DEC 26, 2013

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Compliance Matters

The CFPB Is Getting Busy

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 CFPB UPDATE

FACTS

The Consumer Financial Protection Bureau now has approximately 1,500 employees. Among the other credentials Richard Cordray has is that of having been a former prosecutor. Quite a few employees are enforcement attorneys. Investigations are now being considered under unfair, deceptive, or abusive acts and practices. The areas that we are informed are being investigated are deceptive marketing, those agencies giving consumer loans a “cycle of debt” such as giving checks for a small loan and then renewing the debt on an ongoing basis at exceedingly high interest rates and debit cards. Then going forward to keep 1,500 people busy are third party debt collectors. The CFPB also may be looking to disparate impact on the “protected classes” through the Equal Credit Opportunity Act especially in the areas of car dealerships. The CFPB when investigating these items will be looking at nonbank finance companies as well.

For those with student loan issues, there is a section of the CFPB that investigates this area as well.

MORAL

They are getting busier.

CALIFORNIA REAL ESTATE BROKERS FOUND LIABLE FOR FALSIFYING DOCUMENT INCOME OF AN ELDERLY WOMAN CAUSING HER TO LOSE HER HOME

FACTS

On Dec. 20, Susana Silva and Deanna Gobert, two Monterey real estate brokers, were found liable guilty in civil court of defrauding the public when they falsified loan documents that caused an elderly woman to lose her house, according to the office of the District Attorney.

In 2008, prosecutors opened their investigation of the marketing and business practices of real estate loan brokerage Estates on the Bay Inc. and owners Silva and Gobert, who were assessed fines after a 10-day bench trial before Judge Thomas Wills.

Judge Wills found the pair engaged in fraudulent business practices, including loan fraud, and imposed a civil penalty of $120,425 and victim restitution of $29,575.

An elderly woman had filed a complaint and investigators had found Silva and Gobert knowingly falsified the woman's income information on two loan applications. The elderly woman lost her home after the brokers signed her up for two adjustable-rate mortgage loans that she couldn't afford to repay on her limited income, prosecutors said.

State regulators revoked silva’s real estate broker’s license in 2004 for loan fraud. She continued to act as a broker until 2010.

Records show she unsuccessfully petitioned to have her license reinstated, with then-real estate commissioner Jeff Davi ordering she could obtain a salesperson's license in 2008. But Davi did not permit Silva to reinstate her broker's license because "she has not demonstrated that she has changed her business practices that resulted in license discipline."

The 43-page order indicates Silva said she started in real estate in her 20s and was taught to "push everything through," even if it meant falsifying loan documents.

According to the order, Silva was working for Veronick Mortgage Loans Inc. when she altered a loan document to say a client had $11,000 in savings account when he really had less than $300. In another case, the document said, she altered a savings amount from $6,662 to $66,662 for a client.

Silva told the bureau that after going through counseling, she was "a person who can stand up to someone and say that I cannot perform acts that I know are not ethical or legal."

Prosecutors said that while under cross-examination at trial, Silva testified she didn’t believe falsifying loan applications was illegal. In addition to civil penalties and restitution, the judge imposed a permanent injunction prohibiting Silva and Gobert from engaging in the sale or financing of real estate. (montherald122013)

MORAL

If all the above is true it is surprising and I would suggest that the two ladies were extremely lucky criminal charges were not filed.

MONTANA MAN GETS SENTENCED TO 11 YEARS IN FEDERAL PRISON FOR MORTGAGE FRAUD

FACTS

On Dec. 19, Nicholas Lindsey, who worked as a loan officer in Las Vegas during 2006 and 2007, was sentenced to 11 years in prison, five years of supervised release and was ordered to pay over $2.2 million in restitution for his fraud and identity theft convictions related to a mortgage fraud scheme. He was convicted by a federal jury of nine counts of wire fraud and one count of aggravated identity theft.

From about May to September 2006, Lindsey recruited straw buyers to participate in what he described as a lucrative real estate investment opportunity by purchasing five homes in the Las Vegas area. Evidence at trial demonstrated that Lindsey secured more than $3 million in mortgage loans by knowingly causing to be placed in the straw buyers’ mortgage loan applications false information concerning the buyers’ income, assets, and intent to occupy the homes. Once the mortgages were approved, Lindsey fraudulently diverted to his bank account a portion of the proceeds disbursed from escrow and used these funds for his own benefit. Lindsey realized additional profits by living in or renting out properties in the buyers’ names.

In addition to the five homes of which the buyers were aware, Lindsey stole two buyers’ identities and used their personal information to purchase three additional properties in their names. The evidence established that Lindsey leased two of these properties and collected rental income and used the third as his own personal residence. After collecting profits, Lindsey stopped making the mortgage payments on the properties and allowed all eight homes to default in the borrowers’ names, causing an estimated loss to lenders of $1.6 million. At sentencing, the court also found that Lindsey used his position as a loan officer to commit fraud in relation to five additional properties, causing additional losses of $703,005 for a total loss of approximately $2.3 million.  (usattynv121913)

MORAL

Here the prosecutors are working on 2006 loans. Remember my saying in earlier releases that they have 10 years to prosecute from the date the loan closed? There is now going to be a very small minority of earlier loans they will chase because of the amount of time it take to put a case like this together. 

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

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