California Real Estate Fraud Report

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Archive for the 'Appraisal Fraud' Category

A Story about an Appraiser Who is One of the Good Guys

March 2nd, 2017 at 11:06am

This is an great human-interest story about Gary Crabtree, who has run an appraisal business in Kern County for 55 years.

In the course of his work in the first decade of this century, Crabtree uncovered a massive mortgage fraud and appraisal fraud scheme operated by the brokerage Crisp & Cole Real Estate and Tower Lending. There are many articles posted in the California Real Estate Fraud Report about David Crisp and Carl Cole and their employees.

You can read about Gary Crabtree‘s remarkable career in the Bakersfield Californian.

 

Tony Huy Havens Sentenced in Separate Mortgage Fraud Schemes

January 20th, 2016 at 8:37pm

Modesto resident Tony Huy Havens, 42, was sentenced Monday by United States District Judge Lawrence J. O’Neill for his role in two mortgage fraud schemes.

The sentence of three years and five months was announced by United States Attorney Benjamin B. Wagner.

In the first case, Havens sought out individuals in at least eight states whose construction projects were in danger of foreclosing and extracted advance fees after showing them fraudulent documents indicating a lender would make them loans.

In the second scheme, Havens used two relatives as straw buyers to obtain a loan that exceeded the actual selling price of a residential property. The excess was returned to him, which he used to purchase the property.

The cases were the product of investigations by the Federal Bureau of Investigation, the Stanislaus County District Attorney’s Office, and the Federal Housing Financing Agency, Office of Inspector General.

Read the original Press Release.

 

Appraiser Blocked by Court from Collecting Whistleblower Reward

December 3rd, 2015 at 12:03pm

The appraiser who was the whistleblower on the Mutual Bank of Harvey has been blocked by a federal judge from receiving any of the proceeds of the case as a relator.

Kenneth Conner worked for the bank from 2000-2007 and first noticed and pointed out the fraud to his superiors at the bank. They told him they were aware of the appraisal values and to sign-off on them anyway; he was fired in 2007.

In June 2011, Conner filed suit against the bank, it’s owners, officers and some members of the board, as well as Oakbrook Terrace-based Adams Appraisal Corporation. The federal government declined to intervene in the suit, but the FDIC did, demanding $130 million in damages from the Veluchamy family, which owned 95% of the bank’s shares.

U.S. District Judge Sharon Johnson Coleman has blocked the bid of a former appraisal reviewer who blew the whistle on alleged fraud at a failed suburban bank from collecting as much as a quarter of any settlement the directors of the bank may reach with the Federal Deposit Insurance Corporation, upholding the ruling of another judge who ruled that “the FDIC did not constitute the government as contemplated” in the law, and therefore “Conner did not have a legally protectable interest in any settlement money that the FDIC recovered in that action.”

Read the original article in CookCountyRecord.com

HUD-OIG is Watching for Fraudulent Appraisals in Reverse Mortgages

December 3rd, 2015 at 11:30am

According to a report prepared by the Office of the Inspector General for the Department of Housing and Urban Development, the agency said that it has identified cases of fraudulent property appraisals being used to increase the loan amount for the refinancing of HUD’s Home Equity Conversion Mortgages, HECM.

The purpose for the run-up in appraisals would be to extract higher loan amounts from lenders, which would include loan backers Fannie Mae and Freddie Mac. Some of the appraisals were inflated as much as 60% to 100% over the true market value of the property.

In response, HUD-OIG has issued a warning to appraisers, loan officers, originators and sponsors that the consequences for those who engage in fraudulent HECM transactions will be severe and range from criminal, civil prosecution, or administrative sanctions “as appropriate.”

Read the original article in HousingWire.

 

Whistleblowers victorious in qui tam lawsuits against BofA, Fifth Third for appraisal fraud

November 5th, 2015 at 11:18am

Two qui tam lawsuits filed by the U.S. Department of Justice (USDOJ) against Fifth Third and Bank of America have recently been settled.

George Mann, the former chief appraiser for Fifth Third, had filed a whistleblower lawsuit against his employer, which has resulted in the bank agreeing to pay almost $85 million in settlement for fraudulent appraisal practices. The lawsuit alleged that “… fraudulent and misleading appraisals were used by Fifth Third to qualify for funding from the Troubled Asset Relief Fund (TARP), the Federal Deposit Insurance Corporation (FDIC), Fannie Mae, Freddie Mac, and other federal funding and securitization programs.” The $85 million compensates the government for over 1,400 loans that were insured through the FHA loan program and were later discovered to be defective.

Earlier, Kyle Lagow, of Countrywide, received $14 million in a whistleblower case that led to a $1 billion settlement between Bank of America (BoA) and the USDOJ, and Robert Madsen, who received $56 million for his part in a $16.65 billion settlement, also with BoA.

Read the original article in Mortgage News Daily.

Ratings Discrepancies Found in 39% of Appraisals

October 29th, 2015 at 10:51am

Platinum Data Solutions is reporting that more than 1/3 of appraisals during the third quarter of 2015 showed property quality or condition ratings that did not match previous appraisals.

Read the original article in National Mortgage News.

Associates of Donald Totten Plead Guilty to Mortgage Fraud

October 16th, 2014 at 8:37am

Real estate investor Grant McCollough, 38, and his 36-year-old wife, Marisa, pleaded guilty to conspiracy to commit wire fraud and defrauding the United States.

The McColloughs recruited investors to act as straw buyers and, according to the U.S. Attorney’s Office, arranged for erroneous information to be submitted to lenders to approve their loan applications. They also inflated the value of the homes (appraisal fraud) and disguised the source of the down payments in order to skim funds from the fraudulent transfer of property among their co-conspirators. And they hid their skimmed profits from the IRS.

Their associate, Donald Totten,  was a mortgage loan officer and broker operating out of Rancho Santa Fe who specialized in negative amortization loans. Totten pleaded guilty in February to mortgage fraud, bankruptcy fraud and filing a false tax return that failed to report more than $3 million in taxable income.

Grant McCollough and Marisa McCollough will be sentenced in January 2015 by U.S. District Judge Michael Anello.

Read the original article in Fox 5 San Diego.

 

President of Discovery Sales Arrested in “Builder’s Bailout” Case

May 23rd, 2014 at 7:39am

Ayman Shahid, 38, the president of Discovery Sales, was arrested and charged with conspiracy to commit bank fraud and 17 individual bank fraud counts.

Shahid, of Danville, is the seventh employee of Seeno Construction to be indicted in the case, which began in 2010 when FBI and IRS agents raided the firms Port Chicago Highway headquarters and removed boxes of evidence.

Discovery Sales is the selling  company for Discovery Homes and Seeno Homes. The Seeno family has a long history of construction in the Bay Area and in the past has been fined for “environmental improprieties.”

In Shahid’s case, federal prosecutors allege that, in order to keep sales prices of Seeno homes up during the financial downturn, provided large financial incentives to unqualified homebuyers. Prosecutors further allege that the incentives were concealed from both banks and appraisers (appraisal fraud) so that they loan would be approved (loan fraud, mortgage fraud). Because many of the buyers were unable to afford the loans, more than $154 million in losses was realized by the banks when the homes were either foreclosed or sold as short sales.

Two Discovery Sales employees pleaded guilty in this case last year and have agreed to cooperate with prosecutors.

Read the original article in the Mercury News.

 

Fannie Mae to Blacklist Some Appraisers

February 14th, 2014 at 8:32am

According to an article in National Mortgage News, Fannie Mae has announced that it plans to keep a “virtual blacklist” of appraisers it believes are “shady.” It is going so far as to warn banks and mortgage lenders to think twice about hiring these appraisers and if they do, the loans will be scrutinized more carefully.

Fannie Mae is a government-sponsored entity and bundles loans it purchases into mortgage-backed securities (MBS). Lack of prudent underwriting by banks during the early and mid-2000s in order to earn hefty commissions and bonuses caused huge losses to institutional investors and brought down some of those lenders, such as Washington Mutual and Countrywide.

Currently there are only four names on the blacklist and that list is available only to lenders.

While the new policy at Fannie Mae help get rid of some appraisal fraud and mortgage fraud, the other impact will be to cause many appraisers to be overly conservative. This could result in loans being rejected and escrows being canceled because the appraisal did not meet the agreed-upon purchase price.

 

Financial Times Publishes Lengthy Story about Crisp & Cole Mortgage Fraud

February 12th, 2014 at 8:40am

Many, many articles have been posted in the California Real Estate Fraud Report about David Crisp, Carl Cole and the business they ran in the mid-2000s in Bakersfield that conned banks out of millions.

Now, Financial Times has published an extensive, compelling story that is an intense personal look at both David Crisp and Carl Cole. Writer Gary Silverman looks at their early lives, Cole’s fervent religious beliefs, how the two men came together and how their dishonest practices brought down the real estate market in Bakersfield and perhaps other areas. They and their biblically-named Tower Lending not only fell along with the market, but so did some of their close relatives and employees.

They may have gotten away with their crimes longer if not for the dogged efforts of appraiser Gary Crabtree, who is the real and only true hero of this sordid story.

Silverman correctly notes that “Banks that cheat people pay fines, but people who cheat banks do time.” Prosecutors rarely go after banks, especially in California, and when they do, they take the safe and easy path of seeking financial penalties. Regardless of how wealthy they became, David Crisp, Carl Cole and their associates were neither too big to fail nor too big to prosecute.

© Copyright 2007-2017 Monique Bryher

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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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