HUD/FHA Direct Endorsement Lenders Must Update Their Quality Control Plans for TPOS

FACTS

HUD has issued its new mortgagee letter ML 11-02. The requirement is all Direct Endorsement lenders must update their respective quality control plans to include review of Sponsored Third Party Originators and the FHA insured loans they generate. The update shall document the methodology used to review the sponsored TPO’s, review all TPO loans that go into default during the first six months (i.e. become 60 days past due within the first six payments.) (ml 2011-2)

MORAL

Be certain to update your quality control manual to clearly indicate your monitoring of the loans of the TPO's at a minimum. You should probably monitor their location at least once per year for use of processors in house as opposed to outside processors. Be sure to check Neighborhood Watch on the TPO loans to verify default rates on those loans alone.  All this should be in your updated QCP manual.

MAKE SURE THAT TPOS OF HUD/FHA LOANS HAVE THEIR NMLS UNIQUE IDENTIFIERS OR YOU MAY BE INDEMNIFYING THE LOAN AS THE DIRECT ENDORSEMENT LENDER

FACTS

HUD Mortgage Letter 2011-4 issued Jan. 5, informs Direct Endorsement mortgagees that HUD will begin collecting the unique identifiers assigned by the Nationwide Mortgage Licensing System and Registry to individuals and entities participating in the origination of loans submitted for insurance by FHA. 

FHA-approved mortgagees that act as a sponsor for a third party originator should ensure that their sponsored third party originators obtain and maintain an NMLS unique identifier, as is required by the states and entities with jurisdiction over their activities and in accordance with the registration guidelines set forth by the NMLS.

Entry of the name and NMLS ID of a loan officer is optional until March 31. For all case numbers assigned on or after April 1, this information must be entered in accordance with the following guidelines: The loan officer’s first and last name are required, and if registered in NMLS, the loan officer’s NMLS ID is required.

Changes have been made to Form HUD 92900-A to capture the company, taxpayer ID and NMLS ID of a Sponsored TPO. (ml11-04)

MORAL

For those lenders we represent that are strictly retail this should not pose any problem.

For those lenders we represent that do wholesale and use third party originators, you may want to consider having us audit your company before HUD/FHA does it for you and finds irregularities in your third party originators before you do and before you legitimately correct the oversight.

NOTWITHSTANDING AN E MAIL FROM NMLS YOU ARE NOT REQUIRED TO GIVE CA DRE A FINANCIAL STATEMENT AT THIS TIME

FACTS

Financial statements will not be required by the California Department of Real Estate at this time. If you have received an email from the NMLS system regarding a license item set for financial statements for CA-DRE, please disregard this email. DRE will clear this license item on your NMLS record. (Public notice from DRE website 1-7-11)

MORAL

Thank God for the Real Estate Recovery Fund.

CA DRE PROPOSES TO AMEND REGULATIONS

FACTS

Amend Section 2725-Broker Supervision-

Add 2725(a)(8)   Screening and reporting programs to prevent employment of or business activities with debarred persons consistent with Section 2725.5 of these regulations

ADD Section 2725.5. Broker Responsibility Regarding Debarred Persons

Business and Professions Code section 10087 authorizes the Commissioner to debar licensed or unlicensed persons from any position of employment with, or management or control of, a real estate business. Such debarred persons are further prohibited by section 10087 from participating in any business activity of a real estate salesperson or a real estate broker and from engaging in any real estate-related business activity on the premises where a real estate salesperson or real estate broker is conducting business. A broker is responsible for screening his or her employees, both licensed and unlicensed, and regular business associates engaging in any real estate-related business activity on the broker’s premises, for compliance with Section 10087. Such broker responsibility includes, but is not limited to, QUARTERLY REVIEW of the Department’s online listing of debarred persons and of the listing of disciplinary actions published in the Department’s quarterly bulletin. A broker who becomes aware of violations of Section 10087 is responsible for reporting such violations to the Department.

AMEND Section 2830 on trust accounts:  This section is amended so that a real estate broker may not receive any type of consideration whatsoever that benefits the broker and not the client for whom the trust funds are held.  In this attorneys opinion that would include free checks and free deposit slips and free reconciliation of the accounts.

MORAL

When or if these become effective all of the brokers will have to comply. The biggest ones are broker supervision and a “debarred person’ being allowed to use broker real estate premises for any reason whatsoever. Pay attention. The next time we audit you, we will be looking for these for your own protection.

MARYLAND MORTGAGE BROKER PLEADS GUILTY TO MORTGAGE FRAUD AGAINST LENDERS AND FAMILY

FACTS

On Jan. 6, Douglas Skibicki of Bethesda, Md., pled guilty to two counts of mail fraud in connection with a mortgage fraud scheme in which he defrauded lenders, family and others.

Skibicki was a mortgage originator and/or broker for a company which operated in Laurel, Md.  From April 2006 through August 2009, with the assistance of an appraiser and others, he participated in a scheme to defraud lenders, family members and others through a series of real estate transactions.

In May 2007, G.C., who owned a construction company, was facing financial difficulties. G.C. contacted Skibicki to discuss whether he could help him. Skibicki had previously assisted G.C. in refinancing G.C.’s residence. Skibicki agreed to purchase a 50% interest in property G.C. owned at 7609 Bay Street in Pasadena, for $121,000, but told G.C. that Skibicki’s 50 percent interest in 7609 Bay Street would be put in the name of Family Member 3.

In May 2007, G.C. owned 7609 Bay Street free and clear, but there was only a garage with an attached room, as well as an unusable outhouse, built on 7609 Bay Street. There was no running water and no operable bathroom on the property.

On May 9, 2007, the appraiser working with Skibicki completed a fraudulent appraisal of 7609 Bay Street, including that there was a two-bedroom, one-bathroom existing home on the property with a “modern” kitchen and an enclosed porch and pier. The appraiser also included photographs of the front and rear of the home supposedly located at 7609 Bay Street. Those photographs were of a home that was never located at 7609 Bay Street.

In May 2007, Skibicki submitted a fraudulent loan application to National City Bank for a mortgage on 7609 Bay Street in the name of Family Member 3, which contained false statements as to Family Member 3's income and current residence. Family Member 3 did not sign the loan application and neither Family Member 3 nor G.C. signed the settlement documents that were provided to the mortgage company, showing that a settlement for the Bay Street property occurred on May 15, 2007. Based on the false information submitted by Skibicki, National City provided a mortgage on 7609 Bay Street in the amount of $260,971 in the name of Family Member 3. Skibicki received $249,997.18 in the name of Family Member 3 after taxes and closing costs were deducted. Skibicki told the title company handling the settlement to wire $121,000 to a bank account held in the name of G.C.’s construction company, to pay for the 50 percent interest in 7609 Bay Street that Skibicki had purchased in the name of Family Member 3. Skibicki subsequently allowed the mortgage on 7609 Bay Street to go into default, leading to foreclosure proceedings.

Skibicki and Family Member 1 owned property at 5870 Deer Ridge Lane in Elkridge. On June 2, 2006, Skibicki submitted a loan application for $350,000 to refinance 5870 Deer Ridge Lane. To facilitate the loan application, the appraiser working with Skibicki prepared a fraudulent appraisal indicating that there was a 2,040 square foot home on the property and included a description of the home and photographs purporting to be of the front and back of the home. In fact, there was no home on the property, which was a vacant lot.

In August 2007, with 5870 Deer Ridge Lane still a vacant lot, Skibicki decided to refinance that property again, this time in his name only. On Aug. 18, 2007, the appraiser working with Skibicki completed another fraudulent appraisal of 5870 Deer Ridge Lane stating that there was a 3,297 square foot, five bedroom home on the property that had, among other things, a stone patio, an enclosed and covered porch, and a balcony. Again, the appraiser included photographs purportedly of the front and rear of the home located at 5870 Deer Ridge Lane, but these were photos of a home that was never located there. In October 2007, Skibicki submitted a loan application to Washington Mutual Bank seeking to refinance 5870 Deer Ridge Lane for $517,500. The loan application indicated that title to the property would be held just by Skibicki, even though Family Member 1 had not given permission to take his name off the title to the property. The loan application also falsely stated that the purpose of the refinancing was a cash-out home improvement and contained false statements as to Skibicki’s employment and income, and that he planned to use 5870 Deer Ridge Lane as his primary residence. Skibicki submitted fraudulent documents in support of the loan application, including fraudulent W-2s for tax years 2005 and 2006. Based on the materially false information that Skibicki provided, on Oct. 23, 2007, Washington Mutual provided a loan in the amount of $517,500. Skibicki allowed the mortgage on 5870 Deer Ridge Lane to go into default, leading to foreclosure proceedings.

Skibicki admitted that he made and caused to be made misrepresentations to other lenders in order to obtain mortgages on additional properties. He has agreed to forfeit all money, property and assets acquired as a result of or used to facilitate the fraud scheme and has agreed to a $1.4 million forfeiture money judgment. Skibicki faces a maximum sentence of 20 years in prison and a fine of $250,000 or twice the gross loss or gain of the offense, if greater than $250,000, on each count of mail fraud. U.S. District Judge Catherine C. Blake has scheduled sentencing for April 22 at 9:15 a.m.  (usattymd1611)

MORAL

Well, if you cannot “burn” your family, who can you burn?

NEW JERSEY WOMAN TO DO TIME FOR AIDING IN DOWN PAYMENT ASSISTANCE TO BUYERS

FACTS

On Jan. 4, Taya Romano, a property developer formerly of Ridgewood, N.J., pleaded guilty and admitted in federal court that she participated in a mortgage fraud scheme that defrauded lenders and generated $4.7 million in bogus loans. She will be sentenced on April 13 in Trenton, N.J. by U.S. District Court Judge Peter G. Sheridan.  She’s facing possible federal prison time, as well as a fine that could hit $1 million.

Romano, who moved to Edmund, Okla., where she opened a new real estate business, admitted that from December 2007 to June 2008, she participated in a down payment assistance scheme involving 13 properties in Paterson and East Orange.

Romano, also known as Taya Waldon, said she acquired distressed properties that she could flip by recruiting ineligible buyers with no money down and then submitted bogus financial statements in their names to help secure the mortgages, using proceeds from other loans as down payments.

In one day, she bought three homes for roughly $850,000 and instantly sold them for $1.37 million, a profit of more than half a million dollars. The lenders ended up having to default on the loans, and several buyers were left out in the cold except for her stepfather, authorities said, who bought two properties and turned them into federally-subsidized Section 8 units, guaranteeing him rent.
U.S. Attorney Paul Fishman credited FBI special agents with making the case, which also produced a guilty plea by a settlement agent, Elizabeth Labruna of Little Ferry, N.J. Labruna admitted helping Romano and was expected to testify against her if the case went to trial as a way of mitigating her own sentence.  (cliffviewpilot1411)

MORAL

I wonder how much time she is looking at? Think about it. The federal prosecutors are working on the 2006 and 2007 loans. Anybody out there do “creative down payment assistance.”

THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.

AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE