homesmillbrae.com » Foreclosure Rates

US Homeowners Rise Above Water on Mortgages

Fri, 22 Feb 2013 00:35:44 +0000

The negative equity numbers also don’t say anything about whether or not the loans coming out from underwater are delinquent. While the overall delinquency rate dropped dramatically in the fourth quarter of 2012 to 7.09 percent of all loans, according to a survey released Thursday by the Mortgage Bankers Association, nearly 11 percent of all U.S. mortgages are either delinquent or in the foreclosure process.

“One cautionary note is that the 90 day delinquency rate increased by 8 basis points, reversing a fairly steady pattern of decline and the largest increase in this rate in three years,” notes the MBA’s chief economist Jay Brinkmann.

(Read More: Why Sequestration Will Hit Housing on Several Fronts)

These so-called “seriously delinquent” loans are being processed more quickly now that new foreclosure rules are in place and will therefore be sold back to banks or investors in the next few months. Those sales would therefore be shown as loans coming out from underwater because they would cease to exist.

Another important factor in looking at negative equity, as with everything else in real estate, is location:

“Among the nation’s 30 largest metro areas, those with the highest number of homeowners freed from negative equity last year were Phoenix (135,099 homeowners freed in 2012); Los Angeles (72,936 homeowners freed in 2012); Miami-Fort Lauderdale (70,484 homeowners freed in 2012); Dallas-Fort Worth (59,461 homeowners freed in 2012); and Riverside, Calif. (58,417 homeowners freed in 2012),” notes the Zillow report.

(Read More: Taking The Real Estate Recovery Local)

The highest volume of underwater borrowers were in the most distressed states, where the foreclosure rates are high and where investors are pursuing short sales fervently. It is therefore incorrect to make the assumption that all of the “newly freed” borrowers are either still in their homes with newfound equity or sold at any kind of profit. Of course this also means that negative equity may cure faster than anticipated, since it is so highly concentrated in certain hot investor markets.

The return of home equity is good news for the greater economy, as it makes borrowers feel better about their own personal wealth and therefore more apt to spend. It could also prompt more borrowers to sell their homes. Unfortunately that will not do much to ease the severe inventory shortage of homes for sale, as most sellers will be buyers as well. There are currently just 1.74 million homes for sale, the lowest since December of 1999.

(Read More: Fewer Borrowers Are Behind on Mortgages, but for How Long?)

Article source: http://www.cnbc.com/id/100480500

Will Fed’s Mortgage Buying Juice the Housing Recovery?

Thu, 13 Sep 2012 22:56:30 +0000

Home prices are stabilizing, and new construction is bouncing back, but apparently the U.S. Federal Reserve isn’t buying a bullish housing recovery.

Its announcement Thursday that it would buy up to $40 billion in agency mortgage-backed securities every month, with no clear finish line, says loud and clear that the Fed thinks housing needs more stimulus. (Read More: Fed Pulls Trigger, to Buy Mortgages in Effort to Lower Rates.)

Mortgage rates are already hovering near record lows, but mortgage applications, especially to purchase a home, have been weak. So many have refinanced already at low rates, and so many more are unable to refinance because of lack of home equity or high fees.

As for home buying, the real growth in that area this year has been among investors on the low end, largely using all cash.

Supplies of foreclosed properties have been shrinking dramatically, as those investors swarm auctions and bid on bulk deals. (Read More: How Investors Are Skewing Home Price Recovery.)

The hot and still heating rental market offers potentially more rewards than the volatile stock market.

In turn, all that activity on the distressed end is pushing up home prices. While overall foreclosure activity is falling, we could see volumes of bank-owned properties for sale rising over the next few months, as banks look to take advantage of rising demand and prices.

We are already seeing spikes in foreclosures activity in states where these cases had been backed up in the courts.

“Bucking the national trend, deferred foreclosure activity boiled over in several states in August,” said Daren Blomquist, vice president of RealtyTrac. “In judicial states such as Florida, Illinois, New Jersey and New York, this was a continuation of a trend we’ve been seeing for several months now. The increases in Florida and Illinois pushed foreclosure rates in those states to the two highest in the country — supplanting the non-judicial states of Arizona, California, Georgia and Nevada. Previous to August, the nation’s top two state foreclosure rates have been from those four non-judicial states every month since December 2010.”

As more of these properties come to market, investors will likely prevail, despite many potential owner occupants looking to get in on good deals. Again, this is because investors have the cash advantage. Even low mortgage rates won’t help some potential buyers, because Fannie Mae and Freddie Mac are still increasing guarantee fees, which push rates higher. They could, however, mitigate some of the fee hikes.

“For everyday homeowners, QE3 should work to suppress mortgage rates at a time when they’re artificially increasing. QE3 will offset the majority of the FHFA’s new g-fees, and will help keep FHA loans affordable despite rising mortgage insurance premiums,” argued Dan Green of Waterstone Mortgage.

But there is also plenty of uncertainty about the future of mortgage financing, depending on the outcome of the November election, not to mention action the current administration is taking to shrink Fannie Mae and Freddie Mac. (Read More: ‘Wind Down’ of Fannie, Freddie: ‘Positive for Housing’?)

“One new wrinkle is the recent announcement that Fannie and Freddie will be required to shrink their own retained MBS portfolios faster than expected,” noted Guy Cecala of Inside Mortgage Finance. “This could slightly dilute the impact of the Fed’s action since its increased purchases may be offset by less GSE purchases.”

To see the low interest rates are not the housing cure-all, one need look no further than weekly mortgage applications numbers, which have been lackluster of late to say the least. The one benefit could be in the refinance segment of the market, especially as there is a new push to broaden the administration’s current refinance program for underwater borrowers. More refinances mean more money in consumers’ pockets. Unfortunately the Democrat-led effort is unlikely to make its way into reality, given the rising Republican opposition as election day nears.

No question more and more Americans will be turning to the housing market this fall, as home ownership is now cheaper than renting in all of the 100 largest U.S. markets, “by a wide margin,” according to a new report from Trulia.com. (Read More: As Housing Recovers, Will Apartment Boom End?)

What remains to be seen is how many potential buyers will be able to take advantage of these low rates, given the still tight lending standards that rule today’s market.

—By CNBC’s Diana Olick

Questions? Comments? And follow me on Twitter @Diana_Olick

Article source: http://www.cnbc.com/id/49018526?__source=RSS*blog*&par=RSS

Will Fed’s Mortgage Buying Juice the Housing Recovery?

Thu, 13 Sep 2012 22:56:29 +0000

Home prices are stabilizing, and new construction is bouncing back, but apparently the U.S. Federal Reserve isn’t buying a bullish housing recovery.

Its announcement Thursday that it would buy up to $40 billion in agency mortgage-backed securities every month, with no clear finish line, says loud and clear that the Fed thinks housing needs more stimulus. (Read More: Fed Pulls Trigger, to Buy Mortgages in Effort to Lower Rates.)
Mortgage rates are already hovering near record lows, but mortgage applications, especially to purchase a home, have been weak. So many have refinanced already at low rates, and so many more are unable to refinance because of lack of home equity or high fees.

As for home buying, the real growth in that area this year has been among investors on the low end, largely using all cash.

Supplies of foreclosed properties have been shrinking dramatically, as those investors swarm auctions and bid on bulk deals. (Read More: How Investors Are Skewing Home Price Recovery.)

The hot and still heating rental market offers potentially more rewards than the volatile stock market.

In turn, all that activity on the distressed end is pushing up home prices. While overall foreclosure activity is falling, we could see volumes of bank-owned properties for sale rising over the next few months, as banks look to take advantage of rising demand and prices.

We are already seeing spikes in foreclosures activity in states where these cases had been backed up in the courts.

“Bucking the national trend, deferred foreclosure activity boiled over in several states in August,” said Daren Blomquist, vice president of RealtyTrac. “In judicial states such as Florida, Illinois, New Jersey and New York, this was a continuation of a trend we’ve been seeing for several months now. The increases in Florida and Illinois pushed foreclosure rates in those states to the two highest in the country — supplanting the non-judicial states of Arizona, California, Georgia and Nevada. Previous to August, the nation’s top two state foreclosure rates have been from those four non-judicial states every month since December 2010.”

As more of these properties come to market, investors will likely prevail, despite many potential owner occupants looking to get in on good deals. Again, this is because investors have the cash advantage. Even low mortgage rates won’t help some potential buyers, because Fannie Mae and Freddie Mac are still increasing guarantee fees, which push rates higher. They could, however, mitigate some of the fee hikes.

“For everyday homeowners, QE3 should work to suppress mortgage rates at a time when they’re artificially increasing. QE3 will offset the majority of the FHFA’s new g-fees, and will help keep FHA loans affordable despite rising mortgage insurance premiums,” argued Dan Green of Waterstone Mortgage.

But there is also plenty of uncertainty about the future of mortgage financing, depending on the outcome of the November election, not to mention action the current administration is taking to shrink Fannie Mae and Freddie Mac. (Read More: ‘Wind Down’ of Fannie, Freddie: ‘Positive for Housing’?)

“One new wrinkle is the recent announcement that Fannie and Freddie will be required to shrink their own retained MBS portfolios faster than expected,” noted Guy Cecala of Inside Mortgage Finance. “This could slightly dilute the impact of the Fed’s action since its increased purchases may be offset by less GSE purchases.”

To see the low interest rates are not the housing cure-all, one need look no further than weekly mortgage applications numbers, which have been lackluster of late to say the least. The one benefit could be in the refinance segment of the market, especially as there is a new push to broaden the administration’s current refinance program for underwater borrowers. More refinances mean more money in consumers’ pockets. Unfortunately the Democrat-led effort is unlikely to make its way into reality, given the rising Republican opposition as election day nears.

No question more and more Americans will be turning to the housing market this fall, as home ownership is now cheaper than renting in all of the 100 largest U.S. markets, “by a wide margin,” according to a new report from Trulia.com. (Read More: As Housing Recovers, Will Apartment Boom End?)

What remains to be seen is how many potential buyers will be able to take advantage of these low rates, given the still tight lending standards that rule today’s market.

—By CNBC’s Diana Olick

Questions? Comments? And follow me on Twitter @Diana_Olick

Article source: http://www.cnbc.com/id/49018526?__source=RSS*blog*&par=RSS

Will Fed’s Mortgage Buying Juice the Housing Recovery?

Thu, 13 Sep 2012 22:56:29 +0000

Home prices are stabilizing, and new construction is bouncing back, but apparently the U.S. Federal Reserve isn’t buying a bullish housing recovery.

Its announcement Thursday that it would buy up to $40 billion in agency mortgage-backed securities every month, with no clear finish line, says loud and clear that the Fed thinks housing needs more stimulus. (Read More: Fed Pulls Trigger, to Buy Mortgages in Effort to Lower Rates.)
Mortgage rates are already hovering near record lows, but mortgage applications, especially to purchase a home, have been weak. So many have refinanced already at low rates, and so many more are unable to refinance because of lack of home equity or high fees.

As for home buying, the real growth in that area this year has been among investors on the low end, largely using all cash.

Supplies of foreclosed properties have been shrinking dramatically, as those investors swarm auctions and bid on bulk deals. (Read More: How Investors Are Skewing Home Price Recovery.)

The hot and still heating rental market offers potentially more rewards than the volatile stock market.

In turn, all that activity on the distressed end is pushing up home prices. While overall foreclosure activity is falling, we could see volumes of bank-owned properties for sale rising over the next few months, as banks look to take advantage of rising demand and prices.

We are already seeing spikes in foreclosures activity in states where these cases had been backed up in the courts.

“Bucking the national trend, deferred foreclosure activity boiled over in several states in August,” said Daren Blomquist, vice president of RealtyTrac. “In judicial states such as Florida, Illinois, New Jersey and New York, this was a continuation of a trend we’ve been seeing for several months now. The increases in Florida and Illinois pushed foreclosure rates in those states to the two highest in the country — supplanting the non-judicial states of Arizona, California, Georgia and Nevada. Previous to August, the nation’s top two state foreclosure rates have been from those four non-judicial states every month since December 2010.”

As more of these properties come to market, investors will likely prevail, despite many potential owner occupants looking to get in on good deals. Again, this is because investors have the cash advantage. Even low mortgage rates won’t help some potential buyers, because Fannie Mae and Freddie Mac are still increasing guarantee fees, which push rates higher. They could, however, mitigate some of the fee hikes.

“For everyday homeowners, QE3 should work to suppress mortgage rates at a time when they’re artificially increasing. QE3 will offset the majority of the FHFA’s new g-fees, and will help keep FHA loans affordable despite rising mortgage insurance premiums,” argued Dan Green of Waterstone Mortgage.

But there is also plenty of uncertainty about the future of mortgage financing, depending on the outcome of the November election, not to mention action the current administration is taking to shrink Fannie Mae and Freddie Mac. (Read More: ‘Wind Down’ of Fannie, Freddie: ‘Positive for Housing’?)

“One new wrinkle is the recent announcement that Fannie and Freddie will be required to shrink their own retained MBS portfolios faster than expected,” noted Guy Cecala of Inside Mortgage Finance. “This could slightly dilute the impact of the Fed’s action since its increased purchases may be offset by less GSE purchases.”

To see the low interest rates are not the housing cure-all, one need look no further than weekly mortgage applications numbers, which have been lackluster of late to say the least. The one benefit could be in the refinance segment of the market, especially as there is a new push to broaden the administration’s current refinance program for underwater borrowers. More refinances mean more money in consumers’ pockets. Unfortunately the Democrat-led effort is unlikely to make its way into reality, given the rising Republican opposition as election day nears.

No question more and more Americans will be turning to the housing market this fall, as home ownership is now cheaper than renting in all of the 100 largest U.S. markets, “by a wide margin,” according to a new report from Trulia.com. (Read More: As Housing Recovers, Will Apartment Boom End?)

What remains to be seen is how many potential buyers will be able to take advantage of these low rates, given the still tight lending standards that rule today’s market.

—By CNBC’s Diana Olick

Questions? Comments? And follow me on Twitter @Diana_Olick

Article source: http://www.cnbc.com/id/49018526?__source=RSS*blog*&par=RSS

Why Aren’t Candidates Talking More About Housing?

Fri, 31 Aug 2012 09:15:19 +0000

There has been plenty of political talk about the economy this week, but precious few words about one of the biggest drags on the economy: housing.

Despite recent signs that the housing market is improving, it is far from healthy.

Home prices are still down 31 percent from their 2006 peak according to the latest SP/Case-Shiller home price report, and nearly 12 percent of all mortgages are either delinquent or in the foreclosure process, according to the Mortgage Bankers Association. (Read More: How Investors Are Skewing Home Price Recovery.)

Republican presidential candidate Mitt Romney has said that government should stay out of the housing market and let it correct on its own. Wednesday night, his running mate, Paul Ryan said President Obama didn’t do enough to “correct” the housing crisis, but offered no plan of his own. (Read More: CNBC Special Report: Your Money, Your Vote.)

You would think they would hit housing harder, given that many of the nation’s swing states also have the dubious distinction of holding the highest foreclosure rates.

Take Florida. It had the third highest foreclosure rate in the nation in July, according to RealtyTrac, and that’s up from the sixth highest just in June.

The numbers there are rising because of a huge backlog of delinquent loans stuck in a judicial foreclosure pipeline. Now that the courts are starting to move again, the foreclosures are coming home to roost.

In addition, 46 percent of Florida borrowers owe more on their mortgages than their homes are worth, according to CoreLogic. That’s twice the national number.

Nevada, another key swing state which President Obama recently visited to push his refinance plan, has the sixth highest foreclosure rate. Sixty-three percent of borrowers there are underwater.

The government’s Home Affordable Refinance Program, which lets underwater borrowers with Fannie Mae and Freddie Mac mortgages obtain lower interest rates, refinanced 422,969 loans in the first half of this year, more than all of the HARP refinances last year, according to the Federal Housing Finance Agency.

That is largely due to changes in the plan, one of which lifted the cap on how far underwater a borrower could be. More than two-thirds of borrowers in Nevada refinanced through HARP. (Read More: ‘Wind Down’ of Fannie, Freddie: ‘Positive for Housing’?)

Michigan and Ohio also rank in the top ten highest foreclosure rates, and their underwater borrower rate is also well above the national average. Neither Governor Romney nor President Obama have targeted any housing policy action at either of these states of late.

While many have criticized the Obama administration’s housing bailout, calling it too little and too complicated, the Romney camp has offered nothing other than to criticize the president’s home buyer tax credit that ended in 2010.

Last year, when asked about his plan to fix housing, Romney said, “Don’t try to stop the foreclosure process, let it run its course and hit the bottom.” Later he suggested that the housing market was unlikely to “cure” itself.

One thing working in both sides’ favor is that those hardest hit by the housing crash likely won’t vote. You would think that homeowners in trouble would want to make their voices heard, but the opposite is the case. (Read More: Cautious Moves on Foreclosures Haunting Obama.)

Not only are Americans who lost their homes to foreclosure less likely to vote, but those in neighborhoods impacted by foreclosure are also less likely to vote than those in more stable communities, according to researchers at the University of California, Riverside.

“Neighborhoods affect the political participation of their residents,” the scholars wrote. “Other things being equal, individuals are more likely to vote when they live in places where neighbors vigorously participate in politics, while individuals are less likely to vote when their neighbors are less civically active. Given that foreclosure creates instability in communities, areas that experience higher levels of foreclosure have lower voter turnout.”

There is also a large body of evidence that homeowners are more likely to vote than renters, and that is true in high and low income neighborhoods alike. Given that more Americans are now renting, we could see a big drop in overall voter turnout. (Read More: As Housing Recovers, Will Apartment Boom End?)

Perhaps that is why housing, one of the biggest issues affecting Americans today, is getting almost no voice in the political rhetoric.

—By CNBC’s Diana Olick

Questions? Comments? And follow me on Twitter @Diana_Olick

Article source: http://www.cnbc.com/id/48844717?__source=RSS*blog*&par=RSS

New Crop of Foreclosures Is Coming

Thu, 26 Jul 2012 05:00:43 +0000

While fewer Americans are falling behind on their mortgage payments, the huge backlog of already delinquent mortgages is finally making its way through the banking system to foreclosure.

Total foreclosure activity rose in the first half of this year from the previous six months, according to online foreclosure sale site RealtyTrac, driven by a jump in new foreclosure actions by lenders.

“Those foreclosure starts are welcome news for prospective buyers and real estate brokers in many local markets where a shortage of aggressively priced inventory has been holding up sales activity. Markets with increasing foreclosure starts will likely see more distressed inventory for sale in the form of short sales and bank-owned properties in the second half of the year,” said Brandon Moore, CEO of RealtyTrac.

More than half of the 212 metropolitan areas RealtyTrac surveys saw increases in foreclosure starts, and of the top ten foreclosure rates in the nation, five of them were in California. Stockton still holds the dubious distinction of the nation’s highest metro foreclosure rate, at more than three times the national average. Despite their high ranking, however, all of the California metros in the top ten actually saw decreasing foreclosure activity overall. In fact, Atlanta was the only metro area with a top ten foreclosure rate to see increasing foreclosure activity in the first half of this year.

While many of the previously hard-hit markets are seeing declines in foreclosures, other cities are seeing big gains. Foreclosure activity increased more than 20 percent from second half of 2011 in Tampa (47 percent), Philadelphia (30 percent), Chicago (28 percent), New York (26 percent), and Baltimore (21 percent).

Foreclosure activity dropped the most in Seattle, WA. Other cities where activity dropped more than 10 percent from the second half of 2011 were San Francisco, Detroit, Los Angeles and Boston.

New foreclosures, known as “starts,” rose in more than 60 percent of metro markets. RealtyTrac ranked the best markets for investing, by looking at where sales prices are increasing but foreclosure discounts are still at 15 percent or higher. Durham, NC, Boston, MA, Cleveland, OH and Phoenix, AZ all made the top ten.

Questions? Comments? And follow me on Twitter @Diana_Olick

Article source: http://www.cnbc.com/id/48324812?__source=RSS*blog*&par=RSS

New Foreclosure Numbers: Vallejo-Fairfield Fourth Highest in the Nation

Mon, 15 Aug 2011 06:43:52 +0000

Real estate signs in front of homes for sale March 23, 2010 in San Francisco. Justin Sullivan/Getty

One out of every 140 housing units in the Vallejo-Fairfield metro area is facing foreclosure, according to the latest numbers from RealtyTrac’s U.S. Foreclosure Market Report for July 2011, making the North Bay region the fourth most-impacted in the country. This is a 33 percent jump for the region since last month.

Statewide, the foreclosure activity rate is one out of every 239 housing units, marking a 4 percent increase for California since last month, but a 16 percent decrease compared with July 2010.

Nationally, the rate of foreclosure has decreased 4 percent since June and 35 percent since last year.

But RealtyTrac’s Daren Blomquist told KQED intern Nick Fountain that the decrease in foreclosure activity is not necessarily as good as it seems.

“We have to say that there’s no marked improvement in the economy or the jobs market or the housing market that is causing this improvement in the foreclosure picture,” he said.

Blomquist said the national decline, which has been going on for 10 months, is primarily due to a slow down in processing of foreclosures as a result of of the “havoc” created last October when lenders “got into hot water using slopping paperwork and documentation.”

“So, at this point, the decline is more of a short-term fix,” he said.

Locally, San Francisco County showed a 39 percent increase in foreclosure activity since June, which Blomquist attributed to a jump in bank repossessions. Similarly, activity this month in Contra Costa County increased 17 percent and Alameda County 15 percent.

But several regions outside the Bay Area are faring far worse. While the San Francisco-Oakland-Fremont metro area ranks 28th nationally in foreclosure rates and Vallejo-Fairfield ranks fourth, the Stockton area ranks second. There, foreclosure activity increased 57 percent from June to July, to a rate of one in every 124 homes.

Check out the chart below, created by Fountain and online producer Lisa Pickoff-White, to see how some California counties fare in the new report.

For more on the Bay Area housing market, listen to Wednesday’s Forum program.

Article source: http://blogs.kqed.org/newsfix/2011/08/11/new-foreclosure-numbers-vallejo-fairfield-fourth-highest-in-the-nation/

Calif. investors to plead guilty in bid-rigging

Sun, 10 Jul 2011 17:16:08 +0000

SACRAMENTO, Calif. — Eight California real estate investors have agreed to plead guilty in a bid-rigging scheme to buy foreclosed real estate at public auctions in two San Francisco Bay area counties, the U.S. Department of Justice said Thursday.

The men were charged with bid-rigging and conspiracy to commit mail fraud as part of a joint investigation by the FBI and the antitrust division of the Justice Department.

Investigators say the men conspired or made payoffs from 2008 through 2011 so they would not bid against each other for properties sold at foreclosure auctions in Alameda and Contra Costa counties. After one bought a property at an artificially low price, they would hold a private auction among themselves to resell it and split the extra money paid by the winning bidder.

“While the country faces unprecedented home foreclosure rates, the collusion taking place at these auctions is artificially driving down foreclosed home prices and is lining the pockets of the colluding real estate investors,” said Christine Varney, assistant attorney general in charge of the antitrust division, in a prepared statement.

The felony charges were filed in U.S. District Court for the Northern District of California, in Oakland. Court records did not list attorneys for the defendants or indicate whether they were in custody; court personnel said the cases were newly filed and they could not provide any information about them.

The men charged were:

- Thomas Franciose, of San Francisco

- William Freeborn, of Alamo

- Robert Kramer, of Oakland

- Thomas Legault, of Clayton

- David Margen, of Berkeley

- Brian McKinzie, of Hayward

- Jaime Wong, of Dublin

- Jorge Wong, of San Leandro

No Justice Department spokesperson could be reached to clarify whether the men were in custody, when they might enter a plea, their ages or other details. An FBI spokeswoman referred questions to the Justice Department.

Investigators said in a prepared statement that the charges were part of an ongoing investigation into collusion by real estate investors in foreclosure sales, both in Northern California and elsewhere.

In March, federal prosecutors said Yama Marifat of Pleasanton had pleaded guilty to conspiring to rig bids at foreclosure auctions in San Joaquin County, about 50 miles east of the Bay Area and one of the areas hardest hit by the housing bust. The scheme described was similar to that cited in the charges filed Thursday.

At the time, investigators said Marifat was the fifth person to plead guilty in connection with the probe, and he faced up to 10 years in prison for bid rigging and 30 years for conspiracy to commit mail fraud, plus fines of as much as $2 million.

It was unclear whether the new case was related to the earlier investigation.

Article source: http://www.sacbee.com/2011/06/30/3740033/calif-investors-to-plead-guilty.html

Investors Plead Guilty to Auction Bid Rigging

Wed, 06 Jul 2011 04:21:36 +0000

Eight San Francisco Bay Area real estate investors have agreed to plead guilty for their roles in a conspiracy to rig bids at public real estate foreclosure auctions in Northern California, according to the Department of Justice.

The real estate investors took part in conspiracies to rig bids by agreeing to refrain from bidding against one another at real estate foreclosure auctions in Contra Costa and Alameda counties, according to the Justice Department. Some participants actively engaged in conspiracies in both counties, but outside bidding activity occurred independently in each area.

Federal felony charges were filed in U.S. District Court in Northern California against the eight: Thomas Franciose of San Francisco; William Freeborn of Alamo, Calif.; Robert Kramer of Oakland, Calif.; Thomas Legault of Clayton, Calif.; David Margen of Berkeley, Calif.; Brian McKinzie of Hayward, Calif.; Jaime Wong of Dublin, Calif.; and Jorge Wong of San Leandro, Calif.

The case is the first prosecution brought through a new partnership of the FBI and the Antitrust Division in efforts to battle organized widespread auction bid-rigging and anticompetitive practices at real estate auctions.

The Antitrust Division and the FBI have identified a pattern of schemes among investors intended to eliminate competition at foreclosure auctions, according to federal sources. The charges are part of the department’s effort to combat bid rigging, which goes on at various auction sites throughout the country.

“While the country faces unprecedented home foreclosure rates, the collusion taking place at these auctions is artificially driving down foreclosed home prices and is lining the pockets of the colluding real estate investors,” said Christine Varney, assistant attorney general in charge of the Department of Justice’s Antitrust Division. “The Antitrust Division will vigorously pursue these kinds of collusive schemes that eliminate competition from the marketplace.”

The purpose of the conspiracies was to suppress competition and obtain homes and other properties at foreclosure auctions at greatly discounted prices, according to prosecutors. When real estate is sold at auction, proceeds are used to pay off the mortgage and other debts attached to the property.

Each violation carries a maximum penalty of 10 years in prison and a $1 million fine for each individual.

Article source: http://www.housingpredictor.com/2011/auction-bid-rigging.html

Calif. investors to plead guilty in bid-rigging

Sat, 02 Jul 2011 09:19:47 +0000

(06-30) 16:55 PDT Sacramento, Calif. (AP) –

Eight California real estate investors have agreed to plead guilty in a bid-rigging scheme to buy foreclosed real estate at public auctions in two San Francisco Bay area counties, the U.S. Department of Justice said Thursday.

The men were charged with bid-rigging and conspiracy to commit mail fraud as part of a joint investigation by the FBI and the antitrust division of the Justice Department.

Investigators say the men conspired or made payoffs from 2008 through 2011 so they would not bid against each other for properties sold at foreclosure auctions in Alameda and Contra Costa counties. After one bought a property at an artificially low price, they would hold a private auction among themselves to resell it and split the extra money paid by the winning bidder.

“While the country faces unprecedented home foreclosure rates, the collusion taking place at these auctions is artificially driving down foreclosed home prices and is lining the pockets of the colluding real estate investors,” said Christine Varney, assistant attorney general in charge of the antitrust division, in a prepared statement.

The felony charges were filed in U.S. District Court for the Northern District of California, in Oakland. Court records did not list attorneys for the defendants or indicate whether they were in custody; court personnel said the cases were newly filed and they could not provide any information about them.

The men charged were:

_ Thomas Franciose, of San Francisco

_ William Freeborn, of Alamo

_ Robert Kramer, of Oakland

_ Thomas Legault, of Clayton

_ David Margen, of Berkeley

_ Brian McKinzie, of Hayward

_ Jaime Wong, of Dublin

_ Jorge Wong, of San Leandro

No Justice Department spokesperson could be reached to clarify whether the men were in custody, when they might enter a plea, their ages or other details. An FBI spokeswoman referred questions to the Justice Department.

Investigators said in a prepared statement that the charges were part of an ongoing investigation into collusion by real estate investors in foreclosure sales, both in Northern California and elsewhere.

In March, federal prosecutors said Yama Marifat of Pleasanton had pleaded guilty to conspiring to rig bids at foreclosure auctions in San Joaquin County, about 50 miles east of the Bay Area and one of the areas hardest hit by the housing bust. The scheme described was similar to that cited in the charges filed Thursday.

At the time, investigators said Marifat was the fifth person to plead guilty in connection with the probe, and he faced up to 10 years in prison for bid rigging and 30 years for conspiracy to commit mail fraud, plus fines of as much as $2 million.

It was unclear whether the new case was related to the earlier investigation.

Article source: http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2011/06/30/state/n162200D51.DTL