FHA ALLOWING LOAN MODIFICATIONS
FACTS
The conditions under which FHA will pay loss mitigation claims for modifications of loans where the current note rate is 50 basis points or more over the current market rate as defined herein. To qualify for the incentive payment and allowable costs on such cases, the modified loan must meet the term and interest rate requirements prescribed of Mortgagee Letter 2009-35. These requirements are effective 30 days from Sept. 23, 2009.
In cases where the current note rate is 50 basis points or more over the current market rate:
The mortgagee shall reduce the loan modification note rate to the current market rate. For purposes of this requirement, the Department shall consider market rate to be no more than 50 basis points greater than the most recent Freddie Mac Weekly Primary Mortgage Market Survey Rate for 30-year fixed-rate conforming mortgages, rounded to the nearest 0.125%, as of the date the modification agreement is executed. The weekly survey results are published on the Freddie Mac website at
The mortgagee must re-amortize the total unpaid amount due over a 360-month period from the due date of the first installment required under the modified mortgage.
Example:
The mortgagee approves a loan modification that is executed by the borrower 35 days after the date of this mortgagee letter. The current note rate is 7% and the most recent Freddie Mac Weekly Primary Mortgage Market Survey Rate for 30-year fixed rate conforming mortgages as of the modification date is 5.04%. To be eligible for payment of a mortgagee incentive and costs for a title search and/or recording fees on the Loan Modification, the fixed note rate on the modified loan may not exceed 5.50% (5.04% rounded to the nearest eight of a percent plus 50 basis points). The modified mortgage must also re-amortize the total unpaid amount over a 360-month period from the due date of the first installment required under the modified mortgage. (ml09-35)
MORAL
If you think about this carefully, you may be able to generate new loans via modifications and get paid. Check with your sponsor.
NEW PRINCIPAL LIMIT FACTORS FOR FHA HECM LOANS EFFECTIVE WITH OCT. 1 CASE NUMBERS
FACTS
There is a new set of principal limit factors for the Federal Housing Administration HECM program to assist with the viability of the program. The new principal limit factors must be used for all HECMs for which the FHA case number is assigned on or after Oct. 1, 2009.
Principal Limit Factor Table: FHA is making the new factor table available on HUD's web site, to assist lenders, counselors, and other involved in FHA's reverse mortgage program with immediate implementation of this program change. The new table may be uploaded or copied from the site directly into any reverse mortgage technology systems or tool used to support the HECM program. The new PLF table is posted on the following web site:
MORAL
Download the software from HUD if you are going to do FHA reverse mortgages.
AMEND REG Z-REMOVE YSP SO SAYETH THE FEDERAL RESERVE BOARD AND WATCH OUT FOR THE OTHER CHANGES AS WELL CREDITORS
FACTS
The Federal Reserve Board proposes to amend Regulation Z, for closed-end credit. This proposal would revise the rules for disclosures of closed-end credit secured by real property or a consumer's dwelling, except for rules regarding rescission and reverse mortgages.
Disclosures provided at application would include a Board-published one-page "Key Questions to Ask About Your Mortgage" document that explains potentially risky loan features, and a Board-published one-page "Fixed vs. Adjustable Rate Mortgages" document. Transaction-specific disclosures required within three business days of application would summarize key loan terms. The calculation of the annual percentage rate and the finance charge would be revised to be more comprehensive, and their disclosures improved. Consumers would receive a "final" TILA disclosure at least three business days before consummation. Certain new post-consummation disclosures would be required. In addition, the proposed revisions would prohibit certain payments to mortgage brokers and loan officers that are based on the loan's terms or conditions, and prohibit steering consumers to transactions that are not in their interest to increase compensation received.
The proposal would apply to all closed-end credit transactions secured by real property or a dwelling, and would not be limited to credit secured by the consumer's principal dwelling. The Board is proposing changes to the format, timing, and content of disclosures for the four main types of closed-end credit information governed by Reg. Z: (1) disclosures at application; (2) disclosures within three days after application; (3) disclosures three days before consummation; and (4) disclosures after consummation. In addition, the Board is proposing additional protections related to limits on loan originator compensation.
The proposal would require creditors to provide a final TILA disclosure that the consumer must receive at least three business days before consummation. In addition, two proposed alternatives regarding redisclosure of the final TILA disclosure include:
Alternative 1: If any terms change after the "final" TILA disclosures are provided, then another final TILA disclosure would need to be provided so that the consumer receives it at least three business days before consummation.
Alternative 2: If the APR exceeds a certain tolerance or an adjustable-rate feature is added after the "final" TILA disclosures are provided, then another final TILA disclosure would need to be provided so that the consumer receives it at least three business days before consummation. All other changes could be disclosed at consummation.
For ARMs, increasing advance notice of a payment change from 25 to 60 days, and revising the format and content of the ARM adjustment notice.
For payment option loans with negative amortization, requiring a monthly statement to provide information about payment options that include the costs and effects of negatively-amortizing payments.
For creditor-placed property insurance, requiring notice of the cost and coverage at least 45 days before imposing a charge for such insurance.New limits on originator compensation for all closed-end mortgages. The proposed changes include:
Prohibiting certain payments to a mortgage broker or a loan officer that are based on the loan's terms and conditions. (i.e. no YSP)Prohibiting a mortgage broker or loan officer from steering consumers to transactions that are not in their interest in order to increase the mortgage broker's or loan officer's compensation.
To address the concerns related to loan originator compensation, the Board proposes to prohibit payments to loan originators that are based on the loan's terms and conditions. This prohibition would not apply to payments that consumers make directly to loan originators. The Board solicits comment on an alternative that would allow loan originators to receive payments that are based on the principal loan amount, which is a common practice today. If a consumer directly pays the loan originator, the proposal would prohibit the loan originator from also receiving compensation from any other party in connection with that transaction. These rules would be proposed under the Board's HOEPA authority to prohibit unfair or deceptive acts or practices in connection with mortgage loans.
§226.1(b) would be revised to reflect the proposal to broaden the scope of §226.36 (from transactions secured by the consumer's principal dwelling to all transactions secured by real property or a dwelling.
More charges that were excluded from finance charges will now become finance charges.
Under the proposal, the following fees currently excluded would be included in the finance charge for closed-end credit transactions secured by real property or a dwelling: fees for title examination, abstract of title, title insurance, property survey, and similar purposes; fees for preparing loan-related documents, such as deeds, mortgages, and reconveyance or settlement documents; notary and credit-report fees; property appraisal fees or fees for inspections to assess the value or condition of the property if the service is performed prior to closing, including fees related to pest-infestation or flood-hazard determinations; and amounts required to be paid into escrow or trustee accounts if the amounts would not otherwise be included in the finance charge. The commentary provisions under §226.4(c)(7) would also be amended accordingly.
Section 35-38 disclosures will be grouped. ( 74 FR 43232: Truth in Lending (08/26/09))
MORAL
Lender or broker, read this Federal Register output very carefully. It affects everyone and can lead to more lawsuits. Make your comments as appropriate to the Fed. Submit comments to object to removal of YSP but do not submit "stupid" comments. They are ignored and what is more just show the FRB they are right. There are objective reasons to allow YSP. State then cogently. For example, it decreases closing costs for the borrower who might not otherwise get in a new home since he cannot afford closing costs and loan origination fees. Comments must be received on or before Dec. 24, 2009.
ADDRESSES: You may submit comments, identified by Docket No. R-1366, by any of the following methods:
Agency Web Site:
Federal eRulemaking Portal:
E-mail:
FAX: (202) 452-3819 or (202) 452-3102.
Mail: Jennifer J. Johnson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, NW., Washington, DC 20551.
All public comments are available from the Board's Web site at
HELOC PROPOSED CHANGES BY THE FEDERAL RESERVE BOARD
FACTS
The Board proposes changes to the format, timing, and content requirements for the four main types of home equity line of credit disclosures required by Regulation Z: (1) Disclosures at application; (2) disclosures at account opening; (3) periodic statements; and (4) change-in-terms notices. The Board proposes to replace disclosures required at the time that a consumer applies for a HELOC with a one-page, Board-published summary of basic information and risks regarding HELOCs. The Board also proposes to move the timing of disclosures regarding a creditor's HELOC plan from the time of application to within three business days after application, and to require the disclosures to include significant transaction-specific rates and terms. At the time of account opening, the creditor would be required to provide a disclosure with formatting similar to that provided within three business days after application, but with certain changes such as additional information regarding fees. Formatting and other changes are proposed for the periodic statement, such as elimination of the requirement to disclose the effective annual percentage rate and a requirement to disclose the total of interest and fees for both the period and the year to date. HELOC creditors would be required to give consumers notice of a change in a HELOC term at least 45 days in advance of the effective date of the change.
The Board also proposes to provide when a creditor may temporarily suspend advances on a HELOC or reduce the credit limit, and what a creditor's obligations are concerning reinstating such accounts. In addition, the proposal would limit the ability of a creditor to terminate a HELOC for payment-related reasons; a creditor could do so only if the consumer failed to make a required minimum payment more than 30 days after the due date for that payment. Changes to disclosure requirements related to suspension of HELOC advances, reduction of the credit limit, and account terminations are also proposed. (74 FR 43428: Truth in Lending (08/26/09))
MORAL
Keep track. This is a proposal. Buy it affects all HELOC lenders dramatically.
BORROWING MONEY ON A HOME FOR A BUSINESS PURPOSE IS NOT COVERED BY RESPA OR TILA
FACTS
James Hinchliffe borrowed $283,500 from H & R Block Mortgage Corp. The loan was secured by property owned only by him and consisting of four apartments located in Linwood, Pa. H & R Block assigned the loan to Option One that same day.
It was not contested that Hinchliffe and his wife continue to reside, as they did at the time of the loan, in at least one of the property's four apartments. The appraisal for the loan reported that three of the four apartments were rented to tenants but the Hinchliffes claimed they reside in all four.
Prior to signing the loan documents, Hinchliffe knew that the adjustable interest rate was 10.925%. In his deposition, he said that even though he "expected" a 6.75% rate and "hoped" for a 5.5% rate, he still closed on the loan at the 10.925% interest rate. When questioned why he still proceeded and did not decline to sign the loan upon learning that the adjustable interest rate was 10.925%, Hinchliffe testified that he had "already committed [himself] to other obligations," which he later defined as maintaining "other properties and the taxes and holding onto them." He also testified that a representative from Option One told him prior to closing that he "could refinance in one year from [the] closing date to get a prime rate."
According to the complaint, Hinchliffe was denied a refinance of his loan and stuck with the high interest rate. In addition, Hinchliffe claimed, "in order to create the appearance of non-payment, the defendant failed to deduct his monthly payment and then refused to accept the refinance mortgage payment via check."
Nearly two years after closing on the loan, the Hinchliffes filed a complaint in the U.S. District Court, Eastern District of Pennsylvania asserting 17 causes of action against Option One in May 2008. After Option One moved to dismiss the complaint, the Hinchliffes filed additional amended complaints, which obtained a reduction in the number of claims. The remaining four counts asserted federal causes of action under RESPA and the Truth in Lending Act, and state causes of action under Pennsylvania's Fair Credit Extension Uniformity Act and Pennsylvania's Unfair Trade Practices and Consumer Protection Law.
Hinchliffe claimed his loan was a federally related consumer mortgage loan as defined by RESPA, 12 U.S.C. §2602, et seq., and the pre-paid finance charges paid by Hinchliffe were neither properly disclosed nor bona fide and/or reasonable, thus constituted a RESPA fee splitting violation.
Option One filed a motion for summary judgment, asserting that none of the statutes relied upon by the Hinchliffes apply because the loan was primarily a business transaction. The Hinchliffes argued that the loan was primarily consumer in nature because it was secured by the Hinchliffes' residence and because they were provided with a "Truth-in-Lending disclosure and TILA Notice of Right of Rescind."
The Hinchliffes argued that the loan was confusing in violation of the UTPCPL and FCEUA, because it provided for Mrs. Hinchliffe's signature even though she was not designated a mortgagor on the face of the loan. In violation of the UTPCPL and FCEUA, Hinchliffe also claimed that Option One collected on the loan without recording the assignment from H & R Block.
Option One noted that the Hinchliffes failed to cite to facts in the record to support their arguments, thus failing to show that there are any material facts in dispute that would preclude summary judgment. Additionally, it pointed out that the fact that the loan was secured by the Hinchliffes' residence does not trump the fact that both Hinchliffes testified that the property was refinanced to secure funds for Hinchliffes development properties. Consequently, they argued that RESPA, TILA, the FCEUA and the UTPCPL do not apply.
On June 16, 2009, Judge Timothy Savage of the U.S. District Court for the Eastern District of Pennsylvania considered whether the transaction was for commercial or personal purposes and thereby subject to RESPA and other consumer protection statutes. "TILA, RESPA, FCEUA, and UTPCPL do not apply to business transactions, such as the extension of credit to develop investment property," he said. "Hinchliffe has the burden of evidencing his intent and showing that the loan was entered into primarily for personal purposes, as opposed to financing his businesses." He did not do this.
"The facts in the record -- most notably the Hinchliffes' own deposition testimonies -- viewed in the light most favorable to Hinchliffe, demonstrate that the primary purpose of the loan was business. Specifically, the record shows that the purpose of the loan was to obtain cash to maintain and improve Hinchliffe's development properties," Savage opined.
Where credit is extended for both personal and business reasons, the mere fact that the transaction has some personal purpose does not automatically render it subject to the provisions of TILA. "Here, the fact that the loan refinanced the property in which the Hinchliffes reside does not itself establish that the primary purpose of the loan was personal rather than business," Savage opined. "In short, in determining whether the loan qualifies for TILA, RESPA, UTPCPL or FCEUA protection, the focus is not on the nature of the property securing the loan, but on the use of the loan proceeds." Savage said Hinchliffe's wife testified that her husband refinanced the property so that "he can operate his business." When asked what he did for a living, Hinchliffe discussed his ownership interests in other investment properties, which he is developing or in the process of developing. By their own words, they have presented undisputed evidence that the loan was primarily for Hinchliffe's business purposes. Because each of the statutes relied upon by the Hinchliffes apply only to loans intended for personal and not commercial use, Option One gets judgment as a matter of law. (Hinchliffe v. Option One Mortg. Corp. Slip Copy, 2009 WL 1708007 (E.D.Pa.)
MORAL
Like I have been telling you, look to the purpose of the loan. Listen to me and stay out of trouble. Do not listen to me and get into trouble. There are exceptions but that is the rule.
MORE LOAN MODIFICATION LAWSUITS BY FTC
FACTS
We have named several lawsuits by the Federal Trade Commission against several companies previously. Now here are several others.
CALIFORNIA
The FTC has obtained a stipulated federal court order barring Lucas Law Center and its principals from misrepresenting their services and charging up-front fees. The defendants allegedly used an attorney to circumvent California prohibitions against receiving a fee before providing any services. In addition to falsely representing that they would obtain mortgage loan modifications, the defendants allegedly told some homeowners to stop paying their mortgage in order to pay the defendants' fees of up to $3,995.
The order bars the defendants' allegedly deceptive practices, pending a trial, and requires them to disable Web sites offering their services and to note the FTC's lawsuit and the order on the Web sites. The order also requires domain name registrars to prevent any changes to the defendants' Internet domain name registrations. The order names a permanent receiver over the corporate defendants, extends an earlier asset freeze, and bars the defendants from filing for bankruptcy without the court's permission. The FTC ultimately seeks consumer restitution and a permanent bar on the defendants' deceptive practices.
The defendants are Lucas Law Center Inc., Future Financial Services LLC, Paul Jeffrey Lucas, Christopher Francis Betts, and Frank Sullivan. The complaint was filed in the U.S. District Court for the Central District of California, Southern Division, on July 7, 2009. The stipulated order was entered on Aug. 24, 2009.
Federal Trade Commission v. Loss Mitigation Services, Inc., Synergy Financial Management Corporation, also d/b/a Direct Lender and DirectLender.com, Dean Shafer, Bernadette Carr-Perry, and Marion Anthony (a.k.a. "Tony") Perry. (United States District Court Central District of California)
Civil Action No. 09-CV-800FTC File No. 092 3073
FTC, The People of the State of California, and the State of Missouri v. US Foreclosure Relief Corp., a corporation, also d/b/a U.S. Foreclosure Relief Inc., Lighthouse Services, and California Foreclosure Specialists, George Escalante, individually and as an officer of US Foreclosure Relief Corp., Cesar Lopez, individually and also trading as and doing business as H.E. Service Co., and Adrian Pomery, Esq., individually and also trading and doing business as Pomery & Associates.
(United States District Court Central District of California. )
NEW JERSEY
The FTC has filed an amended complaint in its action pending against Hope Now Modifications LLC, adding as defendants Michael Kwasnik, Esq. and The Law Firm of Kwasnik, Rodio, Kanowitz & Buckley P.C. The original complaint, filed in March 2009, alleged that the defendants misled consumers about their ability to provide mortgage loan modification and foreclosure relief or to provide refunds if they failed to do so, and misrepresented that they were affiliated with, or part of, the HOPE NOW Alliance, a non-profit organization endorsed by the U.S. Department of Housing and Urban Development. The amended complaint also alleges violations of the Telemarketing Sales Rule. FTC File No. 092 3073, FTC v. Hope Now Modifications LLC, Hope Now Financial Services Corp., also dba Hope Now Modifications, Nick Puglia, and Salvatore Puglia, (United States District Court for the District of New Jersey) FTC File No. 092 3079)
The FTC has obtained a preliminary injunction halting the allegedly deceptive practices of United Credit Adjusters Inc., The Loan Modification Shop Ltd., and their principals, and freezing their assets, pending a trial. The Commission recently filed an amended complaint in this matter, adding as defendants The Loan Modification Shop Ltd. and Casey Lynn Cohen, also known as Casey Lynn Collins, alleging that they and one of the original defendants, Ezra Rishty, misrepresented that they would help consumers obtain a mortgage loan modification or stop foreclosure in all or virtually all instances. See Federal Trade Commission v. United Credit Adjusters, Inc., a New Jersey corporation, also d/b/a United Credit Adjustors, and UCA, United Credit Adjustors, Inc., a New Jersey corporation, also d/b/a United Credit Adjusters, and UCA, United Counseling Association, Inc., a New Jersey corporation, also d/b/a UCA, Bankruptcy Masters Corp., a New Jersey corporation, National Bankruptcy Services Corp., a New Jersey corporation, Federal Debt Solutions LTD., a New Jersey corporation, United Money Tree, Inc., a New Jersey corporation, Ahron E. Henoch, also d/b/a United Credit Adjusters, Inc., Bankruptcy Masters Corp., and Federal Debt Solutions Ltd., individually and as an officer or director of United Credit Adjusters, Inc., United Creditors, Inc., United Counseling Association, Inc., Bankruptcy Masters Corp., National Bankruptcy Services Corp., Federal Debt Solutions Ltd., and United Money Tree, Inc., Ezra Rishty, also d/b/a United Credit Adjusters, Inc., and Bankruptcy Masters Corp., individually and as an officer or director of United Credit Adjusters, Inc., and Bankruptcy Masters Corp., and Gerald Serino, a/k/a Jerry Serino, also d/b/a United Credit Adjusters, Inc., individually and as an officer or director of United Credit Adjusters, Inc. (United States District Court District of New Jersey.
MORAL
This is the tip of the iceberg if you will forgive the turn of a phrase. If you are in the business of loan mods and even taking advance fees as a lawyer or as a DRE licensee with an no objection letter, I suggest you keep close track of California SB94 because if the Governor signs it, then it is law at that point and prohibits advance frees from being collected by anyone for any reason if it is related to loan modifications.
MORE BILLS THAT BECOME CALIFORNIA LAW AS OF JAN. 1, 2010
FACTS
Senate Bill 306 is now Chaptered. The changes are as follows:
Upon a breach of the obligation of a mortgage or transfer of an interest in property, the trustee, mortgagee, or beneficiary records a notice of default in the office of the county recorder where the mortgaged or trust property is situated and mails the notice of default to the mortgagor or trustor. Until Jan. 1, 2013, the law prohibits a mortgagee, trustee, beneficiary, or authorized agent from filing a notice of default for an additional 30 days on loans made between Jan. 1, 2003, to Dec. 31, 2007, that secure residential real property, under certain circumstances. The amended law now provides until Jan. 1, 2013 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 declaration required when filing the notice of default is also changed as of Jan. 1, 2010.
Loan servicer duties have to maximize net present value under their pooling and servicing agreements, and their duty is owed to all parties in a loan pool, not to any particular parties, and that a servicer acts in the best interests of all parties if it agrees to or implements a loan modification or workout plan. The new law expands this to certain investors.
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. The new law specifies how and when this notice is to be mailed. The notice will also have to be recorded at least 20 days before the sale date instead of 14 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.
No until Jan. 1, 2014, a beneficiary, within 21 days of the receipt of a short-pay request, as defined, is 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 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 beneficiary that elects not to proceed with the transaction that is the subject of the short-pay request may refuse to provide a short-pay demand statement, but would have to provide a written statement, indicating that the beneficiary has elected not to proceed. If the terms and conditions of the short-pay agreement require approval by the beneficiary of a closing statement prepared by an escrowholder, approval or disapproval shall be provided not more than 4 days after receipt by the beneficiary of the closing statement, or the closing statement shall be deemed approved, except as specified.
There are yet other changes in the bill but these are the critical ones in this attorney's opinion.
Senate Bill 633 is now Chaptered. This amends section 2954 of the Civil Code pertaining to impound accounts.
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.
As of Jan. 1, 2010 included 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
MORAL
If you are a private investor or a hard money lender or hard money servicer I recommend highly you read the bill to see whether your loans are subject to the bill codes and what the penalties are if you fail to comply.
FUGITIVE EXTRADITED FROM SPAIN TO CALIFORNIA
FACTS
Garret Griffith Gililland III, who fled the United States in June 2008 to avoid prosecution and fought against extradition, was arraigned in Sacramento United States District Court on Sept. 25, 2009. He is charged with 24 counts stemming from an alleged large mortgage fraud scheme and has alleged ties to what federal authorities describe as a $100 million mortgage fraud based in Roseville, Calif.
San Diego attorney Philip DeMassa entered a not guilty plea on his behalf and asked for a bail hearing. U.S. Magistrate Judge Gregory G. Hollows informed DeMassa he will be paddling upstream on the issue of obtaining Gililland's release. (sacrbee92609)
MORAL
You have to admit, that asking for bail for a fugitive is really stretching it. I am sure most of you can think of other words. Remember, everyone is innocent until proven guilty. The maximum statutory penalty for each count of mail fraud is 20 years in prison and a $250,000 fine.
MOTHER AND DAUGHTER REAL ESTATE TEAM ARRESTED FOR MORTGAGE FRAUD IN SACRAMENTO
FACTS
A criminal complaint was filed charging Irene and Helen Sotiriadis, both of Manteca, with conducting a mortgage fraud scheme from March 2006 through November 2007 that caused losses to lenders estimated at approximately $5 million. Arrest warrants were issued by United States Magistrate Judge Gregory G. Hollows after a special agent of the FBI received information that the two suspects may have been intending to flee to Greece.
According to Assistant United States Attorney Russell L. Carlberg, who is prosecuting the case, an affidavit filed by a special agent of the FBI alleges that Irene and Helen Sotiriadis recruited as many as 25 members of the Cambodian immigrant community to purchase homes they could not afford in and around Stockton and Modesto. Irene and Helen Sotiriadis promised the Cambodians that after one initial high monthly payment, the homes would be refinanced to a payment of only $1,500 per month. After the initial monthly mortgage payments of $4,000 came due, Irene and Helen Sotiriadis refused to return phone calls to the victims, according to the affidavit. Most of the homes quickly fell into foreclosure.
The maximum statutory penalty for a violation of the federal mail fraud and wire fraud statutes is 20 years in prison and a $250,000 fine.
MORAL
Did you note how the government went back three years? Anyone out there been overly creative in the last three years? To further remind you, the government can go back five and even 10 years if a federal institution is involved.
CALIFORNIA FORMER BRANCH OFFICE MANAGER INDICTED FOR INCOME TAX FRAUD
FACTS
Seth Sundberg, a San Mateo man also goes by the name Franco Metcalf, was indicted by a federal grand jury in San Jose on charges of seeking and receiving a fraudulent tax refund from the Internal Revenue Service of $5 million. Sundberg was indicted on three counts of mail fraud, filing a false tax return for 2008 and making false claims against the government. He pleaded not guilty before a federal magistrate in San Jose and is due to return to court on Sept. 30, 2009 for an appearance before U.S. District Judge Jeremy Fogel. Sundberg was arrested in San Carlos on Sept. 9 and is being held without bail. Sundberg, who is acting as his own lawyer, is a former branch manager for a brokerage company, Access Mortgage and Financial, in San Mateo. He is accused in the indictment of falsely claiming and receiving a tax refund of about $5.08 million. The indictment alleges that Sundberg falsely claimed he had paid $5.7 million in taxes as a result of being credited with a type of interest known as original-issue discount income. Original-issue discount income is a method of accounting for the accrual in value of bonds that are bought at below face value and later redeemed at face value.
Federal prosecutors are seeking forfeiture of $322,000 in cashier's checks, $117,473 in cash and $75,729 in silver and gold coins. (ap92409)
VENTURA COUNTY DISTRICT ATTORNEY AWARDED NEARLY
$1.7 MILLION TO COMBAT MORTGAGE FRAUD
FACTS
Greg Totten, District Attorney for Ventura County, Calif. had his office awarded a grant of nearly $1.7 million from the American Recovery Reinvestment Act to expand the investigation and prosecution of real-estate fraud. The Real Estate Fraud Unit was originally established in 2005. Since its inception, the unit, consisting of one prosecutor and one investigator, has received 368 complaints. Today there are more than 120 pending cases pending. The new funding will enable the District Attorney to add one prosecutor, two investigators and support staff to the unit. (vetctystr92709)
IN ILLINOIS THE NEW OWNER AFTER FORECLOSURE MUST GIVE TENANT OF PROPERTY WRITTEN NOTICE OF OWNERSHIP
FACTS
Effective Oct. 29, 2009 Illinois requires written notice to occupants of foreclosed property. The purchaser of the property or the holder of the certificate of sale or deed must notify all known occupants of the property that the purchaser or holder has acquired the property.
ONE MORE IN MARYLAND MORTGAGE FRAUD RING PLEADS GUILTY TO $19 MILLION MORTGAGE FRAUD
FACTS
Jamilah Al-Bari of District Heights, Md., pleaded guilty on Sept. 25, 2009 to mail fraud arising from the fraudulent purchase of properties in Maryland, the District of Columbia and Virginia.
Jamilah Al-Bari participated in a scheme with her brother, Osman Sharrief Al-Bari and others to pay straw purchasers to purchase houses for them by using false loan documents. Jamilah Al-Bari abused her position as a business banking liaison at M&T Bank in Upper Marlboro, Md. and created false documents purporting to verify assets for the straw buyers. She also sent false verification letters concerning the buyers' income and assets on M&T Bank letterhead to banks and mortgage lenders to facilitate the fraud scheme. Jamilah Al-Bari created a fictitious M&T Bank employee and used the fictitious employee's name to sign some of the false verification letters.
Jamilah Al-Bari prepared false M&T Bank verification forms for straw buyers who purchased five properties in Baltimore and two properties in Spotsylvania, Va. Most of the purchased properties have gone into foreclosure. Jamilah Al-Bari received a check or cash payment, disguised as a "consulting fee," for her role in the fraud scheme. She admitted her involvement in the scheme to M&T Bank investigators who questioned her before her termination. Although this scheme involved fraudulent loans worth over $19,021,366, the loss amount foreseeable to Jamilah Al-Bari was between $400,000 and $1 million. Al-Bari faces a maximum sentence of 30 years in prison. U.S. District Judge J. Frederick Motz has scheduled sentencing for Nov. 13, 2009.
Osman Sharrief Al-Bari, of Washington, an organizer and leader of the scheme, pleaded guilty on Aug. 10, 2009 to mail fraud and is scheduled to be sentenced on Oct. 5, 2009. Timothy Reed of Beltsville; Terrence White of Oxon Hill; Sabrina Weinberg and Kara McIntosh, both of Bethesda; have all pleaded guilty to mail fraud in connection with their participation in this scheme and are scheduled to be sentenced in the next two months. (usattymd92509)
NEVADA MORTGAGE LENDING DIVISION SEEKS TO DISCIPLINE ARIZONA GLOBAL MORTGAGE, LLC DOING BUSINESS AS LIKE FINANCIAL AND SUSAN LIKE FOR DOING MORTGAGE LICENSED ACTIVITIES IN NEVADA WITHOUT A NEVADA MORTGAGE LENDING LICENSE
FACTS
:
Global Mortgage LLC dba Like Financial, is an Arizona limited liability company and Suzanne Like is an owner of Global and neither Global nor Like have ever been issued mortgage broker or mortgage agent licenses by the Nevada Mortgage Lending Division.
On Feb. 27, 2008, the Division received a complaint concerning Global alleging that Global had been representing itself as the so-called preferred lender for the Trump Towers project in Las Vegas, and had been representing to buyers of units in that project that it was able to broker or otherwise arrange loans in the State of Nevada, although at the time it was not licensed pursuant Chapter 645B or NRS.
The Mortgage Lending Division commenced an investigation, during which MLD representatives reviewed Global's website and various written communications which indicated the Respondents' ability to broker or otherwise arrange loans on the Trump Towers project, notwithstanding their lack of licensure.
On April 10, 2008 the MLD issued an ORDER IMPOSING FINE AND ORDER TO CEASE AND DESIST AND NOTICE OF RIGHT TO REQUEST HEARING against Respondents.
Global and Susan Like have been offered a settlement by MLD that the purported violations found during the MLD investigation of the Respondents shall be settled on the following terms and conditions.
Global and Susan Like are to admit they violated NRS 645B.690 and NRS 645B.900 by offering to provide the services of a mortgage broker or mortgage agent without first obtaining the applicable license although at the time Global and Susan Like license application was pending before the Division; such license application has since been withdrawn.
Global and Susan Like agree to permanently cease and desist from conducting any activity in Nevada that requires a license or registration by the MLD unless they are so licensed. For a period of three years from the date the Division executes this Agreement Global and Susan like agree that they shall not apply for any such license or registration from the MLD.
Global and Susan Like shall pay to the MLD the sum of $1,850.00 for investigation costs directly related to the investigation of this matter. (mld92109)
MORAL
That will teach them not to do licensed activities without a license.
OREGON LOAN OFFICER INDICTED ON MORTGAGE
FACTS
Julian James Ruiz III, a Salem loan officer who worked with clients facing foreclosure has been indicted on mortgage fraud and other charges, the Oregon Department of Justice said. Ruiz, who worked at American One Finance and owns American Home Modifications, faces 17 counts in connection with the buying and selling of homes between 2006 and 2008.
Court documents accuse Ruiz of fraudulently using personal information from three clients in transactions, netting more than $50,000. The charges include first degree aggravated theft, mortgage fraud, identity theft, aggravated identity theft, forgery in the first degree and criminal possession of a forged instrument in the first degree. (oregonian92509)
MORAL
Now you AGAIN, know why you need to check the background of your loan officers. The broker and company that hired him can arguably be held liable in a civil lawsuit for negligence.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE
