One house, three quick sales, one familiar link
Questions multiply about a loan officer who is the key thread in a home's rise in hard times.
By SUSAN TAYLOR MARTIN
Published May 6, 2007
In late 2005, Barbara and Gregory Klein agreed to sell their St. Petersburg home for $535, 000 to a man who had seen their "For Sale By Owner" sign.
But when the Kleins sat down to complete the deal, their copy of the closing statement showed a different buyer - and a sale price of $599,000. In less than a year, the house changed hands twice again, each time at a price $50, 000 higher than the previous one despite the sluggish market.
All three transactions involved Victor Clavizzao, a loan officer whose suspicious real estate deals and lengthy criminal record were the subject of a St. Petersburg Times story April 29. After the story ran, the Kleins were among several readers who contacted the paper to share their experiences with Clavizzao.
"I didn't like the way that closing went," says Barbara Klein, a preschool teacher.
Experts say the recent housing boom has been fueled in part by questionable, even illegal practices - "straw" buyers, inflated appraisals, bogus sales prices and frequent turnover or "churning" of the same property. As the boom quiets, mortgage fraud is becoming more obvious.
"In a slowing market, it starts to show itself," says Mark Scott, spokesman for HomeBanc Mortgage Corp., one of the South's biggest lenders. "All of a sudden you've got this scam that's been pushing up the value of some homes, but the rest of the market isn't reflecting that any more."
Inflated prices enable borrowers to get more money out of mortgages. But they can hurt lenders, who are left holding the bag if the borrower defaults. And they can mean higher property taxes for all homeowners in an area if assessments are based on artificially high sales prices.
"If there are enough of them, it would skew the value up and that's something we're always concerned with," says Pinellas County Property Appraiser Jim Smith. "Garbage in, garbage out."
The FBI confirmed last week that it has an ongoing mortgage fraud investigation in south Pinellas County and is looking at "several individuals." The agency would not say if it is investigating Clavizzao's activities, but on Monday it contacted at least one person mentioned in the Times story of the day before.
Though widespread, mortgage fraud can be hard to detect and even harder to prove. It can involve real estate agents, appraisers, loan officers, mortgage brokers and borrowers working in concert. And key documents like appraisals and closing statements are not part of the public record.
"You often see a lot of conspiracy with fraud, but what's difficult about these cases is it's a paper trail, " says Corey Carlisle of the Mortgage Bankers Association, which represents real estate lenders. "You have to follow the trail - where the money is going - and it can be very difficult for law enforcement."
Closing day surprise
The Kleins say Victor Clavizzao contracted to buy their house for $535, 000, but seemed to have trouble lining up the financing. At one point, he gave them what he said was a letter from Bank of America approving him for a loan.
The letter - which the bank says it didn't issue - purportedly came from a Bank of America office at 5825 W Kennedy Blvd. in Tampa. That address would put the office on the Howard Frankland Bridge.
Clavizzao did not return calls seeking comment.
When the Kleins closed on the house in December 2005, they were surprised to see Peggy Lepzinski - not Clavizzao - listed as the borrower on the settlement papers. The sales price was shown as $599, 206, with the Kleins getting their $535, 000 and much of the extra designated for "Shea and Associates" with no explanation.
Lepzinski and her husband, Mark, are Clearwater real estate investors who have been involved in other deals with Clavizzao. Shea and Associates - owned by one of the Lepzinskis' neighbors - is a construction company that has done work on many of the couple's properties.
Records show the Lepzinskis mortgaged the house for $599, 000, leaving them with tens of thousands of dollars of extra cash. Mark Lepzinski said he planned to use the money to stucco the outside of the house, which Clavizzao and his girlfriend had moved into.
But Clavizzao stopped paying the rent, and Shea and Associates never did any work on the home, Lepzinski said. He said the money went to fix up other places he and his wife owned.
Banks and mortgage companies make loans based on the appraised value of a house. That means it is critical for the appraiser to fully document the home's existing condition, as well as any proposed repairs, renovations or additions that could affect its value. Otherwise, the lender could be misled.
"An appraiser is required to have plans and specifications in the work file, and usually the lender will insist after the loan is closed that either the appraiser or a representative of the lender go out and verify the work, " said Francois Gregoire, a member of the Florida Real Estate Appraisal Board.
"Even saying a house is subject to remodeling is, in my opinion, inadequate because remodeling to one person may mean repainting the door while to another person it means something entirely different, " Gregoire said. "The appraiser's responsibility is to make sure he produces a report that is clear and not misleading."
Federal law says it is a crime to make a "material misstatement, misrepresentation or omission that is relied upon by a lender" in funding a loan. In the past few years, the appraisal board has disciplined several of Florida's 11, 100 appraisers for participating in mortgage fraud schemes. One Clearwater man gave up his license last month after admitting that he never set foot on a property he supposedly appraised.
Lepzinski said an appraisal on the Kleins' home showed it to be worth $599, 000 even though he and his wife paid $535, 000 for it. The Tampa company that did the appraisal did not return phone calls. The lender, Acoustic Home Loans of California, is no longer in business.
Price goes up, up, up
About the time he moved into the Kleins' house, Victor Clavizzao became a loan officer for McNulty First Lending in St. Petersburg. Last August, the house sold for a recorded price of $650, 000 to John Lander, an airline pilot who is also a business associate of a former McNulty partner.
Lander said he bought the house because Clavizzao was still living there but "needed some time before he could arrange for someone else to buy it." Records show Lander sold the house three months later for $700, 000 to the grandparents of Clavizzao's wife. They say Clavizzao pressured them into putting their name on the purchase documents, claiming he would lose his job if they didn't sign.
Frequent sales of the same property can be a sign of fraud, experts say.
"One of the things they do with mortgage fraud is to try to inflate the value of the property, " said Scott of HomeBanc Mortgage. "If you get appraisals that are way out of line with other things in the neighborhood, if a property is changing hands numerous times in a short period, that's a tipoff. "
HomeBanc was not the lender in any of the transactions involving the Kleins' house. But it did lend a total of $1.6-million on two Clearwater condos that were recently purchased by Anthony Clavizzao, with Victor signing for his brother under power of attorney.
A notary stamp certifies that Anthony was in Pinellas County when he signed the power of attorney form on March 20. But on that day, he was actually 180 miles away in the Jacksonville jail serving time on felony drug charges.
"We're definitely taking a look at them, " Scott said of the loans made to Anthony Clavizzao. "We have a robust mortgage fraud unit, and we do keep our eyes open for signs" of fraud.
Lenders in general are getting far better at spotting evidence of fraudulent activity, says Carlisle of the Mortgage Bankers Association. But there is enormous pressure to close loans fast, with the result that inflated appraisals, suspect closing statements and even outright forgeries sometimes slip through.
"Unfortunately," Carlisle said, "the lender is always a victim."
Susan Taylor Martin can be contacted at firstname.lastname@example.org.