A FURTHER REMINDER THAT THE NEW TILA PREDISCLOSURE BECAME EFFECTIVE JULY 30
FACTS
On May 7, 2009 the Federal Reserve Board approved final rules that revise the disclosure requirements for mortgage loans under Regulation Z (Truth in Lending). The revisions implement the Mortgage Disclosure Improvement Act, which was enacted in July 2008 as an amendment to the Truth in Lending Act.
UNDER THE MDIA, CREDITORS MUST COMPLY WITH THE NEW PROVISIONS AS OF JULY 30, 2009. The Board's implementing regulations apply to dwelling-secured consumer loans for which a creditor receives an application on or after July 30, 2009. This rule applies to the consumer's primary residence, second homes, vacation homes and time shares.
The MDIA requires creditors to give good faith estimates of mortgage loan costs ("early disclosures") within three business days after receiving a consumer's application for a mortgage loan and before any fees are collected from the consumer, other than a reasonable fee for obtaining the consumer's credit history. The three business days are the days that the offices are open to the public for carrying on substantially all of its business functions. These requirements apply as stated above to loans secured by a consumer's principal dwelling. The MDIA broadened this requirement by also requiring early disclosures for loans secured by dwellings other than the consumer's principal dwelling, such as a second home and time shares.
However, for time share transactions, the early disclosure requirements apply but the seven-day and three-day waiting periods do not apply. The timing on early disclosures for time shares is applicable based on the receipt of the consumer's application or before the credit is extended. Subsequent changes to terms beyond tolerance for time shares can be disclosed no later than consummation.
The early disclosures and subsequent disclosures must contain a clear notice stating, "You are not required to complete this agreement merely because you have received these disclosures or signed a loan application."
In addition, the rules would implement the MDIA's requirements that:
* Creditors wait seven business days after they provide the early disclosures before closing the loan. The seven business days here are interpreted differently and mean normal business days not including Sundays and Legal Holidays as defined in Title 5 of the United States Code Section 6103;. There are ten legal holidays.
* Creditors provide new disclosures with a revised annual percentage rate, and wait an additional three business days before closing the loan, if a change occurs that makes the APR in the early disclosures inaccurate beyond a specified tolerance. The safe rule is that a change of 0.125% or greater means a new disclosure should be given.
The rules would permit a consumer to expedite the closing to address a bona fide personal financial emergency, such as a foreclosure. In order to request this waiver, a pre-printed form cannot be used. The consumer must prepare a dated written statement, signed by each consumer that will be legally obligated and entitled to receive the TIL Statement, detailing the specific emergency and specifies that request for waiver of the waiting period. This waiver should follow the regulatory requirements for waiving rescission rights and waiving a waiting period prior to consummation of a high cost loan under HOEPA. It should be in the consumers' handwriting for your protection. (frb5809)
MORAL
Brokers it is very important to remember you can only collect the credit report fee and no other fees whatsoever, until after the disclosure is given.
SO YOU ARE A LOAN OFFICER WHO DECIDED NOT TO FILE THE FEDERAL INCOME TAX RETURN? READ AND LEARN
FACTS
On Aug. 19, 2009, United States Attorney Lawrence G. Brown announced that a federal grand jury returned an indictment charging DEBORAH MURILLO of Valley Springs, Calif. with evasion of federal income taxes.
According to Assistant United States Attorney Samantha Spangler, who is prosecuting the case, MURILLO failed to file federal tax returns for tax years 1993 through 2004 thus failing to pay approximately $176,644 in taxes that were due and owing during that period. The indictment also alleges that MURILLO manipulated her employer's computer records to reduce the tax withholdings.
If convicted, MURILLO faces a maximum statutory penalty of five years in prison, a $250,000 fine, and three years of supervised release. (usattyed81909)
MORAL
There is no statute of limitations on failure to file since the government doesn't know about it until you file. So in this case they went back 17 years to get her. If found guilty, she faces up to five years in a federal prison, loss of voting rights, loss of right to hold office, inability to obtain certain types of professional licenses and if not a U.S. Citizen, faces deportation possibilities, all for not filing. Notice I did not say anything about paying the taxes, I just said filing the tax return. There are ways to potentially avoid criminal prosecution but only if you see your attorney or CPA before a special agent of the IRS or FBI sees you. If you have not filed for three years or more see your attorney now or you just might see federal prison later. Remember, she is innocent until proven guilty. But, oh the expense in trying to prove innocence.
ARIZONA MAN PLEADS GUILTY TO FEDERAL CASH-BACK MORTGAGE FRAUD SCHEME
FACTS
Jake David Abegg Whitman of Mesa, Ariz., pleaded guilty to federal fraud charges related to his participation in a cash-back mortgage fraud scheme involving 19 unimproved residential properties in the greater Phoenix area. According to John J. Tuchi, U.S. attorney for the District of Arizona, Whitman played a leadership role in a conspiracy to obtain mortgage loans that were substantially larger than the actual value of the properties. Whitman owned 10 of the properties and served as branch manager of the mortgage broker Academy Mortgage that processed the loans. Whitman worked with an appraiser to obtain inflated appraisals for the properties and recruited buyers to purchase the properties at the inflated prices. To overcome the buyers' inability to provide the down payment, Whitman secretly supplied the down payment to the buyers and also provided cash back to the buyers at closing. The properties eventually went into foreclosure and cost lending institutions nearly $1 million in losses. Whitman is cooperating with authorities in the prosecution of others. U.S. District Judge G. Murray Snow has scheduled sentencing for Oct. 26. (nmn82009)
MORAL
If you "others" need an attorney versed in mortgage fraud law, let us know.
ARIZONA HB 2486 ADDING MORE LAWS ON MORTGAGE BROKERS
FACTS
In summary as chaptered the bill defines a Commercial Mortgage Broker, Commercial Mortgage Loan and Commercial Property. Thus superficially, it is not a commercial loan for the owner-occupied property owner to get a loan on his home but for a commercial purpose like influx of cash to keep his business going? That is interesting. The new law defines RESIDENTIAL MORTGAGE LOAN. Those doing the loans must have a license. Describes qualifications and documents needed for Commercial Mortgage Broker License.
MORAL
Read it and comply. Do not read it and get in trouble.
CALIFORNIA UNEMPLOYMENT RATE CLIMBS TO OVER 11% BUT BERNANKE SAYS THE ECONOMY IS RECOVERING
FACTS
California's jobless rate reached a fresh post-World War II high in July, climbing to 11.9%. California employers cut their payrolls by 35,800 jobs in July, according to figures released by the state Employment Development Department.
Federal Reserve Chairman Ben S. Bernanke declared on Aug. 21 the economy to be "leveling out," and the National Assn. of Realtors reported a sharp rise in July home sales.
California is now tied with Oregon for the fourth-highest unemployment rate in the nation, behind Michigan, Rhode Island and Nevada. California over the last year has lost 760,200 jobs. Last month, 805,000 California Latinos were jobless. The Riverside-San Bernardino-Ontario area unemployment rate rose to 14.3% in July.
Economists predict that the unemployment rate in the state will continue to climb. Job growth doesn't usually begin until about six months after the end of a recession says one economist. Some expect the unemployment rate to keep rising into early 2010. (latimes82209)
MORAL
As I have been telling you since 2008, it is still my considered opinion we will not recover until 2012 notwithstanding what economists and Bernanke have been touting optimistically. It is my opinion they have not taken into consideration the fallout from the "step up mortgages" that have yet to step up to the plate. Especially the five-year step-ups that came out on mortgages issued in 2006 and 2007. So we will see who is right. The predicting economists that have been saying since 2008 the economy will recover in 2009 then 2010 and now, just now, some are saying 2011. I still say 2012 before you receive any recovery. In the meantime if someone needs to file bankruptcy we have a full time bankruptcy attorney on staff so come and see us. The consultation is free.
WHOLESALE HOME LENDERS IN SOUTHERN CALIFORNIA AGREES TO SETTLE FTC CHARGES BECAUSE PRESCREENED LOAN OFFERS LACKED PROPER OPT-OUT NOTICE
FACTS
Metropolitan Home Mortgage, Inc., doing business as Wholesale Home Lenders, is to pay a $20,000 civil penalty and bars the company from failing to comply with the Prescreen Rule A home mortgage lender that sent prescreened offers of credit to consumers without properly informing them of their right to opt out of receiving such offers in the future has agreed to settle Federal Trade Commission charges that it violated federal law. The settlement requires the company to pay a $20,000 civil penalty and bars future violations.
Prescreened offers of credit are typically sent to selected consumers based on information in their credit report indicating that they meet the offering company's criteria. The Fair Credit Reporting Act permits lenders or insurers to make prescreened offers if the offer clearly and conspicuously discloses that, among other things, the consumer's credit report was used to make the offer and that the consumer can opt out of receiving such offers in the future. The FTC's Prescreen Opt-Out Notice Rule requires that each written solicitation contain a short and a long notice, and it specifies the format, type size, and content in order to make the notices simple and easy for consumers to see and understand.
According to the FTC's complaint, the company violated the FCRA and the FTC's Prescreen Rule by not providing opt-out notices that comply with the Rule. In some instances, for example, the notices did not contain a short notice on the front page of the solicitation as required by the Rule, or the notices did not comply with the Rule's format requirements.
The settlement also contains record-keeping and reporting provisions to allow the FTC to monitor compliance with the order. The documents were filed in the U.S. District Court for the Central District of California, Southern Division (ftc81609)
MORAL
Notice that the rule controls type size, font and location of notice. Do not mess with the FTC or hire a damn good lawyer if you do. The $20,000 fine is mild I bet compared to the notice requirements that the company has to give to the FTC, usually for 20 years. As of Aug. 21, 2009 this was filed in the wrong district (CENTRAL) and has to be refilled in SOUTHERN. It is not there as of Aug. 22, 2009 but check back in a week to see if the order is filed. Remember, retain good counsel because sometimes the monetary penalty is mild compared to the other stipulations.
HURST FINANCIAL CORP. FILES FOR CHAPTER 7 BANKRUPTCY
FACTS
Hurst Financial Corporation of Atascadero, Calif., is facing an ongoing criminal investigation, several lawsuits and accusations of fraud by state regulators. Its owner and president, Jay Hurst Miller, filed to put the firm under bankruptcy protection on Aug. 20, 2009. In addition, his daughter, company vice president Courtney Brard, also filed her own personal Chapter 7 bankruptcy. Miller had filed for Chapter 7 bankruptcy protection on Aug. 17, 2009.
Miller had operated Hurst Financial as a licensed real estate broker since 1981. Miller also owned and operated Reverse Mortgages of the Central Coast, which he founded in 1993, with branches in Arizona, Nevada and Florida, which has also been shut down. After allegations of fraud by the Department of Real Estate, Miller shut Hurst Financial down in September 2008, and he and Brard surrendered their real estate licenses to the state.
Miller sent the majority of Hurst loans to Robert Borba of Stinchfield Financial to continue to service, but all of those loans have gone into default, according to Borba's court testimony in a Paso Robles hearing earlier this year.
Miller now lists both the assets and liabilities of the company as zero, according to his bankruptcy court petition.
Brard has listed her personal assets at more than $143,000, with debts or other liabilities of nearly $34,500. Brard's husband, Joshua Brard, a carpenter with earnings of roughly $3,000 a month, has been named in her bankruptcy court filing as a co-debtor.
As vice president of Hurst Financial, Courtney Brard met with investors and allegedly represented that their loans would be used to build homes and commercial buildings, according to attorney Craig Hunter, who is suing Brard, Miller and Hurst Financial in at least two lawsuits on behalf of several investors. Because nothing was ever built on the properties in question, investors have lost much of the security they thought they had on the loans, Hunter alleges his clients are among the more than 400 Hurst Financial investors suing Brard and Miller and alleging losses of more than $60 million.
They contend that Brard and her father used at least some of their investor money to purchase land, rather than to pay for construction as promised or to pay off earlier Hurst loans. The Department of Real Estate also alleged last year that Brard and her father committed fraud while working on behalf of Hurst Financial, and with former Atascadero developer Kelly Gearhart.
Gearhart, who partnered with Miller on several projects, and was a Hurst Financial key developer, has gone into bankruptcy protection in Ohio, where he now lives.
Paso Robles Superior Court Judge Roger Picquet, who is hearing what some estimate as up to a dozen cases against Miller and Brard, has set a bankruptcy review hearing with Hunter for Oct. 28, 2009. (slotrib82109)
MORAL
If you know them you may want to see your attorney. If you were part of the business itself, you still may want to see your attorney but for a different reason. If you are considering bankruptcy, our bankruptcy attorney is here to help.
SAN JOSE MAN PLEADS GUILTY TO MORTGAGE FRAUD IN SAN FRANCISCO FEDERAL COURT
FACTS
On Aug. 21, 3009, John A. Bui pleaded guilty in federal court in San Francisco to wire fraud conspiracy, destruction of records in a federal investigation and witness tampering. In pleading guilty, Bui admitted that, in a scheme that began in 2003 and continued until approximately April 30, 2009, he defrauded mortgage lenders and financial institutions by providing false and fraudulent information in support of mortgage loan applications.
Working out of an office in Milpitas, Calif., Bui and his employees assisted individuals who wanted to obtain mortgages from mortgage lenders so they could purchase residential properties in the Northern District of California and elsewhere. As a part of this scheme, Bui routinely transmitted fraudulent loan applications to mortgage lenders. Those loan applications contained false employment information and false and inflated income and bank account information, which were intended to inflate the borrowers' creditworthiness. In addition, the loan applications were supported by false and forged documents that purported to verify the borrowers' employment, income and assets. Bui, and other members of the scheme, used a network of co-conspirators who agreed to pose as the borrowers' employers and falsely verify to the mortgage lenders the accuracy of the employment and income information listed on the loan applications. As a result of Bui's participation in this conspiracy he illegally earned no less than $3.5 million.
Bui of San Jose, Calif., also admitted at the time of his guilty plea that on or about May 2, 2009, after learning that agents of the Federal Bureau of Investigation had executed a search warrant on the San Francisco office of a co-conspirator, he destroyed and caused to be destroyed substantially all of the loan files in his possession with the intent of preventing the FBI from obtaining evidence of his mortgage fraud activities.
Bui also admitted that on or about May 28, 2009, he caused a letter to be delivered to an individual located within the Northern District of California who he believed was cooperating with the FBI's investigation. Bui's letter asked the individual not to provide information to the FBI agents assigned to the investigation.
Bui, who is currently in custody, is scheduled to be sentenced on Nov. 6, 2009, before U.S. District Court Judge Susan Illston in San Francisco. The maximum statutory penalty for wire fraud in violation of Title 18, United States Code, Section 1349 is 30 years and a fine of $1 million. The maximum statutory penalty for destruction of records in a federal investigation in violation of Title 18, United States Code, Section 1519 is 20 years and a fine of $250,000. The maximum statutory penalty for witness tampering in violation of Title 18, United States Code, Section 1512(b)(3) is 20 years and a fine of $250,000.
Bui has agreed to forfeit $3.5 million to the United States. Four other individuals have been charged in connection with the case. (usattyndca82109)
MORAL
As a good friend of mine likes to say Bui is "felony stupid." He calls a known informant cooperating with the government and asks him "not to cooperate?" With that and the destruction of records I would be surprised if Bui received less than eight years in a federal prison. Remember they chased his loans back six years to 2003. Anybody out there overly creative with "stated income" in the last six years? See your lawyer now or you may see federal agents later. The only thing Bui did wisely is agree to the forfeiture of the $3.5 million he had. But that had to be done under sound legal advice because everything else was so stupid.
25% OF LOANS IN ORANGE COUNTY, CA, ARE FHA
FACTS
In July 2009 approximately 25% of homebuyers used FHA to buy homes. Since October 2008 approximately 20-25% of the home purchase loans funded in Orange County were FHA insured with a 3.5% down payment or close to it. (ocreg8209,b2)
MORAL
So why aren't you out there pounding the apartments for buyers?
A REMINDER TO BROKERS THAT EVEN WHEN YOU OBTAIN A CALIFORNIA ALL INCLUSIVE SIGNED RELEASE FROM AN EMPLOYEE, THE EMPLOYEE STILL CAN CLAIM INDEMNITY FROM YOU IF SUED
FACTS
The California Supreme Court has held that a contract provision releasing "any and all" claims does not encompass nonwaivable statutory protections such as the employee's right to indemnity. (Edwards v. Arthur Anderson, LLP (208) 44 C4th 937; Ad.Cal. Emp 2.65,11.47A,11.57)
MORAL
Employee doing something for you such as a loan and not committing fraud means if employee gets sued even if signed a release at termination, you still have to defend. Watch out for this if you are an FHA originator.
A CALIFORNIA REMINDER ABOUT RENT SKIMMING AS A FELONY
FACTS
With all the loan modifications and foreclosure consultants and add on names to title with straw buyers, it is time once again to discuss rent skimming. Rent Skimming is collecting rent for the first year you own the property and not paying the all the mortgages on the property during that first year. Committing rent skimming or multiple acts of rent skimming can get the buyer sued and liable for treble punitive damages and attorney fees. Rent skimming can put you in county jail or state prison for one year and/or a $10,000 fine.
MORAL
This does not sound too bad does it? Unless you are under an investigation for violation of the Foreclosure Consultant Act or Loan Modifications or Mortgage Fraud and it can arguably be used in aggravation to put you away longer or breach of bail or breach of a plea agreement. Interesting? Make sure the lawyer you retain has knowledge in real estate.
CALIFORNIA FORECLOSURE, SHORT SALE, LEASEBACK WITH AN OPTION
HAVE YOU HEARD OF IT? DO YOU FOR A FACT KNOW IT WORKS?
LET ME KNOW BECAUSE I HAVE ISSUES WITH IT
FACTS
In a news article by Kenneth Harney published in the San Francisco Chronicle on Aug. 16 he discusses the proposed Neighborhood Preservation Act which has passed the U.S. Senate by voice vote. The bill is sponsored by Reps. Gary Miller, R-Calif. and Joe Donnelly, D-Ind. There is pro and con on the bill which proposes former owners on foreclosed homes be allowed to lease-back the house from the bank that foreclosed pursuant to a lease-option agreement allowing the home owner to buy back the house if the payments on the lease are maintained at a given price in four or five years. As far as this goes the article then goes into the pros and cons of it and I personally, have no objection and can see how it could be a good thing for some homeowners. However, it is alleged by a real estate broker that he and his partner are currently putting together "seamless short sales," where an investor buys the property from the homeowner on a short sale provided the bank agrees and the investor is bound to do a sale lease-back to the homeowner on a "triple net lease" for two to three years paying current fair market value for the lease. At the end of this time the former owner now tenant can buy the property back at an agreed upon price as set forth in the lease-option. This only to occur if the former owner qualifies. Purportedly this is being done now. (SF Chron.8-16-09, H4.)
QUESTION
Have you heard of just one where this has been done and completed where former homeowner is in place after sale with the lease-option? More than one? Remember the holder of the mortgage that can foreclose has to have knowledge of the entire transaction and agree to it. I would like to hear from you.
COLORADO: SIX NEW FORMS TO COMPLY WITH THE NEW FORECLOSURE PROTECTION ACT
FACTS
The Colorado Real Estate Commission has drafted six new contract documents to comply with the Foreclosure Protection Act for utilization by real estate brokers in applicable transactions. The forms are as follows:
* Contract to Buy and Sell Real Estate (Colorado Foreclosure Protection Act)
* Inspection Notice (Colorado Foreclosure Protection Act)
* Notice of Cancellation (Colorado Foreclosure Protection Act)
* Seller Warning (Colorado Foreclosure Protection Act)
* Counterproposal (Colorado Foreclosure Protection Act)
* Agreement to Amend/Extend (Colorado Foreclosure Protection Act)
As an important note, the Exclusive Right-to-Sell Listing Contract will not be revised at this time due to the expense it would cause to the industry. The Colorado Real Estate Commission adopted the position that it is permissible for a real estate broker to strike through the second to last sentence of paragraph 10.5 of the Exclusive Right-to-Sell Listing Contract. Specifically, the language that may be struck is: "Therefore, if the Act applies, Seller agrees that Broker is not authorized to prepare such a contract for the sale of the Property." Real estate brokers are permitted to make this change only when it is applicable.
The new documents can be obtained by visiting:
MORAL
Update your realtors that may not yet be aware of the change. In either event, it is a talking point to "get your foot in the door" for potential new business.
IN FLORIDA 41 DEFENDANTS INDICTED FOR $40 MILLION MORTGAGE SCHEME
FACTS
The Defendants include bankers, appraisers, mortgage brokers, title agents, real estate agents and straw buyers. On July 28, 2009 charges were against 41 defendants in six separate cases, resulting in more than $40 million in fraudulent loans.
Since September 2007, 218 individuals have been charged for their involvement in mortgage fraud schemes that have resulted or were intended to result in nearly $300 million in mortgage loans.
The 41 new indictments include:
1. United States v. Mayra Rodriguez, et al., Case No. 09-20628-CR-Graham.
On July 23, 2009, 19 defendants were charged in a 20-count Indictment for their participation in a mortgage fraud scheme that resulted in approximately $21 million in fraudulent loans. Charged were defendants Mayra Rodriguez, Lucia Peluffo, Nelson Bermudez, Yamile Segurola, all of Miami; Carlos Rodriguez of Homestead; Mayelin Salas of Miami Springs; Nelida Rodriguez of Opa Locka; Sonya Balmaseda, Jorge Egeraige, both of Hialeah; Jaime Rojas of North Miami Beach; Alejandro Rabelo of Miami Beach; Pedro Huezo of Opa Locka; Jose Arriete, Gerard Wenzel, Elias Fleites, Marcelo Fernandez, Lucy Segurola, Ricardo Segurola and Jorge Lugo, all of Miami.
According to the Indictment, defendants Mayra Rodriguez, Mayelin Salas, Nelida Rodriguez, Yamile Segurola and Lucia Peluffo were employed at companies owned by Magile Cruz (Cruz previously pled guilty and was sentenced in January 2009 to 120 months imprisonment for her participation in this scheme). Cruz's companies included Star Lending Mortgage, State Mortgage Lending, Sherley Title Services, Doral Title Services and Professional Title Express, all in Miami-Dade County. Star Lending Mortgage was a mortgage brokerage firm and State Mortgage Lending was a mortgage lender, both licensed in the State of Florida. Sherley Title Services, Doral Title Services and Professional Title Express were title agencies, but were not licensed by the State of Florida.
The indictment alleges that from 2005 through 2007, Cruz, through her companies, would identify residential properties that were for sale. Thereafter, Cruz, and defendants Mayra Rodriguez, Yamile Segurola and Lucia Peluffo would prepare mortgage loan applications on behalf of complicit straw borrowers. These applications included false employment verifications, pay stubs, income and funds on deposit, and IRS Forms W-2. Defendant Nelson Bermudez, an employee of Wachovia Bank during the fraud, assisted the fraud by creating false verifications of deposit for the purported Wachovia accounts of straw borrowers. Defendants Carlos Rodriguez, Mayelin Salas, and others recruited and paid individuals to pose as buyers and borrowers in the transactions. Defendants Sonya Balmaseda, Jorge Egeraige, Ricardo Segurola, Lucy Segurola, Marcelo Fernandez, Pedro Huezo, Jose Arriete, Gerard Wenzel, Alejandro Rabelo, Elias Fleites, Jorge Lugo, and Jaime Rojas, all acted as straw borrowers.
The indictment describes three methods. First, the defendants created and submitted to the lending institutions false duplicate HUD-1 Settlement Statement Forms, which grossly inflated the purchase price of the properties. At other times, the defendants adopted a shotgun approach through which they obtained near-simultaneous loans for the same piece of property from multiple lenders. Finally, the defendants concocted entirely false real estate sales by stealing the identities of unwitting home owners, forging the sales documents in their names, and using complicit straw purchasers to obtain mortgages without the real property owners' knowledge or consent.
Once the mortgage applications were approved, the lenders wired the loan proceeds to the defendant's title companies for closing. At closing, Cruz, Mayra Rodriguez and Yamile Segurola would keep the difference between the inflated mortgage loan proceeds and the actual selling price of the property. The defendants often filed change of address forms with the Postal Service to prevent home owners from discovering that their property had been sold without their knowledge or consent. The defendants would re-direct the mail to post office boxes opened and controlled by Cruz and Nelida Rodriguez. The defendants would make payment on the loans until the properties could be resold, often to another straw borrower, repeating the cycle of fraud. When Cruz failed to make payment on the loans, some properties went into foreclosure, resulting in substantial losses to the lending institutions.
2. United States v. Bryan A. Guarch, et al., Case No. 09-20627-CR-Moreno.
On July 23, 2009, 13 defendants were charged in a 15-count indictment for a mortgage fraud scheme that resulted in approximately $4 million in fraudulent loans. Charged were defendants Bryan A. Guarch, Richard Pi, Edwin Garcia, Carlos Martinez, Wayne Bermudez, Oscar Quintero, Sunsy Garcia, Ryan Barouh, Jason Cuza, and Anthony Silverio, all of Miami; Rafael Jaramillo of Hialeah Gardens; Mario Estrada Mora of Miami Beach; and Vanessa Negron of Boiling Springs, S.C.
According to the Indictment, defendants Guarch and Pi organized the scheme and identified eight properties to be used to defraud mortgage lenders. Guarch and Pi used defendants Edwin Garcia, Rafael Jaramillo, Carlos Martinez and Wayne Bermudez, to recruit straw buyers to submit fraudulent loan applications to mortgage lenders. Among the straw buyers recruited in this way were co-conspirators Oscar Quintero, Mario Estrada Mora, Sunsy Garcia and Vanessa Negron.
After submitting fraudulent loan applications to the lenders, Pi and Guarch paid-off loan officers, defendants Ryan Barouh and Jason Cuza, to facilitate the approval of the loans. Guarch and Pi caused the title company closer, defendant Anthony Silverio, to approve and submit to the lender a fraudulent HUD-1 Settlement Statement with an inflated purchase price. To conceal the fraud, Silverio provided a second HUD-1 Settlement Statement to the sellers reflecting the actual, much lower purchase price of the property. At closing, Guarch and Pi kept more than $1 million in loan proceeds, representing the difference between the inflated purchase price and the price actually paid to the seller for the property. After closing, Guarch and Pi used those loan proceeds to pay off their co-conspirators and to fund their lavish life styles. After each of the closings, the straw buyers defaulted on the loans, causing each of the properties to go into foreclosure and resulting in possible losses to the lenders of more than $2.6 million.
The indictment includes charges of conspiracy to commit wire fraud and substantive wire fraud.
3. U. S. v. Sixto Figueroa, Susy Figueroa, Rolando Herrera, Manuel Garcia, and Yolanda Garcia-Montes, Case No. 09-20610-CR-Lenard.
On July 21, 2008, five defendants were charged in an eight-count indictment for their participation in a mortgage fraud scheme that resulted in the issuance of more than $830,000 in mortgage loans. According to the Indictment, defendants Sixto Figueroa, and his wife Susy Figueroa, both of Miami, fraudulently sold residential lots in Port LaBelle, Fla. To effectuate their scheme, the Figueroas recruited individuals to pose as buyers of the properties. Among the straw buyers recruited and paid by the Figueroas were co-conspirators Rolando Herrera and Manuel Garcia, both of Miami.
The indictment alleges Figueroas submitted fraudulent loan applications to Wachovia Bank. The applications contained false information regarding the straw buyers financial condition, including fraudulent tax returns and fabricated bank statements, which falsely suggested that the straw buyers had greater income and assets than they actually did. The HUD-1 Settlement Statements provided to Wachovia falsely stated that the straw buyers would use their own money to pay closing obligations. In fact, however, the Figueroas paid all of the straw buyers' closing obligations.
After the loans were approved, the bank wired the loan proceeds to defendant Yolanda Garcia-Montes' title company for closing. For three purported property sales, Garcia-Montes improperly released these funds to the Figueroas, who, in turn, used the money to pay the straw buyers' cash to close obligations for those deals. After the closing, each of the Wachovia mortgage loans eventually went into default after the non-qualifying straw buyers failed to make the required mortgage payments, resulting in substantial losses to Wachovia. The defendants were charged with conspiracy to commit bank fraud and bank fraud.
4. United States v. Fielding Dameron, Case No. 09-20637-CR-Jordan.
On July 27, 2009, defendant Fielding Dameron of Miami, was charged in an information for his role in a mortgage fraud conspiracy that resulted in the issuance of more than $9.8 million in mortgage loans from 2005 through 2007.
According to the information, Dameron, working with other uncharged co-conspirators, participated in numerous fraudulent real estate transactions. Dameron recruited individuals to serve as straw purchasers or otherwise obtained stolen identities for use in transactions. Using a fraudulent loan borrower, a mortgage broker working with Dameron submitted applications to various lending institutions. Once a lender would approve an application, often for an amount higher than what was negotiated with the seller, it would wire the loan proceeds to a title company in advance of the closing. The complicit title company would direct the funds in advance of the closing to Dameron, who would wire back the funds to the title company in the form of cashier's checks to be used as the buyer's contribution to the transaction. Following a transaction's closing, the title company would wire Dameron money as his share of the profit. The defendant was charged with conspiracy to commit mortgage fraud.
5. United States v. Stephen LaLonde, Case No. 09-60181-CR-Cohn.
On July 13, 2009, defendant Stephen LaLonde of Fort Lauderdale was charged in a two-count information for his role in a mortgage fraud closing scheme that resulted in the theft of more than $1 million in loan proceeds.
According to the information, LaLonde stole more than $1 million at real estate closings as part of a scheme to defraud legitimate borrowers, lenders, and a title insurance company in connection with six real estate closings, held at Spectrum Title Inc., in Oakland Park , Fla. The legitimate borrowers in these transactions sought to re-finance and payoff existing mortgages. Unbeknownst to the borrowers, however, LaLonde kept the loan proceeds for himself and did not use the funds to pay off the borrower' pre-existing loans. The defendant was charged with mail fraud and making false statements.
6. United States v. Milennys Foira and Richard Diaz, Case No. 09-20638-CR-Jordan.
On July 28, 2009, two defendants were charged in a three-count indictment for their participation in a mortgage fraud scheme that resulted in the issuance of $450,000 in mortgage loans.
According to the indictment, Milennys Foira of Doral, Fla., a real estate agent, and Richard Diaz of Miami, recruited Jean Claude Cahen, who was previously charged and convicted, to use his identity and credit to buy a selected property in Miami. Cahen agreed to be paid $10,000 for the use of his identity and credit. The applications, prepared by Foira, contained materially false information regarding Cahen's purported employment, income, and rent payment history. As a result of the fraudulent mortgage applications, the lending company wire-transferred the loan proceeds to the closing agent. Without the lender's knowledge, Diaz received a wire in the amount of $24,525 after the closing. Those proceeds were shared by Foira, Diaz and Cahen. After the closing, the parties failed to make the payments on the mortgage and the property fell into foreclosure.
The defendants were charged with conspiracy to commit wire fraud and two counts of substantive wire fraud.
In all cases, the defendants face the following possible maximum terms of imprisonment if convicted: conspiracy to commit wire fraud and substantive wire fraud: 20 years imprisonment; mail fraud: 20 years imprisonment; bank fraud: 30 years imprisonment; false loan application: 30 years imprisonment; and making a false statement to a government agency: five years imprisonment.
An indictment/information is only a charge and is not evidence of guilt. A defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilty beyond a reasonable doubt. (usatysdfl72809)
MORAL
Innocent until proven guilty but they just created work for 41 attorneys.
NEW MEXICO REQUIRES FOUR NEW DISCLOSURES
FACTS
As of Aug. 31, 2009 New Mexico requires four new disclosures: the New Mexico Mortgage Loan Summary Disclosure, New Mexico Mortgage Loan Compensation Disclosure, New Mexico Rate Lock Disclosure and New Mexico Rate Lock Agreement. Although the statute requiring these disclosures became effective on July 31, 2009, according to the New Mexico Regulation and Licensing Department, Financial Institutions Division, the obligation to provide these disclosures will not become effective until Aug, 31, 2009. (compliments of DocMagic)
MORAL
As you can see there are new disclosures, laws and regulations all over the place since the crash in 2007. Read carefully, comply carefully or get disciplined even more carefully.
NORTH CAROLINA SAYS NO DEFICIENCY JUDGMENTS IN NONTRADITIONAL AND RATE SPREAD MORTGAGES
FACTS
Effective Oct. 1, 2009 North Carolina prohibits mortgage holders from obtaining a deficiency judgment against a borrower of a nontraditional mortgage loan or rate spread home loan.
MORAL
Did you notice nothing prevents the banks from shafting the consumer? However, other lenders and brokers are controlled by over 19 governmental agencies at any one time. Makes one wonder who is controlling the legislature, the people or the banks? Seems I read in the state and federal constitutions somewhere it was supposed to be the people. At least this is a "people" law.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.
