February 28th, 2008 at 6:25pm
The U.S. Securities and Exchange Commission accused three Murrieta men of running a real estate scam that resulted in almost 100 investors being defrauded of more than $11 million, causing many to lose their homes to foreclosure. Some of the victims were military personnel at the Davis-Monthan Air Force Base in Tucson, Arizona, as well as the Southern California Filipino community and church members.
The SEC, which handles only civil complaints, charges in its filing in U.S. District Court in Riverside, that James B. Duncan, Hendrix Montecastro and Maurice E. McLeod breached federal securities laws and asks for both civil penalties and restitution of “ill-gotten gains”. Also named as defendants are Murrieta-based Pacific Wealth Management, Stonewood Consulting Inc. and Total Return Fund LLC, all companies controlled by the three defendants. There are also civil suits brought against the parties by the investors.
The Riverside County Office of the District Attorney is also investigating.
Read the Full Article
February 27th, 2008 at 11:52am
Carl Cole, a mortgage broker whose business activities have been profiled recently on The F Word Blog, had a short-lived position with my own mothership, Keller Williams.
“He is no longer affiliated with the company,” said Cristina Better, team leader of Keller Williams Realty’s Camarillo branch.
Cole had been hired by Keller Williams after responding to an advertisement for agents to join their office. His departure was characterized by Better as a matter of “mutual agreement.”
Cole and his former partner at Crisp & Cole, David Crisp, are still under investigation by no less than the FBI and the California Department of Real Estate, which is alleging in its complaint that Crisp & Cole deceived lenders to the tune of $12 million to obtain home loans.
At least 83 properties – $68.5 million in loans processed by Crisp & Cole - have foreclosed so far, according to research by the Bakersfield Californian. This includes properties sold at public auctions at a loss to lenders of more than $14.8 million at public auction.
Read the Full Article in the Bakersfield Californian.
February 22nd, 2008 at 9:43am
Both the Kern County D.A.’s office and the United States Attorney’s office are investigating charges of alleged real estate fraud by a Bakersfield home builder who has filed a Chapter 7 bankruptcy after taking tens of thousands of dollars from prospective homeowners and then failing to build their homes.
Donald Juhasz and his business, DMJ Customs Inc. filed for bankrupty protection in October 2007. According to a spokesman with the California Contractors State License Board, Juhasz’ contractors licenses were suspended for failure to comply with workers compensation and bonding requirements.
Meanwhile, the frustrated home owners have seen their half-built homes go into foreclosure, their credit seriously damaged and they have also been sued by subcontractors who were unpaid by Juhasz.
“All this protection for them and none for us,” said Ammanda Meek, who, along with her husband and another couple, have objected to the discharge of Juhasz’ debts, which amount to more than $6 million.
Read the Full Article in the Bakersfield Californian.
February 17th, 2008 at 9:29pm
Two real estate agents in Simi Valley are being sued by a pair of cousins who claims their life savings were lost through questionable investments recommended by the agents, according to an article published in the Ventura County Star.
The investors, Jose Guillermo Garcia and Luis Monroy, are suing Century 21 Hilltop and agents Roland Northland and Sergio Garcia. Guillermo Garcia’s and Monroy’s attorney, Daniel Quisenberry of Agoura Hills, said the two agents took advantage of his clients’ limited English speaking skills and knowledge of real estate and ultimately lost their money in a series of questionable investments stretching from California to Texas.
Read the Full Story
February 17th, 2008 at 9:11pm
In Bakersfield, mortgage fraud is allegedly a family affair.
Realtor David Crisp, who owned the former Crisp & Cole Real Estate company along with broker Carl Cole, processed loans on two homes for his mother-in-law Leslie Sluga, which now are in default according to property records.
Crisp & Cole was named last September in a state regulators’ complaint last fall alleging multiple counts of mortgage fraud. Sluga’s properties, which each carried first and second mortgages, amount to approximately $2 million in loans. Other family members and associates of the company also have properties in default, with Crisp & Cole loans accounting for up to $66.6 million in loans for 107 distressed properties, according to the Bakersfield Californian.
In addition to the complaint brought by the California Department of Real Estate, the FBI is now investigating.
Read the Full Story.
February 10th, 2008 at 3:00pm
In Sonoma County, lenders are repossessing homes at the average of 23 per week. Many of the buyers applied for loans using stated income only. When stated income loans became popular in 2002, they were seen as a tool to help the self-employed and commission-based applicant purchase, not as a means for inflating one’s income to qualify for a loan one couldn’t afford.
According to First American CoreLogic LoanPerformance, a real estate research firm, in 2005 and 2006 more than half of all loans used to purchase Sonoma County homes were stated-income. These loans were being handed out just as the market peaked, dooming many of the borrowers who could not count on continued increases in real estate prices to help them refinance once their low teaser rates expired.
Loan officers and processors knew for the most part that many of the income applications were inflated, yet either looked the other way or in some cases assisted the borrower in inflating his or her income, despite the fact the falsifying income on a loan application is a federal crime. They were aided by automated systems instituted by lenders to speed up the approval process, such as “E appraisals” and automated underwriting. All contributed to the removal of the checks-and-balances that would have prevented the large-scale foreclosures occuring now.
Rachel Dollar is a Santa Rosa attorney who represents lenders in fraud cases and runs the Mortgage Fraud Blog. According to her:
“The entire real estate debacle is the fault of everybody that was involved. And it was all about greed and speed. The brokers wanted their commission. The lenders wanted their premiums. The borrowers wanted their homes.”
The casual observer might note, then, that the term “liar’s loan” also applies to lenders and other real estate professionals who went along with the game in pursuit of profits.
Read the Full Story
February 9th, 2008 at 10:17pm
In a new twist to stories of appraisal fraud, two couples have accused home builder KB Home and a unit of Countrywide of pumping up home appraisals in one of KB’s Sacramento-area development during a time when prices in their subdivision were actually falling. This is according to an article in the Los Angeles Times Business Section authored by Pete Y. Hong.
In their lawsuit, filed on February 6 in Los Angeles County Superior Court, Deborah and Lonnie Bolden claim they paid $70,000 more for their home than neighbors who used a private appraiser instead of Countrywide’s. The lawsuit alleges that both KB Home and Countrywide “conspired with affiliated appraisers to generate fraudulent” appraisal reports, a claim that KB denied and which Countrywide has so far declined to comment upon.
Read the Full Story
February 8th, 2008 at 11:06pm
In an article posted on its own website January 14, 2008, the FDIC outlines its proposed rules for how to reimburse account holders should their banking institution fail. This is significant because the larger banks have more than 50 million deposit accounts and because the FDIC has in fact never supervised the distribution of insured funds beyond 175,000 accounts – and that was in a bank failure that occurred in 2007 .
Quoted from the FDIC website, and signed by Mitchell Glassman, FDIC Director of Resolutions and Receiverships:
- Part 1 proposes a rule governing how and at what point deposit account balances would be determined in the event of an insured depository institution failure. This part would apply to all insured depository institutions.
- Part 2 proposes requirements to facilitate the process for determining the insurance status of depositors of large insured depository institutions in the event of failure. As proposed, the Part 2 requirements currently would apply only to the 159 insured depository institutions with at least $2 billion in domestic deposits and either (1) more than 250,000 deposit accounts or (2) total assets over $20 billion, regardless of the number of deposit accounts. These “Covered Institutions” amount to less than two percent of the more than 8,500 insured depository institutions.
Read the Proposed Rule changes
February 7th, 2008 at 2:14pm
[The following, published in Mortgage News Daily, is not an article about mortgage fraud per se; however, it indicates the severity of the situation and is descriptive of the resistance by the "big player" lenders to take action. There is an inexplicable sense of bewilderment as to how underwriting practices of the past few years are directly responsible for much of the current chaos and, unfortunately, still an apparent unwillingness to take decisive steps to mitigate what common sense dictates should be done to get themselves, homeowners, and local economies back on track. For the informed reader, this article is worth reading in its entirety. Anybody who thinks that there is such a think as "compassionate corporate capitalism", or "enlightened self-interest" (the term used in this article), might think otherwise after reading it.]
In a conference call/press conference on Thursday, the Conference of State Bank Supervisors (CSBS) released its first report on loss mitigation efforts as reported by 13 major residential mortgage servicers. Iowa Attorney General Tom Miller explained that the report grew out of a concern dating back to last summer that the nation was facing a “foreclosure avalanche.” The AG said at that point the bank regulators and attorneys general who were expressing that concern were looking at the impact of individual foreclosures on the family and the community and had no idea of the collateral damage that would later emerge from the poor underwriting standards. They were, however, convinced that the avalanche could be mitigated by enlightened self interest. Such self-interest should come together where the borrower could afford to make payments in an amount that the owner of his loan could afford to accept.
A State Foreclosure Prevention Working Group was formed and met with 20 of the largest servicers of subprime loans. Most of these servicers agreed that loss mitigation made a lot of sense and signed on to the “enlightened self-interest” proposition. However according to Mark Pearce, North Carolina Deputy Commissioner of Banks, there was an immediate disconnect between what servicers said they were doing to ameliorate the problem and what the Working Group was hearing from borrowers and non-profits seeking to help those borrowers so the Group moved to collect data directly from servicers to verify what was going on. One immediate need was develop a metric of definitions so that “loss mitigation” or “repayment plan” meant the same thing to all players. The Group is now collecting data from 13 servicers representing 58 percent of the subprime market. Six servicers have either declined to provide information or are in negotiations to work out confidentiality concerns. Chase and Wells Fargo have declined to participate based on advice from the Office of Comptroller of the Currency which OCC has refused to change and Washington Mutual along with Chase have refused to provide data because of their participation in the Hope NOW Alliance While the report stated that many of the servicers participating in the data collection had not yet set up the kinds of tracking systems that would allow data to slice and dice information too finely, (e.g.was the loan modification an interest rate modification, a term modification, or a reduction in the amount owed?) this first report, containing data from last October, did contain some findings, the most interesting being that seven out of ten seriously delinquent borrowers are not on track for any loss mitigation option (my emphasis).
Read the Full Story
February 4th, 2008 at 11:11pm
The Originator Times reports that two sisters were indicted by a federal grand jury in Los Angeles on money laundering, wire fraud and conspiracy charges for submitting home loan financing packages for residential real estate that included false information and forged signatures. The defendants used the fraudulently obtained proceeds to purchase properties, which they later sold at a profit.
The 14-count indictment charges that Maria Sanchez, 34, a loan consultant and real estate agent for Online Financial Services in Lawndale, allegedly submitted home loan financing packages containing false statements, forged signatures and falsified financial records to lenders so that she and her sister Beatriz Sanchez, aka Beatriz Salcedo, could purchase homes, which they then resold at a profit.
Unlike the high-roller real estate agents, loan officers, appraisers and developers in Beverly Hills whose recent indictment alleges they stole in the high millions, the less-ambitious Sanchez sisters are accused of obtaining slightly more than $1.5 million in fraudulent loans to purchase just four properties in the cities of El Monte, Norwalk, Paramount and Los Angeles. However, Maria Sanchez is also accused of wiring almost $100,000 in illegal drug money Beatriz’ bank account to an escrow company; monieus that were used as a down payment for the El Monte property.
Read the Full Story, including the prison sentences that await the sisters if they are convicted.