Calvin Davis, 47, New Orleans, Louisiana, pled guilty to a three count Bill of Information in United States District Court in connection with an on-going federal investigation into a “house-flipping” scam.
As previously reported on Mortgage Fraud Blog, the factual basis filed in court documents describes a “housing flipping” scheme and the role Davis had in that scheme. Davis admitted in that document that he purchased the properties, obtained fraudulent appraisals and arranged for straw buyers to purchase them. Davis then sent the strawbuyers to Citywide Mortgage to obtain loans by using fraudulent employment and credit documents as well as false tax returns. These loans were approved by Michelle Cochrane, a former underwriter at Citywide Mortgage. Cochrane recently admitted at her guilty plea, that she participated in the house flipping scheme with Davis and others. Cochrane pled guilty to approving fraudulent FHA/HUD loan applications for the “straw buyers” while employed at Citywide Mortgage. Cochrane also admitted that after she approved the fraudulent loan applications, the loans were forwarded to the HUD offices in Denver Colorado. Based on the fraudulent applications, the Department of Housing and Urban Development insured the loans. Citywide then sold the loans to another mortgage company. Various properties eventually went into default and HUD became responsible for paying off those loans. According to a plea letter filed in Court, Davis is expected to provide cooperation. Davis will remain on bond while awaiting sentencing.
Davis is the sixth person to plead guilty to charges stemming from this investigation. Michelle Cochrane recently pled guilty to Conspiracy to Make False Statements in a HUD transaction. Robert Green pled guilty to an identical charge and admitted that he prepared the fraudulent tax returns. Three “straw buyers” Timothy Falls, Dennis Addison and Dennis LeBlanc have pled guilty to Making False Statements in HUD Transaction. All defendants will be sentenced at a later date. A seventh individual, Michael O’Keefe, Jr. is also charged with various offenses related to the scheme and is awaiting trial.
The Information charged Davis with Conspiracy to Commit Mail Fraud, Making a False Statement to Obtain HUD Insurance and False Statement on an Income Tax Return. The range of punishment for Conspiracy to Commit Mail Fraud is a term of imprisonment of not more than five (5) years, and a fine of $250,000.00; the range of punishment for Making a False Statement to Obtain HUD Insurance is a term of imprisonment of not more than two (2) years, and a fine of $250,000.00 and the range of punishment for False Statement on an Income Tax Return is a term of imprisonment of not more than three (3) years, and a fine of $100,000.00. Sentencing has been set for November 8, 2007.
Is there anything that be done about laywers who send documents to a person diagnosed as Chronic paranoid Schizophrenic saying that they have sold his house? without his knowledge?
Wow, that is a lot of trouble they have gotten themselves in…
I am glad I never got involved in anything like that!
The present mortgage problems were predicted back in the ’90′s during the Savings & Loan Bailout. At that time the appraisers were blamed for bad loans. A state wide appraisal license is now in place.
New homeowners confide is a LICENSED REALTOR. THAT person must be professional because he or she has their name printed on a business card.
The REALTOR feeds the buyer to a mortgage person who is ONLY interested in getting them approved and making money.
The mortgage monkey send work to an APPRAISER who must HIT THE NUMBER or RUBBER STAMP the value to keep getting business from the mortgage person.
SO…
The buyer has THREE licensed persons, all of whom are only interrested in making tha almighty dollar. The Broker, Banker and Appraiser are all supposed to be professionals. In fact, they are all only interested in getting paid.
Solution!!
Have the buyer hire an HONEST, professional appraiser to establish the value for them. In turn they should be able to use that apraisal for the mortgage. It’s called a PRE-PURCHASE appraisal. rELOCATION COMPANIES USE THEM.
Buyers can tust their Broker, the Mortgage person and the Appraiser.
OR the buyer can hire their own APPRAISER who will be working for them and will give an honest opinion of value, not one dictated by the mortgage company. It’s called a Pre-Purchase Appraisal. It tells you what the property is worth. Typically there is a contingency on the Purchase Agreement, contingent upon an appraisal being done at the buyer’s expense. The property must appraise for at least the asking price or the deal is null and voic and earnest money are returned.
OR one can trust the Broker, MLender and lender’s hand picked Appraiser.
Hi, I have been told that on a bulk sale the buyer cannot flip more than 10% of the homes purchased under California law. Is this true? What is the law regulating this type of transaction? Thank you very much.