Real Estate Fraud or Savvy Business

Submitted by Emerson on Fri, 2010-10-01 12:32
in

By Carmen Sabatino

Only two examples of business practice out of many:


1000 Houser, Modesto – On 11/10/2009, Wachovia Mortgage/Wells Fargo bank takes back the property at a foreclosure sale.  The bank debt is $293,215.  The bank hires PMZ/Judi Alves to provide a Brokers Price Opinion and list the property for sale.  After just a few days the property is purchased by Victor Barraza, another PMZ agent.  The sales price is $54,900.  Though the buyer is an agent with PMZ and can represent himself, he is represented by another PMZ agent, Pam Harmon.  (Are they secretly hiding the fact that an agent is buying the property?)  This sale to Victor Barraza closes escrow on 1/25/2010.  After a few days the property is placed back on the market and resold to another buyer.  This new buyer pays $101,000 and escrow closes on 3/15/2010.  Now, my first thought is that the PMZ agent must have put in a lot of money for remodeling, since the property resold for almost twice his purchase price.  To my surprise the original MLS profile sheet, when sold to Victor Barraza shows the property already was remodeled with updated windows, new paint and flooring.

So who is the winner and who is the loser in this transaction?  The winner – PMZ and the agents involved with multiple real estate commissions paid and an estimated profit of $40,000.  The loser – Wachovia Mortgage/Wells Fargo Bank who lost the $40,000.

1014 Ashford, Modesto – Property is listed for sale with PMZ/Dennis Lilly, subject to approval of a short sale.  The property is purchased by Dennis Lilly for $107,000 and escrow closes on 10/29/2009.  Based upon MLS information, when purchased the property is in good condition, featuring new flooring, appliances, windows, newer roof, new paint, bathrooms and electrical service.  The property has an existing first and second mortgage.  Total bank debt is over $300,000.  The first mortgage with MIT Lending in the amount of $230,000 is in foreclosure.  The actual mortgage holder appears to be either Fannie Mae or Freddie Mac.  Lilly convinces the lender to approve the short sale and accept his offer.  Once Lilly becomes the property owner, the property is put back on the market and is resold.  The property closes escrow on 3/03/2010 to this new buyer for $180,000.  Of interest, when pulling Lilly/Lily from the State of California business search is Lily Development.  The agent for service is Mike Zagaris.  Is PMZ/Zagaris fronting the money for these purchases and making a secret profit?

Who is the winner and who is the loser in the transaction?  The winner – PMZ and the agent involved with multiple real estate commissions paid and an estimated profit of $60,000.  The loser – MIT Lending and either Fannie Mae or Freddie Mac, who lost $60,000 and possibly the previous home owner, who may receive a 1099 for forgiveness of debt.

Were these transactions fraudulent?  Maybe or maybe not.  Real estate brokers and agents should however, be ethical and protect their clients and the public in real estate transactions in which they are involved.  Both of these transactions smell and should be investigated.

With homeowners behind in payments, foreclosure knocking on the door and in a vulnerable state and banks losing billions of dollars, these types of sales should be stopped and if fraud is involved the parties should be made to pay.  There appear to be dozens of similar stories in the Modesto and probably thousands in California.