Warren Buffett is predicting a real estate recovery within a year.
Warren Buffett is predicting a real estate recovery within a year.
FORMER EXECUTIVE OF FAILED BANK PLEADS GUILTY
Former Bank Official Ignored Disclosure Reporting Requirements That Would Have Alerted Others to Massive Mortgage Fraud at Omni National Bank
NEWNAN, GA – JEFFREY L. LEVINE, 68, of Atlanta, Georgia, pleaded guilty today in federal district court to causing materially false entries that overvalued bank assets to be made in the books, reports and statements of Omni National Bank.
According to Acting United States Attorney Yates, the charges, and other information presented in court, LEVINE was Executive Vice President, the second largest bank shareholder, and head of the Community Redevelopment Lending Department at Omni National Bank from 2000 through October 12, 2007.
To keep non-performing loans current on paper, LEVINE and others at Omni failed to disclose many exceptions to their policies and procedures which resulted in Omni being exposed to a greater risk of loss. Practices that went unreported included: diversion of loan proceeds escrowed for rehab; excessive credit concentrations to a single borrower; funding additional loans for Omni foreclosures at ever-increasing amounts; and failing to create sufficient reserves for those questionable loans or to properly record them on Omni’s books and records.
Before takeover by the FDIC on March 27, 2009, Omni was headquartered in Atlanta with branch offices in Birmingham, Tampa, Chicago, Fayetteville, N.C., Houston, Dallas and Philadelphia. Omni borrowed Fed Funds at low rates to make high-interest, short-term loans through LEVINE’s Community Redevelopment Department to borrowers with less than stellar credit and often no steady employment or formal education. Such Omni borrowers were supposed to purchase and rehab distressed properties for prompt resale or Section 8 rental in run-down, inner-city neighborhoods.
Borrowers were expected to do most of the rehab themselves within a few months of the loan, and qualify for a loan to purchase a second property only when the first property was sold, or ready for sale. Omni, its regulators and investors relied on the expected increased value of the property after rehab to be we! ll in excess of the loan amount. The Redevelopment Department generated a significant portion of the Omni profits reported on its books and reports, although the facts now show that those profits were materially overstated.
LEVINE and others were well aware that none of the foreclosed properties could be sold on the open market for the amount of the outstanding Omni loans. A number of foreclosures were never disclosed on the Omni books as required, and some properties were resold up to five times at ever-increasing amounts. The actions of LEVINE and others at Omni resulted in an overvaluation of bank assets, which in turn misled Omni’s outside auditors, its Office of the Comptroller of the Currency regulator, its FDIC insurer, the Securities and Exchange Commission, and Omni shareholders. Such practices contributed to the over 500 foreclosures and an additional 500 non-performing loans, which resulted in at least $7 million in losses to the FDIC.
The evidence showed that the HUD Section 8 Program and its tenants also suffered, because many of the Omni-funded distressed properties were not rehabbed, but rather, stood vacant or were inhabited by squatters for years, corrupting other Section 8 properties and the community. Even if rented, the frequent Omni foreclosures resulted in unstable housing for Section 8 tenants, as well as increased crimes resulting from the vacant properties and transient tenants.
LEVINE was charged in a Criminal Information on December 22, 2009, with making, and causing others to make, materially false entries that overvalued bank assets, in the books, reports and statements of Omni National Bank, and today pleaded guilty to this charge. He could receive a maximum sentence of 30 years in prison and a fine of up to $1,000,000. In determining the actual sentence, the Court will consider the United States Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders. Sentencing is scheduled for March 23, 2010, at 2 p.m., before United States District Judge Jack T. Camp.
Additional Omni-related prosecutions to date include:
MARK ANTHONY MCBRIDE, 43, of East Point, Georgia, who pleaded guilty on April 4, 2009, to fraudulently obtaining millions of dollars in mortgage loans from Omni and other lenders. MCBRIDE is scheduled to be sentenced on March 2, 2010 at 2 p.m., before United States District Judge Jack T. Camp. MCBRIDE remains in jail while awaiting sentencing.
BRENT MERRIELL, 37, of Atlanta, Georgia, was indicted on December 15, 2009, with six counts of aggravated identity theft and false statements in connection with his request to the FDIC for permission to “short sale” 14 properties for $2.2 million less than the Omni funded outstanding loans.
MERRIELL was facing foreclosure on each of the properties when the charges allege that he submitted “short sale” requests supported by forged and counterfeited sales contracts and loan commitments in the names of four people whose identities had been stolen. MERRIELL has pleaded not guilty to the charges and remains in jail awaiting trial. No trial date has been set.
DELROY OLIVER DAVY, 37, of Lithonia, Georgia, was charged in a Criminal Information on December 18, 2009, with bank fraud and conspiracy to commit bank, mail, and wire fraud in connection with a scheme to fraudulently obtain millions of dollars of mortgage loans from Omni and other lenders. At his initial appearance DAVY waived indictment and announced his intention to plead guilty to those charges in January 2010.
The plea hearing will be before United States District Judge Jack T. Camp.
The hearing date has not yet been set.
These cases are being investigated by Special Agents of a Mortgage Fraud Task Force for Omni-related cases, which includes FDIC-OIG, HUD-OIG, the Postal Inspection Service, the SIGTARP, and the FBI. The Task Force is continuing a number of Omni-related investigations, including inquiries related to Omni’s application for Troubled Asset Relief Program (TARP) funds.
Assistant United States Attorneys Gale McKenzie and Christopher Bly are prosecuting the case.
For further information please contact Sally Q. Yates, Acting United States Attorney, or Charysse L. Alexander, Executive Assistant United States Attorney, through Patrick Crosby, Public Affairs Officer, U.S. Attorney’s Office, at (404) 581-6016. The Internet address for the HomePage for the U.S. Attorney’s Office for the Northern District of Georgia is www.usdoj.gov/usao/gan .
According to Trulia, Atlanta ranks 17th in the nation in the number of luxury homes (those originally listed at two million dollars and above) experiencing price reductions. 29 percent of homes have had their listing prices reduced, with an average reduction of 11 percent.
The total amount of reductions is $190,220,820.
Once again, the S&P Case-Shiller Home Price Index is showing broad-based improvement in home prices across the country.
The 10-city Index increased 1.7 percent in July, and the 20-city Index was up 1.6 percent. Both were down over 12 percent from July 2009, however.
In Atlanta, prices increased 2.3 in July, but remained 11.8 percent below last year.
It’s the fourth-straight month of price appreciation for the city.
Existing home sales, which had risen for the past four months, slipped 2.7 percent in August, according to the latest report of the National Association of Realtors.
Still, the number of sales was 3.4 percent above last year.
Credited for the slide in sales were higher mortgage rates, which on average were over a percent higher in August than July.
Home sales had shown relative stabilization in the four months prior to August, mostly because of the $8,000 federal tax credit for first-time homebuyers. However with that credit set to expire on November 30th, home sales may end up declining again.
In the South, existing home sales were down 3.1 percent for the month, but remained 1.6 percent above last year. The median price of a home was $157,400 – an 11 percent drop from August 2008.
For the third month in a row, Georgia held the position of having the seventh-highest number of foreclosures in America, according to RealtyTrac’s latest foreclosure report.
The state had 11,136 foreclosure filings in July. That’s up 10.7 percent from last year, but down a whopping 20.6 percent from last month.
Georgia has comparatively speedy foreclosure laws, and lenders are able to foreclose on Georgia properties much more quickly than in other states, perhaps leading to the recent decline.
Nationwide, foreclosures were up 7 percent from last month, and 32 percent from last year.
According to the Atlanta Business Chronicle, the iconic Clermont Motor Hotel is facing foreclosure.
Say it ain’t so, Blondie!
The number of homes being foreclosed upon in Metro Atlanta shows no signs of slowing down, according to Equity Depot.
Pending auctions for the 13-county metro area hit a record-high 7,659. Fulton county had the most listings at 1,804. DeKalb and Gwinnett followed with 1,414 and 1,295 respectively.
Standard & Poor’s released the Chase-Shiller Home Price Indices this morning, showing that the decline in home prices in Atlanta seems to be shallowing.
The data, good through March 2009, show that the metropolitan Atlanta area experienced a 1.7 percent drop in home prices versus February.
February’s drop was 2.5 percent versus January. And January’s decline was 3.2 percent from December 2008.
Still, Atlanta’s home prices show a year-to-year decline of 15.7 percent.
While three months of smaller declines is a positive sign for the city, home prices nationwide are still experiencing significant downward pressure. Nine of the cities tracked by Case-Shiller in fact had record declines in March.