MORTGAGE DEBT RELIEF ACT OF 2007 MIGHT JUST GET EXTENDED THROUGH DECEMBER 32013
FACTS
The Senate Finance Committee approved a bipartisan bill before summer recess that would extend the
The bill now moves to the full Senate for possible action next month, also would extend tax write-offs for mortgage insurance premiums for 2012 and through 2013, and continue some energy-efficiency tax credits for remodelings and new home construction.
The mortgage debt relief extension affect millions of families who are underwater on their loans, delinquent on their payments and heading for foreclosure, short sales or deeds-in-lieu of foreclosure settlements. Under the federal tax code, all types of forgiven debt are treated as ordinary income, subject to regular tax rates. When an underwater homeowner who owes $300,000 has $100,000 of that forgiven as part of a modification or other arrangement with the bank, the unpaid $100,000 balance would normally be taxable.
In 2007 the Mortgage Debt Relief Act agreed to temporarily exempt certain mortgage balances that are forgiven by lenders. The limit is $2 million in debt cancellation for married individuals filing jointly, $1 million for single filers. This special exemption, however, came with a time restriction. The current deadline is Dec. 31, 2012. Without a formal extension by Congress, starting on Jan. 1 all mortgage balances written off by banks would be fully taxable.
MORAL
There are five bills in Congress, so hopefully one of them will make it through for the homeowner.
THIS IS NO WAY TO PAY OFF THE MORTGAGE ESPECIALLY IN ALABAMA
FACTS
On July 31, Donald Joe Barber of Pisson, Ala., was indicted by a federal grand jury for mailing a fictitious financial instrument to pay off his home mortgage.
A one-count indictment filed in U.S. District Court charges Barber with intent to defraud, alleging he used the mail on March 10, 2008, to move a fictitious instrument in a scheme to present it as a valid financial instrument issued under the authority of the United States.
If convicted, Barber could face a maximum sentence of 25 years in prison and a $250,000 fine. (usattyndal73112)
MORAL
Use the mail with intent to defraud and if convicted risk 25 years in a federal person for mortgage fraud. What is noteworthy is this is one loan, probably a relatively minor mortgage, and they chased him four years later to charge him with a federal felony. Remember, the federal government has 10 years to file charges from the date of the last event.
FIVE IN ALABAMA INDICTED FOR MORTGAGE FRAUD
FACTS
Federal prosecutors have filed fraud charges against five people in Alabama this month in connection with false statements made in mortgage loan applications.
On Aug. 6, 2012 prosecutors filed a one-count information in U.S. District Court against Gloria A. Allen, charging her with making a materially false statement on a 2008 loan application that was submitted to the Federal Housing Administration. Another information prosecutors filed charges Crystal S. Douglas with one count of making a materially false statement on a 2008 residential loan application to a financial institution insured by the Federal Deposit Insurance Corporation. Both Allen and Douglas, who were aided and abetted by others in the same loan scheme, signed loan applications that contained falsely inflated income information, according to court documents.
In two other informations filed in connection with a 2007 mortgage loan of more than $500,000, the U.S. Attorney’s Office charged Julie Melissa McBrayer with one count of mail fraud and charged Michael Joseph Bennett with one count of making false statements on loan documents.
At the time of the loan, McBrayer worked at Marathon Mortgage in Birmingham as a loan originator and was responsible for compiling the loan documents for the sale of Bennett’s property in Bessemer, according to McBrayer’s plea agreement with the government. In that agreement, McBrayer admits that she was directed to submit a false verification of employment form and a loan application that included false income information for the intended buyer of Bennett’s property in order to ensure the buyer would be approved for first and second mortgage loans on the house.
Bennett was a homebuilder. He is charged with signing loan documents that he knew contained false information. Those documents included a Department of Housing and Urban Development form that is intended to disclose the party making the down payment on the property being purchased. According to Bennett’s plea agreement in the case, he signed the HUD form stating that the borrower provided a down payment for his property when Bennett knew that someone else had provided the money.
The person who bought Bennett’s property made only a few payments on the first and second mortgages, which totaled $546,659, and the house was placed in foreclosure soon after the loans were approved, according to McBrayer’s plea agreement.
In another information prosecutors charged Danielle Lacey Chavers with two counts of wire fraud associated with applications for mortgage loans on two houses in 2008. Chavers submitted loan documents containing false income and employment information when she applied for mortgages on houses in the Birmingham area, according to her plea agreement. The fraudulent mortgage applications prompted approval of the loans, causing funds to be wired from the lender’s accounts to the trust account of the attorney handling the closings on the real estate transactions, according to the plea agreement.
The maximum sentence for wire fraud and mail fraud is 20 years in prison and a $1 million fine. The maximum sentence for false statements on loan documents is five years in prison and a $100,000 fine. (usattyndala8812)
MORAL
Note that the federal prosecutors are chasing people that did loan applications in 2007! Remember people are innocent until proven guilty but how many are proven guilty. Some of the above have entered plea agreements which in this lawyer’s opinion is an admission of guilt.
CFPB AUDITING SIERRA PACIFIC MORTGAGE
FACTS
Twelve auditors from the Federal Consumer Financial Protection Bureau have come to audit Sierra Pacific Mortgage Co. Inc. in Folsom, Calif., as part of the bureau's enforcement to audit all nonbank mortgage operations, starting with the largest companies. (sacbusjl8312)
MORAL
I know 13 is an unlucky number but the CFPB covers 13 areas and they are: Unfair, Deceptive or Abusive Acts or Practices; Equal Credit Opportunity Act; Home Mortgage Disclosure Act; Truth in Lending Act; Real Estate Settlement Procedures Act; Homeowners Protection Act; Consumer Leasing Act; Fair Credit Reporting Act; Fair Debt Collection Practices Act; Electronic Fund Transfer Act; Truth in Savings Act; Privacy of Consumer Financial Information; and Mortgage Servicing Examination Procedures.
A REMINDER THAT ALL EMPLOYERS PAYING CALIFORNIANS A COMMISSION MUST HAVE A SIGNED WRITTEN CONTRACT WITH THE EMPLOYEE BY JAN. 1, 2013
FACTS
By Jan. 1, 2013, whenever an employer (in or out of California) enters into a contract of employment with an employee for services to be rendered within California and the contemplated method of payment of the employee involves commissions, the contract shall be in writing and shall set forth the method by which the commissions shall be computed and paid.
The employer shall give a signed copy of the contract to every employee who is a party thereto and shall obtain a signed receipt for the contract from each employee. In the case of a contract that expires and where the parties nevertheless continue to work under the terms of the expired contract, the contract terms are presumed to remain in full force and effect until the contract is superseded or employment is terminated by either party. (ab1396, Lab. C. §2751)
MORAL
The key part to remember is to get the written receipt from the employee. This means if you pay any commission. It not only includes 100% commission employees but any employee that receives any commission at all.
TWO NORTHERN CALIFORNIA PARTNERS SENTENCED TO FEDERAL PRISON FOR MULTIMILLION DOLLAR MORTGAGE FRAUD SCHEME THAT INFLATED PRICES OF DOZENS OF NEW HOMES
FACTS
On Aug. 10, Garret Griffith Gililland III was sentenced to nearly eight years and Shane Burreson to nearly two years in jail. Both men pleaded guilty last year to mail fraud and money laundering.
The U.S. Attorney's office in Sacramento said Gililland orchestrated the scheme to inflate the sales prices of about 46 homes in Chico, about 90 miles north of Sacramento, between 2006 and 2008. Homebuilders would pay the men $40,000 to $60,000 in kickback checks for each home. The men would then pay straw buyers $20,000 to $30,000 in kickback payments for purchasing each home.
The scheme defrauded mortgage lenders who financed the properties. Prosecutors said the men originated about $21 million in fraudulent loans, costing mortgage lenders more than $4 million.
Gililland was charged in 2008, but fled to Spain with his wife and at least $250,000 in cash. His flight delayed the case until they could be found and extradited back to the U.S. in 2009.
He and Burreson received credit for cooperating with the investigation, though Gililland received a stiffer sentence for eluding arrest and his larger role in the fraud. Both men lived in the Chico area. (ap81012)
MORAL
I remember reading once, “You can run, but you cannot hide.” Gililland ran but could not hide and now does dight years in a federal prison even though he later cooperated. He either did not listen to his attorney or he ran first before he consulted an attorney. At least that is this one man’s opinion.
CALIFORNIA MAN AGREES TO PAY $5 MILLION TO RESOLVE ALLEGATIONS OF DEFRAUDING DISTRESSED HOMEOWNERS, RENTERS AND LENDERS
FACTS
On Aug. 2, in Riverside United States District Court a federal judge ordered Terrill “Terry” Meisinger to pay $5 million in civil penalties in connection with allegations of a massive fraud targeting homeowners, renters and lenders.
Meisinger aggred to the penalty as part of a settlement agreement to resolve a lawsuit filed by the United States Attorney’s Office in June 2011. On July 31, United States District Judge Virginia A. Phillips signed an order concluding the case against Meisinger and prohibiting hime from participating in the home finance or real estate inudustries for a period of 10 years.
In the civil lawsuit, federal authorities accused him of orchestrating a foreclosure rescue scheme that bilked both homeowners and lenders. The scheme resulted in significant losses to federally insured financial institutions and the U.S. Department of Housing and Urban Development. The lawsuit was based on an investigation conducted by special agents and auditors from the HUD Office of the Inspector General. The complaint alleged that Meisinger’s scheme involved mail fraud, bank fraud and false statements affecting a financial institution, which violated the federal Financial Institutions Reform, Recovery and Enforcement Act.
The complaint alleged that Meisinger contacted individuals who were facing imminent foreclosure and promised that he could help them avoid foreclosure and save their credit. Meisinger allegedly told distressed homeowners that if they deeded their houses to him and immediately moved out, they would receive a small cash payment, typically from $500 to $1,000, with the promise that Meisinger would bring their mortgage payments current and pay them an additional $5,000 to $10,000 when he eventually sold their properties.
According to the lawsuit, instead of taking action to bring the mortgage payments current, Meisinger immediately transferred the properties into the names of unknowing third parties whose identities he had stolen, and then fraudulently filed sequential bankruptcy petitions in these names. The court filings triggered successive automatic stays that prevented lenders from foreclosing. As alleged in the complaint, these fraudulent tactics in Bankruptcy Court allowed Meisinger to rent the properties for extended periods—up to three years on some properties—by repeating this fraudulent transfer and bankruptcy scheme with scores of stolen identities.
Authorities believe that between 2000 and 2004, Meisinger collected more than $1.5 million in illicit rents from renters in more than 100 properties, most of which were in the Inland Empire, and never made any payments on the mortgages. During this five-year period, authorities estimate that Meisinger caused more than 300 bogus bankruptcy petitions to be filed in the names of numerous individuals who had no knowledge their identity was being used. When lenders were finally able to secure dismissal of these fraudulent bankruptcy petitions and complete foreclosure, the renters lost their deposits and rent payments and, in some cases, were evicted and left homeless.
“This is one of the largest civil mortgage fraud cases ever brought against an individual,” said United States Attorney André Birotte Jr. “The $5 million judgment and injunction against Meisinger demonstrate our commitment to using civil remedies, such as the FIRREA statute, to protect everyone, including vulnerable victims like those seen in this case.”
James Todak, the Special Agent in Charge of HUD-OIG, stated: “Our objective is to ensure that the public is not taken advantage of when they have fallen on hard financial times. Distressed homeowners are particularly vulnerable to this type of fraud. An important message has been sent today to those who prey on upon homeowners who are seeking financial assistance with their mortgage. This type of fraud not only affects individual families, it also affects the housing market.”
In agreeing to pay the $5 million settlement, Meisinger did not admit to liability or violation of any law. As part of the settlement, Meisinger is also barred from filing any bankruptcy petitions on behalf of himself or any other person or entity without prior court approval. (usattycaqcd8212)
MORAL
I would say Meisinger had one exceedingly competent attorney. My curiosity is aroused as to the alleged mortgage and other fraud going on from 2000 to 2004—a period of 12 years—and the fact that the statute of limitations on criminal fraud is 10 years, why didn’t the feds criminally prosecute?
WOMAN GETS ONE YEAR IN JAIL FOR FILING FALSE DOCUMENTS TO STOP A FORECLOSURE
FACTS
On June 5, Monica Whitten was convicted of two felony counts of offering to record or recording false documents. The judge has sentenced her to a year in Stanislaus County (Calif.) Jail for filing false documents in an attempt to delay foreclosure on her parents' home.
In 2009, Whitten filed the false documents related to her parents' mortgage to delay a pending foreclosure, prosecutors said. Whitten's case was delayed when she left the country. She was arrested when she flew into Atlanta on her return to the United States.
Prosecutors said Whitten's case is an example of a common real estate fraud scheme in which defendants pay money for forms they believe will slow down or stop a foreclosure sale and file them at the county clerk-recorder's office.
Along with the jail sentence, Stanislaus County Superior Court Judge Nancy Ashley sentenced Whitten to three years of probation and ordered her to pay restitution. (modb8512)
MORAL
Even for family do not file false documents. It may forestall the foreclosure but inevitably it will happen and for the delay this person has felony convictions on her record, which will prevent her from getting meaningful employment.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.
