California Real Estate Fraud Report

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Archive for the 'Forensic Loan Audit' Category

California Attorney Faces Disbarment for Role in US Loan Auditors Investigation

November 12th, 2012 at 8:37pm

An attorney who served as attorney-of-record in what has been characterized as 130 predatory lending lawsuits has had her license pulled after a California State Bar Court judge accused her of having no remorse in a foreclosure rescue scheme.

Bar Court Judge Lucy Armendariz  heard the case against Sharon L. Lapin, 57, of Greenbrae. Lapin was a contract attorney for the firm known by various names as  US Loan Auditors LLC, US Loan Auditors Inc., My US Legal Services and US Legal Services and was paid $177,000 ($350 per hour) for her services for the period August 2009 through November 2010.

Sacramento-based US Loan Auditors charged homeowners in foreclosure fees to conduct “forensic loan audits” that were supposed to be used to convince lenders to give the homeowners loan modifications. Although the company has since filed bankruptcy and its main web page says it has “closed its doors,” its blog is still live, claiming to have “real clients that love US Loan Auditors.”

State Bar spokeswoman Laura Ernde said that Lapin was “culpable of multiple counts of professional misconduct, including moral turpitude, aiding the unauthorized practice of law, sharing fees with a non-lawyer, participating in a non-legal lawyer referral service, failure to perform legal services with competence, failure to maintain only legal or just actions and failure to avoid representing adverse interests,” according to an article in the Mercury News.

For her part, Sharon Lapin denies the charges, said she is innocent and promises to appeal, saying she “never engaged in a scheme to defraud clients.”

Bar spokesperson Ernde said that since February 2009, the State Bar’s Office of Chief Trial Counsel has been flooded with complaints against attorneys regarding loan modification fraud – 22 have been disbarred and 100 have received other disciplinary action.

Read the original article in the Mercury News, which contains the comments of Judge Armendariz regarding this hearing.

The California State Supreme Court still has to approve the disbarment action. You can read the documents filed with respect to this case by clicking on Sharon L. Lapin.

Roseville Residents Charged in Loan Modification Scam

October 4th, 2012 at 2:10pm

Two Roseville residents have been arrested and charged in an alleged loan modification scam.

Martin Wayne Flanders, 48, and Ligia Sandoval Spafford, 46, are facing the accusations in a Sacramento federal court. Prosecutors claim that Flanders illegally charged upfront fees for loan modifications and other mortgage relief “services” to his victims, mostly Latinos found through Spanish language radio broadcasts. He will also be charged with bankruptcy fraud for filing phony bankruptcy petititions.

As is typical with loan modification frauds, many of the victims have lost their homes to foreclosure.

Read the original article in the Sacramento Business Journal.

California DRE Revokes Record Number of Real Estate Licenses for FY 2011-2012

August 7th, 2012 at 7:05am

The fall in real estate markets has not only cost property owners their equity and many times the loss of their homes, it’s also been a magnet for scammers. Some are licensed real estate agents; others are not. Since the top of the market in fall 2006, there has been a flood of real estate crimes consumers had no concept of: real estate fraud, short sale fraud, REO fraud, Ponzi schemes, real estate investment fraud, foreclosure rescue scams and loan modification scams. In a number of cases, those crimes were carried out within certain ethnic or religious circles (affinity fraud).

The California Department of Real Estate, the primary means of investigating housing-related crimes, has responded by revoking a record number of real estate licenses for the fiscal year ending June 30, 2012. Here is a summary of the DRE’s August 6 press release:

781 real estate licenses revoked (up 14% from 681 the prior fiscal year)

190 real estate licenses suspended for cause (up 80% from 106 the prior fiscal year)

138 real estate licenses surrendered by the licensees (up 20% from 115 the prior fiscal year)

213 desist and refrain orders, typically ordered against an unlicensed individual or business

And now . . . my editorial

Why are there so many disciplinary actions in real estate? Very simply, because the barrier to entry is so low. This I blame on the California Association of Realtors, the trade and lobbying association for Realtors®, which gets its strength from the number (=volume) of dues-paying members under its wing. If you’re 18 years old and haven’t committed a major financial crime, you can get your real estate license.

Real estate training schools are big business. RealEstateExpress.com, a real estate “training” website, starts the first paragraph of its web page on licensing requirements by announcing “Getting Your Real Estate License In California is Not Difficult…” Although they state that “eight statutory college-level courses” are required for a prospective licensee to sit for the salesperson’s (aka “real estate agent”) exam, anybody who has attended even community college knows these courses are anything but college level. Prospective licensees are encouraged to sign-up for “boot camps” that are simply mass cramming sessions that show attendees what questions they must know in order to pass the exam. The purposes of these schools is in no way to inspire learning or to impart knowledge. That, along with taking online “practice exams” over and over until the answers are memorized, constitute the sum-and-total of what it takes to get a real estate license.

FTC Puts the Brakes on Forensic Audit Firms

June 15th, 2012 at 8:48am

Real estate fraud schemes are ever-evolving. Whether the real estate market is strong or weak, there are always predators hunting for victims.

After Attorney General Edumund G. Brown (now California’s governor) outlawed charging advance fees for mortgage modification services in 2009, creative scammers have been hard at work looking for a work-around so they could soak their victims. The latest mutation seems to be the “forensic loan audit,” an impressive-sounding term that usually means nothing for the about-to-be-ripped-off homeowner.

The Federal Trade Commission has convinced a U.S. district court to put the brakes on one particular forensic loan audit operation that was charging $1,995 or more to homeowners in distress.  California-based Consumer Advocates Group Experts, LLC, Asset Management Corporation, Advocates for Consumer Affairs Expert, LLC and Ryan Zimmerman are the targets of the FTC investigation, which now includes freezing the companies’ assets and installing a receiver to oversee their operations.

The alleged ploy, per the FTC, is that through website advertising, the defendants claimed that “up to 95% of mortgages may be legally unenforceable due to defects like lost documents, improper notices, appraisal and/or predatory lending.” The websites posted testimonials of successes by the defendants (not verified as genuine or not by the FTC yet) and recommended that the homeowner cease contacting his/her lender so as not to confuse negotiations the defendants were engaging in. In many cases, the defendants allegedly did not contact the lender or perform follow-up.

According to an article in the Imperial Valley News, the FTC complaint charges the defendants with “violating the FTC Act and the Mortgage Assistance Relief Services Rule, known as the MARS Rule, by deceptively telling consumers that they could renegotiate mortgages, making payments substantially more affordable; that they could use the “forensic audits” to negotiate with lenders; and that if they failed to do these things, they would provide a refund. The complaint also charges the defendants with other MARS Rule violations, including collecting fees for mortgage foreclosure rescue and loan modification services before homeowners accept a written offer from their lender or servicer, and failing to make required disclosures.”

Two Men Get Prison for Loan Modification Fraud

June 14th, 2011 at 7:50am

Two men have received prison sentences after they admitted they operated a national business that was little more than a loan modification scam.

Michael Trap has been sentenced to 30 months in federal prison. His business partner Glenn Steven Rosofsky received a sentence of 63 months.

Trap and Rosofsky set up a nationwide telemarketing operation under the names of “Nations Housing Modification Center” and “Federal Housing Modification Department”.  Using the claims of having attorneys and forensic accountants (some con-artists call them “forensic loan auditors”) to find errors in the loans of borrowers in default, the two claimed a high success rate in obtaining loan modifications. They are thought to have made $900,000 from their scam.

There are two earlier postings on the California Real Estate Fraud Report about Michael Trap and Glenn Steven Rosofsky. Read about them here and here.

Read the original article in KGTV 10 News.

Mortgage Rescue Scam Costs Fresno Couple Their Home

November 26th, 2010 at 10:14am

A mortgage rescue scam has cost a couple their dream home in Fresno.

Patty and Jody Farmer lived in their dream home in the Central Valley for approximately 11 years along with their grandchildren. When their adjustable rate mortgage was going to be reset in 2008, making the payments unaffordable for the mostly-retired couple, they turned to US Loan Auditors, Inc. which had sent a solicitation letter to them. US Loan Auditors, Inc., which according to the California State Attorney General’s Office, finds its clients through direct mailing, told the Farmers that they could conduct a “forensic loan audit” of their mortgage to find possible “mortgage violations” committed by the lender. This information would then be used to (somehow) convince the lender to offer the Farmers a loan modification. US Loan Auditors, Inc. told the Farmers to stop making their mortgage payments, which triggered a Notice of Default (NOD) from the lender. In the meantime, US Loan Auditors, Inc. charged the Farmers $1,000 a month for seven months and its representative told them the company attorney would take their case to court against the lender for the 10 violations it found.

The California State Attorney General’s Office has filed a $60 million lawsuit against US Loan Auditors, Inc. on October 6 according to the Fresno Bee, seeking restitution for all of its victims, including now, the Farmers, whose home was foreclosed. There is also a Better Business Bureau Report that gives them an F rating (their worst possible rating) but refers to them as US Loan Auditors LLC.

Read the full article in the Fresno Bee.

Forensic Loan Audit Firms Sued by Attorney General Brown

October 6th, 2010 at 8:14pm

Attorney General Edmund G. Brown Jr. has filed a $60 million lawsuit against two Sacramento-area companies that scammed homeowners by promising to get them loan modifications if they used the firms’ forensic loan audit services.

[Note: "forensic loan audit" is one of those terms that has wormed its way into the English language but is very little than a marketing phrase.]

The two companies are US Loan Auditors and My US Legal Services and are based in Rancho Cordova. They, along with five persons, including two who are (at least for now) attorneys, worked as a team to defraud desperate homeowners by charging upfront fees without delivering anything of measurable value. One of the scams perpetrated by forensic loan audit companies is that their “forensic software” claims to find violations of the law by lenders, which inexplicably translates into the homeowners not having to make their mortgage payments. Additional fees are then tacked on so supposedly sue the lenders for predatory practices.

The natural persons being sued the Attorney General Brown are the owners: attorney and real estate broker James Sandison, Jeffrey Pulvino, and Shane Barker and their California attorneys, Sharon L. Lapin and Jonathan G. Stein. In a separate action, the California State Bar filed disciplinary charges against James Sandison for “the alleged misappropriation of clients’ funds and aiding the unauthorized practice of law.:

Read the Press Release by the California Attorney General’s Office.

Homeowners Warned about New Mortgage Fraud Schemes

August 24th, 2010 at 6:06pm

The U.S. GAO (General Accounting Office) has just released a report on the newest forms of mortgage fraud. Requested by Rep. Doris Matsui of Sacramento,  the new frauds are a variation of the foreclosure fraud schemes in which fraudsters demanded upfront fees and performed little or no work on behalf of the consumer. Attorney General Edmund G. Brown has been aggressively prosecuting licensed agents, attorneys and others who broke the law, with the result that some have been sentenced to prison and fined and some have lost their real estate licenses or the right to practice the law.

The GAO has identified the two new scams as:

(1) a “forensic” loan audit, in which the borrower pays an upfront fee to the “auditor” (someone who is usually NOT an auditor) to see if their were regulatory violations in the original mortgage. The auditor tells the borrower s/he can get the loan modified or even canceled.

(2) the “consultant” promises to get the borrower’s mortgage erased based on a far-fetched notion that the government will pick up the loan due to the lender having done something illegal during the loan origination process.

Read the full article in the Sacramento Business Journal.

Attorney General Brown warns consumers against forensic loan audits

February 22nd, 2010 at 11:56am

In a press release, California Attorney General Edmund G. Brown sent out an alert to distressed homeowners: do not be duped into paying for a forensic loan audits.

According to AG Brown, forensic loan audits are the latest ploy by foreclosure consultants, mortgage relief firms, foreclosure assistance firms, loan modification firms and the like to extract upfront fees from their victims without providing any actual foreclosure relief. These firms are forbidden by law from charging advance fees, must register with Brown’s office and post a $100,000 bond. In the past year the AG’s office has shut down at least 30 of these parasitic companies and has prosecuted numerous licensed (and unlicensed) real estate professionals and attorneys who have violated the law. And the Department of Real Estate (DRE) is actively carrying out investigations and issuing cease-and-desist orders to companies and individuals who cross the line, according to Real Estate Commissioner Jeff Davi.

Read the press release on the California Attorney General’s website.

© Copyright 2007-2014 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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