U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT OFFICE OF INSPECTOR GENERAL

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1 U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT OFFICE OF INSPECTOR GENERAL Michael H. Stolworthy Assistant Special Agent in Charge Criminal Investigation Division

2 ISAAC TOUSSIE

3 Newsday Article concerning the Victims of Toussie s Fraud

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

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

6 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

7 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

8 A Look at FHA Trends

9 FY 2009 Positive Trends 2.9 Million FHA Applications (Up 63%) 1.95 Million Endorsements (Up 62%) 114,691 HECMs 105,233 Typical HECMs 8,985 HECM Refinances 560 HECMs for Purchase

10 HECM Endorsements

11 FHA s Resurgence Market conditions, new products and a Congressionally-mandated expanded role caused a resurgence in FHA s s market share. Now over 30% and increasing FHA now insures 5.5 million mortgages Total insurance in force $696 Billion In FY 2007, new mortgages totaled $59 B In FY 2009, new mortgages totaled $361 B

12 FY 2009 Negative Trends 207,957 Claims Paid 73,413 Conveyances 7,410 Loss Mitigation Property Sales 127,134 Other Loss Mitigation 31,531 REO Sales 8% of FHA Loans are in Default 5% are 90 days late or more

13 Current FHA Housing Trends: Increase in FHA Approved Lenders FY 2009 New Lender Approvals: 2500 approvals Fiscal Year Comparisons: FY 2006: 692 FY 2007: 997 FY 2008: 3300

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

15 HUD-OIG Investigative Cases Opened by Program Area

16 National Mortgage Fraud Team FBI/HUD-OIG/FinCEN Establish Multi-Agency Regional Task Forces and Working Groups Bring HUD FHA data, FBI Intel data and FinCEN data together Identify fraud schemes and major rings Create target packages Provide field support

17 Other Data Analysis Projects The NMFT will be analyzing: Early Defaults, Early Claims HECM Cash Out Financial Institution Complaints/Information

18 HECM Cases Cross Selling Theft by Loan Officers Straw Buyer Schemes HECM for Purchase Schemes Other Schemes

19 $97K Fine For Financial Mortgage USA. Inc. Story Published: Oct 30, 2009 at 3:20 PM CST The U.S. Department of Housing and Urban Development today announced that its Mortgagee Review Board (MRB) is proposing to permanently withdraw the HUD/FHA approval of Financial Mortgage USA, Inc., a Home Equity Conversion Mortgage (HECM or reverse mortgage) lender based in Honolulu, Hawaii.

20 Loan Officer Theft Cases Detroit Loan Officer co-endorsed checks and deposited to personal account.

21 Straw Buyer Schemes

22 Straw Buyer Flow Chart

23 Straw Buyer Flow Chart

24 Straw Buyer Example 1. March - A Real Estate Company purchased a foreclosure for $18, April - Promissory Note in the amount of $51,500 between straw buyer and the real estate company for the previously purchased foreclosure. 3. June - Straw buyer submitted residential loan application for HECM. The estimated appraised value was listed as $88,000. Straw buyer reported that he resided at the property for one month. Straw buyer s home phone number listed on the loan application comes back to owner of real estate company. 4. June - Quit Claim Deed between real estate company and straw buyer.

25 5. June - Appraisal conducted and reflected a value of $90, June - Closing Date; Payoff to real estate company in the amount of $51,500 and cash to straw buyer in the amount of $1, October - Foreclosure process commenced as a result of straw buyer failing to occupy property. The HECM is called due and payable. 8. Subsequent appraisal conducted and reflected value of $13, Investigation reveals that Real Estate Company was owned by member of the Crips gang, and that the company has sold 25 properties to seniors using HECMs.

26 HECM for Purchase Investor sells property to senior for amount determined by HUD HECM calculator. Investor creates fake source of down payment. Fake HUD-1 Fronts money for down payment

27 Other Schemes Occupancy Schemes Power of Attorney Schemes False Marketing Schemes HUD logos TARP Bailout Schemes

28 What are we looking for? HECMs with cash out options Property Flips

29 Contact Information ASAC Michael H. Stolworthy HUD-OIG th Street SW, Room 8266 Washington, DC mstolworthy@hudoig.gov