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Tag Archives: Real Estate

Countrywide magnate pays $67 million – Angelo R. Mozilo former CEO pays to settle civil fraud case brought by SEC

Gretchen Morgenson of the NY Times reports on October 16, 2010:

"…the settlement by Mr. Mozilo is the fist time that a prominent executive has been penalized personally for financial excesses linked to a mortgage boom that, when it went bust, threatened to topple the economy and led to an unprescedented wave of foreclosures."

"Earlier this year, Goldman Sachs paid a $550 million fine to setle securities fraud charges. Securities regulators are also investigating former senior executives at Merrill Lynch for possible securities fraud."

The SEC sued Mr. Mozilo alleging that he improperly generated profits on insider stock sales, and that he allowed "toxic" loan products to move forward, knowing them to be toxic.

Countrywide (acquired by Bank of America) is to pay $20 million of Mr. Mozilo’s settlement. Mr. Mozilo has also agreed to never again serve in a public company. (Note: Big fat deal – he is 71 years old and recorded gains on stock sales of over $140 million on Countrywide stock and for years was among the highest-paid executives in America – and was known as an audacious and flamboyant financier)

The settlement was reached four days before the scheduled beginning of a jury trial in Los Angeles.

Other Countrywide employees sued by the SEC (and whom settled) were David Sambol (former Countrywide president, paying 5.52 million) and Eric Sieracki (former Countrywide chief financial officer, paying $130,000).


Buying foreclosures? – Beware of what you buy – heed the story of Todd Phelps and Paul Whitehead – NY Times October 16, 2010

NY Times Financial Reporter Ron Lieber, on October 16, 2010 reported on the sad story of Todd and Paul: They purchased a Riverside, Calif. home at a foreclosure sale, only to learn that they had bid at the foreclosure of the second mortgage – and the house still remained subject to the lien/mortgage of the first mortgage company.

Todd and Paul paid $137,000 of their hard-earned cash – and faced not getting one penny back. (This story eventually has a happy ending – it appears the foreclosing bank from whom Todd and Paul purchased the property felt them to be such hayseeds that the bank relented and took the property back and returned the $137,000.

Mr. Lieber reports: "The auction process: Foreclosure auctions can be a dangerous place for people who don’t know what they’re doing or are relying on help from people who are sloppy or negligent. … Take your time. Assemble a panel of experts and apprentice yourself to them. And watch listings carefully. For better or for worse, foreclosed properties are going to be available for a very, very long time."


Title Insurance – what does it do? – be cautious if you purchase a foreclosed home to fix up

The NY Times’ Ron Lieber assembled an important article for anyone thinking of buying and then dumping money into a foreclosed home to fix it up either to live in, rent out, or to try to “flip”.

The crux is that if the foreclosure was upset due to “foreclosuregate” or “robosigner” issues – your maximum recovery might be what you paid for the home – and you could not recovery your repair or improvement costs.

Now, to date, I am not aware of alot of foreclosed homes being returned to people who lost them in some flawed foreclosure process. Usually, the foreclosure was for lack of payments and the foreclosed individual is unlikely to want to begin making payments on the old “under water” mortgage.

However, recognize that your “title insurance” only gives you what you paid for the home if your ownership and title to the home is somehow threatened by litigation.

Mr. Lieber: “While homeowners … may ahve title insurance, it generally covers them only for the purchase price of the home. When you buy a home out of foreclosure, however, it often needs a lot of work. ‘If I bought it at $200,000 and it’s a steal but I had to gut it and sink $100,000 more in, my recovery is limited if there is a problem,’ said Matthew Weidner, a lawyer in St. Petersburg, Fla.”

Mr. Lieber’s October 9, 2010, NY Times article (section B1 “Business Day”) is a “must read” for those investing in realty:


10 Worst American Real Estate Markets – SUPRISE! Not all of them are in Michigan!

Now folks, this link was just too darn interesting to pass up, so here it is for a quick read. You may have to wait a moment for the iritating “pop up screen with shade over the article” to pass, but after it passes in about 20 seconds,you will be able to read a fascinating (and shocking) article with eye-popping statistics on the current state of real estate markets in America. Who would have thought Santa Cruz, CA would make the list…read on….