Friday, September 28, 2012
7 News Investigations: Money for Nothing
It sounds like a great deal buying a property in foreclosure that is worth 10 times what you pay. But there is a problem, a problem that will wipe all your money out. And as Patrick Fraser has discovered, many people are saying they spent their Money for Nothing.
Rukiya Deetjen Ruiz: "I looked every day for about two months until I found something that I thought was good."
She got a $104,000 condo for $5,000.
Rukiya Deetjen Ruiz: "I was elated. I told my parents that same night we had a dinner at my house."
Ghassan Barjoud bought four different condos in foreclosure on the county auction site--assessed at about $400,000 total, and he only paid $50,000 for all of them.
Ghassan Barjoud: "I think I buy clear property with no lien in it."
But Ghassan and Rukiya were like other amateurs who have bought from online auctions.
Rukiya Deetjen Ruiz: "It wasn't that it was too good to be true, yeah it was too good to be true."
Patrick Fraser: "This was your life savings?"
Ghassan Barjoud: "Yeah, the whole life savings gone, gone."
The online auction shows they were buying a foreclosure but not the kind of foreclosure where a bank takes over the property and sells it to a new owner. These were condo association foreclosures commonly referred to as association liens.
Luis Valdeon: "They sell it to you so all you are paying is for the back maintenance the guy owes, so all you are buying is a lien."
Luis Valdeon owns the Miami-Dade foreclosure list. He buys bank foreclosures online and mixed into the daily auctions are association foreclosures, which he avoids with a 10 foot pole.
Luis Valdeon: "So what is an association lien worth association lien worth for me is worth nothing."
Valdeon's webpage details the difference between bank foreclosures and association liens. And on the day we were there, there were quite a few.
Luis Valdeon: "So of the six auctions going on today, five of them are no good. They are association liens. Five people are going to buy them. They are going to lose all their money and they have no idea, they have no idea."
When you buy an association lien, you can take over the property maybe for a week, maybe a month or two till the bank that holds the mortgage forecloses and throws you out that's what Rukiya was facing.
Rukiya Deetjen Ruiz: "So I literally bought a piece of paper for $5,000.
Ghassan Barjoud: "I used to have a store. Working in a store and they rob me with a gun, a machine gun. but this county rob me with no gun."
Patrick Fraser: "A great line but its not robbery. The courts order the lien foreclosures to be sold and the Clerks Office is required to auction them off. The Clerks Offices post warnings on their website. Here in Broward in big letters, buyer beware in Dade its in red letters, telling buyers to do title searches to make sure their are no mortgages or other liens. In other words, make sure you know what you are doing."
Harvey Ruvin: "In any auction situation, any real estate situation, any buyer, wither it's on line or in line has to do their due diligence."
Harvey Ruvin is clerk of the Miami-Dade courts. He says the people buying the association liens need to understand what they are doing because overall, the online auction has been an enormous success allowing his office to auction off $130,000 foreclosed homes that were draining the county.
Harvey Ruvin: "We have got to move all these cases through and get this property into the hands of people who will live in it. Pay taxes and go forward and then we will start to see the market rebound."
When the clerks office sells the liens online, they collect a small fee, but one group is making a killing, raking it in the associations and their attorneys.
Luis Valdeon: "They have found a way the attorneys, the associations. They have found a way to rip people off."
Luis Valdeon: "And I have a client who lost another $200,000."
And despite the online warnings, unsuspecting buyers keep snatching up the association liens and coming to valdeon to help get their money back.
Valdeon was able to help Barjoud get some of his money back. He was able to help Rukiya get all her money back.
Rukiya Deetjen Ruiz: "He is a God send is what he is. I don't know what he did but he was able to fix it for me."
She got lucky but as we watched the auction, another lien was sold instead of striking it rich. They struck out.
Luis Valdeon: "Right now this person just lost $16,000 and they don't know about it, and that happens every day."
They spent $16,000 on an association lien, spent their money for nothing.