THE UNITED STATES SUPREME COURT STATES THAT FEDERAL REGULATORS CANNOT USE RESPA AS A PRICE-SETTING STATUTE TO STOP LENDERS AND OTHER SETTLEMENT SERVICES PROVIDERS FROM CHARGING EXCESSIVE FEES OR EVEN “UNEARNED” OR BOGUS FEES FOR WHICH NO SERVICE IS PROVIDED.
FACTS
The Supreme Court in Freeman v. Quicken Loans No. 10-1042 ruled that federal regulators cannot use RESPA as a price-setting statute to stop lenders and other settlement service providers from charging excessive fees or even “unearned” or bogus fees for which no service is provided.
This was a unanimous decision of the Supreme Court by a 9-0 decision and involves the case of Quicken Loans where the justices said the Real Estate
Settlement Procedures Act of 1974 only prohibits fee splitting between two parties and kickback schemes.
Quoting the court, “In our view, [RESPA] unambiguously covers only a settlement service provider¹s splitting of a fee with one or more persons; it cannot be understood to reach a single provider¹s retention of an unearned fee.”
The Freemans alleged that Quicken Loans charged them $1,000 for discount points but they didn't receive a corresponding reduction in the mortgage interest rate. Quicken Loans claimed the borrower did receive a reduction in the interest rate.
The Supreme Court decided to review the Fifth Circuit Court of Appeals decision in Freeman v. Quickens Loans. The New Orleans circuit court had rejected that theory that RESPA prohibits unearned fees.
“When read in its entirety, RESPA is an anti-kickback statute, not an
anti-price-gouging statute,” the Fifth Circuit Court of Appeals said in its decision.
The Supreme Court unanimously ruled in Quicken Loan¹s favor and affirmed the Fifth Circuit¹s decision.
The high court¹s decision is considered a setback for the Consumer Financial Protection Bureau. The bureau filed an amicus brief that supported HUD¹s
RESPA interpretation on unearned fees and urged the justices to rule in favor of the Freemans.
MORAL
Question: Given this rule, can the CFPB set a limit on fees let alone a flat fee? If so where does it obtain its legal authority to do it since RESPA does not allow it and no new law is enacted to allow it considering only the code section numbers were changed and not the law.
CONSUMER FINANCIAL PROTECTION BUREAU PROPOSES RULES AND REQUESTS COMMENTS
REGARDING SUPERVISORY AUTHORITY BASED ON RISK DETERMINATION
FACTS
This proposed rule establishes procedures to implement section 1024(a)(1) (C) of Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (12 U.S.C. 5514(a) (1) (C)). The Consumer Financial Protection
Bureau (CFPB) has the authority to supervise a nonbank covered person when the CFPB has reasonable cause to determine, by order, after notice, to the person and a reasonable opportunity to respond, that the person is engaging, or has engaged, in conduct that poses risks to consumers with regard to the offering or provision of consumer financial products or services. This proposed rule sets forth the procedures by which the CFPB may subject a nonbank covered person to the CFPB's supervisory authority under 12 U.S.C. 5514(a) (1) (C). Pursuant to 12 U.S.C. 5514, the CFPB is authorized to require reports from, and conduct examinations of, entities made subject to its supervisory authority in this manner. Comments must be received on or before July 24, 2012. (alrgs52512)
A QUOTE FROM THE NATIONAL MORTGAGE NEWS ABOUT THE CFPB ROUNDTABLE MEETING
AND THE FAIRNESS IT SHOWS TO TRADE GROUPS
FACTS
The messages delivered by the CFPB were loud and clear: (*) Flat fee compensation is a done deal. Deal with it. (*) CFPB wants licensing and regulatory parity for banks and nonbanks alike. (*) If you have payments made to affiliates your life will be more complicated and difficult. (*) The
CFPB doesn¹t care that its mortgage compensation proposal will destroy the lending industry and hand the business over to the nation¹s largest banks.
A few other notes about the meeting: no representatives from trade organizations were allowed to sit at the U-shaped table with the CFPB\ officials. Trade reps were relegated to the audience. Trade groups, however, were permitted to submit the names of five people who would sit at the table. CFPB chief Richard Cordray was not. (nmn52512)
Mortgage bankers are being told to get ready for CFPB examinations of their shops. Here’s the good news: the big banks get audited first for mortgage compliance. Then the agency will get around to everyone else.
If your firm is listed on the NMLS you will face an audit and some time in your lifetime. (nmn52512)
CALIFORNIA HOMEOWNERS WITH HOMES THAT ARE “UNDERWATER,” i.e., WHERE
MORTGAGE IS MORE THAN THE VALUE OF THE PROPERTY
FACTS
Approximately 9,200 homeowners in Orange County, California have mortgages that are twice as much as the current value of their homes! As of March 31, one out of four Orange County homes has a mortgage where they owe more than the home is worth. (We have been advising some of these homeowners how to best handle the problem.)The amount of homes underwater in Orange County amounts to about 100,000! At least 62,500 owed 20% more than the home was worth. About 36,600 homeowners owed at least 40% more than the homes were worth. About 9,200 borrowers have homes with mortgages that are twice the current value of the home.
Stanton, Ladera Ranch, Santa Ana and Rancho Santa Margarita have the highest proportion of homeowners owing more for their homes than they are worth.
Almost 39% of Stanton homeowners with a mortgage were underwater in the first three months of this year. (ocrb152612)
MORAL
Surprisingly enough there are ways to assist these people. Not necessarily all of them but there are options open to many of them.
HAYWARD, CALIFORNIA MAN GETS THREE YEARS IN PRISON FOR MORTGAGE FRAUD
FACTS
On May 23, 2012 Justin Batemon, 34, of Hayward, California after having pled guilty was sentenced to three years in prison for his role in a $15 million mortgage fraud scheme that involved members of the Hell's Angels.
In 2006 and early 2007, authorities said Batemon obtained fraudulent mortgage loans to buy properties by inventing a company where he claimed to be self-employed, lied about his income, and had others provide altered bank statements, Haag said.
He also referred his friends, including members of the Hell's Angels, to participate in the scheme.
Judge William Alsup delivered the sentence, adding an enhancement for obstruction of justice when the federal prosecutors found that Batemon forged a letter regarding court-ordered drug tests, authorities said. Alsup also ordered the defendant to pay restitution and to serve three years probation after his release from prison. (sjmercnws52412)
MORAL
Federal prosecutors are still at it. Three years in federal prison. No parole in federal prison. And the loans were six years ago. So the federal prosecutors are still at it hot and heavy. It is good politically for them because of the economy and gives them a place to lay the blame and show they are very actively prosecuting. This does not even include the lenders suing the brokers and the FDIC and others threatening lawsuits.
TIBURON, CALIFORNIA REAL ESTATE SALESPERSONS SENTENCED TO 18 MONTHS IN
PRISON FOR REAL ESTATE FRAUD
On May 24, 2012, Abraham Valentio, 53, a Tiburon real estate salesman who falsified his income for $5.6 million in refinancing loans was sentenced to
18 months in prison.
Abraham Valentino, 53, was ordered to surrender to authorities on July 31 to begin his prison sentence, said IRS Special Agent Arlette Lee. He was sentenced by U.S. District Judge Jeffrey White in San Francisco.
The case involved Valentino's property at 121 Sugar Loaf Drive. According to court documents, Valentino bought the lot in 2002 and spent 10 years building a five-bedroom mansion on the hilltop site, intending to sell it.
Last June, federal authorities charged him with wire fraud and money laundering. Authorities said he overstated his income on loan applications claiming $132,000 in base monthly income when it was really $4,500 to $6,000 to obtain $5.1 million in refinancing for the project.
Valentino pleaded guilty to both counts. His lawyer, Jay Weill, said that while Valentino admits falsifying his income, he was encouraged to do so by a mortgage broker and an accountant.
Weill also argued that there was no evidence the loan was approved "as a result of" the false income statement, and that the banks suffered no loss, according to court documents.
Weill asked the judge to sentence Valentino to three years of probation, a $5,000 fine and 240 hours of community service. Federal prosecutor Thomas
Stevens agreed.
"He made a terrible mistake relying on the misguided advice and counsel of professionals," Weill wrote. "The defendant will (lose) his real estate license but will continue to do all he can to sell the property so that all mortgages are paid if he is placed on probation."
The 5,200-square-foot property is currently listed for $6.5 million.
(marinidndjl52412)
MORAL
This shows you why we keep track of judges. Here the prosecutor and defense attorney agreed to probation and the judge did not take their suggestions and sent him away for eighteen months. You have to know how to write the extenuating circumstances to the judge. The last person we had sentenced only received four months.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE
