DS News

92 STATE OF AFFAIRS: WEST » March marked the fifth straight month with sales below the 400,000 level and the eighth month of declining sales on a year-over-year basis. According to the group, "e statewide sales figure represents what would be the total number of homes sold during 2014 if sales maintained the March pace throughout the year." Sales increased from February by 1.4 percent, but were down 12.3 percent from March 2013. "While the demand for housing was up from February, the market is taking a hit from lower housing affordability compared to a year ago, which led to a decline in home sales from last year," said CAR president Kevin Brown. "Moreover, concerns over tighter lending standards and increased borrowing costs are also contributing factors to the sluggish market as they both negatively impact the bottom line of homebuyers who obtain financing through mortgages." Home prices jumped upward as well, reversing a February decline to land on a 7.7 percent increase for March. March's price was 14.9 percent higher than prices from March 2013. Prices have increased on a year-over-year basis for two full years, with 21 straight months of double-digit annual gains. Housing inventory tightened in March, with the available supply of existing, single- family homes for sale slipping to four months. "While housing inventory has loosened since last year, it's still below what's considered typical in a normal market," said CAR VP and chief economist Leslie Appleton-Young. "Many of the listings continue to be priced above what the market will bear and are not moving. As such, even with improved home prices over the past year, new listings are lagging because would- be sellers who have limited options on where to move are hesitant to put their properties on the market." SoCal Home Sales Stuck at 6-Year Low Southern California home sales quick- ened slightly in March compared to February but are far below average, according to a new report issued by DataQuick. e company reported that home sales were at the lowest levels for a March in six years. A total of 17,638 new and resale houses and condos were sold in the areas of Los Angeles, Riverside, San Diego, Ventura, San Bernardino, and Orange counties that month. March's figure was up 25.7 percent from February, when approximately 14,000 homes were sold. March's home sales figures declined from March 2013 by 14.3 percent and have fallen for six consecutive months on a year-over-year basis. "Southland home-buying got off to a very slow start this year, with last month's sales coming in at the second-lowest level for a March in nearly two decades. We see multiple reasons for this: e inventory of homes for sale remains thin in many markets. Investor purchases have fallen. e jump in home prices and mortgage rates over the past year has priced some people out of the market, while other would-be buyers struggle with credit hurdles," said Andrew LePage, a DataQuick analyst. Median prices rose 15.8 percent in March from the previous year; however, last month's gain represented the lowest increase since September 2012. Gains in home prices were also relative to the overall expense of a home. "Home prices continue to rise at differ- ent rates depending on price segment. In March, the lowest-cost third of the region's housing stock saw a 21 percent year-over-year increase in the median price paid per square foot for resale houses. e annual gain was 15.9 percent for the middle third of the market and 14.3 percent for the top, most-expensive third," the report said. Foreclosure sales accounted for 6.4 percent of home sales in March, a drop from 6.7 percent in February and a 13.8 percent decline year-over-year. Foreclosure sales were the lowest they have been since early 2007. Short sales made up 7.7 percent of sales last in March, falling from 9.3 percent in Febru- ary and down 18.7 percent from the previous year. "e most active lenders to Southern California homebuyers last month were Wells Fargo with 7.1 percent of the total home purchase loan market, Bank of America with 3 percent, and IMortgage with 2.4 percent," the report found. 4 Indicted in 'Massive Bank Fraud Scheme' e office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) announced that four men—Sean Cutting, Brian Melland, Bijan Madjlessi, and David Lonich—have been indicted on federal charges of conspiracy, bank fraud, wire fraud, money laundering, false statements to a bank, false bank entries, and obstruction of justice. Cutting was the former president and CEO of TARP-recipient Sonoma Valley Bank. Melland served as an SVP and chief lending officer at the bank. Madjlessi is a real estate developer, and Lonich is an attorney for Madjlessi. According to an indictment by a federal jury, Madjlessi is alleged to have defaulted on a loan of more than $30 million relating to a real estate project known as Park Lane Villas East in Santa Rosa, California. Working with the other three, Madjlessi allegedly obtained a loan from Sonoma Valley Bank to purchase his own defaulted loan on the premise that the nominee was the actual borrower, when in fact Madjlessi and Lonich were the real borrowers. "According to the indictment, Cutting and Melland failed to disclose their knowledge of the true identities of the borrowers to Sonoma Valley Bank and took steps to authorize the loan. Madjlessi's nominee successfully obtained the loan from Sonoma Valley Bank and purchased the defaulted loan from a Federal Deposit Insurance Corporation contractor," SIGTARP said. Madjlessi and Lonich then settled litigation related to the property, obtaining the title to Park Lane Villas East. e two obtained refinancing on the property through Freddie Mac, but not before Sonoma Valley Bank failed in August 2010. e bank had received more than $8.65 million from TARP. "e two TARP bank executives, Cutting and Melland, are alleged to have skirted the bank's internal controls and defrauded Sonoma Valley Bank by authorizing the bank to lend $9.5 million to a straw purchaser so that the funds could be used by real estate developer Madjlessi to repurchase part of the same condominium project for which Madjlessi had already defaulted on a construction loan," said Christy Romero, special inspector general for TARP. She continued, "In order to help Madjlessi regain control of residential units in the proj- ect that had already been sold and to obtain financing from Freddie Mac, TARP bank CEO Cutting is alleged to have produced letters, on Sonoma Valley Bank letterhead, falsely stating that straw buyers had sufficient funds at the bank to purchase the units." All four defendants were arrested on April 9 and released on a $250,000 bond.

• Cover