Last year, Re/Max International honored Lori Polin of Tampa as one of an elite group of real estate agents with gross commissions of at least $500,000.
Now, Florida's attorney general says, approximately $165,250 of Polin's commissions came from her role in a major mortgage fraud scheme that bilked lenders out of more than $37 million and ultimately caused some 50 homes throughout Central Florida to go into foreclosure.
In a lawsuit filed Wednesday in Orlando, prosecutors sued 10 companies and 15 individuals, including Allen Boyarsky, a lawyer with a history of drug arrests who was involved with Polin in several suspect real estate transactions first reported in the St. Petersburg Times in November.
Polin, 49, is not named as a defendant because real estate agents are exempt from the Florida Deceptive and Unfair Trade Practices Act, the law that Boyarsky and others are accused of violating.
But the lawsuit alleges that Polin was one of three agents who conspired with Boyarsky and two other men to artificially inflate the purchase prices of homes so the defendants could obtain bigger loans.
While working for American Heritage Mortgage in Tampa in 2006, Boyarsky, company president Marcus Habeeb and Aziz Mohammed recruited "straw buyers" with good credit and paid them to apply for loans on houses sold at inflated prices. The men received "large amounts of cash at closing," but failed to pay the mortgages, thereby "enabling them and their respective companies to profit from the fraudulently obtained mortgages," the lawsuit says.
In all, the lawsuit says, the three men and their co-defendants siphoned off more than $6 million of loan proceeds from at least 60 house sales.
In one case, the lawsuit says, Polin listed an Oldsmar home for $699,000 in December 2005 and reduced it by $50,000 in January 2006. However, after being approached by Boyarsky and/or Habeeb about the property, Polin raised the price to $725,000. Within two days the house was under contract to Jeanette Lugo, a young Orange County woman who had been paid $10,000 to be the straw buyer.
The sellers did not receive the increased sales price, which instead went to a trucking company whose owner, defendant Stephen Mahadeo, received $100,000 from the loan proceeds at closing.
The Oldsmar house went into foreclosure in January and is now on the market for $351,900 - $373,000 less than it sold for two years ago.
Polin served as the seller's Realtor for five separate purchases by Lugo, and eight transactions in all.
Another real estate agent, Dawn St. Hillaire, allegedly inflated the prices on five houses, allowing her and/or her firm, an ERA affiliate in Lake County, to collect $148,346 in commissions. A third agent, Heather Showalter of Pinellas, bought four houses herself, though the lawsuit does not say who allegedly profited from those transactions.
Other alleged straw buyers include Kimberly Gleaton, who was shown on loan documents as the $15,500-per-month operations manager for an Orlando construction company. In fact, Gleaton, who is not listed as a defendant, had been with the company only three months and made $17 per hour as a part-time assistant.
Among the lenders affected by the alleged fraud scheme was IndyMac, a California-based bank that was seized by federal regulators in July as one of the many casualties of the subprime mortgage crisis that has threatened the entire U.S. financial system. Wednesday's lawsuit comes the same week that Lehman Bros. went bankrupt, Merrill Lynch was sold in a shotgun sale to Bank of America and the federal government bailed out insurance giant A.I.G.
The lawsuit seeks damages for the lenders and civil penalties of $10,000 for each violation of the deceptive practices act. Florida's Department of Business and Professional Regulation, which regulates the real estate industry, would not comment on whether there is any investigation of Polin and the other two agents mentioned in the lawsuit.
Saturday, September 20, 2008
Wednesday, September 17, 2008
Horry County school system has 38,000 students
The new enrollment numbers for the Horry County school system have been released.
Totals show that Horry County schools have increased almost 900 more students than the previous school year.
The four county schools with the greatest gains were.
Ocean Bay Middle School gained extra 137 new students; Myrtle Beach Elementary School received 134 more students than expected; Socastee High School had 97 extra students; and Carolina Forest High School acquired 96 more students.
The total enrollment for this school year rose to almost 38,000 students.
Totals show that Horry County schools have increased almost 900 more students than the previous school year.
The four county schools with the greatest gains were.
Ocean Bay Middle School gained extra 137 new students; Myrtle Beach Elementary School received 134 more students than expected; Socastee High School had 97 extra students; and Carolina Forest High School acquired 96 more students.
The total enrollment for this school year rose to almost 38,000 students.
Monday, September 15, 2008
cut a key interest rate this week
Wreckage from a massive crisis on Wall Street could prompt the Federal Reserve to do an about face and once again cut a key interest rate this week or possibly later this year, economists said Monday.
Just a few days ago, a rate cut appeared largely off the table. Now it has emerged as a possibility as the Fed prepares to meet Tuesday against a backdrop of historic upheaval in the U.S. financial system.
Lehman Brothers Holdings Inc., the country's fourth-largest investment firm, filed for bankruptcy protection on Monday. And, Bank of America is buying Merrill Lynch in a $50 billion deal.
"It puts a Fed rate cut back on the table," said Stuart Hoffman, chief economist at PNC Financial Services Group.
Seeking to calm frazzled markets, President Bush assured the country his administration is "working to reduce disruptions and minimize the impact of these developments on the broader economy."
The Dow Jones industrial average plunged more than 200 points in morning trading.
On the other side of the Atlantic, major European central banks plowed billions into markets Monday with the hope of averting a lending freeze-up in the wake of Lehman's failure.
"It is an ongoing process and we have to remain extraordinarily alert," said European Central Bank President Jean-Claude Trichet.
In Asia, China's central bank cut a key interest rate to stimulate growth as inflation has eased. It was the first rate cut there in almost six years. Chinese regulators have steadily raised interest rates over the past three years to contain inflation pressure.
During emergency sessions over the weekend, Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson made clear there would be no government bailout of Lehman. The Fed took steps Sunday night to keep cash flowing to major Wall Street players by expanding its loan programs, however.
Before the extraordinary events over the weekend, the prevailing wisdom was that the Fed would hold its key interest rate steady at 2 percent at its next meeting on Tuesday.
Although that still could happen, a growing number of economists and investors now believes there is a chance the Fed could reduce its rate by one-quarter or even a bolder one-half percentage point on Tuesday. Much hinges on the information the Fed gets about how the inner workings of the U.S. financial system are functioning and how Wall Street investors react to the crisis.
"It is a different ballgame. Anything can be expected and a rate cut is possible," said economist Richard Yamarone, economist at Argus Research. Yamarone thinks the Fed on Tuesday will decide to stay the course and leave rates alone, fearing another cut would hurt the value of the U.S. dollar more. Hoffman, too, isn't convinced a rate cut will happen.
Were the Fed to slice its key rate, the prime lending rate for millions of consumers and businesses — now at 5 percent — would drop by a corresponding amount. The prime rate applies to certain credit cards, home equity lines of credit and other loans. The Fed's key rate and the prime rate are at four-year lows.
Even if the Fed doesn't lower rates on Tuesday, analysts believe the central bank could switch signals and suggest it could cut rates sooner down the road.
Over the last few months, Bernanke and his Fed colleagues have signaled that the central bank's next move on interest rates would probably be an increase to fend off inflation.
A recent retreat in record-high oil prices and improved readings on wholesale prices, however, gives the Fed more leeway to lower rates if needed or at least hold them steady.
The Fed in June halted its most aggressive rate-cutting campaign to shore up the economy out of fears that those low rates were aggravating inflation. It didn't budge the rate at the last meeting in August for the same reason.
Just a few days ago, a rate cut appeared largely off the table. Now it has emerged as a possibility as the Fed prepares to meet Tuesday against a backdrop of historic upheaval in the U.S. financial system.
Lehman Brothers Holdings Inc., the country's fourth-largest investment firm, filed for bankruptcy protection on Monday. And, Bank of America is buying Merrill Lynch in a $50 billion deal.
"It puts a Fed rate cut back on the table," said Stuart Hoffman, chief economist at PNC Financial Services Group.
Seeking to calm frazzled markets, President Bush assured the country his administration is "working to reduce disruptions and minimize the impact of these developments on the broader economy."
The Dow Jones industrial average plunged more than 200 points in morning trading.
On the other side of the Atlantic, major European central banks plowed billions into markets Monday with the hope of averting a lending freeze-up in the wake of Lehman's failure.
"It is an ongoing process and we have to remain extraordinarily alert," said European Central Bank President Jean-Claude Trichet.
In Asia, China's central bank cut a key interest rate to stimulate growth as inflation has eased. It was the first rate cut there in almost six years. Chinese regulators have steadily raised interest rates over the past three years to contain inflation pressure.
During emergency sessions over the weekend, Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson made clear there would be no government bailout of Lehman. The Fed took steps Sunday night to keep cash flowing to major Wall Street players by expanding its loan programs, however.
Before the extraordinary events over the weekend, the prevailing wisdom was that the Fed would hold its key interest rate steady at 2 percent at its next meeting on Tuesday.
Although that still could happen, a growing number of economists and investors now believes there is a chance the Fed could reduce its rate by one-quarter or even a bolder one-half percentage point on Tuesday. Much hinges on the information the Fed gets about how the inner workings of the U.S. financial system are functioning and how Wall Street investors react to the crisis.
"It is a different ballgame. Anything can be expected and a rate cut is possible," said economist Richard Yamarone, economist at Argus Research. Yamarone thinks the Fed on Tuesday will decide to stay the course and leave rates alone, fearing another cut would hurt the value of the U.S. dollar more. Hoffman, too, isn't convinced a rate cut will happen.
Were the Fed to slice its key rate, the prime lending rate for millions of consumers and businesses — now at 5 percent — would drop by a corresponding amount. The prime rate applies to certain credit cards, home equity lines of credit and other loans. The Fed's key rate and the prime rate are at four-year lows.
Even if the Fed doesn't lower rates on Tuesday, analysts believe the central bank could switch signals and suggest it could cut rates sooner down the road.
Over the last few months, Bernanke and his Fed colleagues have signaled that the central bank's next move on interest rates would probably be an increase to fend off inflation.
A recent retreat in record-high oil prices and improved readings on wholesale prices, however, gives the Fed more leeway to lower rates if needed or at least hold them steady.
The Fed in June halted its most aggressive rate-cutting campaign to shore up the economy out of fears that those low rates were aggravating inflation. It didn't budge the rate at the last meeting in August for the same reason.
How to price a home for sale
In general, property owners want the appraisal district market value to be as low as possible for taxing purposes, but want the market value to be as high as possible if they are actually attempting to sell their property.
Unfortunately, the “market value” system does not allow for a property owner to make those types of distinctions in the process.
Market value
The market value of real estate is known to be the value that a ready, willing and able buyer is willing to pay for a property that has been adequately marketed for an appropriate length of time, in an arms-length transaction, with a ready, willing and able seller.
That definition is a mouthful, so let’s run through it statement by statement.
A “ready, willing and able” buyer is someone who can purchase — has the money or credit to get a loan — and who wants to purchase the property.
The property must be marketed through the same process (e.g. in the Multiple Listing Service) as other properties.
The property should also be available to the “general” market of potential buyers for the average length of time that other properties are marketed before a successful sale.
The arms-length transaction is important because that will allow for the true “market system” to function. If there are other factors in play, such as a child purchasing from a parent or one investor buying out his or her partner, the value could be skewed based on the relationship.
Finally, the seller must be ready (have the motivation to sell now), willing (have the desire to sell) and able (have the ability to consummate the transaction).
List price
There are multiple factors that real estate agents utilize to recommend the “list price.”
They prepare a Comparative Market Analysis on the property. The CMA should include information about other nearby properties with comparable amenities, size and condition that have recently sold, are currently on the market or currently under contract. Condition is one of the most difficult issues to compare. There could be two houses that are side by side and one has been totally updated and the other has had no updating. They might seem comparable, but analysis of condition does not allow for them to be considered a mirror of the other.
They address the average days on market, or DOM.
They take into account the absorption rate in the area.
They also consider the subsequent months’ supply of inventory in the area.
A month’s supply of inventory is defined as an estimation of how long it will take for all of the comparable properties to be sold, or absorbed, based on how many properties are currently on the market and the monthly rate those comparable properties have sold in the past few months. The absorption rate has one key factor: It uses historical data to forecast the time it will take to absorb inventory. For this reason, agents and appraisers prefer using comparable sales within the last six months because older data is no longer applicable to the current market.
Following all of the data analysis, the most important question to ask is, Why is the seller contemplating selling? Is there a time frame for selling the property, such as has the seller been transferred to a new city and must be at work in one month? If the time frame is not equal to the average days on the market of the comparable sales, then the market value will be lower to get the property sold more quickly.
Real estate agents know that the very best time to generate excellent activity for a property is within the first 30 days on the market. The property must be priced competitively and conditioned above the competition on the first day it goes on the market to take full advantage of the initial market exposure. Remember that the competition for a seller’s home is always new construction.
Since we are in a buyers market it will not be uncommon for a home to remain "Active" for a longer time period than over the past few years.
Unfortunately, the “market value” system does not allow for a property owner to make those types of distinctions in the process.
Market value
The market value of real estate is known to be the value that a ready, willing and able buyer is willing to pay for a property that has been adequately marketed for an appropriate length of time, in an arms-length transaction, with a ready, willing and able seller.
That definition is a mouthful, so let’s run through it statement by statement.
A “ready, willing and able” buyer is someone who can purchase — has the money or credit to get a loan — and who wants to purchase the property.
The property must be marketed through the same process (e.g. in the Multiple Listing Service) as other properties.
The property should also be available to the “general” market of potential buyers for the average length of time that other properties are marketed before a successful sale.
The arms-length transaction is important because that will allow for the true “market system” to function. If there are other factors in play, such as a child purchasing from a parent or one investor buying out his or her partner, the value could be skewed based on the relationship.
Finally, the seller must be ready (have the motivation to sell now), willing (have the desire to sell) and able (have the ability to consummate the transaction).
List price
There are multiple factors that real estate agents utilize to recommend the “list price.”
They prepare a Comparative Market Analysis on the property. The CMA should include information about other nearby properties with comparable amenities, size and condition that have recently sold, are currently on the market or currently under contract. Condition is one of the most difficult issues to compare. There could be two houses that are side by side and one has been totally updated and the other has had no updating. They might seem comparable, but analysis of condition does not allow for them to be considered a mirror of the other.
They address the average days on market, or DOM.
They take into account the absorption rate in the area.
They also consider the subsequent months’ supply of inventory in the area.
A month’s supply of inventory is defined as an estimation of how long it will take for all of the comparable properties to be sold, or absorbed, based on how many properties are currently on the market and the monthly rate those comparable properties have sold in the past few months. The absorption rate has one key factor: It uses historical data to forecast the time it will take to absorb inventory. For this reason, agents and appraisers prefer using comparable sales within the last six months because older data is no longer applicable to the current market.
Following all of the data analysis, the most important question to ask is, Why is the seller contemplating selling? Is there a time frame for selling the property, such as has the seller been transferred to a new city and must be at work in one month? If the time frame is not equal to the average days on the market of the comparable sales, then the market value will be lower to get the property sold more quickly.
Real estate agents know that the very best time to generate excellent activity for a property is within the first 30 days on the market. The property must be priced competitively and conditioned above the competition on the first day it goes on the market to take full advantage of the initial market exposure. Remember that the competition for a seller’s home is always new construction.
Since we are in a buyers market it will not be uncommon for a home to remain "Active" for a longer time period than over the past few years.
Sunday, September 14, 2008
start to stimulate the housing market
The federal government's recent bailout of mortgage companies Fannie Mae and Freddie Mac will give a boost to the region's home-buying market, area real experts said.
"I think it'll bring more people into the market," said Russell Pruner, president of the Greenwich Association of Realtors. "If we don't have people looking, then we don't have people buying."
The Treasury Department, Federal Reserve and Federal Housing Finance Agency took control of both companies last Sunday after they amassed $14 billion in debt and put themselves on the brink of failure.
The federal government acted on Congress' authorization in July to give each company as much as $100 billion and start buying mortgage-backed securities from them.
Fannie Mae and Freddie Mac took on mortgages from borrowers who could not pay them back because they had overextended themselves with subprime mortgages at very low interest rates.
Both lending institutions, which were founded by the federal government, are similar in organization and purpose - to lend money so that more citizens can realize the American dream of homeownership.
Fannie Mae, which came from the acronym FNMA for Federal National Mortgage Association, was created in 1938 under President Franklin D. Roosevelt to make sure funds were available for homeownership during the Great Depression.
Freddie Mac was set up in 1970 so that Fannie Mae, which had become a publicly traded company two years earlier, would not have a monopoly on government-backed mortgages.
Ken president of the Connecticut Association of Realtors, said home buyers signed those mortgages with the expectation that they would have better-paying jobs in the near future and the housing market would continue to soar. But many home buyers' incomes did not go up as the housing market went down and their interest rates increased, he said.
"These home buyers never thought about when those rates began to adjust," DelVecchio said.
Realizing that the failure of Fannie Mae and Freddie Mac, which account for 40 percent of U.S. mortgages, would jeopardize the national and global economies, the federal government came to the rescue.
"I wouldn't say it's positive, but it certainly is necessary," said Mark, an economics professor at Fairfield University. "The mortgage industry won't do better unless Fannie Mae and Freddie Mac are rescued."
The federal bailout, which recently has caused mortgage rates to go down, will help more home buyers get mortgages, and lenders won't be offering unaffordable subprime mortgages, LeClair said.
"That's a good thing," he said.
Edward, a fellow economics professor at Fairfield University, said taxpayers are bearing the brunt of the crisis while facing a national deficit of about $500 billion.
"Where's this money going to come from?" he said.
Stuart Svirsky, president of Westport-based Mid-Fairfield Board of Realtors, said the bailout will help the area's real estate market by "loosening up" money for buyers.
"It's been holding its own. I certainly think this is going to have a good impact," he said, adding that the market has not been doing badly.
The bailout should help the home construction business by giving people confidence to get mortgages for new homes, said Joanne, editor of the Guilford-based magazine Connecticut Builder.
"It'll be very good for construction because the biggest issue for builders is getting people to sell their first homes so their buying new homes," she said. "Buyers have a sense of security and ease now that the government has taken hold of the situation."
The buyout most likely will increase business by bringing more buyers into a relatively slow market, said Michae, owner of New Canaan-based construction company Gulick Associates LLC.
"I don't think it's a cure-all, but it's a step in the right direction," he said.
Jeff, owner of Construction Concepts Corp. in Stamford, said the bailout will help his renovation business because of its psychological effect.
"When the market's down, people decide they're not going to do renovations," he said.
Gov. M. Jodi Rell was scheduled to meet last week with state agencies to come up with spending cuts to avoid a major state deficit. It could reach $145 million by June 30 if no cuts are made, Rell said.
Don, chairman of Rell's economic advisory panel, said the state's economy is "growing inch by inch as opposed to yard by yard," and has gained about 5,600 jobs in the past year, despite falling house values and increasing costs for food, energy and other needs.
DelVecchio said it was unfortunate that Fannie Mae and Freddie Mac had to be saved by the government, but he thinks it will bode well for home buyers, the market and the economy.
"I do think as we're starting to see how this is steadying the market, the feeling is that this is not a bad thing," he said, adding that mortgage rates have dropped to about 5 percent or 6 percent. "That may start to stimulate the housing market again, and then the economy may fill in from there."
"I think it'll bring more people into the market," said Russell Pruner, president of the Greenwich Association of Realtors. "If we don't have people looking, then we don't have people buying."
The Treasury Department, Federal Reserve and Federal Housing Finance Agency took control of both companies last Sunday after they amassed $14 billion in debt and put themselves on the brink of failure.
The federal government acted on Congress' authorization in July to give each company as much as $100 billion and start buying mortgage-backed securities from them.
Fannie Mae and Freddie Mac took on mortgages from borrowers who could not pay them back because they had overextended themselves with subprime mortgages at very low interest rates.
Both lending institutions, which were founded by the federal government, are similar in organization and purpose - to lend money so that more citizens can realize the American dream of homeownership.
Fannie Mae, which came from the acronym FNMA for Federal National Mortgage Association, was created in 1938 under President Franklin D. Roosevelt to make sure funds were available for homeownership during the Great Depression.
Freddie Mac was set up in 1970 so that Fannie Mae, which had become a publicly traded company two years earlier, would not have a monopoly on government-backed mortgages.
Ken president of the Connecticut Association of Realtors, said home buyers signed those mortgages with the expectation that they would have better-paying jobs in the near future and the housing market would continue to soar. But many home buyers' incomes did not go up as the housing market went down and their interest rates increased, he said.
"These home buyers never thought about when those rates began to adjust," DelVecchio said.
Realizing that the failure of Fannie Mae and Freddie Mac, which account for 40 percent of U.S. mortgages, would jeopardize the national and global economies, the federal government came to the rescue.
"I wouldn't say it's positive, but it certainly is necessary," said Mark, an economics professor at Fairfield University. "The mortgage industry won't do better unless Fannie Mae and Freddie Mac are rescued."
The federal bailout, which recently has caused mortgage rates to go down, will help more home buyers get mortgages, and lenders won't be offering unaffordable subprime mortgages, LeClair said.
"That's a good thing," he said.
Edward, a fellow economics professor at Fairfield University, said taxpayers are bearing the brunt of the crisis while facing a national deficit of about $500 billion.
"Where's this money going to come from?" he said.
Stuart Svirsky, president of Westport-based Mid-Fairfield Board of Realtors, said the bailout will help the area's real estate market by "loosening up" money for buyers.
"It's been holding its own. I certainly think this is going to have a good impact," he said, adding that the market has not been doing badly.
The bailout should help the home construction business by giving people confidence to get mortgages for new homes, said Joanne, editor of the Guilford-based magazine Connecticut Builder.
"It'll be very good for construction because the biggest issue for builders is getting people to sell their first homes so their buying new homes," she said. "Buyers have a sense of security and ease now that the government has taken hold of the situation."
The buyout most likely will increase business by bringing more buyers into a relatively slow market, said Michae, owner of New Canaan-based construction company Gulick Associates LLC.
"I don't think it's a cure-all, but it's a step in the right direction," he said.
Jeff, owner of Construction Concepts Corp. in Stamford, said the bailout will help his renovation business because of its psychological effect.
"When the market's down, people decide they're not going to do renovations," he said.
Gov. M. Jodi Rell was scheduled to meet last week with state agencies to come up with spending cuts to avoid a major state deficit. It could reach $145 million by June 30 if no cuts are made, Rell said.
Don, chairman of Rell's economic advisory panel, said the state's economy is "growing inch by inch as opposed to yard by yard," and has gained about 5,600 jobs in the past year, despite falling house values and increasing costs for food, energy and other needs.
DelVecchio said it was unfortunate that Fannie Mae and Freddie Mac had to be saved by the government, but he thinks it will bode well for home buyers, the market and the economy.
"I do think as we're starting to see how this is steadying the market, the feeling is that this is not a bad thing," he said, adding that mortgage rates have dropped to about 5 percent or 6 percent. "That may start to stimulate the housing market again, and then the economy may fill in from there."
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