REMINDER THAT REGULATION Z IN TILA REQUIRES YOU TO HAVE AN ESCROW ACCOUNT FOR HIGHER PRICED MORTGAGES
FACTS
On and after April 1 loan applications received by a creditor that are considered "higher priced mortgages" within the meaning of Regulation Z must have an escrow account set up for the payment of property taxes and mortgage related insurance premiums required by the creditor such as hazard insurance, liability insurance and mortgage insurance. This must be done before the loan is completed.
The escrow account can be cancelled if the consumer gives a dated written request more than one year after the account is initially set up which is after loan consummation.
An escrow account need not be established for mortgage-related insurance that is not required by the creditor, such as earthquake insurance or debt-protection insurance. Escrow accounts are not required for either loans secured by shares in a cooperative or for loans secured by condominium units, provided the condominium association is obligated to maintain a master policy insuring condominium units. However, an escrow account for the payment of property taxes for condominium units must still be established. If the other conditions are satisfied.
MORAL
As a reminder: A higher-priced mortgage loan is a consumer credit transaction secured by the consumer's principal dwelling with an annual percentage rate that exceeds the average prime offer rate for a comparable transaction as of the date the interest rate is set by 1.5 or more percentage points for loans secured by a first lien on a dwelling, or by 3.5 or more percentage points for loans secured by a subordinate lien on a dwelling.
"Average prime offer rate" means an annual percentage rate that is derived from average interest rates, points and other loan pricing terms currently offered to consumers by a representative sample of creditors for mortgage transactions that have low-risk pricing characteristics. The board publishes average prime offer rates for a broad range of types of transactions in a table updated at least weekly as well as the methodology the board uses to derive these rates.
Watch yourselves as this is an easy way to get caught.
A REMINDER THAT THE FEDERAL TRADE COMMISSION RULE ON ADVERTISING "FREE CREDIT REPORTS" GOES INTO EFFECT APRIL 2
FACTS
The Federal Trade Commission has amended the Free Annual File Disclosures Rule to require certain advertisements for "free credit reports" to include prominent disclosures designed to prevent consumers from confusing these "free" offers with the federally mandated free annual file disclosures available through the single centralized source. The final amended rule requires nationwide consumer reporting agencies to DELAY ADVERTISEMENTS FOR PRODUCTS AND SERVICES THROUGH THE CENTRALIZED SOURCE UNTIL AFTER CONSUMERS RECEIVE THEIR FREE ANNUAL FILE DISCLOSURES, and prohibit other practices that may interfere with the free annual file disclosure process. The final amended rule also implements certain technical changes to the original rule.
For television and radio advertisements, section 205 specifies the language for the required disclosure: "This is not the free credit report provided for by federal law." This disclosure must appear in both the audio and visual portion of the advertisement. For all other media, section 205 directs the commission to issue a rule determining the content and placement of the disclosures. Finally, section 205 requires the following interim advertising disclosure if a rule is not finalized within nine months: "Free credit reports are available under federal law at: AnnualCreditReport.com."
MORAL
Do not violate the rule. The FTC on the civil side is almost as bad as a federal prosecution. The civil penalties for violating the Section 5 advertising act is in the six figures BEFORE the decimal point.
U.S. DEPARTMENT OF LABOR STATES COMMISSIONED LOAN OFFICERS ARE ENTITLED TO OVERTIME
FACTS
The Department of Labor declared that commissioned loan officers are entitled to overtime pay, reversing a 2006 ruling that favored the mortgage firms that employed them. If DOL's declaration stands, it could increase compensation costs for mortgage originators at a time when production volumes are beginning to decline thanks to rising loan rates and expiring tax credits. If your primary job duty is to sell loans inside an office, then (under this ruling) you are entitled to overtime. In its brand-new ruling, DOL found that a mortgage loan officer's primary duty is sales, which "falls squarely on the production side of the business." A DOL ruling in September 2006 requested by the Mortgage Bankers Association classified LOs as administrators, which are not entitled to overtime under the Fair Labor Standards Act.
MORAL
That has always been the law in California. Indoor sales require minimum wage and overtime. However, if more than 50% of the time is spent in outdoor sales it is exempt from minimum wage and overtime. We have written on this subject well over a year ago. The reason most brokers are not sued by lawyers is because there is not enough money in the company to pay the award.
A REMINDER TO START USING THE NEW URLA ON JULY 1, 2010
FACTS
On June 26, 2009, Fannie Mae announced revisions to the Uniform Residential Loan Application Form (Fannie Mae Form 1003/Freddie Mac Form 65) to accommodate new data elements required by the Federal Housing Finance Agency, specifically the loan originator and loan origination company unique identifier numbers under the Nationwide Mortgage Licensing System and Registry. The revised Form 1003 was initially required to be used for loan applications taken on or after Jan. 1, 2010. The required use date was subsequently delayed to July 1, 2010.
MORAL
Since the new 1003 has to be used commencing July 1 with the "unique identifiers" for the loan officer and the company, how do you do that when the California Department of Real Estate does not require them until Dec. 1, 2010?
HUD OFFICE OF THE INSPECTOR GENERAL AUDITS SCOTTSDALE BRANCHES OF DHI MORTGAGE CO. AND FINDS DISCIPLINE IS WARRANTED
FACTS
HUD/OIG audited Federal Housing Administration-insured loan processes at two DHI Mortgage Co. (DHI Mortgage) branches in Scottsdale, Ariz., to determine whether DHI Mortgage originated, approved and closed FHA-insured single-family loans in accordance with Department of Housing and Urban Development requirements. HUD/OIG recently conducted an audit of DHI Mortgage's Tucson and Scottsdale branches and identified significant underwriting deficiencies and improper restrictive addenda/liens to the purchase contracts. Based on the results of our prior audit, HUD/OIG chose to audit the remaining two DHI Mortgage Scottsdale branches.
DHI Mortgage did not follow HUD requirements for originating, approving, or closing FHA-insured loans.
Specifically, all 20 of the loans reviewed contained underwriting deficiencies, and 12 of these had significant deficiencies that impacted the insurability of the loan. The significant underwriting deficiencies included improper calculation of income, inadequate documentation of income, inadequate determination of credit and/or debt, and inadequate compensating factors when the debt-to-income ratio exceeded HUD's benchmark ratio. HUD/OIG also reviewed all of the loans in the audit period that were either "new construction" or "new condo" to determine whether improper restrictive covenants were recorded against the FHA-insured properties. HUD/OIG identified eight loans that had prohibited restrictive addenda to the purchase contracts. Some of which restricted the buyer from selling or renting the property for one year or they would be subject to a monetary penalty which violates FHA free transferability of the property. This was added as a Schedule A to the purchase contract. This Schedule A was also recorded as a second lien on the property in violation of FHA rules that second liens are not permitted. There was a clause that said it did not apply to FHA/VA loans but notwithstanding the audit found eight FHA loans that were recorded with the restrictive covenants.
HUD/OIG recommended that the deputy assistant secretary for single-family housing require DHI Mortgage to indemnify HUD for more than $2.5 million for loans that did not meet FHA insurance requirements and reimburse HUD $265,420 for the amount of claims and associated fees paid on loans that did not meet FHA insurance requirements.
MORAL
I told you to get us in there first. This one saved a few dollars by not having an outside audit and now risks paying $265,420 plus indemnifying HUD against a loss of $2.5 million if any of the audited loans go bad a d several of them indicate claims in the audit report. So make sure your underwriters are thoroughly familiar with 4155.1 REV 5. A checklist is a good idea.
CALIFORNIA DEPARTMENT OF REAL ESTATE PROPOSED REGULATIONS FOR MORTGAGE LOAN ORIGINATORS ARE OUT FOR PUBLIC COMMENT UNTIL MARCH 29. REVIEW FINANCIAL RESPONSIBILITY SECTION
FACTS
I am not putting forth all the regulations just the one of chief concern among those of you that have contacted me. That is the one concerning "financial responsibility" and your credit report.
Evidence of financial responsibility. NMLS Regulations 3 the commissioner's finding required by Section 10166.05(c) of the Business and Professions Code relates to any matter, personal or professional, that may impact upon an applicant's propensity to operate honestly, fairly and efficiently when engaging in the fiduciary role of a mortgage loan originator. In order to apply for a mortgage loan originator license endorsement, an applicant shall authorize the Nationwide Mortgage Licensing System and Registry to obtain the applicant's current credit report, at such time after this functionality is available on the System and Registry. The credit report will be used as needed to validate the applicant's responses to the electronic application form, in order to support the commissioner's finding required by Section 10166.05(c) of the Business and Professions Code. (a) The applicant may be precluded from obtaining a mortgage loan originator license endorsement where his or her personal history includes (1) any liens or judgments for fraud, misrepresentation, dishonest dealing, and/or mishandling of trust funds, or (2) other liens, judgments, or financial or professional conditions that indicate a pattern of dishonesty on the part of the applicant.
(b) Notwithstanding the requirements above, where an applicant for a mortgage loan originator license endorsement (1) is currently holding a restricted real estate license, or (2) has a right to a restricted license and is making a dual application for the restricted license and mortgage loan originator license endorsement, such applicant must demonstrate, where pertinent, the completion of restitution to any person who has suffered monetary losses through acts or omissions of the applicant that include, but are not limited to, those that substantially related to the qualifications, functions or duties of a real estate licensee as defined in Section 2910 of these regulations, and/or the discharge of, or bona fide efforts toward discharging, adjudicated debts or monetary obligations NMLS Regulations 4 to others. NOTE: Authority cited: Section 10080 and 10166.17, Business and Professions Code.
MORAL
Superficially, it appears the commissioner is not going to look at a bad credit report and determine that a bad FICO score or nonpayment of personal debts are in and of themselves sufficient to deny the endorsement as a mortgage loan originator. The commissioner, as the proposed regulation suggests will look to see if there is a pattern to the bad debts or nonpayment of debts to see if there is a pattern of dishonesty. Thus if you are denied the endorsement based upon that determination or you are worried about the determination you should contact competent legal counsel to assist you in completing the application or in the alternative if you are denied the endorsement retain counsel to request a hearing so you can challenge the determination.
ON MARCH 22, THE 4TH AND REMAINING DEFENDANT TERRAL TOOLE OF LAKE ELSINORE WAS SENTENCED TO 7 YEARS IN FEDERAL PRISON
FACTS
On March 22 Terral Toole, 42, of Lake Elsinore, Calif., was sentenced to 85 months in federal prison and ordered to pay $291,055 in restitution to three financial institutions.
Toole had pleaded guilty in November 2009 to four counts of wire fraud and four counts of money laundering for his role in a mortgage fraud scheme that collected approximately $4 million in loan proceeds for properties that were not for sale.
The three other defendants were previously sentenced for their roles in the mortgage fraud scheme. Angela Cotton, 38, of Fontana, who ran a bogus title company, was sentenced March 18 to five years in federal prison and was ordered to pay restitution of $4,044,681; Miles Davis, 47, of Reseda, a loan processor, was sentenced to three years of probation, including six months of home detention; and Lisa Lievanos, 46, of Fontana, who was convicted at trial of five felony counts, was sentenced to one year and one day in prison.
According to court documents and the evidence presented at Lievanos' trial, the participants in the scheme -- including people such as Lievanos, who agreed to act as "straw buyers" -- fraudulently "purchased" properties and obtained millions of dollars in mortgage loans. The defendants then spent the fraudulently obtained money on personal expenses such as luxury cars and gambling expenses. The various applications for mortgages contained false information, such as false employment and income information.
MORAL
Do you notice how they even get the straw buyers now? They are no longer the "innocents."
SAN JOSE BUSINESSMAN AND SANTA CRUZ LAWYER ARRESTED FOR MORTGAGE FRAUD
FACTS
On March 22, a small army of law enforcement agencies swooped in on a San Jose estate and arrested a businessman and his Santa Cruz lawyer. Headed by the San Francisco Police Department, officers arrested telecommunications executive Jay Chandrakant Shah, 45, at his property on Quimby Road. They also arrested Melvin Lee Emerich, an attorney and real estate broker who lives in Santa Cruz and has an office in San Jose.
Police say Shah and Emerich were involved with falsifying documents at the recorder's office to make it appear as if they were buying luxury condos at One Rincon Hill with stunning views of the bay in San Francisco. In arrest warrants, police allege the two then reaped $2.2 million in loans from the fraudulent transfers of property.
The case began to unravel when One Rincon Hill's owner, Shirley Hwang, a major San Francisco real estate investor, found a package in her mailbox that supposedly belonged to a new owner of her building, when in fact, she hadn't sold it.
Shah, who owns a company named Telsystems, is being held on $10 million bail and Emerich is being held on $7.5 million bail. Both are in custody at the San Francisco County Jail on suspicion of conspiracy, grand theft, identity theft, forged documents, filing false mortgage documents and money laundering.
MORAL
Remember, they are innocent until proven guilty. I wonder who the lawyers' lawyer will be.
VIOLATE THE CC&R's IN CALIFORNIA AND YOU MAY JUST HAVE TO TEAR YOUR HOUSE DOWN
FACTS
Plaintiff Clear Lake Riviera Community Association regulates new construction within a common interest development. Defendants Robert and Catherine Cramer purchased a lot within the development and drew up plans to build a house. In approving their plans, the association committee with responsibility for plan review applied an association guideline that limited the height of homes within the development. Because the home was located on a sloping lot, compliance with the height guideline depended not only on the height of the structure itself but also its location on the lot.
During construction, it was called to the attention of defendant Robert Cramer that the location he selected for the home would result in a violation of the height guideline, but he disregarded the warnings. When the resulting home exceeded the height guideline by nine feet, the association filed suit to abate the violation. Finding the Cramers knowingly violated the height guideline, the trial court ordered them to bring their home into compliance. They contend the height regulation was unenforceable because the association failed to prove it had been properly adopted and the trial court abused its discretion in awarding injunctive relief rather than damages. The Cramers appealed.
The California Court of Appeal 1st Appellate District said...
Affirmed. 1) The association's height guideline was validly adopted; 2) mere participation of a non-appointed person in the business of the committee, under these circumstances, would not invalidate the committee's official actions; and 3) trial court did not abuse its discretion in ordering defendants to tear down their house in order to comply with the guidelines rather than award money damages.
MORAL
Knowingly going against the CC&R's while building is stupid. What is better is to have filed a declaratory relief action before you spend the money to build, then rip it down, only to build again.
COLORADO TO REQUIRE ALL THOSE DOING LOAN MODIFICATIONS TO BE LICENSED AND TO USE A LOAN MODIFICATION CONTRACT
FACTS
A rule making hearing is set for April 8 to review proposed new regulations that those persons doing loan modifications for others must be licensed as mortgage loan originators and that the licensing must be done by July 1. The director of the Colorado Department of Real Estate has dictated that a loan modification contract is to be used and has a model of one on the website. This must be used or one so similar that everything in the model is in the substitute a loan originator may use.
Mortgage Loan Originator Disclosures are also to be changed due to the new disclosure forms required by the RESPA good-faith estimate and HUD-1.
Read the proposed new regulations carefully by going to
MORAL
And the new laws and regulations keep on coming.
GARY T. JOHNSON FORMER HEAD OF GROTON MORTGAGE COMPANY IN CONNECTICUT FOUND GUILTY OF MORTGAGE FRAUD
FACTS
On March 25, a federal jury in Hartford, Conn., found GARY T. JOHNSON, 60, of Groton, guilty of four counts of wire fraud and two counts of engaging in illegal monetary transactions while operating his former mortgage lending business.
According to the evidence presented during the trial, Johnson owned and operated a business known as Matrix Investment Corp., which was based in Groton. Matrix provided mortgage loans to interested borrowers either as a broker for other lenders or as a loan originator itself. Johnson was the chairman of Matrix and oversaw lending activity at the company.
During 2004 and 2005, Matrix and Johnson began to use monies disbursed for the benefit of borrowers for purposes other than the payoffs set forth in the relevant HUD settlement statements, including to pay Matrix's ongoing payroll and other expenses, or to make payoffs to other lenders on unrelated refinancings. In the summer of 2004, Johnson informed some of his employees that he was seeking to refinance certain of his personal properties to put money into the business to fund Matrix. As part of that process, a Matrix employee began to explore refinancing options for Johnson from various lenders, including Greenpoint Mortgage Funding Inc. for $640,000 and a line of credit for $80,000, both to be secured by Johnson's personal residence in Groton. Several months later, Johnson sought refinancing for $575,000 with Flagstar Bank, to be secured by another house he owned in New London.
During the refinancing process, Johnson caused fraudulent personal mortgage loan applications to be submitted to Greenpoint, Flagstar Bank and other lenders. On the applications, Johnson misrepresented to Greenpoint that he owned his primary residence in Groton, when the residence was actually held in his wife's name. Johnson also overstated his monthly employment income, listing it as much as $29,000, when his tax returns listed no employment income. Although Johnson also told Greenpoint and Flagstar that he would use the proceeds of the refinancings to pay off preexisting liens on the properties, he instead used the monies for other purposes.
The $640,000 and the $80,000 loans with Greenpoint closed on Aug. 9, 2004. The Flagstar loan for $575,000 closed on Oct. 8, 2004. In the fall of 2005, Johnson ceased making payments on both the Greenpoint and Flagstar loans. The loans went into default, and the lenders have suffered losses in excess of $1.3 million.
Johnson is scheduled to be sentenced by U.S. District Judge Christopher F. Droney on June 11, at which time Johnson faces a maximum term of imprisonment of 120 years.
MORAL
That will teach you not to lie on your loan application. He is looking at 120 years in a federal prison. For loans totaling $720,000. That comes to about $6,000 per year.
MARSHALL CRAIG SCOTT OF JACKSONVILLE GUILTY OF MORTGAGE FRAUD
FACTS
On March 23, following a two-week trial, a federal jury has found Marshall Craig Scott (age 59, of Jacksonville) guilty of commit mail fraud, wire fraud and conspiracy to commit mail fraud. Scott faces a maximum penalty of 145 years in federal prison. His sentencing hearing is scheduled for June 24. Scott was indicted on Oct. 29, 2009.
According to testimony and evidence presented at trial, Scott was one of four conspirators who schemed to defraud various lending institutions in connection with residential home mortgages. Scott, one of three owners of American Home Builders Inc., participated in a scheme to trick lending institutions into lending money to fund the purchases of new homes built by AHB. He and his co-conspirators did so by fraudulently inflating the price of homes on purchase and sale contracts in order to cause the lending institutions to lend more money on the homes than the true or actual price of the home. Evidence established that the "extra money" extended by the lending institutions was kicked back to the borrower/buyer by both Scott, the homebuilder and co-conspirator Jean Tan Jones, a Realtor for the borrowers/buyers.
Testimony established that buyer/borrowers would be induced into purchasing the homes with the promise of receiving between $50,000 and $100,000 outside of closing, which was not disclosed to the lending institutions. Testimony further established that the vast majority of the homes are in foreclosure or short sale status.
Co-conspirators who testified against Scott included Jean Tan Jones, a Jacksonville real estate broker; Jeffrey Rubin, a Realtor and site sales agent for AHB; and Fe V. Tan, a mortgage broker. All three have pleaded guilty and are awaiting sentencing.
MORAL
Anyone want to bet that the three co-conspirators made a deal in the hope for a lighter sentence?
MAN AND WOMAN FROM KANSAS CITY SENTENCED FOR MORTGAGE FRAUD
FACTS
On March 24 Mark Kiel, 42, and Codi McArdle, 26, who are common law husband and wife, of Kansas City, were sentenced in separate appearances before U.S. District Judge Ortrie D. Smith. Kiel was sentenced to two years and nine months in federal prison without parole; McArdle was sentenced to 18 months in federal prison without parole. The court also ordered Kiel and McArdle to pay restitution to the victim financial institutions.
On Oct. 22, 2009, both Kiel and McArdle pleaded guilty to their roles in a conspiracy to commit wire fraud. They admitted that the conspiracy involved 37 different mortgage transactions with more than 10 different lenders.
Kiel, who was a loan broker at First National Mortgage Solutions, and McArdle would have two separate HUD-1 documents prepared during real estate purchases. One document reflected the true sale price of the property, but the second, fraudulent document reflected an inflated sales price that was disclosed to the lender. At the time of the closing, the difference between the true sales price and the inflated sales price would be cut in a check, which would be provided to either Kiel or McArdle.
The difference between the actual sale price and what was reported to the mortgage company was referred to as the "spread." Kiel and McArdle admitted that the total "spread" from 37 transactions was $438,048.
MORAL
Some of you may wonder why I publish so many fraud cases. At that I am only touching the tip of the iceberg since the ones I publish are but a fraction of the actual cases under investigation or indictment of conviction. The reason is because by reviewing the facts of what is occurring you can put "controls" in place to stop the fraud in your company. Remember, because of the depression in value the lenders (especially Chase and New Century through the bankruptcy court orders) are suing the brokers on the contract to buy back every loan that is "irregular" in any fashion. Now this might not disturb a corporate broker but if you are a loan correspondent or a direct endorsement lender do you really want to buy back the loans? We have defended reasonably well but still it costs money to defend so do your QC and protect your assets.
NEW YORK WOMAN CHARGED AS MASTERMIND IN NEW JERSEY MORTGAGE FRAUD
FACTS
On March 25 Jong Shin of New York the alleged mastermind of a mortgage fraud and money-laundering scheme involving residential properties in Atlantic City had an initial appearance in connection with a two-count Indictment. The indictment charges that Shin conspired with others to obtain more than a million dollars of mortgage loans for unqualified borrowers during June 2006 through December 2006 to purchase seven houses in Atlantic City at inflated prices. The indictment further alleges that Shin and other members of the conspiracy extracted a portion of the proceeds from the fraudulently obtained mortgage funds paid at the real estate closings, which Shin used to, among other things, gamble, purchase a liquor store, and make payoffs to her coconspirators in furtherance of the scheme.
Shin, 50, of Bayside, N.Y., surrendered herself earlier today, and following a brief hearing before the Joel Schneider, U.S. magistrate judge, was released on $100,000 bail.
According to the Indictment, Shin and her conspirators arranged to sell the Atlantic City properties to "straw purchasers," that is, friends and acquaintances whom Shin knew had good credit scores, but lacked the financial resources to qualify for mortgage loans to purchase the properties. According to the Indictment, in exchange for purchasing the properties in their names, Shin promised the straw purchasers that they would not have to pay deposits or closing costs to acquire the properties, would not have to make monthly mortgage payments, and would receive cash after the closing for allowing their names and credit information to be used to buy the properties. The government maintains that, in completing the borrowers' loan applications, Shin and her coconspirators claimed fake employers, inflated incomes, false bank account balances, and fictitious assets in order to induce the lenders to extend the mortgage loans.
It is further alleged that Shin and others took proceeds from the fraudulent mortgage loans by having funds wired into various accounts that they controlled. The indictment further alleged that Shin used some of the proceeds from the mortgage fraud to further the scheme by (1) making payoffs to her coconspirators, including the straw purchasers, a title clerk and a real estate appraiser; and (2) making two to three payments on each property before allowing the mortgage loans to go into default. In addition, the Indictment alleges that Shin also used the proceeds for personal living expenses, gambling and to purchase a liquor store.
The indictment charges Shin with one count of conspiracy to commit wire fraud, which carries a statutory maximum prison sentence of 30 years and a statutory maximum fine of not more than $1,000,000. The indictment also charges Shin with one count of conspiracy to commit money laundering, which carries a statutory maximum prison sentence of 10 years, and a statutory maximum fine equal to the greatest of $250,000, twice the gain from the offense, or twice the loss caused by the offense. Despite the indictment, however, the defendant is presumed innocent unless and until proved guilty beyond a reasonable doubt.
MORAL
Note that the government picked up loans from 2006. I trust she has a good attorney but if she posted $100,000 cash bail, she should have enough left over for legal counsel.
TWO PEOPLE CHARGED IN PENNSYLVANIA FOR HOME IMPROVEMENT MORTGAGE FRAUD
FACTS
On March 26, Calvin Harris, owner of the Philadelphia Homes Improvement Outreach Program, was charged with two counts of wire fraud. Jonathan Ganz, a loan officer for a mortgage brokerage company, is charged with one count of wire fraud.
Harris focused his sales efforts on the African-American community in Philadelphia, promising home improvement work on the houses of those clients who signed with him. He also promised to help them secure financing for the work. For the mortgages, he partnered with Ganz who would complete the necessary paperwork to obtain the loans for the PHIOP customers. According to the indictment, Harris took the funds intended for his clients' home improvements and misspent them, using some of the money for cars, clothes, and vacations for himself and his family. To keep the operation afloat, he had to continue to sign up new customers to pay for the work promised to earlier customers. When the scheme started to unravel, many PHIOP customers were left with little or no improvements to their houses.
Additionally, the indictment alleges, in several transactions Harris and Ganz created phony paperwork to submit to the lenders that were providing the mortgages to the PHIOP customers. In several more transactions, Harris took loan proceeds checks made out to third parties, such as the City of Philadelphia, utility companies, and credit card companies, and cashed them himself, keeping the money, rather than sending it to the third parties.
As a result of the scheme, many PHIOP customers are now struggling to pay mortgages for home improvements that were never done.
If convicted Harris faces a maximum possible sentence of 40 years' imprisonment, three years of supervised release and a $500,000 fine. Ganz faces a maximum possible sentence of 20 years' imprisonment, three years of supervised release, and a $250,000 fine.
MORAL
I trust they find good attorneys. They are innocent until proven guilty but once proven I would say because of the type of "rip-off" they are looking at a lot of "hard time."
EX-CITY OF PHILADELPHIA EMPLOYEE CHARGED WITH PREPARING AND FILING FRAUDULENT DEEDS WHILE EMPLOYED IN THE RECORDERS OFFICE
FACTS
On March 19, former city of Philadelphia employee Ramon Pabon was charged by a federal information with accepting money to prepare fraudulent deeds and deeds not authorized by the records department and filing false tax returns. Pabon was a former title registration aide for the City of Philadelphia Records Department, recorder of deeds.
According to the information, during the period 2003 through 2008, Pabon received money, outside his city employment, from various individuals for preparing and recording fraudulent deeds and deeds that were not authorized by the Department of Records, as well as at least one fraudulent mortgage. With the fraudulent deeds, the true property owners were unaware that their properties had been sold. Pabon received over $46,295 in fees from these fraudulently and unlawfully prepared deeds. Pabon further failed to report the income from these fraudulently and unlawfully prepared deeds on his federal tax returns for the years 2006 through 2008.
MORAL
Remember, everyone is innocent until proven guilty but if someone wants to commit mortgage fraud bribing a city employee may be a way to go, albeit the wrong way. First over eight years Pabon is alleged to have received on average a little over $5,000 per year. Second, all these individuals will soon be known if not already known and do time in a federal prison.
