FBI to target fraudulent lending, hundreds to be arrested

FBI to target mortgage fraud

By Suzanne Kapner in New York

Published: June 11 2010 02:25 | Last updated: June 11 2010 02:25

The Federal Bureau of Investigation is preparing a nationwide crackdown on mortgage fraud, the latest in a series of efforts to curb lending practices that contributed to the housing meltdown, according to people familiar with the matter.

The FBI is preparing to arrest hundreds of people across the US as early as next week for offences including encouraging borrowers to falsify income on mortgage applications, misleading home owners about foreclosure rescue programmes, and inflating home appraisals, said two people with knowledge of the operation. An FBI spokesman declined to comment.

49 Responses

  1. Well, it’s my turn for me to save my beautiful Oregon B & B…the ZIGGURAT..I am suing the President of Bank of America herself, Ms. Barbara Desoer. I have not been able to get any answers as to proof of claim of who has standing to foreclose……verification of my debt from her directly, so NOW I think I have her attention. Sadly, this is what it takes to hold them accountable for their knowledge of wrong doing. When my note was assigned by MERS, the Beneficiary to the Bank of NY Mellon ( as Trustee for the Trust) this last January after default occurred, for the Certificate Holders CWALT, Inc. ALTERNATIVE Loan Trust 2005-77TI Mortgage Pass Through Cert., Series C/O BAC Home Loans Servicing…( what does ALTERNATIVE mean ?) I thought these types of Trust were prohibited in holding an aset is my belief, as then it nullifies the Trust due to Federal Tax violations ??) ..ANWAY< how do I research the SEC rules on this ?

    The documetns filed with the recorder in Oregon show that the same notary witnessed one person, an asst. sec. Christina Balandran ( all public record) that assigned for BOTH MERS the Assignment of the Deed of Trust to B of NY Mellon/and then for Bank of NY Mellon, on the same day, in Venture CA ( BAC Hqtrs) What's up with that ??? the successor Trustee, Recontrust, a subsidiary of BAC….BAC says the are the servicer only, yet seem to pull all the strings… I would appreciate any help..in asking the right questions in court………as the successor trustee is not registerd in Oregon
    ( Recontrust )…has been trying to forecose…I have stayed it 4 times with my pending court action….currently have filied comlaints about the successor trustee to state agencies..will see if that brings forth any violations as well…..so off I go…any helpful hints in prevailing is so appreciated as to the current strategies that seem to be working best.

    I am pro se, and opposing council is the Intnl law firm…"specialty firm-boutique-"special clients"" out of Portland, Lane Powell LP…..and yes, the are trying to dismiss based on jurisdiction….whatever….Bank of America, my home, my mortgage exist in Oregon….your honor! Ms. Desoer does business in this state…is why she is named.
    I am looking for local media coerage as well with the newspapers in Eugene, Or, or Porltalnd…so if there are any legal writers/investigators that want this "David and Goliath" story……I'm in. Blessings……

  2. Barry In Tacoma-
    try youhavetheright.com check out Jack Mizell tab

  3. Can anyone help me with finding Deutsche Bank National Trust Company’s and Carrington Mortgage Svcs- Im looking for the CEO name(s) and EIN or FIN.
    thank you.

  4. Does anyone have any information on Deutsche Bank National Trust Company and Carrington Mortgage Services such as EIN, CEO name, etc. ?
    any help would be greatly appreciated.

  5. Everyone,

    Before you start contacting the FBi – this news just in – 7 FBI agents arrested in Florida for conspiring to obtain millions in illegal loans.


  6. Barry in Tacoma,

    To start you off, here is link to an excellent recent case. The opinion is very well reasoned.


    Give me your email and I can send you more info.

  7. Alina,

    Are you still around? I wanted to follow up with you on your knowledge of any potential perfected-UCC-Claim method for shutting down the pretender lenders. I thought you said you knew a UCC guru.

    I now believe the groups that were succeeding out here in Washington have gone down in flames and there’s nothing there. Even their websites are now “under construction”. Glad I never personally committed to it. Some got hurt, but at the same time, many sure delayed their foreclosure for a very long time for not much money. I don’t actually think the ones I followed were cons or scammers either. They believed they would succeed, until they didn’t. For the most part, they inevitably seem to revert to Freeman idealogy which is practically a cult.

    Still, I’d like some real UCC attorney’s opinion on whether perfecting a UCC claim against a lender based on their lack of proof of ownership is a valid way to shut these guys down. I am over my head, and I don’t want to listen to any more freeman idealogy. Just the facts.

  8. Isn’t his fun?

  9. Listen, I’m 45 days from a sheriff’s sale, and after this letter was received by a supervisor, my loan file has traveled 1500 miles in 24 hours;

    Ms. XXXXX, I am writing seeking disposition of the HAMP modification solicited to me repeatedly after your law firm Litchfield/Cavo successfully obtained a judgment of foreclosure in case#09CV0353, HSBC as Trustee for Wells Fargo Home Equity Asset-Backed Securities 2005-2, in Kenosha County Court. As we both know, the aforementioned trust certificates are subject to Sarbannes-Oxley jurisdiction (misrepresenting ownership of those certificates held by Wells Fargo Asset Securities Corp. 1999) and credit default swaps are included in the TARP (Maiden Lane I) bailout. As put before the court, and as yet not adjudicated, the issues of FASB140-3 (Extinguishment of Liabilities), AB1122 (faulty reporting of servicing), and the fact that the Plaintiff foreclosed upon us with a pooling and servicing agreement that is superceded by the S/3 filing dated 04/02/2008 (SEC File 333-150038), and Wells Fargo’s “lack of good faith” in the handling of this loan modification opens the case for reconsideration.
    It is our intention to find an amicable resolution to the predatory loan foisted upon us by your employee MS XXXXXXXXXXXXXXX(now in the employ of BofA). Documents obtained via discovery show the false asset on our 1003 (Citibank account $15,630) utilized in the underwriting, and the subsequent reworking and forgery of the asset statement submitted with the final loan package. For your information, copies of this loan origination and documentation supporting the fraud claims have been tendered to the FBI, Comptroller of the Currency, FDIC, Office of Thrift Supervision, Wisconsin Department of Financial Institutions, Wisconsin Attorney General, and my contact at the Department of Justice. You may or may not be aware of the article in the Financial Time Monday about the FBI preparing to arrest “hundreds of people” involved in the mortgage fraud leading up to collapse of the Mortgage-Backed Securities markets. But I digress.
    Depending on your future handling of this account, my options are as follows:
    1) Since the Sheriff’s sale date is scheduled for July 28, 2010, I can file a bankruptcy, objecting to your “proof of claim”, and eventually seeking redress through the U.S. Bankruptcy Court to extinguish your claim against the property through further litigation;
    2) I can have my counsel (upon retainer) file a motion to reopen the case in the State Court citing your lack of “good faith” in the handling of the at-hand modification under the HAMP/HAFA legislation;
    3) Wait until documentation arrives at the courthouse and expose the lack of timely assignments and chain of title (and the UCC/SEC/State Law violations) regarding the note you are seeking to foreclose upon;


    4) Accept a loan modification from your company that substantially reduces the amount owed as a setoff for the bad behavior of your company in the origination and subsequent securitization of the note and collection of the mortgage insurance/credit enhancements/swaps associated with this loan account.

    Should this loan become the subject of a forensic investigation relating to Gain on Sale/Secured Borrowings/True Sale/or GAAP/FASB scrutinization, WE WILL PREVAIL!

    I think I have their attention. They were nice enough to call me back and ask me to “re-send” two documents, as I had “missed an item”.

    I’ll let you know what happens next.

  10. Deb wynn

    Everyone should follow your lead – contact the FBI.

    Need to work together.



    By Michael Van Sickler


    Sang-Min Kim, a Tampa tattoo parlor owner who made a fortune flipping homes at the height of the last decade’s real estate boom, was indicted by federal officials Wednesday, charged with money laundering and conspiracy to commit wire, mail and bank fraud.

    Kim, 36, who goes by “Sonny,” agreed to plead guilty to both counts at a hearing that’s scheduled for June 29 before U.S. Magistrate Judge Elizabeth A. Jenkins. Though he faces a maximum 50 years in prison and fines of $750,000, Kim will most likely be given a lighter sentence because he pleaded guitly — and is helping authorities investigate and prosec ute others against whom he might testify.

    A six-page indictment by the U.S. Attorney’s Office accused Kim of operating a far-reaching scam that involved numerous buyers, sellers, lawyers, banks and real estate professionals. T he multimillion dollar scam was first revealed by tbt* in 2008 as an example of how mortgage fraud contributed to the Tampa Bay area’s housing collapse.

    The indictment said Kim flipped about 100 homes from Januar y 2005 to October 2008. Of those transactions, 80 involved fraud that cost lenders about $6.4 million.

    “It’s one of the biggest and one of the more significant mortgage fraud cases we’ve done in the last year,” said Steve Cole of the U.S. attorney’s Middle District of Florida, in its second major mortgage fraud case announced this week. “There’s a conspiracy there, so we’re not done.”

    On Monday, federal officials arrested Joseph Daniele on charges that he participated in a mortgage fraud scam from 2004 to 2008.

    “When we started learning the extent of the fraud, federal prosecutors weren’t ready for it,” said Richard Hagar, a property fraud expert in Seattle who reviewed the Kim case. “They are now reacting to it.”

    Mortgage fraud cases typically take two years to investigate, so more prosecutions should be expected, Hagar said.

    In a deal with federal officials, Kim admitted to a long list of infr actions that relied on the cooperation of real estate insiders and professionals.

    Kim bribed a banker to seal deals. He had a real estate agent create false W-2 forms to inflate a prospective borrower ’s income to qualify for a loan. Mor tgage brokers falsified applications for buyers whom he then paid off.

    Kim paid title agents extra commissions for recommending files for closing . He hired appraisers who he knew would “come in higher on home values,” thereby fetching higher loan amounts that were never paid back.

    T he scam left a trail of foreclosures through some of Tampa’s most impoverished neighborhoods. T he deals were financed by the bad mortgages approved or assigned by the same banks that either went bust or were salvaged only by merging with other banks or by receiving billions in a taxpayer bailout.

    The indictment and plea agreement state that Kim was able to do it using “straw buyers.” It goes like this: • Kim bought a house identified by a co-conspirator as being easy to purchase for a cheap price. Often these homes were in disrepair.

    • Frequently, the co-conspirator would then buy the house from Kim. At closing, this buyer would use money loaned by Kim to make the down payment. The down payment would give the lender the impression the buyer could pay back the loan.

    • After receiving the bank loan, Kim would pay the buyer a small sum for their cooperation.

    • The people who bought from Kim never intended to pay off the loans. The homes would then get foreclosed on, but Kim and the buyer had already been paid.

    The straw buyers paid off by Kim — and enabled by a raft of real estate insiders — borrowed millions because they were “motivated by the fact that they were ac tually being paid to assume the role of ‘purchaser,’” the plea agreement states.

    “The $6 million they mention in the indictment is chump change to what this network represents,” Hagar said. “This is the way (federal officials) work a case. They’ ll get the cooperation of someone like Kim and work their way up. T his is going to be much larger.”

  12. Called FBI Phoenix and I was told they get a least 20 calls per day like
    mine the duty officer was very sympathetic. 20 calls per day and that’s only those who are clued in to call at thus time I called because I’m desparate to do the little bit I can to stop the banks carrying on in their business as usual arrogance. The people are getting it.

  13. A person in Colorado,

    “CDO” stands for “Collateralized Debt Obligations” – which are derivatives of the original certificates to a Trust. They are synthetically created and not actual securities.

    “SPV” stands for “Special Purpose Vehicle” – also called a “SPE” – “Special Purpose Entity” or QSPE – “Qualifying Special Purpose Entity” – which have now been dissolved and consolidated from off-balance sheet conduit to on balance sheet of the mortgage loan purchaser.

    SPVs, SPEs, and QSPEs, were set up for multiple tranche certificates – which were all sold to the stated security underwriters (except for residual tranches.) Since the “pool” of supporting collateral “assigned” to the SPVs, SPEs/QSPEs, was not of Triple A quality, the security underwriters retained some tranches for themselves and sold other tranches to other security underwriters for the purpose of CDO “synthetic securities”. These synthetic “security” holders were only entitled to immediate cash flow pass-through. The CDOs were created by combining multiple tranches of different SPVs/SPEs/QSPEs – in order to attempt to promote a Triple A rated security. This is what investors are crying fraud for.

    Most CDOs, resulting from the mortgage crisis, have been written off as a loss by the synthetic CDO “security” investor. The whole loans were never passed through to any security investors – CDO – or otherwise.

    Accounting is the key. But, remember, it is accounting for the whole loan that is relevant – security investor “interest” income accounting is not relevant. These “security” investors – synthetic or otherwise- never owned the whole loan rights. Why ? they never accounted for it..

  14. What does CDO stand for?
    And please explain “multiple tranches”

    Anyone know of any good Colorado case law

  15. Santa Ana CA 92705-4934, Ha I told you that OC (the county I live in) is the most scandalous.




  17. Mario kenny

    If they put them in jail – the government will “bail” them out.

  18. angry & Not Taking IT

    Document preparation – as to what was submitted to the security underwriters. And, these security underwriters (not the same as originator underwriter) knew very well that these loans were not up to par for MBS pass-throughs. So they allocate these loans to subordinated tranches – and then repackage them into CDOs (by combination of multiple tranches and SPVs) for sale of derivative synthetic securities – made to look like Triple A. (And, Louis Ranieri – the father of subprime securitization feels very terrible about this).

    Security underwriters’ parent corporation knew what they were purchasing – and the security underwriters knew what the certificates to SPV (which they purchased) contained. They went ahead, anyway, with repackaging to promote something to the world that it was not – triple A rated (CDO) “securities.” Some tranches were directly sold as MBS pass-throughs. But most of the subprime “securitization” was just a repackage of multiple tranches and SPVs. This is the crux of the investor lawsuits.

    And, for the life of me, I cannot understand why these “investor” lawsuits have weight in court – when the borrowers – who were the real “target” victims – do not get the time of day.

    Government knows this – and, frankly, just does not know what to do. Come on, President Obama, you can do better.

  19. I also have checked my min number and Mers says that Fannie Mae is the investor, In my case Mers can’t say anything for updates because my min# is deactivated and has been since 2002. Mers according to their own manual Does Not Track Loans After they are Deactivated on the Mers System

  20. I hope that they go after the bankers, like U.S. Bank National Association, working with Barclays Capital Real Estate, dba Homeq Servicing real scumbags.

  21. So when will they put the bankers in jail then?

    Appears to be fraud here in document preparation.??
    dot stated to be sold on the secondary market as cdo not mbs? like that type of fraud?

  23. A person in Colorado,

    Loans that validly met criteria for mortgage-backed securities had to meet guidelines. Subprime loans with “no-doc” were securitized largely through CDOs. CDOs combined tranches and SPVs to manipulate a Triple A rating. CDOs are not really “securities” but are synthetic derivatives. CDO investors are never the creditor.

    Appears to be fraud here in document preparation. Wonder if this party is part of FBI focus. Will see – if not – it should be..


  24. I looked up my MIN @ the mers site. It says the following.

    Investor: This investor has chosen not to display their information. For assistance, please contact the servicer.

    Why would the investor want to remain anonymous ? I was told by WF that our investor was Freddie Mac. Are they lying to us ?

  25. Investor /Trustee on MERS Record

    Please use this small sentence for these thieves who have multi roles,
    “”You cannot be a Trustee or investor or own the note, less, it becomes a partnership with the certificate holders”

    a). Investor and Trustee as per MERS member Org. ID # 1001425. Deutsche Bank cannot be a trustee and investor. If it has both then it has a partnership with the Certificate holders.
    b).. Interim Funder and Trustee as per MERS member Org, ID # 1002959
    c). Document Custodian, Trustee and Collateral Agent as per MERS member Org. ID # 1000649
    d). Investor and Trustee as per MERS member ORG. ID # 1001426
    e). Servicer, Subservicers, Investor, Document Custodian, Trustee, Collateral Agent as per MERS member Org. ID # 1000648

    The address of Deutsche Bank from “ a-e” above is the same 1761 East St. Andrew Pl. Santa Ana CA 92705-4934

    Deutsche Bank is also acting under the various layers 424(b) (5) Prospectus, Pooling & Servicing Agreement (PSA) filed by the THIEVES with the SEC.of Trustees, without any specific description, where One Trustee ends and other Trustee Begins. It is classic obfuscation and musical chairs Note that Deutsche Bank is identified “as trustee” but the usual language of “under the terms of that certain trust dated….etc” are absent. This is because there usually is NO TRUST AGREEMENT designated as such and NOT TRUST. In fact, as stated here it is merely an agreement between the co-issuers and Deutsche Bank, which it means that far from being a trust it is more like the operating agreement of an LLC)

    DEUTSCHE BANK cannot be a Trustee or investor or own the note, less, it becomes a partnership with the certificate holders(Who bought the certificates and invested)


  27. Hey I got a joke,
    What do you call having your home foreclosed on two different times for the same ARM loan?
    Double Jeopardy “twice put in jeopardy of life or limb”…
    Get it?

  28. Patrick,

    I agree with you 100% with regard to the new MERS “disclosure.” This is huge stinky pile of BS. The info means absolutely nothing.

    As you stated, the entity that is identified if the trustee, but it does not tell you tell trustee to what? Not only that, but your loan may not even be part of a trust – it may have been pledged but never sold into the trust. Additionally, over the years, tranches of these trusts were sold – yours may have been one that was sold to another entity – all this info is not available on MERS.

  29. But don’t get me wrong sometimes you have to loose a battle or two to win the war. It ain’t over till the fat lady sings

  30. Talk about a day too late and a dollar short.

  31. Reader: MERS, knows now that the days have been numbered and death keeps no calender.

    MERS is an honest and significant componant in the role of a nominee in a securities for GAAP program that does not work. Its not MERS but the misapplied use of the nominee function as an assignor.

    This is especially true in the foreclosure process whereby MERS has no defined role in a foreclosure.

    Stop already!


  32. The FBI is preparing to arrest hundreds of people for offences including
    1) encouraging borrowers to falsify income on mortgage applications, We hope this includes loan modification companies who actually are alleged to devalue borrower income to discourage modificiations.

    2) misleading home owners about foreclosure rescue programs, I belieive this includes any person representing themselve as expert whereby the person has no courtroom experience or has not participated in the secondary and or capital markets functions.

    3) For inflating home appraisals as mentioned by two people with knowledge of the operation. An FBI spokesman declined to comment.

    Lets watch what happens here.


  33. The information disclosed on MERS means nothing. If you do not know the actual trust, you have nothing.

    Take a loan that says Bank of New York is the investor. What does it mean?

    Look up on Edgar, and look up Bank of New York. You find tons of listings, but you don’t find any MBS’s that apply. Why not?

    BONY is the Trustee. They were not the Issuing Entity. Unless you know that Countrywide used BONY, you have no idea what to even begin to look for, especially since 50-75 trusts may be applicable.

    So…..big deal about MERS and this.

  34. Kickboxer

    MERS, knows now that the days have been numbered and death keeps no calender.

  35. @ The A Man,

    Thank you for the heads up. I just looked up my MIN and it says Fannie Mae is the investor.

    Why did MERS suddenly decide to disclose that information on their site? Strange isn’t it?

  36. Another distraction to keep us from asking they address the real issues, what a bunch of crap! this folks actually think we are really stupid don’t they??? the day they start arresting the real perpetrators i will say good job, until then, no way, it’s all a ball of crap.

  37. Deborah,

    The Utah Injunction was dissolved, as I predicted here. Federal Preemption.

  38. The MERS system only tells who the Trustee is and nothing else. It still takes an inordinate amount of work to determine which Trust.

  39. Oh good, maybe they will arrest Greenspan, Gietner, Paulson and all those ceo’s that perpetrated the fraud and Ponzi game of securtizing mortgages and allowing them to be insured by AIG and then taking $147 billion of bailout money plus all the bonuses for bringing such huge volume to Indymac and Countrywide and all the rest of those bankrupt lenders. Maybe they will arrest those accounting firms that rated the mortgage pools as AAA. HAH! They will probably only go after the poor SOB mortgage brokers and appraisers while the real criminals are floating around on their yachts.
    Oh I forgot, it was some poor SOB mortgage broker that schemed up the Ponzi game which resulted in the melt down, wasn’t it? Yah, it was Joe Blow Mr Mortgage Low Man on the totem pole that schemed up the option ARM, interest only, stated income cash out non owner occupied loan programs, wasn’t it?

  40. Anonymous said “Lenders did not “encourage borrowers” to “falsify income on mortgage applications”. Incomes, and especially for securitizations, had to be verified via the IRS. ”

    I did not falsify income, but either the mortgage broker, escrow agent, or someone else did. I can tell you that the income they put down was never verified via the IRS and my loan was securitized.

    In addition the appraisal was significantly over value. And there was no one from title company at the closing….just me and the broker….yet escrow agent and notary (who it turns out are one and the same, no not an impartial third party) added a page and forged initials (it was a really bad forgery too, they didn’t even try to make it look like my initials).

    Now I have to respond to a rule 120 hearing from someone who is not even the real party in interest.

    Something needs to be done with these banks!





  42. Just contemplating if the FBI round up will make a dent in the “real problem” for the American people… just love the last line in this article!


  43. Have to agree with Anonymous…looks good on paper… but yet another game of 3 card monty… just another sound bite…like the class actions that pay out $42.00 to people with a caveat to absolve the perpetrator of any further wrong doing.

    Look how long it took the American public to catch on that HAMP & Help for Homeowners were a complete fraud…

    All of this is really getting very tired!

  44. J in CO is right. Lenders did not “encourage borrowers” to “falsify income on mortgage applications”. Incomes, and especially for securitizations, had to be verified via the IRS.

    While there may have been a few borrowers in cohoots to falsify documents – this was NOT the case for the vast majority of borrowers. And, a hundred times over – only the lender could qualify a borrower – borrowers could not qualify themselves.

    Numerous Americans have been destroyed – and by greed – motivated by siphoning wealth out of the only thing America had to offer – home equity. Congress needed home equity to be a continued source of income to promote an economy that was largely driven by consumption and consumption only.

    Congress said okay to everything the financial service industry asked for – including deregulation and repeal of the separation of commercial banking and investment banking.

    And, Congress allowed these institutions to target (and solicit) homeowners by disregarding privacy policies that should have protected consumers and homeowners from public disclosure of their assets. These financial institutions – had your number – knew your assets – and knew you were a source of income for their fraud.

    If the FBI really proceeds to arrest “hundreds of people” – again, J in CO is right. They are after the wrong people – Wall Street (CEOs) is the right target – but, then again, Congress already bailed THEM out – and will always continue to bail them out.

  45. The entire mess is heartbreaking. I can almost understand a handful of greedy people cooking up a scheme to get rich quick and over looking the innocent homeowners and their children that they were putting onto the street. But that thousands of people could purposely and maliciously do this to their neighbors is unbelievable. Thank God it’s all coming to the light.

  46. I hope I see my loan originator in bracelets! And while they’re at it, arrest the appraiser! But we all know this wouldn’t have happened if the banks weren’t behind it in the first place.

  47. Too bad they are going after the wrong people. The lenders at all times had the ability built in to verify the income status of all borrowers with an IRS 4506-T form and never utilized it.

    They want to target the small fish when the real meat of fraud was in the banks that created the program to begin with. It is no different than a no-doc in which the lender received nothing but a credit score.

    How is it that they want to hold anyone accountable for using a program created to not have to qualify the income. It is not a burden to have to provide at a minimum the first three pages of a tax return or a recent paystub.

    It is just another joke to make it look like they are doing something.

    The banks are responsible and had a method to verify income as stated and failed to utilize it. That fact is never exposed or even questioned an goes all the way up to the regulators to have responsibility.

  48. The charters should be revoked for any institution that practiced predatory lending and/or servicing.

  49. This sounds good- but they need to put a stop to ALL Foreclosures like Utah did!

Contribute to the discussion!

%d bloggers like this: