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Having an Anti-Money Laundering Policy

NOV 1, 2012 4:38pm ET
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This is one form of short sale fraud. Another is when the real estate agent that lists the REO property bids on it through a straw buyer at a price below market and immediately resells it to a legitimate buyer that the agent has an offer from at a higher price. They get caught because of the paper trail.

 THREE SENTENCED IN FLORIDA FOR MORTGAGE FRAUD

FACTS

On Oct. 26, U.S. District Court Judge Elizabeth A. Kovachevich sentenced George Cavallo, his wife, Paula Hornberger, and Joel Streinz, a former police officer, to federal prison for their roles in a Sarasota-area mortgage fraud scheme to commit wire fraud and to make false statements on loan applications that were submitted to FDIC-insured financial institutions and mortgage lenders. The three individuals were convicted earlier this year following a three-month jury trial.

Streinz, who took out more than $6.2 million in fraudulent loans, was sentenced to five years in federal prison. He was also ordered to pay $1,072,676.31 in restitution.

Cavallo and Hornberger, who collectively took out more than $8.3 million in fraudulent loans, were sentenced to 10 years and one year and one day respectively and ordered to pay $13.2 million in restitution.

Cavallo, Hornberger and Streinz conspired with each other and with numerous other individuals to purchase residential property in the Sarasota area by making false statements on loan applications submitted to various FDIC-insured banks and mortgage lenders. The false statements made and caused to be made pertained to, among other things, the property’s actual purchase/sale price; the purchaser/borrower’s intended use of the property; the purchaser/borrower’s employment, income, assets, and liabilities; and the amount and source of the equity contributed to the purchase by the purchaser/borrower.

The idea behind the scam was to fraudulently obtain the maximum loan possible on each property and then to sell that property within a few years after it had appreciated without risking much, if any, of their own money. The conspiracy began in the late 1990s and then grew slowly until 2004, when it exploded with the drastic increase in real estate prices in Sarasota. The conspiracy ended, when the real estate market collapsed in 2008.  (usattymdfl102912)

MORAL

Notice how this one began in the 1990s! That is 22 years ago. Now one of them gets room and board for ten years in a federal hotel. One gets five years in the same hotel and one gets a year and a day. I wonder who cooperated with the federal investigators.

NEW YORK MAN PLEADS GUILTY IN FLORIDA COURT TO $39 MILLION MORTGAGE FRAUD

FACTS

On Oct. 18, Juan Carlos Sanchez pleaded guilty in a South Florida Federal Court in connection with his participation in a $39 million mortgage fraud scheme. Sanchez pled guilty before the U.S. District Judge William J. Zloch to count one of the indictment, which charged him with conspiracy to commit mail and wire fraud. Sentencing is scheduled for Jan. 3, 2013, in Fort Lauderdale.

Sanchez was originally indicted with seven others for fraudulently obtaining mortgages for the purchase of condominium units at Marina Oaks Condominiums in Fort Lauderdale.

So far, Celeste Mota and David Arboleda pled guilty in 2012, and are awaiting sentencing scheduled for Nov. 28 and Dec. 12 before Judge Zloch. In addition, on Sept. 5, 2012, defendant Sandra Campo arrived at Miami International Airport from Colombia, and surrendered to agents of the Federal Housing Finance Agency Office of Inspector General and the Broward Sheriff’s Office to face the charges in the indictment.

Trial for the remaining defendants is scheduled for Jan. 14, 2013.  According to the indictment, from January 2007 through November 2008, the defendants conspired to recruit individuals who would be willing to purchase condominium units at Marina Oaks Condominiums. These buyers were promised a “buyers’ incentive,” which payment was not disclosed to the lenders or reflected on any of the closing documents. The conspirators would then prepare materially false mortgage applications as to facts regarding the borrowers’ credit worthiness in order to qualify the borrowers for mortgages to purchase the Marina Oaks Condominiums.

The conspirators would allegedly also create false documents to support the mortgage applications. Once the loans closed, the conspirators would divert portions of the mortgage proceeds for their personal use and benefit. The indictment alleges that the conspirators obtained approximately $39 million in fraudulent mortgage loans.  (usattysdfl101812)

MORAL

Sanchez is certainly no piker—$39 million is nice money, but if and only if, you can get it without going to prison. Notice the loans being investigated go back to 2007. So if anyone did “creative” loans in 2007 or later, I suggest you see your attorney now rather than later.  As an additional thought, HUD is investigating its FHA loans and so the audits are becoming more frequent as are my trips out of town to see if Direct Endorsement lenders are in compliance.

NEW JERSEY NOW MAKES IT MORE DIFFICULT TO FORECLOSE

FACTS

The decision by the New Jersey Appellate Division in the case Deutsche Bank National Trust Co. v. Mitchell, A-4925-09 stated that in residential foreclosure cases, the mortgage lender must provide evidence that it actually possesses the mortgage note or an assignment of this mortgage note before it files the foreclosure complaint. “If Plaintiff did not have the note when it filed the original complaint, it lacked standing to do so, and it could not obtain standing by filing an amended complaint.” The Appellate Court cited to the case of Wells Fargo Bank v. Ford, 418 N.J.Supr. 592 (App. Div.2011), which held that a party seeking to foreclose a mortgage must own or control the underlying debt. (Deutsche Bank National Trust Co. v. Mitchell, A-4925-09) 

MORAL

It does give a negotiating tool to use in favor of the owner.  If you are the holder of the “paper” make sure by inventorying your New Jersey Portfolio if you have delinquent loans.

 

THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.  AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.

 

 

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