Bank exec borrows foreclosed estate

[BankruptPinoy]

September 11, 2009

Another day, another story of a banking executive making a boneheaded move. And this one seems too unbelievable to be true.

A Wells Fargo honcho in charge of foreclosures decided to make herself right at home in a $12 million Malibu beach house, moving in and throwing big parties soon after it had been surrendered to her bank, the Los Angeles Times reports after talking to neighbors.

What could make this story even more outrageous? How about a dash of Bernard Madoff? The former owners of the home were victims of Madoff's Ponzi scheme. They lost a fortune in the fraud, their real estate agent told the Times.

The owners turned the house over to Wells Fargo last May, but the bank refused to show the house to potential buyers, the agent said. And then, neighbors say, the foreclosure boss moved in.

Neighbors in the gated community got a little suspicious, and began investigating this woman they say suddenly began living in the house. They got her name from community employees, who admitted to the Times that they issued her a homeowner's parking pass. They believe she is Cheronda Guyton, a Wells Fargo senior vice president responsible for foreclosed commercial properties.

The Times ran the license plate number of the Volvo parked at the 3,800-square-foot home and found it was registered to Guyton. Neighbors said that guests often visited the home where Guyton, her husband and two children lived. They said Guyton threw a huge party in August, bringing a yacht offshore and transporting guests back and forth from the beach.

Wells Fargo is remaining tight-lipped about the whole situation, saying it won't discuss specific employee issues for privacy reasons. But it promises to investigate the allegations. You can see pictures of the home here.

http://www.106malibucolony.com/

A sad and ironic story on so many levels.

Update: The Wall Street Journal has a Q&A with the real estate agent for the former owners. Not much new here, but she says the Los Angeles Times' story is accurate.

Source:
MSN Money

http://blogs.moneycentral.msn.com/topstocks/archive/2009/09/11/bank-exec-borrows-foreclosed-estate.aspx

[justbroke]

Shockingly, that actually doesn't bother me at all. I agree with the Bank that it's an internal issue. The Bank paid for the home. Only the Bank is injured by the employee's conduct. I don't in anyway link this to Madoff or any Wall Street shenanigans.

Shocking? Yes. Newsworthy? It does have some value as news. An indictment of the Financial Services Industry? Not at all.

If the person is actually a Senior Vice president and not an "Executive Vice President", then they aren't even an executive. Just about everyone on salary at a Bank, has a VP title.

This is yet another puff piece to turn on banks, I'm sorry to say. To quote the real estate agents as saying "it’s also because these poor people lost their house and then a bank employee moves in." I wonder how "poor people" is defined. I've never met any poor person who owned a $12,000,000 home. Perhaps that's "poor" for Malibu, but that turned me off when they used those words to describe someone who owned a $12,000,000 home.

[SobStory]

Well. it makes me sick. It implies that bank execs are more likely to foreclose on homes that they want to use personally.

[justbroke]

Well. it makes me sick. It implies that bank execs are more likely to foreclose on homes that they want to use personally.

This person wasn't even a Bank Exec. Bank exec's don't foreclose on homes. People not paying their bill, causes the Bank's loss mitigation department, to foreclose upon the home. This SVP at the bank happened to take advantage of an empty home that was an REO (Real-Estate owned) property. A bank can foreclose upon its collateral and use it for any purpose the bank sees fit.

What if you had personally loans the people the $12M to buy the home. They defaulted on the note. Would you let them stay there, or foreclose? And, if you foreclose, wouldn't you be entitled to use the property, since you in fact do own it?

Remember, the bank loans money. The person defaulted on the loan by not making the payments under the terms of the agreement.

Bank or individual investor... what should you expect them to do? Does foreclosing make any more sense when the collateral is immediately sold? What about the thousands of empty houses right now, that Banks own that are just sitting there? What about the $100K, $200K, $500K, $800K home? Where's the outrage at that?

This article is totally mean than to bring more disdain for banking. Strange, we hold our hands out when we want the loan for the $12M home, but when we stop paying and it's taken back... somehow that's the Bank's fault.

I'm just seeing this pretty clearly as an investor myself. Should I foreclose upon collateral that was given in a deal I did, I feel like whatever I do with it, is fine.

I just can't get all... emotional about people losing their $12,000,000 home in Malibu. I'm sorry.

Let's channel our energy to saving the guy with the moderate home that is around the median home price... in Florida or Alabama or Arkansas. Let's not worry about foreclosures in Brentwood or Malibu.

[HRx]

BP, please post these articles in the BK/Credit Forum.

Thx!

[killinstinct]

It's the utilizing your position within a company for your own personal gain that gets me. This VP, employee of wells fargo, whatever, whoever she may be owes it to the STOCKHOLDERS, the true owners of the bank and therefore the property, to handle it in a responsible manner. There is nothing responsible about this from what I see. It's just downright selfish. Were these actions in the stockholders' best interests? I highly doubt it.

If bigwigs at a police department started having parties at the residence of a convicted drug dealer whose property was 'lawfully seized', how would you feel about that? Is that different somehow?

[justbroke]

If bigwigs at a police department started having parties at the residence of a convicted drug dealer whose property was 'lawfully seized', how would you feel about that? Is that different somehow?

Yes, it is different. First, the police may seize under RICOH, but until there's a trial and it is titled to the police, it doesn't belong to the police. I am very aware of the practices of police departments and seizures. I personally know a detective who drives a convicted drug-dealer's Escalade around. He takes it home too. I never really see him without it. I think it's different because of one fact. The bank actually paid for the home and sued, in a foreclosure, to recover the collateral. The police department didn't "pay" for the home, and had no prior security interest int he property.

I will agree that this was just selfish on the part of the bank employee. How the bank chooses to deal with this issue, is up to the Bank.

Okay, so maybe it's just me that doesn't see any wrongdoing on the Bank's part. Even if the bank employee was partying in the home, that in no way changes the facts that the bank foreclosed upon the property because the former owners... were in breach, were sued, and the Bank recovered the collateral.

We may as well be outraged by Banks that foreclose upon multi-unit dwellings (like apartment complex), then turn around and collect rent from the people living in the units. Or even to allow their traveling employees to stay there free.

[killinstinct]

Interesting points! I don't necessarily disagree. This scenario just leaves a bad taste in my mouth for some reason...the lines all seem pretty grey in this area though, I'll give you that.

[justbroke]

Interesting points! I don't necessarily disagree. This scenario just leaves a bad taste in my mouth for some reason...the lines all seem pretty grey in this area though, I'll give you that.

I totally agree on this. It's a bad taste and makes it look like the Bank have gone wild. (Note to self... start video production company called Banks Gone Wild!)

I just want our outrage (the collective "our") to be directed at things that are actually... wrong. Predatory lending, I hate it. Payday Loans, I hate them. Slugs, I hate them too. What I don't get upset about... people who actually want to make a profit on something. I don't get upset that one party in a two-party transaction, defaulted and the other party sued them for breech. I don't get mad when the Walt Disney Company raises their ticket prices. (Interesting argument once with a friend who was like "Disney is all about family and children". I laughed. Disney is all about protecting its Brand, and pleasing its shareholders. Most of its products just happen to be family oriented. However, if you look deeper, Disney owns production companies that makes R rated movies with gore and nudity and language. Friends are shocked when I tell them that TouchStone Pictures, is one of their "off-brand" labels. LOL)

[killinstinct]

It can be a little fuzzy at times figuring out where responsibility lies in all this economic carnage. Seems to be a little be me, a little bit you, the predatory lenders, the leadership of the country....it's not too cut and dried.

[frogger]

I just want our outrage (the collective "our") to be directed at things that are actually... wrong. Predatory lending, I hate it. Payday Loans, I hate them. Slugs, I hate them too.

Don't forget the "title pawn" places in this mix. I saw some paperwork the other day from one of them on a $600.00 loan. Payback was almost $100.00 per month for 18 months. I ran the exact numbers and the interest rate was 155%. These people told the borrowers that they were only charging them 12%.

[justbroke]

Don't forget the "title pawn" places in this mix. I saw some paperwork the other day from one of them on a $600.00 loan. Payback was almost $100.00 per month for 18 months. I ran the exact numbers and the interest rate was 155%. These people told the borrowers that they were only charging them 12%.

Yeah, 12%... a MONTH. LOL.

[JRScott]

Hopefully the bank will realize that this employee has shafted them and terminate them.

Could be worse....could be ACORN telling folks how to set up a brothel using tax subsidies through fraud I suppose....only in three cities so far.....

[justbroke]

Could be worse....could be ACORN telling folks how to set up a brothel using tax subsidies through fraud I suppose....only in three cities so far.....

Maybe they were ACORN parties?

[kenshirley]

Nothing new here. Conversion for their benefit.
If the private community had not filed a complaint they would still be doing it.