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HUD Audits of Direct Endorsement Lenders Increasing

NOV 8, 2012 4:46pm ET
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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.

Los Angeles County Superior Court Judge Lawrence H. Cho said judgment for the defendant tenant. New owners of foreclosed properties are required to give tenants 90 days’ notice before eviction under the three-year-old Protecting Tenants at Foreclosure Act. The tenant’s motion to quash the eviction complaint was granted. The judge also ruled that any back rent would accrue from the filing of the 90-day notice and not before. (Private National Mortgage Acceptance Company LLC v. Kamie Stanko / 11U04495-2-27-12 Santa Monica Court)

MORAL

What was the attorney reading when the notice was given knowing it was foreclosure property?

SOUTHERN CALIFORNIA WOMAN PLEADS GUILTY IN OREGON FEDERAL COURT TO $20 MILLION MORTGAGE FRAUD

FACTS

On Oct. 31, Wanda Coleman pleaded guilty in federal court in Portland, Ore., to mail fraud charges for orchestrating a mortgage fraud scheme that used fraudulent loan applications and supporting documents to convince lenders to fund more than $20 million in loans on approximately three-dozen properties in Orange, Riverside and San Bernardino Counties in California.

She pleaded guilty to one count of mail fraud pursuant to a plea agreement filed under seal in United States District Court in Portland. As a result of the guilty plea, Coleman faces a statutory maximum sentence of 30 years in federal prison when U.S. District Judge Michael H. Simon sentences her on Jan. 25, 2013.

The case against Coleman was brought by the United States Attorney’s Office in the Central District of California following an investigation by the Federal Bureau of Investigation. The case was transferred to the District of Oregon, which is near Coleman’s new residence, for the entry of the guilty plea and sentencing.

Coleman and several co-conspirators fraudulently obtained funds from financial institutions by making false statements on, and omitting material information from, loan applications submitted to purchase houses in the names of straw buyers. Coleman identified properties for sale across Southern California and offered to pay the sellers substantially more than their asking price, in return for the sellers’ agreement to refund the excess amount to Coleman or companies that she controlled. Coleman recruited straw buyers to submit fraudulent applications for loans to buy the houses. Various participants in the scheme prepared fraudulent mortgage applications that contained false information regarding the buyers’ employment, income and assets, and then submitted the bogus applications to lenders. To corroborate the false claims, co-conspirators forged bank statements and prepared other fraudulent documents, which were submitted to lenders.

As a result of the scheme, financial institutions funded loans totaling more than $20 million in relation to approximately 30 properties across Southern California. The straw buyers ultimately defaulted on the loans, resulting in foreclosure of the properties and losses of more than $11 million to the lenders.  Usattycdca103112)

MORAL

Note that the criminal complaint was filed “under seal.” What that generally means is the defendant is cooperating with authorities, agreeing to be “wired” and cooperate in catching others who do not know or whom it is reasonably believed do not know the person has been arrested and indicted. Look to seeing quite a few more arrests and indictments in the near future in Southern California. If anyone did any creative loans with Coleman, I suggest you see an attorney now as opposed to later. That is presuming the prosecutor’s office or special agents have not already contacted you by now.

FLORIDA FORECLOSURE SOLUTION SPECIALISTS DRAW FIVE-YEAR PRISON TERMS AFTER PLEADING GUILTY

FACTS

On Nov. 2, Lisa Wright and Cathy Saffer were sentenced to serve 66 and 60 months, respectively, for defrauding homeowners and mortgage lenders as part of a foreclosure rescue scheme. U.S. District Judge Kenneth A. Marra in the Southern District of Florida sentenced the two women.

Wright pleaded guilty on March 27, to one count of conspiracy to commit mail and wire fraud, one count of mail fraud, and one count of wire fraud. Saffer was convicted of one count of conspiracy to commit mail and wire fraud, three counts of mail fraud, and two counts of wire fraud, following a two-week jury trial in July.

Wright and Saffer operated Foreclosure Solution Specialists from 2006 to 2009. Through FSS, Wright and Saffer targeted homeowners facing foreclosure, advertising that FSS could assist those homeowners in remaining in their homes. When contacted by distressed homeowners seeking assistance, Wright and Saffer misrepresented to those homeowners that their homes would be sold to investors. They also claimed that customers could remain in their homes after the sales and promised them an opportunity to repurchase the homes at a later date. Rather than selling the homes to legitimate investors, Wright and Saffer designed sham sales to straw purchasers whom they paid to participate in the scheme.

Wright and Saffer paid certified public accountant Barrington Coombs to write a fraudulent letter that falsely vouched for the fraudulent information on various loan applications. Coombs, who was also convicted by the jury, is scheduled to be sentenced on Dec. 7.

Mortgage transactions completed by FSS drew equity out of the homes, which Wright and Saffer pocketed for their own purposes. After doing so, Wright and Saffer allowed the loans to go into foreclosure. Homeowners ultimately lost all of the equity in their homes, and most of the victims were forced to move out of their homes.  (usattyfl11212)

MORAL

Consult your attorney before you play games. This way you know the risks and can avoid the problems. 

ELEVEN CONVICTED FOR MORTGAGE FRAUD IN FLORIDA AND ONE GETS 15 YEARS IN FEDERAL PRISON

FACTS

On Nov. 2, a federal judge in Tampa sentenced 11 individuals for their participation in a mortgage fraud scheme that spanned a decade and involved tens of millions of dollars in bogus loans.

The individuals had previously pled guilty to conspiring to commit fraud and/or to making false statements on bank loan applications so they could get the maximum mortgage possible on properties without risk or any of their own money. The scheme fell apart when the real estate market collapsed in 2008.

Richard Bobka of Sarasota, described in the statement as one of the main perpetrators, was sentenced to 15 years in federal prison and ordered to pay $22.8 million in restitution for his role in the scheme.

R. Craig Adams of Tampa was sentenced to three years in federal prison and ordered to pay $25 million in restitution. Adams had cooperated with the government in efforts to target the most culpable individuals who caused the largest losses to the banks, prosecutors said.

Nine others received sentences ranging from time served to 24 months in prison and were ordered to pay various amounts of restitution.  (tampbusjl usattytampfl103112)

MORAL

Adams is alleged to have ripped off more and gets a sentence one-fifth of the Bobka gentleman. See what cooperation can do?

 

THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.

AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.

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