IF YOU DO NOT FILE THE MORTGAGE CALL REPORT NMLS PUBLISHES YOUR NAME ON ITS WEBSITE FOR STATE LICENSING AGENCIES TO REVIEW
FACTS
The Nationwide Mortgage Licensing System online Resource Center has a webpage which provides information about the
The NMLS releases reports that all state regulators could use to determine if a licensee in that state has filed an MCR.
MORAL
Do not file your quarterly MCR and the state goes in and check the list by state and your license is then subject to discipline. What does this mean? It means that each state has a single source to go to where it can look to check the list of nonfilers and send out form letters that can cause your license to be suspended−if not revoked−for failure to file. So file your MCR, because the state has a one stop go to list to see if you did.
ALABAMA REAL ESTATE INVESTORS SENTENCED FOR RIGGED BIDDING AT PUBLIC FORECLOSURE SALES
FACTS
On May 20, two Alabama real estate investors and their company were sentenced in U.S. District Court for the Southern District of Alabama in Mobile for their participation in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in southern Alabama.
Robert M. Brannon and his son Jason R. Brannon were each sentenced to serve 20 months in prison for their participation in the conspiracies. The Brannons and their Mobile-based company, J&R Properties LLC, were ordered to pay $21,983 in restitution to the victims of the crime.
On Dec. 12, 2012, the Brannons and their company pleaded guilty to an indictment originally returned on June 28, 2012, in the U.S. District Court for the Southern District of Alabama, charging each of them with one count of bid-rigging and one count of conspiracy to commit mail fraud. The Brannons and their company conspired with others not to bid against one another at public real estate foreclosure auctions in southern Alabama. After a designated bidder bought a property at a public auction, which typically takes place at the county courthouse, the conspirators would generally hold a secret, second auction, at which each participant would bid the amount above the public auction price he or she was willing to pay. The highest bidder at the secret, second auction won the property.
The indictment also charged the Brannons and their company with conspiring to use the U.S. mail to carry out a fraudulent scheme to acquire title to rigged foreclosure properties sold at public auctions at artificially suppressed prices; to make payoffs to and to receive payoffs from co-conspirators; and to cause financial institutions, homeowners, and others with a legal interest in rigged foreclosure properties to receive less than the competitive price for the properties. The indictment charged the Brannons and their company with participating in the bid-rigging and mail fraud conspiracies from as early as October 2004 until at least August 2007.
So far, eight people and two companies have pled guilty in the U.S. District Court for the Southern District of Alabama, in connection with this investigation. (usattysdal52013)
MORAL
With 20 months in prison, loss of right to vote, no parole in federal system, plus the loss of ability to obtain certain types of licenses and jobs. Seems like one heck of a price to pay for $21,000 plus. Note how the prosecutors chased them for acts that occurred nine years ago! Remember what I said. The prosecutors have 10 years by using the mail and wire fraud statutes.
CALIFORNIA INVESTMENT MANAGER GETS OVER SIX YEARS IN FEDERAL PRISON FOR TALKING PEOPLE INTO INVESTING IN HIS COMPANIES TO PURCHASE REAL PROPERTY
FACTS
On May 20, Joseph Randall Medcalf, formerly an investment manager in Fresno was sentenced to six-and-a-half years in prison in a scheme to defraud investors. Medcalf carried out a scheme to defraud investors from at least May 2002 through October 2007 by offering investment opportunities in entities he controlled.
Medcalf failed to register these investments with the Securities and Exchange Commission or other governmental entities. Medcalf convinced some investors to move their investments from secure IRAs and other legitimate investments to him. In some cases, Medcalf’s investments were nonexistent; in other cases, they were failing and worthless. Medcalf frequently did not even invest the funds, but either paid other investors “returns” on their investments or spent it for his own personal use.
Medcalf marketed the investment opportunities as safe investments for a set time period, usually with a guaranteed interest rate. He stated that the principal and interest would be returned at the end of the term. In some cases, Medcalf executed promissory notes and subscription agreements that stated the investment’s time period and guaranteed rate of return. In order to lull investors into believing that the investments were secure, Medcalf sent out financial statements showing substantial returns. Medcalf also encouraged his investors to roll over their investments for another term so he could avoid paying out on the investments and to forestall the investors’ discovery of the fraud scheme. Medcalf also filed a bankruptcy petition in which he fraudulently failed to disclose his connection with All Valley Holdings and Cencal Value Investments in an effort to avoid disclosure of his scheme to defraud.
Medcalf was ordered to pay restitution of over $3.3 million to victims of his fraud scheme and was also ordered to forfeit an equivalent amount to the United States. Medcalf has been in custody since December 2011 when the FBI arrested him at the Atlanta airport as he flew back into the United States from overseas. (usattyedca52013)
MORAL
Note here how the prosecutors went back the full 10 years to prosecute for acts that occurred at that time. More importantly, does anyone out there ask for investors to invest in their companies for financing mortgages among other products? Did you check to see if you are violating SEC laws and regulations as occurred here? There are restrictions even under California Securities Laws as do relationship with investors, net worth of investors, exclusions of certain items in computing net worth and other items. I would suggest if you are looking for investors you consult competent legal counsel or you may find yourself in this same type of situation.
FORECLOSURE SALE IS STOPPED IN CALIFORNIA USING THE NEW HOMEOWNERS BILL OF RIGHTS
FACTS
Kevin Singh of West Sacramento is among the first in the state to use California's new Homeowner Bill of Rights to stop a bank from foreclosing on his home.
Singh, a house painter, secured a federal court order earlier in May 2013 after Bank of America allegedly engaged in a now-forbidden practice called dual tracking. The behavior, in which a bank proceeds with foreclosure while negotiating with a borrower for a loan modification, has been widely criticized as deceptive. Singh's case was the first instance in which a judge issued a preliminary injunction to halt a foreclosure auction under the Homeowner Bill of Rights.
In late May 2013 after the injunction Bank of America was negotiating to resolve the case. Any settlement should have to include rescinding the foreclosure. The Homeowner Bill of Rights also provides for attorney’s fees for winning an injunction.
In an email, Bank of America spokeswoman Jumana Bauwen allegedly wrote that "Bank of America has resolved this issue with the borrower."
The Homeowner Bill of Rights, which took effect Jan. 1, has given homeowners real legal leverage in fighting foreclosures. A number of similar Homeowner Bill of Rights cases are moving through the courts in Northern and Southern California. Some, like Singh's, have resulted in judges issuing temporary restraining orders and preliminary injunctions that put a stop to foreclosures.
California is a nonjudicial foreclosure state, where foreclosures typically do not go before a judge. In other states, such as Florida, courts routinely review foreclosures. The new law provides California homeowners more opportunities to mount legal challenges.
Singh said his painting business dried up during the recession and he stopped making mortgage payments. Recently, Singh thought he was working out a loan modification with Bank of America and was stunned to receive a notice that his home would be auctioned on April 22.
First step was to seek a temporary restraining order. The Homeowner Bill of Rights is a state law, but filing his case in federal court in Sacramento, meant it would get heard faster than in the backlogged state courts. The court could take the case because Singh was challenging an entity from another state. It is called “diversity jurisdiction.”
The settlement included terms similar to some provisions of the Homeowner Bill of Rights, including curbs on dual tracking.
The Singh case was a blatant example of dual tracking. Singh had submitted an application for a loan modification but never got an answer before he was notified his house would be auctioned.
Here was no letter saying, “Sorry, you've been denied a loan modification.” There couldn't be a simpler violation of the Homeowner Bill of Rights.
U.S. District Court Judge Morrison England Jr. granted the temporary restraining order on April 17, and Bolanos asked a colleague to go to the auction at a hotel in West Sacramento to "wave the TRO at the auctioneer." The sale was stopped, and on May 1 England issued a preliminary injunction halting the foreclosure indefinitely. England noted in his order that Bank of America had not disputed Singh's claim that he never received a decision on his loan modification before the bank moved to foreclose. (sacb52313/caed0079)
MORAL
If you are in arrears and/or in foreclosure, apply for a loan modification. If you are in foreclosure and the facts fit, then fight.
SAN FRANCISCO MAN PLEADS GUILTY TO BRIBING BANK OFFICIAL TO OBTAIN RESIDENTIAL LOANS
FACTS
On May 23, Jason Sterlino pleaded guilty in federal court in San Francisco to paying bribes to a bank official in order to procure residential mortgage loans, United States Attorney Melinda Haag announced.
He was employed as a sales manager for Discovery Sales from 2006 to 2009. He managed new home sales for two new housing developments in Oakland—the Monte Vista Estates and Monte Vista Villas residential developments. He reported directly to the president of Discovery Sales.
In pleading guilty, Sterlino admitted that he facilitated a 2007 agreement between Discovery Sales and
Sterlino admitted that he understood that a portion of the $30,000 referral fee would be paid by the mortgage broker to the Bank of America loan officer as a gift or commission. The purpose of this payment was to procure loans for unqualified buyers through applications that contained false information. Sterlino admitted that he received a portion of the $30,000, typically $5,000 per buyer, as a kickback from the mortgage broker.
Approximately 20 loans were funded by Bank of America in 2007 and 2008 as a result of this corrupt scheme, from which Sterlino personally received approximately $100,000 in cash.
Under the plea agreement, Sterlino pleaded guilty to with one count of bank bribery and has agreed to cooperate in the FBI’s continuing investigation.
Sterlino is free on bond pending sentencing. The sentencing is scheduled for Oct. 24 before Judge Jeffrey White in San Francisco. The maximum statutory penalty is 30 years in prison and a fine of $1 million plus restitution if ordered by the court. (loansfe.org52313)
MORAL
He is free on bond. Pity the poor bank loan officer who probably is next on the chopping block. How about the buyers of the property? Do you think they may be up for nomination?
CONNECTICUT MAN PLEADS GUILTY TO MORTGAGE FRAUD
FACTS
On May 21, Daniel Monteiro waived his right to indictment and pleaded guilty before United States Magistrate Judge Donna F. Martinez in Hartford to one count of conspiracy to commit bank fraud, wire fraud and money laundering stemming from a mortgage fraud scheme.
From approximately May to October 2007, Monterio conspired with others to obtain residential mortgages through the use of false down payments and hidden referral fees. As part of the scheme, Monterio referred individuals to a co-conspirator who had purchased numerous residential real estate properties, many through the use of a private lender. The individuals Monterio referred were then identified on mortgage documents as having purchased properties from Monterio’s co-conspirator. However, the co-conspirator purchased the bank checks that were used as down payments for each of the transactions. The co-conspirator used money obtained from the mortgages to pay private lenders and, on some occasions, referral fees to Monterio.
Monteiro is scheduled to be sentenced by Chief United States District Judge Alvin W. Thompson on Aug. 16, at which time Monterio faces a maximum term of imprisonment of five years and a fine of up to $250,000. As part of his plea agreement, Monterio has agreed to forfeit $15,000. (usattyct52113)
MINNESOTA AMENDS DEFINITION OF FORECLOSURE CONSULTANT TO INCLUDE LICENSED RESIDENTIAL MORTGAGE ORIGINATORS
FACTS
The definition of a foreclosure consultant under Minnesota’s Mortgage Foreclosure law is amended and expands the scope of regulations that apply to licensed residential mortgage originators there.
Under existing provisions of Minnesota’s Mortgage Foreclosure law, the term “foreclosure consultant” is generally defined as a person who for compensation performs or makes an offer to perform certain services, including, without limitation, to stop or postpone a foreclosure sale or obtain forbearance.
The Minnesota’s Mortgage Foreclosure law expressly exempted residential mortgage originators and servicers licensed under the Minnesota Residential Mortgage Originator and Servicer Licensing Act and acting under the authority of that license from the definition of a foreclosure consultant.
Under the new law, mortgage originator licensees who negotiate the terms or conditions of an existing residential mortgage loan are subject to several provisions of Minnesota’s Mortgage Foreclosure law.
Mortgage originator licensees who are negotiating the terms of an existing residential mortgage are subject to provisions regarding the borrower’s right to rescind a foreclosure consultant contract, requirements that apply to contracts between borrowers and foreclosure consultants, limitations on prohibited practices by foreclosure consultants, a prohibition on waiver of statutory protections, remedies for violations, and a provision making arbitration clauses in contracts with foreclosure consultants void. These amendments in Minnesota are effective now. (h.f.12941913)
MORAL
If you are a mortgage originator that is licensed in Minnesota read H.F. 129 or risk discipline on your license. Especially if you own the company. Watch your loan officers dealing with existing loans.
NORTH DAKOTA AMENDS DEFINITION OF GOOD FUNDS AND DISCLOSURES
FACTS
North Dakota has amended the good funds provisions and requires a new disclosure for closing agents in real estate transactions. There are civil damages for violations of the good funds requirements. A closing agent in North Dakota may not make disbursements from an escrow account in connection with a real estate transaction unless the funds are considered good funds.
The new definition of good funds in North Dakota means funds in any one or more of the following forms: (1) United States currency; (2) Wired funds unconditionally held by and irrevocably credited to the escrow account of the closing agent; (3) A check that has been presented for payment and for which payment has been collected. The term “collected funds” is defined to mean a cash deposit or a check that has been presented for payment and for which payment has been irrevocably credited to the closing agent's escrow account; (4) A check that is drawn on the trust account of a real estate broker licensed under chapter 43-23 of the North Dakota Century Code or on the trust account maintained by an attorney under the North Dakota Rules of Professional Conduct, for which funds are collected funds by the real estate broker or the attorney's trust account; (5) A cashier's check not to exceed fifty thousand dollars in the aggregate which is received by the closing agent and which is drawn on an existing account at a bank, savings and loan association, credit union, or savings bank chartered under the laws of a state or the United States located in North Dakota, Minnesota, Montana, or South Dakota; (6) A check drawn on the escrow account of another closing agent in North Dakota, Minnesota, Montana, or South Dakota; (7) Funds transferred to the closing agent's escrow account by the bank, savings and loan association, credit union, or savings bank that is the host institution of the closing agent's escrow account.
There are civil damages for violations of the good funds requirements in the amount of $500 per violation in the first action and $1,000 in any subsequent action. The new disclosure requirement for closing agents in real estate transactions is required. Specifically, a closing agent must disclose to the seller in a prominent manner in the closing documents the anticipated closing date and all of the dates through which any loan payoffs are calculated. These amendments in North Dakota become effective on Aug. 1. (hb1316 2013)
MORAL
Know the definition of good funds but especially know the new disclosure requirement or risk the penalties and discipline which can appear on your NMLS record.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE. AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE
