Real Estate Agent Admits Scheme
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
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
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
Oversupply Triggers Lenders' Fast Sales; Mr. English BidsBy 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
Mortgage Fraud BlogCade 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
Mortgage Fraud BlogWillie 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
Scale of central bank’s move shows the size of economic riskAssociated 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
Mortgage Fraud BlogMartine 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
Central banks add $200 billion to lend into mortgage marketAssociated PressWASHINGTON - 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
OFHEOWashington, 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
Mortgage Fraud BlogLazaro 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
ReutersBy 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.
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