Michigan officials are putting more resources into combating mortgage fraud schemes, increasing the number of examiners at the Office of Financial and Insurance Services (OFIS) from six to 13.
The seven new mortgage examiners hired in July are focusing on the metropolitan Detroit area, a hot spot for fraudulent activity. OFIS also plans to hire a second staff attorney to handle mortgage fraud cases.
“We needed them desperately for a long time,” said OFIS spokeswoman Kathy Fagan of the new staff members. “We started out regulating this industry in 1981, and there were no mortgage companies at that time. Now it’s about 3,200 mortgage companies, and our staffing levels had stayed the same.”
In its latest report to the Mortgage Bankers Association, the Mortgage Asset Research Institute ranked Michigan ninth in the nation among states with the highest rates of mortgage fraud (Florida, Utah, Georgia, Colorado and Illinois were the top five).
Fagan said Michigan’s high rate of home ownership, even in urban areas like Detroit, may be one reason the state experiences more mortgage fraud. According to the MARI report, from 2002 to 2005 Detroit had the seventh-highest rate of serious early defaults on prime loans among U.S. cities. Serious early defaults on prime loans are often an indication of mortgage fraud or misrepresentations on loan applications.
Michigan’s residential mortgage loan acts grants OFIS the authority to ban people it deems to have engaged in fraud from doing business in the mortgage and consumer finance industry. This year, OFIS has issued “orders of prohibition” against 11 people. Those recently banned include Joseph Saad of Dearborn Heights, found by OFIS to have engaged in fraud in at least 28 residential mortgage loans, and Ronald Lester Ribant of Southfield, banned on the basis of felony convictions involving fraud and breach of trust, OFIS said.
Others banned from the industry this year were Ronnie Duke of Fenton; Robert Clyde Troub of Portland; Chad Eugene Willis of Detroit; Marvin R. Fried of West Bloomfield; James Thomas Keyton of Traverse City; Richard Major of Grand Rapids; Brian Winborn of Ypsilanti; Kalil Khalil of Brownstone Township; and Tariq Hamad of Taylor.
The bans were prompted by fraudulent activity that included equity stripping “foreclosure rescue” schemes; flipping of property involving inflated property values and undisclosed non-arms length transactions; providing borrower down-payment funds, without disclosing such assistance to the lender or investor; creation of fictitious loan application supporting documentation, such as W-2’s, verifications of deposits, and verifications of employment; occupancy fraud; converting loan proceeds or other funds to one’s own use; and being convicted of a felony involving fraud, dishonesty, or breach or trust.
OFIS has also recently revoked the mortgage licenses of William C. Phillips, doing business as Integrity Financial and Urban Mortgage Services of Redford; and Minute Man Financial Holding Co. and Metropolitan Financial & Funding Services of Detroit; and issued a Cease and Desist Order against Chad Eugene Willis’ unlicensed mortgage company, The Mortgage Highway LLC.