#2 Update By Author
AUTHOR: Billie - Denison (U.S.A.)
SUBMITTED: Wednesday, June 25, 2003
POSTED: Wednesday, June 25, 2003
Consumers better realize, they are losing their rights quickly, and they don't even know it.
They better stand up and do something about it, before it's too late.
I have included information here on many things that will amaze, and shock you:
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INSIGHT MAGAZINE:
"Who Is Guarding The HUD Guards?"
Posted March 3, 2003
By Martin Edwin Andersen
Is HUD Secretary Mel Martinez unprotected by IG´s Secret Service ´detail´?
The question is as old as Ancient Rome: Quis custodiet ipsos custodes? (Who will guard the guards?) It was a question raised yet again when media attention focused on pistol-packing Inspector General Janet Rehnquist at the Department of Health and Human Services (HHS) and allegations of document shredding in her office, long considered a model by internal investigators at other agencies. But the epicenter of complaints of wrongdoing by those in charge of policing key government functions may be the Office of the Inspector General (IG) at the Department of Housing and Urban Development (HUD).
Insiders tell Insight that investigative-staff morale has plummeted at HUD in the face of growing allegations of wrongdoing involving senior officials in the internal-affairs office. According to an internal memorandum obtained by Insight, in just 21 months at least 56 agents, nearly 25 percent of the total investigative workforce, voluntarily have left the IG's employment, an attrition rate critics say is 10 times the average.
In place of senior and seasoned investigators, critics complain, a group of retired Secret Service officials, many unskilled in the kind of white-collar fraud investigations required at HUD, have been appointed to what one IG watcher complained is a growing "good-old-boy" network reflecting senior management's background in the presidential-protection service. While investigative talent has leached out of HUD, critics contend, management has compensated by lowering the bar on investigatory targets -- going after what one agent called "low-hanging fruit" -- and systematically giving Congress misleading information about the scope and success of those inquiries it conducts.
An Insight investigation into the inner workings of the HUD IG office has revealed a complex web of alleged abuses of investigative power. Waste and mismanagement of monies appropriated to crack down on the hundreds of millions of dollars' worth of fraud in federal housing programs is common, and allegations of disregard for civil-service hiring rules and a penchant for political cronyism appear to reach into the highest ranks of the investigations office. Scores of documents examined by this magazine, made available by congressional critics of HUD, suggest that within the very office meant to audit, investigate and evaluate the spending by HUD of billions in taxpayer dollars are senior officials who have engaged in chronic wrongdoing.
In a confidential letter prepared for delivery to Congress and obtained by Insight nearly one-dozen current and former IG officials, including winners of that office's highest awards, say current leadership at the HUD IG office "cannot be trusted to address the abuses of investigative power, waste of federal funds, mismanagement, political cronyism and disregard for merit principles within its own office." The IG managers, they charge, engage in cover-ups, "abuse their office to remain in power, ruthlessly crush all dissent and resist any external accountability."
For example, the former San Francisco-based Western regional director of HUD, Richard Mallory, was appointed by President George W. Bush and is a career housing expert. Last year Mallory used his post aggressively to advocate that strong monitoring and enforcement actions should be taken against that city's troubled federal housing programs. His concerns included the city of San Francisco's misuse of HUD community-development funds to sell a property to a convicted felon, a friend of Mayor Willie Brown, who deeded the property to the Nation of Islam for use as a religious institution.
In response, Mallory was warned by one of his superiors that HUD Deputy Secretary Alphonso Jackson, the country's No. 2 housing official, is a close friend of Brown and that Mallory should not anger either Brown or the San Francisco Housing Authority (SFHA). Mallory's predecessor in the post already had been demoted for complaining about long-standing corruption and mismanagement at SFHA, which also had been accused by the HUD IG office of widespread mismanagement.
On Feb. 20, 2002, Jackson fired Mallory without giving a reason. In a letter a week later former California governor Pete Wilson, a Republican and former U.S. senator, sent the White House a letter charging that Mallory had been fired at Brown's request after having exposed internal corruption at HUD. "As I mentioned in our conversation today," Wilson wrote to White House Counsel Al Gonzalez, "Mallory's firing was requested by the mayor in a phone call to the deputy secretary. Also [HUD manager] Lily Lee has arrived in [San Francisco] to be the acting regional director."
Wilson added: "Don't hesitate to call if I can be of any assistance. The president and [HUD] Secretary [Mel] Martinez deserve to be protected."
In response to his removal, Mallory contacted the former regional HUD IG, Daniel Pifer, requesting an investigation of his discharge, which he believed to be the result of retaliation. According to local press reports -- confirmed by the confidential letter prepared for Congress -- Jackson and Lee (who reportedly had been removed earlier under a cloud as head of the Santa Ana [Calif.] Homeownership Center) were close friends, and the SFHA was about to be forgiven some $1.8 million in debt it owed to HUD.
As Pifer prepared to investigate Mallory's charges, he was informed by HUD headquarters in Washington that the unfolding San Francisco situation was considered to be "a very big deal" and that then-IG-designate Kenneth Donohue had been briefed on the matter. A day later, sources say, an acting deputy IG for investigations placed Pifer on one week's administrative leave. When he returned, according to insiders, the assistant IG for investigations ordered him to "stand down on the Mallory issue" and to "initiate no action at this time." The matter was allowed to drop.
Sources at the HUD IG office complain that a climate of orchestrated witch-hunts and the creation of scapegoats pervades the current management structure, adding to the attrition rate and skills drain. They point to the case of Jeffrey Finn, a former special agent in charge of the IG's Denver-based Rocky Mountain district office. Finn did not contest his removal from federal employment in January 2001 after being the target of numerous accusations of misconduct and administrative violations. According to court documents and the testimony of current and former IG employees, however, IG efforts to "destroy" Finn with trumped-up criminal charges also were used to wreck the careers of a number of employees with whom he had a relationship.
An affidavit offered by a senior IG official claiming, under penalty of perjury, that case documents had been shredded in accordance with existing policy cited a policy that does not exist. A senior IG official appeared to perjure himself when he claimed that his decision to remove two employees from their posts could not have had anything to do with their testimony in support of Finn because he knew nothing about it -- yet throughout the court proceedings he had prepared e-mail updates to colleagues around the country. Negative information about two members of the IG team investigating Finn that cast doubt on their credibility never was disclosed to the defense as required.
In throwing out four of the charges against Finn, U.S. District Judge Walker D. Miller found that the HUD IG office not only had engaged in the illegal shredding of potentially exculpatory evidence but also had waged a campaign of "outrageous, improper intimidation" and coercion against Rocky Mountain district agents and administrative employees. Finn was found not guilty of having misused $200 in funds, and Miller has not yet ruled on the other charge -- that Finn ordered a subordinate to change the receipt for these funds from "fence damage" to "storage costs."
IG sources tell Insight that at least half-a-million dollars in federal funds were used to prosecute Finn. The IG investigation of the Rocky Mountain field office found only $18.80 in missing funds out of $1,450,177 in expenditures made by the office during a 33-month period.
Allegations of intimidation did not stop there, IG sources say. They extended to the Fort Worth, Texas, office where two highly regarded IG managers, special agent in charge (SAC) Larry Chapman and assistant SAC James Malloy, one of two American Indian agents in the IG office, were forced into retirement after refusing to support the credibility of the Denver investigation by taking punitive actions in Texas. At issue: their alleged failure to retaliate against former Denver employees who had testified in favor of Finn.
Angry IG staff also have complained that Donohue and Deputy IG Michael P. Stephens, both retired Secret Service agents, have converted the office into "an employment agency" for their retired Secret Service friends. "These retired Secret Service agents, largely white males, have inundated the Inspector General's office at high-graded GS 14/15 positions," according to one source. Retired Secret Service agents "who are now the favored elite" in the office, say insiders, include a deputy assistant IG for investigations, a senior Special Investigation Division (SID) agent, the special agent in charge for the Southeast/ Caribbean region and at least five SID senior agents.
One of the former Secret Service agents selected for a senior HUD IG post later was sued successfully by an IG special agent for sexual harassment; this after the man's estranged wife, saying she feared for her safety, had turned in his weapon to the Anaheim, Calif., police department after he allegedly assaulted her.
IG agents are preparing to take their concerns to a Republican senator who is the chair of a powerful committee. They say they will bypass referral of their complaints to the President's Council on Integrity and Efficiency (PCIE) for investigation because, although the PCIE is within the Office of Management and Budget, "it is controlled by the IG community and therefore not independent. In the unlikely event that the council found cause to discipline one of its own, the result would be no more than a 'slap on the wrist,' given that the council has no statutory authority to take independent corrective action."
Martin Edwin Andersen is a reporter for Insight magazine.
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HUD EMPLOYEES LAUGH AT RIPPED-OFF HOME BUYERS:
Fairhousing.com
Posted on Tue, Feb. 19, 2002
HUD's EXCUSES: A HOUSE OF CARDS
By Monica Yant Kinney
Inquirer Columnist
Last month's tale of a home buyer who got snookered after settlement drew a slew of responses from folks with similar tales of woe. And as the horror stories mounted, officials from the U.S. Department of Housing and Urban Development (HUD) once again came up with laughable explanations and excuses for the not-so-mysterious thefts and disappearances.
The saga began with Antoinette "Toni" Mann, who bought a charming 1950s-era Olney twin last fall only to discover after writing the $53,000 check that someone had stolen her furnace, nine antique sconces, and 11 glass doorknobs. She found skid marks on the basement floor where the heater had been dragged out, and live electrical wires hanging from the walls.
Mann, a University of Pennsylvania researcher, wouldn't stomach the $6,000 loss. She demanded reimbursement from HUD and Golden Feather Realty Services, which has a King of Prussia office and a $236 million contract to manage 9,500 HUD properties across the country - including 600 in Philadelphia.
After weeks of phone calls, e-mails and faxes, Mann finally received a check for $3,538.47 for the cost of the furnace. She cashed it and hired a lawyer, determined to fight for the full cost of her losses, including having to rewire her house.
"They must be out of their minds," Mann said. "I'm not giving up."
Repeat offenders
Two days after I wrote about Mann, I received a four-page, single-spaced e-mail from Colleen Yaremko, a Northeast High School computer graphics teacher who suffered the real estate equivalent of spamming by HUD.
Two years ago, Yaremko bought a Mount Airy house through HUD's "Teacher Next Door" program, which gave the educator half-off the $72,000 price. Before settlement, the heater was stolen. So were nine old hardwood and glass-paned doors.
The theft led one lender to dump her, and another to charge her a higher-risk rate. The missing heater evolved into a running dispute over how many BTUs the old one had. She, too, has a lawyer and plans to sue.
"I feel like I started out with an Audi and wound up with a Ford Pinto," Yaremko lamented.
And then there is William Siemion, a Port Richmond union ironworker with a nose for bad news.
Siemion was working nights at the Kimmel Center when he read the column about Toni Mann. One morning a few days later, he noticed three men enter a vacant HUD house a few doors down the block.
Soon, they were loading a truck with a furnace, antique radiators, window shades, curtains, screen doors, cabinets and light fixtures.
They even took the kitchen sink.
Real-time crime
When Siemion asked what the men were doing, he was told to mind his own bleeping business. So he called the cops, who came and left after the crew flashed identification.
Before the workers left with the loot, he said, they tacked up a Golden Feather sign on the house.
I asked officials at HUD and Golden Feather to talk about the thefts.
Golden Feather pushed me off on HUD. The brass at HUD thought so highly of the issue they had a spokeswoman answer via e-mail.
The spokeswoman acknowledged a "marked increase" in thievery, which she said HUD takes "very seriously." Incidentally, she added, HUD wants to "mitigate the neighborhood impact of 'eyesore' properties."
My e-mailer, Ileana Colon, wouldn't finger HUD contractors as the culprits. She said Golden Feather is paid based on HUD home sale prices, so it wouldn't be in the company's interest to steal furnaces and doors.
Colon is in public relations, not policing, but she did note that lots of people have access to these HUD houses, suggesting that real estate agents, potential buyers - even city workers - could be the real crooks.
Then she typed out my very first government directive:
"If The Philadelphia Inquirer becomes aware of any such incidents . . . HUD expects to be notified of these specific incidents in order to investigate and resolve them immediately."
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"Report to the Ranking Minority
Member, Subcommittee on Housing and
Transportation, Committee on Banking,
Housing, and Urban Affairs, U.S. Senate
United States General Accounting Office
GAO
October 2001
SINGLE-FAMILY
HOUSING
October 24, 2001
The Honorable Wayne Allard
Ranking Minority Member, Subcommittee
on Housing and Transportation
Committee on Banking, Housing,
and Urban Affairs
United States Senate
Dear Senator Allard:
The Department of Housing and Urban Development's (HUD) Federal Housing Administration (FHA) relies on more than 20 different information systems as it annually insures billions of dollars in home mortgage loans made by private lenders. FHA's mission is to expand homeownership in the United States by assuming 100 percent of the risk for mortgages it insures. To carry out its mission, FHA relies on private lenders to determine borrowers' creditworthiness and to make and fund loans. FHA also relies on contractors to help assess lenders' compliance with its requirements and to manage and sell the properties it acquires through foreclosure. Without careful oversight of these lenders and contractors, FHA is vulnerable to mismanagement and fraud. The information systems FHA uses to collect and analyze data on FHA-insured loans and foreclosed properties are crucial to its oversight activities.
However, the White House's fiscal year 2002 budget blueprint stated that inadequate information systems have weakened FHA's ability to monitor lenders. FHA's information and telephone systems are also essential to its efforts to provide customer service to lenders, borrowers, and the general public.
United States General Accounting Office
Washington, DC 20548"
-------------------------------------------------------
"GAO
United States General Accounting Office
Performance and Accountability Series
January 2001
Major Management
Challenges and
Program Risks
Department of Housing and
Urban Development
..."This analysis should help the new Congress and administration carry out their responsibilities and improve government for the benefit of the American people..."
----------------------------------------
"Fraudulent Property Flipping"
The usual scenerio consists of the following:
The flipper (seller) usually owns the house for a short length of time, before reselling it.
The flipper does not tell the buyer that the sales price of the house is much higher than the house is worth.
The flipper only does "cosmetic repairs", and does not disclose the major problems of the house.
The flipper arranges a mortgage loan to cover the inflated sales price, but the loan is based on a false appraisal of the property. (overvalued to "an already pre-determined amount, set by the lender" ; appraisal also does not use correct "comparatives"; appraiser also does not report major deficiencies.)
The final inspector "overlooks" the condtion of the house. - (Will either state all repairs have been done; &/OR, that the house does not need any repairs, to meet minimum living standards.)
The flipper walks away from the deal with all the loan money, but the buyer winds up with a house that is not worth the loan he or she owes. (and is usually majorly deficient)
The lender doesn't worry about a thing...because the lender is covered by FHA's full repayment of the loan, if the buyer forecloses.
(After consumers (homebuyers) then report these fraudulent activities to HUD (FHA), HUD does nothing...even though they have rules and guidelines in place (including the following), TO enforce against fraudulent property flipping, and other fraudulent activities.) :
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(HUD DOES NOT ENFORCE):
"HUD's Policy on Lenders' Accountability for Appraisals
......"HUD issued mortgagee letters to lenders that reiterated its policy that lenders were equally responsible for the quality of appraisals. Also, HUD's Deputy Assistant Secretary for Single-Family Housing instructed HUD staff that in cases in which appraisers missed serious repair conditions or significantly overvalued properties, HUD should request that the lenders who selected the appraisers pay for the needed repairs or pay down the mortgages by the amounts the properties were overvalued. and...
The Deputy Assistant Secretary also indicated that the failure of a lender to voluntarily resolve the appraisal deficiencies raised by HUD would result in enforcement action against the lender, including probation and suspension."
------------------------------------
(HUD DOES NOT ENFORCE):
"HUD Handbook: "Correction of Structural Defects in New Homes"; "Correction of Structural Defects in Existing Homes":
According to HUD's own policies and guidelines, you may qualify for help for repairs (of your house that has an FHA loan) if:
Your home is covered by Mortgage Insurance Under Section 203, 221 or 235.
(My house is covered under 203 (b)
("Sections of the National Housing Act authorizes the Secretary of HUD to correct, or to reimburse owners for the correct of structural or other major defects in some homes if the mortgages were insured by HUD. ") -
"Subpart L --Correction of Structural Defects in Homes Covered by Mortgage Insurance Under Section 203, 221 or 235.
Authority: Sec. 518 (b) and (c)."
"Correction of such defects in your (existing) home may be eligible for assistance if all of the following requirements can be met:
-The dwelling must have been more than one year old at the time you purchased it.
-The dewelling must consist of not more than four living units.
-The defect must be one which so affects the use and livability of the property as to create a serious danger to life or safety.
-The defect must have existed at time of the original appraisal and be one which a proper inspection by the HUD appraiser would have normally revealed. The existence of a defect at this time does not necessarily mean that you have an eligible claim.
-The mortgage, financing the purchase of the dwelling, must have been insured under Section 235 of the National Housing Act.
-A claim must be filed with HUD not later than one year after the insurance of the morgage."
(Similar guidelines are also found in the section for NEW homes. Although of course, some of the guidelines may vary.)
*** I did file this claim with HUD, before the time allowed was up. HUD ignored me about it; told me my house is not covered under this; and I am sure they now have no record of me filing this claim. In fact, I do not think they have kept, or reported all facts of my case, as they are supposed to do.
(However, I have a record of it. I have a record of everything that has happened; everything that has been filed; everything that has been written, and stated by me - and to me - by any and all parties, since this house closed on Aug. 14, 2001. I also have copies of all of the lies that HUD employees have told me, and have written me.)
Copies of everything, have also been printed off, and are stored somewhere other than my home - In more than one, safe, protective place, and with more than one individual.
(In case anything ever happens to me - the proof will ALWAYS still be there.)
---------------------------------------------------
"FHA Buyers Get New Home After Finding 181 Code Violations"
(HUD is now paying the over $700 month mortgage payments for this couple, until their house is paid off.)
REALTY TIMES
Article by: Peter G. Miller - 02/27/2001
After being told that it's efforts to portray FHA appraisers as home inspectors were misleading, HUD is now beginning to pay the price.
According to The Detroit Free Press, Mike and Kim Powers are getting a new house, compliments of HUD. It seems they bought an $86,000 home through FHA but later discovered that the house had 181 building code violations.
"A Federal Housing Administration appraisal and city inspections had uncovered only minor problems," said the story. "The Inkster couple said they did not get a private inspection because a TV commercial they saw on the Learning Channel touted the effectiveness of an FHA appraisal in finding defects in a house."
The result? According to the Free Press, "the Department of Housing and Urban Development, the parent agency of the FHA, agreed to let the couple exchange the house in Inkster for a HUD home of their choice in the same price range." (See: HUD will help get new home; TV ad blamed, February 10, 2001)
It's hardly amazing that buyers in Detroit and elsewhere feel mislead. According to HUD, today's FHA appraisal is far more than a mere estimate of value.
The so-called Homebuyer Protection Plan which then-HUD Secretary Andrew Cuomo announced in 1998, was supposed to assure FHA borrowers that they are not buying a lemon.
"For the first time," said HUD, it would "require that home defects found by appraisers be disclosed to potential buyers."
Under the HUD plan, appraisers are obligated to locate "problems with plumbing, walls, ceilings, roofs, foundations, basements, electrical systems, and heating and air-conditioning systems; soil contamination; the presence of wood-destroying insects; hazards and nuisances near homes (such as oil and gas wells); lead-based paint hazards; and other health and safety problems."
The program, said HUD, "requires the appraiser to complete a new three-page form describing the physical condition of a home in unprecedented detail. HUD will give appraisers a handbook explaining the new appraisal standards."
"Under the new initiative," HUD explained, "appraisers must note the exact deficiencies – such as cracks in floors, cracks in walls and ceilings, evidence of water leakage, and evidence of damaged support structures."
Appraisers, however, are not home inspectors. They do not open electrical service boxes, climb roofs, or check furnaces. Appraisers are not licensed to perform home inspections, they are not trained for such work, and if you ask appraisers they will tell you that they are not professional home inspectors. And because the extra work and liability associated with the HUD program, many appraisers raised their fees to do FHA work while others refused to offer any more FHA valuations.
Appraisers provide independent property valuations so that lenders can be certain they are not lending too much for a given home, and thus not making loans which have needlessly-high levels of risk.
None of this is a criticism of appraisers. They have an important role in the home-buying process, but that role does not include performing home inspections.
HUD, under Cuomo, aired a series of television ads which suggested that buyers need not worry about the condition of a home when they bought with FHA financing because, after all, the FHA appraisal would protect them.
The HUD ad campaign, wrote Maine Senator Susan M. Collins in a letter to Cuomo last September and first reported by Realty Times columnist Lew Sichelman, "implies that the home buyer can blindly trust HUD to protect his or her interest, and that the appraisal process will disclose any and all problems with the house. Given that FHA deals overwhelmingly with persons who have no previous experience purchasing a home, I would hope that this inaccurate message troubles you as much as it troubles me.
The HUD promotions, added Collins, "border on deceptive advertising."
We now have a new Administration in Washington and HUD has a new secretary, Mel Martinez. No organization other than HUD requires appraisers to perform what are effectively home inspections. Thus the questions for HUD look like this:
Will HUD end efforts to have appraisers substitute for home inspectors?
Will HUD end it's HomeBuyer Protection Plan ads?
Will HUD end any appraisal requirement established during the past four years which has not been adopted by both the Veterans Administration and conventional lenders?
Here is a chance for the new Secretary to rein in an unwanted program, better serve consumers, and cut HUD costs. Such an action would draw instant support from Capitol Hill, appraisers, brokers, lenders, and consumers.
Alternatively, you can bet that trial lawyers with college tuition to pay will look at the situation in Detroit and say, "whoa, this gives me an idea...."
If you think that problems associated with the FHA home inspection program are over, they're not. Just consider two recent e-mails received by Realty Times:
"I just recently bought a home through FHA in San Pablo, CA," says one correspondent.
"We had both the FHA appraisal and home inspection completed. We have been there 2 weeks and we are finding so many problems, such as there are no doors to the bedrooms, or closets, all the windows are nailed shut, the 2 backdoors are nailed shut, one of the back doors does not have a door frame, also they left their appliances, which do not work, and finally out of maybe 16 electrical outlets only 5 actually work, and the windows leak, and other stuff."
Here's another:
"I was wondering if there is any protection when you purchase a home through FHA regarding the roof not passing certification.
"We live on the Texas Gulf Coast that requires roofs be certified for the Texas Windstorm Insurance. A few months after we purchased our home, the Texas Windstorm Insurance said that our roof was never certified. We had a engineer come out and inspect the house, so that we could get it certified. The engineer informed us that the roof could not pass certification for the Texas Windstorm Insurance. And no insurance companies carry their our windstorm coverage. Knowing what area we live in that requires us to have windstorm insurance with a loan, why didn't the FHA inspector notify the mortgage company and buyer of the problem that existed?"
There is, of course, no "FHA inspector," a misconception which needs to be corrected.
--------------------------------------------
Mortgage fraud: Real estate's white-collar epidemic
Part 1 of 5: Lenders duped out of millions while regulators stand by and watch
Monday, June 23, 2003
By Jessica Swesey
Inman News Features
Last year, Bree Duke, a real estate agent for Metro Brokers/GMAC Real Estate in Atlanta, was a rookie scrambling to close her first sale when a lender-appointed appraiser called and asked whether she was "cool."
"Cool" was code for Duke turning her head while the lender approved a $140,000 loan on a home she knew was worth only $100,000. The appraiser and mortgage broker were conspiring to commit mortgage fraud and planned to split the extra $40,000, but they presented it to the young sales agent as a creative lending technique that would help a buyer who had poor credit.
The multi-trillion-dollar mortgage industry is a goldmine for fraudsters, and like most white-collar crimes, mortgage fraud may not be obvious to an outsider or even to honest people in the industry. Regulators and many people in the mortgage industry know fraud is rampant, but no one has come up with a viable solution to curtail these crimes.
Mortgage fraud is increasing partly because the high volume of loan originations in the past few years makes it easier for mistakes to slip by unnoticed, according to Jim Croft, executive director of the Mortgage Asset Research Institute, a group that helps financial companies manage risk from third-party contractors.
"A substantial amount of fraud is getting by, and what was put on the books a year or two ago is just now being discovered as fraudulent," Croft said.
Mortgage fraud is a complex crime typically perpetrated by a ring of professionals who know the ins and outs of the real estate process. Attorneys, closing agents, mortgage brokers, appraisers, title insurers and real estate agents can be involved in it.
And mortgage fraud is growing nationally, leaving behind a trail of foreclosed homes, dilapidated neighborhoods, destroyed personal credit histories and unreliable comparative market values in areas where inflated appraisals have been recorded. Millions of dollars are bilked out of lenders who rarely recover their losses, and borrowers eventually end up footing the bill.
Experts say mortgage fraud is becoming more sophisticated through technology that enables perpetrators to produce bogus bank statements, tax records, closing documents, appraisals and proof of employment. Technology also enables criminals to steal identities, making it easier to obtain a home loan in an unsuspecting borrower's name.
Donna Eide, assistant U.S. attorney for the southern district of Indiana, this year helped prosecute an $8 million mortgage fraud conspiracy case in Indianapolis in which 15 conspirators were convicted.
The lead defendant, Paul Dailey, brokered more than 100 fraudulent mortgages between 1998 and 2001, according to a Department of Justice statement.
Dailey recruited several real estate appraisers who appraised properties at two or three times their true value and closing agents who prepared two sets of documents at closing. The closing agents gave the settlement papers with the true value of the home to the seller and sent the second set of closing papers with the bogus inflated value to the lender. The fraudsters then paid the seller the true value of the home and split the rest of the cash from the lender. The buyers who obtained the fraudulent loans in their names, known as "straw purchasers," were in on the scheme.
Mortgage fraud is epidemic in Indianapolis and surrounding areas, according to Eide. The southern district of Indiana launched a mortgage fraud task force comprised of the U.S. Attorney's office, Federal Bureau of Investigation, Internal Revenue Service, U.S. Secret Service, Postal Inspection Service and the Office of the Inspector General of the Department of Housing and Urban Development to crack down on these crimes.
But the damage caused by mortgage fraud can't be reversed easily.
"It's been a blight on our neighborhoods here because now we have all these boarded up houses that were the used and abused properties in mortgage fraud schemes," Eide said.
She said properties used to obtain fraudulent loans always end up in foreclosure.
"Indiana has a really high foreclosure rate-the highest in the nation. I'm beginning to think fraud is at least a contributor to that," she said.
The mortgage fraud task force identified 14 groups of conspirators currently defrauding people in the Indianapolis area, according to Eide. One mortgage fraud ring takes years to investigate because there usually are dozens of properties involved and the complexity of the mortgage process is difficult to present to juries in a simple way that makes clear exactly how the fraudsters broke the law.
Desktop publishing and scanning technology make it easy for crooks to fabricate documents and remain one step ahead of investigators and victims.
Eide said another part of the problem is that it is too easy to become a mortgage broker.
Lenders rely on mortgage brokers to be the eyes and ears of the transaction; when the broker turns out to be unscrupulous, the whole transaction becomes corrupt.
Lenders lose millions of dollars to mortgage fraud, but there's little incentive to uncover or report fraudulent loans because lenders carry the loss on loans that have been sold to the secondary market, according to Croft. If fraud is discovered, the lender has to compensate the company that bought or insured the loan for its loss.
Croft said a lot of lenders don't go to great lengths to spot fraud in their loans, which makes it impossible to ballpark how much money is lost to mortgage fraud each year."
(Note: A huge amount of brokers/lenders ARE involved in the fraudulent activities, themselves.
In many cases, they are the "ringleader". Lenders get "incentives" from HUD, for closing the FHA loans.; They are also given the full amount of the loan, which is insured by FHA, if the sellers have to foreclose.
These lenders also usually "pressure" appraisers and inspectors to "overlook things" and to appraise these houses at "an already pre-determined amount, set by the lender", so that the loan will close, and close at a higher amount - than the house is actually worth.) Many times, "the appraiser and inspector also get a cut of the deal, and lines their pockets with money to do the job, and keep their mouth shut."
Some honest appraisers, and inspectors, have come forward and STATED to these facts...because they refused to do the illegal activities. In their statements, they also stressed just how MUCH the lender tries to pressure you, and threatens you with "the lack of work" if you DON'T do the illegal activities.)
-----------------------------------
(They are ALL "getting in on the take"):
ABC News
Tue, 24 Jun 2003 13:32 AEST
LAWYER STRUCK OFF OVER ROLE IN MORTGAGE LENDING SCHEMES
A Sunshine Coast lawyer has been removed from Queensland's solicitors' roll after a Solicitors Complaints Tribunal hearing.
Terry Boyce was found guilty of eight professional misconduct charges for his part in mortgage lending schemes found to be woefully managed and which cost investors more than $1 million.
The decision to remove Mr Boyce from the roll means he will never be able to practise as a solicitor in Queensland again.
Mr Boyce has vowed to appeal against his dismissal.
A spokesman for the Queensland Law Society says the decision is a salutory one for all lawyers about their conduct.
-------------------------------------------------
(HUD ALREADY has /had regulations and policies in effect, to deal with fraudulent entities. Every year, HUD keeps introducing a "new" bill or policy,...but this will be like all of the others (that are already in effect). This, too, will not be enforced. A regulation that is not enforced, is the same as having no regulations at all.)They didn't / don't even enforce the reulations they already have - including, but not limited to, the "Lender Accountability" for no repairs being done, or overvalued appraisals.)
All of this is just "media propaganda". It's a lie, like everything else they do. (Don't do.)They have been, and will continue, to deceive the general public, just like they have been doing for many, many years.:
"DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 203 [Doc. No. FR-4615-F-02] RIN 2502-AH57
Prohibition of Property Flipping in HUD's Single Family Mortgage Insurance Programs
AGENCY: Office of the Assistant Secretary for Housing-Federal Housing Commissioner, HUD.
ACTION: Final rule.
DATES: Effective Date: June 2, 2003.
SUMMARY: This final rule addresses property ''flipping,'' the practice whereby a property recently acquired is resold for a considerable profit with an artificially inflated value, often abetted by a lender's collusion with the appraiser. Specifically, the final rule establishes certain new requirements regarding the eligibility of properties to be financed with Federal Housing Administration (FHA) mortgage insurance. The regulatory amendments will comply with Congressional mandates to maintain the FHA Insurance Fund in a sound actuarial manner. The new requirements will make flipped properties ineligible for FHA-insured mortgage financing, thus precluding FHA home purchasers from becoming victims of predatory flipping activity. The final rule follows publication of a September 5, 2001, proposed rule and takes into
consideration the public comments received on the proposed rule."
--------------------------------------------------
(Please be aware, before reading the following letter that:
The National Home Builders Association (N.A.H.B.) is one of the biggest money contributors, to political individuals and entities. Although some of these builders are honest, some of their members are questionable. For instance, Richard and David WEEKLEY ("Weekley Homes"), are members of the N.A.H.B.
You can find horror stories about these builders, on www.ripoffreport.com ; www.hadd.com; and other consumer complaint sites as well. You can also do an Internet search for them ("complaints on Weekley Homes", etc.) and find a tremendous amounts of complaints on individuals such as this team.
Richard Fuller ("Fuller Homes") used to be another member of the NAHB. (He was supposedly killed in a plane crash recently.)
"Fuller Homes" ALSO has many complaints filed against them - in OK, TX, and NM. Mr. Fuller also had a lawsuit going on against him, at the time of his death...and other lawsuits were in the process of being filed.
This is only two examples. Also, please be aware that David Weekley is the founder of the "Texans for Lawsuit Reform" - "Working to restore balance and justice to the Texas Civil Justice System". (Imagine that.) He is the SAME person who "knowingly" continues to build faulty homes. (Even leaving out materials, of these houses.)
------------------------------------------
http://www.toxichomes.org/news/news_05-15-02_lobby_watch.shtml
"Leaky Weekleys"
Moldy 'Lemon' Homes Denied Day In Court
Weekley Boys Privatize the 'Justice' System
("Texans for Public Justice")
A Texas House panel today will explore if consumers are being hurt by businesses' increasing reliance on “binding arbitration.” Consumers will decry the privatized “justice” system that binding arbitration has created, while business interests that give millions of dollars to Texas politicians will rush to the defense of this plaintiff-hostile system.
Texas' mushrooming toxic mold epidemic is a crash course in the perils of binding arbitration, clobbering consumers with a one-two punch. First, they learn that their new dream home is a moldy lemon. Then they discover that they unwittingly signed “binding arbitration” clauses that strip their constitutional right to a jury trial and force their claims before costly, secretive tribunals that favor the builders who create arbitration business and even serve as arbitrators in construction disputes1.
The model “Residential Construction Contract” promoted by the Texas Association of Builders contains binding arbitration clauses, which are used by virtually every major Texas homebuilder. Meanwhile, consumers are trying to find one example of an arbitrated construction case in which Texas homeowners have gained more than they spent on arbitration. Builders could not build a more favorable system.
A major developer of this privatized “justice” is David Weekley Homes, both in its own right and through brother Richard Weekley's Texans for Lawsuit Reform (TLR). Since 1997, TLR's huge PAC has spent $2.6 million on all three branches of Texas government (see table)2.
Two homebuilders that rank among TLR's top donors also give heavily to Texas politicians directly. The family of Bob Perry of Perry Homes contributed $2.2 million and the Weekleys doled out more than $300,000 (see table below). Meanwhile, Texas homebuilder PACs gave Texas politicians $1.8 million more since 1997.3
Texas Homebuilder-Related Political Spending (Since '97) Gubernatorial
Races Other
Statewide
Races Legislative
Races Appeals
Court
Races Totals
Weekley Family $51,253 $170,600 $83,368 $12,400 $317,621
Bob Perry Family $120,000 $1,137,500 $ 911,250 $72,000 $2,240,750
Texans for Lawsuit Reform $27,500 $181,650 $2,290,134 $88,460 $2,587,744
Totals: $198,753 $1,489,750 $3,284,752 $172,860 $5,146,115
Note: Contributions cover through the March 2002 primaries.
Unlike court records, arbitration records are not public so it is impossible to fully gauge Weekley Homes' financial stake in arbitration. Nonetheless, there is evidence that this homebuilder fends off a steady stream of disgruntled customers who seek compensation for “lemon homes.”4 Now, spreading mold problems are bringing such lemon homeowners out of the woodwork.
The Richardsons of Austin
Two days after the Richardson family moved into their new $300,000 home last year they discovered that a leaky air conditioning line had bred mold in their attic and spewed water down their walls and under their floors. Although they had ordered special home design features to accommodate Dawn Richardson's allergic sensitivities, the Richardsons say Weekley Homes fixed the leak but failed to dry or remove the wet building materials. Instead, they merely painted over the mold.
All four family members soon experienced a battery of health problems, including skin rashes, headaches, fatigue, nausea, bloody diarrhea, nose bleeds, dizziness and respiratory infections. The worst symptoms afflicted Dawn Richardson and one-year-old Erica (brain swelling, motor skill impairment and language-skills regression). Environmental health experts have diagnosed Dawn with permanent brain and neurological damage caused by exposure to molds and toxic chemicals.
These health problems drove the Richardsons out just five weeks after they moved into their new home. Construction defects resulted in elevated levels of toxic mold in all three bathrooms and other areas of the house. Indoor air tests detected high levels of volatile organic compounds and “outgassing” of toxic chemicals (including benzene, styrene, xylene and formaldehyde) from synthetic building materials. The Richardsons have filed suit in state district court in Austin to recover related damages from Weekley and some of its subcontractors and suppliers5.
Sitting as a visiting judge at a pretrial hearing on the case late last month, former Texas Supreme Court Justice Rose Spector ruled on Weekley's pretrial motion to force the case into arbitration. The plaintiffs countered that—even if they had understood the arbitration clause—they had little choice because virtually every major homebuilder in Central Texas uses these clauses.
At the hearing, Judge Spector (who took $5,000 from Richard Weekley's TLR while on the high court) said she considered recusing herself because she works as a paid arbitrator for the American Arbitration Association where Weekley sends all of its disputes. Opting against recusal, Judge Spector ruled about as favorably for the plaintiffs as possible under the pro-arbitration precedents of the U.S. and Texas Supreme Courts.6 Judge Spector sent claims involving the contract signatories—Weekley and the adult Richardsons—to an arbitration panel. She kept the remaining claims (involving the Richardson children or Weekley's subcontractors and suppliers) in state court.
Other Texans who have yet to file suit over their moldy new homes are turning to the Richardsons to learn about how binding arbitration robs consumers of their day in court.
Aric Barto of Sugarland
Since sports stadium builder Aric Barto closed on a new $268,000 David Weekley home in December 2000 he has been plagued by troubles of almost biblical proportions. Barto keeps a two-inch thick binder of repair work that he says Weekley has not fixed. Workers damaged a tree on his lot that later fell on his house. Weekley Homes came out three times to try to realign a tilting portion of his slab foundation. Half of his roof had to be replaced. Chronic leaks have caused repeated blooms of toxic Strachybotrysatra mold on the ceiling of his garage and study and on his bedroom, closet and bathroom walls. The mold then migrated through air ducts to his kitchen, dining room and living room.
Barto says his girlfriend contracted a leg rash, he has had allergic reactions and both of them have experienced chronic fatigue. He says he hired an attorney after Weekley Homes stopped paying for his temporary housing last month. Barto says his insurer is suing Weekley for mold remediation costs and he is suing the company to buy back his “lemon home” at a reasonable price.
The DeShazos of Missouri City
After the DeShazo family paid more than $300,000 for a new Weekley Home in 2001, the builder came out three times to reseal the joint where the shower in their master bath meets the floor. When they later heard that Weekley discontinued that bathroom design, Dawn DeShazo called to ask if it was defective. In what she now suspects was a lie, Weekley Homes said it simply phased out the design; there was no defect.
Dawn called the builder again last December after a family with bathroom plumbing problems around the corner suddenly moved out. Weekley Homes assured her that it was an isolated leak problem unrelated to any design defect. In the Sienna Plantation development outside Houston, Dawn says Weekley bought out one family's house under a confidential deal. It relocated another family for nine months during mold remediation. And it temporarily relocated yet another family into a vacant Weekley Home—only to encounter yet another mold infestation.
When Weekley came for a one-year inspection of the DeShazo home in February, Dawn complained about bad odors coming from the drain of her master bath. The smell went away when she poured bleach down the drain, as the inspector suggested. A couple of weeks ago Dawn called the builder when the smell returned with a vengeance. This time Weekley sent a member of its “Special Projects” team, which Dawn says is a euphemism for Weekley's mold squad. The builder is negotiating over where to relocate the DeShazos during mold remediation but has not said who will pay their mortgage in the interim.
Meanwhile, Dawn wonders if mold caused recent health problems in herself and her youngest child. Suffering from insomnia, morning headaches and repeated voice loss throughout 2002, Dawn was diagnosed with walking pneumonia 10 days ago. On May 5th she rushed her three-year-old son to the emergency room with severe abdominal pains and a fever spike. The hospital had trouble getting his blood-oxygen level up and was unable to diagnose the problem, which passed after several days. Dawn says she is particularly concerned about this son because a premature birth left him susceptible to respiratory problems and because he has spent more time in her infected bedroom than her older children. Furious with Weekley for misleading her about a spate of mold problems in Sienna Plantation, Dawn is shopping for an attorney.
Across Texas, toxic mold is breeding colonies of angry homeowners. Thanks to the powerful grip that the Weekleys and other homebuilders have on all three branches of government, these Texans are first driven out of their homes and then driven out of the courts. •
1For more on the hazards of binding arbitration, see: The Consumer Pitfalls of Binding Arbitration, Texas Watch Foundation, Austin, Texas, 2002; and The Costs of Arbitration, Public Citizen, Washington, D.C., April 2002.
2In a 2001 lobbying coup, TLR successfully urged Governor Rick Perry to veto a “prompt pay” bill that would have barred HMOs from imposing binding arbitration on doctors.
3The biggest share of this money ($856,400) came from the Texas Manufactured Housing Association, whose members aggressively promote binding arbitration.
4“Slab O' Trouble,” Houston Press, June 27, 1996.
5Richardson v. Weekley Homes, Case No. GN200790, 53rd District Court of Travis County.
6Cone Memorial Hosp. v. Mercury Const., 460 U.S. 1, 42 (1983); Capital Income Properties v. Blackmon, 843 S.W.2d 22, 23 (Tex. 1992).
# # #
Texans for Public Justice is a non-partisan, non-profit policy & research organization which tracks the influence of money in politics.
http://www.tpj.org/Lobby_Watch/arbitrationhomes.pdf
------------------------------------------
------------------------------------------
The N.A.H.B. has been trying to get laws passed (in all states) that says a home buyer will HAVE to agree to "binding arbitration". (This means, you will have NO rights, to take a case to court.) What they DON'T tell you is:
In "binding arbitration", it is NOT done by an "unbiased third-party", as they want you to believe. In fact, that "unbiased third-party" almost always finds for the company. (Crooked builder, etc.) The buyer also walks out with NO money at all, for repairs to the deficient house (which was built, or sold, or has been involved in...fraudulent activities.) They also hit you up for the crooked builder's attorney fees.
(In one case, that just finished, the home buyer ended up with no money for repairs, (even though she could PROVE her house was deficient, and fraudulently built) AND she now has to also pay the $100,000, for the crooked builder's attorney (& other) fees.
- not to mention, what she had to pay for her own part of the arbitration fees. Most of the time, these "binding arbitrations" also hook on a "gag order". (Just like in a court of law.) In this way, the home buyer cannot discuss the case with other consumers, or anyone else. (THIS is why you do not here about all of these cases.)
Up until recently, FHA would not allow "binding arbitration".
They only allowed "an option to arbitration, if the home buyer choose to do so."
I then recently read that the N.A.H.B. was also trying to get FHA to agree that EVERY contract had to state that the home buyer HAD to agree to "binding arbitration", if any problems arose later.
Well...guess what...read the following, that just came in to existence. It states nothing now, about the homebuyer has that "option".
See the HUD regulation as it is now, and how the NAHB wants it to read:
Here is the way the OLD regulation read when I printed it in August 2001:
“In the event of any dispute regarding a homeowner complaint or structural defect claim, Plans must, unless prohibited by applicable law, provide for binding arbitration proceedings arranged through a nationally recognized dispute settlement organization. The sharing of arbitration charges shall be determined by the Plan. A Plan must contain pre-arbitration conciliation provisions at no cost to the homeowner, and provision for judicial resolution of disputes, but arbitration, which must be available to a homeowner during the entire term of the coverage contract, must be an assured recourse for a dissatisfied homeowner.”
The NEW regulation, that the NAHB wants HUD to agree to, does not give an option for the home buyer to take their case to the judicial system.
(This will protect the "crooked home builders" from having to be involved in lawsuits, for their fraudulent activities, which is exactly what they are aiming for.)
--------------------------------------------------
The N.A.H.B. are now "telling" HUD what to do, and how to act.
Big bucks are involved in the whole housing industry.
The same way the NAHB is getting things changed in law, through fraudulent entities within our own government.
---------------------------------
(This is a letter from the President of the NAHB, trying to sway the Governor of New Jersey):
"April 1, 2003
The Honorable James E. McGreevey
Governor of New Jersey
The State House
Trenton, NJ 08625
Dear Governor McGreevey:
On behalf of the 205,000 members of the National Association of Home Builders (NAHB), I write to express my disappointment with the anti-growth agenda that your Administration has embraced. The program you put forward in your recent state of the state address will have the effect of stopping most residential growth in New Jersey by institutionalizing NIMBY-ism throughout the state. It is the worst sort of no-growth rhetoric masquerading as “smart growth.”
NAHB is a strong advocate of smart growth. Across the country, there is an emerging consensus about what smart growth means. Smart growth balances the interests of the economy, the environment and social needs, including housing. Every major player in this debate, from the U.S. Environmental Protection Agency to the National Association of Realtors to the Sierra Club, acknowledges the importance of providing a range of housing opportunities and choices for people of all income levels. Your proposals give priority to the environment over many social needs, and they fail to recognize the importance of housing to the quality of life of New Jersey's residents.
Your plan ignores the fact that New Jersey's population is growing. From 1990 to 2002, New Jersey's population grew by more than 840,000 – an increase of 11 percent. But during this period, New Jersey added just four housing units for every five new households. Your proposed anti-growth policies will only worsen a growing affordability problem.
You talk of encouraging development in urban centers and older suburbs by redeveloping brownfields and steering infrastructure spending. Homebuilders fully support infill development, urban reinvestment and brownfields redevelopment. However, your moratoria proposal and the unprecedented power you propose to grant local municipalities to act on NIMBY impulses guarantees that your infill strategy will fail.
The preservation map you have outlined is further evidence of a plan that fails to account for the current and future needs of the citizens of New Jersey. The map is quite clear in delineating where growth will be prohibited, but it fails to provide adequate land to accommodate the state's growing population.
You speak often of shaping a New Jersey for your children and grandchildren. For the affluent, that's a simple proposition. But for hundreds of thousands of New Jersey families, the plan you've put forth does not include housing they can afford. For their children and grandchildren, New Jersey will be nothing more than a place their families once called home.
For the sake of the hundreds of thousands of working families who will be hurt by your current proposals, I strongly encourage you to take a more balanced approach to dealing with growth issues in New Jersey. It is possible to preserve natural resources while preserving housing affordability and choice for the people of New Jersey. It is the harder course, but as a public leader, you have an obligation to the citizens of New Jersey to find that balance. I hope you will rise to the challenge.
Best regards,
C. Kent Conine
2003 President
----------------------------------------------------
The NAHB are not thinking of the "working families, the children, and the grandchildren"...the NAHB are thinking of future plans of "putting more money into their own individual pockets.", and in ways that cannot be done...if the Governor of new Jersey does what he wants to do.
The NAHB have become "GOD", within the housing industry.
And if do not realize that there are fraudulent activities involved, then you better start doing the research, the investigation, and see just what IS going on.
I cannot begin to explain to you (& show you, and prove to you) just what this organization has become.
---------------------------------------------------
(The NAHB telling Congress what to do):
HUNDREDS OF BUILDERS BLITZ CAPITOL HILL TO PUSH FOR ECONOMIC, HOUSING AND HEALTH CARE LEGISLATIVE PRIORITIES
WASHINGTON, May 7 - As part of its annual Legislative Conference and in conjunction with its Spring Board of Directors meeting, the National Association of Home Builders (NAHB) has hundreds of builders from across the country in the nation's capital today to seek support from Capitol Hill lawmakers for economic stimulus, homeownership tax credit and association
health plan (AHP) legislation that would increase the availability of affordable housing.
"If housing is to continue to lead the economy forward, the economy must produce new jobs so that more people can afford to buy or rent a home.
President Bush's economic growth package clearly offers the best means to provide badly needed near term stimulus to consumer spending and job growth, including more housing consumption and production. NAHB is therefore urging that Congress pass, to the greatest extent possible, a plan that reflects the President's economic stimulus plan," said Jerry Howard, executive vice
president and CEO of NAHB.
Builders are also urging their lawmakers to cosponsor Senate bill S. 198 and House bill H.R. 839, legislation that mirrors a proposal in the Bush Administration's Fiscal Year 2004 budget that would create a homeownership tax credit. Modeled after the successful Low Income Housing Tax Credit, the program is designed to help bridge the gap between the cost of developing
affordable housing and the price that buyers can afford to pay for a home in many lower-income neighborhoods.
Available through a competitive allocation program administered by state agencies, the homeownership tax credit would provide investors with a credit of up to 50 percent of project costs for eligible home rehabilitation or construction. It is intended to encourage new construction and substantial rehabilitation of homes for sale to low- and moderate-income families in conomically distressed areas.
"The homeownership tax credit is good public policy and good for the economy. The program would make it economically viable for development to go forward in inner cities, struggling suburbs and isolated rural areas.
Furthermore, it would provide a great stimulative effect, producing 50,000 homes a year and resulting in 120,000 new jobs on an annual basis. The Treasury Department estimates its cost at $2.4 billion over five years, which would provide an excellent bang for the buck," said Howard.
Another national concern confronting builders and millions of small businesses is soaring health care costs, which has forced more and more small business employers to drop coverage for their employees in recent years. To address this critical issue, builders are urging members of Congress to support House bill H.R. 660 and companion Senate bill S. 545.
The legislation calls for the enactment of association health plans, which recent studies indicate could help small businesses reduce their health insurance costs by 15 percent to 30 percent annually.
"As the owner of my own firm, I know first-hand how skyrocketing health insurance costs can harm workers and small businesses alike by making it difficult to provide quality health insurance at an affordable price.
H.R. 660 and S. 545 provide the right remedy by allowing small businesses to band together through associations to purchase quality health care at a lower cost," said NAHB President Kent Conine, a home and apartment builder from Dallas.
To help spur the production of more affordable rental housing, builders are urging their federally elected officials to enact legislation that would correct four IRS technical advice memorandums (TAMs) that limit the use of low income housing tax credits. This would restore the amount of equity financing available under the Low Income Housing Tax Credit, thereby
creating an incentive for builders to build more apartments and increase the supply of affordable housing.
ABOUT NAHB: The National Association of Home Builders is a
Washington-based trade association representing more than 205,000 members involved in home building, remodeling, multifamily construction, property management, subcontracting, design, housing finance, building product manufacturing
and other aspects of residential and light commercial construction.
Known as "the voice of the housing industry," NAHB is affiliated with more than 800 state and local home builders associations around the country. NAHB's builder members will construct about 80 percent of the more than 1.6 million new housing units projected for 2003, making housing one of the largest engines of economic growth in the country.
#####
NS2003-080
------------------------------------
NOTE: What he DOESN'T say is...how many "crooked builders" are members of this organization.
(Look at the member roster...you can figure out for yourself, because you will see some of those same builders' names, involved in lawsuits due to their fraudulent activities.) - This can be proven.
------------------------------------
(Sent to me by an "acquaintance"):
"The housing industry, through trade organizations and builders associations, contributes millions every year to political campaigns, public relations to put a spin on what they're really doing, and on lobbying to erode consumer protection on new homes. Home buyers do not have access to most complaints filed on builders because many are hidden in the non-public records of confidential binding arbitration, which often comes with a gag order for the home owner. Also, many state agencies that are set up for consumer protection or regulation of builders or other corporations don't make the complaints public. Most BBB's use a rating system and don't make actual complaints public, and the system can take years to reflect a poor record of customer satisfaction. I got our state's attorney general, and our area's BBB, to put this in writing, that complaints are confidential, because no one believed me.
Increasingly, new homes are built with code violations, missing material, and shoddy construction, even dangerously unsound defects. The warranty is all too easy for home builders to ignore, by “stonewalling” the customer, or making promises that are not kept. If they can get the customer to keep contact verbal til the warranty is up, they can claim they never knew about the problems. Home owners try for months, or years, to get construction defects repaired by the builder. The way our system works, in most states there is little practical affordable recourse in the courts, and if the customer signed an arbitration agreement they cannot sue anyway.
I have been to our state's capitol and watched the builder's lobbyists at work to make it harder and harder to get the houses we paid for. I've also seen a video tape from the Texas state capitol, where the builders were trying to have “habitability” removed from the requirements of a new home.
What this organization is trying to do, is sickening.
When I started fighting my personal case I never imagined the corruption and shocking lack of accountability of this industry that I'd find out about. Most consumers innocently believe that this is an essentially honest industry, and that there is adequate legal recourse against the bad apples. Most believe the highly exaggerated media stories of home owners getting huge awards for minor defects. In reality, people with foundation failure and unsafe homes are not getting a dime.
And the false claims made by organizations within the housing industry, of "frivilous lawsuits" is a total joke. This is just another ploy "used to deceive", in order to try to get what they want. I have personally asked them to give me examples of some of these "frivilous lawsuits". They couldn't.
It is a myth that home owners don't try to get a builder to fix defects before filing suit. The process of trying to get warranty work done usually starts with a home owner making phone calls, or talking to the construction supervisor. When this is unsuccessful, they write letters, then file a complaint with the BBB, etc. After months or sometimes even years of trying to get a builder to honor the warranty, some home owners do sue, and they should have that right as guaranteed by the 7th ammendment. However…even if a home owner can afford to sue and wants to, they may not be able to; if they signed an arbitration clause, they gave up their right to use the courts. Arbitration is not necessarily neutral, not cheap, often comes with a gag order, may not be appealed if binding, and is very popular in builder's contracts.
Suing is not easy or cheap. Only those who can afford to sue can even consider it, no matter how valid their case is. Most states don't allow the recovery of enough in court to do more than break even on repair costs and legal fees, and collecting is another matter. It is not uncommon for a home owner who wins a court case against a builder to lose anyway because they can't be awarded enough to break even under their state laws, or can't collect any of it.
Home builders who claim they are being sued too much need to look at the quality of their construction and of their customer service.
They also need to realize that if they cry to our elected officials that “everyone” is suing them, they can't also advertise that they have 99% customer satisfaction.
(And this is EXACTLY what their statements have been. They contradict themselves.)
No state in this nation needs a home builder protection law. What we need is accountability from the companies building a product that can financially ruin a family if it's not done right, and it is done fraudulently."
-----------------------------------------------------
http://realtytimes.com/rtnews/nlpages/20001023_hud.htm?opendocument&Vol=41&ID=sampleplus
"HUD Turns Deaf To Inspector/Appraiser Controversy"
"Even as it comes under increasing pressure, the Department of Housing and Urban development has drawn a line in the sand, declaring it does not intend to withdraw commercials some say are misleading unskilled buyers into believing that appraisers are trained to spot structural problems in the homes they are purchasing.
At the same time, though, HUD has left the door open to changing its message when a new advertising campaign hits the airwaves later this fall.
Many appraisers and independent home inspectors say more than a few changes are needed. In fact, they claim the ads need major surgery. Since appraisers are not qualified to inspect houses, they argue, consumers are being fed the wrong message.
For now, though, HUD says it "stands firm behind" the commercials, which were designed to inform the public of the "substantial consumer protections provided in (its) Homebuyer Protection Plan."
The plan is, indeed, laudable. It provides consumers with important information about the physical condition of the home and promotes the importance of getting a home inspection.
And it holds appraisers accountable for their work.
The plan requires that an appraiser complete a comprehensive four-page form noting physical deficiencies in every home backed by Federal Housing Administration-insured financing. The form must be attached to every FHA appraisal and buyers must receive a summary of the report from their lenders identifying all physical deficiencies noted by the appraiser.
Buyers also are given notices urging them to obtain a home inspection, notices explaining that independent inspectors go over houses much more thoroughly thanappraisers.
The widely praised protection plan was developed in partnership with the Appraisal Institute, the Appraisal Foundation, consumer advocacy groups, the Mortgage Bankers Association and the National Association of Realtors. And as HUD points out in a recent statement, the FHA is the only mortgage insurer that has such stringent protection for home buyers.
But the problem isn't with the protection plan, it's with the television commercials. Whereas appraisers are required to point out whatever physical eficiencies they might spot, they are not required to go up, over, down and underneath a property the way an inspector does. Nor do they have the skills to spot problems that are not plainly evident.
Yet, one ad proclaims that under HUD's FHA Homebuyer Protection Plan, "you get the right loan at the right price and a thorough appraisal. If any problems are found, you'll know them before you close."
Sen. Susan Collins, R-Me., thinks that's misleading. "I think that commercial is an example of deceptive advertising...at its very worst," she recently told ABC television's Good Morning America.
So do a lot of others. But it looks as though HUD won't get that message until a few poor, unsuspecting buyers' houses fall down around them because they saw on television that the appraiser would find any defects."
----------------------------------
(NOTE: The Senate panel DID make HUD take off their T.V. ads, of the HUD "Homebuyer Protection Plan", because..."they border on deceptive advertising." However, the HUD Homebuyer Protection Plan (which went in to effect in 1999, is still in effect, to this day.)
-----------------------------------
(In PREVIOUS regulations of HUD, "fraudulent parties" were also "supposed" to be removed from the HUD FHA program.
(FACT: IF HUD does give a so-called "sanction" to a fraudulent party, they are usually given for a ridiculous length of time: ..."2 months", "2 1/2 months, if you will complete 16 hours of classroom training"; etc. That is IF a sanction is ever given. HUD gives a "slap-on-the-wrist" to these crooked, fraudulent individuals.) Why SHOULD the fraudulent parties be afraid of what HUD will do. HUD never DOES anything.)
"U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
WASHINGTON, D.C. 20410-8000
OFFICE OF THE ASSISTANT SECRETARY
FOR HOUSING-FEDERAL HOUSING COMMISSIONER
June 20, 2003
MORTGAGEE LETTER 2003-09
TO: ALL APPROVED MORTGAGEES
ALL FHA ROSTER APPRAISERS
SUBJECT: Update of Appraiser Qualifications for Placement on FHA
Single Family Appraiser Roster and Appraisal Reporting
Requirements
On May 16, 2003, the Department of Housing and Urban Development
published a final rule FR-4620-F-02 in the Federal Register
making several changes designed to strengthen the licensing and
certification requirements for placement on the Federal Housing
Administration (FHA) Appraiser Roster. The changes in
eligibility requirements are effective June 16, 2003.
This Mortgagee Letter provides a synopsis of the final rule and
updates the requirements contained in Mortgagee Letter 99-35 and
the appraisal reporting requirements, describe in HUD Handbook
4150.2 CHG1. In addition, the Mortgagee Letter provides specific
guidance to assist mortgagees and appraisers in complying with
these new requirements. The Department urges mortgagees and
appraisers to review the entire published final rule at website
http://www.gpoaccess.gov/fr/index.html.
Highlights of Final Rule
The final rule provides: a) twelve-month phase-in of Appraiser
Qualifications Board (AQB) requirements for appraisers listed on
the appraiser roster, b) automatic suspension of appraisers
licensed or certified in multiple states, c) clarification of
scope of automatic suspensions not due to State disciplinary
action.
Twelve-month Phase-in of AQB Requirements for Appraisers Listed
on the Appraiser Roster
An appraiser who is included on the Appraiser Roster on June 16,
2003, but does
not meet the minimum AQB licensing/certification criteria in
effect on that date, has until
June 16, 2004 to comply with the AQB criteria and submit evidence
of compliance to HUD. Failure to submit such evidence to HUD by
the deadline date constitutes cause for removal
from the FHA Appraiser Roster. The phase-in period does not
restrict HUD's ability to remove an unsatisfactory appraiser from
the Appraiser Roster for any other cause identified in
-2-
24 CFR 200.204.
Automatic Suspension of Appraisers Licensed or Certified in
Multiple States
An appraiser, whose license or certification in any state has
been revoked, suspended or surrendered as a result of a state
disciplinary action, will be automatically removed from the
Appraiser Roster. This removal will remain in effect until HUD
receives evidence demonstrating that the state-imposed sanction
has been lifted.
Clarification of Scope of Automatic Suspensions not due to State
Disciplinary Action
An appraiser whose licensing or certification in a state has
expired is automatically removed from the Appraiser Roster in
that state and may not conduct FHA appraisals in that state.
This removal will remain in effect until HUD receives evidence of
the appraiser license with certification renewal. The appraiser
may continue to perform FHA appraisals in other states in which
the appraiser is licensed or certified.
Reasons for Removal from the Appraiser Roster
Reasons for removal from the Appraiser Roster include, but are
not limited to:
* Significant deficiencies in appraisals, including
non-compliance with Civil Rights requirements regarding
appraisals;
* Losing standing as a state-certified or state-licensed
appraiser due to disciplinary action in any state in which the
appraiser is certified or licensed;
* Prosecution for committing, attempting to commit, or conspiring
to commit fraud, misrepresentation, or any other offense that may
reflect on the appraiser's character or integrity;
* Failure to perform appraisal functions in accordance with
instructions and standards issued by HUD;
* Failure to comply with any agreement made between the appraiser
and HUD or with any certification made by the appraiser;
* Being issued a final debarment, suspension, or limited denial
of participation;
* Failure to maintain eligibility requirements for placement on
the Appraiser Roster; or,
* Failure to comply with HUD-imposed education requirements or
failure to comply with such education requirements.
Eligibility Requirements for Placement on the FHA Appraiser
Roster - Current and New Applicants
To be eligible for placement on the FHA Roster of Appraisers an
appraiser must:
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* Be a state-licensed or state-certified appraiser with
credentials based on the minimum licensing/certification criteria
issued by the Appraiser Qualifications Board (AQB) of the
Appraisal Foundation. An appraiser is not deemed to have
credentials based on AQB standards if the state
licensing/certification requirements did not conform to AQB
criteria
at the time the appraiser obtained the license or certification.
This is true even if the state
* has subsequently adopted AQB criteria and has "grandfathered"
previously licensed or certified appraisers (see attachment 1);
* Pass a HUD examination on FHA appraisal methods and reporting;
and
* Not be listed on the GSA Suspension and Debarment List, HUD's
Limited Denial of Participation List (LDP), or HUD's Credit Alert
Interactive Voice Response System (CAIVRS).
Procedure to Obtain Placement on FHA Appraiser Roster - New
Applicants
Appraisers that are not currently on the FHA Roster of Appraisers
must apply to Office of Single Family Housing at the address
listed below. The following information must be submitted:
* A completed Form HUD-92563, "Fee or Roster Designation -
Application for Fee Personnel Designation" (Form HUD-92563);
* A photocopy of a valid State appraiser's license or
certification with credentials based on the minimum criteria
issued by the AQB; and
* A certification from Prometric, the entity providing the test,
to evidence that they passed the FHA appraisal examination.
Prometric's registration number is 1-800-503-8991.
Procedures to Submit Evidence of AQB Compliance.
As required by the Appraiser Roster Rule an appraiser who is
currently listed on the Appraiser Roster as of June 16, 2003, but
does not meet the minimum Appraiser Qualifications Board (AQB)
licensing/certification criteria listed on the Attachment, has
until June 16, 2004, to comply with the AQB criteria. This
evidence of compliance must be submitted to HUD at the address
listed below. Failure to submit such evidence to HUD by the
deadline date constitutes cause for removal from the Appraiser
Roster. The phase-in period does not restrict HUD's ability to
remove an unsatisfactory appraiser from the Appraiser Roster for
any other cause identified in § 200.204.
HUD address for Appraiser Requesting Placement on the FHA
Appraiser Roster, or submitting evidence of AQB Compliance is:
Department of Housing and Urban Development
Office of Single Family Housing
451 7th Street, SW, Suite 9278
Attn: Appraisal Branch
Washington, DC 20410
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Fax Number: (202) 401-0416
Telephone Number: (202) 708-2121
Appraisal Reporting Requirements Superceding of Paragraph 16 in
Mortgagee Letter 2003-07
Effective January 1, 2003, the Uniformed Standards Professional
Appraiser Practice (USPAP), modified Standards Rule 1-5 to
require appraisers to analyze all prior sales of the subject
property within the past three (3) years for all types of real
property (including one-to-four family), if such information is
available in the normal course of business. The Uniform
Residential Appraisal Report (URAR -1004) contains a field for
reporting prior sales within one year of appraisal, which also
includes comparable sales. Therefore, FHA appraisers are now
required to report and analyze:
* All sales of the subject property that occurred within three
(3) years prior to the effective date of the appraisal; and
* All sales of the comparable properties that occurred within one
(1) year prior to the effective date of the appraisal.
Consequently, HUD Handbook 4150.2 CHG-1 Appendix D, Section 6,
page D-17 in the Field and Protocol referring to "Date, Price and
Data for Sales Within One Year of Appraisal" is amended to read
as follows:
Field
Protocol
Date, Price and Data for Prior Sales Within Three Years of Appraisal
This is in accordance with USPAP Standards, which require the appraiser to consider, analyze and report any prior sales of the subject property within three years of the date of the appraisal. For comparable sales, the time period is one year of the date of the appraisal.
The above changes also supercede the reporting requirements
noted in Mortgagee Letter
2003-07, Prohibition of Property Flipping, section titled Date of
Property Acquisition Determined by the Appraiser.
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If you have any questions concerning this Mortgagee Letter,
please contact your local Homeownership Center in Atlanta (888)
696-4687, Denver (800) 543-9378, Philadelphia
(800) 440-8647, or Santa Ana (888) 827-5605.
Sincerely,
John C. Weicher
Assistant Secretary for Housing-
Federal Housing Commissioner
Attachment
Attachment
AQB Requirements as of January 1, 2003
States are required to implement appraiser certification
requirements that are no less stringent than those issued by the
AQB in the Real Property Appraiser Qualification Criteria.
Currently, the AQB lists three Real Property Appraiser
classifications. They are as follows:
Licensed Real Property Appraiser
Certified Residential Real Property Appraiser
Certified General Real Property Appraiser
The following chart specifies the qualification criteria mandated
by the AQB for each recognized licensure/certification type as of
June 2003:
Level of
Licensure/
Certification
Uniform State Licensed Real
Property
Appraiser
Exam
Number of
Classroom
Hours
Required 1
Number of
Experience
Hours
Required
Continuing
Education
Hours
Required 2
Licensed Real
Property Appraiser
Yes
90
2,000
14
Certified Residential
Real Property Appraiser
Yes
120
2,500
14
Certified General Real
Property Appraiser
Yes
180
3,000
14
1. Credit toward classroom hour requirement may only be granted
for subjects related to real estate appraisal where the length of
the educational offering is at least 15 hours, and the individual
successfully completes an examination pertinent to that
educational offering. Fifteen of the total hours in each
classification must be relative to the Uniform Standards of
Professional Appraisal Practice (USPAP).
2. Classroom hours of instruction in courses or seminars for
each year during the period preceding renewal.
Note: The authority to develop requirements for the License and
Trainee classifications is vested in the individual states, territories and possessions."
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(This is just like all the other regulations that are already in effect. This, too, will not be enforced.)
But it looks great in print.
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