NOV 8, 2012
Compliance Matters

HUD Audits of Direct Endorsement Lenders Increasing

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    HUD AUDITS OF DIRECT ENDORSEMENT LENDERS INCREASING

FACTS

I have reviewed two in the past week alone.

1. Do you have your quality control plan updated to include the new Anti-Money Laundering Manual with the compliance officer named therein? 

2. Do you know what the Department of Housing and Urban Development looks for when conducting an audit so that you can check for compliance?

3. Do you know the 25 items HUD requests from you when it sets an audit?

4. Do you know the 18 questions that you will have to answer so they are ready when the HUD auditor appears?

If you know the answer to the above four questions you just might better quality control your loans, loan officers and underwriters.

If you do not know the answers, we will be able to assist you. If you are a DE lender call and I will forward them to you at no cost.

UPDATE ON CONSUMER DEBT COLLECTORS; MORTGAGES SERVICERS ARE EXCLUDED

FACTS

As reported in an earlier eAlert the Consumer Financial Protection Bureau announced its final rule governing its supervision of nonbank consumer debt collectors. The rule subjects nonbank debt collectors to federal supervision if they have more than $10 million in annual receipts from consumer debt collection activities. Consumer debt collection is defined as covering: (1) firms that buy defaulted debt and collect the proceeds for themselves; (2) firms that collect defaulted debt owned by another company in return for a fee; and (3) debt collection attorneys that collect through litigation. CFPB also added a clause excluding traditional loan servicing from the definition of debt collection, by expressly providing that debt collection does not cover "debt which was not in default at the time it was obtained." CFPB also excluded non-profit consumer credit counselors from the definition. The rule will take effect on Jan. 2, 2013, and is expected to cover about 175 debt collectors, which CFPB estimates as encompassing over 60% of the consumer debt collection market.

MORAL

I trust you all have good regulatory counsel available as opposed to collection attorneys. Otherwise, I foresee quite a few consumer lawsuits against debt collectors by consumers and especially by the CFPB.  If you feel you need assistance, call me.

CALIFORNIA MAN FACES UP TO 30 YEARS IN FEDERAL PRISON FOR BID RIGGING AT PUBLIC FORECLOSURE SALES

FACTS

On Nov, 1, Norman Montalvo, a real estate investor from Concord, agreed to plead guilty to a conspiracy to rig bidding at public real estate auctions in the Bay Area, authorities said.

He was charged with four felonies in the U.S. District Court for the Northern District of California, according to an FBI news release and is the 26th person who has admitted to a role in the conspiracy.

Montalvo was also charged with using the mail to fraudulently acquire title to properties sold at auctions, to send and receive payoffs, and to send money to co-conspirators. Montalvo's role in the scheme began as early as June 2008 and lasted until about September 2010, according the FBI.

By conspiring to purchase properties at non-competitive prices, Montalvo and others were preventing mortgage holders from getting fair prices for their properties, and in some, cases, keeping money out of the hands of defaulting homeowners, according to the FBI. Montalvo is charged with bid rigging and fraud at auctions in San Francisco and San Mateo counties, but the Department of Justice's antitrust investigation also covers auctions in Contra Costa and Alameda counties.

He faces up to 30 years in prison and could also be fined up to $1 million or more, depending on his profit and the victims' losses.  (contacostatmnes11212)

MORAL

Anyone up to foreclosure bid rigging? How about short sale bid rigging, i.e., low ball the real estate owned holder when there is a higher bid in the wings that the REO holder does not know about. Guess what? You will need a defense attorney if caught and catching is easy because of the paper trail.

 CALIFORNIA MAN PLEADS GUILTY TO MORTGAGE FRAUD

FACTS

On Nov. 1, Dameene R. Dedrick pleaded guilty to two counts of bank fraud and one count of mail fraud.

In late 2005 and 2006, Dedrick, who was then a licensed real estate agent and appraiser, made false statements on loan applications to get three mortgages approved and funded. The combined value of the mortgages was $1,115,000. Dedrick falsely represented his income, employment, and earnings and submitted false W-2 Wage and Earning Statements to get the loans. Dedrick purchased the three houses with 100% financing and claimed that each was his primary residence.

The scheme was aided by another real estate salesperson, Roy L. Rice. On Sept. 13, he pleaded to bank fraud offenses related to his participation in the purchase of two of the Elk Grove homes.

U.S. District Judge Morrison C. England, Jr. is scheduled to sentence Dedrick on Feb. 28, 2013, and Rice on Jan. 3, 2013. Dedrick and Rice are facing up to 30 years in prison and a $1 million fine for each count.  (usattyedca11112)

MORAL

These loans go back seven years.  Remember all the times  (in fact in practically every eAlert) I have said the government has 10 years from the date the loan closed or you received your commission, whichever is later, in which to prosecute. And as you can see prosecute they do.

GIVE THE WRONG NOTICE TO PAY RENT OR QUIT TO A TENANT AFTER FORECLOSURE IN CALIFORNIA AND YOU MAY PAY FIND THE TENANT STILL CAN STAY ON AND ON AND ON

FACTS

Private National Mortgage Acceptance LLC purchased a property at a foreclosure sale. The company then served the renter, Kamie Stanko, a three-day “pay rent or quit” notice claiming she had stopped paying her monthly rent of $2,500.  Stanko had not paid rent in over a year racking $22,500 in back rent.  Stanko was never a tenant of plaintiff Private National. When the case was filed Stanko offered to pay rent but plaintiff refused.

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