NEW APPRAISALS RULES FROM CFPB EFFECTIVE IN JANUARY 2013
Mortgage lenders are to provide home loan applicants with copies of written appraisals and other home value estimates and ensure that consumers receive information prior to closing about how the property’s value was determined.
Creditors are to inform consumers within three days of applying for a loan of their right to receive a free copy of the appraisal reports and home value estimates. Creditors must furnish the reports as promptly as possible, but in no case later than three days before closing. The rule applies to all loans, regardless of whether credit is extended, denied, incomplete or withdrawn.
Creditors could still charge reasonable fees associated with conducting appraisals and home value estimates; however, the rule would prohibit creditors from charging consumers fees for obtaining the reports.
1. Limit the requirement to applications for credit to be secured by a first lien on a dwelling.
2. Require that creditors notify applicants within three business days of receiving an application of their right to receive a copy of written appraisals and valuations developed in connection with their application.
3. Require creditors provide applicants a copy of all written appraisals and valuations promptly after receiving them, but in no case later than three business days prior to closing on the mortgage.
4. Permit applicants to waive the timing requirement to receive copies three days prior to consummation, provided a copy of all written appraisals and valuations is provided at or prior to closing.
5. Prohibit creditors from charging additional fees for providing a copy of written appraisals and valuations, but permit creditors to charge applicants a reasonable fee to reimburse the creditor for the cost of the appraisal or valuation unless otherwise provided by law. (alrgs101512bkrsadvinc)
Seems repetitive to me since most states require the consumer get a copy anyway. But watch out for the fact that you have to give the consumer the report even if loan denied or withdrawn.
ARIZONA AG ENTERS INTO CONSENT CIVIL JUDGMENT WITH DEFENDANT WHO CLAIMED THE MONEY WAS “CHURCH DONATIONS” AND NOT FOR LOAN MODS
On Oct. 18, Arizona Attorney General Tom Horne obtained a consent judgment against Rosa Galope in a consumer fraud lawsuit in which the state alleged that Galope engaged in a scheme designed to defraud homeowners looking for assistance in obtaining mortgage loan modifications and forestalling foreclosure on their homes.
Horne alleged Galope charged distressed homeowners thousands of dollars in advance fees for her services. When she was unable to obtain results, she refused to refund the money, claiming the payment was a donation to her church, Nation to Nation Ministries. The state also alleged that Galope instructed her clients to not communicate with their lenders and to send their mortgage payments to her so that she could forward them to the consumer’s mortgage lender, while keeping the money for her own use.
The terms of the judgment require Galope to pay full restitution of nearly $65,000 to consumers who filed a complaint with the Attorney General’s Office. Galope was also ordered to pay $10,000 in civil penalties and is prohibited from engaging in any loan modification activities in Arizona or on behalf of Arizona consumers. In entering into the consent judgment Galope did not admit that she violated the law nor did the court make findings that she did so. (azag101812prsrel)
I would say she had a very good attorney. There is no admission of law violation and no findings by the court of any violations.
CALIFORNIA MAY LET YOU HAVE YOUR REAL ESTATE LICENSE FOREVER?
A decision by the Department of Real Estate to delay renewal of a real estate license tolls its expiration until any disciplinary actions pending against the licensee are final or the licensee voluntarily surrenders his, her or its license, whichever is earlier. (B&PC10186.2-1/1/12)
So if your license is set to expire and the DRE files an accusation the license stays active until the hearing is completed—say 10 years from now?
CALIFORNIA SELLER REFUSES TO RELEASE BUYER’S ESCROW FUNDS AND WINDS PAYING BUYER THREE TIMES AS MUCH AFTER TRIAL
Plaintiff entered into an agreement with defendants for the purchase of real property in Riverside County, Calif. An escrow was opened with Arch Escrow and plaintiff Golden State Holding LLC deposited $50,000. Golden State later gave notice of cancellation of the transaction. The sellers’ took the position that the notice was untimely and refused to release the escrow deposit. Golden State sued.
The Riverside Superior Court judge said Golden State gets its money back. Golden State’s cancellation notice was timely. The escrow deposit was ordered released to Golden State. Because the escrow agreement contained an attorney fee clause Golden State filed a motion for the fees and was awarded $101,886 in attorney fees and $1,223 in costs. (Golden State Holdings, LLC v. Arch Escrow/BC382009)
Either the defendants did not think the plaintiff would spend the money to get the deposit back or they thought they were right. Now it costs them the deposit plus over $100,000 in attorney fees they had to play plaintiff. So do not gamble. If the cancellation is correct, give it up or get sued.
CALIFORNIA AG FILES CRIMINAL COMPLAINT AGAINST TWO FROM GARDENA FOR MORTGAGE FRAUD
On Oct. 16, Attorney General Kamala D. Harris announced the arrest of two suspects who have been charged with grand theft, burglary, unlawful collection of advance fees, tax evasion and conspiracy in a wide-ranging mortgage fraud scheme. Both suspects also face special enhancements for excessive taking and aggravated white-collar crime for losses to victims exceeding $350,000.
The arrest declaration alleges Joana Sosa and Zoila Ortega ran a criminal mortgage fraud enterprise mainly against Spanish-speaking victims and targeted members of their own Spanish-speaking community. Other family and friends often referred many of the victims.
Sosa and Ortega are charged with 41 criminal felony counts. If convicted, they each face 36 years in prison, including fines and restitution. They were booked at the Los Angeles County Jail and remain in custody at this time.
From 2008 to 2010, Sosa and Ortega charged their victims thousands of dollars in up-front fees and monthly payments, promising to protect their victims from eviction by purchasing their property from their lender and becoming their new "lender." Sosa and Ortega promised the victims a modified loan they could afford with the opportunity to buy back their home in the future. Sosa and Ortega rendered no services, resulting in consumers being evicted from their homes. Additionally, Sosa and Ortega instructed several consumers to stop making their mortgage payment, and in some instances, to stop paying their bills all together. Consumers were told this would allow them to qualify for a loan modification.
Many of the victims only spoke Spanish and were instructed to sign contracts in English.
In November 2011, the Attorney General’s Office launched an investigation into this matter based on information received by the Los Angeles County Department of Consumer Affairs Real Estate Fraud Unit. Agencies that assisted in this investigation include: California Department of Justice Special Agents with the Mortgage Fraud Strike Force, the Franchise Tax Board and the Los Angeles County Department of Consumer Affairs Real Estate Fraud Unit. (LASC Cse #BA396271)
The state is getting into the act with a vengeance.
SACRAMENTO RESIDENT PLEADS GUILTY TO MORTGAGE FRAUD
On Oct. 18, Sean McClendon pleaded guilty to mortgage fraud arising from home sales in the Sacramento area. Co-defendant Anthony Salcedo is alleged to have compensated McClendon and co-defendant Anthony Williams for finding buyers for four properties owned by or associated with Salcedo. Some of the payments by Salcedo went to the buyers of the property, although the payments were never disclosed to the lenders as part of the purchase and sale agreements. McClendon participated in the loan origination process for the buyers and in each instance the buyers’ income and assets were falsified in order to qualify for the loans. All properties involved were foreclosed by the lenders, resulting in losses of over $1 million.
The date for McClendon’s sentencing is not yet set. The maximum statutory penalty for mail fraud and the elated conspiracy is 30 years in prison and a $1 million fine.
The charges against Salcedo are only allegations, and he is presumed innocent until and unless proven guilty beyond a reasonable doubt. (usattyedsac101812)
As long as you have been reading this e alert, is there any doubt but this is still ongoing and will probably continue for at least two more years.
IDAHO COUPLE PLEAD GUILTY TO MORTGAGE FRAUD
On Oct. 19, Aaron Michael Hymas and Tiffany Kim Hymas pled guilty in United States District Court in Boise to one count of wire fraud.
The defendants admitted that on March 28, 2007, they schemed to defraud a lender by having Tiffany Hymas submit a residential loan application for $295,600, wherein she misrepresented that she was employed by OPM Enterprises with 2.6 years on the job; that she had income and commissions of $72,500 per month; and that she had gross rental income of $14,600 per month from four properties located in Meridian, Nampa, and Boise. Based on these misrepresentations, the loan was funded by Taylor, Bean and Whitaker Mortgage Corp. The defendants admitted that Tiffany Hymas’ statements were false and material to the loan application and that they knew the statements were false at the time she made them.
The defendants face up to 20 years in prison, a maximum fine of $250,000, and up to three years of supervised release. Sentencing is set for Jan. 14, 2013, before U.S. District Judge Edward J. Lodge at the federal courthouse in Boise.
This is part of the long-term investigation into the mortgage activities of those associated with Crestwood Homes.
In a related case, Travis Richard Hymas was scheduled to be sentenced this past week after a federal jury convicted him on June 22 on five counts of wire fraud related to mortgage fraud. During the eight-day trial, the jury heard evidence that between November 2006 and March 2007, Hymas defrauded five lenders on nine residential loans valued at approximately $1.7 million. According to court documents, Travis and his wife Season filed a bankruptcy petition on July 17, 2008, in United States Bankruptcy Court for the District of Idaho. On March 19, 2009, the bankruptcy proceeding discharged a substantial amount of the debt they owed on the fraudulent loans. Season Hymas is set for trial in Boise on Nov. 13. To date, nine people have been sentenced in related cases, (101912loansafe.pr)
Note that the loans go back to 2007. So if anyone did loans from 2007 to 2012 that are questionable, they should seek a knowledgeable attorney now rather than wait until federal agents come to the door. There are legal preventative measures that can be taken usually to mitigate the problem.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE. AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.