Fresh Installment of the Mortgage E-alert

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FEDERAL MORTGAGE e-ALERT©
(March 6, 2006)

HELOC’s AND ADJUSTABLE RATE MORTGAGES

FACTS

If you are the lender and your loan has an adjustable rate mortgage do not forget to get the ATLA 6.0 and 6.1 endorsements to insure you as the lender and your and successors and assigns as well as insure against any loss buy reason of the invalidity or unenforceability of the lien resulting from the provisions of the Mortgage providing for adjustments in the Mortgage interest rate and Monthly payment.

MORAL

Isn’t that nice. The title company guarantees the interest is legal.. If you would like to fund HELOC’s such that the interest rate is not subject to Section 32 of TILA and not subject to the California “Covered Loan law” and possibly other state laws, please e mail me at thor.law@lendinglaw.com and if enough are interested we will set up a seminar event. Herman Thordsen

CALIFORNIA JJNK FAX LAW DECLARED UNCONSTITUTIONAL

FACTS

The new state law providing no faxes unless written consent is first obtained in writing has bee declared unconstitutional by U. S. District Court Judge Morrison England. It is pre-empted by federal law. Businesses can send unsolicited faxes to consumers with whom they had a prior relationship. The federal Junk Fax Protection Act of 2005 is an opt-out statute under the Telephone Consumer Protection Act of 1991. The state law is unconstitutional (SB833) because it attempts to regulate interstate telecommunications. State law may still apply to faxes sent within California and residents can send senders of faxes from outside the state notices to stop. The court is in the process of granting a permanent injunction. (U. S. Chamber of Commerce vs. Lockyer, 05cv2257 2-27-06)

MORAL

Just as you think you understand all the anti-fax and anti-phone and anti predatory lending laws, along comes a case that says it isn’t necessarily anti!! Isn’t the law wonderful?

CALIFORNIA LAW PREVENTS YOU FROM FORCING THE BORROWER TO BUY INSURANCE THROUGH A PARTICULAR INSURANCE AGENT

FACTS

No person engaged in the business of financing the purchase of real or personal property or of lending money on the security of real or personal property and no trustee, director, officer, agent or other employee, or affiliate of, any such person shall require, as a condition precedent to financing the purchase of such property or to loaning money upon the security thereof, or as a condition prerequisite for the renewal or extension of any such loan or for the performance of any other act in connection therewith, that the person for whom such purchase is to be financed or to whom the money is to be loaned or for whom such extension, renewal or other act is to be granted or performed negotiate any insurance or renewal thereof covering such property through a particular insurance agent. (Ins.C. 770)

MORAL

Welcome to the class action arena if you make the buyer or borrower obtain insurance through a particular insurance agent. Especially if the borrower can prove it.

REAL ESTATE BROKERS ACTING AS LENDERS MUST FILE REPORTS BY MARCH 31, 2006

FACTS

The lender notification that became an annual requirement as of January 1, 2005 is again due from direct lenders who meet specific criteria. The criteria, excerpted from Business and Professions Code Section 10131.8, are as follows:
A real estate broker who acts pursuant to subdivision (d) of Section 10131 and who meets all of the following requirements shall notify the department annually in writing on a form that is acceptable to the commissioner:
(1) The real estate broker is an approved lender for the Federal Housing Administration, Veterans Administration, Farmers Home Administration, Government National Mortgage Association, Federal National Mortgage Administration, or the Federal Home Loan Mortgage Corporation.
(2) The real estate broker makes residential mortgage loans to a loan applicant for a residential mortgage loan by using or advancing the broker’s own funds, or by making a commitment to advance the broker’s own funds.
(3) The real estate broker makes the credit decision in the loan transaction.
(4) The real estate broker at all times maintains a tangible net worth, computed in accordance with generally accepted accounting standards, of a minimum of two hundred fifty thousand dollars ($250,000).
(b) As used in paragraph (2) of subdivision (a), “own funds” means (1) cash, corporate capital, or credit lines at commercial banks, savings banks, savings and loan associations, industrial loan companies, or other sources that are liability items on the real estate broker’s financial statements, whether secured or unsecured, or (2) cash, corporate capital, or warehouse credit lines at commercial banks, savings banks, savings and loan associations, industrial loan companies, or other sources that are liability items on the financial statements of an affiliate of the real estate broker, whether secured or unsecured. “Own funds” does not include funds provided by a third party to fund a loan on condition that the third party will subsequently purchase or accept an assignment of the loan.
If you are a lender that meets all of the above criteria please file the notice with the DRE no later than March 31, 2006 stating whether it is your initial notification or your annual notification. If you are a lender that previously met the above criteria but no longer do, please file the notification stating you no longer meet the criteria. The “Residential Mortgage Lender Notification”, RE859, can be printed from the DRE Web site at www.dre.ca.gov under “Forms”.
MORAL

What if you meet all the above and do not have a $250,000 net worth. It seems if your corporation is broke because you sell off the loans you do not need to comply?

CALIFORNIA INSURANCE COMMISSIONER SEEKS $14 MILLION FROM ORANGE COAST TITLE FOR PAYING KICKBACKS TO REAL ESTATE BROKERS

FACTS

State insurance regulators are seeking $14 million in civil penalties from Santa Ana- based Orange Coast Title Co. and its affiliates, accusing them of providing kickbacks five years ago to real estate agents and lenders for client referrals.

The California Department of Insurance states that the companies spent $241,000 between October 1999 and May 2000 for items including free Halloween candy, massages, movie tickets and Mexican vacations, according to an accusation released February 16, 2006. The accusation also charged the companies with providing electronics such as DVD players, radios and TVs; wedding and baby gifts; flowers, lingerie and spa treatments; and catered affairs, training and software. Regulators maintain that more than 12,000 mortgage and real estate professionals benefited, saying that the practice is unfair to competitors and inflates premiums.

The department began investigating in 2000 after getting numerous written and telephone complaints, mainly from competitors, said department spokeswoman Carrie Reinsimar. The department took five years to complete the investigation and review, said Rebecca Westmore, a department lawyer.

The insurance department said the complaint also has been lodged against Orange Coast Title Co. of the Inland Empire, Orange Coast Title Co. of Los Angeles and California Title Co. The matter now goes before an administrative law judge for prosecution. (ocregsister 2-17-06)

MORAL

I hope you have a good lawyer. As you can see the Department of Insurance went back six years and has been investigating for five of the six. I wonder if the DOI ever heard of the Statute of Limitations?

IN CALIFORNIA READ YOUR CC&R’s OR YOU MAY HAVE TO TEAR DOWN THE NEW SECOND FLOOR OF YOUR HOUSE

FACTS

Plaintiff owned a house with a view located in a subdivision regulated by covenants, conditions and restrictions. Defendant owned the lot contiguous to the plaintiff. Defendant decided to add a second story to his house and plaintiff filed for an injunction to stop it contending the CC&R’s provided that no one could substantially block her view.

The trial court said . . .

I agree and granted an injunction to permanently restrain (stop) the defendant from building the second story. Additionally, the court awarded the plaintiff her attorney fees and costs. (shashaty v.Monsour, ec039217, 10-13-05 LASC)

MORAL

It may be bulky, but read the CC&R’s in detail before you buy You may find something that you do not like and change your mind about buying.

MISSOURI MORTGAGE FRAUD CAUSES $14.5 MILLION LOSS

FACTS
Brent Michael Barber, a real estate investor pleaded guilty on February 23. 2006 in federal court in Kansas City, Mo. to devising a massive property flipping and mortgage fraud scheme with several co-conspirators involving nearly 300 fraudulent loans worth almost $20 million. U.S. District Judge Fernando Gaitan took the plea to 104 counts contained in two federal indictments. Those indictments, as well as a third for which a jury convicted Mr. Barber, involve separate schemes to defraud mortgage-lending companies of millions of dollars. Barber pleaded guilty to the conspiracy count contained in each of the two federal indictments. He also pleaded guilty to 52 counts of interstate transportation of funds obtained by fraud and two counts of money laundering contained in the first indictment. He also pleaded guilty to 46 counts of interstate transportation of funds obtained by fraud and two counts of money laundering contained in the second indictment.
The guilty pleas are for 289 fraudulent loans totaling $19.6 million. The total actual loss for the financial institutions that were defrauded by [Mr.] Barber was about $11.8 million."
Barber recruited people to purchase rental properties, assuring them that he would find renters for the properties and sell the properties a short time later, so that the victim-investors would have no financial risk and a guaranteed quick profit. He then provided false information on the loan documents and arranged for inflated appraisals in order to receive approval for the loans.
During the first conspiracy, from May through October 1999, Mr. Barber was a client of Ameriquest Mortgage in Gladstone. During that period, he conspired with co-defendants Roderick Neil Criss, Cauncey Calvert and Avonda Nicodemus, all Ameriquest employees, to defraud the lender. All three co-conspirators have pled guilty to their roles in this scheme, which resulted in Ameriquest Mortgage approving 66 fraudulent loans totaling $4 million.
A second conspiracy began in October 1999, when Mr. Barber approached Mr. Criss and Mr. Calvert and suggested they set up a mortgage broker business to broker mortgage loans, giving Barber's loans precedence. They agreed, launching Express Mortgage, through which Mr. Barber conspired with Mr. Criss and Robert Dale Beckley to defraud lending institutions. Mr. Criss and Mr. Beckley have pleaded guilty to their roles in this scheme, which resulted in the lenders approving 233 fraudulent loans totaling $15.6 million.
In two separate but related cases, real estate appraisers Peggy Snodgrass and Phillip Thomas have pled guilty to providing artificially inflated appraisals on properties for which Mr. Barber was seeking mortgage loans.
In addition, Mr. Barber admitted he engaged in additional fraudulent real estate transactions involving both commercial and residential properties. These transactions involved more than $2.7 million of additional loss.
Barber is subject to a maximum sentence of up to five years in federal prison without parole for each of the two conspiracy counts, plus a fine up to $250,000; up to 10 years in federal prison without parole on each of the 98 counts of interstate transportation of funds obtained by fraud, plus another fine up to $250,000; and up to 10 years in federal prison without parole for each of the four money laundering counts, plus an additional fine up to $250,000.
He agreed not to appeal the jury's guilty verdicts in another federal indictment. On Dec. 2, 2005, Mr. Barber was found guilty of three counts contained in an Oct. 7, 2004 federal indictment in a case involving property flipping and mortgage fraud scheme while involved in buying and selling real estate through KC Properties and KC Securities. Vernon David Williams, an employee of mortgage brokerage companies in Merriam, Kan. and Lee's Summit, Mo., pleaded guilty to his role in the scheme.
The jury found that Mr. Barber conspired with Mr. Williams to defraud mortgage-lending companies MILA and Finance America from July 24, 2004, to Sept. 16, 2004.
For that conviction, Mr. Barber is subject to a maximum sentence of up to 15 years in federal prison without parole plus a fine up to $750,000. Mr. Williams is subject to a maximum sentence of up to 10 years in federal prison without parole, plus a fine up to $500,000. (on3306)
MORAL
If you add up all the federal hotel accommodations for Barber, he is looking at 1030 years of federal accommodations. That is a lot of time. Have you seen your lawyer lately? Note, this goes back 6-years. There is a way to avoid some of it legally, but only if you see your lawyer before the indictment and preferably before any investigation. The loss can be mitigated thus reducing possible time in a federal hotel.
SEMINARS

March 16, 2006: 9:00 a.m.-1:30 p.m.

Updates on laws and regulations affecting real estate broker and salesperson licenses. Do Mortgage Brokers have to pay loan officers, processors and assistants Minimum Wage and overtime?

Location; Wyndham Hotel-1350 North First Street, San Jose, CA

DRE Commissioner Jeff Davi is speaking as well as Attorney Herman Thordsen. Commissioner Davi is speaking on DRE data, regulations, laws and compliance. Herman Thordsen will be speaking on Wage and Hour laws affecting the mortgage broker and why loan officers as employees have to be paid minimum wage and possibly overtime. A syllabus will be given to the attendees.

April 21, 2006 – 9-12

How to Survive an MLD Audit without losing your license.

Location: Wells Fargo Home Mortgage (Wholesale Division)
3650 Jones Blvd., Suite 11, Las Vegas, Nevada
Registration: Dennis Wentworth- (702) 283-3717; Dennis@DennisWentworthTrainingSeminars.com

1-4:30 - TILA-RESPA Updates. Updated laws, regulations and cases from 2005 to February 2006 including how to do high-rate high fee loan without violating Section 32 of Reg;, 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: Wells Fargo Home Mortgage (Wholesale Division)
3650 Jones Blvd., Suite 11, Las Vegas, Nevada
Registration: Dennis Wentworth- (702) 283-3717; Dennis@DennisWentworthTrainingSeminars.com

The two seminars are accredited in Nevada for renewing your MLD license. They may or may not be accredited for other state licensing renewals. Please check with the agency that issues your license.

May 16, 2006 - 5:30 p.m.- 8:30 p.m.

Employee Labor Laws and Regulations affecting mortgage Brokers and Bankers. The necessity to pay overtime to employees, underwriters, loan officers, processors and others. A syllabus will be given to all attendees.

Tony's Seal Landing, 13612 Newport Ave., Tustin CA –Dinner Meeting

TOPIC

Labor laws and regulations affecting mortgage brokers and bankers and the necessity to pay overtime to employee underwriters, loan officers, processors and others. A syllabus will be given to each of the attendees.

Call Loretta Lee to Register at 714-662-4990. Checks payable to Association of Professional Mortgage Women. Registration cost is $45 including manual.

THE INFORMATION HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE 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.
Go to www.lendinglaw.com and upcoming events for further details.

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). He is a member of the Advisory Board of the Mortgage Banking and Real Estate Appraisal Programs at California State University, Fullerton.

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.

Mr. Thordsen is a syndicated columnist for Broker Universe, a division of Thomson Media as well as publishing 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.

We represent our clients in employee labor disputes before various labor boards including minimum wage, overtime and unemployment compensation issues.

The firm’s attorneys are successful in recovering damages for clients in personal injury lawsuits.

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.