The Texas Department of Insurance announced that on September 27, 2007 New Frontier Title Agency, LLC of Plano had their Title Insurance Agent’s license revoked and were fined $41,550 fine and ordered to pay $4,000 restitution in relation to charges that they engaged in fraudulent or dishonest acts or practices and misappropriated or converted money belonging to an insurer or insured.

This action was covered by Order Number 070876.

For confirmation of this and to see the other orders issued in September (we only post those which mention fraud or dishonesty) please click here.

In the following press release Texas Attorney General Greg Abbott (pictured left) today obtained a temporary restraining order and asset freeze against an unlawful Texas-based foreclosure rescue operation targeting struggling homeowners in the state and across the country.

According to court documents, Southern Residential, LLC, and its director and manager, Edward Casey, fraudulently advertised that the company could save homeowners from imminent foreclosure. The enforcement action also names affiliated defendants National Homeowners Assistance, Stephanie Casey, Matthew Casey and Linda McCann. Under the temporary restraining order, the defendants must stop falsely soliciting distressed homeowners immediately. Although the order only applies in Texas, homeowners nationwide are protected by the asset freeze.

“At a time when regulators, policy makers and stakeholders are working to help struggling homeowners, a few unscrupulous operators are scheming to profiteer at homeowners’ expense,” Attorney General Abbott said. “These defendants charged large fees and failed to deliver on their false promises. This court order shuts down an unlawful scheme to defraud Texas homeowners.”

Attorney General Abbott added: “Homeowners facing difficulty making their monthly mortgage payments should be wary of mortgage rescue scams. Schemes offering too-good-to-be-true solutions are usually just that. Texans who fall behind on their payments should contact their lender directly to work out a resolution.”

According to the attorney general’s enforcement action, homeowners who were delinquent on mortgage payments responded to the defendants’ television and newspapers advertisements. The defendants also advertised online through various Web sites, including House911.com and Stop911.com. The company’s so-called “stop foreclosure specialists” boasted that their established relationships with mortgage lenders and banks nationwide could stop the foreclosure process. The defendants also told homeowners that they would only accept clients whom they could help.

Homeowners who contacted Southern Residential and its affiliates were pressured to sign contracts and pay fees of up to $2,000 immediately. Under the contract, Southern Residential strictly prohibited homeowners from contacting their mortgage lenders. After homeowners paid the fees, many never heard back from the defendants’ representatives.

Others complained that Southern Residential’s “renegotiations” with lenders required immediate, upfront balloon payments totaling tens of thousands of dollars. Despite the defendants’ promises, many homeowners lost their homes to foreclosure or went into bankruptcy.

The attorney general’s legal action prohibits the defendants from making false representations to homeowners and deceiving potential clients about the services they provide. The state estimates that Southern Residential receives between $100,000 and $150,000 per month in fees paid by homeowners facing foreclosure. To protect funds already paid by homeowners, the court froze a trust fund and several bank accounts that belong to the defendants.

The Attorney General seeks court-ordered restitution for homeowners who were harmed by the defendants’ acts, as well as civil penalties of up to $20,000 per violation of the Texas Deceptive Trade Practices Act. Additionally, the Attorney General requests up to $5,000 per violation for the defendants’ failure to register their business as one that conducts telephone solicitations.

Attorney General Abbott reminded the company’s customers that they should not wait for Southern Residential to contact them about the status of their mortgages. Homeowners need to call their lenders immediately and ask what preventative measures, if any, the defendants have taken on their behalf.

The Office of the Attorney General is engaged in a variety of efforts to protect Texas homeowners. Last week, Attorney General Abbott secured a temporary injunction against Foreclosure Assistance Solutions, a Florida-based “foreclosure rescue” scheme that targeted Texans who fell behind on their mortgage payments.

In September, Attorney General Abbott launched the Texas Residential Mortgage Fraud Task Force, a partnership that involves key state regulatory agencies to take a proactive stance towards tracking and prosecuting mortgage fraud.

This month, Attorney General Abbott urged three of the largest mortgage lenders and servicing companies doing business in Texas to take steps to address the high foreclosure rates in the state. In meetings with EMC Mortgage, Countrywide Mortgage and Litton Loan Servicing, he outlined five measures that the companies should implement to restore borrowers’ financial stability, including stepping-up efforts to convert adjustable rate mortgages to fixed-interest loans; subjecting more delinquent loans to mitigation first rather than immediately submitting them to an antagonistic collections process; improving communication and outreach with consumers; waiving penalties and fees while companies work with troubled homeowners; and promptly addressing complaints filed against them with the Office of the Attorney General.

Earlier this year, Attorney General Abbott secured $21 million in restitution for Texas homeowners who were harmed by lending giant Ameriquest Mortgage Co. That case resolved allegations that the company and its affiliates did not clearly disclose certain terms to homeowners, including unpredictable adjustable rates.

Homeowners who believe they have been harmed by this or similar fraudulent businesses may call the Office of the Attorney General’s toll-free complaint line at (800) 252-8011 or file a complaint online at www.oag.state.tx.us .

Resources:
Press Release
Attorney General’s lawsuit against Southern Residential
Temporary restraining order against Southern Residential
Southern Residential TV Commercial

In the following press release The Texas Attorney General, Greg Abbott announced that the 408th District Court has issued a temporary injunction against a Florida-based “foreclosure rescue” scheme. Under the court order sought by Texas Attorney General Greg Abbott, Foreclosure Assistance Solutions, LLC of Florida, and its principal operators, Herb Zerden and Adolfo Quintero, as well as J.W.W. Services, Inc. of California and owner John Woodruff, are prohibited from targeting and deceiving Texans who fall behind on their mortgage payments.

Last September, the Attorney General obtained an emergency restraining order and froze assets belonging to Foreclosure Assistance Solutions and its various operators. The temporary injunction issued this week extends the initial order, securing approximately $750,000 in fees that the defendants charged more than 700 Texans who paid for its services. The monies will remain frozen pending further orders from the court.

“This court ruling prohibits these unscrupulous ‘services’ from unlawfully preying on struggling homeowners,” Attorney General Abbott said. “Texans who fall behind on their mortgage payments should be very wary of anyone promising to save their homes for a large fee. We will remain vigilant and will take aggressive enforcement action to protect Texas consumers.”

According to the Attorney General’s enforcement action, the defendants mailed cards and letters to homeowners who were facing foreclosure because of delinquent mortgage payments. The defendants’ promotional materials boasted established relationships with mortgage companies and banks nationwide. These purported relationships, Foreclosure Assistance Solutions claimed, would enable it to persuade lenders to refrain from foreclosing on its customers.

Homeowners who responded to Foreclosure Assistance Solutions were pressured to immediately sign a $1,200 contract. Once Foreclosure Assistance Solutions received its fee, company representatives rarely interacted with clients. When homeowners repeatedly called the company seeking information or action, they were ignored. Because the terms of the company’s customer contract strictly prohibited homeowners from directly contacting their mortgage companies, Foreclose Assistance Solutions’ inaction worsened the situation for many homeowners.

The temporary injunction prohibits the defendants from continuing to target and mislead troubled Texas homeowners.

The court’s order also requires that Foreclosure Assistance Solutions disclose important account information to its Texas customers. Specifically, the defendants must provide each of its customers with a written statement describing every contact the company’s representatives had with the customer’s mortgage company. The disclosure statement must include the specific dates of contact, the mortgage company representative with whom they spoke, and the results of the contact. If Foreclosure Assistance Solutions representatives learn they cannot prevent a home from going into foreclosure, the company is obligated to notify the home owner within 48 hours. Foreclosure Assistance Solutions must also provide refunds to any of its existing customers it is unable to help.

The Attorney General reminded the company’s customers that they should not wait for Foreclosure Assistance Solutions to contact them about the status of their mortgage. Homeowners need to call their lenders immediately and ask what preventative measures, if any, the defendants have taken on their behalf.

The pending legal action seeks court-ordered restitution for homeowners who were harmed by the defendant as well as civil penalties of up to $20,000 per violation of the Texas Deceptive Trade Practices Act. Additionally, the Attorney General has requested up to $5,000 per violation for failure to register as a business that conducts telephone solicitations.

The Office of the Attorney General is engaged in a variety of efforts to protect Texas homeowners. Last month, Attorney General Abbott launched the Texas Residential Mortgage Fraud Task Force, a partnership that involves key state regulatory agencies to take a proactive stance towards tracking and prosecuting mortgage fraud.

This month, Attorney General Abbott urged three of the largest mortgage lenders and servicing companies doing business in Texas to take steps to address the high rate of foreclosures in the state. In meetings with EMC Mortgage, Countrywide Mortgage and Litton Loan Servicing, he outlined five measures that the companies should implement to restore borrowers’ financial stability, including stepping-up efforts to convert adjustable rate mortgages to fixed-interest loans; subjecting more delinquent loans to mitigation first rather than immediately submitting them to an antagonistic collections process; improving communication and outreach with consumers; waiving penalties and fees while companies work with troubled homeowners; and promptly addressing complaints filed against them with the Office of the Attorney General.

Earlier this year, Attorney General Abbott secured $21 million in restitution for Texas homeowners who were harmed by lending giant Ameriquest Mortgage Co. That case resolved allegations that the company and its affiliates did not clearly disclose certain terms to homeowners, including unpredictable adjustable rates.

Homeowners who believe they have been harmed by this or similar fraudulent businesses may call the Office of the Attorney General’s toll-free complaint line at (800) 252-8011 or file a complaint online at www.oag.state.tx.us .

Resources:
Press Release
Attorney General’s lawsuit against Foreclosure Assistance Solutions
Temporary restraining order against Foreclosure Assistance Solutions
Temporary injunction against Foreclosure Assistance Solutions
Brochure: Avoid Home Buying Scams
Video of Foreclosure Assistance Solutions website
Sample Mailer

In the following press release the Georgia Department of Banking and Finance announced that on October 10, 2007, the Georgia DBF’s (“Department’s”) Order to Cease and Desist issued to Richard Steele of Monroe, Georgia, became final.

Mr. Steele was issued an Order to Cease and Desist by the Department for making misrepresentations in loan files submitted to mortgage lenders.

Pursuant to state law that was in effect when the violations underlying the Order to Cease and Desist were committed, the Department may revoke the license of a mortgage broker or lender that employs an individual against whom a final Order to Cease and Desist has been issued within the preceding three years if the Order resulted from misrepresentations being made in loan documents.

In the following press release the Georgia Department of Banking and Finance announced that on October 10, 2007, the Georgia DBF’s (“Department’s”) Order to Cease and Desist issued to Sonya Hardeman of Covington, Georgia, became final.

Ms. Hardeman was issued an Order to Cease and Desist by the Department for making misrepresentations in loan files submitted to mortgage lenders.

Pursuant to state law that was in effect when the violations underlying the Order to Cease and Desist were committed, the Department may revoke the license of a mortgage broker or lender that employs an individual against whom a final Order to Cease and Desist has been issued within the preceding three years if the Order resulted from misrepresentations being made in loan documents.

In then following press release Illinois Governor Rod R. Blagojevich announced that as part of his ongoing efforts to protect homeowners from the impact of fraud on the value of their property and the safety of their neighborhoods, the State’s Mortgage Fraud Task Force, working with the DuPage County Sheriff’s office and the Illinois Department of Financial and Professional Regulation (IDFPR), revoked the license of Investor’s Choice Mortgage Corporation and its owner Kelli Wilson as well as loan originator Amber Seng.  IDFPR also fined Investor’s Choice $20,000.

The DuPage County Sheriff’s office special investigative unit and IDFPR conducted a search of Investor’s Choice earlier today. After reviewing the evidence collected, criminal charges may be filed as early as Wednesday in DuPage County. 

“Mortgage fraud hurts communities across the state and we’re working hard to protect homeowners and families seeking to own their own homes in Illinois.  Working with local law enforcement agencies should send a message that we won’t tolerate unlawful activities that interfere with a fair housing market,” said Gov. Blagojevich. 

The investigation found that Investor’s Choice Mortgage Corporation, owned by Kelli Wilson (also a loan originator), and loan originator Amber Seng suggested to a married couple that they should falsify the information on their mortgage application so that the loan would be approved.  Initially the couple tried to borrow the funds using the husband’s credit information.  When that effort failed, Wilson suggested that the wife purchase the property using her own credit record. 

Wilson and Seng knew that the buyer, as an investor, was not qualified for a loan under the lender’s no document program, but they urged the buyer to falsify the application to state that the property was to be owner-occupied.  This allowed the buyer to qualify for a loan without having to provide documentation about income, outstanding debts, or other information about her or her husband’s financial situation.

“Promising to live in a home in DuPage County and then using it for investment purposes can weaken the market values in our neighborhoods.  In worse case scenarios, vacant houses can increase the risk of criminal activities in our community,” said John E. Zaruba, DuPage County Sheriff.

Wilson and Seng also had the buyer falsely use one of Wilson’s rental property addresses at 3940 Paradise Canyon Ct, Naperville, Illinois 60564 as her present address with a notation “living rent free” instead of her true address.  Wilson told the borrower that this would improve the likelihood of the lender’s approval of the loan application.

Wilson, through Investor’s Choice, submitted the loan application and file with this fraudulent information to the lender.  The false statements allowed the customer’s no document loan to be approved.  The mortgage was approved by American Brokers Conduit, which has since filed for bankruptcy. 

“We look forward to working with DuPage County as it prosecutes this case.  Governor Blagojevich’s Mortgage Fraud Task Force will continue to pursue cases of mortgage fraud as we continue to protect Illinois homebuyers. We will also refer cases to law enforcement agencies across the state as necessary,” said Dean Martinez, Secretary, IDFPR. 

Investor’s Choice, the mortgage company Kelli Wilson owned, was disciplined about a year ago for failure to cooperate with IDFPR examiners and for violations in its maintenance of office operations and loan file records.

Resources:
Press Release
Investor’s Choice Revocation
Investor’s Choice Fine
Kelli Wilson, loan originator revocation
Amber Seng, loan originator revocation

In the following press release Illinois Governor Rod R. Blagojevich announced that as part of its ongoing crackdown on mortgage fraud and illegal mortgage practices, the Illinois Department of Financial and Professional Regulation (IDFPR) announced its most recent enforcement action against unlicensed practice by loan originators. IDFPR revoked the license of Illinois Mortgage Funding Corporation, in Westchester after Governor Blagojevich’s Mortgage Fraud Task Force (MFTF) found thousands of loans written by unlicensed loan originators and other illegal business practices at the company’s corporate office. 

The investigation began when IDFPR received a complaint on its consumer hotline from a customer of Illinois Mortgage Funding Corp. who claimed that she was not informed of her right to cancel the transaction during the legally allowed cooling-off period.  Following up on this complaint, the Task Force began a comprehensive examination of the firm’s files. It found more than 12,000 home loans applications were taken by unlicensed loan originators.  The examiners also found 9,750 additional entries where the loan originator was not listed in the company’s loan records. Some files were missing Truth in Lending and Good Faith Disclosure documents required to be provided to borrowers before closing.  One file was missing the appraisal listing the value of the property used to secure the mortgage.

“Governor Blagojevich is committed to protect Illinois borrowers from unscrupulous lenders and our department is going to use every means possible to achieve that goal,” said Dean Martinez, Secretary, IDFPR.  “By revoking this license we are sending a signal that we take mortgage fraud and loan originator reporting violations very seriously.” 

Loan originators are registered in Illinois to ensure that borrowers’ confidential financial information is handled only by professionals who undergo criminal and financial checks as well as pass a rigorous examination about home lending processes.  Of the more than 30,000 practitioners working in the field when the licensing retirement took effect, less than half were granted registration after the screening process.  Loan Solicitors are also registered but do not have to pass the exam and may not take mortgage applications from consumers.

IDFPR examiners also found repeat violations from an earlier examination, including: asking customers to sign blank forms intended to lock interest rates at a certain level, failure to notify customers about changes made to their proposed mortgages prior to closing, and boxes of files containing consumer loan information that were marked for shredding before being properly archived. 

“Purchasing a home is the largest investment most Illinois families make and they are entitled to professional, secure and fair treatment when they visit an Illinois residential mortgage licensee,” said Jorge Solis, Director, Division of Banking, IDFPR. “Companies and loan originators licensed by IDFPR must meet the highest standards of consumer protection and business practices.”

In addition to individual loan files that were incomplete or misfiled, Illinois Mortgage Funding Corporation failed to notify IDFPR that it had two judgments entered against it for $36,000.  It also failed to make public that it had a business affiliation with Global Title Company.  While such affiliations are not illegal, Illinois residential mortgage licensees are required to notify IDFPR about such affiliated business arrangements so customers are aware there might be a conflict of interest.

The original consumer complaint also resulted in revoking the licenses of two employees at Illinois Mortgage Funding Corporation.  A loan solicitor, Rodolfo Martinez, took the consumer’s application, which is against the law.  Only registered loan originators may take applications for loans at residential mortgage companies.   Martinez’s cousin, Francisco Herrera, a registered loan originator, signed off on the loan documents Martinez handled to ensure that the loan would be funded and the violation would not be caught. 

In addition to numerous mistakes on the paperwork, Martinez failed to provide the customer with the Notice to Cancel form which would have explained how the customer could cancel the loan during the legal time period.  When the customer tried to cancel the loan, Martinez failed to respond to her telephone calls or emails.  Martinez attempted to pass the exam required of loan originators and failed the exam in July.

Current customers of Illinois Mortgage Funding Corporation will be permitted to close their loans with IDFPR confirmation of loan application dates, but the company will not be allowed to take any new loan applications once the license revocation takes effect.  The company has 10 days after notification under state law to request an administrative hearing on the revocation order.

Resources:
A copy of the Order Revoking Loan Originator Registration for Francisco Herrera is available by clicking here.
A copy of the Order Revoking Loan Originator Registration for Rodolfo Martinez is available by clicking here.
A copy of the Order Revoking License for Illinois Mortgage Funding Corporation is available by clicking here.
Press Release

In a press release the Colorado Division of Real Estate announced that the Board has alleged that Pueblo appraiser James Esters overvalued eight Pueblo properties. The Board assessed a $24,000 fine. Mr. Esters agreed to permanently surrender his appraiser license and pay $7,500, the balance of the fine becoming due should he attempt to reapply for licensure.

Overvaluing property contributes to the state’s rising foreclosure rate. “We will aggressively pursue appraisers who demonstrate a pattern of overvaluing properties,” said Erin Toll, Director of the Division of Real Estate. “We will be taking a particularly close look at valuations in Greeley and Pueblo, counties with extremely high foreclosure rates.”

In the Final Stipulation (Order) for this case order the Board looked at 8 properties:
2681 Emilia Street, Pueblo
1230 Elm Street, Pueblo
1800 E. Evans Ave, Pueblo
1712 Quillian Avenue, Pueblo
1322 Bragdon Ave, Pueblo
2026 E Routt Street, Pueblo
1716 Jones Avenue, Pueblo

In addition the appraisal of a further property at 1706 Spruce Street, Pueblo was referred directly to the Colorado Attorney General. Click here to read the order.