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Fraud case ends for Arizona’s Mortgages Ltd.

Unfinished Hotel Monroe project, downtown Phoenix

[Source: Andrew Johnson, Arizona Republic] — The U.S. Securities and Exchange Commission has resolved fraud accusations it brought against an investment arm of failed commercial real-estate financier Mortgages Ltd.  The federal agency on Monday announced that Mortgages Ltd. Securities LLC agreed to an order revoking the company’s registration as a securities broker-dealer.

The SEC also sought $7.3 million in penalties and prejudgment interest but waived the amount because the investment firm demonstrated a lack of funds to pay.   The action stems from the downfall of Phoenix-based Mortgages Ltd., once considered Arizona’s largest private commercial lender.

Mortgages Ltd. distributed more than $900 million in loans for real-estate acquisitions, development, and construction projects… Mortgages Ltd.’s failure led to the collapse of several high-profile real-estate projects, including Hotel Monroe in downtown Phoenix and the Centerpoint condo towers in Tempe.  It also left the company’s thousands of investors, many of them retired, in the lurch.  [Note: Read the full article at Fraud case ends for Phoenix’s Mortgages Ltd.]

Four states rack up half of nation’s foreclosures (yes, Arizona is one of them)

[Source: Alan Zibel, Associated Press] — The nation’s foreclosure crisis is centered in four states. But taxpayers across the country will feel the pain of bailing them out. California, Florida, Nevada and Arizona generated about half of all foreclosure filings nationwide last year, according to RealtyTrac Inc., even though residents in those states hold just a quarter of U.S. mortgages.  Since mid-2007, skyrocketing foreclosures in those states have been magnifying the national rate.

As lawmakers prepare to spend up to $100 billion in financial bailout money on a sweeping foreclosure prevention plan pushed by President-elect Barack Obama, the discrepancy is adding another layer to a problem already confounding economists, politicians, and homeowners.

Just this week, RealtyTrac, an Irvine, Calif.-based foreclosure listing service, reported that more than 2.3 million American homeowners faced the loss of their homes last year, an 81 percent increase from 2007. And Goldman Sachs chief economist Jan Hatzius said in a report that the number of unsold homes on the market is so large that prices are likely to keep falling by an additional 20 percent to 25 percent by mid-2010. But there’s more to it than that.  The Sun Belt states now in trouble are the same ones that for decades have taken jobs and residents from states in colder climates…

The risky loans that were prevalent in Las Vegas and Phoenix are “just completely foreign” to North Dakotans, said David Flynn, an economics professor at the University of North Dakota.  [Note: To read the full article, click here.]

State senators host June 3 public forum on mortgage crisis

Arizona State Senate Democrats will host a public informational forum addressing the mortgage crisis in Arizona on Tuesday, June 3, 2008 from 4-6 p.m. at the State Capitol Executive Tower 2nd Floor Conference Room.  “While the legislature is waiting for a budget, the Democrats feel that we could make use of the time to address vital issues that impact Arizonans.  The mortgage crisis impacts all of Arizona’s families, neighborhoods, and communities, but the perception is that it only involves the immediate family.  In actuality, the impact on the entire community is quite substantial,” said Sen. Marsha Arzberger (D-Willcox), Senate Minority Leader.

One major innovation in mortgage fraud schemes includes home equity theft, which was labeled the “Latest Scam on the Block” by the FBI this March.  In some cases, the unscrupulous entity will locate homes going into foreclosure and make promises to the current owner that if the owner refinances the home that they will be able to keep their home.  Instead, the mortgage rescue company purchases the home with a stolen identity or “straw buyer,” keeps the money from the loan, never makes payments on it, and then takes over what was once your home.  “Numerous Arizonans call or come by on a daily basis telling their stories and asking for help to combat the mortgage crisis.  Now, when Arizona ranks third highest in the nation in foreclosures, we should be building bridges for people to get the help they need while establishing clear consequences for fraudulent practices aimed at vulnerable individuals and take steps to help prevent this in the future,” said Sen. Debbie McCune Davis (D-Phoenix), Ranking Democratic Member of the Senate Financial Institutions, Insurance, and Retirement Committee.

Representatives from the Department of Financial Institutions, Arizona Department of Housing, Arizona Bankers Association, Arizona Appraiser’s Association, and Arizona Realtors Association have been invited to report on what types of activity are being witnessed in the marketplace during the first part of the informational forum.  The second part will be open for members of the public to share their stories about their experiences.  The Executive Tower is located at 1700 W. Washington accessible through 19th Avenue. There is public parking immediately to the west of the Tower.  For security purposes, attendees would need to be in the doors by 5 p.m.