A REMINDER ABOUT NATIONWIDE LOAN OFFICER LICENSING BY AUG. 1, 2009
FACTS
On July 30, 2008, President Bush signed the Housing and Economic Recovery Act of 2008. Title V of the Act, the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, affirms that any residential mortgage loan originator must be either state-licensed by Aug. 1, 2009, or federally registered. Loan originators must register with the Nationwide Mortgage Licensing System and Registry.
STATE Requirements
All states to adopt a system of licensing for all residential loan originators. States that want to maintain originator supervisory authority must meet the following minimum requirements:
* Provide effective supervision and enforcement of such law, including suspension, termination or nonrenewal of a license for a violation of state or federal law.
* Ensure all state-licensed loan originators operating in the state are registered with the Nationwide Mortgage Licensing System and Registry.
* Regularly report violations of such law, as well as enforcement actions and other relevant information to the Nationwide Mortgage Licensing System and Registry.
* Have due process in place for challenging information contained in the Nationwide Mortgage Licensing System and Registry.
* Establish a mechanism to assess civil money penalties for individuals acting as mortgage originators in their State without a valid license or registration.
* Establish minimum net worth or surety bonding requirements that reflect the dollar amount of loans originated by a residential mortgage loan originator, or establish a recovery fund paid into by the loan originators.
To be licensed within a state, loan originators must not have any felonies over the past seven years, never had a felony involving fraud or dishonesty, never had a loan originator license revoked, must demonstrate financial responsibility and general fitness, score 75% or better on a national test created by the Nationwide Mortgage Licensing System and Registry and take eight hours of continuing education annually.
States have until Aug. 1, 2009, to successfully meet these standards as defined in H.R. 3221. Any state legislature that meets biennially will have two years to enact state license legislation, while the Department of Housing and Urban Development may also grant a two-year extension for states making a good faith effort for incorporating a system of licensing. If, however, a state does not meet the threshold by the allotted deadline, HUD will create a backup licensing system to coordinate licensing and registration for loan originators for that state. (ncslHR3221,Title V, 12usc5101, et. Seq.)
MORAL
It is my understanding California intends to seek an extension until 2010. It also means that if your license is ever revoked for all time and you cannot be an originator in any state at all.
FOUR BANKS TO STOP FORECLOSURES UNTIL MARCH 6, 2009
FACTS
Wells Fargo, J.P. Morgan Chase, Bank of America and Citigroup Inc. have agreed to halt home foreclosures while the federal government works out a plan to stabilize the nation's banking industry.
"We will not add to the foreclosure process any new owner-occupied residential loans that are owned and serviced by J.P. Morgan Chase," said J.P. Morgan Chase CEO Jamie Dimon in a Feb. 12 letter to Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee.
Citigroup said it would put a moratorium on foreclosures of Citigroup-owned loans on principal residences, among others. Citi's moratorium is scheduled to last until March 12, barring federal action before then.
San Francisco-based Wells Fargo one of the nation's largest mortgage lenders, joined the moratorium Friday along with BofA. "The vast majority of the mortgage loans Wells Fargo services are owned by other investors. We are fully committed to helping our customers find ways to avoid all preventable foreclosures, and we are working with these investors and related contractual commitments to determine how we will support the moratorium request," said Wells Fargo spokesman Chris Hammond.
With the Dec. 31 completion on the Wells Fargo/Wachovia merger, Wells Fargo became the investor in the Wachovia Pick-a-Payment portfolio. "All customers within this portfolio referred to foreclosure or in foreclosure already received an extension through the end of February," Hammond said. "For these customers and all of the loans Wells Fargo holds, we will extend the timeline until the Secretary of Treasury's foreclosure prevention plan is announced, assumed to be in the next couple of weeks." (labus.com21309)
MORAL
That by definition should mean no NOD's filed, no NOS's filed, and no sales until after March 6. Any bets as to whether they keep their word? If you find them violating their word, quote this article, name the person for each bank that made the comment and send it to hour Senator and Congressperson with names, addresses and copies of the documents filed after Feb. 13 and copy the CEO and person that said it as well. That should make their seats a little warm as to truthfulness.
IDENTITY THEFT FOR 2008 IS 9.9 MILLION WHICH PUTS YOU THE BROKER AT RISK
FACTS
This number is pursuant to a study released by study released by Javelin Strategy & Research. This is the reason for the "Red Flag" Identity Theft Prevention manual required is to be in place by May 1, 2009. Do you have yours? If not you can purchase ours from our publications page on
MORAL
Failure to have it in place means if a borrower's identity is stolen and you broker or fund the loan of the person that stole the identity you are personally at risk to reimburse the person that had the identity stolen and worse yet, subject to fine and other penalties from the FTC which at one time put two people in two different cases under a 20-year consent decree. For not shredding financial documents. If you would like a copy of the article on the two let me know and I will send it.
SO YOU DO NOT THINK YOU HAVE TO PAY A REAL ESTATE AGENT MINIMUM WAGE AND OVERTIME IN CALIFORNIA?
FACTS
D. R. Horton, Inc. terminated plaintiff Judy McClure, a 61-year old real estate agent. During her 10-months of employment, Judy sold residential property on a new home project called Arbor Real, located in Palo Alto, Calif. She contended she was terminated so that Horton would not have to pay her several hundred thousand dollars in commissions on sales she completed. She claimed Horton relied on an unconscionable real estate commission plan, which was designed to cut off plaintiff's commissions within 90 days of her termination.
The mediator worked out a settlement of $180,000 by finding for Ms. McClure on her commissions, meal periods and penalty claims. She also gets attorney fees. (McClure v. D. R. Horton, Inc. / 1100052372/JAMS, 8-14-08)
MORAL
By finding Ms. McClure gets meal periods and penalties, the implicit finding is she is an employee and not an independent contractor. Guess what? With the market the way it is, are you that sure your agreement will stand up before the Division of Labor Standards Enforcement?
CALIFORNIA HAS OVER $1 BILLION IN MORTGAGE FRAUD FOR THE LAST THREE MONTHS OF 2008
FACTS
That being the case, I wonder where the FBI agents are working to indict people.
MORAL
I recommend if you have been doing it, stop now and see your attorney now. With a little more than $1 billion in California fraud your attorney can find out how to mitigate the problem to attempt to avoid prison.
COMMIT MORTGAGE FRAUD IN CALIFORNIA AND LOSE YOUR PERSONAL HOME AS WELL AS OTHER ASSETS
FACTS
A Huntington Harbour house snatched by the U.S. government as part of a plea agreement in a mortgage fraud case went to a foreclosure auction the week of Feb. 7, 2009 in front of the Orange County courthouse in Santa Ana. A small group stood around the auctioneer as she reeled off addresses for properties all over Orange County. Then she called out 3281 Bounty Circle and the amount due -- now up to $3,604,775.77. No one bid, so the waterfront home reverted to the lender. That part took 30 seconds. The house belonged to Edward Seung Ok, who pleaded guilty to his part in a $12 million mortgage fraud ring.
Between the drop in the real estate market and Ok's failure to make his mortgage payments on the house -- the latter is a common scenario in asset forfeiture, according to prosecutors -- the equity in the property disappeared. Court records show the lender was Countrywide Home Loans. (ocre21109)
MORAL
Commit the fraud, lose your property and it goes to the U.S. Government.
COLORADO ADVANCE FEE SCHEME LANDS MAN A FEDERAL CRIMINAL INDICTMENT
FACTS
David Gwin, of Commerce City, Colorado, was indicted by a federal grand jury in Denver on Feb. 10, 2009 on charges of wire fraud and money laundering in connection with an advanced fee scam.
Gwin was arrested Feb. 10, 2008 by federal agents. He was scheduled to appear in U.S. District Court in Denver on Feb. 11, 2009 for an initial appearance.
According to the indictment, starting in October 2003 and continuing until August 2005, David Gwin devised a scheme to defraud individuals and companies seeking multi-million dollar loans by collecting an advanced fee from them and then failing to secure funding for the loans that were sought.
From early October 2003 through January 2005, Gwin operated a business called "Asset Funding Solutions, Inc.", which purported to be in the business of finding private investors to fund loans for investment projects, as well as being the lender itself for such loans. In February 2005, Gwin and others changed the name of the business to "Asset Global Funding, Inc.", which continued to operate until about August 2005.
Gwin allegedly told people and companies seeking multi-million dollar loans that they were required to pay a fee in advance of receiving the funding for their loans. The advanced fee was called a "due diligence fee," or "retainer," or an "application fee." Between October 2003 and July 2005, Gwin received advance fees totaling $1,127,700.
In order to persuade the people and companies seeking multi-million dollar loans to send the advanced fee, Gwin falsely told them that the fee was refundable if the loan they sought was not funded. The advanced fees ranged from $5,000 to $340,000, depending on the size of the loan sought. During the course of the fraudulent scheme, Gwin repeatedly told the people and companies who had sent AFSI/AGF advanced fees that he was meeting with investors to secure their funding, and that funding for their loan would happen soon. The defendant did not secure funding for the loans and he did not return the vast majority of the advanced fees that were paid.
Counts one through 11 allege wire fraud, which carries a penalty of not more than 20 years imprisonment, and up to a $250,000 fine, per count.
Counts 12 through 14 allege money laundering, which carries a penalty of not more than 10 years imprisonment, and a fine of up to $250,000.
Count 15 is an asset forfeiture count, where the government is seeking to seize and forfeit illicit proceeds from the fraudulent scheme. (usatty21109)
MORAL
Anyone see the resemblance between this and advance fees to modify loans? I trust you have a good attorney.
DELAWARE MORTGAGE LOAN ORIGINATOR ACT EFFECTIVE JAN. 1, 2009 NOW HAS REGULATIONS
FACTS
Individuals affiliated with a licensed lender or broker must submit their fees and application by March 31, 2009. Records of loan originator continuing education must be kept for at least six years. License numbers must be on the loan applications. (Thank you Weiner, Brodsky)
MORAL
Rent more storage space for the records.
FLORIDA TITLE OFFICER DRAWS FIVE YEARS IN FEDERAL PRISON FOR MORTGAGE FRAUD
FACTS
Evelyn Rivera, a licensed title agent and owner of Asset Title LLC, in West Palm Beach, Fla., was sentenced on Feb. 6, 2009, by U.S. District Court Judge Daniel T.K. Hurley to 60 months in prison for her role in a mortgage fraud scheme.
Rivera had previously pled guilty to participating in a scheme intended to result in the issuance of $18,500,000 in fraudulent mortgages on 55 condominium units. The fraud was discovered after approximately $690,000 in fraudulent mortgage loans had been issued on two condominium units in a development called the Rookery, in Ft. Lauderdale, FL.
Also charged and convicted in the scheme were Mike Acosta, a licensed property appraiser, and William Louisma, a recruiter of straw buyers. They were sentenced to 41 months and 46 months incarceration, respectively. The investigation is continuing. (usattysodstfl2909)
MORAL
Did you notice the words "investigation continuing?" Means more people to follow the footsteps into federal prison.
HONOLULU BANK EXECUTIVES ON TRIAL FOR FORECLOSURE FRAUD
FACTS
The top two executives of a Honolulu mortgage company accused of orchestrating a foreclosure bailout scheme that stole hundreds of thousands of dollars from banks and distressed homeowners pleaded not guilty in federal court yesterday. John M. Dimitrion, founder and chief executive of Mortgage Alliance LLC, and his wife, Julie A.B. Dimitrion, the firm's chief financial officer, are accused of conspiracy to commit mail fraud, wire fraud, money laundering and making false statements on loan applications to obtain $1.3 million in new loans between 2005 and 2007.
The Dimitrions were indicted along with Rick Kealoha Pa Jr. and Benjamin Yoshito Thompson. Thompson pleaded not guilty Wednesday and posted $25,000 bail. Pa was found by FBI agents in Iowa and is scheduled to turn himself in on Tuesday.
Of the fraudulently obtained loan money, $139,114 was used at the discretion of John and Julie Dimitrion and an undisclosed amount went to Mortgage Alliance, Pa and Thompson, court documents show.
The Dimitrions pleaded not guilty before U.S. Magistrate Judge Kevin S.C. Chang, who set their bail at $50,000 each. They are scheduled to go to trial April 14 and have been ordered to live with John Dimitrion's father, Honolulu physician Michael Dimitrion.
If convicted, the Dimitrions, Pa and Thompson each face up to 20 years in prison on each charge.
This is the result of a more than a year-long FBI investigation that has resulted in the indictments of nine people. In May 2008, five people -- John Gilbert Mendoza, Antonio Alcantara Jr., Ira Altwegg, Albert A. Alimoot Jr. and Evan M. Koizumi -- were indicted as a result of the investigation. Mendoza and Altwegg were former employees of Mortgage Alliance LLC.
Alimoot and Koizumi have plead guilty to conspiracy and face up to five years in prison when sentenced April 27.
Dimitrion and his associates are accused of finding homeowners on the cusp of foreclosure and offering help if the homeowners agreed to a temporary sale of the house to a third-party "investor" who worked for John Dimitrion, according to court documents. They allegedly told the homeowners they could remain in their homes and their title would be returned to them after a set period of time. Homeowners paid John Dimitrion $20,000 for the service, thinking their mortgage payments would be handled by Dimitrion's company, court documents said.
John Dimitrion and his associates applied for larger loans than what the homeowners owed and allegedly stole the proceeds by funneling the money into fake escrow accounts created by Julie Dimitrion, the documents said. In each case the homeowner was unable to make the payments on the larger loan, the documents show.
John and Julie Dimitrion took the money from the escrow accounts for themselves and failed to make all the monthly payments for the distressed homeowners, the documents said. When the loans defaulted, the "investors" who worked for Dimitrion initiated eviction proceedings against the homeowners, according to the court documents. (honoadv21409)
MORAL
Like I have been telling you it takes about one to two years, generally two to build a case because of the amount of documents involved. It is better to see your lawyer now then wait til the FBI comes to your door.
IOWA UPDATES ITS REGULATIONS FOR LOAN ORIGINATORS
FACTS
As of Dec. 24, 2008 loan originators must complete at least 20 hours of approved education prior to applying for their license and must complete 12 hours of annual education. (Thanks again to Weiner Brodsky)
MORAL
More education, more licensing, more clean records, more clean credit, less originators, less competition, more business.
MARYLAND GETS ANOTHER GUILTY PLEA FOR MORTGAGE FRAUD
FACTS
Timothy Reed, of Beltsville, Md., pleaded guilty on Feb. 10, 2009 to mail fraud arising from the fraudulent purchase of 25 properties in Maryland, the District of Columbia and Virginia using false mortgage and settlement documents.
Reed and others paid over 15 straw purchasers $10,000 per property to purchase houses for Reed and others. Reed created false mortgage and settlement documents, many of which misrepresented the straw purchasers' income and assets. Reed and others also created false invoices to claim that their company, Brotherly Investment Group, performed "renovations" on some of the properties. Using these false invoices, Reed and others were "repaid" at closing for the purported renovations. Reed was an organizer and leader in this scheme.
From 2006 to 2008, Reed and others received approximately $3,830,418 in fraudulent funds as part of this scheme. Many of the purchased properties have been foreclosed upon.
Reed faces a maximum sentence of 30 years in prison. (usattymd21009)
MORAL
You may wonder to some extent why we keep these up. 1-It aids our clients to tell them what not to do. 2-It aids us in assisting our clients when in unfortunate circumstances they are investigated or indicted for mortgage fraud.
OREGON HAS PERMANENTLY ADOPTED ITS ANNUAL REPORTING REQUIREMENTS
FACTS
From this point forth annual reports must be filed by March 31.
MORAL
Do it or get in trouble. I am sure your CPA will appreciate the business.
PENNSYLVANIA DEPARTMENT OF BANKING REQUIRES ADDITIONAL DISCLOSURE AND COMPLIANCE REGULATIONS
FACTS
Licensed loan originators cannot offer loans without having a reasonable determination that the borrower will have the ability to repay by final maturity at the fully indexed rate. The loan originator may rely on the income the borrower chooses to rely on to repay the loan but cannot rely on sale or refinancing of collateral. The originated cannot ignore facts that indicate borrower may not be able to repay the loan. Originator may rely on FHA loans, VA-guaranteed loans as proof of ability to repay.
One page disclosure to borrower whether lender will escrow taxes and hazard insurance, whether loan has a variable interest rate, prepayment penalty or negative amortization. Give to borrower within three days of borrower getting the 1003 or other loan application and to be signed by borrower within 10 business days after delivery or mailing. Issue a new one if first one becomes inaccurate.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.
