Sunday, June 8, 2008

How to Lose $50,000 in Roxbury Updated

Update - At first I felt sorry for this homebuyer, but something did not seem right - they had the funds to put down 20% but could not afford the mortgage after six months. That just does not add up - usually the people who can not afford a property after a few months put little to nothing down. This homebuyer and their trading partner should be investigated for fraud.

This is what I can tell so far - two buyers have traded alot of properties back and forth. It may even be the same people under a different name. The previous owner had the property for 18 years, looks like this buyer snapped it up as part of a trust. The original owners transferred the property over for $10 - that is correct $10. (I have found some other properties they have also done this with.) The foreclosure process started against the trust and the old owner so the trust buyer sold it to the trading partner for $250,000. Fell into foreclosure six months later - just long enough not to set off any scam alert is my guess. In this case it looks like they scammed the previous owner and the lender.

In addition the trust buyers have given a testimonial to The Fast Track - Real Estate Investors Training Program. Here is what they had to say -

We enjoyed the entire Fast Track Program. The three things we loved the most were: (1) Learning to set up and run our business, (2) The hands on experience of inspecting houses and analyzing deals duringduring the House Buying Weekend, and (3) The sessions time management and organization!
You may think that this is not that much - the trading team traded a $1.1 million home in Chatham in March 2007 - which they financed $990,000. Of course a Lis Pendis was filed last July. The other trading partner purchased the house in 2005 for $830,000 - so it looks like this group just pocketed another $160,000 on another property. I am sure the more I dig into this group the more examples I will find. And this is just for Morris County - wonder what they did in Bergen, Essex, Passaic, Sussex and the rest of New Jersey.

This is one of those sad stories of a family buying during the peak of the Great Housing Bubble and watching their money and their home disappear. The put a hefty down payment that is now gone, just gone and the porperty has been foreclosed. Here is a look at the Roxbury property - it is foreclosure so no inside pictures -

Here is the property info -

Property Features

  • Single Family Property
  • Status: Active
  • County: Morris
  • Year Built: 1953
  • 2 total bedroom(s)
  • 1 total bath(s)
  • 1 total full bath(s)
  • 4 total rooms
  • Style: Ranch
  • Basement
  • Basement is Unfinished
  • 1 car garage
  • Parking features: Detached Garage
  • Heating features: Oil
  • Approximate lot is 56X140
  • Approximately 0.18 acre(s)
  • Lot size is less than 1/2 acre
  • Utilities present: Septic,Electric Service
Here are the financials -
  • The property was purchased in June 2006 for $250,000.
  • The only mortgage was taken in June 2006 for $200,000 with Ivy Mortgage.
  • Foreclosure started in March 2007.
  • Originally for sale with a Realtor for $199,000, currently listed at $179,000.
This former homeowner put a 20% down payment consisting of $50,000. This was very unusual during the Great Housing Bubble, at the time getting 100% financing was common. The homeowner ran into problems about six months after purchasing the property, judging from the foreclosure timeline.

The lender originally tried to get their investment back, but lowered the asking price $20,000 - when you add that to the standard cost of foreclosure the lender loss was probably close to $70,000 add that to the homeowners loss of $50,000 and the is property has already lost $120,000. This is a case where the impact was felt by everyone.


Tom said...

That's sad, and I think we're going to see a lot more along that line.

This person did almost everything right. They put a nice sized deposit and bought a reasonable home. They just bought at the wrong time for the wrong price. If they did this 5 years ago they'd probably be ok.

Lenders shifted from their conservative lending practices by letting borrowers borrow more than they could afford and there are going to be a lot of casualties.

NJHH said...

Yes they did try to do everything right. One thing to note with this is that the foreclosure process started 9 months after the purchase. That would indicate there was problems with the mortgage about 6 months after the purchase, if not earlier. This looks like one of the cases where the buyer could never afford the loan in the first place. The down payment was probably from a previous sale - seems very high for savings.

Tom said...

"That would indicate there was problems with the mortgage about 6 months after the purchase"

Yeah, after looking at the charts I came up with the lenders were giving away too much credit to people.

I just posted a Bergen County chart and it looks about the same although the price to income ratio is slightly higher than the national but the spikes are inline and the ratio is dropping. But while Rich's data indicates that BC housing prices are falling, they're not falling at the same rate as the ratio.

Tom said...

Hmm.. I can't seem to pull up that much info on that property.

Looks like the bank already got it back.

You said Calafat purchased it for 10 bucks? Might have been a quick sale deed they conned the owner into.

Not really sure without knowing more. I did see some of the other properties.

Apparently Anchorena purchased a home in 2006 from Calafat for $1.1mil. Hard to believe he'd get foreclosed on over a 250k home.

Something strange does seem to be going on.

njhh said...

Thanks Tom. The same four names see to trade the houses back and forth and the drive the prices up. Most are appropriated through some type of trust with one of the four names on them. Seems very strange to me.

Have you ever heard of The Fast Track? I will do some research on them tomorrow. Thanks for all your input.

Tom said...

I haven't heard of Fast Track other than skimming their website because of your find.

I did some searches for Richard Douglas, the person that owns the domain name and found these.

Don't know if it's the same guy but same name in texas accused of mortgage fraud.

Same name with mortgage fraud against a company in NJ here

The term "house flipping" has two meanings. In one it is the normal process of buying a home, making improvements and selling it fast for a profit. There is also another definition more popular in the south that has a negative connotation. Basically, you buy a house, get it appraised for a much higher price, then quickly sell it.

The appraisal is pretty much a joke and the house value goes up for no real reason.

That's what I'd guess these people are doing from what you described.

Anonymous said...

One of the founders of seems to be Tony Reaves.

That fast track program is offered through

Looks like a bunch of courses on the type of stuff you see in late night infomercials.