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Mortgage e-Alert: Pending California Legislation

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(4-24-2017) – From our good friends at the Thordsen Law Offices:

PENDING CALIFORNIA LEGISLATION THAT AFFECTS REAL ESTATE LICENSEES, MORTGAGE LOAN ORIGINATORS AND LANDLORDS

FACTS

AB 325  Termination of tenancy/sale of property left behind. (amends Civil Code Section 1988)

This bill requires personal property left behind by a residential tenant be sold at public sale subject to competitive bidding and held in the county where the vacated premises are located. If the landlord reasonably believes that the total resale value of the property not released is less than seven hundred dollars ($700), the landlord may retain the property for his or her own use or dispose of it in any manner. Nothing in this section shall be construed to preclude the landlord or tenant from bidding on the property at the public sale.

MORAL

Landlords keep track of this bill and read it VERY carefully. It controls the liability in the event a tenant that has left sues.

AB 543- Residential Apartment Managers and Minimum Wage
Section 1182.8 of the Labor Code is amended to read:
(a) No employer shall be in violation of any provision of an applicable order of the Industrial Welfare Commission relating to credit or charges for lodging for charging, pursuant to a voluntary written agreement, a resident apartment manager up to two-thirds of the fair market rental value of the apartment supplied to the manager, if credit for the apartment is not applied to meet the employer’s minimum wage obligation to the manager.
(b) If an employer does not charge a resident apartment manager to occupy the apartment supplied to him or her, the employer, pursuant to a voluntary written agreement, may apply up to one-half of the fair market rental value of the apartment to meet the employer’s minimum wage obligation to the manager without violating any provision of an applicable order of the Industrial Welfare Commission relating to credit or charges for lodging.

MORAL

Notice the words “voluntary written agreement.”  No voluntary written agreement equals no exemption and then the landlord has minimum wage issues. Landlords need to watch this bill.

AB 749 Substantial Changes to Real Estate Law affecting Licensees
This bill recasts and redefines the term “salesperson” as a person who is retained by a licensed real estate broker. This bill defines the term “retained” to mean the relationship between a broker and a real estate licensee who is an independent contractor affiliated with, or an employee of, a broker to perform certain real estate activities subject to a broker’s supervision. The bill also defines various other terms to describe the relationships between real estate brokers and salespersons and the parties involved in the sale of real estate transactions, including, but not limited to, seller, buyer, seller’s licensee, buyer’s licensee, dual broker, and dual licensee.

This bill requires a real estate licensee to immediately notify the commissioner whenever a licensee affiliates or is retained by a real estate broker, if that agreement is terminated, or if the licensee acquires a new business address.

This bill authorizes a licensee to enter into an agreement with another licensee to share compensation provided that the compensation is paid through the responsible broker. The bill defines a “responsible broker” as a real estate broker responsible for the exercise of control and supervision of real estate salespersons.

When a licensee prepares or has prepared an agreement authorizing or employing such licensee to perform any of the acts for which he or she is required to hold a license, or when such licensee secures the signature of any person to any contract pertaining to such services or transaction, he or she is required to deliver a copy of the agreement to the person signing it at the time the signature is obtained.
This bill requires the copy of the agreement to be delivered either in print or electronic record as soon as practicable after obtaining the signature.

Existing law requires a notice containing certain information to be filed with the commissioner within a specified period of time after the first transaction and within that same time period if there is any material change in the required information. Existing law requires the broker or the designated officer or corporate broker to sign the notice.  This bill requires the responsible broker to sign that notice.

Existing law requires the real estate salesperson’s license to remain in the possession of the licensed real estate broker employer until canceled or until the salesperson leaves the employ of the broker, and the broker is required to make his or her license and the licenses of his salespersons available for inspection by the commissioner.  This bill repeals those requirements.

Existing law authorizes the commissioner to suspend or revoke the license of a real estate licensee, delay the renewal of a license of a real estate licensee, or deny the issuance of a license to an applicant, who has committed specified acts. Existing law also authorizes the commissioner to suspend or revoke the license of a corporation, delay the renewal of a license of a corporation, or deny the issuance of a license to a corporation, if an officer, director, or person owning or controlling 10 or more of the corporation’s stock has done specified acts.  This bill authorizes the commissioner to take such action for failure to surrender a license issued in error or mistake.

Under existing law, when a real estate license is issued to a corporation, if it desires any of its officers other than the specified designated officer to act under its license as a real estate broker, it is required to procure an additional license to so employ each additional officer.

This bill authorizes a corporation, in the event of death or incapacity of a sole designated broker-officer, to operate continuously under its existing license if notice and an application is provided to the bureau within a specified period of time of the death or incapacity.

Under existing law, each officer of a corporation through whom it is licensed to act as a real estate broker is, while so employed under that license, a licensed real estate broker, but is only licensed to act as such for and on behalf of the corporation as an officer.

This bill does not preclude a designated corporate officer who has a separate individual license from conducting licensed activity for another entity if the entity for which he or she acts is clearly disclosed and apparent to any member of the public using his or her services outside the corporation. When a corporation wishes to act as a real estate broker, the bill would require the corporation to be licensed by the bureau through qualified broker-officers. The bill provides that an officer of a corporation through whom it is licensed to act need not maintain an individual broker’s license, but would provide that the officer is subject to all duties and responsibilities of a licensed real estate broker.

MORAL

This requires a conference because of dramatic changes.  If you would like us to speak to your organization on these proposed  changes for 2018 contact Herman Thordsen who will prepare a syllabus and speak to the proposed new laws and explain their effect on  each licensee and the potential for discipline by the California Bureau of Real Estate.

PENDING LEGISLATION THAT AFFECTS ALL REVERSE MORTGAGES

FACTS

SB 739 (California). REVERSE MORTGAGES: LENDER NOTICE REQUIREMENTS.
Under existing law, a “reverse mortgage” means a nonrecourse loan secured by real property if the loan provides cash advances to a borrower based on the equity or the value in a borrower’s owner-occupied principal residence, the loan requires no payment of principal or interest until the entire loan becomes due and payable, and the loan is made by a specified licensed or chartered lender. Existing law requires the lender to prominently disclose in the loan agreement any interest rate or other fees to be charged during the period that commences on the date that the reverse mortgage loan becomes due and payable, and that ends when repayment in full is made. Existing federal law authorizes the nonborrowing spouse of a reverse mortgage borrower to exercise an option, sometimes referred to as a mortgagee optional election (MOE), to further defer the due and payable status of the reverse mortgage upon the death of the borrower, upon meeting specified conditions.

This bill prohibits a lender from making a reverse mortgage loan on a principal residence without first informing the borrower, and nonborrowing spouse of the opportunity for a nonborrowing spouse to exercise the option described above to permit that spouse to remain in the residence following the death of the borrowing spouse upon the satisfaction of specified conditions. The bill for a reverse mortgage entered into on or after January 1, 2018, prohibits a lender from initiating a foreclosure on a principal residence after the death of the borrowing spouse unless the notice requirements regarding the option were met and the nonborrowing spouse was given the opportunity to exercise the option.

MORAL

If anyone reading this is doing reverse mortgages they just might want to read this legislation carefully and keep track to see if it becomes law in 2018.

Mortgage e-Alert: HUD/FHA and other news

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MORTGAGE e-ALERT©
(3-2-2017) from Thordsen Law Offices

  1. HUD/FHA home sold for less than the balance owed.
  2. Long Beach, California Real Estate Broker goes to prison for using straw buyers.
  3. Employer claims employee is exempt from overtime and loses to employee for over  $100,000 in back wages.

SELL HUD/FHA INSURED PROPERTY FOR LESS THAN THE BALANCE ON THE MORTGAGE

FACTS

UNKNOWN CITIZEN tips off HUD/FHA about preforeclosure sale violation in St. Louis, MO area.  The preforeclosure sale option allows borrowers in default (resulting from an adverse and unavoidable financial situation) to sell their home at fair market value and use the sale proceeds to satisfy the mortgage debt even if the proceeds are less than the amount owed. This option is for borrowers whose financial situation requires that they sell their home, but are unable to without FHA relief because the gross recovery on the sale of their property (sale price minus sale expenses) is less than the amount owed on the mortgage.

The services of a real estate broker-agent must be retained to market a property within 7 days of the date on which the approval to participate is granted.

The broker-agent selected should have no conflict of interest with the borrower, the lender, the appraiser, or the purchaser associated with the preforeclosure sale transaction. Any conflict of interest, appearance of a conflict, or self-dealing by any of the parties to the transaction is strictly prohibited.

The purchaser of the property entered into a consulting agreement with the realtor for the preforeclosure sale. The agreement required that when the purchaser later sold the property, he would pay half of the net proceeds from the sale of the property to the realtor’s consulting company.

Despite having this additional agreement in place, the purchaser signed the arm’s-length affidavit as the buyer and affirmed, “…there are no agreements, special understandings, hidden terms, or contracts between the parties other than the Contract…”

The property was sold a second time on the day of the preforeclosure sale. The title company paid $19,140 from the proceeds of the second sale to the realtor’s consulting company. HUD strictly prohibits any conflict of interest or self-dealing by preforeclosure sale participants. HUD paid a claim for $139,323 to the lender because the preforeclosure sale price was less than the balance of the loan.

Later on December 17, 2015, HUD served a complaint on the purchaser, alleging that the purchaser caused the submission of a false claim to HUD and made multiple false statements in the arm’s length
affidavit and seeking a penalty and an assessment under the Program Fraud Civil Remedies Act.

HUD and the purchaser entered into a settlement agreement where the purchaser agreed to pay HUD $5,000.  November 18, 2016, the settlement agreement of $5,000 had been reached and it represents an amount due HUD.  (2017-KC-1801)

MORAL

Since this was a fraud on HUD/FHA the purchaser was really lucky.  Fraud on FHA can be prosecuted as a felony under 3 different code sections of Title 18 United States Code which is the criminal volume for federal crimes.

LONG BEACH, CALIFORNIA REAL ESTATE BROKER AND ONE OTHER GO TO FEDERAL PRISON FOR USING “STRAW BUYERS”

FACTS

On March 2, 2017, JOHN MARTYNEC, 41, licensed real estate broker from Long Beach California and ELEK ANDRADE 32, of Downey linked to a mortgage fraud scheme that cost at least $2.4 million when fraudulently purchased homes went into foreclosure have been sentenced to federal prison.

This was a scheme to fraudulently obtain mortgages for residential properties through the use of “straw buyers” who pretend to purchase the properties and had no intention of living in the homes. In this case, the straw buyers’ personal information was used to obtain mortgages without their knowledge. At the time of the scheme it was run out of JTR REAL ESTATE, INC., a Norwalk-based real estate brokerage company (license now expired) which bought, renovated and sold residential properties.

The two defendants sentenced on Monday by United States District Judge Dale S. Fischer were:
• John Martynec, 41, of Long Beach, a licensed real estate broker and co-owner of JTR, who previously pleaded guilty to one count of conspiracy and was sentenced to two years in prison; and
• Elek Andrade 32, of Downey, who also previously pleaded guilty to one count of conspiracy and was sentenced to one year and one day in federal prison. (reason for one day is it allows for an early release whereas if exactly one year he would have to serve all the prison time)

In addition to the prison terms, Judge Fisher ordered both men to pay $2,573,092 in restitution.

Martynec was responsible at JTR for identifying distressed residential properties which could be purchased, renovated, and then sold for a profit. Andrade worked for Martynec as a real estate agent and assisted in selling the properties. When the market for renovated properties slowed in 2007, Martynec and Andrade engaged in a scheme to use straw buyers to purchase the renovated homes.

The loan applications were submitted without the knowledge of the straw buyers and included fraudulent supporting documents, such as verifications of employment.

A third defendant who fabricated documents that were submitted with the fraudulent loan applications – MIREYA ESPINOZA, 36, OF CARSON – was sentenced on February 6 to one year and one day in prison and was ordered to pay $1,476,966 in restitution.  (usattycdca3217release no. 17-043)

MORAL

Still prosecuting crimes from 2007.  The FBI may be working through a check list since the prosecution complaint has to be filed within ten years of the actual offense.

CALIFORNIA EMPLOYEE CLAIMED EXEMPT BY EMPLOYER
EMPLOYER PAYS OVER $100,000 FOR WRONGFUL CLASSIFICATION

FACTS

On February 28, 2017 the California Labor Commissioner’s Office announced a Northern California hunting club paid an on-site caretaker $100,867 in back wages after the wage claim hearing officer ruled the worker was making less than minimum wage. He was MISCLASSIFIED AS AN EXEMPT, SALARIED EMPLOYEE and should have been paid hourly.

The caretaker of BUTTE LODGE OUTING CLUB, INC. IN COLUSA filed a claim for unpaid wages from April 2014 to June 2016. Following the hearing, the Labor Commissioner’s Office awarded the worker $76,003 in overtime wages, $17,988 in liquidated damages, and $6,875 in interest!

The 55-year-old caretaker had been employed at the hunting club for 18 years as a salaried employee paid biweekly. In addition to the care of the property, the worker was tasked with planting the wetlands with trees, grasses and grain preferred by waterfowl, and upon request, frequently plucked, gutted and cleaned the ducks shot down by the lodge members.  He worked more than 70 hours a week during duck hunting season, which normally takes place for 10 to 12 weeks from October through January.

Most workers in California, unless exempt from overtime laws must receive overtime pay of 1.5 times the regular rate of pay for all hours worked over 8 hours in a workday or over 40 hours in a week, and double the regular rate of pay for all hours worked over 12 hours in a workday. Workers paid less than minimum wage are also entitled to liquidated damages which equal the amount of underpaid wages plus interest.   (Release No.: 2017-16    February 28, 2017)

MORAL

There has been an increase in investigations by Department of Labor Standards Enforcement (DLSE), EDD and CalBRE due to improper classification of employees as independent contractors.  There are “magic words” that must be use when hiring independent contractors licensed by the California Bureau of Real Estate. If not used, then no matter how good the agreement the court, Labor Commissioner and the California Bureau of Real Estate will find them invalid.  However, there is a statute of limitations that requires claims/lawsuits to be brought within three years.

THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.
AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.

THORDSEN LAW OFFICES
Toll Free (888) 667-8529.  (714) 662-4990 (310) 277-4254

Herman Thordsen, Esq.* Direct Line-(714) 662-4993
Sean Thordsen, Esq.**    Direct Line-(714) 662-4995

*      Licensed in California State and Federal Courts
**    Licensed in California and Nevada State and Federal Courts

Six Simple Questions Guaranteed to Convert Prospects Into Clients Faster

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Duane Gomer, educator extraordinaire recently sent out a newsletter recommending a great article for MLO’s.  Here’s what Duane wrote:

Cindy Douglas is one of our most treasured instructors for MLO education. She is loaded with knowledge, personality and delivers her message clear and concise, therefore earning marvelous reviews and testimonials.

Let’s see what Cindy says about herself on her website, CindyDouglas.com. Cindy Douglas is an accomplished 30-year veteran of the southern California home mortgage environment. Her expertise spans from starting as a loan processor, to becoming a high producing originator, then moving on to lead production and operations management.

I would highly recommend her recent article to MLO’s and Real Estate Agents. The title is “Six Simple Questions Guaranteed to Convert Prospects Into Clients Faster”.

  1. In a perfect world how would your business operate?
  2. Paint me a picture on how your business looks today?
  3. It seems there is a gap between where you would like to be and where you are now. What do you think is stopping you from moving forward?
  4. What is the number one thing that needs to happen for you to reach your potential?
  5. What is your current plan and do you have a plan “B” while you are perfecting your business model?
  6. I’d really like to help you close that gap.

What do you think? Want to read the Answers to the questions?  Go to Cindy Douglas.com and while you are there sign up for her email. Also, you can visit Cindy at Duane Gomer Education offerings in the Inland Empire and Desert areas. Watch for Cindy’s new book coming soon. Working title is “12 Steps to Success: Powerful Lessons from Top Mortgage Professionals Who Survived the Worst Financial Crisis Since the Depression.”

CalBRE and the Real Estate Bulletin

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For a long time all Real Estate licensees would receive the Real Estate Bulletin in the mail on a quarterly basis. Several years ago, however, the CalBRE stopped mailing the Bulletin and started to post it online at www.bre.ca.gov, still on a quarterly basis.

It is important to read the Bulletin and keep up on current issues that the CalBRE managers and the commissioner write about in this publication.  In addition to the most current Bulletin being posted, the archive of Bulletins goes back to the Spring 2000 edition.  There is even a Table of Real Estate Bulletin Articles that gives the title of each article in every edition for the last 16 years. [Read more…]

Consumer e-Alert (May 24, 2016): New Federal Overtime Law

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(from our good friends at Thordsen Law Offices)

NEW FEDERAL OVERTIME LAW BEGINS DECEMBER 1, 2016
OVERTIME IS FOR ANYONE MAKING LESS THAN $47,476 PER YEAR.
THIS INCLUDES SALARIED EMPLOYEES

FACTS

To be exempt from overtime one of the first parameters is that the employee must be paid a salary of a minimum amount.  Under new changes to the overtime regulation, this minimum salary will be  at least $913 per week (equivalent to $47,476 per year).  Salaried white collar employees paid below this amount will generally be entitled to overtime. HOWEVER, THERE ARE CERTAIN CATEGORIES OF EMPLOYEES TO WHOM THIS MINIMUM SALARY DOES NOT APPLY, INCLUDING TEACHERS, LAWYERS OR DOCTORS.

Those employees paid above $913 per week can be exempt if they are employed as Executive Administrative or Professional employees. However, there are three tests to be met for the exemption from overtime to apply:

  1. The employee must be paid on a salary basis that is NOT SUBJECT TO REDUCTION based on quality or quantity of work. So if there is a chargeback to the employer from an investor it cannot be charged back to the employee salary as an example.
  2. The salary MUST MEET minimum salary level which after the effective date of December 1, 2016 is $913 per week equivalent to $47,476 annually for a full year worker.
  3. Primary job of the employee MUST involve the kind of work associated with exempt executive, administrative, or professional employees. (guidforprivempomnchanges 5-18-16 WHD-USDOL)

MORAL

The above is a brief summary only.  THIS MEANS THAT ALL EMPLOYEE CONTRACTS ANYONE IS USING MAY VIOLATE THE NEW LAW WHEN IT GOES INTO EFFECT ON DECEMBER `1, 2016.   If you are using an employee contract (especially a written one) YOU WILL AND ABSOLUTELY SHOULD HAVE IT REVIEWED PRIOR TO DECEMBER 1 BECAUSE IT MAY BE INVALID AS OF THAT DATE.  For those of you that have retained us over the years to prepare and/or review or revise employment contracts they will have to be updated BEFORE DECEMBER 1.

Thordsen Law Offices
(714) 662-4990
(714) 662-4993 Direct Line

MORTGAGE e-ALERT: FORECLOSE AND GET SUED FOR WRONGFUL FORECLOSURE BY THE HOMEOWNER

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Report from the Thordsen Law Offices:

Did you loan money secured by a note and deed of trust?

Did you assign them to a buyer?

Was the buyer investor sued by the borrower?

If you are a broker, read your investor/lender contract. This opinion states you are responsible for all losses regardless of the reason:

FACTS

On February 18, 2016, the California Supreme Court issued its opinion in the case of Tsvetana Yvanova v. New Century Mortgage Corporation. This decision allows borrowers to file lawsuits for wrongful foreclosure and the borrower/homeowner could seek to halt or delay foreclosures on their homes where the mortgages are loans pooled into securitized trusts.  The borrower on a home loan secured by a deed of trust may sue for wrongful foreclosure alleging that a purported assignment of the note and deed of trust to the foreclosing party had defects making the assignment void.

The California Supreme Court, in a unanimous opinion, held that “a borrower who has suffered nonjudicial foreclosure does not lack standing merely because he or she was in default on the loan and was not a party to the challenged assignment.” [Read more…]

Mortgage e-Alert: July 14, 2015

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News that will enlighten you from the Thordsen Law Offices:

  1. JPMorgan Chase giving refunds for bad debt collection practices.
  2. Misclassify a California Employee as an Independent Contractor and you to can owe the state over $179,000.00
  3. $820,000 to be returned to121 Californians in San Diego County and Riverside County who were deceived about foreclosure rescue schemes.
  4. San Diego, California man pleads guilty to mortgage loan modification fraud.
  5. Two more in Northern California plead guilty to rigging bids at public foreclosure sales and the arrests continue onward. A word to the wise. Anyone that had anything to do with rigging bids in the last ten years contact your attorney. The prosecutors have ten years to file a criminal complaint.
  6. Three real estate developers in Miami draw prison terms up to ten years for $27.8 million mortgage fraud and forfeit over $56 million in assets-eleven others already convicted. total is now fourteen and counting.

[Read more…]

FTC News: Court Halts Mortgage Relief Operation that Targeted Homeowners Facing Foreclosure

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Some People Lost Their Homes: Paid Defendants Instead of Making Mortgage Payments

At the Federal Trade Commission’s request, a federal court halted a sham operation that allegedly told financially distressed homeowners it would help get their mortgages modified, but instead effectively stole their mortgage payments, leading some to foreclosure and bankruptcy. The FTC seeks to permanently stop the scheme and its participants’ illegal practices. It also filed a contempt action against one of the scheme’s principals, Brian Pacios, who is under a previous court order that prohibited him from mortgage relief activities.

[Read more…]

RESPA Violations on Kickbacks Cost These People Dearly

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From the Thordsen Law Offices

THIS IS WHAT HAPPENS WHEN ANYONE VIOLATES RESPA.
ESPECIALLY SO BLATANTLY!

If there are any questions then call.

CONSUMER FINANCIAL PROTECTION BUREAU AND STATE OF MARYLAND FILE LAWSUIT AGAINST LOAN OFFICERS AND FORMER TITLE COMPANY EXECUTIVES WHO TRADED CASH AND MARKETING SERVICES FOR ILLEGAL REFERRALS AND WILL BE BANNED FROM THE INDUSTRY AS WELL AS PAY REDRESS AND PENALTIES
THIS IS A CONSENT JUDGMENT AS TO ALL BUT ONE

FACTS

On April 29, 2015 the Consumer Financial Protection Bureau (CFPB) and the Maryland Attorney General filed a lawsuit against the participants in a mortgage-kickback scheme. In the complaint filed in federal court, the CFPB and Maryland allege that the Maryland-based title company’s executives and the named loan officers traded cash and marketing services in exchange for mortgage referrals. Under proposed consent orders filed April 29, 2015, if entered by the court, FIVE OF THE SIX INDIVIDUAL DEFENDANTS WOULD BE BANNED FROM THE MORTGAGE INDUSTRY AND REQUIRED TO PAY A TOTAL OF $662,500 IN REDRESS AND PENALTIES. The action will proceed against the remaining defendant. [Read more…]

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Standard Mortgage Financial Services, Inc.
6700 Indiana Avenue Suite 220
Riverside, CA 92506-1827
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