Nationstar told Truman Capital that it was the winning bidder for more than 500 loans, and then a few days later refused to complete the transaction. Image: ThinkStock

HOMEOWNERS MAY SUE BANKS UNDER HAMP WHEN BANK DENIES PERMANENT LOAN MODIFICATION AFTER HOMEOWNER COMPLIES WITH THE TRIAL PERIOD PLAN

FACTS

Genevieve West agreed to a trial period plan with JPMorgan Chase Bank after her home loan went into default. TPP was a form of temporary loan payment reduction under the Home Affordable Mortgage Program. West complied with the terms of the TPP and timely made every payment during the trial period and afterwards.  Regardless Chase denied her a permanent loan modification via a letter dated April 5, 2010. West requested a re-evaluation, and on or about May 24, in a conference call with Chase, the bank promised her that she could resubmit her updated financial data for re-evaluation. Chase also assured her that there was no foreclosure date or sale scheduled.  However, Chase sold her home at a trustee’s sale two days later. West then sued Chase for breach of contract, and other causes of action.  Chase filed a demurrer with the trial court sustained without leave to amend. West appealed.

The 4th District Court of Appeal said reversed in part. The Appellate court reversed and allowed her to go forward to sue JPMorgan Chase Bank for (1) fraud; (2) negligent misrepresentation; (3) breach of written contract; (4) promissory estoppel; and unfair competition. Under the United States Dept. of Treasury, HAMP Supplemental Directive 09-01, if a lender approves a TPP, the borrower complies with all of the terms of the TPP, and all of the borrower’s representations remain true and correct, the lender must offer a permanent loan modification.

As a party to a TPP, a borrower may sue the lender or loan servicer for its breach. Here Chase approved West for a TPP, which West dutifully complied with. Consequently, Chase was required to offer West a permanent loan modification under HAMP and its failure to do so constituted a breach of their written contract. Accordingly, West properly pleaded a breach of written contract claim, and the trial court erred in dismissing her claim without leave to amend. (West v. JPMorgan Chase Bank N.A., California Courts of Appeal, 4th District, No. G046516, March 18, 2013;  2012 DJDAR 3471.)

MORAL

Under these circumstances, if she can prove it and get a good trial lawyer, I would love to see the amount of punitive damages awarded against the bank if she wins. Remember, read the contract, word for word. Then when entering into agreements for modifications and Trial Payment Plans make sure you comply and read HAMP Supplemental Directive 09-01 very, very carefully for compliance and citation in any correspondence after the plan is completed successfully so you can cite to it! I would also represent to you Ms. West represented herself on appeal without an attorney arguing for her. It is more likely than not though, she had an attorney prepare the appeal.

CALIFORNIA LOAN OFFICER PLEADS GUILTY TO

MORTGAGE FRAUD

FACTS

On March 18, Reginald Dodson Sr. pleaded guilty to mail fraud charges in connection with a mortgage fraud operation. Dodson was a loan officer in a scheme to squeeze large kickbacks from unknowing financial institutions, federal prosecutors say. Prosecutors say the main conspirator, Buena Marshall recruited unqualified buyer Temika Reed to act as the person purchasing seven properties. Marshall acted as the agent on some of the properties. Another woman, Deborah Loudermilk, was the agent on two of the sales. Dodson, a loan officer for W.B. Financial, helped get three of the properties financed. The seven properties identified in the scheme were sold at inflated prices, and in most cases using 100% financing, prosecutors said. Marshall and Loudermilk allegedly structured the deals to provide large kickbacks in a cash-back-to-buyer scheme. If convicted, the defendants face a maximum statutory penalty of 20 years in prison, a $250,000 fine and a three-year term of supervised release.  (modbee32213)

MORAL

I bet you have all noticed the increase in California criminal prosecutions for mortgage fraud. 

CALIFORNIA WOMAN CONVICTED OF MORTGAGE AND BANKRUPTCY FRAUD

FACTS

On March 19, a federal jury convicted Myra Holmes of one count of bankruptcy fraud, one count of bank fraud, and three counts of making a false statement to a bank. The guilty verdict followed a three-week trial before U.S. District Court Judge Edward J. Davila. The jury acquitted Holmes on two other false statement counts.

Holmes enriched herself by knowingly receiving from her father his half-interest in a Vallejo residence in which she lived. Holmes knew at the time she received this property that her father had previously declared bankruptcy and that, as a result, his half-interest in the Vallejo property now belonged to his Chapter 7 bankruptcy estate. Holmes took this half-interest in the Vallejo property without paying anything to the bankruptcy estate and also without notifying or obtaining the permission of the United States Bankruptcy Court or the bankruptcy trustee.

After Holmes received her father’s half-interest in the Vallejo property, she drained the equity from the property through a fraudulent refinancing mortgage loan application. The jury found that Holmes falsely told World Savings Bank in her refinancing mortgage applications: (1) that she earned $15,000 a month; (2) that she had a bank account balance of $15,000; and (3) that she was not a party to a lawsuit. Evidence at trial showed that Holmes knew at the time she filed her refinancing mortgage applications that she was overstating her monthly income and account balance and also knew that the bankruptcy trustee had recently filed a lawsuit against her seeking to recover the bankruptcy estate’s half-interest in the Vallejo property.

As a result of her bankruptcy fraud and mortgage fraud, Holmes received approximately $147,000 directly and arranged for personal debts to be paid (including her debts to Neiman Marcus, Lord & Taylor, Macy’s, and Spiegel). By the end of April 2006, Holmes had spent on personal expenses (including gambling and shopping) all the approximately $147,000 that she had fraudulently received as a result of the November 2005 refinancing of the Vallejo property. To date, Holmes has not repaid the bankruptcy estate for the funds she took out of the Vallejo property in the November 2005 refinancing.

Holmes is scheduled to be sentenced on July 1, before Judge Davila in San Jose. Judge Davila ordered that Holmes remain out of custody pending sentencing on a co-signed $50,000 release bond.  The maximum statutory penalty bankruptcy fraud/concealment of assets is five years’ imprisonment, a $250,000 fine, and restitution. The maximum statutory penalty for making a false statement to a bank is 30 years’ imprisonment, a $1,000,000 fine, and restitution. (usattyndca32013)

MORAL

One life ruined for something foolish and what is worse, easily traceable.

IOWA MAN GETS FOUR YEARS IN PRISON FOR MORTGAGE FRAUD

FACTS

On March 18, Lane Anderson was sentenced to four years’ imprisonment for conspiracy to commit bank fraud and wire fraud, announced United States Attorney Nicholas A. Klinefeldt. Chief United States District Judge James E. Gritzner also sentenced Anderson to five years’ supervised release following imprisonment.

From 2006 to 2008, Anderson, along with co-defendants Shannon Flickinger, Dave Mable and Paul Kramer, executed a scheme to defraud lenders by using straw buyers and fraudulent loan applications to obtain inflated mortgage loans. Mable and Flickinger previously pled guilty and were sentenced. Kramer was found guilty after a joint jury trial with Anderson. Kramer’s sentencing is currently set for April 12.

Anderson, Flickinger and Mable owned and operated LDF Development in Urbandale, Iowa. LDF purchased, renovated, and resold residential real estate and initially acquired approximately 30 properties but struggled to renovate and resell the properties. LDF needed additional capital to continue to operate but was saddled with properties and debt and could not obtain additional financing. Anderson, Flickinger, and Mable submitted 13 fraudulent loan applications in Flickinger’s name when the true buyer was LDF. In an effort to qualify Flickinger for the loans, Anderson knowingly falsified Flickinger’s income and liabilities. When the applications were approved Kramer knowingly closed the fraudulent transactions at his closing company, Iowa Closing and Escrow. LDF and Flickinger were unable to keep up with the mortgage payments and the 13 properties were eventually foreclosed upon. The scheme caused more than $600,000 in losses to the lenders.  (usattysdiowa31913)

MORAL

As I have been repeatedly stating, the prosecutors go back 10 years and indict 10 years after the fraud occurred. The sentences are stiffer now and straw buyers get indicted as well. We have represented some of those indicted and represent others under investigation. Thus far when the ones under investigation come to us before indictments are filed we have had a reasonably good success rate.

TWO CHARGED IN NEW JERSEY WITH $13 MILLION MORTGAGE FRAUD

On March 22, New Jersey residents John Leadbeater and Daniel Cardillo were each charged in a superseding indictment with conspiracy to commit wire fraud. Leadbeater is also charged with conspiracy to commit money laundering. The two alleged conspirators were alleged to be involved in a $13 million mortgage fraud scam that used phony documents and straw buyers to make illegal profits on overbuilt condos at the Jersey shore U.S. Attorney Paul J. Fishman announced.

According to the superseding indictment, Leadbeater and his co-conspirators located for purchase ocean town condominiums overbuilt by financially distressed developers in Wildwood and Wildwood Crest, New Jersey, and recruited straw buyers, including Cardillo, to purchase those properties. The straw buyers had good credit scores but lacked the financial resources to qualify for the mortgage loans. The conspirators created false documents such as fake employment records, W-2 forms, and investment statements to make the straw buyers appear more credit-worthy than they actually were in order to induce the lenders to make the loans.

To prepare the straw buyers’ false loan applications, Leadbeater and his conspirators caused fraudulent mortgage loan applications in the name of the straw buyers, including the supporting documents, to be submitted to mortgage brokers that the brokers knew were false, attributing to the straw buyers inflated income and assets. Once the loans were approved and the mortgage lenders sent the loan proceeds in connection with real estate closings on the properties, Leadbeater and his conspirators took a portion of the proceeds, having funds wired or checks deposited into various accounts they controlled. They also distributed a portion of the proceeds to the other members of the conspiracy for their respective roles.

Some previously charged co-conspirators have already pleaded guilty in connection with the scheme. Angela Celli, Robert Horton and Justin Spradley pleaded guilty before Chief Judge Simandle and await sentencing.

The wire fraud conspiracy charge carries a maximum potential penalty of 30 years in prison and a $1 million fine. (usattynj32213)

MORAL

Note well how the straw buyer was indicted. The government is now criminally starting to indict straw buyers whereas earlier it was not charging them treating them as innocent dupes in this attorney’s opinion. Now the realization is they had to know what they were doing was wrong and they are being indicted like the others. In this attorneys opinion the ones that have already pled guilty will or are cooperating against the remaining two. As I have been stating all along, if anyone has been involved in any questionable mortgage loans since 2005 they are best advised to seek legal counsel now for an opinion as opposed to later after they are visited by people with gold badges.

TENNESSEE MAN PLEADS GUILTY TO MORTGAGE FRAUD IN VIRGINIA

FACTS

On March 18, David Burrus Jr. pleaded guilty in Norfolk federal court to conspiring to commit mail and wire fraud in conjunction with mortgage loans he obtained from 2005 through 2007.

Burrus faces a maximum penalty of 30 years in prison when he is sentenced on July 8. He managed and ran a Virginia Beach branch office of a mortgage brokerage firm headquartered in Tennessee from 2003 through 2007. Burrus also co-owned a title and escrow company which conducted real estate closings for many of the loans originated by loan officers supervised by Burrus. Burrus also owned another entity, Southern Living Properties, which he used to receive money from numerous fraudulent real estate transactions that he conducted.

From 2005 through 2007, Burrus sought and obtained numerous mortgage loans in both his and his spouse’s names. In the course of these transactions, Burrus agreed to buy local properties for more than the sellers’ listing prices, provided that the transactions were structured to ensure that any extra sales proceeds were paid to Southern Living Properties at the real estate closings. This ensured that, unbeknownst to the mortgage lenders, Burrus received a substantial portion of the loan proceeds when buying properties in his or his spouse’s name.

To induce lenders to approve various requests for mortgage loans, Burrus also submitted false loan applications, forged and fictitious leases purporting to show his properties were generating rental income, and false Southern Living invoices billing property sellers for work and services that had never been performed. Burrus also made material misrepresentations to mortgage lenders about his and his spouse’s income and liabilities, his rental income, and about his spouse’s intent to occupy properties purchased as her primary residence.

Shortly before the crash of the real estate market, Burrus also sought to sell properties in his portfolio to his associates and offered to pay kickbacks to buyers to facilitate sales. Rhonda Wyland, at the time a loan officer working for Burrus, agreed to purchase one such property in Portsmouth, Va., in exchange for a kickback of $140,000. Wyland also made false statements to obtain a mortgage loan to complete this transaction and, after receiving the $140,000 kickback, defaulted upon the loan. On Dec. 12, 2012, Wyland pled guilty to criminal information charging her with conspiracy to commit wire fraud. Wyland faces a maximum penalty of five years in prison when she is sentenced by Chief United States District Judge Rebecca Beach Smith on April 5.

As a result of his activities, Burrus obtained mortgage loans to purchase 17 properties in Hampton Roads and then defaulted upon those loans. The known losses stemming from these loans are approximately $2,036,296.00.(usattyedva31813)

MORAL

There are two lessons to be learned here. One is the federal prosecutors have 10 years to file criminal charges for mortgage fraud. Here they went back eight years. Two is that Rhonda Wyland was charged in criminal information not by a grand jury indictment. The odds are she is a cooperating witness against Burrus. Lesson to be learned? Do not confide in anyone about any acts you do or intend to do. They will come back to haunt you.

 

 THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE. AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.