Monthly mortgage summary, May 2008

NDFI

MONTHLY MORTGAGE SUMMARY

May 2008
Georgia Department of Banking & Finance-- Non Depository Financial Institutions Division MonthlMyoSnutmhlmyaSruymomf aMroyrotfgaMgoertAgcatgieviAticetsivfiotiretshfeorPethrieodPeErnioddinEgnMdianyg 2A0p0r8il 2007

Inside this issue:

Page 1

NEWS ITEMS
NEWS

FinCEN: RE & Money Laundering

1

Renewals & 2
License Distribution

Records Disposal

2

Fraud Prevention

3

Customer Service 5

ADMINISTRATIVE ITEMS

Administrative Actions

6-7

Fines

8

Licenses Revoked, 9Expired...Denied 10

Licenses Approved & Reinstated

10

Useful Links MORTGAGE FORMS: DBF.GEORGIA.GOV/
DBFMTGFORMS
UPDATING LICENSE INFORMATION
DBF.GEORGIA.GOV/
DBFMTGFORMS
MORTGAGE SUMMARY DBF.GEORGIA.GOV/
DBFMTGSUMMARY

FinCEN News
FinCEN Report Warns of Money Laundering Methods and Trends in
Residential Real Estate Industry
(May 1, 2008)
The Financial Crimes Enforcement Network (FinCEN) released the latest in a series of reports, which are based upon analysis of suspicious activity reports (SARs) provided by the financial industry. That report, Suspected Money Laundering in the Residential Real Estate Industry: An Assessment Based Upon Suspicious Activity Report Filing Analysis, identifies several transactional typologies and associated illicit activities that may be perpetrated by individuals or groups seeking to launder funds via residential property transactions.
This study confirms an increase in the number of SARs indicating suspected money laundering in the industry which tracks closely with the past expansion of the real estate market, especially in the 2004-2005 period. Previous FinCEN studies concerning Mortgage Loan Fraud and Money Laundering in the Commercial Real Estate Industry confirmed similar trends. However, in contrast to criminals seeking to profit by committing mortgage fraud, those who seek to launder money through residential real estate generally intend to make timely payments and seek to make their transactions appear as unremarkable as possible in order to disguise the source of their funds.

into the use or ownership of real property assets. For example, a criminal may use illicit funds to outright purchase or to make monthly rental payments on real property. Internationally, these laundering techniques are well known and have been described in the Egmont Group publication, FIU's [Financial Intelligence Units] in Action, 100 cases from the Egmont Group, and are often referred to in various reports on methods and typologies published by the Financial Action Task Force (FATF). FinCEN's report shows that U.S. financial institutions have been able to identify some possible instances of money laundering through residential real estate. The report is intended to help raise awareness of the vulnerability and assist financial institutions to better recognize risk and thus provide better information to law enforcement in order to combat criminal activity.
Significantly, as the report describes, more than 75 percent of reported suspects had no professional relationship with the residential real estate industry and any reported collusion with various real estate or construction professionals was somewhat rare. Money launderers were found to use many techniques, including: structuring large transactions into smaller amounts in order to evade detection; using "straw buyers" to front for the true purchaser; and fraudulent documentation. In some cases, laundering money through residential real estate was found to support tax evasion, fraud and identity theft.

Laundering money through residential real estate involves turning the proceeds of crime

Page 2

May 2008

News--Continued

FY 2009 Renewals
The on-line renewal system is still available through June 30, 2008. Late renewal fines of $300 will be reflected in your renewal record for those filing late and will be paid with your renewal fee, and for broker/processor licensees who failed to obtain Continuing Education credits prior to April 1, a notice will be given that the $1,000 fine will also be assessed as your record is reviewed. Should any additional information be required for any license renewal, the licensee will be con- tacted by e-mail. Make certain your delivery e-mail address is correct. Corrections can be made at:
https://bkgfin.dbf.state.ga.us/MortgageDocs/ MBContactChng.html
FY 2009 License Distribution
For those licensees who have successfully completed the submission of their renewal applications for licensing for FY2009, please note that new licenses for the year are being sent out by e-mail. The distribution began June 2 and will continue through the end of the month. If you do not receive your new license by the end of June (assuming you timely filed for renewal), contact the office.
Brokers please note that if your lenders EVER need to check the status of your license, it can be found on the Web at: http://dbf.georgia.gov/dbfmtg under the selection Mortgage Licensee Search Page. This is the official listing regarding license status.
To check your renewal status: Go to http://dbf.state.ga/dbfmtg and click on the Pending Applications & Renewal Status Lookup link.

Record Disposal Requirements Under the Business Administration Act
O.C.G.A. 10-15-1 et seq.
(Due to the number of licensees who have made a business decision to withdraw from the mortgage business, and noting the serious issues which often arise when customer records are not properly secured, handled, and subsequently disposed of, the State's legislation related to proper disposition of records under the State's Business Administration Act bear repeating.)
The Governor's Office of Consumer Affairs reminds regulated entities about Georgia's Business Administration Act (BAA), which regulates the proper disposal of business records that contain the following: sensitive information about a customer's medical condition; certain financial data relating to a customer's account or transaction with a business; data provided by a customer to a business upon opening an account or applying for a loan or credit; and data about a customer's federal, state, or local tax return. According to the BAA, once such records are no longer needed, a business must do one of the following before discarding them:
Shred the record;
Erase the personal information contained in the record;
Modify the record so that the personal information is unreadable; or
Take actions that will ensure that no unauthorized person will have access to the personal information contained in the records.
Improper disposal of records containing personal information may result in a fine of $500 per record, up to $10,000.
Licensees are reminded that Department Regulation 8011-2-.01 Location Requirement and Minimum Retention Period, Paragraph (4), requires maintenance of certain books and records for a period of five (5) years, and this maintenance requirement exists even if a licensee has ceased doing business. Once the required time period has elapsed, the records then need to be properly disposed of according to the procedures delineated in Georgia's Business Administration Act (BAA) noted above.

May 2008

Page 3

News--Continued

Fraud Prevention
This publication continues with excerpts from Freddie Mac's publication "Discover Gold Through Quality--Fraud Prevention Best Practices", an educational booklet to provide members of the industry with assistance in avoiding and preventing mortgage fraud. This booklet provides guidelines for licensees and their employees to assist in the prevention, detection and resolution of mortgage fraud in business operations. "Preventing Fraud" was published in last month's edition of the Monthly Mortgage Summary available on the Department's website. In addition, you may download the entire publication from Freddie Mac's website at: http://www.freddiemac.com/dgtq/pdf/fr.pdf

seller on the contract and title documents on a purchase, and match the borrower on the loan application and title documents on a refinance. If the property seller/borrower is not the owner of record, the loan needs to be investigated to ensure the circumstances of the transaction are legitimate.
Unusual HUD-1 Payouts
Payouts may be made to unknown entities, often the ones profiting from the scheme. Payouts might also be made to cover phantom liens, repair allocations, referral fees, and non-lien disbursements.
A Mortgage Screening Checklist with a list of HUD-1 related red flags, is contained in Chapter 2 of the booklet.

DETECTING AND INVESTIGATING FRAUD
Common Fraud Elements
The following are descriptions of common fraud elements. It is not meant to be all inclusive. There are certainly more types of fraud than described in this section, and there will be new types of schemes that emerge. Keep in mind that many of these schemes contain several of the same elements, or may be referred to by a different name, so it can be difficult to distinguish between, or even keep track of the latest schemes.
Some common fraud elements typically found in many fraud schemes include:

Identify Theft
Identify theft is frequently used to impersonate realtors, loan officers, appraisers, borrowers and others in the mortgage industry. One or more parties in the transaction may be using a false identity. Forgeries often rely on participation of a notary.
A list of some of the following red flags may occur when identity theft is perpetrated in the transaction:
Borrower lives out of the area and does not appear on credit report to have any tie to the area in which property is located
Payments on the loan are not remitted from the borrower

Inflated Appraisals
Inflated appraisals are appraisals with fabricated or altered values and supporting information. The comparables used in the appraisal are often not valid comparables and may also contain false values and information. A list of appraisal-related red flags that may occur when inflated appraisals are being used in the transaction is contained in Chapter 2 of the booklet.

The borrower did not attend closing and there was a use of a Power of Attorney
Social Security number has not been issued
The number of years employed is greater than the issue date of the SSN
Borrower name not associated with SSN

Loan-level Misrepresentations
Misrepresentations in files may include fabricated or altered employment, income and asset documentation. There may be undisclosed mortgage debts on the application if the borrower is applying for multiple loans at the same time. Sources of funds to close may be misrepresented, or provided to the borrower by the person "orchestrating" the fraud scheme. The borrower's occupancy intent may also be false.

Straw Borrowers
A straw borrower is an individual whose personal profile is used to serve as a cover for a transaction. They are sometimes referred to as a nominee borrower or straw buyer. Straw borrowers are chosen for their ability to qualify for the loan. Straws can be willing participants in the transaction, or victims whose identity is being used unbeknownst to them (identity theft). Straw borrowers can cause loans to be approved that would ordinarily be declined.

Rapid Transfers of Title The owner of record should be consistent with the property

(Continued on page 4)

Page 4

May 2008

News--Continued
("Fraud Prevention" Continued from page 3)
For example, the actual borrower may NOT: Qualify for the mortgage Intend to occupy the property as a primary residence Be eligible for a loan program Exist

With affinity fraud, there is an immediate level of trust within the group. Some members may have invested and made high returns, becoming advocates for the scheme. Loyalty to the group may deter members from reporting schemes or monetary losses to authorities.
Next month this column will look at "Detecting and Investigating Fraud--Common Fraud Schemes"
(Reprinted with permission of the Federal Home Loan Mortgage Corporation)

Some of the following red flags may occur when a straw borrower is used in the transaction:
A quit claim deed is used either right before, or soon after, loan closing Investment property is represented as owner-occupied Someone signed on the borrower's behalf or use of a Power of Attorney Names were added to the purchase contract Purchase contract addenda adjusts the price Purchase contract or HUD-1 contains references to secondary financing Sale involves a relative or related party No sales agent is involved There is an indication of default by the property seller High FICO score Good assets, but gift used as down payment Sources of funds are questionable Repository alerts on credit report Post closing payments are remitted by a party other than the borrower

Affinity Fraud
Affinity fraud exploits the trust and friendship that exist in groups of people who have something in common. The fraudsters who promote affinity scams frequently are--or pretend to be--members of the group, often preying on their own community of friends, family and co-workers. Affinity fraud has been found in many different types of groups such as religious, military, ethnic, professional, workplace, elderly and
fitness/gym. Investment property schemes often take root from affinity groups.

SPEAKING ENGAGEMENTS There are no upcoming speaking engagements for
June, 2008.
HOLIDAY CLOSING There are no holiday closings in June. The office will be
closed Friday, July 4th, 2008 for Independence Day.

May 2008

Page 5

DBF's Customer Service Stars for the Month of May

It is the Department's goal to provide excellent customer service, meeting and exceeding the expectations of our customers. Along those lines, we would like to recognize the following individuals or groups for going above and beyond in serving our customers:
Assistant Review Examiner Deborah Long (NDFI Division): The Department received comments from two different customers stating: "Ms. Deborah Long was very responsive and thoroughly answered all of my questions! She made the process much easier and much less time consuming than I thought it would be." and "I really appreciated working with Deborah Long. She has a great attitude and replied quickly to my questions and concerns. Thanks Deborah."

The Department is the state agency that regulates and examines banks, credit unions, and trust companies chartered by the State. The Department also has regulatory and/or licensing authority over mortgage brokers, lenders, and processors, money service businesses, international banking organizations, and bank holding companies conducting business in Georgia.
Our MISSION is to promote safe, sound, competitive financial services in Georgia through innovative, responsive regulation and supervision.
Our VISION is to be the best financial services industry regulator in the country Progressive. Proactive. Service-Oriented.
CONGRATULATIONS AND GREAT JOB TO THIS MONTH'S CUSTOMER SERVICE STARS!!

Page 6

May 2008

Administrative Actions

CEASE AND DESIST ORDERS--ISSUED & FINAL

Advisors of Southern Lending, LLC, Suwanee, GA (license no. 21113) Cease and Desist Order issued April 29, 2008 became final on May 29, 2008.
Amber Financial Group, LLC aka Amber Mortgage, San Diego, CA (license no. 22269) Cease and Desist Order issued April 1, 2008 became final on May 1, 2008.
Blue Chip Mortgage Wholesale, LLC, Lantana, FL (license no. 21249) Cease and Desist Order issued May 1, 2008 became final on May 31, 2008.
Brown, Chris, Lithonia, GA Cease and Desist Order issued November 21, 2006 became final on May 30, 2008.
Christopher E. Hobson, Inc. aka Franklin Financial, Corona Del Mar, CA (license no. 13628) Cease and Desist Order issued April 4, 2008 became final on May 7, 2008.
CNB Enterprises, Inc., Ladera Ranch, CA (license no. 22779) Cease and Desist Order issued April 22, 2008 became final on May 24, 2008.
Cubias, Alvaro E., Lawrenceville, GA Cease and Desist Order issued February 10, 2006 became final on May 5, 2008.
Cubias, Manuel, Lilburn, GA Cease and Desist Order issued February 10, 2006 became final May 5, 2008.
Dezard Financial Group, LLC, Augusta, GA (license no. 22654) Cease and Desist Order issued April 29, 2008 became final on May 29, 2008.
DMA Mortgage,LLC, Columbus, GA (license no. 21590) Cease and Desist Order issued April 17, 2008 became final on May 17, 2008.
Elizabeth Ann Forrester, Suwanee, GA (license no. 18221) Cease and Desist Order issued April 15, 2008 became final on May 17, 2008.
Fremont Investment & Loan, Brea, CA (license no. 13367) Cease and Desist Order issued April 8, 2008 became final on May 8, 2008.
Hernandez, Roberto, Lawrenceville, GA Cease and Desist Order issued February 10, 2006 became final on May 5, 2008.
HomeBanc Corp., Atlanta, GA (license no. 19488) Cease and Desist Order issued April 21, 2008 became final on May 21, 2008.
HomeBanc Mortgage Corporation, Atlanta, GA (license no. 15622) Cease and Desist Order issued April 21, 2008 became final on May 21, 2008.
Le, Katherine, Houston, TX Cease and Desist Order issued April 15, 2008 became final on May 6, 2008.

May 2008
Administrative Actions
CEASE AND DESIST ORDERS--ISSUED & FINAL

Page 7

Moka Financial, Inc., East Point, GA Cease and Desist Order issued April 23, 2008 became final on May 24, 2008.
Monterrosa, Erik, Lawrenceville, GA Cease and Desist Order issued February 10, 2006 became final on May 5, 2008.
Mortgagepointer.com, Inc., San Mateo, CA (license no. 22073) Cease and Desist Order issued April 29, 2008 became final on May 29, 2008.
Mountain Range Funding, LLC, Westminster, CO (license no. 22346) Cease and Desist Order issued April 29, 2008 became final on May 31, 2008.
North American Real Estate Services, Inc. aka Pacific Bancorp, Coral Springs, FL (license no. 18601) Cease and Desist Order issued April 29, 2008 became final on May 29, 2008.
Sauceda, Alejandro (Alex), Lilburn, GA Cease and Desist Order issued February 10, 2006 became final on May 5, 2008.
Set2Go Loans, Inc., Irvine, CA (license no. 21220) Cease and Desist Order issued April 21, 2008 became final on May 21, 2008.

CEASE AND DESIST ORDERS--LIFTED
HouseTech, Inc., El Segundo, CA (license no. 21564) Cease and Desist Order issued March 28, 2008 was rescinded on May 2, 2008

FINAL CONSENT ORDERS ISSUED
Cole Realty and Lending, Inc, Laguna Beach, CA (license no. 22855) Consent Order issued on May 5, 2008 became final on May 5, 2008. Total Mortgage Solutions, LLC, and Tanya Biggers, Canton, GA (license no. 19249) Consent Order issued on May 8, 2008 became final on May 8, 2008.

Page 8
Administrative Actions

May 2008

SUPERIOR COURT INJUCTIONS ISSUED

Melvin, Kwana-- Superior Court Injunction issued May 20, 2008 became final on May 20, 2008.

FINE INFORMATION

Information regarding fines assessed against a specific licensee, against whom there are no pending administrative actions, is available on an individual licensee basis by submitting a written request to the following e-mail address: dbfmort@dbf.state.ga.us

FINE REASON

8 Licensees fined for Advertising Violations 2 Licensees fined for Prohibited Acts 1 Licensee fined for Loan Files Not Properly Maintained 2 Licensees fined for Late Renewal Filing 1 Licensee fined for Failure to Report Violations/Discharges 2 Licensees fined for 1099 Employees 11 Licensees fined for Continuing Education Obtained Late 1 Licensee fined for NSF Checks

2 Licensees fined for Background Check Violations 3 Licensees fined for Books & Records Violations 1 Licensee fined for Unapproved Branch Manager 1 Licensee fined for GAFLA Violation 1 Licensee fined for Employment of a Felon 1 Licensee fined for Failure to Respond to a Consumer Complaint 2 Licensees fined for Employee Under C&D or Revocation

May 2008

Page 9

LICENSEES/REGISTRANTS REVOKED, EXPIRED, SURRENDERED, WITHDRAWN OR DENIED

ID# 5621 5870 5910 5986 11752 13367 13628 14415 15622 16308 16686 17314 17413 17813 18066 18221 18601 18936 19249 19329 19478 19488 19716 19796 19997 20943 21113
21220 21249
21456 21590 21640 22073 22145

NAME USMONEY SOURCE INC MASTER MTG CORP FUTURE FUNDING INC UNITED SVC FINL CORP FOCAL POINT FINL CORP FREMONT INV & LOAN C E HOBSON INC PINNACLE MTG CORP HOMEBANC MTG CORP SMS MTG SVCS INC ALL ACCESS MTG CORP UNITED CAP INC BALLPARK MTG INC EQUIPRIME MTG CO RIDGE MTG SVCS INC FORRESTER, ELIZABETH A. N AMER RE SVCS INC EMBASSY MTG INC TOTAL MTG SOLUTIONS,LLC 1ST CLASS MTG SVCS LLC LIFE CHOICE MTG INC HOMEBANC CORP PHM FINL INC CITYWIDE GRP (INC) GA PREMIER LENDING CORP PATRONIS ENTRPRISES INC ADVISORS SOUTHERN LENDING SET2GO LOANS INC BLUE CHIP MTG WHOLESALE GRANT CAP INC DMA MTG LLC 1ST BH MTG INC MORTGAGEPOINTERCOM INC BOLAND, DAVID CULLEN JR

22269 22282 22346 22502 22654 22779 22855

AMBER FINL GRP LLC LENDING.COM INC MT RANGE FUNDING LLC ALOHA LENDING INC DEZARD FINL GRP LLC CNB ENTERPRISES INC COLE REALTY & LENDING INC

CODE LD BD BD BD BD RD LD BD LD BD LD LD BD BD BD BD LD LD BD BD BD LD LD LD BD BD
BD
BD
LD
BD BD BD LD BD LD LD LD BD BD BD
BD

IN MAY 2008

REVOKED

EXPIRED

SURRENDERED

05-08-2008 05-07-2008
05-21-2008

05-17-2008 05-29-2008 05-08-2008
05-21-2008
05-05-2008 05-29-2008 05-21-2008 05-31-2008 05-17-2008 05-29-2008 05-01-2008 05-31-2008 05-29-2008 05-24-2008

WITHDRAWN 05-05-2008 05-20-2008 05-05-2008 05-20-2008 05-09-2008
05-29-2008 05-05-2008 05-20-2008 05-28-2008 05-30-2008 05-20-2008 05-01-2008
05-09-2008 05-30-2008 05-20-2008 05-30-2008 05-06-2008
05-30-2008
05-16-2008 05-30-2008 05-22-2008
05-07-2008 05-28-2008
05-01-2008

DENIED

Page 10

May 2008

LICENSEES/REGISTRANTS REVOKED, EXPIRED, SURRENDERED, WITHDRAWN OR DENIED

IN MAY 2008

ID#

NAME

22905 G&E MTG SOLUTIONS LLC

22931 MUTUAL W INC

23070 FIDELITY MTG SOLUTIONS IN
23087 PRUDENTIAL MTG CORP

TOTAL: 45

CODE BD BD
BD BD

REVOKED

EXPIRED

SURRENDERED

WITHDRAWN 05-09-2008 05-21-2008
05-30-2008 05-01-2008

DENIED

ID#
21412 23299 23346 23357
6385 20622
23303

LICENSEES/REGISTRANTS APPROVED OR REINSTATED IN MAY 2008

MB

ORIGINAL

COMPANY NAME
Cornerstone Mortgage Group, LLC *
B & B Funding, LLC

CITY
Atlanta Duluth

ST

CODE

APPROVAL

RENEWAL

GA

L

06-02-2006

05-02-2008

GA

B

05-02-2008

05-02-2008

Clear Summit Mortgage, Inc.

Elkridge

MD

B

05-02-2008

05-02-2008

Galin Vinasco

Duluth

GA

B

05-02-2008

05-02-2008

Providence Mortgage, Inc. +
The Prime Financial Group, Inc. (MI) +

Tucker
Bingham Farms

GA

B

06-23-1993

05-09-2008

MI

B

09-16-2005

05-09-2008

The Action Mortgage Group, LLC Tucker

GA

B

05-09-2008

05-09-2008

23355 Nationwide Funding Group Corp. Torrance

CA

L

05-09-2008

05-09-2008

23377 Willie Roberts

College Park

GA

B

05-09-2008

05-09-2008

23316 Graystone Solutions, Inc.

Sudbury

MA

L

05-16-2008

05-16-2008

23325 Sinclair Oconee Mortgage, LLC

Eatonton

GA

B

05-16-2008

05-16-2008

23341 Advantage Mortgage Group, Ltd Roanoke

VA

L

05-16-2008

05-16-2008

23345 E Mortgage Management, LLC

Haddon Township

NJ

L

05-16-2008

05-16-2008

23361 Advanced Mtg Systems, Inc.

Lexington

SC

B

05-16-2008

05-16-2008

23362 Anchor Home Mortgage, Inc.

Suwanee

GA

B

05-16-2008

05-16-2008

23372 Edwin C. Holt

Duluth

GA

B

05-16-2008

05-16-2008

23384

Advanced Process Solutions, LLC

Canton

GA

B

05-16-2008

05-16-2008

16509 Best Home Mortgages, Inc +

Suwanee

GA

B

06-01-2001

05-23-2008

22019 Smith-Myers Corporation +

Upper Marlboro

MD

B

12-08-2006

05-23-2008

23337 Oceanside Mortgage Company

Forked River

NJ

L

05-23-2008

05-23-2008

23364 Peoples Home Equity, Inc.

Nashville

TN

L

05-23-2008

05-23-2008

19100 Lenox Financial Mortgage, LLC * Atlanta

GA

L

02-20-2004

05-30-2008

20044 Sher Financial Group, Inc. * 23315 Mechanic Mortgage Group, Inc.

Towson Stuart

MD

L

02-18-2005

05-30-2008

FL

B

05-30-2008

05-30-2008

23344 Professional MTG Source, LLC

Centennial

CO

B

05-30-2008

05-30-2008

23390 Godwin Mortgage Group, Inc.

Louisville

KY

B

05-30-2008

05-30-2008

23392 Secure Capital Mortgage, LLC

Celebration

FL

B

05-30-2008

05-30-2008

21564 HouseTech, Inc.

El Segundo

CA

B

07-07-2006

04-08-2008

20639

Residential Lending Corporation of MC

CALVERTON

MD

L

08-12-2005

05-30-2008

TOTAL: 29

REINSTATED
05-02-2008 05-30-2008

May 2008

Page 11

Georgia Department of Banking and Finance
2990 Brandywine Road Suite 200
Atlanta, Georgia 30341-5565
Phone: (770) 986-1136 Fax: (770) 986-1654 or 1655
Email: dbfmort@dbf.state.ga.us

LICENSE STATUS CHANGE INDICATORS & MORTGAGE LICENSE CODES--(In Tables)

License Status Indicators

(MB CD) - Mortgage License Codes

*

Upgrade Broker to Lender

B

Broker

+

Downgrade Lender to Broker

L

Lender

We're on the Web! dbf.georgia.gov

#

Upgrade Lender to Registrant

P



Downgrade Registrant to Lender

R

Processor Registrant

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