CFPB CAN ISSUE A TEMPORARY CEASE AND DESIST ORDER WITHOUT A COURT ORDER WHICH CAN EFFECTIVELY PUT A MORTGAGE LENDER OR BROKER OUT OF BUSINESS
FACTS
The Consumer Financial Protection Bureau has issued an interim final rule with request for comment regarding rules of practice for the issuance of temporary cease-and-desists orders. The Dodd-Frank Act requires CFPB to prescribe rules establishing procedures for the conduct of adjudication proceedings.
On June 29, 2012, CFPB published the final Rules of Practice for Adjudication Proceedings. That final rule, however, does not apply to the issuance of a temporary cease-and-desist order pursuant to section 1053(c) of the Dodd-Frank Act. CFPB has proposed an interim final rule governing such issuance and seeks public comments. Comments must be received on or before Nov. 25, to be assured of consideration. (Federal Register 78 fr 59163)
MORAL
You have only 10 days to react if you want to remove it before a hearing and the venue for the suit in U.S. District Court is limited. If you are served with a Temporary Desist and Refrain Order (TDRO) call us (or your attorney) immediately. Ten days is not a long time and we (or they) need every bit of it to respond on your behalf.
TWO FROM ARIZONA GO TO PRISON FOR MORTGAGE FRAUD
FACTS
William Michael Naponelli and Bryan Atwood were sent to federal prison for their roles in a mortgage fraud scheme. Naponelli was sentenced to 24 months in prison. Atwood was sentenced to 15 months in prison. Naponelli previously pleaded guilty to the felony offenses of conspiracy to commit bank fraud and conspiracy to commit transactional money laundering. Atwood previously pleaded guilty to conspiracy to commit wire fraud, also a felony.
Naponelli, a former real estate developer and loan officer, admitted his participation in a scheme to obtain various loans between July 2006 and May 2007. Naponelli and another co-conspirator real estate developer purchased several properties using various business entities with which they were associated. Thereafter, Naponelli and his fellow co-conspirator sold these properties to straw buyers.
Naponelli knowingly caused to be submitted documents with knowledge that they contained material false statements including representations that the borrowers would provide the down payment or cash to close the real estate transactions. After the loan proceeds were received, portions of these proceeds were wired or deposited into bank accounts controlled by Naponelli or another co-conspirator.
Atwood, who at the time of this conspiracy was a licensed real estate agent, admitted as part of his guilty plea that he obtained three properties through fraudulently obtained loans. He admitted that he knew that documents provided to the lenders on his behalf relating to these properties contained one or more material false representations.
The properties obtained as result of this mortgage fraud scheme went into foreclosure resulting in significant losses to the lenders. As part of Naponelli’s sentence, he was ordered to pay restitution totaling approximately $3.1 million. Atwood was ordered to pay approximately $585,000.
Naponelli and Atwood are the third and fourth co-defendants to be sentenced in this case. Previously, co-defendants Walter Scott Fruit got 30 months and Sandra Jackson got six months. (usattyaz92413)
MORAL
Jackson had a better lawyer? You know, I discover more and more that people would rather not pay an attorney for advice to avoid the problem and then pay a lot to get out of the trouble they could have avoided by getting legal advice in the beginning.
CALIFORNIA ATTORNEY GETS TWO YEARS IN FEDERAL PRISON FOR MORTGAGE FRAUD
FACTS
On Sept. 25, after a guilty plea had been entered, United States District Judge John A. Mendez sentenced Sean Patrick Gjerde to two-and-a-half years in prison for conspiring to commit mortgage fraud and make false statements in loan applications.
According to court documents, Gjerde, an attorney, took part in a mortgage fraud scheme by providing false income verifications. He was hired by Hoda Samuel, owner of With Liberty Real Estate & Investment Co. Samuel already has been convicted and sent to prison for 10 years.
Eight others were charged in the scheme. Seven other co-defendants in the scheme pleaded guilty and are awaiting sentencing.
Certain Liberty clients falsely told lending institutions that they were self-employed and made incomes far in excess of what they actually earned. Gjerde wrote letters to the lenders stating that he was an attorney with a masters in taxation who had prepared individual tax returns for the clients and could attest that they were employed as they stated in their loan applications. When lenders called Gjerde to follow up on the fraudulent letters, Gjerde falsely confirmed the information he had provided. On at least one occasion, he signed a false tax return that was submitted to a lender to establish inflated income. Gjerde admitted writing approximately 20 fraudulent letters.
As of April 2012, Gjerde had 18 cases pending against him before the California State Bar Court. Each of these contained allegations of misconduct, and none of them were related to the mortgage fraud charged in the federal indictment. On April 18, 2012, the State Bar Court determined that the allegations were likely to be upheld in a majority of the pending cases and involuntarily enrolled Gjerde as an inactive member of the bar.
In sentencing Gjerde, Judge Mendez said that Gjerde willfully lied to back up the lies in the loan applications, and that as a lawyer, “He should have shut this whole thing down. That’s his obligation as a lawyer. He didn’t do that. He went along with it.” Judge Mendez also noted the allegations pending before the State Bar Court and the number of former clients who had been affected by Gjerde’s conduct. (usattedca92413)
MORAL
Seven years of higher education shot down the tubes.
SAN DIEGO LENDER AGREES TO SETTLE BIAS SUIT AND PAY $3 MILLION TO BORROWERS
FACTS
The Justice Department reached a settlement with Plaza Home Mortgage Inc., San Diego, to resolve allegations of mortgage lending discrimination. The settlement provides $3 million in compensation to African-American and Hispanic borrowers. The settlement covered allegations that it engaged in a pattern or practice of discrimination on the basis of race and national origin.
The settlement also requires Plaza to establish race- and national origin-neutral standards for the assessment of broker fees, monitor its wholesale mortgage loans for potential disparities based on race and national origin, conduct fair lending training and continue to operate a community enrichment program designed to address the lack of affordable housing and lending products in minority and underserved communities nationwide.
The settlement, which is subject to court approval, was filed in conjunction with the Justice Department’s complaint in the U.S. District Court for the Southern District of California. The complaint alleges that Plaza charged thousands of African-American and Hispanic borrowers higher fees than white borrowers on wholesale mortgage loans in violation of the Fair Housing Act and Equal Credit Opportunity Act. Plaza cooperated fully with the Justice Department’s investigation into its lending practices and agreed to settle this matter without contested litigation.
The lawsuit originated from a 2011 referral by the Federal Trade Commission to the Justice Department’s Civil Rights Division.
The proceeds of the settlement will be used to compensate the African-American and Hispanic victims of Plaza’s alleged discrimination. The proposed settlement provides for an independent administrator to contact and distribute payments at no cost to borrowers whom the Justice Department identifies as victims. Borrowers who are eligible for compensation will be contacted by the administrator. The department will make a public announcement and post contact information on its website once the administrator begins contacting victims. (DOJ92713)
MORAL
“It is patently wrong for a lending institution to require African-American and Hispanic homebuyers to pay more for their mortgages than white borrowers,” said Laura Duffy, U.S. Attorney for the Southern District of California. “We are happy to be able to make this right for the victims, and to send a message that we will protect people of all races and national origins from injustice of any kind.”
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE. AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.
