FACTS
Adult child loses home to foreclosure and bankruptcy. Now lives in a fine home a month later? It is possible with an FHA loan. Adult parent over 62 can take out a reverse mortgage to purchase a home in parent name only. Adult child with family can move in and live with parent as long as parent is only one on reverse mortgage loan. It could happen.
FHA allows the borrower to hold title in an inter vivos trust. You do not need to take the property out of trust. If the lender insists you may want to find another lender. Imagine if the borrower dies while the property is out of trust and did not have to be? Could you then be sued for malpractice?
From the FHA point of view when doing an FHA insured loan involving a PUD or CID, the HOA dues may not be more that 15% behind.
FHA has noticed there may be fraud going on in short sales. By way of example, Buyer in short sales has document showing the holder of the second mortgage is only receiving $2,500 in the short sale. At the last minute the holder of the second mortgage demands $5,000 more and instructs everyone that it is not to be put on the HUD-1. This is a RESPA violation as sell as fraud in the documents. To prevent it, ask the borrower at closing if anyone asked the borrower for more money than was disclosed in the HUD-1.
California cities and state offer CALFHA assistance in down payments. Some do it and some cities do not. But there is no harm in checking and can endear you to the borrower which lessens the probability the borrower will shop you.
FHA checks to be certain short sale negotiators in California are licensed.
In FHA loss mitigation cases, FHA will carry back the principal it is forgiving in the first mortgage as a “silent second” with zero interest.
On insuring condos, FHA requires 51% owner-occupied. But it does not count foreclosures where lender still owns it and does not count second homes.
FANNIE MAE AND FREDDIE MAC FORECLOSURES INCREASE 12%
FACTS
Foreclosures mandated by the government-controlled Fannie Mae and Freddie Mac jumped by 12% in the second quarter to 275,000 units.
MORAL
Many of you are aware that Downey Savings and Loan through the FDIC is suing lenders that sold it mortgage loans, the brokers, loan officers and borrowers. You are also aware the trustee in bankruptcy for New Century is doing the same thing. You are also aware the United States Attorney is suing brokers for questionable loans by seeking a civil penalty. From this I must presume Fannie Mae and Freddie Mac will be joining the party. Remember that there are only 20 days to respond to the complaint in federal court and 30 in state court. Usually, you will receive a “buyback” demand first based upon the written contract you signed with the lender.
DID YOU KNOW THAT IN CALIFORNIA YOU CAN BREAK THE SALES COMMISSION TO THE REAL ESTATE LICENSEE IN TWO PARTS?
FACTS
Part 1—Partial commission when sells house listed either as the listing or the selling agent.
Part 2—Remainder only if the licensee follows the escrow through closing and is still employed by the broker when the sale finally closes.
MORAL
Draw your broker salesperson agreement up correctly and you know then the salesperson will work that much harder to see he gets Part 2 of the commission.
FLORIDA MAN INDICTED IN MARYLAND FOR MORTGAGE FRAUD
FACTS
On Sept. 10, 2010, a federal grand jury unsealed the indictment against Darryl Stanley Paxton Jr., a/k/a David Sosa of Broward County, Fla., formerly of Maryland, on charges of wire fraud, money laundering, and fraudulent use of a Social Security number in connection with a scheme to defraud lenders of over $1.8 million, using a false identity.
According to the 15-count indictment, between 1997 and 2007 Paxton utilized the identification, including the Social Security numbers of a man and woman, both of whom had the initials DEB. During that period of time, Paxton began to use the fictitious identity, David Sosa, creating or obtaining a fraudulent Virginia driver’s license purportedly issued on May 12, 1999, in the name of David Sosa. Paxton also created or obtained Georgia and District of Columbia driver’s licenses in the name of David Sosa and on June 23, 2003, was issued a Maryland driver’s license in that name.
The indictment alleges that from September 2005 through August 2007, Sosa obtained over $1.8 million in loans from four lenders by submitting fraudulent loan applications, including a fictitious name, a misappropriated Social Security number, false information about his employment, income, address and ownership of real estate. According to the indictment, Paxton utilized a portion of the loan proceeds to repay part of the previous loans, but left most of the loans substantially unpaid.
By submitting a fraudulent loan application, Paxton allegedly obtained a loan for $620,000 to purchase a property in Cockeysville, Md., then repaid that loan with the proceeds of a $1.4 million loan and a $420,000 loan he fraudulently obtained from another lender to refinance that property. The indictment alleges that Paxton then defaulted on those loans, causing a loss to the lender of $900,000.
The indictment alleges that through this scheme, Paxton fraudulently obtained over $2.85 million in loans and caused losses to the lenders of over $1.8 million, which is the amount the government seeks to forfeit.
Paxton faces a maximum sentence of 30 years in prison for wire fraud; a maximum of five years in prison for fraudulent use of a Social Security number; and a maximum of 10 years in prison on each of five counts of money laundering. Paxton is detained on state charges in Florida pending his transfer to U.S. District Court. (usattymd)
MORAL
If found guilty I would say he is looking at a loss of $1.5 million and he is looking at about seven or eight years in a federal prison, unless he does have a very good attorney.
MASSACHUSETTS ATTORNEY CHARGED WITH MORTGAGE FRAUD
FACTS
On Sept. 8, 2010, a Massachusetts attorney, Michael R. Anderson of Framingham, was charged in federal court with wire fraud, bank fraud, and money laundering in connection with a multi-year, multi-property mortgage fraud scheme in Dorchester and Roxbury. The defendant was charged in Information with 16 counts of wire fraud, nine counts of bank fraud, and two counts of money laundering.
The information alleges that from September 2006 to April 2008, Anderson committed fraud in connection with the purported sale of some 27 condominium units in Boston. A developer, Michael David Scott, who was charged separately in an indictment on Aug. 26, 2010, and his associates bought multi-family dwellings promising to convert them into condominiums, and then resold the individual units to various straw buyers. Scott, Anderson and others arranged for the straw buyers to obtain mortgage financing by falsifying key information, such as the buyers’ intent to reside in properties, assets, down payment, and/or funds paid at closing. The defendant and others arranged to prepare loan closing documents which the defendant used to facilitate the closings.
The information further alleges that Anderson caused mortgage loan proceeds to be disbursed to Scott. In most instances, the straw buyers obtained residential mortgage loans for properties they never intended to live in. While the lenders (mortgage companies and one bank) were led to believe they were lending to residential purchasers who had made substantial down payments, the developer and others recruited buyers by representing the purchases to them as a no-money-down “investment” opportunity. The “investors” were assured that they would not have to make any down payments, pay any closing costs, or pay expenses relating to the maintenance of the units, but would share in profits when the units were sold.
If Anderson is convicted on these charges, each count of bank fraud carries a sentence of up to 30 years in prison to be followed by up to five years of supervised release and a fine of up to $1 million; each wire fraud count carries imprisonment up to 20 years to be followed by up to three years of supervised release and up to a $250,000 fine; the money laundering counts each carry a maximum punishment of 10 years in prison to be followed by up to three years of supervised release and a fine of $250,000.
MORAL
Usually, an “information” means that the defendant negotiated a plea with the authorities before it is filed. Otherwise the government usually issues an indictment from the federal grand jury. That is why it makes it so important you consult legal counsel the moment you “feel” you may be under investigation. Remember you do not have to be sure, just feel it. The sooner you see counsel the better it is for you in this one attorneys’ opinion.
THREE PLEAD GUILTY TO MORTGAGE FRAUD IN MICHIGAN
FACTS
On Sept. 3l, 2010, Giuseppe Cracchiolo of Romeo, Mich., pleaded guilty before U.S. District Judge Paul D. Borman to federal information that charges him with conspiracy to commit wire fraud. Also charged in the one count information was Attim Collins and Ted Carter, both of Detroit, both of whom have already pleaded guilty to the same information.
FROM 2002 THROUGH 2005, Collins, owner of EDGEWOOD PROPERTY MANAGEMENT in Shelby Township, Michigan, recruited and paid individuals to act as straw buyers in fraudulent mortgage loan transactions. The scheme to defraud involved homes built by Cracchiolo, through his company, Mark Christian Inc., in Romeo. The straw buyers generally had good credit ratings, but not enough income, and lacked the qualifications necessary to purchase the properties. Carter participated in the conspiracy by creating false documents, including fictitious W-2 forms and pay stubs, used by the straw buyers to support the fraudulently inflated asset and income information submitted on their mortgage loan applications. After the loans were approved by the lending companies, Cracchiolo used MCI to receive and disburse the illegally gained proceeds. This scheme to defraud resulted in the approval and disbursement of over $4.1 million in fraudulent mortgage loans.
Cracchiolo admitted that during the conspiracy, he arranged to have the illegally obtained loan proceeds transferred back to borrowers and others without the knowledge and approval of the lending companies. All of the properties involved in the fraud went into foreclosure resulting in approximately $2.5 million in losses to the lenders.
Conspiracy to commit wire fraud is punishable by a maximum sentence of 20 years’ imprisonment and $250,000 in fines.
Sentencing is scheduled as follows in front of United States District Court Judge Paul D. Borman: Carter on Oct. 6, 2010 at 3:00 p.m., Collins on Nov. 11, 2010 at 2:00 p.m., and Cracchiolo on Dec. 2, 2010 at 3:00 p.m..(usattyedmi9310)
MORAL
Did you notice how the prosecutors went back to 2002? That is eight years ago. They have ten years legally to prosecute. If you had any questionable loans I suggest you see your attorney now. If you own or owned the company or were the designated officer for the company see your lawyer now. Because of the mortgage meltdown and the drastic effect it had on the economy, the federal prosecutors are chasing all fraud loans almost with a vengeance. It is a directive that they treat it very seriously and as you can see from my e Alerts, they obviously have. I do not even publish all the mortgage fraud cases or it would literally take up at least twelve pages each and every week. But accept my word for it. They are chasing everyone they find and every state they find mortgage fraud has been active.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE
