Hathaway Duke

Stevie L. Johnson, a former licensed Escrow Officer, was sentenced to 40 years in prison for his part in a multi-million dollar mortgage fraud scam in the Houston, Texas area.  The case involved the fraudulent acquisition of mortgage loans associa…

The mortgage fraud trial involving Nelson Miller, owner of Freedom Financial Services, resulted in a hung jury. A mistrial was declared on November 19, 2007. A new trial date has been set for January 2, 2008. As previously reported by Mortgage Fraud …

From MPR: Minnesota’s predatory lending law went into effect on Aug. 1 with a goal of reducing the number of foreclosures in the state. But some e say the new law is making it more difficult for them to get a loan, even though they haven’t done anything wrong. In a piece that sets out to describe some of the unintended consequences of Minnesota’s freshly minted anti-predatory lending laws, the MPR perpetuates a bit of mythology that we want to debunk here and now. Minnesota’s predatory lending law eliminated a large number of high-risk loans. The law was designed to stop mortgage brokers from making loans that require little or no documentation of a home buyer’s income and assets. The law did not eliminate these high risk loans - it simply restricted lwhich lenders had access to them. Under the new law, stated income loans remained alive and well - just not through a broker. You had to get it through a bank. Or at least that was the plan. But a funny thing happened on the way to legislative bliss. [read the rest after the jump]

Graphic via MSNBC Last Week: Though the short week was fairly volatile, most conforming mortgage rates remained unchanged, and still hover at or near the low point for 2007. This Week: A very full economic calendar this week, with a number of reports that will give us a glimpse of the state of the economy and of inflation. As for inflation, The GDP chain deflator, and PCE (personal consumption expenditures) index, both key measures of inflation, print on Thursday and Friday, respectively. On the economic front, GDP, consumer confidence, existing and new home sales, and durable goods orders will give the market a lot to digest. Any signs of a weakening economy may help move mortgage rates lower - signs of economic strength, especially if they coincide with rising inflation will move rates up. This Week’s Economic Calendar [Barron’s]

Harold Stafford, Miles Jackson Black and Jeffrey Dunn Hathcock were indicted by a federal grand jury for conspiracy, wire fraud and bank fraud. In addition, Harold Stafford was charged with money laundering. The fifty-one count Indictment alleges tha…

Alejandro Lopez, Emilio Lopez, Ravinderjit Singh Sekhon, and Linda Velasquez each pled guilty in federal court in San Diego, California to conspiracy and wire fraud charges.

According to the criminal information, Alejandro and Emilio Lopez were two of the owners of Century 21 El Dorado, a San Marcos, California firm that offered real estate and home financing services targeting mostly Hispanic clientele in the southern California area. Alejandro and Emilio Lopez headed the “Lopez Team,” which consisted of, among others, loan officers, loan processors and real estate agents who conducted fraudulent real estate and loan broker activities. Ravinderjit Singh Sekon was a loan officer, and Linda Velasquez was the office manager. The Lopez Team obtained funding for financially unqualified clients from several sub-prime lenders who offered stated or no income verification loans at higher interest rates than conventional loans. To secure the loans, they submitted false information on loan applications and false supporting documents to lenders. During the conspiracy, they brokered fraudulent loans (including first and second mortgages), averaging approximately $400,000, for over 200 unqualified clients.

As part of their guilty pleas, the defendants admitted that they solicited clients at swap meets and by advertising in Spanish language newspapers and publications and on Spanish language radio stations. At times they used third parties with higher credit scores as “straw buyers,” misrepresenting to lenders that the third parties would occupy the homes. To fraudulently qualify clients for loans, the Lopez Team inflated clients’ incomes and bank account balances; falsified employment, rent, and credit information; misrepresented that clients were United States citizens; used altered social security cards and bank statements; and purchased from tax preparers letters that misrepresented that clients were business owners and that the tax preparers had prepared the clients’ tax returns. When lenders called to check the references, they impersonated employers, landlords, and creditors to falsely verify the information.

The defendants admitted that they obtained $1,070,000 in loan commissions from their fraudulent loan activities. As part of their plea agreements, Alejandro Lopez, Emilio Lopez, Sekhon, and Velasquez have agreed to repay to the Government their illegal gains, totaling $1,070,000, in the form of forfeitures or fines.

United States Attorney Hewitt said, “In the midst of our nation’s sub-prime loan crisis, the U.S. Attorney’s Office is committed to prosecuting fraud schemes such as this one and will aggressively pursue those who attempt to circumvent lenders’ loan requirements.”

FBI Special Agent in Charge Keith Slotter commented, “We continue to investigate allegations of mortgage fraud, not only because of the wrongdoing that is associated with this particular criminal behavior, but because we are committed to protecting many Americans from paying higher mortgage rates as a result of unscrupulous behavior on the part of a few.”

Sentencing is scheduled before Judge Marilyn L. Huff on February 4, 2008 at 9:00 a.m., in federal court in San Diego.

As you can see in the chart at right, the mounting losses at Fannie Mae and Freddie Mac, the two government sponsored enterprises who buy and guarantee 40% of US Home loans, have punished stock prices in the two mortgage giants. And the buck won’t stop at investors portfolios. Beyond the meltdown in share prices, the impact of these losses will soon be felt by the average consumer, when Fannie and Freddie begin charging a hefty new premium for borrowers whose credit scores fall below 680 - a solidly average number. Take a look at the table below: Quick Translation: “Price increase to Discount” means additional up-front “points,” as a percentage of loan amount required. LTV = Loan amount divided by sales price. Ex: 20% down = 80% LTV In other words, if you are buying a $350,000 property, putting 20% down ($280,000 total loan amount) with a 659 credit score, you will be charged an additional 1.25% or $3500, for the same rate as a borrower with a 680+ credit score. Though this premium can be absorbed by taking a rate .375-.5% higher (in lieu of the up-front charge,) it will still result in quite a hit for those with mostly average credit scores. This is a big deal precisely because credit scores between 620-680, though not perfect, were fairly easy to lend upon even with a modest down payment, and rarely resulted in higher rates or fees. Though timelines will vary, expect most lenders to implement these changes on loans closing after Dec 31st 2008 - right around the corner in real estate time. Raising one’s credit score can take 60 days or more, so if you have not been taking an active role in managing your credit score, start now. The price of average credit just went waaay up. Ready to turn over a new credit leaf? Here’s a couple of resources: ?? AnnualCreditReport.com: The only source for truly free credit reports (though you will pay for the score.) ?? My Fico: Loads of great information and credit management tools, straight from the horses mouth, Fair-Isaac. Mortgage Giants Fuels Worries with Steep Losses [WSJ]

Michael Eliasof, Mahwah, New Jersey, was charged with conspiracy to commit money laundering in a criminal information filed on November 14, 2007. According to the information, Eliasof assisted underqualified borrowers to obtain financing from several l…

New Mexico Attorney General Gary King reports that people facing foreclosures and seeking bankruptcy relief are being victimized by unscrupulous companies that are making their money problems worse, not better.  Consumers are being contacted by co…

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