MORTGAGE FRAUD HIGHER IN 2008 AND EXPECTED TO GO HIGHER
FACTS
The FBI's 2008 Mortgage Fraud Report released the week of July 3, 2009 clearly shows mortgage fraud was bad in 2008 and will probably be worse this year. Nevada was listed as one of the top 20 states for mortgage fraud. Las Vegas FBI agents are investigating twice as many mortgage fraud cases this year of 2009 compared with last year, according to supervisory special agent Scott W. Hunter, who leads the FBI's local white collar crime section. Hunter would not disclose exact numbers, however.
The top mortgage fraud states for 2008 were California, Florida, Georgia, Illinois, Michigan, Arizona, Texas, Maryland, Missouri, New Jersey, New York, Ohio, Colorado, Nevada, Minnesota, Rhode Island, the District of Columbia, Massachusetts, Pennsylvania, and Virginia. Note that California beat out Florida for first place. For the past five to 10 years I have been tracking this, it always has been a contest between Florida and California as to which had the most mortgage fraud.
Nationwide, reports of suspected mortgage fraud filed by financial institutions grew 36% in fiscal 2008. And all signs seem to indicate that even more reports of suspected fraud will be filed this year, the FBI document states.
The worse the real estate market, the more the fraud. Or, to take a line directly from the FBI report, we're in the midst of a "favorable climate for mortgage fraud schemes to proliferate." The FBI determined the top 20 states for mortgage fraud last year by polling various financial institutions, real estate tracking companies and law enforcement agencies for their in-house fraud rankings, then listing the states that topped the various rankings with the most frequency.
One company that was polled, Interthinx, ranked Nevada first last year for possible fraudulent mortgage loan activity -- based on the number of loan applications the company reviews and flags for suspicious content, such as inflated property value, phony incomes and signs of identity theft. And our first-place ranking has held steady; in the first quarter of 2009, almost half the Nevada loan applications Interthinx reviewed had at least one indicator of fraudulent activity.
The Mortgage Bankers Association, which was also surveyed by the FBI for the 2008 report, found that Nevada had one of the country's highest rates of delinquent payments. RealtyTrac determined Nevada had the nation's highest percentage of houses in some state of foreclosure in 2008: 7.29%.
RealtyTrac records indicate the problem is getting worse: In May, foreclosure filings were reported for one out of every 54 Las Vegas metropolitan area houses -- a 78% increase from May 2008.
The number of FHA borrowers who defaulted before they could make a single payment grew 182% nationwide from 2007 to 2008.
The FBI report estimated losses from mortgage fraud for 2008 at $1.5 billion. (Epochtmes 71509, lasvgssun71709)
MORAL
Fraud is up. It is epidemic and the punishment sought by the U.S. Attorney's office is more severe. I would recommend those doing it stop and those that have done it see a lawyer now before law enforcement seeks you out later.
ARIZONA ALLOWS FOR SALE SIGNS BY PROPERTY OWNERS NOTWITHSTANDING WHAT THE DEED OR HOA RESTRICTIONS STATE
FACTS
The governor has signed the bill that would override deed restrictions that prevent owners from putting up for sale signs on their property.
MORAL
This may interest your borrowers who are refinancing or buying. It makes the mortgage broker look good when he can tell a potential buyer or seller about this new law.
WARNING TO CALIFORNIA LENDERS AND SERVICES OF MORTGAGE LOANS SENATE BILL 306 IS ENROLLED REGARDING FORECLOSURES
FACTS
Senate Bill 306 amends Sections 2923.5, 2923.6, 2924.8, and 2924f of the Civil Code and amends, repeals and adds Section 2943 of, the Civil Code, and amend Section 17312 of the Financial Code.
Existing law requires that, upon a breach of the obligation of a mortgage or transfer of an interest in property, the trustee, mortgagee, or beneficiary record a notice of default in the office of the county recorder where the mortgaged or trust property is situated and mail the notice of default to the mortgagor or trustor.
Existing law, until Jan. 1, 2013, prohibits a mortgagee, trustee, beneficiary, or authorized agent from filing a notice of default for an additional 30 days on loans made from Jan. 1, 2003, to Dec. 31, 2007, that secure residential real property, under certain circumstances.
This bill would, until Jan. 1, 2013, provide that these provisions apply to mortgages and deeds of trust recorded between Jan. 1, 2003, to Dec. 31, 2007, secured by owner-occupied residential real property containing no more than four dwelling units.
The bill would also, among other things, revise the declaration that is required to be filed in this connection with the notice of default.
Existing law requires a trustee or authorized agent, upon posting a notice of sale, to post and mail a specified notice addressed to residents of property subject to foreclosure upon posting a notice of sale.
Existing law requires a notice of sale to be recorded in the county in which the property, or some part of it,
is situated at least 14 days prior to the date of sale.
This bill would specify how and when this notice is to be mailed and would extend the time during which the notice of sale must be recorded from 14 to 20 days.
Existing law requires a beneficiary on a deed of trust or a mortgagee on a mortgage to prepare and deliver a beneficiary statement or a pay-off demand statement within 21 days of receipt of a written demand from specified entitled parties.
Existing law requires the written statement to include information reasonably necessary to calculate the payoff amount on a per diem basis for the period of time, not to exceed 30 days, during which the per diem
amount is not changed by the terms of the note.
The bill would, until Jan. 1, 2014, require a beneficiary, within 21 days of the receipt of a short-pay request, as defined, to prepare and deliver a short-pay demand statement, which would be a written statement, conditioned on the existence of a short-pay agreement, that is prepared in response to a request from an entitled person or authorized agent, setting forth an amount less than the outstanding debt, together with any terms and conditions, under which the beneficiary would execute and deliver a reconveyance of the deed of trust securing the note that is the subject of the short-pay demand statement. The bill would provide that the short-pay agreement is an agreement in writing in which the beneficiary agrees to release its lien on a property in return for payment of an amount less than the secured obligation. The bill would permit a beneficiary that elects not to proceed with the transaction that is the subject of the short-pay request to refuse to provide a short-pay demand statement, but would require that he or she provide a written statement, indicating that the beneficiary has elected not to proceed. The bill would provide that if the terms and conditions of the short-pay agreement require approval by the beneficiary of a closing statement prepared by an escrow holder, approval or disapproval shall be provided not more than four days after receipt by the beneficiary of the closing statement, or the closing statement shall be deemed approved, except as specified.
MORAL
Follow the bill if you are a hard money lender or servicer. Remember, if the Governor signs it and you violate it, there are plenty of lawyers suing lenders out there and you really do not want to pay us to defend something that is easily avoidable.
ANOTHER REMINDER ON EXISTING CALIFORNIA FORECLOSURE LAW
FACTS
A mortgagee, trustee, or other person authorized to sell a property in foreclosure and serve and record a notice of sale shall not give notice of sale until at least 90 days after the lapse of three months from the notice of default in order to allow the parties to pursue a loan modification to prevent foreclosure, if all of the following conditions exist:
(1) The loan was recorded during the period of Jan. 1, 2003 to Jan. 1, 2008, inclusive, and is secured by residential real property.
(2) The loan at issue is the first mortgage or deed of trust that the property secures.
(3) The borrower occupied the property as the borrower's principal residence at the time the loan became delinquent.
(4) The notice of default has been recorded on the property.
(b) This section does not apply to loans serviced by a mortgage loan servicer if that mortgage loan servicer has obtained a temporary or final order of exemption pursuant to Civil Code Section 2923.53 that is current and valid at the time the notice of sale is given. (cc2923.52)
MORAL
Remember this, especially if you are a private investor or you can be in for big legal trouble by private attorneys that are suing investors and brokers in droves right now.
COLORADO LOAN OFFICER DRAWS 41 MONTHS IN FEDERAL PRISON
FACTS
Linda Carnagie, a Bennett, Col. loan officer was sentenced on July 15, 2009 to up to 41 months in federal prison following her conviction on conspiracy charges in connection with a mortgage-fraud scheme. She was ordered to pay $206,693 in restitution and forfeit $41,205. Following Carnagie's prison term, which is to begin by Aug. 31, 2009 she is to spend three years in supervised release.
Carnagie was an independent contractor who worked with Highland Mortgage of Evergreen. According to the indictment against her, Carnagie submitted false information in loan applications and other documents submitted to mortgage companies and to federal housing agencies -- including false income information and employment verifications -- in order to obtain mortgage loans and FHA/HUD insurance for buyers who could not otherwise qualify. (denbusjl71609)
MORAL
Do not do it. It is never worth it. If you have, see your attorney now, before government agencies see you. The attorney may be able to mitigate the problem and possibly keep you out of a federal prison.
FLORIDA AG SUES LOAN MODIFICATION CO. FOR FRAUD
FACTS
On Friday, July 17, 2009 Attorney General Bill McCollum filed a lawsuit against Victor Lopez & Associates, a Central Florida company that allegedly charges homeowners facing foreclosure up-front fees for loan modification services. According to the lawsuit Victor Lopez & Associates and its owners are in violation of Florida's Foreclosure Rescue Fraud Prevention Act. The company's office is located in Orlando.
An investigation conducted by members of the Attorney General's Economic Crimes Division, working as part of the Attorney General's Mortgage Fraud Task Force, indicated that Victor Lopez & Associates was charging up-front fees as high as $2,295 to homeowners seeking loan modification services. Additionally, consumer complaints allege that the company has not performed the promised services and that consumers are unable to contact the company or get refunds.
According to the lawsuit, Victor Lopez & Associates targeted the Hispanic community by advertising on Spanish radio and television and conducting the majority of sales transactions in Spanish, but only provided consumers with contracts in English. The lawsuit seeks a permanent injunction prohibiting Victor Lopez & Associates from charging up-front fees, restitution on behalf of all victimized consumers, civil penalties of $15,000 for each violation of the Foreclosure Fraud Prevention Act, and reimbursement for fees and costs related to the investigation. (realestaterama71709)
MORAL
The states' attorneys general are chasing with a vengeance. California recently sued 35 consisting of 21 individuals and 14 companies. In April 2009 the Florida Attorney General obtained a settlement against Homestead Protection Services LLC which had agreed to dissolve and must refrain from any future violations of the Florida Deceptive and Unfair Trade Practices Act. The company must also pay $20,000 in consumer restitution and must reimburse the state $5,000 for fees and costs of the investigation. If you are creative in loan modifications, I suggest you have legal counsel advise you or you too may become a target of the state Attorney General's office. We currently represent several companies that either are or have been or may be chased for loan modifications in violation of law.
FLORIDA MAN PLEADS GUILTY TO MORTGAGE FRAUD
FACTS
Garry S. Martin of Orlando has pleaded guilty to conspiring to commit money laundering in connection with various mortgage fraud schemes. Martin faces a maximum penalty of 20 years in federal prison.
Martin was convicted in the United States District Court for the Eastern District of New York in 2006 for engaging in mortgage fraud. Martin had made several applications to secure mortgages from Citimortgage, Inc., a subsidiary of CitiBank. Those applications contained several false statements, including inflated values for the borrower's income and assets.
The terms of Martin's supervised release for his 2006 conviction prohibited him from offering various real estate services. After Martin had been placed on supervised release in the Middle District of Florida, however, he maintained his real estate sales agent license and obtained his real estate brokers license. He also formed various companies, including Antigua Housing and Management Inc., Antigua Real Estate, Antigua Abstract LLC, GSM Financial LLC and Savvy Professional Title Co., each with its principal office listed as 5449 South Semoran Boulevard, Suite 200, Orlando. Through those companies, and up until August 2008, Martin conducted various schemes, including foreclosure fraud, reverse mortgage fraud, and completely sham transactions, to defraud financial institutions out of more than $5 million.
Through Antigua H&M, Martin obtained money from people facing foreclosure by promising that Antigua would bring their past due mortgages current through refinancing and forward their payments to their lenders. He then used the foreclosure payments himself and did not pay the banks.
Through Savvy and Antigua Abstract, Martin marketed reverse mortgages to seniors, sent fraudulent financing packages to support the mortgage applications, arranged the mortgage closings himself, and then diverted mortgage proceeds to his personal use. Martin also created wholly fictitious agreements between fake buyers and fake sellers to receive mortgage proceeds. (usattymdfl71609)
MORAL
Does it once. Gets convicted and put on supervised release meaning he probably did not do hard time on the initial conviction and while on supervised release goes back to the same old thing. My educated guess is he is looking at a minimum of five years hard time and serving 85% of it in federal prison. Remember, the federal system has no parole.
MAINE REQUIRES LENDER TO CONDUCT MEDIATION WITH BORROWERS BEFORE IT CAN START FORECLOSURES
FACTS
Foreclosures filed after Jan. 1, 2010 require lenders on Maine principal residences to conduct mandatory foreclosure mediation. A form notice that includes a description of the foreclosure mediation program must be attached to the foreclosure complaint. Mediation is required in the event the defendant returns the form notice, otherwise requests mediation or makes an appearance in the foreclosure action. A final judgment may not be issued until the mediator's report regarding the mediation has been completed. In addition, the bill sets forth additional content to be included in a Notice of Right to Cure and requires lenders to provide written notice of foreclosure proceedings to tenants of properties in foreclosure. (args71409)
MORAL
Foreclosures now take longer, cost more and mean the lender has to start sooner if it wants the property as REO to reduce its loss. I suggest loan modification may be cheaper or deed in lieu with a property profile may be faster if you waive the deficiency. Otherwise, be prepared to take a bigger loss per property.
MICHIGAN LOAN OFFICER STEALS LEAD LIST OF POTENTIAL REVERSE MORTGAGE BORROWERS AND FACES 20 YEARS IN FEDERAL PRISON
FACTS
Bruce Jarrard, a former reverse mortgage loan officer at World Alliance Financial Corp. could face up to a maximum 20 years in prison and $250,000 in fines after pleading guilty to wire fraud in alleged data theft from the company.
Jarrard allegedly collected prospective reverse mortgage borrower information before he left his job in 2008. Federal officials alleged that World Alliance Financial's data were trade secrets, and Jarrard took them for his personal financial benefit.
"When a corporate insider steals critical trade secrets from his company -- a company which has entrusted him with an important position --- then all citizens are at risk," said Terrence Berg, United States Attorney, at the indictment in March. "In today's global economy where competition is fierce, corporations cannot afford to lose trade secrets because an unfaithful worker decides to steal its valuable property."
Jarrard faced the wire fraud charge and one count of theft of trade secrets under an indictment filed in March before U.S. District Judge. He awaits sentencing Nov. 2, 2009. (revmtgdly71509)
MORAL
If you are a loan officer and are thinking of taking a lead list or log, I suggest you read this and take it to heart or alternatively, you may take it to prison.
MINNESOTA LOAN OFFICER PLEADS GUILTY TO MORTGAGE FRAUD ON LOAN FOR HIS OWN PROPERTY
FACTS
Angelo Mancini III, of St. Paul pleaded guilty on July 16, 2009 in federal court in connection with a scheme to obtain more than $163,000. He was indicted on April 15, 2009.
He admitted that from September 2006 through November 2006, he devised a scheme to defraud and to obtain money by means of false and fraudulent pretenses. During this period, he was a loan officer at City Mortgage in St. Paul. While employed, Mancini admitted that he applied for a loan to refinance a residence he owned in St. Paul through the mortgage company.
Mancini also admitted he provided materially false statements on the mortgage loan application, including stating that his income was nearly $5,000 per month and that he worked as a landscaping manager for the four years preceding the loan application.
A loan, based on the fraudulent loan application, was disbursed to a title company via a wire transmission. Mancini admitted that on Nov. 24, 2006, he knowingly transmitted the disbursements of the loan proceeds.
Mancini faces a potential maximum penalty of 20 years in prison. (usattymin71609)
MORAL
Note three things: 1-Only one stated income loan: 2-Loan occurred three years ago: 3- faces 20 years in federal prison where there is no parole and a person must serve 85% of the time. Sounds like music but he is not Henry Mancini. Do not do it. But if you did stated income see your attorney now rather than later. There are legal ways to mitigate the problem.
NEW JERSEY ATTORNEY GENERAL FILES TWO NEW LAWSUITS AGAINST 10 INDIVIDUALS ALLEGEDLY DOING FALSE LOAN MODIFICATIONS
FACTS
On July 15, 2009 Attorney General Anne Milgram announced two new lawsuits that charge 10 individual and corporate defendants with preying on struggling homeowners looking to modify the terms of their mortgages.
Named in the first case are: attorney Ejike N. Uzor, who practices in Linden and Newark, and Stephen Pasch of Green Brook Township. The complaint accuses Uzor and Pasch, along with seven corporations, of violating fraud, advertising, and federal debt counseling laws. According to the lawsuit, from roughly September 2008 through March 2009, the Newark-based companies used Web-based advertising, radio ads and telephone calls to find homeowners in financial straits.
Milgram said the companies charged customers thousands of dollars to help them obtain a better home loan, offering a money-back guarantee if the company failed to get it. Often, customers were urged to stop making mortgage payments while the company tried to secure a new loan on their behalf, putting homeowners in even worse financial standing.
Milgram said that when the companies failed to obtain a modified loan, they returned only part of the fees, and in many cases, nothing at all.
In the second case, the state accused mortgage lender BIRMCO, based in Haddon Township, of similar offenses dating back to November 2008. Milgram said BIRMCO used direct mail solicitations, which included a homeowner's specific mortgage information, to urge distressed homeowners to call.
Customers were promised that BIRMCO would negotiate a lower interest rate and lower monthly payments. Like the other lawsuit claimed, consumers were charged an upfront fee of several thousand dollars and promised a refund if BIRMCO failed to obtain a modified loan agreement. Customers were again told to stop making mortgage payments and to avoid contacting their lenders, purportedly to strengthen their position in seeking loan modification.
\Customers typically learned through a call from their lenders that they were delinquent on their mortgages and that nothing had been done to modify their loans. Ultimately, Milgram said customers ended up working directly with their lenders to get a better loan. Afterward, she said BIRMCO typically sent a letter to the consumer claiming credit for the better loan. Customers who sought a refund usually got nothing back.
Debbie Mangroo, of Belleville, paid BIRMCO, which stands for "Best Interest Rate Mortgage Company," $2,900 to help her get a better loan. She said the company told her that she should stop paying her mortgage for three months because that was the only way she would qualify for a lower rate.
She didn't question that advice at the time. "I figured that's how they do it," she said. "Now, because of BIRMCO, I'm behind on my mortgage." She said she was able to work directly with her lender to arrange a way to catch up on the missed payments. BIRMCO eventually refunded half of her money.
A message left for BIRMCO owner Michael Diplacido Sr. was not immediately returned. To date, the state has filed 11 mortgage fraud lawsuits since June 2008 against 102 individual and corporate defendants. More than 950 people have been affected by the scams, according to prosecutors. The state has also obtained indictments or guilty pleas in seven criminal mortgage fraud cases involving loans worth nearly $11 million. (phily.comap71509)
MORAL
Like I have said, the states Attorneys General are chasing and chasing loan modification companies hard. For those doing it I suggest you see competent counsel now and not later and have a sufficient reserve to allow the attorney to protect you. Alternatively, be prepared for the state to seek restitution, forfeiture and fines.
VIRGINIA WOMAN SOUGHT IN $50 MILLION FRAUDULENT "RENT-TO-OWN" PROGRAMS
FACTS
Diane H. Frederick Atari of Ashburn, Va., is being sought by members of the Loudoun County Sheriff's Office and the Office of the Virginia Attorney General. She was indicted July 13, 2009 in a $50 million mortgage scheme.
She is accused of fraudulently fixing clients' credit status and inflating their income on financial records to place them into homes they could not afford. Atari allegedly illegally obtained monies in excess of $1 million in the scheme. The total loss on these fraudulently obtained mortgages is estimated at more than $50 million dollars and authorities believe that more than 100 potential homebuyers may have been victims of her scheme.
Atari is the owner and operator of ACR Consulting Co. and Atari Management Co., both located in Loudoun. Investigators say Atari offered "rent-to-own" services for customers who were seeking home ownership. Typically these customers were unable to qualify for mortgages because of bad credit or low incomes. Atari allegedly signed agreements with the victims with the understanding ACR Consulting Company would attempt to fix the victim's credit. Mulholland said many of Atari's victims were lower income, hard working people, some of who worked $7 to $8 per hour jobs at local retail stores.
Mulholland said Atari would sometimes target homes for her clients that she believed were undervalued or could get a higher appraisal, meaning "more money, higher commission" for her.
The suspect apparently worked with her clients' creditors to pay off debt, most of the time at less than face value. The debt was usually paid out of the suspects' own funds. The money would be returned upon the closing of the customer's house purchase. The suspect also allegedly created false credit for her clients by taking associates with excellent credit and advising credit card companies to add her client as an "authorized user" of credit cards. This would help increase the clients' FICO score, albeit a false credit score, and help the clients qualify for a mortgage.
During this time the suspect allegedly also was inflating the client's reportable income. As the suspect moved her client toward purchasing a home, investigators say she apparently falsified her clients' financial documents, inflating the client's financial status to the point they could qualify for the mortgage. In some cases the suspect deposited her own funds into the client's bank account to show high balances and created false employment documents.
Once the mortgage was approved, Atari would take her clients to close on the property. Sometimes the clients would balk at the large monthly payments required under the mortgage. Atari would agree that she would subsidize their payments and help them make the monthly payments until such time as she could refinance their loan at a much lower interest rate, thus reducing their monthly payment to a manageable figure for a period of time. Mulholland said in some instances Atari even arranged to assist clients in a short sale of their property, in the guise of not hurting their credit. In reality, Mulholland said, this was another instance where Atari would benefit financially, as she would take a 6% commission on the first sale of the home and then a 3% commission on a short sale.
Atari was paid a commission upon the sale of the property. She would also receive the fee for credit repair and any monies that she fronted for her client. Investigators said she also took a percentage of the fees paid at closing for the brokerage of the services. Most of these homes were unaffordable for her clients and many have since been foreclosed or repossessed by banks. Mulholland said the majority of the affected homes were in Loudoun County, though some are in other jurisdictions.
Simpson also pointed out the tremendous losses suffered by the lenders who unknowingly issued loans to people who were never able to make the payments. Although not all affected lenders have been identified, sheriff's office investigator Tim Ortwein said JP Morgan has been discovered to have issued many of the loans.
Atari was indicted July 13, 2009 in Loudoun County Circuit Court on 10 counts of making false statements to obtain credit, one count of money laundering and one count of racketeering.
Commonwealth's Attorney Jim Plowman said his office believes the mortgage fraud scheme run by Atari ran from January 2006 to the end of 2008, though authorities were quick to say the investigation is still ongoing. (leesburgtoday71509)
MORAL
$50 million is one heck of a loss and should she be caught and found guilty she is looking at a lot of time in a federal prison.
LOWER PRICED HOMES WITH INTEREST DEDUCTIONS CAN COST LESS THAN RENT
FACTS
For Americans debating whether to buy or rent their homes, the scales are tipping toward ownership. Because of the slide in home prices, low interest rates and tax incentives, renters are realizing they could handle a mortgage for a just little more money.
An Associated Press analysis of 45 metro areas finds the gap between the monthly mortgage payment on a median-priced home and the median rent has shrunk from $777 a month to just $221 in the past three years. It could mean a quicker end to the housing-market doldrums, as renters buy up unsold homes languishing on the market.
In some metro areas, including Cleveland, Atlanta, Indianapolis and St. Louis, the gap was less than $100 a month. Home prices are expected to fall faster than rents this year.
Phoenix, Las Vegas and inland parts of California and Florida, where prices have gone down more than 40 percent, sales are rising with first-time homebuyers as the market.
The federal tax credit can cover 10% of the home price or up to $8,000 for first-time buyers who earn up to $75,000 a year, or $150,000 for a couple. The credit expires November 2009.
Cheap foreclosures in some places are drawing multiple bids. Buyers are having little trouble finding bargains.
For example Jere Ross, an Air Force vehicle operator, and his wife recently bought a four-bedroom, 1 1/2-bath house in Zephyrhills, Fla., a Tampa suburb, for $86,500 rather than sign another yearlong apartment lease. Ross used a Veterans Administration loan, which doesn't require a down payment, and got a 30-year mortgage at a fixed rate of 5.5%. His monthly payment comes to $700 a month, including property taxes and insurance, $110 less than he paid to rent an apartment nearly half the size.
The study, conducted for the AP by Marcus & Millichap Real Estate Investment Services, used prices for the first three months of 2009. It calculated mortgage payments by assuming a 10% down payment, a 30-year fixed loan at 5.5%, and taxes and insurance that added up to 1.5% of the purchase price. It assumed borrowers used private mortgage insurance.
Renters with jobs in the education, retail and transportation industries don't earn enough to rent the average two-bedroom apartment in many of these major cities, let alone buy, according to a recent study of 200 metro areas by the Center for Housing Policy. Renters who want to become homeowners also face the obstacles of scraping together a down payment and qualifying for the loan. And renters with a record of paying bills late will have a hard time getting a low interest rate. *azrep72109)
MORAL
Run the math for Barstow, Bakersfield, Las Vegas, Phoenix, Tucson and see what a two family income renting comes to and see if they can do it. This does give you a potential source for buyers. Especially, with all the veterans around these days.
CALIFORNIA SEARCH WARRANTS ISSUED ON THREE PEOPLE ALLEGEDLY INVOLVED IN FORECLOSURE RESCUE AND LOAN MODIFICATIONS
FACTS
On July 23, 2009, investigators with the Orange County District Attorney's Office served search warrants on three Ladera Ranch homes. The homes are allegedly connected to Terence Green Sr., and Stefano Marrero of Home Relief Services and Christopher Diener of the Diener Law Firm.
Attorney General Jerry Brown stated he had filed a lawsuit against the three men among others on July 15, 2009 alleging they charged homeowners $4,000 in upfront fees and then failed to get them cheaper payments on their home loans. Brown also allegedly said the companies sometimes promised to arrange a short sale but instead attempted to use the customer's personal information for their own benefit.
Orange County District Attorney Tony Rackauckas has said his office is expanding investigations into real estate fraud. Currently the office has two prosecutors, two investigators and a paralegal just on real estate fraud. Elizabeth Henderson, a Deputy District Attorney in the same office, is alleged to have been blunt at a meeting of community leaders and stated "We want to send people to jail."
Defrauding just one person can translate to a maximum penalty of three years in prison for grand theft was purportedly said by Deputy District Attorney Henderson. (ocreg72409)
MORAL
Let me see. On the one hand Attorney General Jerry Brown is suing everyone civilly in federal court. On the other hand Orange County District Attorney Tony Rackaukas is investigating the same people for potential criminal liability. I trust they all have a lot of money because the legal fees for fighting a war on two fronts are going to be tremendous!
CALIFORNIA: NO IMPOUNDS ON HIGHER PRICED MORTGAGES OR LOAN MODIFICATIONS EXCEPT UNDER CERTAIN CONDITIONS
FACTS
Existing law prohibits requiring an impound, trust or other type of account for payment of property taxes, insurance premiums, or other purposes relating to the property as a condition of a real property sale contract or a loan secured by a deed of trust or mortgage on real property containing only a single-family, owner-occupied dwelling, except as specified.
This bill would include among those exceptions sales where a loan is made in compliance with the requirements for higher priced mortgage loans established in Regulation Z, as defined, whether or not the loan is a higher priced mortgage loan, and where a loan is refinanced or modified in connection with a lender's homeownership preservation program or a lender's participation in such a program sponsored by a federal, state, or local government authority or a nonprofit organization. (7-6-09)
MORAL
If you are going to require impounds, I suggest you read this carefully. Especially if the Governor signs it and you do hard money loans.
CALIFORNIA WOMAN PLEADS GUILTY IN MISSOURI TO MORTGAGE FRAUD
FACTS
Cheryl Ann Romero of Santa Fe Springs, Calif., pleaded guilty in federal court July 22, 2009 to her role in a $12.6 million mortgage fraud conspiracy that involved 25 upscale residential properties in Lee's Summit, Mo., and Raymore, Mo.
Romero is among 10 defendants who have pleaded guilty to the scheme to buy and sell new homes -- all of which were built by Jerry R. Emerick -- in the Raintree and Belmont Farms subdivisions in Lee's Summit and the Eagle Glen subdivision in Raymore. Buyers purchased the homes at inflated prices, obtaining mortgage loans for more than the actual sale price by providing false information to mortgage lenders, and then kept the extra proceeds. Buyers created shell companies for the purpose of receiving those kickbacks from Emerick, with kickbacks of up to $125,000 on each house.
Emerick owned and operated Ty Construction and Residential Contracting LLC, which was engaged in the business of residential construction. He pleaded guilty on April 9, 2009, to conspiracy to commit mortgage fraud and wire fraud and to transfer funds obtained by fraud across state lines.
In total during the course of the conspiracy from June 2005 to May 2007, mortgage lenders approved loans for 25 homes totaling more than $12.6 million. From that total, buyers received approximately $2.3 million without the lenders' knowledge.
Romero purchased two Lee's Summit properties from Emerick. In obtaining mortgage loans to make the purchases, Romero made material misrepresentations in the loan applications upon which the lenders relied and received money back unbeknownst to the lenders.
Romero received a $519,900 loan to purchase the property at 4101 S.E. Canter Drive, for which she received a $90,000 kickback. Romero also received a $549,900 loan to purchase the property at 4513 Admiral Byrd Drive, for which she again received a $90,000 kickback. Both payments were made from the loan proceeds by the title company to Miracle Management, a company Romero set up for that purpose.
Under federal statutes, Romero is subject to a sentence of up to five years in federal prison without parole, plus a fine up to $250,000 and an order of restitution. (usattywdmo72209)
MORAL
The government went back four years to convict for this one. Anyone out there commit mortgage fraud in the last four years? Did anyone put primary residence when it was to be a rental? Anyone overly creative like with stated income? If you answer yes to any of this, see your attorney now.
MISSOURI MORTGAGE BROKER PLEADS GUILTY TO FRAUD
FACTS
Cheryl Joan Kassebaum of Ozark, Mo., pleaded guilty in federal court on July 21, 2009 to her role in a $500,000 mortgage fraud scheme.
Kassebaum, a former mortgage broker and co-owner of Metro Consulting Group, admitted that she participated in a scheme to defraud home mortgage lenders from March to July 2006. Kassebaum participated in a conspiracy to obtain mortgage loans for the purchase of a home based on false loan applications, and to return a significant portion of the loan proceeds to the purchasers of the homes without the lender's knowledge and outside the closing of the home purchase.
This scheme involved seven houses with home mortgage loans ranging from approximately $200,000 to more than $400,000. The amount of loan proceeds returned to the borrowers ranged from less than $30,000 to nearly $100,000. Some of the home purchasers subsequently defaulted on the loans, and the homes have been foreclosed or are in the process of being foreclosed. The readily provable economic loss attributable to Kassebaum's criminal conduct is $497,200.
Kassebaum's role in the conspiracy was to prepare and submit fraudulent loan applications to lenders. Kassebaum knew those loan applications included overstatements of income and understatements or omissions of liabilities, and falsely represented that the purchaser/borrower intended to reside in the home to be purchased. Kassebaum also facilitated the return of a significant portion of the loan proceeds to herself and other purchasers/borrowers without the lender's knowledge and outside the closing of the home purchase by routing the returned proceeds through Master Marketing Consultants and then through Metro Consulting Group. Kassebaum also pleaded guilty to one count of wire fraud, related to the transfer of loan proceeds from the scheme, and one count of money laundering, related to monetary transactions involving criminally-derived property.
Kassebaum is subject to a sentence of up to 45 years in federal prison without parole, plus a fine up to $1.5 million and an order of restitution. (usattywdmo72109)
MORAL
Pay close attention. 1- The fraud took place three years ago. 2-Part of charge is false representation to occupy the premises as her home. Anybody out there, do that within the last three years? See your lawyer if the answer is yes.
SOME NEVADA MORTGAGE BROKERS LOOKING TO BE CIVILLY OR CRIMINALLY PROSECUTED BY STATE ATTORNEY GENERAL
FACTS
State officials say most mortgage modification and foreclosure consultants are not complying with a new Nevada law requiring them to obtain licenses. The law took effect on July 1, and the state Division of Mortgage Lending gave consultants until Aug. 9 to submit completed applications.
The DML reported on July 22 that only four mortgage or foreclosure consulting services have applied, and all those applications were returned as incomplete, which means no one is licensed to do loan modifications or act as a foreclosure consultant.
The DML plans to accept applications on a temporary basis while it prepares permanent regulations. Gov. Jim Gibbons issued emergency regulations for licensing on July 8.
Edie Cartwright, a spokeswoman for the Nevada attorney general's office, says it can take civil or criminal action against consultants who operate without a license. (lvrevjl7-09)
MORAL
We are happy to see you are represented in civil or criminal court but it seems to me getting the license would be a lot cheaper.
NORTH DAKOTA COMPLIES WITH S.A.F.E. AND ENACTS ITS OWN MORTGAGE LOAN ORIGINATION ACT
FACTS
Effective Aug. 1, 2009 North Dakota requires compliance with the Mortgage Loan Originator Act. Mortgage loan originators and loan processors or underwriters acting as independent contractors are required to obtain a license under the MLOA. Additional requirements are set for education, renewals, notifications, advertisements, net worth, bonds and fees. All application forms, solicitations and advertisements must contain the NMLS unique identifier of the person originating the mortgage loan.
MORAL
Isn't this nice. Remember loan processors and underwriters acting as independent contractors must be licensed as well.
TEXAS PREVENTS FORECLOSURES OF HOMES OWNED BY MILITARY PERSONNEL
FACTS
Any foreclosure actions filed on or after June 19, 2009 must comply with the new Texas law protecting military service members facing foreclosure. A foreclosure may not be conducted during active duty or for nine months after active duty concludes unless the foreclosure is conducted pursuant to a court order or an agreement that waives the service member's foreclosure protection rights. In addition, a court may after a hearing and on the court's own motion, and must on the application by a service member, stay foreclosure proceedings as justice and equity require or adjust the obligations of the contract to preserve the interests of all parties. (alrgs72109)
MORAL
In addition to all other laws protecting homeowners against immediate foreclosure such as necessity of first seeking modification or workout with the homeowner, you the lender should verify the person is not in active military service.
TEXAS FATHER, WIFE AND DAUGHTER INDICTED IN $2.5 MILLION MORTGAGE FRAUD CONSPIRACY
FACTS
An 11-count sealed indictment charging conspiracy and wire fraud has been unsealed on July 21, 2009 following the arrests of Claymon "Butch" Trammell, Michelle Trammell and Jeannettea Williams. Claymon Trammell operated real estate and home repair companies in the Houston area. Michelle Trammell, Claymon Trammell's daughter, operated as a mortgage broker while Jeannettea Williams, Claymon Trammell's wife, operated as a real estate agent.
The trio was charged for their alleged involvement in a scheme to defraud residential mortgage lenders out of loans totaling more than $2.5 million in connection with purchase money home loans.
According to allegations in the indictment, the defendants paid individuals to use their names and credit on loan applications to buy residential properties and submitted fraudulent home repair and other invoices to pay themselves from the loan proceeds. Michelle Trammell allegedly filled out loan applications for the straw buyers and provided lenders with false information about borrowers' employment, income, assets and intent to occupy the properties. Jeannettea Williams notarized borrower occupancy affidavits that borrowers intended to occupy the properties as primary residences, even though she and Claymon Trammell occupied two of the properties, according to the indictment.
The indictment also provides notice to each defendant of the intent of the United States to forfeit their interest in the $2.5 million they allegedly obtained as a result of the mortgage fraud scheme. The maximum penalty, upon conviction, for conspiracy and wire fraud affecting a financial institution is 30 years in prison and a $1 million fine. (usatty72109sdtx)
MORAL
Innocent until proven guilty but oh the expense of proving that innocence. Oh well, if guilty then the family that commits mortgage fraud together gets to go to federal prison together although it would be in separate cells?
VERMONT REQUIRES ALL REVERSE MORTGAGES TO BE HUD/FHA OR GSE
FACTS
Effective July 1, 2009 Vermont requires lenders to obtain HUD approval prior to issuing reverse mortgage loans. Any reverse mortgage loan issued by an approved lender must comply with the requirements for participation in the HUD HECM program and must be insured by the FHA or be a government sponsored enterprise reverse mortgage loan. Lenders are required to refer borrowers to counseling and obtain a certification of completion of counseling prior to accepting an application for a reverse mortgage loan. Lenders are prohibited from requiring an annuity as a condition of obtaining a reverse mortgage loan or from offering an annuity prior to closing or prior to the expiration of the right to rescind. (alrgs72309)
MORAL
So basically no private lender may do reverse mortgages as portfolio loans. I wonder if that is constitutional.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.
