Woman Sentenced For 11 Years For “Straw Buyer” Home Purchase Fraud Scheme

Newby-Allen conducted a mortgage fraud scheme that siphoned millions of dollars in fraudulently inflated mortgage loans being provided to unqualified straw buyers, one of whom was her husband and co-defendant, Brinson Allen.

 http://www.bizjournals.com/atlanta/stories/2008/11/10/daily21.html

Adriene Newby-Allen, 40, of Alpharetta, Ga., was sentenced late Monday to more than 11 years in federal prison for her role in a multi-million dollar mortgage fraud scheme.

Newby-Allen also must pay $5.3 million in restitution. She pleaded guilty in July 2008 shortly before trial.

From mid-2004 through March 2006, Newby-Allen conducted a mortgage fraud scheme that siphoned millions of dollars in fraudulently inflated mortgage loans being provided to unqualified straw buyers, one of whom was her husband and co-defendant, Brinson Allen. Her husband was found guilty of multiple charges relating to the scheme on July 30 by a federal jury after a 10-day trial and will be sentenced at a later date.

Newby-Allen inflated the sale prices of residential real estate and arranged for the submission of false loan applications, documents and other information to mortgage lenders to obtain loans for the unqualified straw buyers. When the loans closed, Newby-Allen and her co-conspirators received millions of dollars of the mortgage loan proceeds through Newby-Allen’s shell company, “Swiss Acquisitions,” by using misrepresentations about disbursements of the loan proceeds.

Newby-Allen personally received more than $1 million of the loan proceeds obtained in the fraudulent scheme.

Freddie Mac and Fannie Mae Loan Modifications Are Half-Hearted Attempt To Correct Mortgage Loan Abuses

It’s based on the idea that servicers “have dedicated personnel who are experienced in working with borrowers who are struggling with finances, but who are eager to keep their homes”. Not nearly enough of them, they don’t.

http://seekingalpha.com/article/105468-the-underwhelming-frannie-loan-mod-plan?source=email

The Frannie loan-mod plan has arrived, and it’s not particularly exciting. Among the more obvious problems:

• It applies only to mortgages owned by Frannie (FRE and FNM), which means, by definition, that it doesn’t include subprime mortgages. FHFA is trying to apply moral suasion — but no cash — to persuade other mortgage holders to adopt the same plan. Good luck with that.
• It doesn’t even begin to address the problem of mortgages which have been securitized, rather than being held by a single bank.
• It’s based on the idea that servicers “have dedicated personnel who are experienced in working with borrowers who are struggling with finances, but who are eager to keep their homes”. Not nearly enough of them, they don’t.
• It requires borrowers to be 90 days delinquent — and therefore gives many borrowers with mortgages over 38% of their gross monthly income a massive incentive to cease making any mortgage payments now.
• The onus is on the borrower to initiate proceedings, providing a package including “monthly gross household income, association dues and fees, and a hardship statement”. For $800 per mod, servicers aren’t going to be proactive about helping get this kind of thing done, especially given how overworked they are already.

In a quite extraordinary turn of events, FHFA director James Lockhart said in his statement that “we have drawn on the FDIC’s experience and assistance, and have greatly benefited from the FDIC’s input”, yet the FDIC’s Sheila Bair then turned around and released her own statement, saying that the plan “falls short of what is needed to achieve widescale modifications of distressed mortgages”.

Clearly this is not going to be the last word when it comes to government attempts to help stabilize the housing market. It’s probably going to be the last word until January 20, though; after that, Bair might find Treasury and the White House more amenable to her ideas.