Monday, October 13, 2008

Two Indicted in Cash Back Mortgage Fraud Scheme

Derek Davis aka Terry McCullough, 62, Sacramento, California, and Dino Rosetti, 39, Roseville, California, were indicted on charges of mail fraud and making false statements in loan documents. Davis was separately charged with attempting to cause a financial institution to fail to file a currency transaction report, and Rosetti was separately charged with engaging in a monetary transaction in criminally derived property in an amount greater than $10,000.

Rosetti was recently arrested by federal agents. Davis was previously arrested on a criminal complaint and is in custody. Both defendants are scheduled to be arraigned on the indictment before United States Magistrate Judge Kimberly J. Mueller in Sacramento.

According to Assistant United States Attorney Courtney J. Linn, who is prosecuting the case, the indictment charges that from June 2005 through December 2006, the defendants engaged in a scheme to defraud mortgage lenders in connection with residential real property purchases in Sacramento, El Dorado, and Placer Counties, California. Davis recruited various individuals, including straw and nominal purchasers, to purchase 16 real properties. Davis orchestrated the transactions and Rosetti, through his company 1st Option Mortgage, acted as mortgage broker.

The indictment charges that the transactions involved fraudulent or false representations to obtain 100% mortgage financing, including misstatements about the purchasers’ monthly income, intent to occupy the property, and existing liabilities. In addition, the indictment charges that in each transaction the purchase price was above the true market price of the property. An amount approximately equal to the difference between the purchase price and the true market price was then diverted as “cash back” at the close of each escrow to the bank account of a Nevada Corporation called Calorneva Land Company. These credits ranged from approximately $42,000 to nearly $138,000. As part of the scheme, Davis caused these credits to be concealed from the mortgage lenders. The indictment charges that Davis in fact exercised control over the Calorneva Land Company bank account and used the fraudulently-obtained funds for various purposes, including extensive cash withdrawals.

“Over the course of numerous investigations we have seen how fraud-for-profit mortgage schemes took root in our Sacramento-area housing market, particularly in this 2005 to 2006 time frame,” said U.S. Attorney McGregor Scott. “There were undoubtedly many catalysts to the lending crisis that now grips our national economy. Mortgage fraud was one of them. As this investigation illustrates, the Department of Justice is committed to prosecuting those responsible for mortgage fraud, and to working with federal, state, and county law enforcement agencies to investigate and prosecute those involved in these activities.”

The maximum penalty for mail fraud is 30 years in prison if the fraud affects a financial institution, and a fine of up to $250,000, or twice the value of the gain or loss, whichever is greater . The maximum penalty for making false statements in loan applications is 30 years in prison and a fine of $1,000,000. The maximum penalty for engaging in monetary transactions involving more than $10,000 in crime proceeds is 10 years in prison and a fine of $250,000, and the maximum penalty for money laundering is 20 years in prison and a fine of up to $500,000 or twice the value of the money laundered, whichever is greater. The maximum penalty for causing or attempting to cause a financial institution to fail to file a currency transaction report is ten years in prison and a fine of $500,000. The actual sentence, however, will be determined at the discretion of the court after consideration of the Federal Sentencing Guidelines, which take into account a number of variables and any applicable statutory sentencing factors. 

The charges are only allegations and the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt

mortgage fraud

1. What Is Loan Modification And How It Can Help Homeowners

   We’re all experiencing hard times. The economy went down the drain and most of us can’t afford to pay our bills nor our homes. Credit card companies tightening up their regulations and so mortgage companies, so we can’t fix an adjustable interest rate to get a more affordable mortgage payment. Also some of us are loosing their jobs on top of it, so how we can change it?

   First of all I personally think that we can change it by being strong and patient. Of course being patient and strong will not put money in your pockets, but it will definitely keep your health and your hope in order.
   You have to understand that probably 90% of the population in America and the whole world is experiencing the same problems as you do.

   So what is loan modification?

   While you’re struggling to make your mortgage payments due to economic changes, the banks and the government developed programs that can help you. The government has many reasons to help homeowners, some of the reasons are:

   1.  Try to stabilize the economy so it will not crush completely.
   2.  Banks approved so many bad home loans.
   3.  Greed in Wall Street, as well as bank ceo’s and owners.
   4.  Government couldn’t oversee financial crash
   5.  Innocent and not innocent homeowners that took loans they couldn’t afford from the beginning.

   Ok now back to the loan modification process, what is loan modification? Loan Modification is a adjustment of an existing mortgage a homeowner have, it can be with a government loan or a bank loan. Let’s say you had a 6% interest rate on your mortgage that was matured and now the interest rate have changed to 7%. Now it’s harder for you to make the payment due to increase in the payments and the fact that your job don’t pay you the same as before. This is a perfect example of an average homeowner in America today. So what do you do?

   There are two different ways you can go with. You can do it your self or higher a professional mortgage modification broker to do it for you. Let’s assume for a second you do this your self, what are the steps to do it your self?

   1.  You contact your bank
   2.  You will ask for the loss mitigation or collection department.
   3.  Give them a brief of your financial background today- expenses and income.
   4.  Write a hardship letter. You basically tell them in the letter why you can’t make the payments.
   5.  They would want to see also some bank statements or pay stubs.

   After talking to you on the phone they will process everything you’ve submitted to them. They want to make sure that this time if they will lower your interest rate and make some adjustments for you, if you could make the payments in order without defaulting on the loan. This process is almost as qualifying for any loan, so you need to know how to qualify your self with no mistakes. I would definitely recommend hiring a professional to do this for you, since they know the market and how to make things happen to you in a legitimate way of course.

   The process of a loan modification approximately can take up to 3 months, but it’s definitely worth it. You can get a much better interest rate on your mortgage and some banks can also reduce your principle. That’s right, you can also lower what you owe on your property, but you will need a very good reason to do that.

   There are some mortgage companies and law firms that help homeowners and real estate investors with loan modification. I think that you definitely need to contact a professional do this for you. Be careful from scam artists, because for this service you normally need to pay up front and there are many people out there that will take your money and will not deliver what they’ve promised.

   Good Luck.

   Yanni Raz
   

   Posted by  on  10/22  at  10:08 AM

2. interesting article thank you.

   Posted by  on  10/25  at  08:17 AM