The burst of the U.S. housing bubble created plenty of unforeseen problems for lenders – like figuring out how to keep mounting foreclosures from flooding the market with unsold bank-owned homes. And preventing those bank-owned homes from falling into disrepair and decay.

Cheronda Guyton found a creative solution to both problems. And it may cost her job and her freedom.

That’s because Guyton, a Wells Fargo & Co. senior vice president responsible for foreclosed properties, moved into a $12 million mansion in Malibu, California, and turned it into an exclusive party pad just after the owners – a couple whose savings were wiped out in Bernie Madoff’s ponzi scheme – surrendered the house to Wells Fargo to settle their debts.

According to the Los Angeles Times, Guyton – and her husband and two children – apparently started squatting full-time in the luxurious beach house last May. That’s when residents of the manse’s gated community, the celebrity- and financier-encrusted Malibu Colony, say Guyton obtained a homeowner’s parking pass from the community’s guards.

Since then, her 2007 Volvo sport utility vehicle has been a fixture in the driveway, and the family Guyton has played host at the house on numerous occasions – most recently at a lavish mega-party in late August.

At one such soiree, revelers arrived by yacht to the 3,800-square-foot house, with its commanding patio view of the Pacific Ocean, the Wall Street Journal said.

In the meantime, Wells Fargo reportedly refused to show the home to would-be buyers, leaving local real-estate agents bewildered.

“It’s outrageous to take over a property like that, not make it available and then put someone from the bank in it,” Phillip Roman, a resident on Guyton’s street, told the Times.

Guyton’s free ride could spell disaster for Wells Fargo and its peers in the mortgage-lending industry. As the housing and credit markets begin to steady, politicians are focusing greater attention on the behavior of the industry’s lenders, servicers and investors to see if they were on the up-and-up.

Nowhere has that scrutiny been heavier than at Wells, a top-five national mortgage lender. The bank lags behind the national average in modifying loans for troubled homeowners, and Congressional leaders have been stinging in their criticism of those numbers, saying banks like Wells don’t care about their borrowers. Last week, the Journal reported that Wall Street also is frustrated with Wells over its lack of transparency on investor issues.

Those developments could explain why reporters are now questioning whether Guyton made her move with Wells’ knowledge. If so, it could indicate the bank wanted to quietly keep the mansion in its “shadow inventory” of available housing that’s not brought to market, out of fears doing so would drive down its sales value. The institution also may have decided it was better for the house to be maintained and look lived-in while it was off the market.

But those questions remain unanswered. Guyton was unavailable to the media for comment, and Wells said in a written statement that it would “conduct a thorough investigation of the allegations,” although it declined to “discuss specific team member situations/issues for privacy reasons.”

The bank also said the property would soon be listed publicly for sale.

 

09/11/2009 BY: ADAM WEINSTEIN  http://www.dsnews.com/articles/reports-wells-fargo-executive-squatted-partied-in-foreclosed-mansion-2009-09-11