Uncle Herman's e-alert HUD facts.

chow · Posted: Tue Nov 15, 2005 3:28 pm Post subject: Uncle Herman's e-alert HUD facts.

Posted with permission of Herman Thordsen

FEDERAL MORTGAGE e-ALERT©

(November 14, 2005)

HUD AUDITS RYLAND MORTGAGE IN TEMPE ARIZONA AND FINDS PROBLEMS

FACTS

In response to a recommendation from the Department of Housing and Urban Development’s (HUD) Santa Ana Homeownership Center Quality Assurance Division and Ryland Mortgage Company’s (Ryland) high default rate for its branch office, the HUD Office of the Inspector General (OIG) audited Ryland’s loan origination activities for its Tempe, Arizona, branch office. Although most of Ryland’s loans are performing, OIG found Ryland failed to originate 23 of the 24 loans in compliance with HUD requirements and regulations. All 23 loans involved multiple origination deficiencies that should have precluded their approval. The deficiencies included false employment data; questionable false Social Security numbers; improper treatment of downpayment gifts, service fees, and/or buydowns, resulting in inflated sales prices; unsupported/overstated income; insufficient income and employment documentation; an understated liability; an unacceptable credit history; inaccurate or excessive qualifying ratios without adequate compensating factors; an unallowable fee; and unsupported sources of deposits. In addition, Ryland did not adequately implement its quality control plan. OIG attributed these problems to Ryland’s failure to fully implement its quality control plan and its aggressive position on approving loans over more prudent lending practices. As a result, Ryland placed HUD’s single-family insurance fund at risk for 23 unacceptable loans with original mortgages totaling $3,085,094. HUD remains at risk of losses totaling $2,730,099 related to 20 of the 24 loans.

OIG recommended that HUD take appropriate administrative action against Ryland by seeking recovery for 14 of the loans totaling $85,741 in partial claims, loan modification, special forbearance, and inflated sales prices; indemnification of $2,730,099 against future losses on 20 of the loans; and requiring Ryland to reimburse the borrowers for $4,000 in unallowable fees on one of the loans. (2006la2002203205)

MORAL

Unless you are funding at least 20 FHA loans per month my opinion is do not do HUD loans and do not have HUD approval. The regulations are so restrictive that the least little thing wrong can cause HUD to seek indemnification and HUD is now using collection agencies to collect.

ARE MARK-UPS OF THIRD PARTY CHARGES LEGAL OR ILLEGAL

UNDER RESPA?

FACTS

If the property you are buying or refinancing is located within the 4th, 7th, or 8th federal appellate circuits, lenders and other settlement service providers are free to mark up your fees with no fear of federal constraints. The 15 states within those circuits are Maryland, Virginia, North and South Carolina, West Virginia, Illinois, Iowa, Wisconsin, Indiana, Minnesota, Missouri, Arkansas, Nebraska, and North and South Dakota. There may be state consumer protection statutes that protect you against fee-gouging or deceptive marketing practices, but no federal law.

If you are buying or refinancing in the 11th or 2nd federal appellate circuits, lenders and other service providers are prohibited from markups that are not accompanied by additional, valuable services. The states within those circuits are Florida, Georgia, Alabama, New York, Connecticut and Vermont.

MORAL

This issue first came up in February 2005. it is now November 2005. Guess what? The government still has done nothing to prevent third party mark-ups or builders indirectly forcing buyers to use their lenders. Guess who has the strongest lobby? Join our state mortgage brokers association and through NAMB with enough members like NAR has, you to can increase your voice.

CORONA, CALIFORNIA DETECTIVES ARREST ONDEYA M. REDEEMER FOR REAL ESTATE IDENTITY THEFT

FACTS

Police arrested Ondeya M. Redeemer, the owner of a storefront realty and lending business in Corona November 7, 2005 on suspicion of using the business to steal people’s identities to buy and refinance $ 2.5 million in real estate around Corona, Riverside and Moreno Valley, police said.

Ondeya M. Redeemer, of Corona, surrendered after police issued an arrest warrant accusing her of eight counts of identity theft and grand theft. Redeemer is being held, with bail set at $ 2.5 million, at Robert Presley Detention Center. She is arraigned in Riverside County Superior Court. She also faces two enhancement charges of aggravated white-collar crime and could be sentenced to almost 16 years in prison if convicted.

Police said, Redeemer illegally opened shop using the real-estate broker’s license of Lisa Tiger, who owns Tiger Mortgage & Equities in Los Angeles. Tiger also is under investigation, Zellers said.

With the license and stolen Social Security numbers, Redeemer procured loans and purchased and refinanced four properties for fictitious clients, Zellers said. All four properties are under lien, and officials have seized $ 114,722 from Redeemer for victims’ restitution if she is convicted.

“She set up virtual offices in Los Angeles and Newport Beach so that she could transfer calls when financiers called to verify her fictitious clients’ employment,” Zellers said. “She left the financiers holding the bag for more than $ 2.5 million in losses.”

Three of those financiers include BNC Mortgage, Freemont Investments and Argent Mortgage, Zellers said.

Last month, Hubert Jean Turner, of Corona, was sentenced to eight years in prison for posing as a real-estate agent and using a Riverside man’s identity to purchase at least four homes for more than $ 500,000 each. (pressenterprise11805)

MORAL

So if you loan your license to someone and they commit fraud it is arguable you are an aider and abetter and may get indicted as well. You may be innocent, but do you really want to pay me a lot of money to prove it? I think not. Do not do it.

SAN JACINTO, CALIFORNIA JOHNNA KOJIS AND STAN KOJIS PLEAD GUILTY TO IDENTITY THEFT AND SHE GETS 13-YEARS IN PRISON

FACTS

Johnna Marie Kojis, 28 and her husband Stan George Kojis, 33, pleaded guilty on November 7, 2005 to stealing the identities of others to obtain Internet loans and then cashing the checks worth more than $300,000, authorities reported. As part of plea agreements that involved pleading guilty to identification and grand theft-related charges, Johnna Marie Kojis, 28, received 13 years in state prison while her husband Stan George Kojis, 33, was given credit for 290 days served in jail and released on three-years probation, court officials said. They entered the plea at the Southwest Justice Center in French Valley.

The couple, who had moved to Banning shortly before their arrest, also had the proceeds from two home sales and an additional escrow account seized, Riverside County Deputy District Attorney Jack Lucky said. The funds will be used to repay the loan company and several victims throughout California and Florida - including one in San Jacinto - that the investigators knew about, Lucky said.

Authorities believe Johnna Kojis gained personal information such as Social Security numbers while working as a loan officer at Allied Home Mortgage Capital Corp., Lucky said. (pressenterprise110805)

MORAL

Background your loan officers, or you may be sued. The person whose identity is stolen can arguably sue you the broker for failure to have a privacy security manual in place as required by the Gramm-Leach-Bliley Act and FACTA. Do you really want to pay us to prove you are innocent or do you want to keep a privacy manual.

ADMIRAL MORTGAGE OF BALTIMORE MARYLAND HIT WITH CLASS ACTION LAWSUIT FOR OVERCHARGES

FACTS

Baltimore lending company, Admiral Mortgage Inc., faces a class action lawsuit accusing it of charging excessive fees on its secondary mortgage loans and other predatory lending practices.

Plaintiffs in the case are Rodney G. Coster and Teresa L. Coster of Essex, Md., and Amanda Connor and Kevin F. Ashe of Rosedale, Md. The Costers claim that Admiral charged them an origination fee of $5,936 on a $74,200 second mortgage -- 8 percent of the loan amount. They also allege they were charged more than $1,400 in credit report, processing, document preparation and underwriting fees.

Connor and Ashe said they took out a secondary mortgage loan for $29,000 on Dec. 17. They claim they paid a $2,340 origination fee, also 8 percent of the principal amount, and then another $1,395 in underwriting, processing and document preparation fees.

Plaintiffs’ attorney John A. Pica Jr. said the class of those who were illegally charged by Admiral could include over 500 people and said his firm, the Law Offices of Peter G. Angelos, will file several similar complaints in the upcoming weeks. According to Pica, the additional charges imposed on the Costers’ and Connors’ violate Maryland’s Secondary Mortgage Loan Law. That legislation, the complaint states, permits companies like Admiral to charge an origination fee “not to exceed 10 percent of the net proceeds for making a loan.”

Once such a fee is assessed, the law says, a lender cannot collect any other charges. Pica said Admiral and other companies get away with overcharging consumers, because many people are not aware of the law.

Furthermore, in both instances cited in the complaint all the charges were “pro-rated over the term of the loan so that every monthly mortgage payment included and continues to include, a portion of the illegal and excessive fees disguised as principal and interest payments, thereby wrongly increasing the monthly payment,” the complaint alleges. (consumeraffairs.com102805)

MORAL

It took the plaintiff lawyers a while to catch on but now that they have figured out how a loan works more brokers and lenders are being sued. Point to be taken. Review at least 10% of your loan files.

DONNA LYNN GLOCK, PREVIOIUS OPERATOR OF A REAL ESTATE TITLE COMPANY IN RENO, NEVADA PLEADS GUILTY TO IDENTITY THEFT

FACTS

DONNA LYNN GLOCK who operated a real estate title company in Yerington, Nevada, in the late 1990’s pleaded guilty November 7, 2005, in U.S. District Court in Reno to one count of Identity Theft and one count of Tax Evasion for obtaining mortgage loans by fraud and misappropriating the monies for her own use. She is facing up to15 years in prison and a $250,000 fine on the identity theft count, up to five years in prison and a $250,000 fine on the tax evasion count, and is scheduled to be sentenced on February 16, 2006.

According to her guilty plea memorandum, during the years 1999 to 2000, GLOCK operated American Title & Escrow, Inc., in Yerington, Nevada. Old Republic National Title Insurance Company in Minneapolis, Minnesota, was the underwriter for the company. GLOCK used her position at the title company to obtain loans from private lenders by fraud, and she misappropriated these funds and other funds from the business for her own personal use. She did not report these misappropriated funds as income to the IRS, nor did she file a tax return for the years 1999 and 2000.

Specifically, GLOCK admitted to creating false documentation and using the names of other individuals to obtain three mortgage loans during 1999 and 2000 totaling approximately $192,500. GLOCK listed their names on preliminary reports of title insurance indicating they had fees in certain real properties, when in fact they did not. GLOCK also listed their names and forged their signatures on deeds of trust, assignments of rents, and promissory notes to secure monies from private lenders. These individuals included her daughter, her daughter’s husband, and a close friend of her daughter’s.

Using her position as owner of the title and escrow company, GLOCK then obtained the monies for her own personal use. The underwriting company, Old Republic National Title Insurance Company, reimbursed the private lenders.

The guilty plea memorandum further indicates that during the years 1999 and 2000, GLOCK diverted $377,511 from the bank accounts of American Title & Escrow, Inc. for her own personal use by writing business checks to herself and her husband, or by depositing business checks in her daughter’s account. The tax loss to the IRS for both years is estimated to be $118,516. (usattynev11905)

MORAL

Nice mom! Do you have one like her?

SIX INDICTED IN MORTGAGE FRAUD SWEEP BY NEW YORK

NASSAU COUNTY DISTRICT ATTORNEY

FACTS

Charges were filed against Alton Lawson, a.k.a. Alton Lawson and Lamont Lawson, 43, of 88-73 Commonwealth Boulevard, Queens; Chester W. Matthews, 54, of 107-12 133rd Street, Richmond Hill; and Reginald Johnson, 32, of 25 South Haven Drive, Brookhaven. All three defendants worked in concert to defraud a 45 year old woman from Roosevelt and a 80 year old female Hempstead resident, who were both homeowners having financial difficulties. Each victim received unsolicited visits from Lawson who told them he could help them save their houses by refinancing.

Lawson tricked the victims into selling their houses to Matthews for $295,000 and $320,000. Matthews, was serving as a ‘straw’ or phony buyer for Lawson, was able to purchase the properties of the victims by obtaining mortgages for the full amounts from Fremont Investment and Loan of Brea, California and BNC Mortgage, Inc. of Irvine, California, on the basis of fraudulent income information submitted on the mortgage applications. Johnson, who was the mortgage broker from Reliable Capital Corporation, provided the fraudulent mortgage application that was submitted to BNC Mortgage, Inc., which enabled Matthews to ‘purchase’ the Hempstead home. Johnson also provided Lawson a ‘show’ settlement check made out to the Hempstead victim for $15,852.27 that was shown at the closing which enabled the loan to close.

Although the outstanding mortgage on the Roosevelt victim’s house was paid, she received nothing, while Lawson received mortgage proceeds totaling $46,383.54. Although the tax lien on the Hempstead victim’s home was paid, she received only $150,555.10., while Lawson received mortgage proceeds totaling $110,500. Matthews was paid $17,500 and $20,000 by Lawson for serving as the ‘straw’ buyer on each of the two properties. Johnson was paid $10,715 from the mortgage proceeds for serving as the mortgage broker on the sale of the Hempstead house.

After essentially stealing the houses of the two victims and retaining substantial portions of the mortgage proceeds, Lawson, in the name of Matthews, the purported owner of the properties, had begun eviction proceedings to evict each complainant. Lawson, who was the principal architect of this fraud, has been charged with two counts of Grand Larceny in the Second Degree, and two counts of Criminal Possession of a Forged Instrument in the Second Degree. Johnson has been charged with one count of Grand Larceny in the Second Degree, and one count of Criminal Possession of a Forged Instrument in the Second Degree. Matthews has been charged with two counts of Grand Larceny in the Third Degree, and two counts of Criminal Facilitation in the Fourth Degree."

"Louis Carter, 54, of 470 Brookside Avenue, Roosevelt has also been charged," said Dillon.. "Carter was given power of attorney by a Wyandanch woman to sell her house at 19 Beech Street, Wyandanch. Carter sold the property for $250,000 on May 10, 2005. At the closing the victim’s mortgages of $174,589.19 and $16,952.89 were paid off. The victim, however, received only one check for $7,926.90. The investigation disclosed that at the closing Carter directed that a check for $16,000 be made out to pay for three months past due rent that he owed. The defendant has been charged with one count of Grand Larceny in the Third Degree, punishable by up to 7 years in prison."

"Daniel Stern, a.k.a. Daniel Slovak, 41, of 7 Chester Avenue, Apt. 2, Brooklyn, was also charged and arrested as part of this mortgage fraud," said Dillon. "On June 23, 2004, Stern, while posing as an attorney and the President of Nietos Realty, Inc. sold a piece of commercial property located at 286 Willoughby Avenue in Brooklyn, to an attorney. The closing took place at a law office in Uniondale. During the next month the victim attempted to work on the property with the intention of building condominiums, but discovered that another party was already conducting repairs. Upon further inquiry the victim discovered that Stern had sold the same piece of property to another attorney. After further investigation we discovered that Stern is not an attorney and that the property was actually owned by another Nietos Realty, Inc. Stern has been charged with one count of Grand Larceny in the Third Degree and two counts of Criminal Possession of a Forged Instrument in the Second Degree, punishable by up to 7 years in prison."

"Jamal Zafar, 34, of 578 Old Country Road, Huntington, was charged by the DA’s Criminal Frauds Bureau," said Dillon. "On March 14, 2004, Zafar offered to sell a house located at 1542 Brentwood Road, Bayshore to two individuals. Zafar told them that the purchase price was $155,000 but that the property had to be purchased in cash. Zafar stated the house was a Section 8 rental and needed repairs, but told them not to worry since they would be receiving the $1,400 monthly rent from Section 8. The victims agreed to the offer. On March 18, 2004, the victims attended a closing in Elmont and paid $155,000 in cash for the property. The deed, however, was executed in the name of Zafar who said that he would sell the property for them. After several months of stalling Zafar finally conveyed the property by a signed deed executed on August 11, 2004. The deed was recorded on September 2, 2004. When the victims went to record the deed they discovered that Zafar had already sold the same house to another individual on July 22, 2004 for $275,000. Zafar has been charged with one count of Grand Larceny in the Second Degree and one count of Criminal Possession of a Forged Instrument in the Second Degree. If convicted he faces up to 15 years in prison." (11705orig.times.)

MORAL

You would think two attorneys would know better and that someone asked to pay all cash would be suspicious. The greedier you are the more gullible you become.

HOMEOWNERS LOAN CORPORATION A WHOLLY OWNED SUBSIDIARY OF THE LAREDO HATION BANK, LAREDO, TEXAS SIGNS AGREEMENT WITH OCC TO SET ASIDE $14 MILLION TO REIMBURSE CONSUMERS

FACTS

The OCC announced a Formal Agreement with The Laredo National Bank, Laredo, Texas, and its subsidiary, Homeowners Loan Corporation (HLC) requiring HLC to strengthen its policies and control systems to ensure compliance with all applicable consumer protection laws, regulations and OCC guidance, and reimburse borrowers who were harmed due to the lack of appropriate controls. If you would like to read the detain go to Formal Agreement 11/7/05.

MORAL

Nice to see a bank take it on the chin once in a while.

THE INFORMATION HEREIN IS NOT LEGAL ADVICE.

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Herman Thordsen

IF YOU HAVE TROUBLE WITH:

MORTGAGE FRAUD
NEVADA MORTGAGE LENDING DIVISION AUDITS
HUD AUDITS AND THE MORTGAGEE REVIEW BOARD;
LICENSING IN THE VARIOUS STATES
DEPARTMENT OF REAL ESTATE AUDITS OR LICENSE DISCIPLINARY MATTERS
DEPARTMENT OF CORPORATIONS AUDITS OVER CFL OR RMLA LICENSES;
MINIMUM WAGE OR OVERTIME LAWS
Please contact Herman Thordsen toll free (888) 667- 8529.

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Herman Thordsen and his firm are the attorneys for numerous mortgage brokers and lenders, both in California and nationally as well as the attorneys for trade associations including Central Coast Chapter-- (CAMB), Central Valley Chapter-- (CAMB), Inland Empire Chapter-- (CAMB), North Bay Chapter-- (CAMB), North San Diego Chapter—(CAMB), San Diego Chapter --(CAMB), Silicon Valley Chapter-- (CAMB). In the past, the firm has represented the Nevada Association of Mortgage Brokers. Mr. Thordsen has been a member of the California Department of Real Estate Solicitation Task Force Committee, the California Department of Motor Vehicles Anti-Fraud Task Force and the Banking and Real Estate Appraisal Programs at California State University, Fullerton.

Mr. Thordsen publishes weekly articles for the Broker Universe , a division of Thomson Media, monthly columns for the San Diego Chapter-CAMB and is a responding attorney for RESPANEWS.com. He conducts seminars on Federal and State mortgage loan compliance issues that cover HUD, RESPA, TILA, PREDATOREY LENDING, NEVADA and CALIFORNIA.. He authors numerous manuals and articles on HUD Audits, California Department of Real Estate Audits, Nevada Mortgage Lending Division Audits, Truth in Lending, RESPA, Mortgage Fraud and Predatory Lending. His most recent publication is on loan officer minimum wage and overtime laws.

Mr. Thordsen is an invited guest speaker before trade groups, and has been a guest speaker on HUD audits before the Clark County Bar Association, Las Vegas Nevada and the Nevada Association of Mortgage Brokers Education Committee. He has been a guest speaker along with the FBI as invited guests on mortgage fraud issues as well as California Department of Real Estate and Nevada Mortgage Lending Division audits.

The firm regularly represents brokers and lenders before licensing agencies including the HUD-FHA Mortgagee Review Board (MRB), HUD Home Ownership Centers, California Office of Administrative Hearings, and the Nevada Mortgage Lending Division. This representation includes those charged with violation of federal and state mortgage laws or the withdrawal of FHA/HUD approval and the threat of paying civil penalties to HUD.

The firm represents those accused of civil and criminal Mortgage Fraud and other white-collar crimes such as wire fraud and mail fraud in federal court actions filed by the Office of the United States Attorney and others.

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If we may be of service in these areas of personal injury, probate, or estate planning and asset protection, please contact us, and an attorney will discuss the matter with you.

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