ARIZONA REQUIRES LOAN MODIFICATION BROKERS TO BE LICENSED AS WELL AS THE LOAN OFFICERS IN 2010
FACTS
People handling loan modifications in Arizona will have to be licensed by the summer of 2010. The new law signed by Gov. Jan Brewer is intended to crack down on firms who charge hefty fees for quick loan modifications but then fail to deliver.
Arizona House Bill 2143 mandates that anyone handling a loan modification in Arizona be licensed like a loan officer. Legislation to license the state's thousands of loan officers passed last year. Both Arizona loan officers and loan modifiers must pass criminal-background checks, take 20 hours of education on lending laws, pass a national test and post yet-to-be determined bonds and contributions to the state's financial crime-recovery fund beginning July 1, 2010.
Non-profit housing counselors, who provide free loan help and are certified by the U.S. Department of Housing and Urban Development, are exempt from the licensing law.
Passage of Arizona's licensing coincides with a national crackdown dubbed "Operation Loan Lies" launched Wednesday by Attorney General Terry Goddard and 17 other state attorneys general, the U.S. Department of Justice and the Federal Trade Commission. See details on the Operation Loan Lies below where California Attorney General and FTC initiated lawsuits in Federal Court against 21 individuals and 14 companies.
The attorney general also sent notices to a dozen Arizona loan modification firms about deceptive advertising.
"The licensing law isn't perfect, but it will help keep out some bad actors," said Chris Mozilo, a former president of the Arizona Mortgage Lenders Association. (azrep71609)
MORAL
As you can see the "hayride" for loan modifiers is over. Do not make guarantees, do the modifications by the book and stay out of trouble. If not, we are happy to see you have representation in California, Nevada and Arizona.
189 LAWSUITS FILED IN 20 STATES WITH 21 INDIVIDUALS AND 14 COMPANIES SUED FOR LOAN MOD FRAUD BY CALIFORNIA AG AND FTC
FACTS
On July 15, 2009 a flurry of lawsuits was unveiled as a part of Operation Loan Lies, a nationwide crackdown by federal, state and local authorities on those who prey on homeowners desperate for mortgage relief.
"At the moment, there are more scammers than there are government officials going after them," California AG Jerry Brown said at a news conference in downtown Los Angeles. "There are more of these rats coming out of these holes than we can stomp on, but we'll keep doing the best we can."
Although the announcement was made on July 15, the operation has been underway for weeks, FTC chairman Jon Leibowitz said. So far, 189 lawsuits, cease-and-desist orders and other legal actions have been filed in 20 states as a result of Operation Loan Lies, officials said.
In Southern California, prosecutors have taken legal action against 14 companies and 21 people accused of running loan-modification scams that ripped off thousands of struggling homeowners looking to avoid foreclosure. In documents filed in U.S. District Court in Los Angeles and Orange counties, Brown and the FTC alleged that the California firms charged $500 to $5,500 in upfront fees, often promising to get lenders to modify mortgages to make payments more affordable, and they never delivered.
For an upfront fee of $3,500, one alleged victim was promised a 40% reduction in her mortgage principal and a $2,000 reduction in her monthly payment by U.S. Homeowners Assistance, one of the lawsuits said. After learning in April 2008 that her loan modification request had been denied, the woman discovered that the Irvine company had forged her signature and falsified her financial information, the suit said.
"Part of the reason why we're out here today is because California consumers have been among the most hard hit and also because a lot of these malefactors are based in Orange County," Mr. Leibowitz said. "It's one of the hotbeds of mortgage scam activity."
Mr. Brown and the FTC are demanding millions in civil penalties and restitution for homeowners as well as permanent injunctions to prevent the defendants and companies from offering mortgage-relief programs.
In the press release by his office, it is noted, "Brown filed five lawsuits as part of 'Operation Loan Lies' which is a nationwide seep of sham loan modification consultants, which he conducted with the Federal Trade Commission, the U.S. Attorney's office and 22 other federal and state agencies."
Those named in the California suits included: U.S. Homeowners Assistance (also known as Statewide Financial Group Inc.) based in Irvine, and its executive, Hakimullah "Sean" Sarpas and Zulmai Nazarzai; We Beat All Rates; U.S. Homeowners Preservation Center; U.S. Foreclosure Relief Corp. (also known as Lighthouse Services and California Foreclosure Specialists), and its legal affiliate Adrian Pomery based in the city of Orange; Home Relief Services LLC, its executive Terence Green, Sr. and Stefano Marrero with offices in Irvine, Newport Beach and Anaheim with its legal affiliate, the Diener Law Firm along with its principal attorney Christopher L, Diener; RMR Group Loss Mitigation Group LLC with offices in Newport Beach, Orange, Huntington Beach, Corona and Fresno, and its executives Michael Scott Armendez of Huntington Beach, Ruben Curiel of Lancaster and Ricardo Haag of Corona and its legal affiliates at Shippey & Associates along with its principal attorney Karia C. Shippey of Yorba Linda and Arthur Aldridge; United First Inc., based in Los Angeles, Paul Noe Jr., and its lawyer affiliate Mitchell Roth; Payment Relief Services Inc. of Costa Mesa (also known as Mercury Financial Services Corp.); and Living Water Lending of Newport Beach.
Mr. Brown alleges two other companies with the same management were also involved in the effort to deceive homeowners. These are Payment Relief Services Inc. and Golden State Funding Inc.
Mr. Brown has sought court orders to shut down several other companies including First Gov and Foreclosure Freedom and has brought criminal charges and obtained lengthy prison sentences for deceptive loan modification consultants. He has also sued H.E. Service Co., and executive George Escalante and Cesar Lopez.
There are 23 state and local agencies from 18 states are working with the FTC under the effort, and that number is expected to grow dramatically by the end of the year, Mr. Leibowitz said. (attygeneral California, press release 6-15-09; lat71609)
MORAL
Let us not forget about Federal Loan Modifications Law Center, which was sued several weeks ago along with its managing attorney. Are you doing loan modifications? Do you think doing it through an attorney as opposed to the attorney doing it is legal? I suggest you contact your attorney now. For those of you that really know me, I have advised previously on the only legal ways I am aware of that loan modifications can be done. For those that are not doing it the legal way as defined by law, we are happy to defend you as we are in several cases. By the way, do you know anyone here? You can follow the lawsuit in federal court using PACER.
WELLS FARGO SUES ITSELF IN FLORIDA FORECLOSURE CASE
FACTS
Wells Fargo is suing itself in a Florida mortgage foreclosure case. Wells Fargo owns both the first and second mortgages on a foreclosed Sarasota, Fla. condominium. As holder of the first mortgage, Wells Fargo is suing all the other lien holders including it as the second lien holder. The bank has two separate law firms, one to represent Wells Fargo as plaintiff and one to represent Wells Fargo as defendant. The defendant Wells Fargo made an answer denying all claims of the plaintiff Wells Fargo. (dwjnesnwswr71309)
MORAL
Only in Florida! Why didn't it just do waivers? This looks stupid. But then only in Florida and then in Sarasota. They have horse races there, don't they? Maybe Wells Fargo will bet on the 99-to-one long shots.
TENNESSEE TITANS EX-FOOTBALL PLAYER PLEADS GUILTY IN CALIFORNIA TO $5 MILLION PONZI SCHEME FRAUD
FACTS
Reed Kyle Diehl, a former player with the Tennessee Titans pleaded guilty on July 13, 2009 to federal fraud charges related to a $5 million Ponzi scheme in which he collected funds with promises of high rates of returns on investments in loan programs, including multimillion dollar condominium projects in Mexico.
According to a plea agreement in the case, Diehl falsely represented himself to potential clients as a banker who made hard money loans to businesses or individuals. Diehl also admitted that he fraudulently collected deposits for lines of credit for people who desired financing for construction and development projects in Mexico.
In relation to the hard money loans, Diehl told investors that he would pool their funds and make secured loans to individuals or businesses that had short-term cash needs. Instead of using investor funds to make loans, he used investors' money to repay earlier investors and to fund his lifestyle.
In relation to the second part of his scheme, Diehl told victims involved in construction projects in Mexico that he could secure multimillion-dollar lines of credit. Diehl told one victim that it would cost $1.175 million to secure a $24 million loan and that the deposit would be used as collateral for the line of credit. The victim eventually paid Diehl $2.5 million, money that Diehl used to pay, among others things, other people who had made investments with Diehl. None of the victims ever obtained a line of credit through Diehl.
In his plea agreement, Diehl admitted that he caused losses of just over $5 million. Diehl pleaded guilty before United States District Judge David O. Carter, who is scheduled to sentence the defendant on Sept. 28. At sentencing, Diehl faces a statutory maximum sentence of 20 years in federal prison for each of the three counts of wire fraud and 10 years in prison for the money laundering count.
Diehl was initially charged and arrested in this case in March 2008. After being freed on bond, Diehl's bond was revoked in January after he attempted to enter into a real estate transaction for a $3.5 million house using a false name and someone else's social security number. (usattycdca71309)
MORAL
Touchdown, touch back or running wrong way Corrigan?
KANSAS CITY MAN INDICTED IN $3.6 MILLION MORTGAGE FRAUD
FACTS
Quentin Henley, of Kansas City, Mo., was indicted by a federal grand jury on July 14, 2009 for his role in a mortgage fraud conspiracy that involved loans on 34 properties totaling more than $3.6 million.
Henley did business as Quality Remodeling, as All and One Construction and as Corporate Remodeling Associates. According to the indictment, from July 2003 to January 2009, Henley acquired residential properties for the stated purpose of rehabbing the properties, then renting or selling them.
Henley and unnamed co-conspirators allegedly submitted materially false, fraudulent and misleading loan applications and supporting documentation to mortgage lenders, all to induce the lenders to approve the applications and lend funds. In each case, the indictment says, Henley received money from the proceeds of the loans. In some instances, Henley bought or sold the property himself or refinanced mortgages. In other instances, Henley falsely represented that his company had remodeled the properties and was entitled to payment from the proceeds of the loan; in reality, the indictment says, Henley did little or no work to rehab some of the properties.
Henley allegedly caused mortgage lenders to make loans regarding at least 34 properties in the amount of at least $3,600,482.
In addition to the mortgage fraud conspiracy, the indictment charges Henley with three counts of interstate transportation of money obtained by fraud and three counts of money laundering. (usattywdmo71409)
MORAL
Mortgage fraud leaves a very large volume of paper for a trail. He is going to spend a lot of money to prove innocence.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.
