FACTS
ILLINOIS BONDING REQUIREMENTS increase effective Dec. 31. The rate is $25,000 to $150,000 depending on the total loan officer volume. (I hope you have a lot of volume)
Surety Bond Volume Requirements:
Less than $5,000,000: $25,000 Bond
$5,000,001 to $20,000,000: $50,000 Bond
$20,000,001 to $50,000,000: $75,000 Bond
$50,000,001 to $100,000,000: $100,000 Bond
$100,000,001+: $150,000 Bond
Minnesota Bond Minimum Changes by December 1, 2010
$100,000 Surety Bond Needed by mortgage originators
In accordance with legislative changes to Chapters 58 & 58A, mortgage originator companies will now be required to carry a surety bond of no less than $100,000. Letters of credit and net worth will no longer be accepted. Bond amounts may be adjusted at a later date according to loan volume. MLOs not covered by a company bond are required to carry an individual bond.
New Oregon Surety Bond Requirement
As of Dec. 31, every licensed mortgage company that employs loan originators must increase the coverage of its corporate surety bond to meet these requirements. If the company is a brand new license in Oregon, the company must provide a surety bond in the amount of $50,000. Following a company's filing of its first annual report, the amount of the corporate surety bond must be calculated each year based on the dollar amount of Oregon residential mortgage loans listed in the previous year's annual report using the following scale:
Mortgage Loan Origination Bond Requirements:
Less than $10,000,000: $50,000 Bond
$10,000,001 to $25,000,000: $75,000 Bond
$25,000,001 to $50,000,000: $100,000 Bond
$50,000,001 to $100,000,000: $150,000 Bond
$100,000,001+: $200,000 Bond
TENNESSEE BONDING REQUIREMENTS FOR MORTGAGE LENDER, BROKER AND/OR LICENSEES MAKING RESIDENTIAL MORTGAGE LOANS
The Mortgage Act requires the Department to establish a mechanism by which the surety bond posted by mortgage lenders and brokers will be annually adjusted to reflect the dollar amount of loans originated by the company. The proposed rules compute a licensee's surety bond amount for renewal applications via a three-tier system based on the dollar amount of Tennessee residential loans the licensee originated in the preceding calendar year.
Mortgage Brokers:
Less than $10,000,000: $45,000 Bond
$10,000,001 to $50,000,000: $90,000 Bond
$50,000,001+: $135,000 Bond
Mortgage Lenders:
Less than $10,000,000: $100,000 Bond
$10,000,001 to $50,000,000: $200,000 Bond
$50,000,001+: $300,000 Bond
New Wisconsin Surety Bond Requirement
Minimum $300,000 for Bankers and $120,000 for Brokers
The minimum amount of the required surety bond is $300,000 for mortgage bankers and $120,000 for mortgage brokers. In addition, the bond must be increased by $10,000 for each licensed branch location when the number of branch locations exceeds five. As an example, if a mortgage banker has nine licensed branches, the required surety bond amount is $340,000.
MORAL
Do you think the states are trying to drive the mortgage brokers out of business? Throw out the good apples with the bad. If that is the case, how come they do not throw out all the politicians?
ARIZONA MAN GETS FIVE YEARS IN FEDERAL PRISON FOR MORTGAGE FRAUD AND TAX EVASION
FACTS
On Nov. 11, Chris Nero of Tucson, also known as CHRISTOPHER SISNERO, was sentenced to 58 months in prison. He pleaded guilty to three counts of Felony Attempted Evasion of Income Taxes.
Nero was originally indicted June 11, 2008, on charges related to his involvement in mortgage fraud. From 2003 through 2005, Nero and a co-defendant conspired to commit mortgage fraud in Tucson. Co-defendant, ROY FIFE, a former real estate agent, is scheduled for guilty plea, sentencing and restitution hearing on Dec. 12.
Nero took part in a conspiracy to fraudulently submit mortgage applications on behalf of straw buyers under false pretenses. Nero then obtained and disbursed the proceeds of fraudulently obtained loans to bank accounts under his control or to others acting on his behalf. The conspiracy resulted in losses to institutions of over $2 million.
Nero admitted he earned a total gross income of at least $2.7 million dollars for the years 2001 through 2007. He also admitted he failed to file any income tax returns either personally or through his company, MIH Real Estate Investor’s Inc., for tax years 2001 to 2008, a period of eight years.
In determining Nero’s sentence, the court found he actively participated in a cash back mortgage fraud conspiracy that occurred over several years. The vast majority of Nero’s total gross income during these years was generated from his involvement in the mortgage fraud conspiracy. (tucsonciti.com111110)
MORAL
Normally after the third year the IRS starts an investigation especially where 1099’s are involved and no tax returns are filed. Notice how the government went back nine years? If you did not file tax returns over three years and had significant income that required the filings I would suggest you see your attorney now. You can file late and generally if you file before a criminal investigation has begun, the IRS leaves it civil since you did it voluntarily. BUT, when a “Special Agent” starts talking to you, my experience has been that the IRS will not drop the criminal charges even if you do file. The theory being in this attorneys’ opinion that you only filed in order to try and prevent criminal prosecution.
CALIFORNIA DRE PROPOSES TO REGULATE USE OF NICKNAMES
FACTS
The Department of Real Estate proposes to add a subsection e to 10 CCR §2731 (Licenses under Fictitious Names) where if the licensee is a natural person the use of a nickname in place of his or her legal given name shall not constitute a fictitious name as long as the correct last name as issued on the license is used and the Department issued license identification number is used as well as required by Section 10140.6 of the California Business and Professions Code.
MORAL
You are already required to put the license number on any material that is a point of first contact with someone so this does not seem to add too much.
THREE INDICTED IN SACRAMENTO FOR MORTGAGE FRAUD ON 10 PROPERTIES
FACTS
On Nov. 9, a 13-count indictment was today charging DOUGLAS HEALD, OF SACRAMENTO; BRANDON HANLY, OF REDDING; AND JERAD MAGGI in a scheme to defraud mortgage lenders.
The indictment alleges that in 2005 and 2006, the defendants altered appraisal documents and title reports in order to obtain $5 million in mortgage loans with $1.5 million in "cash out" loans that would not have been made but for their fraud. Nine of the mortgaged properties were in Redding and one was in Lodi.
Heald and Hanley were arraigned, pleaded not guilty and are set to appear before U.S. District Judge William B. Shubb on Dec. 21. Maggi is sought by the FBI.
The case stems from the successful prosecution of JOSHUA GERVOLSTAD, A REDDING MORTGAGE BROKER WHO ON JULY 12, WAS SENTENCED TO THREE YEARS IN PRISON and ordered to pay $1.4 million in restitution.
The maximum statutory penalty for a violation of mail fraud and wire fraud is 20 years in prison and a $250,000 fine. The maximum statutory penalty for money laundering is 10 years in prison and a $250,000. (usattyedca1190)
MORAL
Notice how they went back five years to get to them? I wonder if Mr. Gervolstad had anything to do with the indictment of these three? Hmm, I wonder!
FIVE FROM MINNEAPOLIS PLEAD GUILTY TO STEALING $5 MILLION FROM MORTGAGE LENDERS
FACTS
On Nov. 9, the last two of five defendants connected to a $20 million mortgage fraud scheme appeared in federal court in Minneapolis to plead guilty.
THANH VAN NGO, of Plymouth, pleaded guilty to one count of aiding and abetting wire fraud, and DANG HAI NGUYEN, OF AUSTIN, TEXAS, pleaded guilty to one count of conspiracy to commit wire fraud. The two men were indicted, along with three co-defendants, on April 21, 2010. The co-defendants include VINCE LONG NGUYEN, OF MINNEAPOLIS; JESSE STEVEN MOXNESS, OF BLAINE; AND TRUNG QUANG TRAN, OF MINNEAPOLIS. The scheme involved 54 Minnesota homes and resulted in a $5 million loss to various mortgage lenders.
The defendants admitted operating the mortgage fraud scheme between 2006 and 2009. During that time period, Tran was either an owner or co-owner of several businesses that negotiated with builders to purchase residential properties at discount prices. Vince Nguyen was the owner of a business that handled real estate closings. Ngo worked as a loan officer and co-owned a company with Tran through which he too negotiated with builders to purchase residential properties at discounted prices. Moxness was a homebuilder, and Dang Nguyen worked to recruit real estate investors.
Ngo admitted that on November 28, 2006, he recruited a straw buyer to purchase a St. Paul residence, and that he reported false information about that buyer on the mortgage loan application so the buyer would qualify for a loan. Based on the fraudulent application, a $380,000 loan was awarded; and at closing, Ngo received a $70,753 kickback. Then, three days after closing, Ngo issued a $10,000 check to the straw buyer. The financial transactions were made via wire transfers. In all, Ngo was responsible for fraudulent activities involving 15 properties, with a related loss amount of approximately $1.7 million.
Dang Nguyen admitted that between 2007 and 2008, he too recruited straw buyers and produced fraudulent loan applications, which were then sent to various mortgage lenders and ultimately approved. Dang Nguyen also received a portion of the loan proceeds, as a "commission," for each straw buyer he recruited. Dang Nguyen was responsible for illegal activity involving eight properties, with a related loss amount of approximately $1.3 million.
The co-defendants already have pleaded guilty. On Nov. 3, Vince Long Nguyen pleaded guilty to one count of wire fraud. On Oct. 29, Moxness, pleaded guilty to one count of conspiracy. And, on Oct. 28, Tran, pleaded guilty to one count of wire fraud.
Specifically, Moxness admitted building homes that were then appraised for significantly more money than they were worth. Those homes were purchased by straw buyers through Tran and Ngo and, eventually, went into foreclosure. Moxness received a kickback of $15,000 for each residence built for the scam. Moxness was responsible for criminal activity involving nine properties, with a resulting loss amount of approximately $1 million.
Tran admitted recruiting investors with good credit to buy homes, promising them kickbacks of between $1,250 and $10,000 per purchase. Investors were told TRAN'S COMPANY, would lease the purchased properties on their behalf and use the rental income to pay the investors' mortgage payments and other property expenses. Investors were also told the properties would be sold for profit, to be shared by them and the defendants.
In addition, Tran admitted helping prepare false loan applications, which were submitted to mortgage lenders. Based on those fraudulent applications, more than $20 million in loan proceeds were approved. The proceeds were disbursed contrary to the understanding of the lenders, and Vince Nguyen admittedly provided false settlement statements to the lenders to conceal the fraud scheme. Tran was responsible for fraudulent activity involving 30 properties, with a related loss amount of approximately $4.8 million, while Vince Nguyen's actions involved 34 properties, with a resulting loss amount of approximately $5 million.
For their crimes, the defendants face a potential maximum penalty of five years in prison on the conspiracy charge and 20 years on the wire fraud charge. Judge Montgomery will determine their sentences at a future hearing, yet to be scheduled.(usattymn11910)
MORAL
Five defendants, $5 million and now possibly five years in prison. I guess the number five was not a good luck charm for them.
FORMER LOAN OFFICER AND DOCUMENT FORGER FROM NEW JERSEY PLEAD GUILTY TO ROLES IN MORTGAGE FRAUD SCHEME
FACTS
On Nov. 10, EDIVALDO DOS SANTOS, OF HARRISON, AND ROSA DAMASCENO, BELLEVILLE, each pleaded guilty to conspiring to commit mortgage fraud, admitting that they attempted to use false documents to secure a fraudulent mortgage loan. Dos Santos and Damasceno were originally charged in June 2010 as part of a coordinated mortgage fraud takedown in which 28 defendants were charged for their alleged roles in various mortgage fraud schemes in northern New Jersey.
Dos Santos was a former loan officer holding himself out as a mortgage consultant; Damasceno was the owner of a Newark-based company that provided tax services and driver education in Belleville, N.J. In August 2009, Dos Santos asked a loan officer at a New Jersey mortgage company to act as a loan officer on a real estate transaction in which a client would buy a property and then receive money back from the seller at closing. The prospective purchaser was not qualified to obtain the loan, so Dos Santos and others provided falsely inflated income information in support of his application. Damasceno created fraudulent W-2 forms in furtherance of the fraud.
At sentencing, Dos Santos and Damasceno each face up to 30 years in prison and a fine of $1 million, or twice the gross gain or loss from the conspiracy. Sentencing is currently scheduled for both defendants on Feb. 16, 2011. (usattynj111010)
MORAL
Seems lot of time in prison.
NEW YORK APPRAISER SENTENCED FOR MORTGAGE FRAUD
FACTS
On Nov. 10, ELMER J. "JOE" MCINDOO was sentenced in Albany to six months of home detention and five years of supervised release for his role in a local mortgage fraud scheme. McIndoo also was ordered to make full restitution in the amount of $135,148.45, due jointly and severally with the other defendants convicted in the case, and he was required to surrender his New York state real property appraiser's license as a result of his conviction.
McIndoo, of Watervliet, was sentenced for his involvement in preparing and causing to be submitted false appraisals for each of the properties involved in a fraudulent scheme, led by co-defendant MICHAEL CASSADEI, in which the victim financial institution, the former First Union National Bank of Delaware, financed the sale of Capital Region residential properties in amounts well in excess of their actual value, with the proceeds of the loans used to purchase the properties in much lower amounts and the bulk of the funds retained by the defendants. Cassadei's sentencing currently is set for Dec. 15, at 9:30 a.m., before Judge McAvoy in Albany.
The ongoing investigation in this matter is being conducted by the Office of the Inspector General of the United States Department of Housing and Urban Development, the Albany Division of the Federal Bureau of Investigation, and the New York State Police Special Investigations Unit, with the assistance of the Internal Revenue Service - Criminal Investigation Division, the United States Postal Inspection Service, and the New York State Banking Commission. It is being prosecuted by the United States Attorney's Office for the Northern District of New York. (usattyndny111010)
MORAL
Two down. How many to go? Notice it states “ongoing investigation.”
OHIO HOMEBUILDER CONVICTED OF MORTGAGE FRAUD FACES UP TO 85 YEARS IN PRISON
FACTS
A jury convicted BERNARD KURLEMANN, a homebuilder in the Cincinnati area, for his role in a mortgage fraud scheme involving luxury homes. He was accused of selling high-end luxury properties to fake buyers, and then he would submit false information on contracts and loan documents.
The high-end homes were part of Homearamma 2007 and 2008. Kurlemann could face up to 85 years behind bars. (fox19.com111010)
MORAL
Depending on the loss to the lenders, it goes this way: the higher the loss, the more time you do and in the federal system there is no parole.
PENNSYLVANIA REAL ESTATE ATTORNEY PLEADS GUILTY TO MORTGAGE FRAUD
FACTS
On Nov. 8, WILLIAM BUCHKO, an attorney specializing in real estate transactions and a resident of New Brighton, Pa., pleaded guilty in federal court to a charge of bank fraud.
In connection with the guilty plea, the court was advised that Buchko participated in a bank fraud scheme related to a property in Coraopolis, Pa., in June 2009. Some years earlier, co-conspirators purchased the property under the corporate name SPO Capital, LLC. In June 2009, a co-conspirator applied for the loan through Wesbanco Bank falsely representing that Eloheh Group LLC, which was owned by co-conspirators, had purchased the property from SPO Capital in January 2009. The loan was to refinance so that Eloheh Group could get cash. It was represented that Eloheh Group had paid $3.2 million for the property and had made a cash down payment of approximately $750,000.
Eloheh Group had not purchased the property in January 2009. In terms of successfully applying for a refinance loan, it is important to establish what is called in the industry as "seasoning." Borrowers cannot typically purchase a property one month and then refinance the loan the next month. Banks want to see a history of payments made on the loan.
In order to convince the bank of this fraudulent January sale, Buchko create false documents evidencing the January sale. Those fraudulent documents included a settlement statement and a deed. These false documents were submitted to the bank in support of the loan application.
Judge Cercone scheduled sentencing for April 6, 2011. The law provides for a total sentence of 30 years in prison, a fine of $1,000,000, or both. (usattywdpa11810)
MORAL
I do not know what he was paid, but now he will lose his license and not be able to make a decent living. I can only presume he has been an attorney for at least30 years and for one transaction he winds up losing everything. He spends four years in college, then three more in law school and now loses it all not counting the shame and sorrow he has brought upon his family. Read on below. This seems to be the week for attorneys to get in trouble.
RHODE ISLAND REAL ESTATE ATTORNEY WHO IS ALSO A FORMER STATE SENATOR PLEADS GUILTY TO EIGHT COUNTS OF BANK FRAUD NETTING MORE THAN $1.7 MILLION
FACTS
On Nov. 4, CHRISTOPHER B. MASELLI, a NORTH PROVIDENCE REAL ESTATE ATTORNEY AND FORMER STATE SENATOR from Johnston, pled guilty in U.S. District Court in Providence to eight counts of bank fraud. Maselli pled guilty to information filed by the government on Oct. 26 alleging that he falsified bank and federal tax documents and lied about his income and assets in obtaining more than $1.7 million in mortgages and loans. Mr. Maselli pled guilty as charged in the information. There is no plea agreement between Mr. Maselli and the government.
Beginning in June 2007, Maselli applied for a series of loans, primarily mortgage loans, from several federally insured banks. In order to qualify for those loans, the defendant lied about his income and assets and produced fabricated documentation including false tax returns and bank statements to support his misrepresentations regarding his income and assets. In all but one instance, the banks relied on the defendant’s false statements in approving him for the loans.
Maselli commenced his schemes on May 27, 2007, when the defendant and his wife signed a purchase and sale agreement to buy land and a home on Pinehill Ave. in Johnston for $200,000. Maselli intended to demolish the existing structure and build a home. The defendant used his wife’s elderly grandmother as a straw borrower and applied for two mortgages in her name, totaling $200,000. The defendant’s wife’s grandmother was falsely told that she would be cosigning the loan with the defendant’s wife and that her name would be removed from the mortgage within three months of the purchase. Instead, the loan applications Maselli submitted to the bank were submitted with the wife’s grandmother named as the sole applicant and the loans were issued in her name only.
In order to deceive the bank into thinking that his wife’s grandmother was the true purchaser of the property and the true borrower, the defendant created numerous false documents relating to his wife’s grandmother and submitted false information on the loan applications concerning the grandmother, her income and assets. Maselli never removed the grandmother’s name from the mortgage and a week after the closing the defendant completed a deed transfer which transferred her ownership in the property to him.
In each of the seven subsequent instances of applying for and obtaining mortgages and loans, the latest which was obtained in March 2009, Mr. Maselli employed schemes where he lied about his income and assets and produced fabricated documentation including false tax returns and bank statements to support his misrepresentations regarding his income and assets. In each instance, the banks relied on the defendant’s false statements and false documents in approving the loans.
Sentencing has been scheduled for Feb. 10, 2011. Bank fraud is punishable by a maximum sentence of 30 years' imprisonment, a $1,000,000 fine, and five years' supervised release. (usaattyri11910)
MORAL
Using his wife’s elderly grandmother to sign for the loan and then taking title and still leaving the mortgage in her name. Did he hate the grandmother? Love his wife? I wonder why?
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE
