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"Chindian lemming"

That will be my favorite new phrase.

astrid Says:
“Chindian lemming”
That will be my favorite new phrase.

Glad to be of service. I originally had written "Chindian desperadinks", but figured that didn't quite fit the bill since these are usually DI2K's, not DINK's.

SP

Thanks to whomever put the picture at the top of the post (Harm?)

I mentioned this article to my mom today and she said to send it over. Progress? I think my dad is actually the stubborn one. It's the car salesman in him, he's always convinced he can make the sale.

As an Indian, the phrase "Chindian lemming" makes me chuckle (as well as a little bit sad.)

It pays to remember, though, that Chindians are no stupider than the rest. It is just that (a) there are more DINKs in there who are Chindians and (b) being foreigners, they have no historical perspective of how much houses used to cost.

The ridiculous obsession with school districts don't help either.

I don't know about Indians, but Mainland Chinese are now paying something like 40X annual wage for 800 sq. ft Shanghai apartments. By that measure, BA is absurdly cheap.

sriramgopalan said:
As an Indian ... that Chindians are no stupider than the rest.

Didn't mean to imply stupidity - just that based on what I see in my limited circle, they seem to be extremely focused on school-district and prone to a high degree of peer-pressure when it comes to houses.

An extreme case is an indian couple I know who stopped attending parties because they were too embarrassed to host parties back at their apartment. They only got back to socializing after they bought a McMansion that they too could show off.

SP

SP, no offense taken.

There are different kinds of stupidities and "house stupidity" is one of them. Most Chindians I know are house stupid.

@SQT,

You're welcome :-).

Regarding : Chindian lemmings and Garden Gate area of Cupertino

Another nice phrase, SP.

I also find it very funny that Cupertino has "areas". It's such a small town. San Jose or San Francisco having areas/districts/whatever is fine. But Cupertino ?

This is not against what SP wrote, people actually refer them as such. Not surprisingly, these areas take their name from the neighborhood schools. Garden Gate, Monta Vista etc. Do you need any more proof of school fetish ?

Not much dislodges "mental accounting", thus the concept itself. Mental accounting is the primary reason for down price-stickiness in residential real estate. Real estate is already sticky enough being a very imperfect market with high transaction costs and lots of imperfect information. But add to that the sellers' psychology and it's no wonder that down price markets become terrible, fragmented messes.

The standard general techniques for dealing with mental accounting go something like this:

Given: People perceive losses as 2x worse than equivalent gains. Therefore they will engage in "irrational" behaviors that they perceive as removing losses, even if at too much real cost. (People overbuy insurance, for example).

Therefore: If you can break up big losses into a series of small losses, people will perceive less total loss, even if the aggregate is exactly the same (6 easy payments of $29.99).

If possible: Turn perceived losses into perceived gains. (It's not that you're spending money for life insurance, it's that you're ensuring the safety of your family).

Create scarcity: Act now or else you'll miss your opportunity. This might be hard, but just put the buy now or be priced out argument in reverse -- but be careful not to appeal to fear, which won't work for sellers like it does for buyers. Instead put it more like the window of opportunity to reap top-of-the-market prices is closing.

Link the action to more than 2X more gains than will be "lost". Talk in terms of all those gains, minimizing the loss. Appeal to the "price" of qualitative factors (don't really price it, just talk in touchy feely terms of "priceless" and "invaluable").

All this said, it probably won't work. Sellers have an almost insurmountable nominal-price-tag effect working to create the illusion of losses. They've already booked the gains in their head from a price a year or two ago a neighbor got. Now they simply won't take anything much below that price, not for no reason not for nobody. It just hurts too much. Remember, they "feel" a $100K price reduction like it costs them over $200K, even if the original price was fanciful.

Oh yea, that's because of "anchoring". It doesn't matter how much bullshit the original asking price is, it creates a very powerful anchor. And sellers always get to set the anchor, and they usually anchor high. All buyers can do is counter with an equally offset mythically low anchor. Ask me how well that works.

--

And to this point, here in Marin tons of stuff we've been anxiously waiting out -- much of it approaching 100+ DOM, much of that really close to a year on market with a couple relists -- is being simply pulled. The agents have all sung the same recital: "we think you're price is a bit low, but not too low to at least consider and negotiate from, but the sellers just don't believe it. They think something is going on and they'll get their price in 6 months or so. And they will just live there another couple years until they do, if necessary".

Mental accounting sucks.

SQT: This is a no-win situation. All it takes is for one neighbor to sell later at a higher price, and your parents will forever think that you cost them tens of thousands of dollars. They need to draw their own conclusions. You should not attempt to be their source of facts; you should be asking specific questions that they should ask their realtor. Otherwise your best case is that they lower the price thanks to your advice, but then eternally believe that the house sold quickly just because it was undervalued.

Suggest to your parents that they go to some open houses of similar homes. Tell them to look at the staging, the updating and so forth. Heck, they might even ask their realtor to just take them on a fact-finding tour. Then they can look at the DOM of the comps. They can do a square footage cost analysis, then factor in the updating and adjustments.

When one becomes overly identified with the goal of home ownership and ones logical, intelligent reasoning runs into the owner(s) subjective yet collective emotionality there is nothing to be done, for now.

Paraphrasing from Hesse’s Siddhartha: I can think, I can wait, I can rent

StuckInBA Says:
Regarding : Garden Gate area of Cupertino - I also find it very funny that Cupertino has “areas”.

You're right, the 'areas' generally map to schools. The Miller-Lynbrook area, Garden Gate area and the 'Bubb Area' (aka Lincoln-Kennedy-MontaVista), and so on.

That said, there were two reasons I restricted my post to that area - one is that the homes values are generally comparable and in the same 'band'. Secondly, the sheer number of 'upside-down' sales (relative to Zestimates) precludes me from covering all of the Fortress in one post.

If you run the same query in Zillow, you will find the same pattern across the board. Looks like nearly _every_ recent sale in the last three months has been below Zestimates. I remember last year nearly every sale was above the Zestimate. It sounds like a very telling indicator to me.

SP

Brand

You're right, it is a no win. The worst part though, is if they don't sell soon I think bankruptcy or foreclosure is a fairly sure bet.

SQT,

A few threads ago astrid (I think) had asked a similar question. The consensus was similar. Giving advice to sell (or to not buy) will not help your relations no matter what - whether you are right or wrong. In your case, the situation is trickier. So forwarding an article seems like a good start.

Nestle's Brabeck says food prices set for 'long-lasting' inflation.

http://tinyurl.com/3ac2mp

Thank God, we don't consider "food" a part of "core" needs. These Europeans need to learn a thing or two from us. They still live in a financial stone age - like increasing interest rates and such stuff to combat inflation. How backward !

The SF Chronicle has an article about Rex, a company that will buy a "share" of you homes future appreciation (or depreciation). Seems they have added a 5 year "hold" window to prevent "flipper arbitrage" (sorry Randy). The reason I am writing, though, is because it contains this priceless quote from Chris Thornberg, who seems to be getting a bit surly these days.
"Most people are over-invested in their home," said Christopher Thornberg, principal at Beacon Economics in Los Angeles. Selling "an equity stake in your home makes sense to me. Taking money out of your house and putting it in some other type of investment like stocks or bonds basically reduces the overall risk of your portfolio."

Thornberg said he wondered why Rex is starting now "considering that equity will go nowhere but down."

Nothing to worry about though, another expert theorizes they could package this investment as a security to be foisted on the general public, just like what is done with mortgages -- nifty.

Prince Prospero, a Mr. Zest is here to see you in the purple room.

My SoCal sister has been looking at a preconstruction purchase in a new development near Eugene and we discussed it last month - my suggestion being she 'keep her powder dry' as the Cali bust was in progress and still had a ways to go. I did tell her, however, it wouldn't surprise or upset me to learn she'd liked the deal and decided to purchase.

Just spoke with her last night and learned she gave it a pass. The dealbreaker? No direct flights from San Diego. Essentially, I get credit for caring while having no effect whatever on basis of her decision.

Oy geev opp.

The sort of good news on that front is that my friend is no longer planning to move to Palo Alto. The bad news is that she still wants to buy a house on an in-house counsel's salary and WHILE paying $30,000/yr tuition for each of her two kids.

She must be planning a move into BigLaw soon.

My sister-in-law (SIL) is a realtor in MA and told me she sold her house at a picnic on the 4th. I was impressed at first - she said she got full asking in this market.
Well, she didn't really sell it; she has a P&S contingent on the potential buyers selling their home for full asking, because they need every penny in "equity" for the down payment on the upgrade. Meanwhile, SIL has a P&S on another house, contingent on her house selling.
The house she wants is empty and the sellers installed a college dropout friend to "watch" the place while it's unoccupied (!). The P&S has been extended on both ends twice at 45 days each.
The situation reminds me of one of those slapstick action sequences where each character has a gun to another's head. Who'll twitch first?
[At the end of the conversation about "selling" her house, she did ask me when I was going to "stop throwing my money away on rent" and "let her find me a house". Ah jeez!]

talking about messanger. here's a bad one.

i talked my friend out of buying a house in bay area in 2000. i thought it was too expensive then. couple of my friends had bought a house and paid twice the amount for what the sellers bought it for. the house has appreciated over 150-200k.

fast forward : 2006 market : trying to convince another friend to wait another year or two to get better deals, ignores my advice and buys in sunnyvale for close to 1M. now he says his house is appreciated more than 100K.

both cases my calculation leads me to believe they actually didn't make( wouldn't have made) much profit and are paying huge amount of interest and taxes/insurance.

one feels bad he took my advice, other feels good he ignored me.

the only talk i do now a days is to tell people that house prices can go down. never tell when to buy or when not to buy. after all you are not a fool if you have one behind you.

astrid Says:
I don’t know about Indians, but Mainland Chinese are now paying something like 40X annual wage for 800 sq. ft Shanghai apartments. By that measure, BA is absurdly cheap.

An Indian guy at work said he recently bought an _apartment_ in India for more than 300K USD, which makes it sound equally expensive. I have no idea what wages are like over there, but since all this offshoring is supposed to be for lower-wage engineers, it logically follows that wages are lower there than here. So, it looks like housing is a bit out of whack there too.

SP

EBGuy

Two showstoppers for REX in my opinion. I looked into them (for the 3rd time) again about 2 months ago or so.

1. Their ceilings are too low to really help much with Bay Area prices. Seems they're targeting the bottom of the BA market, and the median of the wider Western RE markets. I know they do business in most major states, so they may cover places like the Midwest well at price. But where $1.00mm is *below median* (ie. Marin), their offering doesn't add enough value to justify a structured purchase.

What I toyed with was the notion of buying in a 50% or less ownership, therefore "reverse levering" losses on premiums.

2. The holding period. 3 years would be better. That would have allowed (1) to work. I was imagining buying something close to $2mm, with them taking well over $1mm of that, eating the losses, then buying them out at 3+ years at a discount.

3. What happens if they go kaploohey. In passing I asked my RE attorney what could happen and he basically said "anything". It's really untested how rights would flow in the case they went belly up, and one could end up with some hedge fund holding a residual claim on your title. In the worst case, they could have some kind of callable rights and a financial incentive to try to force foreclosure. It's also a bit likely the courts wouldn't favor you much being they'd look at you like a sophisticated investor for having used the Rex service in the first place, and the legislature wouldn't have an incentive to protect you since you'd be in a tiny minuscule minority of distressed home owners.

Just my 0.02USD nominal.

i talked my friend out of buying a house in bay area in 2000. i thought it was too expensive then.\

This story smells a tad fishy to me. 2000 would have been a fantastically good entry point, as CA prices have roughly tripled since. PITI would have been at or below equivalent monthly rents at that time.

I have no idea what wages are like over there, but since all this offshoring is supposed to be for lower-wage engineers, it logically follows that wages are lower there than here. So, it looks like housing is a bit out of whack there too.

SP,

This WSJ article (login needed) is relevant to your point:

http://online.wsj.com/article/SB118342455118256110-search.html?KEYWORDS=salary+india&COLLECTION=wsjie/6month

It only means more "Chindian Sheeple" looking for homes in the "Fortress"!!
__________________________

Some in Silicon Valley Begin to Sour on India

A Few Bring Jobs Back As Pay of Top Engineers In Bangalore Skyrockets
By PUI-WING TAM and JACKIE RANGE
July 3, 2007; Page A1

Silicon Valley has helped power India's outsourcing boom by shifting technology jobs to that country. Three months ago, Munjal Shah reversed a bit of that shift.

Mr. Shah, who leads a California start-up called Riya Inc., had opened an office in India's technology capital of Bangalore in 2005, hiring about 20 skilled software developers. The lure was the wage level: just a quarter of what experienced Silicon Valley computer engineers make.

Then Indian salaries soared. Last year, Mr. Shah paid his engineers in India about half of Silicon Valley levels. By early this year, it was 75%. "Taking into account the time difference with India," he says, "we weren't saving any money by being there anymore." In April, Mr. Shah shut down the Bangalore office and offered half of its engineers a chance to move to San Mateo, Calif., with work visas.

Across Silicon Valley, some technology companies, particularly start-up and midsize ones, are beginning to turn away from India for low-cost labor to do sophisticated tech work.

This story smells a tad fishy to me. 2000 would have been a fantastically good entry point, as CA prices have roughly tripled since. PITI would have been at or below equivalent monthly rents at that time.
Uhhh.... HARM. Our fearless leader gave up house hunting in Berkeley in 2000 and eventually took his pine table to Palo Alto. Also, prices have about doubled since that time period. Winter of 1999/2000 was brutal. Normal off season low inventory with hordes of swarming buyers. Things definitely seemed overpriced, especially when the dotcoms crashed in 2000.

i talked my friend out of buying a house in bay area in 2000. i thought it was too expensive then.\

This story smells a tad fishy to me. 2000 would have been a fantastically good entry point, as CA prices have roughly tripled since. PITI would have been at or below equivalent monthly rents at that time.

my friend bought a house for 550k from a seller who had bought it 2 years before selling (1998) for 270K. if that doesn't look expensive, i don't tknow what is. like i said, you are not a fool if another one is behind you. the difficult part is to know if one is behind you. it's very obvious now but wasn't in 2000.

@RandyH
Check out my response on previous thread re: a personal carbon-credit application. Nothing for your startup to worry about, :-) but would like to get your opinion on it.
SP

Regarding prices in 2000....

I think it depends on where you are living. Prices here hadn't gone totally crazy by 2000, though they had gone up. I didn't really start taking notice until about 2003 when it seemed like things had really gotten out of hand. That was about the time the flipper mania had started around here.

I was just astonished to find 3 real comments languishing in moderation, and NO spam comments!

So requiring logins has nearly eliminated spam, but now I do have to watch the moderation queue. I don't even know how those comments got picked for moderation.

Please poke me by email (p@patrick.net) if your comment gets into moderation and I'll hurry to get it posted.

Patrick

Administrator Says:
I was just astonished to find 3 real comments languishing in moderation, ... I don’t even know how those comments got picked for moderation.

One of my comments was snagged by the auto-moderator because of a phallic reference in the corporate-jet discussion. I changed it to leet-speak and it went through.
SP

RE: prices in 2000,

Ok, my bad --I had forgotten about Patrick and his pine table history ;-) . Things were not crazy-expensive in SoCal in 2000, like they were in NCal (due to the Dot.com bubble). Also, as EBGuy pointed out, NCal prices have *only* doubled since then, vs. 3X or more in SoCal. Sometimes, I forget that the entire state isn't L.A.

Also, let's not forget that tomorrow (07/07/07) is SoCal Blog Party III at Surfer-X's. If you would like to attend (Ventura), say so here (make sure you are logged in using a valid email address) and I'll forward your emails to Mr. X for invite consideration & directions.

HARM Says:
July 6th, 2007 at 11:01 am
"i talked my friend out of buying a house in bay area in 2000. i thought it was too expensive then.
This story smells a tad fishy to me. 2000 would have been a fantastically good entry point, as CA prices have roughly tripled since. PITI would have been at or below equivalent monthly rents at that time."

In hindsight you are right but I believe the story. I remember worrying that prices were going up rather quickly for no real good reason at about that time. Then started really worrying when I saw what some of my engineer friends were paying for their homes, and even a crappy condo conversion.

Also, as EBGuy pointed out, NCal prices have *only* doubled since then, vs. 3X or more in SoCal. Sometimes, I forget that the entire state isn’t L.A.
As a (we truly are special) Bay Aryan, I was skeptical about this whole *tripling* business in SoCal. Well, here is the tale of the tape. You have to go back to Jan. 99 for the true triple -- yikes, makes us look sane up here. About the only other place more "prosperous" than LA is Miami.

More ways to watch RE info porn.

ZipRealty has a new option - search for Short Sale. I searched Santa Clara county - all cities, ONLY short sales, for single family and there are currently 103 short sales in this land of ever increasing home prices.

MLS 735637 is weird. Zillow says it was purchased in 1993, for 232K. It's in lender approved short sale now for 680K, below the Zestimate. Propertyshark doesn't show any refinance.

MLS 719927 is a McMansion. Purchased for 925K, with Zestimate 1M+ and on short sale for 885K. No need to go to Propertyshark.

As SP noted, asking prices are below Zestimate. In addition it's a short sale. But even today the Chindian lemmings around me claim, "Bay Area is different". No kidding. Heard it just today. Again.

EBGuy :

Your Alameda county is not far behind. It has 99 short sales listed.

I can give you a couple of personal accounts of prices tripling from 99-04,05. San Diego was just wacked out. I still shake my head at some of the deals.

Garden Gate is the favorite community of mainland Chinese immigrants in Cupertino because it is close to Mariner's, Ranch 99, and still falls within the zone of Monta Vista High, although I suspect as the # of students grow and the # of condos soars, Garden Gate will need to be re-zoned into Cupertino High.

The other favorite spot for mainland Chinese is the Palo Alto High area around Oregon Expressway because it is still quite a bit cheaper than west PA, plus PA just incorporated Mandarin immersion class in the public school system (even Cupertino doesn't have that), which is a big magnet. A new Cupertino is forming around Oregon Expressway for sure.

http://online.wsj.com/article/SB118360072311457784.html?mod=googlenews_wsj

THE MIDDLEMEN
Mortgage Mess Shines
Light on Brokers' Role
Job-Hopping Mr. Shaikh
Left Trail of Lawsuits,
Failed License Exams
By RUTH SIMON and JAMES R. HAGERTY
July 5, 2007; Page A1

In 2005, World Savings Bank honored Secure Financial Inc. with a "Top Broker Award." It was a tribute to the sales prowess of Zak Khan, who arranged more than a hundred mortgages out of the small real-estate firm's Union City, Calif., office.

But Mr. Khan, a onetime professional cricket player, wasn't all he seemed. For starters, his real name is Altaf A. Shaikh. Contrary to California law, he never held a license to broker mortgage loans. Still, he managed to find jobs at a variety of mortgage firms since 1997, leaving a trail of unhappy borrowers and a lengthening list of criminal charges and lawsuits filed against him.

Third in a series
• Page One: How Wall Street Stoked The Mortgage Meltdown
6/27/07
• Page One: 'Subprime' Aftermath: Losing the Family Home
5/30/07
• Interactive Map: See photos of the houses and homeowners with subprime mortgages on Detroit's West Outer Drive.As defaults pummel the home-loan industry, Mr. Shaikh represents an extreme case of one of the big vulnerabilities in the business: mortgage brokers. In recent years, these middlemen have assumed a crucial role in handling surging volumes of business for lenders. Today, mortgage brokers are involved in about 58% of home loans, up from 40% a decade ago, according to Wholesale Access, a research firm in Columbia, Md.

Mortgage brokers originate about half of loans made to borrowers with good credit. Their presence is even greater in other segments of the mortgage market where defaults are rising. Brokers originate about three-quarters of subprime mortgages made to borrowers with scuffed credit, according to Wholesale Access. They also originate 70% of so-called Alt-A mortgages, a gray area that falls between prime and subprime. World Savings, which gave the award to Mr. Shaikh's employer, made prime and Alt-A loans.

Mortgage brokers didn't set the standards for the many aggressive loans that are now going sour. But they provided the low-cost sales force that made it possible for lenders to quickly ramp up production without hiring employees. As business surged, some brokers put borrowers into loans they didn't understand, couldn't afford or were otherwise ill-suited for, one reason defaults have skyrocketed. In the worst cases, brokers have been known to falsify information and resort to other fraudulent means to get mortgage loans approved. Critics say regulators and lenders haven't done nearly enough to insure the quality and integrity of this independent sales force.

"The mortgage brokers are the wild, wild West of mortgage finance," Sen. Charles Schumer, a New York Democrat, says in an interview. "We need to bring a sheriff to town."

Mortgage brokers say it isn't fair to single them out. Joseph Falk, legislative chairman of the National Association of Mortgage Brokers, says regulators, lenders and their Wall Street financiers all contributed to the subprime mess. Borrowers also can be cheated by loan officers at banks, he notes, adding: "There's plenty of blame to go around."

The ranks of mortgage brokers have surged in part because they offer lenders such as banks or thrifts a way to reach more borrowers without the heavy expense of operating large numbers of branches. Brokers find customers, advise them on which types of loans are available and collect fees from lenders for handling the initial processing. Unlike bank employees, brokers don't get medical benefits or need to be laid off when business is slow. Brokers are particularly active in low-income neighborhoods where there are few bank branches and where many residents may assume that a big institution wouldn't want to deal with them.

MORTGAGE OVERSIGHT

• The Issue: Mortgage brokers helped fuel the real-estate boom, but the industry is loosely regulated and consumer complaints abound.
• The Controversy: Background checks are sparse, and many states don't even require a test to obtain a mortgage-broker license.
• What's at Stake: Borrowers can face soaring monthly payments and unexpected fees.When brokers cross the line into blatantly unethical or even criminal behavior, there's often little to stop them. Surveys by the Conference of State Bank Supervisors show that 32 states don't require people to pass a test before obtaining a mortgage-broker license, and nine states don't require criminal background checks on license applicants. Brokers who run afoul of authorities in one state often can set up shop in another.

Mr. Shaikh, 46 years old, was able to skip from one employer to another for years with little scrutiny -- until California prosecutors finally caught up with him. In May, Mr. Shaikh pleaded no contest to charges of grand theft in a plea agreement reached with nine California counties. Prosecutors alleged that he lied to borrowers about the terms of their loans, forged documents and had checks written to companies he controlled without the borrowers' knowledge. A court hearing, set for August, will determine the amount of restitution Mr. Shaikh must pay and whether he will be required to serve a one-year jail term, as the prosecutors have requested.

"The tragedy of this thing is that many of these people had better credit than the product that was offered to them," says William Denny, a deputy district attorney in Alameda County, Calif., who coordinated the multicounty settlement of the criminal case.

A spokesman for Wachovia Corp., which bought World Savings last year, says the company "acted appropriately at all times in this situation." The spokesman adds that Mr. Shaikh "was not an employee or an agent" of the company, which wasn't a defendant in the criminal proceeding. "We feel that World Savings is a victim of fraud in this matter as well," the spokesman says.

Jeff Widman, the lawyer representing Mr. Shaikh in a lawsuit brought by borrowers, says his client has "generally denied the allegations." Most of the borrowers "consented happily to the terms of these loans and their fees," he adds.

In an interview earlier this year, Mr. Shaikh, a stocky, genial man with gray hair, declined to discuss his legal problems. He said he immigrated to the U.S. from Pakistan in 1989. He settled in Fremont, home to some of his wife's relatives. At first, he worked at a Taco Bell restaurant and sold leather jackets, imported from Pakistan, at a flea market. Court records show that he and his wife filed for Chapter 7 bankruptcy protection in 1994, citing assets of $17,000 and liabilities of $416,000. That year, Mr. Shaikh earned $3,000 a month as a salesman at a Mitsubishi dealership, according to bankruptcy filings.

In 1997, a friend who worked at Ameriquest Mortgage Co. persuaded Mr. Shaikh to join the company, then a small but fast-growing subprime mortgage lender.

He was getting in on the early stages of a gold rush. Spurred by the housing boom of the first half of this decade, the number of mortgage brokerage firms nationwide has soared to more than 50,000 from 23,000 in 1995, according to Wholesale Access. At the height of the boom in 2003 and 2004, the most successful loan officers at those firms could earn as much as $400,000 a year, says Tom LaMalfa, managing director of Wholesale Access.

Court records show Mr. Shaikh was an assistant manager and, in October 1998, was promoted to manager of Ameriquest's Campbell, Calif., office. In that job, he didn't need a license.

In 2000, Mr. Shaikh and Ameriquest were sued by a borrower whose home was foreclosed on the previous year because a refinancing wasn't completed by a promised deadline. Mr. Shaikh failed to tell the holder of a second mortgage, who was foreclosing on the loan, to postpone the foreclosure sale, according to the lawsuit, filed in Alameda County Superior Court. The case was settled in 2002, according to Joseph Kafka, the borrowers' attorney.

Mr. Shaikh left Ameriquest in May 1999 for the San Jose branch of Atlantic Financial Mortgage Inc., a local firm. Later that year, Ameriquest sued him in Santa Clara County Superior Court for allegedly trying to steal Ameriquest customers and employees. In 2002, a Superior Court judge ruled in favor of Ameriquest.

"Mr. Shaikh's employment was terminated, and we're not able to comment on the reasons behind it," says an Ameriquest spokesman.

At Atlantic, Mr. Shaikh's customers included Nathaniel Winn and Arnetta Petty Winn, an elderly couple in Oakland. In a telephone call in May 1999, Mr. Shaikh told the Winns his company specialized in making low-interest home loans to senior citizens on fixed incomes, according to a lawsuit the couple filed in 2002 in Alameda County Superior Court. At a meeting at their home days later, Mr. Shaikh said he could refinance the Winns into a new mortgage with a "senior discount" that would lower their monthly payments and allow them to pay off $4,200 in debts. He also offered to hire Nathaniel to do some landscaping, Ms. Winn says in an interview.

But the couple's monthly payments rose with the new mortgage, and their loan balance climbed by about $15,000 to $100,000. The Winns received just $1,600 in cash from the refinancing, according to loan documents, while Atlantic got more than $5,700. The couple also paid a $3,500 prepayment penalty.

In February 2004, a Superior Court judge issued a default judgment and ordered Atlantic and Mr. Shaikh to pay the couple $340,000. Mrs. Winn says she is still hoping to collect. Edwin Mendaros, Atlantic's owner, didn't respond to repeated calls requesting comment.

Mr. Shaikh was next hired as an assistant to a loan officer at Home Advantage Corp., a Fremont mortgage broker located in a stucco building adjacent to a shopping center. Within six months, the company received a call from a wholesale lender complaining about a "discrepancy" in a mortgage application Mr. Shaikh had worked on, says the firm's president, Rana Ahmed. "We actually had to fire him," Mr. Ahmed says.

Mr. Ahmed says he doesn't always check references because, in the mortgage business, "references are not reliable." And he says he never heard from prospective employers seeking to check Mr. Shaikh's references.

In January 2001, Mr. Shaikh signed on with Hampton Financial, a local San Jose real-estate and mortgage firm. In nearby Union City, he opened an office called As West Coast Marketing, scouting for potential borrowers and helping them fill out mortgage applications that were then processed by Hampton.

In December 2001, Mr. Shaikh arranged for Mohammad and Karima Ebrahimi to get a $198,000 mortgage from World Savings to buy a home in Fremont. The good-faith estimate, a calculation of the fees borrowers can expect to pay at closing that is required by regulators, provided that the Ebrahimis would pay the broker $1,980. But when the loan closed, it included additional commissions of $8,570, according to a lawsuit by the couple and two other borrowers that was before Santa Clara County Superior Court.

Patricia DeLuca, Hampton's owner, terminated her relationship with Mr. Shaikh in early 2002 because of complaints and questions from borrowers, according to her attorney, John Crowley. Ms. DeLuca settled the lawsuit brought by the Ebrahimis and the other borrowers for $25,000 and filed a cross-complaint alleging that Mr. Shaikh and others conspired to engage in "wrongful and fraudulent conduct," according to court records. In testimony related to her cross-compliant, Ms. DeLuca said World Savings briefly cut its ties to her because of problems with loans originated by Mr. Shaikh. The Ebrahimi lawsuit names Mr. Shaikh, Ms. DeLuca and "Does 1 through 10."

In testimony related to Ms. DeLuca's cross-complaint, Mr. Shaikh said he failed the licensing exam "three or four times," beginning first in 2000 or 2001.

In a decision filed in April of this year, Superior Court Judge Mary Jo Levinger found "no evidence" that Ms. DeLuca knew that commissions had been altered so the payments would be higher. The judge ordered Mr. Shaikh to pay $75,000 in damages and attorney's fees. Mr. Shaikh is appealing the decision.

Mr. Shaikh moved to Golden Gate Mortgage, a local mortgage broker in Hayward, Calif., in early 2003. There he introduced himself to customers as Zak Khan. Dean E. Johnson, a lawyer for Mr. Shaikh, says he used the name "because he found that many of his American friends and customers found Altaf Shaikh hard to pronounce and spell."

In 2004, he arranged for JoAnn Curran, a retired manager, to refinance the mortgage on her home in Alamo, Calif.

Ms. Curran says that at a meeting with Mr. Shaikh at a Starbucks coffee shop, he told her he owned his own mortgage company and could get her a new mortgage with a low interest rate that would allow her to pull out cash to pay some of her son's medical bills. "It was too good of a deal to pass up," she says. Still, she found it odd that Mr. Shaikh notarized her loan documents on the hood of a car.

While Mr. Shaikh was working at Golden Gate, he and his wife bought a $2 million two-story beige stucco house with a swimming pool on a cul-de-sac in Fremont, according to public-records data compiled by RealQuest.com. The following year, the couple bought a three-bedroom home in Las Vegas for $328,000.

Mr. Shaikh says he left Golden Gate in September 2004 because the owner, Nadeem Shahzada, hadn't lived up to his promises on compensation and because he had an offer from Secure Financial. Michael Lauer, an attorney representing Mr. Shahzada, says, "It was a mutually desirable parting."

Mr. Lauer says Mr. Shaikh didn't need a license for the duties he was supposed to perform at Golden Gate, but declines to specify what those duties were. Mr. Shahzada "didn't know he [Mr. Shaikh] was doing the things he was alleged to have done," Mr. Lauer says.

In response to complaints from several borrowers, the California Department of Real Estate issued an order in January 2005 that told Mr. Shaikh, also known as "Zack Khan," to "desist and refrain" from making mortgages without a license.

Tom Pool, an assistant real-estate commissioner, says the department doesn't send notices of such orders to lenders because "there are thousands and thousands of lenders out there. I don't think it's practical." He notes that anyone can check whether a broker is licensed or has been disciplined on the department's Web site.

Mr. Pool calls Mr. Shaikh's continued presence in the mortgage industry "kind of perplexing. I'm not sure those who allowed him to work are doing their due diligence."

Atiya Khan says she was working as a property manager when a family friend introduced her to Mr. Shaikh, and he persuaded her to set up Secure Financial. "He is a famous personality back home with a good decent family," she says. "We went to his house. He introduced his family" she adds. "All these things to make you trust him."

Mr. Shaikh then persuaded Ms. Khan, a property manager at the time, to obtain a broker's license, says Thomas Swihart, her attorney. The two leased an office, but Ms. Khan, who lived in another part of California, says her understanding at the time was that he hadn't yet gone into business. But in fact, using Ms. Khan's broker's license and picking up the pseudonym Zak Khan he had used previously, he started churning out mortgage sales, says Ms. Khan's lawyer. "He took her license and ran with it and defrauded a lot of people," Mr. Swihart says.

In May 2005, Pedro Franco, a landscaper, showed up in lawyer Pamela Simmons's office after receiving a closing statement for a mortgage loan with a check stapled to it. Mr. Franco thought that was odd because, while he had talked to Mr. Shaikh, he didn't recall ever signing the final loan documents. Mr. Franco also discovered that some numbers on his closing statement had been whited out: A $15,650 payment to Secure Financial appeared as $650. Mr. Franco had also received a $29,787 check as part of the deal, not the $40,000 he says he had discussed with Mr. Shaikh.

The next day, Ms. Simmons received a visit from Rosendo Zamudio, whose loan from Mr. Shaikh and World Savings included a $7,655 payment to Bay Area Marketing, a company owned by Mr. Shaikh, that didn't appear on his closing statement. This meant the numbers on Mr. Zamudio's loan documents didn't add up properly. As Ms. Simmons began making inquiries, Mr. Shaikh called Mr. Zamudio and offered to come to the borrower's home to work out the misunderstanding.

"I called the local police because I didn't want my client meeting with him," Ms. Simmons recalls. Mr. Shaikh was arrested in May 2005 and charged by the Santa Cruz County District Attorney with criminal fraud and grand theft.

Prosecutors say Mr. Shaikh didn't disclose to borrowers payments to Bay Area Marketing or that he was earning an extra 2% of the loan amount from World Savings for putting borrowers into more costly mortgages that also contained prepayment penalties. They further allege that he failed to tell borrowers that their loans carried prepayment penalties and that those who made the minimum payment would see their loan balances rise. And they say he forged notarization seals on borrowers' closing statements, though his notary license expired in 2001. Prosecutors say they are continuing to investigate whether other individuals in the real-estate industry aided the fraud crimes.

Other aggrieved borrowers found their way to Ms. Simmons, who specializes in consumer real-estate law. In March 2006, Ms. Simmons filed a lawsuit in Alameda County Superior Court on behalf of borrowers who had contacted her about their dealings with Mr. Shaikh.

Ms. Simmons says she called World Savings to inform it of Mr. Shaikh's first arrest just after the event. Instead of freezing all pending transactions involving Mr. Shaikh, the civil lawsuit alleges, World Savings "continued to fund at least 20 loans" presented to it by Mr. Khan and Secure Financial.

Borrowers who called World Savings to check out Zak Khan were reassured that they could rely on him, the lawsuit further alleges, and World Savings "ignored numerous, and often vociferous, complaints" from borrowers.

A spokesman for Wachovia, World Savings' new parent, says World Savings "checked the license of Secure Financial," rather than that of Mr. Shaikh, because the company "is the broker listed on the loans." He adds the company terminated its relationship with Secure Financial on May 9, 2005, and contacted customers who "had loans in process to confirm that they were, in fact, seeking a loan and had received or expected to receive our disclosures." Wachovia says it has since agreed to the rescission of dozens of loans originated by Mr. Shaikh.

The Wachovia spokesman adds that the "Top Broker" award was "not a company-sanctioned award. It was a local market certificate given by a World Savings salesperson" to roughly eight brokers. Secure Financial originated about 125 loans for World Savings in a one-year period, the spokesman says.

Ms. Khan, a defendant in the civil lawsuit, has filed a cross-complaint against Mr. Shaikh, alleging that she was tricked into forming Secure Financial and that Mr. Shaikh forged her signature on "numerous loan documents" without her knowledge or consent. Ms. Khan says she has never made a mortgage loan and never had any contact with World Savings. "I was out of the picture," she says.

Around the country, efforts are now under way to improve quality control of mortgage brokers. Lenders are beefing up their scrutiny of mortgage brokers and other third parties. The Conference of State Bank Supervisors is setting up a national database that would allow consumers and regulators to check whether brokers are licensed or have been subject to regulatory enforcement actions. Sen. Schumer of New York in early May introduced legislation that would establish a fiduciary duty for brokers and others who arrange home mortgage loans to look after their customers' interests.

Mr. Shaikh is now working in the Fremont area as a car salesman, according to Mr. Johnson, his attorney.

--Zahid Hussain in Islamabad contributed to this article.