Here’s more about our investigation.
Reader Eskimo asked for:
… a little background on how you learned about and researched the identity-renting scheme.
A source had passed along an initial list of a few dozen condos that had sold in one of the complexes last summer in the $300,000-plus price range — incredibly high for condo conversions in the middle of a tough, tough year for real estate.
We noticed several quite peculiar characteristics. Several different names showed up as the owners on these units, but nearly all listed one mailing address: 3206 Baumberg Court — or Avenue in some cases — in the Bay Area city of Hayward. We later learned it was the address for a house that served as an office for Jim McConville’s operation.
When we began looking up some of the buyers in the county property records, we noticed that some owned condos in other complexes — complexes we soon learned were also part of this series of deals. You can see, for example, that Norman Johnson owns three units in Sommerset Villas and two units in Westlake Ranch. We ran a title search for deeds that listed the Baumberg address, which helped us find more of these units, too.
In total, we were able to expand our spreadsheet to include 81 transactions with similar characteristics that took place in a total of three complexes.
All 81 transactions had one of five purchase prices: $265,000 or $310,000 in Sommerset Villas; $337,000 or $370,000 in Sommerset Woods; and $375,000 in Westlake Ranch. Those seemed quite high for Escondido and San Marcos condo conversions in the middle of 2008, three years into the housing market downturn. Checking with a few local appraisers, we learned that those prices were much, much higher recent sales prices in the same complexes.
Another thing that caught our eye was that so many of these sold so quickly. You can see in the spreadsheets we put together of some of the data we collected — all of the 34 units in Sommerset Villas, for example, had sale dates recorded between July 1 and Aug. 1 last year.
Many of these documents are public records. At the County Recorder’s Office, anyone can search public property records to find out who owns a property, how much they paid, what kind of mortgage they have, and whether they’ve received a notice of default — the first record filed to signal that a property is in foreclosure.
Those documents also told us which companies had lent mortgages on these properties, which company did the escrow and who notarized the documents. And we could also check how many had received notices of default.
From there, we tried to contact as many of the buyers as we could. Repeated interviews with six of them helped us understand the identity-renting situation that we described in Part I. And repeated interviews with two of the lenders on these transactions — responsible for 26 of the loans — yielded an account of how some of these loans got through. We also learned, from several former members of McConville’s team, some of the details about how the operation worked, from getting loan papers signed to rounding up straw buyers.
Our contact with the developers of the condos, represented by Premier Coastal Development, yielded a sampling of the condos’ closing statements — the final receipt-like document that comes out of escrow — that showed the breakdown of where the money went.