Category Archives: Lending

SEC, Delaware accuse mortgage loan officer of running Ponzi scheme

A Delaware mortgage loan officer ran a Ponzi scheme that bilked more than $1.69 million out of investors who thought they were investing in a “highly successful” mortgage business, the Securities and Exchange Commission and the Delaware Department of Justice claim in new legal filings.

The SEC announced this week that it is charging Matthew Krimm and Krimm Financial Services, the company Krimm owned, with fraudulently inducing at least 25 investors to invest more than $1.69 million with Krimm and KFS in an unregistered offering of promissory notes.

Among the investors allegedly taken by Krimm are mortgage loan customers of his former employer.

In its complaint, the SEC alleges that Krimm and Krimm Financial Services falsely claimed that they owned and operated their own “highly successful” mortgage loan business.

The SEC also alleges that Krimm and his company lied to investors about the profitability of the company by providing the investors with “misleading offering documents, false income statements and false revenue and profit projections.”

According to the SEC complaint, Krimm falsely claimed that the money raises from investors would be used to expand Krimm Financial Services’ mortgage business, including opening new offices, hiring new loan officers and expanding its reverse mortgage lending business.

But, according to the complaint, Krimm and Krimm Financial Services actually did not operate a mortgage lending business of their own, and they allegedly used more than 75% of the money from new investors to pay Krimm’s personal expenses and to pay back prior investors to maintain the appearance that Krimm Financial was profitable.

The Delaware Department of Justice was more blunt in its assessment of the situation, stating that Krimm was allegedly running a “Ponzi scheme,” where he repaid his early investors with funds from later investors.

For his participation in the alleged Ponzi scheme, the state of Delaware filed a 25-count charge against Krimm, including charges of racketeering and securities fraud.

The Delaware indictment also charges Krimm with eight counts of felony theft, eight counts of securities fraud and eight counts of selling unregistered securities.

Article source: http://www.housingwire.com/articles/39963-sec-delaware-accuse-mortgage-loan-officer-of-running-ponzi-scheme

Mortgage bond trader Jesse Litvak sentenced to two years for fraud…again

The tale of the government’s pursuit of former Jefferies managing director and mortgage-backed securities trader Jesse Litvak may finally be coming to a close.

Way back in March 2014, Litvak was found guilty of lying to clients about mortgage-backed securities.

All in all, Litvak received a two-year prison sentence for 10 counts of securities fraud, one count of defrauding TARP, and four counts of making false statements within the jurisdiction of the United States government.

Litvak successfully fought that sentence, getting it thrown out because he wasn’t allowed to bring expert witnesses to testify on his behalf.

But the government didn’t give up in its pursuit of Litvak, eventually securing a guilty verdict on one count of fraud.

And now, more than three years after first being convicted, Litvak has been sentenced to a two-year prison term, again.

Bloomberg has the details:

The former Jefferies LLC managing director was an aggressive negotiator when trading mortgage-backed bonds, bending the truth or even falsifying chat transcripts in order to maximize his earnings.

On Wednesday Litvak learned his punishment: two years behind bars and a $2 million fine for lying to a customer about bond prices. Litvak was found guilty at a trial in January — although on just one of 10 counts — after his first conviction was reversed on appeal.

“Your victims were harmed by your lies,” said U.S. District Judge Janet C. Hall. “They would not have paid you what they paid if you told the truth. You did what you did to make more money for yourself. Being pressed for money or wanting more money is never an excuse or even an explanation for a crime.”

Click here or below for much more on Litvak’s trial, from Bloomberg.

Article source: http://www.housingwire.com/articles/39964-mortgage-bond-trader-jesse-litvak-sentenced-to-two-years-for-fraudagain

How will a government shutdown impact the mortgage process?

Lenders and homebuyers might need to prepare for potential roadblocks in the homebuying process if the government does shutdown after April 28. And according to an article in CNBC by John Schoen, government shutdowns have already created hiccups in the mortgage process in the past, with the last shutdown in October 2013 delaying about 17% of closings.

Yes, lenders handle the main decision of if a borrower gets a loan, but there are key parts of the mortgage process that rely on government workers.

Here are the areas of the mortgage process that could be impacted. From the article:

Borrowers who are applying for an FHA or VA mortgage could run into delay if workers from those departments are sent home, and there’s no one available to process the loan.

A loan could also be delayed if a lender tries to verify a Social Security number. That’s often required if something in an application doesn’t match the information associated with a Social Security number in a credit report or other database, even if it’s just a typo. If the lender tries to verify the number with the Social Security Administration, and no one at the agency answers the phone, that borrower could be out of luck.
Since the government shutdown back in 2013, lenders do have a frame of reference of what they could possibly expect.

The article cited a survey from the National Association of Realtors back in 2013 that stated few sellers reported that they lost bids because of the shutdown.

Last time the government shutdown, housing stocks did take a dive leading up to shutdown due to concerns over the uncertainty of the future of the economy. 

Article source: http://www.housingwire.com/articles/39935-how-will-a-government-shutdown-impact-the-mortgage-process

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