Monthly Archives: March 2007

Dream Big

Tall Hedge View

Asking Price: $2,275,000

Purchase Price: $1,471,500

Purchase Date: 2/24/2005

Address: 35 Tall Hedge, Irvine, CA 92603

Beds: 4IrvineRenter

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.”

{adsense}

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.

The Plot Thickens in Fraud Park

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.

{adsense}

*** 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.

{adsense}

*** 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.

Make me move; no, just let me out!

Calabria Inside

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

Where are the flippers when you need them?

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.

Lindstrom Front 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.

Linstrom YardLinstrom Damage

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!”

Why the Sub-Prime Meltdown is a Problem

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.

Impact of Tightening Lending Standards

We all know intuitively this sounds bad. But what is the impact?

Sub Prime Move Up Chain

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.

Loan Reset Calendar

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.