California Real Estate Fraud Report

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U.S. House Moves to Ban FHA Funding Homes Seized by Eminent Domain

December 12th, 2014 at 12:28pm

The U.S. House just passed an appropriations bill that will make it more difficult for municipalities to use eminent domain to condemn and seize underwater mortgages. The bill would ban the FHA from refinancing loans that have been seized via eminent domain, a practice already forbidden by Fannie Mae and Freddie Mac.

Read the original article in National Mortgage News.

Consumer Financial Protection Bureau’s 7 Measures to Protect Homeowners

December 11th, 2014 at 9:43pm

The following information is being made available, courtesy of mortgage broker Dan Dobbs. If you’re looking for a loan, you can find Dan on his website:  http://danieldobbs.org/

The Consumer Financial Protection Bureau (CFPB) is proposing additional measures to ensure, it says, that homeowners are treated fairly by mortgage servicers.

Since the new mortgage rules went into effect on Jan. 10 2014, the CFPB has kept a close eye on making sure servicers maintain accurate records, and give troubled borrowers direct and ongoing access to servicing personnel.

This proposal follows the CFPB’s continued focus on making sure the rules are working as intended.

Here are the 7 key changes that will impact servicers:

  1. Extended borrower protection

Right now , a mortgage servicer must give the borrower certain foreclosure protections, including the right to be evaluated under the CFPB’s requirements for options to avoid foreclosure, BUT only once during the life of the loan.

Under the newly proposed rule, servicers would have to give those protections again for borrowers who have brought their loanscurrent at any time since the last loss mitigation application. 

  1. Death protection

If a borrower dies, CFPB rules currently require that servicers promptly identify and communicate with family members, heirs, or other parties, known as “successors in interest,” who have a legal interest in the home.

The proposal would expand the circumstances in which consumers would be considered successors under the rules, including when a property is transferred after a divorce, legal separation, through a family trust, between spouses, from a parent to a child or when a borrower who is a joint tenant dies.

  1. Proper notifications

Servicers must notify borrowers promptly that the loss mitigation application is complete, so that borrowers know the status of the application and their foreclosure protections.

  1. Holds servicers to timeframe

The proposal clarifies that generally a transferee servicer must comply with the loss mitigation requirements within the same timeframes that applied to the transferor servicer.

Under the current system, when mortgages are transferred from one servicer to another, borrowers who had applied to the prior servicer for loss mitigation may not know where they stand with the new servicer.

  1. Clarifies servicers’ obligations

The bureau is proposing to clarify what steps servicers and their foreclosure counsel must take to protect borrowers from a wrongful foreclosure sale.

Servicers who do not take reasonable steps to prevent the sale must dismiss a pending foreclosure action.

This aids servicers in complying with, and assist courts in applying, the dual-tracking prohibitions in foreclosure proceedings to prevent wrongful foreclosures.

  1. Delinquent advance date change

It would clarify that delinquency, for purposes of the servicing rules , begins on the day a borrower fails to make a periodic payment.

Under the proposal, when a borrower misses a payment but later makes it up, if the servicer must apply the payment to the oldest outstanding periodic payment, the date of delinquency advances.

  1. Keep borrower updated, regularly

The proposal would generally require servicers to provide periodic statements to those borrowers, with specific information tailored for bankruptcy, along with requiring servicers to provide writtenearly intervention notices to let those borrowers know about loss mitigation options.

 

Walnut Creek Real Estate Broker Charged with Defrauding Neighbors

December 11th, 2014 at 3:13pm

Walnut Creek real estate broker James Thomas Haro has been arrested and is accused of defrauding his neighbors out of $370,000.

According to the Contra Costa County District Attorney’s Office, Haro, 67, was arrested and charged with one count of securities fraud and two counts of grand theft in relation to investments he made on behalf of a neighbor who is a physician and the physician’s spouse.

Haro has been in real estate for over 32 years and is the sole officer of the Walnut Creek-based real estate brokerage firm Alamo Mortgage Corporation.

Anyone who believes they may have been a victim of real estate fraud by James Haro is asked to call Contra Costa County District Attorney’s Senior Inspector Ike Menchaca at (925) 957-2248.

Read the original article in the Pleasant Hill Patch.

Sentences Handed Out in Spanish-Language Foreclosure Fraud

December 10th, 2014 at 8:39am

Four people have been sentenced in a large-scale real estate loan modification scam operating out of Pico Rivera.

Sergeant Dana McCants of the Los Angeles County Sheriff’s Fraud and Cyber Crimes Bureau said that his agency’s investigation into “Safe Haven,” aka “Your Dreams Come True,” showed that the firm falsely promised distressed homeowners help in saving their homes. The company advertised on Christian Spanish radio stations (affinity fraud) and according McCants, reeled in over 500 Spanish-speaking homeowners.

Safe Haven Executive Director Alex Jurado received five years in prison, as did co-defendant Alex Canjura. Erika Perez and Oswaldo Flores each received 16 months in county jail.

Attorney Tanmay Mistry, who was associated with Safe Haven, was disbarred after being accused of 13 counts of professional misconduct. If you read the California State Bar’s notes on Mistry’s disbarment, you will learn more details about his involvement with Safe Haven.

Read the original article in the Whittier Daily News.

 

Five Real Estate Investors Indicted for Bid Rigging at Foreclosure Auctions

December 10th, 2014 at 8:20am

Five more real estate investors have been indicted on nine counts of fraud and illegally rigging bids at foreclosure auctions in Contra Costa County.

U.S. Department of Justice officials say that John Michael Galloway, Nicholas Diaz, Glenn Guillory, Thomas Joyce, and Charles Rock conspired to defraud mortgage holders and others by bid rigging at foreclosure auctions. As with other similar prosecution, the defendants are alleged to have made prior agreements to not bid against one another and to pay each other for not bidding on some of the properties that their fellow conspirators wanted.

Fifty people have already pleaded guilty or agreed to plead guilty in related cases; another 21 have been charged in Alameda, Contra Costa and San Francisco counties.

Read the original article in CBS Local.

Realtor® and Home Seller Plead Guilty in San Jose-area Short Sale Fraud

December 5th, 2014 at 9:26am

Two persons have pleaded guilty  has pleaded guilty in U.S. District Court in Fresno to conspiracy to commit bank fraud, announced U.S. Attorney Benjamin Wagner.

Minerva Sanchez, 48, of Fremont, was the real estate agent for the seller, Agustin Simon, 52.

Simon’s home was located in Patterson, California. According to court documents, he and Sanchez conspired to effect a short sale of his home to Sanchez’ son, who would act as a straw buyer and provided Simon with the hardship letter explaining why he was unable to afford his mortgage payments. Sanchez would later regain title to the property but at a reduced mortgage as a result of the short sale.

As part of her plea agreement, Minerva Sanchez admitted that the lenders lost over $316,000 from her criminal conduct.

Note: most, if not all, lending institutions require short sales to be arm’s-length, meaning that the parties to the transaction may not be known to each other. This is to prevent schemes such as resulted in this prosecution.

You can learn more about short sale fraud by reading my book “How to Commit Short Sale Fraud . . . and Get Away with It“.

Read the original article in the Central Valley Business Times.

 

Zillow Sued for Sexual Harassment and Wrongful Termination by Fired Female Employee

December 3rd, 2014 at 4:34pm

GeekWire has published an article announcing the lawsuit filed by former Zillow employee Rachel Kremer, which accuses the real estate website of fostering an “adult frat house” culture that humiliated female employees and that  “ratifyied” the alleged hostile work environment by failing to take action against the managers and other employees who created it.

Kremer is represented by the law firms of Mark Geragos and Bobby Samini. The complaint, filed in U.S. District Court, describes self-documenting behavior by Zillow male employees, via emails, text messages and sexually-explicit photos that, if true, will be served up as evidence by Ms. Kremer’s attorneys.

GeekWire should be commended for actually including a copy of the lawsuit on its website, unlike the rest of the media, which took the lazy approach and omitted the filing.

Geragos and Geragos has brought two additional lawsuits against Zillow, which were reported on in an earlier post on the California Real Estate Fraud Report.

Zillow, which has won awards by the Orange County Business Journal and the Orange County Register for being “one of the best places to work,” vigorously denies the allegations. If the allegations are found to be true by the trier of fact, doesn’t it make you wonder what the criteria were to win such awards?

 

 

California-Based Franklin Loan Corporation Must Pay Restitution to Borrowers – CFPB

December 3rd, 2014 at 12:12pm

The federal agency known as the Consumer Financial Protection Bureau (CFPB) has announced that it has ordered residential mortgage lender Franklin Loan Corporation to pay $730,000. The monies are restitution the California-based lender must make for its practice of paying bonuses to its employees for steering borrowers to loan programs that carry higher interest rates. This practice was found to be a violation of the Federal Reserve Board’s Loan Originator Compensation Rule.

Read the press release on the Consumer Financial Protection Bureau website, which also includes copies of its complaint against Franklin Loan Corporation and the proposed consent order, which would require Franklin Loan to stop illegally compensating employees and refund the money to affected consumers.

 

Zillow the Target of Two Employee Lawsuits

December 1st, 2014 at 10:19am

Orange County resident and former Zillow employee Ian Freeman has filed a federal lawsuit against Zillow. His attorney, Mark Geragos, is seeking class-action status on the behalf of Freeman and at least 120 of Zillow’s hours “inside sales consultants,” alleging they were forced into working early, late and through lunch breaks without pay. The amount of overtime in dispute is $5 million.

Freeman is alleging that Zillow’s time timekeeping system was automated to record employee’s hours as 8 a.m. to 4 p.m., whether or not the employee worked more actual hours.

A current Zillow sales associate named Ashley Boehler has filed a second lawsuit claiming that he was “written up, given poor work reviews, had lucrative sales accounts stripped from him and given to others and was micromanaged in retaliation for exposing credit card fraud, forged contracts and the use of unlicensed agents to consult with clients.” Boehler further claims he was harassed after Zillow’s upper-management violated a promise to keep his name confidential.

Read the original article in the OC Register.

Sisters Convicted At Trial For Bakersfield Mortgage Fraud Scheme

November 25th, 2014 at 7:10am

The following is a press release from the U.S. Attorneys Office for the Eastern District of California:

FRESNO, Calif. — A federal jury in Fresno stayed late into the evening on Friday, November 21, and returned guilty verdicts on all counts in the trial of Evelyn Brigget Sanchez, 32, and Darling Arlette Montalvo, 33, both of Bakersfield, United States Attorney Benjamin B. Wagner announced. The case against the two sisters focused on their involvement in an extensive mortgage fraud scheme that ran from October 2005 to May 2007.

Sanchez and Montalvo were both convicted of conspiracy to commit mail fraud, wire fraud, and bank fraud. Sanchez was also convicted of 11 counts of mail fraud. Montalvo was also convicted of 10 counts of mail fraud and one count of money laundering.

According to court documents, between October 2005 and May 2007, Sanchez and Montalvo conspired with co-defendants Eric Hernandez, Monica Hernandez, and Patricia King to defraud mortgage lenders by submitting false loan applications and fraudulent supporting documentation, causing the lenders to fund mortgage loans for the defendants’ benefit on the basis of false and misleading information. During this time, Eric Hernandez and Evelyn Sanchez were employed at mortgage brokerages in Bakersfield. The defendants submitted loan applications to lenders that included material misstatements concerning the borrowers’ income, assets, and employment, and false statements concerning the borrowers’ intent to reside in the properties as owner-occupiers, among other false statements. The defendants also fabricated false supporting documentation and submitted it to lenders in support of the loan applications. The total losses in the scheme were approximately $6 million.

Co-defendants Eric Hernandez, Monica Hernandez, and Patricia King previously pleaded guilty for their roles in the scheme. Eric Hernandez was sentenced on Sept. 16, 2013, to 10 years and 10 months in prison. King was sentenced on April 23, 2012, to three years and one month in prison. Monica Hernandez is scheduled to be sentenced on January 5, 2015.

This case is the product of an investigation by the Internal Revenue Service – Criminal Investigation and the Federal Bureau of Investigation. Assistant U.S. Attorneys Kirk Sherriff and Henry Carbajal III are prosecuting the case.

Sanchez and Montalvo are to be sentenced on February 2, 2015, by United States District Judge Anthony W. Ishii. The maximum statutory penalty for conspiracy to commit mail fraud, wire fraud, and bank fraud is 30 years in prison and a $1 million fine. The maximum statutory penalty for one count of mail fraud is 30 years in prison and a $1 million fine, and for money laundering is 10 years in prison and a $250,000 fine. The actual sentences, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

This case was investigated and prosecuted in coordination with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. For more information on the task force, please visit www.StopFraud.gov.

© Copyright 2007-2015 Monique Bryher

Legal Disclaimer.

The information and notices contained on The California Real Estate Fraud Report are intended to summarize recent developments in real estate fraud, mortgage fraud, short sale fraud, REO fraud, appraisal fraud, loan modification scams, loan modification fraud and other real estate related crimes occurring in Los Angeles and California. The posts on this site are presented as general research and information and are expressly not intended, and should not be regarded, as legal advice. Much of the information on this site concerns allegations made in civil lawsuits and in criminal indictments. All persons are presumed innocent until convicted of a crime. Readers who have particular questions about real estate fraud, mortgage fraud and appraisal fraud matters or who believe they require legal counsel should seek the advice of an attorney.

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