HUD TO ALLOW LOAN CORRESPONDENTS UNTIL APRIL 30, 2010 TO FILE THE ANNUAL RECERTIFICATION FINANCIAL AUDIT FOR 2009
FACTS
As proposed on Nov. 30, 2009, HUD is seeking to eliminate FHA approval for loan correspondents. Because this rulemaking is still in process and a final rule has not yet been issued, FHA is extending the deadline for the submission of audited financial statements for loan correspondents seeking renewal of their FHA lender approval for 2010.
For loan correspondents with a fiscal year end of Dec. 31, and that would ordinarily be required to renew their FHA approval by March 31, 2010, HUD is providing these lenders with an additional 30 days in which to submit their audited financial statements. These loan correspondents must continue to comply with existing requirements for the submission of their annual Certifications and renewal fees, but will be given until April 30 to submit audited financial statements. Again, the deadline for the submission of the annual certification and renewal fee has not been changed. Loan correspondents that do not complete their renewal in accordance with the deadlines as specified above will no longer be FHA-approved as of the effective date of the final rule that follows the Nov. 30, 2009, proposed rule. (HUD announc 3-4-10 Jerry Mayer)
MORAL
HUD is not there yet. So everything is status quo except you can file the audited financial by April 30 instead of March 31 if you are on a fiscal year of Dec. 31.
HUD/FHA CHANGES THAT AFFECT YOUR ABILITY TO QUALIFY BORROWERS AND INCREASE YOUR EXPOSURE TO INDEMNIFYING FHA LOAN LOSSES
FACTS
1. Effective April 5, 2010 the initial up front MIP goes to 2.25%.
2. New borrowers required to have a minimum score of 580 for maximum financing. Less than a 580 credit score limits borrower to 90% financing. Probably go into effect summer 2010 after publication and comment period.
3. FHA borrowers to be limited to 3% seller concessions. Probably go into effect summer 2010 after publication and comment period.
4. FHA is increasing enforcement of lenders/brokers to enforce more compliance with guidelines. FHA will increase terminating lender/broker approvals based upon Credit Watch and the compare ratios. (ml10-03)
5. FHA seeking to remove approvals for entire lender instead of individual branches only when violations are large enough.
6. FHA seeking stricter enforcement to make lenders indemnify and pay the indemnifications of loans. This amendment is to make all direct endorsement lenders assume liability for all loans they originate and underwrite. (David h. Stevens assistant secretary HUD, 3-4-10)
CALIFORNIA REAL ESTATE AGENT AND HER FATHER CHARGED WITH MORTGAGE FRAUD
FACTS
Guadalupe Ramirez, a real estate agent, and her father Augustine Ramirez, have been charged in a mortgage fraud scheme, accused of getting kickbacks from $4.1 million in fraudulent mortgage loans that almost immediately went into default, according to legal filings.
As of March 4, 2010 each is wanted on $1 million arrest warrants, according to the Bakersfield Police Department.
Four years ago, the father purchased five homes between November 2006 and January 2007 and each time indicated he planned to live in the place, according to the criminal complaint filed in Kern County Superior Court. He is identified as both Augustine and Agustin in court documents, and on some property records he is listed as Agustin. The pair also failed to disclose to lenders large cash "kickbacks" Augustine Ramirez obtained from sellers via inflated appraisals, according to the allegations listed in the complaint.
Guadalupe Ramirez once worked for the former Touchstone Real Estate, which is now Watson Touchstone ERA. She is no longer employed there. Company officials did not respond to a request for an interview. The California Department of Real Estate says Guadalupe Ramirez's real estate license, first issued in 2002, expires later this month. No current employer is listed for her.
The loans were in the name of Augustine Ramirez, but both father and daughter were present when loan applications were submitted, and both received at least $384,940 in kickback payments, the police reports filed in court allege.
The pair face two counts of conspiring to commit a crime, five counts of grand theft of property and eight counts of money laundering, all felonies. A conviction on all charges could mean up to 19 years in prison.
Current and former appraisers who evaluated the five properties cited in the complaint were sanctioned by the state Office of Real Estate Appraisers for "errors and omissions" in their work. The license of Eli Donati, who appraised four of the homes, was revoked effective November 2009.
In 2008, Jenny Recondo of All Kern Appraisals was ordered to pay a $1,500 fine and undergo 30 hours of state-approved training. A home on Lindsay Road that Augustine Ramirez purchased in 2007 was mentioned in the reprimand. (bkrsfld.com34100
JACQUEZ PLEADS NO CONTEST TO GRAND THEFT IN KERN COUNTY, CALIF. SUPERIOR COURT
FACTS
On Feb. 25, 2010, Primo Feliciano Jacquez pleaded no contest in Kern County Superior Court to one count of grand theft by false pretense. (A no contest plea is the same as a guilty plea but cannot be used in civil proceedings against the person.) Jacquez was accused of taking $385,000 from seven investors in late 2007, using forged documents to convince them to finance a fictitious strip mall project in the Rio Bravo area, according to the Kern County District Attorney's Office.
Jacquez, a contractor, was also accused of diverting more than $43,000 he was paid to repair a home that had been damaged in a fire. The work was never done, the DA's office said.
Jacquez will be sentenced April 8, 2010 to two years and four months in state prison, as well paying restitution to all his victims. (bkrsfldca22610)
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MORAL
As I have said before, mortgage fraud is the top priority of law enforcement all over. If you have been involved see your attorney before law enforcement sees you. Mr. Jacquez will be in state prison for over two years according to this.
CALIFORNIA MAN ARRESTED ON SUSPICION OF TAKING MORE THAN $900,000 FROM INVESTORS FOR A HOME-FLIPPING VENTURE
FACTS
On March 4, 2010, William Warren Baker of Laguna Niguel, Calif., was arrested on suspicion of taking more than $900,000 from investors for a home-flipping venture. It is alleged he embezzled nearly $1million from at least ten investors between Jan. 20, 2008 and May 7, 2008. He allegedly used the money to purchase property for himself and transfer it to his wife and son.
Mr. Baker is suspected of luring investors into a real estate business where he promised to use their money to buy and refurbish distressed homes, then flipping the homes for a profit according to a news release from the Orange County District Attorney's office. Prosecutors are alleged to have stated Baker did not refurbish any distressed homes. He is accused of buying property and transferring it to a trust under his son's name. The property was then allegedly transferred to a trust belonging to his wife according to prosecutors.
Prosecutors have allegedly filed 26 felony counts for securities violations because of exchanging investor funds for promissory notes or stock which were never qualified with the California Department of Corporations. He faces up to 32 years in state prison if convicted.
Bail was set at $1 million and the money to be used for bail must be proven to come from a legal and legitimate source before posting the bond. (ocr31610l16, ocda3410)
MORAL
He will need to mortgage his home if he can to retain counsel if he can afford counsel. Remember, he is innocent until proven guilty.
CALIFORNIA MAN GOES TO PRISON FOR 41 MONTHS CONVICTED OF MORTGAGE FRAUD
FACTS
On March 5, 2010, John A. Bui was sentenced to federal prison for 41 months and ordered to pay $3.5 million for a mortgage loan fraud scheme that spanned six years. He had pleaded guilty to conspiracy to commit wire fraud, destruction of records in a federal investigation and witness tampering. He was sentenced by U.S. District Court Judge Susan Ilston in San Francisco.
Bui admitted that from 2003 through April 2009, he masterminded a scheme to defraud mortgage lenders and banks by providing false and fraudulent information for bank loan applications. Bui routinely transmitted fraudulent loan applications that included false employment information and inflated income. He and his employees maintained a network of people who posed as the employers to verify the phony information.
Bui also admitted he destroyed information after hearing the FBI searched the San Francisco office of an associate. And he admitted he tried to convince someone not to cooperate with the FBI. He has so far handed over $460,000 of the $3.5 million he's been ordered to pay. (sjmernws3510)
MORAL
Notice (as I have been repeatedly saying) that the federal government can go back to loans that occurred 10 years ago to indict the people involved. So if anyone has done creative loans since 2000, I suggest they see an attorney now.
FLORIDA JOINS THE FEDERAL COURTS AND SEVERAL STATES IN RULING THAT THE LENDERS MUST PROVE IT HAS POSSESSION OF THE PROMISSORY NOTE AND DEED OF TRUST BEFORE IT CAN FORECLOSE
FACTS
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The Florida Supreme Court said in February 2010 that before foreclosing, a lender must verify that it has all the proper documents, including proof it owns the mortgage in question. If when pressed by the borrower a lender cannot produce the papers, the institution could be fined for perjury, the court said.
Foreclosures in other states have been dismissed for lack of such proof. However, Florida is requiring some pretty strict rules of evidence and documentation of who is the actual holder of the note. In December 2009 the Supreme Court said all Florida foreclosure cases must go through mediation.
Both rulings are designed to help ease the backlog of foreclosure cases that have been clogging Florida courts. The verification requirement, for example, precludes long, drawn-out arguments over whether the lender has the right to bring an action against the borrower in the first place.
Only 20 states require lenders to go through courts to conduct foreclosures. (In most other states, lenders can simply move to sell the house, though the borrower can sue to stop the foreclosure. A handful of states have a hybrid system where a lender can choose to process a foreclosure in or out of court.)
One of the more prominent instances of a borrower's lack-of-documentation defense holding up occurred in October 2007, when a federal judge in Cleveland dismissed 14 foreclosure claims brought by a subsidiary of Deutsche Bank AG on the grounds that it could not adequately show it owned the mortgages in question.
The Florida Supreme Court's February ruling doesn't require lenders to submit documentation of the note with an initial complaint. The perjury charges become a risk only when a borrower demands to see the papers and the lender cannot produce them. Though the maximum fine is just $500, a second-degree misdemeanor is embarrassing. The court said it wanted "to provide incentive for the plaintiff to appropriately investigate and verify its ownership of the note or right to enforce the note and ensure that the allegations in the complaint are accurate."
So now, when filing an action for foreclosure of a residential property in Florida, the plaintiff must include an oath verifying that the facts alleged in the complaint are true and correct to the best of the plaintiff's knowledge.
In December 2009 the Florida Supreme Court signed an order requiring mediations (which some lower Florida courts had already been using), and followed up with the amendment to the Florida Rules of Civil Procedure in February 2010 requiring that all foreclosure complaints be verified. (nmn3310)
MORAL
Sue the lender if they fail to come up with the promissory note and assignment of deed of trust (presuming the mortgage was sold on the secondary market.)
FLORIDA MAN GETS EIGHT YEARS IN PRISON FOR MORTGAGE FRAUD
FACTS
Hector L. Rivera, of Ocala, Fla., who was known as the "Magic Man" for securing mortgages and who posed as a mortgage broker and submitted falsified loan documents to a now-fallen national mortgage home lender, has been ordered to serve an eight-year prison sentence.
Rivera was arrested in December 2008 on one count of racketeering, four counts of fraudulent use of personal identification information and one count of grand theft for a string of illegal transactions he conducted over a year and a half period. Known as the "Magic Man" in Marion Oaks for his ability to secure mortgages, in February 2010 he pleaded no contest to the racketeering count, while state prosecutors dropped the other counts. As part of a plea agreement, Circuit Judge Edward L. Scott ordered Rivera to pay restitution in the amount of $100,000 to Taylor, Bean & Whitaker Mortgage Corp., which accepted the falsified applications and funded the mortgages, and another $100,000 to Attorney's Title Insurance Fund, which was underwriting a Miami-Dade real estate attorney retained by Rivera. That attorney, Jorge Enrique Rodriguez, was disbarred in August 2009 for violating rules regulating trust accounts.
Rivera operated a mortgage brokerage company out of Belleview called Windsor Capital. On probation for a prior organized fraud conviction, he did not have a license to be a broker, but operated the business through the name of a former son-in-law who did, according to prosecutor Phil Hanson.
Once a loan processor for Pinnacle Financial in Ocala, Rivera used past clients' personal information to falsify loan documents, which in turn were approved by Taylor Bean. This was taking place between August 2007 and December 2008.
The individuals whose information was used to apply for loan documents were not aware they were listed as purchasers to these homes, which have since gone into foreclosure. At least four people were victimized by Rivera's scheme and are now suffering from ruined credit, according to the prosecutor.
Checks from the lender were issued to Windsor Capital, then diverted into the account of a limited liability corporation Rivera had named Pinnacle Financial. (ocal.com3510)
MORAL
Look at the names of the companies carefully. Recognize any of them? Remember, if you do not watch over your branch offices, they can watch over you to put you out of business. In the meantime this gentleman has room and board for the next eight years!
GEORGIA WOMAN SENTENCED FOR MORTGAGE FRAUD
FACTS
On March 1, 2010, Latoya Dawkins of Augusta, Ga., was sentenced by United States District Judge J. Randal Hall in Augusta to imprisonment for 12 months and one day for making a false statement to a bank in a mortgage application. Dawkins was also ordered to pay $253,000 in restitution. Dawkins entered a guilty plea in July 2009 to one count of making a false statement to a federally insured bank in violation of Title 18, United States Code, Section 1014.
Dawkins allowed another person to use her name and Social Security number to make a mortgage loan application which was used to purchase a home that was later foreclosed. (usattysdga3210)
MORAL
Don't lend someone your Social Security number. Do you notice how they audit the loan file after foreclosure?
IN GEORGIA, THREE MEMBERS OF AN ALLEGED REVERSE MORTGAGE FRAUD RING INDICTED
FACTS
Indicted by a federal grand jury on Feb 24, 2010, Jonathan Alfred Kimpson of Lithonia, Ga., and Gia Harris of Atlanta, were charged with conspiracy to commit financial institution fraud involving so-called "reverse" mortgages. Kimpson was also charged with aggravated identity theft and wire fraud. Kelsey Torrey Hull of Lithonia, Ga., was charged on Feb. 25, 2010, in criminal information related to the same scheme, on a charge of financial institution fraud and conspiracy.
Acting United States Attorney Sally Quillian Yates said, "These defendants are charged with profiting from the corruption of an FHA-insured program designed to assist seniors with either cash for equity in their home or with funds toward the purchase of a home. These defendants allegedly altered real estate records, used fake documents, and posed as Realtors. This abuse of the system took money away from qualified senior citizens who need these funds."
The indictment charges that Kimpson, Harris and Hull, in an attempt to take advantage of the system, allegedly faked the required down payments by the senior citizen to establish the equity needed in the home to qualify for the FHA-insured reverse mortgages. The defendants did this through bogus gift letters in amounts between $50,000 and $105,000. They used fake HUD-1 Settlement Statements reflecting the sale of non-existent assets closed by fictitious law firms to show the source of the required down payments. All down payments were actually supplied by the defendants, not the senior citizens, to be returned to the defendants upon the reverse loan closings, along with profits far in excess of the true sales prices of the properties. The return of such payments to the defendants was disguised as seller proceeds or lien payoffs. All such reverse mortgages included fraudulently inflated appraisals.
Kimpson's charge of aggravated identity theft and wire fraud relates to a scheme to use stolen identities of realtors. Kimpson allegedly used Realtor passwords obtained in his and relatives' names, and in the stolen identities of other Realtors. With that information, he allegedly falsified Georgia MLS records to create fake property sales at inflated amounts to support many of the properties' fraudulent appraisals.
The Kimpson indictment charges a conspiracy count which carries a maximum sentence of up to 30 years in prison and a fine of up to $1,000,000, a wire fraud count with a maximum sentence of up to 30 years in prison and a fine of up to $250,000, and three aggravated identity theft counts which each carry a maximum sentence of up to two years in prison and a fine of $250,000 with at least two years required to be imposed consecutive to the sentence on the other counts.
The Harris indictment charges a conspiracy count which carries a maximum sentence of up to 30 years in prison and a fine of up to $1,000,000.
The Hull Criminal Information charges a bank fraud count which carries a maximum sentence of up to 30 years in prison and a fine of up to $1,000,000, and a conspiracy count which carries a maximum sentence of up to 30 years in prison and a fine of up to $1,000,000. (usattyndga33100
MORAL
I am willing to be this is not the last we will see of purchase money reverse mortgages, including false birth certificates.
MARYLAND MORTGAGE BROKER GUILTY OF $2.3 MILLION
MORTGAGE FRAUD
FACTS
On March 1, 2010, David Wehrs Sr., of Annapolis, Md., pleaded guilty to wire fraud in connection with a scheme to defraud investors and financial institutions of more than $2.3 million.
Wehrs owned Maryland Title and Escrow Co. Inc., located in Annapolis, and operated a small home remodeling company called Show-Me. From 2007 to October 2009, Wehrs induced individuals to invest money through Maryland Title into a purported FDIC-insured money market fund that Wehrs "guaranteed" would pay monthly interest payments of 10.85%. Instead of depositing the money into an "American Funds Fixed Rate Money Market" as promised, Wehrs deposited investor funds into one of two bank accounts he controlled in the name of his title company. Wehrs wire transferred a large portion of these investor funds to a brokerage account in the name of his title company, and then used the money to day trade. During the scheme, Wehrs conducted millions of dollars of stock trades per month. From early 2008 until mid-2009, Wehrs lost approximately $1 million.
In addition to day trading, Wehrs used some of the investor funds to: pay "monthly interest" and "redemptions" to other investors; pay expenses of his other businesses, including Show-Me; make escrow payments for his title company; buy real estate and personal property; and pay other personal expenses.
Wehrs admitted that in June 2009, when he had no money left in his personal bank accounts or day trading accounts to pay interest due to investors, he used $630,611 earmarked to pay lending institutions for mortgage payoffs from his escrow account at Maryland Title to pay investors, causing that amount of loss to the title insurance company for Maryland Title. He also used $100,000 from the Maryland Title escrow account that was earmarked as earnest money for the purchase of an individual's home to pay interest to investors, causing a loss of $100,000 to the homebuyer.
The total loss as a result of Wehrs' scheme is $2,371,061 to investors and the title insurance company. U.S. District Judge Benson Everett Legg has scheduled sentencing for May 19, 2010 at 3:00 p.m. Wehrs faces a maximum sentence of 20 years in prison. As part of his plea agreement, Wehrs is required to pay restitution of $2,371,061 and to forfeit any assets derived from the scheme. Any forfeited assets will be applied to the restitution amount. (usattymd3110)
MORAL
Don't day trade. I know of someone else that became addicted to this and lost everything, including his family.
OWNER OF LEGACY LENDING IN MINNESOTA PLEADS GUILTY TO MORTGAGE FRAUD
FACTS
On March 2, 2010, Thomas John Hunter of Maple Grove, part owner of Legacy Lending, pleaded guilty to participating in a mortgage fraud scheme that involved 37 separate real estate transactions and $20 million in loan proceeds. Appearing before United States District Court Judge Richard H. Kyle, he pled guilty to one count of wire fraud and one count of money laundering in connection to this crime. He was charged via information on Jan. 26, 2010.
Hunter admitted that from September 2005 through July 2007, he and others carried out a fraud scheme, through which mortgage loans were obtained from unsuspecting lenders by straw purchasers, in amounts far exceeding actual purchase prices, based on inflated property appraisals. Hunter also admitted that during the course of this scheme, he and others failed to inform lenders that funds in excess of the actual property purchase prices were misappropriated by those involved in the fraud scheme, and that concealed payments were made out of loan proceeds to participants in the scheme.
Hunter and others caused fraudulent loan applications to be provided to potential lenders in which property purchasers were falsely identified and the property was falsely described as owner-occupied when in fact each straw buyer was purchasing multiple properties at the same time. In application materials submitted to lenders, the defendant and others also inflated the income and assets of potential borrowers, and a licensed real estate appraiser involved in the fraud scheme created inflated appraisals of the properties. The defendant participated in 37 separate fraudulent real estate transactions, worth approximately $20 million in total loan proceeds, from which at least $2.2 million was received by participants in the scheme through illegal, concealed payments.
Hunter admitted that on April 20, 2006, he and others engaged in an illegal wire transaction when they obtained $825,000 in mortgage loan financing for the purchase of a residence in Rogers, Minn. Hunter also admitted that from those funds, he and his co-conspirators misappropriated at least $110,000. In addition, Hunter admitted that on April 21, 2006, he engaged in an illegal monetary transaction when a check in the amount of $13,200, representing proceeds from the fraud, was deposited into a Legacy Lending bank account.
For his crimes, Hunter faces a potential maximum penalty of 20 years in prison on the wire fraud count and 10 years on the money laundering count. Judge Kyle will determine his sentence at a future date.
One of Hunter's co-conspirators, Frederick Earle Deen of Minneapolis, who also had part ownership interest in Legacy Lending, is scheduled to be sentenced March 5, 2010. Another co-defendant, Taylor Trump, was sentenced for his involvement in this crime on Aug. 21, 2008. (usattymn3210)
MORAL
Did you notice that checking the box primary residence and not using it as your residence is a felony in and of itself?
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE
