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Rachel Dollar, the editor of Mortgage Fraud Blog, is an attorney and Certified Mortgage Banker who handles litigation for lending institutions and secondary market investors. She is an author and a nationally recognized speaker on the topic of mortgage fraud. Ms. Dollar is a shareholder with the law firm of Smith Dollar, PC, is licensed to practice law in California and maintains offices in Santa Rosa, California. Email Ms. Dollar
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Massachussets Increases Loan Fraud Enforcement and Regulation
The Massachusetts Division of Banks announced the implementation of a coordinated plan designed to address abuses by rogue mortgage lenders and brokers. Several recent investigations have produced evidence that some mortgage lenders and brokers have purposely steered perspective consumers, often of low and moderate-income or limited English language ability, into loans that they can not afford by using misleading tactics and, in some cases, committing fraud.
‘We cannot allow the record gains in homeownership over the past 15 years in low and moderate-income communities across the Commonwealth to be lost,‘ said Commissioner of Banks Steven L. Antonakes.
The plan combines enforcement and regulatory initiatives, community and industry partnership and outreach, including a planned fall summit of government, industry, and non-profit organizations to craft a coordinated statewide foreclosure prevention strategy.
The Division’s numerous actions to fight abusive lending practices include the following initiatives:
Enforcement:
The Division has launched multiple surprise examinations of mortgage lenders and brokers that are continuing, specifically directed at companies in low and moderate-income communities. Division examiners are focusing on stated income loans and looking for any evidence that borrowers’ incomes were inflated and borrowers were purposely steered into loans they could not afford.
The Division recently issued cease and desist orders against two licensed mortgage brokers and two unlicensed entities in Lawrence. The Division issued cease and desist orders against four additional licensed mortgage brokers and three unlicensed entities. Initial findings from on-site examinations according to Antonakes indicate that additional enforcement actions will soon be taken.
The Division-issued an industry letter to all licensed mortgage lenders and brokers and financial institutions threatening immediate and severe action should any evidence of inflating borrower income be found.
‘Putting these abusive companies out of business will be the minimum action we will take,’ added Antonakes.
The Division has established a mortgage fraud hotline for consumers to call if they believe they have been victims of unfair and deceptive mortgage practices. The number is 800-495-2265 extension 1501.
‘I would encourage individuals to call the mortgage fraud hotline, said Antonakes. ’Consumer complaints remain one of our most valuable sources of timely information to identify illegal lending activities.’
Regulatory Initiatives:
The Division issued emergency amendments to its regulations which govern the supervision of mortgage lenders and brokers. These changes significantly expand the number of existing prohibited acts and practices that constitute grounds for the issuance of cease and desist orders and license suspension or revocation.
The Division is continuing to dedicate significant resources to the development of a nationwide mortgage database of mortgage professionals. This project has been underway for more than 18 months and is being built through the Conference of State Bank Supervisors, the organization of all state banking departments. The implementation of the database is essential to fill cracks in the existing regulatory framework and reduce fraud. Specifically, the nationwide database would eliminate the ability of bad actors to move from state to state by providing a comprehensive listing of enforcement actions taken by all state regulatory agencies. In addition, the system would require fingerprinting and full access to existing national criminal databases.
‘A significant limitation of our existing licensing process is that we only have access to Massachusetts criminal offenses. Given the number of regional and national lenders we regulate, full access to the national criminal histories is essential,’ said Antonakes.
Outreach & Partnership:
In addition to the Division of Banks anti-fraud initiatives, there is a need for a comprehensive strategy made up of government, industry and community groups to address the broader issue of foreclosures. The increase in foreclosures is precipitated by current market conditions, including rising interest rates, a slowing real estate market, and a lack of financial education which have contributed to the up tick in foreclosures rates in Massachusetts and nationwide.
Director of Consumer Affairs and Business Regulation Janice S. Tatarka announced that her office and the Division of Banks will host a mortgage summit this fall. The summit will bring together government, industry, and nonprofit organizations in an effort to address the increasing number of mortgage foreclosures across Massachusetts and to develop a statewide foreclosure prevention strategy that will also put into place lasting measures to provide additional, meaningful measures to help consumers confronted with the loss of their homes. The summit agenda will include the discussion of the development and delivery of pre and post home purchase, financial education and counseling, additional statutory changes, and the creation of a source of funding for borrowers to refinance out of loans with high interest rates and unmanageable terms.
‘I am confident that the Division’s anti-fraud actions will go a long way toward policing rogue mortgage lenders and brokers,’ said Tatarka. The summit will bring together a broader group to develop a coordinated strategy to deal with the issue of rising foreclosure rates.
Thomas Callahan, Executive Director of the Massachusetts Affordable Housing Alliance noted, ’MAHA applauds the actions of the Commissioner of Banks. Today’s actions are an important step in reining in these out of control companies and brokers. We look forward to working with the Division of Banks as we seek other long-term solutions to all of the problems that rob homeowners of the American Dream.‘
‘We agree that a comprehensive mortgage foreclosure strategy is necessary and look forward to participating in the summit,‘ said Kevin F. Kiley, Chief Operating Officer of the Massachusetts Bankers Association.
‘The Massachusetts Mortgage Association agrees with the Division that immediate remedial action needs to be taken against any fraud practices in our industry and considers the mortgage summit a vital opportunity to aid in facilitating the eradication of such practices and to advance a foreclosure prevention strategy throughout the Commonwealth,‘ said Massachusetts Mortgage Association Executive Director Denise M. Leonard. ’We are eager to be at the table with all interested parties and to contribute to the development of solutions to these unsettling issues.‘
Failed Mortgage Firm Trustee Allowed $50,000 in Fees Union Leader
U.S. Bankruptcy Court Judge J. Michael Deasy will approve $50,000 in legal fees for the trustee of failed mortgage brokerage businesses Financial Resources Mortgage Inc. and CL&M Inc.
Bend Oregon Event to Help Homeowners Prevent Foreclosures Oregon.Gov
As part of an ongoing effort to help homeowners avoid foreclosure, state agencies are organizing a foreclosure-prevention event in Bend on Saturday, March 27, 2010.
Shelbyville Man Gets 2-Year Sentence For Loan Fraud Chattanoogan.Com
Prosecutor Gary Humble said the lost was approximately $2.3 million in the mortgage fraud involving hundreds of homes in the Shelbyville area.
Lend America, VP Ashley Banned from FHA Housing Wire
Michael Ashley, the embattled former vice president of Federal Housing Administration (FHA)-backed mortgage originator Lend America, and the company he worked for, were permanently banned from doing business in the industry last week.
Countrywide Tries to Pin Blame on Insurer Court House News
Countrywide Home Loans demands $111 million from Triad Guaranty Insurance, claiming Triad is trying to blame mortgage lenders for the insurer's role in the housing bubble and collapse.
Investors Say They Were Swindled in Property Scheme Fox 13 Now
Utah Division of Consumer Protection is joining forces with a few investors who claim they have been cheated by an agency called "Utah Mini Ranches.
Greenfield Man Accused of Housing Scam The Republic
A former real estate agent conned at least eight people by renting them properties actually owned by a federal agency and then running off with their deposits, prosecutors said.
Appraisal Institute Opposes Obama Administration's Plan for Homeowner 'Short Sales' PR News Wire
Citing concerns about increased mortgage fraud, four organizations representing more than 35,000 real estate appraisers today voiced their opposition to changes to an Obama administration program that will encourage "short sales" of homes.
Ownership Rights to Get Another Look TBO.Com
State lawmakers may beef up protections of property owners' rights by rewriting a law this spring that is at the center of a case of alleged fraud in Pasco County.
Thursday, February 18, 2010 F. Jeffrey Miller Trial Continued Testimony
As reported by Anne Mitchell, who viewed the trial:
Angela Parenza worked for Jeff Miller as the office manager for 7 or 8 years beginning in 1998. Parenza was indicted along with Miller and pled guilty to conspiracy to commit bank fraud and money laundering. Parenza testified that Miller or his contractors allegedly preferred to build all the...
Wednesday, February 10, 2010 F. Jeffrey Miller Trial Coverage Continued - Witness Testimony
Steve Middleton Testimony - Coverage Provided by Anne Mitchell
The Government continued in its cross examination of Steve Middleton. He was shown several HUD-1 statements involving sales of homes located in Overland Park, KS, and Olathe, KS. The HUD statements each allegedly showed line items of payments to (James) Moser & Associates, LLC's...
Monday, February 01, 2010 F. Jeffrey Miller Trial Coverage - Continued Witness Examination
According to Anne Mitchell, who is present in court for the trial:
Next Witness: Kelly Sanford
Kelly Sanford of the Federal Reserve was a short witness for the Government. Sanford manages electronic payments between banks and member financial institutions. He was shown copies of wire transfers and asked whether they coincided with the counts in...
Wednesday, January 27, 2010 F. Jeffrey Miller Trial - Prosecution Witnesses Continued
According to Anne Mitchell, who is viewing the trial:
January 13, 2010
Witness: Rick Hayes
Rick Hayes testified that on the day that he closed on his Miller Enterprise home, he received a phone call from the Kansas Banking Commission informing him that his loan was fraudulent. After the Hayes responded to a classified ad, they met with John...
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The information and notices contained on Mortgage Fraud Blog are intended to summarize recent developments in mortgage fraud cases and mortgage banking matters nationwide. The posts on this site are presented as general research and information and are expressly not intended, and should not be regarded, as legal advice. Much of the information on this site concerns allegations made in civil lawsuits and in criminal indictments. All persons are presumed innocent until convicted of a crime. Readers who have particular questions about mortgage banking, mortgage fraud matters or who believe they require legal counsel should seek the advice of an attorney. The creators, editors and sponsors of Mortgage Fraud Blog do not intend to create a confidential relationship or an attorney-client relationship by communication via or arising from this site.
Rachel Dollar, the editor of Mortgage Fraud Blog, is an attorney and Certified Mortgage Banker who handles litigation for lending institutions and secondary market investors. She is an author and a nationally recognized speaker on the topic of mortgage fraud. Ms. Dollar is a shareholder with the law firm of 
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