Realty Place- Deception, Collusion, And Fraud?

For some time I've waited for the "other shoe" to drop-- the real estate Broker/Agent role in the high number of foreclosures and "upside down" neighborhoods built by Beazer and financed with sub prime lending...

I can't speak for the industry, but I can speak for myself, reading "Homebuyers in the Dark" and "Promises Upfront, Deals on the Side" by Observer reporters Applebaum and St. Onge, in my opinion three words descibes the Realty Place concept and their agents: Deception, Collusion, Fraud...A possible fourth, Conspiracy would be harder to prove, but I think there needs to be an investigation, state SBI, are you listening?

Key facts uncovered by their excellent reporting:

From 2002-2005, Beazer Homes paid Realty Place 2.2M in commissions including 700K in bonuses, on 420 transactions averaging 3.9% of sales price, a full 1.2% higher than the national average. Of 50 purchasers interviewd, not one said they were told of the bonus by builder or agent.

From the Observer statisticians, "Most of the increase in foreclosures in Mecklenburg County are accounted for by the increase of "starter home" foreclosures." And, of the "Beazer Homes sold by Realty Place in 2002, 1/3 are in foreclosure". Wow, the national average for foreclosures is 3%.

Lets look at where the foreclosures are on the Observer map here. Anyone want to bet that there were a high number of minority purchasers as well? So it seems clear that the "Heinemann Innovation" was to bring sales techniques formerly confined to low class sales companies (sell the payment to undereducated people has been the practice of some home improvement companies, timeshare guys and some of the early Land (swampland) sellers)and prey on a new class of unsuspecting, unfortunately all too gullible first time home buyers. And hide behind statements like, "We disclosed everything," and "I can't be sure we trained to tell every buyer there was a bonus," the owners have produced a wall of what they think is plausible deniability.

As they say in Texas, "That dog won't hunt."

Key Questions: Realty Place was known for its horrible "split"- the percentage paid to the Agent doing the work. Of that 2.2M paid to Realty Place, how much went to brokers/owners Heineman, Jordan and Boschele?

Also- why would Beazer pay 3.9%, over 1.2% higher than the national average to Realty Place? Why would they do that-what were they getting in return? And who were the biggest beneficiaries of that extra 1.2% and what did they give Beazer? And did you note the customer who was taken only to Eastwood and Beazer, and once Eastwood was out, they only looked at Beazer? When there are at least 10 other builders building in this price range, only Beazer? Is it possible the other builders only paid the industry standard 2.5%?

The answers to these and other interesting questions lie in the records of Realty Place where every HUD must be kept for a minimum of 7 years. The HUD is a highly detailed record of the transactions, the precise records an investigation would collect. Every lending transaction would appear here as well- anyone want to bet that the loan costs are at least 1.2% higher than the national average? Legal fees, title fees and insurance too? It's the HUD-the one place that will diagram the tangled web of relationships that will prove collusion, quite probably deception, and maybe fraud and conspiracy too.

So I think if an investigator reviewing the HUD Statements, and looking at the books to see precisely the income streams and how the owners of Realty Place made their living-
this thing will unravel and we'll see some perp walks.

Let's hope for that investigation and see where it takes us.