chow
Joined: 22 Jan 2005
Posts: 2350
Location: Cornfield County, Indiana
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| Posted: Tue Jun 07, 2005 2:04 pm Post subject: Federal Mortgage e-Alert by Herman Thordsen |
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This Mortgage Alert information is provided by Herman Thordsen. For more information and previous alerts and articles, please visit his website at www.lendinglaw.com
FEDERAL MORTGAGE e-ALERT©
(May 31, 2005)
CORINTHIAN MORTGAGE CORPORATION OF MISSION, KANSAS AUDITED BY HUD-OIG BECAUSE OF HIGH DEFAULT RATE
FACTS
Corinthian Mortgage Corporation is a nonsupervised direct endorsement lender located in Mission, KS. HUD-OIG audited the company because of its high default rate. Corinthian Mortgage’s quality control did not comply with HUD requirements. Corinthian Mortgage did not ensure that it conducted sufficient and timely quality control reviews. It also did not take prompt corrective action when quality control reports identified material deficiencies. It did not review loans that defaulted within the first 6 months and did nto even do its Quality Controls until May 2004 even though it had been an approved mortgagee for years.
Corinthian Mortgage did not follow HUD requirements when processing and underwriting FHAloans. It improperly originated 3 of 44 loans reviewed. Additionally, Corinthian Mortgage submitted one loan with a serious misstatement. As a result, HUD insured four loans that placed the insurance fund at risk for $472,833.
HUD-OIG recommends the General Deputy Assistant at a minimum, indemnification for the three actively insured loans and reimbursement for losses already incurred on the remaining loan Secretary for Housing take administrative action against Corinthian Mortgage including,. Corinthian Mortgage should also reimburse the appropriate parties for unallowable costs charged to borrowers.(2005-kc-1006, 51305)
MORAL
Everytime there is a high default then you have ana audit by HUD. See Allied Home Mortgage below.
ALLIED HOME MORTGAGE CAPITAL CORPORATION OF TEXAS (HURST BRANCH) AUDITED BY HUD ALSO BECAUSE OF HIGH DEFAULT RATE
FACTS
Allied Home Mortgage Capital Corporation(Hurst Branch) was audited because of its’ high loan default rate (I keep telling you to check the Neighborhood Watch and for whatever reason you do not. When you do not and that ration goes over 150% you will be audited by HUD). Allied is a nonsupervised loan correspondent (meaning a broker with a sponsor.) Its default rate was 6.51% while the entire state of Texas was only 4.31 for the two-year period ending June 30, 2004.
HU-OIG found Allied had a quality control plan that complied with HUD requirements, BUT Allied did not fully implement the plan. Allied did not always review early payment defaults, perform reviews of its offices, or complete its monthly quality control reviews in a timely manner. In fact Allied was almost one year behind in reviewing its early payment defaults. In addition, Allied’s monthly quality reviews were vague and failed to adequately address corrective actions. This occurred because Allied did not dedicate the resources necessary to operate an effective quality control program. Allied did not review all of its/’ branch offices in 2004.
Of its’ 607 branches it only reviewed 331 contrary to HUD Mortgage Approval Handbook 4060.1 REV 1. Allied considered its’ quality control area fully staffed with five employees and HUD-OIG stated it questioned whether five people could adequately review 607 branches for compliance. (This is why we suggest you have us come in and conduct an audit. Or get more people). As a result, Allied was unable to ensure the accuracy, validity, and completeness of its loan origination process.
Allied did not follow HUD requirements when originating the 20 Federal Housing Administration mortgages reviewed. Allied’s Federal Housing Administration sponsors are ultimately responsible to HUD for these deficiencies. However, these same sponsors will sued the loan correspondent broker for repurchase if the sponsor is required to repurchase or indemnify HUD. HUD-OIG recommended Allied fully implements its quality control program and that the Mortgagee Review Board takes appropriate administrative actions to include civil money penalties. (2005-FW-1009,5-24-05)
MORAL
Let us audit you before HUD-OIG gets there. You should check Neighborhood Watch Compare ratio. If it is over 150% you will be audited. Better us first and HUD-OIG second. Unless of course you want to indemnify HUD against loss on all your loans. Then by all means don’t retain us. Good Luck.
RESPA VIOLATION BY BUILDERS AND TITLE COMPANY COSTS TITLE COMPANY $10.3 MILLION
FACTS
LandAmerica subsidiaries Transnation Title and Lawyers Title have agreed to settle a consolidated class action suit alleging kickbacks and fee splitting under RESPA. The affiliated business exemption regarding a relationship with Pulte Homes did not work. The case involves claims that the companies agreed to split title premiums with homebuilders in exchange for the referral of business. The class actions are still pending against First American and Chicago Title. (52505rewspa.comusdceasterdistrictmichigan)
MORAL
This is one way to get back at the builders.
ILLINOIS PROPOSES TO UPDATE PREDATORY LENDING LAW
FACTS
Illinois Bill will Establish a Predatory Lending Database Pilot Program for a number of Illinois zip codes. The bill (HB 4050) will establish the zip codes to receive and store specific loan-related information received from brokers, originators, credit counselors, title companies and closing agents. A broker or originator must give a prospective borrower borrowing money in the proposed zip codes notice within 10 days after the broker receives the loan application: (1) Names of at least three lenders and a comparison of the rates and terms of those lenders; (2) Notice of whether loan terms contain a prepayment penalty, negative amortization, a balloon payment, a fixed-rate payment schedule or an adjustable rate payment schedule; and (3) notice stated separately for each lender of the amortization period, monthly principal and interest payable, yield spread premiums, and any other compensation paid to the broker or originator for the rate quoted.
Also within the first ten days of taking the loan application the broker or originator would have to provide specific information to the predatory lending database. Seven days after the Department of Financial and Professional Regulation receives the information it is to determine if the borrower must take mandatory credit counseling to be paid by the broker or originator. Neither the broker, originator, or the borrower would be permitted to “take any legally binding action concerning the loan application” until either the Department of Financial and Professional Regulation determines that no credit counseling is required, or credit counseling is required and the credit counselor submits certain specified information to the predatory lending database regarding the counseling.
After loan closing, the title insurance company and closing agent would be required to submit information to the predatory lending database including a certificate of compliance. Failure can prevent the mortgage from being recorded.
MORAL
Don’t do business within the stated zip codes if the bill passes.
OWNER OF PHOENIX TITLE, JAMES ANDREW T HURMAN, 41 OF ST. CHARLES, MISSOURI INDICTED FOR WIRE FRAUD AND BANK FRAUD AND SEVEN OTHER FELONY COUNTS
FACTS
James Andrew Thurman, 41, of the 2600 block of Hampton, St. Charles, Missouri, was indicted by a federal grand jury on nine felony counts of wire fraud and one felony count of bank fraud. Additionally, Thurman is charged with a forfeiture count, which, if convicted, will require the forfeiture of all proceeds of the illegal activity. (I warned you all many months ago that this was the reason the government switched charges to wire fraud from bank fraud and HUD fraud. The wire fraud allows the government to seek forfeiture of your property by adding the forfeiture count.) If convicted, Thurman faces a maximum penalty of five years in prison and/or a fine of $250,000, per count on the mail fraud charges; and thirty years in prison and/or a fine up to $1,000,000 on the bank fraud charge. Restitution is mandatory. The loss is expected to total over $3.9 million.
The indictment alleges that beginning in 2002 and continuing until April 2005, Thurman defrauded Phoenix Title's customers of approximately $3,840,000 and defrauded First Bank, St. Charles, of approximately $100,000. As a part of the scheme, beginning in March 2002 and continuing until January 2005, Thurman allegedly fraudulently transferred a total of approximately $3.84 million from Phoenix Title's customers' escrow funds to either a second company he owned, James Andrew Properties, Inc., or to his own personal bank account.
According to the indictment, Phoenix Title, Inc. was formed in 1996 and conducted business from offices located at 324 N. Main Street, St. Charles, Missouri. Phoenix Title performed two primary services for its customers. First, Phoenix Title conducted real estate closings and loan closings for its customers.
James Andrew Properties, Inc., was formed in 2002 and also conducted business from 324 N. Main Street, St. Charles, Missouri. James Thurman owned and operated both Phoenix Title and James Andrew Properties, Inc.
The indictment alleges that in January 2005, Thurman ordered his employees to delay disbursements of customers' escrow funds for ten days in order to mask shortages in the customers' escrow funds.
The indictment alleges that Thurman failed to disclose to new customers the shortages in Phoenix Title's customers' escrow funds. Further, the indictment alleges that Thurman caused representations made on customers' settlement statements, that disbursements would be made, to be false.
In addition to the scheme to defraud Phoenix Title's customers, the indictment alleges Thurman defrauded First Bank, St. Charles, Missouri. According to the indictment, H & D Properties, LLC held a deed of trust on the property located at 324 N. Main Street, St. Charles, Missouri. Thurman obtained a loan on November 18, 2003, from First Bank in the amount of $388,000 for the purpose of paying off the existing debt to H & D Properties of approximately $288,000 and to obtain cash of approximately $100,000. Phoenix Title handled the closing on this loan from First Bank to Thurman. According to the indictment, Thurman represented to First Bank that the debt to H & D Properties would be paid off with the proceeds of the loan. Instead, Thurman failed to pay off the original debt to H & D Properties, leaving both lenders with deeds of trust on the same property. (originatortimes52305)
MORAL
Boy, does he need a lawyer.
MORE MORTGAGE FRAUD IN CINCINNATI, OHIO
FACTS
Five more people will plead guilty in a multimillion-dollar real estate fraud “flipping scheme in Cincinnati. This brings to 21 the total number of people to plead in this particular fraud in United States District Court.
The homes that were artificially inflated as to value were primarily in Hamilton and Butler counties. The scheme used the usual false documents such as pay stubs, employer verifications, bank statements and appraisals submitted to banks. The properties were bought for $20,000 or less and then sold within months for $85,000 or more.
The current people pleading guilty were Steven J. Minger, who operated Preferred Funding, LLC and DS Property Holdings, LLC who was described as the leader and organizer of the flipping scheme recruiting buyers, loan officers, title agents and appraisers to participate. He is accused of defrauding 10 financial institutions of $9.7 million.
Next we have Erica Crum of Cincinnati, a loan officer at two different mortgage companies. She was working at Airline Union’s Mortgage CO., in Springdale, Ohio until April 2002 and out of her house until May 2003 for Loan Star Mortgage. She misrepresented to lenders the source of the down payments purportedly made by the borrowers. She is alleged to cause a loss to 10 financial institutions of over $1.8 million.
Next we have Jeffrey Henry a mortgage broker and branch manager for National Mortgage Funding. He operated two loan processing companies, Precision Processing and National Processing and brokered many of the “flipped” properties. He is alleged to have know the buyers received kickbacks outside the property closing THAT WERE NOT DISCLOSED TO THE LENDERS. His losses were about $242,836.
Next we have Steven J. Schneider, of Cincinnati, who was a manager at Your Mortgage Solutions who agreed to plead guilty to income tax evasion for avoiding $30,874 from 1997 through 2002. (I want you to notice if the government cannot connect you directly to the fraud, the IRS is kind enough to check your undeclared income.)
Next in line is Heather Batdorf, a loan processor at Airline Union, WHO WAS AWARE that false documents were submitted to lenders, causing losses of $404,543. Notice I said was aware? This means she did not do it herself but know the documents she was processing were fraud. Knowing that makes her a conspirator under federal law and as guilty as if she did it herself! (cincinnatienq52405)
MORAL
If you fit any of the above scenarios it may be worthwhile to contact us before the federal agents do it for you.
NEVADA MORTGAGE LENDING DIVISION ISSUES ORDER TO REVOKE LICENSE OF KYLE PULSIPHER AND ASKS FOR $110,000 FINE
FACTS
Nevada's mortgage-lending regulator Scott Bice is alleged to have issued an order to revoke the license of mortgage agent Kyle Pulsipher and to fine him $110,000 based on allegations that the agent provided false and misleading income and employment information on 11 mortgage loan applications. State mortgage examiners allegedly reported that they discovered that agent Kyle Pulsipher fraudulently applied for 11 loans for himself and family members between November 2003 and July 2004. Some of the loans did not close, the division said. The examiners also learned that several loan documents contained forgeries.
Nevada Morgage Lending Division Commissioner Scott Bice ordered a $10,000 fine for each of the 11 fraudulent loan transactions. Bice also ordered Kyle Pulsipher to stop mortgage lending. Pulsipher’s attorney said his client will "absolutely" request a hearing. "The allegations are unfounded and my client is entitled to due process," said the attorney and he further is alleged to have said: "This was an order that was generated at a private meeting" and . "We're looking forward to the discovery process and an opportunity to be heard." If the mortgage lending hearing officer finds in favor of the order, Pulsipher may appeal to state District Court. Pulsipher, whose mortgage license has been inactive since January, formerly was an agent for USA Home Loans and later worked for Soma Financial. Both mortgage companies fired Pulsipher, the state said. Pulsipher submitted multiple loan applications for himself and relatives, the mortgage division order stated. The applications contained false information about income and employment of the borrowers, the order explains. One was to refinance a property at 7963 Lions Main Court for the agent's brother, Kolby Pulsipher. It showed his brother was employed at Fairway Chevrolet but didn't disclose his brother also worked as a Realtor with Liberty Realty. The agent also prepared a loan application for his brother's wife, Cassey Pulsipher, and said she was separated and receiving $6,900 monthly as office manager for PBL RokcRock. Kyle Pulsipher filed other mortgage applications for imself, his wife, Sadie, and Mai Melville. (reviewjournal51305)
MORAL
I wonder what the forgeries were about ?
SEMINARS
DATE TIME TOPIC LOCATION
7-13-05 9-noon Loan officers-should you pay them Southwest Title, Las Vegas, NV
minimum wage and/or overtime
7-13-05 1:30-4:30 RESPA Enforcement and the private Southwest Title
companies hired by RESPA to enforce
the anti-kickback law along with updated
enforcement actions/Mortgage Fraud
There is a syllabus for each attendee. Contact Loretta at 714-662-4990 or 888-667-8529 to register. You may contact us also by e mail at hthordsen@lendinglaw.com
IF YOU HAVE TROUBLE WITH:
• MORTGAGE FRAUD
• NEVADA MORTGAGE LENDING DIVISION AUDITS
• HUD AUDITS AND THE MORTGAGEE REVIEW BOARD;
• DEPARTMENT OF REAL ESTATE AUDITS OR LICENSE DISCIPLINARY MATTERS
• DEPARTMENT OF CORPORATIONS AUDITS OVER CFL OR RMLA LICENSES;
Please contact us for further information. hthordsen@lendinglaw.com or call (714) 662-4990. If you are out of state, contact us Toll Free (888) 667- 8529.
VISIT OUR WEBSITE www.lendinglaw.com FOR PREDATORY LENDING LAWS ENACTED AND IN PROCESS OF BEING ENACTED LAW AS OF MARCH 1, 2005.
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
THE INFORMATION HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.
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), San Diego Chapter --(CAMB), Silicon Valley Chapter-- (CAMB). In the past Mr. Thordsen has been the attorney for the Nevada Association of Mortgage Brokers as well as 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 as well as conducting seminars on mortgage loan audit compliance. Additional Mr. Thordsen 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
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.
In addition, Mr. Thordsen publishes a weekly column for Broker Universe, a division of Thomson Media as well as monthly columns for the San Diego Chapter of CAMB and is a responding attorney for RESPANEWS.com
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 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 on behalf of the United States.
The firm’s attorneys are successful in recovering damages for clients in personal injury lawsuits. In the latest, they obtained the full liability insurance policy of $100,000.00 for a child in the form of a tax-free annuity.
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. The firm has an in-house Estate Planning and Probate Section for clients that desire to plan their estates, minimize taxes, protect assets, and avoid probate proceedings.
THE FEDERAL MORTGAGE E-ALERT IS FREE TO THOSE OUTSIDE THE STATE OF CALIFORNIA. IF YOU WOULD LIKE TO SUBSCRIBE TO THE FEDERAL MORTGAGE E-ALERT, PLEASE SUBMIT THE FOLLOWING INFORMATION TO “LAW OFFICES OF HERMAN THORDSEN.” MAIL TO LAW OFFICES OF HERMAN THORDSEN, 6 HUTTON CENTRE DRIVE, SUITE 1040, SANTA ANA, CA 92707 or email to thorlaw@lendinglaw.com |
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