CONGRESS PASSES BILL MAKING IT TOUGHER TO GET AWAY WITH MORTGAGE FRAUD
FACTS
Congress has passed legislation that tightens existing anti-fraud and money laundering statutes. It also strengthens the False Claims Act allowing private attorneys to file lawsuits against companies accused of defrauding government agencies. This legislation authorizes $400 million in spending over the next two years to 2011 to hire more than 200 new federal prosecutors, 300 federal agents and 200 forensic analysts and support staff to reinforce white-collar enforcement.
The definition of financial institutions has been changed in the criminal code to include the mortgage lending business. The definition of "money laundering" has been changed to overturn a Untied States Supreme Court decision (U.S. vs. Santos, 06-1005) and now will cover proceeds now rather than profits from the business. This makes it easier to charge and convict mortgage fraud defendants for money laundering in addition to the fraud. (ladj52009)
MORAL
In this lawyer's opinion it will make it easier to go back 10 years, pick up the 2003-2007 stated income loans and prosecute the loan officers and mortgage brokers that helped create stated income amounts that were non-existent. So, if you were involved in "creative income" or creative employment or self-employment, I suggest you see your attorney to see how you might be able to alleviate the problem legally before you become a target.
U.S. TREASURY OFFERS INCENTIVES FOR SHORT SALES
FACTS
On May 14, 2009 the Treasury Department announced a plan to "provide incentives for servicers and borrowers to pursue short sales" in cases where the borrower is generally eligible for a modification under the federal government's Making Home Affordable plan, but either can't qualify or gets the modification but then can't keep up the payments.
In these cases, Treasury will pay a servicer $1,000 for completing a successful short sale, it will pay the borrower $1,500 to assist with relocation expenses, and it will pay second-lien holders who release their claims up to $1,000. Details of the plan can be found at links.sfgate.com/ZHEO.
BofA also is trying to streamline and shorten the short-sale process. It has increased staffing, updated training and created a dedicated short sale call center at 866 880-1232.
MORAL
Maybe this will help some sales go down.
REMINDER TO CALIFORNIA REAL ESTATE BROKERS AND SALESPEOPLE: PUT YOUR LICENSE NUMBER ON YOUR BUSINESS CARDS
FACTS
Effective July 1, 2009, Section 10140.6 subsection (b) (1) of the California Business and Professions Code provides that a real estate licensee shall disclose his or her license identification number on all solicitation materials intended to be the first point of contact with consumers and on real property purchase agreements when acting as an agent in those transactions. The name of the licensee alone does not provide this protection due the commonality of names and the use of nicknames or team names in the course of doing business. Further, this section provides that the commissioner may adopt regulations identifying the materials in which a licensee must disclose a license identification number. The proposed adoption of Regulation Section 2773 is intended to implement, interpret or make specific the applicable laws and regulations cited herein above.
MORAL
Put on the number or get audited by the DRE for not doing it.
OVER 200 PEOPLE OR COMPANIES IN CALIFORNIA ISSUED DESIST AND REFRAIN ORDERS AND/OR ACCUSATIONS FOR VIOLATING DEPARTMENT OF REAL ESTATE LAWS OR REGULATIONS GOVERNING ADVANCE FEES
FACTS
Over 200 people and/or companies are listed on the DRE website as having been issued a Desist and Refrain Order and/or had an accusation filed against them. (
Now there are four laws in the Real Estate Code (B&PC §§ 10000, et. seq) that make certain violations a misdemeanor. This does not include the California Penal Code. The B&PC Sections are 10085, 10138, 10139, and 10185.
The question is: Has any one of the corporations or people listed on the DRE website violated any of the four? Is the DRE or Jerry Brown looking into prosecution? Since it is a serious logistics problem, if those listed are being looked into, who are the targets?
MORAL
If I were these people or corporations, I would seriously consult with my attorney. Interesting questions, don't you think?
CALIFORNIA BORROWERS WIN JUDGMENT AGAINST LIFETIME FINANCIAL, DEAN D. STORM AND ERIC PONY
FACTS
In February 2006, defendant Lifetime Financial solicited George and Sandra Fimbres, to refinance their Ventura house. The plaintiffs did this through the broker of Lifetime Financial, Dean Storm. Defendant Storm testified he closed between 1,800 and 2000 refinance loans between 2004 and 2006 and that the broker fees were $30,000 to $40,000. When the Fimbres received their closing statement they found Lifetime had charged them $30,000 for a broker fee.
Lifetime had 20 brokers and 300 telemarketers that used scripts promising homeowners they could refinance into lower payments and interest rates and receive cash back from the higher value of their home.
Prior to trial of this case the California Attorney General shut down Lifetime Financial for predatory lending schemes and arrested Eric Pony, its president and chief executive and other alleged conspirators. Additionally, the Attorney General froze Pony's assets prior to trial on the criminal charges.
The Fimbres alleged fraud and that the mortgage lending scheme was a scam. Further they said they were promised a low interest fixed rate mortgage, lower monthly payments, a vehicle loan would be paid off and cash back. Instead they received higher payments, an adjustable rate mortgage and defendants allegedly further falsified documents and forged signatures to further their operation. They requested damages in the amount of $234,000 including $130,000 in lost equity in their home, which was foreclosed, and $104,000 in out of pocket expenses.
The defendants denied the charges.
The judge in the Ventura Superior Court said the plaintiff and defendants then stipulated to a judgment for $51,500 which may be increased once the defendants' assets are fully liquidated. (Fimbres vs. Storm, et al., CIV247309, 5-6-09)
MORAL
Good luck on collecting. 2000 loans over three years at even $30,000 a loan is $60 million or $20 million a year. Where did all the money go? Sounds like a song.
MORTGAGE BROKER SENTENCED TO THREE YEARS IN PRISON FOR SOLICITING MURDER OF HIS GIRLFRIEND
FACTS
Daniel Villanueva Patino of Santa Ana, Calif., pleaded guilty to one felony count of solicitation to commit murder. He did this because he wanted custody of his three-year old son. Patino was arrested on Aug. 18, 2008 after he tried to hire an undercover Sheriff's Department investigator to kill his former girlfriend prosecutors said. (5-15-09 OCReg.local p.1)
MORAL
This is or was a mortgage broker who had to know finances and could go to court for joint custody and visitation. He will be lucky if he ever sees the child again at all.
THREE SOUTH FLORIDA RESIDENTS AND A REAL ESTATE BROKERAGE FIRM INDICTED FOR MULTI-MILLION DOLLAR MORTGAGE FRAUD CONSPIRACY AND MONEY LAUNDERING
FACTS
On May 18, 2009, a 59-count indictment was unsealed charging three South Florida residents and a real estate brokerage corporation with participating in a long-term mortgage fraud scheme designed to launder drug money. Defendant Garry Souffrant was ordered detained pending trial.
The other defendants are his wife Yvonne Souffrant; Gamaliel Souffrant, a/k/a Neal Souffrant, 44, Garry Souffrant's brother; and Progressive Real Estate of Broward, Inc., located in Miami Lakes, Fla. The defendants are charged with conspiracy, in violation of Title 18, United States Code, Sections 371; conspiracy to commit money laundering, in violation of Title 18, United States Code, Section 1956(h); mail fraud, in violation of Title 18, United States Code, Section 1341; and receipt of stolen bank funds, in violation of Title 18, United States Code, Section 2113( c). Defendants Garry and Yvonne Souffrant are also charged with making false statements to mortgage lenders, in violation of Title 18, United States Code, Section 1014. Additionally, defendant Garry Souffrant is charged with conspiracy to possess with intent to distribute cocaine, in violation of Title 21, United States Code, Section 846; bank fraud, in violation of Title 18, United States Code, Section 1344; and bank theft, in violation of Title 18, United States Code, Section 2113(b).
The Indictment alleges that from 2002 to 2008, defendants Garry Souffrant, Yvonne Souffrant, and Gamaliel Souffrant used Progressive Real Estate of Broward, Inc. to launder millions of dollars in drug proceeds through an extensive mortgage fraud scheme. The defendants allegedly assisted drug traffickers in purchasing homes and luxury automobiles, including a 2004 Rolls Royce Phantom. The defendants allegedly arranged for and/or acted as straw buyers on behalf of the drug traffickers. This allowed the traffickers to use their drug proceeds to purchase homes and lease automobiles, while concealing the source of the income. The defendants also allegedly diverted several million dollars of mortgage loan proceeds to continue to fund the scheme and for their personal use.
If convicted, all defendants face the following potential maximum penalties on these counts charged: 5 years for conspiracy (18 U.S.C. §371); 20 years for money laundering conspiracy (18 U.S.C. §1956); 20 years for mail fraud (18 U.S.C. §1341); 10 years for receipt of stolen bank funds (18 U.S.C. §2113(c)). In addition, defendant Garry and Yvonne face a possible sentence of 30 years for making false statements to mortgage lenders (18 U.S.C. §1014). Defendant Garry Souffrant faces the following additional penalties: 40 years for conspiracy to possess cocaine with intent to distribute (21 U.S. C. §846); 30 years for bank fraud (18 U.S.C. §1344); and 10 years for bank theft (18 U.S.C. §2113(b)). (usattysdfl51809)
MORAL
Do not do business with drug traffickers. Innocent until proven guilty but if proven guilty I would say they are looking at a lot of prison time.
GEORGIA REQUIRES LICENSING OF LOAN ORIGINATORS, PROCESSORS AND UNDERWRITERS
FACTS
Effective July 1, 2009, Georgia requires mortgage loan originators and loan processors or underwriters acting as independent contractors to be licensed under the Georgia Residential Mortgage Act. Education, renewal, notification, advertisement, exemption, and surety bond requirements are changed as well. All application forms, solicitations and advertisements are to contain the NMLS unique identifier of the person originating the mortgage loan. Mortgage loan originators and loan processors or underwriters acting as independent contractors are not required to obtain a license under the GRMA until Jan. 1, 2010.
NEW YORK LEADER OF MULTIMILLION-DOLLAR MORTGAGE FRAUD SENTENCE TO PRISON FOR OVER FOUR YEARS
FACTS
After having pleaded guilty, DOMINICK DEVITO was sentenced to 51 months in prison by United States District Judge BARBARA S. JONES in Manhattan federal court for mortgage fraud, insurance fraud and obstruction of justice.
From January 2002 through November 2004, DEVITO was the leader of a fraudulent real estate investment scheme that purchased multimillion-dollar residential properties with loans obtained through the submission of false and misleading information to banks and other lenders. DEVITO identified properties for sale, orchestrated the purchase of the properties, and performed construction work at the properties.
From January 2003 through February 2005, DEVITO engaged in a scheme to defraud insurance companies by submitting false and misleading insurance claims and supporting documents for water damage caused by broken pipes at several of the homes he and his co-conspirators had purchased as part of the mortgage fraud scheme.
DEVITO obstructed justice in connection with his sentencing in 2003 in Manhattan federal court for racketeering and mortgage fraud in an earlier case. Specifically, DEVITO submitted false and misleading information regarding the value of his assets and his personal net worth following his sale of a property located in Purchase, N.Y.
In addition to his 51-month prison term, Judge JONES ordered a supervised release of three years and ordered DEVITO to forfeit a total of $1.4 million. DEVITO's co-defendant JOHN LISCIO was sentenced on March 31, 2009, to 12 months in prison and three years of supervised release. LISCIO was also ordered to pay $50,000 in restitution. DEVITO's other co-defendant, ROBERT DIDONATO, was sentenced on April 13, 2009, to 18 months in prison and three years of supervised release. DIDONATO was also ordered to pay $18,000 in restitution and to forfeit $112,000. The last remaining defendant, LOUIS CORDASCO JR., is scheduled to be sentenced on May 27, 2009. (usattynyman51909)
MORAL
Because of the mortgage fraud and foreclosure fallouts, sentencing is getting tougher, forfeitures more common. If you have any issues or questions regarding mortgage fraud speak with your knowledgeable attorney now. Not latter after you are a target.
NEW YORK LOAN OFFICER ARRESTED FOR FORGERY AND MORTGAGE FRAUD
FACTS
Anita Bareja, of Dix Hills, N.Y., a former loan officer at a EFI Capital Corp., a mortgage broker in Garden City, was arrested on Thursday, May 21, 2009 and charged with grand larceny and forgery that allegedly stared in May 2006 after she allegedly approved at least three loan applications from co-conspirators that she knew were based on falsified bank and employment information, Nassau County District Attorney Kathleen Rice said. The alleged scheme included loan applications made with forged appraisals that inflated the cost of the loans and allowed her and her co-conspirators to pocket thousands of dollars in profit, Rice added.
Bareja and the two yet to be apprehended co-conspirators allegedly used falsified employment records, financial information and appraisals to obtain more than $1.5 million in fraudulent mortgages, DA Rice said. The co-conspirators would find a property they wished to buy, then would either get a bogus appraisal or inflate and forge the appraisal on the mortgage loan application, according to the district attorney.
They then supported the loan requests with falsified personal financial information, DA Rice said. One co-conspirator claimed to have $200,000 in the bank when, in reality, his account balance never exceeded $9,000 and in another, a welder earning $11 an hour listed his employment as sales manager with an income of $15,000 per month, according to the district attorney.
Once Bareja approved the loan for the inflated price, she and her co-conspirators would profit from the difference after the property was paid for, Rice said. For example, a homeowner asking $200,000 for his or her home received their asking price, unaware that the purchaser had applied for and received a $400,000 mortgage from a lender that believed they were dealing with a more valuable property and a borrower with both a high-paying job and substantial assets, according to the district attorney. Such a scheme would net the group $200,000 and send the newly-purchased home into immediate foreclosure when the co-conspirators defaulted on the loan, she added.
Investigators combed through Bareja's e-mail account where they found numerous forged financial and appraisal documents, Rice said. They are still determining the extent of the illegal profit and estimate the amount will be in excess of $500,000.
Bareja was charged with two counts of grand larceny, three counts of falsification of business records, four counts of criminal possession of a forged instrument and one count of scheme to defraud. She was arraigned at First District Court in Hempstead, where a Nassau County judge ordered she be held on $20,000 bond or $10,000 cash. She is due back in court in Mineola May 26 and faces a maximum of 15 years in prison if convicted of the top charges against her.
Ms. Rice said that her office is continuing to investigate individuals she believes provided the group with the forgeries or others who may have profited from the scheme. Arrests of Bareja's co-conspirators are expected in the immediate future, she said. (lipress52209)
MORAL
Like I have been saying, mortgage fraud is a top priority in law enforcement and they are going back six years here but 10 years in quite a number of cases investigating the fraud.
FOUR IN NEW YORK INDICTED IN $3 MILLION FORECLOSURE SCAM INVOLVING MORTGAGE FRAUD
FACTS
A six count indictment has been filed against four individuals associated with MTC Real Estate Inc., charging them with perpetrating a $3 million mortgage fraud.
Lavette M. Bills; Kirk Lacey; Omar Henry; and Peter Chevere were charged with engaging in a mortgage fraud scheme involving loans totaling over $3 million on at least six different residences.
Bills and Lacey were previously charged in a criminal complaint filed in Manhattan federal court on March 17, 2009.
Bills was the chief executive officer of MTC Real Estate, Inc., in the Bronx, and Lacey, Henry and Chevere all worked for MTC during various periods between 2008 and in or about March 2009. Bills targeted homeowners who had fallen behind on their mortgage payments and whose homes were facing foreclosure by running radio advertisements and appearing on radio programs representing that she was a foreclosure specialist and had the ability to keep a home from going into foreclosure.
Prosecutors say Bills and Lacey were then able to convince some of these homeowners to sell or transfer their homes to Bills or to a company Bills controlled, NNI LLC. In at least one case, involving a residence on Tinton Avenue in the Bronx, Bills allegedly convinced the homeowner to place Bills' name on the deed to the house and to "gift" the equity in the house to Bills in return for Bills' fraudulent promise to transfer the house back to a relative of the homeowner. However, without the knowledge of either the lenders who approved the short sales, or of the selling homeowners, Bills and Lacey or their co-conspirators allegedly "flipped" the properties to third-party straw buyers at a higher price, usually on the same day or within a short period of time. The sales price in the second transactions was often significantly higher, typically by $150,000 or more than the short sale price, yet the homeowners typically received little or no money from the sale of their homes.
In some instances, the straw buyers thought that they were helping the homeowner "save" his or her home from foreclosure, or they were told that they were purchasing an investment property. The straw buyers were also often told that they would not need to make mortgage payments on the property, either because the payments would be made on their behalf, or because the payments would be covered by the rental income from the property.
The defendants allegedly convinced lenders to give the straw buyers mortgages by falsifying personal and financial information about the straw buyers.
Each defendant is charged with one count of conspiracy to commit bank fraud and wire fraud. In addition, Bills is charged with three counts of bank fraud, one count of wire fraud, and one count of false statements; Lacey is charged with one count of wire fraud and one count of bank fraud; and Henry and Chevere are charged with one count of bank fraud.
The indictment also seeks forfeiture of the alleged proceeds obtained from the charged offenses. (52109noctygazny)
MORAL
If you have been noticing lately, more and more prosecutors are seeking forfeiture of property and other assets from people convicted of mortgage fraud.
BEAZER HOMES TO PAY $2.5 MILLION IN REFUNDS TO NORTH CAROLINA RESIDENTS FOR CHARGING DISCOUNT POINTS AND NOT GIVING THEM
FACTS
Beazer Homes will pay $2.5 million to about 1,200 North Carolina borrowers who state regulators said were charged illegal fees. The state banking commission said it thinks that Beazer's mortgage business illegally collected money for discount points. Homebuyers typically pay the points to reduce their mortgage interest rate, which should mean a lower monthly payment that offsets that upfront fee. "We believe that they charged discount points that weren't in compliance with North Carolina law," said Mark Pearce, North Carolina deputy commissioner of banks. "They didn't reduce rates the way they're supposed to."
Actual and potential settlements announced this month in connection with the probes and a lawsuit against the company could top $80 million. The average refund in the state case is expected to be more than $1,500 and will be sent within the next 60 days. Most of the refunds are for home sales in the Charlotte area, where Beazer was once a major builder. The commission reviewed Beazer mortgages made from May 2003 through December 2007.
In 20 cases examined by the Charlotte Observer, Beazer Mortgage charged loan discount points, but those loans carried interest rates at or above the market average. That was the focus of the banking commission's case.
In 2007, an Observer analysis of federal data found that builders' mortgage subsidiaries charged higher interest rates on average to Charlotte-area customers than did mortgage companies not affiliated with builders. (charobs52009)
MORAL
It would seem a mortgage broker could make "hay" out of the last paragraph as to why mortgage brokers shop the loan for the borrower and the builder does not.
FOUR IN TENNESSEE ARRESTED FOR MULTI-MILLION DOLLAR MORTGAGE FRAUD
FACTS
William Thomas McMahan, Roger Dwight Ritch, Carrie Cameron Galvin Snow and Jonathan B. Henderson were indicted by a federal grand jury in the Eastern District of Tennessee in Chattanooga and charged with one count of violating Title 18 United States Code Section 1344 and one count of violating Title 18 United States Code Section 1956. The indictment of a fifth defendant remains under seal.
The indictment alleges that the defendants devised a scheme to obtain financing under false pretenses for purchasers of residential properties developed by American Value Homes, a construction company owned by defendant Roger Ritch. The indictment further alleges that as part of the scheme, the defendants, doing business as Mortgage Processing Services and Value Title, prepared loan applications containing false information, misrepresented the down payment amount made by borrowers, and falsely represented the employment status and income of borrowers. The scheme involved sales of houses by American Value Homes totaling approximately $30 million. Foreclosures on the fraudulent loans have resulted in a loss to lenders totaling approximately $2.4 million. (fbiknoxv51909)
MORAL
Remember. Innocent until proven guilty but boy the expense of defense is nothing to be sneezed at.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.
