Homeowners file a class action lawsuit in a $60 Million Mortgage Fraud case from Maryland, Washington DC and Virginia.

The U.S. Justice Department says more than 400 real estate brokers have been arrested since March, including dozens over the last two days, in a crackdown on Mortgage Fraud that has contributed to America’s housing crisis.

As we continue to analyze and manage our product set, Chase has made the decision to discontinue offering our Subprime and Home Equity products through our Wholesale channel.

New Wholesale Subprime and Home Equity registrations will not be accepted after Friday, May 16, 2008.

The Federal Reserve proposes protections for high cost mortgage borrowers aimed at easing the mortgage crisis. Banks would be required to verify income and assets and to be more transparent about their own compensation for making the loan.

Suitability Standards Could Open Up Lenders To a Fair Housing Can of Worms, a compliance expert said Monday at the SourceMedia Fraud and Risk Conference in Las Vegas.

According to Gary Lacefield, who spent a decade as a senior civil rights analyst and supervisor of lending investigations at the Department of Housing and Urban Development, lenders will “need to be very cautious” if legislators and regulators impose true suitability standards on the mortgage business.

“If we do away with automated underwriting,” he asked, “how are we going to protect ourselves from frivolous charges of discrimination?” Mr. Lacefield, who left HUD in 1999 after personally supervising or conducting more than 1,600 investigations, said automated underwriting was created in large measure in the mid 1990s to protect lenders from charges of bias. And it worked.

Once computer systems started spitting out loan approvals based solely on lenders’ underwriting criteria, without being touched by humans and their inherent biases, they all but wiped out fair housing cases against lenders, he said.

But if suitability standards are imposed as a response to abusive lending practices, Mr. Lacefield, who is now director of compliance at WR Starkey Mortgage, Plano, Texas, said automated underwriting would be little more than an exercise in futility.

“If we take out the specificity provided by automated underwriting, we leave ourselves wide open to allegations of discriminatory behavior,” he warned.

“The allegations brought against these individuals are unspeakable. To prey on the hopes and dreams of these people who were simply trying to improve their homes is a terrible scheme and my office is committed to prosecuting those involved to the fullest extent of the law,” said Attorney General Bill McCollum. “I commend the cooperation exhibited by this investigation and look forward to a positive resolution for the citizens who were victimized.”

“The FDLE is committed to working with our local and state partners to investigate these types of major fraudulent schemes,” said FDLE Commissioner Gerald Bailey. “It is important for us to send a message that this type of criminal behavior will not be tolerated in our state.”

The investigation began in 2004 when some of the victims filed complaints about incomplete and substantial construction work. The TPD and HCCPA initiated separate investigations that quickly grew from construction fraud and theft to a sophisticated mortgage fraud by a criminal enterprise. As the investigations expanded to Pinellas and Polk counties, and statewide, the FDLE and the OSWP joined to form a task force. The task force investigators conducted hundreds of interviews, issued approximately 250 subpoenas, and reviewed tens of thousands of documents.

The majority of the fraudulent loans were submitted through and funded by Argent Mortgage Company, one of the nation’s largest wholesale “sub-prime” mortgage companies. Thirty-one of these fraudulent residential mortgage loans totaling nearly $3 million are outlined in a 150-page arrest affidavit.

Two of the defendants charged, Orson Benn and Samuel Green, are former high-ranking employees of Argent’s White Plains, New York office. Benn and Green were instrumental in the fraud as they subverted Argent policies and approved fraudulent documents and loan packages submitted by brokers. The fraudulent loans were funded and the proceeds were distributed to the defendants. Benn received bribes or kickbacks from Scott Almeida, Frank Giffone and others associated with submitting the fraudulent loan packages for approval.

The other three defendants, Scott Almeida, Frank Giffone and Adrienne White, are all former owners, principals or employees of the Hillsborough County mortgage broker companies Advanced Mortgage Solutions and Consumer Lending Resources. In addition to the mortgage brokerage businesses, the defendants operated two home improvement companies: Premier Quality Renovations and Florida Beautiful Construction.

In addition to the construction-related mortgage fraud cases, Almeida submitted fraudulent documents in support of at least two mortgages for his own personal property and for close associates of the criminal enterprise. In addition to Argent, fraudulent loans were also submitted by Almeida and processed and approved by Pinnacle Mortgage Company, Decision One Mortgage Company and Mortgage Lenders Network USA.

In total, Almeida and his associates, through various mortgage broker businesses, have submitted approximately 180 loans through Argent Mortgage Company totaling nearly $18 million. At least 129 of these loans were funded in the amount of approximately $13 million.

Argent executives and their outside legal counsel have cooperated with investigators and have provided information and documents to support the investigation. Argent made swift personnel decisions and conducted their own internal investigation to help prevent similar activity in the future. Argent has also communicated with and assisted the victims in this case, many of which were facing potential foreclosure actions.

The investigation is ongoing and additional charges are anticipated against other associates related to these five defendants and their criminal enterprise.

“This case is an excellent example of a specialized County level Consumer Protection Agency looking beyond the initial consumer complaints about shoddy and unfinished construction work,” said Director James L. Sudberry. “This multi agency team of experienced investigators worked tirelessly uncovering a major mortgage fraud scheme that would have likely gone undetected costing citizens hundreds of thousands of dollars and, in some cases, their homes. We still feel this may just be the tip of the iceberg.”

Gwen Ifill discusses the worsening housing crisis with Nicholas Retsinas of Harvard University’s Joint Center for Housing Studies and chief economist Mark Zandi of Moody’s. Debate: What Role Should The Government Play In The Current Dilemma For Both Americans/Business

Meltdowns. Subprime disasters. Hedge Fund fraud.

Connecticut Banking Commissioner Howard Pitkin Issues Temporary Order to Cease and Desist to American Home Mortgage

Connecticut State Banking Commissioner Howard F. Pitkin issued a Temporary Cease and Desist Order and Summary Suspension Against American Home Mortgage Corp. of New York (American) and two of its affiliates today. The action is the result of an on-going investigation of American for possible violations of Connecticut’s mortgage banking laws. Upon receipt of the order, American is required to cease and desist from failing to timely fund loans, failing to perform agreements with borrowers, failing to cooperate with the Department and from making material misstatements. American and its affiliates are also placed on notice that a maximum fine of $1,000,000 could be levied by the Department.

This order comes after the Department determined that American did not transfer loan proceeds for 38 loans scheduled to close in Connecticut, Commissioner Pitkin stated. My primary responsibility is the protection of Connecticut consumers. Therefore, in addition to issuing this order which requires the company to cease all business activities, I have also ordered American to create a separate escrow account containing all fees that consumers paid to the company, in order to reimburse those consumers whose mortgage loans did not close.

A hearing is scheduled for August 24th to determine if the temporary cease and desist order shall become permanent and whether the company’s licenses shall be revoked. Please find the attachment containing the complete order.
Temporary Order to Cease and Desist and Notice of Summary Suspension

A Mass woman’s dying wish is that mortgage lender Ameriquest not force her family out of their Wayland home. The family is behind on payments and the lender is threatening foreclosure. Now, Mass. Governor Patrick is stepping in. NECN’s Karen Meyers has the story.