FINCEN MAKES NONBANKS COMPLY WITH REPORTING REQUIREMENTS; THIS INCLUDES ALL MORTGAGE LOAN ORIGINATORS, BROKERS AND LENDERS FACTS - Over the last 20 years you have all heard me speak of this agency. All federal financial institutions have to file Suspicious Activity Reports with it. The filer may not reveal to anyone this has been done under criminal penalty. The filer does it in good faith and does not even have to be right. It reaches the desks of the FBI, Secret Service and local prosecutors. The agent n charge for the local FBI office decides which of the reports will be investigated. Now nonbanks must comply. The Financial Crimes Enforcement Network finalized regulations on Feb. 7 by which non-bank residential mortgage lenders and originators will have to follow the same rules as other financial institutions.
FinCEN will require non-bank mortgage lenders and originators to establish anti-money laundering programs and to file suspicious activity reports in order to help law enforcement agencies detect any possible fraud within their businesses. This means the reporters only have to be suspicious. They do not have to be right.
According to FinCEN, the new regulations will help mitigate some of the risks and minimize some of the vulnerabilities that criminals have exploited in the non-bank residential mortgage sector. FinCEN said scams that fraudsters have used against non-banks include false statements, the use of straw buyers, fraudulent flipping, flopping and identity theft.
The final rule will go into effect 60 days after publication in the Federal Register and compliance begins for non-banks six months after it is published. So get prepared. (nmn2712)
MORAL
This wears an ugly hat because you do not have any options but to file.
HUD/FHA CHANGES COMPARE RATIO VALUES BY NOT INCLUDING STREAMLINE REFINANCING
FACTS
FHA has changed the way in which Streamline Refinance loans are used in the Neighborhood Watch System. Streamline Refinances will be removed from the public compare ratio in Neighborhood Watch. Lenders will still be able to view their own traditional compare ratio with streamlines included. FHA will modify its execution of the Credit Watch Termination Initiative to correspond to the changes noted. (wbrod2812)
MORAL
I have warned everyone in HUD programs to watch the Compare Ratio in Neighborhood Watch on a regular monthly basis. Failure to do so can trigger an audit and possible loss of the DE endorsement.
ORANGE COUNTY DA ACTIVATES FRAUD UNIT WITH THE HELP OF THE REAL ESTATE FRAUD ADVISORY BOARD
FACTS
As if the FBI, the Attorney General and the HUD Special Agents are not enough, there is now Elizabeth Henderson, an assistant Orange County District Attorney that is head of the major fraud unit and who has the help of the Real Estate Fraud Advisory Board.
Henderson and the board meet every three months at the District Attorney's office to talk about new scams that may be occurring and how to catch the people doing them. There are two attorneys and three investigators that work full time in real estate fraud and currently there are 37 active cases where charges have already been filed.
What is interesting about the Real Estate Advisory Board? Of the 20 people, most are real estate licensees. Still at it according to the D.A.'s office are loan modification scams and short sale frauds. (pcrenewsdpp3621112)
MORAL
If someone is not sure whether a new business venture is legal, it is a lot cheaper to consult with your real estate lawyer for one hour than it is to pay the same lawyer to defend you in a criminal prosecution. You also sleep better.
THREE NORTHERN CALIFORNIA REAL ESTATE INVESTORS AGREE TO PLEAD GUILTY FOR BID RIGGING AT FORECLOSURE SALES
FACTS
On Feb. 9, three Northern California real estate investors agreed to plead guilty for their roles in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California. To date, 20 individuals have agreed to plead guilty.
Charges were filed in U.S. District Court for the Northern District of California in Oakland, Calif., against Barry Heisner, Dominic Leung and Hilton Wong.
Between August 2008 and January 2011, the three conspired with others not to big against one another at public real estate foreclosure auctions. Instead, the investors designated a winning bidder to obtain selected properties at public real estate foreclosure auctions in Contra Costa County.
Heisner, Leung and Wong also were charged with conspiracies to use the mail to carry out a scheme to fraudulently acquire title to selected properties sold at public auctions, to make and receive payoffs, and to divert money to co-conspirators that would have gone to mortgage holders and others by holding second, private auctions open only to members of the conspiracy. The department said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions. The private auctions took place at or near the courthouse steps where the public auctions were held. A forfeiture allegation was also included in the charges against Heisner.
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 Contra Costa County public foreclosure auctions at noncompetitive prices. When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner.
Each violation of the Sherman Act carries a maximum penalty of 10 years in jail and a $1 million fine for individuals. Each count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in jail and a $1 million fine. The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud. 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 the $1 million statutory maximum. (usattydc2-9-12)
MORAL
Investigation is ongoing? If anyone out there did any foreclosure bidding at the foreclosure sales may be it is time you came to see me? If not, good luck.
FOUR MORE PLEAD GUILTY IN NORTHERN CALIFORNIA TO MORTGAGE FRAUD; TOTAL NOW IS 50 FROM NORTHERN CALIFORNIA
FACTS
Four more people have pleaded guilty to charges in a $20 million mortgage scheme that involved more than a dozen Northern California properties. Ronald Nelson and his wife Edith entered the pleas to federal charges of bank fraud and tax evasion. Additionally, Cristeta Lagarejos and Nelda Asuncion also pleaded guilty in the case.
Prosecutors say the defendants obtained loans for at least 20 properties many of them care facilities using fake buyers and false employment and earnings information between 2002 and 2007. All four defendants are set to be sentenced on May 11. (ap2812)
MORAL
Fifty in one operation. It would seem that if you have been reading my morals, I am a reasonably good fortuneteller. I would like you all to note that the federal prosecutors are looking at mortgage fraud that took place nine years ago in 2009. Like I have been saying in my morals, the sweep is on and my prediction is it will continue full speed ahead through all of 2012 and into 2013.
STAYING WITH NORTHERN CALIFORNIA THREE MORE INDICTED FOR MORTGAGE FRAUD.
FACTS
A federal grand jury indicted three Sacramento residents for alleged money laundering and wire fraud as part of a wide-ranging mortgage fraud probe. The panel also filed new charges against a real estate agent, Valeri Mysin, who was first indicted in October on mail fraud charges.
The cases stem from a federal mortgage fraud investigation that has produced charges against more than 50 individuals in the local Russian American community.
The indictment alleges that Mysin recruited local landscaper Valeri Kolesnikov, and a local couple, Valentina and Anatoliy Beknazarov, to purchase homes in Sacramento, Roseville and Copperopolis by using phony loan documents. The homes later went into foreclosure, resulting in a loss of nearly $1.8 million for lenders. (sacbee21112)
MORAL
Kind of remind you of the Salem witch-hunts. Remember they are all innocent until proven guilty. I trust they have the funds to work on the case. As an aside the federal prosecutors are a lot easier to deal with than the state prosecutors.
STILL IN NORTHERN CALIFORNIA—PASTOR PLEADS“NOLO CONTENDRE” TO SIX FELONY COUNTS INVOLVINGLOAN MODIFICATIONS, FORECLOSURES AND REFINANCING
FACTS
On Feb. 9, Rodney Andrews, an Elk Grove, Calif., pastor who offered loan modification services pleaded no contest to a total of six felony violations, including embezzlement, theft by false pretenses, diversion of construction funds and unlawful use of personal identifying information.
Andrews operated Andrews Investment Group. He is also a pastor at the Comeback Christian Church, where he solicited parishioners and low-income property owners, promising to refinance their loans, lower their mortgages or stall foreclosures. He collected illegal up-front fees, failed to provide the services he promised and did not use the funds he obtained for the stated purpose. Andrews obtained money from one homeowner that was supposed to be used on a project to improve her home. He faces up to four years in prison. (sacbusjl21012)
MORAL
Nolo contendre is a fancy way of pleading guilty but it cannot be used against the person in a civil case should Andrews get sued civilly. Two) Time and again I have spoken at lectures before professional associations and others, if anyone asks for an advance fee to stop a foreclosure, get a loan modification or refinance your mortgage, walk away. If our firm has represented you as a mortgage loan originator or lender, we have informed you to keep track of the loan officers to be sure this is not being done. The owners can be held liable personally as well as risking the license they hold. The old adage holds true: “An ounce of prevention is worth a pound of cure.”
CONNECTICUT MAN CHARGED WITH MORE MORTGAGE FRAUD IN SUPERSEDING INDICTMENT
FACTS
On Feb. 7, a superseding indictment was filed charging Henry J. Papale of Southington, with eight counts of wire fraud and four counts of money laundering stemming from an alleged mortgage fraud scheme involving four properties in Florida.
The superseding indictment alleges that, in 2007, Papale persuaded two individuals to use their names and credit information to purchase four homes in Florida, purportedly as legitimate investments. Papale also obtained mortgage financing using the names and credit information of the two individuals.
The indictment further alleges that Papale submitted to the Florida settlement agent fraudulent invoices and work authorizations, which purported to be from a construction company for restoration on the properties, along with wire transfer instructions. In fact, the construction company was fictitious and no work was performed on the properties. Following the closing on each property, the settlement agent, at Papale's direction, transferred loan proceeds corresponding to the fictitious construction company's price for restoration work, in the total amount of $360,307.23, to the Connecticut bank account of an individual known to Papale. That individual then turned the majority of the fraudulently obtained loan proceeds over to Papale, who deposited them into his own bank account. Papale then transferred $255,500 in funds from his bank account to an investment trading account.
It is alleged that Papale did not make the mortgage payments due on the Florida properties, resulting in delinquencies on the properties' mortgages.
If convicted, Papale faces a maximum term of imprisonment of 20 years on each count of wire fraud, and a maximum term of imprisonment of 10 years on each count of money laundering. (usattyct2712)
MORAL
On and on it goes and where it will stop nobody knows. By the way, you all know what a superseding indictment is, don't you? It means since you will not plead guilty to the initial indictment we will add more charges so that going to trial will be more expensive. Notice how the federal prosecutors went from two counts to eight counts which will add more time.
CONNECTICUT MAN PLEADS GUILTY TO MORTGAGE FRAUD
FACTS
Domingos Dias of Trumbull nervously stood before a federal judge admitting his role in defrauding the lenders. He faces up to eight years in prison when U.S. District Judge Stefon R. Underhill sentences him on seven charges of wire fraud and a single charge of conspiring to commit bank and wire fraud for taking $3.2 million worth of bank loans.
Hector Natera, his co-conspirator, is still being sought by the FBI. Natera is better known for his failed attempt to buy and turn the 78-acre Stratford Army Engine Plant into a movie studio called Hollywood East. While those plans were pending, FBI agents raided Natera's 1944 Boston Ave. real estate office in connection with the mortgage fraud investigation.
Documents filed in federal court claim that from January 2006 until April 2008, Natera, who held a real estate license and Dias, who claimed to be a real estate agent and mortgage broker, recruited a real estate appraiser to overvalue homes and recruit potential buyers with good credit to apply for mortgages. Once the mortgages were obtained, the money was divided among them.
It is alleged the scam defrauded lenders such as Countrywide Home Loans, Washington Mutual Bank, AmTrust Bank and others of more than $3.2 million. Dias is alleged to have "escorted buyers to the closings" and "witnessed all of the mortgage" filings, which contained falsified information. (ctpost.com21012)
MORAL
As I have been saying all along. The hunt for mortgage brokers and loan originators will go on for at least two more years. I am publishing more prominent cases and mostly where guilty or sentenced. The country is in an uproar over the fraud and it is easier to catch the small guy and look good because it makes good statistics when law enforcement can say it caught and convicted thousands as opposed to one or two banks. And I do believe the count is over three thousand now and counting. I believe the counting will go on through and including all of 2012. So be sure to consult with your lawyer if anyone out there has questionable loans including and especially stated income loans from 2005 to the present.
FORMER UNIVERSITY OF CINCINNATI BASKETBALL PLAYER ANDEX-GIRLFRIEND SENTENCED TO 41 MONTHS FOR MORTGAGE FRAUD
FACTS
On Feb. 7, former University of Cincinnati basketball player Anthony O. Buford and his former girlfriend Jolie O. Neal each got 41 months in federal prison plus ordered to pay $2,779,609 in restitution to lending institutions they defrauded as part of a scheme to obtain mortgages on three properties they owned and keeping the money rather than paying off existing loans.
Buford worked for Dynus Financial, while Neal owned Tri-State Title Co., when they met and became romantically involved in 2003.
Neal asked Buford to broker a loan for an additional mortgage on her house. She closed the loan herself and kept the money rather than paying off the existing mortgage. She and Buford conspired to repeat the scheme in order to defraud approximately nine lending institutions beginning from in or about September 2004 until in or about July 2007 for an approximate loss of $2,779,500. (usattysdoh2912)
MORAL
Notice how they went back eight years? Like I have been saying the federal prosecutors are using special task forces to pick up on all the fraud loans. Flagstar still has its own vendetta going after brokers and loan originators where there is something wrong with the paper work and the FDIC and Chase have joined the war. So what we have is the state, the federal and three lenders chasing everybody.
DOCX AND ITS FOUNDER INDICTED IN BOONE COUNTY, MISSOURI BY A GRAND JURY ON 136 COUNTS OF FORGERY RELATED TO FORECLOSURE DOCUMENTS AND ROBO SIGNING
FACTS
DocX and its founder Lorraine Brown have been indicted by a grand jury in Boone County, Mo. for alleged forgery of mortgage documents used to evict distressed borrowers from their homes.
The 136-count indictment alleges that the person whose name appears on 68 notarized deeds of release on behalf of the lender is not the actual person who signed the paperwork. These inaccurate documents were then allegedly submitted to the county's Recorder of Deeds as though they were the truth.
According to the indictment, employees at DocX, a subsidiary unit of Lender Processing Services, allegedly notarized thousands of mortgage-related documents for several banks in multiple handwritings. LPS shut down DocX in April 2010 after evidence became apparent of possible illegal activity..
If convicted, Brown could face up to seven years in prison for each count, while DocX could be fined a maximum of $10,000 for each forgery conviction and $2,000 for every false declaration conviction. (nmn2712)
MORAL
So DocX gets fined. So what? Now going to prison for seven years that is something to worry about. But how does this help the evicted homeowners?
FORMER NEW JERSEY PUBLIC SERVANT SENTENCED TO PRISON FOR MORTGAGE FRAUD BECAUSE HE STATED BORROWERS WORKED FOR HIS AGENCY
FACTS
On Feb. 7, Ronald O'Malley, former chairman and commissioner of the Bergen County Improvement Authority and principal in a Ridgewood, N.J., mortgage brokerage firm, was sentenced to 24 months in prison in connection with a mortgage fraud scheme that falsely claimed BCIA employment for numerous mortgage borrowers.
O'Malley was the founder and co-owner of Diversified Financial Group, D/B/A Residential Mortgage Corp. Former Residential Mortgage employee Laura-Jean Arvelo also was sentenced to a two-year term of probation.
Both defendants previously pleaded guilty to a count of conspiracy to commit wire fraud. The defendants admitted that they conspired with each other and other to commit wire fraud in connection with fraudulent mortgage and home equity loans brokered by Residential Mortgage between 2006 and 2009. Both entered guilty pleas before U.S. District Judge Dennis M. Cavanaugh, who also imposed the sentences in Newark federal court.
According to the indictment, other documents filed in this case, and statements made in court: The participants in the mortgage fraud scheme falsely represented on mortgage loan applications and other documents that certain borrowers were employed by the BCIA when they were not. In support of the false representations, O'Malley and his coconspirators arranged for the BCIA staff to falsely confirm the borrowers' employment to banks and other mortgage lenders calling to verify the information. O'Malley and his co-conspirators also created and arranged for the creation of false and fraudulent BCIA pay stubs and W-2 forms, which were also submitted to lenders.
O'Malley and his coconspirators also made false representations regarding borrowers' employment at places other than the BCIA, and created similar false documentation in support of such claims. The coconspirators also created false asset information for borrowers, including by taking O'Malley's own bank and brokerage account statements and “cut-and-pasting” a borrower's name and address over his own. They also prepared phony leases showing fake rental income for borrowers.
In addition to the prison term, Judge Cavanaugh sentenced O'Malley to three years of supervised release and ordered him to pay a $25,000 fine. Three others involved with Residential Mortgage have also pled guilty and are awaiting sentencing. (USATTYNJ2712)
MORAL
Still at it hot and heavy. Loans here were done five years ago! Being a public official was not enough, now he will be an official in a federal prison along with several of his cohorts.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE
