Mortgage and title Fraud

Mortgage Fraudsters Continue to Pay

Mortgage fraudsters continue to pay as can be seen in yet another federal trial. The FDIC and CFPB are hard at work with the DOJ and a host of others continuing to clean up the mortgage debacle from the 2008 Crash. I hope that the severe penalties and continuing cleanup will make other fraudsters think twice. It seems you can’t regulate ethics, but perhaps punishment will suffice.

After an 11-day trial, a jury found a husband and wife guilty of conspiracy and bank fraud that totaled $49.6 million.
Domenico “Dom” and Mae Rabuffo were convicted of participating in an elaborate scheme to defraud banks of tens of millions of dollars in connection with a development known as Hampton Springs in Glenville’s Big Ridge community. The crimes are alleged to have occurred between 2003 and 2008.
Dom Rabuffo, 77, of Miami, and Mae Rabuffo, 75, of Fort Lauderdale, Fla., and Williston Park, N.Y., were found guilty of conspiracy to commit bank fraud and wire fraud affecting a financial institution. Dom Rabuffo was charged with multiple counts of bank fraud.
Sentencing by Chief U.S. District Judge Kevin Moore is expected to take place Sept. 25. They each face a maximum of 30 years in prison for each count.
read more at the Sylva Herald

Who is Responsible for Who Gets Paid?

Whos on FirstWho to pay?  It starts to feel a little like “Who’s on first, What’s on second and I-don’t-know is on third” when we start to look at complicated mortgage transactions these days. We have mortgages, deeds of trust, lenders, assignees, beneficiaries, lender’s servicing agents, trustees, securities, exchange securities, and more.  

Here, as happens, title companies are charged with collusion in a complicated Ponzi scheme. I question how we legitimately know who should be paid in some of these complicated transactions.  Should the check for a payoff go to the Lender holding the Mortgage or to the Servicing Agent, in hopes it will be properly credited? Did the title company know the scheme?

From Lexology Title Insurance Article by Carlton Fields, an interesting read:

Escrow Agent: Where payments are disbursed to lender’s servicer and escrow agent has not knowledge of servicer’s scheme to defraud lender, lender fails to state a cause of action against escrow agent — Fazeli v. Williamson, No. H036951 (Cal. App. March 27, 2014) (affirming escrow agents’ objections)

State of Delaware Sues MERS

In a new twist, the State of Delaware is suing MERS under the Unlawful and Deceptive Trade Practices Act (UDTPA.) The suit claims that MERS has left for borrowers “no public trail by which anyone can identify the principals or verify the propriety of the (mortgage) transfer.” The private and obscure nature of their database makes it difficult for consumers “to know of or challenge inaccuracies in the MERS System”  i.e. – who the heck holds the mortgage and who the heck has the right to foreclose?  Read more at Delaware Online

Chicago Title Employees Accused of Fraud

Chicago Title employees together with Rollo “Rick” Norton, a financial planner and leader of a scheme were accused by 19 people who said they lost their investments in a San Diego condominium project because of sham real estate transactions.  Investors claimed insiders at Chicago Title helped Norton prepare and sign fraudulent documents. Norton pleaded guilty to mail fraud in connection with the scam and told the jury that an escrow officer and a local office supervisor at Chicago Title knew what they were doing was wrong. The Court agreed.  See more at Bloomberg.com

Some Loan Servicers Run a Scam

A great article by George Mantor at RisMedia points out problems with some loan servicers. It reads in part:
“Servicing, the collecting and distributing of mortgage payments, is the land of opportunity…Who is in a better position to exploit a defaulting borrower than a person posing as someone who wants to help? And, it’s all part of a scam…”

link to  RisMedia article here

Forest Lake Title Company in Bankruptcy

Strand Closing Services of Forest Lake has filed bankruptcy, according to a MN Commerce Department news release. The Dept Commerce is charging Strand, among other things, with allegedly failing to record title documents, failing to remit title insurance premiums, using fraudulent, coercive or dishonest practices and demonstrating incompetence, untrustworthiness or financial irresponsibility. See more at Twin Cities.com

MN Dept Commerce Takes Action against Embezzeling Closer

Used with Permission of Robert Franco, Source of Title
The Minnesota Department of Commerce has summarily suspended the real estate closing license, resident insurance producer license and Notary Public commission of Kuntee Singramdoo and charged her with embezzling over $230,000 in real estate closing proceeds and using the money to pay off her own creditors or her family members’ creditors.

Singramdoo, a resident of Lakeville, was an independent closer hired by Walsh Title & Real Estate Services, where she provided real estate closing services, sold title insurance policies and notarized real estate documents. The Commerce Department complaint alleges that Singramdoo engaged in a pattern of misappropriating, converting and/or embezzling settlement proceeds by issuing Walsh Title checks for her own benefit or for the benefit of her family members.

The alleged embezzlement includes at least 184 checks issued between February 2004 and June 2007 to 24 different creditors including $68,109 to U.S. Bank, $48,863 to Wells Fargo, $800 to JC Penney, $4,764 to Macy’s, $6,286 to Goodman Jewelers, $800 to Bloomingdale’s, $6,866 to Honda, $2,734 to American Express and $2,323 to Discover.

Singramdoo admitted under questioning from Commerce Department investigators that she embezzled the funds but at this time has only paid back $10,000 to Walsh Title.

Singramdoo accomplished the embezzlement by entering her own creditors on the HUD-1 mortgage loan form as if the debts belonged to the buyer or seller and subsequently issued checks directly to the creditors in her name. She also changed HUD-1 mortgage loan documents after closings to reflect the fraudulent payments.

“This brazen embezzlement scheme is a warning to everyone to pay close attention to the loan documents you are signing during the closing of a mortgage,” said Glenn Wilson, the commissioner of Minnesota’s Department of Commerce.

It's up to YOU to Protect your Privacy

Here is an adaptation from Wesley Darity’s PrivacyGurus Newsletter. It is a good reminder that we often don’t think when giving out private information that could turn into a huge problem!

“…(It is important for) everyone from senior citizens to grammar schoolers to stay aware and alert. After all, the U.S. Constitution does not provide any explicit right to privacy so we have to take it into our own hands.

There are four general areas of privacy: bodily, territorial, communications, and information.

  • Bodily Privacy- We expect that our bodies are private, unless we as a society have agreed otherwise. For example, if we are in an airport security line and the metal detector beeps as we walk through the scanner. We expect to be searched. Or if we agree to having drug tests as a condition of employment. Or if we are renewing our driver’s license and agree as a condition of having that license to submit a thumb print.
  • Territorial Privacy- We expect that our homes are private. However, when we walk into a convenience store or up to the ATM, we know or should know that we are being video-taped. Or  we are at an intersection with a red light traffic camera there to record violators of the red light.
  • Communication Privacy- We expect that our personal conversations are private. But our expectation changes, or should change, if we are on a cell phone versus a land line. We expect that our letters signed, sealed and mailed with the postal service are private but our expectation changes, or should change, when sending email. It is not in any way “private”.
  • Information Privacy- We expect that our financial information at the bank and the health concerns we discuss with our doctors is confidential. However, anyone can watch what our work-out routines are at the fitness center and we expect that a number of people will know what we buy at the store. The act of purchasing is a public act, for which there is no reasonable expectation of privacy.

It is important for each parent/guardian of a school-ager, from elementary school through college, to provide them with ways to protect their privacy while out in the world. It is becoming as critical as not accepting rides from strangers.

Privacy Rule 1- You have rights. Know and let your child know that it is a good idea to say NO to requests for unnecessary information. Schools, athletic teams and pediatric offices routinely request Social Security Numbers for registration purposes. Before giving that information, always ask if it is this required and by whom. If you do not like the answer, then decline to provide the data. Remember: Social Security cards are not a form of identification.

Rule 2- Always Beware. The best way to protect your/ your child’s identity is by teaching them that documents containing their personal information, such as social security cards, bank statements, and passports, should be locked up in a safe place rather than carrying them around everywhere.

As always, be aware and alert as to the information you divulge online. Assume that none of it is confidential unless overtly stated in the website’s privacy policy. Know that your every move online may be tracked by sophisticated technology poised to collect your data.

Thanks, Darity, We will try to remember and pass on your good advice. Darity can be reached at [email protected] 

 

Can Massive Legislation be Far Behind?

From the Providence Journal

The former owner of a title insurance firm in East Providence pleaded guilty yesterday to a federal fraud charge for looting more than $1.3 million from company accounts and using the money for vacations, hair care, cosmetics and clothing. The FBI launched an investigation into the missing money in April 2007 amid allegations that owners may have emptied more than $800,000 from client accounts at Title America Closing Services LLC, an agent for Stewart title.

 “We see a steady stream of these types of cases,” Connell, the spokesman for U.S. Attorney Corrente, said.

Can massive legislation be far behind, because the title insurance industry  seems to be unable to police itself and the FBI, Secret Service, State Regulators and others are all getting involved to prosecute and clean up the messes.

Info On Home Closing

Home Closing 101: An Educational Initiative of the American Land Title Association