Economic collapse opens up more homes to residents

By Tom Sharpe | The New Mexican

2/24/2012

The recent economic recession has made Santa Fe housing more affordable, says a report released Friday by the Santa Fe Association of Realtors.

“For the first time in years,” the report says, Santa Fe’s median household income is enough to qualify for the purchase of a median-priced home.

“The market rates of homes have declined which does, unfortunately, negatively affect current homeowners’ investments,” it says, “yet the result is a larger number of affordably priced homes in Santa Fe.”

The report, 2011 Affordable Housing in Santa Fe, cites how the economic collapse in late 2008 led to the loss of 4,600 jobs, increased unemployment rates, poverty rates and foreclosure rates while decreasing median incomes.

But the recession caused the median price of reported real-estate sales to drop from an all-time high of $425,000 in 2007 to $330,000 for the third quarter of 2011, says the report.

“There are a considerable number of re-sale homes on the open market at low prices that were unimaginable a few short years ago,” it says.

In addition to the lower median prices, the report notes that prevailing interest rates also have fallen, although lenders have become stricter in qualifying borrowers, sometimes requiring larger down payments than before.

The report says that even though there is little residential building under way in Santa Fe, nonprofits have been able to pull together funding from federal sources, grants and tax credits to increase the number of affordable-housing units:

u 110 units at the Santa Fe Civic Housing Authority’s new Villa Alegre compound;

u 60 rental units for the Housing Trust’s Village Sage;

u 60 rental units at the old Stage Coach Inn on Cerrillos Road have been approved for the Housing Trust;

u Habitat for Humanity has acquired eight townhouse lots and has started construction on four townhouses.

The report was researched and written by Jeri Chenelle, a former government-affairs officer for the Realtors Association of New Mexico, with funding by the state association and the National Association of Realtors.

Victoria Murphy, president-elect of the Santa Fe Association of Realtors and an associate broker at Santa Fe Properties, said the idea for the affordable-housing study began when the city proposed a 1 percent “transfer tax” on the sale of homes priced at $750,000 and up. Voters rejected the tax in 2009.

“Obviously, as Realtors, we were in opposition to that, but we did come to [the city] and say, ‘Look, we understand that there is a need here,’ and in that, we found out that at times the city didn’t know how many affordable homes they actually had,” she said. “So our thing was, ‘Let’s find a way that we can have a database that we can find out exactly what’s out there and what the needs are.’ ”

Murphy said her biggest surprise was finding out how many “stakeholders” are involved in affordable housing — not only the nonprofit housing groups, but also the many construction companies that specialize in affordable housing. An extensive list of stakeholders are included in the report.

Both the City Council and the County Commission recently lowered requirements for including affordable homes in new subdivisions. But Murphy said the report’s findings don’t suggest the need for further easing of affordable housing requirements.

“The whole idea is just saying, ‘OK, this is what we have out there,’ ” she said. “How can we start promoting this so we don’t have this perception that Santa Fe is unaffordable to our workforce?”

Contact Tom Sharpe at 986-3080 or tsharpe@sfnewmexican.com.

Some of CoreLogic’s profits come from selling market research to lenders aiming to cut losses from mortgage fraud.

Investigators and lenders say they are seeing a similar upswing in fraud.

The Federal Bureau of Investigation in June indicted a Phoenix man for mail and wire fraud among other alleged crimes when the agency says he tried to steal a house from his landlord. Also in June, federal prosecutors in New Jersey charged 29 defendants—including 12 real-estate agents, four mortgage consultants, an appraiser, a bank employee and a mortgage broker—with wire fraud in an alleged scheme involving 17 properties in the state and losses of $5.5 million.

“Even though we have certain compliance measures in place, people will adapt whatever scheme,” said Sharon Ormsby, the FBI’s section chief for financial crimes. “It doesn’t matter if the market is going up or down.”

The kinds of fraud that contributed to the mortgage crisis and the collapse of the housing market were relatively simple. Crooks took advantage of the size of mortgage loans and the lax rules governing who qualified for them.

In one common con, they would recruit as accomplices “straw buyers” with good credit to apply for “no-doc” loans, which required no documentation or proof of income, to buy their house. Good credit was required because lenders generally did check a borrower’s credit score, even if they didn’t require pay stubs or bank statements.

When the bank sent funds, typically to make a down payment or for a home-equity loan, the schemers and the fake buyer would split the profits and walk away, leaving the house to fall into foreclosure and the bank stuck with the loss.

Since the mortgage crisis, banks and the government-sponsored entities that underwrite or insure mortgages, including Fannie Mae, Freddie Mac and the Federal Housing Administration, have tightened lending standards and closely scrutinize mortgage applications.

No-doc loans are a thing of the past, and many lenders now require borrowers to furnish proof of employment, tax forms, credit reports, bank statements and other documents.

Fraudsters have adapted to the new restrictions. With banks less apt to lend to borrowers with shaky finances, criminals rely more on falsifying documents, recruiting loan officers and other bank insiders to work for them, and stealing identities to get loans, federal investigators and mortgage industry research reports.

In the Phoenix case, prosecutors allege, Jose Victor Buencamino did all three. Some people who knew Mr. Buencamino describe him as a large, friendly man devoted to his children, the life of many a party and a passionate golfer. Gary Weaver, who rented a home to Mr. Buencamino last year, has a different impression. He said the Arizona businessman tried to snare him in an elaborate mortgage scheme.

According to a federal indictment unsealed in June, while Mr. Buencamino was renting Mr. Weaver’s house on the golf course at Moon Valley Country Club, he intercepted mail intended for Mr. Weaver and obtained his social security number, then applied for a driver’s license in Mr. Weaver’s name.

Then, the indictment alleges, with the help of a friend who worked as a loan officer at a local branch of Compass Bank, a unit of Spanish bank Banco Bilbao Vizcaya Argentaria SA, Mr. Buencamino obtained a $245,000 cash-out mortgage on the property. A homeowner using a cash-out mortgage refinances the home loan for more than the mortgage is currently worth and pockets the difference in cash.

A Compass Bank spokesman didn’t respond to requests for comment. Mr. Buencamino, who couldn’t be located for comment, has not responded to the charges.

A federal agent said he had been tracked to Vancouver, where the agent said he is applying for Canadian residency. Prosecutors involved in the case said he didn’t have an attorney on whom they could serve court papers. U.S. authorities said they were seeking his extradition.

“Fraud continues to be a pervasive issue, growing and escalating in complexity,” said an April report from LexisNexis’s Mortgage Asset Research Institute, which cited as reasons easy access to records via the Internet and, in many cases, though not Mr. Weaver’s, the vulnerability of cash-strapped homeowners.

MARI’s breakdown of the numbers reflects the shift in technique. Fraud related to falsified credit reports has declined each year since the boom years, MARI reports, while the share of mortgage fraud involving false appraisals jumped 50% between 2008 and 2009.

Application fraud—in which borrowers lie about their names, where they live, how much money they earn, their employment, their debt or their assets—remains high, accounting for 59% of all mortgage fraud.

One of the defendants in the New Jersey dragnet, a mortgage consultant with Newark-based Invest & Investors LLC named Viviane Bernardim, allegedly paid accomplices $15,000 apiece to steal the identities of several New Jersey residents who earned $90,000 or more and had good credit ratings. She used those identities to obtain second mortgages on a number of homes in the Newark area, according to U.S. Attorney Paul J. Fishman, head of the office prosecuting the case.

But since good credit ratings are no longer enough to get a mortgage, Ms. Bernardim also needed friends who worked for the lenders to pull off the caper.

“Having players at every level of a conspiracy makes it easier to carry out fraud,” said Mr. Fishman. “But each bad actor and criminal act is also another chance for law enforcement to find a way in.”

Maria Delgaizo Noto, an attorney for Ms. Bernardim, said that she had no comment until an indictment was unsealed, but that her client “maintains her innocence of any criminal activity.”

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Associated PressBeth Phillips, left, a U.S. Attorney in Missouri, announces a pair of indictments Aug. 4 in Kansas City in a $2.7 million mortgage-fraud case.

In Phoenix, Mr. Buencamino’s alleged fraud was assisted by an insider, but also by easy access to public documents on the Internet. After intercepting mail intended for Mr. Weaver and obtaining his Social Security number, Mr. Buencamino applied online for an Arizona driver’s license in Mr. Weaver’s name, according to the criminal complaint and law enforcement agents involved in the case.

When he received the permit, he submitted mortgage application documents by mail to Compass Bank and, with the help of co-conspirator William Baxaveneous, the Compass loan officer, obtained a second mortgage on Mr. Weaver’s home—which had no mortgage—without ever having to meet any bank officials face to face, Mr. Weaver said. He said he learned this from the federal agents investigating the case.

Mr. Baxaveneous’s attorney said he was trying to settle the case and declined to comment further.