DOING OUTSIDE SALES OVER 50% OF THE TIME MAKES THE EMPLOYEE EXEMPT FROM OVERTIME LAWS IN FLORIDA
FACTS
Bruce Napolitano is the owner of First Title of America Inc., a title marketing company based in Lake Mary, Fla. Ms. Gregory was an employee from July 2004 through January 2005, who was hired as a marketing executive due, in large part, to her prior experience in selling title insurance. According to the employment agreement executed between the parties, her job description was to "provide the services for referring and closing title insurance companies." Under the terms of the agreement, Ms. Gregory initially was paid $1,000 per week. At Ms. Gregory's suggestion, she later began to be paid on a commission basis and received a 50% commission on all orders for title insurance from her clients that closed with First Title. Gregory claimed that although she often worked more than 40 hours per week, she was never compensated for her overtime. First Title argued she was an outside salesperson and not entitled to overtime. It made a motion for summary judgment which was granted and Ms. Gregory appealed.
The 11th Circuit of the United States Court of Appeals said affirmed. The Fair Labor Standards Act, a federal law, provides, in part:
Except as otherwise provided in this section, no employer shall employ any of his employees who in any workweek is engaged in commerce or in the production of goods for commerce, or is employed in an enterprise engaged in commerce or in the production of goods for commerce, for a workweek longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed. (29 U.S.C. § 207(a)(1).)
There are several exemptions. One of those exemptions is § 213(a)(1) of the statute and exempts any employee employed in the capacity of an outside salesperson, as defined by the Secretary of Labor. See 29 U.S.C.§ 213(a)(1). The regulations applicable to outside sales employees are found in 29 C.F.R.Part 541. The term "outside sales employee" is defined as any employee whose primary duty is: making sales within the meaning of section 3(k) of the Act, or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and who is customarily and regularly engaged away from the employer's place or places of business in performing such primary duty. 29 C.F.R. § 541.500(a).
"Primary duty is further defined in 29 C.F.R. § 541.700: To qualify for exemption...an employee's primary duty must be the performance of exempt work. The term 'primary duty' means the principal, main, major or most important duty that the employee performs. Determination of an employee's primary duty must be based on all the facts in a particular case, with the major emphasis on the character of the employee's job as a whole. Factors to consider when determining the primary duty of an employee include, but are not limited to, the relative importance of the exempt duties as compared with other types of duties; the amount of time spent performing exempt work; the employee's relative freedom from direct supervision; and the relationship between the employee's salary and the wages paid to other employees for the kind of nonexempt work performed by the employee.
"Other work that furthers the employee's sales efforts also shall be regarded as exempt work including, for example, writing sales reports, updating or revising the employee's sales or display catalogue, planning itineraries and attending sales conferences." 29 C.F.R. § 541.500(b).
The primary duty test compels us to consider a number of factors when determining the primary duty of an employee, including, but not limited to, "the relative importance of the exempt duties as compared with other types of duties; the amount of time spent performing the exempt work; the employee's relative freedom from direct supervision; and the relationship between the employee's salary and the wages paid to other employees for the kind of nonexempt work performed by the employee." 29 C.F.R. § 541.700(a).
That being said, the court ruled Ms. Gregory was an exempt employee and therefore not entitled to overtime. (Gregory vs. First Title of America, Inc., No. 08-10737, 12709, 11thcir.usca)
MORAL
You are given this much data so you can read for yourself. Remember though, you should consult an attorney before acting on the matters stated herein. Your facts are bound to be different and therefore could cause a different legal opinion.
ARIZONA PROPOSES TO ADD TO PROHIBITED ACTS OF MORTGAGE BROKERS
FACTS
HB 2216 proposes to amend A.R.S. Section 6-909 by adding new subsections Q and R as shown herein.
Q. A mortgage broker shall not:
1. Make, provide or arrange for a residential mortgage loan without verifying the borrower's reasonable ability to pay the scheduled payments of principal, interest, real estate taxes, homeowner's insurance, assessments and mortgage insurance premiums, as applicable. For loans with an interest rate that may vary, the reasonable ability to pay shall be determined based on a fully indexed rate and a repayment schedule that achieves full amortization over the life of the loan. For all residential mortgage loans, the borrower's income and financial resources must be verified by tax returns, payroll receipts, bank records or other similarly reliable documents.
2. Engage in churning. For the purposes of this paragraph, "churning" means knowingly or intentionally making, providing or arranging for a residential mortgage loan when the new residential mortgage loan does not provide a reasonable, tangible net benefit to the borrower considering all of the circumstances, including the terms of both the new and refinanced loans, the cost of the new loan and the borrower's circumstances.
3. Make or assist in making any residential mortgage loan with the intent that the loan will not be repaid and that the residential mortgage broker will obtain title to the property through foreclosure.
4. Make, provide or arrange for a residential mortgage loan that is of a lower investment grade if the borrower's credit score or comparable underwriting data, if the mortgage broker does not use credit scoring or if a credit score is unavailable, indicates that the borrower may qualify for a residential mortgage loan available from or through the mortgage broker that is of a higher investment grade unless the borrower is informed that the borrower may qualify for a higher investment grade loan with a lower interest rate or lower discount points or both a lower interest rate and lower discount points and consents in writing to receive the lower investment grade loan.
5. Charge a fee for a product or service if the product or service is not actually provided or misrepresent the amount charged by or paid to a third party for a product or service.
6. Compensate, whether directly or indirectly, coerce or intimidate an appraiser for the purpose of influencing the independent judgment of the appraiser with respect to the value of real estate that is to be covered by a residential mortgage or that is being offered as security according to an application for a residential mortgage loan.
R. This section does not limit a mortgage brokers or exempt person's ability to rely on criteria other than the borrower's income and financial resources to establish the borrower's reasonable ability to repay a residential mortgage loan, except that the other criteria must be verified through reasonably reliable methods and documentation. A statement by the borrower to the mortgage broker or exempt person of the borrower's income and resources is not sufficient to establish the existence of the income or resources when verifying the borrower's reasonable ability to pay. (HR2216)
MORAL
In other words a full doc loan at the best interest rate possible with the ability to repay at the highest rate if the loan is an ARM. Track the bill if you do not want to be disciplined. Propose amendments where appropriate and talk to your lobbyist.
ADDITIONAL PROPOSED ARIZONA BILLS THAT CAN AFFECT YOUR ABILITY TO EARN A LIVING AS A MORTGAGE BROKER
FACTS
HR 2513-Relating to reverse mortgage loans, counseling and disclosures.
HR 2522-Affecting home equity purchasers and foreclosure consultants including two payments in arrears.
CALIFORNIA PROPOSED LAWS OF IMPORTANCE TO REAL ESTATE LICENSEES TO BE EFFECTIVE IN 2010
FACTS
NEW PROPOSED LAW FOR HIGHER-PRICED MORTGAGE LOANS
ABX2: This bill would further authorize the commissioner to suspend or revoke those licenses, or to deny issuance of those licenses, upon a violation of specified federal lending laws or regulations. This bill would also establish "higher-priced mortgage loans," as defined, as a new category of regulated loans. The bill would, among other things, limit prepayment penalties and prohibit provisions for negative amortization. The bill would prohibit a licensed person, as defined, from making false, deceptive, or misleading statements or representations in connection with higher-priced mortgage loans. The bill would also, among other things, prohibit a mortgage broker, as defined, who arranges higher-priced mortgage loans with prepayment penalties from receiving a compensation that exceeds certain amounts. The bill would provide that a violation of the provisions regulating higher-priced mortgage loans by a licensed person is also a violation of the person's licensing law. The bill would authorize a licensing agency or the Attorney General to enforce the provisions regulating higher-priced mortgage loans. The bill would authorize civil penalties in an amount up to $10,000 against a licensed person who willfully and knowingly violates the provisions regulating higher-priced mortgage loans, would nullify prepayment penalties or yield spread premiums that violate these provisions, would make a licensed person who violates these provisions liable to the borrower in the amount of the borrower's actual damages, and would authorize the court to award court costs and attorney's fees to a prevailing plaintiff.
The bill's provisions would apply to higher-priced mortgage loans originated on or after July 1, 2010.
The bill would also provide that a mortgage broker, as defined, providing mortgage brokerage services, as defined, to a borrower is the fiduciary of the borrower, and any violation of the broker's fiduciary duties is a violation of the mortgage broker's licensing law and specified civil penalty and liability provisions. The bill would further provide that this fiduciary duty includes a requirement that the mortgage broker place the economic interest of the borrower ahead of his or her own economic interest. (amends B&PC §10177, adds CC §2923.1, adds Fin.C. §§4995-4995.5: 22346, amends Fin.C. §50505)
ENDORSEMENTS REQUIRED TO REAL ESTATE LICENSE AS A MORTGAGE BROKER
SB 36: This bill would require a real estate license endorsement from the commissioner in order to engage in the business of a mortgage loan originator, as defined. The bill would establish penalties if a real estate licensee fails to obtain a license endorsement before conducting business as a mortgage loan originator and would authorize the commissioner to suspend or revoke a real estate license for a failure to pay these penalties. The bill would require applicants for a license endorsement as a mortgage loan originator to furnish specified background information to the Nationwide Mortgage Licensing System and Registry. The bill would establish standards for issuance and renewal of a license endorsement to act as a mortgage loan originator, including satisfying specified educational requirements. The bill would require these real estate licensees to annually submit business activities reports, and other reports that may be required, to the commissioner. The bill would authorize the commissioner to examine the affairs of real estate brokers, including those that obtain license endorsement as a mortgage loan originator. The bill would require the commissioner to report violations of the provisions regulating real estate brokers and mortgage loan originators to the Nationwide Mortgage Licensing System and Registry. The bill would require recipients of a license endorsement as a mortgage loan originator to use or disclose a specified unique identifier provided by the Nationwide Mortgage Licensing System and Registry in advertisements and solicitations of the mortgage loan originator. (Repeals B&PC §10131.8, amends §§10140.6, 10150, adds §§10166.01-10166.14, amends §§10235.5, 10236.4)
NO ADVANCE FEES TO BE COLLECTED FOR LOAN MODIFICATIONS
SB 94: This bill would prohibit real estate licensees from charging or receiving an advance fee, and finance lenders and brokers and residential mortgage lenders and servicers from charging or receiving any interest or charge, for performing services for borrowers in connection with the modification of the terms of a loan secured directly or collaterally by a lien on single-family residential real property, except as specified. The bill would also require any person who, for compensation, solicits customers for mortgage loan modifications to provide a specified 10-point bold type statement regarding loan modification fees, and would prohibit those persons from receiving any preperformance compensation, as specified, or requiring any security as collateral for final compensation. The bill would also provide that a real estate licensee who fails to comply with specified provisions related to mortgages would be subject to disciplinary action by the Real Estate Commissioner.
The bill would add to the California Finance Lenders Law a prohibition on making any false, deceptive, or misleading statement or representation in connection with a loan.
This bill would instead specify that a real estate licensee and a finance lender are excluded from the definition of a foreclosure consultant when acting under the authority of that person's license, and would delete the commissioner's authority to terminate the finance lender's exclusion. (amends B&PC §10085., adds §10147.6, amends §10177, adds C.C. §§2944.6, 2944.7, amends C.C. §2945.1, amends Fin.C. §§22161, 22301, adds §50002.5,)
MORAL
Keep track of the bills, for they will surely track you if they become law.
THREE ACCUSED FLEE $100 MILLION MORTGAGE SCHEME
FACTS
Scott Edward Cavell, Sacramento, Calif., is one of three men now considered to be on the lam in an ongoing federal probe into purchases of hundreds of homes nationwide, many of which are now in foreclosure. The deals have allegedly led to about $100 million in losses by lenders. Cavell described in court papers as the longtime "right-hand man of (Christopher Jared) Warren in many of Warren's fraudulent activities."
An affidavit by IRS Special Agent Christopher Fitzpatrick, filed on Feb. 6, 2009 in Sacramento federal court, quotes "intelligence sources" as saying Warren and Cavell allegedly fled the United States on Feb. 2, 2009. U.S. State Department records show the pair allegedly obtained passports in San Francisco on Jan. 27, 2009 under assumed names: Warren as "Mark Andrew Seagrave" and Cavell as "Adam Kingsbury Curry." Both said on their applications they planned to spend six months in Mexico. Warren is alleged to have paid $156,000 to charter a private jet out of the country, while Cavell took a commercial flight, the intelligence sources told Fitzpatrick.
Garret Griffith Gililland III, who has been linked like Warren and Cavell to Loomis Wealth Solutions, was the first to flee the country. Gililland is under indictment in Sacramento federal court, charged with mortgage fraud, money laundering and conspiracy to manufacture marijuana.
Until his departure on Feb. 2, Warren is alleged to have been cooperating with authorities in their investigation of Lawrence Leland "Lee" Loomis, head of Loomis Wealth Solutions and affiliated entities. When he was allegedly cooperating, Warren purportedly told FBI Special Agent Mark Roberts that he ranked Loomis, himself and Cavell one, two and three on his "top 10 list of mortgage fraudsters," Fitzpatrick's affidavit says.
On Feb. 5, 2009, Warren was allegedly charged with fraud, conspiracy and conducting a financial crimes enterprise. Cavell was allegedly charged on Feb. 6, 2009 with conspiracy to commit bank and mail fraud, and passport fraud. "Cavell was one of the 'personal account managers' that Warren brought with him to Loomis Wealth Solutions and its lending entity, Nationwide Lending Group," Fitzpatrick's affidavit says.
Loomis has not been charged, and his attorney, Patrick Hanly, says he is confident his client "will be shown not to have done anything wrong." In August 2008 agents executed search warrants at Loomis Wealth Solutions' Roseville office, Lee Loomis' Granite Bay home, and on him personally at Sacramento International Airport, and seized $461,000 from two bank accounts controlled by him.
Borrowers were merely nominees, and Loomis Wealth Solutions received "tens of thousands of dollars per transaction" without the knowledge of lenders and borrowers, according to another affidavit Fitzpatrick filed. The fraud allegedly involved the purchase of 500 homes and condominiums in California, Florida, Nevada, Illinois, Colorado and Arizona, the affidavits say.
Some of the straw buyers were paid for the use of their identities. Others were told the purchases were investments on which they would receive a handsome return while Loomis Wealth Solutions would make the mortgage payments. But payments were never made, and buyers could either assume the payments or default on the loans.
Most of the loans ultimately went bad and lenders foreclosed on the properties, taking enormous losses. The IRS has calculated more than $100 million in losses thus far. (sacrbee2809)
MORAL
Well, at least you now know what it costs to rent a private jet to fly you out of the country.
10 INDICTED IN SAN DIEGO FOR FORECLOSURE FRAUD
FACTS
The San Diego county grand jury indicted 10 people on Feb. 2, 2009 for allegedly stealing hundreds of thousands of dollars in a foreclosure scam that victimized hundreds of homeowners in San Diego and Riverside counties. The District Attorney's Office received indictments on more than 150 felony counts.
The alleged victims mostly Latinos, said they were tricked into paying fees to foreclosure consultants who did nothing to prevent their homes from being taken back by lenders. Many had only a basic command of the English language, said Deputy District Attorney Stephen Robinson.
Five suspects in the case were arrested in May 2008. On Feb. 2, 2009 in Superior Court, 10 defendants were arraigned on charges of conspiracy, grand theft, rent skimming and deceitful practices. They were William Hutchings and his wife, Xiaoke Li, both of San Diego; Edgar Martinez; Diego Gil; Shawna Landis; Octavio Escatel; Joel E. Garcia; Stephen P. Mauer; Rose M. Napoli; and Alex Olmos. Attorneys for the defendants said they planned to challenge the indictments before entering pleas. A demurrer hearing has been set for April 3.
If convicted, the defendants could face sentences ranging from three years to more than 25 years, officials said. Authorities moved to freeze the bank accounts of the suspects to preserve remaining assets for victim restitution.
The alleged scammers had two ways to trick the owners of some 400 homes into paying them fees for bogus consulting services, the district attorney charged. One required them to pay a one-time fee of up to $10,000 to place their property into a land grant. The second method was a leaseback, in which they deeded over their properties and paid rent. (sduntrib2309)
MORAL
If the property were already in foreclosure with a recorded notice of default I would say these defendants have a very serious problem. Remember, everyone is innocent until proven guilty but lord help the guilty.
THIS IS NOT HOW TO AVOID FORECLOSURE IN SAN DIEGO
FACTS
Justine Lorraine Rice and her husband, Wendell Anthony Rice, are being held without bail after being charged on 11 counts -- including perjury and contempt of court -- for fraudulently trying to avoid foreclosure on their Rancho Santa Fe, Calif. home. The couple was arrested in Escondido after being indicted on charges of mortgage fraud, false statements on loan applications, bankruptcy fraud, contempt of court, perjury, and money laundering. A federal grand jury in San Diego initially handed up the 11-count indictment on Jan. 22, 2009.
According to the allegations, in the summer of 2004, Justine Rice allegedly obtained a mortgage loan to purchase the residence. According to the indictment, she used false statements and false documents regarding her income on the mortgage application. About two years later, the couple filed for bankruptcy, claiming the home as their primary asset. During the bankruptcy proceedings, the home was foreclosed.
Justine Rice allegedly arranged for a third party to purchase the home from the lender in order to get her home back and obtain the equity in it. According to the indictment, Justine Rice helped the third party falsify a mortgage loan application and supplied the down payment without informing the lender. Justine Rice managed to obtain part of the down payment by borrowing money from other third parties, say investigators.
The Bankruptcy Court granted permission for the sale of the home, but ordered that any proceeds from the sale, except payments to secured creditors, had to be placed in a blocked account or an attorney-client trust account. Instead, Justine Rice allegedly caused the more than $200,000 in proceeds to be wired to an account controlled by her husband. Wendell Rice then funneled the money to an account controlled by his brother, according to court documents. He allegedly directed his brother to issue a check to help repay the third party lenders that had supplied a part of the down payment.
After the money laundering was discovered, Justine Rice allegedly lied in several Bankruptcy Court proceedings regarding the third-party loan, according to the indictment.
She allegedly claimed that the funds were taken by her brother-in-law and given to her as a gift.
Both Justine and Wendell Rice were held without bail pending a detention hearing. The two defendants, each 45-years-old, are scheduled to appear before U.S. District Judge Roger T. Benitez on March 16 for a motion hearing and trial setting. (ml2409)
MORAL
I think this is called egomania. I do not know how she thought she could get away with it, presuming she did it. Notice though the government went back five years to get to the mortgage? Did you do anything unconventional with mortgages in the last five years?
LAWYER AND EXECUTIVE OF COMPANY PLEAD GUILTY TO $20 MILLION MORTGAGE SCHEME IN NEW JERSEY-TOTAL LOSS OVER $75 MILLION
FACTS
Anthony Natale, of Neshanic Station N.J., an attorney and Kenneth Lagonia, formerly of New Brunswick, N.J. but who now resides in North Carolina, a company executive, pleaded guilty to participating in a criminal conspiracy involving NJ Affordable Homes Corp, a purported real estate investment company, which defrauded hundreds of investors and mortgage lenders of more than $20 million. These make the ninth and 10th defendants associated with the investigation of NJAH to plead guilty to federal charges. Sentencing for both defendants is scheduled for May 18. Natale and Lagonia are both free on $100,000 unsecured bonds.
Natale, whose law office was in Cranford, was retained by Wayne Puff, NJAH's President and founder, to conduct real estate closings for properties bought by NJAH as part of an investment program referred to as "Our Money, Your Credit," where NJAH promised to purchase and renovate properties to be resold at substantial, guaranteed profits.
Natale admitted that he directed his paralegal, Sydney Raposo, to prepare false and fraudulent HUD-1 Universal Settlement Statements that falsely showed that Natale's clients, who were "nominee buyers," or buyers who were "in name only," had paid money to purchase the properties, and thus had equity in the properties, when Natale knew they had not. Natale also acknowledged that these false HUD-1s were often submitted to mortgage lenders for mortgage loans, and then to the Department of Housing and Urban Development and the Federal Housing Administration, which, in turn, federally insured the loans.
Lagonia, President of Quality Homes Are Us LLC, a company affiliated with NJAH, admitted that he created false solicitation letters on behalf of NJAH, representing that NJAH was profitable, in order to lure investors.
Lagonia acknowledged that he signed false employment verifications for nominee purchasers which were submitted to lenders, and notarized deeds and other mortgage documents, falsely representing that the nominee purchasers were present at closings when, in fact, they were not.
As part of the conspiracy, Puff recruited the nominee buyers, to serve as supposed bonafide purchasers of real estate properties. The buyers did not pay money in connection with the purchases although the closing documents falsely stated they did. Puff is currently in federal custody after being charged by criminal complaint for masterminding the fraudulent scheme which, in total, caused over $75 million in losses to investors and mortgage lenders.
Others who have previously pleaded guilty:
* Mitchell Fishman of Princeton Junction, a lawyer, pleaded guilty to a one-count Information charging him with conspiracy to commit wire fraud for creating and signing materially false and fraudulent Settlement Statements relating to NJAH real estate transactions.
* Michael Meehan of Bellmar, NJAH's former licensed real estate appraiser, pleaded guilty to a one-count Information charging him with conspiracy to commit wire fraud for creating and submitting materially false and misleading property appraisals in the names of nominee buyers to various mortgage lenders.
* Katrina Arrington of Hillside, a mortgage loan processor, pleaded guilty to a one-count Information charging her with conspiracy to commit wire fraud for her role in falsifying the income, assets, and employment status of nominee buyers on loan applications submitted to mortgage lenders.
* William Page of Old Bridge, a former licensed real estate appraiser, pleaded guilty to a one-count Information charging him with conspiracy to commit wire fraud for creating materially false and misleading property appraisals and construction progress letters.
* John Morris of Fort Lee, NJAH's appraisal coordinator, pleaded guilty to a one-count Information charging him with conspiracy to commit wire fraud for his role in overseeing the creation of fraudulent property appraisals for properties which were sold by NJAH, in the names of nominee buyers, to straw buyers at inflated prices.
*John Kurzel of New Brunswick, a mortgage loan processor at NJAH, pleaded guilty to a one-count Information charging him with conspiracy to commit wire fraud for his role in preparing false and misleading loan applications in the names of nominee buyers which were submitted to mortgage lenders.
*Lucesita Santiago, of Woodbridge, an account manager at NJAH, pleaded guilty to a one count Information charging her with conspiracy to commit wire fraud for her role in creating fictitious account statements falsely showing that nominee buyers had assets invested with NJAH, which in turn were submitted to mortgage lenders.
Each of the above pleaded guilty to conspiracy to commit wire fraud are subject to a maximum term of five years in federal prison and a $250,000 fine.
Sydney Raposo of Rahway, who served as a paralegal for Natale, pleaded guilty to a one count Information, charging her with making false statements to HUD relating to a federal insured mortgage loan issued by a mortgage lender. She is subject to a two-year maximum period of incarceration and a $250,000 fine. (usattnj2409)
MORAL
Ten people now whose lives are ruined. Felony convictions mean no ability to vote, hold public office, obtain various licenses such as real estate, insurance agent, liquor storeowner, etc. Do not do it. We do defend but we do feel badly for the people and especially their families who must suffer through it all.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.
