California Real Estate Fraud Report

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Archive for the 'Foreclosure Gate' Category

OCC restricts Wells Fargo, other banks, in mortgage servicing

June 29th, 2015 at 9:51am

The Consumer Financial Protection Bureau / CFPB is not the only agency after the banks for unethical mortgage practices. Now the Office of the Comptroller of the Currency / OCC has forbidden several of the biggest lenders from acquiring servicing contracts until they clean up their acts.

Read the article in RE-Insider.

Addicted to Fraud: JPMorgan Chase

March 3rd, 2015 at 12:23pm

Still not “getting the message” after being part of the $25 billion national mortgage settlement with the 50 state attorneys general for allegations that it robo-signed foreclosure documents, JPMorgan Chase‘s investors are paying the piper again.

Read the full article in National Mortgage News.

CFPB a Target of New Republican Majority

November 10th, 2014 at 7:45am

As a result of the election, Republicans have indicated that they want to curtail the power of the Consumer Financial Protection Bureau and replace Richard Cordray, its head. If successful, this would be a huge step backwards for consumers who need the government to step-in and help when their banks and loan servicers are either unresponsive or commit fraud.

The CFPB was created in 2011 as part of the Dodd-Frank Act.

Read the article in DSNews.

Flagstar Penalized $37.5 Million for Violating Mortgage Servicing Rules

September 30th, 2014 at 7:49am

Banks that continue using stall tactics to prevent borrowers from refinancing their homes or getting loan modifications are now finding their dishonesty is very costly. The Consumer Financial Protection Bureau has just fined Michigan-based Flagstar  $37.5 million for violating the new mortgage servicing rules.

Read the article in DSNews.

Wells Fargo “Smoking Gun” Foreclosure Manual Going on Trial

May 9th, 2014 at 7:38am

A plaintiff suing Wells Fargo has achieved an important pre-trial ruling that could affect other homeowners seeking to sue the banking behemoth for how it treats its borrowers in foreclosure.

U.S. Judge Allan Gropper of New York ruled that Wells Fargo’s Home Mortgage Foreclosure Attorney Procedure Manual will be allowed into court after attorney Linda Tirelli argued the 150-page manual was relevant to the bankruptcy case of Mota v. Wells Fargo because the bank was using the manual to “falsely create evidence of ownership” in the note. Just as interesting, the manual allegedly instructs the bank’s attorneys on how to proceed with a foreclosure, even when the bank is missing critical documents.

“(Wells Fargo) can no longer deny having procedures for endorsing notes or provide witnesses who lack knowledge about the procedures, which is what they have consistently done in the past,” Tirelli told HousingWire on Monday. “The procedure manual is raising a lot of eyebrows and rightfully so. I attended the National Association of Consumer Bankruptcy Attorneys convention April 11-13 … during which I spoke with many consumer attorneys from across the country who have run into the same problem of witnesses being provided by Wells Fargo who simply lack knowledge of the process or deny there is a process for obtaining endorsements on notes and creating assignments or affidavits of lost note.”

In a different bankruptcy case – Cynthia Franklin v. Wells Fargo – Tirelli has filed a motion to re-open discovery post-trial because she only discovered the foreclosure manual just after the trial.

Read the original article in HousingWire.

Why the Obama Administration Doesn’t Prosecute Banks: a Hypothesis (Parts 1 and 2)

August 23rd, 2013 at 11:06am

William K. Black, J.D., Ph.D. is an Associate Professor of Law and Economics at the University of Missouri-Kansas City. According to his website Financial Sense, Dr. Black was the “litigation director of the Federal Home Loan Bank Board, deputy director of the FSLIC, SVP and General Counsel of the Federal Home Loan Bank of San Francisco, and Senior Deputy Chief Counsel, Office of Thrift Supervision. He was deputy director of the National Commission on Financial Institution Reform, Recovery and Enforcement.”

Recently, Dr. Black has written a 3-series set of essays that center around the theme that President Obama and his Attorney General Eric Holder refuse to prosecute “elite banksters,” a decision that follows the policy of the previous Bush Administration.

For your reference, please go to this link on the FBI’s website to read the “2010 Mortgage Fraud Report: Year in Review.” You will notice immediately when you enter the FBI’s website that it issued Mortgage Fraud Reports for five consecutive years, from 2006 through 2010, but has been awkwardly silent for almost three years.

This report can also be found, and is discussed, in my book “How to Commit Short Sale Fraud . . . and Get Away with It,” albeit from a different perspective. My own inquiry to the FBI confirmed that there have been no mortgage fraud reports by the agency since the 2010 report and the FBI apparently has no plans to publish any future similar reports. This fact alone gives credence to Dr. Black’s accusation that the Obama Administration, including the Department of Justice, has no interest in holding the banks accountable for the bulk of the mortgage crisis.

The first of Dr. Black’s articles is titled “The FBI’s 2010 Mortgage Fraud Report Reveals Why the Banksters Love Holder” and is published on New Economic Perspectives. I will attempt to summarize the key points of this first article, as follows:

– Both the Bush II and Obama administrations have had a hands-off policy with respect to prosecuting C-suite bankers for their role in precipitating the mortgage crisis, i.e., making subprime loans and “Liar’s Loans” not only possible but ubiquitous;

– Both administrations are adherents to the “cult of the Virgin Crisis” – that is, the mortgage crisis emanating from throwing caution to the wind and revising centuries-old tried-and-true underwriting practices was unforseeable, which many of us in the real estate and mortgage industries find incomprehensibly naive;

– As such, “the rule of law no longer applies to wide ranges of life and that crony capitalism will continue to reign.”;

– The Federal Reserve, the FDIC, the OCC (Office of the Comptroller of the Currency), and OTS (Office of Thrift Supervision) are all banking regulatory agencies, yet none of them contributed information regarding reporting of mortgage fraud to the FBI. Nor has the SEC proven to be anything short of worthless in protecting American citizens and residents from abuses (“control fraud“) by the banks;

– Honest appraisers and white-collar criminologists who approached the above agencies, including the FBI, to warn of post-Enron control fraud by banks were ignored.

MARI, the Mortgage Asset Research Institute, “had warned the entire mortgage industry (and the FBI) that the incidence of fraud in liar’s loans was 90 percent.”

Benjamin Wagner, the U.S. Attorney for the Eastern District of California, does not prosecute bank executives because he apparently doesn’t believe banks would deliberately underwrite fraudulent loans. “It doesn’t make any sense to me that they would be deliberately defrauding themselves,” says Wagner, quoted in Dr. Black’s article.

In his second article,  “The Incredible Con the Banksters Pulled on the FBI,” Dr. Black states what is obvious to all except state and federal prosecuting agencies: “banks will not make criminal referrals against their own CEOs.” Obviously, then, “criminal referrals have virtually vanished against the ‘accounting control frauds’ that drive our recurrent, intensifying financial crises. ” To prove his point, he cites the investigative reporting of Huffington Post report David Heath, as well as the 1993 article by George Akerlof and Paul Romer called “Looting: The Economic Underworld of Bankruptcy for Profit”. The sum of all three writers is that since there is no required reporting by banks of criminal activity of their executives, criminal behavior by bankers (aka “banksters”) is now “epidemic.”

Dr. Black posits that the above named federal regulatory agencies failed to provide the FBI with evidentiary findings of fraud, leaving the FBI dependent on either the non-existent self-reporting or that of whistleblowers. I can personally confirm that at least one of the offices of the California Department of Justice (California Attorney General) claims to be interested in prosecuting banksters to the exclusion of what they consider to be minor crimes, such as the expanding epidemic short sale fraud, but astoundingly thinks they are going to get evidence of said crimes from “insiders,” meaning whistleblowers. As evidence of the logic of their thinking, not a banker in California has been criminally prosecuted, to my knowledge.

So, with $25 million in its pocket from its 50-state settlement with the largest banks, what is the Office of the California Attorney General doing to protect homeowners by punishing banksters? As far as I can tell, very, very little.

And the FBI? According to William Black, the FBI got “conned” by the  Mortgage Bankers Association (MBA) – the trade association of the “perps,” by convincing the feds to “partner” with them on posters and alerts to warn lenders about how lenders are “victimized” by borrowers submitting fraudulent loan applications. In other words, if an individual borrower lies on a loan, this is a crime against the banks, but both sides were comatose in discussing the other side of the issue: that the banks engaged in robosigning, “lost” paperwork on homeowners’ loan applications, fraudulently foreclosed on homeowners and lied to investors about the toxic assets sold to institutional buyers. And certainly not a single sentence about control fraud committed by the banks, aka accounting fraud.

Coming: more reporting on William K. Black’s series of articles describing how state and federal government has abandoned homeowners by permitting control fraud by bank executives.

 

 

 

 

Bank of America Employees Say They Were Told to Lie about Loan Modifications

June 20th, 2013 at 10:41am

The following story, as reported by NBC News, is no surprise to the thousands of distressed homeowners who have tried and failed to get home loan modifications under the government’s HAMP program (Home Affordable Modification Program). Realtors® who try to help homeowners with loan modificationsAlthough the bad guy in this story is Bank of America, I can safely say that homeowners whose loans are with all of the major big-name banks have experienced the same frustrations.

In sworn testimony in response to a Massachusetts lawsuit filed on behalf of dozens of Bank of America borrowers in 26 states, former employees of the bank have acknowledged that they routinely denied qualified borrowers a chance to modify their loans to more affordable terms.

That’s not the shocking part: Bank of America actually paid cash bonuses to its employees for pushing homeowners into foreclosure, this, according to affidavits filed as part of the lawsuits.

Simone Gordon, who worked in the bank’s loss mitigation department until February 2012, said “We were told to lie to customers. Site leaders regularly told us that the more we delayed the HAMP [loan] modification process, the more fees Bank of America would collect.” Gordon is one of six former employees who recounted stories where the bank deliberately thwarted the efforts of the homeowners, their housing counselors and attorneys.

Read the Affidavit of Simone Gordon.

William Wilson Jr., a manager in the company’s Charlotte, N.C., headquarters, said that the point of delaying or denying the HAMP loans to which many borrowers were qualified was so Bank of America representatives could upsell them to a more costly “in-house” loan modification. Rates for these bait-and-switch in-house loans were 3 points higher than the 2 percent rate available under HAMP guidelines, he said.

“The unfortunate truth is that many and possibly most of these people were entitled to a HAMP loan modification, but had little choice but to accept a more expensive and less favorable in-house modification,” he said.

Read the William Wilson Declaration.

The testimony of these employees makes clear why the government’s Home Affordable Modification Program, initiated in 2008, has been a dismal failure.

Bank of America has denied the allegations and issued the following statement: “We continue to demonstrate our commitment to assisting customers who are at risk of foreclosure and, at best, these attorneys are painting a false picture of the bank’s practices and the dedication of our employees,” a spokesman said in a statement. “While we will address the declarations in more depth when we file our opposition to plaintiffs’ motion next month, suffice it is to say that each of the declarations is rife with factual inaccuracies.”

Man Dies in Court after Suing Wells Fargo for Negligence, Wrongful Foreclosure

June 7th, 2013 at 10:45am

This is one of the most egregious cases of corporate ineptitude and callousness I’ve heard of to date. And after wrongfully costing a man his property, it then may have cost him his life.

Larry Delassus was a disabled retiree, living on $1,600 a month in the Hermosa Beach condo he had owned for 16 years.

One of Delassus’ neighbors neighbors fell behind in his property tax payments. The neighbor, like Delassus, had his mortgage with Wells Fargo. Wells Fargo, in order to preserve its interest in the property, paid the property taxes. But instead of pursuing the neighbor for the shortfall, these idiots went after Delassus because they mistyped the parcel number on documents to show the person in default was Delassus.

Larry Delassus had actually paid his property taxes six months in advance.

In a scenario familiar to thousands of homeowners who have tried to communicate with this lender, Wells Fargo heaped on penalties, interest, fines and attorney fees in its relentless pursuit of Larry Delassus, forcing him into default by doubling his mortgage. He and his attorney tried and tried to call the bank, but got the runaround typical of Wells Fargo and other mega-lenders: put the borrower on hold forever, disconnect the call, transfer the call to the wrong department, transfer the call to employees unauthorized to make decisions, lose paperwork, etc.

According to an article in the LA Weekly, even after it admitted its error, Wells Fargo foreclosed on him anyway.

The next two paragraphs are quoted directly from the LA Weekly:

Robert Baily of Anglin Flewelling Rasmussen Campbell & Trytten LLP admitted the bank’s mistake: “Wells Fargo paid the amount it determined was owed to the County Assessor: approximately $10,500. This was a mistake. The $10,500 was the tax amount owed on a neighboring property, not Plaintiff’s.” (Bailey did not address the discrepancy between $13,361 and $10,500.)

Bailey added: “In September, 2010 Wells Fargo acknowledged its error in paying the taxes on Plaintiff’s neighbor’s property and corrected it.” By then, however, Delassus was so far behind on his mortgage payments wrongly doubled by Wells Fargo that the bank refused to let him resume his $1,237.69 installments, Trujillo says. He faced a sizable “reinstatement” cost — which is often the past due amount plus fees.

Delassus’ neighbor and friend, attorney Anthony Trujillo, sued Wells Fargo on his behalf for negligence and discrimination (based on his disability).

Wells Fargo litigation support manager Michael Dolan, in a videotaped deposition, was asked the following:  “So Plaintiff was never provided with the reinstatement amount after the bank discovered its error, correct?” Dolan replies, “That is correct.”

Larry Delassus was in Torrance Superior Court last December listening to Trujillo argue his case when he slumped over and died.

Watch this YouTube video that discusses this story further. Read another article in Slate about Larry Delassus versus Wells Fargo.

New York Attorney General Sues HSBC for Stalling Foreclosures

June 6th, 2013 at 7:02am

New York Atorney General Eric Schneiderman has sued HSBC Bank USA and HSBC Mortgage Corp., accusing it of dragging out foreclosure cases in violation of state law in order to make it more difficult for homeowners to avoid foreclosure. 

Banks use stalling tactics as a strategy in order to stack up more penalties, fees and interest against homeowners. That said, Schneiderman is looking at suing other lenders for using the same tactics.

According to Schneiderman, “Companies like HSBC are brazenly ignoring state law, leaving homeowners across New York stuck in a legal limbo where they can’t even get the legally required settlement conference that could help them keep their homes. For homeowners facing foreclosure, time is their greatest enemy. Every day spent waiting for a settlement conference is a day that the lender piles on additional interest, fees and penalties and the homeowner falls further behind.” Read his statement on the New York Attorney General’s website.

Unlike California, which is not a judicial foreclosure state, in New York, the lender is required to file a request for judicial intervention once it files suit against the borrower. That triggers a requirement to hold a settlement conference to explore alternatives to foreclosure, including mortgage modification, within 60 days, which Schneiderman is saying HSBC and other lenders are intentionally avoiding.

An example of this tactic, Schneiderman outlined the case of Rebecca Karm of Erie County. Karm, who suffered both a medical illness and the loss of her job, fell behind on her payments. Although HSBC filed the proof of service on November 12, 2010, it didn’t file the request for the conference until June 8, 2012. According to an affirmation filed by the Western New York Law Center, during those 547 days, Karm’s principal balance ballooned by $23,000 because of fees and penalties HSBC piled on her.

Read the original article in MSN Real Estate.

California Homeowners’ Bill of Rights

January 3rd, 2013 at 8:53pm

This Bill comes too late to save many homeowners who were bent over the table by corrupt and inept tactics by the major banks, but it will help many homeowners and possibly save many more from improper, unethical foreclosure practices.

Here is the new law, as copied verbatim from the Office of the California Attorney General’s website:

The California Homeowner Bill of Rights became law on January 1, 2013 to ensure fair lending and borrowing practices for California homeowners.

The laws are designed to guarantee basic fairness and transparency for homeowners in the foreclosure process. Key provisions include:

  • Restriction on dual track foreclosure: Mortgage servicers are restricted from advancing the foreclosure process if the homeowner is working on securing a loan modification. When a homeowner completes an application for a loan modification, the foreclosure process is essentially paused until the complete application has been fully reviewed.
  • Guaranteed single point of contact: Homeowners are guaranteed a single point of contact as they navigate the system and try to keep their homes – a person or team at the bank who knows the facts of their case, has their paperwork and can get them a decision about their application for a loan modification.
  • Verification of documents: Lenders that record and file multiple unverified documents will be subject to a civil penalty of up to $7,500 per loan in an action brought by a civil prosecutor. Lenders who are in violation are also subject to enforcement by licensing agencies, including the Department of Corporations, the Department of Real Estate and the Department of Financial Institutions.
  • Enforceability: Borrowers will have authority to seek redress of “material” violations of the new foreclosure process protections. Injunctive relief will be available prior to a foreclosure sale and recovery of damages will be available following a sale. (AB 278, SB 900)
  • Tenant rights: Purchasers of foreclosed homes are required to give tenants at least 90 days before starting eviction proceedings. If the tenant has a fixed-term lease entered into before transfer of title at the foreclosure sale, the owner must honor the lease unless the owner can prove that exceptions intended to prevent fraudulent leases apply. (AB 2610)
  • Tools to prosecute mortgage fraud: The statute of limitations to prosecute mortgage-related crimes is extended from one to three years, allowing the Attorney General’s office to investigate and prosecute complex mortgage fraud crimes. In addition, the Attorney General’s office can use a statewide grand jury to investigate and indict the perpetrators of financial crimes involving victims in multiple counties.
    (AB 1950, SB 1474)
  • Tools to curb blight: Local governments and receivers have additional tools to fight blight caused by multiple vacant homes in their neighborhoods, from more time to allow homeowners to remedy code violations to a means to compel the owners of foreclosed property to pay for upkeep.
    (AB 2314)

The California Homeowner Bill of Rights marked the third step in Attorney General Harris’ response to the state’s foreclosure and mortgage crisis. The Mortgage Fraud Strike Force was created in May 2011 to investigate and prosecute misconduct at all stages of the mortgage process. In February 2012, Attorney General Harris secured a commitment from the nation’s five largest banks for up to $18 billion for California borrowers.

© 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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