Alright, something is happening on the Hill! The House approved legislation that would institute a consumer's "Bill of Rights" regarding the credit card industry's unfair practices. The credit card companies are finally being reined in!  (If you believe that, I have a wonderful bridge for sale. Interested?)

House bill: H.R.627

Senate bill: S.235

The House, by a vote of 357/70, adopted a series of amendments, some of which were pushed by the White House, that increases restrictions on industry practices. The bill, dubbed the "Credit Card Holders' Bill of Rights," wouldn't take effect until a year after enactment. For sure, there are some much needed reforms addressed by this bill, such as prohibiting retroactive rate hikes and double cycle billing (Double-cycle billing eliminates the interest-free period for consumers who move from paying the full balance monthly to carrying a balance). Also, companies would be prohibited from giving cards to people under 18 years of age. Good rules, but what I don't understand, is why these rules, if the bill passes the Senate, would not take effect for a full year, July 2010.

If it were left to some legislators, the bill would never even become law. Opponents tried to weaken the bill with amendments that would have given credit card issuers some openings to raise rates within the new proposed restraints.

"We shouldn't take credit opportunities away," insisted Rep. Jeb Hensarling, R-Texas. "I just want consumers to have choices. I want there to be a competitive marketplace." (Trust me, this bridge is a deal!!) 

Last week President Barack Obama met with executives of the credit card industry and made clear he wants to sign a bill into law. He reaffirmed it as a priority that legislation was a must to protect consumers from "abusive fees and penalties." Earlier Wednesday, Rep. Carolyn Maloney, D-N.Y., the bill's chief sponsor, and Treasury Secretary Timothy Geithner met with representatives of consumer and civil rights groups to discuss the credit card overhaul.

At least something appears to be happening. Still, the fact remains, the credit card companies have powerful lobbyists. The Senate still has to work on their version of the bill, and pass that. In the meantime, we need to take the driver's seat, and do what we can to free ourselves from the tyrranical influence of credit card abuse.

During this next year, the credit card companies will be able to wreak as much havoc as they please! The only exception in the House bill, is that customers receive 45 days notice before their interest rates are increased; this provision will take effect in 90 days.

When the FBI said in mid 2008, that they would be making more arrests for cases they had been investigating since 2004, they weren't kidding! Originally when I first blogged about this in June, 2008, the FBI announced that they had arrested five people who all worked together perpetrating a scam that I detailed in that post. Then, just three days ago, I reported on the latest FBI bust, involving a couple who owned a mortgage financing company here in Honolulu.

Now today, the FBI has announced that yesterday they have arrested five more people associated with four lending companies, for participating in alleged foreclosure bailout schemes. The lending companies named were: 

• Asian Pacific Funding
• New Horizons Financial
• Accel Mortgage LLC
• Walter P. Yim and Associates

The five persons arrested have all pleaded not guilty to multiple charges of mail fraud, wire fraud, money laundering, conspiracy  and making false statements on a mortgage application. To date, more than 17 people have been arrested on similar charges. The FBI investigations have been active for the past 18 months.

I hope that all of those shady individuals that have perticipated in these kinds of fraud, who have not yet been arrested, are shaking in their boots! I believe there are many more perpetrators out there. I know I met a few lending agents, whom I refused to do business with because they were not shy about their willingness to stretch the truth on mortgage applications. A couple of them even went so far as to say that if the borrowers were willing to sign the applications, they could care less if they lost the property later!

Well, now it looks like the day of reckoning is about to land on their heads! More arrests are surely on the way. If any of those loan officers are reading this blog, what do you think about that?

Of course, I would rather hear from everyone else regarding their thoughts about these arrests!

The day has come. The Honolulu City Council, by a margin of 6 to 1, has passed a ban on using mobile electronic devices while driving. Personally, I'm split down the middle.

I applaud the ban, because how many times has my blood pressure risen because of some other idiot, slowing down the single lane of traffic behind them, because they can't drive at the speed limit and talk at the same time? I wonder, do they talk slower while they're driving, too?

I resent the ban, because I need to use the phone for my business! I can't pull off the road just to answer a call! Oh yeah, the ban exempts users with handsfree devices, like my cherished Bluetooth! Whew! Nevermind!

The bill also allows for other exemptions:

c) The following persons shall be exempt from the provisions of subsection (a):

1. Emergency responders using a mobile electronic device while in the performance and scope of their official duties:
2. Drivers using two-way radios while in the performance and scope of their work-related duties:
3. Drivers holding a valid amateur radio operator license issued by the federal communications commission and using a half-duplex two-way radio.

All in all, the bill looks like a straight forward and well written piece of legislation. The problem will be in the area of enforcement. The Mayor has stated his intention to sign it, after he reviews it further and consults with the Police Department and the Prosecutor's Office regarding any issues they may have regarding enforcment of it's provisions.

The bill will become law on July 1, 2009 after the Mayor signs it. Hawaii will join California and New York with such bans. First time offenders will face fines of between $40.00 to $100.00.

Finally, the Obama administration is trying to rein in the credit card companies. Because congress is at the beck and call of the credit card lobbyists, they have been stalling on enacting any credible credit card reform. Even though the U.S. Federal Reserve has already drawn up new rules to protect consumers, they aren't scheduled to take effect until July 2010.

Get this quote from Edward Yingling, president of the American Bankers Association, the banking industry's lobbying group. "The [banking] industry understands the concerns about credit cards, but the administration should fully recognize the impact of the Federal Reserve Board regulation, which is one of the strongest consumer- protection regulations ever adopted". Yeah, right.

In the meantime, the credit card companies are having a field day! They are cranking up rates to usurious levels, Many people who have been stellar credit users are suddenly finding that, because of actions taken by the credit card companies, their credit scores are being destroyed, their credit histories being compromised. In effect, the credit card companies are destoying peoples financial reputations. 

All of this is happening while the American, indeed the world's economy, is in a fragile state. People whose finances are being strained due to current circumstances, are finding that their "last resort" source of security, their credit ratings, are being furtively stripped from them. The credit card users who have played by the rules, been responsible, and proactively constructed a credit history in the proscribed manner, are having the rules changed on them, to their extreme detriment.

Particular criticism is due to those Banks that raised rates on some existing card holders even as the banks received federal bailout funds. The lame excuses put forth by the banks, is that  "credit-market conditions" and "changes in borrowers' credit scores" necessitated the increases. Let us remind them: the "credit-market  conditions" and "changes in borrowers credit scores" are for the most part due to the shenannigans and deceptive practices of the credit card companies themselves. They created the problems, then want to punish the consumers by increasing rates and lowering credit limits, because of the effects their policies have had on the credit consumer.

President Obama is taking action now! On Sunday, on NBC's "Meet the Press", Larry Summers (Pres. Obama's top economic advisor) quoted Obama's statement that "people have been deceived into paying extraordinarily high rates that they wouldn't have paid if they knew what they were getting themselves into". Tomorrow, (Thursday, April 23, 2009) President Obama, Summers, and several other key economic officials, including Treasury Secretary Timothy Geithner, are meeting with top executives at banks with large credit card divisions. Let us hope that some real reform comes out of this meeting.

During his presidential campaign, Obama laid out a pro-consumer credit card reform plan. Currently, the administration is backing legislation to crack down on credit card companies, including major players like VISA and MasterCard, that hike interest rates on unsuspecting customers. Obama also wants to establish a credit card "bill of rights" that would ban universal default, prohibit unilateral changes to contracts and also prohibit credit card issuers from charging interest on fees.

There's a great newly revised website, that lets you find all kinds of information having anything to do with Hawaii. It's called e-Hawaii.com.

I just had to share that with you, as well as this piece of Local Style Hawaiian humour:

"U Know U Local Eef" - e-Hawaii Joke

1. You have a separate circuit breaker for your rice cooker/warmer.
2. Only NOW you know that cilantro is the same as Chinese parsley.
3. You measure the water for the rice by the knuckle of your index finger.
4. You know which market shave poi on which days.
5. You know that Char Hung Sut is closed on Tuesday.
6. You can handle shoyu with green mango, li hing gummy bears, raw egg on hot rice and pearl tea (Carnation milk in hot water with sugar) with creme crackers.
7. Your refrigerator has a half-empty jar of mango chutney from the 1993 Punahu Carnival.
8. The condiments at the table are Shoyu, ketchup, chili peppah watah and kimchee. Also, takuwan, Hawaiian salt, slice onion and pickled onion.
9. You go to Maui and your luggage home includes potato chips, manju, cream puffs and guri-guri for omiyage (gifts).
10. You think the four food groups are starch, Spam fried food and fruit punch.
11. A balanced meal has three starches, rice, macaroni and bread.
12. You know 101 ways to fix your rubber slippers...50 using tape, 50 using glue and one using a stick to poke the strap back in.
13. You sometimes use your open car door for a dressing room.
14. You wear two different color slippahs together and you no mind.
15. Nice clothes means a T-shirt without pukas.
16. You are barefoot in most of your elementary school pictures.
17. You have a slipper tan . . . an upside down "v" on top of both your feet.
18. Your only suit is a bathing suit.
19. You drive barefoot.
20. You have at least five Hawaiian bracelets.
21. You never, ever, under any circumstances, wear socks with slippers, or an aloha shirt that matches your wife's muumuu.
22. You still call the Blaisdell Center, the HIC and its Sandy's, not Sandy Beach
23. You say "I going for lawnmower da grass" when you mean "I'm going to mow the lawn."
24. You can understand every word Bu La'ai says and you know what his name means, too.
25. You have a sister, cousin, aunty or mom named "Honey Girl" or, someone in the family named "Boy," "Tita," "Bruddah," "Sonny," "Bachan," "Taitai," "Popo" and/or "Vovo."
26. You still chant "Hanakokolele" when a friend or co-worker goofs up.
27. You say, "Shtraight," "Shtreet," and "Shtress."
28. You say "Da Kine," and the other person says "Da kine" and you both know what is "Da kine."
29. The "Shaka" and the "Eye Flash" are worth 1,000 words.
30. You're shopping at Epcot Center at Disneyworld and you may say something to your sister and a complete stranger says, "you're from Hawaii, aren't you?"
31. You feel guilt leaving a get-together without helping clean up.
32. The idea of taking something from a heiau is unthinkable.
33. You call everyone older than you "Auntie" or "Uncle" and you kiss everyone in greeting and farewell.
34. You let others cars ahead of you on the freeway and you give shaka to anyone who lets you in.
35. Your philosophy is "Bumbai."
36. You'd rather drag out the compressor and fill that leaking tire every single morning than have it fixed at the local gas station.
37. The only time you honk your horn is once a year during the safety check.
38. If a child needs a home, give him one. He becomes "Hanai."
39. You can live and let live with a smile in your heart.
40. Your male best friend's name is either Kimo, Kaipo,  or Big Al.

Finally, the long, slow arm of the law has thrown one of the local mortgage fraud scammers into the slammer. This case began in 2005, and the perpetrators won't be sentenced until September 17, 2009. Still, they have been convicted, and the day of reckoning has come!

Back in mid 2008, I posted a blog about a Mortgage Fraud Bust in Honolulu, which involved five people, including loan officers and middlemen, basically run with the "We Buy Houses" signs, used as bait to find distressed homeowners. Back then, the FBI had said that they were investigating several more cases that were run during the years from 2004 through 2006, and that there would be many more cases to come.

This particular case involved a husband and wife team, owners of a mortgage company. The founder of Mortgage Alliance LLC, one John M. Dimitrion, and his wife, Julie A.B. Dimitrion, pleaded guilty in federal court. Mr. Dimitrion Faces a maximum prison sentence of 45 years and $1.5 million in penalties; Mrs. Dimitrion faces a maximun of 15 years and penalties of $500,000.

The scam this couple, and their cohorts ran, was basically one where they used the "subject to" clause in a contract, a technique taught in many of those so called "Investment Seminars". The clause is legal, but it is fraught with danger. By using the subject to clause, a homeowner signs the title of their home over to the "Rescuer", who claims they will save the home from foreclosure (by the way, the term "Rescuer" could be considered to be the type of person the "Distressed Property Consultant" regulations are meant to protect homeowners from). The "Rescuer" then owns the property, "subject to" the underlying mortgage, which the original homeowner is still liable for. The "Rescuer" promises to make the mortgage payments, while temporarily renting the home back to the homeowner. In the meantime, the "Rescuer" can secure a new loan on the property, using a third party "straw" person as a new purchaser.

The twists and turns to this scam can become complex. The "Rescuer", in this case the Mortgage Alliance company, never told the homeowners they were signing away the title to their home. Instead, they thought they were simply refinancing their home. The Mortgage Alliance company then went on to create a fake escrow account, made fraudulent loans on the property, greater than the home's actual value, and stole the proceeds. Often in cases like this, the underlying mortgage is never paid, and eventually the original homeowner gets foreclosed on and evicted, which also occurred in this case.

One thing I want to mention is that this type of fraud and mortgage scam has been happening for years. The obvious malfeasance should be easy to spot and avoid, but the scammers manage to gain the homeowners trust. The homeowners are desperate, and fall victim to these scams because they are hoping for a miracle. In a way, this is not unlike the subprime mortgage fiasco, which bears similarities to this type of fraud.

The plethora of subprime mortgages that many homeowners unwittingly signed onto, in many cases, caught many unwitting buyers unaware of the pitfalls they were falling into. Often, they were looking for a miracle, the chance to own their own home, and trusted greedy, unscrupulous lenders.

Unfortunately, most of those situations will not result in any criminal prosecutions. 

This Sunday, I held an open house in Mililani Mauka. Mililani is my area of expertise, a pre-planned bedroom community in Central Oahu. I have lived here in Mililani since 1977, and own investment property here as well. I litterally saw Mililani sprout out of the pineapple and sugar cane fields, and grow into the suburban community that it is today.

The townhouse, a unit in Northpointe Terrace (in Hawaii it's a townhouse; on the mainland it would be an apartment), is on the second floor. 3 bedrooms, 2 baths, and 2 open parking stalls. The unit is in average condition for a 14 year old building; carpets are a  little faded, but clean. Paint is good, but not bright.

The most important character about this unit though, is that it is an REO (Real Estate Owned, by Countrywide financing). Previously foreclosed on, now owned by the bank.

Traffic was steady at the open house, a welcome change from the previous few months, and as spring moves into summer, traffic should continue to be good. What struck me at this open house as different, was that just about everyone coming through was looking for an investment property. Some came with their agents, some knew what an REO was (believe it or not, I'm refering to the agents!), some didn't know anything, other than they wanted to find an investment property.

I want to tell you, I love educating inexperienced homebuyers! I was in hog-heaven at this open house!

I met two young couples that are homeowners, but neither has any experience being an investor. One of the couples told me they were just starting out, exploring the idea of buying an investment property. Why? Tempted by the extremely low interest rates, and the depressed prices. It's all over the news, so they wanted to see what's going on.

The other couple, same story. Their biggest question, can they use VA financing? I said they could. Before you knowledgeble readers throw knives at me, let me explain! They could use their VA financing if they move into the unit they purchase, and rent out their present home. As most, but not all of us know, VA and FHA finacing is for owner occupied purchases only. Just a little detail that the inexperienced might not know.

There is a lot more to know about becoming a first time investor. I explained a few of the details about investor financing options, setting the criteria for their investments, and quite a few other details. I set up automatic property searches on my laptop, right there at the open house, so they will be notified as soon as any new listings which meet their criteria come on the market. I am eager to help them get started in their quest, and I am excited about helping them learn the ropes about becoming landlords, and real estate investors!

Everyone wants to become a real estate investor! Why not?

Just a little bit about me: I have been an Accredited Buyer's Representative for 5 years, as well as a Certified Residential Specialist. I also recently earned the designation as a Resort and Second-home Property Specialist. I love helping first time homebuyers and investors of any degree of experience, or lack therof. Please give me a call if I can be of any assistance! 808-780-7043

This is a re-blog of a very informative post by Pat Killeen.

Good information about credit scoring.

I want to pass on this blog by Matt Listro. This is an exceptional review of a few ways to deal with credit card debt, as simple as 1,2, 3.

Very good advice. Thank you Matt!

Yesterday's business section of the newspaper had a headline that broke a story about a fraudulent investment scam allegedly perpetrated on the Big Island, in Hilo.

Basically, it was another Ponzi scheme, dealing with fraudulent securities trading. The perpetrators, two gentlemen, were living large, driving leased Jaguars and BMW's. One of them, who I will just call 'James', even rented a $25,000 a month Big Island beachfront home, presenting it as his own, and using it to hold presentations to would be investors. 

What I want to mention, is that I was reading this article with great interest, because in the recesses of my mind, I remember a close call I had with a gentleman who had recently located in Hilo, on the Big Island. The situation was, about a 18 months ago I met this fellow at a real estate investment 'seminar', which I attended more for the purpose of making contacts than for gaining any investment knowledge. This gentleman impressed me with his stories of investment coups that he had engineered, dazzled me with stories of his contacts on the Big Island, and how he was hoping to team up with a knowledgable real estate professional such as myself, to continue building his empire in Hilo.

Within a couple of weeks, we were discussing plans for a new venture, and busied ourselves with getting our corporate documents filed, drawing up our bylaws, issuing stock and all that good stuff. Then one day, out of the blue, I get a phone call from some unknown person, who askes me if I know Mr. 'X' (James). This mystery caller gave me his name, and identified himself as someone whom 'James' had swindled out of more than $250,000.00 in a real estate deal.

He went on to tell me more horror stories, about how 'James' had emptied a young womans trust fund, and liked to drive brand new Jaguars, along with numerous sordid details. He asked me to meet him downtown, where he handed over to me a two inch thick file from the State Attorney Generals office, documenting complaints, filed by residents that 'James' had run a "Foreclosure Rescue" scheme on. There were at least 5 people who had lost their homes, and untold sums of money, because they had trusted 'James' to save them from financial ruin. There was testimony from one young man who had worked with 'James', and been duped into committing fraud on his friends and neighbors.

Needless to say, thanks to this good samaritan's warning, I bailed out of this venture before any harm was done. I was even contacted by the state prosecutors office, which was very interested in learning of 'James' whereabouts. What happened after, I have no clue.

I only had to read less than three column inches before 'James' name popped off of the newspaper.

The U.S. Commodity Futures Trading Commission (CFTC), in addition to action taken by the state Commisioner of Securities, described their complaints against 'James' as portraying his corporation as having a proprietary software that "never lost money" and "automated the trading of commodities".

The state has issued "cease and desist" orders aginst the firm, along with 'James' and the corporations officers. The case alledges that the firm was selling unregistered securities to investors in several states, promising 20% monthly returns using the automated trading system. The firm also issued false account statements, and lied to investors about the firms success.

The newspaper went on to explain that "the firm started up last year in Hilo, first looked at the real estate business before deciding in investing in off-exchange foreign currency contracts, though none of the principals had extensive experience in the business."

Three of the firms workers, who were not participating in the fraud, became  suspicious about the firms promises, and in February reported their suspicions to state regulators.

By the way, 'James' was contacted by the newspaper, and declared "We're not criminals", and declined further statements until he can retain an attorney.

How's that for a close call?