Mortgage Fraud Can Have a negative Ripple Effect
by John Occhi, Hemet CA REALTOR
Hemet CA Real Estate

As you may know, I have this sort of "Law & Order" fascination with the topic of Mortgage Fraud, and have shared a couple of articles in the past that have gotten some great response from the on line real estate community.

Today, I received an email from a friend in Temecula - 30 miles south of where I am and the market I concentrated on until last July.  Apparently, one of the largest Mortgage Fraud cases ever uncovered is starting to unravel fight now.  He sent me a published article in the Californian, the local print newspaper and website.

It has my stomach in knots.

Long story short is a family conspired to milk what very well be thousands of investors in a classic ponzy or pyramid scam.  This is where they take an investors money and pay the investors who came before them, keeping them happy and keeping them referring more unsuspecting victims to the evil villains.

The article does a great job of describing what they did and how they did it, read it if you like. 

The problem is what do you do when this happens in your own back yard?  They did not mention Hemet CA specifically, but I am positive they have done business here - how much, I don't know.

The scam looks like it will involve thousands of homes and investors before it all unravels.  Many of these homes are already in the foreclosure process and many of the investors are ready to lose their own personal residences.

What really bites is that the investors are not seasoned savvy real estate investors - they are hard working middle class people who were in Riverside County at the right time - as prices were escalating by 20 to 25% per year and they were offered an opportunity to take advantage of this great windfall.  One of the scammers, the mother of evil, is actually a nurse at the local hospital and she steered many other nurses and hospital employees into the clutches of her son and other family members who set up a whole network of companies to perpetrate their fraud.

So now imagine what type of medical care you will get there if just 10% of the staff is stressed out over personal financial disasters.  I know my own mother-in-law was hospitalized there after a stroke last April - I sure would not want her going there today!  Would you want to got her for an emergency?  This is awful how it affects a community.

So what else can this do to the region - a region that already has the highest numbers in the State of California for Notice of Defaults?

Well, imagine a development of 100 new homes built and occupied 20 months ago.  If you lived there and wanted to cash out your equity after the 24 month window necessary to avoid capital gains, you would have to wait 4 more months.  Well, we already know several of your neighbors have the same "2-year itch".  So, there will already be stiff competition for your home, as there is in any tract when the 2-year itch hits.

Now imagine instead of competing with the 10 to 20% of the homes that are coming on the market anyway, you have another 10 to 20% of homes sitting vacant and neglected.  The appeal of your neighborhood just went down.  Then prices are going to plummet because the lenders are going to have fire sales to dump the REO excess properties, as quick as they can unload them.

With thousands of homes, I can tell you that the Temecula-Murrieta area is not so large that there will be any neighborhoods left unharmed by this atrocity.

This is a stone that has been cast into the Real Estate Pond that will have a ripple effect for years.

It is nothing but greed and evil and I hope the whole family pays dearly.  Catch them all.

If possible, have a Blessed Day,

John Occhi, Hemet CA REALTOR
http://www.johnocchi.com/