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House Foreclosures for Sale in Atlanta from Omni Flippers

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By : John Cutts    99 or more times read
A large portion of house foreclosures for sale in Atlanta arose from the flipping and other fraudulent activities by Omni National Bank that enriched bank executives but wiped out the hard-earned money of people who invested a total of $33 million in Omni stocks in 2006.

Insured bank depositors were luckier, but the payout to depositors caused the Federal Deposit Insurance Corporation to cough up about $289 million from its insurance fund.

During the peak flipping days of the bank, Omni financed deals that flipped houses two to five times at price increase rates that exceeded 100 percent. In Fulton County alone, of the top deals involving houses priced between $226,500 and $500,000, almost half of the deals were closed through flipping schemes.

During the years 2006 and 2007, Omni refinanced delinquent loans on 169 foreclosure homes with new loans worth $25 million. The loans accounted for around one-sixth of total redevelopment loans.

According to Atlanta civil engineer Brent Brewer, who became a neighborhood activist after seeing the effects of foreclosures in his West End community, the flipping activities of Omni have pushed up real estate taxes in his area despite the prevalence of unmaintained house foreclosures for sale.

Brewer criticized Omni for refinancing loans on vacant windowless homes in the area despite knowing that the appraisals were far above the values of the property. The bank allowed agents to flip houses many times at inflated prices and approved loan applications that were obviously using straw buyers.

Jeffrey Levine, co-founder of Omni, has pleaded guilty to fraud recently and faces a maximum of 30 years of imprisonment. The lawyer for the other co-founder, former CEO Stephen Klein, said Klein was cooperating with investigators as a witness.

Levine and Klein started Omni in the 1990s as a small private lending enterprise. Klein was previously a bank director and real estate and insurance firm owner while Levine was a real estate attorney. They provided short-term loans averaging $20,000 to house renovators who could not borrow from banks.

With interest rates that soar above 18 percent and costly upfront fees, their lending operation expanded rapidly. In 2000, they bought banks that enabled them to tap into millions of deposits, which reached $797 when Omni closed in 2009.

By the time Omni was facing regulatory investigations in 2008, more than 75 percent of its loans were for delinquent commercial properties, house foreclosures for sale and properties for rehabilitation.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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