Creator of Freddie Mac’s Home Possible goes to FHA ( The Creator of Housing Blue Print bubble???)

Hot Air ^ | March 24, 2009 | Ed Morrissey

[Liz]

Husband And Wife Plead Guilty To Massive Florida Straw Buyer Scheme ("God's children" living the American Dream (/sarc)

Staff Reporter, 06/02/08

Juan and Rachael Torrens pled guilty to conspiracy charges in connection with their participation in a recent multi-million dollar mortgage fraud scheme in South Florida. The defendants acknowledged as part of their guilty plea that their scheme produced over $15,000,000 in fraudulent loans, and resulted in losses of over $5,000,000 to various lenders. With Juan and Rachael Torrens‘ guilty pleas, 15 of the original 31 defendants charged have pled guilty.

As previously reported by Mortgage Fraud Blog, defendants Juan Torrens, the de facto owner of Amsouth Trust & Investment Corp. (”Amsouth”) and president of Countryside Land & Development, Inc., Rachael Torrens, president of 1st Choice Realty of South Florida, Inc. and de facto owner of First United Mortgage USA Corp., Daniel Ramos, Alfonso A. Muxo, a State of Florida certified real estate appraiser and owner of Palm Bay Real Estate Appraisals, Inc., and Katherine Harris, former president and part owner of Floridian Home Title Corporation, were charged with conspiracy to commit wire fraud and/or wire fraud for their participation in this massive mortgage fraud scheme.

The scheme involved fraudulent mortgage loans obtained for the purchase of 28 properties located in Miami-Dade and Broward Counties, Florida, and in the City of Marco Island. All except Katherine Harris have already pled guilty, and are awaiting sentence.

The Indictment also charges defendants Mario E. Diaz, Aurelio Pozo, Oscar Barreiro, Lellany Rordriguez, Jose Asensi, Carlos Morales, Damaris Jimenez, Lizabeth Perez, Mario Blanco, Rene Rodriguez, Tamaris Angulo, Alicia Loaiza, Ester Crespo, Jesus Enrique Guevara, Janette Lugo, Priscilla Fleitas, Erick Clavijo, Luis DeJesus Planas, Moises Llorens, Milva Roque, Aurora Ramentol, Gladys Lens, Nancy Fundora, Yanny Cruz Pavon, Roger Rosario and Jacqueline Perez-Castillo ("the straw buyer defendants") with wire fraud for their participation in this mortgage fraud scheme. To date, guilty pleas have been entered by defendants Aurelio Pozo, Oscar Barreiro, Carlos Morales, Damaris Jimenez, Mario Blanco, Jesus Enrique Guevara, Janette Lugo, Priscilla Fleitas, Moises Llorens, Gladys Lens, and Roger Rosario.

According to the Indictment, Juan Torrens would identify sellers of residential properties who were willing to overstate the true selling price of their properties. Daniel Ramos and Juan Torrens would then recruit and pay the straw buyer defendants to pose as buyers and ostensibly participate in the purchase of the selected properties. Defendants Rachael Torrens and Juan Torrens would prepare fraudulent mortgage loan applications for the straw purchasers that included false employment verifications, pay stubs, income and funds on deposit, and IRS Forms W-2.

Thereafter, to support the overstated sales prices on the properties and the fraudulent mortgage applications, defendant Alonso A. Muxo would prepare fraudulent appraisals attesting to the inflated property values dictated by Juan Torrens. Roger Rosario, an employee of Regions Bank, assisted the fraud by providing, on at least one occasion, a fraudulent verification of deposit in connection with a mortgage loan application for one of the straw buyer defendants.

To effectuate the scheme, defendants Juan Torrens and Rachael Torrens, together with the straw buyer defendants, would create and submit to the banks and lending institutions HUD-Settlement Statement Forms, also known as HUD-1s, which falsely stated that the straw buyers brought their own funds to the closings. Once the mortgage applications were approved, the lenders would wire the loan proceeds to the title company, Floridian Home Title, for closing. At closing, Amsouth, a company owned and controlled by Juan Torrens, would receive a credit for the difference between the inflated price and the actual selling price of the property. Defendants Juan and Rachael Torrens would make the payments on the mortgage loans to maintain the loans afloat until the properties could be resold again, often to another straw buyer.

When the Torrenses failed to make payments on the loans, some properties went into foreclosure, resulting in substantial losses to the lending institutions.

http://www.mortgagefraudblog.com/index.php/weblog/comments/husband_and_wife_plead_guilty_to_massive_florida_straw_buyer_scheme/

[SunkenCiv]

Thanks Ernest!

Yesterday, the Obama administration announced the appointment of David Stevens to run the Federal Housing Administration (FHA). The appointment got little attention from the media, but his Senate confirmation hearing might prove more interesting. Stevens will have to explain his work for Freddie Mac in the years when the mortgage giant fueled a lending frenzy, mostly through Stevens' own work on a program called Home Possible. Stevens' experience at Freddie Mac should prove instructive. The Home Possible program that Stevens launched practically gives a blueprint for the housing-bubble collapse and the government's role in it...

[Liz]

Only God knows what hidden land mines and other financial disasters the Clintoons, Gorelick, Raines, Pelosi, Reid, Kennedy, Kerry, Dodd and the rest of the rat-pack have inserted, timed to explode in the future.

RAINING MONEY - Franklin Raines fired for cooking the books---walks away w/ $90 million tax dollars

Proving you can fool most of the people most of the time until you get caught, Franklin Raines (seen here with Clinton), who reigned for 5 years following Clinton's appointing him as CEO of Fannie Mae, the US' quasi-governmental mortgage house, has been ousted.

There are several ongoing investigations of Fannie Mae's operations and accounting practices under Raines covering the last 5 years in order to determine when accounting irregularities started and the magnitude of the financial shortfalls. Current estimates indicate that there was a $9 billion misstatement of earnings and accounting irregularities between 2000-2004.

Former chief executive Franklin Raines received more than $40 million in bonuses and other pay as a result of falsely inflated earnings at the US' largest mortgage finance company.

This is according to a supplement of a lawsuit filed by Ohio Attorney General Jim Petro. Fannie Mae added "tens of millions of false revenue" to meet "Raines' 1999 publicly announced goal to double" earnings over the next five years, Petro's November 23, US District Court in Washington alleges.

The filing alleges that, "Raines personally profited by over $40 million by this false earnings history.

Update -- 2/22/2006: Former Senator Warren Rudman's team of investigators and auditors from his law firm, Paul, Weiss, Rifkind, Wharton & Garrison, and from Huron Consulting Group presented their 600-page report calling Fannie Mae's accounting systems "grossly inadequate." It is based on a review of millions of documents.

The report found that accounting obfuscations were intended to increase stock valuations, thus increasing executive bonuses.

Raines was one of the most influential and politically savvy figures in Washington is identified by the Rudman investigation as not directly knowing that Fannie Mae's accounting practices violated rules. The report does state, "We did find, however, that Raines contributed to a culture that improperly stressed stable earnings growth and that... he was ultimately responsible for the failures that occurred on his watch".

Raines will continue to live well ad infinitum.

--- Raines and his wife will pocket $114,393 a month as long as they live. -- Stock options: Raines holds vested stock options worth roughly $5.7 million. -- Stock bonuses: Raines was granted awards, payable in stock, for reaching performance goals. Under the program, he got 69,577 shares... half of what Fannie determined he should receive in January. At Monday's close (circa 2006), the shares are worth $4.9 million. It is unclear if he will receive the rest.

-- Deferred pay: For tax planning while employed by the company, Raines was allowed to put off the receipt of payment. These deferred past payments total $8.7 million --

-- Future salary: Although Fannie Mae says Raines' retirement was effective December 21, 2004, he is seeking to have it effective as of June 22, 2005, to extort $600,000 more in pay.

WALL STREET RAINES Mr. Raines followed a well-worn path in the United States during the later half of the 20th century. His humble beginnings were in Seattle. He won a scholarship to Harvard and was a Rhodes Scholar at Oxford. He worked on Wall Street for over a decade in the prestigious firm Lazard Freres. He was a member of President Clinton’s cabinet and director of his Office of Management and Budget. In 1999, Clinton selected him for the position of Fannie Mae CEO.

Following revelations of the financial scandal, Mr. Raines took early retirement from Fannie Mae so that he could collect a compensation package including $1 million per year for life and $11 million in vested stock. In 2003 Mr. Raines was paid $20 million in salary and bonus.

Fannie Mae is facing criminal investigations by the Justice Department, operational investigations by the SEC, and various Congressional investigations. There are questions regarding earnings statements being incorrectly inflated. In 2003, if derivative and other losses had been included, no bonuses would have been paid to top executives. However, deferral of the losses allowed declared earnings to reach a level which triggered maximum executive bonuses.

It is a far stretch to imagine that Franklin Raines actually was capable of satisfying the requirements of the positions he held from Harvard to Director of the White House Office of Management and Budget. If he had been competent enough to hold those positions, how could he have been Fannie Mae's CEO for 5 years and allowed, facilitated, and feigned ignorance that $9,000,000,000 was being mishandled?

[MeekOneGOP]

Yes’m.

Mah pleasure! :)

[ntnychik]

Thanks for the ping. We need the conservative talk show hosts screaming about this one.

[Ernest_at_the_Beach]

Hope you are feeling better today!

[Ernest_at_the_Beach]

Thanks for the comments and adding material to the thread....am watching for more info but things are quiet at the moment....

Tried watching the Baarney Frank/ Geithner hearings this morning...CNBC had more coverage than others but lots of cut aways...

Sounds like FDIC would be the preferred BIG regulator...

U.S. FDIC would run seized non-bank firms-Treasury

***********************EXCERPT**********************

Under the proposal, the Treasury would build on the FDIC's existing authority to seize banks and thrifts, but a decision to seize control of a non-bank institution would require involvement of the Treasury Secretary, the Federal Reserve and be done in consultation with the U.S. president.

**********************************

Don't know where FHA would fit in here....

[Ernest_at_the_Beach]

The Federal Deposit Insurance Corporation (FDIC) is a United States government corporation created by the Glass-Steagall Act of 1933. It provides deposit insurance, which guarantees the safety of deposits in member banks, currently up to $250,000 per depositor per bank. Funds in non-interest bearing transaction accounts are fully insured, with no limit, under the temporary Transaction Account Guarantee Program. However, not all banks are participating in the TLGP/TAGP.

On January 1, 2010[10], the standard coverage limit will return to $100,000 for all deposit categories except IRAs and Certain Retirement Accounts, which will continue to be insured up to $250,000 per owner.

Insured deposits are backed by the full faith and credit of the United States.^[2]

[Ernest_at_the_Beach]

The Federal Housing Administration (FHA)

**********************************EXCERPT************************

What is the Federal Housing Administration?

The Federal Housing Administration, generally known as "FHA", provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories. FHA insures mortgages on single family and multifamily homes including manufactured homes and hospitals. It is the largest insurer of mortgages in the world, insuring over 34 million properties since its inception in 1934.

What is FHA Mortgage Insurance?

FHA mortgage insurance provides lenders with protection against losses as the result of homeowners defaulting on their mortgage loans. The lenders bear less risk because FHA will pay a claim to the lender in the event of a homeowner's default. Loans must meet certain requirements established by FHA to qualify for insurance.

[rockinqsranch]

Thanks for the ping Ernest....

Appears the most important email, fax, phone call message to our leaders of interest would include something along the lines of “GRAB THEIR SHOVELS”. “Make them stop digging”. “The hole’s deeper than it should be now” as example.

This misAdministration, or as the sign should read “Children at Play” is causing one “H” of a Constitutional mess that will require serious adult attention in the future.

[Marine_Uncle]

Yet another pandora box opened for more scams to be generated.
Acorn will probably have field day with this one.