Appraisal Industry News

Real Estate Agent Admits Scheme

2008-03-26T14:46:00.002-07:00

Michael John Sorensen, Jr., 40, Anchorage, Alaska, pleaded guilty to wire fraud associated with kickbacks he received from home sales in Anchorage, Alaska.

In connection with the guilty plea, Assistant United States Attorney Retta Randall advised the court that Sorensen was a real estate agent licensed by the State of Alaska and an associate broker with ReMax Properties, Inc. Sorensen also owned a remodeling and construction company called Right Way Construction. Using Right Way Construction, Sorensen devised a scheme to obtain money by means of material false representations. The purpose of his scheme was to financially assist buyers and defraud various mortgage lenders by submitting false invoices from Right Way Construction to title companies, who then prepared false settlement statements which reflected payments for repairs and remodeling work which were never done to the properties. The false settlement statements were relied upon by the mortgage companies when they wired funds for the mortgage loans from outside the State of Alaska to title companies in Alaska who conducted the closing on each transaction. The amounts paid by the title companies to Right Way Construction pursuant to the false invoices were then given to the buyers by Sorensen after closing as a cash-back scheme without the knowledge of the mortgage lenders. Cash backs operate by falsely inflating the sales price of a property.

Read more at the Mortgage Fraud Blog.

California Mortgage Fraud Task Force Established

2008-03-26T14:46:00.001-07:00

In recent months, an Eastern District of California Mortgage Fraud Task Force has been established. This action was taken as a result of the significant increase in reported mortgage fraud as economic conditions and the housing market have worsened. Members of the task force include representatives from the U.S. Attorney’s Office, FBI, IRS-CI, the Department of Housing and Urban Development, the United States Bankruptcy Trustee’s Office, and the California Department of Real Estate.

”Mortgage fraud is a very real problem, both legally and economically. Federal law enforcement here in the Eastern District is fully committed to holding responsible those who in their greed have stolen from their fellow citizens. It is our duty to do all we can to restore faith and confidence in the marketplace by placing these thieves where they belong: in prison.” stated U.S. Attorney Scott.

Read more at the Mortgage Fraud Blog.

Operation Homewrecker Nets 19 Indictments

2008-03-25T14:44:00.000-07:00

19 individuals were indicted for mortgage fraud-related offenses under Operation Homewrecker. The leader of this nationwide scam is Charles Head, 33, Los Angeles, California, who targeted homeowners in dire financial straits, fraudulently obtaining title to over 100 homes and stole millions of dollars through fraudulently obtained loans and mortgages. Operation Homewrecker is the product of an extensive investigation by the FBI and IRS Criminal Investigation.

The charges are broken out into two separate indictments, “Head One” and “Head Two”. Head One involved a foreclosure rescue scam, netting approximately $6.7 million in fraudulently obtained funds taken from 47 homeowners, nearly all of whom were located in California. Head Two involved an equity stripping scheme, netting approximately $5.9 million in stolen equity from 68 homeowners in states across the nation. While still targeting distressed homeowners and defrauding mortgage lenders through the use of straw buyers, this time Charles Head altered the scheme so that he would receive approximately 97 percent of the stolen equity, while his sales agents and employees, and the other defendants, would receive either the remaining 3 percent of equity or a salary from the fraudulently-obtained funding.

Read more at the Mortgage Fraud Blog.

Wave of Foreclosures Drives

2008-03-25T12:01:00.000-07:00

Oversupply Triggers Lenders' Fast Sales; Mr. English Bids

By JAMES R. HAGERTY and KRIS HUDSON
March 25, 2008

A glut of foreclosed homes of historic proportions is starting to drive down U.S. home prices faster as lenders put more properties on the market and buyers show signs of interest.

The ability of America's lenders to manage this fire sale will be crucial to determining how long the housing market stays in the dumps -- and how quickly blighted neighborhoods can heal. The oversupply is severe: In some major markets, including Las Vegas and San Diego, foreclosure-related sales have accounted for more than 40% of all sales in recent months.

Read more at the Wall Street Journal.

Colorado Brokers Recieve Cease And Desist Orders

2008-03-19T09:49:00.000-07:00

Mortgage Fraud Blog

Cade Emerson Lee, was issued a cease and desist order by the Colorado Department of Real Estate. This is the first formal action against mortgage brokers accused of violating Colorado’s new lending laws. The Division of Real Estate is also seeking a $20,000 fine against Lee. In addition, Adriana Arzate‘s license was summarily suspended and the Division is seeking $10,000 in fines asserting that Arzate falsified borrowers’ financial information so they could obtain loans for which they were not qualified. Cease and desist and summary suspensions are emergency measures used when the public’s safety or welfare is in danger, and immediately prohibit the individuals from acting as mortgage brokers.

Read more at the Mortgage Fraud Blog.

Kentucky Man Sentenced For Identity Theft

2008-03-19T09:48:00.000-07:00

Mortgage Fraud Blog

Willie Collins, 76, Chicago, Illinois, was sentenced to 2 years and 1 day imprisonment in United States District Court, Louisville, Kentucky, for aggravated identity theft and conspiracy to commit bank and wire fraud; all in connection with the fraudulent obtaining of mortgage loans on two Kentucky residences, one in Indian Hills and the other in Cherokee Triangle. Thomas B. Russell, Judge, United States District Court, also sentenced Collins to 3 years supervised release following incarceration. There is no parole in the federal judicial system.

Read more at the Mortgage Fraud Blog.

Fed cuts key rates three-quarters of a point

2008-03-18T13:19:00.000-07:00

Scale of central bank’s move shows the size of economic risk

Associated Press

WASHINGTON - The Federal Reserve on Tuesday slashed a key interest rate by three-fourths of a percentage point, moving aggressively to contain a credit crisis threatening to push the country into a severe recession.

The latest action brought the federal funds rate — the interest that banks charge each other — down to 2.25 percent, the lowest point since late 2004. It marked the second cut of three-fourths of a percentage point this year. The first occurred at an emergency meeting on Jan. 22 and was followed by a half-point cut at a regular meeting on Jan. 30.

Read more at MSNBC.com.

Appraiser Pleads Guilty To Accepting Suggested Valuations

2008-03-12T07:37:00.000-07:00

Mortgage Fraud Blog

Martine Yanisse Castrillon, 30, Miami, Florida, pled guilty to two counts of wire fraud, in violation of Title 18, United States Code, Section 1343. Castrillon faces a statutory maximum sentence of twenty (20) years in prison on each of the wire fraud counts and a fine of up to $250,000 on each count. Sentencing is scheduled for May 22, 2008.

Castrillon is one of fifteen defendants charged in a wide-ranging mortgage fraud scheme in United States v. Henry Quintero-Lopez et. al. Case No 07-60207-CR-ZLOCH, known as Operation Whose House. According to the Indictment in the case, the defendants and their co-conspirators orchestrated a scheme through which they located properties for sale in the Southwest Ranches area of Broward County, Florida, fraudulently purchased the properties using straw buyers, and received cash back at the closings. To date, nine defendants have pled guilty to various federal charges in the Indictment.

Read more at the Mortgage Fraud Blog.

Fed takes further steps to ease credit crunch

2008-03-11T07:29:00.000-07:00

Central banks add $200 billion to lend into mortgage market

Associated Press

WASHINGTON - Staring at spreading financial dangers, the Federal Reserve announced a rescue package that would pour as much as $200 billion into banks and investment houses and allow them to put up risky home-loan packages as collateral.

Wall Street rebounded on the news Tuesday with its biggest rally of the year — and hoped the Fed had even more cards to play.

The Federal Reserve’s maneuver, coordinated with central banks overseas, was its latest effort to stem the global credit crisis and severe housing woes that threaten to bury the United States in its first recession since 2001. Fed Chairman Ben Bernanke and his colleagues have been stretching for new and imaginative ways to confront the situation.

They are hoping to bring relief where it is sorely needed: in the market for mortgage securities. Home loan financing has become much harder to get as nervous lenders have hunkered down.

“It is a highly significant move. The Fed is innovating in a way that is going to push liquidity directly into the mortgage markets, where it is most needed,” said David Jones, president of DJM Advisors.

On Wall Street, the Fed’s action propelled stocks upward. The Dow Jones industrials jumped by some 416 points.

Traders will be looking for still more action. Recent stock rallies have been followed by renewed selloffs by investors who believe the economy is still headed for recession, if it isn’t there already.

Read more at MSNBC.com.

OFHEO, NY Attorney General, Fannie Mae and Freddie Mac Sign Agreements To Combat Appraisal Fraud

2008-03-06T10:31:00.000-08:00

OFHEO

Washington, DC – OFHEO Director James B. Lockhart announced agreements with OFHEO, New York State Attorney General Andrew Cuomo, Fannie Mae and Freddie Mac (the Enterprises) to strengthen the independence of the appraisal process. For mortgages the Enterprises buy or guarantee, the agreements seek to enhance appraisal and evaluation services that are critical to the residential mortgage process. Flawed appraisals artificially inflate home prices and are often a sign of mortgage fraud and undue influence on appraisers.

"Accurate, independent appraisals are very important to ensuring the safety and soundness of Fannie Mae, Freddie Mac and the mortgage market," said Director Lockhart. "These agreements build upon existing federal and state laws and regulations to further strengthen the single-family home appraisal process. The agreements should help restore confidence in the mortgage market by enhancing underwriting practices, reducing mortgage fraud and making home valuations more reliable. I thank the Attorney General, Fannie Mae and Freddie Mac for their strong roles in this important effort."

Read more at OFHEO.

Leader Of Mortgage Fraud Ring Pleads Guilty

2008-03-05T07:49:00.000-08:00

Mortgage Fraud Blog

Lazaro Villalba pleaded guilty to one count of conspiracy to commit bank fraud, wire fraud and mail fraud, in violation of Title 18, United States Code, Section 1349. Villalba faces a statutory maximum sentence of twenty (20) years in prison and a fine of up to $250,000. Sentencing is scheduled for May 16, 2008, before the Honorable William J. Zloch, United States District Court Judge for the Southern District of Florida.

Villalba is one of fifteen defendants previously charged in a wide-ranging mortgage fraud scheme (United States v. Henry Quintero-Lopez et. al. Case No 07-60207-CR-ZLOCH). According to the Indictment, Lazaro Villalba and other co-conspirators orchestrated a scheme through which they located properties for sale in the Southwest Ranches area of Broward County, Florida, then fraudulently purchased the properties through straw buyers and received cash back at the closings.

Read more at the Mortage Fraud Blog.

Housing bust means at least 12 more months of pain

2008-03-03T07:44:00.000-08:00

Reuters

By Jennifer Ablan - Analysis

NEW YORK (Reuters) - It was only nine months ago that pundits, investors and government officials, argued that the U.S. subprime mortgage crisis had been "contained." So they were wrong.

The implosion of the subprime mortgage market has been rampantly spreading throughout the economy, slamming consumers, banks, investors, even state and local governments to a degree unforeseen by most pundits and analysts and yes, U.S. Federal Reserve officials.

And it ain't over: it could last another 12 months, sucking the life out of lending, driving layoffs, and spurring company bankruptcies and bank failures. Some argue a recession has already begun and it could last for some time.

The depth of the crisis hasn't been hit yet if a new study by several prominent economists is correct concluding that unless financial markets can quickly recapitalize, banks are likely to cut back their lending to consumers and businesses by nearly $1 trillion. That will slash economic growth by more than a percentage point over the next 12 months, said the study by David Greenlaw of Morgan Stanley, Jan Hatzius of Goldman Sachs, Anil Kashyap of the University of Chicago, and Hyun Song Shin of Princeton University, released Friday.

Read more at Reuters.

Real Estate Agent Pleads Not Guilty In Ohio Fraud Scheme

2008-02-27T13:10:00.000-08:00

Mortgage Fraud Blog

Scott McCann, 45, Columbus, Ohio, has been arraigned and plead not guilty to charges stemming from a mortgage fraud scheme involving several Ohio properties. McCann was released on $100,000 bond with strict orders not to contact other persons involved in the scheme.

As previously reported by Mortgage Fraud Blog, Gihan Ahmed Ismail Zalat aka Gigi Zalat, 40, Columbus, Ohio, and McCann, were separately indicted for engaging in a pattern of corrupt activity, aggravated theft, money laundering and receiving stolen property.

Read more at the Mortgage Fraud Blog.

2 Arrested in So Cal Real Estate Fraud Conspiracy

2008-02-26T13:07:00.000-08:00

Mortgage Fraud Blog

Daniel Rudat, 43, was arrested by investigators from the San Bernardino County, California District Attorney’s Real Estate Fraud Unit, outside of his residence in the City of Orange, California, regarding felony charges connected to real estate fraud. Rudat was arrested for several felony counts including forgery, conspiracy, and filing forged documents with the County Recorder’s Office. Thursday, February 21, 2008, Ronald Fauria, 71, a co-conspirator of Rudat, was arrested at his Irvine home for similar charges.

Read more at the Mortgage Fraud Blog.

NY attorney general near Fannie, Freddie deal

2008-02-26T09:13:00.000-08:00

Reuters
By Patrick Rucker

WASHINGTON (Reuters) - Mortgage firms Fannie Mae (FNM.N: Quote, Profile, Research) and Freddie Mac (FRE.N: Quote, Profile, Research) would require their mortgage lending partners to have independent appraisals of home values under a deal being thrashed out with New York's attorney general, sources familiar with a draft deal said on late Monday.

Andrew Cuomo, New York's top lawyer, began a wide-ranging investigation last spring into how Wall Street bundled and sold billions of dollars of home loans to investors and a deal with Fannie Mae and Freddie Mac would close an important line of his inquiry.

Home appraisals would have to come from assessors that do not have formal ties with a lender or mortgage broker, according to sources familiar with negotiations over a deal that could be finalized as soon as Tuesday.

Read more at Reuters.com.

Foreclosure auctioneer's lonely task

2008-02-22T08:09:00.000-08:00

With housing market's downturn, an auction is no longer a hot property

By Nick Miroff
Washington Post
updated 2:43 a.m. ET, Fri., Feb. 22, 2008

WASHINGTON - With an unhurried stride and a fresh stack of mortgage loans gone bad, Rick Crossley arrived at the small plaza outside the Prince William County courthouse on a bright, windy morning recently and found it deserted. He cleared his throat, opened a thick folder and, with little ceremony, began to read aloud.

"This is a trustee's foreclosure auction," he announced. "Any parties with interest, please step forward at this time."

The deliveryman unloading packages nearby paid no attention; a sheriff's deputy gave little more than a passing glance. Crossley continued.

Read more at MSNBC.com.

New data reveal breadth of housing slump

2008-02-14T10:17:00.000-08:00

Data show existing home sales lower in 45 states at end of 2007

Associated Press

WASHINGTON - Sales of existing homes fell in 45 states during the October-December quarter, with metropolitan areas showing growing weakness, a real estate trade group said Thursday.

The fourth-quarter data from the National Association of Realtors underscore the breadth of the housing market’s slump.

South Dakota was the lone state to show a sales increase. Existing home sales there rose 8.9 percent from the same quarter a year ago. Sales were unchanged in North Dakota. No sales figures were available for Idaho, Indiana and New Hampshire. Sales also fell in Washington, D.C.

Read more at MSNBC.

Major Lenders Expand Mortgage Relief Plans

2008-02-12T08:51:00.000-08:00

MSNBC

WASHINGTON - The Bush administration, trying to deal with a worsening housing slump, announced a new initiative Tuesday aimed at helping homeowners about to lose their homes. For qualified homeowners, it will put the foreclosure process on hold for 30 days.

Read more at MSNBC.

Scrutiny Tightens for Title Insurers

2008-02-12T07:56:00.000-08:00

The Wall Street Journal

By JOHN R. WILKE
February 12, 2008; Page A1

The collapse of the housing boom is bringing harsh new scrutiny to the $17 billion title-insurance business, including allegations that insurers colluded illegally and paid kickbacks to agents or brokers to get business.

In the latest legal challenge, an antitrust suit filed Feb. 1 in federal court in Brooklyn accuses the four firms that dominate title insurance nationwide of illegally fixing prices in New York state. Although insurance firms have limited immunity from antitrust claims because state regulators approve their rates, the suit accuses title firms of concealing improper costs underlying their rate requests.

Read more at the Wall Street Journal.

Real Estate: How Far Will It Fall in 2008?

2008-02-11T08:53:00.000-08:00

By Alex Frangos
From The Wall Street Journal Online

There is one big question looming for homeowners and commercial real-estate investors this year: How much worse will it get?

The past year was the most painful in decades for residential real estate, as defaults on loans to less-creditworthy borrowers created a broader credit squeeze. House prices fell, home ownership dropped, foreclosures soared, and the housing market emerged as the soft underbelly of the economy.

Commercial real estate hit its peak early in 2007, when private-equity firm Blackstone Group LP paid $23 billion for office giant Equity Office Properties Trust, and then did an about-face. As credit tightened throughout the economy, commercial-property values tilted downward for the first time in several years.

Read more at RealEstateJournal.com.

Reports of Arson Escalate Alongside Foreclosures

2008-02-03T12:18:00.000-08:00

Banks.com

By Hayli Morrison

The fire departments of Detroit and other cities have been investigating more arsons lately. Coincidence? Perhaps, or perhaps not. But the Detroit Fire Department has noted that they issued twice as many arrest warrants on arson charges in 2007 than they did in 2005. Also, since 2004, the median home price in Detroit has dropped more than 17 percent to $145,173 and foreclosures increased more than 65 percent, according to MSN Money.

Read more at Banks.com.

Fed stays aggressive, cuts rates a half-point

2008-01-30T09:05:00.000-08:00

Move follows last week’s cut in attempt to stabilize economy, markets

Associated Press

WASHINGTON - The Federal Reserve on Wednesday cut a key interest rate for the second time in just over a week, reducing the federal funds rate by a half point. It signaled that further rate cuts were possible.

Read more at MSNBC.

Federal Reserve Proposal Addresses Appraisal Coercion

2008-01-24T06:47:00.000-08:00

Appraisal Institute

The Federal Reserve Board recently proposed prohibiting creditors and mortgage brokers from coercing real estate appraisers to misstate a home's value on all mortgages. The announcement was part of the Fed’s December 18 proposed changes to Regulation Z (Truth in Lending), which would restrict certain practices and require certain mortgage disclosures to be provided earlier in the transaction.

Read more at the AppraisalInstitute.org

Fed Rate Cut Halts Market Free Fall, But Recession Fears Are Mounting

2008-01-23T09:44:00.000-08:00

Wall Street Journal

Ben Bernanke blinked.

The Federal Reserve chairman, who normally tries to avoid reacting directly to financial markets, saw global markets in free fall, and yesterday abruptly orchestrated the single deepest cut in the Fed's main interest-rate target in more than two decades.

The move shored up confidence, at least for the moment. U.S. and many global markets quickly rebounded from huge losses in response to the three-quarter percentage-point cut in the target for the federal-funds rate, to 3.5%.

But in a sign that risks to the U.S. and global economy remain strong, the Fed hinted another rate cut next week is likely. The central bank's moves may be too late to stop the U.S. from entering recession, as many economists now forecast, but it may make one milder and shorter.

Read full article at the Wall Street Journal.

Mortgage Fraud News, January 2008

2008-01-22T09:39:00.000-08:00

Here are this month's links to mortgage fraud news articles:

Mortgage Fraud Blog
California Appraiser Sues WaMu

Mortgage Fraud Blog
Michigan AG Announces Second Foreclosure Forum

Mortgage Fraud Blog
Loan Originator Pleads Guilty To Mortgage Fraud Scheme

Mortgage Fraud Blog
Lender Seeks Declaratory Judgment as to Scope of Coverage