HUD OIG AUDITS MORTGAGE COUNSELING SERVICES AND RECOMMENDS IT BE DISCIPLINED
FACTS
HUD OIG performed an audit of Mortgage Counseling Services Inc., a Federal Housing Administration approved non-supervised lender. The review was performed based on the lender's high default rates (over 200%). The purpose of the audit was to determine whether the lender followed the U.S. Department of Housing and Urban Development's requirements for (1) borrower eligibility and creditworthiness and property eligibility when underwriting loans and (2) implementing a quality control program. Based on information received during the audit, it expanded our audit objectives to include reviewing the closing process to determine whether Mortgage Counseling Services complied with HUD requirements.
From February 2007 through January 2009, Mortgage Counseling Services originated 204 FHA loans. As of Jan. 31, 2009, 33 of the loans, valued at approximately $4 million, were at least 30 days delinquent. Thirteen of those loans defaulted within the first six payments. Loans that default within the first six payments are classified as early default loans. Mortgage Counseling Services had a default rate of 13.73%. This is significantly higher than the 6.85% default rate for the Atlanta area.
Mortgage Counseling Services reportedly did not follow HUD requirements when underwriting eight of 16 FHA loans. HUD insured the eight loans that unnecessarily placed the FHA insurance fund at risk for more than $433,000. HUD/OIG recommended Mortgage Counseling Services indemnify HUD against loss in the amount of $433,000 on the eight loans. Furthermore, Mortgage Counseling Services did not conduct its quality control reviews in a timely manner. In addition, the lender did not report a significant quality control violation to HUD. Also, Mortgage Counseling Services did not fully comply with HUD requirements in closing two loans. Specifically, the lender misrepresented a HUD-1 settlement statement to HUD. Finally, the lender collected an uncustomary and unreasonable appraisal fee after the loan closed. As a result, HUD could not be assured that loans were properly closed, and the noncompliance could result in an increased risk to the FHA insurance fund.
OIG recommended that the Deputy Assistant Secretary for Single Family Housing require Mortgage Counseling Services to indemnify HUD for the potential loss on the eight loans with material deficiencies, reimburse HUD for overinsuring one loan, and ensure that Mortgage Counseling Services conducts quality control reviews in a timely manner as required by HUD regulations. OIG also recommended that the Deputy Assistant Secretary for Family Housing take appropriate action against Mortgage Counseling Services for its noncompliance in closing two loans. (Audit Report No.: 2010-AT-1001, 1-13-10)
MORAL
The company is looking at a possible $433,000 indemnification to HUD in the event of loss on eight loans. Had it done an internal audit, some of these errors could have been spotted earlier by routing review of 10% on monthly basis. Note the excessive comparison ratio. You can look at yours and if it is over 200% the likelihood you will be audited is there. The more the ratio exceeds 200%, the more likely you will be audited. Better to have us do it first than HUD do it later. If you correct before HUD arrives, HUD does consider that in mitigation of any proposed penalty.
FTC HITS NEVADA MORTGAGE BROKER THAT DUMPED CONSUMER RECORDS WITH $35,000 CIVIL PENALTY AND OTHER RESTRICTIONS FOR NOT PROTECTING PRIVACY OF BORROWERS
FACTS
Gregory Navone of Las Vegas, a mortgage broker who discarded consumers' personal financial records in a publicly accessible dumpster paid a $35,000 civil penalty to settle Federal Trade Commission charges.
According to an FTC complaint filed in December 2008, the defendant improperly disposed of about 40 boxes of sensitive consumer records collected by companies he had owned, including tax returns, mortgage applications, bank statements, photocopies of credit cards and drivers' licenses, and at least 230 credit reports. In addition, two mortgage brokerage companies he previously owned failed to provide reasonable and appropriate security for sensitive consumer information, despite promising they would do so.
The FTC charged the defendant with failing to take reasonable measures to protect credit report information from unauthorized access during its disposal, in violation of the Fair Credit Reporting Act and the FTC's Disposal Rule. The complaint also charged him with violations of the FTC Act for his company's misrepresentations about its data security practices.
The settlement order also bars defendant from misrepresenting measures taken to protect sensitive consumer information and failing to take reasonable measures to protect credit report information during its disposal. The order also requires him to employ a comprehensive information security program for sensitive consumer information, and to hire an independent third-party security professional to review the program every year for 10 years to ensure that it meets or exceeds the order's requirements.
Mr. Navone's two former mortgage brokerage companies were First Interstate Mortgage Corp. and Nevada One Corp. The stipulated final order was to be entered in the U.S. District Court for the District of Nevada on Dec. 30, 2009.
Stipulated final orders are for settlement purposes only and do not constitute an admission by the defendant of a law violation. Stipulated orders have the force of law when signed by the judge. (ftc1202010)
MORAL
I have been informing you for years about FACTA and about the Gramm-Leach-Bliley Act on protecting privacy of the borrowers both funded and unfunded when you elect not to do the loan. This is what can happen to you if you fail to comply. If you do not have a privacy manual you can purchase one from our office. The federal law in fact requires you to have one.
WELLS FARGO MINNESOTA FORGETS TO TIMELY RECORD THE MORTGAGE AND NOW MUST PAY THE TRUSTEE IN BANKRUPTCY FOR THE BENEFIT OF ALL CREDITORS AND FOR THE BENEFIT OF THE DEBTOR IN BANKRUPTCY
FACTS
On May 16, 2003, Wells Fargo loaned the debtor $196,000. The debtor executed a promissory note payable to Wells Fargo for the principal amount of the loan and granted Wells Fargo a mortgage on his home in Hennepin County, Minn. On Oct. 14, 2005, the debtor filed a petition for Chapter 7 bankruptcy relief, claiming $400 in non-exempt assets, $6,600 in unsecured priority claims and $37,833 in unsecured nonpriority claims. However, Wells Fargo never recorded the mortgage, but the debtor erroneously listed Wells Fargo as a secured creditor. On the date he filed for bankruptcy, the unpaid principal balance on the note was $190,808.71.
Soon after the debtor filed his bankruptcy petition, Wells Fargo sold a bundle of 334 mortgage loans to EMC Mortgage Corp. In this transaction, Wells Fargo "assigned, sold and transferred" its rights under the debtor's note and mortgage to EMC. The bankruptcy court granted the debtor a discharge on March 7, 2006, and closed the case on March 20, 2006. EMC recorded the mortgage on or about Oct. 11, 2006.
The trustee subsequently learned that Wells Fargo had not recorded the mortgage before the debtor filed his bankruptcy petition, meaning that Wells Fargo should have been listed as an unsecured creditor in the petition. At the trustee's request, the bankruptcy court reopened the case on January 29, 2007.
On April 17, 2007, the trustee filed a complaint against Wells Fargo in bankruptcy court, seeking to avoid the debtor's grant of the mortgage to Wells Fargo. The trustee argued that the transfer of the mortgage to Wells Fargo to have occurred immediately before the debtor's Oct. 14, 2005 bankruptcy filing because Wells Fargo did not perfect its security interest in the property by recording the mortgage before the debtor filed for bankruptcy. The pre-petition transfer of the mortgage from the debtor to Wells Fargo should be avoided as a preference and the trustee claimed that Wells Fargo should pay the value of the mortgage to the debtor's bankruptcy
The bankruptcy court granted the trustee's motion for summary judgment. It held that the transfer of the mortgage occurred immediately before the debtor's Oct. 14, 2005 bankruptcy filing by operation of law. The court avoided the transfer of the mortgage to Wells Fargo as a preferential transfer under and ordered Wells Fargo to pay the debtor's bankruptcy estate $190,808.71. The district court affirmed, and Wells Fargo appealed.
The 8th Circuit of the U.S. Court of Appeals said affirmed. "Under the Bankruptcy Code's preference avoidance section, the trustee is permitted to recover, with certain exceptions, transfers of property made by the debtor within 90 days before the date the bankruptcy petition was filed. Title 11 U.S.C. § 547(b) requires that in order for a transfer to be subject to avoidance as a preference, (1) there must be a transfer of an interest of the debtor in property, (2) on account of an antecedent debt, (3) to or for the benefit of a creditor, (4) made while the debtor was insolvent, (5) within 90 days prior to the commencement of the bankruptcy case, (6) that left the creditor better off than it would have been if the transfer had not been made and the creditor asserted its claim in a Chapter 7 liquidation."
This transfer of the mortgage is deemed to have occurred immediately before the debtor's Oct. 14, 2005 bankruptcy filing by operation of § 547(e)(2)(C) because Wells Fargo failed to record the mortgage. (Wells Fargo Home Mortgage v. Lindquist, No. 08-3442, 8th Cir. USCA, 1-11-10)
MORAL
Now you might ask why our bankruptcy attorney went to so much trouble to the point of quoting the code sections since the debtor does not get the money back. Just the trustee gets it. I want you to think about the fact that certain debts are not dischargeable in bankruptcy such as child support, income taxes that are assessed in the last three years and other debts such as fraud. Some of these debts have priority in bankruptcy and are paid first before unsecured creditors such as taxes. When the money is there, your taxes get paid first and then you do not have to pay them arguably because the trustee paid them first because the mortgage holder fouled up and did not record. We have had this happen once before where the mortgage was not recorded, the debtor filed bankruptcy, the mortgage holder did not get paid and the debtor had equity protected by a homestead. When the creditor came back later we reminded the creditor of this and the client wound up $50,000 richer because of no mortgage and the homestead was now that much larger. This does not happen too often but when filing bankruptcy you should check to see if the mortgage was recorded.
CALIFORNIA LAWYER ARRESTED FOR DEFRAUDING 400 HOMEOWNERS WITH PROMISES OF LOAN MODIFICATIONS
FACTS
Christopher Lee Diener, once a practicing attorney in Orange County, Calif., was arrested on charges that include one count of conspiracy to commit grand theft, and 97 felony counts of grand theft by false pretenses, with sentencing enhancements for white collar crime and excessive taking. Diener and his partners are said to have defrauded 400 homeowners in a $1.25 million loan modification scam. If convicted, defendants face up to 70 years in state prison.
This appears to be the first criminal prosecution of an attorney offering loan modification services, that has resulted from the collaborative effort of the Orange County District Attorney's Office, working with the State Bar of California, the Department of Real Estate, and the California Attorney General's Office.
Diener's business partners, Stefano Joseph Marrero and Terrence Green Sr., were also similarly charged, but a $1.5 million warrant for Marrero has been issued and he remains at large. Diener and Green are being held on $1.5 million bail each, and assuming either of the defendants were able to post such a bond over the weekend, the money posted as bail must be proven to have come from legal and legitimate sources, which means that they could not use any of the proceeds of their alleged fraud.
According to the OC District Attorney's Office, the pair will be arraigned on Tuesday, Jan. 26, 2010 in Department CJ-1, Central Jail in Santa Ana. The defendants are accused of targeting homeowners at risk of losing their homes and offering loan modification services that required an upfront fee. They are accused of operating loan modification businesses under a list of names that include: Home Relief Services, LLC, US Loan Mod Processing, HRS Communications, The Diener Law Firm, and Diener Law Group.
According to the OC District Attorney, the defendants made false statements and enticed homeowners to hire them by saying they could "guarantee loan modifications, negotiate lower interest rates with lenders, reduce the principal owed on a customer's mortgage, have second mortgages eliminated or forgiven, and have late fees forgiven by the lenders." They are also accused of promising to complete a homeowner's loan modification in less than 90 days, and claimed a 90% rate of success.
It should go without saying that they promised a 100% money back guarantee if not successful, and required homeowners to pay 100% of their fee in advance of any work being completed. The new state law in California, signed by the governor last October, prohibits attorneys that offer loan modification services from accepting payment until services contracted for have been provided. Real estate brokers cannot accept payment in conjunction with a loan modification until all services have been provided and a loan modification has been granted by the lender or servicer.
They are also accused of soliciting referrals in exchange for payment from real estate and mortgage brokers, and are even said to have attended a mortgage banker's convention in Las Vegas to promote such referral programs.
This is not the first time the state has run into the trio. The California Department of Real Estate issued a cease and desist against Marrero and Green in February 2009, related to soliciting clients, and in October last year, Diener was involuntarily enrolled as an inactive member of the California State Bar. Attorney General Jerry Brown filed a civil suit against Diener last July, as part of the nationwide sweep of loan modification consultants, termed "Operation Loan Lies," which was conducted with the Federal Trade Commission, the U.S. Attorney's office and 22 other federal and state agencies. In total, the sweep resulted in 189 suits and orders to stop doing business were filed across the country.
According to the Attorney General's Office, "None of Diener's or U.S. Homeowners Assistance's known victims received loan modifications despite paying upfront fees ranging from $1,200 to $3,500."
According to the State Bar, his conduct posed "a substantial threat of harm to his clients or the public." In the press release issued by the OC District Attorney, "California's Attorney General filed for civil penalties against the three defendants related to this scam, seeking restitution and an injunction from further illegal practices."
MORAL
How many more lawyers are the Attorney General and the District Attorney pursuing?
ILLINOIS AMENDS THE MORTGAGE ESCROW ACCOUNT LAW
FACTS
The Mortgage Escrow Account Act adds definitions for the terms "Homeownership Preservation Program" and "Subprime Mortgage Lender" and by establishing certain guidelines for mortgage loans made by a subprime mortgage lender in compliance with the requirements for higher-priced mortgage loans and for the termination of escrow accounts upon a borrower's request. It also provides guidelines for a refinance or modification made by a subprime mortgage lender under a homeownership preservation program, and the circumstances under which the escrow account can be terminated. (ILSB 0253eff123109)
MORAL
If you are going to play with a subprime loan or a higher priced mortgage you may want to read the amended act as it applies to the escrow.
TWO NEW JERSEY TITLE COMPANY OWNERS INDICTED FOR
MORTGAGE FRAUD
FACTS
On Dec. 28, 2009, a Monmouth County Grand Jury returned a seven count indictment charging Rebecca Marchese-DePeri-Grande of Jackson Township, N.J., and her sister, Meredith Miller of Brick Township, N.J., with second degree Conspiracy, second degree Misapplication of Entrusted Property, second degree Theft by Failure to Make Required Disposition of Property Received, and second degree Misconduct by a Corporate Official. The indictment also charges Miller with one count each of third and fourth degree Bad Checks, and one count of third degree Theft by Deception.
Marchese-DePeri-Grande and Miller were arrested on Dec. 28, 2009, by detectives from the Monmouth County Prosecutor's Office. The Jackson Township, Brick Township and South Brunswick police departments also assisted in the arrests. Following the arrests, Monmouth County Superior Court Judge Ira E. Kreizman set bail for Marchese-DePeri-Grande and Miller at $150,000 each.
The investigation was initiated in 2005 after numerous individuals complained to law enforcement authorities that after they had refinanced their homes, disbursements which were to have been made to the homeowners' creditors by Marchese-DePeri-Grande's and Miller's title agencies were not made. The victims learned that the disbursements had not been made when they began receiving late notices from the creditors. In addition, some of the victims were served with foreclosure complaints as a result of Marchese-DePeri-Grande's and Miller's failure to have paid off earlier mortgages.
The investigation revealed that initially, Marchese-DePeri-Grande was the owner of R.M.J. Title Agency located in Freehold, N.J., and Miller was an employee there. In the Fall of 2004, Marchese-DePeri-Grande and Miller formed Spectrum Title Agency, also in Freehold, N.J., as co-owners. The investigation determined that after the victims obtained loans with the banks, the banks entered into agreements with R.M.J. and/or Spectrum regarding disbursement to the various escrow accounts for payments in accordance with the closing procedures set forth in the HUD-1 forms. Instead of making the required disbursements, Marchese-DePeri-Grande and Miller failed to remit the deposited funds to the proper entity or individual and instead unlawfully transferred the funds from their escrow accounts into their own business accounts. Marchese-DePeri-Grande and Miller then utilized the stolen funds for personal expenses. The personal expenses which the stolen funds were used to pay for included high-end vehicles such as Ferraris, lavish homes and travel for Marchese-DePeri-Grande and Miller. The total amount of the theft is approximately $786,152.62. In addition, Marchese-DePeri-Grande and Miller failed to file required documents with the County Clerk's Office in connection with the refinanced mortgages.
Miller's charges of Bad Checks and Theft by Deception relate to her issuance of checks on behalf of her clients which were returned for insufficient funds and her failure to pay the lease for Spectrum's office space.
As Title Agents, Marchese-DePeri-Grande's and Miller's responsibilities included the preparation of closing statements, payment of mortgages and other liens, government charges, taxes and other expenses, disbursement of funds, and the preparation, execution and recordation of all necessary legal documents. From November 2002 through March 2005, Marchese-DePeri-Grande and Miller failed to perform these duties with respect to fifteen of their clients.
If convicted of any of the second degree crimes, the maximum potential custodial sentence is a State Prison term of up to 10 years. If convicted of any of the third degree crimes, the maximum potential custodial sentence is a State Prison term of up to five years. The maximum potential custodial sentence for a fourth degree crime is a term of up to 18 months. (monmouthcoprosoff122909)
MORAL
What amazes me is what made them think it would not be discovered considering the bounced checks and the people that did not have the underlying mortgages paid off.
FHA WANTS 2.25% MIP
FACTS
The Federal Housing Administration has increased the mortgage insurance premium to 2.25% effective as of case numbers drawn on or after April 5, 2010. This will increase premiums for purchase money and refinance transactions, including FHA-to FHA credit qualifying and non-credit qualifying streamlined refinance transactions. Does not apply to HECM mortgages. Changes to HOPE and HECM are in the 2.00% range. Read mortgage letter for more details. (ml1002)
MORAL
Read the change carefully so you know what has to be sent to HUD very quickly.
HUD/FHA INCREASING ENFORCEMENT AGAINST MORTGAGEES
FACTS
HUD will terminate a mortgagee's authorization to underwrite loans in geographic areas where the lender has a high rate of early defaults and claims
HUD as of Jan. 21, 2010), systematically review all direct endorsement underwriting mortgagees' defaults (loans 90 or more days' delinquent) and at its option terminate the underwriting authority of DE mortgagees with excessive default and claim rates.
HUD will review the rate of defaults and claims every three months in each geographic area served by a HUD field office.
HUD can terminate your underwriting authority when your comparison ratio exceeds 200% in this geographic area and at the same time also exceeds the national default and claim rate. (Do you know what a comparison ratio is or how to look it up? We do it whenever someone is in trouble with HUD. In fact it is one of the first things we do to check the seriousness of the problem,)
THE NEW THRESHOLDS ARE . . .
| 24 Month Period Ending Date | Termination Threshold |
| December 31, 2009 | 300% |
| June 30, 2010 | 250% |
| December 31, 2010 | 200% |
Those terminated will be notified prior to termination. There is a right of appeal via informal conference.CALIFORNIA MAN FOUND GUILTY OF BILKING MORE THAN 2, 000 PEOPLE OUT OF MORE THAN $62 MILLION IN A REAL ESTATE FRAUD SCHEME
FACTS
On Jan. 19, 2010 Milton Retana of Huntington Park, Calif., was found guilty of preying on Spanish-speaking investors with promises of hefty returns in the real estate bubble. The charges for bilking more than 2,000 victims out of more than $62 million were found true by a federal jury that convicted him on six counts of mail fraud and one count of making false statements to government agents who were investigating the case.
Following a week-long trial in United States District Court, jurors deliberated for less than an hour before convicting Retana of charges that carry a potential penalty of 125 years in federal prison.
Retana began soliciting investors in 2006 through his company, Best Diamond Funding, by telling them that their money would be used to buy and sell real estate. Best Diamond Funding solicited money through advertisements in Spanish-language magazines, on the Internet, and during weekly investment seminars at locations across Los Angeles. The investment seminars often had as many as 300 potential investors and incorporated religious messages. Retana guaranteed returns as high as 84% each year, claiming that he would purchase properties in bulk at below-market prices and immediately sell them for a profit. However, records obtained by federal investigators showed that Retana used only a tiny fraction of the victims' money to purchase real estate and that his company was actually losing money.
During the trial, several victims testified that they mortgaged their homes and drained their retirement accounts because they believed Retana's promises that their investments would be safe. The victims who testified at trial were largely from working-class families in East Los Angeles, and they included a stonemason, a long-haul truck driver, and a roofer who was also a pastor at his local church.
Retana's scheme was almost uncovered in the summer of 2008, when the California Department of Real Estate audited his company. But Retana stymied that investigation by ordering his employees to hide all of the investor files at the back of his wife's religious bookstore, La Libreria Del Exito Mundial. His scheme was disrupted in October 2008, when federal agents from the United States Postal Inspection Service and the Federal Bureau of Investigation executed search warrants on the offices of Best Diamond Funding and the bookstore. During those searches, agents found $800,000 in cash stashed in Retana's desk, as well as another $3.2 million in cash hidden in the back of the bookstore. The FBI also seized another $8 million from Retana's bank accounts.
Soon after the execution of the federal search warrants, agents interviewed Retana, who lied about how much money he had received from the investors and claimed that he could pay all of them back. Retana was later secretly recorded telling a Best Diamond employee not to tell the government how much money Best Diamond had received from the investors.
Retana is scheduled to be sentenced by United States District Judge R. Gary Klausner on April 26, 2010. (usattycdca11910)
MORAL
I would say he is looking at 20-25 years in a federal hotel. Note how the DRE found it out, and then must have reported it to federal law enforcement that continued the investigation. Be careful what you do, it may come back to haunt you.
CONNECTICUT ACCOUNTANT PLEADS GUILTY TO FRAUDULENT MORTGAGE ACCOUNTANT LETTERS
FACTS
On Jan. 20, 2010 Jose I. Flores of Stamford, waived his right to indictment and pleaded guilty before United States District Judge Christopher F. Droney in Hartford to one count of conspiracy to commit wire fraud stemming from his participation in a mortgage fraud scheme.
In pleading guilty, Flores, an accountant, admitted that from approximately 2004 to 2008, he conspired with others to defraud mortgage lenders by causing so-called "accountant letters," which contained materially false information about the loan applicant, to be submitted to lending institutions on behalf of applicants for residential real estate mortgages.
Flores, who did business as a tax preparer and accountant under the name Harvard Financial Services in Stamford, was approached by the owner of a real estate and mortgage broker in Stamford to create fraudulent accountant letters. Under a mortgage program offered at the time by certain mortgage lenders, mortgage applicants could apply for a stated income loan which did not require income verification. Through this program, lenders required a letter from the applicant's accountant or tax preparer verifying, among other things, the applicant's employment status, particularly for applicants claiming to be self-employed. Flores agreed to write accountant letters containing false information for the owner of the mortgage brokerage and its loan officers knowing that the letters would be used in connection with loan applications to mortgage lenders. Over the period of several years, Flores was paid up to $100 per letter by the mortgage brokerage to provide numerous false accountant letters.
Judge Droney has scheduled sentencing for April 9, 2010, at which time Flores faces a maximum term of imprisonment of five years and a maximum fine of $250,000, or twice the gross gain or loss from the offense. U.S. Attorney Dannehy stated that the investigation is ongoing. (usattyct12110)
MORAL
First note how the government prosecutors went back to loans that occurred 14 years ago. Next note the investigation is "ongoing" and guess who it is ongoing for? The real estate owner and the mortgage broker and all the loan officers for whom the accountant wrote the letters.
INDIANA ATTORNEY SENTENCED IN FORECLOSURE FRAUD CASE
FACTS
On Jan. 19, 2010 Brian L. Nehrig of Fishers, Ind., was sentenced to three years' probation by U.S. District Judge Sarah E. Barker following his guilty plea to mail fraud.
During 2005 and 2006, Nehrig worked as a foreclosure attorney doing foreclosure work for Citifinancial. Citifinancial required Nehrig to submit a bid at sheriff's sales for foreclosed houses, sell the houses at arm's length transactions, and then submit the proceeds if the home sold to a third party. Instead, Nehrig sometimes submitted inflated bids and had arrangements with friends and associates to buy the properties. Nehrig did not tell Citifinancial about the side deals, which were usually for a few thousand dollars more than the minimum bid requested by Citifinancial. Nehrig did not send Citifinancial the profits. The Court determined the loss to Citifinancial to be $66,000. Citifinancial has been paid through an insurance claim.
Judge Barker also imposed six months' home confinement, and a requirement that Nehrig perform eight hours of community service per month for each of the 36 months that he is on probation. Nehrig was fined in the amount of $2500. Judge Barker noted that Nehrig's law license was previously revoked and ordered that he not be self-employed and give full disclosure of this felony conviction to any future employer. (usattysdin11910)
MORAL
All for $66,000 which he had to share with others. Why someone that spent four years in undergraduate school, then three years in law school, then three days taking the bar exam would do this amazes me.
OHIO MAN PLEADS GUILTY TO $7.3 MILLION REAL ESTATE INVESTMENT SCAM
FACTS
On Jan. 20, 2010, Kevin Miller of Fairfield, Ohio pleaded guilty in United States District Court to one count of conspiracy to commit mail fraud and one count of obstruction of an investigation for his role in a real estate investment fraud scheme between 2005 and 2008 that defrauded approximately 80 victims out of approximately $7.3 million.
Miller was a salesperson for Capital Investments. Capital Investments, Greater Miami Debentures and Great Miami Real Estate were three entities that duped victims into investing with them, claiming the investments were secure and backed by equity in real estate properties in Butler County, Ohio and in Florida. Many of the properties were not purchased or developed with investor monies and were owned by one of the conspirators, or the spouse or parent of a conspirator, and by November 2007 many of the properties lacked substantial equity, were in a state of disrepair, were in default or were in some stage of foreclosure.
Miller sent a letter dated Jan. 8, 2008 to one couple he had persuaded to invest with Capital Investments, representing that the investment was a "success" and continuing to be "an active player in the investment industry" providing "yields that are higher than those found elsewhere in the marketplace" when, in fact, by or before November 2007 all investors' money was gone, with many of the properties which purported to back the victims' investments in or approaching foreclosure.
In June, 2008, Miller tried to conceal his role in the investment scheme by falsely completing a questionnaire sent to victims by the Ohio Department of Commerce Division of Securities which was investigating the sale of the unregistered securities.
Conspiracy to commit mail fraud and obstruction of an investigation are each punishable by up to 20 years imprisonment. (usattysdoh12110)
MORAL
Anyone take note that the federal prosecutors are going back 15 years to find mortgage fraud and prosecuting the perpetrators today?
RHODE ISLAND PASSES NEW REQUIREMENTS FOR FORECLOSURE
FACTS
Effective March 4, 2010, Rhode Island requires foreclosing mortgagees to provide notice of default and the mortgagee's right to foreclose by mail; provides for foreclosure counseling and for written notice of availability to be mailed to the mortgagor prior to initiating foreclosure proceedings; relates to HUD-approved mortgage counseling agencies; provides that failure to provide such information shall render the foreclosure void. (alrgs11910)
MORAL
It is getting tougher and tougher to foreclose.
FORMER IRVING, TEXAS POLICE OFFICER PLEADS GUILTY TO HUD MORTGAGE FRAUD
FACTS
Ramon Anthony Reyes, Jr., a former Irving, Texas police officer, has pleaded guilty before U.S. District Judge Jane J. Boyle to one count of making a false statement to the U.S. Department of Housing and Urban Development with regard to his participation in HUD's "Good Neighbor Next Door/Officer Next Door" mortgage program. Reyes faces a maximum statutory sentence of two years in prison and a $250,000 fine. He is scheduled to be sentenced by Judge Boyle on April 29, 2010.
Under the terms of the "Good Neighbor Next Door/Officer Next Door" mortgage program offered through HUD, law enforcement officers receive a 50% discount from the list price of a home in return for living in the property as their sole residence, for 36 months. Participating law enforcement officers also may not own any other residential real estate property at the time they submit their purchase offer and for one year previous to that date.
According to plea documents filed in the case, Reyes was employed as a police officer for the City of Irving since 1998. In 1998, Reyes purchased a home located on Dorothy Drive in Grand Prairie, Texas, and began living there.
In 2007, Reyes purchased another home, located on Palo Alto Drive in Mesquite, Texas, using the "Good Neighbor Next Door/Officer Next Door" mortgage program. To comply with the program's requirements, Reyes transferred title of this Grand Prairie home to a relative and continued to live in the Grand Prairie home, maintaining all utilities in his name and paying the property taxes on the residence.
Reyes admitted that he made a false statement on the annual certification form for the program when he signed the form certifying that he had continuously resided at the Mesquite address, when he knew that he had not. (usattyndtx11910)
MORAL
He blew his entire career for a 50% discount.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE
