Life In Wake Forest NC.....

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    Keep 100% of every paycheck free from federal witholding & payroll taxes

    Shut down the IRS forever

    Tax drug dealers, illegal immigrants and others who do not contribute

    Close the loopholes that the wealthy use to manipulate the tax code and escape their fair share

    Pay your taxes when you choose

    End business taxes

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    NO! 63 members of the United States Senate and House of Representatives support it.

    This is not a radical idea.  It's common sense and it will speed up the economic recovery. 

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Foreclosure Rescue - Bankruptcy 

Bankruptcy courts are being used to defraud homeowners facing foreclosure.

How it works:

Distressed homeowners are lured through advertisements that claim to assist them from losing their home.  The homeowner pays a non refundable up-front fee, typically ranging from $200 to $1,000.  In many cases the homeowner is convinced to stop talking to their lender and told they must make regular monthly payments to the Rescuers.

The Rescuers direct the homeowner to complete the necessary paperwork which includes signing a bankruptcy petition. 

This gets filed with the homeowner's name using either the signed petition or a forged petition.

The bankruptcy petition postpones the foreclosure (invoking automatic stay) and the homeowner stops receiving collection calls and letters.  Homeowners are unaware of the bankruptcy petition and believe that the Rescuers have fulfilled their obligation to prevent them from losing their home.  The homeowners are also told to ignore any court notices to appear at the bankruptcy hearing. However, when no one appears at the bankruptcy hearing, the foreclosure process begins again. 

In a variation of this scheme, the homeowner will “quit-claim” the property to the Rescuer or will sell their home for a nominal fee, usually $1.  The homeowner agrees to pay them rent with the understanding that they can buy the home back when the problems are resolved or they will share in the profits if the home is sold.

In some property transfers, the homeowner is told to transfer only a fractional interest in the property to the Rescuer who then transfers that interest to another individual or entity (often fictitious).  The fractional interest can be transferred over and over as the automatic stays are lifted, which delays foreclosure for months and generates additional “rent money” for the perpetrators. 

            Another disturbing fraud scheme is Arson.  Homeowners commit arson and then  file a fraudulent

            claim to avoid foreclosure.  

Watch ABC news video regarding arson to avoid foreclosure       

Information for this series was gathered from mortgage fraud blog, the FBI 2008 fraud report and the IRS.

Home loans since 1977

  First Priority Financial is licensed by the California DRE # 654852  Nevin's California DRE license 016552

  The opinions expressed in this blog are not necessarily those of First Priority Financial.

                                 3700 Hillborn Rd #700, Fairfield, California 94534.   This is not a guarantee to lend. 

The FHA 90 day flip rule

To understand it you have to go back to 2003 when HUD provided Mortgagee letter 2003-7 to combat predatory practices known as "Property Flipping".

On May 1, 2003, the Department of Housing and Urban Development published a final rule in The Federal Register amending the mortgage insurance regulations to prevent the practice of flipping on properties that will be financed with Federal Housing Administration (FHA) insured mortgages. 

Property flipping is a practice whereby a recently acquired property is resold for a considerable profit with an artificially inflated value, often abetted by a lender’s collusion with the appraiser.  These changes to existing credit policies, in effect for all mortgage loan applications signed on or after June 2, 2003, will eliminate the most egregious examples of predatory flips of properties within the FHA mortgage insurance programs and, thus, preclude home purchasers using FHA financing from becoming victims of predatory flipping activity. 

Because so many of the homes that are valued within FHA limits are foreclosures and have been owned by the seller within the last 90 days many first time home buyers with FHA financing are turned away because of this 90 day flip rule. The bank does not want to have to wait a mandatory 90 days before allowing the home to close escrow.

Acting on the necessity to reduce foreclosure inventory HUD has agreed to lift this ban starting February 1, 2010 for a total of one year.  However there are some restrictions to protect buyers from predatory practices.  For homes purchased for more than 20% of the sellers aquisition price, a waiver must be obtained.  No reverse mortgages and parties in the transaction must be arms length.  You can read more about this new rule at HUD's pressroom.

This should have a significant impact on foreclosure sales in helping to reduce inventory.  However keep in mind that some lenders may have credit overlays (company underwiting policies that reject the new law) that prohibit properties be purchased using FHA financing inside of 90 days.  Your loan officer should know which lenders have such credit overlays before prequalifying a buyer(s).

Home loans since 1977

  First Priority Financial is licensed by the California DRE # 654852  Nevin's California DRE license 016552

  The opinions expressed in this blog are not necessarily those of First Priority Financial.

                                 3700 Hillborn Rd #700, Fairfield, California 94534.   This is not a guarantee to lend.  

           Builder-Bailout - Condominium Conversion

During the housing boom, many apartment complexes were purchased by developers and contractors.  They purchased these apartment complexes and converted them into condominiums.  When the housing market began to decline, developers had excess inventory of units that they couldn’t sell.

A couple of ways builders will try to encourage investors to purchase their units is by offering cash-back at closing and paying their HOA dues. Since buyers purchased the condos as investment properties developers and contractors claimed that they would find renters and manage the property including collecting rent from the tenants.

The value of the condominium is usually inflated to obtain a larger sales price to offset the cost of the incentives.

Pump and Pay

Builders throughout the United States are working with fraudulent appraisers and perpetrators to inflate the appraised value of their properties.  This false equity is distributed to the perpetrators and disguised as set-asides for future maintenance, insurances, and tax payments on the property.

Information for this series was gathered from mortgage fraud blog, the FBI 2008 fraud report and the IRS.

Home loans since 1977

  First Priority Financial is licensed by the California DRE # 654852  Nevin's California DRE license 016552

  The opinions expressed in this blog are not necessarily those of First Priority Financial.

                                 3700 Hillborn Rd #700, Fairfield, California 94534.   This is not a guarantee to lend.  

Credit Enhancement Schemes

There are several ways to perpetrate credit enhancement schemes.  One of the most common is when a loan officer and home builder encourage borrowers to have their names added to the bank accounts of friends or family members temporarily to make it look like they have the necessary funds for deposit.

In some cases where the home buyer doesn’t have enough assets to qualify for a mortgage the loan officer and/or home builder will deposit money into their bank account to make them look like they qualify. Once the loan funds and it closes, the loan officer and/or builder has their money refunded and then uses it for the next unqualified home buyer.

Another scheme includes buying credit privacy numbers and seasoned trade-line accounts which create fraudulent retailer financial relationships  with the intent to strengthen a buyer or straw buyers credit history so they can qualify for new loans.

In some cases where the buyer does not make enough income the loan officer or builder encourages the buyer to file amended tax returns and pay back taxes on income they never really earned and have them claim it was unreported income.  The amended return show that the buyer made more than they really did over the last two years.  That false income averaged over two years is what underwriters use to determine their ability to qualify for the loan.

Information for this series was gathered from mortgage fraud blog, the FBI 2008 fraud report and the IRS.

Home loans since 1977

  First Priority Financial is licensed by the California DRE # 654852  Nevin's California DRE license 016552

  The opinions expressed in this blog are not necessarily those of First Priority Financial.

                                 3700 Hillborn Rd #700, Fairfield, California 94534.   This is not a guarantee to lend.  

Mortgage Fraud Short Sale Schemes

Short sale fraud schemes are used in combination with foreclosure rescue schemes to steal from homeowners and financial institutions. 

How it works:

Real estate agents are paid referral fees by the perpetrators for locating and soliciting homeowners undergoing foreclosure. 

The homeowner enters into an agreement with the perpetrators deeding their property to them in the form of a land trust.  The homeowner is listed as the beneficiary of the trust and the real estate agent is listed as the trustor. 

The perpetrators then negotiate a short sale with the lender.  When the short sale is completed the real estate agent sells the property to another previously identified buyer for a profit but neither the homeowner nor the lender know about it.

The property is bought for less than the mortgage owed and then re sold, often the next day, for a profit.

Example:

Connecticut real estate agents charged with engaging in short sale mortgage fraud

Information for this series was gathered from mortgage fraud blog, the FBI 2008 fraud report and the IRS.

Home loans since 1977

  First Priority Financial is licensed by the California DRE # 654852  Nevin's California DRE license 016552

  The opinions expressed in this blog are not necessarily those of First Priority Financial.

                                 3700 Hillborn Rd #700, Fairfield, California 94534.   This is not a guarantee to lend.  

Mortgage fraud is split into two categories - 

Fraud for property -    and Fraud for profit  

Fraud for property - Fraud for property entails misrepresentations by the buyer(s) for the purpose of buying a home as their primary residence. This fraud scheme usually involves a single loan. Although buyers may lie about their income and conceal debt, their intent is to repay the loan.  Rising home values of past made it hard for people to qualify for home loans and are considered the main reason for why this kind of fraud was so common.

Fraud for profit - involves multiple loans and elaborate schemes to make money from property sales. Fraud for profit schemes, involve loan document and appraisal misrepresentations. The people involved are paid for participating. Also, mortgage fraud perpetrators likely seized the opportunity to take advantage of the relaxed lending practices to commit fraud for profit.

The most common form of mortgage fraud is illegal property flipping which entails false appraisals and other fraudulent loan documents. Combating mortgage fraud effectively requires the cooperation of law enforcement and industry entities. No single regulatory agency is charged with monitoring this crime. The FBI, Department of Housing and Urban Development-Office of Inspector General (HUD-OIG), Internal Revenue Service, Postal Inspection Service, and state and local agencies are among those investigating mortgage fraud.

Perpetrators can include mortgage brokers, lenders, appraisers, underwriters, accountants, real estate agents, settlement attorneys, land developers, investors, builders, bank account representatives, trust account representatives, investment banks, and credit rating agencies. 

Despite increased scrutiny, many industry insiders will commit fraud to maintain or increase their current standard of living.  It had proven so lucrative that various organized criminal groups and gang members are sometimes involved in mortgage fraud activity. 

People living in neighborhoods affected by mortgage fraud see their property values suffer.  Properties purchased with fraudulent means are sold at artificially inflated prices, making properties in surrounding neighborhoods also become artificially inflated.  When this happens property taxes artificially increase. 

When unqualified homeowners begin to default on their inflated mortgages, properties go into foreclosure, neighborhoods begin to deteriorate and the surrounding properties and neighborhoods home values drop.  As a result, homeowners who bought their homes legitimately find it difficult to sell their homes.  The decline in home values has a direct negative impact to state and local governments.

Their ability to provide public services such as police, firefighters, teachers etc. becomes hindered because a large part of that funding comes from property tax revenue. 

Information for this series was gathered from mortgage fraud blog, the FBI 2008 fraud report and the IRS.

Home loans since 1977

  First Priority Financial is licensed by the California DRE # 654852  Nevin's California DRE license 016552

  The opinions expressed in this blog are not necessarily those of First Priority Financial.

                                 3700 Hillborn Rd #700, Fairfield, California 94534.   This is not a guarantee to lend.  

Real Estate Fraud Schemes –Part 1 of 8 for Agents, Buyers & Sellers

Real estate agents and other real estate professionals may not realize that their transaction is a fraud scheme. I recently compiled the most common types of fraud from the FBI and IRS to create this blog series.  During the making of this blog series I have noticed that many of these schemes include inflated appraisals.  Although I dislike HVCC I am beginning to understand why it was implemented so forcefully. I hope you learn as much as I have and that this series proves useful in helping you identify fraudulent transactions before they happen.

Part 1 - Is your transaction a real estate fraud scheme?

Part 2 - Mortgage & real estate fraud categories

Part 3 - Short sale schemes

Part 4 - Credit enhancement schemes

Part 5 - Builder bailout-condo conversion schemes

Part 6 - Foreclosure rescue-bankruptcy schemes

Part 7 - Reverse mortgage schemes

Part 8 - Agencies that report mortgage & real estate fraud

Florida Businessman Sentenced to 10 Years in Prison in Real Estate Fraud Scheme

On September 16, 2009, in Fort Myers, Fla., Samir Nel Cabrera was sentenced to 120 months in prison, to be followed by three years of supervised release, and ordered to pay an $1,100 special assessment; the amount of restitution will be determined at a later date.  In addition, Cabrera was ordered to forfeit $75,500 in assets.  Cabrera was indicted in August 2008 and charged with perpetrating an investment fraud involving undisclosed transfers or “flips” of real property and same-day closings. 
According to court documents, STR & Associates, LLC, a Florida limited liability company controlled by Cabrera, purchased two parcels of undeveloped real property and then flipped the properties on the same days by selling them to real estate investment limited liability companies also controlled by Cabrera and funded by investors. The proceeds created by the flips were approximately $2.8 million, almost all of which Cabrera misappropriated.  The misappropriated funds were from individuals who invested in Cabrera's real estate limited liability companies.

Source: mortgage fraud blog

One example of why HVCC was implemented

FBI Statistics

Financial Institution Reporting of Mortgage Fraud Increases
Suspicious Activity Reports (SARs) from financial institutions indicate an increase in mortgage fraud reporting.  There were 63,713 mortgage fraud related SARs filed with FinCEN in FY2008, a 36-percent increase from FY2007.  Preliminary statistics indicate SAR filings in FY2009 will exceed 70,000 (see Figure)

Information for this series was gathered from mortgage fraud blog, the FBI 2008 fraud report and the IRS.

Home loans since 1977

  First Priority Financial is licensed by the California DRE # 654852  Nevin's California DRE license 016552

  The opinions expressed in this blog are not necessarily those of First Priority Financial.

3700 Hillborn Rd #700, Fairfield, California 94534.   This is not a guarantee to lend.  

To search homes for sale in Raleigh, Cary and throughout Wake county all you have to do is click on the picture of the home below for Wake county MLS.  If you want the most up to date mortgage rates click on the picture that says "rates". 

                                        Search homes for sale

Get current mortgage rates

If you are shopping mortgage rates to finance your home in Cary:

being misled! 

You often see mortgage rates being advertised but mortgage rates change daily and often a couple of times during the day.  It's impossible to ask for rate quotes from a few lenders and compare unless you ask all of the lenders for a rate quote at the same exact time.  If lender "A" quotes you a rate at 10:00AM and lender "B" quotes you a rate at 10:30AM the rates could have changed so trying to accurately compare is impossible.

The only way to know for certain is to ask all lenders at the same time or hire a mortgage broker who will shop the rates with various lenders using state of the art software and present the current rate options for you.  In most cases we will receive our compensation from the lender directly lowering your closing costs!

We are the largest mortgage brokerage in the nation and we are also a direct lender with offices nationwide.

                                                           Since 1977

The opinions expressed are not necessarily those of First Priority Financial.

Raleigh office location: 5106 Oak Park Rd. Raleigh NC 27612

2009 Events

Reflecting on the events of 2009 and how they impacted my life, I renewed the belief that "things" don't make us happy but rather we must be happy with the things we have. Life isn't yesterday or tomorrow, it's right now at this very moment.  Tomorrow is a hope for continuance not a guarantee.