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1. Ralph, Ralph, Ralph:
   Please, please, please.

   These foreclosures will not foster a new era of fraud forensics in real estate and mortgage fraud.

   As to real estate agents and loan officers falling all over themselves when given the opportunity to do business with a celeb, that just is not the case.

   Why do I say that? Simple, these celebs just don’t walk into just any realtor’s office and certainly do not walk into a mortgage broker’s office by chance.

   Realtors that deal in this extremely high end market are used to dealing with people like that and certainly don’t get awe struck by them.

   As to loan officers, these deals are not done through your typical mortgage broker. These loans are not conforming, sub prime, FHA or VA loans. These loans are asset based loans usually made to a corporation owned or controlled by the celeb.

   Do you think that when Donald Trump buys a property he goes to his local mortgage broker/banker, provides copies of his tax returns, pay check stubs and W-2’s? Of course not. Often times he is loaned money, secured with a mortgage just based on his signature.

   These celebs provide Profit and Loss Statements and Balance Sheets. The lender is looking at asset strength, cash flow, liabilities. Net worth is the important figure here.

   These loans are not based on your typical Loan to Value ratios or Debt to Income ratios. These are not loans sold to Fannie, Freddie or Wall Street (sub prime) bankers.

   Is it possible to create fraudulent P & L’s and Balance Sheets, of course it is, but it is highly improbable.

   Often in loans of this size, there are cross collateralized assets. The borrower may pledge other real estate property, stocks, bonds or a myriad of other assets in addition to the property being purchased.

   In the case of Ed McMahon, as he said on Larry King Live, his failure was due to money mismanagement as well as losses from multiple divorces and a medical emergency that put him out of work for the past 18 months. I would venture to say that many of the celebs you mention suffer from the same. Remember, McMahon was Worth over $200 Million, meaning that his assets exceeded his liabilities by that much, when he first purchased this home.

   Michael Jackson probably went broke defending his legal battles and payoffs. At the time he purchased his ranch, he was one of the all time income earners in the recording industry earning multi millions each year.

   As to athletes, specifically boxers, they have a tendency to grossly overspend and most of them die broke. But, at the times they acquired their properties they were solvent.

   Most loans of this type are not even governed by state laws. As most of these loans are done on a business to business basis, there is no licensing required. They do not fall under RESPA, state or federal mortgage banking regulation.

   This is an entirely different animal then the consumer mortgage loans we deal with every day. A loan secured by a mortgage is not necessarily the same as a mortgage loan.

   I have done a few such loans (not with any celebs of this stature). They were difficult to do and the scrutiny that went into verifications of assets was high. Again, the process and requirements were totally different then would be for a typical mortgage loan.

   We are all here to combat fraud in the real estate and mortgage industry but to allude to the celeb loans as a new frontier for mortgage fraud is way off base.

   You say above, “I wouldn’t put it past an aggressive autograph seeking/commission generating financial advisor, Realtor or loan officer to do anything they could to earn that business, including, knowingly engage in real estate and mortgage fraud”. The professionals doing this business are way beyond being “autograph” seekers who would do or say anything just to get the deal and autograph.

   The professional involved in these transactions are typically long time trusted advisors or are referred by long time trusted advisors and business associates. Most of these celebs are large corporations onto themselves. They don’t fill out 1003’s to get pre qualified by numerous loan officers.

   You know that old saying, “All that glitters is not gold”, well let me coin another, “All that is tarnished is NOT fraud”. Your examples above could very well be a very sad commentary on the state of our economy in general.

   We are all here to combat fraud, but to again imply that the common everyday real estate agent or loan officer is creating fraud on that scale in that market is frankly, absurd.

   The real “high end” fraud is what needs to be exposed. The bankers that created the mechanisms, laid the blame off and are enjoying their multi million dollar lifestyles in homes similar if not larger then the celebs you mention. They are FREE while the little guy - they got to do their dirty work by being told it was OK - is being indicted, charged and convicted or even worse - thrown into poverty with no hope of recovery.

   Comment by Larry Rubinoff — June 7, 2008 @ 5:59 pm

2. I just googled celebs in foreclosure and found this blog (it took me to another page but I found this eventually). Larry this does happen and I lived with a man (cannt really call it a mariage) who did this and then boasted to all of his frieinds about who he knew and did work for and about how they didnt really deserve to be in their homes but they were. I know nothing about ferensics or whatever it is but this does happen and I thought about it when I read that Ed Mcmahan was in trouble. Maybe not Mcmahan like you said but others yes for sure.

   Comment by Realtors former wife — June 7, 2008 @ 9:10 pm

3. Mr. Rubinoff: Thanks again for your brutal honesty in defining the crux of this mortgage fraud mess! Big government and their sham infested partners of Wall Street, are trying to sell the American public that they are “fixing” this mortgage crisis by charging the small street level mortgage brokers and loan originators with millions of dollars in fraud! Mr. Rubinoff please explain to me how come the government get to indict and FORCE convictions on these small time players with the total amount of the mortgage loans? The homes or better yet said, the security of the investment is still there. Does these guilty pleas and attachment of these ungodly resitutions allow the lenders to write these loans off as corporate losses? I believe that sooner or later a competent jury is going to expose our governmental cover-up of Wall Street fraud. Please keep writing. Your writing is like a “voice crying in the wilderness”.

   Comment by whooper — June 10, 2008 @ 8:44 am

4. Whooper, thank you for your comments.

   Your question concerning “write offs”, is an interesting one. We have read much in the media concerning the billions of dollars of write downs and write offs by the banks and Wall Street firms.

   However, here is what becomes interesting. The majority of these loans were packaged into asset backed securities and sold to investors around the world. The security is then owned by hundreds maybe even thousands of investors. The investors could be indidviduals, other banks, pension plans and other funds. This means that the lending bank NO LONGER OWNS the mortgage(s). The losers are those holding interests in the security.

   This begs the questions, “Why are the banks/lenders taking these massive write downs”? “How can they write down/off what they no longer own”?

   It is true that many of the bank/lenders believed so much in their own “junk” securities that they purchased large blocks of shares themselves. This was also the case during the Great Depression when Wall Street was selling over valued and over rated stock. The greed and the returns were so high on paper they knew was worthless they began to believe their own “bs” and purchased their own “junk”. This was instrumental in causing the Great Depression.

   If, somehow, they are taking tax write offs on what they don’t own then there is obviously much more to this story. This could be the tip of the iceberg.

   This also begs another question. “If properties are owned by a “security”, who then is foreclosing on them and under what legal means”? The next question that is raised is. once foreclosed upon how then can the bank’s REO (Real Estate Owned) department sell them and take the losses on their books. I might point out here that a judge in Ohio Dismissed 22 foreclosure filings due to the the Plaintiff’s inability to prove ownership of the Mortgage and Note.

   This is a large and broad topic. I will write more on it. If you are curious about my positions on this so called “meltdown” you can scroll down to my name on the left side of this page and view articles I wrote as a “Guest” contributor to this blog.

   You can also click on my name above under my comments which will link you to my site. You may also want to read my comments under:
   Larry Rubinoff on Credit Expansion and Borrowed Time.
   The link is to the right on this page.

   I will continue to write on this topic as there is much more for the public to know and question in order to understand the “truth”.

   Fraud is fraud no matter who, on the social and economic scale, commits it. But then again, some on the higher levels of our society do get away with murder.

   Comment by Larry Rubinoff — June 10, 2008 @ 1:58 pm

5. I’ve read some of your comments and observations regarding the current and ongoing mortgage industry problems. I see where current government administration and our incoming officials are contemplating some type of mortgage bailout in order to save home owners and the mortgage industry itself. It appears that any bailout will fallon the shoulders of the American tax payer. I have no problem with helping the home owners who fell behind on their mortgage due to loss of job or disability, etc. I don’t feel the tax payers should have to bear the complete burden of bailing out tens of thousands of real estate speculators and buyes who fudged assets and income to acquire income properties with the idea of “making a killing” in the real estate market.

   Comment by lynn williams — July 10, 2008 @ 1:43 pm

6. This is one crisis that will go on for years to come! Governmnet will fix it’s end, the banks and financials will fix their ends and the rest of the big money will do their parts. The only people who won’t learn from this is the poor, lonely real estate owner, the buyers! We will forever be thrown into a big pile of greedy individuals who want more than we can pay for!
   Want a huge house so that people think that you are somebody? No problem, we can “fudge” a few things to make it happen.
   Interest rates were at all time lows for a period of time, so go ahead and buy it now and sell it in 3 years before the rates go up and you will be ahead with money in your pocket towards the next home you buy!!

   Can’t see that far into the future? No problem! Just let us help you with this enormous house that we know you and the whole family will enjoy for years to come!!
   And when we fall for this kind of stuff, we are asking for trouble. Our parents and grand parents would have never done some of the dumb things that we are into nowadays!
   This should serve as a wake-up call to everyone involved!

   Comment by albert — November 15, 2008 @ 12:58 am

7. Good morning America.

   Comment by Larry Rubinoff — November 15, 2008 @ 2:08 pm

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