chow
Joined: 22 Jan 2005
Posts: 2350
Location: Cornfield County, Indiana
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| Posted: Mon Feb 13, 2006 10:36 am Post subject: Federal E-Alert Herman Thordsen |
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FEDERAL MORTGAGE e-ALERT©
(February 13, 2006)
FEDERAL COURTS HOLD THERE IS NO PRIVATE RIGHT TO SUE FOR VIOLATIONS OF THE TELEPHONE CONSUMER PROTECTION ACT (TCPA)
FACTS
The United States District Court (S.D.NY) and the United States District Court for the District of Columbia has dismissed claims filed under the Federal Communication Commission’s (FCC) regulations that implemented the TCPA of 1991. The recipients of unsolicited facsimile advertisements do not have a private right of action to recover statutory penalties from advertisers that fail to comply with the FCC fax identification requirements. While the sender may be sued under one subsection for sending the fax (547 U.S.C. §227(b)), the sender may not be sued under §227(d) or regulations enacted under subsection d. Thus a plaintiff cannot sue under Section 227(d) nor under the regulation enacted pursuant to that subsection (47 C.F.R. §68.318(d)) (Klein v. Vision Lab Telecommunications, Nov. 2005 S.D., N.Y.; Adler v. Vision Lab Telecommunications, October 2005)
MORAL
This means you can fight the lawsuits when they use the regulation to sue your or do it under improperly identified faxes and recover costs. Use the case to deny the right. BUT consult your attorney first.
FAILURE TO GIVE RISK BASED PRICING NOTICE UNDER THE FAIR CREDIT REPORTING ACT (FCRA) DOES NOT ALLOW BORROWER TO SUE USERS OF THE CONSUMER REPORTS
FACTS
In the Northern District of Illinois, two courts have held that there is no private right of action for consumers to enforce any violation of the failure of the creditor to give a specific notice when the creditor uses the credit report to give the consumer credit “on material terms that are materially less favorable than the most favorable terms available to a substantial proportion of consumers.” This notice is commonly referred to as the “Risk Based Pricing Notice.” Regulations to implement this notice requirement have not yet been proposed. (subsection 615(h) FCRA, 12 U.S.C. §1681m(h), Murray v. Cross Country Bank (unpublished), 8-15-06; Murray v. Household Bank, N…A.,(published),)
MORAL
You may remember we published this earlier as a potential source of plaintiff attorneys suing brokers when they give a borrower a loan that is not the best rate available regardless of credit. If the 9th Circuit agrees with this then the teeth are taken out of this statute since the broker and the lender cannot be sued personally. Remember, check with your attorney before you make any decisions. Especiall7y foolish decisions.
PREDATORY LENDING LAW UPDATE
FACTS
Twenty-eight states and the District of Columbia have high-cost home loan laws. Arkansas, California, New Jersey, New Mexico, New York, North Carolina, South Carolina and Pennsylvania define a high-cost loan based on the loan size. These thresholds are: Arkansas-$150,000; California-FNMA conforming loan sized for a first lien on a single family (1-4 units) currently at $417,000; News Mexico-FNMA conforming loan amount of $417,000; New York-$300,000; North Carolina-$$300,000; South Carolina-FNMA conforming loan amount currently at $417,000 and Pennsylvania-$100,000.
CALIFORNIA DEPARTMENT OF REAL ESTATE FILES ACCUSATION AGAINST REAL ESTATE BROKER FOR ACCEPTING KICKBACKS FROM TITLE INSURANCE COMPANY
FACTS
The California Department of Real Estate (DRE) has filed a 21-page accusation alleging that R.J. Young Co. of Westlake Village in Southern California took $15,996 in 2004 in exchange for steering home sellers to title companies owned by industry giant Fidelity National Financial. The DRE asserts that the brokerage, which has seven agents, also committed “fraud or dishonest dealing” by failing to disclose to sellers that the brokerage would receive compensation from title insurance companies that it sent them to.
An Accusation allows the respondent Young 15 days to file a response and faces penalties that could include revocation of her brokerage license, said Tom Pool, a department spokesman. The accusation will be heard by a state administrative law judge, whose decision is accepted or rejected by the state Real Estate Commissioner. It ultimately can be appealed to Superior Court.
In its accusation, the DRE asserts that various Fidelity subsidiaries would give part of the insurance premium to a title reinsurance company established by the parent company, Fidelity National Financial. The parent company would then give 15 percent of that reinsurance premium to R.J. Young Co., according to the accusation. Reinsurance companies assume part of the risk of the title policy in return for a portion of the title premium. However, state Insurance Commissioner John Garamendi has argued that reinsurance is unnecessary for residential title policies.
In July 2005 Garamendi released a list of 43 firms—including R.J. Young and other brokerages, lenders and builders—that he said participated in reinsurance activity. (contracostatimes2606)
MORAL
Are you taking kickbacks from the mortgage broker? Are you giving kickbacks to the realtor? I suggest you have second thoughts. If R.J. Young, Co., has its’ license revoked, the loss of the license will cause a much larger loss than the $15,996 mentioned above.
CALIFORNIA EMPLOYER POSTING OF A BOND TO APPEAL AN EMPLOYEE’S WAGE AWARD IS NOT MANDATORY
FACTS
Plaintiff employee was awarded $133,339.38 by the Division of Labor Standards Enforcement against the employer in a wage dispute. The employer filed for new trial in the Superior Court but failed to post the appeal bond required by law. The trial court nevertheless heard the appeal and awarded the employee a substantially lesser amount. The employee appealed stating the court had no jurisdiction to hear the appeal for failure of the employer to post the appeal bond in the amount of the award.
The 4th Appellate District said . . .
Affirmed. The posting of the bond is not mandatory. (Progressive Concrete, Inc. v. Parker (02/07/06 - No. D045798)
MORAL
Now the employer can appeal an unjust award and ask the Superior Court to waive the bond or reduce it, at the court’s discretion.
CALIFORNIA EMPLOYE NOT LIABLE WHERE INTENTIONAL MISCONDUCT OF EMPLOYEE DOES NOT ARISE FROM ACTIVITY OF EMPLOYER’S ENTERPRISE
FACTS
This was a case of road rage where the employee drove another care off the road and the plaintiff’s in the other car attempted to hold the employer liable. The plaintiffs’ lost. In the process, certain rules of law arose that can apply to protect employers against loan officers that conduct illegal activities in violation of licensing or state or federal criminal laws.
In determining whether an employer is liable, you must first determine whether the employee has departed from the course and scope of employment by looking at the intent of the employee, the nature, time, place of the employee’s conduct; the work the employee was hired to do; the incidental acts the employer should reasonably expect; the amount of freedom allowed to the employee in performing his or her duties; and the amount of time consumed in the personal activity.
An employer may be, but will not necessarily be, held vicariously liable for an employee’s wrongful acts that are willful, malicious, or criminal. This type of liability is not appropriate when an employee’s misconduct does not arise from the conduct of the employer’s enterprise, but instead arises from a personal dispute. There must be a “causal nexus to the employee’s work. The fact that the employment brought the employee and the victim together in and of itself is not enough.
The incident leading to the injury must be an outgrowth of the employment; the risk of the injury must be inherent in the working environment or typical of or broadly incidental to the enterprise of the employer.
The court may consider whether the wrong that occurred was foreseeable in the sense that the employment is such as predictably to create the risk employees will commit intentional wrongs of the type for which the plaintiff desires to hold the employer liable. The conduct must not be so unusual or startling that it would be unfair to include the loss resulting from it among other costs of the employer’s business. (kephart vs. genuity, 2005 djdar 1385, 2-2-06)
MORAL
What does all this mean in a nutshell? If the employee takes a down payment or appraisal fee and does not turn it in you are probably going to be held responsible. If the employee damages property of the potential borrower, you probably will not be held liable. But what if the employee borrows money from the borrower? Or asks for a further fee after the loan closes? Or if the employee harms the borrower and you new or should have known that person had a criminal record for violent crimes? In other words! Do you have insurance coverage?
TIPS ON UPDATING YOUR EMPLOYEE MANUALS
FACTS
1. If you have At Will employment, every employee should sign a document with the appropriate language that it is “At Will” employment. The manual should state: This at-will relationship cannot be modified except in a writing signed by the president of the company.”
2. Note that initial complaints under the Equal Employment Opportunity Act can be oral or in writing. An employer cannot require the initial complaint be in writing.
3. Vacation time may not be forfeited. However, the employer can place a limit on the amount of vacation that can be accrued. For Example, in California, the Division of Labor Standards Enforcement has stated that employees may take up to nine months to use vacation that is earned during a previous year while still accruing vacation in the new year. Employer’s cap on vacation must then be at least 1.75 times the annual accrual, the minimum required by Labor Standards Enforcement. It is easier to recommend twice the annual accrual to make it easy to calculate.
4. Sick Leave-If you give employees sick leave, then employers must allow employees to use up to 50% of their sick leave for the care of ill family members. Sick leave in California can be on a “use it or lose it” basis. Failure to note that may give the employee the right to demand payment for the unused sick leave on termination.
5. Registered Domestic Partners-Update the employee manuals to include the phrase “registered domestic partners” whenever “family members” or “spouse” is used. This most often appears in the sick leave or bereavement portion of the manual.
6. “Paid Family Leave.” Since 2004 employees are allowed to take up to six weeks off for the care of an ill family member while being compensated by the state of California (similar to state disability insurance compensation for one’s own illness or injury.).
MORAL
Theses are but a few reminders. BUT NOT ALL. Please consult your attorney if you use an employee handbook and especially if you have more than 25 employees.
JONATHAN BORNSTEIN AND DAVID WILLER PLEAD GUILTY TO MORTGAGE FRAUD IN FLORIDA COURT
FACTS
Jonathan Bornstein and David Willer accused of engaging in a real estate fraud scheme by obtaining home loans based on inflated appraisals, then defaulting pleaded guilty in February 2006.
Jonathan Bornstein pleaded guilty to three counts of grand theft over $20,000 and David Willer pleaded guilty to three counts of grand theft and one court of money laundering in the 15th Judicial Court of Florida.
Bornstein was sentenced to six months in jail and eight and half years of probation. Willer was sentenced to two years home confinement followed by eight years probation. They were each ordered to pay $107,000 in restitution to two lending institutions. Willer was ordered to forfeit an additional $143,000 on top of the $107,000.
The two men bought homes then paid somebody to appraise them at far more than their market value. The defendants then applied for mortgage loans with fraudulent records. After receiving the inflated loans, they made a few payments then defaulted. When the lenders foreclosed on the properties, they recovered much less than they had lent.
According to court documents, Bornstein's wife Sherri Bornstein, mortgage broker David Widstrand and appraiser Gary Eilen assisted the two men in their scheme. Mrs. Bornstein, who was married to Willer before she married Bornstein, pleaded guilty and assisted the prosecution. Bornstein is to start his sentence March 8, 2006. (on21006)
NEVADA MORTGAGE LENDING DIVISION PROPOSES SETTLEMENT WITH SYNERGY FINANCIAL MANAGEMENT DBA DIRECTLENDER.COM
FACTS
The proposed settlement alleges that the Division asserts the following facts:
1. Directlender was licensed on November 1, 2004 by the Division as a mortgage broker to conduct mortgage broker activity in the State of Nevada from offices located at 1770 Dori Way, Ste. A, Carson City, Nevada. These offices are now closed and the main office of Directlender is currently located at 2620 Regatta Dr., Ste 102, Las Vegas.
2. Directlender maintains corporate offices at 8700 Warner Ave., Suite 100 Fountain Valley, California.
3. Directlender, through their California Branch Coordinator Bill Pipes (hereinafter referred to as ‘Pipes”), entered into Branch Manager Employment Agreements with California mortgage agents and brokers to originate Nevada mortgage loans from offices in California utilizing Directlender’s Carson City, Nevada
license to facilitate closings. These California mortgage agents and brokers were not licensed by the Division pursuant to NRS645B to conduct Nevada loan originations. Directlender alleges that these transactions were accommodated by the participation of the qualified manager of Directlender’s Carson City licensed office under an agreement with Pipes; activities which allegedly were unknown to Directlender.
4. Directlender terminated Pipes for these activities, yet the termination was not immediate upon disclosure of these activities.
5. Directlender replaced the president of record with the Division for Directlender to Aaron Cuha, who is the son of one of the owners of record with the Division, Ron Chua, without notification to the Division pursuant to NAC645B.057. Additionally, the Division was noticed by Ryan Marshall that he no longer owns any interest in Directlender as reflected in Division records and had sold his interest to Aaron Cuha. Directlender failed to request approval of the change in control from the Division pursuant to NRS 645B.095; however Directlender has now noticed the Division that the change in ownership is not yet final.
The proposed settlement is $10,000 for investigative and attorney fees and not to do business from any location except those licensed by the Mortgage Lending Division. (mldnoticeweb21106)
MORAL
1. The proposed settlement does not have to be accepted and Synergy can request a hearing to deny the allegations.
2. Do not do business as a mortgage broker from any location outside of Nevada and outside of the authorized offices.
NEW JERSEY ALLOWS ADDITIONAL SECURITY WITH FIRST MORTGAGE
FACTS
New Jersey now allows licensed lenders to utilize items other than household or personal goods as additional security for first mortgage loans. Items that may be used as additional security include certificates of deposit and stocks. This new rule liberalizes the prior rule that allowed only the mortgaged property to be used as security for the loan. (allregs1306)
MORAL
I guess option ARMS are not what they are cracked up to be.
NEW JERSEY INCREASES THE AMOUNT FOR HIGH-COST HOME LOANS
FACTS
High Cost, High Fee loan amount increased to $383,682.60 for 2006. Loans below this amount must be reviewed for the APR and points and fees.
MORAL
Watch the predatory lending laws annually for changes or you may get caught.
SEMINARS
April 21, 2006 – 9-12
How to Survive an MLD Audit without losing your license.
Location: Republic Title Las Vegas, Nevada
Registration: Dennis Wentworth- (702) 283-3717; Dennis@DennisWentworthTrainingSeminars.com
1-4:30 - TILA-RESPA Updates. We will cover the updates from 2005 to January 2006 including how to do high-rate high fee loan without violating Section 32 of Reg Z, what is and is not a kickback; how to legally give someone a fee in a cooperative brokerage without violating RESPA and cases where brokers, loan officers and real estate salespeople have been disciplined and fined by RESPA Police for accepting kickbacks.
Location: Republic Title at same location
The above two seminars are accredit in Nevada for renewing your license. They may or may not be accredit for other state licensing renewals. Please check with the agency that issues your license.
THE INFORMATION HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.
If you want to make certain you receive our e-mails you must put our e mail address in your address book. Otherwise, AOL among other servers may reject the message and you will not receive the information.
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.
Go to www.lendinglaw.com and upcoming events for further details. |
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