Register real estate reporter Jeff Collins attended Department of Real Estate Commissioner Jeff Davi’s annual appearance at the California Association of Realtors conference Wednesday. Here’s his report. …
State Real Estate Commissioner Jeff Davi vowed to get tough on real estate license violators and pleaded with an audience at the California Realtor Expo to report violations so his department can get “bad actors” out of the business. Davi said that complaints this year are up 15% to 17% because of the housing slump. There’s also been an increase in the number of mortgage-related complaints, he said.
Still, the commissioner warned, don’t expect prompt action: It can take up to a year or longer before legal proceedings can be launched against violators because of the time involved in investigating complaints. He said a staff of 38 professionals are devoted to policing around 540,000 real estate licensees as well as those practicing real estate without a license. Even if his staff were increased, it still would take months to complete investigations, he said.
While Davi wants bad actors out of the business, his administration isn’t trying to limit the overall number of licensees. Responding to a question from the audience, Davi said Gov. Arnold Schwarzenegger opposes efforts to limit those getting into the real estate game, even though one out of every 53 California adults now has a license.
“You can’t swing a dead cat without hitting a real estate licensee,” complained Los Angeles real estate broker Laura Hall.
“The position of the governor has always been to promote opportunities,” Davi replied. “And he feels real estate is an opportunity.”
Davi, meanwhile, turns 40 today. He briefly donned a set of pink Mickey Mouse ears as the audience sang “Happy Birthday” on Wednesday.
HOW TO COMPLAIN: For information from DRE, CLICK HERE. To see a Register story about the proliferation of real estate licensees, CLICK HERE.
I can’t wait for this Expo to end so we can talk about something other than the evil Realtors.
Most of the fraud that happened in the housing market was from shady broker, and lenders. Oh and the appraisers who inflated the home values. Relators have very little to do with the Wholesale market. However, they have alot to do with the retail market.
Question?? If 90% of lenders have in house appraisers, why is that the values got as inflated as they did?
Most lenders laid over and did everything and anything they could to get a loan and quickly sell it to a 3rd party so they would not retain responsibility for them.
Sad but true.
Realtors, excuse me.
Kim
I agree that lending practices were lax but there had to be willing buyers to start the process. Now your argument could be that these willing buyers weren’t really qualified (even though motivated) and if so then the price runup might have stopped earlier.
Greg,
There will always be buyers, especially if they think its a good deal. It just got so out of hand so fast, it’s ridiculous.
The greatest blame is shared by lenders and buyers.
Realtors’ responsibility in this is dwarfed by these first two.
And appraisers? Hardly. Appraisers use comps - period. If the comps weren’t there, the value couldn’t be supported. Vitually all jumbo loans require either a field review, desk review, AVM or second appraisal - in addition to a standard underwriting review.
I know Kim knows this, but does anyone else?
I think appraisals are worthless. Always have been always will be. They do nothing other than pull comps (most of the time they aren’t even comparable) and pull tax records. I do that myself as an underwriter. So why do people rely heavily on an appraisal?
The real key is getting a home inspection. So for anyone who buys a home, make sure you get one!!
I guess agents were complicit if they knew that 1.95 start rates were teasers and just cheered on the buyers. The fiduciary relationship of an agent and a buyer should have led the agent to caution the buyer about some of the loan details.Don’t ya think?
Greg,
I agree, they should have cautioned them, but the buyers should also know the way a transaction should work before they jump into buying or refi-ing a home.
It doesn’t take much to become a Realtor. No school, no nothing, just a little money and a good suit!! So I dont trust anyone who stands to profit from me regardless of the trade. People just need to be more educated about the process before they jump head first.
Many agents are clueless about the financing side. I doubt most even know what the client closes with.
As for home inspections: I’ve had incredibly good ones that took six hours. I’ve also had the worst one you could ever imagine that overlooked what turned out to be $100,000 in issues.
Well obviously the key to this whole thing is to go with someone you know and who comes highly recommended.
But I guess some people probably go through the phonebook!
I just got an appraisal of a property a bit ago that was appraised at $667,000 with no home inspection. Since I knew the owner I had asked him if he disclosed all the mold and termite structural damage. He said “hell no”. And sold the property. So now the new owner is stuck with all of these issues, because the value was just supported my comps. Ridiculous. Every home should be required to get a home inspection by a state inspector.
Bruce R. White, President/Owner/Inspector
Buyers Profile
Laguna Beach, CA
949-499-5859
This is the best home inspector I have ever known.
He’s unbelievably thorough.
I guess some of you honestly that if a Realtor had a motivated buyer that was referred to a Lender, that if that Lender cautioned them on the various low “intro” rates, and told them them what the fully indexed rate and payment would be (known future event) and their client walked……the Realtor would accept that….. Yeah right!, (I have a bridge I’d like to sell you), no they immediately took their clients to other lenders that “would do the deal” with out all the explanations or a slicker sales presentation.
Come on, there is a lot of people to be blamed, and YES the Realtor is one of them!
Louis
Thanks ROC,
I will definitely keep it handy.
It is unbelievable how many realtors I have contacted for various properties in Orange County in the last 6 months that lack follow-through. Every single one of them are lazy. They’ve had it real easy the last few years, selling houses and making money. Now it’s time to do some real work and getting a simple phone call back after leaving a voice mail is ridiculous. If I do get one on the phone they make every excuse to not show me a property that they are the listing agent for. If they are the listing agent, they will get at least half the commission of the sale right?
Real Estate agents need to re-evaluate their work ethic and roll up their sleeves, their fax machine isn’t rolling offers in every 5 minutes like it was 2 years ago. If they’re not committed to offering excellent service and being experts at follow through, then they are going to fail in this market. They need to get with the program, especially when it comes to communication. If they don’t use e-mail and/or carry a blackberry, it’s time to look for another career. We’ll see who the real experts are who are still in this industry by the end of next year.
May I add my real estate complaint? Houses are too expensive in OC and it really sucks.
Thanks for pointing that out Mick. I think that is all of our chief complaint.
Kim,
You seem like a nice, level-headed young lady.
What do you consider to be a fair price for a condo and/or home in Orange County?
Please describe where and what you would consider buying, and at what price (if you don’t mind).
By the way, I am not saying they are not too expensive - they are.
It’s just that everything great I really ever wanted was!
Whatn do I consider a fair price for a condo?? Well personally I have kids and want more so a condo might be out of the question. But if I had to I would n’t pay anymore than $350K for a 3 bedroom 2 bath 1600 sqft condo with $150 HOA period!! I dont want a condo because the HOA is ridiculous and not worth it.
I am paying my fathers mortgage since my parents are in the midst of a bad divorce, but I want a home in Anaheim Hills. Not a huge one, but at least 3 bedroom 2 bath with some type of yard for my kids to play in. I dont want to pay more than $500K for it. And I wont. I have about $100-120K to put down, but I want to buy a business as well. So I just have to decide which I want more.
I live in a 4 bedroom 3 bath 2800 sqft home with a pool and spa but it is my parents for the time being. I dont know if I want to buy it for them, because I dont want to pay $700K for it. But I love the house and its in the best school district around, so a higher price might be worth it for the exchange in education for my kids.
I’m not making any sudden moves to do anything. I want to see where the market goes. I’m not in any rush.
Why, you have something you want to sell me!! lol
This whole disaster was started by and condoned by the FED. Period.
Kim,
Thanks for answering.
No, not trying to sell anything - very snarky of you!
I am glad to hear that you have very specific wishes, much like Samson. That way, you will know when to jump-in and when not to.
Since the home you describe is smaller than the one you are living in, I imagine your $500,000 home is probably under $600,000 right now?
Regardless, you are clearly knowledgable, and I am certain that you will do well (you’re also a fast typist)!
Best wishes with the business, should that be your choice.
(I vote for a business over a home, depending on the risk.)
Thanks.
The business is a General Contracting Company either in OC or the IE. My boyfriend and I both work for one and we want our own. Before I got into real estate I also worked for another GC and my boyfriend has been with his for 10 years now and we are very knowledgeable about it, but I want to be done having children by the time I am 30. And I want 2 more. So it might be a little time restricting.
I will wait until the summer of 2008 to see what to do. Hopefully I will know a little more about the housing market and where its going.
The home I like is about $600-620 right now. So in a year if it drops $50-100K like I think it will, then I’m in.
Kim
If you are Truely an Underwriter, What May I Ask that you Did with the File Where You Know the Owner and that the Property Had MOld?
What Conditions Did You Place on the File?
This was a friend of mine whose home he sold. I am not an underwriter anymore.
If I was still an underwriter, I would have put a stip on the file to have the borrower repair the problem and (no not credit the buyer) and then offer a cert. from the inspector showing it had been fixed.
Why? Are you testing me….
Kim,
How exciting for you.
Yikes, 4+ kids by my count!
I always thought being a general contractor is a fabulous career. It brings business sensibilites together with the creative, and gives the satisfaction that comes from seeing something take shape.
You’ve got a lot on your plate.
Good luck with your choices.
Kim I was just curious since your post at 11:34 said that you Just Got an Appraisal in and that You Knew the Owner?
I find that Both You and ROC who is Obviously a Realtor are Quite Biased.
I consider myself an Ethical Broker, And I have to make the following observations from my 35 years in Banking, Mortgage Banking, and now as a Broker.
No One Group is Totally at Fault Here- Each has It’s Own Bad Apples.
And Believe Me the Realtors ARE in the Mix.
Where I see it the Problem Began in 1996 when HUD and Congress Approved the Controlled Business Arrangement with Lobbying from CAR, the BIA Building Industry Association, Mortgage Bankers, and Banks. I’ve written about this before.
Basically Builders and Realtor Brokers AND Agents for Years Asked for Kickbacks- Many Still DO. This is a CLEAR Violation of RE Law.
To Skirt this, they Lobbied so that they could be allowed to create their own Mortgage Companies, Escrow and Title Arrangements. The Name of this Created so much Uproar that in name only it was changed to The Affiliated Business Arrangement. Realtors AND Builders Practically Force thier Agents to USE IN-HOUSE Services AND Hide Incentives to Do So- If Caught They are also in Clear Violation at least with the DRE- BUT they seem to Skirt Around in Creative Ways- Right ROC- Advertising Expenses, Shared Assistants, etc, and HIgher Commision Bases if they Can get Away with It.
To site an Example of this AND the Problems that Have Arisen Take Santa Ana for instance…..A former Wholesale Rep came in one day and We were discussing Fraud ( A Realtor Had Asked me if I knew Anyone Who Could Dummy Up Tax Returns- I Fired the AGENT on the Spot as a Client) So the Rep and I got to talking about Fraud……..He Mentioned that a Large piece of His business involved Realtors in SA who ALSO did Mortgages AND Admitted they Were Mousing Loans…Then They Wondered Why He refused the Loans from them, so they sent the Loans Elsewhere. NOW look at the Foreclosures in SA and I’m sure if you investigated would find a Very Close Correlation.
This is Not Isolated to Santa Ana but Nationwide with Builders Also in the Mix and Large to Medium Sized Real Estate Brokerage Houses that All have IN-HOUSE Services.
As a Former Banker, this Violates ALL Rules of Checks and Balances.
The Banks and also Large Mtg Bankers are in this Too since they are Guaranteed a Consistant Flow of Loans since the Affiliated Business Arrangement essencially Allows Legal Sharing of Earnings from Loans and Other Services.
I’ve Detailed this to Lansner and Padilla on several occasions but Never See Any Investigation into this. If you care to Research go to RESPA and Check Section 8 of RESPA- make sure to scroll down to see changes in the Name from Controlled Business Arrangement to Affiliated Business Arrangment.
HUD, Congress, and the Lobbyists for these Groups Started this Mess and Now Congress wants to get It’s hands on it Again-LOL.
Care to Comment ROC and Kim?
Why should I comment, when you think you already know me?
I am not in any way involved in real estate (other than as an owner) - and haven’t been for years.
To state that affilidated party arragements are the core of this problem is off-the-charts myopic.
Everybody has an angle.
“affiliated” and “arrangements”
Ugh, need glasses.
ROC
You Clearly Missed the Point….Too Bad.
Clearly it Means a Clear Lack of Checks and Balances AND HELPED to Create this Mess thats all.
There is no one person to blame for all of this mess. There are wonderful people in the mortgage business, but there are also money hungry biggots as well.
I have read your article and cant say I agree 100% but there are as ROC says a different angle to every story.
When I was referring to the mold home. I was concerned as to the fact that people are sacrificing their morals for cash. Including my friend and the lender for not requiring a home inspection. There is alot that can be done, but there should have been alot to prevent it in the 1st place.
Also, I dont feel I am biased on any level. I have the same opinion as most. House’s at a ridiculous price and most can not afford them.
Everyone just wants the American Dream.
Straight Arrow
This is an awesome point that I had not considered to be part of the problem. I personally know agents who were let go or left because of brokers demand on services. I also know that 75% of all counter offers contain demands on services creating a pissing contest where one is not necessary. I see your point how in house lenders would be looking for the easiest underwriting and maximum profits, but I wonder if all mortgage people don’t look for the same?
Kim
You Are Right….Prices Are Out of Control and Have Been for Some Time.
Kinda like the Days When Realtors wrote Contracts with Astonomical Price Increases AND Placed Conditions in the Contract that the Buyer Would Proceed Even if the Appraisal did not Match Sales Price.
As Far as Prices this Practice had some affect in the Escallation of Prices, But Builders Also had Thier Hands in the Pot……Past Register Articles had the CEO of Lennar Describing Huge Price Increases Between Phases in the Hey Days when the Buying Frenszy was On.
I know your time is Valuable, but if you care to go back to Arcives go to Lansner on 04-14-06 with a Question and Answer from the Local BIA President and Refer to My comment # 7 to her.
Have a Great Day.
“Clearly it Means a Clear Lack of Checks and Balances AND HELPED to Create this Mess thats all.”
Agreed.
Builders are the worst. They are so greedy, especially since they are sitting on inventory that is costing them daily.
I just went to look at home in Rancho Cucamonga and found one that I liked for $400K, but the incentives were another $80K and the HOA was $365/month. Who do they think they are kidding??
Besides a commute to Newport, (which I wont do) why would I buy in the IE when I can buy used in OC for $400K. Builders are reducing there prices..yes, but they are still outrageous. They act as though they will not make a profit off a $350K condo, when it probably cost them not even $100K to build it.
Greedy, greedy people.
Greg
I can’t speak for All, but in a way It Will be Nice When the Whole Industry is Cleansed……………And I mean ALL Groups.
But as I said Congress and HUD helped to Create this Mess and Now they are at it Again……………………Heaven Help Us.
What we are experiencing Now from all the Paronoia is a Complete Knee Jerk Reaction to the Opposite End of the Spectrum. This Too has Placed the Brakes on Any Sensible Solution but is Somewhat Understandable.
I am seeing it now- the Sad Part are the Homeowners Who Can Not Now Refi. We Are Just at the TIP of the Ice Berg… Trust Me.
But I leave you with this Thought… and I said this in 96 when All this Controlled Arrangement began………………..Corrolate the Outrageous Rate of Appreciation over the Last 10 Years and I Guarantee You this Had Alot to Do With It……… Again
NO CHECKS AND BALANCES JUST GREED FOR CERTAIN ENTITIES.
Kim,
Sorry to take so much of your time, but here’s a question you are eminently qualified to answer.
I know from personal experience that there is a “make-sense” test on stated income.
Knowing you were with “the shadiest (lender) of them all”, means your answer should cover the worst case scenario.
What percentage of loans that you approved had income that was wildly overstated in your opinion?
And what percentage overstatement would you say that was?
ROC,
It depends…About 85-90% of the loans I underwrote were stated income no asset. What would happen is I would get a housekeeper stating $8000 per month. I would deny the loan for overstated income. Once this was happening and Argent saw its loan volume drastically declined, they decided to have management look it over if any underwriter was to decline a loan. If we were, then the manager would stip for 2-6 months PITI and/or a bank statement within 30 days with everything blacked out except the balance.
This had brokers in a fit of rage considering the loan was “stated”, however after some pretty extreme arguments with them they got me what I wanted. However, once I started calling banks to verify these amounts were correct, I started to find they were the brokers bank accounts and they altered the names to match the borrowers. Some were changed and some didnt even have bank accounts at that bank! There was ALOT of fraud going on.
But if management felt it was a “STRONG” loan, meaning above a 680 FICO and not over 90% LTV then then normally got pushed through.
I would say most stated income loans were overstated by at least 50% for the minimum and up to 85% for the high end borrowers with nothing.
Thanks Kim.
Funny, I was 100% sure you were with Argent!
They were the absolute worst - you are right. They are a huge part of the reason I left the industry as a whole!
They were very slimy and did not price for risk - it was obscene.
Good for you that you’re out of there.
Yeah I couldn’t do it anymore. I left and went to a 2nd Mtg lender and they were better but still shady and when I got laid off I said I would never do it again. Unless it was on my terms. I loved what I did, but didn’t like being told to do something knowing it would hurt in the end..
I respect that.