In a letter to Warren by Stephen A. O'Connor, MBA's senior vice president for public policy and industry relations, the trade group states that a direct meeting, rather than a request for comment, would provide lenders a better understanding of the direction of the project so they could offer more informed comments and would offer stakeholders an opportunity to explain challenges under RESPA and TILA and the practical concerns posed by the current prototypes.

"The MBA has long been committed to greater transparency in the mortgage process and appreciates that the [CFPB] is treating this initiative as a high priority and moving expeditiously," O'Connor wrote. "Nevertheless, we do not believe the weeklong comment period provided, which included the July 4 holiday, was sufficient. This is especially so considering that comments are sought on the presentation of closing costs. This is a matter that the Department of Housing and Urban Development considered for several years through two successive rulemakings that engendered tens of thousands of comments."

I can't understand why especially in this time of fiscal austerity that we need another gov't agency(CFPB) to take another look at something HUD spent an exhaustive amount of time on just a couple years ago.

To put this in context, we are tracking the following foreclosure and mortgage-related cases: (1) borrower class actions – 67 pending class-action suits in 23 states challenging foreclosures based upon robo-signing, defective assignments, reliance upon the Mortgage Electronic Registration Systems (MERS), or the misapplication of payments; (2) class action cases related to the Home Affordable Modification Program (HAMP) – 57 class actions in 25 states alleging impropriety in processing loan modifications regarding HAMP, as well as another 24 class actions in 18 states alleging misconduct under non-HAMP modification programs; (3) investor actions – 21 investor suits in 12 states alleging foreclosure and securitization misconduct that seek to “put back” defaulted loans to the loan originator and damages based upon failure to properly form the securitization trusts, misrepresentation regarding underwriting and other misrepresentations, robo-signing, or the use of MERS; and (4) Attorney General initiated suits – three suits brought by the Attorney General of Ohio against GMAC, and the Attorneys General of Nevada and Arizona against Countrywide and Bank of America. Additional investigations have just recently been undertaken. Absent a settlement with the state Attorneys General, more suits by state Attorneys General are likely to be filed.

Although no major judgments have been rendered to date, most of these cases are in the initial phase of litigation. If judgments are rendered for plaintiffs in these cases they could materially forestall the foreclosure process and create considerable uncertainty. Absent resolution to the mortgage servicing practices, claims and investigations regarding past practices will continue to proliferate, likely deferring the recovery of housing and mortgage markets.

It is no wonder the market is sluggish. This is taken from recent testimony by FDICs Mark Pearce. If lenders are dealing with these issues, they are going to be reluctant to approve new loans.

The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending January 21, 2011.  The Market Composite Index, a measure of mortgage loan application volume, decreased 12.9 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index decreased 12.0 percent compared with the previous week. The results do not include an adjustment for the Martin Luther King holiday.

The Refinance Index decreased 15.3 percent from the previous week and reached its lowest level since January 2010.  The seasonally adjusted Purchase Index decreased 8.7 percent from one week earlier. The Purchase Index is at its lowest level since October 2010.  The unadjusted Purchase Index decreased 3.1 percent compared with the previous week and was 20.8 percent lower than the same week one year ago.
 
The four week moving average for the seasonally adjusted Market Index is down 1.0 percent.  The four week moving average is down 3.7 percent for the seasonally adjusted Purchase Index, while this average is down 0.1 percent for the Refinance Index.

The refinance share of mortgage activity decreased to 70.3 percent of total applications from 73.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.2 percent from 5.0 percent of total applications from the previous week.

The average contract interest rate for 30-year fixed-rate mortgages increased to 4.8 percent from 4.77 percent, with points decreasing to 1.19 from 1.20 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This week’s increase in the rate followed three consecutive weekly decreases.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.12 percent from 4.16 percent, with points increasing to 1.26 from 0.90 (including the origination fee) for 80 percent LTV loans.

Anthony V. Weis, 45, Phoenix, Maryland, pleaded guilty to wire fraud in connection with a mortgage fraud scheme to defraud lenders of approximately $3.7 million in just eight months.

According to Weis's plea agreement, Weis was the president and a shareholder of Maple Leaf Title LLC (MLT), a real estate title agency located in Towson, Maryland. Weis directed MLT employees in 13 real estate closings conducted between February and September 2009 to withhold the payoff checks from institutions that held the existing mortgage loan notes on the properties. In each instance, the settlement statement sent to the borrower's lender falsely represented that the payoff was being made.

In an effort to conceal the fraud scheme, Weis caused monthly mortgage payments to be made to the banks holding the mortgage notes. Believing that the bank had been paid off as a result of the settlement, the borrower stopped making monthly payments on that mortgage. And since that lender was receiving monthly payments, it had no reason to notify the borrower of any delinquency. However, because Weis was unable to send checks in every case where he had misappropriated the payoffs from escrow, a number of MLT clients received delinquency notices for non-payment of the mortgage note. A few were threatened with foreclosure and were forced to hire attorneys to prevent being ejected from their homes.

Because the existing mortgages had not been paid off, the liens against the property were not removed and a title free of pre-existing liens and claims (clear title) could not be passed to the new lender and borrower. An insurance company had issued title insurance policies to the borrowers guaranteeing clear title. As a result of Weis's criminal conduct, the title insurance company ultimately paid out $3.7 million to financial institutions that held mortgage notes.

Weis faces a maximum sentence of 30 years in prison followed by five years of supervised release and a fine of $1 million. U.S. District Judge Catherine C. Blake has scheduled sentencing for February 4, 2011, at 10:15 a.m.

Why would the fraudulent nonprime lenders and brokers rely on financially unsophisticated borrowers to not only lie — but lie astutely? Why would working class borrowers know the amount of income they would have to falsely claim so that the loan would appear to meet the magic debt-to-income ratios that would get the loan approved and allow it to be sold at a premium? Why would the borrowers know that they could rely on the brokers and lenders to not verify income and to wink at claims that hairdressers made $100,000 annually? It strains all credulity to think that millions of working class Americans managed to defraud financially sophisticated lenders.

It is even more absurd to believe that honest lenders, finding themselves the victims of an epidemic of mortgage fraud by these clever working class Americans, responded by (1) massively expanding the number of liar’s loans they made, (2) spreading them to subprime borrowers with severe credit defects, (3) made defaults on the loans, and the loss upon default, far greater by layering risk and inflating appraisals, and (4) slashed their allowances for losses (ALLL) to trivial levels to ensure that the inevitable fraud losses would cause catastrophic losses.

Investigations, to date, have confirmed this logic. The fraudulent nonprime lenders and brokers typically initiated, directed, and sometimes even directly created the lies on the liar’s loans. The testimony of Thomas J. Miller (Miller, 2007), Attorney General of Iowa, at a 2007 Federal Reserve Board hearing began by describing the Gresham’s dynamic that the interaction of accounting control fraud and modern executive compensation produces:

Sixto Figueroa, 58, his wife Susy Figueroa, 45, Rolando Herrera, 64, and Manuel Garcia, 41, all of Miami, Florida, were all found guilty of participating in a mortgage fraud scheme that resulted in the issuance of $ 832,118 in mortgage loans from Wachovia Bank.

According to the evidence produced at trial and as previously reported on Mortgage Fraud Blog, defendants Sixto and Susy Figueroa owned residential lots in Port Labelle, Florida. The Figueroas recruited associates, including defendants Herrera and Garcia, who each received a fee for their participation in the crimes, to act as straw buyers to purchase lots from the Figueroas at inflated prices. Without the bank’s knowledge, the Figueroas provided the down payment to buy the properties and money to pay the mortgages for a period of time.

As part of the scheme, the Figueroas submitted loan applications to Wachovia that contained false information. The applications contained false information regarding the straw buyers’ financial condition, including fraudulent tax returns and fabricated bank statements, which falsely suggested that the straw buyers had greater income and assets than they actually did. Additionally, the HUD-1 Settlement Statements provided to Wachovia falsely stated that the straw buyers would use their own money to pay closing obligations, including the down payment. In fact, however, the Figueroas paid all of the straw buyers’ closing obligations.

After the loans were approved, the bank forwarded the loan proceeds to a title company for closing. For three of the property sales, at the Figueroa’s insistence, the title agent improperly released these funds to the Figueroas. They, in turn, used the money to pay the straw buyers’ closing obligations for those three deals. After the closing, each of the Wachovia mortgage loans eventually went into default after the non-qualifying straw buyers failed to make the required mortgage payments, resulting in substantial losses to Wachovia.

The defendants were found guilty of conspiracy to commit bank fraud and bank fraud, in violation of Title 18, United States Code, Sections 1349 and 1344. Each defendant faces a maximum of thirty years’ imprisonment. Sentencing is scheduled for September 2010.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Michael K. Fithen, Special Agent in Charge, U.S. Secret Service, and James K. Loftus, Director, Miami-Dade Police Department made the announcement.

Mr. Ferrer commended the investigative efforts of the Federal State Mortgage Fraud Strike Force with special commendation to the Miami-Dade Police Department, Economic Crimes Bureau, and the U.S. Secret Service. The case is being prosecuted by Assistant U.S. Attorneys Joseph B. Shumofsky and Andrew K. Levi.

Mortgage Fraud Blog

Related Articles:

• Accountant Admits Preparing False Borrower Documents
• Consumer Bankruptcy Litigator Trains Attorneys In The Art Of Foreclosure Defense
• Ohio Foreclosures Continue Moving Forward, Despite Obviously Problematic Paperwork
• Foreclosing Lender Actions In Robosigner Scam Targeted By Kentucky County Court Order; Other Bluegrass State Jurisdictions Expected To Follow Suit

Tags: Defendants, Fraud, Mortgage, Sentenced

Tyler Durden
Zero Hedge
Oct 5, 2010

The Massive Mortgage Mess as we affectionately call it seems to be getting new names with each passing day – the latest one is, quite appropriately, RoboSigning Scandal (funny how after the stock market, “robotic” technology will soon becoming equated with the biggest mortgage scam in history). During today’s Kudlow segment, CNBC’s Diana Ollick who is by and far the company’s best (and only) investigative reporter, confirms various so far unfounded rumors, that the government is planning to institute a 90 day foreclosure moratorium as it deals with the realization of just how big and pervasive the mortgage problem is, and even worse, will soon be. It is so bad that even a typically ebullient Larry Kudlow is forced to note that this is the “housing equivalent of the credit financial meltdown” and that “this is going to go on for ever.” The biggest issue that is now developing, as we noted last week, is the fact that title insurers (firms such as Fidelity National, First American, Stewart Info and Old Republic) are refusing to insure mortgages in foreclosure or otherwise, uncertain as to who actually owns the title. And for all those who believe this will merely keep prices artificially high, we have very bad news – the problem with the title insurers walking away on fears of lawsuits is that no lender will be willing to write a mortgage without title insurance, meaning that suddenly the up-front component of home purchases will either necessarily have to surge, or home prices will have to plunge by a like amount, as there is simply not enough equity (read money) to cover the resulting debt deficiency. Alas, this mess is just starting, and as people realize how bad it is, it very well may lead to a total collapse in the housing market.