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Archive for January, 2008

FBI Probing 14 Companies in Subprime Lending Crisis

January 29th, 2008 at 6:41pm

According to an article published in Bloomberg today, the Federal Bureau of Investigation (FBI) is looking into possible accounting fraud and other crimes that may have been committed by up to 14 corporations in the current nationwide residential housing crisis. Still unnamed (darn!), the companies being investigated include subprime lenders, developers and the firms that package/bundle loans for resale to investment groups.

While the FBI is working the criminal side of the lending crisis, the Securities and Exchange Commission (SEC), which brings civil prosecutions, has approximately three dozen cases open. According to the Bloomberg article, the FBI has 1,210 mortgage fraud cases open currently.

Read the Full Story

Loan Sense Accounts Remain Frozen

January 29th, 2008 at 10:33am

Following up on an earlier story posted by The F Word, Loan Sense accounts that had been frozen by court order four months ago have not been released due to failure to submit required paperwork by the defendant’s brother. The District Attorney has promised to investigate.

Thomas Hastert is a Walnut, California attorney and real estate broker whose mortgage office was raided in September and who is under investigation for real estate fraud by both local and state agencies. His brother Mike Hastert, owner of Villa Mortgage, also in Walnut, was placed in charge of 100 Loan Sense accounts by Judge Robert Tamietti.

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New York Sues Countrywide Underwriters for Fraud

January 26th, 2008 at 10:36am

Three New York agencies, including pension funds, have filed suit against Goldman Sachs Group Inc., Citigroup Inc., JPMorgan Chase & Co. and 23 more underwriters of Countrywide Financial Corp. The new defendants were added by New York’s city and state comptrollers and their pension funds as part of a federal securities-fraud lawsuit filed in August 2007.

According to New York State Comptroller Thomas DiNapoli,

“The underwriters and accountants enabled Countrywide to release false statements. Investors lost millions and New Yorkers lost their homes.” “We need to recover the pension fund’s losses and find a way to help all those families.”

What is most ironic about the rise and fall of Countrywide is that CEO Angelo Mozilo – who stands to cash in well over $100 million while the stock of his company plunged 85% in the past year, stated as recently as March 2007 that the housing crisis would

“be great for Countrywide” and that “at the end of the day, all of the irrational competitors will be gone,” according to the lawsuit.

[From The F Word’s viewpoint, the housing crisis was “great” for Angelo Mozilo]

Countrywide fell 9 cents to $6.02 in New York Stock Exchange composite trading.

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Impersonator Pleads Guilty in Sacramento Loan Fraud Case

January 22nd, 2008 at 3:13pm

Usually, The F Word writes about real estate professionals who have committed unethical or illegal acts. This story is about an unlicensed individual who held himself out to be a lender and has now pleaded guilty to bank fraud and money laundering.

According to Sacramento prosecuting Assistant United States Attorney Matthew Stegman, Sennett H. Swift, 25, defauded both lenders and homeowners by fradulently refinancing two homes, his goal being to collect the commissions a licensed individual would have been entitled to. Swift not only lied to the homeowners about the terms of loans – promising lower caps than would have been applicable – he also forged a number of documents, including inflating the income of at least one of the loan applicants.

Swift is scheduled to be sentenced by the Honorable Lawrence K. Karlton on March 25, 2008, at which time he could receive substantial jail time for his fraudulent acts and crimes.

Read the Press Release by the United States Attorney for the Eastern District of California.

Appraiser Cleans Up San Diego Fraud

January 20th, 2008 at 3:40pm

Todd R. Lackner became an appraiser in 1989.  Since March of 2007 he’s also become a mortgage fraud investigator of sorts and has reported more than 400 cases of inflated-sale and-crash schemes, a scam in which a buyer purchases property for more than its market price, receives cash at the closing of escrow and then lets the property fall into foreclosure. Of course, said fraud requires the help of dishonest real estate agents and appraisers.

The biggest story of inflated-sale-and-crash involves the Beverly Hills ring of developers and real estate professionals who have been indicted for their activities, which have been profiled extensively in the Los Angeles Times, Forbes Magazine, and The F Word.

Now he’s on a roll:

“I’m trying to nail (them)” Lackner said. “Some of these people made well over a million dollars in a couple months time.” He said he remembers well the day the first case came to light. He was doing an appraisal of a home in San Diego and was checking the sales information on comparable properties, Lackner said.While checking comparable home prices in the same area, he said, he noticed that one of them had sold for $70,000 more than the listed price. So, he did a drive-by to check out the property, he said. There was no one living there, he said, and the house was run-down, with an overgrown lawn.He realized immediately that something was wrong, so he went back to the office and began doing research on the real estate agent who had represented the buyer, Lackner said.It turned out, he said, the man had been involved in the purchase of 17 properties over a period of just a few months. All of the sales were suspicious, because the sales prices were significantly higher than the list prices, Lackner said. Ten of the properties later foreclosed, he said.“Then, I knew I was onto something,” Lackner said. “I said, ‘how can people get away with this?’ ”

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Lehman Bros. to Cut 1,300 Mortgage Jobs

January 18th, 2008 at 5:24pm

On Thursday, Lehman Bros. Holdings announced that it was eliminating 1,300 jobs from its Aurora Loan Services unit and close three of Aurora’s offices in Orange County, Florida and New Jersey. This is the fourth round of cuts by Lehman Bros., which has made newslines in the past few months for its eyes-wide-shut response to loans reported as suspicious and possibly fraudulent by vigilant real estate agents. In fact, one wonders how many of the job cuts can be traced to the massive losses incurred by Lehman Bros. courtesy the Bevery Hills real estate fraud gang that has been profiled in this blog, the Los Angeles Times and Forbes Magazine.

Indicted members of the Beverly Hills gang include developers Mark Alan Abrams and Charles Elliot Fitzgerald, real estate agents Joseph Babajian and Kyle Grasso, appraisers Lila Rizk and Scott Robinson, loan processor Nicole LaViolette, real estate worker Jamieson Matykowski, escrow officer Timothy Holland, and mortgage banker Richard Maize.

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Forbes Magazine Provides Juicy Details to Beverly Hills Real Estate Fraud

January 16th, 2008 at 10:23am

Following up on the Los Angeles Times’ story of unbridled greed on the part of a pack of real estate professionals operating out of Beverly Hills, Forbes Magazine has written about some of the details that made stealing so easy: lender Lehman Brothers – too busy writing loans without showing the slightest due diligence to its investors by failing to verify loan documents; chronic crooked developers Mark Alan Abrams and his bigamist partner Charles Elliot Fitzgerald; celebrity still-not-rich-enough Realtor Joseph Aram Babajian and his crew of professionally creative appraisers and mortgage brokers.

In a plug for my home team, Christian Stevens, a broker in the Beverly Hills office of Keller Williams Realty, was the good guy that Lehman Brothers wished would go away. Calls by Stevens to Lehman Brothers to report what Stevens thought was fraudulent lending, were brushed off. When the lender finally contacted Abrams about his scam, Abrams’ reply was “What’s the worst that can happen to us?”

Another good guy was appraiser Gary Crabtree, working out of Bakersfield, California. Crabtree called lenders WaMu, SunTrust Bank, Countrywide and others to report up to 207 residential sales he believed were fraudulent. According to Crabtree:

“GreenPoint Mortgage told me it was none of my business,” he recalls. “SunTrust was another I reported numerous frauds to. They just want to write them down and get out of town.” The banks declined comment.

Read the full story

California Appraiser Sues WaMu, First American, eAppraiseIT, and LSI

January 16th, 2008 at 10:03am

WaMu’s (Washington Mutual) problems with fraudulent appraisals has moved rapidly from New York State, where it is being sued by New York Attorney General Cuomo, to California.

According to Appraisal Scoop, WaMu is being sued by Jennifer Wertz, a California Office of Real Estate Appraisers (OREA) licensed appraiser for fraud, breach of both oral and written contracts and other tortious acts. The 12 count lawsuit also names First American Corp., eAppraiseIT, Lenders Services (LSI), FNIS, Inc, and Susan Richter, a WaMu sales manager.

Wertz’ attorneys wrote the complete article on Appraisal Scoop describing the history of appraiser Wertz’ business relationship with the defendants and the events that transpired, culminating in her legal claims against them. This is a fascinating read, a prelude of the problems washing up at WaMu’s front door.

Here is just a taste of the article:

Jennifer Wertz was considered a preferred real estate vendor which means that Wertz’s worked had previously been used and WaMu was familiar with and considered Plaintiff’s work to be proven.
On or about May 21, 2007, Susan Richter (a Sales Manager employed by WaMu) informed Jennifer Wertz that a loan for which Wertz had prepared an appraisal report had been declined because Wertz had indicated in her report “declining” market conditions. Richter insisted that Wertz change her appraisal report to indicate “stable” market conditions so that the loan could be approved.

Again, click on the above link for the full article.

Click here to read about NY AG Cuomo’s lawsuit against WaMu.


Former Placer Planning Commissioner Sues County

January 15th, 2008 at 10:27pm

Michelle Ollar-Burris, former Planning Commissioner of Placer County, has countersued the County this week, stating that the County’s lawsuit, which claims fraud and misrepresentation by Ollar-Burris in several land deals, has hurt her business. in a counter lawsuit this week saying that false allegations have hurt her real estate business. The County also removed her as Planning Commissioner in conjunction with its complaint.

According to Steve Belzer, Ms. Ollar-Burris’ attorney,

“All the allegations in their complaint and the fact that she was removed from the planning commission based on these unsupported allegations has damaged her business.”

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FBI: Housing Scams More Than Double

January 14th, 2008 at 8:20am

In an article published today, USA Today reports that Federal mortgage fraud convictions have more than doubled in the past year, and the Bureau expects further growth in foreclosure scams as the crisis over lenders granting subprime loans continues to escalate. Defaults on subprime mortgages are at record highs, with no end in site.

In 2007, the FBI opened 1,210 mortgage fraud cases, 300 percent more than the number of new cases they opened in 2003. Convictions more than doubled from 123 in the 2006 fiscal year to 260 in 2007. Financial Crimes Section Chief Sharon Ormsby states that they expect convictions to increase . . .

“We expect that number to increase again in 2008,” says FBI financial crimes section chief Sharon Ormsby.

Although the FBI is busy, according to consumer advocates, they have not done enough.

Read the Full Story

© 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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