According to the Grand Jury Indictment filed January 20, 2010, Susan Lynn Maroon defrauded Guaranty Bank. Ms. Maroon was a mortgage broker who was the owner of Maroon Mortgage in Eldridge, Iowa. Guaranty Bank required that Ms. Maroon's borrowers had $500 in the bank to qualify for the loan. Apparently these particular borrowers did not have enough money in the bank to qualify. The indictment says that over a period of five days, she gave the borrowers a total of $1,250 to put in their account, and then, after Guaranty verified that the borrowers had the money in their bank, Ms. Maroon had the borrowers withdraw the money and return it to her. Of course, logic would tell us that since these folks did not even have $500 of their own money in their bank account prior to closing, they might default on the loan. They did. The indictment claims that Guaranty lost more than $88,000 after the borrowers defaulted.
What can be the justification here? That she was trying to help these folks out by allowing them to purchase a home? They lost their home and their credit is trashed. Sure, the borrowers have responsibility here, but they would not have been able to get in this position without the complicity of Ms. Maroon as alleged in the indictment. If you really want to help someone in such a situation, tell them to come back when they were in a position to legitimately qualify for the loan, maybe even give them suggestions on how they could get there.
According to PACER, the trial is set for April 5, 2010.
Update: The trial has been continued to May 3, 2010.
Update 2: The trial has been continued to August 2, 2010.
www.thomasmoens.com
Tuesday, March 9, 2010
Monday, March 8, 2010
A Scam Directed at Veterans
A client recently received a letter from Department of Veterans Assistance. Sounds suspiciously like Department of Veterans Affairs, no? It is not a government agency, which you can plainly see by reading the 5 point type buried at the bottom of the page. But they have a fancy military looking shield for a logo, their document is entitled IRRRL-1030 Benefit Allotment Form 792-B Eligibility Notification Reinvestment Initiative, and shows a very government looking "Case #." And when they answer the telephone, the automated attendant says, "Welcome to the Mortgage Division." Even though they are "not a part of any government agency, they are sure trying to, um, imply?, otherwise.
The letter advises that the Department of Housing Assistance (not the Department of Housing and Urban Development. No, no, not even close!) "in accordance with the 2009 Economic Stimulus Act must inform Federally Insured homeowners that FHA or VA insured mortgages must reflect the rate modifications passed by this office" Um, what? It goes on in excruciating faux-government-speak to tell you that you MUST call or horrible things will happen, and you are foolish if you do not call because you might get to skip TWO MONTHS of payments. That can happen with any refinance. You just pay the interest at closing. Notice, they do NOT say you get to skip two months of interest. The letter is signed by the Director of Veterans Assistance, Cynthia Moore. What a lofty title, Cynthia.
Maybe they have a nice interest rate and reasonable fees for our veterans. But the underhanded way they try to get them to call leads me to believe that may not be the case. In case you were not counting, we have three different names for this outfit. I almost forgot to mention that even though their address is a PO Box in Washington, DC (are there few government agencies in that town?), the letter was apparently mailed from California.
www.thomasmoens.com
The letter advises that the Department of Housing Assistance (not the Department of Housing and Urban Development. No, no, not even close!) "in accordance with the 2009 Economic Stimulus Act must inform Federally Insured homeowners that FHA or VA insured mortgages must reflect the rate modifications passed by this office" Um, what? It goes on in excruciating faux-government-speak to tell you that you MUST call or horrible things will happen, and you are foolish if you do not call because you might get to skip TWO MONTHS of payments. That can happen with any refinance. You just pay the interest at closing. Notice, they do NOT say you get to skip two months of interest. The letter is signed by the Director of Veterans Assistance, Cynthia Moore. What a lofty title, Cynthia.
Maybe they have a nice interest rate and reasonable fees for our veterans. But the underhanded way they try to get them to call leads me to believe that may not be the case. In case you were not counting, we have three different names for this outfit. I almost forgot to mention that even though their address is a PO Box in Washington, DC (are there few government agencies in that town?), the letter was apparently mailed from California.
www.thomasmoens.com
Friday, November 20, 2009
Part of Iowa FED statute unconstitutional
A part of the Iowa Forcible Entry and Detainer (FED) statute has been declared unconstitutional by the Iowa Supreme Court. The FED statute is that part of the Iowa Code which sets forth the procedures for eviction. The code section at issue states that residential tenants can be informed of their eviction hearing by certified or restricted certified mail, whether or not the tenant signs a receipt for the notice.
Somehow Iowa legislators decided that just putting something in the mailbox was sufficient to give someone notice that there was going to be a hearing which would determine whether or not someone would be thrown out of their home. The Iowa Supreme Court determined that this is not notice at all. A tenant might not even get notice that the certified mail is waiting for them until after the hearing date. I have never understood why, in Illinois, the sheriff needs to put the documents in someone's hand, but in Iowa landlords were allowed just drop a note in the mail.
Here is the opinion.
Somehow Iowa legislators decided that just putting something in the mailbox was sufficient to give someone notice that there was going to be a hearing which would determine whether or not someone would be thrown out of their home. The Iowa Supreme Court determined that this is not notice at all. A tenant might not even get notice that the certified mail is waiting for them until after the hearing date. I have never understood why, in Illinois, the sheriff needs to put the documents in someone's hand, but in Iowa landlords were allowed just drop a note in the mail.
Here is the opinion.
Friday, October 23, 2009
Blue Seal Staffing Scam
Wow, it looks real. We see a lot of certified checks here, and this thing looks REAL. It even does that "VOID" thing in the background when you copy it. Kudos scammers. Except next time, it should say DOLLARS and CENTS, not DOLLAR and CENT. But other than that, top notch, really.
It came in this morning's mail accompanied by a letter from my new bestest friends at Blue Seal Staffing in North Carolina. But strangely the letter came from Canada. Good day, eh? I have been selected to be a mystery shopper! So, here is what I am supposed to do:
1. Deposit the $3,480.
2. Keep $300 for my first week's pay!
3. "Evaluate" Money Gram or Western Union by sending $2,900 to one of Blue Seal Staffing's training agents. Why we couldn't evaluate them for $29 is indeed a good question, and one that will be answered in a moment.
4. Pay the transfer fees of $180.
5. Go buy $100 worth of merchandise at one of several retailers, ostensibly evaluating their service. And I get to keep the merchandise!
That sounds just great, eh? They even did their math correctly. If I do good, I might even get a raise!
Here is what is really going to happen if I went along with this scam. I would deposit the check in my account. Since it is a cashier's check, the funds will probably be available in three days or less. I "keep" my $300.00. I send their "training agent" $2,900. I pay Western Union $180 (does it really cost that much to send money via Western Union? Yowza.) I spend the other $100 on trinkets at any local retailer. Since I want that big raise they promised me, I will send Blue Seal Staffing the forms with all of my personal information. By the time that cashier's check wends through the byzantine maze of banks, I will have spent $3,180. Then my bank will tell me that the check was a forgery, and I get to cover that money I sent.
Well, I thought I would try something different and contact the local authorities to see if they would like to have fun with these folks.
Wednesday, September 30, 2009
Are you kidding me?
An attorney in Somerville, Massechu, Masatchus, Massechuset, Massachusetts came up with a new one. He kept getting new mortgages without paying off his old ones. It appears he had four mortgages on one property, three on another, two on another. These were not second or home equity mortgages. He was directed by the lenders to pay off the previous mortgages. He just didn't. Apparently he kept the money for his own purposes. It took some time for the lenders to catch on, since it was making his payments on time. It took a Fannie Mae database search to uncover the frauds. He failed to disclose some of these additional loans on his loan applications. They even got the Postal Inspector in on this one. He plead guilty to eight counts of Larceny and seven counts of Willfully Making a False Statement Regarding Financial Condition or Assets.
Doesn't it seem to be pretty simple math that making QUADRUPLE house payments eventually is going to catch up to you?
Doesn't it seem to be pretty simple math that making QUADRUPLE house payments eventually is going to catch up to you?
Georgia Attorney Disbarred for Mortgage Fraud
The Georgia Supreme Court has disbarred a Georgia attorney for mortgage fraud. According to the opinion:
"The complaint in S09Y0485 is based upon Moore’s service in June 2006 as the closing attorney for a real estate transaction. At closing, the HUD-1 settlement statement listed a sales price $9,000 higher than the price listed on the sales contract. The settlement statement also listed “cash to seller” of $16,329.84. Of this amount, the seller received $8,079.84 through a wire transfer and Moore wrote a check to the seller for the balance, but gave the check to the buyer’s loan officer. The check has two endorsements, the first from the seller, which the seller’s wife contends is a forgery, and the second from a third person who purportedly loaned money to the buyer to cover the buyer’s down payment."
Sound familiar? You might think, well heck, maybe this poor guy had no idea that the money wasn't going to the seller, but there are enough red flags here to start a Chinese marching band. Why didn't the purchase price match the purchase agreement? He wired part of the money directly to the seller. Shouldn't he question why he wasn't wiring the full amount to the seller? Why did he give the check to the buyer's loan officer. Wouldn't it be more appropriate to give it to a representative of the seller, if not the seller himself? When these kind of things come up at closing, the closing agent and the attorneys have a duty to ask questions.
www.thomasmoens.com
"The complaint in S09Y0485 is based upon Moore’s service in June 2006 as the closing attorney for a real estate transaction. At closing, the HUD-1 settlement statement listed a sales price $9,000 higher than the price listed on the sales contract. The settlement statement also listed “cash to seller” of $16,329.84. Of this amount, the seller received $8,079.84 through a wire transfer and Moore wrote a check to the seller for the balance, but gave the check to the buyer’s loan officer. The check has two endorsements, the first from the seller, which the seller’s wife contends is a forgery, and the second from a third person who purportedly loaned money to the buyer to cover the buyer’s down payment."
Sound familiar? You might think, well heck, maybe this poor guy had no idea that the money wasn't going to the seller, but there are enough red flags here to start a Chinese marching band. Why didn't the purchase price match the purchase agreement? He wired part of the money directly to the seller. Shouldn't he question why he wasn't wiring the full amount to the seller? Why did he give the check to the buyer's loan officer. Wouldn't it be more appropriate to give it to a representative of the seller, if not the seller himself? When these kind of things come up at closing, the closing agent and the attorneys have a duty to ask questions.
www.thomasmoens.com
Thursday, August 27, 2009
(More) Something local
Two more players have been indicted along with Mary Pat Harper. The buyers who were working with Ms. Harper, Darryl Hanneken and Robert Herdrich, have been indicted on eighteen counts of wire fraud and five counts of bank fraud. Yowza. I have a feeling the US Attorney is not done yet either. According to the indictment, the above-referenced frauds were perpetrated by Mssrs. Hanneken and Herdrich (H&H) "and others." Note: that's "others," plural. Particularly interesting is Paragraph 7 of the that part of the indictment entitled "The Scheme" which says:
"It was further part of the scheme
that HANNEKEN and HERDRICH,
along with the real estate agents,
mortgage brokers, and attorneys,
intentionally concealed from each
financial institution or mortgage
lender the existence of the lower
actual price and the kickback."
In case you haven't read the previous blog, this is the old dual contract scam. There would be a contract presented to the seller which showed a price well in excess of what the seller actually wanted for the property. A page tacked onto the back of the contract would say that extra money was to be given to the buyer after closing. This extra page was "somehow" removed from the contract when it was presented to the lender. This is bad because the lender doesn't know how much the purchase price actually is.
For example, if you agree to buy my pen for $100 (hey, I have cool pens--I make them myself), but I am going to give you $50 back when you buy it, how much did you actually pay for it. Fifty bucks, right? The only thing is, the lender didn't know about that money that was given back to the buyer because that page was missing, and the parties to the transaction didn't put it on the HUD-1 Settlement Statement. And no, that wasn't the buyers' money, it was the lender's, and it was provided for the sole purpose of purchasing the property (especially considering they never even made a payment on some of these properties). This money was not provided to line the buyers' pockets.
Go ahead, read that quoted paragraph again. Yes, they said "attorneys." Did the attorneys know about the fraud? Looks like the US Attorney thinks so. Did they attorneys do anything to stop it? It sure doesn't look like it. Why not!? It is our job to explain the law to our clients. Most of the time, they follow our advice. Granted, we do not have a duty to wrestle them to the ground to stop transactions like this, but it is damn easy to refuse to be involved. I have walked away from a few transactions--it is not difficult at all.
I looked up a few of these transactions to see what kinds of prices and price changes were involved. Here are a few:
Purchased by H&H for $110,000, sold after the foreclosure for $52,000
Purchased by H&H for $125,000, sold after the foreclosure for $50,560
Purchased by H&H for $125,000, sold after the foreclosure for $52,000
Purchased by H&H for $110,000, sold after the foreclosure for $40,000
Purchased by H&H for $115,000, sold after the foreclosure for $34,900
There are 23 properties referenced in the indictment.
"So what," you say. "They done bad and they got caught, so all is well." Not really. Imagine the impact on neighbors of these properties. Appraisers use comparisons of similar properties (called comparables) when they appraise properties. Say you purchased a property in the dizzying heights of the H&H buying spree. H&H bought at least 23 properties in what appears to be a fairly small geographic area. So, now the comparables are skewed by these over-inflated prices--remember the pen analogy--they didn't really pay the price which appears in the public records. You paid too much, because you didn't do any kickbacks under the table at closing. Now you want to sell or refinance. Based on these new prices, we have some new information for our comparables. Same houses, but different prices. Based on the examples above, your house might now be worth almost 40% less than it was just a few years ago. Don't forget that these properties probably have been sitting vacant for months during the foreclosure proceedings. Now aren't you glad the FBI and the US Attorneys office are taking this seriously? I know I am.
I will keep my eye on PACER (the Federal Court system's online access portal) to let you know of any new developments. Please send me a comment if you see anything else on this case, or if there is any other subject you would like to see discussed.
Thanks to Joshua for bringing this one to my attention.
www.thomasmoens.com
"It was further part of the scheme
that HANNEKEN and HERDRICH,
along with the real estate agents,
mortgage brokers, and attorneys,
intentionally concealed from each
financial institution or mortgage
lender the existence of the lower
actual price and the kickback."
In case you haven't read the previous blog, this is the old dual contract scam. There would be a contract presented to the seller which showed a price well in excess of what the seller actually wanted for the property. A page tacked onto the back of the contract would say that extra money was to be given to the buyer after closing. This extra page was "somehow" removed from the contract when it was presented to the lender. This is bad because the lender doesn't know how much the purchase price actually is.
For example, if you agree to buy my pen for $100 (hey, I have cool pens--I make them myself), but I am going to give you $50 back when you buy it, how much did you actually pay for it. Fifty bucks, right? The only thing is, the lender didn't know about that money that was given back to the buyer because that page was missing, and the parties to the transaction didn't put it on the HUD-1 Settlement Statement. And no, that wasn't the buyers' money, it was the lender's, and it was provided for the sole purpose of purchasing the property (especially considering they never even made a payment on some of these properties). This money was not provided to line the buyers' pockets.
Go ahead, read that quoted paragraph again. Yes, they said "attorneys." Did the attorneys know about the fraud? Looks like the US Attorney thinks so. Did they attorneys do anything to stop it? It sure doesn't look like it. Why not!? It is our job to explain the law to our clients. Most of the time, they follow our advice. Granted, we do not have a duty to wrestle them to the ground to stop transactions like this, but it is damn easy to refuse to be involved. I have walked away from a few transactions--it is not difficult at all.
I looked up a few of these transactions to see what kinds of prices and price changes were involved. Here are a few:
Purchased by H&H for $110,000, sold after the foreclosure for $52,000
Purchased by H&H for $125,000, sold after the foreclosure for $50,560
Purchased by H&H for $125,000, sold after the foreclosure for $52,000
Purchased by H&H for $110,000, sold after the foreclosure for $40,000
Purchased by H&H for $115,000, sold after the foreclosure for $34,900
There are 23 properties referenced in the indictment.
"So what," you say. "They done bad and they got caught, so all is well." Not really. Imagine the impact on neighbors of these properties. Appraisers use comparisons of similar properties (called comparables) when they appraise properties. Say you purchased a property in the dizzying heights of the H&H buying spree. H&H bought at least 23 properties in what appears to be a fairly small geographic area. So, now the comparables are skewed by these over-inflated prices--remember the pen analogy--they didn't really pay the price which appears in the public records. You paid too much, because you didn't do any kickbacks under the table at closing. Now you want to sell or refinance. Based on these new prices, we have some new information for our comparables. Same houses, but different prices. Based on the examples above, your house might now be worth almost 40% less than it was just a few years ago. Don't forget that these properties probably have been sitting vacant for months during the foreclosure proceedings. Now aren't you glad the FBI and the US Attorneys office are taking this seriously? I know I am.
I will keep my eye on PACER (the Federal Court system's online access portal) to let you know of any new developments. Please send me a comment if you see anything else on this case, or if there is any other subject you would like to see discussed.
Thanks to Joshua for bringing this one to my attention.
www.thomasmoens.com
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