As the many onion layers begin to peel away, the greater Portland area now begins to savor the fresh aroma of its late to the party housing bubble. Along with a decline in real estate prices, comes the discovery and prosecution of fraud. When the most blatantly corrupt local players in the real estate game are brought to justice, those tales inevitably serve as a dose of reality for the local housing market. We now have this story hitting homes oh so very close to Stumptown:
"If regulators forced the bank to adjust loan values down based on new appraisals, Worthy wrote, that could start a chain reaction that could ultimately force the bank to stop using brokered deposits, the "hot money" the institution used to fund its loans."
“ "If that happens, we will be out of business," Worthy wrote, according to the plea. Although his prediction ultimately came true, for 10 months the bank held on."
"Before regulators arrived, Kennelly told a vice president identified as “K.B.” that there were several appraisals that Kennelly “did not want to see the light of day,” according to the plea agreement. Over a series of meetings, Kennelly instructed at least five bank employees, all identified only by initials, to hide appraisals from bank examiners, according to the plea agreement."
“Kennelly turned red, started to shake, and falsely responded that he did not think that BoCC possessed the requested appraisals,” according to the plea statement. “Within 20 minutes, however, Kennelly produced all of the requested appraisals.”
From the Portland Business Journal: 2010-02-19_by_Courtney Sherwood