California Real Estate Fraud Report

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Archive for the 'Reverse Mortgage Fraud' Category

Steve Mnuchin’s Former Bank Pays $89 Million to Settle Reverse Mortgage Claims

May 19th, 2017 at 10:05am

Reverse mortgage company Financial Freedom of Austin, Texas, has agreed to pay $89 million to settle claims that it misused a federal home insurance program, which was under investigation by federal officials.

The payment closes a U.S. government investigation into its practice of allegedly accelerating home foreclosures without following the requirements of the Department of Housing and Urban Development requirements. Mnuchin led a group of investors that bought IndyMac Bank and its Financial Freedom unit in 2009. The investors realized a large profit when they reorganized IndyMac, based in Pasadena, Calif., as OneWest Bank.

Sandra Jolley, the Oxnard, California, consumer advocate and whistleblower, was awarded $1.6 million of the settlement, according to the U.S. Department of Justice, which announced the settlement Tuesday.

Read the original article in NBC News.


Nipomo Woman Sentenced to Prison for Defrauding Senior Citizen in Reverse Mortgage Scam

April 6th, 2017 at 1:46pm

San Luis Obispo District Attorney Dan Dow announced that a Nipomo woman who scammed an elderly man out of $117,000 by conning him into taking out a reverse mortgage on his property, has been sentenced to one year in jail.

Araceli Cortes, 38, pleaded no contest to one count of felony grand theft with an enhancement for stealing more than $100,000. Her victim was a 74-year-old man who had financially backed her business.

In addition to serving her sentence, Cortes received four years of probation and must pay restitution.

Read the original article in

Nationstar, Celink Sued for Fraud in Reverse Mortgage Inspections

June 2nd, 2016 at 12:26pm

Champion Mortgage Co., also known as Nationstar Mortgage, LLC, is the target of a class-action lawsuit accusing it of ordering excessive home inspections for elderly homeowners.

While home inspections are allowed as much as every 30 days, the plaintiffs’ attorneys allege that Champion Mortgage used automated software (blame the computer) to order its subcontractor, Celink, to perform home inspections several times a week and even more than once in the same day. The homeowner is charged for these inspections. Celink, also known as Compu-Link Corp., is based in Michigan and is also named as a defendant.

The lawsuit was filed in the U.S. District Court for the District of Columbia by Tycko & Zavareei, the National Consumer Law Center and AARP‘s Legal Counsel for the Elderly.

Read the original article in the Chicago Tribune.


Realtor-Funded “Reverse Mortgage” for Elderly Woman Now a Lawsuit

April 27th, 2016 at 7:55am

Barulich Dugoni Law Group is representing an elderly Menlo Park woman in a lawsuit against a Realtor®.

Alexandra Banis, an attorney with the firm, says Robert Leitao  gained an interest in the home of Gunhild B. Bogue after he took advantage of her when she was facing foreclosure last year.

San Mateo has an Elder and Dependent Adult Protection Team that consists of representatives from the county’s Health System, District Attorney’s Office, County Counsel and private law firms, such as Barulich Dugoni.

Bogue is an 89-year-old whose estate is now under the conservatorship of the San Mateo County Public Guardian. The lawsuit alleges Leitao contacted Bogue after the property was listed as in foreclosure. He allegedly drafted several documents  such as a will, deed of trust and loan agreement and offered to pay her mortgage while allowing her to remain in the home until she died in exchange for her to deed him the property worth an estimated $1.4 million. According to Banis, Bogue signed the documents under duress.

Leitao denies the allegations and said he saved Bogue’s property, which was just days away from foreclosure and had amassed almost $800,000 worth of debt and a mortgage that hadn’t been paid in years.

Read the original article in the San Mateo Daily Journal.

HUD-OIG is Watching for Fraudulent Appraisals in Reverse Mortgages

December 3rd, 2015 at 11:30am

According to a report prepared by the Office of the Inspector General for the Department of Housing and Urban Development, the agency said that it has identified cases of fraudulent property appraisals being used to increase the loan amount for the refinancing of HUD’s Home Equity Conversion Mortgages, HECM.

The purpose for the run-up in appraisals would be to extract higher loan amounts from lenders, which would include loan backers Fannie Mae and Freddie Mac. Some of the appraisals were inflated as much as 60% to 100% over the true market value of the property.

In response, HUD-OIG has issued a warning to appraisers, loan officers, originators and sponsors that the consequences for those who engage in fraudulent HECM transactions will be severe and range from criminal, civil prosecution, or administrative sanctions “as appropriate.”

Read the original article in HousingWire.


Reverse Mortgage Fraud Gets Loan Officer Prison Time

January 27th, 2012 at 9:24am

A loan officer in Floridas has been sentenced to 70 months in prison, five years of supervised release and order to pay his victims more than $2 million in restitution after being caught stealing from elderly persons in a reverse mortgage fraud scam (elder financial fraud).

According to prosecutors, Louis Gendason, 42, was the brains behind the reverse mortgage fraud that operated nationwide and preyed on seniors who were experiencing financial problems. He created, then stole false equity (mortgage fraud, loan fraud) he created on the properties.

Gendason’s co-conspirators Kimberly Mackey, 47,  and Marcos Echevarria, 29, received a 60 months and 24 months respectively for their roles.

Read the original article in the Sun Sentinel.


Reverse Mortgage Fraud Could Get Woman 30 Year Sentence

September 29th, 2011 at 3:54pm

A Dallas woman could receive a sentence of 30 years in prison as a result of her guilty plea in a reverse mortgage fraud case.

Mary Ann Fulbright obtained a $176,000 HECM (Home Equity Conversion Mortgage loan on the Rochester, New York home of her deceased parents. Per the Department of Justice and U.S. Attorney Marisa Miller, the loan was based on an application in Fulbright’s father’s name after her mother’s name was removed from title as a result of a quitclaim that was fraudulent (title fraud). Fulbright used the money for herself.

Also participating in the investigation was the Financial Fraud Enforcement Task Force, a federal agency that is part of the US Treasury.

Read the original article in Reverse Mortgage Daily.

FBI Release 2010 Retrospective Mortgage Fraud Report

August 18th, 2011 at 7:53pm

The FBI has released a comprehensive report detailing the state of mortgage fraud in the country. According to their research, the states most affected by mortgage fraud and other real estate crimes are the same states where housing prices escalated rapidly during the mid-2000s: California, Florida, Michigan, Nevada, Arizona, Texas, New York, Illinois, Georgia and New Jersey.

The most prevalent mortgage fraud schemes reported by law enforcement agencies and private industry during fiscal year 2010 included loan fraud in the origination process, mortgage rescue fraud, real estate investment fraud, equity skimming, short sale fraud, illegal property flipping, title fraud, escrow fraud (incl. settlement), commercial loan fraud, builder bailout schemes, loan modification fraud and reverse mortgage fraud.

The FBI notes that short sale fraud has become so prevalent that organized crime committed by Asian, Armenian, Balkan, Eurasian, Russian and La Costra Nostra groups has infiltrated lending institutions in order to have access to financial information, mortgage origination software, notary seals and licensure information.

In other words, all forms of real estate fraud are alive and well and it is being committed by both licensed real estate professionals and unlicensed individuals and criminal organizations. Law enforcement is bailing water out of a ship that needs enormous reinforcements just to stay afloate.

This is an excellent report with a lot of detail and is well-worth reading.

Click here to read the report on the FBI’s website. There is also an excellent synopsis on Inman News.

AARP Sues Wells Fargo, Fannie Mae over Reverse Mortgages

August 8th, 2011 at 8:58am

AARP, formerly called the American Association of Retired Persons, has filed a class action lawsuit against Wells Fargo Bank and Fannie Mae, accusing both of prohibiting the surviving spouses and heirs of people who had taken out reverse mortgages from purchasing the homes for the appraised values after the owner died.

AARP’s attorneys battled and won a reversal several months ago from the U.S. Department of Housing and Urban Development (HUD), which regulates and insures reverse mortgages.  The common reverse mortgage known as the Home Equity Conversion Mortgage (HECM), was created to prevent foreclosures by guaranteeing that the borrower can never owe more than the property is worth.

The two rules on which HUD reversed itself are (1) previously forbidding arms-length sales (in this case, to surviving spouses or relatives) for 95% of the current appraised value of the homes, and (2) when the borrower dies, the surviving spouse must repay the full balance of the loan, even if the home is worth less.

Wells Fargo is being sued for allegedly continuing to foreclose on properties with reverse mortgages after HUD backed down on the two rules. The plaintiff suing Wells Fargo in the class action suit is Robert Chandler, of Elk Grove, California.

Read the original article in Reuters.

FFIEC publishes white paper on mortgage fraud

March 2nd, 2010 at 11:39am

The Federal Financial Institutions Examination Council, aka FFIEC, is a federal interagency organization which is “empowered to prescribe uniform principles, standards, and report forms for the federal examination of financial institutions by the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), and the Office of Thrift Supervision (OTS) and to make recommendations to promote uniformity in the supervision of financial institutions.”

The FFIEC has just updated its white paper on mortgage fraud and deterrence. Important topics for consumers and financial professions are its chapters on reverse mortgage fraud (a new addition), as well as property flipping fraud, short sale fraud, loan modification fraud and other schemes.

Read the FFIEC white paper on The Detection and Deterrence of Mortgage Fraud against Financial Institutions. There is also a link to the white paper on the blogroll to the right of this column.

To learn more about the FFIEC, click here.

© Copyright 2007-2018 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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