Mortgage Woes Draw Scam Artists

As foreclosures become more commonplace and more homeowners worry about losing their properties, “foreclosure rescue” scams are on the rise, according to law enforcement officials.

New Jersey Attorney General Anne Milgram recently announced that lawsuits have been filed charging 37 mortgage loan providers, mortgage industry employees, lawyers and other defendants with consumer fraud and civil racketeering for a variety of predatory schemes designed to bilk worried homeowners of their money, and sometimes of their homes.

Charges have been filed in two cases of mortgage fraud in Union County, as well, according to Sergeant Vincent Cagliardi of the Union County Prosecutor’s Office.

While details of the Union County cases, including the names of the defendants, could not be released because they are still under investigation, Cagliardi explained the basic premises of the scams in order to put other area homeowners on alert.

The first case involves a “typical straw party purchase,” Cagliardi said. A person who claims to be interested in purchasing a property for an unidentified third party contacts a homeowner. The person convinces the homeowner to use his real estate agent and lawyer to “save money.”

After the title papers assigning the home to the third party are signed, the homeowner either receives a bad check or no money at all.

The second scam is more complex and has involved several dozen Union County homeowners, Cagliardi said.

A homeowner receives a packet in the mail offering to purchase his or her house for well above current market value. The packet includes a number of papers to sign along with one or more checks. The homeowner is instructed to call a phone number and provide personal information to assist the buyer in closing the sale.

When the homeowner attempts to cash the checks, he or she learns that they are not valid. In the meantime, the alleged thieves file a notice of settlement that freezes the sale of the home to any potential legitimate buyer for at least 30 days, and possibly leads to the theft of the home.

The prosecutor’s office quickly arrested the front men in this scam.

“They were coming in to the county clerk’s office and filing ten or 12 of these a day,” Cagliardi said.

It has been harder to locate the real leaders behind the scam. Cagliardi is still investigating and expects to announce arrests shortly.

There are steps homeowners can take to protect themselves from fraud, law enforcement officials say. If someone who is not a licensed real estate agent approaches you about purchasing your home, be suspicious. In addition, both the buyer and the seller should have their own attorney.

“The most important thing to remember to keep from getting scammed,” said Cagliardi, “is if someone makes you an offer that is too good to be true, it probably is.”

Local Job Market to Fair Better than Nation

HELP WANTED – Dynamite opportunity! Must be physically fit; hard hat, pick axe, earplugs and explosives supplied; free rail transportation to and from work site; those with claustrophobia need not apply.

As the national and world economies continue their tailspin, the  nation’s unemployment rate is spiking upward. U.S. employers trimmed another 240,000 jobs from their payrolls in October, pushing unemployment to 6.5 percent, its highest level since March 1994.

For workers willing to travel west or south and go deep underground, mining remains the only sector expected to increase staffing levels for the upcoming quarter, according to Manpower Inc., a leading employment services firm.

In every other sector, jobs may be scarcer than gold nuggets.

Reports show that every region of the country is affected, as is every job sector. In durable and non-durable goods manufacturing; transportation/public utilities; wholesale/ retail trade; and finance/insurance/real estate and services, employers all expected decreased hiring activity during the current quarter, according to the most recent Manpower, Inc. quarterly survey of 14,000 employers in 460 cities nationwide.

Employers in the construction, education and public administration sectors indicated stable hiring conditions.

More than 1.2 million jobs have disappeared already this year, according to the U.S. Labor Department. It is expected to get worse; some analysts are predicting unemployment rates as high as 8 percent in 2009, even double-digit if the auto manufacturing industry implodes.

Union County, and the rest of New Jersey, will not be immune, experts say, but there are areas that will not be as hard hit.

“Manufacturing will have its ups and downs,” said Kenneth DeGraw, partner with WithumSmith+Brown, who represents 200 clients in Union County. “The automakers are getting whacked at the moment, so anything connected with that will be hurt.

“(But) there are a lot of chemical and petrochemical industries in Union County, and with our dependency on energy, I don’t see any of those jobs going away. I don’t see that taking too big a hit.”

Michael Affuso, vice president and director of governmental affairs for the New Jersey Bankers Association, said the state’s banks, particularly the smaller community banks, are in good shape. It is the larger banks and other financial institutions on Wall Street where he expects trouble and an ensuing domino effect that may impact New Jersey.

“You hear anecdotally of layoffs occurring on Wall Street,” Affuso said. “In New Jersey there are significant back office operations (associated with these companies), so I think it would be reasonable to say that we would not be immune from layoffs.”

Affuso also said the combination of larger financial firms, such as Bank of America buying Merrill Lynch, likely will contribute to the pressure to layoff employees, noting overlapping functions.

“As for smaller community banks in New Jersey, it’s business as usual,” he said. “They didn’t get involved in the more exotic loan products and markets. They’re actually going to be able to increase their market share as people look for more safety.”

Laying off employees is a difficult step for businesses, according to DeGraw.

“The last thing employers cut is people,” he said. “From working with my clients I can tell you that they never want to do it. They want to hang on to their people as long as possible. Nobody wants to deliver that news.”

However, some companies may be left with no other choice, DeGraw added.

“Payroll is the single largest cost,” he said. “Once you get past the manpower all that’s left is paper and pencils. You can try using both sides of the copy paper for just so long.”

Like the rest of New Jersey, Union County is dominated by service industries like Federal Express, one of the largest employers in the county with 2,500 workers at the FedEx hub at Newark Liberty International Airport.

FedEx blames record high fuel prices and a sluggish global economy for a 22 percent drop in net income in the company’s first quarter, which concluded Aug. 31, from $494 million last year to $384 million this year.

FedEx spokesman Jim McCloskey declined to address the possibility of layoffs at the Newark Hub, but emphasized the importance of the operation and its employees in the Northeast region.

“Obviously, the economy is soft,” he said. “However we have a strong and robust presence in that market. Even in this sluggish economy we are providing a service that is in demand to help our customers get goods from one point to another.  Certainly that activity will continue.”

Don’t be nervous - It’s time we  had “the talk.” I feel our relationship has reached that point where you can handle it. I want to share the secret of business development success. Ready? “Adapt your customer marketing to the customer.”

Hit the moving target - I know this sounds obvious, as you sit there wishing you had said that. Truth is, with all the change we see today, this is more difficult than it sounds. The customer has become a moving target. They learn, listen, connect and buy through a whole new set of tools that vary by: product, customer, timing and all the variables that drive the customer at the moment.

It’s worth a shot - The answer is to build a flexible marketing program based both on the variables where the customer is now and where the customer will be tomorrow.

Like a hunter leading his shot to where the game is flying, here are some suggestions where to aim:

Start with the relationship - We all pay attention to relationships we think are already important. Use your marketing tools to build real dialogue and experience. When done right, your marketing and communications will allow your customers to tell you what they want, need and how they want to be sold.

Move from shiny to smart - They say you can tell the difference between a man and a boy by the price of the toy (ask my wife). Despite my male attitude, in the end, I buy function over form. Recently, I became the credit card company’s new best friend when I bought new office equipment. State-of-the-art got my attention but relevant answers got the credit card out of the wallet. Make sure your marketing message addresses the need you discover through your dialogue.

Talk when they want to hear - Have you ever noticed how many car commercials there are when you are looking for a car? Be ready when the customer’s radar goes on. Adapt your marketing timing and message to the moments that bring the radar up now.

Communicate through the mediums of their choice - Each customer is at the center of his own community of people, media and information sources. More than multi-taskers, we are also multi-sourcers. We choose our information sources and input from a unique mix that varies for each individual across mass media, the web, personal conversations, and the buzz at the local store. Mix and match the channels that reflect where your prospect is and where they will be listening.

Build a story - The sale is never about a single roll of the dice. Maximizing the number and alignment of all the touchpoints (connections) that form your customer relationship makes business happen. Create a flow of successive messages across all your sales tools and communications to form a single powerful story.

It’s do or die - Bottom line: Forget all the latest marketing gizmos. Choose a custom blend of marketing for each customer and stage of relationship. I’m glad we had this chance to talk. Don’t make me have to do it again.

Yet it need not come to that. Increasingly homeowners unable to make mortgage payments and locked in a home worth less than they owe are turning to the new trend of short-selling.

“If a foreclosure is a car wreck where you total your car, short-selling is a fender bender,” said Jonathan Steingraber, foreclosure division manager of Striker Realty in Linden.

According to the legal dictionary Nolopedia, short-selling is, “A sale of a house in which the proceeds fall short of what the owner still owes on the mortgage. Many lenders will agree to accept the proceeds of a short sale and forgive the rest of what is owed on the mortgage when the owner cannot make the mortgage payments…(avoiding) a lengthy and costly foreclosure.”

Foreclosure is a nasty word for banks and mortgage lenders, as well, according to Randy Zimnoch, also foreclosure division manager of Striker Realty.

“Banks are in the business of lending money, not owning property,” he said.

Zimnoch notes that a foreclosure costs a bank on average $40,000 to $60,000 and brings the added responsibilities of possession of the property, including maintenance; potential vandalism; taxes, insurance and utilities; and the cost of selling the property.

According to RealtyTrac, foreclosure filings were reported on more than 300,000 U.S. properties in August, a 12 percent increase from the previous month. One in every 416 U.S. households received a foreclosure filing during the month, the firm reported.

“Banks want to work with people,” Zimnoch said. “They are overwhelmed and are ripe to be helped to find a solution.”

Striker Realty provides that solution.

A homeowner typically contacts Striker because they are behind in their mortgage payments, know their home is worth less than they owe or for some other reason must sell the house due to hardship. But a standard sale will not yield enough money to pay off the debt.

Striker represents the homeowner throughout the entire process, including initiating contact with the bank. Steingraber and Zimnoch – who are fluent in Spanish and Polish, respectively – work directly with the bank-appointed appraiser, who sets the fair market value on which the bank will make its decision, help locate a buyer and handle all the paperwork. They also negotiate a final agreement with the bank and any secondary lienholder.

Most importantly, Striker works to ensure release of the deficiency judgment, or the unpaid balance of the mortgage, so the homeowner can walk away and restart his or her life.

The process can be complete in just three-to-nine months and allows someone to return their credit to good standing in 12-18 months. It also is an option with which most real estate agents are not familiar, Steingraber added.

“We are here to educate people,” he said. “We want them to know what their options and solutions are. That’s the first step toward starting over.”

Inside Views

The Sky is NOT Falling

Governance.

When the campaign rhetoric ends and the attack ads silence…when the polls become moot and pundits mute…when the votes are cast and tallied…it all comes down to governance.

Whether as a rebuke of eight years of Republican dominance in Washington or a kneejerk punishment of the party in the White House during an economic crisis, voters across the nation opted to give someone else a try at running the nation. In addition to the presidency, Democrats picked up at least eight seats in the Senate and 20 in the House.

Yet the results could have been worse for the Republican Party. While Obama defeated John McCain in nearly every voter category, more than 46 percent of Americans casting their ballots did so for the Senator from Arizona.

In the end, no one walked away with a mandate from America to implement sweeping changes at will. The only thing Americans seemed to agree upon on November 5 was that they were glad it was over and that they want the folks in Washington to work together to make things better.

So now it is time to move forward…with the governance of the nation.

Obama took a somber approach in accepting victory. There was no dancing on the stage and saxophone playing as with the Clinton victory in 1992. We did not hear the belligerence of Newt Gingrich tossing the gauntlet and declaring the Republican Revolution in 1994, followed by Tom Delay’s announcement shortly thereafter that “It’s time for all-out war.” There was no “bring ‘em on” bravado in Obama’s speech.

In addressing the nation election night, Obama used words such as humility and affection and acknowledged that 57 million Americans did not vote for him. He quoted Abraham Lincoln about mending strained relations. He invoked memories of Jack Kennedy when speaking of a responsibility to look after one another as well as ourselves and he sounded not unlike Martin Luther King in saying, simply, “Yes we can.”

Obama even echoed Ronald Reagan as he asked Americans to summon a new spirit of patriotism and reminded them how great a nation is the United States.

He told us, “This is our time, to put our people back to work and open doors of opportunity for our kids; to restore prosperity and promote the cause of peace; to reclaim the American dream and reaffirm that fundamental truth that, out of many, we are one.”

So now it is time to do just that. It is time for Obama – and Lautenberg and Lance,

Democrat and Republican and Independent – to govern. To put aside partisan politics and take the nation in the right direction, regardless of the impact on their party or political careers.

There will be roadblocks. If he holds true to his promise of being the president of those who voted nay to him as well as those who voted yea, Obama may find as many battles with Capital Hill Democrats as he will with Republicans.

Maybe that’s fine. Maybe that’s how we will know it is not the same old circus with a new cast of clowns.

Because this is no laughing matter.

Government reports for October show that the U.S. economy lost another 240,000 jobs last month, bringing the year’s total job loss to 1.2 million. Unemployment rose to 6.5 percent. Wall Street and the international financial markets remain in chaos, General Motors reported a $3.0 billion loss for the third quarter and claims to be running out of money, and the real estate market remains an albatross around the neck of the nation’s economy.

As basketball player Michael Ray Richardson once said about his dismal Knicks team, “The ship be sinking.”

Ironically, when asked how far the ship could sink, Richardson answered, “The sky’s the limit.”

It will take sound governance to right the good ship America, with all hands on board pulling in the same direction. It will take insightful leadership, but perhaps more so it will take non-partisan cooperation.

As Dwight Eisenhower said, “You do not lead by hitting people over the head.”

On January 20 the chief justice of the United States will swear in a new president. Let us hope what follows is the blessing of a new period of cooperation and progress and not the curse of a return to partisan politics.

The 2008 election was historic on many levels. Barack Obama was elected as the first African American ever to the presidency of the United States. And for the first time in over a decade, the Democratic Party will control both the legislative and executive branches of our federal government as the majority party in both the House and Senate – with President-elect Obama in the White House.

With single-party control in Washington, we can certainly expect that there will be many changes on the horizon for our nation, for taxpayers and especially for small business owners all across the country.

Small businessmen and women right here in Union County are no doubt asking themselves, what will President-elect Obama’s presidency mean to me, to my family and to my business?

How will the President-elect’s call for change impact our company, our employees and our ability to continue to grow competitively? Will we pay more in taxes? Will we be better off?

While there are no specific legislative proposals before the Congress right now, the President-elect made many promises on the campaign trail that could impact small businesses across our country. Specifically, President-elect Obama proposed the following:

    • Employment – Called for a plan that would give a $3,000 tax credit to businesses for every new job they created, and proposed tying the minimum wage to inflation.

   • Taxes – Called for increasing taxes on all Americans who make more than $250,000 a year; this would include many of America’s small business owners who make more than $250,000 a year.

   • Health Care – Called for a health care plan that would punish employers with a fine if they failed to purchase health insurance for all of their employees.

   • Unionization – Supported the card check proposal that would make it easier for employees to unionize.

   • Immigration – Proposed requiring employers, like small businessmen and women, to serve as the verifier of their employees’ citizenship status.

These are all very big and important issues that the new president has pledged to address. It is my hope that when the new Congress and President-elect are sworn into office in January, elected officials of both parties – regardless of promises made on the campaign trail –will work together cooperatively on policies that reward small businesses as the job creators of our communities.

That would include working together to help get our economy on track with an economic plan that would lower taxes for all Americans – including our small businessmen and women who will no doubt play a key role in helping strengthen our economy.

Downturn or recession? Regardless of which descriptor one chooses, one thing is certain: the current state of the economy will lead to major changes in both the levels and types of consumer spending in the United States. And such changes will have a fundamental effect – especially since consumer spending in the United States is now a whopping 70 percent of gross domestic product (GDP).

Because of the sharp decline in housing prices, consumers’ wealth levels have fallen drastically. Combined with the tightening of consumer credit and unemployment, this means overall consumer spending will fall sharply. This decline will be particularly severe in the consumer durable goods market as consumers postpone or even forgo purchases of expensive durables.

In the supermarket, consumers are likely to switch from national brands to cheaper store brands. Consequently, major national brands could lose market share. And these losses could be permanent as consumers discover that many store brands offer high quality at prices that are lower than those charged by national brands.

Firms are likely to rely more heavily on coupons to stimulate sales; in addition, consumers are likely to spend more time searching for coupons. The net result is that prices are likely to fall. In addition, consumers may expect coupons to be part of “normal” pricing. This will make it harder for firms to increase prices later when the economy rebounds.

How will consumer spending across product categories change? Historically, certain industries have been “recession proof.” For example, the alcoholic beverage industry has been stable even when the economy is in a downturn. The entertainment industry has also been immune to business cycles. In the Great Depression, for example, the movie industry did well, even though unemployment was rampant. These patterns are likely to continue as in the past.

Given the rapid proliferation of new industries in the last decade or so, interesting new patterns of consumer behavior are likely to emerge. For example, in a good economy, the vacation and videogame industries do not compete with each other. This is unlikely to be true given current economic conditions. Consumers may have no option but to forgo vacations. To compensate for this loss, consumers may decide to reward themselves with a small, affordable gain such as the purchase of a videogame.

The patterns of competition within an industry are also likely to change dramatically.

Consider the chocolate industry. Since many consumers may be unable to afford the expensive items that they would purchase in good times, they may reward themselves with the purchase of a premium-brand chocolate. Thus, paradoxically, an expensive premium brand may gain even if the product category as a whole does not.

An interesting question is whether or not consumers will engage in more “one-stop shopping” and how this effect will vary across industries. Consider the mass merchandise market. Because of the high prices of gasoline in the recent past, more consumers are finding it cost-efficient to purchase groceries and other items from the same store. Consequently, mass merchandisers such as Wal-Mart have been able to capitalize on this shift in consumer behavior.

However, is this shift a short-run or long-run phenomenon? Also, will this one-stop shopping strategy work in other industries, especially those that sell high-priced durables? The answer is less clear.

On one hand, in tough economic times consumers are more likely to search for the best price for a product. (The Internet makes this easy.) On the other hand, consumers are likely to be more bargain-conscious. Thus, a firm that sells bundles of durables at attractive prices may succeed by using the one-stop shopping model.

In summary, the current economic conditions are likely to lead to major changes in both the levels and types of consumer spending. Traditional definitions of industries  are likely to break down. In addition, various forms of “irrational” behavior may become more prevalent as consumers adjust to difficult economic circumstances.

Sharan Jagpal is professor of marketing at Rutgers Business School and president of Strategic Management & Management Consultants. His most recent multidisciplinary book is “Fusion for Profit: How Marketing and Finance Can Work Together to Create Value” (Oxford University Press 2008).

In 2007 Trinitas admitted more than 17,000 patients, treated more than 60,000 emergencies and provided more than 300,000 outpatient treatments. In addition to its 531 beds in Elizabeth, Trinitas has a healthcare presence throughout the state with nearly 100 locations. With a staff of more than 2,400 employees and a medical staff of close to 500 physicians, Trinitas Regional Medical Center is one of the largest employers in central New Jersey.

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Capital One Bank recently announced that its middle-market/ corporate banking groups for New York and New Jersey will be consolidated under the leadership of Douglas Kennedy, who has headed this function for New Jersey since June 2004.

Kennedy is responsible for the bank’s middle-market business in New York and New Jersey. He joined the banking business of Capital One in 2007 with the acquisition of North Fork Bank. Kennedy earned a bachelor’s degree in economics and a master’s degree in business from Sacred Heart University in Fairfield, CT.

Schering-Plough Corporation employees (left-to-right) Priscilla Gregory, Sherry Winckler and Renanda Woodford, assembling meals for Mobile Meals of Westfield, were among more than 1,000 employees from company sites across the United States who volunteered for local charities as part of Schering-Plough’s annual Community Projects Day.

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The Irish Business Association recently welcomed Cormac McDonnell of IDA Ireland (Industrial Development Agency), who spoke about the role played by the multinational sector in contributing to Ireland’s transformation from being one of the poorest economies in Europe to now being the second richest, and the steps Ireland is IBA President Patrick Sheridan (left) and Program Director Rob Connolly (right) welcome Cormac McDonnell and Niamh Casey of IDA Ireland to the group’s October meeting. taking to maintain that position in spite of greatly increased global competition for multinational investment. McDonnell also discussed the impact the current crisis in the world’s financial markets is having on Ireland and its economy.