CARAVAN               2011Deanna SabeyDirector of Real Estate                          1
Agency InformationRevamped Division web-site    Color Coded Boxes    Upcoming Events & Notices    Disciplinary Action Look...
Newsletter  New Flip  format  Topical guide  in 4th Q  Newsletter  for 2010  Legal Corner                  3
Governor’s call for agencies to review regulationsGOAL:     REDUCE REGULATION    Removed 10 day reporting of Class C misde...
H.B. 91 (effective 5/10)No 10 day reporting of class CmisdemeanorsMORTGAGE and REAL ESTATE: Commission review of a Divisio...
H.B. 91 (effective 5/10)APPRAISAL:   Reorganize the existing provisions   Correct inconsistencies   Add Division concurren...
H.B. 91 (effective 5/10)APPRAISAL MANAGEMENT:   Increase penalty to $5,000 per violation   Limit the automatic revocation ...
H.B. 91 (effective 5/10)Decisions relating to disciplinary proceedingsmade through concurrence of the Divisionand the Appr...
APPRAISAL RULESWorking onreorganizationof rules to mirrorthe organizationand numberingof the appraiserstatute.            ...
APPRAISAL RULESR162-103:  student must attend 100% of  scheduled class time.  Individual can be awarded up to ½ of  CE for...
APPRAISAL MANAGEMENT COMPANIES  Reorganized reflecting the AMC statuteR162-2e: AMC must have systems in place to:  Verify ...
MORTGAGE           Reorganized and           renumbered rules           in a system that           correlates to the      ...
MORTGAGER162-2c-201 Factors for determining  financial responsibility for licensure  through credit report:     outstandin...
REAL ESTATEReorganized and renumberedold rules into a format that ismore user friendly.                              14
REAL ESTATER162-2-2 Plea in abeyance toMM charge involving fraud,misrepresentation, theft, ordishonesty no longer acts as ...
REAL ESTATER162-4-1Licensees will nolonger be subjectto discipline ifthey do notpersonally attendclosings.                ...
DODD FRANK ACTHas far-reaching ramifications.  2300-page document creates  Consumer Financial Protection Bureau.          ...
DODD FRANK ACTMORTGAGE (TILA amendments)Compensation:  No compensation  based on the  terms of the loan.  No origination  ...
DODD FRANK ACTMORTGAGE (TILA amendments)Origination Standards: consumersmust be offered and receive residentialmortgage lo...
DODD FRANK ACT  MORTGAGE (TILA amendments)Minimum Loan Standards:    ability to repay    qualified mortgage safe harbor   ...
DODD FRANK ACT MORTGAGE (TILA amendments)Qualified Mortgage:    verified income and financial resources,    payment schedu...
DODD FRANK ACTMORTGAGE (TILA amendments)Foreclosure Defense:    consumer can assert violations    of the ability to repay ...
DODD FRANK ACT  APPRAISALIndependence:     No improper influence of appraiser.     Settlement service provider obligated  ...
DODD FRANK ACT   APPRAISALBPOs:   may not be used as   the primary basis in   determining the value   of a piece of proper...
DODD FRANK ACT  APPRAISALAMCs:   Subcommittee supervision –   requirements for regulation in Interim   Rules.   Must pay a...
FTC MARS Rule (Mortgage Assistance Relief Services)SCOPE:includes loanmodificationcompanies andsome realestate agents.    ...
APPLICATION TOREAL ESTATE AGENTS:YES, if you are an agent who promotesyour services as a way to helpconsumers avoid forecl...
FTC MARS Rule     DISCLOSURES:1.   General audience     IMPORTANT NOTICE     “(Name of company) is not associated     with...
FTC MARS Rule    DISCLOSURES:2. Prospective Customers for Every Communication   IMPORTANT NOTICE   “You may stop doing bus...
FTC MARS Rule     DISCLOSURES:3.    Offer of mortgage relief services:     1-page written notice from customer’s lender or...
FTC MARS Rule   DISCLOSURESIMPORTANT NOTICE  Before agreeing to this service, consider the  following:     This is an offe...
FTC MARS RuleDISCLOSURES   If there is any representation or implication the   provider has suggested that the consumer   ...
FTC MARS RuleDISCLOSURE CONFUSIONHow do agents comply with disclosurerequirements?  NAR has asked FTC for clarification on...
FTC MARS Rule   NO UP FRONT FEESPayment to service providercan only occur after theconsumer accepts in writingthe lender/s...
FTC MARS Rule  RECORD-KEEPING Ads and promotional materials Sales records Communications with customersAgreements with cus...
FTC MARS RuleRECORD-KEEPINGIncludes a provision requiring providerto take reasonable steps to ensureemployees and independ...
UTAH LAWForeclosure Rescue Services and Loan Modification Services       no up-front fees       written agreement       fo...
UTAH LAWProhibitions-  Suggestion that there is a special relationship with  the person’s lender or loan servicer;  falsel...
Future Challenges           for the Division        THE MARKET        FEDERAL LAW        TECHNOLOGY                       ...
Thank you! Questions?              40
Dee JohnsonEnforcement Director                       41
CARAVAN HISTORY The last 7 caravan topics for Enforcement have been on types and variations of mortgage fraud or real esta...
2007 Caravan Topic: Types of Fraud. Mortgage Fraud was our hot issue. Foreclosures were not an issue yet. Short sales were...
Types of Mortgage FraudIncome - Employment                Forged CPADisinformation                     Verification FormsI...
45
2008 Caravan Topic: Inflated Appraisals used in Mortgage Fraud. Properties that were the Parade of Homes were being inflat...
47
48
49
2009 CaravanTopic: Mortgage Fraud, Loan Modifications.Provo River Bottoms Properties.  Inflated appraisals.  Manipulated v...
April 03, 2009U.S. District Judge Ted Stewart noted Thursday that the offenders who stole millions of dollars frommortgage...
2010 Caravan Topic: Short Sale Fraud and Scams. Short Sale Transactions and Description. Short Sale Scams. Computers and s...
53
CLEAN TRANSACTION                      BUYERSELLER       REAL             ESTATE             AGENT   TITLE                ...
IDEAL CASE FOR SCAMMER                                       FEE   STRAW BUYER SELLER/OWNER    FACILITATOR  LIENS         ...
56
Midvale Man Pleads Guilty to Mortgage Fraud  May 3rd, 2011  By Dennis RomboySALT LAKE CITY — A Midvale man has pleaded gui...
DISCLAIMERNot all foreclosure rescue plans are           Fraudulent                Or              Illegal                ...
State and Federal Regulation State statute to deal with foreclosure rescue issues.   Utah Code 61-2f-401.   Advanced fees....
60
Foreclosure Process Owner has home for residence. Owner has existing mortgage. Owner falls behind on payments. Tries to fi...
Foreclosure Process Owner tries to negotiate but can not cure loan. Foreclosure Sale takes place. Lender takes property. P...
Foreclosure Process                      63
Foreclosure Rescue Process Owner has home as residence. Owner has existing mortgage. Owner falls behind on monthly payment...
Foreclosure Rescue Process A buyer is found, offer written. Offer accepted by Seller. Parties go to the title company. Try...
Foreclosure Rescue                     66
Foreclosure Rescue ScamThis is a huge, profitable,fraudulent enterprise.It represents millions of dollars in ourstate each...
What is the Scam A distressed homeowner looking for help is conned out of their title or money by a person or group who ta...
What is the ScamThe scammers either take the property ortake the money and then disappear.Many times the homeowner couldne...
How the scammers do it They make unrealistic promises to the homeowner. They guarantee results. The claim phantom governme...
How the scammers do itThey convince the homeowner to vacatethe property.They convince the homeowner toquitclaim title and ...
How the scammers do it They convince the homeowner they can provide a loan modification. They charge the homeowner money t...
Foreclosure Rescue Scam                          73
The scammers calling card…               “Stop               "Get a loan      "We have special               foreclosure  ...
The Phony Counselor or The Phantom Helper             The Scam Artist                                            75
The Bait-and-Switch  The Accomplice                      76
Rent-to-Buy SchemeThe Lease Option Specialist                              77
The StingSteal the property and split the “score.”                                            78
How to stop the fraud  Employ a reputable real estate  licensee.  Consult city or county programs.  Look for local governm...
How to stop the fraud  Contact the lender or servicer first.  Make payments only to the lender or  servicer.  Do not pay u...
How to stop the fraud  Never sign a deed to the property  unless it is a legitimate transaction.  Report suspicious activi...
Thank you! Questions?              82
CARAVAN 2011      Mark Fagergren      Licensing and Education Director                                         83
84
85
REAL ESTATE              86
Real EstateProposed Rule Providesbetter protection forcompany names.    Closely resembles an    existing name    Misleadin...
CE Credit for Commission Meeting AttendanceCredit for attending a Real EstateCommission or Appraiser Board Meeting.One mee...
Commission Calendar 2011 Mortgage        Real Estate    Appraiser    May 4         May 18, 19      May 25*   June 1*      ...
Educators not banking CEUnsubstantiated Complaints                     MY CE HASN’T                         BEEN          ...
Proof of CE CompletionCE must be completed by the 15th of the   month in which license renews.                      Tradit...
Proof of CE Completion        $42 vs. $69                         92
Late Renewal1 day to 30 days     = $50 late fee       18 hours CE31 days to 6         =$100 late fee +                    ...
Late RenewalLate inactive renewal (one to thirty days)        requires 18 hours of CE                                     ...
New (and improved) Agents Education ImprovementsPre-license Education of 120 hours for Sales Agents andBrokersSalesperson ...
New (and improved) AgentsContinuing Education Continuing Education increase to 18 hours New Agent Course    Education (inc...
New (and improved) AgentsExamsBoth Sales Agentand Broker examsare new in 2011.Exams now includesettlementstatements and th...
WEBSITE          98
RELMS        99
RELMSRenewal System Improvements  CE taken after license renewal date but prior to  license expiration will now be banked ...
RELMSCompany Change Process will now be sending e-mails to all parties throughout the change process.              Broker ...
RELMSCompany Change Process will now be sending e-mails to all parties throughout the change process. Uncompleted company ...
APPRAISAL            103
Appraisal  Company Affiliation                        104
Appraisal      2010 Utah Appraiser ExaminationsFirst Time Takers   Repeat Test Takers   Overall StatisticsLicensed      59...
AppraisalTrainee Registration  Group A – Registered BEFORE 1/1/08    474   Group A Trainees whose registration          wa...
AppraisalTrainee Registration  Group B – Registered DURING 2008    28 Hours CE and fee required to re-register    Must re-...
AppraisalTrainee Registration  Group C – Registered 1/1/09 ( OR AFTER)     28 Hours CE and fee required to re-register    ...
AppraisalSegmented Applications submitted before12/31/2007 had until 12/31/2010 to completetheir experience requirement, p...
AppraisalSegmented Applications                   Here are the Results 19      Applications approved for testing who eithe...
AppraisalSegmented Applications             Here are the Results 168      Segmented applicants received their licenses    ...
AppraisalAll applicants for licensure are now required to submitall appraiser experience (no selectivity in determiningwha...
AppraisalPre-licensing education taken during current two-year licensing period may be used to fulfill 21elective continui...
AppraisalNational Registry Fee increasing. Beginning 1/1/12 the registry fee will increase from $50 ‐ $80, every two years...
AppraisalAppraiser CE banking has now been in operation for the past two years. In the next couple of months, when an appr...
AppraisalAvoid falling off National Registry by applying in the month preceding their license expiration: May 31, 2011 lic...
AppraisalAvoid falling off National Registry by applying in the month preceding their license expiration: April 15, 2011 –...
AppraisalAvoid falling off National Registry by applying in the month preceding their license expiration: License renewal ...
AppraisalAppraisal Subcommittee AuditDRE in compliance“Timeliness” of investigations (one‐year “turn around” criteria)Mass...
AppraisalAppraiser CE auditsZero discrepancies found since renewal on­line                                                ...
MORTGAGE           121
MortgageWe finished a difficult transition and licensing year into the NMLS System 5/2010 – Transition deadline 7/2010 – C...
Mortgage474 –Mortgage licensees reinstated between 1/1/11 and 2/28/11                      123
MortgageLicensing Numbers 2010 to 2011:        1/1/2010                  3/2011       9,027 MLOs             3,938 MLOs   ...
MortgageUnique Branch Lending Manager (BLM)            for each branch                                       125
MortgageNew Licensee Pre­License Education:    MLO = 40 hour Utah + 20 hour NMLS    PLM = 40 hour UtahFingerprintsCredit r...
127
128
MortgageCredit Reporting Review (Financial Responsibility) Liens, judgments, bankruptcies, foreclosures, child support bei...
MortgageCurrently, no requirement for Call Reports                                             130
Mortgage2012 License Renewal (11/1/11 – 12/31/11)Only 6 months away!                                            131
MortgageNo DRE CE for Mortgage license renewal8 hours NMLS CE 3 hours – federal law and regulations 2 hours – ethics 2 hou...
MortgagePersonal information disclosure – only what is on the NMLS Consumer Access.No e‐mail addresses.                   ...
Questions?             134
Thank you!             135
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2011 Utah Real Estate Caravan

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2011 Update from the Utah Division of Real Estate.

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2011 Utah Real Estate Caravan

  1. 1. CARAVAN 2011Deanna SabeyDirector of Real Estate 1
  2. 2. Agency InformationRevamped Division web-site Color Coded Boxes Upcoming Events & Notices Disciplinary Action Look Up Consumer Resources for Filing a complaint Getting information on foreclosure prevention and loan modifications Mortgage and real estate education fund information Statutes and rules Licensee look-up 2
  3. 3. Newsletter New Flip format Topical guide in 4th Q Newsletter for 2010 Legal Corner 3
  4. 4. Governor’s call for agencies to review regulationsGOAL: REDUCE REGULATION Removed 10 day reporting of Class C misdemeanors Did not participate in the NMLS Mortgage Call Report Removed rule requiring appraisers to certify with the Division to provide testimony in court. Removed appraiser education committee requirement FUTURE reductions in regulation are coming! 4
  5. 5. H.B. 91 (effective 5/10)No 10 day reporting of class CmisdemeanorsMORTGAGE and REAL ESTATE: Commission review of a Division order is de novo. Prohibit up-front fees in loan mods and foreclosure rescue services. REAL ESTATE, define “business opportunity”. 5
  6. 6. H.B. 91 (effective 5/10)APPRAISAL: Reorganize the existing provisions Correct inconsistencies Add Division concurrence for decisions relating to disciplinary proceedings Allow appraisers who are also real estate licensees to produce broker price opinions 6
  7. 7. H.B. 91 (effective 5/10)APPRAISAL MANAGEMENT: Increase penalty to $5,000 per violation Limit the automatic revocation provision regarding AMC control person Revise AMC definition Give the Division concurrent rulemaking authority with the Appraisal Board. 7
  8. 8. H.B. 91 (effective 5/10)Decisions relating to disciplinary proceedingsmade through concurrence of the Divisionand the Appraiser Board.AMC cannot require an appraiser toindemnify the AMC against liability exceptliability for appraiser errors and omissions.Disciplinary action for a violation of 15 U.S.C.Sec. 1639e(i), customary and reasonablefees provision. 8
  9. 9. APPRAISAL RULESWorking onreorganizationof rules to mirrorthe organizationand numberingof the appraiserstatute. 9
  10. 10. APPRAISAL RULESR162-103: student must attend 100% of scheduled class time. Individual can be awarded up to ½ of CE for teaching, program development, authorship of textbooks, or similar activities. 10
  11. 11. APPRAISAL MANAGEMENT COMPANIES Reorganized reflecting the AMC statuteR162-2e: AMC must have systems in place to: Verify each appraiser on the panel is licensed or certified; Verify an assignment is completed by the appraiser; Ensure an assignment offer has enough information; Track the client and the appraiser on each assignment. 11
  12. 12. MORTGAGE Reorganized and renumbered rules in a system that correlates to the mortgage statute. 12
  13. 13. MORTGAGER162-2c-201 Factors for determining financial responsibility for licensure through credit report: outstanding civil judgments; outstanding tax liens; foreclosures; multiple social security numbers attached to the individuals name; child support arrearages; and bankruptcies. 13
  14. 14. REAL ESTATEReorganized and renumberedold rules into a format that ismore user friendly. 14
  15. 15. REAL ESTATER162-2-2 Plea in abeyance toMM charge involving fraud,misrepresentation, theft, ordishonesty no longer acts as anautomatic bar to licensure. 15
  16. 16. REAL ESTATER162-4-1Licensees will nolonger be subjectto discipline ifthey do notpersonally attendclosings. 16
  17. 17. DODD FRANK ACTHas far-reaching ramifications. 2300-page document creates Consumer Financial Protection Bureau. 17
  18. 18. DODD FRANK ACTMORTGAGE (TILA amendments)Compensation: No compensation based on the terms of the loan. No origination fees from both the borrower and lender. 18
  19. 19. DODD FRANK ACTMORTGAGE (TILA amendments)Origination Standards: consumersmust be offered and receive residentialmortgage loans that reflect their ability torepay, that are understandable, and thatare not unfair, deceptive, or abusive. 19
  20. 20. DODD FRANK ACT MORTGAGE (TILA amendments)Minimum Loan Standards: ability to repay qualified mortgage safe harbor 20
  21. 21. DODD FRANK ACT MORTGAGE (TILA amendments)Qualified Mortgage: verified income and financial resources, payment schedule includes taxes, insurance, assessments, etc; meet debt-to-income guidelines/regs established by Fed; total points and fees may not exceed 3 % of loan. 21
  22. 22. DODD FRANK ACTMORTGAGE (TILA amendments)Foreclosure Defense: consumer can assert violations of the ability to repay standards or steering prohibitions as a defense to foreclosure. 22
  23. 23. DODD FRANK ACT APPRAISALIndependence: No improper influence of appraiser. Settlement service provider obligated to report USPAP violations to state agency. Interim Rules promulgated by Federal Reserve. HVCC sunset provision. 23
  24. 24. DODD FRANK ACT APPRAISALBPOs: may not be used as the primary basis in determining the value of a piece of property that will be security for a mortgage loan. 24
  25. 25. DODD FRANK ACT APPRAISALAMCs: Subcommittee supervision – requirements for regulation in Interim Rules. Must pay appraisers customary and reasonable fees. Interim rule further discusses how to determine customary and reasonable. 25
  26. 26. FTC MARS Rule (Mortgage Assistance Relief Services)SCOPE:includes loanmodificationcompanies andsome realestate agents. 26
  27. 27. APPLICATION TOREAL ESTATE AGENTS:YES, if you are an agent who promotesyour services as a way to helpconsumers avoid foreclosure. Example:getting a lender’s approval for a shortsale.NO, if you are an agent who onlyprovides services to help people inbuying or selling homes. 27
  28. 28. FTC MARS Rule DISCLOSURES:1. General audience IMPORTANT NOTICE “(Name of company) is not associated with the government, and our services are not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.” 28
  29. 29. FTC MARS Rule DISCLOSURES:2. Prospective Customers for Every Communication IMPORTANT NOTICE “You may stop doing business with us at any time. You may accept or reject the offer of mortgage assistance we obtain from your lender (or servicer). If you reject the offer, you do not have to pay us. If you accept the offer, you will have to pay us $________ for our services. PLUS General audience disclosure. 29
  30. 30. FTC MARS Rule DISCLOSURES:3. Offer of mortgage relief services: 1-page written notice from customer’s lender or servicer explaining material changes and Disclosure after offer. 30
  31. 31. FTC MARS Rule DISCLOSURESIMPORTANT NOTICE Before agreeing to this service, consider the following: This is an offer of mortgage assistance we received from your lender/servicer. You do not have to accept this offer. If you reject the offer, you have no obligation to pay us. If you accept the offer, you will have to pay us $____ (same as previous disclosure) for our services. 31
  32. 32. FTC MARS RuleDISCLOSURES If there is any representation or implication the provider has suggested that the consumer discontinue any mortgage payment,ADD TO DISCLOSURE:“If you stop paying your mortgage, you could lose your home and damage your credit rating.” 32
  33. 33. FTC MARS RuleDISCLOSURE CONFUSIONHow do agents comply with disclosurerequirements? NAR has asked FTC for clarification on how agents should implement disclosures. NAR interpretation: Rule applies to ANY real estate professional negotiating, obtaining, or arranging a short sale of a dwelling. 33
  34. 34. FTC MARS Rule NO UP FRONT FEESPayment to service providercan only occur after theconsumer accepts in writingthe lender/servicer’s writtenoffer for modification orshort sale approval letter. 34
  35. 35. FTC MARS Rule RECORD-KEEPING Ads and promotional materials Sales records Communications with customersAgreements with customers 35
  36. 36. FTC MARS RuleRECORD-KEEPINGIncludes a provision requiring providerto take reasonable steps to ensureemployees and independentcontractors comply with the rule. 36
  37. 37. UTAH LAWForeclosure Rescue Services and Loan Modification Services no up-front fees written agreement for services 37
  38. 38. UTAH LAWProhibitions- Suggestion that there is a special relationship with the person’s lender or loan servicer; falsely represent or advertise; recommend or participate in a foreclosure rescue when an agent has a business relationship with or financial interest in 3rd party purchaser/transferee; advise that the person should make a mortgage payment to a person other than the person’s loan servicer; tell the person to refrain from contacting the person’s lender, loan servicer, attorney, credit counselor, or housing counselor. 38
  39. 39. Future Challenges for the Division THE MARKET FEDERAL LAW TECHNOLOGY 39
  40. 40. Thank you! Questions? 40
  41. 41. Dee JohnsonEnforcement Director 41
  42. 42. CARAVAN HISTORY The last 7 caravan topics for Enforcement have been on types and variations of mortgage fraud or real estate fraud. We have identified more than 20 types of fraud related to real estate. 42
  43. 43. 2007 Caravan Topic: Types of Fraud. Mortgage Fraud was our hot issue. Foreclosures were not an issue yet. Short sales were few and far between. Loan modifications were minimal. Utah was No. 2-5 in mortgage fraud Depending on who was keeping score. 43
  44. 44. Types of Mortgage FraudIncome - Employment Forged CPADisinformation Verification FormsIllegal Property Flipping Unrecorded andArtificially Inflated Appraisals Fraudulent SecondsStraw Buyers Notice of Interest LiensOccupant – Foreclosure and EquityNon-Occupant Schemes SkimmingIdentity Theft Air LoansIdentity Creation Non-Existent PropertiesPurchase RefinanceSchemes Reverse MortgagesStated Income Schemes New Construction Schemes 44
  45. 45. 45
  46. 46. 2008 Caravan Topic: Inflated Appraisals used in Mortgage Fraud. Properties that were the Parade of Homes were being inflated and flipped. Real Estate licensee were caught in the middle. Misuse of appraisals. Conviction of Appraisers. 46
  47. 47. 47
  48. 48. 48
  49. 49. 49
  50. 50. 2009 CaravanTopic: Mortgage Fraud, Loan Modifications.Provo River Bottoms Properties. Inflated appraisals. Manipulated values.Provo River Bottoms Convictions Individuals involved. Licensees involved. Criminal sentences by federal courts. 50
  51. 51. April 03, 2009U.S. District Judge Ted Stewart noted Thursday that the offenders who stole millions of dollars frommortgage companies in a fraud involving the sale of homes in an upscale Provo neighborhood "aremen of stature and status, success and privilege." So, the judge said, it was a mystery to him why they took part in a conspiracy to steal as much money as possible by using straw buyers to flip houses inthe River Bottoms area. The consequences for the mortgage companies, which lost $5.5 million, and residents, whose home values and property taxeswere affected, have been devastating, Stewart said. "It is not too much of a stretch to say this is part of a larger corruption in our society that led to theeconomic troubles notonly in this country, but in the whole world," he said. One by one, Stewart sentenced five defendants who had functioned in various roles in the scam toprison. All had pleaded guilty to conspiracy or fraud-related counts. Sentenced Thursday were: -- Bradley Grant Kitchen, 42, of Provo, whomprosecutors say orchestrated the conspiracy, to 51 months behind bars. -- David R. Bolick, 52, Sandy, a physician and owner of Home Owners Group Ron K. Clarke, 41, Provo, a licensed real estate agent, 41and Paragon Investments, 41 months. --months. -- Steve Wells Cloward, 41, Orem, a licensed real estate appraiser, 33 months. --Jeffery David Garrett, 44, Provo, an escrow officer, 12 months. Garrett was ordered to pay $100,000 in restitution. The other four are jointly liable forabout $5.4 million to Americas Wholesale Lender, which is the wholesale mortgage arm of Countrywide Home Mortgage; and American BrokersConduit, the wholesale mortgage arm of American Home Mortgage. A 2007 federal indictment says the defendants entered false sales prices in theMultiple Listing Service, then used the exaggerated figures to support inflated appraisals of other properties in the affluent River Bottoms area. Thedefendants used straw buyers to flip five residences in the neighborhood, according to the indictment, and kept the difference between the home loan andthe actual value of the properties. The case was the first filed in federal court as part of the Utah Mortgage Fraud Task Force. The group --- made up oflocal, state and federal law-enforcement officers and state and federal prosecutors -- has brought prosecutions in state courts. Three of the prosecutionswere of straw buyers, including KUTV Channel 2 sports anchor Dave Fox, who admitted he made a misrepresentation to obtain a loan for one of thehomes. Fox entered a plea in abeyance to communications fraud. The case was dismissed and his record wiped clean after he met certain conditions,including cooperating with prosecutors. The other two straw buyers also entered pleas in abeyance in Utah County. On Thursday, Stewart rejected arequest by Garretts lawyer for a shorter sentence for his client. Attorney David Maddox argued that Garrett had acted as a straw buyer and pointed outthat Fox and the other straw buyers had been allowed to make pleas in abeyance. The argument didnt sway Stewart. "Why some were not prosecuted ... Idont know," Stewart said. "I consider the role of straw buyers to be reprehensible." Assistant U.S. Attorney Scott Thorley said Garrett did more than actas a straw buyer. Meanwhile, Clarke specifically directed his attorney not to ask for a sentence that was shorter than the 41 months, recommended underfederal sentencing guidelines. "I crossed the line," he told Stewart. "I humbly beg for forgiveness." 51
  52. 52. 2010 Caravan Topic: Short Sale Fraud and Scams. Short Sale Transactions and Description. Short Sale Scams. Computers and scanners are changing what looks like an original document. Technology and fraud. Documents that look real but are not. 52
  53. 53. 53
  54. 54. CLEAN TRANSACTION BUYERSELLER REAL ESTATE AGENT TITLE LENDER COMPANY 54
  55. 55. IDEAL CASE FOR SCAMMER FEE STRAW BUYER SELLER/OWNER FACILITATOR LIENS LEASE UNAWARE OPTION LENDER TENANTTITLE COMPANY FLIP END BUYER SHORT SALE 55
  56. 56. 56
  57. 57. Midvale Man Pleads Guilty to Mortgage Fraud May 3rd, 2011 By Dennis RomboySALT LAKE CITY — A Midvale man has pleaded guilty infederal court to falsifying documents to drive up home pricesas part of a mortgage fraud scheme.In a plea agreement, Christopher D. Hales, 30,admitted to one count of bank fraud in U.S. DistrictCourt last week. He initially faced 10 counts of mail, wire and bank fraudand money laundering. Prosecutors agreed to dismiss nine counts in exchange forthe guilty plea.Judge Ted Stewart will sentence Hales on Aug. 30. Prosecutors recommendedHales spend 90 months in prison.Hales admitted that he enlisted others in 2005 to file anappraisal falsely valuing a Salt Lake house at $750,000.He then arranged to purchase the home through a straw buyer in order to keepthe equity total of $172,000 for himself.Cedar Hills Mayor Eric Richardson was linked to the other alleged financial scamsinvolving Hales, according to court documents. Richardson has not been chargedwith a crime. 57
  58. 58. DISCLAIMERNot all foreclosure rescue plans are Fraudulent Or Illegal 58
  59. 59. State and Federal Regulation State statute to deal with foreclosure rescue issues. Utah Code 61-2f-401. Advanced fees. Federal Regulations. Federal Trade Commission. Mortgage Assistance Relief Services MARS Rule. 59
  60. 60. 60
  61. 61. Foreclosure Process Owner has home for residence. Owner has existing mortgage. Owner falls behind on payments. Tries to find financial help. Notice of Default is filed by lender or servicer. Owner can not cure late payments. Foreclosure is filed. 61
  62. 62. Foreclosure Process Owner tries to negotiate but can not cure loan. Foreclosure Sale takes place. Lender takes property. Property sold by lender. Transfer title to new owner. 62
  63. 63. Foreclosure Process 63
  64. 64. Foreclosure Rescue Process Owner has home as residence. Owner has existing mortgage. Owner falls behind on monthly payments. Owner tries to find financial assistance. Notice of default is filed. Owner finds a real estate licensee. Real estate licensee markets property. 64
  65. 65. Foreclosure Rescue Process A buyer is found, offer written. Offer accepted by Seller. Parties go to the title company. Try to stall foreclosure. Possible short sale. Deed in lieu of foreclosure. Requires permission of the lender. 65
  66. 66. Foreclosure Rescue 66
  67. 67. Foreclosure Rescue ScamThis is a huge, profitable,fraudulent enterprise.It represents millions of dollars in ourstate each year.Thousands of people have lost theirhomes through this process.People you know have been victims. 67
  68. 68. What is the Scam A distressed homeowner looking for help is conned out of their title or money by a person or group who take advantage of the homeowners. These unscrupulous individuals place the homeowner in a worse position than they were in before the scam. 68
  69. 69. What is the ScamThe scammers either take the property ortake the money and then disappear.Many times the homeowner couldnegotiate without the services of others.The scammers charge high fees and thenprovide no services. 69
  70. 70. How the scammers do it They make unrealistic promises to the homeowner. They guarantee results. The claim phantom government assistance. They charge advance fees and provide no services. 70
  71. 71. How the scammers do itThey convince the homeowner to vacatethe property.They convince the homeowner toquitclaim title and rent back.The homeowner enter into a lease optionagreement with the scammers.They offer the homeowner what looks likeand official government program. 71
  72. 72. How the scammers do it They convince the homeowner they can provide a loan modification. They charge the homeowner money to file for bankruptcy to stop the process. The homeowner signs away interest to the property without knowing what is happening. 72
  73. 73. Foreclosure Rescue Scam 73
  74. 74. The scammers calling card… “Stop "Get a loan "We have special foreclosure modification!" relationships now!" with banks that can speed up the "Keep Your approval Home. We know process." your home is scheduled to be sold. No Problem!" "Over 90% of our“This is a "100% Money customers getgovernment Back results."program, paid by Guarantee."your tax dollars.” 74
  75. 75. The Phony Counselor or The Phantom Helper The Scam Artist 75
  76. 76. The Bait-and-Switch The Accomplice 76
  77. 77. Rent-to-Buy SchemeThe Lease Option Specialist 77
  78. 78. The StingSteal the property and split the “score.” 78
  79. 79. How to stop the fraud Employ a reputable real estate licensee. Consult city or county programs. Look for local government assistance. There may be help for free. Be suspicious. Ask for credentials. Verify what is expressed. 79
  80. 80. How to stop the fraud Contact the lender or servicer first. Make payments only to the lender or servicer. Do not pay upfront fees. Know what you are signing. Do not vacate the property. Do not quitclaim your interest in the property. 80
  81. 81. How to stop the fraud Never sign a deed to the property unless it is a legitimate transaction. Report suspicious activity to the proper state or federal agencies. 81
  82. 82. Thank you! Questions? 82
  83. 83. CARAVAN 2011 Mark Fagergren Licensing and Education Director 83
  84. 84. 84
  85. 85. 85
  86. 86. REAL ESTATE 86
  87. 87. Real EstateProposed Rule Providesbetter protection forcompany names. Closely resembles an existing name Misleading Confusing to the public 87
  88. 88. CE Credit for Commission Meeting AttendanceCredit for attending a Real EstateCommission or Appraiser Board Meeting.One meeting for credit per two year licenseperiod. 88
  89. 89. Commission Calendar 2011 Mortgage Real Estate Appraiser May 4 May 18, 19 May 25* June 1* June 15 June 22 July 6 July 20 July 27* August 3* August 10 August 24 September 7 September 21 September 28* October 5* October 19 October 26 November 2 November 16 November 9* December 7* December 21 December 14*Phone Meeting 89
  90. 90. Educators not banking CEUnsubstantiated Complaints MY CE HASN’T BEEN BANKED! AAAH! 90
  91. 91. Proof of CE CompletionCE must be completed by the 15th of the month in which license renews. Traditional CE Banking three business day “time lag” VS. Live CE Banking $1.50 x 18 hours 91
  92. 92. Proof of CE Completion $42 vs. $69 92
  93. 93. Late Renewal1 day to 30 days = $50 late fee 18 hours CE31 days to 6 =$100 late fee + $15 activation fee 24 hours CEmonths6 months to 1 year =$100 late fee + 42 hours CE $15 activation fee 93
  94. 94. Late RenewalLate inactive renewal (one to thirty days) requires 18 hours of CE 94
  95. 95. New (and improved) Agents Education ImprovementsPre-license Education of 120 hours for Sales Agents andBrokersSalesperson 120 hour course includes: 16 hours on Contracts 24 hours of Utah Law 40 total hours on contracts and Utah specific requirements 95
  96. 96. New (and improved) AgentsContinuing Education Continuing Education increase to 18 hours New Agent Course Education (including forms and contracts) after agents are licensed, to receive practical, real experience vs. textbook realities 96
  97. 97. New (and improved) AgentsExamsBoth Sales Agentand Broker examsare new in 2011.Exams now includesettlementstatements and theREPC. 97
  98. 98. WEBSITE 98
  99. 99. RELMS 99
  100. 100. RELMSRenewal System Improvements CE taken after license renewal date but prior to license expiration will now be banked and usable by licensee at renewal. Notice at the completion of online renewal confirming license renewal (including fee paid). Allowed to print license renewal confirmation. Receipt to the licensee if they included their e-mail address. Renewal on mobile browser. Back button in license renewal module will now return the user back to RELMS. 100
  101. 101. RELMSCompany Change Process will now be sending e-mails to all parties throughout the change process. Broker BRequests Affiliation Change Agent acknowledges or or accepts Broker A acknowledges accepts the change. The change Company B from Company A to is complete. the change. Agent Broker A Broker B 101
  102. 102. RELMSCompany Change Process will now be sending e-mails to all parties throughout the change process. Uncompleted company transfers “fail” after ten days. 102
  103. 103. APPRAISAL 103
  104. 104. Appraisal Company Affiliation 104
  105. 105. Appraisal 2010 Utah Appraiser ExaminationsFirst Time Takers Repeat Test Takers Overall StatisticsLicensed 59% 37% 48%Certified 49% 49% 49%ResidentialCertified 73% 50% 62%General 105
  106. 106. AppraisalTrainee Registration Group A – Registered BEFORE 1/1/08 474 Group A Trainees whose registration was set to expire on 12/31/10 424 Group A Trainees whose registration expired on 12/31/10 50 Group A Trainees who renewed their registration 106
  107. 107. AppraisalTrainee Registration Group B – Registered DURING 2008 28 Hours CE and fee required to re-register Must re-register this year by initial registration anniversary date 107
  108. 108. AppraisalTrainee Registration Group C – Registered 1/1/09 ( OR AFTER) 28 Hours CE and fee required to re-register Must re-register on two-year registration anniversary 108
  109. 109. AppraisalSegmented Applications submitted before12/31/2007 had until 12/31/2010 to completetheir experience requirement, pass their exam, Here are the Resultsand subsequently become licensed. 393 Segmented applications submitted to the Division 196 No experience submitted to complete their application 109
  110. 110. AppraisalSegmented Applications Here are the Results 19 Applications approved for testing who either did not take or pass their exam Pending rule allows these individuals to not have to re-submit experience for review, if they meet new education requirement and become licensed before 12/31/11. 110
  111. 111. AppraisalSegmented Applications Here are the Results 168 Segmented applicants received their licenses 111
  112. 112. AppraisalAll applicants for licensure are now required to submitall appraiser experience (no selectivity in determiningwhat is placed on experience log) 112
  113. 113. AppraisalPre-licensing education taken during current two-year licensing period may be used to fulfill 21elective continuing education hours. 113
  114. 114. AppraisalNational Registry Fee increasing. Beginning 1/1/12 the registry fee will increase from $50 ‐ $80, every two years. 114
  115. 115. AppraisalAppraiser CE banking has now been in operation for the past two years. In the next couple of months, when an appraiser renews their  license they will not be able to “add” non‐banked CE courses (that  were taken before CE banking was required) 115
  116. 116. AppraisalAvoid falling off National Registry by applying in the month preceding their license expiration: May 31, 2011 license expires. April 15, 2011 – Six weeks before license expires, RELMS system  renewal module is enabled. 116
  117. 117. AppraisalAvoid falling off National Registry by applying in the month preceding their license expiration: April 15, 2011 – (Approximately), Courtesy renewal postcard sent  by the Division to your RELMS public address 117
  118. 118. AppraisalAvoid falling off National Registry by applying in the month preceding their license expiration: License renewal in the month preceding license expiration will  prevent your license from briefly “falling off” National Registry 118
  119. 119. AppraisalAppraisal Subcommittee AuditDRE in compliance“Timeliness” of investigations (one‐year “turn around” criteria)Mass appraiser experience log – Division verification “random sampling” required 119
  120. 120. AppraisalAppraiser CE auditsZero discrepancies found since renewal on­line 120
  121. 121. MORTGAGE 121
  122. 122. MortgageWe finished a difficult transition and licensing year into the NMLS System 5/2010 – Transition deadline 7/2010 – Certification deadline (education and exam) 12/2010 – License renewal deadline 2/2011 – Reinstatement deadline 122
  123. 123. Mortgage474 –Mortgage licensees reinstated between 1/1/11 and 2/28/11 123
  124. 124. MortgageLicensing Numbers 2010 to 2011: 1/1/2010 3/2011 9,027 MLOs 3,938 MLOs 124
  125. 125. MortgageUnique Branch Lending Manager (BLM)  for each branch 125
  126. 126. MortgageNew Licensee Pre­License Education: MLO = 40 hour Utah + 20 hour NMLS PLM = 40 hour UtahFingerprintsCredit report 126
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  128. 128. 128
  129. 129. MortgageCredit Reporting Review (Financial Responsibility) Liens, judgments, bankruptcies, foreclosures, child support being  reviewed Circumstances, payments and  payment plans 30 suspended for not authorizing  Credit Report 129
  130. 130. MortgageCurrently, no requirement for Call Reports 130
  131. 131. Mortgage2012 License Renewal (11/1/11 – 12/31/11)Only 6 months away! 131
  132. 132. MortgageNo DRE CE for Mortgage license renewal8 hours NMLS CE 3 hours – federal law and regulations 2 hours – ethics 2 hours – non‐traditional mortgage lending products 1 hour ‐ electiveInitial licensing year – no CE required 132
  133. 133. MortgagePersonal information disclosure – only what is on the NMLS Consumer Access.No e‐mail addresses. 133
  134. 134. Questions? 134
  135. 135. Thank you! 135

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