Mark M. Benun of New York has been charged with fraudulently selling a Bronx building for more than $5 million and not disclosing several liens on the property. U.S. District Judge Victor Marrero has been assigned to the case. Mr. Benun was unavailable for comment.

According to Preet Bharara, U.S. Attorney for the Southern District of New York, Mr. Benun and a real estate company operator purchased a commercial property in the Bronx near Yankee Stadium for $9.5 million.

Mr. Benun, purporting to be the sole owner of the property, allegedly sold it for approximately $5.96 million to another buyer, who paid $4 million in cash and gave Mr. Benun a note for the remaining $1.96 million. Shortly after the sale, Mr. Benun is alleged to have sold the note for $1.46 million.

To establish his apparent sole ownership of the building, Mr. Benun allegedly created false satisfactions of the three mortgages on the property and transferred ownership of his co-purchaser’s majority interest in the property to himself.

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Mortgage Loan Compliance

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Although delinquencies for residential properties continued to climb in the second quarter of 2009, the rate of new foreclosures started was essentially unchanged from last quarter’s record high, according to the Mortgage Bankers Association’s national delinquency survey.

The delinquency rate for mortgage loans on one-to-four-unit residential properties rose to a rate of 9.24% of all loans outstanding at the end of the second quarter of 2009, up 12 basis points from the first quarter of this year and up 283 basis points from the second quarter one year ago. According to the MBA, the percentages of loans 90 days or more past due and loans in foreclosure both set new record highs, breaking records set last quarter.

The percentage of loans 30 days past due is still well below the record set in the second quarter of 1985.

The percentage of loans in the foreclosure process at the end of the second quarter was 4.3%, up 45 basis points from the first quarter of 2009 and 155 basis points from one year ago. The combined percentage of loans in foreclosure and at least one payment past due was 13.16% on a non-seasonally adjusted basis, the highest ever recorded in the MBA delinquency survey.

The percentage of loans where foreclosure actions were started during the second quarter was 1.36%, down one basis point from last quarter and up 28 basis points from one year ago. “There was a major drop in foreclosures on subprime ARM loans,” said MBA’s chief economist Jay Brinkmann. “The drop, however, was offset by increases in the foreclosure rates on the other types of loans, with prime fixed-rate loans having the biggest increase.”

California, Florida, Arizona and Nevada continue to have a disproportionately high share of foreclosure starts, although the share has fallen slightly from last quarter. Those states had 44% of all new foreclosures in the U.S. during the second quarter 2009, down from 46% in the first quarter 2009.

A man from Mesa Arizona, Jake David Abegg Whitman, recently pleaded guilty to federal fraud charges related to his participation in a cash-back mortgage fraud scheme involving 19 unimproved residential properties in the greater Phoenix area.

According to John J. Tuchi, U.S. attorney for the District of Arizona, Whitman played a leadership role in a conspiracy to obtain mortgage loans that were substantially larger than the actual value of the properties. Whitman owned 10 of the properties and served as branch manager of the mortgage broker Academy Mortgage that processed the loans.

Whitman worked with an appraiser to obtain inflated appraisals for the properties and recruited buyers to purchase the properties at the inflated prices. To overcome the buyers’ inability to provide the down payment, Whitman secretly supplied the down payment to the buyers and also provided cash back to the buyers at closing.

The properties eventually went into foreclosure and cost lending institutions nearly $1 million in losses. Whitman is cooperating with authorities in the prosecution of others. U.S. District Judge G. Murray Snow has scheduled sentencing for Oct. 26.

In Indianapolis, Robert Andrew Penn and Keven M. Lafavers, were indicted for federal mortgage fraud charges and have a trial date set for this fall.

According to Timothy M. Morrison, U.S. attorney for the Southern District of Indiana, Mr. Penn and his numerous business entities, with the assistance of Mr. Lafavers and others, allegedly obtained at least 112 fraudulent loans, totaling $12.6 million.

Participants in the schemes allegedly located straw purchasers who invested their good credit, but no money, to be the purchasers of properties at a much higher price than that negotiated with the seller. Seven other individuals were charged earlier this year with allegedly participating with Mr. Penn and Mr. Lafavers in their mortgage fraud crimes. The investigation is continuing. Trial is currently set for both defendants, who were unavailable for comment, before U.S. District Court Judge David F. Hamilton on Sept. 21.

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Mortgage Loan Compliance

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U.S. District Judge Raymond A. Jackson sentenced Kristina Marie Cardwell, a former attorney from Virginia Beach, Va., to 66 months in prison, followed by three years of supervised release for her participation in a mortgage fraud scheme.

According to Dana J. Boente, U.S. attorney for the Eastern District of Virginia, Cardwell worked at law firms associated with co-defendant Troy Aurelius Titus for nearly 10 years. She admitted to purchasing three residential properties in Virginia Beach from entities associated with Mr. Titus. She purchased the properties in her own name and received mortgages on the properties, although she intended for Mr. Titus to retain control over the properties and sell them to third parties at a later time.

The funds taken from Cardwell’s purchases were allegedly used to cover some of Titus’s financial obligations. Mr. Titus, who is currently in custody, is scheduled to appear in court on Nov. 10, 2009.

While applying for the mortgages, Cardwell made false statements about her income, assets and financial liabilities. During the application process, thousands of dollars were moved into Cardwell’s bank account to inflate her account balance then moved out of the account.

Cardwell was also ordered to pay $708,339 in restitution and consented to her license to practice law being revoked.

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Mortgage Loan Compliance®

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Forensic Audits, Demand Letters, and Rapid Reports™ – Get The Facts On Your Loan and Protect Your Rights!