CALIFORNIA MAN GETS NEARLY EIGHT YEARS IN FEDERAL PRISON FOR MORTGAGE FRAUD
FACTS
On April 25, James Delbert McConville, a Fremont man, was sentenced to nearly eight years in prison and must pay more than $7 million in restitution after being convicted of conspiring to commit mail and wire fraud, federal prosecutors said.
McConville pleaded guilty in January to charges that he conspired with others in 2008 and 2009 to submit about 80 fraudulent loan applications to lending institutions, while concealing that he was paid an average of $150,000 in marketing fees on each loan transaction. He also admitted that he paid straw buyers between $5,000 and $10,000 to use their names and credit histories on the phony applications to obtain financing from the banks. The false documents resulted in the approval of nearly $20 million in fraudulent loans. McConville has been in custody since he was arrested in 2010. (sjmercnws5212)
MORAL
At least he gets credit for time served!
MORTGAGE SERVICERS TO BE SUBJECT TO NEW CFPB RULES ON HOW THEY TREAT BORROWERS
FACTS
The Consumer Financial Protection Bureau is planning to release new rules this summer and expects to put them in place in January 2013. Servicers themselves will probably be given up to one year to make the final rules a part of their regular routine. Thus the rules will undoubtedly not be enforced until 2014. What is CFPB planning?
1.
2.
3.
4.
To make sure servicers are keeping accurate records for handling customer accounts, CFPB is proposing:
1.
2.
3.
MORAL
Anyone want to take bets that 90% of this does not happen?
TRUSTEES MAY EXERCISE THE POWER TO SELL PROPERTY IN CALIFORNIA REGARDLESS OF WHETHER THE ASSIGNMENT OF THE BENEFICIAL INTEREST IN THE DEED OF TRUST IS RECORDED FIRST OR NOT
FACTS
On May 4, 2006, Nathaniel Haynes purchased a home in Oakland and executed a deed of trust that named EquiFirst Corp. as the lender, Placer Title Co. as the trustee and Mortgage Electronic Registration Systems Inc. as the beneficiary under the security interest (deed of trust). The deed of trust secured a promissory note in the amount of $437,750. Haynes defaulted.
On April 10, 2008, Quality Loan Service Corp. started a nonjudicial foreclosure and on May 22, 2008 was substituted for Placer as the trustee under the deed of trust. On Aug. 7, 2008, QLSC recorded a notice of trustee’s sale of the property. On Nov. 24, 2008, QLSC sold the property at a public auction. On Dec. 4, 2008 a trustee’s deed upon sale was recorded in favor of EMC Mortgage, providing that QLSC was the trustee and that EMC was the purchaser of the property and foreclosing beneficiary.
On Dec. 21, 2009, Haynes sued EMC, alleging that it unlawfully foreclosed on the property because there was no assignment of the promissory note to EMC recorded before the sale of the property. EMC demurred stating there was no cause of action because the code section Civil Code Section 2932.5 did not apply. The trial court agreed and sustained the demurrer. Haynes appealed.
The 1st District Court of Appeal said affirmed. Civil Code Section 2932.5 provides the assignee of a mortgagee must record the assignment before exercising a power to sell real property. Section 2932.5 applies only to mortgages. Where a deed of trust is involved, the trustee may initiate foreclosure irrespective of whether an assignment of the beneficial interest is recorded. There is no requirement that the assignment from MERS to QLSC be recorded before the institution of nonjudicial foreclosure and the trial court property sustained the demurrer. (Haunes v. EMC Mortgage, No. A131023, 4-24-12 1st Dist.)
MORAL
Funny how deed of trust and mortgage equate everywhere else but here.
IN SOME CALIFORNIA MUNICIPALITIES YOU CANNOT EVICT A TENANT IF YOU FORECLOSE
FACTS
The Merced, Calif. City Council enacted the first anti-eviction ordinance in the Central Valley. The Just Cause eviction law restricts the grounds under which a tenant can be evicted to things such as nonpayment of rent, violating lease terms and the removal of the property from the rental market by the landlord. The law forbids tenant eviction due to foreclosure. There are 15 other cities with similar laws such as Los Angeles, San Francisco, Maywood and Richmond. Glendale, Oakland and San Diego have ordinances as well. (ladj42512)
MORAL
If the tenant already has a lease before the foreclosure and/or did not know about the foreclosure at the time of the lease the tenant is already protected by federal law. The biggest effect here is that it appears to allow month-to-month tenancies to stay on indefinitely while the federal law allows 90 days notice where there is no lease. I wonder if preemption comes into play here.
IN OTHER CALIFORNIA LOCATIONS YOU CANNOT EVEN EVICT THE TENANT WHEN THE RENT IS NOT PAID FOR THREE MONTHS.
FACTS
In the City of Los Angeles a mortgage company attempted to evict a tenant because of nonpayment of rent. Private National Mortgage Acceptance Co. LLC purchased the property at a foreclosure sale. The company then served the renter Kamie Stanko with a three day notice to pay the rent or quit. Private National contended she had stopped paying the rent of $2,500 per month.
Los Angeles Superior Court Judge Lawrence H. Cho granted Stanko’s motion to quash the eviction complaint finding the bank failed to give her a 90-day notice to quit under the three-year old Protecting Tenants at Foreclosure Act. The judge ruled that Private National’s failure barred it from booting her out even though she was behind in her rent to the tune of $22,500 after not paying for nearly a year. (PNMAC Mortgage Go. LLC v. Stanko, 11Uo4495 (Los Angeles County Superior Court, filed 2011).
MORAL
Seems Cash for keys has gone up as to cash considering this case.
CALIFORNIA MAN PLEADS GUILTY TO MORTGAGE FRAUD CAUSING LOSSES OF $650,000
FACTS
Wesley Fort, who was a bishop of the New Life Family Worship Center Church of God in Christ in Hollister, California pleaded guilty to felony charges that he cheated Silicon Valley homeowners out of more than $650,000 and took title to their homes.
It was alleged he scammed three families in San Jose and Milpitas. He will be sentenced to no more than two years and eight months in jail, three years of supervision and may be required to make restitution to the victims.
Fort, acting as a foreclosure consultant in 2005 and 2006, told the families he could save their homes from foreclosure. He convinced them to transfer title of their homes to him and also to make mortgage payments to him, in one case a victim paid him more than the regular mortgage payments. He told the owners he would eventually return title to them, according to prosecutors.
All three families lost their homes. Fort, meanwhile, made money through either refinancing the homes or by selling the properties to himself, according to prosecutors.
It is a felony for a foreclosure consultant to acquire an interest in a foreclosed home from a client. Fort is scheduled to be sentenced Nov. 16. (SJMERCNEWS43012)
MORAL
It is pretty hard to come up with a moral when a bishop cheats three families. The surprise is two years expected prison time. I would say he has a very good attorney.
MOTHER AND DAUGHTER GET 24 MONTH PRISON TERM FOR MORTGAGE FRAUD
FACTS
On May 4, mother and daughter Patricia and Jamilah Smith, of Irvington, N.J., each were sentenced today to 24 months in prison for participating in a scheme involving New Jersey properties that caused mortgage lenders to release more than $1.9 million in loans obtained by fraud.
Both pleaded guilty in the fifth day of trial to two counts of wire fraud contained in the superseding indictment against them. Co-conspirator Carol Ashley also pleaded guilty to two counts of wire fraud and was sentenced today to six months of house arrest with electronic monitoring.
According to documents filed in this case and statements made in court, the Smiths served as straw buyers to purchase two condominiums each in North Wildwood, N.J. The straw buyers had good credit scores but lacked the financial resources to qualify for mortgage loans. The Smiths’ accomplices created false documents—such as fake bank statements, W-2 Forms, and paystubs—to make the straw buyers appear more creditworthy than they actually were. Ashley falsely verified to the lenders that Patricia Smith worked for Ashley’s company, Exclusive Entertainment Production, based in the Los Angeles area.
Once the loans were approved, the mortgage lenders sent the loan proceeds in connection with the real estate closings. The defendants’ accomplices used a portion of the proceeds to pay the Smiths for their roles.
In addition to the prison term, the judge sentenced Patricia and Jamilah Smith each to serve five years of supervised release. Ashley was ordered to serve three years of supervised release. The judge ordered Patricia Smith to forfeit $82,746.80 and pay $892,168.01 in restitution and ordered Jamilah Smith to forfeit $65,047.70 and pay $647,290.13 in restitution. He also ordered Ashley to pay $892,168.01 in restitution.
A fourth defendant, Oliver Rudolph Thaxton, pleaded guilty to one count of wire fraud in September 2011 and is scheduled to be sentenced June 1. (usattynj5412)
MORAL
See how the federal prosecutors are picking up the straw buyers lately? Before they did not really bother to prosecute them. The family that commits fraud together sticks together. In federal prison that is.
TEXAS MAN SENTENCED TO 61 MONTHS IN FEDERAL PRISON FOR BANKRUPTCY FRAUD AND IDENTITY THEFT IN CONNECTION WITH NATIONWIDE FORECLOSURE-RESCUE SCHEME
FACTS
On May 3, Frederic Alan Gladle was sentenced to 61 months in federal prison in the Western District of Texas for his role in operating a foreclosure-rescue scam in Southern California and elsewhere that charged distressed homeowners fees in exchange for fraudulently delaying foreclosure sales.
Gladle was charged on Dec. 9, 2011, in U.S. District Court in Los Angeles with one count of bankruptcy fraud and one count of aggravated identity theft. On January 6, he pled guilty after the case was transferred to Austin, Texas, and was ordered detained without bond.
Gladle admitted that beginning in October 2007 and continuing until October 2011, he operated a foreclosure-rescue fraud scheme that netted him more than $1.6 million in fees from distressed homeowners. Gladle used five aliases to avoid detection, including stealing the identity of at least one person and setting up a mobile phone account in that victim’s name.
Gladle admitted that he recruited homeowners whose properties were in danger of imminent foreclosure and falsely promised to delay the foreclosures for up to six months, in exchange for a fee of approximately $750 per month. Gladle, directly or through salespersons, directed homeowners to sign deeds granting fractional interest in their properties to debtors in bankruptcy proceedings whose names Gladle found by searching bankruptcy records. The debtors were unaware that their names and bankruptcy cases were being stolen by Gladle in his scheme. Gladle then sent the unsuspecting debtors’ bankruptcy petitions, and the deeds that transferred fractional interests to the debtors, to the homeowners’ lenders to stop foreclosure proceedings.
Because bankruptcy filings give rise to automatic stays that protect debtors’ properties, the receipt of the bankruptcy petitions and deeds in the debtors’ names forced lenders to cancel foreclosure sales. The lenders, which included banks who received government funds under the Troubled Asset Relief Program, could not move forward to collect money that was owed to them until getting permission from the bankruptcy courts, thereby repeatedly delaying the lenders’ recovery of their money. When homeowners wanted to void the deeds to the unsuspecting debtors, Gladle would forge the debtors’ signatures on papers voiding the deeds.
Gladle’s sentence follows the arrest in Canada last month of Glen Alan Ward, who had been a fugitive since 2000 for allegedly operating the same scheme as Gladle. According to court documents, Ward, who also goes by the name Brandon Michaels, is alleged to have worked with and taught Gladle the scheme. Ward is currently being detained in Canada pending his extradition to the United States. (usattycdca5312)
MORAL
Busy little beaver, wasn’t he. Now it is alleged Ward taught him all he knew. Ward awaits being extradited back to the U.S to allegedly face charges for doing the same type of foreclosure fraud.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE. AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.
