MORE INFORMATION ON THE BILL AFFECTING MORTGAGE BROKERS AND CONSUMERS
FACTS
The financial reform bill protects consumers from the home-lending abuses that led to thousands of foreclosures in Silicon Valley by establishing the Bureau of Consumer Financial Protection. The provisions establishing the Bureau grant the Bureau rule making authority and provide the Bureau with supervisory authority over nondepository-covered persons. This includes any person that engages in offering or providing a consumer financial product or service and any affiliate of such person if the affiliate acts as a service provider to such person.
Lenders are required to ensure borrowers have the ability to repay a home loan and restrict costly features of many mortgages, such as prepayment penalties and fees to brokers for steering borrowers to higher-priced loans.
Mortgage applications are modified to make them easier to understand and allow a better ability to comparison shop for loans.
Stricter requirements apply to some types of mortgages including negative amortization loans, interest-only loans, and balloon payments. Banks will be required to retain 5% of these types of loans on their books.
The new law places limitations on loan originator compensation to a total of 3% for points and fees based on the total loan amount. Lenders are required to consider a consumer’s ability to repay a mortgage loan and the bill expands the coverage of HOEPA.
The new rules will not apply to temporary, or bridge, loans or to reverse mortgages.
MORAL
Read the bill very carefully and read the new regulations even more carefully.
IF YOU ARE A CALIFORNIA REAL ESTATE BROKER WITH AN IN HOUSE ESCROW BE SURE YOU HAVE THE RIGHT LEGEND IN YOUR ADVERTISING IF YOU DO NOT WANT TO HAVE AN ACCUSATION FILED AGAINST YOUR LICENSE
FACTS
When a broker has an in-house escrow division and has been issued a license with a fictitious business name containing the term “escrow”, or any term which implies that escrow services are provided, the broker is required to include the term “A NON-INDEPENDENT BROKER ESCROW” in any advertising, signs, or electronic material. This term provides full disclosure to the public that they are not dealing with an independent escrow company, and that available services are limited.
A real estate broker license with a fictitious business name containing the term “escrow” or any term which implies that escrow services are provided will not be issued or renewed by the Department unless the fictitious business name itself includes the term, “A NON-INDEPENDENT BROKER ESCROW.” Renewing real estate brokers will need to file a new fictitious business name statement, containing the now required language, with the county in which their main office is located and submit the FBN’s along with the renewal application. (rebsum2010martrso)
MORAL
There are many, many changes in the law, including but not limited to Federal, State, RESPA and FHA. Read them and learn or contact your attorney before you act. Things are not as they were before and to continue as before is guaranteed to get you in trouble.
MINNESOTA WOMAN PLEADS GUILTY TO MORTGAGE FRAUD
FACTS
On July 8, 2010, Sharon Michelle Thomas of Otsego, Minn., pleaded guilty in federal court to participating in a mortgage fraud scheme that resulted in a $400,000 loss to several mortgage loan lenders. Appearing in St. Paul before United States District Court Judge Richard H. Kyle, Thomas pleaded guilty to one count of aiding and abetting mail fraud. Thomas was charged on June 7, 2010.
Thomas admitted that from 2005 through 2006 she assisted others in obtaining money through fraudulent pretenses by depositing 10 “closing packages” in the U.S. mail or with private commercial carriers. During this time, Thomas was a closing agent for a licensed title company, which was affiliated with a local builder and closed residential real estate transactions for the builder. Thomas provided documents to mortgage loan companies that were funding the mortgage loans for each residential transaction, after which the lenders would approve loans and provide loan proceeds to the title company. Thomas admitted concealing from the lenders payments she made to “investors” associated with Superior Investment Group on 10 Minnesota properties. Thomas admitted receiving only her customary salary and small bonuses for closing the transactions.
SIG was owned and operated by Troy David Chaika and Dustin Lee LaFavre. The two men conspired to obtain money fraudulently through approximately 183 residential property transactions that defrauded real estate mortgage lenders out of more than $7 million. LaFavre pleaded guilty to one count of conspiracy to commit mail and wire fraud and awaits sentencing. Chaika has been indicted on seven counts of wire fraud, three counts of mail fraud, and one count of conspiracy to commit wire fraud and mail fraud.
For her crime, Thomas faces a potential maximum penalty of 20 years in prison. Judge Kyle will determine her sentence at a future date, yet to be scheduled. This case is the result of an investigation by the Federal Bureau of Investigation and the U.S. Postal Inspection Service. It is being prosecuted by Assistant U.S. Attorney Tracy L. Perzel. (usattymn7810)
MORAL
She just dropped the stuff in the mail and is indicted and pleads guilty to a felony for her regular salary and small bonuses. Somehow you have to feel sorry for her.
NEVADA MORTGAGE LENDING DIVISION PROPOSES STIPULATED SETTLEMENT WITH DONALD GOLD FOR UNLICENSED ACTIVITY AS MORTGAGE BROKER
FACTS
Direct Property Group LLC was a limited liability company organized and existing under the laws of the State of Nevada since on or about March 5, 2009. The current status of Direct Property with the Nevada Secretary of State is “dissolved.” The MLD alleges at all relevant times herein mentioned, Direct Property held itself out as engaging in or carrying on the business of a mortgage broker and conducted mortgage broker activity in the State of Nevada. At all relevant times herein Donald Gold was the president and manager of Direct Property. At no time did Desert Property have a mortgage broker license issued by the Division of Mortgage Lending when the acts alleged herein occurred.
On or about June 21, 2009 and June 29, 2009 the Division received written complaints from DJF and GW, respectively, and conducted an investigation of same. The investigation revealed, among other things, that under the direction and leadership of Donald Gold, Direct Property issued loan prequalification letters to borrowers PCS and MDS, VC, and GL; compiled information for, prepared, and executed 1003 Uniform Residential Loan applications for VC and JLG, GL, and AA, respectively; and also compiled information for, prepared, and executed two 1003 Uniform Residential Loan applications for LLC and JLC. During this entire time period Desert Property was not licensed as a mortgage broker in Nevada. Direct Property broadcast approximately 178 television advertisements on KTNV Channel 13 in Las Vegas from March 2009 through May 2009 wherein Direct Property represented that “We can help and we offer 100% financing.” Donald Gold admitted that he requested and approved the above-described advertising with KTNV Channel 13.
Donald Gold admitted that he and/or Direct Property held themselves out as engaging in or carrying on the business of a mortgage broker and/or mortgage agent and conducted mortgage broker and/or mortgage agent activity in the State of Nevada.
After settlement negotiations, the Division and Donald Gold wish to resolve this matter without the necessity of a formal hearing.
It is hereby stipulated and agreed by the parties that the purported violations of NRS shall be settled on the following terms and conditions:
1. Donald Gold admits that he engaged in unlicensed mortgage broker and/or mortgage agent activity, or otherwise engaged in, carried on or held himself out as engaging in or carrying on the business of a mortgage broker and/or mortgage agent in violation of NRS645B.900.
2. Donald Gold shall, pursuant to NRS 645B.670 and/or NRS 622.400, pay to the Division an administrative penalty in the amount of $12,875 plus the sum of $1,800 for its costs of investigation and $2,825 for attorney fees incurred herein. Donald Gold shall make such payments, in full, to the Division upon its execution of this Agreement.
Donald Gold acknowledges that he has retained an attorney to represent him in this matter at his sole cost and expense. (nvmldprop7-18-10)
MORAL
If you would like to do unlicensed broker activities in the state of Nevada be aware it can cost you a lot more than the license. In this case about $18,000 more presuming Gold agrees and signs the stipulation. What is beyond me is the advertising he did on television. He had to know the Commissioner was bound to find out about it and proceed against him. I wonder what he was thinking would happen when he advertised?
FORMER LAS VEGAS RESIDENT PLEADS GUILTY TO COMMITTING MORTGAGE FRAUD IN NEVADA
On July 9, 2010, Brian K. Jackson pleaded guilty in the United States District Court at Las Vegas to conspiracy for his involvement in a Nevada mortgage fraud scheme involving straw buyers and falsified mortgage loan documents. He pleaded to conspiracy to commit mail fraud, wire fraud, and bank fraud and is scheduled for sentencing on Oct. 8, 2010, at 10:00 a.m. Jackson was indicted by the Federal Grand Jury in Las Vegas on Oct. 21, 2009. He faces up to 30 years in prison and a $1,000,000 fine.
From about 2002 to May 14, 2008, Jackson, owner of Unlimited Properties, a now-revoked Nevada limited liability corporation, participated in a conspiracy to submit mortgage loan applications to financial institutions to finance straw buyer real estate purchases in Nevada. Jackson recruited and caused to be recruited straw buyers to purchase properties on behalf of the members of the conspiracy. The loans were processed through Sapphire Mortgage, Henderson, Nev. Jackson caused false and fraudulent information to be placed in the straw buyers’ mortgage loan applications concerning their employment, income, assets, intent to occupy property, etc. Jackson caused the same home to be purchased multiple times by different straw buyers at ever-increasing prices, and caused the “equity” to be diverted to himself or his company. Jackson also placed renters in the properties and caused the mortgages to default.
The plea agreement states that Jackson caused fraudulent loan applications to be sent to financial institutions to fund mortgage loans for the purchase of a home at 2061 Scenic Sunrise Drive in Las Vegas. Between March 2002 and late 2004, Jackson twice orchestrated the sale of the property using two straw buyers and the placement of false information in their loan applications. In June 2004, Jackson also orchestrated the sale of the Scenic Sunrise property to himself, and falsely stated in his loan application that he intended to reside in the property when he knew he did not. During this period, Jackson also leased the Scenic Sunrise property to another individual and accepted money from the individual as guarantee that he would purchase it in the future, even though Jackson knew that the property at the time was owned by the first straw buyer and was in the process of being sold to the second straw buyer. As a result of the fraud, the financial institutions suffered a loss of approximately $111,103.
In May 2008, the owner of Sapphire Mortgage, Cindy Birkland, was arrested and charged in state court in Las Vegas with mortgage fraud related offenses. Trial appears to be set for Nov. 15, 2010 (usattynv71210+ctcalstate)
MORAL
Remember everyone is innocent until proven guilty. Jackson appears to be guilty since he pleaded guilty.
SUMMARY OF NEW OREGON LAWS
FACTS
Payday and title loans - SB 993. This bill separated laws regulating payday lenders and title lenders from those regulating traditional consumer finance lenders. It didn't make any policy changes to the licenses for any such lenders. The law took effect on passage.
Use of credit history for employment purposes – SB 1045. The “Job Applicant Fairness Act” limits use of credit history for employment purposes. With specific exemptions, the bill makes it illegal for an employer to use information in the credit history of an applicant for employment or for an employee, or to refuse to hire, discharge, demote, suspend, retaliate or otherwise discriminate against an applicant or employee for a promotion, or related to the compensation for or conditions of employment. Credit history is defined as any communication of information by a consumer reporting agency that bears on a consumer’s creditworthiness, credit standing, or credit capacity. The Bureau of Labor and Industries can take actions for violations of this law and individuals can pursue a civil action in circuit court. The specific exceptions from the bill are for financial institutions, public safety offices, and other employment if credit history is job-related and use of the credit history is disclosed to the job applicant or employee. The law will take effect on July 1, 2010.
Registration of appraisal management companies - HB 3624. The bill requires appraisal management companies to register with the Department of Consumer and Business Services and file a $15,000 surety bond or irrevocable letter of credit and the department may require applicants to provide fingerprints. The bill prohibits appraisal management companies from attempting to influence appraisals or substantively alter completed appraisal reports. The law took effect on 03/23/2010.
Unlawful Trade Practices Act extended to loans and extensions of credit - HB 3706. This bill includes loans and extensions of credit in definition of what constitutes "real estate, goods or services" for purposes of Unlawful Trade Practices Act (with the exception of pawnbroker pledge loans which are still excluded). The Unlawful Trade Practices Act (ORS 646.605 to 646.656) is Oregon's primary consumer protection law. It helps protect consumers from businesses that fail to deliver all or a portion of goods or serves as promised, cause a likelihood of confusion or misunderstanding about products or services, use deceptive representations or designations, represent goods as meeting standards they do not, and making false or misleading representations about products or services. The bill adds mortgage bankers, mortgage brokers, mortgage loan originators, and consumer finance lenders.
MORAL
These are not all the new laws that were enacted but I would recommend you become thoroughly familiar with these if you want to stay out of trouble with Oregon authorities.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE
