Steve Hawks - Home Upside Down?

OWE MORE THAN YOUR HOME IS WORTH?

Las Vegas realtor Steve Hawks discusses the Las Vegas real estate markets recent drop and the effect on Las Vegas homeowners. Steve Hawks discusses the new phenomena of mortgage walkers "people who walk out on their mortgage because they are owe more than than home is worth. Hawks states that there are several reasons for the recent unprecedented drop in the Las Vegas real estate market.

The first was the rampant puffed up price cash back fraud, the second factor was the predatory lending; consumers being put in higher margin loans even though the loans were not the best fit for their situation. Thirdly homeowners making offers and purchasing Las Vegas homes based on fraudulent over inflated prices believing that the comparables were purchased by a good faith buyer. Fourth factor the home owner thinking that the Las Vegas real estate would continue to rise. When the Las Vegas real estate market dropped and did not continue its unprecedented appreciation the homeowners who owed more than their home is worth and their adjustable rate mortgage is adjusting can not refinance into a affordable loan because they have no equity in their home.

Las Vegas realtor Steve Hawks also states if a homeowner is in the situation where they owe more than their home is worth and can not afford the payment or refinance and need to short sale or be foreclosed on the homeowner should not let this get them down or depressed. Their situation has many outside influences that drastically effected the value of their home which were unprecedented and mostly unforeseen in previous real estate booms.

The high number of fraudulent loans, the predatory lending and the major financial institutions hedging their bets on the American homeowner, in the aspect that the Real estate market would continue to rise and the loans the lenders were giving under favorable short term terms but horrific long term terms would be paid off and refinanced out of the equity from the appreciating market. Unfortunately the appreciation stopped and an actual reverse in equity began.

Las Vegas Real Estate - Steve Hawks one of the leading consumer advocates for victims of mortgage fraud

Las Vegas real estate experts Steve Hawks and Jason Van Zant bring to light the massive mortgage fraud that had led to the unprecedented drop in the Las Vegas real estate market. Las Vegas Realtor Steve Hawks discusses in detail how fraudulent transactions occur. Steve Hawks states the sales price is raised to the highest amount possible then the amount above what the true value is worth is given back to the buyer or third party entity. The most devastating type of mortgage fraud can be when a third party approaches an individual and offers them to be a real estate investor. The third party will offer to select the property and arrange for all the loans on the property.Then after the homes have been purchased the third party will rent out the homes, collect the rent and not make the mortgage payments. Thereby making a huge profit at the purchase with a huge sum of money at the close of escrow. Secondly making a monthly income by collecting rent but not paying the mortgage.

The average consumer trusting the so called professional believes they are buying into an investment pool and that the real estate is just the vehicle for their return on investment. "Instead of investing your money you are investing your credit". The homebuyer /consumer is promised a small amount of return upfront then a certain return on the profit when each house is sold. The third party would purchase several homes with the consumers credit sometimes up to ten homes in a 30 day period. The reason the loan officer would have to do it in a 30 day period is to be able to purchase all the homes with no money down owner occupied. The loan officer would shop the loan to different lenders and since the credit reports have a 90 day delay, the institutional investors would not know that the consumer had other homes. Therefore the bank would be unaware the current one was not an owner occupied home, and lend on the home with favorable owner occupied loan to values.This process would repeat itself until the consumer could no longer qualify for anymore no money down loans.

The consumer doesn't realize they have a problem until a few months down the road when the banks start contacting them for payment and sending them notices of default or they try to apply for credit and their credit is shot due to the defaulting.

The results are devastating to the real estate market, Homeowners will soon be paying higher rates due to the new fraud risk ,less money for the banks to loan since they are losing 50-60% on the old money they have already lent, hence the new credit crunch, artificially high property taxes and legitimate buyers who used these fraudulent puffed up price comparables to buy their current home are now going to be upside down.

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It's not just sellers who get caught up in mortgage fraud, Steve Hawks of ReMax Platinum said. Thousands of unsuspecting home buyers in Las Vegas become victims through cash-back deals involving the seller, mortgage lender, appraiser and other essential parties in real estate transactions. Almost every one of them is pitched as an investment, he said. "Let us use your credit and you'll get $5,000 back," Hawks said. "Little do they know that there's anywhere from $25,000 to $180,000 getting kicked back to a third-party LLC (limited liability corporation) that the buyer doesn't know about.

The Greater Las Vegas Association of Realtors' Multiple Listing Service showed a Feb. 1, 2005, sale price of $490,000 for a house at 2073 Fountain City St. in Henderson. However, the Clark County Assessor's Office has a recorded value of $800,000 for the sale. The home apparently went into foreclosure and was purchased from U.S. Bank trustee's deed in September for $375,000.

"Buyers don't find out it's happening until they get a notice of default. The third party rents the house and pays no mortgage. Now when the buyer tries to sell the house, they're overpriced," Hawks said. "It's happening to thousands of people."Jim Garvey of Las Vegas said he got suckered into real estate investing through a client in his automobile detailing business. He had established a good business relationship and personal friendship with the client, who helped Garvey increase his revenue from $2,000 a month to $20,000 a month by bringing him more business.

Garvey would receive $5,000 cash for any house he bought using his credit and $1,000 for any referrals. When he went to sign the papers for one house in the northwest, the price had gone from $459,000 to $600,000, he said. "It was a little out of my league, but he said it's an investment property and he'd rent the yard out for $4,500 a month, so my payment would just be $500," Garvey said.

Garvey ended up buying five homes that were supposed to be recorded under a limited liability corporation. He got suspicious when his sister, who joined the real estate investment venture, called and said her name was on a foreclosure list. All of the homes have started foreclosure and are up for short sale, which means they are being offered for less than what's owed to the bank.

Hawks said he examined title work on several homes and found that someone had removed an addendum that instructs the title company to issue checks to a third-party limited liability corporation. The document is removed or hidden, either way with same result, he said.

For example, a $500,000 listing is bumped to $800,000 and $300,000 gets kicked back to the third party through the addendum. If the institutional investor knew about the $300,000 cash, they would never buy the loan. That's why the addendum has to be pulled or hidden, Hawks said. "This is why Credit Suisse and other institutional investors are pulling out of Vegas. This is why Vegas is going to take a dive worse than anyone thought," he said.Hawks said Las Vegas will soon see many cases of this type. Higher mortgage rates are just one repercussion of the puffed-up price, cash-back fraud, he said.

"The FBI agent says 'unscrupulous behavior on the part of a few,' which is exactly the same with Realtors. Just a few are conspiring with these modern-day bank robbers. These few are causing huge financial losses for the many," Hawks said.

He referred to a lawsuit filed July 3 in Nevada District Court alleging that "highly inflated false appraisals were used to trick (lender) FMFC into making significantly larger loans decimating FMFC's loan-to-value requirement."

FMFC claims to have incurred significant losses in remedying loans that were issued fraudulently and at inflated purchases prices.

"Institutional lenders are lending on 80-20 loan-to-value," Hawks said. "They think they're loaning $160,000 on a $200,000 home when people only paid $120,000. They don't see the kickback. This kind of mortgage fraud is devastating to the market and people that buy legitimately on market comps, they don't see these (kickbacks)."

The pyramid flipping scheme generally requires participation by a number of "conspiracy" members, the lawsuit said.

They include speculators who purchase the property through fraudulent means such as fabricating information about the property, buyer or seller to make the transaction appear financially sound, only to resell the property; appraisers who overstate the value of the property; and title companies that provide a facade of legitimacy to the scheme by fraudulently preparing documents for closing escrow and disbursing checks to the participants. "The only way these deals get done is if the Realtor knows, the title company knows, the appraiser knows," Hawks said.

Hawks said he's seen million-dollar homes purchased with $500,000 kickbacks in which the buyer never makes a payment and lets it go back to the bank. Sometimes it's a "straw buyer" who knows what's going on, but most of the time the buyer has no idea, he said.

"This is like stocks in 2000, so nobody knows what the true value of a home in Las Vegas is right now. That's why nobody's buying," Hawks said.

The rise in "mortgage walkers" is a new phenomenon for Las Vegas, Realtor Steve Hawks of ReMax Platinum said

Las Vegas real estate expert steve hawks comments on home owners who owe more than their home is worth. Steve Hawks finished in the top 1% of Nevada real estate agents and finished top 2% in the nation in 2007, 2008, 2009. Steve Hawks is one of the leading real estate agents in the country helping homeowners who owe more than their home is worth. Hawks also is the leading consumer advocate in Las Vegas for victims of mortgage fraud. Steve Hawks has assisted countless victims of mortgage fraud that was taken place during the recent real estate boom.

Home prices have dropped to 2004 levels, so most homeowners who bought into communities built after 2005 are going to owe more than their house is worth, he said. Many are "short-selling" their home, selling for less than the mortgage balance or simply giving the property back to the bank.

"When they try to sell for whatever reason, they either have to do a short sale or get foreclosed on. In addition, many investors purchased in these new areas and now are so upside-down they don't see the break-even point," Hawks said.

"Meanwhile, they're paying on a loan that's probably going to adjust, or even if it's fixed, they can't get the rent to cover the mortgage when their new neighbor just purchased the same house for $220,000 when they paid over $420,000. The person who bought for $220,000 can rent it out for far less, obviously, and the snowball continues."

Homeowners are concluding that the smartest economic decision is to walk away, even if they can afford the payment, Hawks said. It's common to see homes that sold for $350,000 to $650,000 in those high foreclosure ZIP codes now going for $220,000 to $400,000, he said.

LAS VEGAS REVIEW JOURNAL ARTICLE

Steve Hawks talks about the Short Sale

Las Vegas Home Owners and the Short sale process ask the expert Steve Hawks, B.S Finance Real Estate & Law.

Las Vegas Short Sale Expert Steve Hawks talks about the short sale process.

The current Vegas real estate market has cause many homeowners to have to sell their home for less than it is worth. The process can be very difficult and the homeowner should seek out an expert who has experience in this field. Steve has good relationships with several different banks which in many cases helps the short sale close. Steve and his partner have currently negotiated millions of dollars off their clients loans. If you need to short sale your home or need more information regarding the process contact Steve Hawks and his partner. They have successfully closed millions of dollars short sale transactions.

Did Your Flip Flop? Real Estate Investing Gone Bad.

Kendall Trotter and Steve Hawks Las Vegas real estate experts are joined by Max, a California investor who made a living in the recent real estate boom by successfully flipping houses.When the Las Vegas real estate market started to turn the investors flipping game was over.

Max the California investor now wants to weigh his options on what would be the best solution for his current situation. Should he rent it, fix it up after the renters damaged it and the city boarded it up, should Max let the house get foreclosed on,should he short sale it or try and ride it out. Max wanted to hear some input from local Vegas realtors Steve Hawks and Kendall Trotter.

Trotter pulled the comparables for Max and it showed his house was worth about 50% less than what he owed. Steve Hawks explained to Max if he hypothetically owes $200,000 and the house is now worth approximately $100,000 the value of his home would have to double just to break even and that's not considering any negative cash flow or upkeep.

Today's value is 100,000 so for it to be worth $200,000 it would have to double. If a property value drops 50% many people assume off the top of their head that it just has to go back up 50% to break even. Which as we can easily see is far from the case.If the property drops 50% it must appreciate 100% to return to its former value before the 50% drop.How often does a real estate market double under normal conditions.Hawks then put forth the question to Max.

How long do you think it will take for the Las Vegas real estate market to double? Hawks added that's your answer on how long you need to keep the home to break even! .Armed with this information Max can now make his own personal judgment on what he should do with his Las Vegas investment.That is what Max and every other Las Vegas real estate investor and Las Vegas homeowner have to determine based on their own personal financial situation.

If you are in a similar situation and would like to know your options contact realtor Steve Hawks at 1-888-918-Bank.

Steve Hawks Las Vegas Real Estate Update-Mortgage Crisis-Loan Fraud #2-A

Consumer advocate and realtor Steve Hawks from Las Vegas Nevada discusses the effects of mortgage fraud on the Vegas real estate market. Hawks also touches on the effects of the price puffing cash back on the availablity of credit and higher intrest rates.

Steve Hawks Las Vegas Real Estate Mortgage Fraud / Loan Fraud #1

Steve Hawks Las Vegas realtor and consumer advocate talks with Kendal Trotter about how mortgage fraud has hurt the Las Vegas market and set in motion the first wave of foreclosures. Hawks also states that when the fraudulently purchased home goes into foreclosure and the bank takes it back the innocent neighbor and homeowner across the street is severally hurt because now their property value will begin to drop also.

For Example
Home listed at 500,000. The buyer paid 815,000 and received 315,000 cash back. Makes one to three payments then lets it go into foreclosure.

The cash going to the buyer or related third party is hidden from the lender or institutional investor by having a check made payable to a third party llc or company from the seller proceeds.

The mortgage broker sells the loan to an institutional investor like Credit Suisse, Aurora Citigroup and others on the secondary market. Wall Street is buying a loan they believe to be 80% loan to value on the first and 20% on the second Reality the home was not even worth $500,000. When the home gets foreclosed on the bank thinks they have a loan on an asset worth 815k and an 80% cushion so if they sell it at 20% less they will still break even. They actually loaned at a 140% loan to value because of the fraudulent price puffing.Instead of recouping their $640,000 of the $815,000 they have to sell the home at the real market value which in this case happened to be 375,000! The first lien holder lost 265k plus expenses and the second lost their entire 80,000 for a total bank loss of 345,000 plus expenses!!!!

BOTTOM LINE
The institutional investor believes they are lending on an 815k asset .they had no idea that there was a 315k cash kick back. They would never do loan like that. This is why the cash back has to be hidden or disguise as something else.

Results
It makes rates higher because now lenders have to figure in a new risk a fraud risk. It has caused 90% of the loans that used to be available to vanish because the losses from the fraud have dried up existing pools of money and nobody with any sense is going to offer the former loans until the cash back fraud is eliminated.

The Legit Buyer
The legit buyer gets hit the most. When they buy a house the legit buyer looks at e comps they see that a comp sold for 815,000. The legit buyer thinks they are getting a great deal for 700,000 they have no idea that the 815,000 comp was sold with 300,000 cash back. Fast foreword one year the 815,000 home is foreclosed on and sold for 375,000 the real market value. The legit buyer is now upside down $325,000.

This is why the cash back mortgage fraud is so devastating to the Las Vegas real estate market . Its ripple effect hurts each process of the sale of a home from the lending to the accuracy of the value of the comparables. Now many people with good credit who need to refinance their adjustable rate mortgage will not be able to because of the lack of equity.