FACTS
To elaborate further on recent HUD withdrawals of mortgagee approvals: Approval of a mortgagee by HUD/FHA to participate in FHA mortgage insurance programs includes an Origination Approval Agreement between HUD and the mortgagee. Under the Agreement the mortgagee is authorized to originate single-family mortgage loans and submit them to FHA for insurance endorsement. The Agreement may be terminated on the basis of poor performance of FHA-insured mortgage loans originated by the mortgagee.
HUD’s regulations permit HUD to terminate the Agreement with any mortgage having a default and claim rate for loans endorsed within the preceding 24 months that exceeds 200 percent of the default and claim rate within the geographic area served by a HUD field office, and also exceeds the national default and claim rate.
Termination of the Agreement precludes that branch(s) of the mortgagee from originating FHA-insured single-family mortgages within the area of the HUD field office(s) listed in this notice.
A terminated mortgagee may apply for a new Origination Approval Agreement if the mortgagee continues to an approved mortgagee meeting the requirements of 24 CFR 202.5, 202.6, 202.7, 202.8 or 202.10 and 202.12, if there has been no Origination Approval Agreement for at least six months and if the Secretary determines that the underlying causes for termination have been remedied.
MORAL
In simple English (as if law can ever be put into simple English), once the termination goes into effect, the branch office of the mortgagee operating in the HUD field office area where it was terminated must wait six months before it can reapply (at least in this person's opinion. However, all other branches not terminated may continue to operate and loans in progress can be transferred to the other branches. If you have any questions, give me a call.
EFFECTIVE APRIL 1, 2011, REG Z WILL CONTROL ALL LOAN ORIGINATION FEES TO BROKERS AND LOAN OFFICERS ON CLOSED END LOANS
FACTS
The final rule (which does not apply to HELOC’s) prohibits payments to loan originators, which includes mortgage brokers and loan officers, based on the terms or conditions of the transaction other than the amount of credit extended. The final rule further PROHIBITS ANY PERSON OTHER THAN THE CONSUMER FROM PAYING COMPENSATION TO A LOAN ORIGINATOR IN A TRANSACTION WHERE THE CONSUMER PAYS THE LOAN ORIGINATOR DIRECTLY. The Board is also finalizing the rule that prohibits loan originators from steering consumers to consummate a loan not in their interest based on the fact that the loan originator will receive greater compensation for such loan. The final rules apply to closed-end transactions secured by a dwelling where the creditor receives a loan application on or after April 1, 2011.
Section 1403 of the Dodd-Frank Reform Act creates new TILA Section 129B(c), which imposes restrictions on loan originator compensation and on steering by loan originators. The Board intends to implement Section 129B(c) in a future rulemaking after notice and opportunity for further public comment. This is in addition to this new final rule that goes into effect on April 1, 2011.
Section 226.36(d)(1) of the final rule is consistent with TILA Section 129B(c)(1), which prohibits payments to a mortgage loan originator that vary based on the terms of the loan, other than the amount of the credit extended. Likewise, § 226.36(d)(2) of the final rule is consistent with TILA Section 129B(c)(2), which allows mortgage loan originators to receive payment from a person other than the consumer (such as a yield spread premium paid by the creditor) only if the originator does not receive any compensation directly from the consumer.
TILA Section 129B(c)(2) also imposes a second restriction when an originator receives compensation from someone other than the consumer: the consumer also must not make any upfront payment to the lender for points or fees on the loan other than certain bona fide third-party charges. This restriction was not contained in the proposed rule, and therefore, is not included in this final rule and will be addressed in a subsequent rulemaking.
This final rule only applies to parties who arrange, negotiate, or obtain an extension of mortgage credit for a consumer in return for compensation or other monetary gain.
MORAL
You can receive YSP from the creditor or Origination from the borrower but not both. However, you still must comply with Reg X as amended.
BUY BACK DEMANDS INCREASE AND SO DO LAWSUITS
FACTS
Lenders are facing increasing loan-repurchase demands from Fannie Mae and Freddie Mac. In addition, the mortgage insurance companies are rescinding coverage on more loans, which is putting even more pressure on lenders. MI "rescissions of mortgage insurance coverage continued to increase in the first half of 2010," Freddie Mac said in a recent public securities filing. This forces the GSE to go back to the lender to negotiate a buyback or reimbursement for losses.
Freddie currently has $5.6 billion in buyback requests outstanding and 24% of those requests are more than 120 days old and remained unpaid as of June 30. To insure more timely payments, Freddie said it is now requiring "certain seller/servicers commit to plans for completing repurchases, with financial consequences or with stated remedies for noncompliance, as part of the annual renewals of our contracts with them."
Freddie collected $1.4 billion from loan repurchases in the second quarter, compared to $911 million in the year-ago period.
The GSE also received $676 million from MIs during the first six months of this year, compared to $421 million during the same period in 2009.Freddie still has $1.3 billion in unpaid MI claims as of June 30, compared to $1 billion at the beginning of the year. Fannie Mae reported that its seller/servicers repurchased $1.5 billion in bad loans in the second quarter, down from $1.8 billion in the first quarter. However, Fannie said it had unpaid buyback requests of $1.5 billion at June 30, 2010. The GSE has a backlog of claims totaling $3.6 billion that the MIs have not paid.
MIs paid Fannie $3.5 billion for claims on primary and pool insurance during the first half of 2010. (nmn82010)
MORAL
What does all this mean to you? Fannie demands buyback from the lender. The lender demands buyback from the mortgage broker and the mortgage broker gets sued. We have seen the number of demands and lawsuits made on wholesale lenders and brokers increase this year by the number of clients we are representing in these buy back demands and lawsuits. It is better to have us negotiate for you when you get the demand in the beginning before the lawsuit is filed and served.
EMPLOYEE VS. INDEPENDENT CONTRACTOR SEVEN TIPS FOR BUSINESS OWNERS
FACTS
There are rules that will help you determine how to classify the people you hire.
HERE ARE SEVEN THINGS EVERY BUSINESS OWNER SHOULD KNOW about hiring people as independent contractors versus hiring them as employees.
1. The IRS uses three characteristics to determine the relationship between businesses and workers:
Behavioral Control covers facts that show whether the business has a right to direct or control how the work is done through instructions, training or other means.
Financial Control covers facts that show whether the business has a right to direct or control the financial and business aspects of the worker's job.
Type of Relationship factor relates to how the workers and the business owner perceive their relationship.
2. If you have the right to control or direct not only what is to be done, but also how it is to be done, then your workers are most likely employees.
3. If you can direct or control only the result of the work done—and not the means and methods of accomplishing the result—then your workers are probably independent contractors.
4. Employers who misclassify workers as independent contractors can end up with substantial tax bills. Additionally, they can face penalties for failing to pay employment taxes and for failing to file required tax forms.
5. Workers can avoid higher tax bills and lost benefits if they know their proper status.
6. Both employers and workers can ask the IRS to make a determination on whether a specific individual is an independent contractor or an employee by filing a Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, with the IRS.
7. You can learn more about the critical determination of a worker’s status as an Independent Contractor or Employee at IRS.gov by selecting the Small Business link. Additional resources include IRS Publication 15-A, Employer's Supplemental Tax Guide, Publication 1779, Independent Contractor or Employee, and Publication 1976, Do You Qualify for Relief under Section 530? These publications and Form SS-8 are available on the IRS website or by calling the IRS at 800-829-3676 (800-TAX-FORM).
MORAL
If it is not absolutely clear see your attorney; see your CPA or see us. But see at least one or you risk serious penalties. The independent contractor you classify may be an employee that can sue you later for overtime, wage penalties and workers compensation benefits if you guess wrong.
MORTGAGE FRAUD STILL ON A HIGH AND NEVADA LEADS THE PACK
FACTS
.
Interthinx notes that six of the ten riskiest MSAs in the nation were in the top 10 a year ago, and all 10 of the MSAs that were at the top of the list for fraud last year are still in the top 20 today.
Interthinx reported that NEVADA REPLACED ARIZONA AS THE STATE WITH THE HIGHEST FRAUD RISK, THOUGH BOTH STATES HAVE INDICES ABOUT 40 POINTS GREATER THAN THAT OF THIRD-PLACE CALIFORNIA. (on81810).
MORAL
So what’s new? Florida did not make the top three this time. That is news. Nevada I like since we do have clients that have “issues" there and the restaurants are exceptional.
ARIZONA LICENSING LAW WENT INTO EFFECT JULY 1, 2010
FACTS
The law creates state oversight for people who take loan applications and establishes a fund to help repay borrowers who lose money because of unethical or illegal acts by their loan officers.
Prior to the new law there were more than 10,000 unlicensed loan officers.
Now, in Arizona, any person who handles a loan application or takes a borrower's financial information will be fingerprinted and subject to a background check. Officials at the Arizona Department of Financial Institutions can reject applicants with a record of misconduct. Applicants also have to pass a test to prove their understanding of federal law, mortgage standards and ethics.
So far, 4,336 people have applied to be loan originators in Arizona and 2,413 LICENSES HAVE BEEN ISSUED, according to the department. About 1,000 of the applications are on hold because not all the necessary information was provided or the state agencies found problems with them. The rest are still being processed.
Loan officers, sometimes called originators, weren't subject to state scrutiny. They worked under the licenses of their brokers, much the way an apprentice would work for a licensed contractor. Previously, that oversight was considered sufficient. Now they have to be licensed and have unique identifiers issued by the National Mortgage Licensing System & Registry.
Additionally, the Wall Street Reform and Consumer Protection Act provides loan originators must now be registered under the new federal system that is tied to state licensing systems. The act makes it illegal for mortgage brokers and loan officers to be paid higher commissions for riskier loans with higher interest rates and fees. Loan brokers and officers can be paid a commission based only on the principal amount of a mortgage and bonuses on the number of loans they complete.
Arizona's new law establishes a recovery fund, using money from licensing fees and bonds, allows consumers damaged by the actions of a loan officer to recover up to $200,000. (azrep81110)
MORAL
Originally Arizona had over 10,000 loan officers. Now it is slightly over 2,000 licensed. That is an 80% drop! Now for the good news: That means less competition and more money for the survivors. Additionally with the TPOs now being allowed by HUD/FHA companies no longer need approval from FHA to do FHA loans as brokers. With the recovery fund, there should be no net worth requirement. Without the recovery fund, the net worth requirement is $250,000 per company.
CALIFORNIA LOAN ORIGINATORS DROP BY 25,000
FACTS
There are 40,000 mortgage originators registered with the California Department of Real Estate. Only 15,000 have completed compliance with the SAFE Act. So said Dale DiGennaro, president of the California Association of Mortgage Professionals at the group's meeting in Long Beach, California on August 18-19, 2010. (on81910)
MORAL
Competition is cut by more than one-half. So the rest of you should have more loans to do since 25,000 may not be around doing them on Jan. 1, 2011. However, you should all join the California Association of Mortgage Professionals because in numbers there is political power where you don’t get stomped on.
SO YOU THINK YOU DO NOT HAVE ENOUGH REGULATIONS FOR CALIFORNIA REAL ESTATE LICENSEES—WELL HERE ARE 12 MORE COMING UP
FACTS
On Aug. 11, the Commissioner of the California Department of Real Estate issued a list of five regulatory proposals covering 12 proposed new and/or amended regulations for hearing currently set for Sept. 29 in Sacramento. Learn these new changes now and if you need us to audit or update your manuals and/or your activities for compliance let us know. Better to audit now to correct mistakes then be audited by DRE later and disciplined for them because of the failure to correct.
1. B&P §10087 was added to the law in 2008 effective Jan. 1, 2009 allowing the DRE to suspend or bar a person from a position or employment, management or control of a real estate enterprise under conditions including violation of laws, regulations of the DRE or conviction of certain crimes or found liable in certain civil actions involving dishonesty, fraud or deceit.
10 C.C.R. §2725 as amended will cover broker supervision is being amended to add a subsection that the supervising broker must establish policies, rules, procedures and systems to review, oversee, inspect and manage the salesperson activities to prevent employment or real estate related business activities with debarred persons. The amendment also includes that where the broker delegates supervision, it must be in writing and limits the persons to whom supervision may be delegated.
10 C.C.R. §2725.5 (new) requires the broker to have a regular pattern of broker review of the list of debarred persons to be certain the broker is continually aware of the debarment list and does not allow the salespersons or the broker to do business with them.
10 C.C.R. §2930 as amended adds language in proposed decisions specifying the activities that a debarred person will not be allowed to do. This is very broad and effectively removes the person from real estate support in any form and can easily be read to include marketing including selling flyers and business cards. (20(a))
10 C.C.R. §2960 (new) adds broad definitions including “business activities’ which the debarred person will not be allowed to perform. The intent is that the debarred person can have absolutely nothing to do with real estate except as a principal to a transaction. This is very, very broad.
10 C.C.R. §2961 (new) adds specific grounds including all the elements necessary within each to substantiate the imposition of the suspension or debarment.
10 C.C.R. §2962 (new) states that when a person receives a notice of intention to issue order of suspension or debarment that person must immediately stop any real estate business activities. (In other words you are guilty until you prove yourself innocent since no hearing has yet been held. I wonder where the United States Constitution comes in about the right to due process. Even the federal people allow a hearing via an ex parte or preliminary injunction. Both of which require notice.)
10 C.C.R. §2963 (new) sets out the effect of the actual issuance of an order. In addition to the prohibitions already in effect when the person receives the notice of intent listed in Section 2962, the actual issuance of the order triggers additional prohibitions containing broad categories of activities from which a suspended or debarred person must refrain. These actually extend beyond the business activities prohibition.
10 C.C.R. §2830 (new) Receiving any benefit (with very, very limited exceptions) from the institution where a broker places trust fund accounts is a violation of the law and the broker is subject to discipline.
10 C.C.R. §2785 (new) Details what is considered to be improperly influencing an appraiser and/or appraisal.
10 C.C.R. §3012.3 (amended) Redefines “good standing” when allowing licensees with over 30 years as a licensee and over 70 to be excluded from having to take the continuing education courses.
10 C.C.R. §2770.1 (amended) Clarifies the abbreviations used in advertising have not changed their meaning since B&PC §10140.6 was amended effective July 1, 2009.
10 C.C.R. §2847.3 (amended) Clarifies method of disclosures of license and licensing department have not changed since B&PC §10140.6 was amended effective July 1, 2009.
MORAL
Now you know why we waited so long to update our DRE self-audit manual. I would highly recommend you now purchase a new DRE audit manual from us. Because of all the new laws and regulations, not the least of which is the Dodd-Frank Wall Street Reform & Consumer Protection Act (H.R. 4173 ENR) as well as the new regulations including but not limited to the ones set out herein and the SAFE ACT, our old manuals should be considered out of date. If you would like to purchase the new one as soon as publication is complete please contact Loretta at 888-667-8529 with your credit card information and she will take the order. We need to know how many of you will be getting the updated one to determine how fast it has to be completed.
DRE AND GETTING A UNIQUE IDENTIFIER UNDER THE SAFE ACT-IS IT REALLY REQUIRED FOR ALL REAL ESTATE LOANS?
FACTS
MU1 form for companies-This form is completed on behalf of a licensed real estate corporation or on behalf of a sole-proprietor license real estate broker.
MU2 form for officers-This form will be completed for the broker or officers (licensed and non-licensed) of the company identified in the MU1 form.
MU3 form for branches-This form is completed for each licensed mortgage loan branch office location.
MU4 form for individuals-This form will be completed by each mortgage loan originator who will take a mortgage loan application, or who will negotiate or offer to negotiate a residential property mortgage loan. This includes brokers, salespersons, and independent or contract loan processors or loan underwriters. If a MLO License Endorsement application is filed for a corporation, the corporation licensed broker officer must also file this form.
MORAL
I would like you to note two things: (1) all officers of the corporation have to complete the MU2 form even if they are not licensed; (2) It would superficially appear that not all Real Estate Brokers doing mortgage loans and not all Real Estate loan officers are legally required to have unique identifiers under the SAFE ACT or under the DRE Laws and Regulations. There appears to be a hole in the law and regulations if you look at the intent of the DRE, the intent of the SAFE ACT and the actual laws and regulations as written by the State of California though the legislature. The issue resolution remains to be seen depending on whom the DRE is disciplining for what reason.
IN CALIFORNIA WHEN A LENDER SAYS YOU “QUALIFY” FOR A LOAN IT DOES NOT MEAN THE LENDER IS ALSO SAYING YOU CAN “AFFORD” THE LOAN
FACTS
Plaintiffs Mercedes Perlas and Vellacorta owned real property on Drakes Circle in Discovery Bay, California. In 2007, they sought to refinance their home by obtaining a loan from GMAC in the amount of $417,000. GMAC determined they qualified for a 30-year fixed rate loan with monthly payments of $2,601.54.The plaintiffs alleged they gave their correct income as $50,000 per year but that it was later falsified by others to be $9,466 per month. Further that at signing the note and deed of trust and other documents they were not allowed to read the application for the loan. Later when they defaulted and the loan was foreclosed upon they sued GMAC and others alleging that when GMAC qualified them for the loan GMAC was also representing they could afford the loan. Further that GMAC also acted as their broker and owed them a fiduciary duty to tell them they could not afford the loan. The defendants demurred to the complaint and it was dismissed without leave to amend and the plaintiffs appealed.
The 1st Appellate District of the California Courts of Appeal said affirmed. A lender is under no duty to determine the borrower’s ability to repay the loan. There was no allegation in the complaint that GMAC stated at any time that plaintiffs could afford the payments. A lenders’ determination that the borrower qualifies for the loan does not mean it is also determining the borrower can afford to pay the loan. Absent special circumstances a loan transaction is an arm’s length transaction and there is no fiduciary relationship between the borrower and the lender. A lender has no duty of care to the borrower in approving the loan. Perlas et al., vs. GMAC Mortgage, LLC, et al., 2010DJDAR 12466 (8-11-10)
MORAL
However, now with all the new laws, section 35, and other laws, the lender does have a duty in consumer loans to determine ability to pay. The banks however, may still be an exception. That remains to be seen.
COLORADO SPRINGS, COLORADO MAN ACCUSED OF MORTGAGE FRAUD AND MURDERING HIS FATHER
FACTS
On Aug. 10, WILLIAM SILVI, a former Colorado Springs man accused of murdering his father in New Jersey in a plot to obtain insurance money has been indicted by a federal grand jury in Denver for an alleged mortgage fraud scheme. The U.S. attorney's office in Denver says Silvi was indicted for wire and mail fraud and money laundering in a scheme to defraud financial institutions and commercial lenders to obtain money and property. Authorities say the transactions involving 11 properties occurred between March 2005 and January 2008 when Silvi lived in Colorado Springs.
Silvi his and brother-in-law, DANIEL TUNKS, are charged with murder, conspiracy and weapons offenses in the 2008 death of Silvi's father, William Marcucci, in Saddle Brook, N.J. Silvi is being held without bond. (nj.comapdvrco81010)
MORAL
Aside from the murder accusation, I feel sorry for the brokers that may have brokered the 11 loans. But if they are being requested to buy back or indemnify we have had very good luck in those areas should they decide to speak with us.
NEW REGULATIONS FOR FLORIDA UNDERWRITERS
FACTS
The Florida Office of Financial Regulation's Assistant General Counsel issues an opinion letter on loan underwriter licensing as loan originators. Underwriters who are W-2 employees of licensed mortgage lenders are not required to obtain loan originator licenses. In-house underwriters who work for a licensed lender must be supervised by a licensed loan originator and if underwriters intend to underwrite exclusively for one employer, they will not be subject to the existing requirement that "loan processors" file declarations with the department of intent to engage solely in loan processing in order to contract with multiple mortgage brokers or mortgage lenders. (alrgs819100)
MORAL
When taking this to heart be sure to remember that FHA underwriters with their own CHUMS number cannot underwrite for other lenders.
FLORIDA MORTGAGE BROKER, LOAN PROCESSORS AND STRAW BUYERS PLEAD GUILTY TO MULTI-MILLION DOLLAR MORTGAGE FRAUD
FACTS
On August 18, 2010 defendant JOHN FISHER, OF JUPITER, pled guilty in federal court to one count of conspiracy to commit mail and wire fraud and to one count of substantive mail fraud. Also pleading guilty today were DEFENDANTS TRACEY BALLI OF Pembroke Pines, JUSTINA BRYAN OF HOLLYWOOD, AND DELANO MCLENNON OF NORTH LAUDERDALE. These defendants pled guilty to one count of making false statements on a HUD-1 Real Estate Settlement Form in connection with a mortgage fraud scheme. Sentencing has been scheduled for Nov. 19, 2010 before U.S. District Judge Ursula Ungaro.
The defendants and other conspirators engaged in a scheme to fraudulently cause real property in Fort Lauderdale, Jupiter, Cape Coral, and Royal Palm Beach, Fla., to be bought and sold through straw buyers who obtained high value mortgages based upon fraudulent mortgage loan applications. A co-conspirator orchestrated the scheme, in which defendant John Fisher, a licensed mortgage broker, Tracey Balli and Justina Bryan, both loan processors, joined. Balli and Bryan, along with other conspirators, recruited straw buyers, including Delano McLennon, to join the scheme. In order to obtain mortgages on these properties, the defendants and other co-conspirators submitted and caused to be submitted fraudulent documents to various mortgage lenders across the United States. Based on these false documents, the mortgage lenders issued approximately $2,500,000 in loans to the defendants and their co-conspirators. (usattysdfl81810)
MORAL
Do you notice that the straw buyers are now being indicted more often? Could be they ‘cop out” faster making the proof against the broker easier?
NORTH CAROLINA HAS MORTGAGE LENDER PAY $4.5 MILLION FOR A SCHEME TO SIGN CONSUMERS TO LOANS THEY COULD NOT AFFORD
FACTS
North Carolina attorney general Roy Cooper states W.R. STARKEY MORTGAGE, PLANO, TEXAS, a mortgage lender will pay $4.5 million for its role in a scheme to sign consumers to loans they couldn't afford on overpriced modular and manufactured homes. Mortgage lender W.R. Starkey Mortgage, of Plano, Texas, provided home loans for North Carolina consumers who bought homes from PHOENIX HOUSING GROUP INC. between January 2007 and September 2008.
The North Carolina AG alleged that Starkey worked with Phoenix to improperly qualify borrowers for loans and finance the sales of manufactured homes and land at inflated prices. The allegations state that Starkey employees and agents failed to verify financial information provided about borrowers by Phoenix, disguised the source of the information, placed inaccurate information on consumers' credit reports to boost their ability to qualify for loans, made loans without regard to their ability to repay, and added discount points to mortgages without reducing the interest rate as required by law.
After Starkey officials were notified of the fraud, they quickly agreed to corrective actions and consumer refunds, according to Cooper. Under a consent judgment between Starkey and the attorney general's office, Starkey will pay $4.4 million to 171 families who purchased mobile or manufactured homes from Phoenix, a refund of $26,000 per family; pay $125,000 for consumer education and to cover the costs of the enforcement action; and pay $25,000 to the Western Piedmont Council of Government to help provide financial counseling to consumers who receive refunds under the settlements.
In addition, Starkey is permanently barred from making loans when a manufactured housing dealer is a party to the deal, collecting financial information about prospective borrowers from anyone other than the borrowers, and charging discount points unless requested and paid by a borrower to reduce the interest rate.
Cooper filed suit in November 2009 against Starkey, Phoenix and a third company, K&B HOMEBUILDERS, as well as several individuals connected with the companies. The case against Phoenix and K&B remains active, and the attorney general is asking the court to permanently ban them from "engaging in deceptive activities and to order refunds and civil penalties." A preliminary injunction remains in place against K&B, its owners and other employees.
The court also approved a consent judgment against one former Phoenix and K&B employee, GEORGE WILLIAM VARSAMIS, for his role in the scheme to put consumers in overvalued homes. Varsamis is banned permanently from "engaging in any unfair or deceptive practices related to housing or land sales in North Carolina" and must pay $500 for investigative costs. If Varsamis is found to violate the judgment, he will also owe the state $100,000 in civil penalties.
The AG's office said Phoenix is headquartered in Greensboro but also does business as HOMESAMERICA and SOUTHERN SHOWCASE HOUSING. Phoenix has multiple offices across the state and at one time operated in Asheboro, Asheville, Burlington, Granite Falls, Greensboro, Hendersonville and Winston-Salem. K&B was founded by a former Phoenix employee and sold stick-built homes, modular home/land packages and foreclosed homes in Catawba, Burke and Caldwell counties. (on81810)
MORAL
Don’t mess with North Carolina!
WASHINGTON MORTGAGE ORIGINATOR INDICTED FOR MISUSING FORMER CLIENTS’ PERSONAL INFORMATION
FACTS
On August 10, 2010 LIZA BAUTISTA of Tukwila, was arraigned in Seattle on charges of mail fraud, wire fraud and misuse of a Social Security Number, in connection with a scheme to defraud lenders and line her own pocket. BAUTISTA entered “Not Guilty” pleas to all charges. Her trial, in front of U.S. District Judge Ricardo S. Martinez, is scheduled for Oct. 18, 2010.
According to the indictment, between August 2005, and July 2006, BAUTISTA engaged in a scheme to defraud lenders by submitting false and fraudulent information in connection with home loans. According to the indictment, BAUTISTA held herself out as someone who could help first time buyers with bad credit purchase their first home. According to the indictment, she took advantage of these purchasers naiveté—they trusted BAUTISTA when she told them the paperwork was all in order, and that they had purchased their first home.
In reality, BAUTISTA had obtained the home loans and placed title to the properties in the names of past clients who had better credit. These past clients were shocked when lenders started contacting them about homes they had never purchased. The naive buyers could not understand why lenders kept mailing information to their home in the names of other people. Some of these new purchasers made their mortgage payments to BAUTISTA who pocketed the payments instead of passing them on to the lending institutions. When the young purchasers learned they had not really purchased their dream home, they had to move out, and the lending institutions lost thousands as the homes were foreclosed and sold at a loss. BAUTISTA pocketed about $20,000 on six loans worth over $800,000. The scheme involved properties in Federal Way, Kirkland and Everett, Wash.
Mail fraud and wire fraud are punishable by up to 20 years in prison and a $250,000 fine. Misuse of a Social Security Number is punishable by up to five years in prison and a $250,000 fine.
The charges contained in the indictment are only allegations. A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law. (usattywdwa81010)
MORAL
If, notice I said IF, she did it, I do not know how she expected to get away with it when you consider the facts. She received according to the indictment about $20,000. The information as laid out above is bound to raise questions from the start. I trust she can afford legal counsel. That is good legal counsel.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE
