U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT OFFICE OF INSPECTOR GENERAL. Michael H. Stolworthy Director of Fraud Prevention

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1 U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT OFFICE OF INSPECTOR GENERAL Michael H. Stolworthy Director of Fraud Prevention

2 ISA AC TOU SSIE

3 Robert Toussie and President Bush Isaac Toussie s father, Robert Toussie, donated $28,500 to the Republican National Committee in 2008.

4 On December 23, 2008, President Bush granted a pardon to Isaac Toussie.

5 President Bush yanks pardon of housing scammer Isaac Toussie BY James Gordon Meek DAILY NEWS WASHINGTON BUREAU Updated Wednesday, December 24th 2008, 11:02 PM

6 Making Home Affordable Low Mortgage Rates and Access to Credit State and Local Housing Initiatives Tax Credits for Housing HAMP/HARP NSP HAFA 2MP FHA Short Refi FHA Loss Mitigation

7 WKYC.com Cleveland, OH Video x?bctid=

8 Inspector General Act Enacted in October 1978 Created Inspectors General in 12 of the largest Federal agencies Currently authorizes IGs in more than 50 agencies

9 HUD-OIG MISSION Prevent and detect fraud, waste, and abuse. Promote integrity, efficiency and effectiveness in HUD programs and operations. Seek administrative sanctions, civil, and/or criminal prosecution. Independent and objective reporting to the Secretary and Congress

10 What is the Federal Housing Administration (FHA)? The FHA is a wholly-owned government corporation created by Congress in The FHA was consolidated into HUD in FHA provides mortgage insurance on loans made by FHA-approved lenders. It is the largest mortgage insurer in the world.

11 Ups and Downs of FHA In the early 90s, FHA had about 15% of the home purchase mortgage market. Through the 90s FHA lost business to the sub-prime. By 2006 FHA market share was a marginal 3%-- and dropping. People asked if we still needed the FHA.

12 The Collapse

13 Mortgage Crisis FHA was left as the only game in town. Market conditions, new products and a Congressionally-mandated expanded role caused a resurgence in FHA s market share. Mortgage limits raised to $729,750 Now about 35% market share. In some markets, FHA loans constitute about 70% of the new loan market.

14 FHA s Resurgence Today, FHA insures million mortgages Totaling $1.1 trillion. More than 75% of First-Time Homebuyers Nearly 1/3 Minority Households.

15 Negative Trends 203,402 Claims Paid YTD 95,580 Conveyances REO Sales 9.5 % of FHA Loans are Seriously Delinquent (729,000 loans)

16 FHA s Impact on HUD-OIG Realignment of investigative priorities: Single Family investigations are an investigative priority. Established nationwide mortgage fraud initiatives. Special Agents participate in numerous task forces and working groups.

17 Financial Fraud Enforcement Task Force (FFETF) Created by President in November HUD-OIG is co-chair of Mortgage Fraud Working Group.

18 Trends Rescue Schemes Flopping Eminent Domain REO HECMs

19 Loan Modification Scams Target Desperate Homeowners - YouTube ABC News Report

20 Common Loan Modification Scams Phony Counseling or Foreclosure Rescue Schemes Forensic Loan Audits Mass Joinder Lawsuits Rent to Own or Leaseback Schemes Fake Government Modification Programs Short Sale Scams Bankruptcy to Avoid Foreclosure HECMs

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22 Property Flipping/Flopping

23 Mortgage Fraud Trends Flopping Short sales up 33% over last year. FBI and Freddie Mac have warned that Flopping May Be on the Rise. HAFA

24 REO Property Thefts m/story/ /th e-investigators-dirtydeeds?autostart=true &topvideocatno=defa ult&clipid=

25 Eminent Domain

26 HECM Frauds

27 Ernest Leak Brooklyn Victim

28 Owns home, seeking HELOC options Calls TV ad for HECM Telemarketer targets Mr. Leak visits home, improves home, obtains PII and assumes identity Subject obtains reverse mortgage, hires imposter, closes loan all via Identity Theft. Steals equity payout Mr. Leak realizes something wrong when new insurance carrier sends him bill.

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30 Charged As Hate Crime

31 POAs

32 Sovereign Citizens

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34 Cases in Florida and Georgia Florida Involves 100 properties Appraisals 1800% of actual value Two appraisers Atlanta Kelsey Torrey Hull Jonathon Kimpson

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36 Adam Szumilas Deaf, mute monolingual Polish speaker w/ successful Pirogue business Wife under home care dying from cancer Home health aide introduces Szumilas to deaf mute Spanish speaker She moves in, moves family in, things begin to happen accidents, then marriage while recovering, claims of abuse, etc. POA obtained by now wife and daughter without Szumilas present at actual notary HECM obtained. Proceeds used to buy grocery store. Grocery store fails. Szumilas never provided permission for HECM Entire wealth drained

37 Dual Benefit Program Fraud Senior has ongoing Section 8 Uses HECM for Purchase of Home Continues Section 8 with either self or family living in apartment or home

38 Watch out for Common Appraisers Quit Claim Deeds Mortgage Satisfactions

39 Interest Rates $400,000 Sales Price $40,000 Down Payment $360,000 Mortgage 3.5% $1,616/month $1,616/month 6.5% $255,000 Mortgage $40,000 Down $295,000 Value 26% Decrease in Value