FEB 28, 2013

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Part 3: Technological Considerations for Leading in the New Mortgage Marketplace
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Part 1: Leading in a Changing Mortgage Marketplace
Compliance Matters

Could CFPB Consider Real Estate Brokers as Loan Officers?


Bernadette Nicholas was a mortgage broker who intentionally misrepresented material facts to Wilmington Trust about borrowers’ income and assets, the potential rental income, and accurate appraisals of properties. She falsified borrowers’ tax returns and documents relating to the true source and amount of the down payments being made by borrowers and forged borrowers’ signatures on loan documents.

Kevin McAllister was a loan officer with Wilmington Trust working in conjunction with Nicholas to approve mortgage loans for borrowers who did not meet Wilmington Trust’s criteria for income, assets, and credit scores, in return for bribes and kickbacks from Nicholas. As a result, Nicholas and McAllister caused the approval of loans totaling more than $30 million.

Bernadette Nicholas received a mortgage broker’s commission equivalent to approximately two to three percent of the total amount of a funded loan at the time of loan settlement. During the years 2004, 2005, and 2006, Bernadette Nicholas received approximately $1.2 million as the result of the loans funded by Wilmington Trust. She deposited the money into accounts maintained by Dennis Nicholas who then paid Kevin McAllister equivalent to approximately one percent of the amount of the funded loan, which was a kickback/bribe for getting the questionable loan approved and funded. McAllister made $379,075 in kickbacks. None of the defendants reported the income on their taxes.

Another defendant, Wayne Rosen, who was charged in a scheme with Bernadette Nicholas to defraud Malvern Federal, was scheduled to be sentenced on Feb 25. Nicholas brokered the sale of an apartment building between Rosen and mortgage clients and sought a $1.6 million loan from Malvern Federal for her clients.

Nicholas altered the borrowers’ income tax returns prior to submitting them to Malvern Federal and falsely represented the borrowers’ income, the amount of the borrowers’ down payment, and the details of a subordination agreement between Rosen and the borrowers on the borrowers’ loan application and supporting documents. At settlement on the apartment building, Dennis Nicholas, Bernadette Nicholas, and Rosen falsely represented to Malvern Federal that the borrower had made a down payment. Bernadette Nicholas and Rosen applied for a $3.5 million loan to refinance an existing loan that they had on a medical building.

In order to influence Malvern Federal’s actions, Bernadette Nicholas, Dennis Nicholas, and Rosen prepared and caused to be prepared fraudulent leases which misrepresented the potential rental flow income of their medical building and caused these leases to be submitted to Malvern Federal.  (usattyedpa21313)


Notice how long the sentences are getting. Notice too, that the federal prosecutors went back to 2004 (nine year old loans) to get to them. The prosecutors are doing this nationwide and have been for some time.  They 10 ten years from when a loan closed to file criminal charges against the people involved, usually brokers and loan officers as here.



Comments (3)
Well, whereas I'd love to see the cfpb involved in the real estate shenanigans of one stop shopping at the real estate broker's office, the end result will be damaging to a consumer if they cannot be given a few names of reputable lenders to a buyer. They will be out on their own, often choosing the wrong lender for the wrong reasons. It will be deja vu most of the other cfpb rules, like longer and more confusing GFE. The only way for a real estate agent to feel safe will be to not refer anyone.
Posted by Griff | Friday, March 01 2013 at 5:22PM ET
I have been in the business for 20 years and have never seen anything like this in my experience to many agency's to many rules and reg's that is a given the industry at it's core is very simplistic.

Addressing Realtor's and CFPB's close look if it walks like a duck and quacks like a duck it' more than likely is a duck the relationship between in house lending and the retail mortgage industry is and has been so corrupt it could be said that there is a plethora of collusive opportunity in any given deal that merits being held to the Highest Standard.

On that Note people that write and ultimately pass these regulations and rules should be required to not only Register with the NMLS they should also be subject to the same vetting that Originators must endure.

On the subject of rules and regulations it should be as simplistic as the Ten Commandments I think everyone knows how to read them and understands them and most Importantly how to apply them in everyday* life.

As it is now the sheer size and scope and the cost of enforcement is off the charts next there will Special Units that infiltrate Real Estate Offices small Independent Origination bases and Starbucks for morning coffee to make sure that nobody refers a friend to someone they know in the business.

Cash is King and where there is a deal to be made it will be done period it's just that simple you cannot enforce that part of it I think for the most part the industry is solid there will always be the sensational are you that stupid story.

*Which brings us to last months Oscar for Stupid the Supreme Court Magistrate in Michigan yes this Judge committed fraud Real Estate and Document fraud.

NewsJet Magazine

Posted by NewsJet Magazine | Saturday, March 02 2013 at 11:21AM ET
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