FACTS
The U.S. District Court for the Eastern District of Virginia held that the Home Owner's Loan Act preempts state tort law claims alleging that Flagstar Bank FSB improperly represented itself as as a lender to collect brokerage fees on a home mortgage (Down v. Flagstar Bank F.S.B., E.D. Va., No. 3:10-cv-847, 4/4/11).
The borrower asserted "bait and switch" claims under Virginia law, alleging that Flagstar used a Good Faith Estimate to pose as the lender in order to collect brokerage fees. The borrower claimed that he paid fees and rates than he could have avoided by dealing directly with the lender, First National Bank of Arizona.
Flagstar removed the case to federal court, arguing that HOLA preempts the Virginia claims. The federal court agreed. Although HOLA regulations include an exception to the normal preemption for tort law claims that only "incidentally affect the lending operations," the exception did not apply in this instance because Flagstar's representations about its role and the loan transaction are “inextricably linked to one another.
“If a plaintiff were permitted to allege fraud and to receive the return of fees required to be disclosed by RESPA in state court, state courts would be left to interpret the RESPA statute and regulations, analyzing a defendant's compliance in each individual case—and this is precisely what federal preemption intends to avoid.”
The court's holding recognizes the broad reach of HOLA preemption, and evidences a federal court's willingness reject one of the special preemption exceptions in the post Dodd-Frank era.
MORAL
Meaning if is a federal bank, it can get out of a state fraud action where the loan is involved but if you are a mortgage banker than is not a bank you get sued in state court and it stays there?
FORMER ARIZONA MORTGAGE LOAN OFFICER WAITING TRIAL ON 30 COUNTS OF MORTGAGE FRAUD INDICTED AGAIN AND AGAIN
FACTS
On April 27, PAIGE KINNEY, AKA JAIMELEE LAWLER, OF PHOENIX was arraigned on fraud charges from an insurance scam involving Allstate Insurance Co. Kinney is already facing trial on Aug. 23, on a 30-count indictment charging Wire Fraud, Conspiracy, Money Laundering and Conspiracy to Commit Money Laundering related to her leadership role in a nearly $40 million mortgage fraud scheme. Kinney was also recently indicted on additional fraud charges, including Bankruptcy Fraud charges stemming from her attempt to hide assets from the federal Bankruptcy Court by holding the assets under the name JaimeLee Lawler.
The superseding indictment alleges that Kinney committed Mail Fraud against Allstate by staging a burglary of her residence and then reporting the loss against her homeowners’ insurance policy with Allstate. Between September and December 2010, Allstate compensated Kinney almost $140,000 for her reportedly stolen items. Kinney had other people hide the items that were alleged to have been stolen, and investigators subsequently found many of those items.
A conviction for Mail Fraud carries a maximum penalty of 30 years prison, a $1 million fine or both. (usattyaz42811)
MORAL
I would say this lady has a bundle of trouble if convicted on all counts. The people that hid the items may be in trouble also if they know why they were given the items that Kinney allegedly hid to make insurance claims. What we have here is allegedly Mortgage Fraud, then Bankruptcy Fraud and then Insurance Fraud. I would say that if convicted she is looking at significant prison time.
NINE INDICTED IN FLORIDA FOR MORTGAGE FRAUD
FACTS
On April 27, the U.S. Attorney’s office released the return of two indictments and one superseding indictment involving mortgage fraud schemes relating to properties in the Versailles development in Wellington, Fla. What is interesting is that TWO ATTORNEYS WERE CHARGED, A FORMER PROFESSIONAL FOOTBALL PALYER AND A FIREFIGHTER. Charged in at least one of the indictments are CARL ALEXANDER OF PARKLAND; CAROL ASBURY, AN ATTORNEY, OF LAKE WORTH; PATRICK BRINSON OF MIAMI; DAVID LAM, A REAL ESTATE BROKER, OF PARKLAND; DAVID MILLER, MIRAMAR; GODFREY MYLES, FORMER PROFESSIONAL FOOTBALL PLAYER, OF MIAMI, FLORIDA; MICHAEL SAMUDA, 38, AN ATTORNEY, OF WESTON; THOMAS THELUSMA, A FIREFIGHTER, OF MIAMI; AND VICTORIA WILSON, A MORTGAGE BROKER, OF HOLLYWOOD.
All three indictments allege the defendants used "straw buyers" to submit false documentation substantially inflating the purchase price of the properties to various mortgage lenders. As part of the conspiracy, double HUD-1 Settlement Statements were prepared. One set with the real price was provided to the seller and another set with the inflated price was provided to the lender. The difference between the real price and the inflated price was either made to appear as if it were a debt owed to business entities controlled by the defendants and their co-conspirators, or was made to appear as profits to the seller. The fraudulent loan proceeds were instead laundered through multiple accounts to conceal the source and distribution of the money and were ultimately used for the benefit of the defendants and their co-conspirators.
More specifically, in one of the indictments, Asbury, Brinson, Lam and Myles were involved in a mortgage fraud scheme that generated more than $2.55 million in mortgage loans and approximately $488,000 in fraudulent loan proceeds involving two properties in the Versailles development in Wellington. Asbury and Lam are also charged with a mortgage fraud scheme which generated an additional $2 million in mortgage loans and $785,000 in fraudulent loan proceeds involving Versailles properties. Asbury and Lam are charged with two counts of conspiracy to commit mail and wire fraud and Brinson and Myles are charged with one count. Asbury, Brinson and Myles are each charged with two counts of wire fraud and Lam is charged with four counts. Asbury and Lam are also each charged with one count of mail fraud. Asbury, Brinson, and Myles are each charged with one count of making false statements on loan applications and Lam is charged in two counts. Each of the defendants is also charged with one count of conspiracy to commit money laundering; Asbury and Lam are charged in three counts of money laundering and defendants Brinson and Myles are charged in six counts.
In a second indictment Asbury, Alexander and Lam were charged for their involvement in a mortgage fraud scheme that generated more than $4.9 million in mortgage loans and approximately $1.8 million in fraudulent loan proceeds involving four Versailles properties. Alexander, Asbury and Lam are charged with one count of conspiracy to commit mail and wire fraud, nine counts of wire fraud, four counts of mail fraud, four counts of making false statements on loan applications and one count of conspiracy to commit money laundering. In addition Alexander and Asbury are charged in 13 counts of money laundering and Lam is charged in six counts.
The third indictment charges Lam, Miller, Samuda, Thelusma and Wilson in a mortgage fraud scheme that generated more than $3.79 million in mortgage loans and approximately $1 million in fraudulent loan proceeds involving three Versailles properties. All of the defendants are charged with one count of conspiracy to commit mail and wire fraud, six counts of wire fraud and one count of criminal forfeiture.
If convicted, the defendants face a maximum statutory sentence of 20 years in prison for the mail and wire fraud conspiracy, 20 years in prison for each of the mail and wire fraud counts, 20 years in prison for the money laundering conspiracies, 10 years in prison for each of the money laundering counts, and five years in prison for each of the false statement charges.
Investigative agencies were the IRS Criminal Investigation Division, Department of Financial Services, FBI, FDLE, U.S. Secret Service, and the Palm Beach County Mortgage Fraud Task Force. (ustyysdfl42711)
MORAL
$13.24 million in loans. Nine people charged including two attorneys, one firefighter and a former professional football player. There appear to be 197 different criminal accounts against the nine defendants when you add them all up as to each defendant
FORMER MORTGAGE BROKER IN IOWA SENTENCED FOR FRAUD
FACTS
On April 27, MARY LEE REINKING OF CLINTON, a former mortgage broker with CROW VALLEY MORTGAGE in Bettendorf, Iowa, was sentenced by United States District Judge John A. Jarvey to five years' probation, including one-year home confinement, in connection with Reinking's previous guilty plea to one count of wire fraud. Reinking also was ordered to pay $97,343 in restitution.
REINKING AND NATALIE LONG, ANOTHER BROKER EMPLOYED AT CROW VALLEY MORTGAGE, ASSISTED DARRYL HANNKEN AND ROBERT HERDRICH in a scheme to defraud mortgage lenders Argent Mortgage and New Century Mortgage in connection with loans to purchase two rental properties in Davenport, Iowa. Reinking and Long, aware that Hanneken and Herdrich would divert some of the loan proceeds to their own pockets without lender knowledge, facilitated the scheme by acting as broker for Herdrich and Hanneken. Reinking and Long also submitted false information concerning the income and financial assets of Herdrich and Hanneken in order to qualify them for the loans.
This fraud was uncovered as part of a broader FBI investigation of fraudulent mortgage practices in connection with the purchases of dozens of rental properties in Davenport between 2004 and 2006. Thus far, two mortgage brokers, a real estate agent, and two property buyers have pleaded guilty to fraud charges resulting from this investigation. Another mortgage broker and an attorney have been charged and are awaiting trial. (usattysdia42711)
MORAL
There appear to have been 10 people involved in this by the above accounts. I would say she had a good attorney judging from the sentence and she still has a permanent felony on her record with all the loss of rights incurred with that.
FORMER LOAN OFFICER FOR WELLS FARGO BANK IN MINNEAPOLIS, PLEADS GUILTY TO MORTGAGE FRAUD
FACTS
On April 26, in federal court in Minneapolis, a former loan officer for Wells Fargo Bank pleaded guilty to participating in a $4.3 million mortgage fraud scheme. LARRY GENE HILLARD OF MAPLE GROVE pleaded guilty to one count of conspiracy to commit wire fraud.
Hillard admitted that between 2007 and August 21, 2008, he participated in 12 fraudulent transactions with TRUANG QUANG TRAN AND THANH VAN NGO, owners of INVESCORP. Hillard admitted that in his capacity as a loan officer, he received from Tran and Ngo personal information regarding several people for the purpose of running run credit reports on them. He then gave those reports to Tran and Ngo. He subsequently received a loan application in the name of one of the individuals who had a good credit score. In addition, he provided Tran and Ngo with specific information about the assets and income required to qualify for a particular loan. Then, a short time later, he received loan applications that contained the information he previously provided. Hillard also admittedly completed fraudulent loan applications. The loan amounts for the 12 properties involved in this fraud scheme totaled more than $4.3 million. The loss amount was more than $1.4 million.
Hillard faces a potential maximum penalty of five years in prison. Tran was earlier sentenced to 24 months in federal prison for his role in the scheme. On April 20, Ngo was sentenced to 12 months and one day in prison. Three co-defendants also have been sentenced. (usattymn42611)
MORAL
That is a total of six indicted and five already sentenced. The federal prosecutors went back to loans that occurred in 2007, four years ago. We have seen that in California and in Nevada as well
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