State files charges against Carl Cole and Tower Lending

As first reported by one of my loyal readers the DRE is investigating Carl Cole and Tower Lending. Hopefully this time around we get the real story and not another puff piece from the Bakersfield Californian.


From KGET TV 17:

BAKERSFIELD - The California Department of Real Estate took the first steps Friday to suspend or revoke the license of Bakersfield real estate giant Carl Cole.

The accusation also names Tower Lending, the Crisp & Cole mortgage affiliate.

Cole is the broker and officer responsible for Tower Lending, and he denies the accusations.

Last year, Cole separated from the mega-brokerage Crisp & Cole and opened his own office. The D.R.E. allegations do not name Crisp & Cole Real Estate.

The allegations concern mortgages on three Bakersfield homes, which the D.R.E. said are typical of more than 50 loans made illegally in 2005.

The D.R.E. said Tower Lending, under Cole's supervision, used an unlicensed broker to solicit prospective borrowers and lenders for real estate loans.

If proved, that's grounds for revocation of Cole's license, but Cole said he was as much a victim as anyone.

He said he hired the broker from another mortgage company and believed the man when he said he was licensed.

Cole said as soon as he discovered the man had no license, he fired him.

The allegations also said Cole signed papers claiming he had personally discussed the terms of mortgages with three homeowners, going over complicated legal issues outlining their rights.

But the DRE said Cole never met with those clients.

From KBAK:

State levels allegations against prominent realtor

Video High

29 Eyewitness News has learned that serious allegations are being levied by the state against one half of a high profile, Bakersfield real estate agency.

Bakersfield realtor Carl Cole, one half of the real estate team of Crisp and Cole, faces 10 serious code violations from the California Department of Real Estate. The case also includes the realtor's in-house mortgate company, Tower Lending.The state alleges Cole and Tower Lending violated a number of "California Business and Professions Codes."

The allegations include "negligence, fraud or dishonest dealing, substantial misrepresentation and failing to exercise reasonable supervision over the activities of his salespersons."The 14 page filing cites three specific real estate deals.

Cole can file a Notice Of Defense to appeal the charges. A hearing date would then be set.Cole and partner David Crisp recently got a tentative thumbs up for a $400 million high rise project on the campus of Cal State Bakersfield.

The whole state is going to be foreclosures

From the current edition of Bakersfield Magazine just out on newstands, comes an interview with local realtor Betty Byrom. This magazine has no online link for the story, if you want the whole article you will have to pay $2.50 for a copy or just go to Barnes and Noble and read it for free.

Here are some highlights from the Q&A section:

You have been called the "Queen of HUD". Do you still specialize in those
kind of sales?

There is no HUD now, hasn't been any HUD for the last four years because the market was crazy. When the market's good there are no foreclosures but there will be. This whole state's going to be foreclosures (soon) so I'm starting campaign now.

What is your view of the current real estate market?

Its a little below normal. I think it has almost reached bottom. I knew it was coming 15 months ago, told all my investors if you're going to sell, sell now. All those crazy loans people did, the repos are going to be horrible, but it's mostly going to be the upper-end ones. I think it's going to be the more expensive ones - your million dollar houses are going to see it first.

Will it continue to grow as it has in the last few years?

No, because we have too much inventory now. We have always grown a little. But we are not going to get any big industry in here as far as I know. We grew when we were affordable; we're now almost as high as the rest of the state.

$80,000 saved!

Your continued patience is paying off in the form of some rather significant savings. The following is a listing where you have now saved $80,000., that is approximately $750 a month in PITI you can spend on whatever you want. Keep up the good work!

This home, at 12402 Portebello drive, is listed by Touchstone Real Estate Group with the following heading - "WAS $975,000, NOW $895,000!!!"

The following is the information from the local MLS:

JUST REDUCED! Unique Hard to find attached mother in-law unit in Trinity at Villages of Brimhall Gated. Roberson built custom hm appr. 4,300 Sq Ft w/a gorgeous pebble tec beach entry pool/spa. Home sits on appr. 18,000 sf lot & 5 bd + office, 3.75 ba. Gourmet kit, w/GE SS appl. & Granite counter tops. Master suite w/sitting area, dual fp, wet-bar, lavish btrm w/glass block shower dual vanity, his/her closets, & jet tub. All bdrms are spacious. Living, family & din rm 3 water heaters, 3 AC units.

Click here for more details on this property.

Dr. Grammy claims prices will rise 2.5% in 2007

I attended the sold out Kern County Economic Summit today. The highlight of the annual event is the presentation made by Dr. Abbas P. Grammy.

Dr. Grammy is forecasting 2007 Kern County median home prices to rise by 2.5%. We will hold his feet to the fire on this one. Dr. Grammy is a distinguished professor and economist, however, he is already wrong on this prediction as Kern County prices have already dropped year-over-year by 2%.

Maybe he is expecting a late rally this year? I am guessing he has not factored in the massive credit tightening, inventory tsunami flooding the local MLS or the significant increase in foreclosures and NOD's?

Also, our median HH income (adjusted for inflation) is the same as it was in 2001, according to his graphs, $38,600. However, our median price has gone from $93,400 in 2001 to $275,700 in 2006. Clearly, this rapid increase in prices was not built on fundamentals, as the fundamental driver of home prices is HH income. This increase was built on cheap and easy credit and fueled by massive speculation.

"Proposed "twin towers" shrink"

An update on the proposed twin 31 story condo towers, from the Bakersfield Californian:


BY JENNY SHEARER, Californian staff writere-mail: jshearer@bakersfield.com Wednesday,

Mar 28 2007 12:17 PM

Last Updated: Wednesday, Mar 28 2007 1:46 PM

The size of twin high-rise towers proposed at Cal State Bakersfield have gotten a little shorter.

For now, The Towers are 24 stories instead of 32 stories, said developer Carl Cole.

Cole said the project components may change.

For now, The Towers features a town/lifestyle center approach.

It will not include a Nordstrom, Cole said. Retail tenants along the lines of Coach and J.Crew are being sought.

“We think there’s enough retailers coast to coast to enable us to provide upscale shopping without duplicating anything else in town,” Cole said.

Hilton has given Cole a letter of intent to plan and develop the hotel and 1,000-seat conference center.

The hotel will be its own facility rather than situated on top of condominiums, Cole said.

He said the California State University system was concerned two 30-plus story towers would look monolithic.

With the reduction, the towers will be about 50 percent taller than the Stockdale Tower, he said.

The towers will house 500 condominiums ranging from 700 to more than 3,000 square feet.

The project may cost about $400 million and be built in three phases:

• Phase 1: The hotel, convention center, parking and the first tower will be built. That may be completed by mid-2010, said architect David Milazzo.

• Phase 2: The second tower and additional parking will be added.

• Phase 3: Additional retail and office space will be constructed.

The project received conceptual approval from the CSU Board of Trustees in late January.


Here is a link to the most recent story.

Beazer Homes lending problems

From thestreet.com, national builder with a local precense having some serious lending issues. Hopefully, the did not use these same lending standards here in Bakersfield:


Federal investigators have opened a criminal probe into the lending practices of homebuilder Beazer Homes according to a BusinessWeek report Tuesday.

The Federal Bureau of Investigation, the Internal Revenue Service, the Justice Department, and the Inspector General of Housing and Urban Development are all involved in the matter, BusinessWeek said. The report cited an FBI spokesman and other people familiar with the probe.

The probe is related to a recent report in The Charlotte Observer that looked at significantly higher-than-average foreclosure rates for Beazer homes and allegations of abusive lending practices.

A representative from Beazer couldn't immediately be reached for comment. Shares of the Atlanta-based company were plunging $3.19, or 10%, to $28.22 in after-hours trading.

The news comes as the subprime mortgage industry has been slammed by rising delinquencies and criticisms of its lending practices. An investigation into Beazer, however, would mark the first time a major homebuilder has been brought into the recent lending ruckus

Doom and Gloom?

From today's Bakersfield Californian an update on the real estate market. Most of the stories have been covered here in the last few days. However, they do have some excellent quotes that we can post now and get fired up about, then review in 6-12 months and recall how idiotic they were. I have highlighted the "money" quote:


Rapid rise left room for decline

BY RYAN SCHUSTER, Californian staff writere-mail: rschuster@bakersfield.com Monday, Mar 26 2007 10:05 PM

Last Updated: Monday, Mar 26 2007 10:14 PM

Bakersfield's cooling home market landed the city on a list of the nation's worst housing markets Monday despite holding its own against other California markets.

Based on a wide range of data, real estate Web site housingpredictor.com forecasts a 5.9 percent decline this year in Bakersfield's median home price, now about $280,000. Only 23 other markets nationwide are expected to experience steeper declines, according to the site's Worst 25 Market Forecast.

Mike Colpitts, the Web site's founder and editor, said the local market is returning to normal from the boom market of recent years.

"This is a transition back to normal cycles," Colpitts said.

While some local real estate professionals voice skepticism at predictions of tough times for the Bakersfield market, many see a reckoning ahead.

"I think our market is in for a correction," said local appraiser Gary Crabtree of Affiliated Appraisers. "It was just a matter of time. We went up so rapidly in such a short period of time that the salaries of homebuyers could not keep up."

Crabtree has forecast a 5 percent to 6 percent decline in Bakersfield's median home values in 2007.

Moody's Economy.com has predicted that Bakersfield home prices will decline by 5.5 percent in 2007. And Business 2.0 magazine, using some of Moody's data, last fall included Bakersfield in its list of the 10 housing marketings across the country "ready for a fall."

Ray Karpe, president of Karpe Real Estate Center and president of the Bakersfield Association of Realtors, wonders how such projections are reached.

It's awful easy to make these broad-sweeping predictions," Karpe said. "Doom and gloom tends to catch people's attention. How do some of these people know what our market is like when they are not here? You can put numbers together to make it say just about anything."

Local appraiser Michael Launer of Launer & Associates Inc. said the new housing market is strong. He said median sales prices do not accurately reflect the market as a whole and can be skewed if fewer high-priced homes are sold during a certain period.

"I don't think it's time to panic," Karpe said. "Two or three years ago we were one of the hottest markets in the country. Our market couldn't sustain that growth. It is in a correction phase. It's not bad. It's not going to crash."

Kern County had 634 properties enter some stage of foreclosure in February, up from 185 in February 2006, according to RealtyTrac, an online marketplace for foreclosure properties.

Crabtree said that recently about one of every three notices of default have led to foreclosure, up from a historical average of 10 to 15 percent.

"It is a sign of weakening of the market," Crabtree said, blaming questionable subprime lending practices for the increase. Subprime loans, which usually require no down payment but carry above-market interest rates, are typically made to homebuyers with credit problems or meager financial reserves.

"Foreclosures will increase and supply will increase, which will place downward pressure on prices," he said.

Crabtree predicts a 27 percent decrease in overall home sales volume in 2007. Building permits issued for new construction are down 42 percent between February 2006 and February 2007, Crabtree said.

Local foreclosures more than tripled in last year

From today's Bakersfield Californian:

The Bakersfield Californian Monday, Mar 26 2007 12:15 PM
Last Updated: Monday, Mar 26 2007 12:15 PM

Kern County foreclosures have more than tripled in the last year, according to numbers released Monday.

RealtyTrac, an online marketplace for foreclosure properties, reported 634 properties in Kern County entered some stage of foreclosure in February, up from 185 in February 2006.

Kern County had 406 foreclosure filings in January, RealtyTrac reported.
California had 16,273 foreclosure filings in February, up 79 percent from February 2006 and a 4 percent increase from January.

Bakersfield home prices crumble

California Association of Realtors numbers for February 2007 are out and Bakersfield home prices crumbled along with other Central Valley towns:


City_________ CurrentYr________ Prior Yr________ Change

Bakersfield___ $280,000.00______ $295,000.00______(5.1% )

Clovis_______ $359,000.00______ $439,000.00______(18.2%)

Fresno______ $277,500.00_______$285,000.00______( 2.6%)


Inventory update. Net additions to the Bakersfield MLS are rising fast. At this same time last year we had 2,410 homes on the market, as of today we have 3,597. That is a 49.3% increase, year-over-year.

Housing Market Slumps In Kern County

So now Gary Crabtree is changing his tune and becoming as bearish on local housing as me.

Where was this guy a few years ago, actually the Summer of 2005. During the Summer of 2005, he appeared on the Channel 17 real estate love fest and claimed the market was ok.

That was the peak of the market, prices are down since then, inventory has skyrockted since then and foreclosures are through the roof! Now he thinks prices will come down, no Shit Sherlock!

From KERO TV23:

BAKERSFIELD, Calif. -- The housing market in Bakersfield has shifted in favor of the buyer and experts expect the trend to continue for the next two to three years.

Bakersfield is in it's first housing slump since 1998.

Gary Crabtree, owner of Affiliated Apraisers, said Bakersfield has seen high levels of sales for the past four years, and now the market is correcting itself.

He is confident prices on houses will go down, but he's not sure how far they will fall.

One reason for the surplus of homes on the market is an increase in oreclosures, Crabtree said. Crabtree said that comes from buyers using what are called "sub-prime" loans.

Sub-prime loans are interest only loans that count on low interest rates to keep payments down. Now, with rising interest rates, buyers with "sub-prime" loans are sometimes being forced to foreclose because they can't come up with their higher mortgage payments.

Those foreclosures add to an already beefed up surplus of houses on the market.

Motivated or looking for a couple of greater fools? UPDATE #2

Looks like our realtor is trying to drum up some business at Bakersfield Californian Blogs. We orginally featured him here and then did an update here.

From the Bakersfield Californian Blog :

posted by jasonthoele on
Mar 22, 2007 at 10:46 AM

Does anyone have any comments on the recent decline in the real estate market?

posted by Bakersfieldbubble on Mar 22, 2007 at 11:35 AM

Yes.
Why do you post on craigs list with claims of "motivated seller, buy this house and have instant equity"? Meanwhile the homes have been listed for months? Also, these homes appear to be owned by a realtor?
Clearly this is misleading. Is this allowed in the realtor "code of ethics"?

posted by jasonthoele on Mar 22, 2007 at 12:08 PM

I do own the house and I am very motivated!!!! I need to sell this house and it has been appraised at 550K, I am selling it at 460K so there is instant equity. It's not misleading at all.

posted by Bakersfieldbubble on Mar 22, 2007 at 12:37 PM

That home is not worth $550k.

You purchased the property on 2/13/06 for $425,000, whoever did the appriasal should have their license revoked.

At first you listed it for $475,000, now its for sale for $460,000, sounds like some of that instant equity wasn't so "instant"?

Once again, knowing that prices are down year over year, is this misleading. Is this allowed in the realtor "code of ethics"?

Local realty office to close

What happened to the spring rally? Who closes their offices right before the busiest time of the year for realtors?

From today's Bakersfield Californian:

McMillin closure will let go about 26 real estate agents

BY RYAN SCHUSTER, Californian staff writere-mail: rschuster@bakersfield.com Tuesday, Mar 20 2007 11:20 PM


McMillin Realty's Bakersfield office will close at the end of the week, another sign that the real estate industry is tightening its belt as the housing market stalls.

More than two dozen jobs will be lost as a result of the closure.

McMillin officials said that while the local office's performance played a role in the closure, there was also a decision to consolidate company resources amid a stagnating market.

"We were approaching break even. It certainly wasn't highly profitable. If it was, we would still be in business," said Don Cohen, the vice president and general manager of McMillin Realty in Bakersfield. "We couldn't count on the other offices to carry us because they are at break even.
We looked at what was the best way to manage our assets."

About 26 real estate agents will be displaced when the Coffee Road office closes its doors for the final time on Friday. McMillin Realty employees were informed of the closure at a Monday morning meeting.

"There was disappointment," said McMillin agent David Bradshaw, who said he and his daughter, Leslie Miller, have been with McMillin for the last three years. "I was a company man. I promoted what they did. To find out they are going away, there is still some loyalty there. You don't just turn it on and off. But you have to move on."

New Century ordered to stop loans in California

From CBS Marketwatch:

SAN FRANCISCO (MarketWatch) -- California ordered New Century Financial to stop taking mortgage applications in the state, according to a regulatory filing by the subprime specialist on Tuesday.

New Century said it got the cease and desist order from California authorities on March 16. It had already received several similar orders from other states, but the company is based in California and has originated more than a third of its loans in that state.

NEW said it hasn't decided whether to appeal the California orders and noted that they will become permanent if there's no appeal.

The company also disclosed that it can't sell mortgage loans directly to Fannie Mae (FNM :
Fannie Mae anymore or act as the primary servicer of any mortgage loans for the industry giant, according to the filing.

New Century shares fell 15% to $1.84 during afternoon trading on Tuesday.

Subprime mortgages are offered to home buyers with spotty credit records, lower income and higher debt. The business has descended into crisis after interest rates climbed and home prices stopped rising quickly.

New Century, the second-largest subprime mortgage lender, has been among the worst hit. It faces a federal criminal probe and has stopped offering loans.

The California orders require New Century subsidiaries to create escrow accounts to hold fees relating to pending mortgage applications and transfer outstanding applications and unfunded mortgages to other lenders, the filing stated.

Loan City - DONE!

Per website:

LoanCity is closed for business. Today March 20, 2007 is the last day we will be funding loans. To our customers, our staff and business partners - we thank you.

Peoples Choice Home Loans and Loan City

Two more subprime meltdowns to report.

First People's Choice Home Loan Files for Bankruptcy:

March 20 (Bloomberg) -- People's Choice Home Loan Inc., a mortgage lender for people with credit problems, filed for bankruptcy protection.

The Chapter 11 filing today in U.S. Bankruptcy Court in Santa Ana, California, comes as delinquency rates on so-called subprime home mortgages hit a four-year high. Subprime lenders specialize in loans to customers with bad credit or heavy debt.

People's Choice, the fourth subprime lender to file for bankruptcy since December, specializes in ``non-prime'' residential mortgages, according to its Web site. The site says the Irvine, California-based company is ``devoted to serving borrowers with less-than-perfect credit.''

Subprime lenders Ownit Mortgage Solutions LLC, Mortgage Lenders Network USA Inc. and ResMae Mortgage Corp. have all filed for bankruptcy recently. In the past year, shares of three independent subprime lenders -- Fremont General Corp., New Century Financial Corp. and NovaStar Financial Inc. -- have lost at least half their market value.

People's Choice estimated that it has more than $100 million each in assets and liabilities, according to court documents. Among the 20 largest unsecured creditors listed in court papers are Wachovia Bank NA, Bear Stearns Mortgage Capital Corp. and Merrill Lynch Mortgage Lending Inc.

The company is a subsidiary of People's Choice Financial Corp., a real estate investment trust. Last week, that company withdrew a registration statement with the U.S. Securities and Exchange Commission that it had filed tosell around 64.3 million shares valued at $192.9 million. The company cited ``various business and market reasons'' for the withdrawal.

According to the registration statement, filed in June 2006, People's Choice Financial had about $3.9 billion in mortgage loans for investment on its balance sheet in March2006. It issued $4.5 billion in mortgage-backed securities in 2005.

Second from Brokers Outpost:

Effective immediately Loan City has shut there doors. They will fund through today only.