SIX MORTGAGE BANKERS TO GET $9.9 BILLION TO HELP REDUCE PAYMENTS FOR EXISTING BORROWERS
FACTS
The six bankers will receive a maximum of $9.9 billion in incentive payments, which are designed to encourage mortgage companies to lower borrowers' monthly bills. The government expects to finish arrangements with other Companies in the coming months. Chase Home Finance, part of JPMorgan Chase & Co., will receive up to $3.6 billion, the largest amount among the companies. The other recipients are: Wells Fargo & Co., GMAC Mortgage Inc., Citigroup Inc.'s CitiMortgage unit, Select Portfolio Servicing and Saxon Mortgage Services Inc.
The program, unveiled on March 4, will offer struggling homeowners the chance to obtained modified loans with lower monthly payments. It's being funded by $50 billion out of the government's $700 billion financial rescue program. The remaining $25 billion will come from other government sources.
The refinancing plan is limited to borrowers who owe up to 5% more than their home's current value. The administration has estimated the program could help 9 million struggling homeowners avoid foreclosure.
Housing and Urban Development Secretary Shaun Donovan said in an interview that mortgage companies "weren't waiting to sign the contracts to get going." The banks, he said, "have already taken hundreds of thousands of applications for refinances and modifications." (ap41509)
MORAL
Words are wonderful, but let us see where the action is.
WATCH THE NEXT LOAN MODIFICATION YOU ATTEMPT-THE LENDER MAY BE TURNING YOU INTO THE FBI OR FTC
FACTS
Lenders are being asked to help identify potential mortgage modification scams as part of a major coordinated federal-state crackdown on con artists who target financially strapped borrowers struggling to hold onto their homes.
Last week, the Financial Crimes Enforcement Network issued a "red flag" advisory to help financial institutions spot questionable loan-mod schemes and report them to law enforcement authorities. Armed with that information, and other information supplied by the participating policing agencies themselves, FinCEN will help the agencies focus their investigative and prosecutorial efforts most efficiently.
"We will shut down fraudulent companies more quickly than before," Treasury secretary Timothy Geithner vowed in announcing the initiative with attorney general Eric Holder, Federal Trade Commission chairman Jon Leibowitz, secretary Shaun Donovan of the Department of Housing and Urban Development and Illinois attorney general Lisa Madigan. "We will target companies that otherwise would have gone unnoticed under the radar," Mr. Geithner said. "And we will increase our knowledge of how these companies operate, enhancing our efforts to identify and prosecute every individual involved in a mortgage rescue scam."
Mr. Holder had a similar message: "If you prey of vulnerable homeowners," he said at a press conference, "we will find you and we will punish you."
To show that it means business on the civil enforcement side, Mr. Leibowitz said that five new cases have been brought against companies who "kick people when they are down, sabotaging" their efforts to save their homes. The FTC chairman also said warning letters have been sent to 71 additional possible charlatans who pledge to help people avoid foreclosure.
Such rogue companies "promise" to do these things "but they don't," said Ms. Madigan, speaking on behalf of state agencies that have joined the cleanup effort. "All they do is take your money." The targeted effort will be spearheaded by FinCEN, which will help law enforcement agencies streamline and coordinate their efforts so their resources are used most efficiently, as opposed to separate investigations and prosecutions.
As financial institutions learn of possibly fraudulent activity, they are being asked to include the term "foreclosure rescue scam" in the narrative portions of all relevant suspicious activity reports that they file. Also, as recommended by Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, every modification package submitted under President Obama's Marking Home Affordable program will now include a cover sheet containing fraud warnings and a reference to a fraud hotline.
"American homeowners have been through enough over the past two years," Mr. Geithner said at a press conference covered live by CNN.
"The last thing they need now is to be taken advantage of as they try to hold on to their homes." For its part in the effort, HUD has begun distributing literature to its field offices, housing authorities, state and local agencies, and nonprofits warning about modification fraud.
FTC FILES ACTIONS AGAINST LOAN MODIFICATION COMPANIES
The Federal Trade Commission last week filed enforcement actions against five operations the agency contends use deceptive tactics to market their schemes. The agency also sent warning letters to 71 companies it has identified as possibly using deceptive marketing tactics.
The actions were announced in conjunction with the joint federal-state crackdown on fraudulent loan modification and foreclosure rescue scams.
"Scammers are taking advantage of people in a difficult situation," said FTC chairman Jon Leibowitz. "We're enforcing the law against these scam artists. We're putting others on notice that unless they change their ways, they're next, and we're working with other government agencies, nonprofits and mortgage companies to reach out to our neighbors in distress with the details of how to get help."
The five enforcement actions name firms, which have marketed their services by giving the false impression they were affiliated with the federal government. In each case, the agency is seeking or already has received a temporary restraining order to halt the alleged illegal conduct.
The actions are in addition to six others brought against similar companies over the last 12 months. The companies sent warning letters by the FTC were identified through a nationwide review of the Internet and other advertisements. State agencies also have sent warning notices to companies that may be acting illegally.
The complaints named Fedmod, Bailout.HUD-gov-US, Home Assure, Hope Now Modifications, and HEW Hope Properties. All also operate under other names.
According to the FTC's charges, these and other charlatans typically use terms like "guarantee" and "97% success rate" to mislead consumers. They also tend to charge upfront fees, fees that legitimate nonprofit organizations do not charge. (nmn41709)
MORAL
What does this mean to you? If you are doing loan modifications using names that imply government backing or affiliation, making promises like 97% success or always successful, etc., or if you are not properly licensed by the state in which you perform these services, you are at risk. We are currently representing and defending numerous companies being investigated by several agencies. So do it right and if not come see us before you get into too much trouble.
LOS ANGELES CITY ATTORNEY FILES CHARGES AGAINST EIGHT REAL ESTATE AND LOAN BROKERS AND ONE NOTARY PUBLIC FOR MORTGAGE FRAUD
FACTS
City prosecutors filed charges on April 14, 2009 against a group of real estate workers accused of preying on non-English speaking homebuyers by running ads on Spanish-language radio that touted a made-up government loan-assistance program. Prosecutors also filed a separate set of charges against a group of mortgage workers who allegedly bilked a couple by forging a mortgage refinancing application.
The first set of charges accuse three agents in a Century 21 Allstars Inc. franchise and a loan officer of using the fictitious government program to entice five homebuyers into taking out loans they could not afford, the city attorney's office said in a statement. Once a victim agreed to purchase a home, the defendants falsified and forged loan applications by overstating the victim's income without the victim's knowledge, in order to guarantee approval of the loan. The falsified closing documents were drafted in English, while the victims spoke and read only Spanish. All of the victims have been forced into foreclosure, and all but one lost their homes, the city attorney's office said.
Century 21 employees Joseph Villaescusa, Isabel Gutierrez and Tony Gutierrez were each charged with nine counts, including conspiracy to commit grand theft, grand theft, and forgery. Identical charges were filed against Ralph Rodriguez.
If convicted on all counts, the defendants each face a maximum penalty of nine years in jail and $18,000 in fines.
The second set of charges were filed against four mortgage brokerage employees and a notary public who allegedly deceived a couple into applying for and obtaining refinancing in excess of the amount, interest and monthly payments they were led to believe they would receive, the city attorney's office said.
The victims later learned their signatures had been forged on many of the loan documents, and their income and assets had also been changed on many of the documents.
Liberty One Financial Group workers John DiBona, Layne Nocera, Garnik Poghosyan and Wayne Stimson were each charged with nine counts, including conspiracy to commit grand theft, grand theft, and forgery.
Those same charges were filed against notary public Vighen Mkrtoumian, who is accused of notarizing some of the forged or falsified loan documents.
If convicted on all counts, the defendants face a maximum penalty of 18 ½ years in jail and $35,000 in fines.
Nocera said he had worked for Liberty One as an independent contractor and that he had nothing to do with funding the questionable loan or notarizing the loan documents. (AP41509)
MORAL
Nine people, all are innocent until proven guilty beyond a reasonable doubt.
MARYLAND LOAN OFFICER AND CONSPIRATOR PLEAD GUILTY TO SCAM ON SAVING HOMES FROM FORECLOSURE AND IMPROVING CREDIT
FACTS
Cheryl Brooke and Winston Thomas pleaded guilty on April 13, 2009 to their participation in a scheme in which they offered to help financially-vulnerable individuals save their homes from foreclosure, and instead defrauded homeowners and mortgage lenders.
From at least 2004 until May 2008, a conspirator aired television advertisements that targeted financially vulnerable individuals, representing that he could improve their credit, save their homes from foreclosure and assist them with bankruptcy. Viewers who called the toll-free number would meet the conspirator and they were solicited to purchase a variety of for-fee services for reducing debt, as well as a pre-paid legal plan, income tax return preparation services and bankruptcy petition preparation.
Thomas, a senior loan officer with a mortgage lender, and Brooke specifically targeted individuals who owned and had equity in their homes, but were facing foreclosure. The defendants represented to the homeowners that their lease/buy-back program would help the homeowners to keep their homes. The homeowners were told that the good credit of another co-conspirator would be used to temporarily refinance their homes, that they had to sign their homes over to such co-conspirator and that they could repurchase the homes in roughly one year, or once they regained their financial footing. During the interim, they could remain in their homes by paying rent and fees to the co-conspirator by having their bank accounts directly debited by an account belonging to Brooke's company, In the House Technologies. Brooke allowed the IHT account to be used to deposit the proceeds of the equity-stripping scheme.
Thomas and other co-conspirators allegedly misrepresented the amount of money that the homeowners would receive at settlement, what would be done with any equity in the homes and the need to file for bankruptcy protection. In order to induce mortgage lenders to provide mortgage loans to purchase the homes, Thomas submitted false financial and employment information to mortgage lenders. After financing was obtained to purchase the properties, Brooke would file motions to dismiss the homeowners' bankruptcy cases so that the settlements could take place.
Thomas failed to file individual federal income tax returns for the years 2004 to 2006, resulting in a total tax loss of $57,830.
Brooke and Thomas face a maximum sentence of 20 years in prison for the conspiracy to commit wire fraud. Brooke also faces a maximum of five years in prison for bankruptcy fraud and Thomas faces a maximum sentence of one year in prison for failure to file a federal income tax return. U.S. District Judge Deborah K. Chasanow has scheduled sentencing for Brooke and Thomas on July 31, 2009. As part of their plea agreements, Brooke and Thomas each agree to the entry of a forfeiture order of $2,228,878 and further agree that at least this amount was generated as proceeds of the criminal activity. (usattymd41309)
MORAL
Any of this sounds familiar? Note two things. The federal system went back five years and the federal government is now aggressively seeking forfeiture of property of the perpetrators.
MARYLAND MAN PLEADS GUILTY TO MORTGAGE FRAUD FORECLOSURES SCAM AND AGREES TO FORFEIT OVER $2 MILLION OF HIS PROPERTY
FACTS
Michael K. Lewis pleaded guilty on April 14, 2009 to conspiracy and bankruptcy fraud arising from a scheme in which he and his conspirators offered to help financially vulnerable individuals save their homes from foreclosure, and instead defrauded homeowners and mortgage lenders. "Michael Lewis led a group of conspirators who stole the homeowners' equity by inducing financially vulnerable homeowners to sell their properties and convert the sale proceeds to the use of the conspirators," said the U.S. Attorney for the District of Maryland, Rod J. Rosenstein.
From at least 2004 until May 2008, Lewis aired television advertisements that targeted financially vulnerable individuals, representing that he could improve their credit, save their homes from foreclosure and assist them with bankruptcy. Viewers who called the toll-free number were scheduled to meet with Lewis, for a fee. At the meetings, Lewis solicited individuals to become MKL Associates and to purchase a variety of for-fee services, such as the Michael K. Lewis financial diet for reducing debt, as well as a pre-paid legal plan, income tax return preparation services and bankruptcy petition preparation.
Lewis specifically targeted individuals who owned and had equity in their homes, but were facing foreclosure on their homes because of their inability to make monthly mortgage payments. Lewis and co-conspirators fraudulently represented to the homeowners that their lease/buy-back program would help the homeowners to keep their homes. Lewis and Winston Thomas (see above item), a senior loan officer with a mortgage lender, told the homeowners that the good credit of another co-conspirator would be used to temporarily refinance their homes, that they had to sign their homes over to such co-conspirator and that they could repurchase the homes in roughly one year, or once they regained their financial footing. During the interim, they could remain in their homes by paying rent and fees to the co-conspirator by having their bank accounts directly debited by an account belonging to co-conspirator Cheryl Brooke's company In the House Technologies.
Lewis and Thomas misrepresented the amount of money that the homeowners would receive at settlement, what would be done with any equity in the homes and the need to file for bankruptcy protection and failed to inform the homeowners of the particulars of how the lease/buy-back program worked. Lewis met with several homeowners facing foreclosure and provided them with information about bankruptcy. He referred several homeowners to Brooke for bankruptcy-related assistance.
Lewis faces a maximum sentence of 20 years in prison for the conspiracy and five years in prison for bankruptcy fraud. U.S. District Judge Deborah K. Chasanow has scheduled sentencing for Aug. 17, 2009. As part of his plea agreement, Lewis agreed to the entry of a forfeiture order of $2,228,878 and further agreed that at least this amount was generated as proceeds of the criminal activity.
MORAL
All three face over 20 years in prison and forfeit over $2 million of their personal assets. Where is the profit motive? I suggest you get a good lawyer if you have been involved in any similar transactions. Notice the years that the loans occurred. The "stated income" years.
OHIO LOAN OFFICER PLEADS GUILTY TO $4.2 MILLION MORTGAGE FRAUD
FACTS
Kamal J. Gregory pleaded guilty in United States District Court in Cincinnati on April 14, 2009 to one count of conspiracy to commit mail fraud, wire fraud and money laundering and one count of conspiracy to commit money laundering. Gregory committed the crimes in connection with an extensive mortgage fraud scheme affecting 210 residential properties. The scheme affected 63 investors and led to foreclosure against owners of more than 90% of the properties.
Gregory admitted that, between March 2002 and June 2008, he along with 11 other individuals prepared and submitted on behalf of various purchasers/investors certain mortgage loan application packages to various lending institutions located throughout the United States.
These loan applications included documents that made fraudulent claims involving the income of the borrowers and values of the properties involved. Most of the homes involved were dilapidated and otherwise depressed properties. The loan application packages claimed the properties were worth prices which had been artificially inflated above legitimate fair-market values.
Gregory admitted during his guilty plea hearing to participating in 46 separate fraudulent real estate closings between February 2003 and April 2005. The net fraudulent loan amounts associated with these closings exceeded $4,200,000. Gregory worked as a loan officer under individual or company names including Alliance Mortgage, Gregory Investments Inc., KG Enterprises, Mad River Properties, Premier Mortgage Funding of Ohio, Star Point Mortgage, and Ohio Financial Group.
A federal grand jury indicted Gregory and five co-conspirators, Julian M. Hickman, Robert Mitchell, Kenneth O. McGee, Edward McGee, and Jessica A. Zbacnik, in June 2008. Hickman pleaded guilty on Dec. 12, 2008 to conspiracy and tax crimes and Mitchell pleaded guilty on March 11, 2009 to two counts of conspiracy. Both are awaiting sentencing. Charges against Kenneth O. McGee, Edward McGee, and Jessica A. Zbacnik are pending.
The conspiracy to commit mail fraud, wire fraud, and money laundering is punishable by up to 30 years and a $1,000,000 fine. The conspiracy to commit money laundering is punishable by up to 20 years imprisonment and a fine in the greater amount of $500,000 or twice the value of the property involved. (usattysdoh41409)
MORAL
Notice how they went back to loans that occurred over six years ago? Gregory is looking at a lot of federal prison time. There is no parole in the federal system and generally the defendant has to serve 85% of the time sentenced.
TENNESSEE UNIVERSITY PROFESSOR GUILTY OF MORTGAGE FRAUD
FACTS
On April 13, 2009 a jury convicted Pamela Gail Holder of two counts of wire fraud and two counts of bank fraud. The guilty verdict followed a one-week trial before U.S. District Judge Aleta Trauger.
Dr. Holder, a professor of nursing at Middle Tennessee State University and the former coordinator of the statewide Tennessee Board of Regents On-Line Degree Program, and her husband, Fred "Fat Man" Holder were originally charged in a four-count indictment in June 2008. (Fred Holder died in 2008). At trial, the jury heard evidence that Dr. Holder and others helped orchestrate a multi-million-dollar mortgage-fraud scheme. The scheme involved a straw buyer with a good credit score who was deceived by Dr. Holder into securing $2.4 million in loans for the purchase of a $1.5 million dollar home in Hendersonville, Tennessee. The jury heard evidence that, in the months leading up to the purchase, Dr. Holder helped create documents that greatly inflated the straw buyer's income and falsely claimed that the straw buyer was president of "Team Fat Man," an automotive sales business operated by Dr. Holder's deceased husband. This aided the buyer to qualify for large loans obtained at Bank of Nashville, Countrywide Home Loans and First Tennessee Bank that far-exceeded what the straw buyer could afford. After the purchase of the lavish home, Dr. Holder and her husband occupied the property and spent the excess loan funds on various purchases, including several pieces of expensive jewelry. When the straw buyer was unable to make the approximately $10,000 monthly mortgage payments, the mortgage defaulted and the property was foreclosed upon.
After the guilty verdict, Judge Trauger scheduled the sentencing hearing in the case for July 10, 2009. Dr. Holder faces up to 30 years of imprisonment for each of the two counts of bank fraud and 20 years of imprisonment for each of the two counts of wire fraud. (usattymdtn41409)
MORAL
Professor at Middle Tennessee State University; Former coordinator Tennessee Board of Regents On-Line Degree Program. Now jailbird. You have to ask yourself why a highly educated woman with tenure would do this. If you would like a lecture on mortgage fraud, FHA audits and the new Red Flag manual required as of May 1 by the FTC, let me know. The manual is free to the attendees and is to comply with the new law.
TEXAS MAN CONVICTED OF MORTGAGE FRAUD
FACTS
Robert Wilfred Stanley has been convicted of conspiring to commit mail fraud and wire fraud as part of a scheme to defraud residential mortgage lenders and money laundering conspiracy.
Stanley was charged in a six-defendant indictment. This mortgage fraud scheme involved the recruitment of individuals to purchase residential properties at or near 100% financing using their good credit. The borrowers were paid from the loan proceeds for their participation in the acquisition of the property and loan officers at mortgage brokerage offices were utilized to furnish false and fraudulent information to the lenders. It was part of the scheme that loan proceeds would be disbursed to one or more of the conspirators through checks or wire transfers from the title company to a bank account established in an assumed name.
Stanley participated in the scheme as a borrower, a recruiter of borrowers and a loan originator at Consumer Direct Mortgage. Each loan was obtained using false and fraudulent information and the residential loans obtained by Stanley during the scheme eventually fell into default. Sentencing is scheduled for June 25, 2009. (usattytx41309)
MORAL
No one wants to learn it seems. The U.S. Attorney publishes, we publish, others publish the cases and yet it goes on. Well, we do get paid well to defend.
FIVE INDICTED IN VIRGINIA FOR MORTGAGE FRAUD
FACTS
On April 15, 2009, a federal grand jury indicted Nelson C. Cardoza, of Ranson, W.V.; Victor A. Valdez, of Fairfax, Va.; Monica J. Lambert, of Gainesville, Va.; Liguia Abaunza Miranda, of Chantilly, Va.; and Erick G. Chavarria, of Manassas, Va., on conspiracy and wire fraud charges.
Cardoza, Valdez and Lambert were each indicted on five counts and face a maximum penalty of 100 years in prison. Miranda was charged with four counts and faces a maximum of 80 years in prison, and Chavarria was charged with three counts and faces a maximum sentence of 60 years. They are accused of a mortgage scam fraudulently purchasing homes in Northern Virginia and profiting by using the mortgage proceeds to pay home improvement expenses and other payments totaling nearly $337,000.
According to the indictment and other court documents, Cardoza provided names of two different people to purchase five different properties in the Northern Virginia region. These buyers did not know of or authorize the purchases but the conspirators used their names and Social Security numbers to apply for and obtain the mortgage financing.
Lambert, a real estate agent, prepared the sales contracts, and Valdez, a mortgage broker, prepared fraudulent mortgage applications, which falsified the income and assets of the buyers. Chavarria worked for Valdez and added the names of one of the buyers to his bank account so the buyer would appear to have the funds needed to qualify for the loan. Miranda, the mother of Lambert and mother-in law of Valdez, operated a tax preparation business and authored letters to substantiate the fake employment of the buyers as listed in the fraudulent mortgage applications.
The conspirators profited by using part of the mortgage proceeds to pay home improvement expenses to themselves, entities they controlled and their associates. These home improvement expenses were approximately $33,000 to $55,000 per house. Some of the conspirators allegedly also earned thousands of dollars in commissions on the sales. According to the indictment, the conspiracy resulted in a total of at least $336,957 in fraudulent proceeds. The properties involved in the scheme have been foreclosed upon, causing substantial losses to the lenders. (usattyedva41709)
MORAL
There sure is a lot of prison time listed if convicted. Remember, they are all innocent until proven guilty.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.
