California Real Estate Fraud Report

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Archive for April, 2008

San Diego Jury Sides with Realtor

April 11th, 2008 at 6:56am

In a lawsuit watched closely in San Diego a jury sided with Carlsbad real estate broker Mike Little against a couple who claimed that Little’s lack of due diligience caused them to overpay by about $150,000 for their home in July 2005.The burning question at the heart of the case? What are the responsibilities of a real estate agent?

The jury found unanimously that Little had executed a reasonable standard of care when he showed Vern and Marty Ummel more than 80 homes in a house hunt beginning in May 2005. Two months later, they decided to pay $1.2 million.

Read the Full Article in the Voice of San Diego and the San Diego Union Tribune.

WaMu Trying to Dig Out of Subprime Troubles

April 8th, 2008 at 5:37pm

The Mortgage News Daily reported that Washington Mutual (WaMu) is getting a cash infusion of $5 billion from private equity firm TPG, Inc. and other investors to keep it from going under. An additional $2 billion in capital received from the sale of company stock brings the total to $7 billion.

Most of WaMu’s troubles stem from its zealous entry into the subprime market and, according to New York State Attorney General Andrew Cuomo, crossing the line into appraisal fraud by pressuring appraisers to inflate the values of properties so that WaMu could squeeze more profit out of the subprime loans it was underwriting. See The F Word Blog article from January 2008.

Following the steps of Countrywide, WaMu will post a $1.1 billion quarterly loss and will begin a series of layoffs, up to 3,000. This includes the closing of all of its 186 loan offices and no longer acquiring home mortgages from independent brokers.

Read the Full Article

Making Appraisal Fraud More Difficult.

April 7th, 2008 at 7:43am

The investigation into mortgage and appraisal fraud by New York Attorney General Andrew Cuomo against WaMu (see The F Word, Jan. 2008)  and other firms has yielded some positive movement against future fraud by the mortgage industry. Fannie Mae and Freddie Mac, also the focus of Cuomo’s office, agreed to cooperate with both the New York Attorney General and the Office of Federal Housing Enterprise Oversight in their quest to ensure independence in home appraisal practices. In exchange, Cuomo agreed to terminate his investigation into some of the business practices at both government lenders.

The Home Valuation Protection Code will take effect January 1, 2009. Its purpose is to prevent lenders from pressuring appraisers to inflate their estimate of properties, something that WaMu is accused by Cuomo of doing to exploit the wider profit margins of subprime loans.

Read the Full Article

Huge Indictment for Mortgage Fraud in Sacramento Area

April 4th, 2008 at 9:35am

Nineteen individuals were indicted last week for mortgage fraud-related offenses under Operation Homewrecker in an investigation that included the U.S. Attorney’s office, the FBI, and the IRS’ Criminal Investigation Division.The ringleader of this scam, most of whose victims are in California, is Charles Head, 33, of Los Angeles. Head and his co-defendants are accused of targeting homeowners in financial distress, of fraudulently obtaining title to over 100 homes and stealing millions of dollars through fraudulently obtained loans and mortgages. Mail fraud, conspiracy to commit mail fraud, conspiracy to commit money laundering and other related offenses are a few of the charges outlined in the indictment. What is amazing is that the defendants netted the crime ring approximately $6.7 million for less than 3 months of their “business” activity in early 2004, which consisted primarily of contacting desperate homeowners, replacing their names with that of straw buyers on title (often without the homeowners’ knowledge), applying immediately for loans to suck whatever equity existed out of the property, and then leaving the homeowner to be evicted with their credit in even worse condition.

Read the Full Article

Judge OKs Probe of Countrywide

April 4th, 2008 at 9:16am

An article in the Los Angeles Times Business section reports that a federal bankruptcy judge has given the green light for Countrywide Financial Corp. executives to be questioned under oath in order to determine whether Countrywide misled borrowers and has abused the bankruptcy process. Judge Thomas Agresti ruled that the U.S. Justice Department’s Office of the U.S. Trustee, which monitors bankruptcy proceedings, “has made a showing of a common thread of potential wrongdoing” by Countrywide.

The ruling came out of almost 300 cases filed by borrowers against Countrywide in Pittsburgh, alleging that Countrywide threatened them with foreclosure, even after Bankruptcy Court-approved payment plans that the borrowers were honoring. The Trustee’s office is pursuing other claims of abuse by Countrywide in lawsuits filed in Florida, Ohio and Georgia.

Read the Full Article

California Mortgage Fraud Task Force Established

April 2nd, 2008 at 7:31am

As reported in attorney Rachel Dollar’s Mortgage Fraud Blog, a Mortgage Fraud Task Force has been established in the Eastern District of California in response to worsening conditions in the housing market. Members include the FBI, US Attorney’s Office, the IRS’ Criminal Investigation Division, the Department of Housing and Urban Development (HUD), the US Bankruptcy Trustee’s Office and the California Department of Real Estate (DRE).

<><>Said Drew Parenti, Special Agent in Charge of the Sacramento FBI:  ”Mortgage Fraud has recently been elevated to the FBI’s highest financial crime priority, and we are attempting to address the numerous reports of fraud within the real estate industry that have occurred across the country. We are focusing on the industry professionals (the F Word’s emphasis), the “insiders” who have manipulated the mortgage loan process for their own financial gain. These investigations are lengthy and complicated but we will work with our law enforcement partners and utilize every resource available to us to ensure these cases are investigated and prosecuted to the extent the law allows.”To read statements by the various Task Force leaders, read the Full Article.

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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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