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Life after Money

Part II

Real Estate & Economics


Old Real Estate Motto: Location, Location, Location

New Real Estate Motto: Deflation, Deflation, Deflation

Many people believe that because of the amount of money the Federal Reserve is printing and allocating to the economy we will experience inflation and possibly hyperinflation soon or in several years. We believe that these forecasters are completely wrong. We have entered into for now a controlled deflationary economy that may last for many years and is being managed effectively by the Chairman of the Federal Reserve Ben Shalom Bernanke [34] a student of studying the great depression.


 Currently in the United States we are experiencing high unemployment and a deflating real estate market in both residential and commercial markets. Extended and high unemployment eventually exerts downward pressure on wages which eases costs of production for goods and services.

The Nevada law that the minimum wage must exceed the Federal Minimum wage by some increment soon to appreciate to $8.00+ will escalate the costs of service and production in an economy leading the nation in unemployment teetering at 15% and demonstrates the clash of arbitrary solutions imposed by our glorious Nevada elected officials with economic reality.

Minimum Wages only intensify unemployment pressures and were never designed as a living wage otherwise the minimum wage would exceed $15.00 per hour as in San Francisco, the legal district of Mayor Gavin Newsome, and annualized remains slightly below $30k but above the federal income tax poverty line or threshold for a family of six and is livable at least according to the government. [76] Mayor Gavin Newsome is not afraid to expose the hypocrisy of left wing moderates by actually supporting a livable minimum wage.

If only the government would budget comparatively speaking of course like a sole bread winner of a family of six on $29,530.00 a year to exceed the poverty threshold [77]. We would retain surpluses as far as the eye can see rather than forking over $500b+ {$500,000,000,000.00} in annual interest payments on our debt.

We applaud Mayor Newsome’s tenacity and concur that half measures availed us nothing but disagree with his economic theory. We believe all local, state and federal minimum wage laws require repeal to reduce this stubborn unemployment rate in a meaningful way.

The minimum wage is contributing to the deficit and eventual bankruptcy of the government as our fearless leaders continue to subsidize their failures in social engineering and the minimum wage through unemployment benefits the end game of artificial pumping now waxing as a new moon; the self preservation of Representatives and Senators denial partially lifted as the corpses of their sacred brethren line the path of primary voters.

Some may argue that additional taxes for such things as healthcare will cause the costs of production to rise but we disagree suggesting that additional taxation of any kind will only depress production further increasing unemployment and exerting additional downward pressure on wages. Businesses must discount pricing to stimulate demand creating additional deflation and the cycle repeats itself until unemployment and asset prices stabilize and cash buyers retain enough confidence to bid on real estate and other hard assets without fearing additional losses after purchase. This bottoming cycle remains in its infancy and could last for ten to twenty years as when Japanese financial system crashed requiring an infusion of cash and failed to require their banks to disgorge toxic debt creating to big to fail  Zombie banks. Sound familiar!


Mortgage Loan Volumes are falling fast

Fannie Mae revised their full year forecast for residential investment {mortgage funding} from an increase of 2.8 percent to -17.2 percent. Mortgage originations for 2010 = 1.31 trillion from 2009 = 1.97 trillion a 33% decrease. [46] Home prices may continue their march south as loan volumes decline and foreclosures increase. Prices remain at significant premiums dissuading cash buyers. However if and when the home we discussed in the previous case study bottoms at or around $150,000 this and thousands of other properties in the Las Vegas Valley would be purchased with cash or private transactions as lease options or owner financed for free and clear properties first and ultimately the banks willing to slow the cycle of foreclosures by accepting interest only payments as they did in the Great Depression or converting their former homeowner clients to tenants signaling a bottom in the market. Establishing a floor in housing should not be confused with the beginning of a new bull real estate market, despite the redundant monotonous and shameless propaganda spewing forth from the real estate industry.

The new reality of debt destruction will significantly impact future credit expansion and cash will remain king effectively propelling society back in time to the 1960’s for proportional credit/cash allocations.



The Tipping Point has arrived

We are not referring to U.S. House of Representative Johnson a Democrat from Georgia who previously voiced concern in a Defense committee meeting that the U.S. Territory of Guam could suddenly tip over like a raft in the ocean if the weight of additional troops, and equipment were stationed on the island. The Admiral to whom the question was directed stated rather dryly and with respect words to the effect that: “I don’t think that is a major concern”.

The attempted seizing of personal effects of a long term entertainer signaled the end of an era to which we are speaking. We must work through the fear and night sweats. If we fail to deal with our personal financial problems, read our mail, make the necessary phone calls and make court appearances, otherwise the Police or Sheriff will someday arrive with cargo vans to seize our stuff like what recently happened with Mr. Las Vegas, Wayne Newton.

 The pilot who was awarded  a civil judgment against Mr. Newton was prepared to cart off two Van loads of Mr. Newton’s home furnishings to satisfy a paper judgment. Of course they were turned away at the gate but we should appreciate that Mr. Newton needs to reach a settlement or evacuate Las Vegas for other states which provide greater exemptions from judgments.

 In Texas one vehicle per each household licensed driver is exempt from civil judgment and confiscation regardless of value. So your Ghost, Goodman or Phantom Rolls Royce is exempt, oh and the Silver Ghost in the garage; That’s exempt too; and if you own one of each they’re all exempt if you’re married and the parents of two children as licensed drivers. Go ahead let them tow your son’s 1970 Ford Falcon; you can make it up to him at Christmas. Not so in Nevada!

In Texas the mansion where Mr. Newton is living would be exempt from any judgment creditor since it rests on less than 100 acres. In Nevada only the first $135,000 in the value of your home is exempted. In Texas you can exempt up to $60,000.00 of your personal effects. In Nevada the limit is a paltry $4,500 plus some incidentals expenses like professional libraries.

In Nevada even with the exemption a loophole exists for lawyers to serve you with a judgment and notice of intent to seize your assets. You have {10} ten days to file an answer with the court claiming the exemption for your effects or they can be legally seized.

In Texas the exemptions are codified in the Constitution providing you apply and receive a homestead exemption preventing such legal end runs. [18] Finally in Florida, North Carolina, South Carolina, Pennsylvania and Texas; wage garnishments are significantly curtailed or only applicable in court ordered child support payments and IRS tax liens.

When the creditors come calling for an iconic local figure such as Wayne Newton whatever his proclivities for spending and not paying his horses feed bill.  It’s time to bail, so to speak; Wilbur!


Mortgage Scams continue targeting homeowners living free and clear.

In a recent case investigated by the Office of the Attorney General of Nevada Catherine Cortez-Masto; a former employee of a homeowner fraudulently obtained his personal information without permission to obtain a $65,000 mortgage from either the husband or wife. The couple had purchased the home with cash. They were alerted to the scam when they received a foreclosure notice stating that they had not made the payments. Two persons pleaded guilty. A third man pled guilty to fraudulently notarizing documents. [49]

 Other Mortgage Scams prosecuted by the Office of the U.S. Attorney        

“Eve Mazzarella, 31, a Las Vegas real estate broker and her husband, Steven Grimm, 45, were charged in a superseding indictment with conspiracy to commit bank fraud, mail fraud, wire fraud and money laundering, 13 counts of bank fraud and criminal forfeiture in connection with defrauding federally-insured financial institutions of millions of dollars through a scheme that involved inflated housing values, straw purchasers and limited liability companies.  Mazarrella is also charged with money laundering. Four additional defendants, Melissa R. Beecroft, 28, Christina R. Thompson, 46, Amy R. Ortiz, 33, and Jyothi Panikkar, aka Joe Panikkar, 52, all loan officers and mortgage brokers in Las Vegas, are now included in the Superseding Indictment and are charged with conspiracy to commit bank fraud, mail fraud, wire fraud, and money laundering, various counts of bank fraud, and criminal forfeiture. Amy Ortiz is also charged with assisting with the provision of fraudulent and false forms to the IRS. Defendants Beecroft, Thompson, Ortiz, and Panikkar, were arrested in Las Vegas on Wednesday, June 18, 2008, and are scheduled to make their initial appearance in federal court before U.S. Magistrate Judge Peggy A. Leen. Defendants Grimm and Mazarrella were arraigned on the new charges June 27, 2008, at 8:30 a.m. Since the superseding indictment, 5 defendants have pled guilty: Daicy Vargas, 23, Las Vegas, Nevada, pleaded guilty to misprision of a felony, or concealing or failing to report a felony. She admitted that she helped Grimm divert proceeds of the fraud and failed to report the fraud as soon as possible.Benjamin Labee, 27, a mortgage loan processor and his wife, Shauna Labee, a mortgage agent, both of Salt Lake City, Utah, plead guilty to conspiracy. The Labees admitted that they conspired with Grimm to recruit straw buyers to pose as property purchasers. The Labees said they misrepresented information in loan applications to induce lenders to fund loans for otherwise unqualified borrowers. Craig Christians, 39, a Las Vegas real estate broker, pleaded guilty in June, 2008 to misprision of a felony, admitting that he allowed his company Western Pacific Funding to be used to facilitate the fraud scheme. Robert Samora, 41, a Las Vegas mortgage agent, pleaded guilty to money laundering.

The Superseding Indictment alleges that the object of the conspiracy was to obtain money and property by causing false information to be placed in the mortgage loan applications of straw buyers. It is alleged that the straw buyers were paid to participate in the conspiracy. After the mortgage loans were funded, defendants Grimm and Mazzarella allegedly caused title and escrow companies to disperse a portion of each loan to one of their limited liability companies, and caused mortgage brokers, loan officers and others to remit a portion of their commissions and fees to Grimm and Mazzarella. Once Grimm and Mazarrella obtained control over a property, they re-sold the same property to another straw buyer at an inflated price. Grimm and Mazzarella are also charged with concealing receipt of the monies they obtained through this scheme by causing disbursements to be made to shell companies under their control and by moving money between multiple accounts.

Grimm and Mazarrella allegedly engaged in approximately 432 straw buyer transactions involving approximately 227 properties with a total purchase price of over $107 million. Grimm and Mazzarella defaulted on mortgage payments on many of the loans which caused the properties to go into foreclosure. At least 143 of the approximately 227 properties purchased by the defendants are in default causing losses to the banks estimated at more than $17 million.

The maximum penalties for conspiracy to commit bank fraud, mail fraud and wire fraud and for each bank fraud charge are 30 years in prison and a $1,000,000 fine. The maximum penalties for conspiracy to commit money laundering and money laundering are 10 years in prison and a $250,000 fine. The maximum penalty for aiding and assisting with fraud and false statements is three years in prison and a $250,000 fine.” [52]. Persons not pleading guilty are presumed innocent. A special thank you to Rachel Dollar for her ability to synthesis a very complex case into a few readable paragraphs and yes we love your smile and spiritual essence.

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