Former Fannie Mae Official Sentenced To Federal Prison For Soliciting Kickbacks From Broker Who Sold Foreclosed Properties

8-4-14 from Justice dot gov

SANTA ANA, California – A former sales associate with the Federal National Mortgage Association (Fannie Mae) was sentenced today to 15 months in federal prison for taking kickbacks from a real estate broker who sold properties on behalf of the mortgage agency.

Fannie Mae mortgage sues nine banks

Armando Granillo, 45, of Huntington Beach, who worked in the Fannie Mae’s Irvine office, was sentenced by United States District Judge David O. Carter.  In addition to his 15 month sentence in federal prison, Granillo was ordered to spend 6 months in a residential reentry center.

Following a two-day trial in March, Granillo was found guilty of three counts of “honest services” wire fraud for soliciting kickbacks while working for Fannie Mae.

As a “real estate owned foreclosure specialist” for Fannie Mae, Granillo reviewed applications submitted by real estate brokers who wanted to list Fannie Mae foreclosure properties, and he had the authority to approve sale offers presented by the brokers. In late 2012, Granillo asked a real estate broker in Tucson to pay a percentage of the commissions the broker earned for selling Fannie Mae foreclosure properties. The broker brought the matter to the attention of federal law enforcement officials and assisting in the investigation.

During subsequent conversations between Granillo and the broker, Granillo demanded 20 percent of the real estate broker’s commissions in exchange for preferential treatment in the assignment and sales of Fannie Mae properties. In February 2012, Granillo traveled from Orange County to the Phoenix area, where he met with the broker. During the recorded meeting, Granillo stated that the kickback arrangement was a “natural part of business.” Granillo promised to increase the broker’s portfolio and ensure that he always had at least 100 listings, to give the broker the best properties, and to help the broker get offers approved by Fannie Mae. Granillo then arranged to receive the $11,200 payment from the broker.

Granillo was arrested in this case on March 5, 2013 during an undercover operation after accepting an $11,200 payment from the real estate broker.

Granillo “violated Fannie Mae and the public’s trust by engaging in a form of public corruption,” prosecutors wrote in a sentencing brief filed with the court. “This crime is akin to those involving governmental officials who solicit bribes in exchange for favorable treatment. The reputational damage is devastating and potentially permanent.”

Fannie Mae is currently under the conservatorship of the Federal Housing Finance Agency. The investigation into Granillo was conducted by the Federal Housing Finance Agency’s Office of Inspector General.

Release No. 14-103

See also; http://blogs.ocweekly.com/navelgazing/2014/08/armando_granillo_fannie_mae_kickback.php

Debt Collectors Harass Americans Even After They’ve Lost Their Homes To Banks

Reuters 10/14/14

By Michelle Conlin

NEW YORK, Oct 14 (Reuters) – Many thousands of Americans who lost their homes in the housing bust, but have since begun to rebuild their finances, are suddenly facing a new foreclosure nightmare: debt collectors are chasing them down for the money they still owe by freezing their bank accounts, garnishing their wages and seizing their assets.

Dept. of common sense
By now, banks have usually sold the houses. But the proceeds of those sales were often not enough to cover the amount of the loan, plus penalties, legal bills and fees. The two big government-controlled housing finance companies, Fannie Mae and Freddie Mac, as well as other mortgage players, are increasingly pressing borrowers to pay whatever they still owe on mortgages they defaulted on years ago.

Using a legal tool known as a “deficiency judgment,” lenders can ensure that borrowers are haunted by these zombie-like debts for years, and sometimes decades, to come. Before the housing bubble, banks often refrained from seeking deficiency judgments, which were seen as costly and an invitation for bad publicity. Some of the biggest banks still feel that way.

But the housing crisis saddled lenders with more than $1 trillion of foreclosed loans, leading to unprecedented losses. Now, at least some large lenders want their money back, and they figure it’s the perfect time to pursue borrowers: many of those who went through foreclosure have gotten new jobs, paid off old debts and even, in some cases, bought new homes.

“Just because they don’t have the money to pay the entire mortgage, doesn’t mean they don’t have enough for a deficiency judgment,” said Florida foreclosure defense attorney Michael Wayslik.

Advocates for the banks say that the former homeowners ought to pay what they owe. Consumer advocates counter that deficiency judgments blast those who have just recovered from financial collapse back into debt – and that the banks bear culpability because they made the unsustainable loans in the first place.
“SLAPPED TO THE FLOOR”

Borrowers are usually astonished to find out they still owe thousands of dollars on homes they haven’t thought about for years.

In 2008, bank teller Danell Huthsing broke up with her boyfriend and moved out of the concrete bungalow they shared in Jacksonville, Florida. Her name was on the mortgage even after she moved out, and when her boyfriend defaulted on the loan, her name was on the foreclosure papers, too.

She moved to St. Louis, Missouri, where she managed to amass $20,000 of savings and restore her previously stellar credit score in her job as a service worker at an Amtrak station.

But on July 5, a process server showed up on her doorstep with a lawsuit demanding $91,000 for the portion of her mortgage that was still unpaid after the home was foreclosed and sold. If she loses, the debt collector that filed the suit can freeze her bank account, garnish up to 25 percent of her wages, and seize her paid-off 2005 Honda Accord.

“For seven years you think you’re good to go, that you’ve put this behind you,” said Huthsing, who cleared her savings out of the bank and stowed the money in a safe to protect it from getting seized. “Then wham, you get slapped to the floor again.”

Bankruptcy is one way out for consumers in this rub. But it has serious drawbacks: it can trash a consumer’s credit report for up to ten years, making it difficult to get credit cards, car loans or home financing. Oftentimes, borrowers will instead go on a repayment plan or simply settle the suits – without questioning the filings or hiring a lawyer – in exchange for paying a lower amount.

Though court officials and attorneys in foreclosure-ravaged regions like Florida, Ohio and Illinois all say the cases are surging, no one keeps official tabs on the number nationally. “Statistically, this is a real difficult task to get a handle on,” said Geoff Walsh, an attorney with the National Consumer Law Center.

Officials in individual counties say that the cases, while virtually zero a year or two ago, now number in the hundreds in each county. Thirty-eight states, along with the District of Columbia, allow financial institutions recourse to claw back these funds.

“I’ve definitely noticed a huge uptick,” said Cook County, Illinois homeowner attorney Sandra Emerson. “They didn’t include language in court motions to pursue these. Now, they do.”

“A CURSE”

Three of the biggest mortgage lenders, Bank of America, Citigroup, JPMorgan Chase & Co and Wells Fargo & Co., all say that they typically don’t pursue deficiency judgments, though they reserve the right to do so. “We may pursue them on a case-by-case basis looking at a variety of factors, including investor and mortgage insurer requirements, the financial status of the borrower and the type of hardship,” said Wells Fargo spokesman Tom Goyda. The banks would not comment on why they avoid deficiency judgments.

Perhaps the most aggressive among the debt pursuers is Fannie Mae. Of the 595,128 foreclosures Fannie Mae was involved in – either through owning or guaranteeing the loans – from January 2010 through June 2012, it referred 293,134 to debt collectors for possible pursuit of deficiency judgments, according to a 2013 report by the Inspector General for the agency’s regulator, the Federal Housing Finance Agency.

It is unclear how many of the loans that get sent to debt collectors actually get deficiency judgments, but the IG urged the FHFA to direct Fannie Mae, along with Freddie Mac, to pursue more of them from the people who could repay them.

It appears as if Fannie Mae is doing just that. In Florida alone in the past year, for example, at least 10,000 lawsuits have been filed – representing hundreds of millions of dollars of payments, according to Jacksonville, Florida-based attorney Chip Parker.

Parker is about to file a class action lawsuit against the Dallas-based debt collection company, Dyck O’Neal, which is working to recoup the money on behalf of Fannie Mae. The class action will allege that Dyck O’Neal violated fair debt collection practices by suing people in the state of Florida who actually lived out of state. Dyck O’Neal declined to comment.

In Lee County, Florida, for example, Dyck O’Neal only filed four foreclosure-related deficiency judgment cases last year. So far this year, it has filed 360 in the county, which has more than 650,000 residents and includes Ft. Myers. The insurer the Mortgage Guaranty Insurance Company has also filed about 1,000 cases this past year in Florida alone.

Andrew Wilson, a spokesman for Fannie Mae, said the finance giant is focusing on “strategic defaulters:” those who could have paid their mortgages but did not. Fannie Mae analyzes borrowers’ ability to repay based on their open credit lines, assets, income, expenses, credit history, mortgages and properties, according to the 2013 IG report. “Fannie Mae and the taxpayers suffered a loss. We’re focusing on people who had the ability to make a payment but decided not to do so,” said Wilson.

Freddie Mac spokesman Brad German said the decision to pursue deficiency judgments for any particular loan is made on a “case-by-case basis.”

The FHFA declined to comment.

But homeowner-defense lawyers point out that separating strategic defaulters from those who were in real distress can be tricky. If a distressed borrower suddenly manages to improve their financial position – by, for example, getting a better-paying job – they can be classified as a strategic defaulter.

Dyck O’Neal works with most national lenders and servicing companies to collect on charged-off residential real estate. It purchases foreclosure debts outright, often for pennies on the dollar, and also performs collections on a contingency basis on behalf of entities like Fannie Mae. “The debt collectors tend to be much more aggressive than the lenders had been,” the National Consumer Law Center’s Walsh said.

A big reason for the new surge in deficiency claims, attorneys say, is that states like Florida have recently enacted laws limiting the time financial institutions have to sue for the debt after a foreclosure. In Florida, for example, financial institutions now only have a year after a foreclosure sale to sue – down from five.

Once financial institutions secure a judgment, they can sometimes have years to collect on the claim. In Maryland, for example, they have as long as 36 years to chase people down for the debt. Financial institutions can charge post-judgment interest of an estimated 4.75 percent a year on the remaining balance until the statute of limitation runs out, which can drive people deeper into debt.

“This is monumentally unfair and damaging to the economy,” said Ira Rheingold, the executive director of the National Association of Consumer Advocates. “It prevents people from moving forward with their lives.”

Software developer Doug Weinberg was just getting back on his feet when he got served in July with a $61,000 deficiency judgment on his old condo in Miami’s Biscayne Bay. Weinberg thought the ordeal was over after Bank of America, which rejected Weinberg’s short sale offers, foreclosed in 2009.

“It’s a curse,” said Weinberg. “It’s still haunting me. It just doesn’t go away.” (Reporting by Michelle Conlin in New York; Editing by Dan Wilchins and Martin Howell)

Regulators Size Up Wall Street, With Worry

March 12, 2014
Money laundering, market rigging, tax dodging, selling faulty financial products, trampling homeowner rights and rampant risk-taking — these are some of the sins that big banks have committed in recent years.
Wall
The regulators also said that they have stepped up pressure on the banks’ boards. The regulators hope that more independent-minded directors will demand changes if they see standards and practices slipping, especially in crucial areas like accounting and risk management.To help promote that push, Mr. Dudley said, the New York Fed has bolstered the stature of supervisors who interact with the boards and senior executives. “We’ve put some of our very best people in those spots,” he said.But boards may have very different priorities from regulators.Directors may not see the need for far-reaching changes if a bank is producing large profits that benefit shareholders.JPMorgan Chase’s board took steps to hold management accountable after the so-called London Whale trading scandal that engulfed the bank in 2012 and 2013. Still, in January, JPMorgan’s board approved a large raise in the 2013 pay of Jamie Dimon, the bank’s chief executive.Antony P. Jenkins, the chief executive of Barclays, which has been hit by its own scandals, took a different approach with his 2013 compensation. Earlier this year, he turned down a bonus worth $4.5 million.

And compensation is one area where bank regulators may need to do more if they want to do more to clean up bank culture, according to critics of the industry.

Wall Street’s compensation practices can reward unhealthy levels of short-term risk-taking and entice bankers into ethical lapses. Acknowledging that, regulators around the world agreed after the crisis to overhaul bankers’ pay, in part by requiring them to wait several years before they receive all of their bonuses. The hope is that bankers will behave better if they know their employers can easily take back the deferred part of their pay.

But there is evidence that large American banks are still deferring much less pay than their European peers. The Fed is in charge of regulating compensation at American banks. When asked whether the pay overhaul at American banks had gone far enough, Mr. Dudley said, “There is potential to defer more compensation for longer periods of time.”

One particularly daunting challenge looms over the efforts to improve the ethics of banks. Some banks may be so large and complex that it would be difficult for managers to maintain a clean culture across all of their operations.

But Mr. Dudley said he would not allow size or complexity to be an excuse for ethical breaches. “Either the firm is not too complex, you can manage it, you do know what’s going on,” he said. “Or, if you don’t know, that’s sort of raising the question whether the firm is too complex to manage.”

Fannie Mae worker’s foreclosure kickback trial begins

March 12, 2014

 

Armando Granillo viewed the kickbacks as commonly accepted behavior and did not intend to defraud Fannie Mae, his lawyer says.

Fannie Mae mortgage sues nine banks

Armando Granillo is accused of defrauding Fannie Mae by failing to get the best possible prices at foreclosure sales, instead promising to provide Arizona broker Angus “Gus” Maughan unlimited foreclosure listings in a preferential deal.

A former Fannie Mae employee accused of soliciting kickbacks from a real estate broker in return for foreclosure listings regarded the practice as commonly accepted behavior.

His defense lawyers said Wednesday in a Santa Ana courtroom that the former employee had no intention of defrauding the home finance giant last year when he accepted $11,200 in cash in what turned out to be a videotaped federal sting.

The unusual explanation came on behalf of Armando Granillo, 44, a foreclosure specialist at a Fannie Mae Western regional office in Irvine. Before his arrest in May, he had spent 3 1/2 years overseeing brokers as they cleaned up and sold the foreclosed homes that had swamped Fannie Mae, requiring a $116-billion taxpayer bailout during the subprime mortgage meltdown.

Granillo is accused of defrauding Fannie Mae by failing to get the best possible prices at foreclosure sales, instead promising to provide Arizona broker Angus “Gus” Maughan unlimited foreclosure listings in a preferential deal.

According to conversations recorded by prosecutors, the deal was for Granillo to “cherry-pick” prime listings and make Maughan the No. 1 broker in the Tucson area — but he demanded in return a 20% cut of the commissions that Maughan earned.

“The scheme might have worked except for one thing,” Assistant U.S. Atty. Stephen Goorvich said during opening statements. “Mr. Maughan called the authorities,” who secretly recorded a series of meetings, including Granillo grabbing a cash-stuffed envelope in what was to have been the first in a series of payments.

Deputy Public Defender Jeffrey A. Aaron, one of Granillo’s attorneys, acknowledged during his opening statement that “much of what the government told you is not disputed.”

“But there’s more than that,” Aaron said. “The evidence in this case is going to show you that Mr. Granillo was a Fannie Mae employee working under extraordinarily difficult circumstances and extraordinary stress to fulfill what he was told was Fannie Mae’s mission.”

Aaron said Granillo and other sales representatives were under enormous pressure to get the foreclosures off Fannie Mae’s books. Crediting Fannie Mae’s recent return to profitability to the efforts of Granillo and his colleagues, he said the case would prove “surprising” to the eight-woman, four-man jury.

“The evidence will show yes, Mr. Granillo did intend to deceive,” Aaron said. “But he intended to deceive Mr. Maughan and not Fannie Mae.”

In fact, Aaron said, the defense would show that Granillo could not have delivered on his promises to Maughan because he had no authority to “cherry-pick” properties or to approve their sale at less than market value, as the government contends, without review by higher-ups.

“He did what he believed to be the mission of Fannie Mae — to preserve, deliver and sell properties as fast as he could,” Aaron said.

It was unclear whether evidence from Cecelia Carter, another Fannie Mae foreclosure specialist in Irvine, would be introduced to bolster Granillo’s contention that kickbacks were widespread and tolerated at the government-backed company.

In a pending state court lawsuit, Carter contends Fannie Mae fired her in 2011 after she tried to expose widespread corruption, including her belief that Mary Irvine, a supervisor who oversaw both her and Granillo, was among those accepting kickbacks for property listings. She and Granillo have said they discussed the kickbacks and the agency’s lack of interest in doing anything about them.

In remarks out of the presence of the jury, U.S. District Judge David O. Carter — no relation to Cecelia — expressed dismay that Carter was traveling out of the country with her daughter and not available to testify.

“It’s my fault, your honor,” said Deputy Public Defender David Israel Wasserman, representing Granillo. “She should have been subpoenaed.”

Since 2009, Fannie Mae, the nation’s biggest buyer of home loans, has been a treasure trove of lucrative foreclosure listings — a premium commodity for brokers, as buyers and investors swarmed for bargains in beaten-down housing markets such as California and Arizona.

Abandoned homes haunt Florida’s housing market

By Kimberly Miller

Florida’s real estate market remains haunted by

decaying and abandoned properties

even as new foreclosures slow 

and home values rise. 

Zombie

These so-called “zombie” foreclosures — properties forsaken by both the bank and borrower — number 54,900 statewide, including 14,600 in Palm Beach, Broward and Miami-Dade counties, according to a new report from RealtyTrac.

The concentration in Florida makes it tops in the nation for zombie foreclosures, with South Florida ranking first among large metro areas.

Illinois has the second highest number of vacant foreclosures by state at 15,510, followed by New York with 10,880. Among metro areas, Tampa-St. Petersburg ranks second nationally, with Chicago coming in third.

“The reality is that new foreclosure activity is no longer the biggest threat to the housing market,” said Daren Blomquist, RealtyTrac vice president. “The biggest threat from foreclosures going forward is properties that have been lingering in the process for years, many of them vacant with neither the homeowner nor the lender taking responsibility for maintenance and upkeep.”

Many of the homes are stuck in limbo because banks filed to foreclose on them years ago, but then walked away from the case after realizing it didn’t make financial sense to take the home back, said Nicole Clowers, director of the U.S. Government Accountability Office.

Clowers and Blomquist spoke Tuesdayduring a housing conference sponsored by the Federal Reserve Bank of Cleveland.

New foreclosure filings nationwide were at their lowest level in February since December 2005, according to RealtyTrac. In Florida, new foreclosures were down 53 percent from the same time last year, while Palm Beach County’s clerk’s office recorded just 518 new cases in February_ a 49 percent drop from 2013.

It’s still unclear, however, whether the drop in Florida foreclosures is a permanent change or a temporary trend while banks catch up to a new law that went into effect in July.

U.S. Postal Service information on vacancies was used to study the issue of abandoned foreclosures. But the Government Accountability Office also had access to bank records, leading it to the conclusion that lenders will walk away from a foreclosure if it’s too costly to repossess.

“In some cases they initiate the foreclosure and then realize it’s going to be a money-losing venture and stop,” Clowers said.

Suburban Lake Worth resident Mike Herndon doesn’t know if that’s what happened to a moldering house in his neighborhood on Burlington Court, but he’s frustrated the home isn’t being maintained by the bank or owner.

JPMorgan Chase filed to foreclose on the home in 2010, according to Palm Beach County court records. Herndon said the owner left soon after. The most recent court action taken was in July 2013, but there is still no final judgment. A message to Chase was not returned by deadline.

The Burlington Court home has slowly deteriorated. A leak in the roof turned into a large hole that different property maintenance firms have repeatedly tried to cover with a tarp. Last Thursday’s heavy winds pulled the tarp off again, taking roof tiles with it.

Palm Beach County put a $50-a-day lien against the home in July.

“I have been writing letters and emails for the better part of three years trying to get this property taken care of,” Herndon said.

George Gingo ESQ is giving away a FREE HOME

1135 Nova Terrace

 

If interested in a free home, send a short email – 200 words or less to EMAIL GEORGE******* gingo.george@gmail.com.

READ THE POST

FREE HOME

Yes, you read that right. We are going to give away a home located at 1135 Nova Terrace, Titusville, Florida 32796. The legal description is:

LOT 4, BLOCK 5, COUNTRY ESTATES UNIT ONE, ACCORDING TO PLAT RECORDED IN PLAT BOOK 18, PAGE 134, OF THE PUBLIC RECORDS OF BREVARD COUNTY, FLORIDA

The Real Property Parcel Identification Number is: 21-35-29-80-00005.0-0004.00

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This is a beautiful home and it has a washer and dryer, new gas stove and refrigerator. It was exceptionally well taken care of by its owner. Anyone who wants this home must first qualify. To qualify, you have to convince us that you are in great need of a home (for example – you are homeless or about to be homeless and you have children; or other great hardship). We will reject you if you aren’t going to live in it, if you intend to rent it or part of it, if you won’t keep it in good repair, if you won’t put the utilities in your name and pay those utilities, or if you intend to parasitize the home. Anyone with a record of theft need not apply (we are lawyers and ex-cops and we will do a background check on you).

But of course, it’s not “free and clear”. Here’s the story – the owner tried to short sale this house. Regions Bank holds both the first and second mortgage. Regions refused to wipe out a deficiency, so we refused to allow it to go through a short sale. Regions Bank then filed a foreclosure on the home. We fought for the owner who only wanted to hand the home back to the bank. We offered the home to Regions Bank, but Regions Bank refused to take the home. We offered it to Fannie Mae, but Fannie Mae refused to take the home. Why we even offered it to the City of Titusville, but the City of Titusville refused to take the home. We filed a federal lawsuit against Regions Bank. The bank then dismissed the foreclosure case. The owner has moved out and left the home in our care. So the property is not in foreclosure at this time. There’s no one living in it. The only problem at this time with the home is that someone stole the air conditioner.

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2012 National Mortgage Settlement_Preliminary Servicing Settlement Agreement