08 January 2013

Sentencing Begins for the Fraudulent Fourteen

You may remember the story of the small-time organized crime group who ran a fraudulent mortgage business here in the islands. One of their 'business practices' was to falsify documentation to get un-deserved individuals into real estate loans.  This was just one of many practices that occurred during the bubble years, which helped create the housing bubble that forced the country into bankruptcy (all but in name). Country, state, and individuals are still reeling from the financial shockwaves sent out by both the blowing up and the collapse of that bubble.

So it is bitter-sweet justice that today we read in the Star-Advertiser that the first of the 'defendents' has been sentenced to 52 months in the Big House:

Estrellita "Esther" Garo Miguel is going to prison for about four years for running the largest mortgage fraud scheme in Hawaii. 
U.S. District Chief Judge Susan Oki Mollway sentenced Miguel on Monday to 52 months in prison for wire fraud, making false statements on loan applications, money laundering and conspiring to commit mortgage fraud. She gave Miguel until March 4 to turn herself in to begin her sentence. Miguel remains on electronically monitored home detention. 
Read more here: http://www.staradvertiser.com/s?action=login&f=y&id=185975022
and here: http://www.bizjournals.com/pacific/news/2013/01/08/hawaii-mortgage-broker-sentenced-to.html


This crime ring made over 200 fraudulent loans for over 100 properties.

On the other hand Countrywide was probably the nation's largest fraudulent loan creator during that time, yet its boss and owner, Angelo Mozilo, won't spend a day in jail, nor it appears will any of its mortgage officers.

The little people are always easier to catch and prosecute. They form a 'criminal class' of society that can't afford to buy its freedom as did Angelo Mozilo.

01 September 2012

Slips and Skids: The Honolulu Housing Price Index

In the second quarter of 2012, Honolulu home prices continued to skid downward - by a little. The Honolulu Home Price Index (HHPI, lets call it) slipped just a bit (-0.79%, before inflation correction) last quarter while the rest of the country ticked up a bit.  Here's the updated graph.
[click for larger image]

* The FHFA, where I get the nominal index values (actually the quarterly change) revised their database for Honolulu since the last time I made this chart. I'm not sure why, but the numbers only changed a little as you can see by comparing this chart to the previous version.
** These are inflation adjusted (CPI-U) values and by definition 1990=100.

22 July 2012

FBI Still Looking for Two Local Scoundrels: The Dimitrions

On the list of the FBI's Most Wanter White-Collar Criminals are a Hawaii husband and wife team wanted for mortgage fraud:

From BusinessInsider.com:
The Dimitrions allegedly told homeowners they would invest proceeds of their homes' sale.
Instead, they used the money to fund their own lifestyle, which for Julieanne included high-end lingerie and expensive shoes and purses, the FBI claims.
The couple pleaded guilty to mortgage fraud but failed to show up to their July 6, 2010, sentencing.
The FBI is offering a $10,000 reward for information leading to the arrest of the couple, who were last known to be in the Mililani area of Oahu, Hawaii.

Read more: http://www.businessinsider.com/fbis-most-wanted-white-collar-criminals-2012-7?op=1#ixzz21NpcpIPo
FBI Wanted Poster: http://www.fbi.gov/wanted/wcc/julieanne-baldueza-dimitrion/view



The FBI is chasing Julieanne Baldueza Dimitrion and her husband for allegedly defrauding homeowners to fund a lavish lifestyle that included 'high-end lingerie.'

And they look like such a cute couple.

Oahu Land Owners Map

Here is a map showing Oahu's landownership.
You can click on the map for a larger version, but the highest quality (original) version can be found at:
http://hawaii.gov/dbedt/gis/maps/oahu_large_landowners.pdf

Note: You will recognize the names of the largest land owners. The so-called Property Reserve, Inc (Hawaii Reserves) may be unfamiliar. It is a branch of the Mormon church. They hold roughly 7000 acres, a bit less than 2% of the total land.

25 June 2012

Introducing: The Honolulu Real-Price Index 1975-2012!

Long-time readers (if there are any left after my long hiatus) will have heard me gripe about the lack of a repeat-sales housing index for Honolulu, such as can be found for the nation and 20 major cities.

Back ground: The Case-Shiller Housing Index is an index of home prices for the nation and for 10 and 20 major US cities. The index uses data on repeat sales of the same homes. In this way the index tracks changes in prices of actual houses rather than just median sales price. What you say? Well, the median price of sales can change via two major factors (1) true changes in the valuation of individual homes, and (2) changes in the mix of expensive and less expensive homes that sell. In other words, the median sales price can go up if more rich people buy expensive homes and fewer poor people buy less expensive homes, even though the value of each home may be depreciating.  Hence the Case-Shiller index, and others like it, give close to true changes in the value of homes, in contrast to the 'median sales price' so-often reported by the NAR and HBR.

While the economics professors at UHERO sit on their hands or play with shiny objects, I would like to introduce:

The Honolulu Repeat-Sales Real Price Index:

[click image for larger version]

Honolulu is in fuchsia and is overlain onto the very popular Case-Shiller Inflation-Adjusted plot from CalculatedRisk.  Note the big lag between Honolulu price movements and the nation as a whole. Also note that currently Honolulu is still quite high, while the rest of the nation has come down considerably. (Hawaii State, not plotted, has come down much further in recent years than Honolulu).  What does the future hold? I will just say this: one of the most powerful laws in economics is: Reversion to Mean.

Will all of those thousands of homes currently locked up in the Judicial Foreclosure Process (in the courts) and elsewhere in the so-called shadow inventory come spilling out soon to drive up supply and drive down prices? Only the Shadow Knows!

This summer, the Honolulu market heated up considerably due to a significant lack of inventory and a significant number of moneyed buyers. Put those two together and the bids start flying on well-priced homes.  The buzz it that the bubble is back!  Real estate talking heads spit all over themselves as they gush over the median price sales numbers. Agents dust off their black Reebok casuals and permanent press pants - then visit their dentist for a whitening.  Industry shills sound even more positive and orgasmic about the market than ever before (which I never thought possible).

Meanwhile, at an open house near you the following scene played out: The set: a formerly-cute-but-now-run-down-terribly-dilapitated-bug-infested-fire-trap. The actors: various ladies and gents and young couples stamping around with eyes darting there and there. An agent, smiling white, pressed skirt, hair up, popcorn bowl in hand. The action: the agent darts from place to place pointing to all the home 'attributes'. The would-be-buyers, sour-faced, sphincters tight, hands at side. The lines: everyone is thinking: "Oh god what a dump, this place would ruin me financially."

--------

It turns out that the Federal Housing Financial Agency, of which doubtless you have never heard, was keeping track of this information all along for both Honolulu and Hawaii in general.  It was only up to a non-economist blogger to find it, correct it for inflation, and plot it here for all to see.
According to the FHFA, they use the same methodology as the Case-Shiller index to come up with indices of all of the states and many many cities. Leave it to the federal government to not only reproduce the private sector results, but to do it for all the states and more cities, and then to never tell anybody about it!

*One caveate, CalculatedRisk uses CPI (Consumer Price Index) less shelter to make the inflation adjustment to the curves on the plot. I used CPI-U, because it was easy to enter into my spread sheet.

28 February 2012

Nationwide Real House Prices are Still Falling

Here is an update of the (inflation-corrected) Case-Shiller Index along with CoreLogic values (from CalculatedRisk).

 [click image for larger version]

23 February 2012

Shilling: Why Renters Rule U.S. Housing Market

A three-part Bloomberg piece well worth reading:

http://www.bloomberg.com/news/2012-02-22/why-renters-rule-u-s-housing-market-part-1-a-gary-shilling.html

http://www.bloomberg.com/news/2012-02-23/why-renters-rule-u-s-housing-market-part-2-a-gary-shilling.html

http://www.bloomberg.com/news/2012-02-24/why-renters-rule-housing-market-part-3-commentary-by-a-gary-shilling.html

And remember this chart?