CFPB COMPENSATION RULES ARE TO BE FOLLOWED BY BANK MORTGAGE LOAN ORIGINATORS BUT YOU CAN GIVE THEM ANOTHER TYPE OF BONUS
FACTS
The Consumer Financial Protection Bureau issued Bulletin 2012-02 to provide additional guidance on permissible forms of compensation to loan originators under the Truth in Lending Act Regulation Z's compensation rules. The Bulletin addresses whether and how the compensation rules apply to qualified profit-sharing, 401(k), and employee stock ownership plans (collectively, Qualified Plans). Specifically, the CFPB indicates that the compensation rules permit employers to contribute to qualified plans out of a profit pool derived from mortgage originations. The CFPB does not provide guidance on profit-sharing arrangements or plans that are "not in the nature of Qualified Plans," but indicates it anticipates providing greater clarity in a future rulemaking,
MORAL
You can pay into a qualified plan extra money for the MLO. However, unqualified plans are not address and must be submitted to CFPB on an individual basis
CFPB ISSUES GUIDELINES ON ENFORCEMENT OF ECOA
FACTS
The CFPB issued a guidance bulletin on compliance with the fair lending requirements of the Equal Credit Opportunity Act and its implementing regulation, Regulation B. The CFPB stated that it will continue to use the doctrine of disparate impact in its supervisory and enforcement activities, and concurred with the Interagency Task Force on Fair Lending’s 1994 Policy Statement on Discrimination in Lending, which provided three methods for establishing lending discrimination under ECOA: (1) overt evidence of discrimination; (2) evidence of disparate treatment; and (3) evidence of disparate impact.
The CFPB also released a credit discrimination brochure which provides consumers with tips and warning signs to identify credit discrimination. (calbarrlprpty5712)
MORAL
CFPB is beginning to move. Bring yourself into compliance or like a tank it might just run you down.
CFPB CONSIDERS NEW RULES ON FIXING MORTGAGE LOAN ORIGINATOR COMPENSATION
FACTS
On May 9, CFPB outlined rules it is considering that would simplify mortgage points and fees and bring greater transparency to the mortgage loan origination market. These rules, the CFPB expects to propose this summer and finalize by January 2013.
The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act places certain restrictions on the points and fees offered with most mortgages. The CFPB is considering proposals that would:
• Require an Interest-Rate Reduction When Consumers Elect to Pay Discount Points. The CFPB is considering proposals to require that any discount point must be “bona fide,” which means that consumers must receive at least a certain minimum reduction of the interest rate in return for paying the point.
• Require Lenders to Offer Consumers a No-Discount-Point Loan Option. Under the proposal under consideration, consumers must also be offered a no-discount-point loan.
• Ban Origination Charges that Vary with the Size of the Loan. Brokerage firms and creditors would no longer be allowed to charge origination fees that vary with the size of the loan. Instead, under the rules the CFPB is considering, brokerage firms and creditors would be allowed to charge only flat origination fees.
In addition to regulating origination points and fees, the proposals the CFPB is considering would also address mortgage loan originators’ qualifications and compensation. Mortgage loan originators, who take mortgage loan applications from consumers seeking to buy a home or refinance a mortgage, include mortgage brokers and loan officers.
• Prohibit Paying Steering Incentives to Mortgage Loan Originators. The Dodd-Frank Act requires the CFPB to issue rules as well. The proposals the CFPB is considering would reaffirm the Board’s rule, which bans the practice of varying loan originator compensation based on interest rates or certain other loan terms.
The rules the CFPB is considering would also set qualification and screening standards. Under state law and the federal Secure and Fair Enforcement Act, loan originators currently have to meet different sets of standards, depending on whether they work for a bank, thrift, mortgage brokerage, or nonprofit organization. The CFPB is considering rules to implement Dodd-Frank requirements that all loan originators be qualified. There would be character and fitness requirements—all loan originators would be subject to the same standards for character, fitness, and financial responsibility; criminal background checks—loan originators would be screened for felony convictions; and training requirements—Loan originators would be required to undertake training to ensure they have the knowledge necessary for the types of loans they originate.
MORAL
The new proposed rules are extensive and it is my understanding they will not be enforced until Jan. 1. In the meantime the payment to MLOs has not changed.
FORMER ARIZONA LO INDICTED ON FIVE COUNTS OF MORTGAGE FRAUD
FACTS
During the week of May 1, a five-count indictment was unsealed, charging former loan officer Sergio Martinez with bank fraud, false statement to influence a financial institution, wire fraud and conspiracy to commit wire fraud.
The indictment alleges that Martinez participated in a scheme to defraud a financial institution in order to obtain financing. Although Martinez was not the listed loan applicant, he allegedly caused to be submitted a loan application that contained material false statements including: (1) a false representation that the loan applicant was self-employed; (2) a falsely inflated income; and (3) a false representation that no part of the down payment was borrowed. The indictment further alleges that another document submitted to the lender falsely represented that the borrower would provide $359,982.38 in cash to close the deal when, in fact, the borrower and Martinez received a separate loan that was used to provide most of that cash. These documents were allegedly provided to obtain $1.4 million in loans to purchase a $1.75 million home. After the financing was used to purchase the property, the home went into foreclosure due to lack of payments. The foreclosure resulted in a significant loss to the lender.
A conviction for bank fraud, false statement to influence a financial institution, wire fraud, and conspiracy to commit wire fraud each carries a maximum penalty of 30 years in prison, a $1,000,000 fine, or both. (usattyaz5712)
MORAL
I trust he has enough “clean money” to pay for an attorney.
ARIZONA AG FILES COMPLAINT AGAINST WOMAN ALLEGING FRAUD ON HOMEOWNERS IN OBTAINING LOAN MODIFICATIONS AND SAVING HOMES FROM FORECLOSURE
FACTS
On May 11, Attorney General Tom Horne announced today that a complaint has been filed in Maricopa County Superior Court against Rosa Galope alleging that she defrauded homeowners looking for help in obtaining mortgage modifications and saving their homes from foreclosure.
The lawsuit alleges that Galope charged thousands of dollars in advance fees for mortgage loan modification and foreclosure rescue services that she later falsely claimed were donations to her church, Nation to Nation Ministries. The lawsuit also alleges that Galope prohibited her clients from communicating with their lenders and told them to send her any payments that they intended to go to their lenders, and that Galope would forward the payments to the lender. The lawsuit alleges that rather than forwarding homeowners' payments to their lenders, Galope kept the funds for her own use, even endorsing checks made payable to lenders and cashing them at a local check cashing store.
The lawsuit further alleges that when Galope was unsuccessful in helping homeowners get a modification. She convinced them to give her thousands of dollars more, money that Galope said would be used as a down payment for the homeowners to repurchase their homes from an investor. The investor would buy at a substantial discount and sell it back to the homeowner for much less than their current mortgage. The lawsuit alleges that Galope kept the down payment money for herself and failed to refund it to homeowners when no investor deal occurred.
Attorney General Horne is requesting that the court prohibit Galope from engaging in unlawful and deceptive practices related to mortgage modification and foreclosure rescue activities, provide full restitution to consumers harmed by her actions, and order her to pay civil penalties and costs and fees to the Attorney General's Office. (azag511112)
MORAL
I trust she has a good attorney.
CALIFORNIA BROKER SENTENCED TO 6.5 YEARS IN FEDERAL PRISON FOR FALSE PROMISES TO FAMILY AND FRIENDS HE WOULD INVEST THEIR MONEY IN FORECLOSURE PROPERTIES
FACTS
David Richard Sparks, an Irvine broker and former planning commissioner, was sentenced the week of May 7 to 6.5 years in federal prison for falsely promising to invest family’s and friends’ money in foreclosed homes.
Sparks claimed to be buying, fixing up and selling foreclosed or pre-foreclosure homes that he never actually purchased. He was also accused of forging bank documents, using no-existent escrow companies, providing bogus status updates and falsely reporting profits.
He pleaded guilty to one count of felon interstate wire fraud. His sentence was 15 months longer that the government prosecutor recommended and is the longest term possible under federal sentencing guidelines. The sentence is believed to be longer due to his ripping off family and friends as opposed to the general public. The total loss to the victims was believed to be $4.3 million. (ocr51312)
MORAL
Just goes to prove that no matter what deal you make with the government prosecutor, you are warned that the federal judge does not have to follow the recommendation.
MOTHER AND SON FROM RIVERSIDE COUNTY, CA NOW ANSWER TO AN INDICTMENT FOR FRAUD CONTAINING 312 COUNTS!
FACTS
Hendrix Moreno Montecastro and his mother, Helen Moreno Pedrino, were arrested in November 2009 and accused of persuading mom-and-pop investors in California and Arizona to turn over savings and retirement funds as well as max out credit cards and refinance their homes by promising them big returns on investments in things like real estate, foreign currency and diamonds.
The investors lost most of their money and more than 200 Riverside County homes were pushed into foreclosure, according to allegations. At their arraignments on May 7, the two refused to enter pleas and trial was scheduled to begin June 21. Five others charged in the case have pleaded guilty.
Montecastro, thought by prosecutors to be a second-in-command in the scheme, was originally charged with 247 felony counts, including grand theft, securities fraud, corporate identity theft and elder abuse. Riverside County Superior Court Judge Thomas Kelly found cause to send the defendant to trial on 231 of those counts following an eight-day preliminary hearing last month.
Pedrino, who faced 42 counts after the preliminary hearing, also was charged with additional counts. Montecastro and Pedrino are representing themselves in the case after parting ways with several attorneys, including one who challenged Montecastro's mental competency despite his client's objection.
Both defendants refused to enter a plea Monday, saying the court lacked jurisdiction. Riverside County Superior Court Judge Becky L. Dugan entered not guilty pleas on their behalf and strongly urged the defendants to engage lawyers.
Montecastro repeated objections lodged previously in court against the proceeding, citing his constitutional rights and conflicts between state and federal law, among other things. Dugan called his objection "word hash" and "gibberish" and suggested he was either trying to obstruct the proceedings or did not understand what he was saying and needed representation. Dugan offered to read every count against them aloud after Montecastro said he did not understand the charges, but the defendants changed their minds after about 14 counts. (prsent5812)
MORAL
Five have pleaded guilty. Any bets as to whether they intend to testify against Montecastro and Pedrino?
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE
