The Home Owners and Equity Protection Act regulation that goes onto effect this Thursday (October 1) "would prevent lenders from making higher-priced FHA loans," NAR says in a letter to the Fed.
Now the National Association of Realtors is urging the Federal Reserve Board to delay implementation of a HOEPA provision that could place higher-priced Federal Housing Administration loans in violation of new restrictions on prepayment penalties.
The American Bankers Association, Mortgage Bankers Association and Consumer Mortgage Coalition have asked the Fed to drop its treatment of post-payoff interest as a prepayment penalty.
"We are requesting this delay to give the Board, the Federal Housing Administration and Ginnie Mae an opportunity to correct the unintended consequences of the intersection" between the new HOEPA rule and Ginnie Mae's payoff requirements, NAR president Charles McMillan said.
Ginnie Mae requires that all interest on a mortgage must be paid for the full month. If an FHA loan is prepaid on October 9, for instance, the borrower has to pay interest for the rest of the month. The Fed views this extra interest as a prepayment penalty.
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Tuesday, September 29, 2009
Saturday, September 26, 2009
Mortgage Loan Compliance | Foreclosure Rescue Fraud
According to Rod J. Rosenstein, U.S. Attorney for the District of Maryland, Michael K. Lewis aired TV ads claiming he could help homeowners facing foreclosure improve their credit, save their homes from foreclosure and assist them with bankruptcy.
U.S. District Judge Deborah K. Chasanow in Maryland sentenced the two final conspirators of the fraud scheme led by Michael K. Lewis that targeted financially vulnerable homeowners facing foreclosure through local television ads.
Winston Thomas of New Carrollton, Md., was sentenced to 37 months in prison, followed by three years of supervised release.
Cheryl Brooke of Upper Marlboro, Md., was sentenced to 46 months in prison, followed by three years of supervised release.
Lewis along with Thomas, a loan officer, told the homeowners that the credit of Michael's brother Earnest Lewis would be used to refinance their homes if they temporarily signed their homes over to Earnest. They could remain in their homes by paying inflated "rent" and fees, which were directly debited from their bank accounts to an account Cheryl Brooke controlled.
The Lewis brothers and Thomas lied about the amount of money that the homeowners would receive at settlement, what would be done with any equity in the homes and the need to file for bankruptcy protection and failed to inform the homeowners of the particulars of how the lease/buyback program worked, it is alleged.
Thomas also allegedly submitted false financial and employment information to mortgage lenders. After financing was obtained, Brooke filed motions to dismiss the homeowners' bankruptcy cases so that the settlements could take place.
Michael K. Lewis and Earnest Lewis were previously sentenced to 78 months and 54 months in prison, respectively.
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U.S. District Judge Deborah K. Chasanow in Maryland sentenced the two final conspirators of the fraud scheme led by Michael K. Lewis that targeted financially vulnerable homeowners facing foreclosure through local television ads.
Winston Thomas of New Carrollton, Md., was sentenced to 37 months in prison, followed by three years of supervised release.
Cheryl Brooke of Upper Marlboro, Md., was sentenced to 46 months in prison, followed by three years of supervised release.
Lewis along with Thomas, a loan officer, told the homeowners that the credit of Michael's brother Earnest Lewis would be used to refinance their homes if they temporarily signed their homes over to Earnest. They could remain in their homes by paying inflated "rent" and fees, which were directly debited from their bank accounts to an account Cheryl Brooke controlled.
The Lewis brothers and Thomas lied about the amount of money that the homeowners would receive at settlement, what would be done with any equity in the homes and the need to file for bankruptcy protection and failed to inform the homeowners of the particulars of how the lease/buyback program worked, it is alleged.
Thomas also allegedly submitted false financial and employment information to mortgage lenders. After financing was obtained, Brooke filed motions to dismiss the homeowners' bankruptcy cases so that the settlements could take place.
Michael K. Lewis and Earnest Lewis were previously sentenced to 78 months and 54 months in prison, respectively.
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Friday, September 25, 2009
Mortgage Loan Compliance | Loan Modification Ratings
"Homeowners are not receiving responses from banks as fast as they would like," said Treasury Assistant Secretary Herbert Allison. "To provide additional impetus for them to improve their service quality," Mr. Allison said Treasury would publish reports soon on the service quality of each bank.
Meanwhile, Treasury and the servicers are working on streamlining the documentation that homeowners have to provide servicers to qualify for a modification.
Mr. Allison noted that Treasury and other administration officials would be meeting the servicers in early October to discuss documentation and other efforts to improve the Home Affordable Modification Program.
The Treasury official also told the Senate Banking Committee that the first public-private investment partnership transaction would close at the end of this month. Mr. Allison did not provide any specifics, except to say that it involves that sale of non-agency residential and commercial MBS.
Mortgage servicers participating in the Obama Administration's loan modification program will soon be ranked on their response times and other indicators of service quality. Allison told a Senate panel that servicers have placed homeowners into nearly 400,000 trial modifications. However, Treasury, like members of Congress, continues to receive complaints about servicers.
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Meanwhile, Treasury and the servicers are working on streamlining the documentation that homeowners have to provide servicers to qualify for a modification.
Mr. Allison noted that Treasury and other administration officials would be meeting the servicers in early October to discuss documentation and other efforts to improve the Home Affordable Modification Program.
The Treasury official also told the Senate Banking Committee that the first public-private investment partnership transaction would close at the end of this month. Mr. Allison did not provide any specifics, except to say that it involves that sale of non-agency residential and commercial MBS.
Mortgage servicers participating in the Obama Administration's loan modification program will soon be ranked on their response times and other indicators of service quality. Allison told a Senate panel that servicers have placed homeowners into nearly 400,000 trial modifications. However, Treasury, like members of Congress, continues to receive complaints about servicers.
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Thursday, September 24, 2009
Mortgage Loan Compliance | Nationwide HELOC Scam
Yomi Jagunna, a New Jersey man responsible for digging up Social Security numbers and other personal data that was used to siphon millions of dollars from phony HELOC accounts at dozens of banks and credit unions has been sentenced to almost 11 years in prison.
Among the financial institutions harmed were Bank of America, JPMorgan Chase, Wachovia - now part of Wells Fargo, Navy Federal Credit Union in Virginia, and others.
Part of the scam involved using sophisticated dodges to circumvent the institutions' attempts to verify the wire transfers with telephone calls. In some cases, they convinced phone company employees to reroute their victims' calls. When the credit union or bank called the victim's home number, one of the suspects' cell phones rang, authorities said.
Jagunna, a Nigerian immigrant, is one of 17 individuals charged in the nationwide HELOC scheme that fooled credit union and bank employees into transferring funds to accounts in at least seven countries, authorities said. Jagunna pleaded guilty to selling Social Security numbers for $30 apiece to a group that may have siphoned as much as $5 million from financial institutions.
Jagunna, who set up the sham collection agency to gain access to Social Security numbers, was also ordered to pay $3.2 million in restitution.
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Among the financial institutions harmed were Bank of America, JPMorgan Chase, Wachovia - now part of Wells Fargo, Navy Federal Credit Union in Virginia, and others.
Part of the scam involved using sophisticated dodges to circumvent the institutions' attempts to verify the wire transfers with telephone calls. In some cases, they convinced phone company employees to reroute their victims' calls. When the credit union or bank called the victim's home number, one of the suspects' cell phones rang, authorities said.
Jagunna, a Nigerian immigrant, is one of 17 individuals charged in the nationwide HELOC scheme that fooled credit union and bank employees into transferring funds to accounts in at least seven countries, authorities said. Jagunna pleaded guilty to selling Social Security numbers for $30 apiece to a group that may have siphoned as much as $5 million from financial institutions.
Jagunna, who set up the sham collection agency to gain access to Social Security numbers, was also ordered to pay $3.2 million in restitution.
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Wednesday, September 23, 2009
Mortgage Loan Compliance | Prime, Subprime, Non-Prime
The definitions of “sub-prime” continue to vary from one source to the next, or, in some cases, from one state to the next. A bill that takes effect Oct. 1, 2009 in Connecticut defines a “nonprime home loan” as any loan or extended line of credit for the primary use personal family or household purposes.
The principal amount of the loan cannot exceed $417,000 for loans originated after July 1, 2008 and before July 1, 2009.
The delinquency rates for prime and subprime mortgages increased nearly every month since March of 2009, according to Equifax’s consumer credit trends for August 2009, at least when the borrowers of those loan products are classified as sub-prime borrowers. The definition of prime and sub-prime mortgages for this data set refers to the credit score of the borrower, not the type of loan originated. Borrowers with an Equifax credit score below 620 are considered sub-prime. Those above 620 are considered prime.
In August, 30-day plus unit delinquencies for prime mortgages jumped to 6.51% from 5.89% in March, and the 30-day plus unit delinquencies of sub-prime mortgages increased to 36.35% in August from 33.61% in March, according to the report. The dollar rates for prime 30-plus day delinquencies bumped to 7.58%, up from 6.98% in March, and the dollar rates for sub-prime 30-plus day delinquencies rose to 36.35% from 33.61% in March. Growing balances on existing accounts or new account origination offsets increasing delinquent balances, according to the report.
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The principal amount of the loan cannot exceed $417,000 for loans originated after July 1, 2008 and before July 1, 2009.
The delinquency rates for prime and subprime mortgages increased nearly every month since March of 2009, according to Equifax’s consumer credit trends for August 2009, at least when the borrowers of those loan products are classified as sub-prime borrowers. The definition of prime and sub-prime mortgages for this data set refers to the credit score of the borrower, not the type of loan originated. Borrowers with an Equifax credit score below 620 are considered sub-prime. Those above 620 are considered prime.
In August, 30-day plus unit delinquencies for prime mortgages jumped to 6.51% from 5.89% in March, and the 30-day plus unit delinquencies of sub-prime mortgages increased to 36.35% in August from 33.61% in March, according to the report. The dollar rates for prime 30-plus day delinquencies bumped to 7.58%, up from 6.98% in March, and the dollar rates for sub-prime 30-plus day delinquencies rose to 36.35% from 33.61% in March. Growing balances on existing accounts or new account origination offsets increasing delinquent balances, according to the report.
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Mortgage Loan Compliance | Mortgage Fraud and Stolen Identity
According to Michael J. Garcia, U.S. Attorney for the Southern District of New York, Mr. Bernard B. Kerik, former New York City police commissioner and commissioner of the New York City Department of Corrections, allegedly borrowed part of his down-payment from a Manhattan Realtor, but falsely denied that he had done so to the bank that extended him the mortgage loan for his purchase of a apartment.
Kerik has been charged with making false statements on a loan application in connection with purchase of the apartment in Riverdale, N.Y.
In St Louis a man has been sentenced for filing for Chapter 13 bankruptcy using a false Social Security number. According to Michael W. Reap, U.S. attorney for the Eastern District of Missouri, between August and October 2005, Shawn Cannon, knowing he would be unable to qualify for a loan to purchase a home using his true identity, used fraudulent information, including a false Social Security number and false payroll information, to obtain a loan from Pulaski Bank to purchase a personal residence in Florissant, Missouri, for approximately $300,000.
Cannon failed to make required payments. In December 2008, Cannon filed a Chapter 13 bankruptcy petition in U.S. Bankruptcy Court, again using the false Social Security number.
After pleading guilty in June to charges connected to a scheme to use a stolen identity to buy a home, Cannon was sentenced to 60 months in prison.
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Kerik has been charged with making false statements on a loan application in connection with purchase of the apartment in Riverdale, N.Y.
In St Louis a man has been sentenced for filing for Chapter 13 bankruptcy using a false Social Security number. According to Michael W. Reap, U.S. attorney for the Eastern District of Missouri, between August and October 2005, Shawn Cannon, knowing he would be unable to qualify for a loan to purchase a home using his true identity, used fraudulent information, including a false Social Security number and false payroll information, to obtain a loan from Pulaski Bank to purchase a personal residence in Florissant, Missouri, for approximately $300,000.
Cannon failed to make required payments. In December 2008, Cannon filed a Chapter 13 bankruptcy petition in U.S. Bankruptcy Court, again using the false Social Security number.
After pleading guilty in June to charges connected to a scheme to use a stolen identity to buy a home, Cannon was sentenced to 60 months in prison.
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Tuesday, September 22, 2009
Mortgage Loan Compliance | Loan Modification Firms Sued by FTC
As loan modifications become more difficult to obtain some firms are turning to the dark side to get your money. Last week the Federal Trade Commission filed complaints against two loan modification companies for allegedly making false claims that they could obtain a mortgage modification in virtually all cases.
One complaint, filed in the U.S. District Court for the Central District of California's Southern Division, charges Infinity Group Services and its president, Kahram Zamani, with violating the FTC Act by falsely representing that they would obtain a loan modification in all instances and would allegedly obtain loan refinancing for an up-front fee.
The other complaint, filed in the U.S. District Court for the District of Columbia, charges Nations Housing Modification Center and its principals, Michael A. Trap, Glenn S. Rosofsky, and Bryan P. Rosenberg, with violating the FTC Act and the FTC's Telemarketing Sales Rule by allegedly misrepresenting themselves as a government agency and falsely claiming to obtain mortgage modifications for consumers. The FTC alleges that very few homeowners got modifications and the defendants accepted advance fees for their services.
The Federal Trade Commission alleges that Infinity Group Services often failed to obtain loan modifications and either failed to answer or return consumers' telephone calls or update them about their status.
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One complaint, filed in the U.S. District Court for the Central District of California's Southern Division, charges Infinity Group Services and its president, Kahram Zamani, with violating the FTC Act by falsely representing that they would obtain a loan modification in all instances and would allegedly obtain loan refinancing for an up-front fee.
The other complaint, filed in the U.S. District Court for the District of Columbia, charges Nations Housing Modification Center and its principals, Michael A. Trap, Glenn S. Rosofsky, and Bryan P. Rosenberg, with violating the FTC Act and the FTC's Telemarketing Sales Rule by allegedly misrepresenting themselves as a government agency and falsely claiming to obtain mortgage modifications for consumers. The FTC alleges that very few homeowners got modifications and the defendants accepted advance fees for their services.
The Federal Trade Commission alleges that Infinity Group Services often failed to obtain loan modifications and either failed to answer or return consumers' telephone calls or update them about their status.
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Tuesday, September 15, 2009
Mortgage Loan Compliance | New Consumer Protection Agency Bill
Many financial services groups and the U.S. Chamber of Commerce have lined up against the creation of a new agency that would write and enforce the rules for mortgage and other forms of consumer lending. But House Financial Services Committee Chairman Barney Frank, D-Mass., is trying to get small depositories on his side as his committee prepares to mark up a Consumer Financial Protection Agency bill on Sept. 23.
Frank said he is working with small banks and credit unions to craft a bill that will create a new consumer protection agency. "We are working with them on legitimate concerns and I am confident we will get a tough enforcement agency to protect consumers," Rep. Frank said in an interview with Bloomberg News.
"The better answer to consumer protection is to amend the charters of the existing prudential regulators, giving consumer protection parity with safety and soundness regulation," Roundtable president and chief executive Steve Bartlett said.
The Financial Services Roundtable opposes the idea of stripping the federal bank regulators of their consumer protection functions and giving the CFPA enforcement and rulemaking authority over national banks.
The Independent Community Bankers of America has been talking with Rep. Frank. "We have offered our ideas. We will have to see how far he goes," said ICBA's top lobbyist Steve Verdier.
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Frank said he is working with small banks and credit unions to craft a bill that will create a new consumer protection agency. "We are working with them on legitimate concerns and I am confident we will get a tough enforcement agency to protect consumers," Rep. Frank said in an interview with Bloomberg News.
"The better answer to consumer protection is to amend the charters of the existing prudential regulators, giving consumer protection parity with safety and soundness regulation," Roundtable president and chief executive Steve Bartlett said.
The Financial Services Roundtable opposes the idea of stripping the federal bank regulators of their consumer protection functions and giving the CFPA enforcement and rulemaking authority over national banks.
The Independent Community Bankers of America has been talking with Rep. Frank. "We have offered our ideas. We will have to see how far he goes," said ICBA's top lobbyist Steve Verdier.
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Mortgage Loan Compliance | Foreclosure Specialist Gets 30 Years Fixed
According to John E. Murphy, acting U.S. Attorney for the Western District of Texas, Rosario Divins was convicted in June of seven counts each of criminal contempt and mail fraud. The jury found that since January 2000, Divins engaged in a fraudulent foreclosure prevention scheme.
Divins continued to implement her scheme despite three separate sanctions from the U.S. Bankruptcy Court for the Western District of Texas ordering her to stop misrepresenting herself and making false promises to her clients.
In addition to the prison term, U.S. District Judge Fred Biery ordered that Divins pay $83,600 restitution to her victims.
Rosario Divins, a self-proclaimed foreclosure prevention specialist from San Antonio, was sentenced to 350 months in federal prison, followed by three years of supervised release, for criminal contempt and mail fraud.
Testimony during the three-day trial revealed that Divins collected more than $80,000 in cash from individuals in desperate financial situations who responded to her mail-out offering to stop their residential foreclosures.
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Divins continued to implement her scheme despite three separate sanctions from the U.S. Bankruptcy Court for the Western District of Texas ordering her to stop misrepresenting herself and making false promises to her clients.
In addition to the prison term, U.S. District Judge Fred Biery ordered that Divins pay $83,600 restitution to her victims.
Rosario Divins, a self-proclaimed foreclosure prevention specialist from San Antonio, was sentenced to 350 months in federal prison, followed by three years of supervised release, for criminal contempt and mail fraud.
Testimony during the three-day trial revealed that Divins collected more than $80,000 in cash from individuals in desperate financial situations who responded to her mail-out offering to stop their residential foreclosures.
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Monday, September 14, 2009
Mortgage Loan Compliance | 103 and Counting
As of September 11th this year's running tally of failed banks now stands at 103, including banks and credit unions that have been closed, acquired or placed into conservatorship.
Corus Bank, a $7 billion Chicago-based institution, was one of three banks closed by federal regulators on Sept. 11. Venture Bank of Lacy, WA. and Brickwell Community Bank of Woodbury, MN. were also closed and acquired by other institutions.
In June 2009, Corus Bank had total assets of $7 billion and total deposits of approximately $7 billion. MB Financial Bank will pay the FDIC a premium of 0.2 percent to assume all of the deposits of Corus Bank.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $1.7 billion.
Corus Bank, National Association, Chicago, Illinois, was closed by the Office of the Comptroller of the Currency, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. The FDIC entered into a purchase and assumption agreement with MB Financial Bank, N.A. to assume all of the deposits of Corus Bank, N.A.
Depositors of Corus Bank will automatically become depositors of MB Financial Bank.
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Corus Bank, a $7 billion Chicago-based institution, was one of three banks closed by federal regulators on Sept. 11. Venture Bank of Lacy, WA. and Brickwell Community Bank of Woodbury, MN. were also closed and acquired by other institutions.
In June 2009, Corus Bank had total assets of $7 billion and total deposits of approximately $7 billion. MB Financial Bank will pay the FDIC a premium of 0.2 percent to assume all of the deposits of Corus Bank.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $1.7 billion.
Corus Bank, National Association, Chicago, Illinois, was closed by the Office of the Comptroller of the Currency, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. The FDIC entered into a purchase and assumption agreement with MB Financial Bank, N.A. to assume all of the deposits of Corus Bank, N.A.
Depositors of Corus Bank will automatically become depositors of MB Financial Bank.
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Mortgage Loan Compliance | Commercial Delinquencies Still Rising
Between the first and second quarters, the 30-plus day delinquency rate on loans held in commercial mortgage-backed securities rose 2.04 percentage points to 3.89%.
Delinquency rates are continuing to increase for all commercial/multifamily mortgage investor groups, according to the most recent Commercial/Multifamily Delinquency Report from the Mortgage Bankers Association.
The 60-plus day delinquency rate on loans held in life company portfolios rose 0.03 percentage points to 0.15%. The 60-plus day delinquency rate on multifamily loans held or insured by Fannie Mae rose 0.17 percentage points to 0.51%.
“The economic recession drove the latest surge in commercial and multifamily delinquency rates during the second quarter,” said Jamie Woodwell, Mortgage Bankers Association's vice president of commercial real estate research.
The 90-plus day delinquency rate on multifamily loans held or insured by Freddie Mac rose 0.02 percentage points to 0.11%. The 90-plus day delinquency rate on loans held by FDIC-insured banks and thrifts rose 0.64 percentage points to 2.92%.
"Lower levels of employment, the pullback by consumers and other aspects of the slowdown translated into a difficult operating environment for many income-producing properties. That in turn has led to increased stress on the loans those properties support," Mr. Woodwell added.
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Delinquency rates are continuing to increase for all commercial/multifamily mortgage investor groups, according to the most recent Commercial/Multifamily Delinquency Report from the Mortgage Bankers Association.
The 60-plus day delinquency rate on loans held in life company portfolios rose 0.03 percentage points to 0.15%. The 60-plus day delinquency rate on multifamily loans held or insured by Fannie Mae rose 0.17 percentage points to 0.51%.
“The economic recession drove the latest surge in commercial and multifamily delinquency rates during the second quarter,” said Jamie Woodwell, Mortgage Bankers Association's vice president of commercial real estate research.
The 90-plus day delinquency rate on multifamily loans held or insured by Freddie Mac rose 0.02 percentage points to 0.11%. The 90-plus day delinquency rate on loans held by FDIC-insured banks and thrifts rose 0.64 percentage points to 2.92%.
"Lower levels of employment, the pullback by consumers and other aspects of the slowdown translated into a difficult operating environment for many income-producing properties. That in turn has led to increased stress on the loans those properties support," Mr. Woodwell added.
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Saturday, September 12, 2009
Mortgage Loan Compliance | FDIC and the Little Guy
The Federal Deposit Insurance Corp. provides loss-sharing protection to banks and other acquirers of failed depositories so they will acquire and manage troubled assets. These acquirers also agree to follow a FDIC loan modification program for struggling borrowers.
Now the FDIC wants homeowners who lose their job to get immediate relief. "This is simply good business since foreclosure rarely benefits lenders and would cost the FDIC more money, not less," said FDIC Chairman Sheila Bair.
"With more Americans suffering through unemployment or cuts in the paychecks, we believe it is crucial to offer a helping hand to avoid unnecessary and costly foreclosures," Bair said.
FDIC is "encouraging" its loss-sharing partners to temporarily reduce mortgage payments for at least six months when borrowers lose their jobs.
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Now the FDIC wants homeowners who lose their job to get immediate relief. "This is simply good business since foreclosure rarely benefits lenders and would cost the FDIC more money, not less," said FDIC Chairman Sheila Bair.
"With more Americans suffering through unemployment or cuts in the paychecks, we believe it is crucial to offer a helping hand to avoid unnecessary and costly foreclosures," Bair said.
FDIC is "encouraging" its loss-sharing partners to temporarily reduce mortgage payments for at least six months when borrowers lose their jobs.
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Friday, September 11, 2009
Mortgage Loan Compliance | Investor Fraud
According to John J. Tuchi, interim U.S. attorney for the District of Arizona, participants in a real estate scheme recruited unqualified straw borrowers, submitted fraudulent loan applications on their behalf, obtained mortgage loans in excess of the selling price and then took the excess amount of the loans out through escrow.
Mario Bernadel, a real estate investor from Phoenix, has been convicted of running a mortgage fraud scheme involving at least 32 residential properties in the greater Phoenix area. Bernadel is the 20th defendant to date who has been convicted. U.S. District Judge Stephen M. McNamee set sentencing for late November.
Bernadel recruited and trained mortgage brokers, straw buyers and an escrow officer in the scheme and, following the funding of the loans, received cash back. Seven other co-conspirators were also charged and have pleaded guilty and await sentencing.
The homes purchased through the scheme have been foreclosed or sold at a loss. The scheme resulted in $20 million in loans obtained by fraud and a loss of more than $2 million.
Bernadel's conviction is part of "Operation Cash Back," in which 40 defendants were indicted and arrested.
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Mario Bernadel, a real estate investor from Phoenix, has been convicted of running a mortgage fraud scheme involving at least 32 residential properties in the greater Phoenix area. Bernadel is the 20th defendant to date who has been convicted. U.S. District Judge Stephen M. McNamee set sentencing for late November.
Bernadel recruited and trained mortgage brokers, straw buyers and an escrow officer in the scheme and, following the funding of the loans, received cash back. Seven other co-conspirators were also charged and have pleaded guilty and await sentencing.
The homes purchased through the scheme have been foreclosed or sold at a loss. The scheme resulted in $20 million in loans obtained by fraud and a loss of more than $2 million.
Bernadel's conviction is part of "Operation Cash Back," in which 40 defendants were indicted and arrested.
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Mortgage Loan Compliance | Former Bank CEO Found Dead
Finn Casperson, former Chief Executive Officer of Beneficial Finance, has been found dead in what authorities say is an apparent suicide.
Beneficial Finance was once one of the largest players in consumer home equity-based lending. When Finn Casperson became CEO of the firm he succeeded his father.
Casperson served as CEO from 1976 to 1998, during a time when the firm specialized in low loan-to-value ratio second liens backed by homes.
Later in 1998 Beneficial was sold to Household International for $9 billion. HSBC Holdings eventually bought Household for $14 billion. The British bank later booked huge losses on Household's subprime business.
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Beneficial Finance was once one of the largest players in consumer home equity-based lending. When Finn Casperson became CEO of the firm he succeeded his father.
Casperson served as CEO from 1976 to 1998, during a time when the firm specialized in low loan-to-value ratio second liens backed by homes.
Later in 1998 Beneficial was sold to Household International for $9 billion. HSBC Holdings eventually bought Household for $14 billion. The British bank later booked huge losses on Household's subprime business.
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Thursday, September 10, 2009
Mortgage Loan Compliance | Cram-Downs, Modifications, and Short Sales
House Financial Services Committee chairman Barney Frank, D-Mass., is threatening to attach a bankruptcy cram-down provision to a regulatory reform bill if servicers don't speed up the loan modification process.
Rep. Frank said he is "disappointed" in the servicers' efforts to implement the Obama administration's Home Affordable Modification Program. But he noted there are legal obstacles such as second mortgage and servicing agreements that made modification decisions difficult.
The 45 Home Affordable Modification Program servicers are now on track to meet the Obama administration's initial goal of starting 500,000 trial modifications by Nov. 1, according to Treasury Assistant Secretary Michael Barr. Servicers participating in the administration's Home Affordable Modification Program had over 360,000 homeowners in 90-day trial modifications as of the end of August up from 235,000 in July, according to the latest Treasury report.
While performance of individual servicers has been "uneven," Mr. Barr told a congressional panel, "we think all the servicers can do more than they are doing now and we would like to continue to work with them for better results."
If the frustration over voluntary modifications continues to build, Mr. Frank said, it will make it easier to pass a provision that allows bankruptcy judges to modify mortgages on a primary residence. "The best lobbyists we have for getting bankruptcy legislation passed are the servicers that are not doing a very good job of modifying mortgages. If they do not improve their performance then they improve the chances of the legislation," Chairman Frank said. Previously Frank has warned that a lack of progress on modifications could lead to more cram-down related legislation efforts.
Meanwhile the major mortgage servicers are preparing for the Treasury Department to roll out a short sale program and they are signing up vendors that specialize in handling these difficult real estate transactions that help troubled homeowners avoid foreclosure. Loan Resolution Corp. chief operating officer Travis Olsen said one of the top 10 servicers has hired his firm to manage the short sale process. "We will take their borrowers who have been denied a home retention plan and hand-hold them during the rest of the process," he said.
Treasury is expected to provide incentives for servicers to conduct short sales and share some of the costs of paying off second lien holders. "The final details of the short sale program are being finalized, and will be announced as soon as completed," HUD assistant secretary David Stevens told a congressional panel.
In a short sale, the lender agrees to accept a loss on the sale of the property and forgive the remaining balance on the mortgage. If a modification or short sale doesn't work, the next stop is foreclosure.
_________________
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Rep. Frank said he is "disappointed" in the servicers' efforts to implement the Obama administration's Home Affordable Modification Program. But he noted there are legal obstacles such as second mortgage and servicing agreements that made modification decisions difficult.
The 45 Home Affordable Modification Program servicers are now on track to meet the Obama administration's initial goal of starting 500,000 trial modifications by Nov. 1, according to Treasury Assistant Secretary Michael Barr. Servicers participating in the administration's Home Affordable Modification Program had over 360,000 homeowners in 90-day trial modifications as of the end of August up from 235,000 in July, according to the latest Treasury report.
While performance of individual servicers has been "uneven," Mr. Barr told a congressional panel, "we think all the servicers can do more than they are doing now and we would like to continue to work with them for better results."
If the frustration over voluntary modifications continues to build, Mr. Frank said, it will make it easier to pass a provision that allows bankruptcy judges to modify mortgages on a primary residence. "The best lobbyists we have for getting bankruptcy legislation passed are the servicers that are not doing a very good job of modifying mortgages. If they do not improve their performance then they improve the chances of the legislation," Chairman Frank said. Previously Frank has warned that a lack of progress on modifications could lead to more cram-down related legislation efforts.
Meanwhile the major mortgage servicers are preparing for the Treasury Department to roll out a short sale program and they are signing up vendors that specialize in handling these difficult real estate transactions that help troubled homeowners avoid foreclosure. Loan Resolution Corp. chief operating officer Travis Olsen said one of the top 10 servicers has hired his firm to manage the short sale process. "We will take their borrowers who have been denied a home retention plan and hand-hold them during the rest of the process," he said.
Treasury is expected to provide incentives for servicers to conduct short sales and share some of the costs of paying off second lien holders. "The final details of the short sale program are being finalized, and will be announced as soon as completed," HUD assistant secretary David Stevens told a congressional panel.
In a short sale, the lender agrees to accept a loss on the sale of the property and forgive the remaining balance on the mortgage. If a modification or short sale doesn't work, the next stop is foreclosure.
_________________
Mortgage Loan Compliance®
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Mortgage Loan Compliance | Fraudulent Loan Reselling
According to the Newark, N.J. office of the FBI, David Findel, from Colts Neck, N.J., surrendered himself to the FBI and made his initial appearance before Judge Mark Falk, regarding a complaint that alleges Mr. Findel, obtained more than $11 million from secondary market lenders through this scheme.
David Findel, the president and CEO of Morganville, N.J.-based Worldwide Financial Resources, was released on a $1 million secured bond.
Findel expanded Worldwide Financial Resources, originally a financial planning company, to include home mortgage origination and banking services. This allowed Worldwide Financial Resources to both originate and fund mortgages for its clients by borrowing money from a warehouse lender. To repay the lender, Findel would resell each mortgage the company originated in the secondary mortgage market.
Early in 2008 Worldwide Financial Resources began experiencing a liquidity crisis. Findel allegedly conducted a scheme to defraud mortgage banks by reselling the same mortgages to multiple financial institutions. Once Worldwide Financial Resources sold a mortgage, Mr. Findel would allegedly create a second set of fraudulent mortgage documents and resell the same mortgage to a different secondary market lender.
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David Findel, the president and CEO of Morganville, N.J.-based Worldwide Financial Resources, was released on a $1 million secured bond.
Findel expanded Worldwide Financial Resources, originally a financial planning company, to include home mortgage origination and banking services. This allowed Worldwide Financial Resources to both originate and fund mortgages for its clients by borrowing money from a warehouse lender. To repay the lender, Findel would resell each mortgage the company originated in the secondary mortgage market.
Early in 2008 Worldwide Financial Resources began experiencing a liquidity crisis. Findel allegedly conducted a scheme to defraud mortgage banks by reselling the same mortgages to multiple financial institutions. Once Worldwide Financial Resources sold a mortgage, Mr. Findel would allegedly create a second set of fraudulent mortgage documents and resell the same mortgage to a different secondary market lender.
_________________
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Sunday, September 6, 2009
Mortgage Loan Compliance | Taylor, Bean & Whitaker Employee Theft
Victor Cedeno was a loss mitigation negotiator in the loan resolution management department at the Ocala, Fla.-based company Taylor, Bean & Whitaker. A spokesman for the U.S. Attorney office said Mr. Cedeno is being sought by authorities.
Cedeno faces charges he allegedly stole more than $1.6 million from Taylor, Bean & Whitaker by depositing the funds into accounts he controlled at Navy FCU of Virginia.
The scheme allegedly began on July 16, 2008, when Mr. Cedeno opened an account at Navy Fed's branch in Winter Park under the name, "Tailor Bean W." The name "Tailor Whitaker" was listed as primary account holder.
Cedeno allegedly deposited checks made out to Taylor, Bean & Whitaker into this account from July 17, 2008, until as recently as Aug. 10, 2009 according to a criminal complaint filed by the U.S. Attorney's office.
A total of 58 checks worth $1.6 million were allegedly funneled into the "Tailor Bean W." account.
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Cedeno faces charges he allegedly stole more than $1.6 million from Taylor, Bean & Whitaker by depositing the funds into accounts he controlled at Navy FCU of Virginia.
The scheme allegedly began on July 16, 2008, when Mr. Cedeno opened an account at Navy Fed's branch in Winter Park under the name, "Tailor Bean W." The name "Tailor Whitaker" was listed as primary account holder.
Cedeno allegedly deposited checks made out to Taylor, Bean & Whitaker into this account from July 17, 2008, until as recently as Aug. 10, 2009 according to a criminal complaint filed by the U.S. Attorney's office.
A total of 58 checks worth $1.6 million were allegedly funneled into the "Tailor Bean W." account.
_________________
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Saturday, September 5, 2009
Former NFL Player and Others Charged in Fraud Scheme
Eugene Lockhart, Jr., a former player with the Dallas Cowboys, has been charged, along with eight others, with running an alleged mortgage fraud scheme in the Dallas area from 2001 through 2005.
According to James T. Jacks, U.S. attorney for the Northern District of Texas, the indictment alleges that the defendants, who were involved with several real estate entities, ran a scheme in which they located single-family residences for sale in the Dallas area -- including distressed and pre-foreclosure properties -- and negotiated a sales price with the seller.
The alleged scheme involved 54 fraudulent residential property loan closings resulting in the funding of $20.5 million in fraudulent loans.
In addition to Mr. Lockhart, the following defendants named in the indictment include - Lendell Beacham; Hubert Jones, III; Suzette Switzer Hinds; Patricia Ortega Suarez; William Randolph Tisdale, Jr.; Michael Anthony Caldwell; Donna Lois Kneeland; and Bryan J. Moorman.
The defendants allegedly recruited straw borrowers and caused the loan applications for each straw borrower to include false financial information. Prosecutors say they created surplus loan proceeds by inflating the sales price to an arbitrary amount more than the fair market value of the residence.
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According to James T. Jacks, U.S. attorney for the Northern District of Texas, the indictment alleges that the defendants, who were involved with several real estate entities, ran a scheme in which they located single-family residences for sale in the Dallas area -- including distressed and pre-foreclosure properties -- and negotiated a sales price with the seller.
The alleged scheme involved 54 fraudulent residential property loan closings resulting in the funding of $20.5 million in fraudulent loans.
In addition to Mr. Lockhart, the following defendants named in the indictment include - Lendell Beacham; Hubert Jones, III; Suzette Switzer Hinds; Patricia Ortega Suarez; William Randolph Tisdale, Jr.; Michael Anthony Caldwell; Donna Lois Kneeland; and Bryan J. Moorman.
The defendants allegedly recruited straw borrowers and caused the loan applications for each straw borrower to include false financial information. Prosecutors say they created surplus loan proceeds by inflating the sales price to an arbitrary amount more than the fair market value of the residence.
_________________
Mortgage Loan Compliance®
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Friday, September 4, 2009
Mortgage Loan Compliance | FHA Bends The Rules To Lend A Hand
The Census Bureau recently reported that multifamily starts fell to an all-time low of 80,000 units in July, 2009 down 72% from same time last year. Now the Federal Housing Administration is providing a helping hand to some multifamily developers that started construction but had their financing pulled after completing the foundation.
The FHA mortgagee letter indicates that the agency is not going to insure multifamily loans for condominium projects that are 90% complete and are trying to convert to rental units.
FHA generally does not insure multifamily projects where construction has already started. But for the next six months, the federal mortgage insurer is willing to consider applications in cases where construction was halted early and only site preparation and foundation work was completed.
To qualify, developers have to prove that their financing was cancelled and they have been unable to find alternative financing.
The mortgagee letter points out some lenders are backing out of commitments and refusing to fund construction draws. The Department of Housing and Urban Development said it is taking this step "due to the illiquidity in the financial markets."
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The FHA mortgagee letter indicates that the agency is not going to insure multifamily loans for condominium projects that are 90% complete and are trying to convert to rental units.
FHA generally does not insure multifamily projects where construction has already started. But for the next six months, the federal mortgage insurer is willing to consider applications in cases where construction was halted early and only site preparation and foundation work was completed.
To qualify, developers have to prove that their financing was cancelled and they have been unable to find alternative financing.
The mortgagee letter points out some lenders are backing out of commitments and refusing to fund construction draws. The Department of Housing and Urban Development said it is taking this step "due to the illiquidity in the financial markets."
_________________
Mortgage Loan Compliance®
www.ml-compliance.com
Commercial and Residential Forensic Audits, Demand Letters, and Rapid Reports™ – Get The Facts on Your Loan and Protect Your Rights!
We have extended our End of Summer Sale, Don’t Miss Your Chance to Save $100 Off Your Audits!
Mortgage Loan Compliance | FDIC Shut Down 85th Bank
The Federal Deposit Insurance Corp. (FDIC) has been appointed receiver of First Bank of Kansas City, based in Kansas City, Missouri.
First Bank had a total of $16 million in assets and $15 million in deposits as of June 30, 2009.
The failure of First Bank of Kansas City is expected to cost the already cash strapped FDIC's deposit insurance fund an estimated $6 million. The insurance fund has been so depleted by the epidemic of collapsing banks that some analysts believe it could sink into the red by the end of this year.
As of the end of June the fund fell 20 percent to $10.4 billion, the FDIC reported Thursday.
Sheila Bair, FDIC Chairman, said there were no immediate plans to borrow money from the government to replenish the insurance fund by tapping the agency's $500 billion credit line with the Treasury. The FDIC may, however, impose an additional fee on
U.S. banks this year to bolster the fund, atop the estimated $5.6 billion from a new emergency premium that took effect June 30.
Today the FDIC said First Bank of Kansas City deposits will be assumed by Great American Bank based in De Soto, Kan. Its sole branch will reopen Saturday as a branch of Great American Bank.
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First Bank had a total of $16 million in assets and $15 million in deposits as of June 30, 2009.
The failure of First Bank of Kansas City is expected to cost the already cash strapped FDIC's deposit insurance fund an estimated $6 million. The insurance fund has been so depleted by the epidemic of collapsing banks that some analysts believe it could sink into the red by the end of this year.
As of the end of June the fund fell 20 percent to $10.4 billion, the FDIC reported Thursday.
Sheila Bair, FDIC Chairman, said there were no immediate plans to borrow money from the government to replenish the insurance fund by tapping the agency's $500 billion credit line with the Treasury. The FDIC may, however, impose an additional fee on
U.S. banks this year to bolster the fund, atop the estimated $5.6 billion from a new emergency premium that took effect June 30.
Today the FDIC said First Bank of Kansas City deposits will be assumed by Great American Bank based in De Soto, Kan. Its sole branch will reopen Saturday as a branch of Great American Bank.
_________________
Mortgage Loan Compliance®
www.ml-compliance.com
Commercial and Residential Forensic Audits, Demand Letters, and Rapid Reports™ – Get
The Facts on Your Loan and Protect Your Rights!
We have extended our End of Summer Sale, Don’t Miss Your Chance to Save $100 Off Your Audits!
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