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Mortgage-e-Alert
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MORTGAGE e-ALERT© (December 5, 2011) FEDERAL CONSUMER FINANCIAL PROTECTION BUREAU (CFPB) TAKING COMPLAINTS INVOLVING HOME LOAN MORTGAGES AS OF FACTS The consumer bureau has so far limited its complaint process to just credit cards. Now the CFPB will begin taking complaints related to home mortgages as of December 1, 2011 MORAL One more enforcement agency to chase mortgage loan originators. This means you have: 1-State licensing agency; 2-FDIC seeking damages on loans from portfolios of failed banks; 3-FBI- seeking indictments on fraud loans; 4-HUD Special Agents and auditors seeking damages, indemnity and indictments on FHA and FHA Reverse Mortgage Loans; 5-VA seeking indictments on fraud VA loans; 6-State Attorneys General seeking civil and criminal charges on state laws regarding mortgage fraud; 7-Local County District Attorney Prosecutors indicting for mortgage fraud. We have seen them all. In some cases we have seen both the federal and state prosecutors chasing the same person on the same matters but one under federal law and one under state law AT THE SAME TIME. FEDERAL VA LOANS ALLOW THE DEPARTMENT OF VETERAN AFFAIRS TO OBTAIN A DEFICIENCY JUDGMENT AGAINST THE VA BORROWER WHEN THE HOME GOES THROUGH A FORECLOSURE AND THE VA HAS TO PAY ON THE GUARANTEE FACTS Veterans in Oregon had challenged the Secretary, Veteran Affairs where the lower federal district court entered a summary judgment for the Secretary that the United States could proceed against veterans with VA loans to collect a deficiency from the foreclosure of homes. The veterans appealed. The 9th Circuit U.S. Court of Appeals said . . . Affirmed. Oregon anti-deficiency law was preempted by Veterans Administration regulations. (Connelly et al vs. Edward J. Derwinski, Secretary, Veterans affairs, et al., (1992), 961 F.2d 129) See also 36 C.F.R. 36.4326. MORAL Before you go into foreclosure on any real property loan see your attorney to learn what the risks are. Most people think that the lender cannot obtain a deficiency from the borrower(s) if there is a nonjudicial foreclosure in several states, among them California. And they are both right and wrong! They are right in that the lender cannot sue the borrower for the deficiency. They are wrong because the VA can sue the borrower for the deficiency to the extent it paid on the guaranty. See your lawyer first and foreclosure second or you may be paying the lawyer second to defend and negotiate the deficiency. MOBILE, ALABAMA REAL ESTATE INVESTOR PLEADS GUILTY TO RIGGING BIDS AT PUBLIC FORECLOSURE SALES FACTS On December 2, 2011 charges were filed in U.S. District Court for the Southern District of Alabama against BOBBY THRELKELD, JR., a Mobile, Ala., real estate investor who has agreed to plead guilty for his role in a conspiracy to rig bids and commit mail fraud at public real estate foreclosure auctions in southern Alabama. Threlkeld was charged with one count of bid rigging to obtain selected real estate at foreclosure auctions and one count of conspiracy to commit mail fraud. The Department of Justice alleges that Threlkeld participated in a conspiracy to rig bids by AGREEING TO REFRAIN FROM BIDDING AGAINST OTHER INVESTORS AT PUBLIC REAL ESTATE FORECLOSURE AUCTIONS in Mobile County and its surrounding areas. The department said that the primary purpose of the conspiracy was to suppress and restrain competition and to make and receive payoffs in order to obtain selected real estate offered at public foreclosure auctions at noncompetitive prices. According to the court documents, BETWEEN MAY 2001 AND DECEMBER 2006, Threlkeld conspired with others not to bid against one another at public real estate foreclosure auctions in southern Alabama. After the conspirators’ designated bidder bought a property at the public auctions, which typically take place at the county courthouse, the conspirators would generally hold a secret, second auction at which each participant would bid the amount above the public auction price he was willing to pay. The highest bidder at the secret, second auction won the property. Threlkeld was also charged with conspiring to commit mail fraud by using the U.S. mail in carrying out the conspiracy to defraud financial institutions by paying potential competitors not to bid competitively in the public auctions for foreclosed properties. Threlkeld was CHARGED WITH VIOLATING THE SHERMAN ACT, WHICH CARRIES A MAXIMUM PENALTY OF 10 YEARS IN PRISON and a $1 million fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the statutory maximum. Threlkeld was also charged with conspiracy to commit mail fraud which carries a maximum penalty of 20 years in prison and a fine in the amount equal to the greatest of $250,000, twice the gross gain the conspirators derived from the crime, or twice the gross loss caused to the victims of the crime by the conspirators. Today’s charges are the latest filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in southern Alabama. In addition to today’s charges, ON SEPT. 15, 2011, ALLEN K. FRENCH, HAROLD H. BUCHMAN AND BUCHMAN’S COMPANY, M & B BUILDERS LLC, WERE EACH CHARGED IN U.S. DISTRICT COURT FOR THE SOUTHERN DISTRICT OF ALABAMA WITH ONE COUNT OF BID RIGGING TO OBTAIN SELECTED REAL ESTATE IN SOUTHERN ALABAMA AT FORECLOSURE AUCTIONS. On the same day, M & B Builders was also charged with one count of conspiracy to commit mail fraud. ON OCT. 14, 2011, FRENCH, BUCHMAN AND M & B BUILDERS PLEADED GUILTY TO THE CHARGES. (usdoj12211) MORAL Remember the one I just published about the bid rigging in Sacramento? Now Alabama. Note that the federal prosecutors are treating it so seriously that they went back TEN YEARS TO 2001 TO PROSECUTE THIS. Anyone reading this do any bid rigging at foreclosure sales from 2001 to the present? I suggest you see your attorneys now. There are legal ways to protect you. Your attorney should know them. We have been protecting our clients for over 30 years. FIVE PEOPLE CHARGED WITH A FORECLOSURE SCHEME ON DECEMBER 1, 2011 IN SACRAMENTO, CALIFORNIA FEDERAL COURT FACTS On December 2, 2011 JESSE WHEELER, 34, OF ROSEVILLE along with four other defendants was publically charged with a foreclosure scheme in an indictment unsealed in federal court in Sacramento. The other defendants include JEWEL HINKLES ALSO KNOWN AS CYDNEY SANCHEZ, 61, OF LOS ANGELES; BERNADETTE GUIDRY, 43, OF IRVINE; ; CYNTHIA CORN, 58, OF OAKLAND; AND BRENT MEDEARIS, 45, OF MODESTO Hinkles and Guidry were charged with eight counts of mail fraud. All the defendants except Guidry are charged with 16 counts of bankruptcy fraud. According to court documents, Hinkles founded and ran HORIZON PROPERTY HOLDINGS LLC IN BEVERLY HILLS, which offered a "Save My Home" service, that promised to rescue homeowners from foreclosure. The company offered its services directly and through affiliated companies, including JW FINANCIAL SOLUTIONS, operated by defendant Jesse Wheeler in Roseville. New Horizons told people in distress they could save their homes in return for an up-front fee and monthly payment. The company would either find a buyer for the existing mortgage or negotiate a mortgage reduction. The indictment says Horizon Property Holdings failed to arrange for the purchase of clients' mortgages or to negotiate reductions in the mortgage debt owed by clients. To prevent foreclosure, Horizon allegedly filed fraudulent deeds transferring the interest in the property to a fictitious entity called PACIFICA GROUP 49/II. In many cases, the defendants also filed fraudulent bankruptcy filings, naming the homeowner and Pacifica as the debtor. That tactic triggers the automatic provision of bankruptcy law that halts foreclosure action. The indictment alleges the defendants used this scheme and collected at least $5 million in fees from more than 1,000 clients. (sacbusjl12211) MORAL Repeating myself, the federal prosecutors are up in arms as well as the state. Prosecutions in California have dramatically increased during 2011 as you see from reading the e Alert. Anyone that believes they may have been involved directly or indirectly in questionable loans from 2004 to the present should consult with their attorneys, if for no other reason, to develop a comfort level on where they may stand. THREE TOP OFFICERS OF STOCKTON, CALIFORNIA LEGACY HOME LOANS AND REAL ESTATE ARRESTED FOR LOAN MODIFICATION FRAUD FACTS On December 1, 2011 three top officers of a Stockton, California real estate company who allegedly took thousands of dollars in up-front loan modification fees and made false promises to lower the mortgage payments of struggling Central Valley homeowners were arrested. MAGDALENA SALAS, 42, ANGELINA MIRELES, 42, AND
JULISSA GARCIA, 36, OF STOCKTON, WERE ARRESTED on 13 felony and two misdemeanor
counts, including conspiracy, grand theft and false advertising. They are
being held at the San Joaquin County Jail on $100,000 bail. SALAS, OWNER OF LEGACY HOME LOANS AND REAL ESTATE, MIRELES, HER TWIN SISTER, AND GARCIA took up-front fees of up to $5,000 from dozens of Central Valley homeowners for loan modification services that were never performed. From November 2009 to August 2011, Salas and her employees circulated flyers throughout Stockton that read, in both English and Spanish: "We will save your home! Guaranteed!" and "Guaranteed new lower mortgage payments!" Along with the flyers, Legacy Home Loans ran television and radio advertisements in English and Spanish and broadcast its services on a billboard. Clients of LEGACY HOME LOANS AND ITS RELATED BUSINESSES - including SALAS PROPERTIES, SALAS ESTATES, PEACE AND FREEDOM LEGAL SERVICES AND DIVINITY LEGAL SERVICES - were promised a full refund if they did not receive a loan modification. Many clients ended up losing their homes. (caag12111prsrel) MORAL I trust they can afford legal counsel. If not, the public defender will have to do. NEW LONDON, CONNECTICUT MAN DRAWS TEN YEARS IN FEDERAL PRISON FOR MORTGAGE FRAUD FACTS On November 28, 2011 SYED A. BABAR, ALSO KNOWN AS “ALI” AND “ASAD,” 29, OF NEW LONDON, WAS SENTENCED IN HARTFORD TO 120 MONTHS OF IMPRISONMENT, followed by three years of supervised release, for orchestrating a multi-million-dollar mortgage fraud scheme. “The U.S. Attorney’s Office, FBI, HUD-OIG and the other participants in the Connecticut Mortgage FraudTask Force are committed to investigating and prosecuting those who are responsible criminally for creating blight in our communities and contributing to our nation’s banking crisis.” BETWEEN FEBRUARY 2007 AND APRIL 2010, BABAR and others engaged in a scheme to obtain millions of dollars in residential real estate loans, including loans insured by the Federal Housing Administration, through the use of sham sales contracts, false loan applications and fraudulent property appraisals. BABAR was the de facto leader and organizer of the conspiracy. BABAR and others recruited and paid straw purchasers to nominally purchase homes. He and his co-conspirators then directed the straw purchasers to enter into sales contracts with the sellers of homes for prices higher than the actual prices that the sellers would receive. Members of the conspiracy submitted false documentation in connection with loan applications, including fraudulent appraisals of the properties being purchased in order to justify the inflated sales prices and the loan amounts being sought to fund the purchases. BABAR and his co-conspirators also created a fictitious construction company in order to divert fraud proceeds to it and, in some cases, to falsely justify the artificially inflated sales price of houses based on renovations to the property that never occurred. BABAR and his co-conspirators then split the fraud proceeds. Contrary to the representations made on the loan applications, THE STRAW PURCHASERS NEVER OCCUPIED THE HOUSES AS THEIR PRIMARY RESIDENCES. They defaulted on the loans they obtained and let the houses go into foreclosure. BABAR and his co-conspirators conducted this scheme on approximately 30 properties in Connecticut. As a result, various lenders suffered total losses of approximately $4.75 million. Chief Judge Thompson ordered BABAR to pay restitution in the amount of $4,749,024.76. On February 1, 2011, BABAR pleaded guilty to one count of conspiracy, eight counts of wire fraud, one count of mail fraud, and four counts of making false statements to the government. BABAR has been detained since his arrest on May 12, 2010. (usattyct112811) MORAL Remember what I have been saying. It takes about two years for the federal government to get together all the paperwork to make a case and an indictment on average. BUT they have ten years from the date of the offense to file the indictment. Here they used loans that funded four years ago. The federal prosecutors are still hard at work as you will note from the recent spate of California prosecutions and convictions. CHRISTIAN TUDOROF, 43, OF STAMFORD, CONNECTICUT SENTENCED TO 18 MONTHS IN FEDERAL PRISON FOR MORTGAGE FRAUD FACTS On November 29, 2011 CHRISTIAN TUDOROF, 43, of Stamford, was sentenced by United States District Judge Janet Bond Arterton in New Haven to 18 months of imprisonment, followed by three years of supervised release, for his involvement in a $4 million mortgage fraud scheme. He pleaded guilty to ONE COUNT of Wire Fraud. Between December 2006 and March 2007, TUDOROF submitted mortgage applications to a number of different mortgage lenders in association with the purchase of residential properties in Florida, Arizona, and Connecticut. In many of the mortgage applications, TUDOROF provided false information and failed to disclose information to the mortgage lender. For example, after TUDOROF obtained one mortgage to purchase a home in Florida, he deliberately failed to disclose the existence of this mortgage when he applied for mortgages on the other properties purchased in his name. He also falsely represented in the mortgage applications that he intended to live in some of the homes that he intended to purchase when, in fact, he had no intention of occupying these homes. TUDOROF obtained more than $4 million in mortgages from mortgage lenders and purchased at least six properties. After he failed to service the mortgages, each of the homes he purchased was sold in foreclosure. As a result, the mortgage lenders suffered losses of more than $2 million. Judge Arterton ordered TUDOROF to pay restitution in the amount of $2,099,400. (usattyct112911) MORAL Imagine what would happen if he had to plead to two or more counts of wire fraud. Basically, if anyone uses the phones or e mails or letters or faxes IN FURTHERANCE OF TH SCHEME TO DEFRAUD the federal prosecutor can charge the person with mail fraud or wire fraud among other charges. This is true even if the content was purely innocent such as mailing a preliminary title report. Note that the prosecutors are working loans that funded in 2006! UNIVERSAL AMERICAN MORTGAGE COMPANY OF LAS VEGAS, NEVADA BRANCH FOUND NOT TO COMPLY WITH HUD REGULATIONS IN THE SEPTEMBER 2011 AUDIT BY HUD FACTS On September 21, 2011 HUD-OIG issued its audit report of Universal American Mortgage Company, Las Vegas, Nevada Branch No. 2011-LA-1017. The findings stated that it did not comply with HUD Regulations in the Origination and Quality Control of FHA insured loans. The branch was selected for audit because its default rate, when compared to the national average was the highest of all of its branches. The lender was found NOT TO HAVE FOLLOWED HUD REQUIREMENTS IN THE ORIGINATION OR QUALITY CONTROL REVIEW of FHA-insured loans. Specifically, all 15 loans reviewed contained underwriting deficiencies and inappropriate restrictive covenants that affected the insurability of the loan. In addition, HUD-OIG reviewed 10 quality control reviews, and all 10 were in violation of HUD regulations or the lender’s quality control policies HUD-OIG recommended that the Acting Deputy Assistant Secretary for Single Family Housing REQUIRE THE LENDER TO (1) INDEMNIFY HUD AGAINST LOSSES FOR 9 OF 10 FHA-INSURED LOANS WITH SIGNIFICANT UNDERWRITING DEFICIENCIES AND UNALLOWABLE RESTRICTIVE COVENANTS OF MORE THAN $1.1 MILLION; (2) reimburse THE FHA INSURANCE FUND $118,861 IN LOSSES RESULTING FROM THE CLAIMS AND ASSOCIATED EXPENSES PAID ON ONE LOAN WITH SIGNIFICANT UNDERWRITING DEFICIENCIES or unallowable restrictive covenants; (3) develop, implement, and enforce written controls to ensure that FHA-insured loans are originated in compliance with HUD regulations; and (4) FULLY IMPLEMENT ITS QUALITY CONTROL PLAN AND FOLLOW UP TO ENSURE THAT ITS QUALITY CONTROL REVIEWS ARE CONDUCTED IN ACCORDANCE WITH HUD REGULATIONS. (hud-oig92111-2011-LA-1017) MORAL See. The branch saved money on using an outside auditor for compliance and gets hit for over $100,000 plus indemnification. I submit we would have been cheaper. That is presuming the Secretary follows the recommendation and at that the branch has a right to and MRB hearing. We have done several of those and most of them are telephonic and do not require an appearance in Washington. I suggest they hire good legal counsel familiar with HUD MRB and negotiations. That is if they have not done so already. Next time keep a closer eye on Neighborhood Watch. They would have seen it coming. IN CINCINNATI, OHIO SIX FAMILY MEMBERS AND AN EMPLOYEE OF ONE OF THE COMPANIES THEY OWNED HAVE ALL BEEN SENTENCE FOR MORTGAGE FRAUD FACTS Six family members and an employee of one of the companies they owned have been sentenced in U.S. District Court for a mortgage fraud scheme involving nine properties they bought and sold for their own use between 2004 and 2009. On December 1, 2011 DEBBIE SFERRAZZA, 47, OF WEST CHESTER, WAS THE LAST OF THE SEVEN SENTENCED. She was given a TOTAL OF 46 MONTHS IN PRISON FOLLOWED BY 10 YEARS OF SUPERVISED RELEASE. She pleaded guilty to one count of conspiracy to commit wire and mail fraud, one count of money laundering, and three counts of filing false income tax returns. She was ordered to pay $384,537 in restitution to the lenders she defrauded and $151,671.48 to the IRS. Between 2004 and 2009, Debbie Sferrazza started several mortgage brokerage companies in the area, including ALPHA MORTGAGE LENDING, LLC; ALPHA MORTGAGE EXCHANGE, LLC; S.D.S. PROCESSING LLC (ALSO KNOWN AS S.D.S. INC.); AND TARGET LOAN PACKAGING (ALSO KNOWN AS TARGET LOAN PROCESSING). Over the years, she used the different companies to help perpetrate the fraud and avoid detection of the fraud. She was the sole owner and operator of the companies and their final office was operated out of her house. “The Sferrazza brokerage companies provided loan services for numerous clients over the years that involved allegations of fraud,” Assistant U.S. Attorneys Timothy Mangan and Jennifer Barry told the court in a sentencing memorandum filed with the case. “However, out of practical necessity, the indictment focused strictly on nine properties that were bought and sold for personal gain and use by the Sferrazza family.” All the properties involved eventually landed in foreclosure. Debbie Sferrazza’s husband, Salvatore SFERRAZZA, 72, OF WEST CHESTER, WAS SENTENCED December 1, 2011 TO THREE YEARS OF PROBATION TO INCLUDE 10 MONTHS OF HOME CONFINEMENT. Salvatore Sferrazza pleaded guilty to one count of conspiracy to commit wire and mail fraud and one count of money laundering. He was ordered to pay restitution of $71,709.80 to the lenders. HEATHER ASHURST, 28, OF WEST CHESTER, was sentenced June 29, 2011 to two years of probation and ordered to pay $99,406.96. She pleaded guilty to one count of conspiracy to commit wire and mail fraud. WHITNEY BONAPFEL, 23, OF CINCINNATI, DEBBIE SFERRAZZA’S DAUGHTER, was sentenced on June 29, 2011 to two years of probation for making a false statement or report to HUD (a misdemeanor offense). JAMES ASHURST, 28, OF WEST CHESTER, was sentenced on June 29, 2011 to one day in jail, three years of supervised release and ordered to pay $99,406.96 in restitution. James Ashurst pleaded guilty to one count of conspiracy to commit wire and mail fraud, and one count of money laundering. He is the husband of Heather Ashurst and a son of Debbie Sferrazza. KEIRON ASHURST, 45, OF FAIRFIELD, WAS SENTENCED ON JUNE 30, 2011 TO 12 MONTHS AND ONE DAY IN PRISON FOR CONSPIRACY TO COMMIT WIRE AND MAIL FRAUD. HE WAS ORDERED TO PAY $138,500 IN RESTITUTION. He is the brother of Debbie Sferrazza, and also a citizen of Great Britain who may face immigration consequences. TABATHA STURGILL, 36, OF HAMILTON, WHO WAS EMPLOYED BY DEBBIE SFERRAZZA, WAS SENTENCED ON JUNE 30, 2011 TO 12 MONTHS AND ONE DAY IN PRISON for conspiracy to commit wire and mail fraud and for filing a false income tax return. She was ordered to pay $384,537.18 in restitution. James and Heather Ashurst lived in the houses, worked for Debbie Sferrazza at the mortgage businesses, and were involved in the laundering of funds. Salvatore Sferrazza was often present at and involved in the mortgage business and laundering of funds, but was not officially an employee. Keiron Ashurst did not work at Debbie Sferrazza’s mortgage business, but his home was fraudulently bought and sold twice in order to pull money out of the loans and save the property from foreclosure and divorce proceedings. Whitney Bonapfel did not work for the mortgage business or live in the subject homes, but she was listed as the purchaser for a property where James and Heather Ashurst eventually lived. “The fraud scheme was fairly simple in nature, but extensive and persistent,” Mangan and Barry wrote. “The scheme involved the submission of false and fabricated supporting documentation to mortgage lenders. The supporting loan documents often included fraudulent Verifications of Employment, Verifications of Deposits, W-2 forms, pay stubs, Social Security payment letters, HUD-1 statements, and/or banking statements. The false Verifications of Employment and Verifications of Deposit for the borrower typically misrepresented not only the borrower’s information, but also the verification process itself.” (In other words, a “full doc” fraurd?”) (usattysdoh12111) MORAL Did you notice the prosecutors went back seven years to 2004? I trust none of our readers have any questionable loans that go back that far. Remember, the federal government can go back TEN YEARS for fraud loans and still prosecute as long as the indictment is within ten years of the last event to occur in the loan which is generally payment to the broker or wholesaler at sale of the loan.
LEXINGTON, SOUTH CAROLINA MORTGAGE BROKER DRAWS THREE YEARS IN FEDERAL PRISON FOR MORTGAGE FRAUD FACTS On November 28, 2011 ROBERT C. SASSER, AGE 32, OF LEXINGTON, was sentenced in federal court in Columbia for wire fraud, a violation of 18 U.S.C. § 1343 to three years’ imprisonment and ordered him to pay approximately $1.6 million in restitution to Wells Fargo bank. Sasser was a realtor and mortgage broker doing business in West Columbia. He was involved in eight real estate transactions that involved modular homes from the Aiken Housing Center (AHC) and a private residence. WACHOVIA MORTGAGE CORPORATION (WMC) financed the eight mortgage loans for approximately $2.5 million. All the loans were collateralized by modular homes that were significantly overvalued. The loan documents contained multiple misrepresentations that showed that the eight loans were fraudulent. They included grossly misstated income and asset information, forged signatures, and improper down payments. Due to subsequent foreclosures, the amount of loss suffered in this case was approximately $1.6 million, owed to Wachovia’s successor, Wells Fargo. (usattysc112811) MORAL He changed his plea to guilty and still goes away for 3 years. I told you the sentencing was getting stiffer.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE. AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE
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Last Updated 12-11-11 Entire Site and contents copyright 2001-2011 Law Offices of Herman Thordsen, All Rights Reserved If you have comments or suggestions, please contact our offices in Southern California call (714) 662-4990. Northern California and out of state call toll free (888) 667-8529. No information on this page, or on any other page within this site, is to be considered legal advice. No information should be used before obtaining competent legal counsel. The Law Offices of Herman Thordsen does not, by linking to outside URLs, imply any endorsement of the publisher (s) of, or the source (s) of the content for, or the actual content of those pages, and expressly disclaims responsibility for any results of users' access to, or use of, such pages or the information they contain.
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