Editor's note: This post has been updated to clarify the author's basis for inferring that First Alliance has been giving the CFPB "leads" on other companies violating RESPA, an interpretation the company disputes.
CALIFORNIA MAN GETS NEARLY 18 YEARS IN FEDERAL PRISON FOR MORTGAGE FRAUD
On Feb. 24, Carl Cole was sentenced to almost 18 years in a federal prison for his role in a $30 million mortgage fraud scheme in Bakersfield. Cole had previously pleaded guilty to conspiracy to commit mail fraud, wire fraud and bank fraud.
After his sentencing he was immediately taken into custody.
On the same day his son Caleb was sentenced to six months in prison after a guilty plea to charges of mail fraud. Caleb Cole will not have to report to prison until April 21. (bkrsfldcas22414)
And so ends a saga that has been going on for over six years since the investigation began.
CFPB ORDERS FIRST ALLIANCE LENDING TO PAY PENALTY FOR RESPA KICKBACK
On Feb. 24, the Consumer Financial Protection Bureau orderedConnecticut-based mortgage lender First Alliance Lending to pay an $83,000 civil money penaltyfor violating federal law by illegally splitting real estate settlement fees. First Alliance self-reported these violations to the Bureau, admitted liability, and, according to the CFPB's press release issued that day, "provided information related to the conduct of other actors that has facilitated other enforcement investigations."
Director Richard Cordray stated the CFPB will continue to take into account the self-reporting and cooperation of companies in determining how to resolve such matters.
First Alliance is a mortgage lender in East Hartford, Conn. that focuses primarily on providing loss-mitigation financing to distressed borrowers. First Alliance obtains troubled mortgages from mortgage servicers, and reaches out to consumers to offer them new loans with reduced principal amounts under federally related mortgage programs.
First Alliance started using a hedge fund to finance its loans in 2010. Under this arrangement, First Alliance split revenues and fees with affiliates of the hedge fund. In 2011, First Alliance secured less costly financing and ended its arrangement with the hedge fund and its affiliates. Although the hedge fund and its affiliates no longer financed First Alliance’s mortgages, First Alliance continued to split origination and loss-mitigation fees with them. The hedge-fund affiliates received payments from 83 First Alliance loans made between August 2011 and April 2012.
In 2013, First Alliance reported to the Bureau that it believed it had violated the Real Estate Settlement Procedures Act by paying these unearned fees. RESPA bans a person from paying or receiving a portion or split of a fee that has not been earned in connection with a real estate settlement. First Alliance cooperated with the Bureau's investigation, and the Bureau concluded that First Alliance's payments to the hedge fund and its affiliates had violated RESPA. First Alliance's self-reporting and cooperation, consistent with the Bureau’s Responsible Business Conduct bulletin published on June 25, 2013, were taken into account in resolving this matter.
Under the terms of the consent order, First Alliance is required to pay a civil money penalty of $83,000 to the Bureau and agrees not to violate RESPA in the future. The Bureau will continue to enforce RESPA's provisions to protect consumers and to deter unlawful activity. (cfpb22714)
From the CFPB's press release, it sounds like First Alliance gave "leads" to CFPB of others violating RESPA. However, a company spokesman says it "never gave the CFPB any information other than what was related to the other party who was involved in the matter," i.e. the hedge fund. If any other parties were affected, they'll find out soon enough.
CALIFORNIA WOMAN GOES TO JAIL FOR MORTGAGE FRAUD
On Feb. 27, Gloria Becerra was sentenced to a year in jail after pleading guilty to charges of felony fraud, grand theft and recording a false document. In my opinion she had a sharp attorney when she paid $60,000 in restitution before being sentenced which will be given to the victims. That goes a long way with a judge when the judge is considering how long a person should stay in custody.
Becerra was a local representative for a loan modification and foreclosure rescue business, Sunset Beach Management.
Law enforcement shut down the operation in 2010 but Becerra continued to operate under other business names, including Financial Wellness for Homeowners L.A., California Sky Premier, Sunrise Financial I, Dream Care Holding and Secured Assets Group LLC.
Becerra pleaded guilty to five counts of felony grand theft, two counts of felony foreclosure consultant fraud and one felony count of recording a false instrument. She also admitted to a special allegation of taking money in excess of $65,000.
Becerra collected about $78,000 in illegal upfront fees from victims and promised to reduce their mortgage loans and "save" their homes from foreclosure. (vntrastr22714)
As I said the prosecutors are still pursuing fraudulent mortgage loans that funded as long as 10 years ago. Here it was loan modification. Remember fraud includes NINA and SISA loans. If a loan officer did not get some validation and in fact had reason to know the information was fraud they to can be and have been prosecuted. Offhand it would appear Becerra had a good attorney since she was only sentenced to one year. In the federal system it could have been a lot longer. Both state and federal agencies are still pursuing mortgage fraud and loan modification cases very aggressively because of the meltdown and in this lawyer’s opinion.
SEVEN ARRESTED IN SAN BERNARDINO COUNTY FOR LOAN MODIFICATION FRAUD
On Feb. 26, seven suspects were arrested and charged in a scheme that defrauded more than 1,550 Inland Valley homeowners seeking loan modification services during California’s foreclosure crisis.
The felony complaint alleges that Nehad "Nick" Ayyoub, president of The Firm Loans, Insurance and Investments Inc. and First Choice Debt Solutions Inc. along with his six colleagues, Ghydan Rabadi, Zaid Rabadi, James Clemons, Wissam Ismail, Eddie Mercado and Majid Safaie, deceived homeowners by illegally charging up-front payments for loan modification services and lying about the services they provided.
The suspects are charged in a 24 count complaint with felony grand theft, personal and corporate income tax evasion and conspiracy. Ayyoub is being held with bail set at $75,000 and all others are being held with bail set at $50,000. Ayyoub is facing a maximum exposure of 12 years in prison while his colleagues are facing a maximum exposure of eight years in prison.
According to court filings, Ayyoub and his colleagues took advantage of homeowners who were desperate to lower their mortgage payments by selling them home loan modification services and requiring payment of up-front fees. Homeowners were falsely told that attorneys would be negotiating their loan modifications, that they would get a loan modification with no risk of failure, that they would receive a refund if they were dissatisfied and that the suspects had special contacts with lenders, which would give them an advantage in obtaining lowered monthly payments.
Homeowners were instructed to stop paying their mortgage and to instead give the money to Ayyoub and his colleagues to ensure that they would obtain a loan modification, causing many victims to default on their home loans without obtaining a modification, according to court filings.
The suspects operated this scam from January 2007 to March 2010, according to court filings. (CALAG22614)
The state is going back seven years so if anyone reading this has been involved in a loan modification company since 2007, I would suggest they see their attorney now or call me.
NEW JERSEY REAL ESTATE CONSULTANT GETS 20 MONTHS IN FEDERAL PRISON FOR MORTGAGE FRAUD
On Feb. 21, William Barksdale, a real estate consultant, was sentenced today to 20 months in prison for helping five people defraud banks by obtaining multiple home equity loans on the same property.
He was the owner of Barksdale Business Group, Barksdale Investment Properties and Barksdale Loan Consultants. He devised a scheme to obtain multiple home equity lines of credit on a single home for more than the property was worth. A homeowner would submit loan applications to several lenders simultaneously without advising each lender about the other applications. Any bank conducting a title search would receive a clean title report because the other home equity lines of credit had not yet been recorded.
Barksdale advised five people to secure multiple home equity loans using his scheme, and each obtained at least three home equity loans on a single property. One individual obtained seven home equity loans on one home. Each person paid Barksdale a portion of the fraudulent proceeds. Many of the home equity loans later went into default. The scheme caused more than $1 million in losses.
In addition to the prison term, Judge Robert Kugler sentenced Barksdale to five years of supervised release. (usattynj22114)
It always leaves a paper trail that is easy for the FBI to follow. As I have stated many times before any one even remotely involved with mortgage fraud, should see their attorney now. An attorney, based upon the facts (which are privileged and which the attorney cannot be forced to disclose on pain of risking loss of license) can advise anyone on possible scenarios and outcomes. Knowledge lets a person sleep better. Lack of knowledge causes anxiety. If anyone has been involved even remotely, see your attorney now. If you do not have one you can consult with me.
NORTH TEXAS WOMAN PLEADS GUILTY TO MORTGAGE FRAUD
On Feb, 26, Lacie Devine pleaded guilty to federal charges of conspiracy to commit mail fraud in connection with a mortgage fraud scheme in the Eastern District of Texas. She faces up to 20 years in federal prison,
From March 2008 through February 2010, Devine, an escrow officer at National Escrow & Title LCC, Dallas, conspired with others, including the five individuals identified below, to defraud lending institutions by submitting false documentation in support of mortgage applications on 28 property transactions located in the Dallas/Fort Worth Metroplex. Specifically, Devine created fraudulent HUD-1 documents for each transaction that falsely stated the source of the down payments and concealed the true nature of the loan fund disbursements from the lending institutions. Devine’s criminal conduct in the scheme resulted in a loss to lending institutions of approximately $3.7 million
Her five co-conspirators, all charged in separate indictments, have also pleaded guilty and been sentenced for their roles in the mortgage fraud conspiracy. Roslyn Long, a loan officer got 97 months in prison and was ordered to pay $3.5 million in restitution. Michael Ross, a loan officer and coordinator received 63 months and was ordered to pay and $3.3 million in restitution. Curtis Callier, a recruiter, got 30 months and ordered to make restitution in the amount of $691,200. Another recruiter, Ronzell Mitchell, was sent away for 46 months and must pay
$1.4 million in restitution. Finally, Christi Wyatt, also a recruiter, was sentenced to 37 months and must make $1 million in restitution. (usattedtxy22614)
If you have been reading the e-alerts religiously, you will find that prosecution of mortgage fraud has not let up but has increased dramatically on all frauds that occurred in last 10 years. If you have questions about the prosecutions, how they are picked, what are parameters and would like to know these statistics that are public record, call me.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE. AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE