A story is circulating in the LA media today about a Wells Fargo executive, Cheronda Guyton, who allegedly moved into a foreclosed propertybeing held by the bank and threw lavish parties there.
The previous owners of the Malibu, CA home, which is or was supposedly worth $12 million, lost the house after they lost all their money to Bernard Madoff.
According to reports, Guyton, who oversees foreclosed commercial properties, moved into the swanky home with her husband and two children and even had a large party there the last weekend in August.
What is this, Risky Business 2?
According to the LA Times, the bank said its ethics code wouldn't let Wells Fargo employees "make personal use of property that had been surrendered to satisfy debts."
The Realtor for the house told the Times that Wells Fargo wouldn't show the house to potential buyers either. The bank stated that it had some kind of agreement with the prior owner to keep it off the market for "a period of time."
Now I'm not sure what rights an owner has to tell any bank what to do with a home after said bank has already foreclosed on the property.
I am sure that whether or not the Wells Fargo executive was hanging out there legally or illegally, she is definitely acting unethically.
First of all, I doubt any VP who oversees commercial foreclosures makes enough money to afford to purchase a $12 million home, even at today's discount prices. (According to the Times a person at the home, who wouldn't come out, told the reporter through the intercom that the home was owned by Collin Equities, which just so happens to be a Wells Fargo company in charge of liquidating foreclosures.)
REAL ESTATE Slideshow on CNBC.com
Secondly, in what warped Wells universe does said VP think a) this is a good idea, and b) she can get away with it?
I called Wells and received the following statement:
Collin Equities is a wholly owned subsidiary of Wells Fargo that manages, leases, and liquidates properties owned by Wells Fargo through the process of collection.
The property located at 23360 Malibu Colony Drive is owned by Collin Equities, a subsidiary of Wells Fargo. The company took possession of the property in May 2009.
The property was transferred pursuant to the terms of a private agreement between Wells Fargo and the prior owner. Under the terms of the private arrangement, the property was withheld from the market for a period of time and accordingly Wells Fargo has not yet listed the property for sale, but plans to do so in the near future.
Consistent with our policies, Wells Fargo will conduct a thorough investigation of the allegations.
Wells Fargo’s Code of Ethics and Business Conduct handbook instructs team members to avoid conflicts of interest or the appearance of conflicts of interest in their personal and business activities.
We don't discuss specific team member situations/issues for privacy reasons.
I don't often have a lot of sympathy for multi-millionaires who lose their homes to foreclosure because of reckless investing, but I don't know anything about these previous owners, and when I hear the Madoff connection, I do start to feel for them. Hey, I'm all for making a ton of money legitimately and spending it nicely. The house, by the way, is spectacular, at least what can see on the Realtor's website: www.106malibucolony.com. I can see where someone might be tempted, but seriously folks. This is over the top.
Oh, and by the way, according to the Obama Administration's latest progress report on its Making Home Affordable loan modification plan, Wells Fargo has started trial modifications on just 11 percent of the homes that the program deems eligible. I was at the hearing earlier this week, when members of the House Financial Services Committee grilled administration officials about the poor showings from many of the banks. Administration officials said the banks need to do more. I realize this particular executive works on the commercial, not residential side of the foreclosure crisis, but it does make you wonder....
Questions? Comments? RealtyCheck@cnbc.com