The U.S. Attorney's Office for the Northern District of California filed a complaint that seeks to permanently block an alleged "fraudulent mortgage elimination scheme" carried out by Dale Scott Heineman and Kurt Johnson through The Dorean Group, Oxford Trust and Universal Trust.

Heineman was arrested by police in Union City, Calif., and faces charges of communications fraud, racketeering, unlawful dealing of property by a fiduciary, theft, fraudulent handling of recordable writings and conspiracy in Utah.

Authorities are still seeking Johnson, who faces similar charges in Utah. A Web log, http://www.doreanblog.com/, purports to be authored by Johnson, and it includes details about current cases pending against Johnson and Heineman.

An Aug. 1 hearing date has been set to consider the U.S. Attorney's Office request for a restraining order that would prevent The Dorean Group from "advertising their debt elimination services via the Internet, telephone or any other wire communication, or by mail, to any individual and/or any entity."

The order, if approved, would also prevent the group from "withdrawing, transferring, removing, dissipating and disposing of property obtained as a result of the fraud," including money held in two Union City-based bank accounts.

"According to FBI statements in court papers, $2.8 million was deposited into one Dorean bank account over the course of a year and at least $230,000 was wired from that account to a bank account in Riga, Latvia," said Rachel Dollar, a lawyer who operates a mortgage-fraud blog.

The U.S. Attorney's Office complaint alleges that the Dorean Group's operators "are continuously alienating or disposing of funds they have obtained as a result of the fraudulent practices described (here)."

Heineman and Johnson "have been continuously transferring funds by wire from bank accounts within the Northern District of California to accounts controlled by defendants in Riga, Latvia," court documents state.

Several groups, including title companies and Better Business Bureaus across the country, have issued alerts warning about The Dorean Group's alleged mortgage elimination process.

The FBI, with state and local law enforcement agencies, earlier this year raided a Union City, Calif., office used by promoters of The Dorean Group. Agents seized documents and bank accounts connected with the office, sources said, and the Dorean Group reportedly was evicted from its Union City offices.

Court documents allege that Dorean Group representatives "maintain offices in Newark, California" and that "fraudulent activities...continue to be conducted."

The Dorean Group is under fire in other states, too. North Carolina Attorney General Roy Cooper in March filed a lawsuit against Johnson and Heineman to bar them from operating a mortgage-elimination scheme in that state.

According to Web sites that have promoted The Dorean Group process, homeowners pay an up-front fee of about $3,000 to begin the debt elimination process. The Dorean Group process has been promoted through a network of affiliates in many states who have set up Web sites and published comments about the process in Internet forums.

These mortgage-elimination Web sites have promoted anti-bank philosophies that question the validity of the nation's mortgage process and overall financial system, and some Dorean-affiliated Web sites have described intricately detailed conspiracy theories involving the Federal Reserve, the military industrial complex and a vastly powerful New World Order, for example.

Through some creative paperwork, The Dorean Group process attempts to dismiss loans by fighting the legitimacy of those loans.

"After receiving a homeowner's application and fee, defendants begin the 'mortgage elimination' process by recording various false documents with the county recorder's office in the county where the property is located," according to the U.S. Attorney's Office complaint.

"(Their) ultimate purpose in recording these false documents is to create the appearance on the public record that the property is free and clear of encumbrances."

Homeowners who participate in the process are encouraged to refinance their properties and to split these refinancing proceeds with The Dorean Group and affiliates, and to pocket a portion of the proceeds, according to Web descriptions of The Dorean Group process.

"The end result is that the client gets free and clear title to the home and a good amount of cash in hand," according to a Web description of the process.

But real estate industry lawyers have said that homeowners entering into such processes could face foreclosure, criminal charges or the challenge of clearing up a clouded title to their homes.
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John Robbins, CMB

“John is a dynamic member of MORPAC and his involvement is invaluable to us,” said MORPAC Chairman David Kittle, CMB. 

AmNet, a subsidiary of AmNet Mortgage Inc., is one of America’s largest sellers of mortgage loan servicing and ranks in the top 20 of the nation’s wholesale mortgage banks. AmNet underwrites and funds an extensive array of home loan programs that emphasizes competitive-pricing and customer-focused technology. 

The growth and depth of company campaigns is a top priority for MORPAC. Under federal law, MORPAC may solicit only executive and administrative staff of member companies that have approved company campaigns. For more information on MORPAC and requirements for establishing a company campaign please contact Julie Eddy, MORPAC director at (202) 557-2808, jeddy@mortgagebankers.org or visit www.morpac.org.
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Under the initiative, more than 13 local organizations will offer the financial literacy classes.

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DocuLex, Orlando, Fla., introduced an electronic document management system, called ArchiveStudio. DocuLex ArchiveStudio’s system is comprised of two programs—Goby Capture and WebSearch. Using a digital copier or production scanner, Goby Capture provides electronic document conversion with content indexed for ease of organization, with WebSearch providing secured access, full-text content search and retrieval of stored documentation.

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Ellie Mae, Dublin, Calif., released ePASS Express, an add-on utility available to Calyx Point users at no charge. ePASS Express provides another for Calyx Point users to pre-qualify, price, register, lock and submit loans to lenders. ePASS Express facilitates the uploading of borrower information and transmits the data securely from Point.

ePASS Express can be downloaded at www.ePASSexpress.com at no charge.

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Sovereign Bank, Philadelphia, announced the eligibility guidelines have been expanded to provide low-cost loans to Massachusetts educators. The Massachusetts Educators Loan Program through Sovereign Bank will provide up to $100 million in mortgages. 

The program uses a linked deposit approach to leverage state funds to provide additional benefits. The Treasury has deposited $100 million, which will support the lending, and in return, Sovereign provides the Treasury with market rate returns.

The program will allow educators who are buying their primary residents or refinancing an existing mortgage to obtain fixed-rate home mortgage loans and home equity loans for a down payment as low as 5 percent. There are no application costs or rate lock fees for applicants. In addition, applicants also benefit from discounted closing costs.

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The Chicago Federal Home Loan Bank plans to award nearly $41 million to support a variety of affordable housing projects throughout Illinois and Wisconsin. More than $30 million will be disbursed in two rounds of competitive applications through the Bank’s Affordable Housing Program (AHP), while more than $10 million has been set-aside for down payment and closing cost grants of up to $5,000 for low-income homebuyers through the Downpayment Plus Program.

In the first of its two rounds of competitive applications, the Chicago Bank awarded $14.5 million to 66 affordable housing projects for the creation and rehabilitation of nearly 2,900 units of housing. More than 60 percent of the units will serve households earning less than half of the median income for the area in which they are located. The remaining units will be affordable primarily to households earning at or below 80 percent of the area median income.
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Christopher Fenton, first vice president at Love Funding’s Mass. office, managed the transaction for the borrower, the David Drye Company. Greenwich Capital Markets provided the financing.

Fenton, who is also director of senior housing, closed a refinance loan for Pheasant Ridge Assisted Living Investors, LLC. The loan refinanced Pheasant Ridge Assisted Living in Roanoke, Va., a 90-unit senior housing facility. The loan was a refinance of an existing bridge loan that Love Funding secured through Heartland Bank in 2001.

Loan terms include permanent financing under the FHA Section 232/223(f) mortgage insurance program. The loan amounted to nearly $8 million with a 35-year fixed term and amortization, and a 5.57 percent interest rate.
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For additional information please contact Beth Percynski at 202-557-2866 or bpercynski@mortgagebankers.org. This call is open to MBA members only and is closed to the media.
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In its Seventh Periodic Mortgage Fraud Case Report to the  Mortgage Bankers Association (MBA), MARI examines the current composition of residential mortgage fraud and misrepresentation in the U.S. The report found subtle changes in the incidences and types of fraud lenders, mortgage insurers and secondary market agencies are experiencing, MARI said.

"Mortgage fraud against lenders is a serious problem and one that requires cooperation from all segments of the mortgage industry," said Bill Matthews, vice president and general manager of MARI.

During the past four years, there has been a shift in the states with the most problems. Georgia and South Carolina have experienced high rates of reported fraud. Florida came in third followed by Utah and North Carolina, using MARI’s Fraud Index (MFI). Fraud reports dropped in California, while the Midwest and cities of moderate size are having problems with recent originations that have become delinquent, the report said.

The MARI Fraud Index ranks states with the most serious mortgage fraud problems in loans originated over the past four years. A score of "0" would indicate no reported fraud from a state. An MFI of 100 would indicate that the reported fraud is exactly what one would expect; thus, a state with a score of 100 would be "average."

The report also found that among prime and nonprime lending, the state indices are similar. However, there are major exceptions for New York, Arizona and Mississippi , which shows a rise in nonprime lending problems, MARI said.

The MFI found prime lenders from South Carolina (MFI 303) had the highest instances of fraud against lenders, followed by Georgia, North Carolina, Missouri and Florida. Of the nonprime lenders, Georgia (MFI 297) had the highest rate, followed by Florida, South Carolina, Nevada and Utah .

On behalf of its members, MBA has undertaken a comprehensive campaign to combat mortgage fraud against lenders. Earlier this year, MBA launched the Mortgage Fraud Against Lenders Resource Center Web site (http://MBAFightsFraud.MortgageBankers.org) and hosted its inaugural National Fraud Summit that brought together a broad cross-section of the real estate finance industry, government and law enforcement officials to discuss the impact of mortgage fraud on the lending industry.

"Mortgage fraud against lenders is a growing problem for the industry, and one that impacts homeowners as well as lenders. MBA has been at the forefront of efforts to help lenders detect, investigate and prevent mortgage fraud," said Kurt Pfotenhauer, senior vice president of government affairs at MBA. "The MARI report is another tool that equips MBA's members with the necessary knowledge to catch and avoid fraud in their operations."
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