Interesting times out there. I just got back from a Foreclosure Crisis Town Hall meeting up in Riverside with Assemblymember Ted Lieu. Assemblymember Nestande was a co-sponsor of the event but was not in attendance.

You might remember Ted Lieu recently for ABX2 7 - that was the one where the headlines trumpeted a '90 Day Moratorium on Foreclosures' but four paragraphs in you found the text that said it didn't apply to over 90% of the lenders in California. But everybody remembers the headlines and figures we got a reprieve until September 15. Wrong. Lieu told us today he was pleased to get 90% compliance with the bill. If you're confused, refer to that other 90% in the previous line - they were already comlpliant before the bill. But it was the catchy headline - '90 Day Foreclosure Moratorium' that created another artificial barrier to returning to a normal market. IMHO

According to a recent statement released by the HELP Program, Riverside County was hit by 16,829 NOD's in the past 120 days. During that same period, 7,441 places sold. Almost 17,000! That sounds like a ton of homes, doesn't it? And it is - that's no joke.

But talk to any Realtor® in the region and you hear the same story - NO INVENTORY. How many office stories have you heard that involve 21 or 43 or 97 offers on a home, 27 of them cash? Even discounting for multiple-buyer offers, it looks like we could absorb a pretty big hit quickly and without major impact to our median price level. Maybe.

But nobody can tell you what rathole those foreclosed homes are disappearing down. Our market is running contrary to what a lot of the country is experiencing right now. Our prices locally have been stable for months, our inventory is at unhealthy low levels - 1.8 to 2.2 months and record sales volumes dating to last September, have been slowed by the lack of homes to sell. The elusive 'shadow inventory'.

In addition to the much deserved savaging the banking industry, Lieu's agenda included an opportunity to take questions and many of these were sad. Sometimes we tend to look at the numbers for what's happening in the market. Numbers like tens of thousands of homes, 100,000's of thousands nationwide - trillions in bail-outs, but each of those numbers, at a micro level, is a family down the block or maybe even closer to home. And several of them were heard today. One gentleman enumerated a litany of obfuscation by one of the nations largest banks, others spoke of the 'limbo' they seem to descend into - with no help in sight, a confusion of solutions or lack thereof, and being prey to every scam artist and grifter that can afford a phone line or postage stamp.

Lieu was aware of these problems and more. He is targeting the lending industry with performance-specific incentives tied to better response on shorts-sales and loan restructure. One of the problems here-to-fore has been that most of the problems in the mortgage crisis have been engineered by just a very few banks and they are federal banks. As we've repeatedly seen in the real estate industry, they frequently urinate on our state laws and contracts with impunity. Well tell me I'm lyin' on that.

But Lieu is trying a work-around. He acknowledges it will be an uphill battle but he feels the time is right to enact bills to provide more relief and force the banks to be good citizens and willingly give of their resources and assets for the benefit of those who can no longer fulfill their contract for a variety of reasons. I'm not sure I agree with his premise and will wait to see more of this new legislation.

When National Association of Realtors® Chief Economist Lawrence Yun spoke with us at GAD Institute last week he specifically noted that California appears to have turned the corner. Prices have stabilized across the state, sales for the first quarter were way up which has driven inventory to it's lowest level in years - we appear to be through the worst of it. Yun even forecast that California MIGHT see appreciation of between 4% and 5% in 2010. But that's just Ole Larry talking, you know.

So we might be throught the worst of it UNLESS, of course, some mis-guided legislation comes out that forces banks to pull back, seeks to inject additional government intervention at a state level or inadvertently extends the length of time this cycle lasts. And don't tell me they're not capable of screwing up a two car parade.

To date - of the billions and billions of dollars spent on a variety of alphabet bail-outs, estimates range from 1.5 to about 3% of applicants actually successfully completing a loan mod through GOVERNMENT run programs like the much touted Making Home Affordable program. That's abysmal!

Banks are either incompetents overwhelmed by the onslaught or brilliantly involved in some vast worldwide conspiracy to withhold homes from the market. I don't have the answer to that one. I'm not sure Assemblymember Lieu does either but I applaud him for his efforts to bring this to the community. There were several people in attendance today who may have been helped by one of the federal, state and local program volunteers at the session. And that's how this will happen - not in an avalanche, but by helping a few people at a time into and out of their homes. That's our business. Can we just get politicians the hell out?

Well. That's just my opinion - I could be wrong.

The Times also had some carefully parsed words for our own Senator Hollingsworth. While they were careful to maintain their liberally correct stance by pointing out how conservative Hollingsworth is and what an unusual alliance he has formed both with the Governor and his Chief of Staff, they did admit that Hollingsworth is usually the first to arrive at meetings and the last to leave and has been known to enjoy a stogie with the Gov.

I'm guessing maybe Senator Hollingsworth had something to do with the Governor finding his balls again during this process. After the Teachers Association, the Prison Guards Union and the SEIU deftly removed them and hid them back in 2005, the Gov has been a shadow of the man we thought we elected to replace the Grey Man. However, Arnie has been waving the old saber around again, he actually vetoed numerous line items including many that are near and dear to the hearts of liberals, and though the budget has numerous gimmicks and smoke shrouded fixes, it DOES NOT contain any new taxes.

California's budget process as sausage-making

In addition to board members representing the interests of 4 local chambers of commerce and a broad spectrum of local businesses, the SCLC also welcomes guests to our monthly meetings that typically include representatives of  Economic Development agencies, our cities, the building industry, the League of Cities and, of course, our representatives at the county, state and federal level,. The meetings are an opportunity for us to evaluate and take positions on legislation, to communicate this directly to our representatives, and to allow them to update us on what our  legislators are up to. 

At our most recent meeting on 7/20, our representative from Representative Mary Bono-Mack's office provided us with a packet of information detailing the Representatives recent activities in DC. Among the items addressed were her views on the current healthcare debate, a revisit of the outdated subsidies for ethanol production (another 'GREEN' initiative that wasn't thought through to it's logical conclusion), a call to address substance abuse, another call to the House Energy Committee to hold a hearing on the role of technology in giving voice to those silenced by repressive governments (ala Twitter and the recent Iran election), and a message encouraging Interior Secretary Salazar to 'fast-track' solar energy development on western lands. All worthwhile positions - even though most represent positions of interest rather than actual accomplishment. 

Conspicuous by it's absence was a Bono-Mac statement on why she was the only Republican on the House Energy Committee to vote for the horrendous bill that has come to be known as the 'Cap & Trade' Bill or  the Waxman-Markey energy bill. Nor was there an explanation of why she was one of only a few Republicans to vote for it's passage in the House when Republicans (including her husband Representative Connie Mack) and more than a few Democrats voted against it. 

You may recall my rant following Realtor Hill visits in DC when we encouraged Bono-Mack (who has heretofore shown considerable support for Realtors and property rights) to  vote against this bill based on the extremely onerous 'energy-star' component which would have had an extremely deleterious impact on housing. She was the lone Republican vote to pass this bill out of committee a scant 2 days after our visit. Her excuse at the time - well, while the 685 page bill contained many flaws, she believed it deserved a full hearing and an opportunity to 'fix' it. 

Well, the bill didn't get 'fixed'. instead they added another 400 +/- pages of crappola that nobody read and passed this POS out of the House and onto the Senate. In spite of the lack of her desired 'fixes', Bono-Mack joined just a smattering of other Republicans to help garner passage of this landmark climate bill authored by homely Henry Waxman. Even Time Magazine columnist and Obama sycophant Joe Klein pointed out in a recent article that 'this bill is an excellent candidate for euthanasia. It is a demonstration of all that's wrong with the legislative process in latter day America.' Couldn't have said it better myself. 

After being taken to task by constituents on FaceBook pages for several days after her vote, Bono-Mack posted a tepid response that she was only representing the wishes of her constituency in voting to expand the use of solar and wind power in her district. Interesting that most of her constituents didn't see it that way. Following the failure to include information on this vote to the SCLC, her representative promised to email us all a letter wherein Bono-mack would explain all. I'm eagerly awaiting that. 

Most readers know I'm not a big fan of Darrell Issa - but I will be the first to tell you that Issa has voted against the rush-rush stimulus bills starting last year, and has been consistent and vocal in his opposition to the rapid expansion of government we have seen under the Obama regime. On the other hand - if you look at the voting record, Bono-Mack has voted opposite Issa and supported every stimulus and bail-out that's been proposed so far, and has capped off this losing streak by joining Democrats to support the Waxman-Markey energy bill. Perhaps it's time Bono-mack reconsidered her party affiliation. Or if the rigors of maintaining a bi-coastal legislative marriage is proving too taxing, she should consider some alternative form of public service.

I happen to know a Republican with exceptional conservative credentials who currently serves as Minority Leader of the California Senate. Dennis Hollingsworth will be termed out of his California service next year, which would position him for  run at this seat in much the same district he has represented so ably at the state level. Being the gentleman and party stalwart he has been, Hollingsworth would be unlikely to run against a sitting Republican but either he should consider it, or Bono-Mack should consider giving up the seat she inherited following the untimely death of Sonny Bono. 

Of course that's just my opinion. I could be wrong.

Chris Bagley at the Californian forwarded this great article. Some of you have been following our saga with these gentlemen for the past few years. This was the original group in our area to pull off the old $150,000 overpay scheme. That and some investment 'vehicles' that the SEC cracked down on last year. Our Real Estate Fraud Task Force, which we formed nearly five years ago with the Inland Valley Association, was initially in response to this group. They operated under the umbrella of Stonewood Financial and a variety of aliases. Chris at the Californian, Leslie Berkman at the PE and others invested a lot of research and ink in this effort as well. 

As a result of this case we have developed a very good working relationship with our District Attorney's  Office and have initiated a statewide effort with CAR to add real estate fraud to our statewide agenda. We have also given numerous Fraud Prevention presentations to City Councils, County groups and civic organization as part of the program you've seen as my tagline in the Mortgage Fraud Group.  

Realtors. We're part of the solution - not part of the problem. 

While the amount awarded doesn't represent the total damages these individuals wreaked on our community, it's a good start.

HOUSING: Judge puts $59M price tag on fraud allegations

RIVERSIDE ---- A federal judge ruled that two Murrieta-area men defrauded dozens of investors and ordered them on Monday to repay a total of $58.6 million.

The order followed a civil lawsuit in which the U.S. Securities and Exchange Commission accused James Duncan and Hendrix Montecastro of selling unregistered securities and defrauding investors through fabricated investments. Judge Virginia Phillips agreed with the bulk of the agency's claims and noted that Duncan and Montecastro had invoked their Fifth Amendment rights not to offer testimony that could be used in a subsequent criminal prosecution. An attorney for one of the men cited an FBI raid of their homes in February 2008 for the refusal to testify.

In a separate lawsuit, former clients allege that Duncan and Montecastro roped them into a real estate investment arrangement that pushed about 100 homes, most of them in Murrieta, into foreclosure in 2006 and 2007.

Phillips ordered Duncan to repay $30.3 million and Montecastro to repay $28.3 million, amounts that include interest. Maurice McLeod, a co-defendant who settled some claims with the SEC last year, was ordered to repay $483,000. Phillips ordered fines of $130,000 for each of the men and ordered them barred from offering investments in the future.

"The wrongful conduct continued over the course of at least three years and defendants evolved their conduct to evade detection as well as to continue to separate investors from their money," Phillips wrote. "Defendants have not recognized the wrongful nature of their conduct and have not given any indication that they will not engage in such conduct in the future."

RELATED STORIES:

MURRIETA: Foreclosure figure seeks bankruptcy status

REAL ESTATE: Second indictment in foreclosure investigation

Feds take action against real estate group

New player emerges in fraud suits