Jerry Brown discovers mortgage fraud

News item: California prosecutors have finally brought what they consider to be a major case alleging mortgage fraud.

From the L.A. Times tonight: "California authorities said today they cracked a mortgage fraud ring that allegedly victimized thousands of Californians, some of them elderly and some who lost their homes."

More: " 'As the mortgage crisis worsens, a growing number of fly-by-night companies are employing utterly brazen tactics to push homeowners into illegal and unconscionable loans,' Atty. Gen. Jerry Brown [pictured] said."

The companies accused in the crackdown are not exactly household names and were operated by a single family in Tarzana. The companies named include Lifetime Financial, Nations Mortgage, Greenleaf Lending, Virtual Escrow, Olympic Escrow and Direct Credit Solutions.

John Gittelsohn, writing on the Mortgage Insider blog at the OC Register, reports that this appears to be Brown's first attempt at prosecuting mortgage fraud since he took office. "As the birthplace of America’s subprime lending boom and bust, you’d expect California’s Attorney General to be a national leader in policing the mortgage industry," Gittelsohn writes, pointing out that AGs in New York and Ohio have been at the forefront of investigating mortgage abuses. He asks, "So what’s taken Brown so long?"

Good question, John.

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo Credit: Getty Images

Comments

[Uncle Billy]

One of the local news stations was all over this guy last year. They tried to interview him at home, and while driving away very quickly in a dark porsche.
At the beginning of the piece, they asked him if he was Eric Pony. He said, "no" and walked away. Then he came back out of the house and pretended he was someone else completely. Extremely bizarre, but explains the predation completely.

But he was licensed as a salesperson. How come his broker is still in business and a bunch of other affiliated companies still seem to be licensed (including some mentioned in the article).

And then there's the lingering questions about Jerry Brown's sister. Anyone ever follow up and see if there was impropriety between Countrywide, where she was a director, and Goldman Sachs, where she sat in the fixed income department?

Family.

[Geek Seek]

Here is the video from April of last year.

http://www.youtube.com/watch?v=3ThP7_D7ELM

Pony? That's got to be a made up name.

[Inland Empire]

Wonder how many more we will find out about in the near future. I don't think these were the only people involved in mortgage fraud.

[PeonInChief]

Jerry Brown has never been ahead of the curve on housing problems. His entire career has been spent avoiding the problem of housing, particularly when low and moderate income people are in trouble. I guess the situation as so egregious that local governments were likely to bring their own prosecutions if he didn't.

[butterflysoup]

This is totally lame.
With his campaign for governor coming up, he would have done better to keep quiet.
Who's advising him now, anyway?

[C. Aguilar]

Isn't Jerry's sister, Kathleen Brown Rice Sauter, on the board of Countrywide?

[JohnnyB]

I mean it's good there's some activity going on which should be commended... but...

It seems more like busting a few crack dealers on skid row and claiming it's an important step in the "war on drugs".

[peter m]

This news of one 'discovered' mortgage fraud ring is about .0001 % of potential mortages fraud activities ocurring in CA last 3-5 yrs duiring the insane house price runup. Tons of mortgage fraud committed in inner city ghetto slums, which i had discovered thru probings of sales activity in only three selected LA slum zips:pacoima, inglewood, La 90011. I saw prices for Sfh's in such gutted slimzones going for $ 600,000-$700,000- even $900,000 in one 3-1 bed 6000 sq ft property in LB in area in which comps were in $450,000-500,000 range. This was during the height of inner city RE runups in 2005 thru early 2007.

The city,state, fed mort fraud investigators wil not go after RE fraud comitted in tough gang-infested inner city heavily minority zones for PC reasons, and also due to the fact that these areas are not worth nvestigating at the cost of shattered windshields, trashed vehicles, whizzing bullets, and menacing gangbangers guarding their hoods against intrusions in their territory by Gov't investigators.

State is a day late and a $ short: Most of the perpetrators of the mort fraud have already fled the coop, changed identites, stashed the loot in accts under different names, fled across the border, or simply walk ed away with the loot with little consequence or fear from the authorities.

The state of CA is about as effective in going after/ prosecuting RE mort fraud as it is in collecting Franchise sales taxe revenuess in LA inner city, where estim ated 40% of all sales transactions are underground and underreported or not reported at all,

[peter m]

The City, state, Fed mort fraud investigators simply lack the manpower and resources to investigated more than a miniscule fraction of all the mortgage fraud out there. There was a tremendous amt of teardowns , quick refurbishmnets, buyin up and doing quick cheap fixs of old SFH s, or cramming cheap twnhome/condo units on former wasted weedy plots which was a prominent feature of the inner city crapburgs last several tears. There will naturally be accompanying fraud in the transactions.
The massive fraud rings prosecuted in Temelula- riverside, and recently in Beverly hills, were in middle class/upper class areas, and investigators are more likely to go after mort fraud rings in these safe areas because they are mostly pasty-faced fat cubilcle workers who don't want to dirty their fingernails or shiny Gov't- provided vehicles going into nasty grimy graffitited trashed-out impoverished ghetto pockets to investigate RE fraud.
This is why $500-700,000 RE loans were given out like candy in extreme ghetto parts of LA, then sold and packaged to wall st . The lenders never bothered to see exactly i n what neighborhoods and what types of homes were given the 100% toxic loan using faked/lier/ stated income . Later on the buyer(s) simply walk out or resold to family members or relatives or fake scam buyers and ran up another $100,000 on the sale price. Plenty of fraudulent equity extracted from these ignorant pasty faced lenders/bankers in their isolated cubilcles in South OC or across the country.

The LA city planners, permitting depts, development depts were part of the problem as they were extremely lax and still are in enforceing any code enforcement or zoning laws in Central and other impoverished LA burgs. They in effect created the conditions which allowed for rampant out of control small unit developments in the LA ghettos,and in the abundant marginal areas abutting the ghettos. Two examples of this rampant development binge are East & central SFV, and multiple districts surrounding dwtn and in SScentral, NE LA areas.