California Real Estate Fraud Report

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Archive for February, 2016

Lakewood Woman Convicted in Real Estate Fraud

February 26th, 2016 at 9:16am

Felicia Muhammad, 45, has been convicted on five felony counts for lying to banks that funded mortgages for three properties, according to the U.S. Attorney’s Office. Muhammad, a licensed real estate salesperson living in Long Beach, was convicted of making false statements to federally-insured financial institutions: U.S. Bank, Countrywide Bank and First Horizon Home Loans — a subsidiary of First Tennessee Bank, causing losses of $662,000 when the properties were foreclosed.

“This defendant lied to three different financial institutions, causing significant losses to all of them,” said U.S. Attorney Eileen M. Decker, in a statement. “The Department of Justice will continue to hold accountable those who would commit mortgage fraud and place U.S. financial institutions at risk.”

 

Read the original article in the Long Beach Press Telegram.

Los Angeles Man Who Conned Churches in Mortgage Fraud Scheme Sentenced

February 26th, 2016 at 9:08am

Chester Peggese, 59, who previously pleaded guilty to bank fraud and tax evasion charges, has been sentenced to a year in federal prison and five years of probation. He was also ordered to pay restitution of $4.2 million to Broadway Federal Bank and $38,609 to the Internal Revenue Service, according to the IRS.

Peggese, 59, admitted going to local churches between 2007 and 2009 and convincing them that he was a consultant who could help them to either refinance or acquire new properties.  Unidentified co-schemers altered the financial statements of the churches, causing Broadway Federal to underwrite their loans. Peggese was paid money out of escrow and kicked back a portion of it to former bank employee Paul Ryan, who has pleaded guilty to receiving bribes and rewards.

Read the original article in MyNewsLA.com

Woodland Man Pleads Guilty to Mortgage Fraud Conspirary

February 26th, 2016 at 9:00am

Christian Parada-Renteria, 40, a former loan officer at Delta Homes and Lending Inc., pleaded guilty to one count of concealing a widespread conspiracy to commit wire fraud and one count of concealing a mail fraud transaction in connection with a mortgage fraud scheme, according to a U.S. Attorney’s Office news release.

Prosecutors alleged that Moctezuma Tovar, 46, Delta Homes’ founder and president operated a mortgage fraud conspiracy between 2004 and 2007 along with other loan processors and real estate agents. Parada-Renteria had been accused of assisting his alleged co-conspirators in falsifying loan applications.

Co-defendants Jaime Mayorga, 36, and Ruben Rodriguez, 38, both of Sacramento, have a trial date of April 5.

Read the original article in the Sacramento Bee.

Danville Businessman’s Sentence in Mortgage Fraud, Drug Money Case, Delayed until April

February 26th, 2016 at 8:50am

Anthony Keslinke, 47, who was prosecuted last year for operating a scheme to short-sell his properties and for taking accepting alleged drug money from an undercover Internal Revenue Service agent, has had his prison sentence postponed until April.

Keslinke signed a plea agreement in May 2015 to pay approximately $1.3 million in restitution and to forfeit an additional $3 million in assets, including property, coins and jewelry. He was known in the Bay Area for attempting to restore run-down structures in Antioch.

Read the original article in the Contra Costa Times.

SLO District Attorney argues against plea deal for defendants in mortgage fraud

February 26th, 2016 at 8:41am

Two former San Luis Obispo County mortgage brokers who were being prosecuted in a mortgage fraud case could get off easy if a California appellate court’s recommendation that they have to pay only $114,400 in restitution to their 80 victims stands, instead of the $8.2 million that they are thought to have owed to those people.

The appellate court’s alternative write of mandate ruled that the San Luis Obispo Superior Court should honor the deals it made with Rodney Virgil Jarmin, 75, and Tammy Marian Jordan, 53, former owners of Paso Robles-based Real Property Lenders.

Read the original article in the San Luis Obispo Tribune.

Former FDIC Attorney Sentenced Prison for Bank Fraud (Short Sale Fraud)

February 23rd, 2016 at 4:51pm

The following is a press release from the U.S. Attorney for the Eastern District of Virginia:

ALEXANDRIA, Va. – Michelle M. Borzillo, 59, of Bristow, was sentenced today to 12 months and one day in prison, followed by two years of supervised release, for defrauding Wells Fargo Bank in connection with the sham short sale of her home to her live-in boyfriend.  She was also ordered to pay $288,497 in restitution and to forfeit the proceeds of her offense.

Borzillo pleaded guilty on Nov. 17, 2015 to committing bank fraud.  According to court documents, the defendant was a senior attorney at the Federal Deposit Insurance Corporation (FDIC) until September 2014.  In 2007, she purchased a home in Nokesville for $850,000, with mortgages totaling $807,500 from Wells Fargo Bank.  In 2013, she engineered the short sale of her Nokesville home to her boyfriend, who had been living with her at the property for several years.

In order to induce Wells Fargo Bank to approve the short sale and relieve the defendant of her mortgage obligations, the defendant falsely represented to her lender that the sale of the property was an arm’s-length transaction to someone with whom she had no close personal relationship. She also falsely certified that she was moving out of the property, and claimed she was suffering a financial hardship due to the then-federal pay freeze.  In reality, as the defendant has admitted, she had no intention of moving out of the property, despite accepting $3,000 in relocation assistance in connection with a federal program designed to assist financially distressed short sellers.  As a senior FDIC employee, the defendant also had not been subject to the federal pay freeze, and her base annual pay had steadily increased during the time she owned the home, to $230,000 at the time of the short sale.  As a result of the fraudulent short sale transaction, Wells Fargo Bank was required to write off nearly $300,000 in losses.

Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; Fred Gibson, Acting Inspector General of the FDIC; and Rene Febles, Deputy Inspector General for Investigations, Office of the Inspector General for the Federal Housing Finance Agency, made the announcement after sentencing by U.S. District Judge Claude M. Hilton.  Assistant U.S. Attorneys Samantha P. Bateman and Paul J. Nathanson prosecuted the case.

A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia.  Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:15-cr-135.

Imprisoned Attorney Loses Suit, Must Pay Litigation Costs in Mortgage Fraud Case

February 12th, 2016 at 12:00pm

Attorney Mitchell Stein, already serving a 17-year prison sentence in Florida on multiple fraud, money laundering and conspiracy charges, has lost his case in which the State of California is seeking court costs.

Los Angeles County Superior Court Judge Jane L. Johnson ruled that the mortgage fraud lawsuit filed by Attorney General Kamala Harris in 2011 against multiple entities entitled California to collect costs. Stein and other were accused of fraudulently taking millions of dollars from thousands of homeowners who thought they would receive help with their mortgages.

The case is The People of the State of California v. The Law Offices of Kramer and Kaslow PLC et al., case number LC094571, in the Superior Court of the State of California, County of Los Angeles.

Here is a press release about Mitchell J. Stein.

Read the original article in Law360.

Operator of Excel Investments “Builder Bailout” Case Convicted

February 12th, 2016 at 11:45am

A Huntington Beach man suspected of running what authorities described as a “builder bailout” real estate scheme was convicted Friday of fraudulently buying more than 100 condominium units across the country.

Momoud Aref Abaji, 34, of Huntington Beach was found guilty by a federal grand jury of multiple felony counts of bank fraud, wire fraud and tax evasion in relation to a “builder bailout” scheme that resulted in foreclosures that caused losses of $9 million to lenders.

Prosecutors from the U.S. Attorney’s Office for the Central District of California accused Abaji and others affiliated to Excel Investments and related companies in Santa Ana and Irvine to a scheme in which they purchased struggling condominium developments from the developers in exchange for “hefty commissions.” Up to 100 condominium units were involved in these purchases, which Abaji and other defendants sold to straw buyers by utilizing altered bank statements, pay stubs and other documents.

“Abaji’s fraud cost these financial institutions millions of dollars and put taxpayer funds at risk,” said United States Attorney Eileen M. Decker.

Read the original article in the OC Register.

There is also an earlier article about Momoud Aref Abaji and Excel Investments  in the California Real Estate Fraud Report.

Morgan Stanley Agrees to Pay $3.2 Billion to Resolve Toxic MBS Claims

February 11th, 2016 at 12:46pm

Morgan Stanley is the latest firm to settle federal and state probes concerning its “deceptive” handling of mortgage-backed securities (MBS).

Exactly one year ago, Morgan Stanley entered into a settlement with the Justice Department for $2.6 billion to settle claims that it packaged and sold toxic MBS to institutional investors, a prelude contributing to the housing market collapse.

Read the original article in DSNews.

Attorney General Kamala D. Harris Reaches $470 Million Joint State-Federal Settlement with HSBC to Address Mortgage Loan Origination, Servicing, and Foreclosure Abuses

February 5th, 2016 at 10:21am
Thursday, February 4, 2016
Contact: (415) 703-5837, agpressoffice@doj.ca.gov

Agreement to provide certain California borrowers with loan modifications; foreclosed HSBC loans may be eligible for payments for past abuse 

SAN FRANCISCO – Today Attorney General Kamala D. Harris announced that California will join the U.S. Department of Justice, Department of Housing and Urban Development, and 48 other states in entering into a consent judgment with mortgage lender and servicer HSBC over its mortgage faulty servicing practices. This ruling will address mortgage origination, servicing, and foreclosure abuses perpetuated by HSBC.

“California homeowners worked hard and played by the rules to stay in their homes during the housing crisis, but for too many, their struggle and sacrifice was met by abusive mortgage servicing practices,” said Attorney General Harris. “This settlement holds HSBC accountable for its abusive practices that manipulated people fighting to stay in their homes. I encourage eligible borrowers who receive a claim form and feel they were a victim of HSBC’s practices to file a claim immediately.”

Under the terms of the agreement, HSBC will pay $100 million in cash, of which $59.3 million will be used to distribute payments to borrowers whose homes were foreclosed upon between 2008 and 2013, and $40.5 million will be paid to the federal government. The agreement also requires HSBC to provide $370 million in other consumer relief, such as loan modifications, principal reductions, and loan refinancing.

Based on foreclosure numbers, it is estimated that California borrowers are eligible for about 10% of the $59.3 million fund for payments to foreclosed borrowers.

This agreement is very similar to the National Mortgage Settlement of 2012, in which Attorney General Harris secured a historic $20 billion for California homeowners affected by the mortgage crisis. In 2014, Attorney General Harris announced several multimillion dollar settlements regarding mortgage fraud crime, including a national settlement with SunTrust Mortgage that provided $40 million in payments and $500 million in consumer relief nationwide; a national settlement with Bank of America in which California recovered $300 million in damages and $500 million in consumer relief credits; and a national settlement with Citigroup in which California recovered $102.7 million in damages and $90 million in consumer relief.

Additional information concerning today’s announcement is listed below.

Loan Modifications

The HSBC agreement requires the company to provide certain California borrowers with loan modifications or other relief. The modifications, which HSBC chooses through an extensive list of options, include principal reductions and refinancing for underwater mortgages. HSBC decides how many loans and which loans to modify, but must meet certain minimum targets. Because HSBC receives only partial settlement credit for many types of loan modifications, the settlement will provide relief to borrowers that will exceed the overall minimum amount.

Payments to Borrowers

Approximately 7,526 eligible California borrowers whose loans were serviced by HSBC and who lost their home to foreclosure from January 1, 2008 through December 31, 2012 and encountered servicing abuse will be eligible for a payment from the national $59.3 million fund for payments to borrowers. The borrower payment amount will depend on how many borrowers file claims.

Eligible borrowers will be contacted about how to qualify for payments.

Mortgage Servicing Standards

The settlement requires HSBC to substantially change how it services mortgage loans, handles foreclosures, and ensures the accuracy of information provided in federal bankruptcy court.

The terms will prevent past foreclosure abuses, such as robo-signing, improper documentation, and lost paperwork.

The settlement’s consumer protections and standards include:

  • Making foreclosure a last resort by first requiring HSBC to evaluate homeowners for other loss mitigation options;
  • Restricting foreclosure while the homeowner is being considered for a loan modification;
  • Procedures and timelines for reviewing loan modification applications;
  • Giving homeowners the right to appeal denials; and

Requiring a single point of contact for borrowers seeking information about their loans and maintaining adequate staff to handle calls.

Independent Monitor

The National Mortgage Settlement’s independent monitor, Joseph A. Smith Jr., will oversee HSBC agreement compliance for one year. Smith served as the North Carolina Commissioner of Banks from 2002 until 2012, and is also the former Chairman of the Conference of State Banks Supervisors (CSBS). Smith will oversee implementation of the servicing standards required by the agreement and issue public reports that identify whether HSBC complied or fell short of the standards imposed by the settlement. If HSBC is alleged to have violated terms of the agreement, the states and federal agencies can seek relief through the court.

Additional Terms

The agreement resolves potential violations of civil law based on HSBC’s deficient mortgage loan origination and servicing activities. The agreement does not prevent state or federal authorities from pursuing criminal enforcement actions related to this or other conduct by HSBC, or from punishing wrongful securitization conduct that is the focus of the Residential Mortgage-Backed Securities Working Group. Additionally, the agreement does not prevent any action by individual borrowers who wish to bring their own lawsuits.

The agreement will be filed as a consent judgment in the U.S. District Court for the District of Columbia. 

For more information on how to file a claim against a business/company, visit:https://oag.ca.gov/contact/consumer-complaint-against-business-or-company

© 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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