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Get Ready for Disparate Impact

FEB 14, 2013 5:25pm ET
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HUD-OIG recommended that HUD’s Associate General Counsel for Program Enforcement determine legal sufficiency and if legally sufficient, pursue civil remedies, civil money penalties, or other administrative action against Standard Pacific Mortgage, its principals, or both for incorrectly certifying to the integrity of the data or that due diligence was exercised during the origination of FHA-insured mortgages. It was also recommended that HUD’s Deputy Assistant Secretary for Single Family Housing require Standard Pacific Mortgage to (1) reimburse the FHA fund for the $1,535,189 in actual losses resulting from the amount of claims and associated expenses paid on 15 loans that contained prohibited restrictive covenants and liens; (2) support the eligibility of $1,390,235 in claims paid or execute an indemnification agreement requiring any unsupported amounts to be repaid for claims paid on 13 loans for which HUD has paid claims but has not sold the properties; (3) analyze all FHA loans originated, including the five active loans identified in this memorandum, or underwritten beginning Jan. 1, 2008, and nullify all active restrictive covenants or execute indemnification agreements that prohibit it from submitting claims on those loans identified. The five active loans with prohibited restrictive covenants carries a potential loss of $544,967 that could be put to better use; and (4) follow 24 CFR 203.32 and 203.41 by excluding restrictive language and prohibited liens for all new FHA-insured loan originations and ensure that policies and procedures reflect FHA requirements. (Audit Memorandum Number: 2013-LA-1801)

MORAL

Which is less expensive? Having us audit you or being potentially liable for over $4 million. You should have an internal experienced HUD QC person or have us audit you for compliance.

CALIFORNIA MAN IS THE 27TH PERSON WHO AGREES TO PLEAD GUILTY TO RIGGING BIDS AT PUBLIC FORECLOSURE SALES OF REAL PROPERTY

FACTS

On Feb. 5, felony charges were filed against Gilbert Chung, a Northern California real estate investor who has agreed to plead guilty for his role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California.

He is the 27th individual to plead guilty or agree to plead guilty as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public real estate foreclosure auctions in Northern California.

According to court documents, Chung conspired with others not to bid against one another but instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in San Francisco and San Mateo Counties. Chung was also charged with conspiring to use the mail to carry out schemes to fraudulently acquire title to selected properties sold at public auctions, to make and receive payoffs, and to divert to co-conspirators money that would have otherwise gone to mortgage holders and others.

The department said Chung conspired with others to rig bids and commit mail fraud at public real estate foreclosure auctions in San Francisco and San Mateo Counties beginning as early as January 2010 and continuing until about December 2010.

The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at San Francisco and San Mateo County public foreclosure auctions at non-competitive prices.

A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than $1 million. A count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine. The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud.

These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Field Office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Field Office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm or call the FBI tip line at 415-553-7400.  (usatty2513)

MORAL

If you have any questions about “bid rigging” at foreclosure sales you may reach me at 888-6678-8529

RIVERSIDE COUNTY IN CALIFORNIA TO INCREASE REAL ESTATE FRAUD PROSECUTIONS’ DRAMATICALLY

FACTS

You should ask how? The answer is by raising the fee for all documents you file with the county recorder.

On Feb. 5, Riverside County supervisors approved doubling the fee charged for filing a variety of real estate documents to raise revenue for anti- fraud investigations and prosecutions. The board hiked the Real Estate Prosecution Trust Fund fee from $3 to $6 per document. The change takes effect on March 5. 

The fees are imposed whenever an individual or business records a deed of trust, notice of default, notice of trustee sale, affidavit, lien, lease or quitclaim deed, as well as other documents filed with the Office of the Assessor-Clerk-Recorder.

Revenue generated from the fees is placed into an account from which the District Attorney's Office withdraws funds as needed but which are restricted for investigations and prosecutions of mortgage and foreclosure-related scams, according to county officials.

A staff of eight people makes up the D.A.'s Real Estate Fraud Unit, which often has to plow through tens of thousands of pages of documents to uncover fraud and abuse.

MORAL

If anyone has filed questionable documents with the recorder or been involved in creative mortgage loans in the past several years you might want to ask us a few questions since it is attorney client privilege and we cannot be forced to disclose what you tell us by anyone.  That is as long as it does not involve a future crime.

COLORADO MAN SENTENCED FOR SHREDDING DOCUMENTS RELATED TO MORTGAGE FRAUD INVESTIGATION

FACTS

 

Comments (1)
Regarding the FHA commentary. The moral is: This is what happens when a builder is allowed to own and operate a mtg banking co. The big builders were huge cause of the crash and crisis. Whole subdivisions sold on crap.
Builder builds and sells house and provides financing. Builder does not have a clue, just wants loans closed. Makes money 3 ways. Very strong conflict of interest. BUILDERS AND RE COMPANIES SHOULD NOT BE ALLOWED TO OWN AND OPERATE MTG COMPANIES.
Posted by KARIN B | Tuesday, February 19 2013 at 2:24PM ET
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