1/19/2007 for $2,800,000. Assuming a 6% commission (which is probably too high for an expensive home) these people made $759,000 in about 18 months! Could this be fraud? Zillow thinks the new owners overpaid by $400,000. When you map the comps, this one does seem like an outlier. In any case, there seems to be some activity with these pricey homes, so maybe our flippers will get lucky.
You know, I worked the last 18 months, and I did not make $759,000. I should flip houses.
Back in October, we did a post on a property in North Park and discovered some fraud going on. Even Casey Serin stopped by and posted a comment. Recently, I've gotten some excellent leads on even more fraud going on in Irvine and beyond. I'd like to thank graphrix, brealiving, and IrvineMom for all their help in uncovering this. This thread in our forums was extremely helpful.
Figuring out how all the fraud is connected is a lot of work. Writing a post to explain it is even more difficult. So please accept my apologies if this is hard to follow. Also, because I'm convinced there is something shady going on here, I'm not going to go through the extra work of jumbling names, etc. It's all public information anyways.
OCRenter at Bubble Tracking and his readers have made some inroads as far as getting the Main Stream Media to notice what's being said on the blogs (regarding flippers, fraud, etc.). Hopefully, we can get some exposure to this story as well. 
So let's begin!
*** GROUP 1 - CHAPA, HUSSAIN, YEASMIN, MOZUMDER ***
It appears this group of people purchased 7 homes in North Park in late 2005 and early 2006. Here are the details:
71 Avondale (MLS I703478) - Listed at $725,000 - Short sale
- Purchased by Nurer Chapa and Moktadul Hussain on 12/28/2005 for $735,000
43 Modesto (MLS I703441) - Listed at $750,000 - Short sale
- Purchased by Nurer Chapa and Moktadul Hussain on 12/29/2005 for $750,000
86 Sorenson (MLS I703639) - Listed at $630,000 - Short sale
- Purchased by Nurer Chapa and Moktadul Hussain on 12/22/2005 for $735,000
78 Sorenson (MLS I703654) - Listed at $630,000 - Short sale
- Purchased by Marina Yeasmin and Helal U Mozumder on 10/13/2005 for $715,000
5 Winterfield (MLS I703388) - Listed at $709,000 - Short sale
- Purchased by Marina Yeasmin and Helal U Mozumder on 11/22/2005 for $726,000
1 Thorn (MLS I703426) - Listed at $875,000
- Purchased by Marina Yeasmin, Helal U Mozumder, Moktadul Hussain, and Nurer Chapa on 10/27/2005 for $840,000
63 Modesto
- Purchased by Nurer Chapa and Moktadul Hussain on 3/15/2006 for $715,000
- Transferred to Crossroads Enterprises Inc on 11/28/2006
You can see how the property at 1 Thorn ties all 4 of these people together (it looks like they are 2 couples). Also, ALL 7 of these properties were purchased on 100% financing. The 6 properies that are on the market are listed by Darlene Gallegos of Century 21 Beachside (just click on the links and you'll see this). Of the 6 that are listed, 5 of them say they are short sales in the private remarks.
*** GROUP 2 - SCHUMACHER, YEASMIN, HOQUE ***
Here we have 4 more homes in North Park that are linked together:
3 Del Mar #10 (MLS I703772) - Listed at $870,000
- Purchased by Sabina Yeasmin on 4/27/2005 for $750,000
- Transferred to a revocable intervivos trust in the name of David Schumacher via a Warranty Grant Deed on 9/19/2005
81 Sorenson (MLS I703686) - Listed at $725,000 - Short sale
- Purchased by Sabina Yeasmin on 5/26/2005 for $700,000
- Transferred to a revocable intervivos trust in the name of David Schumacher via a Warranty Grant Deed on 9/19/2005
47 Middlebury
- Purchased by Mansurul Hoque on 4/28/2005 for $745,000
- Transferred to a revocable intervivos trust in the name of David Schumacher via a Warranty Grant Deed on 9/19/2005
12 Apple Valley
- Puchased by Mansurul Hoque on 10/16/2006 for $869,000
So how is Group 1 linked to Group 2? There are a few connections although I'll be the first to admit they are kind of loose. First, the Sabina Yeasmin in Group 2 could be related to the Marina Yeasmin in Group 1. Second, 81 Sorenson in Group 2 is practically next door to 78 Sorenson and 86 Sorenson in Group 1. Third, the agent listing the properties in Group 2 is also listing the properties in Group 1. What do you think?
David Schumacher is the common element here in Group 2. Anyone know what a revocable intervivos trust or a Warranty Grant Deed is? All 4 of these homes were purchased using 100% financing. Also, I don't have any info on Hoque's properties. Does anyone know if there is a NOD on them? If not, they could be legitimate.
*** GROUP 3 - HOSSAIN, CHOWDHURY, UDDIN ***
11 Solstice - On Foreclosure.com
- Purchased by Shapna and Khoka Hossain on 7/31/2006 for $950,000
- Transferred to First Capital Investments Inc on 11/28/2006
1 Armory - On Foreclosure.com
- Purchased by Manik Chowdhury on 5/9/2006 for $735,000
- Transferred to First Capital Investments Inc on 11/28/2006
68 Arcata - On Foreclosure.com
- Purchased by Manik Chowdhury on 5/9/2006 for $720,000
- Transferred to First Capital Investments Inc on 11/28/2006
39 Modesto - On Foreclosure.com
- Purchased by Giash Uddin on 7/31/2006 for $720,000
- Transferred to First Capital Investments Inc on 11/28/2006
Here, the common link is First Capital Investments Inc. All 4 of these properties are listed on Foreclosure.com. They were all transferred to First Capital Investments on 11/28/2006. They were all initially purchased with 100% financing. Some of you may have noticed that the last propety, 39 Modesto, is the one that started the original fraud post back in October (yup, Shagi Indud = Giash Uddin). Apparently, all of Giash's properties were transferred to First Capital Investments as well. Thanks to someone who may want to remain anonymous, I've come to find that there are 16 properties (7 from Giash, 3 from Group 3, and 6 others) that are owned by First Capital! And almost all of them are NOD!
Ok, we've got 11 homes in Groups 1 and 2 that could be connected. And we've got possibly 16 homes in Group 3. But is there a link between Group 3 and Group 1? Well, after a little bit of digging, I found out that the address for First Capital Investments AND Crossroads Enterprises is the SAME on the property records! Crossroads Enterprise is the entity that is on the title of 63 Modesto in Group 1. The address for both of these companies is: 25202 CRENSHAW BLVD STE 301, TORRANCE CA 90505.
That's possibly 27 properties that may be intertwined in some sort of fraud!
Now what? Time to dig up what we can on these corporations. I've got some leads from a source who may want to remain anonymous. Apparently, First Capital Investments may be incorporated in Nevada. If anyone has information on these companies, please email me (zovall at gmail dot com) or post a comment. I'll try to do a follow up post but it may take a while.
Asking Price: $675,000
Purchase Price: $659,000
Purchase Date: 8/8/2005
Address: 19 Calabria, Irvine, CA 92620
Beds: 3
Baths: 2.5
Size: 1,547 sq. ft*
Housing: Residential
Year Built: 1982
MLS #: S479474
Craigslist, Redfin, Zillow.
As many of you know, Zillow has a feature called the "Make Me Move Price" where owners can provide asking prices that would get them to move out. To me it seems like a good place to look for "wishing prices" because that is exactly what they are. This flipper/seller must not have been very motivated when they first started because they went to Zillow and put in a Make Me Move Price of $725,000. The Zestimate is only $686,460. Obviously, the house didn't sell.
Come forward in time, and our flipper is a bit more motivated. There is an add on Craigslist where it seems our flipper is just looking for someone to take over his payments, and he will walk. I don't have the mortgage data, but I smell 100% financing, particularly when the add says, "Only $4,550/mo + tx & ins." Want to guess what his payments are? " Just four payments and closing costs moves you in." Well, he isn't so desperate if he wants $18,200 up front, or do you suspect he might be four payments behind on his mortgage?
NO BANK QUALIFYING, NO CREDIT APPLICATION!!!
Do you think he is offering owner financing? Is this an installment deal? Or is this just a fantasy?
I will give you my opinion, to quote Billy Joel:
It's just a fantasy
It's not the real thing
It's just a fantasy
It's not the real thing
But sometimes a fantasy
Is all you need
For as much as flippers annoy use because they drove prices up to such dizzying heights, in a healthy market, they do serve a legitimate function. When a property becomes distressed, a flipper can come in, perform the necessary repairs and make a buck or two. This rehabilitates our ailing housing stock and keeps our neighborhoods in good condition.
This house is at 4741 Lindstrom Ave., Irvine, CA 92604. The property is being offered on Craigslist for 647,000. See virtual tour video here. Zillow puts the zestimate at $782,126 (for whatever that is worth). A comparable property a few doors down just sold on 11/17/2006 for $732,000. The comp is smaller, but updated inside (it was listed as a rental just before the sale at $2,800 a month). The Craigslist ad says "Comps come in at $750,000--$775,000!" (again, for whatever that is worth). In a healthy market, a flipper would buy this property, and fix some of its problems.
This property is a mess, but it does not seem that bad off (I am not privy to any inspection info which might change my opinion). It is the kind of property that benefits from flipping. Anybody here want to put their own money and sweat equity into a property during a declining market? If so, follow the link, you might be cut out to be a flipper, and you might help rejuvinate an ailing property. Five years from now when a lot of our housing stock looks like this one, we will be begging the flippers to come back and fix up things; until then, I will enjoy watching their destruction as much as you do.
.
Update: Check out the funny new Craigslist ad "$647000 call for showing and make urself some money reselling!"
The big discussion on Wall Street today is whether or not the problems with sub-prime will impact alt-A and prime loans and if all of this will impact housing markets and the economy as a whole. I want to examine why and how sub-prime's implosion will impact the housing market.
It is estimated that tightening lending standards are going to eliminate 21% of the buyers from the market.
We all know intuitively this sounds bad. But what is the impact?
For a deeper understanding read The Plankton Theory Meets Minsky.
This will result in lower prices. If prices are lower and standards are tightening, serial refinance will come to an end. Many, if not most of the borrowers needing to refinance over the next 5 years will be underwater when the loan resets resulting in more foreclosures.
As you can see, it will take 5 years for the existing ARM's to reset. For these people to be able to refinance, they must either have enough cash to buy down the loan (do you think any of them will?), or their house must be worth more than the loan amount. For the latter to happen, there must be a lot of buying in the market. Given that 21% of the buyers were just removed. What do you think is going to happen?
.
Update: Irvine must be concerned about the sub-prime issue.
