Well at least we know the process works. NOT

Condo conversion time!

Excuse me, MV Resident, but are you indicating that you think they should be able to count their California Apartment Association dues for rent increases, or their property manager salaries as "maintenance" rather than "management" like the name "manager" would imply? Is it just that you're opposed to the law as passed by the people of Mountain View?

My "humble" observation:

Anyone trying to claim that due process was not provided to Del Medio will have to provide evidence to support it.

It will be interesting to observe a court action, I am almost certain that Lindsey will file a court action.

But the court will simply evaluate whether the RHC applied common criteria used in any other City in the proper way. If the court detemines that, the court will reject it.

Finally, My apartment recently had a CO poisoning problem. This apartment has an active petition with the RHC. But since the Gas heating was not serviced for more than 2 years, the assumption for the RHC is that the warranty of inhability is broken. The common rule is that all indoor gas heating must be serviced at least every other year, and that parts involved with CO control should be replaced. Thus, the petition must be dismissed.

In fact a friend of mine was subject to the posioning.

For a property that should be worth around $50M compared to recent sales of similar multifamily housing in Mt. View, $1.3M annual net income is a 2.6% return on the money tied up in the property. For all of the grief, the Lindsay family could earn that putting their cash in a money market or, better yet, tax-free bond instruments. Why go through the agony?

I sold my apartment project, about half the size of Del Medio Manor, which earned me a net income of $1M annually (a 4% return). I still sold it and reinvested in multiple properties in and out of state, providing a better return and requiring NO management oversight.

Oh, and the kicker! My buyer is scraping the property to build homes for sale. Heads up Del Medio Manor Tenants Assocation, you're next.

In response to The Successful Businessman you said:

“For a property that should be worth around $50M compared to recent sales of similar multifamily housing in Mt. View, $1.3M annual net income is a 2.6% return on the money tied up in the property. For all of the grief, the Lindsay family could earn that putting their cash in a money market or, better yet, tax-free bond instruments. Why go through the agony?”

On WHAT basis are you making such an appraisal? In fact in the state of California, appraisal are NOT market values at all. They are just opinions made by those who have a interest in inflating the prices so they get rehired by real estate agents because the real estate agents get a larger commission. This is a legal judgement made in the past by the California Courts. Simply put, you have no other idea than trying to compare to “recent” sales? That is simply NOT A MARKET VALUE, and you know that. You said:

“I sold my apartment project, about half the size of Del Medio Manor, which earned me a net income of $1M annually (a 4% return). I still sold it and reinvested in multiple properties in and out of state, providing a better return and requiring NO management oversight.”

That is your right to do, I will not argue against it. But at the same time, you simply indicate that you are compelled to discuss issues in a city where you have no investment in at all. Why? You said:

“Oh, and the kicker! My buyer is scraping the property to build homes for sale. Heads up Del Medio Manor Tenants Assocation, you're next.”

Under new laws in the State of California, made enforceable as of January 1, 2019, at least 50% of either rental or owner housing built will have either 45 year for own and 55 year for rent price controls. 30% will have to be affordable to 120% Area Median Income, 15% will need to be affordable to 80% AMI, and 5% will need to be affordable to 50% AMI.

Especially if it is in a residential zone, the law clearly states that any residential zone is by default a housing element, and subject to state law.

Just understand that that will significantly reduce the ROI of any project, but the risks of the development will significantly increase. AND IT IS STATE LAW SO IT APPLIES TO THE WHOLE STATE

@BM, you have no idea what you're talking about and I'll simply leave it there.

@TSBM

If you are not able to demonstrate any proof of your "evaluation" then it simply is arbitrary and capricious, and without any merit.

The state law is GOVERNMENT CODE:-TITLE 7. PLANNING AND LAND USE DIVISION: 1. PLANNING AND ZONING :CHAPTER 3. Local Planning [65100 - 65763] ( Chapter 3 repealed and added by Stats. 1965, Ch. 1880. ):

65623 (a) (1) Except as provided in paragraph (2), for a period of five years from the adoption of the specific plan pursuant to Section 65621, a local government shall approve a development that satisfies all of the criteria listed in paragraphs (3) to (7), inclusive, of subdivision (a) of Section 65621 in effect at the time the application for the development is deemed complete.

(2) If the local government finds, based upon substantial evidence in the record of the public hearing on the project, that a physical condition of the site of the development that was not known at the time the specific plan was prepared would have a specific, adverse impact upon the public health or safety, then the local government shall either: (A) approve the project subject to a condition that satisfactorily mitigates or avoids the impact, or (B) deny the project if the cost of complying with the condition renders the project unaffordable for the intended residents of low, moderate, or middle income and approval would cause more than 50 percent of the total units in the zone to be sold or rented to persons and families of above moderate income in violation of paragraph (3) of subdivision (c).
(b) As used in this subdivision, “specific, adverse impact” means a significant, quantifiable, direct, and unavoidable impact, based on objective, identified written public health or safety standards, policies, or conditions as they existed on the date the application was deemed complete.
(c) After the adoption of the zone pursuant to Section 65621, a lead agency is not required to prepare an environmental impact report or negative environmental declaration for a housing development that satisfies all of the following criteria:
(1) The development is located on land within a Workforce Housing Opportunity Zone.
(2) The development is consistent with the plan adopted pursuant to subdivision (a) of Section 65621, including the density ranges established pursuant to paragraph (4) of subdivision (a) of Section 65621. If a development is not consistent with the elements and standards in the plan, then the provisions of this section does not apply and the city or county shall consider the application as it would an application for development that is not within the zone, including the preparation of an environmental impact report or a negative declaration for the housing development.
(3) (A) AT LEAST 30 PERCENT OF THE TOTAL UNITS CONSTRUCTED OR SUBSTANTIALLY REHABILITATED IN THE ZONE WILL BE SOLD OR RENTED TO PERSONS AND FAMILIES OF MODERATE INCOME, AS DEFINED BY SECTION 50093 OF THE HEALTH AND SAFETY CODE, OR PERSONS AND FAMILIES OF MIDDLE INCOME, AS DEFINED IN SECTION 65008; AT LEAST 15 PERCENT OF THE TOTAL UNITS CONSTRUCTED OR SUBSTANTIALLY REHABILITATED IN THE ZONE WILL BE SOLD OR RENTED TO LOWER INCOME HOUSEHOLDS, AS DEFINED BY SECTION 50079.5 OF THE HEALTH AND SAFETY CODE; AND AT LEAST 5 PERCENT OF THE TOTAL UNITS CONSTRUCTED OR SUBSTANTIALLY REHABILITATED IN THE ZONE WILL BE RESTRICTED FOR A TERM OF 55 YEARS FOR VERY LOW INCOME HOUSEHOLDS, AS DEFINED BY SECTION 50105 OF THE HEALTH AND SAFETY CODE. NO MORE THAN 50 PERCENT OF THE TOTAL UNITS CONSTRUCTED OR SUBSTANTIALLY REHABILITATED IN THE ZONE SHALL BE SOLD OR RENTED TO PERSONS AND FAMILIES OF ABOVE MODERATE INCOME.”

As far as appraisals goes here is the court case I found:

In most cases, the problem with the homeowners’ claim is that the homeowners were not the appraiser’s client or intended user. The client and intended user should be identified on the appraisal report. The appraiser works for the client/intended user.

Courts have recognized that an appraiser only owes a duty to his/her client or intended user. (Bily v. Arthur Young & Co.; Nymark v. Heart Fed. Sav. & Loan Ass’n). Thus, a borrower’s or homeowner’s claim for breach of a duty against an appraiser where the borrower is not listed as the client or intended user of the appraisal report will most likely be unsuccessful.

Alternatively, the borrower sometimes claims that an appraiser made a misrepresentation to the borrower. However, in order to make this claim, the borrower must establish that the appraiser intended for the borrower to rely on the appraisal report or that the borrower belonged to a particular group or class that the appraisal report was intended to benefit (Soderberg v. McKinney; Bily v. Arthur Young & Co.). This is a difficult obstacle for borrowers to overcome and successfully sue an appraiser or his/her management company.

@BM, why can't you get it through your analytical mind that the state code you refer to only pertains to Workforce Housing Opportunity Zones (WHOZ) to be established by a municipality's General Plan AFTER (1) conducting an exhaustive inventory of available residentially zoned parcels adjacent to mass transit and employment centers, (2) conducting EIR and CEQA reviews for the entirety of the designated WHOZ Specific Plan Area within the General Plan's Housing Element, and (3) arranging financial incentives through various state programs to get the necessary funding to make any such development economically feasible? All of which will take years to accomplish!

This law is not a blanket edict for every residential development in the state, only those designated WHO Zones adopted by a municipality after going through the lengthy process of an EIR and CEQA study for the designated area within a city.

You are completely misinformed about the law and continuing to spew falsehoods is not helping anyone understand the opportunities, limits and intent of SB-540.

@BM, as a matter of course for commercial and residential appraisal, the primary analysis used to establish a value is the comparable sales approach; the most recent price paid by a ready, able and willing buyer and the price accepted by a ready, able and willing seller of comparable property. Like it or not, that is how appraisal is done worldwide. Alternatively, the replacement cost or income capitalization approach may be used to support the sales comparison approach or to determine a range of value but the comparable sales approach is the final say.

That's Appraisal 101 at your local community college.

To everyone bickering on here. Truth is that is the ROI for this property continues to be below average by limitations from the city, the landlord (investor) will find a solution. Likely sell and convert to non-apartments. Regulate all you want, but unless the state is actually paying for it, theres only so much they can control before investors say "i've had enough"

The committee made a good decision, although it will be interesting to see if the apartment complex actually follows through on their repacking project or not.

The so-called “successful businessman” [Portion removed due to disrespectful comment or offensive language] would have made more money by staying in the premium area of MV and enjoy the steep upward valuations, rather than “diversifying” into a number of sub-standard areas.

The Del Medio business is doing quite well and the so-called 1.4 million is low—their accounting is obviously designed to hide profit from the committee. Regardless, in addition to the cash flow coming out of this property, the owners will enjoy the increasing valuation down the line when they sell. Taking that into account in addition to the very conservative 1.4 mil profit should leave little sympathy for the owners.

In response to The Successful Businessman you said:

“@BM, as a matter of course for commercial and residential appraisal, the primary analysis used to establish a value is the comparable sales approach; the most recent price paid by a ready, able and willing buyer and the price accepted by a ready, able and willing seller of comparable property.”

Hardly a SCIENTIFIC measure. So you are saying that if the majority of buyers are gullable enough to overpay for a property, that is good enough to be a valid value. Isn’t that the logic that got us into the Great Reccession? Where is the process to provide both reliability and validity proof? Somebody simply is used to taking advantage of a misinformed customer. You said:

“ Like it or not, that is how appraisal is done worldwide.”

Again, just because everyobe is jumping off a cliff, does that make it a good idea? You said:

“Alternatively, the replacement cost or income capitalization approach may be used to support the sales comparison approach or to determine a range of value but the comparable sales approach is the final say.”

Only if the the replacement cost is properly documented to establish a valid accounting. Not just by making a claim and hoping that the public will buy it.

Income capitalization is a exploited approach because the formula does not actually assess value. That formula is manipulated like crazy. The formula goes like this:

“Potential gross income = $50,000”

What evidence is there to back up this value?

“– Vacancy and collection loss (10 percent of $50,000) = –$5,000”

What evidence is there to back up this value?

“Additional income = $3,000”

What evidence is there for this value?

“Effective gross income =$48,000”

What evidence is there for this value?

“Expenses

Fixed= $10,000”

What evidence is there for this value?

“Variable =$23,000”

What evidence is there to back up this value?

“Reserves =$5,000”

What evidence is there to back up this value?

“- Total expenses – $38,000

Net operating income $10,000”

So just provide so SCIENTIFIC process and evidence. This is simply just an expression of a marketing scam.

AND YOU KNOW IT.

So, no news regarding any cases filed in court?

Is there any word from Lindsay regarding the next move?

BM you really need a hobby.
The CSFRA requires the owner to receive a fair rate of return, which the owner of Del Medio Manor did not receive. When decisions are made by those who do not have experience in or understand industry standards this is what happens. If the city really wanted to have a system that worked for all involved they would have real estate professionals help to create the process and would have required some oversight of the hearing officer. 12 of her 13 decisions were remanded, that says something. The process does not work and now all landlords know that. Why would they want to put themselves though any more abuse when they could just sell and pocket 50+million?

In response to Seriously? You said:

“BM you really need a hobby.

The CSFRA requires the owner to receive a fair rate of return, which the owner of Del Medio Manor did not receive.”

Yes a fair rate of return, BUT NOT DICTATED BY THE INVESTORS. That is to be determined by the courts. The courts said in Birkenfeild this:

“We also emphasized that, in the absence of an unconstitutional and confiscatory taking, THE COURTS WERE NOT AUTHORIZED TO INTERFERE WITH THE ACTIONS OF THE LOCAL RENT BOARDS, WHICH HAD BEEN DELEGATED THE POWER TO PERFORM THIS FUNCTION OF SETTING FAIR AND REASONABLE LEVELS FOR RENT AND RATES OF RETURN: "WHILE ALL OF THE ABOVE ARE FACTORS THAT MAY BE CONSIDERED, THE EXTENT TO WHICH THEY ARE CONSIDERED IN SETTING A FAIR RENT IS WITHIN THE PROVINCE OF LOCAL GOVERNMENT, NOT THE COURTS." (Cotati, supra, 148 Cal.App.3d at p. 296, italics added, fn. omitted.) Our Supreme Court denied review.”

And:

“The Fisher court also rejected the notion that under the ordinance, the rent board lacked the specifically enumerated ability to grant rent increases for [27 Cal. App. 4th 960] inflation, so as to avoid an unconstitutional taking: "First, it is not apparent that the ordinance on its face precludes alternative means of adjusting landlords' frozen May 1980 profit amounts." (37 Cal.3d at p. 683, fn. omitted.) Then, in a footnote, the high court referred to section 12 of the ordinance as contemplating just such a result: "For example, nothing in the ordinance precludes the Board from adjusting the rate (percentage) of return on investment in order to increase a landlord's amount of profit. INDEED, THE ORDINANCE SEEMS TO CONTEMPLATE AD HOC ADJUSTMENT OF INDIVIDUAL LANDLORD[S'] RATES OF RETURN IN ORDER TO REACH THIS RESULT: SECTION 12, SUBDIVISION (C)(8), PROVIDES THAT IN MAKING INDIVIDUAL ADJUSTMENTS THE BOARD SHALL CONSIDER '[T]HE LANDLORD'S RATE OF RETURN ON INVESTMENT.' (Italics added.)" (Id. at p. 683, fn. 39, underscored italics added by this court.) fn. 4”

And :

“More recently, in Cole v. City of Oakland Residential Rent Arbitration Bd. (1992) 3 Cal. App. 4th 693, 700 [4 Cal. Rptr. 2d 593] (Cole), Division Two upheld the decision of the Oakland rent board to consider debt service costs when determining the property owners' gross income, for purposes of calculating an upward rental adjustment for rental units, despite the complaints of tenants that the rent board was thereby allowing the property owners to raise rents excessively: "In order to be constitutionally valid, rent control legislation must permit landlords to earn a ' "just and reasonable" ' rate of return on their investment [citations], I.E., ONE HIGH ENOUGH TO ENCOURAGE GOOD MANAGEMENT, REWARD EFFICIENCY, DISCOURAGE THE FLIGHT OF CAPITAL, AND ENABLE OPERATORS TO MAINTAIN THEIR CREDIT. [CITATION.] THE FACT THAT PERMISSIBLE RENT INCREASES AS TO PETITIONING TENANTS ... MAY ULTIMATELY RESULT IN A LANDLORD REALIZING A NET RETURN RATHER THAN A NEGATIVE CASH FLOW DOES NOT RENDER THE BOARD'S CONSTRUCTION OF SECTION 10.4.1 [THE REGULATION ALLOWING DEBT SERVICE COSTS TO BE CONSIDERED IN CALCULATING GROSS INCOME AND PASSED THROUGH TO TENANTS] UNREASONABLE." fn. 17”

So in effect, one’s ability to produce profit is the responsibility of the landlord or investor and not the public. The Constitution never claims that the public must subsidize the profits of private investors. In fact the California Constitution CANNOT INSURE AN INVESTORS PROFITS. You know that. You also said:

“When decisions are made by those who do not have experience in or understand industry standards this is what happens. If the city really wanted to have a system that worked for all involved they would have real estate professionals help to create the process and would have required some oversight of the hearing officer. 12 of her 13 decisions were remanded, that says something.”

In 2017/18 in the public record there were only 2 appeals regarding landlords. No others were filed afterwards. You are going to have to provide a lot more proof that the decisions made were OVERRULED. Remand only means that a further explanation is necessary to substantiate the decisions. In this case the decision was revised and approved. You are trying to mislead the Mountain View Citizens. You said:

“The process does not work and now all landlords know that. Why would they want to put themselves though any more abuse when they could just sell and pocket 50+million?”

That is their choice. But the public has the right under CSFRA to ensure that the landlords are not simply trying to force the public to pay for poor business management, or worse in this case, subsidize fees and inflated costs that are not in general acceptable accounting practices. The public has the right to inspect this, the landlords are not in a “privileged” practice of business or other practices, like an attorney, or a doctor or a member of the clergy. EVERYTHING IS PUBLIC INFORMATION

In response to hey businessman

Simply put, you can only complain about my comment?

Can't you contribute something substantial?

Typical response from those who want to "kill the messenger" since the message was aggravating

I still want to know what Del Medio is going to do.

Since Del Medio has exhausted their petition in the City of Mountain View.

Probably because "Hey Business Man" is working wherein you have ample time to pontificate.

Actually, I work for the department of defense.

I have 2 BACHELORS of SCIENCE in BUSINESS ADMINISTRATION from an accredited College of Business.

I have the same security clearance as Jared Kushner.

I am capable of doing effective time management.

And "Virtual" presence.

Finally, I remember that Lindsay claimed her property was worth $60 Million.

Now she and her advocates are claiming $50 Million.

Given the property hasn't changed at all, why the loss of value?

Oh yes, that is because those claims are not SCIENTIFIC, they are made up by practices that provide no evidence or interater relaibility or validity in their work.

Its just a MARKETING SCAM.

Simply put, you just want to claim "fake news" or try to "personally attack" those whith opposing opinions with some evidence to back them up.

Remember: Local rent control laws in California are not allowed to and do NOT regulate the initial rent charged new tenants. So when a unit turns over, landlords may raise that unit's rent to the "market" and make a mint. The City should conduct a survey regarding turnover and rent levels.

"business man" your degree and post are so annoying.

In response to Bob you said:

“"business man" your degree and post are so annoying.”

I agree, when someone questions the validity of posts with good reason, it is annoying to those who cannot provide any evidence to substantiate there comments.

It is a VALID question whether there is a SCIENTIFIC method used to determine appraisals in the state of California.

It is a VALID question whether the values of properties in California are still INFLATED due to the same practices that caused the “Great Recession”?

It is a VALID question to ask that proper auditing of bookkeeping is performed to prevent the iMPROPER USE IF INFLATED EXPENSES which are in result payments to those who request higher rents?

The fact was that Honey wanted to allow for double billing. SHE WANTS TO ALLOW INFLATED SALARIES THAT ARE PAID TO THE “EMPLOYEES” OF A BUSINESS. “Employees” WHO HAPPEN TO OWN THE BUSINESS. In effect if the owners are paid $100,000 a year from the business, THEY CANNOT USE THAT COST TO EXPLAIN HOW LITTLE THEY MAKE IN PROFIT, BECAUSE IT IS IN FACT A PROFIT IMPROPERLY CATEGORIZED IN ACCOUNTING.

Just understand that when the accounting is properly audited and these improper accounting practices get corrected, it increases the profit of the business after expenses. WHY WOULD A BUSINESS DO THIS?

It is the Standard Operating Procedure in the U.S. TO INFLATE EXPENSES AND REDUCE PROFITS TO CONTROL TAXATION ON THE BUSINESS. For example when Donald Trump claimed a multimillion dollar loss to established the privilege of paying NO FEDERAL TAXES for as much as 10 years. AND YOU WONDER WHY HE IS PERSISTENTLY BEING AUDITED FOR HIS TAXES?

YES these thoughts being expressed in a way so that the Mountain View Citizens can be informed of the way that they are cheated is VERY ANNOYING to those who perpetrate the actions.

I just read a good article that indicates the bubble is popping in the housing market, the article was published on the CNBC website.

Many other articles are in agreement.

Those who do not agree appear to be sponsored or written as opinions by those who have conflicts of financial interests.

The reality is that the market promised many benefits in investing in apartments regarding high ROI.

But the sales professionals are not professional financial managers, they are in the business of selling their property inventory.

They are free to make any claim they want. It is the responsibility of the buyer to prevent misleading information from clouding their decision making.

This story should be titled: Here come the condos!

I am not able to judge if the landlords numbers are accurate or not, but if they are close to right (if...) expect to see this place sold within a few years to a condo developer. Maybe they’ll park it and wait for the market to bump up more and put as little money into repairs until then. It’s your home, but it’s just a business to someone (not judging, just the truth, and if they can make more money somewhere else they will).

Don’t make the mistake of looking at that $1 million / year number because it’s irrelevant... I know it’s hard for some to ignore.... that landlord family probably has loans for the property and maybe ownership is split among a bunch of people. You just don’t know. What we do know is if they’re getting 2% return / year or even more, many finincal advisors would tell them to sell it and put the money in like, stocks or bonds.... why get 2% or 3% when you can many times that with a passive investment with this hassle?

The option is never to appeal to the town or do nothing at all- there are many places for them to put their money if the rate of return is below market and you don’t have to deal with the headache of the city and tenants.

It sucks to be a renter like this but you’d be dumb to think this will end well if you make them sell their investment to the highest bidder.

Is there any new regarding Del Medio filing as court action?

I got some good news regarding my apartment petition.

The landlord won in name only. He wanted at minimum adjustments to be $500 a month and only on our units.

He was directed to raise rents on ALL units and the avererage rent incresae was less than $100. a month for the petitioned units.

Mr Business Man,

So great to hear! You won! You snatched a fair rate of return away from your landlord, good for you! You are “entitled”to a cheap apartment but your landlord is not “entitled” to a decent rate of return on his investment?

Unfortunately you and many other tenants have bought into the flawed and dishonest narrative of the tenant attorneys from the East Palo Alto Law group.
-“Landlords are bad! They are all trying to hide something and why should they make money due to their sacrifice, risk, efforts and investments?”
- “Tenants should be allowed to live wherever they want, forever.” -“Because a tenant has lived in an apartment for 2 years, the landlord should have to subsidize his rent... forever or pay him to leave.”
-“I am entitled to live less than 2 miles from my workplace in the heart of Silicon Valley and it doesn’t matter that I make more than 6 figures, I should pay under market rent”.

The “pro bono” attorneys theory of “win at any cost even if it ruins the community,” is fueled by their unlimited resources granted by Mr “I got mine so screw the rest of you”, Zuckerberg. He gave $10,000,000 to these “pro bono” attorneys and the mom and pop owners will never be able to defend themselves against that machine. They will be forced to sell their naturally affordable units and so goes the gentrification of Mountain View.

Your entitlement mentality is what is wrong with this community. Lucky You! You can give a 30 day notice and be gone and those who are actually invested in the community are left with the mess.

Congratulations, so glad it has worked out for YOU!

Seriously,

Simply put, he is getting a fair rate of return.

Simply put FRR does not mean you make money.

As the California Supreme Court has stated, if investment returns are disappointing but not confiscatory, “the solution is not constitutional litigation but, as with nonregulated investments, the liquidation of the investments and the transfer of capital to more lucrative enterprises.” (Galland v. Clovis, 24 Cal. 4th 1003, 1026 (2001).)”

A Landlord cannot use tenants as a bailout as described:

In 2015, tenants’ coalitions were lobbying for rent control, and the issue was raised before the City Council. It is not credible that at the end of 2015 and the beginning of 2016 Landlord did not know about the possibility that his prospective investment could be subject to rent control. While Landlord’s position is unfortunate, fairness and justice under the CSFRA do not involve providing a safety net for landlords who have speculated and gotten themselves into trouble.

And finally, you are under the impression that the investor is doing due diligence regarding an investment into an apartment. Thie particualar person relied not in a licensed investment agent, NOR any licensed CPA regarding measuring the choice, only a real estate agent and THEIR appraiser. Simply put Caveat Emptor. No Real Estate company can or should promise any investment ROI evaluations ever. That is NOT THEIR BUSINESS.

Perhaps you should reflect on that situation. Unfortunately, hundreds of Californians have done this without having a clue regarding the consequences.

[Post removed due to poster being banned for repeated violations of terms of use]

[Post removed: responding to a banned poster]

[Post removed due to poster being banned for repeated violations of terms of use]

Another interesting observation.

If real estate agents worked with their appraisers to inflate values of properties, given the recent news, this is in fact a crime. The FBI stated so in this article (Web Link :

Mortgage Fraud

Mortgage fraud is a sub-category of FIF. It is crime characterized by some type of material misstatement, misrepresentation, or omission in relation to a mortgage loan which is then relied upon by a lender. A lie that influences a bank’s decision—about whether, for example, to approve a loan, accept a reduced payoff amount, or agree to certain repayment terms—is mortgage fraud. The FBI and other entities charged with investigating mortgage fraud, particularly in the wake of the housing market collapse, have broadened the definition to include frauds targeting distressed homeowners.

There are two distinct areas of mortgage fraud—fraud for profit and fraud for housing.

Fraud for profit: Those who commit this type of mortgage fraud are often industry insiders using their specialized knowledge or authority to commit or facilitate the fraud. Current investigations and widespread reporting indicate a high percentage of mortgage fraud involves collusion by industry insiders, such as bank officers, appraisers, mortgage brokers, attorneys, loan originators, and other professionals engaged in the industry. Fraud for profit aims not to secure housing, but rather to misuse the mortgage lending process to steal cash and equity from lenders or homeowners. The FBI prioritizes fraud for profit cases.

…

The FBI seeks to maximize its impact on the mortgage fraud and financial institution fraud as a whole thorough collaboration.

For example, the Bureau operates Financial Crimes Task Forces within several field offices throughout the country that act as force multipliers in addressing large scale financial fraud schemes. Comprised of federal, state, and local regulatory and law enforcement agencies who work together on a daily basis, these tasks forces have been an effective way to merge valuable resources of participating agencies.

The FBI also participates in both formal and ad hoc interagency working groups that address FIF and mortgage fraud matters. These task forces and working groups—comprised of federal, state, and local regulatory and law enforcement agencies nationwide, along with private industry to include bank security investigators—meet routinely to share intelligence, de-conflict cases, and initiate joint investigations.

By leveraging the skills, knowledge, and resources of various government agencies and private industry, the FBI and its partners are able to bring more perpetrators of fraud to justice.

Common Mortgage Fraud Schemes

COMMERCIAL REAL ESTATE LOANS: OWNERS OF DISTRESSED COMMERCIAL REAL ESTATE (OR THOSE ACTING ON THEIR BEHALF) OBTAIN FINANCING BY MANIPULATING THE PROPERTY’S APPRAISED VALUE. Bogus leases may be created to exaggerate the building’s profitability, thus inflating the value as determined using the ‘income method’ for property valuation. FRAUDULENT APPRAISALS TRICK LENDERS INTO EXTENDING LOANS TO THE OWNER. AS CASH FLOWS ARE LOWER THAN STATED, THE BORROWER STRUGGLES TO MAINTAIN THE PROPERTY AND REPAIRS ARE NEGLECTED. BY THE TIME THE COMMERCIAL LOANS ARE IN DEFAULT, THE LENDER IS OFTEN LEFT WITH DILAPIDATED OR DIFFICULT-TO-RENT COMMERCIAL PROPERTY. Many of the methods of committing mortgage fraud that are found in residential real estate are also present in commercial loan fraud.

THIS SEEMS TO SPECIFICALLY BE A GOOD DESCRIPTION REGARDING THE PURCHASE OF 184 CENTRE STREET.

THIS MAY BE A VERY COMMON PRACTICE IN CALIFORNIA, BUT HARDLY PROSECUTED.

In California specifically there is this (Web Link

2. Common Types of Mortgage Fraud

Mortgage transactions, in which several parties and large sums of money are involved, seem very gainful and give more opportunities for fraud. Some of them can be extremely complicated and unique. Pay attention to the following types of mortgage fraud, which are the most common:

– Property Flipping: A piece of real estate is acquired (with a falsely inflated value) and quickly resold. It is falsely inflated appraisal that makes this practice fraudulent, as “flipping” during a housing boom is not necessarily illegal.

– Inflated Appraisal: Collusion of the mortgage broker and/or loan officer with appraiser for ensuring very high appraisal value to match the buyer’s offer and complete the deal.

c) Commercial Real Estate Loan Fraud

Commercial real estate loan fraud continues to mirror fraud in the residential mortgage loan market. LAW ENFORCEMENT INVESTIGATIONS INDICATE THAT PERPETRATORS SUCH AS REAL ESTATE AGENTS, ATTORNEYS, APPRAISERS, LOAN OFFICERS, builders, developers, straw buyer investors, title companies, and others are engaged in same-day property flips; the falsification of financial documents, performance data, invoices, tax returns, and zoning letters during origination; the diversion of loan proceeds to personal use; the misrepresentation of assets and employment; THE USE OF INFLATED APPRAISALS; and money laundering.

FBI reporting indicates that some commercial real estate-driven bank failures may expose insider and accounting fraud in regional and community banks. According to FBI analysis, these frauds are emerging in addition to the residential mortgage frauds still being found in roughly half of all bank failures investigated by the FBI. EVEN MORE SOME EXECUTIVES AND LOAN OFFICERS MAY RESORT TO ISSUING FRAUDULENT LOANS, DISHONEST ACCOUNTING, OR OTHER CRIMINAL ACTIVITY TO DISGUISE THE POOR FINANCIAL CONDITIONS OF THEIR INSTITUTIONS.

The fact that the property was assessed at $1.15 Million the same year that an appraiser tried to claim it was worth $4.95 Million simply is a good indication of an inflated appraisal. Thus if the purchaser got a loan to buy the property at $4.95 Million, but it can only eventually be determined to be only say $2 Million, that is a financial crime.

Just look at the recent news regarding Mike Cohen and Donald trump.

Once again your pontification has totally missed the point. This is not all about YOU. The ones most hurt by the inability to receive a fair rate of return are not speculative investors who have owned their property for five or less years. This has nothing to do with fraudulent appraisals or misleading real estate agents. These are the mom and pop investors and long-term owners who made prudent investments 20-50 years ago and kept their rents reasonable. They worked hard, made sacrifices and took risks. They have cared for their properties and given only moderate increases periodically.

These were the “naturally low rents”. These landlords were required to roll their rents back to 2015 rates so they can not pay their 2019 expenses and the high maintenance costs of older buildings.

They will be forced to sell which is of no consequence to you until the new owner redevelops it and you lose your home. The “naturally low” rents will disappear eventually and average rents will be much higher than ever. This is hurtful to both good landlords and good tenants.

Reality is quite different than your text book quotations. They are not applicable to the situations at hand.

You can find always find a lawyer to fight for whatever they are paid to fight for but it doesn’t make it moral or ethical.

I have had several tenants tell me they know they are substantially under market and are happy to come to a fair compromise for a moderate rent increase. They know my costs have increased and don't want me to sell the building. Many of them feel it is not morally right to get something for nothing. I really appreciate it and it allows me to continue running my building efficiently. It would be nice if more tenants would feel that it is morally right to pay a fair price for what they receive instead of hiring attorneys to see how little they can get away with and how much they can stick it to their landlords.

Does this hit close to home? I hope so.

In response to Seriously? You said:

“Once again your pontification has totally missed the point. This is not all about YOU. The ones most hurt by the inability to receive a fair rate of return are not speculative investors who have owned their property for five or less years. This has nothing to do with fraudulent appraisals or misleading real estate agents. These are the mom and pop investors and long-term owners who made prudent investments 20-50 years ago and kept their rents reasonable. They worked hard, made sacrifices and took risks. They have cared for their properties and given only moderate increases periodically. “

AGAIN, a Fair Rate of Return is NOT a promised ROI. You want to make them the same, but they cannot be. Simply put, you TRY to claim that if one does not get a “promised” ROI that it is unfair. This is an unregulated investment, there are no guarantees and sufficient risk. Point of this is that you cannot claim that may point is not correct, and it is directly related to the status quo of housing in the entire state of California, unless you can prove with evidence that what I demonstrated was invalid. You said:

“These were the “naturally low rents”. These landlords were required to roll their rents back to 2015 rates so they can not pay their 2019 expenses and the high maintenance costs of older buildings. “

That was a part of the risk taken when investing in such an unregulated investment market, if those who choose without duress make bad decisions, they alone are responsible for the consequences. You cannot put the blame on anyone but the investor. You know that. You said:

“They will be forced to sell which is of no consequence to you until the new owner redevelops it and you lose your home. The “naturally low” rents will disappear eventually and average rents will be much higher than ever. This is hurtful to both good landlords and good tenants. “

There are new state laws as well as the CSFRA that requires new “Inclusionary” housing and affordability requirements, along with if new apartments are built the existing tenants are entitled to first pick and paying the existing rent they have paid. Finally, you simply underappreciate the process it takes to get approval of new development. An owner simply cannot just on their own destroy their building and put up another one without approval. Nice try to make such a false claim. You said:

“Reality is quite different than your text book quotations. They are not applicable to the situations at hand. “

My quotes are from the FBI and reputable California attorneys. The information I presented are public records and not text books. You simply find it very difficult to accept that things have been ignored regarding the laws and they in fact put all of these people I described in serious criminal danger. Perhaps because you may be one of them. You said:

“You can find always find a lawyer to fight for whatever they are paid to fight for but it doesn’t make it moral or ethical. “

Simply put, the laws can be unethical and immoral in many peoples point of view. But the law must be obeyed. Violation of law is simply that. Morals and Ethics are individually defined, but Laws are constructed and enacted because there is a Collective agreement by the representatives of the people and the approval of the executive officers. Simply put, until the laws are revised or removed, they must be adhered to, and your moral or unethical determination does not provide defense for violating them. You said:

“I have had several tenants tell me they know they are substantially under market and are happy to come to a fair compromise for a moderate rent increase. They know my costs have increased and don't want me to sell the building. Many of them feel it is not morally right to get something for nothing. I really appreciate it and it allows me to continue running my building efficiently. It would be nice if more tenants would feel that it is morally right to pay a fair price for what they receive instead of hiring attorneys to see how little they can get away with and how much they can stick it to their landlords. “

First observation, you used the past tense regarding your sentence “I have had several tenants tell me they know they are substantially under market and are happy to come to a fair compromise for a moderate rent increase.” Do you have any tenants willing to publically testify to that situation? We cannot assume that your claim is valid without sworn testimony along with you presenting any evidence to encourage the testimony to be favorable to you? Otherwise, this is just a story, a work of fiction.

The City needs more proof other than an anonymous discussion claim. Everyone knows who I am and can validate everything I have said with reputable sources. Can you?

My simple observation regarding likes.

The likes on this website are an invalid measure of any approval regarding comments made here.

It simply doesn't matter to me or anyone with any understanding of this webpage how many "likes" you get.

I have demonstrated how easy it is to manipulate the count on multiple occasions. I have made as much as 100+ likes to myself. Others are able to do the same.

The public simply has the right to their opinion, but the "likes" are not a scientific or valid measure of the publics point of view.

I know that my comments are going to cause discomfort to many people based on the content of them. They are not targeting anyone, they are discussing related aspects of the big story. But these presentations are disturbing to me and they are probably also to others. Either "PRO" or "CON".

In response to Seriously:

Seriously?

Here is a real world case of mortgage fraud by inflated appraisals:

"Beverly Hills woman convicted of mortgage fraud to be sentenced today

KPCC Wire Services | January 29, 2010

A BEVERLY HILLS REAL ESTATE APPRAISER CONVICTED IN A FAR-REACHING MORTGAGE FRAUD SCHEME IS SCHEDULED TO BE SENTENCED TODAY IN LOS ANGELES FEDERAL COURT.

A JURY FOUND LILA MARIE RIZK, 42, OF TRABUCO CANYON, GUILTY LAST AUGUST OF CRIMINAL CONSPIRACY, BANK FRAUD AND NUMEROUS COUNTS OF LOAN FRAUD IN CONNECTION WITH A SCHEME IN WHICH INFLATED MORTGAGE LOANS WERE OBTAINED FOR HOMES IN SOME OF CALIFORNIA'S MOST EXPENSIVE NEIGHBORHOODS.

Prosecutors recommended that Rizk be sentenced to almost nine years in federal prison, according to documents filed in U.S. District Court in Los Angeles.

"RIZK ABUSED HER POSITION AND BREACHED HER DUTIES AS A LICENSED REAL ESTATE APPRAISER IN THE COURSE OF THIS CRIMINAL SCHEME," PROSECUTORS WROTE. "RIZK'S INFLATED APPRAISALS ENABLED THE MASTERMINDS OF THE FRAUD SCHEME TO STEAL OVER $40 MILLION FROM FEDERAL INSURED LENDERS."

The scheme defrauded mortgage lenders by generating inflated mortgage loans on high-end homes in Beverly Hills, Bel Air, Holmby Hills, Malibu, Carmel, Mill Valley, Pebble Beach and La Jolla.

THE CONSPIRATORS IN THE SCHEME SENT FALSE DOCUMENTATION, INCLUDING BOGUS PURCHASE CONTRACTS AND APPRAISALS, TO BANKS TO DECEIVE THEM INTO UNWITTINGLY FUNDING MORTGAGE LOANS THAT WERE HUNDREDS OF THOUSANDS OF DOLLARS HIGHER THAN THE HOMES ACTUALLY COST, ACCORDING TO THE U.S. ATTORNEY'S OFFICE.

Lehman Brothers alone was deceived into funding more than 80 such inflated loans from 2000 into 2003, resulting in tens of millions of dollars in losses, according to prosecutors.

EIGHT OTHER REAL ESTATE PROFESSIONALS PREVIOUSLY PLEADED GUILTY TO FEDERAL FELONY CHARGES IN CONNECTION WITH THE SCHEME AND ARE SERVING SENTENCES RANGING FROM PROBATION TO 14 YEARS IN PRISON.

This is proof that it is not just Text book, BUT REAL.

I listened to the hearing recording.

In reality, the case presented to the RHC was very weak.

The testimony provided by Del Medio was disorganized and also the person testifying herself demonstrated no knowledge about the actual operations of the company.

The hearing completely disproved the notion that the rent increases should only apply to the units petitioned. Vega adjustments are building wide. If you want individual unit adjustments they will be capped at the HUD FMR standard of 2015.

No increases above that rate.

So this was a just decision

Mike Rose,

all you can do is "kill the messenger"

I just learned that my landlord is NOT going to appeal the latest decision by the hearing officer.

So it appears that instead of getting an $850./month rent increase, he will recieve somwhere around $100./month

I remember someone always telling me, "just wait until your rent gfoes up $1000./month.

Well, that appears to be not going to happen.