FACTS
While a loan broker or loan officer is prohibited from “steering” a consumer to a lender offering less favorable terms in order to increase the broker’s or loan officer’s compensation, the loan broker or loan officer is not prohibited from “steering” a consumer to the same type of lender if the lender is offering more favorable terms! (12 CFR §226.36(e))
LENDERS FACE UP TO 20 NEW REGULATORY REQUIREMENTS AND COUNTING
FACTS
In addition to recently implemented requirements for appraiser independence, loan originator registration and loan originator compensation, as many as 20 new mortgage lending requirements are in the regulatory pipeline. This grim assessment came in a speech by Acting Comptroller of the Currency John Walsh before the Housing Policy Council of the Financial Services Roundtable, according to a copy of his prepared remarks. (mdn6111)
MORAL
And you wonder why it takes time for an attorney to give you an opinion on all new laws and regs plus the ones that are in the process of enactment?
CALIFORNIA LOAN ORIGINATOR PLEADS GUILTY IN ARIZONA FEDERAL COURT TO MORTGAGE FRAUD
FACTS
On June 9, Thomas Gregory Alexander, a loan originator from San Diego, pleaded guilty in U. S. District Court, Phoenix, to 10 felony counts for his role in a multi-million-dollar mortgage fraud scheme. He entered guilty pleas for one count of conspiring to commit wire fraud and nine counts of wire fraud. U.S. District Chief Judge Roslyn O. Silver will sentence him on Sept. 19.
Alexander’s mortgage fraud scheme induced Mesa Bank (now known as Sunrise Bank of Arizona) to issue over $40 million dollars in loans, and caused millions of dollars in losses to the bank.
U. S. Attorney Dennis K. Burke is quoted in part as saying: “Virtually nothing this defendant put into his loan documents was true—not the borrower’s income, their credit worthiness, their savings or even their desire to live in the house”
Between 2005 and 2007, Alexander worked as a loan originator for American Mortgage Funding. Through AMF, Alexander assisted third-party borrowers to qualify for loans from Mesa Bank. These loans were used to acquire parcels of land in Maricopa County, and to fund the construction of a custom home on the parcel. Starting in 2005, Alexander concocted a scheme to defraud Mesa Bank by creating fraudulent documents for unqualified third-party borrowers. In many cases, Alexander directed the third-party borrower to sign blank Uniform Residential Loan Applications. Alexander and his co-conspirators fraudulently completed the blank applications by overstating the borrower’s monthly income, overstating the amount of money in the borrower’s bank accounts, falsely representing that the borrower would make a down payment at closing, and misrepresenting the intent of the borrower to use the property as a primary residence. Alexander and his co-conspirators would alter Verification of Deposit documents to falsely overstate the amount of money in the borrowers' bank accounts, and they would alter a borrower’s credit report to falsely represent a higher credit score.
During the time of the conspiracy, Mesa Bank required borrowers to pay 5% to 10% of the total project cost at the time of closing. Because Alexander’s third-party borrowers were financially unqualified to obtain the loans, Alexander and his conspirators submitted false documents to Mesa Bank to show that a down payment was deposited into escrow. None of Alexander’s third-party borrowers, as part of his scheme, actually paid a down payment.
In addition, Alexander obtained a significant amount of cash back from his scheme by selling lots to some of the third-party borrowers at an inflated price. Alexander operated a company called Sea Rock LLC, which owned several parcels of land. Alexander directed many of the third-party borrowers to acquire loans to purchase lots from Sea Rock. The borrowers were unaware that they were purchasing lots that were actually owned by Alexander, their loan originator. Alexander ultimately received a significant amount of profits after the sale, because he inflated the price of the lots, and directed a co-conspirator to create a false appraisal to support the loan amounts.
A conviction for conspiracy carries a maximum penalty of five years in federal prison, a $250,000 fine, or both. A conviction for wire fraud which affects a financial lending institution carries a maximum penalty of 30 years in federal prison, a $1 million fine, or both. (usattyaz61011)
MORAL
Prosecutor goes back to loans that occurred six years ago and based on loss I would say Alexander is looking at a lot of time in federal prison.
CALIFORNIA LAW ENFORCEMENT LOOKING FOR IRVINE COMPANY OWNER
FACTS
Law enforcement officials are seeking James Toufic Assali, allegedly the owner of a Costa Mesa-based mortgage refinance company and escrow business who is charged in a loan modification scheme that they say preyed on victims in California and other states. Prosecutors allege they've also found victims in Maryland, Minnesota, Florida and Washington.
He is charged with 18 felony counts of grand theft, three felony counts of grand theft of an adult over 65, four felony counts of money laundering and two felony counts of filing a false tax return. There are 27 counts in all. There are sentencing enhancements for money laundering exceeding $50,000. If convicted, he faces a maximum sentence of 23 years in state prison. An arrest warrant was issued May 26 for Assali, who is believed to be either in California or Vermont, according to the Orange County District Attorney's office.
Prosecutors say that Assali owns Meredian Financial Corp., and an escrow business, Fortis Title Solutions, both operating out of Costa Mesa. He's accused of soliciting Meredian's home loan rate lock and modification services for a fee ranging from $750 to $10,000.
According to the news release, authorities accuse Assali of collecting a fee from victims to lock in a lower interest rate to refinance their home or modify their home loan, and promising to refund the fee at the close of escrow. He is also charged with failing to complete a majority of home loan modifications or refinancing services and refusing to issue the promised refunds, and electronically transferring funds from his business bank account to his personal account totaling more than $100,000 annually in both 2008 and 2009, filing false tax returns in 2008 and 2009, and underreporting his compensation by more than $200,000. As a result, he's accused of owing more than $18,000 in unpaid taxes for filing false returns in 2008 and 2009. (ocreg61211)
MORAL
I would suggest Assali needs a good lawyer now!
FDIC SUES AMERIFUND FINANCIAL FOR $1 MILLION BASED ON FRAUD ALLEGATIONS AMONG OTHER REASONS
FACTS
On June 3, the Federal Deposit Insurance Corp., receiver for Downey Savings & Loan Assn., sued Amerifund Financial Inc. and 15 affiliated individuals in federal court seeking more than $1 million in damages.
The FDIC alleges breach of contract, professional negligence and civil fraud in the complaint against Amerifund, a mortgage broker, in U.S. District Court in Santa Ana. Amerifund, based in Spring Valley, Calif., and its agents, processing mortgages for Downey in 2004 and 2005, “caused borrowers’ financial statements to be altered or misstated” in loan applications, the FDIC said. (pacer6311)
IOWA LAWYER CHARGED WITH MORTGAGE FRAUD
FACTS
On May 20, Marc Robert Engelmann, an attorney from Davenport, Iowa, appeared in United States District Court to answer an indictment charging him with two counts of bank fraud, six counts of wire fraud, and one count of conspiracy. The indictment alleges that Engelmann, an attorney, participated in a scheme to defraud banks and mortgage lenders during 2005 and 2006. Engelmann was alleged to have personally participated in eight such transactions involving nine properties in Davenport. Chief United States Magistrate Judge Thomas J. Shields ordered Engelmann released on bond pending trial which is set for July 5.
Each count of wire fraud is punishable by up to 20 years of imprisonment, a fine of up to $250,000, up to three years of supervised release, and a $100 special assessment for the Crime Victim Fund. Each count of bank fraud is punishable by up to 30 years of imprisonment, a fine of up to $1,000,000, up to five years of supervised release, and a $100 special assessment. The single count of conspiracy is punishable by up to five years of imprisonment, a fine of up to $250,000, up to three years of supervised release, and a $100 special assessment. (usattysdia52011)
MORAL
Here the federal prosecutors went back six years to loans that occurred in 2005. They are still going at it hot and heavy prosecuting and demanding buybacks and loss payments.
INTERTHINX STATES NEVADA LEADS IN FRAUD
FACTS
Interthinx latest Mortgage Fraud Risk Report states that occupancy and employment fraud continue to be a major problem nationwide.
In the first quarter, Interthinx found that its occupancy fraud risk index rose by 25% from the previous quarter. This index is based on investors who falsely claim the intent to occupy a purchased property so they can obtain a mortgage with lower down payments and interest rates.
For the fourth consecutive quarter, Nevada had the highest fraud risk. Other notable states that have the most risk for fraud is Arizona, Florida and Hawaii. California, which contains five of the top 10 riskiest metropolitan statistical areas, was fifth on Interthinx’s list for possible fraud. There is an average 24% increase in the occupancy fraud index. (on6611)
MORAL
If the borrower states on the 1003 he/she intends to occupy the property and does not, that is criminal fraud.
OREGON WOMAN SENTENCED IN MORTGAGE FRAUD SCHEME
FACTS
On June 8, Jennifer Venable of Beaverton, Ore., was sentenced by Judge Robert E. Jones of the United States District to five years probation and ordered to pay $15,000 in restitution relative to her Jan. 13, wire fraud conviction.
In 2006, Venable was working as a real estate agent for John L. Scott Realty. At that time she began assisting clients of Richardson Equities LLC to purchase real estate. Venable admitted to participating in a mortgage fraud scheme in which she assisted Nicolas Cooper to purchase a residential property located in Gladstone, Ore. As part of the transaction, Venable helped Cooper receive a $15,000 kickback from the mortgage loan proceeds without the knowledge of the lender. Although Venable knew that no improvements had been done on the property, Venable prepared a bogus construction invoice that falsely claimed that work had been done and submitted the invoice for payment as a repair credit at closing. After the title company at closing paid the invoice, Venable routed the money back to Cooper.
COOPER was sentenced to a term of five years probation and ordered to pay $102,058 in restitution on May 23, following his plea of guilty to wire fraud in relation to his purchase of the Gladstone property. (usattyor6911)
MORAL
Notice the kickback to the borrower without the knowledge of the lender is a federal felony offense. It is not the money going back to the borrower that creates the offense, it is not telling the lender about it that creates the crime and now Cooper is a felon.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE
