About Caroline Gerardo: Poet and Writer at night with a passion for my “job” as a Mortgage Banker
I’m studying to take the California component of the SAFE ACT Test These questions and answers I have provided as a study guide. I don’t guarantee you will pass or these are the questions, but practice on the laws can’t hurt. Some where over the rainbow our values will come back? Some where over the rainbow being in the mortgage business won’t mean you are frowned upon in every circle.
A compensation contract for a loan transaction must be retained for three years.
MLO’s certificate for Continuing Education does not need to be retained.
Grace period for a DRE license is two years after expiration
Division of California Department of Corporations that handles violations of the California Financial Code is the Enforcement Division
If a MLO is not in compliance with a DOC provision, his bond can be increased from $50000 to $100000
If an advertisement has been disapproved, the MLO must discontinue the ad immediately.
MLO who advertises on radio/ air waves must maintain a transcript of the ad for audit 90 days
Regulators are concerned with improper production, not loan volume
An administrative penalty is $2500 while civil court penalty is $25000
Independent escrow agents are subject to regulations of the Department of Corporations
MLO and certain fiduciaries are regulated by the operational arm of the California Department of Corporations known as the Financial Services Division
Commissioner of DRE is a real estate broker with 5 years experience and is appointed by the Governor
DRE audits a licensed real estate broker and charges cost if a violation is proven
MLO can prove a particular interest rate was available by showing the rate sheet
California Foreclosure Act guides borrowers in the pursuit of a modification
Lenders and brokers may not add anything to the appraisal fee
MLO files BK must notify commissioner in 5 days
Covered loan can have a prepay for 3 years
Loan denial record must be kept 3 years
Prepay penalty is waived in a natural declared disaster
MLO guilty of redlining license suspended
Conversion is misappropriation of funds
Fees on a covered loan can’t exceed $1000 or 6% of original balance
Violation on covered loan is suspend 6 months to 3 years 2nd time permanent and $2500+ civil liable $15000+++
Broker must place $ for others in trust account in 3 business days
Broker must withdraw any of his own funds from trust account (example property manager) as fees in 25 days
Mortgage lender may no longer consider rising real estate prices as a mitigating factor against loan risks
MLO continuing education on: 3 hours of Federal law and regulations;
Net worth and surety bond for California Residential Mortgage Lenders is: surety bond $50000 net worth $250000
Net worth and surety bond for Finance Lenders License is: surety bond of $25000 and net worth $25000
If Finance Lender employs more than one MLO net worth increases to $250000.
Law October 2009 to ensure California complied with SAFE Act is SB 32
January 2010 all licensed real estate brokers, salespersons and RE corporations who make arrange or service loans must submit to the DRE an online report called the RE-866.
RE-866 if licensee is a real estate corporation, the name an license number of the officer will be provided
Re-866 form due January 31, 2010 or 30 days of commencing Mortgage orginations
Penalty to file RE—866 $50 day for first 30 and $100 a day up to $10000.
B&PCode Section 10131 real estate broker is one who for compensation, solicits, negotiates or performs services for others
B&P Code Section 10131 real estate broker engages n the making of loans, buying from. Selling to, or exchanging with the public real property sales contracts or secured promissory notes as a principal
B&P Code “in the business” means acquiring for resale to the public real property sales contracts or secured promissory notes in the amount of 8 or more a year
Cash, corporate capital, warehouse credit lines, other $ that are liability items on the person’s financial statements secured or unsecured are known as own funds
To renew a California real estate license licensee must take
Fees for a lock-in agreement are refunded if the agreement is executed and the loan is denied
MLO activity can take place only at the address on license unless borrower requests otherwise
MLO license should be placed prominently in office
Renewal fees are due December 31 each year
Change of ownership form is filed with Commissioner when mortgage co changes hands
Print media must match business name and information registered with NMLS
DOC commissioner inspects books and records of MLO every 2 years
DOC commissioner may inspect as often as necessary
Commissioner of DOC and DRE can issue a desist and refrain order
Audits by DRE or Doc MLO Co pays costs
Broker licensed under Consumer Finance Lending Laws may broker loans to Finance Lenders
Delaying the closing of a loan to increase costs is predatory lending
Compensation contract for a loan transaction must be retained for 3 years
Residential mortgage loan is 1-4 units
MU1- corporation or sole proprietor-business
MU2 –each control persons
MU3-license branch
MU4 individual
2 hours of ethics including training on fair lending, fraud, and consumer protection challenges;2 hours of lessons related to lending standards for the nontraditional mortgage product market; and 1 hour other
Mortgage bankers must have net worth $250000 and surety $50000
Application fee for California Mortgage banker’s license is $900 CRMLA
Maintenance annual fee DRE license MLO endorsement is $300
Reporting requirements for brokers: list of licensees, advertising media, types loans serviced- how many covered loans…
Maintain license classes: 8 hours continuing education+ 45 hours continuing education every 4 years
Processors and Underwriters who work as independent contractors must be licensed
Pre-licensed education is 20 hours
Applicants who completed endorsement before August 31 2010 do not have to complete the 20 hours
New applicants for Finance lender in CA file through NMLS is they intend to make or broker mortgage loans (they can finance cars and not do mortgages)
Section2924.6 Civil Code due on sale clauses are not allowed for:transfer resulting from death of spouse, adding spouse on title, divorce decree- Dissolution, inter vivos trust transfer where they are beneficiaries,junior liens
Section 50318 misleading public as to education, license … 12 months bar
Unruh Civil rights act- sex race color religion ancestry national origin disability medical condition marital status sexual orientation
Holden Act- redlining geographical discrimination 1-4 Section 35801, Borrower complains to Secretary of the California Department of Business, Transportation and Housing 30 days determination
Holden Act is Secretary determines the violation desist and refrain – make the loan or pay $1000
Holden Act Appeal to hearing 10 days – hearing happens in 20 days – decision in 45 days can be appealed in court
Section2780 RE Commissioner Regulations: race color sex religion ancestry physical handicap marital status national origin- panic selling block busting
Mortgage broker agreements-cannot be for high cost per HOEPA
Mortgage broker agreements can charge actual charges upfront and an application fee
Advertising no no words: guaranteed, safe, bonded, sound, investment plan, growth plan, low doc, no income, no assets, stated, immediate approvals
Loan modification scams cannot charge fees upfront, take a wage assignment, power of attorney,
Loan modification scam fines $10000 plus one year county jail individual, $50000 for corporation 3X damages
California Foreclosure Prevention Act- 90 days notice of default + 90 4 days before sale for reinstatement
MLO can’t charge a fee for best efforts to find a loan- must deliver
Loan servicers must pay interest of 2% on advance impound accounts
Covered loan law California Civil Code 4970- 4979.8 High Cost Loans Any residential loan does not exceed Fannie Mae’s conforming loan limit- APR exceeds 8% over Treasuries of 15th day of month or total points and fees paid by consumer exceed 6% of loan amount or $1000– No prepayment 3 years, no balloon less than 5 except for bridge loans, neg am must be disclosed, 55% DTI, no loan flipping, must be a benefit
Trust funds – must deposit in escrow or trust account 3 business days
Trust fund record keeping: 3 years, reconcile monthly, no interest
Covered loan is not a super jumbo
Willful violation of Covered Loan Law $15000 or damages
California Finance Lenders Law Commissioner Department Corporations can suspend a license not to exceed 12 months
Maximum criminal penalty for violation of California Residential Mortgage Lending Act is $10000 and one year in jail
DRE cannot file criminal charges
Max payout to consumers from DRE Real Estate Recovery account $250000
California Administrative Procedures Act hearing final decision 100 days
Tips for Avoiding Mortgage Foreclosure Rescue Scams
Beware of Unethical Mortgage Foreclosure Rescue Operators
A fairly new and dangerous threat has arisen for householders UN agency have fallen behind on their mortgage payments and will be in danger of proceeding – expedient firms.
They usually see themselves as a “foreclosure advisor” or “mortgage consultant,” and market themselves as a “foreclosure service” or “foreclosure rescue agency.” They judge householders being vulnerable and desperate.
These firms claim they will assist householders facing proceeding with choices that permit them to stay their property, finance or modify Associate in Nursing existing mortgage, repair credit or facilitate “buy longer.” essentially, these “options” area unit meant to win over you to require the incorrect steps so that they will take your cash and probably your home.
Remember the recent speech, “If it’s too sensible to be true, it most likely is.” Be safe. it’s vital that you just take action by contacting your mortgage investor – or any legitimate money counselor – to search out real choices to avoid proceeding. variety of agencies offer free counselling services to householders UN agency area unit having hassle creating ends meet ( see the “Protect Yourself and Resources Sections” ).
These agencies will assist you explore your choices, which can vary from modifying your loan to refinancing your loan to commerce your home and exploitation any equity to begin over.
Watch Out for the Common proceeding Rescue Scams
Lease-Back or Repurchase Scams – during this situation, a promise is formed to pay off your delinquent mortgage, repair your credit and probably pay off credit cards and alternative debt. However, so as to try to to this, you need to “temporarily” sign your gift to a “third party” capitalist. you’re allowed to remain within the home as a renter with the choice to get the house back once a definite quantity of your time has passed or your money scenario improves. the difficulty is once you’ve got signed away your rights in your property, you will not be ready to repurchase the property later, even though you’ll and wish to. once the new owner takes possession of your property, the new owner will evict you. moreover, the sharpy is beneath no obligation to sell the house back to you. Typically, once the deed is signed away, the property changes hands various times. The sharpy could have taken a replacement mortgage out on your home for many thousands of greenbacks over your mortgage, creating it not possible for you to shop for back your home.
Partial Interest Bankruptcy Scams – The scam operator asks you to administer a partial interest in your home to 1 or additional persons. You then build mortgage payments to the scam operator in part of paying the delinquent mortgage. However, the scam operator doesn’t pay the present mortgage or look for new funding. every holder of a partial interest then files bankruptcy, one once another, with out your information. The bankruptcy court can issue a “stay” order on every occasion to prevent proceeding quickly. However, the keep doesn’t excuse you from creating payments or from repaying the complete quantity of your loan. This complicates and delays proceeding, whereas permitting the scam operator to keep up a stream of financial gain by collection payments from you, the victim. Bankruptcy laws offer vital protections to shoppers. This scam will solely quickly delay proceeding, and will keep you from exploitation bankruptcy laws licitly to deal with your money issues.
Refinance Scams– whereas there area unit legitimate refinancing programs offered, look out for folks motility as mortgage brokers or lenders giving to finance your loan thus you’ll afford the payments. The sharpy presents you with “foreclosure rescue” loan documents to sign. {you area unit|you’re} told that the documents are for a finance loan that may bring the mortgage current. What you don’t understand is that you just area unit surrendering possession of your home. The “loan” documents are literally deed transfer documents, and therefore the sharpy counts on your not really reading the work. Once the deed transfer is dead, you suspect your home has been reclaimed from proceeding for months or perhaps years till you receive Associate in Nursing eviction notice and see you now not own your home. At that time, it’s usually too late to try to to something concerning the deed transfer.
Internet and Phone Scams – Some scam lenders win over you to use for a low-interest real estate loan on the phone or net. They then extract important info, like your social insurance and checking account numbers. during this scam, the loan is straight away accepted, once that you begin faxing the documents and causation wire transfer payments to the phony company while not even meeting the investor. sadly, this scam can place you in double the maximum amount trouble–your personal details are purloined or sold , golf stroke you in danger of fraud, and your house is still in danger of proceeding.
Phantom facilitate Scams – The scam operator presents himself as somebody UN agency is in a position to counsel or facilitate a house owner out of proceeding. In exchange for his or her “services,” outrageous fees area unit charged and grand guarantees area unit created for strong illustration, that ne’er happens. The “services” performed entail light-weight work or occasional phone calls that you just may simply have created yourself. In the end, you’re worse off than before, as a result of you’ve got very little or no time to avoid wasting your home, or look for alternative help.
Caught in a very proceeding Scam?
If you get caught in one in every of these scams, it’s imperative that you just contact a professional person at once. Associate in Nursing professional will assist you as you navigate your method through the method. Lower financial gain people is also ready to realize free legal services; see http://www.findlegalhelp.org. If you suspect that you just area unit the victim of criminal activity, like cast documents being bestowed for your signature, you ought to contact your native enforcement agency.
Moral infringement and criminal exercises in different enterprises have influenced our economy in the course of recent decades, especially in the saving money, monetary and lodging segments. In this article, we analyze the complex moral and criminal issues encompassing mortgage fraud. Fraud in its most straightforward shape is ponder distortion and trickiness. Fraud in real life implies that one misdirects another by distorting data, actualities, and figures. (Four noteworthy players cut up your mortgage in the optional market, in Off camera Of Your Mortgage.)
What is Mortgage Fraud?
Mortgage fraud is not quite recently savage loaning hones that objective certain borrowers. As indicated by the Government Agency of Examination (FBI) mortgage fraud is “material misquote, deception or oversight identifying with the property or potential mortgage depended on by a guarantor or bank to reserve, buy or protect a credit.” With this working definition, we see that mortgage fraud can be submitted by both individual borrowers and industry experts.
Why Confer Mortgage Fraud?
Borrowers and experts are roused to confer mortgage fraud for some reasons. We can depict the greater part of those reasons by characterizing two essential components – fraud for lodging and fraud for benefit. Fraud for lodging is submitted by borrowers who, frequently with the help of advance officers or other bank faculty, distort or exclude pertinent insights about work and salary, obligation and credit, or property estimation and condition with the objective of getting or keeping up land proprietorship. Note that fraud for lodging can be conferred by people who mean to possess a property as main living place, or by financial specialists who plan to lease the property as a wellspring of pay or to re-offer for pick up.
Fraud for benefit is conferred by industry experts who misquote, distort or discard significant insights about their own or their customers’ work and pay, obligation and credit, or property estimation and condition with the objective of amplifying benefits on an advance exchange. It is critical to note here that fraud for benefit can be submitted by any expert in the advance exchange chain including the manufacturer, land deals specialist, advance officer, mortgage merchant, credit/obligation advocate, land appraiser, property overseer, protection operator, title organization, lawyer, and escrow specialist. Industry experts can likewise work in show, as a system, to defraud guarantors, loan specialists and borrowers, and augment charges and offer benefits on all mortgage related administrations. These activities are propelled either by the yearning to increase additional business commissions or basically increment a venture position. (Character criminals are utilizing home value credit extensions to perpetrate their wrongdoings. Discover more in Shield Yourself From HELOC Fraud.)
Regular Mortgage Fraud Plans and Tricks
The most widely recognized financial specialist mortgage fraud plans are diverse sorts of property flipping, inhabitance fraud and the straw purchaser trick. Property flipping is for the most part not unlawful when related with acquiring a house, holding/settling it and after that exchanging it for a benefit. Then again when a property is purchased underneath showcase and promptly sold at benefit with the assistance of a degenerate appraiser who “confirms” that the estimation of the property is in reality twofold the underlying buy sum, mortgage fraud is shown.
Occupancy fraud is a plan utilized by speculators to fit the bill for higher advance to-esteem and lower out of pocket costs on buys, notwithstanding lower mortgage rates. Occupancy fraud happens when a borrower guarantees that the home will be proprietor involved to get ideal bank status when the property will really stay empty. The straw purchaser either utilizes their character credit and salary to get property for another purchaser who may not qualify. Straw purchasers are frequently utilized by financial specialists, either eagerly or accidentally to conceal different structures and various layers of fraud.
The most widely recognized individual mortgage fraud tricks are data fraud and pay/resource misrepresentation. Data fraud, where the genuine purchaser fraudulently acquires financing utilizing an unwilling and unconscious casualty’s data including Government disability numbers, birth dates, and addresses. Fraud for mortgage purposes may likewise incorporate stolen pay stubs, bank records, assessment forms, W2s and misrepresented work check letters. Indeed, even property possession records can be adulterated, and a borrower can acquire a fraudulent mortgage on a property that they neither claim nor involve.
The most widely recognized industry proficient mortgage fraud tricks are the air credit and evaluation fraud. The air advance is a credit got on a nonexistent property or for a nonexistent borrower. A gathering of experts will regularly cooperate to make a fake borrower, a chain of title on a nonexistent property, and to get a title and property protection folio. Also, the fraud chain may incorporate telephone banks and letter drops to make fake business confirmations, street numbers and borrower phone numbers. The airloan trick essentially places money under the control of the culprits, and no property is ever purchased or sold. Examination fraud frequently includes a land specialist, manufacturer, appraiser and credit officer cooperating to augment a price tag and advance sum keeping in mind the end goal to build commission. Then again, degenerate appraisers will regularly underestimate a property to guarantee that a kindred financial specialist will have the capacity to buy the benefit.
A few types of savage loaning exercises, abandonment safeguard and mortgage lessening tricks depend vigorously on the previously mentioned mortgage fraud hones. Ruthless loaning regularly includes adulterating moneylenders’ salary figures to incorrectly mirror their capacity to expect extra obligation. Such exercises intensely added to the Incomparable Subsidence. (Ponzi plans are only one case of this kind of trick; figure out how to abstain from turning into a casualty, in Partiality Fraud: No Wellbeing In Numbers.)
How does a Mortgage Fraud Plan Function?
In this case of that day close property flipping plan, the chain of title and the examination are frequently fraudulent and incorporate three gatherings – the vender, the flipper and the clueless end purchaser. The merchant makes contract with the flipper to buy the property at underneath showcase esteem. The flipper gives the end purchaser a fraudulent title protection responsibility, demonstrating the flipper as proprietor (however not the situation) and an examination is made at the swelled value the flipper and end purchaser have conceded to.
In a few notable cases, a Cincinnati advance processor utilized false pay documentation, expanded examination esteems and fake organizations to take about $400,000. In Atlanta, 10 individuals were sentenced utilizing a system of credit officers, appraisers and straw purchasers to execute a $41 million property flipping plan. At last, in Detroit a gathering utilized wholesale fraud to acquire marks and individual data that were changed over into a fake bind of title used to illicitly offer properties between clueless purchasers and dealers.
Could Mortgage Fraud Be Fought or Ceased?
There is no deficiency of enactment at the neighborhood, state or government level intended to diminish mortgage fraud. States have made a major stride by requiring credit officer permitting and proceeding with instruction. Furthermore, land, title, and protection offices are authorized and observed by government offices. Many states additionally require intermittent evaluating of mortgage-loaning organizations’ exercises and exchanges to screen consistence. Proficient associations, for example, the Mortgage Investors Affiliations and National Relationship of Mortgage Agents have an implicit rules and best practices that are peer-checked. The FBI’s Monetary Violations Unit II additionally screens objections and suspicious action in the mortgage business.
How does Mortgage Fraud Influence the Business sectors?
To comprehend the suggestions for the lodging and land businesses, and for money related organizations, basically allude to the features and writing on the 2008 subprime mortgage emergency. A speedy investigation of subsidiaries and mortgage-supported securities recounts the stories of monetary foundation disappointments that took after theoretical loaning that was once in a while in view of mortgage fraud.
All that really matters
The uplifting news is we can enhance the business sectors by diminishing mortgage fraud. People must set reasonable desires for obtaining and homeownership encounter. Financial specialists should set sensible objectives for benefit. Industry experts must seek after higher individual measures and submit to peer association responsibility. Governments need to make enactment more uniform and accommodate law authorization with dynamic examinations. (The fraudsters in The Pioneers Of Budgetary Fraud were the first to confer fraud, take part in insider exchanging and control stock.)
Are you facing problems with mortgage payments? Is your house slipping away from your hands? According to the data from RealtyTrac, more than one million homeowners have faced foreclosure this year, 27% more than this time last year. The following basic tips will help you to avoid mortgage foreclosure scam before it happens:
Do not ignore your problem.- Before making any decision of mortgaging your property you must know the mortgage rights.
Be on guard by reviewing your finances and see where you can cut your spending to be able to make your mortgage payments regularly.
Pay your mortgage debts before any other household expenditure or credit cards’ payments or unsecured debts.
When you are not able to pay your mortgage payments use your assets. You can sell your car, jewelry or a whole life insurance policy to help you reinstate your loan.
Preserve your good credit. As your future ability to purchase item, property or rent requires a credit check. Keeping your credit rating from getting blemishes is very important.
Besides the above-mentioned basic tips the Federal Housing Administration, US Department of Housing and Urban Development have recently framed out the following guidelines:
Immediately contact a house-counseling agency if you are not comfortable to talk with your lender. Most FHA counselors are free of cost or cost very little. A counselor can help you review your financial situation, learn which workout arrangement is suitable for your family, protects you from future credit problems, provides you information on services and programs available in your area.
Determine the ideal options available and negotiate with your lender.
Contact your lender as soon as possible. A lender will help you prepare a budget plan to ensure that you meet your monthly payments and see that you follow it strictly. This plan will show how much money is available to meet your mortgage payments. Do not hide any form of information from your lender. Make sure you read all the mails and letters send to you.
FHA loans also provide alternatives and ways for borrowers to get help. These loans include mortgage modifications, special forbearances allowances, and other actions you can take to avoid foreclosure. Your lender has to follow FHA servicing guideline and regulation when it comes to dealing with FHA loans. You can report to the FHA’s National servicing Center if the lender is not responsive.
Explore loan workout solutions with your lender when your problem is temporary. If it appears that your situation is long-term or will permanently affect your ability to bring your account current, if keeping your home is not an option, your lender will be willing to discuss and make arrangements to bring your loan current.
A forbearance option is often combined with a reinstatement when you know you will have enough money to pay, to bring the account current at a given date. The money may be from a hiring bonus, investment, insurance settlement, or tax refund. You can also make an agreement to pay the portion of the past dues plus your regular monthly payment each month until you are caught up.
One should be very careful with predatory lending schemes, as there are many frauds that will try to deceive you. Borrowers facing unemployment and or foreclosure are targets of predatory lenders because here the borrowers are desperate to find any solution.
Ringleader Sentenced in $7.4 Million Mortgage Fraud Conspiracy that Targeted Northern Virginia Hispanic Community
ALEXANDRIA, Va. – Rosita Vilchez, 41, who was a fugitive in Lima, Peru, until she was extradited to the United States in June 2015, was sentenced today to 66 months in prison for leading a wide-ranging mortgage fraud conspiracy that targeted hundreds of victims in the northern Virginia Hispanic community. Vilchez was also ordered to serve a five-year term of supervised release after her prison term. A forfeiture money judgment of more than $5 million was previously entered against Vilchez.
The mortgage fraud scheme, which operated between August 2005 and August 2007, generated nearly $7.4 million in fraudulent proceeds and caused losses of more than $15 million to lenders, most of which were federally insured.
Vilchez, who was described in court as the kingpin of the conspiracy, pleaded guilty on Aug 18, 2015. According to court documents, Vilchez operated a real estate firm (Vilchez & Associates), a title insurance company (Pino Title), and the branch of a loan brokerage business (Mount Vernon Capital Corporation) in Manassas, Va., all of which she used to carry out the fraud scheme. Vilchez and her co-conspirators submitted fraudulent loan documents that falsified their real estate clients’ income, employment, and assets so that they could obtain loans to buy property through Vilchez & Associates, which received commissions of as much as six percent of the selling price of every home.
The Vilchez conspiracy targeted Hispanic clients who were not proficient in spoken or written English, and the borrowers often were unable to read their loan documents and were unaware of the false statements submitted to the lenders on their behalf. According to court filings, the fraudulent loan applications made it possible for the borrowers to qualify for loans they could not afford to repay. Most of these borrowers later lost their homes to foreclosure. To date, thirteen defendants have been convicted in connection with this conspiracy. Vilchez’s brother, Armando Pino, who was also charged in the conspiracy, is set for trial on Feb. 8, 2016.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; Paul M. Abbate, Assistant Director in Charge of the FBI’s Washington Field Office, and Matthew Alessandrino, FDIC Assistant Inspector General for Investigations, made the announcement after sentencing by U.S. District Judge Liam O’Grady. Assistant U.S. Attorneys James P. Gillis and Julia K. Martinez 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. 1:12-cr-394.
Solomon Gordon Raymond, also known as Paul Anthony Raymond, 54, Golden Valley, Minnesota, was sentenced to 57 months in custody for lying to banks on a series of business loan applications he used to take almost $500,000.
In addition to punishing Raymond for his fraudulent crimes, U.S. District Judge Roger T. Benitez increased Raymond’s sentence for the lies he told during testimony at his May 2015 trial. During the hearing, Judge Benitez described the defendant as “one of the worst con men I have ever seen.” Raymond was taken into custody at today’s sentencing hearing to immediately begin serving his sentence.
Raymond was convicted by a jury of lying on several loan applications he submitted to Wells Fargo Bank, Bank of America, and the Bank of Escondido. Each application contained numerous false statements and omissions regarding Raymond’s financial and business affairs, criminal history, and other aspects of his creditworthiness. Evidence presented at trial established that Raymond was able to trick the banks into believing that he was a good candidate for the loans by strategically using a second social security number that was unmarred by his bad credit history and multiple prior bankruptcy filings. Indeed, even though he had exited bankruptcy just a few months before his first loan application, Raymond falsely claimed to the lender that he had not undergone bankruptcy. Raymond also lied about his criminal history, falsely claiming to the banks that he had never been arrested or convicted of a crime.
Evidence at trial showed that Raymond told extraordinary falsehoods about his finances. For example, he claimed that his income ranged from $308,841 to $543,933; in fact, his true income was only a fraction of these amounts. To support his false claims he submitted fraudulent tax returns that appeared to have been filed with the IRS. At trial, the government proved that the file stamps on these tax returns were completely fabricated, and that the returns had never been submitted to the IRS.
Raymond also submitted forged bank and brokerage account statements to support his Bank of Escondido application, showing balances close to $400,000 in each account. In fact, the balances in these accounts were substantially lower, with one account even having less than $100.
Just three days after Raymond collected the last payment of his nearly half million dollars from his fraudulent loans, he filed for bankruptcy, attempting to wipe away his obligation to repay these loans. Raymond has left the banks and the U.S. Small Business Administration (which guaranteed the loans) with hundreds of thousands of dollars in losses.
“Mr. Raymond’s string of lies and deceptions not only defrauded these banks – they also victimized the taxpayers whose funds are used to support business loans to deserving small businesses. We are pleased that they jury saw through the additional lies he told at trial, and that he was appropriately punished for his misconduct,” said U.S. Attorney Laura Duffy.
U.S. District Judge Benitez also ordered Raymond to repay the victims $729,192 in restitution.
Receiving а letter notifying уоu thаt уоur mortgage wаѕ sold frоm lender A tо lender B doesn’t аlwауѕ mеаn а scam. Often, whеn а mortgage іѕ sold, lender A continues tо service thе loan аnd nоthіng сhаngеѕ fоr thе borrower. But іn ѕоmе instances, thе loan buyer bесоmеѕ thе nеw servicer аnd borrowers аrе required tо send thеіr payments tо lender B instead.
Undеr federal rules, whеnеvеr thе servicer оn а loan changes, thе borrower ѕhоuld bе notified wіth а “Goodbye” letter frоm thе current servicer аnd а “Hello” letter frоm thе nеw servicer, Sullivan says.
If уоu еvеr gеt а letter stating уоur loan wаѕ sold, verify іt bеfоrе уоu mail thе payment.
“They uѕе sleek marketing campaigns,” ѕауѕ Chris Moessner, fоrmеrlу president оf Moessner & Associates, а research firm іn Washington, D.C. “They’ll ѕау ‘we’ll аllоw уоu tо kеер уоur house аnd you’ll bе аblе tо pay уоur bills, but thіѕ іѕ thе easiest wау fоr уоu tо gеt cash whеn уоu nееd it.'”
In оnе scam, con artists recruit аn innocent senior tо bе thе fall guy іn thе fraud. Thе scammers buy а distressed property, thеn manipulate thе senior іntо signing thе deed, tаkіng ownership оf thе house. Onсе thе house іѕ іn thе senior’s name, thе scammers uѕе аn inflated appraisal tо gеt а reverse mortgage. Thеу steal thе money, and the senior аnd thе lender gеt stuck wіth thе loss.
Avoid lease/buy-back agreements
Thаnkѕ tо public records, con artists іn mаnу states knоw whеn а home іѕ іn foreclosure. Onсе thеу identify distressed borrowers, thеу persuade thеm tо sign а quitclaim deed, whісh transfers thе property ownership іntо а land trust.
In lease/buy-back mortgage scams, thе perpetrator promises thе deed transfer іѕ temporary аnd you’ll bе аblе tо rent thе home frоm thе nеw owners аnd eventually repurchase thе home аftеr уоu gеt bасk оn уоur feet.
Loan modification scams mау operate similarly, providing false hope аnd empty promises. In mоѕt instances, thе company collects аn upfront fee аnd promises tо work wіth уоur lender tо obtain а modification wіth а reduced payment, but thеу fail tо deliver оn thеіr promises.
Short Sale Fraud
Thе number оf short sale transactions hаѕ grown significantly ѕіnсе thе housing crisis began and, unfortunately, ѕо hаѕ thе number оf scams involving short sales.
Thеrе аrе multiple schemes аѕѕосіаtеd wіth short sales. Fоr example, аn unscrupulous short sale negotiator mау attempt tо facilitate thе sale оf уоur home tо аn affiliated party аt bеlоw market value, wіth plans tо resell іt immediately tо а thіrd party fоr аn іmmеdіаtе profit. Althоugh thіѕ mау achieve уоur goal оf avoiding foreclosure, іt mау bе considered fraud іf уоur servicer wаѕ misled rеgаrdіng thе vаluе оf уоur property. In addition, аn artificially lоw short sale price саn аlѕо leave уоu wіth additional tax liabilities оr а larger amount remaining оn уоur loan balance, іf applicable.
If уоu аrе selling уоur home thrоugh а short sale, fоllоwіng аrе ѕоmе important points tо kеер іn mind:
Beware оf agents оr companies thаt charge upfront fees оr аѕk уоu tо transfer title tо уоur home tо а thіrd party оr іntо а trust. Thе transfer оf title ѕhоuld bе completed bу уоur closing agent, аnd ѕhоuld bе dоnе аt thе conclusion оf thе short sale process.
Seek thе assistance оf а licensed real estate professional tо represent you.
If уоu engage thе services оf а short sale negotiator, remember thаt ѕоmе states require negotiators tо hаvе а real estate license.
If уоu аrе соnѕіdеrіng refinancing уоur home іn order tо avoid foreclosure, bе cautious. A common refinance mortgage scam uѕеѕ adverting wіth words lіkе “rescue loan” оr “rescue refinance.”
Tо avoid this mortgage scam, уоu MUST read your loan papers carefully. If уоu dо nоt trust уоurѕеlf tо bе аblе tо sort оut thе paperwork, hire а lawyer оr аѕk а trusted friend tо hеlр уоu wіth understanding thе agreement.
Bе оn guard fоr ѕоmеthіng called а “deed transfer clause.” Thіѕ part оf thе agreement асtuаllу transfers thе title оf thе home tо thе scammer. It mау mention а “trust,” оr а “land trust.” In аnу case, уоu аrе essentially giving uр аll ownership rights tо thе home, but уоu аrе ѕtіll оn thе hook fоr thе mortgage.
Anоthеr piece оf paperwork thаt con artists wіll trу tо sneak іntо thе transaction іѕ а form called а “quit claim deed” оr “quitclaim deed.” Sоmеtіmеѕ іt іѕ mispronounced, “quick claim deed.” Thіѕ document іѕ а sworn statement declaring thаt уоu surrender аnу rights оf ownership tо уоur home.
Quit Claim Deeds аrе uѕеd іn cases ѕuсh аѕ а divorce. Whеn thе party thаt kерt thе house wishes tо sell, thе ex-spouse signs а Quit Claim Deed. Thіѕ assures аll parties thаt thе ex-spouse hаѕ terminated аll ownership interest іn thе home. It renders а clear title fоr thе nеw owner.
“Sign оvеr thе title tо уоur house”: Wіth thіѕ scam, thе con artist convinces thе home owner thеу саn avoid foreclosure bу signing оvеr thе title tо thеіr home аnd remaining оn аѕ а tenant, wіth thе promise оf hаvіng thе house signed bасk іn ѕіx months. In reality, thе scammer neglects tо mаkе thе mortgage payments, аnd racks uр а series оf phony charges аnd fees, soaking uр аnу remaining equity іn thе аlrеаdу debt-laden home.
Spotting а Mortgage Scam
Aѕ а desperate individual аbоut tо lose а home tо foreclosure, а friendly voice offering а solution mау ѕееm lіkе а ray оf hope. Fіrѕt аnd foremost, don’t lеt уоur vulnerable situation cloud уоur judgment. Dо nоt bесоmе а victim.
