GOOD NEWS ABOUT THE NMLS SAFE ACT TEST
FACTS
Roughly 71% of loan officers pass the national test the first time they take the exam, according to figures released by the Nationwide Mortgage Licensing System. The state (first-time) pass rate is even better: 78%, according to NMLS. The results are for tests administered between July 30 of last year and April 30, 2010. (nmn6810)
MORAL
You study, you pass. You do not study, you do not pass. So if you really want to stay in the industry, study!
FORECLOSURE TREND TO CONTINUE WITH A DOWN MARKET
FACTS
Foreclosures in the United States will not stabilize until late 2011. Only three out of eight bank-owned homes are on the market, and two-thirds of those under-valued homes yet to hit so the housing market still faces years of low prices. The bad news is it will prolong the time it takes for market recovery. (nmn6810)
MORAL
Anyone remember me telling you in my prior e-Alerts since 2008 that I said the foreclosures would continue until 2012? I still say 2012. You still have the five year "step-ups" that funded up to September 2007 to hit the market when they reset in September 2012. In the meantime the lenders, FDIC and the trustee of the New Century Bankruptcy are suing everyone that sold them loans including but not limited to the wholesale lenders, the brokers and even the homeowners. How do I know? Because we are defending a few of them now and more are coming in weekly.
CALIFORNIA AG ARRESTS THREE MORE IN BAIT AND SWITCH HOME REFINANCE SCHEME
FACTS
On June 9, 2010, Attorney General Edmund G. Brown Jr. announced the arrests of president and co-owner of ALG Capital Inc, Sean McConville and two associates who used "deceptive promises and forged documents" to steal almost $1 million from homeowners falsely guaranteed attractive home loan refinancing packages.
Brown's office initiated its investigation in October 2008 in response to more than 70 complaints against the defendants and their mortgage brokerage business. The brokerage operated out of Calabasas from early 2006 until late 2007 and then moved to Mission Hills until it shut its doors in 2008.
Brown's investigation found that from April 2007 to October 2008, the owners and their associates lured dozens of borrowers into refinancing home loans by falsely promising low interest rates, minimal broker fees and other attractive terms. The brokerage then negotiated different terms with lenders.
When homeowners were presented with closing documents, they bore the terms promised, but which the lenders never approved. After homeowners signed the closing documents, key pages were removed and replaced with pages bearing the terms that the lender had actually agreed to. The homeowners' signatures were then forged on the replacement pages, and ALG forwarded the forged documents to the escrow company.
Homeowners only discovered they had been defrauded when they received the final loan documents with the true terms and their signatures forged on closing cost disclosures, Truth-in-Lending disclosures, loan applications and other documents.
Additionally, ALG collected almost $1 million in undisclosed fees, charging homeowners up to! $57,000 in broker fees. In total, dozens of homeowners were locked into almost $30 million in loans with terms they did not agree to.
As a result of this scheme, many homeowners were forced to sell their homes, come out of retirement, or tap retirement savings. Others paid significant prepayment penalties, including over $21,000 in one case. Borrowers also rarely received the large cash-outs they were promised as part of the refinance.
Sean McConville is from Austin, Texas, and is being held at the Travis County Jail in Texas pending extradition. He was previously convicted of robbery in November 1997.
Matthew Bourgo of Thousand Oaks, who posed as a licensed notary for the brokerage, was also arrested on June 8, 2010 at his residence. He is being held in Ventura County Jail and will be transferred to Los Angeles County.
Joseph Nguyen of Woodland Hills, a former loan officer for the brokerage, was also arrested at his business, where he worked as a chiropractor. He is being held by authorities in Los Angeles County. The suspects are each being held on $29.5 million bail.
In September 2009, Brown's office arrested three others involved in the bait-and-switch scam, including Michael McConville of Simi Valley, Sean's brother and co-owner of the brokerage, Alan Ruiz of Huntington Beach, a former loan officer and Garrett Holdridge of Palmdale, who was convicted of seven felonies in March for his involvement in the scam.
The complaint, filed in Los Angeles County Superior Court, includes the following charges: 38 counts of grant theft, 19 counts of forgery, three counts of elder abuse and one count of conspiracy to commit grand theft.
Brown also filed suit against the McConville brothers in May 2009 for running a property tax reassessment scam which targeted Californians looking to lower their property taxes. The brothers billed tens of thousands of homeowners throughout California nearly $200 each for property tax reassessment services that were almost never performed and are available free of charge from local tax assessors. (caagbrown6910)
MORAL
Note the bait and switch from the original loan quoted to a higher loan and then the forged signatures. Sound familiar? If it does, I suggest you see an attorney now if you had any relationship with these people. Note the bail amount!
OWNER OF SAN DIEGO LOAN MODIFICATION COMPANY PLEADS GUILTY
FACTS
On June 1, 2010, GLENN STEVEN ROSOFSKY pleaded guilty to superseding information charging him with one count of conspiracy to commit wire fraud and money laundering, one count of money laundering, and one count of filing a false tax return. The guilty pleas were tendered before United States Magistrate Judge William McCurine, Jr., subject to final acceptance by United States District Court Judge Roger T. Benitez. These criminal charges stemmed from Rosofsky's operation of a fraudulent telemarketing operation involving loan modifications in San Marcos, California during 2009.
In his guilty plea Rosofsky admitted that in approximately April 2009, he and MICHAEL TRAP (who previously pleaded guilty) began OPERATING A LOAN MODIFICATION BUSINESS using the names NATIONS HOUSING MODIFICATION CENTER and FEDERAL HOUSING MODIFICATION DEPARTMENT, in an effort to fraudulently sell loan modification services to homeowners who were delinquent on their monthly mortgage payments. Rosofsky admitted that he, Trap and others used false and fraudulent statements and representations to induce customers to purchase loan modification services from NHMC. Among the misrepresentations made to customers were claims that NHMC had "attorneys" and "forensic accountants" on staff to deal with the loss mitigation departments of banks on behalf of NHMC's customers, that NHMC had achieved an "extremely high success rate for homeowners that met the Nations Home Affordable Modification Program guidelines," and that NHMC was located on "Capitol Hill" in Washington. In fact, as Rosofsky admitted, NHMC did not have attorneys or forensic accountants on staff, it did not have a high success rate of modifying loans, it had no connection with the U.S. Treasury Department's "Making Home Affordable" program, and its only presence in Washington was a rented post office box. These false claims were made in solicitation letters that were mailed throughout the country to individuals behind on their mortgage payments and encouraged struggling homeowners to call a toll-free number to purchase NHMC's loan modification services. The staff of telemarketers at NHMC's offices in San Marcos used a script provided by Rosofsky and others to make similar false and misleading statements to potential customers.
Relying on such misrepresentations, over 300 homeowners paid between $2,500 and $3,000 to NHMC between April and July 2009, resulting in over $900,000 in customer funds to be transferred to NHMC's bank accounts in the Southern District of California. Rosofsky admitted that he and Trap then conducted financial transactions with the customer funds transferred to NHMC's bank accounts in order to pay expenses of the business and to compensate themselves. Rosofsky acknowledged in his plea agreement that at his sentencing he will be ordered to pay restitution to victims of the NHMC scheme.
Rosofsky also admitted that while living in San Diego in 2006, he worked at a separate mortgage brokerage business and received at least $350,358 in checks, cash withdrawals and transfers from this business. When filing his 2006 federal income tax return in June 2007, however, Rosofsky falsely stated that he only received $112,000 in gross receipts. Rosofsky admitted that he willfully signed this false tax return, and thereby understated his total tax due and owing for 2006 by at least $82,853.
In September 2009, the Federal Trade Commission filed a civil suit against Rosofsky and Trap in the United States District Court for the District of Columbia, alleging that their operation of NHMC constituted unfair and deceptive trade practices.
Rosofsky will next appear in court on Sept. 17, 2010, before United States District Court Judge Roger T. Benitez for final acceptance of the plea and sentencing. (usattysdca6110)
MORAL
Anyone reading this do loan modifications stating a high success rate? Anyone not refund the money when they did not complete the work? I suggest you see your attorney now so he can advise how to mitigate the problem to possibly avoid the consequences Rosofsky and Trap suffered above.
CALIFORNIA SISTERS PLEAD GUILTY TO MORTGAGE FRAUD
FACTS
On June 10, 2010, RALONDRIA STAFFORD and NECOLE WARD, BOTH FORMERLY OF VALLEJO, CALIF., pleaded guilty before United States District Judge Morrison C. England, Jr., to Bank Fraud.
From 2004 through 2006, Stafford and Ward, who are sisters, operated RN REALTY, a real estate office located in Vallejo, from which they carried out a scheme to commit mortgage fraud by using straw buyers to purchase properties at inflated prices. The straw buyers were approached and offered $5,000 for the use of their names, credit histories, and financial information. The defendants represented to the straw buyers that the purchases would be in name only and that the properties would be repurchased by Stafford and Ward from the straw buyers in six to 12 months. With one of the straw buyers, the defendants signed a document called the "The $5,000 Deal," with the terms of the straw buyer agreement.
In August 2005, Stafford and Ward sold a property in Vallejo, owned by Stafford's husband to straw buyer "J.G." "J.G." received a loan based upon information contained in a fraudulent loan application prepared by Stafford and Ward and signed by the straw buyer. This application contained materially false information concerning the straw buyer's income, employment, and the purpose of the purchased location as a primary residence. Attached to the application were falsified Internal Revenue Service W-2 forms and a lease agreement. As a result of these false statements, a mortgage company funded a $475,000 loan to the straw buyer for the purchase of the property. Neither Stafford or Ward ever repurchased the property from the straw buyer. Public records indicate that one year after the sale, in August 2006, the property was foreclosed upon and resold for approximately $400,000.
In April 2006, Stafford and Ward sold Ward's house in Vallejo to straw buyer "C.S." A mortgage company funded a $1,000,000 loan to the straw buyer for the purchase of the property based upon information contained in a fraudulent loan application prepared by Stafford and Ward and signed by the straw buyer. This application contained materially false information concerning the straw buyer's income, employment, and the purpose of the purchased location as a primary residence. Among the false representations on the application were the fact that the straw buyer had a monthly salary of $6,000 and earned $13,000 in rental income; neither of these statements were true. On April 17, 2006, a title company wired $97,279.00 to Ward. This money represented Ward's equity in the property and her profit from the sale. Ward directed that this money be deposited into accounts controlled by Stafford and Ward and that it be disbursed to pay Ward's creditors.
Neither Stafford or Ward repurchased the property from the straw buyer. Public records indicate that eight months after the sale to the straw buyer, the property was sold in a foreclosure sale for approximately $800,000.
The defendants are scheduled to be sentenced by Judge England on Aug. 26, 2010, at
9:00 a.m. The maximum statutory penalty for bank fraud is 30 years' imprisonment, a $1,000,000 fine, a term of supervised release of five years, and a special assessment of $100. (usattyedca61010)
MORAL
Why be stupid enough to write the straw buyer deal on paper? I would say they are looking at about seven actual years in federal prison, the loss of the write to vote, loss of right to hold office, if non-citizens looking at deportation never to return to the United States legally, no jobs of any significance when they get out and you need to remember there is no parole in the federal criminal system.
DENVER MAN INDICTED FOR MORTGAGE FRAUD
FACTS
On May 10, 2010, Gary A. Noble of Denver, was indicted by a federal grand jury in that city. The indictment charges 63-counts of wire fraud related to a mortgage fraud scheme. Noble was arrested by FBI special agents on June 3, 2010 in California. He will make his initial appearance in U.S. District Court in Denver on June 18, 2010, where he will be advised of the charges pending against him. According to the indictment, beginning on May 1, 2005 and continuing until March 3, 2006, Noble knowingly devised and intended to devise a scheme to defraud lending companies that funded residential mortgage loans and for obtaining money from them and from buyers who paid cash for a residence by means of materially false and fraudulent representations.
The indictment alleges it was part of the scheme that Noble allegedly orchestrated the purchase of numerous residential properties by his family members, and in most cases, the resale of those properties shortly thereafter to his and his family's associates. The defendant used companies he controlled to facilitate and conceal his scheme. Through NOBLE MORTGAGE COMPANY, he acted as mortgage broker and arranged to have false and fraudulent documents presented to the lenders to enable the buyers to qualify for loans for the properties. Through NOBLE TITLE AGENCY, he acted as a title insurance agent, and caused commitments for title insurance to be issued which made it appear that the buyers would be purchasing the properties free of prior encumbrances and that the lenders would be guaranteed priority leans, when they would not be. Through Noble Title Agency, the defendant acted as settlement agent for the lenders and received all of the loan proceeds and monies associated with the loans, but failed to use them to pay off the prior loans as directed by the lenders. He also misappropriated a portion of the proceeds for his own use and benefit. Through EQUITY BUILDERS, Noble diverted proceeds of the fraud and concealed payments he made to facilitate the fraud.
If convicted, the defendant faces not more than 20 years' imprisonment and/or a fine of not more than $250,000 per count for each of the 63 counts. Noble could also be ordered to pay restitution. (usattyco61010)
MORAL
The prosecutors went back five years to get to Noble. It is alleged he used family to further the fraud. I wonder if the family was indicted as well?
SHORT SALES CAN GET A BROKER CHARGED CRIMINALLY-AT LEAST IN CONNECTICUT
FACTS
SERGIO NATERA AND ANNA MCELANEY are scheduled to be sentenced in Hartford's federal court in August 2010 after pleading guilty to fraud. Their crime involved persuading lenders to approve the sale of homes for less than the balance owed--known as a short sale--without disclosing that there were better offers. They then flipped the houses for a profit.
The Federal Bureau of Investigation, the California Department of Real Estate and mortgage finance company Freddie Mac have warned that such schemes may be spreading after a plunge in values left homeowners owing more than their properties are worth. The scams threaten to deepen losses for lenders that are increasingly agreeing to short sales as an alternative to more costly foreclosures
In the Connecticut case, Regions Bank in April 2008 agreed to a short sale of a Bridgeport house for $102,375, unaware that Natera and McElaney had a bidder willing to pay $132,500, according to the plea agreements. Eight weeks after the bank sold for a loss, the pair resold the house for a $30,125 gain. (BLMBRGBUSWK61010)
MARYLAND ACCOUNTANT GETS FIVE YEARS FOR MORTGAGE FRAUD
FACTS
On June 11, 2010, Lloyd Mallory of Silver Spring, Md., was sentenced today to 60 months in prison, followed by three years of supervised release, for his role in helping to carry out a multi-million-dollar mortgage fraud scheme. He was also ordered to pay $2,797,855 in restitution.
Mallory was convicted of conspiracy and mail fraud on March 25, 2010. According to court records and evidence at trial, Mallory was a self-employed certified public accountant who conspired with Michael Milan of Bethesda, Md., and others to defraud mortgage lenders into lending funds for the purchase and refinance of residential properties. Mallory created false tax returns in the names of Milan's clients which listed inflated income amounts. These false documents were submitted to banks to back up false claims made in the mortgage applications prepared by Milan and his associates. Milan's conspiracy defrauded lenders through at least a dozen real estate transactions and caused losses of more than $2.7 million.
At sentencing, the court found that Mallory committed perjury when he testified at trial. (usattyedva61110)
MORAL
No wonder he gets five years! Commit perjury adds to the offense.
MINNESOTA MORTGAGE BROKER AND CLOSING AGENT INDICTED FOR $2.5 MILLION LOSS DUE TO MORTGAGE FRAUD
FACTS
On June 9, 2010, FAWAZ MAHMOUD WAZWAZ, a mortgage broker, and GENEVIEVE MARIE MCCULLOUGH of Inver Grove Heights, Minn., a real estate closing agent, were indicted in federal court for allegedly orchestrating a mortgage fraud scheme that resulted in a $2.5 million loss for financial lenders. They were charged with one count of conspiracy to commit mortgage fraud by commercial carrier and interstate wire, six counts of mortgage fraud through interstate wire, and one count of mortgage fraud through use of commercial interstate carrier.
The indictment alleges that from 2004 through 2006, the defendants conspired to defraud mortgage-lending institutions out of money. During that time, Wazwaz was employed as a loan officer, primarily at COMMONSENSE MORTGAGE, INC., a mortgage brokerage business in Shoreview. WAZWAZ originated mortgage loans while McCullough, on the other hand, was employed as a real estate closer with two different title companies during this time period.
The object of the defendants' alleged conspiracy was to recruit straw buyers to purchase homes at inflated prices. The money to pay for those homes was acquired from area lenders, purportedly based on fraudulent loan applications. When loan proceeds were made available at transaction closings, portions of those funds were reportedly distributed to Wazwaz and others involved in the conspiracy. The indictment states that between Jan. 24 and Sept. 15, 2005, the defendants participated in the fraudulent purchase of 19 residences totaling approximately $2.5 million in losses to financial lenders.
Wazwaz allegedly arranged for an unindicted appraiser to prepare appraisals supporting the inflated home prices. He also purportedly caused lenders to receive false loan applications. Moreover, he reportedly provided down payments to straw buyers without disclosing that assistance to the lenders. Finally, according to the indictment, he arranged for McCullough to close the real estate transactions.
McCullough allegedly provided false documents, including false HUD-1 settlement statements, to the lenders and routinely violated the settlement instructions in those documents. She also purportedly closed the fraudulent real estate transactions for above-average fees, which she retained. Furthermore, the indictment states she disbursed some of the mortgage loan proceeds, usually the amounts over and above the true sale prices, to Wazwaz, the straw buyers, and others. In addition, she allegedly disbursed to her co-conspirators portions of the loan proceeds actually meant to go to the property sellers.
If convicted, the defendants face a potential maximum penalty of five years in prison on the conspiracy charge and 20 years on each mortgage fraud count.
On May 4, 2010, TALEB WAZWAZ pleaded guilty for his role as a straw buyer in this fraud scheme. Specifically, he pled to one count of conspiracy to commit mortgage fraud by interstate wire. (usattymn6910)
MORAL
Note two things. One is an unindicted appraiser which in my opinion means he is cooperating with the prosecution with anything he knows about the two indicted here and two that Taleb Wazwaz pleaded guilty which means he is probably cooperating as well.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE
