Broker facing license suspension for flipping activities

The owner and broker-in-charge of two North Carolina real estate firms that specialized in appraising, listing and marketing bank-owned properties for a number of mortgage lenders has landed in hot water with the N.C. Real Estate Commission.

Jason Cox, who ran East Coast REO LLC in Graham, near Burlington, is facing either a two-year license suspension or a stayed suspension, if he completes ethics and broker-in-charge courses.

Calls and emails to Cox seeking comment were not returned.

The commission contends Cox flipped properties without making proper disclosures to buyers and sellers.

Cox bought bank-owned properties from lenders and resold them to investors and homeowners for a profit, according to the commission. He owned companies or hired family members in related businesses that handled the transactions, but failed to disclose his associations to either the bank or the buyers, the commission alleges. Additionally, he never obtained or disclosed to any parties his dual-agency status.

An investigator at the commission found that between 2006 and 2009, Cox listed 32 bank-owned properties that were subsequently bought by individuals associated with Cox or someone in his family. After the initial transaction, Cox would flip the property, selling to investors or homebuyers at a higher price.

Using deeds, the investigator, Scott Schiller, pieced together that the 32 properties were purchased from the banks for a total of $1,575,000 and then resold for a total of $2,081,500, netting Cox $506,500.

Cox’s other compensation included the commissions he and his associates received from the banks for listing and marketing each property and sales commissions.

The commission also said Cox misused language in contracts not involving an REO seller by instructing buyers to enter “corporate” or “owner of record” as the seller in contract documents and telling buyers the name of the actual seller would be added at a later date.

According to their investigation, on eight occasions an entity associated with Cox or his family accepted offers on bank-owned properties before these same properties had even been purchased. Also, sellers were not informed that these offers had been obtained or that they were at a higher price than the list price.

An example of these schemes occurred on Sept. 30, 2008 when Cox entered into an “exclusive right to sell contract” with M&T Bank for a vacant lot in Burlington. In his broker price opinion, Cox recommended a list price of $25,000. Based on the advice, the bank asked Cox to list the property in the Alamance Multiple Listing Service at $28,750 and provide them a copy of the listing.

However, Alamance MLS records show that on Oct. 1, 2008, the lot was listed for $48,750, even though Cox provided the bank with an MLS sheet showing the lot was listed at $28,750.

On Sept. 30, 2008, a sales contract for the lot was submitted to the bank for $28,750 signed by REO Portfolio Services, a company owned by Cox’s uncle. M&T was not informed of Cox’s relationship with the buyer.

The next day, REO Portfolio Services entered into a purchase contract with Donald Williamson, selling the lot for $48,850. After both sales were completed in late October, REO Portfolio Service realized a profit of $20,100.

When the bank learned of the resale, it filed a complaint about Cox and his uncle, Kevin Faulkner, with the Alamance MLS for not disclosing their relationship and for providing them with a fraudulent MLS sheet. In response, the Realtor group terminated Cox’s membership rights and fined him $2,500.

Cox and his associates changed their business model in 2009, according to what they told the commission. But even as recently as 2012, complaint boards like ripoffreport.com and complaintboard.com were filled with postings cautioning people not do business with Cox or East Coast REO.

In July, the company issued a statement saying East Coast’s real estate services was rebranding under the Compass Property Services name in what it called “a long planned reorganization.”

Listed as president on the Compass website, Cox is described as “bringing over 13 years of experience in the mortgage default services and real estate industry, working with clients nationwide to identify and act on opportunities in loss mitigation, REO disposition, and large scale real estate investment funds.”