Real Estate

Real estate agent indicted for mortgage fraud

Riddle used money from the sale of the homes to buy more homes and made most of his money collecting fees as the real estate agent, prosecutors say. The case was investigated by the FBI and postal inspectors.

Both Riddle and his lawyer declined comment.

Alverson said most of the buyers got into trouble when their adjustable rate mortgages shot up after the housing market crashed. Many had put little or no money down and could not afford the higher payments.

Prosecutors say almost all of the properties have been foreclosed, for a total loss of at least $2.6 million on the original $7 million in loans.

The indictment indicates others assisted Riddle, but it identifies them only as “close business associates.”

“Obviously, when you have a scheme like this, it’s not a one-person operation,” Alverson said.

But he said no charges are expected against anyone else. He would not comment when asked whether anyone got a deal with prosecutors in exchange for their cooperation.

Judge Karen Litkovitz accepted Riddle’s not guilty plea Thursday and allowed him to remain free pending his trial.

Another Real Estate Time Bomb: Unsellable Vacant Homes? « naked ...

For those who don’t know the New York area, Westchester County is full of wealthy bedroom communities like Scarsdale; Dutchess County is further out but well off by national standards. The unemployment rate for the state is better than the national average, and with New York famously having the longest foreclosure clearing time in the US (as in the number of defaulted homes versus throughput rates in the courts), the state is not a prime candidate for a huge inventory of unsold homes.

Put more simply, if you are seeing a significant overhang of unsold, and perhaps more important, unsellable, houses in two relatively well off counties in New York, it’s likely that the same problem exists elsewhere.

We noted last October that Bank of America was now eating title insurance liability on foreclosed properties sold by its servicer. Perhaps BofA has since reversed course, but it may be that other major servicers have not followed suit. We’ve also been told by real estate attorneys of title insurers offering policies for foreclosed properties with significant carveouts, making them more or less useless for the buyer.

One of the notions you often hear voiced is that the residential real estate market won’t recover until it “clears”. That belief is then used to argue for faster foreclosures, when foreclosures are certain to result in lower prices than modifications (to the extent that borrowers have enough income to be viable with a deep mod; there is no point in trying to rescue those beyond salvation). But whatever form of “let’s get this over with” you believe in, whether the Mellonite “liquidate homeowners” or a mix of foreclosures and mortgage mods, the tacit assumption is that the foreclosed homes will be sold in an orderly manner (or in cases where communities have shrunken, razed).

But what happens when you have unsellable homes, becoming havens for squatters or targets for vandals? They not only pull down the values of properties nearby, but they also represent a safety risk.

To put it bluntly: vacant homes are crackhouse futures.

This puts quite another complexion on the story of Fannie and Freddie’s interest in renting homes. Per the Wall Street Journal :

Mortgage giants Fannie Mae and Freddie Mac sold a record 100,000 homes during the second quarter. Together with the Federal Housing Administration, the entities owned about 250,000 homes at the end of June, or around half of all unsold, repossessed properties. Another 830,000 homes backed by the entities are in some stage of foreclosure, according to Barclays Capital.

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