FACTS
Less competition and more work for the ones that are left. Problem is that many of the loan officers were classified as independent contractors when they did not meet the criteria under federal or state law. Especially in California. So read below what can happen if you are misclassified as an independent contractor and really are an employee.
CALIFORNIA LAW ON INDEPENDENT CONTRACTORS AND EXEMPTIONS FROM OVERTIME
When a person is in sales, that does not necessarily make them an independent contractor. California has four and with the federal government five methods of determining who is or isn't an independent contractor. Furthermore, the status is determined by each agency according to its own criteria. The agencies are Division of Labor Standards Enforcement for purposes of collecting unpaid wages. If you are determined by DLSE to be an employee at a minimum you are entitled to minimum wage for the first eight hours of every day you work and time and one half after that. Over 12 hours in any one day is double time. (Lab. C. §§510, 515, 8 Cal. Admin. C. §§11000, et seq.).
There are exemptions for executive, administrative and professional employees who do not get overtime. However, to fit in the exemptions the employee must be primarily engaged in the duties of one of the three exemptions. Under federal law this means at least 25% of the time. However, under California law it means over 50% of the time must be engaged in these duties.
Vacation pay cannot be forfeited. Although California has no law that requires an employee to give vacation time, once given it cannot be taken back. It is considered deferred compensation. The employer can however, limit the amount of accrued vacation. For example the employer can allow an employee to accrue 10 days vacation. If not used then the employer can stop vacation from accruing beyond that amount so that the employer is not a savings bank. The vacation time must be paid at the current rate of the employees pay. (Lav. C.®227.3, DLSE and Interp. Man. §15.1.4)
Final paychecks. If employee is terminated, then must be paid immediately. If employee gives 72 hours notice must be paid on termination. If less than 72 hours then must be paid within three days. (Lab. C. §§1400 et seq.) If not timely paid then there is one days pay penalty for each day paid late up to a maximum of 30 days. (Lab. C. §§201,202, 203).
MORAL
Keep good track of pay periods or the employee may sue and attorney fees can be awarded if the employee prevails.
CALIFORNIA REDEFINES ADVANCE FEE FOR REAL ESTATE LICENSEES
FACT
Effective Jan. 1, 2011 you had better be thoroughly familiar with AB 1762 which has now been Chaptered.
California Business and Professions Code Section 10026 (a) The term "advance fee," . . .is a fee, regardless of the form, that is claimed, demanded, charged, received, or collected by a licensee for services requiring a [real estate] license, or for a listing, as that term is defined in Section 10027, before fully completing the service the licensee contracted to perform or represented would be performed. NEITHER AN ADVANCE FEE NOR THE SERVICES TO BE PERFORMED SHALL BE SEPARATED OR DIVIDED INTO COMPONENTS for the purpose of avoiding the application of this division.
(b) For the purposes of this section, the term "advance fee" does not include:
(1) "Security" as that term is used in Section 1950.5 of the Civil Code.
(2) A "screening fee" as that term is used in Section 1950.6 of the Civil Code.
(3) A fee that is claimed, demanded, charged, received, or collected for the purpose of advertising the sale, lease, or exchange of real estate, or of a business opportunity, in a newspaper of general circulation, any other written publication, or through electronic media comparable to any type of written publication, provided that the electronic media or the publication is not under the control or ownership of the broker.
(4) A fee earned for a specific service under a "limited service" contract. For purposes of this section, a "limited service" contract is a written agreement for real estate services described in subdivision (a), (b), or (c) of Section 10131, and pursuant to which such services are promoted, advertised, or presented as stand-alone services, to be performed on a task-by-task basis, and for which compensation is received as each separate, contracted-for task is completed. To qualify for this exclusion, all services performed pursuant to the contract must be described in subdivision (a), (b), or (c) of Section 10131.
(c) A contract between a real estate broker and a principal that requires payment of a commission to the broker after the contract is fully performed does not represent an agreement for an advance fee.
(d) This section does not exempt from regulation the charging or collecting of a fee under Section 1950.5 or 1950.6 of the Civil Code, but instead regulates fees that are not subject to those sections.
MORAL
I would read and understand very carefully between now and Jan. 1, 2011 or risk discipline.
COSMOPOLITAN OF LAS VEGAS SUED IN CALIFORNIA FOR FRAUD
FACTS
A lawsuit has been filed in Los Angeles County on behalf of three local individuals who placed deposits towards condominiums at the Cosmopolitan of Las Vegas.
The complaint alleges that DEUTSCHE BANK, NEVADA PROPERTY 1 LLC, NEVADA VOTECO LLC, 3700 ASSOCIATES LLC AND KO REALTY GROUP "knowingly committed fraud and conversion against the plaintiffs by failing to disclose the Cosmopolitan of Las Vegas' intention to convert the condo-hotel project into a hotel-only development."
The Cosmopolitan of Las Vegas has previously settled the claims of approximately 1,500 other purchasers of the condominiums by issuing only partial refunds of their earnest money deposits, despite their intention to convert the project to hotel-only use, according to the law firm Lurie & Park, which brought the complaint. The complaint charges the defendants with fraud, active concealment and suppression of material facts, and conversion. The plaintiffs are seeking compensatory damages, punitive damages, attorney fees and costs.
As of the filing of this lawsuit —a mere five months before the Cosmopolitan's announced grand opening —the Cosmopolitan of Las Vegas has not recorded a subdivision map with Clark County showing any condominium units, the law firm said.
"Clark County's senior planner, who has overseen every major hotel and condominium project on the Las Vegas Strip for the last 19 years, believes that the Cosmopolitan will be hotel-only, in accordance with the subdivision map approved in 2008 and all available news reports," said Park. (on8410)
MORAL
Sounds like the MLD might have an interest in looking at this lawsuit.
CONNECTICUT PARALEGAL PLEADS GUILTY TO MORTGAGE FRAUD
FACTS
On July 30, 2010 HEATHER BLISS of Norwalk, Conn., pleaded guilty in Bridgeport to one count of conspiracy to commit wire fraud stemming from her participation in a mortgage fraud scheme.
Bliss was employed as a paralegal for a real estate lawyer in Wilton and, in that capacity, had responsibility for preparing and maintaining all legal and bank documents related to real estate transactions handled by her employer. Between approximately April 2006 and April 2007, BLISS, THE LAWYER FOR WHOM SHE WAS EMPLOYED, A PROPERTY DEVELOPER and others conspired to defraud various lenders in a mortgage fraud scheme.
During the scheme, Bliss and her co-conspirators submitted false mortgage loan applications to financial institutions to obtain mortgages on various properties in Westport in order to develop and sell the properties for profit, and to pay off debts owed to “hard money” lenders from whom they had previously obtained high interest loans. The mortgage applications, which included false income information and omitted the mortgage applicants’ true indebtedness, caused the financial institutions to issue mortgage loans on properties that Bliss and her co-conspirators would not have otherwise been qualified to purchase, allowing the applicants to qualify for mortgages that far exceeded their ability to repay the loans.
Bliss overstated her income on the mortgages for which she had personally applied, and that she applied for new mortgages within 60 days of receiving prior mortgages knowing that the earlier mortgage would not be revealed when Bliss' credit report was run by the financial institution to which she applied.
Bliss’ involvement in the scheme caused a loss to financial institutions of more than $1.24 million.
Judge Hall has scheduled sentencing for October 18, 2010, at which time Bliss faces a maximum term of imprisonment of five years and a fine of up to approximately $5 million. (usattyct73010)
MORAL
The people that work together can go to prison together.
FAILURE TO GIVE BUYER DISCLOSURES IN FLORIDA ALLOWS THE BUYER TO RESCIND THE PURCHASE CONTRACT
FACTS
Princeton Homes, Inc., the seller of a pre-construction town home at the Townhomes at St. Andrews Park Phase I, a community in Port St. Lucie, Fla., appealed the district court's grant of summary judgment to Joseph A. Virone and Mary Ann Virone, the buyers who permanently reside in New Jersey. The district court granted the Virones' motions for summary judgment substantially for the reason that the Virones did not receive a disclosure summary, which they were entitled to receive pursuant to Florida Statute, or a printed property report pursuant to the Interstate Land Sales Full Disclosure Act. The district court ordered the cancellation of the purchase agreement with Princeton, the return of the Virones' $50,000 deposit, and attorneys' fees and costs. Princeton appealed.
The 11th Circuit of the U.S. Court of Appeals said affirmed. No disclosure equals no sale. Florida law requires that the “developer” or “parcel owner” provide the buyer of a lot governed by a community association with a disclosure summary identical to or substantially similar to the disclosure summary provided in the statute. Further, if the buyer does not receive a disclosure summary before executing the contract of sale, the purchaser may void the contract by delivering to the seller or the seller's agent or representative written notice canceling the contract within three days after receipt of the disclosure summary or prior to closing, whichever occurs first. This right may not be waived by the purchaser but terminates at closing. The Virones never received any disclosure. Princeton was the subsequent owner of the development but not the developer and argued it did not have to give the disclosure. Regardless of which entity was required to present the disclosure summary, the right to void the contract arose because the Virones did not receive the disclosure summary before executing the contract for sale or at any time thereafter.
Additionally, when the contract falls within the Interstate Land Sales Full Disclosure Act Virones never received a printed property report pursuant to 15 U.S.C. § 1703(a)(1)(B), and that the purchase agreement failed to disclose the Virones' right to revoke the purchase agreement based on the lack of a property report pursuant to 15 U.S.C. § 1703(c). When a property report has not been provided to the buyer before executing the contract of sale, “such contract or agreement may be revoked at the option of the purchaser or lessee within two years from the date of such signing, and such contract or agreement shall clearly provide this right.” 15 U.S.C. § 1703(c). (Princeton Homes, inc. v. Virone, 09-15089, 7-30-10, 11th Cir. USCA)
MORAL
When you are buying property in a subdivision, there may be two sets of laws that allow you to rescind if the developer does not disclose to you properly. Nationally there is the Land Sales Full Disclosure Act if you meet the requirements and then there may be a state law as there was here and both laws applied in this case. Therefore, if you did not read before you signed consult legal counsel and counsel may find a way out. Counsel may not but the cost of the advice at least lets you know where you stand.
PERSON GUILTY IN ATLANTA OF MORTGAGE FRAUD SENTENCED TO OVER THREE YEARS IN PRISON
FACTS
On Aug. 3, 2010 BRENT MERRIELL of Atlanta was sentenced to federal prison on charges of making false statements to the Federal Deposit Insurance Corporation and aggravated identity theft. Merriell used stolen identities, created fictitious buyers, and negotiated phony short sale deals for properties, all in an effort to defraud FDIC of millions of dollars he owed on mortgages. Merriell was sentenced to three years and three months in prison to be followed by five years of supervised release.
Merriell obtained millions of dollars in loans from Omni National Bank as mortgages on numerous properties. Omni later failed and was taken over by the FDIC. Beginning in October 2009, Merriell faced foreclosure on 14 different properties subject to Omni mortgages. In response, Merriell asked the FDIC to forgive $2.2 million in loan payments and instead allow him to short sell the properties to seven new purchasers at significantly reduced amounts. The seven new purchasers, however, were phony: the seven names Merriell presented to the FDIC were, in fact, stolen identities whose names were forged on sales contracts and counterfeit loan commitment letters.
The Merriell short sale fraud was DISCOVERED THROUGH A STING OPERATION conducted by the Special Inspector General for the Troubled Asset Relief Program with the assistance of the FDIC.
MORAL
You have to admire Merrill for his chutzpah. First he gets the properties through fraud and then asks the same lender to approve short sales to fraudulent buyers. For those of you unfamiliar with the meaning of the word “chutzpah” it is best defined by an example. First you get a baseball bat, break somebody’s jaw with it and while the jaw is hanging and bleeding ask him or her to give you $100 so you can go and have a good time. The asking for the $100 is chutzpah.
MARYLAND WOMAN INDICTED FOR REAL ESTATE AND BUSINESS LOAN FRAUD-FEDS WANT OVER $4 MILLION IN FORFEITURE
FACTS
On July 30, 2010 a federal grand jury has indicted WINNIE JOANNE BAREFOOT, A/K/A WINNIE JO BUDZINA, A/K/A WINNIE JOANNE CONN, A/K/A JOANNE KNOPSNYDER, A/K/A OLIVIA JOANNE MORGAN, A/K/A OLIVIA JOANNE BAREFOOT MORGAN, OF ANNAPOLIS, MD, for bank, wire and mail fraud; Social Security fraud; and making false statements to the Social Security Administration. According to the seven-count indictment, from December 2005 to August 2009, Barefoot used the identity of Olivia JoAnne Morgan and her daughter to engage in fraudulent real estate and loan transactions, including transactions involving three properties in Annapolis and a business entity she operated.
The indictment alleges that BAREFOOT USED A FORGED POWER OF ATTORNEY FROM HER DAUGHTER to purchase property at 3528 Narragansett Ave., Annapolis. Her daughter had not provided any such power of attorney nor had any intention of acquiring the property. Barefoot is alleged to have falsely increased the amount of the deposit to the sellers by $100,000, thus changing the loan-to-value ratio of the transaction; and falsely stated the amount of her daughter’s income and assets. As a result, a mortgage company lent $616,250 for the purchase of the property.
The indictment further alleges that Barefoot used the identity of Olivia JoAnne Morgan and other false information to apply for a mortgage loan to purchase property at 896 Coachway, Annapolis. In February 2007, Barefoot is alleged to have submitted a fraudulent loan application to a bank to increase an existing home equity credit line from $1.3 million to $2.1 million, secured by property at 1588 Eaton Way in Annapolis where she resided with CWH from 2002 to 2009. Barefoot is alleged to have falsely represented in the loan application that she and her “husband” CWH each had monthly income of $25,000; that her net worth was over $10 million; and used a false social security number.
Barefoot is alleged to have submitted fraudulent applications for a $250,000 line of credit loan and a $120,000 commercial loan to operate Maryland Hyperbarics LLC, a hyperbaric clinic. On one application in February 2007, she is alleged to have falsely represented that her income and the combined assets for herself and CWH was over $12 million; that the value of the Eaton Way property was $4 million and that it was unencumbered; and used a false Social Security number. In the other application she falsely represented that her monthly income was $30,861, her personal net worth was approximately $1.2 million and that she had not filed bankruptcy in the past 10 years, although in fact she filed bankruptcy in 1999. Barefoot secured the $250,000 line of credit using a forged indemnity deed of trust on the Eaton Way property that was purportedly signed by CWH.
Finally, the indictment alleges that on June 3, 2003 Barefoot applied to the Social Security Administration for SSI benefits, claiming that she was disabled beginning in 1997 due to back problems. The indictment alleges that she falsely: denied ever having been accused or convicted of a felony, when in fact she was arrested in 1980 and convicted of federal and state felony offenses; and represented that she had no resources nor received any type of income. Barefoot was ultimately approved for SSI disability benefits in April 2007, and received more than $26,000 in benefits to which she was not entitled. In December 2008, Barefoot falsely represented to SSA representatives investigating her eligibility for benefit payments that she lived alone and that “Olivia Joanne Morgan” was her sister, who was married to CWH, and that they were getting a divorce so CWH spent a lot of time at her house on 896 Coachway, Annapolis.
As a result of the fraud schemes, the indictment seeks forfeiture of $4,061,000. Barefoot faces a maximum sentence of 30 years in prison and a $1 million fine on each of three counts of bank fraud; 20 years in prison and a $250,000 fine on each of two counts of wire fraud; and five years in prison and a $250,000 fine for Social Security fraud and making false statements. (usattymd8210)
MORAL
Nice mother if all the above is true. Six names so I guess she did not know who she really was and then allegedly forges her own daughter’s signature. Now there is someone you would love to call mother.
FORMER MISSOURI HOME BUILDER SENTENCED FOR $12.6 MILLION MORTGAGE FRAUD
On July 30, 2010 JERRY R. EMERICK the former owner of a residential construction business in Raymore, Mo., was sentenced in federal court for his role in a $12.6 million mortgage fraud scheme that involved 25 upscale residential properties in Lee’s Summit, Mo., and Raymore.
He was SENTENCED TO TWO YEARS AND SIX MONTHS IN FEDERAL PRISON WITHOUT PAROLE. The court also ordered Emerick to pay $5,289,819 in restitution.
Previously Emerick pleaded guilty to conspiracy to commit mortgage fraud and wire fraud and to transfer funds obtained by fraud across state lines. Emerick OWNED AND OPERATED TY CONSTRUCTION AND RESIDENTIAL CONTRACTING LLC, which was engaged in the business of residential construction, primarily in Lee’s Summit and Raymore.
SEVENTEEN DEFENDANTS WHO WERE CHARGED IN A RELATED FEDERAL INDICTMENT HAVE PLEADED GUILTY TO THEIR ROLES IN THE MORTGAGE FRAUD CONSPIRACY; 11 OF THOSE DEFENDANTS HAVE BEEN SENTENCED. They were involved in buying and selling new homes—all of which were built by Emerick. Buyers purchased the homes at inflated prices, obtaining mortgage loans for more than the actual sale price by providing false information to mortgage lenders, then kept the extra proceeds. Buyers created shell companies for the purpose of receiving those kickbacks from Emerick, with kickbacks ranging up to $125,000 on each house.
Emerick admitted to participating in the fraudulent mortgage loans involving 25 residential properties. Emerick was aware that loan applications and supporting documentation containing material false and fraudulent representations and omissions of fact would be submitted to mortgage lenders. Emerick was also aware that buyers were creating false business entities in order to receive loan proceeds without the knowledge of the lender.
Emerick submitted false documentation and made fraudulent material representations to title companies in order for the buyers to receive funds from the loan proceeds; he also made payments to the buyers outside of closing.
In total during the course of the conspiracy from June 2005 to May 2007, mortgage lenders approved 25 loans totaling more than $12.6 million. From that total, buyers received approximately $2.3 million without the lenders’ knowledge. Lenders sustained actual losses totaling $6,434,043. (usattywdmo63010)
MORAL
Note the loss. Note the federal prosecutors and investigators went back over five years to find the loans executed in 2005. Note he received less than three years prison time. Anyone taking bets as to whether he cooperated with the prosecutors to get the other 16 or 17 involved to incriminate themselves.
NEW JERSEY REQUIRES ITS OWN DISCLOSURE FOR MORTGAGE LOANS SINCE THE NEW GFE DOES NOT COMPLY WITH STATE LAW
FACTS
The state of New Jersey published Bulletin 10-17 which clarifies disclosure requirements for allowable fees. The state requires a separate disclosure form with individual fees totaled by category, with the total amounts equal to the various blocks and lines on the GFE. The disclosure must also identify which fees are refundable in whole or in part and the terms and conditions of refunds, as well as, the date of presentation. A copy of the disclosure must be maintained; and must be created by licensees until such time as the Department adopts new rules or amendments.
The relevant sections of the New Jersey Administrative Code are: N.J.A.C. 3:1-16.3(d), which provides that “Not later than three business days after the lender receives the borrower’s application, or before closing of the loan, whichever is earlier, the lender shall provide the borrower with a good faith estimate as a dollar amount or range of each fee for a settlement service which the borrower is likely to incur;” N.J.A.C. 3:1-16.3(d)2, which provides that “With respect to the settlement service fees imposed on a borrower by the lender (and not by third parties), the lender shall indicate which, if any, of such fees are refundable in whole or in part and the terms and conditions for such refund;” and N.J.A.C. 3:1-16.3(d)3, which provides that “Good faith estimates of fees for settlement services which are made pursuant to, and conform to, Federal Regulation X (RESPA) shall satisfy the disclosure requirement of this subsection n, provided that the lender also makes the disclosures required by (d)2 above.”
The amended RESPA regulations are no longer consistent with these rules. Under the revised RESPA rules, the individual mortgage broker and banker fees that are described in N.J.A.C. 3:1-16.2 and that are required to be disclosed to the borrower under N.J.A.C. 3:1-16.3(d) are no longer separately disclosed on the GFE form, but are aggregated on Blocks 1 through 11 of that form. Thus, the information that is permitted to be entered on the GFE form by the amended RESPA rules will no longer satisfy the disclosure requirements imposed by N.J.A.C. 3:1-16.3(d). In addition, the inclusion of fees for settlement services on the GFE as referenced in N.J.A.C. 3:1-16.3(d)3 may no longer be relied upon to comply with New Jersey’s disclosure requirements.
New Jersey Disclosures Form
In order to satisfy the fee disclosure requirements of N.J.A.C. 3:1-16.3(d) without affecting the scope of required RESPA disclosures, THE BORROWER SHOULD BE PRESENTED WITH A NEW JERSEY DISCLOSURES FORM THAT IS COMPLETELY SEPARATE AND APART FROM THE HUD FORMS, and on which all of the applicable origination and settlement fees encompassed in
N.J.A.C. 3:1-16.2 are listed. The individual fees must be totaled by category, with the total amounts equal to the amounts shown on the various Blocks and Lines on the GFE form. In order to satisfy the requirements of N.J.A.C. 3:1-16.3(d)2, the New Jersey Disclosures Form should also identify which, if any, fees are refundable in whole or in part and the terms and conditions for such refund.
The New Jersey Disclosures Form should be provided to the borrower, and specify the date of such presentation, in accordance with N.J.A.C. 3:1-16.3(d). The Department recommends having the borrower sign and date the New Jersey Disclosures Form as evidence of compliance. A copy should be maintained with the disclosure documentation in the licensee’s mortgage files, and would be subject to inspection and examination by the Department. The New Jersey Disclosures Form should not, however, be attached or referred to in any manner as an addendum or supplement to the GFE or HUD-1/HUD-1A forms. Until new rules or amendments are adopted, to comply with the New Jersey rules referenced above licensees should create and use their own New Jersey Disclosure Forms for these purposes, consistent with the content requirements noted above. (NJ Bulletin 10-17)
MORAL
Read it and weep. Create it at your own risk. I would recommend using an experienced attorney myself. Don’t you just love all the disclosures. How many are there? There are at least 10 from my superficial count.
NORTH CAROLINA ENACTS HOMEOWNER AND HOMEBUYER PROTECTION ACT
FACTS
Effective Oct. 1, 2010 the act will prohibit home foreclosure rescue scams in which a transferor is induced to sell property for less than 50% of its fair market value to avoid foreclosure, to provide protections in lease option contracts by requiring that such contracts be in writing, include specified minimum contents, be recorded, give purchasers under the contract notice of and the right to cure any default, and specify the consequences of a seller's default on a loan secured by a lien on the property, to provide protections in contract for deed transactions by requiring that such contracts be in writing, include specified minimum contents, be recorded, give purchasers under the contract notice of and the right to cure any default, and involve property to which the seller holds title, and to make violation of chapters 47g and 47h of the general statutes a basis for discipline under the manufactured homes licensing act. (sb1015nc)
MORAL
You will now need to learn real estate laws and loans all over again starting from scratch. It might just be faster and less expensive considering your time to call your attorney.
NORTH CAROLINA STOPS FORECLOSURES AGAINST THOSE IN ACTIVE MILITARY SERVICE
FACTS
North Carolina enacted Senate Bill 1400, which adds provisions regarding prohibition on foreclosure power of sale process for any active duty military service members and up to 90 days after their service ends. There are additional provisions for the military service member to waive these rights. The bill indicates an effective date of Jan. 1, 2011 for foreclosures initiated after that date, however, there are provisions regarding hearings that have effective dates prior to and after Oct. 1, 2010.
MORAL
I would recommend reading SB 1400 very carefully. For example. I am in active military service. I am also career military. I stop paying the mortgage, rent the property for the next twenty years until I retire and without paying the mortgage make one heck of a profit? I wonder if the bill covers this fact scenario?
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE
