HR Tip: To Increase Sales, Change Your Culture

Category: National Mortgage News
Published: Thursday, 16 October 2014
Written by Admin
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Calif. businessman accused of $12M fraud

Category: National Mortgage News
Published: Wednesday, 15 October 2014
Written by Admin

An affluent California businessman featured on the pages of an Orange County society magazine has been indicted in Louisville on charges of defrauding nearly $12 million from National City and PNC banks.

Brady Bunte, 49, a champion sports fisherman and the owner of tequila and chip companies in Southern California, was charged in an indictment unsealed Tuesday with fraudulently taking $17.9 million from the Louisville offices of National City and PNC, which acquired it, by submitting funding requests for non-existent mortgage loans.

A one-count indictment charges that Bunte, of Laguna Beach, Calif., through his company, Trust One Mortgage, submitted 43 fraudulent funding requests on its warehouse line of credit to the banks.

Stephanie Collins, a spokeswoman for the US attorneys office, said he paid back only about $5 million. It was kind of like a Ponzi scheme, she said.

Bunte did not respond to requests for comment submitted through the Facebook pages of his businesses. His lawyer, H. Dean Steward of San Clemente, Calif., could not be reached at his office and did not immediately respond to an email.

Trust One Mortgages website no longer exists and the company is defunct, according to the Kentucky secretary of states office. National Mortgage News, a trade publication, reported in 1998 that the company then employed 147 people in its Irvine headquarters and five regional branches and was licensed in 29 states.

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According to a real estate blog in Los Cabos, Mexico, Bunte owns a a luxurious vacation villa there, a tortilla chip company, and a tequila company, Tres Sietes.

The Orange County Register reported in 2003 that Bunte and two other men teamed to catch a 565-pound marlin for which they won a $1.165 million prize at the 23rd annual Bisbee Black and Blue Marlin Jackpot Tournament.

Bunte and his wife have been pictured at charity events in the Orange County Riviera edition of Modern Luxury magazine.

The Sept. 18 indictment alleges that from March 2007 through October 2008 the fraudulent funding requests submitted by Trust One and Bunte caused NCB to suffer a loss of about $12 million. NCBs warehouse lending operations were in Louisville. PNC acquired NCB in 2008.

As a warehouse lender, NCB provided revolving, short-term loans, known as warehouse lines of credit, to mortgage lenders. The mortgage lenders, such as Trust One, were required to pay off specific loans issued on its warehouse line, by warehouse lenders, within a set period of time or when the warehouse lender demanded payment.

Bunte was arraigned Monday in US District Court located in Santa Ana, California, and was released on a $100,000 third-party bond. He also was required to surrender his passport.

If convicted at trial, he could be sentenced to 30 years in prison and fined up to $1 million.

This case is being prosecuted by Assistant United States Attorneys Bryan Calhoun and Amanda Gregory and is being investigated by the FBI.

David vs. Goliath in the World of Reverse Mortgages

Category: National Mortgage News
Published: Wednesday, 15 October 2014
Written by Admin

Few people have made a more vibrant impact on the reverse mortgage sector than Atare E. Agbamu. In his work as a broker, originator, columnist, book author, activist and consultant, Agbamu has been a champion of the reverse mortgage product and a tireless advocate for older consumers the product was designed to support.

Among Agbamu's achievements is his successful campaign for the repeal of Federal Housing Administration (FHA) Mortgagee Letter 2008-38 (ML 08-38), which redefined the non-recourse feature of the home equity conversion mortgage or HECM. Whereas the US Department of Housing amp; Urban Development (HUD) initially mandated that the borrower or the borrower's heirs and estate would not owe more than the homes value at loan termination. Under ML 08-38, if the borrower or the heirs/estate sold a home at loan termination, then all that was owed was nothing more than homes market value; but if the property was kept, the full loan balance must be repaid, even if it is more than the market value.

In his writings--including his long-running column for The Mortgage Press (the first regular monthly column on reverse mortgages in Americas financial media), the forerunner of National Mortgage Professional Magazine, in his ThinkReverse Blog posts, and in interviews, Agbamu warned that ML 08-38 would create undue hardship for borrowers and tie up HUD and lenders in endless litigation. In both cases, Agbamu was on target.

Three years after Agbamu called for its repeal, and in the face of a highly publicized lawsuit initiated by AARP on behalf non-borrowing spouses facing foreclosures and displacements upon the death of their borrowing spouses, HUD rescinded ML 08-38 in 2011.

Following the ML 08-38 recall, Agbamu turned his advocacy to a related senior-protection issue in reverse mortgages: foreclosure and displacement of non-borrowing spouses (NBS). While AARP Foundation Litigation and the Washington, DC law firm of Mehri amp; Skalet were fighting HUD in federal courts, Agbamu was doing the same thing in the media through his blog ( and in op-eds in the financial media.

In a January 2013 op-ed in National Mortgage News, Agbamu framed and proposed four options for resolving the NBS problem. His option four, which called for reworking HECM's actuarial assumptions to cover the risk of non-borrowing spouses for prospective loans, has been adopted and codified by HUD in Mortgagee Letter 2014-07 released on April 25, 2014. Effective Aug. 4, every disclosed and certified non-borrowing spouse will be protected from displacement when their borrowing spouse dies for the first time in the programs 25-year history.

Because HUD has yet to come up with a satisfactory solution to the plight of existing non-borrowing spouses who are facing foreclosure and displacement and those who are expecting the same fate when their spouses die, Agbamu continues his media campaign through his blog and other channels, calling on HUD to remove obstacles to assignment, the only viable solution to the existing NBS cases.

Today, Agbamu's occupational focus is primarily in education (he serves on the board of Books for Africa), but he still has time to offer consulting services on reverse mortgages and to author his ThinkReverse blog. We spoke with the Oakdale, Minn.-based Agbamu about his career in reverse mortgages and his thoughts on the state of the product.

How did you first get involved with reverse mortgages?
Agbamu: I came into the mortgage industry in 1998 from a 14-year stint in education in New York City, and I accidentally ran into reverse mortgages around 2001 when my boss at People's Choice Mortgage asked me to research the product. Up to that time, I knew nothing about reverse mortgages. As I researched reverse mortgages, I was fascinated and hooked.

What hooked you so quickly and attracted you to the reverse product?
Agbamu: The counter-intuitive nature of the product was a draw for me. It is a product that seniors can use to get cash without having to make monthly repayments as with other types of home equity loans, and they can still retain every vestige of ownership. It seemed like the greatest product for seniors who need extra cash to meet their needs.

I'm particularly drawn to seniors because my grandmother had a role in my upbringing in Nigeria. The African adage, "When we honor our elders, we honor ourselves," was drummed into my head early in life. So for me, reverse mortgages was an opportunity to do good and do well.

Reverse mortgages have been around for many years, but are still a niche product within the mortgage world. In your opinion, why havent they become more popular?
Agbamu: Perhaps, it is the too-good-to-be-true nature of the product. Perhaps, we don't hear the word reverse," we just hear the mortgage part. The product also attracted some unsavory actors in past who would prey on seniors. Compared to 2001, reverse mortgages have come a long way in popularity, especially through televisions ads with famous actors and politicians.

Let's talk about Mortgagee Letter 08-38. What was your reaction when you first learned that HUD made this significant change?
Agbamu: It struck a nerve. It made everyone of us in the industry a liar. Here was a product that came with controls for a vulnerable demographic of the public--the product was designed and sold to protect seniors. HUD said from day one that borrowers and their heirs were not liable for more than the value of the home at loan termination. Then they changed that cardinal promise initially without public notice. Unconditional non-recourse was, and remains, an integral part of the piece-of-mind promise we make to seniors who take reverse mortgages. It was a travesty.

But there was no great hue and cry across the industry over this. Why did you take the leadership role in arguing against ML 08-38?
Agbamu: As an advocate for consumers, a product champion, and a visible thought leader with a communication platform, I knew deep down that this was where the rubber met the road. Silence, in the face of obvious wrong against the weak by a powerful unit of our federal government, was not an option for me. In the life of every person, both professionally and ethically, there comes a crossroads moment when you have to stand for something that is bigger than your own self-interest. The so called clarification of HECM non-recourse, or ML 08-38, was that moment for me. The recall of ML 08-38 and the resulting failure-to-protect lawsuits by non-borrowing spouses have completely vindicated the stand I took. And for that, I am grateful to the Author of all victories!

How did your outspoken actions impact your work?
Agbamu: When you are wrongly perceived as a troublemaker, it doesn't help. There were times when influential businesses and associates would not return my calls. No one wanted to offend HUD, and I accepted that. It was a price I knew I had to pay for the stand I took. Like the proverbial city hall, picking a fight with a powerful arm of the federal government that controls your industry is not fun.

What is your role in the reverse mortgage world today?
Agbamu: Today, I am essentially an advocate for seniors.They call me, they send e-mails, and share their worries about losing their homes when their borrowing spouses die. I do substitute teaching and some reverse mortgage consulting work as well. Regulators call me, as do attorneys in litigation, for advice on the world of reverse mortgage.

Phil Hall is managing editor of National Mortgage Professional Magazine. He may be reached by e-mail at This email address is being protected from spambots. You need JavaScript enabled to view it..

This article originally appeared in the July 2014 edition of National Mortgage Professional Magazine.

The Other Fannie and Freddie Lawsuit

Category: National Mortgage News
Published: Tuesday, 14 October 2014
Written by Admin

On Tuesday, a federal judge dismissed a lawsuit from a group of Wall Street investors claiming that the governments decision to sweep the profits of Fannie Mae and Freddie Mac violated the rights of the companies shareholders. As a result, all quarterly profits at Fannie and Freddie will continue to flow directly to the US Treasury for the foreseeable future, pending further legal action.

Thats good news for taxpayers, who have invested $187.5 billion in the mortgage companies since they were placed under government conservatorship in 2008. Not so much for the speculators who bought up Fannie and Freddie stock after the crash: shares in the companies lost more than a third of their value on Wednesday after the decision was announced.

The lawsuit will surely leave its mark on Wall Street and influence the future of Fannie and Freddie. However, when it comes to pain felt on Main Street, another far-less-publicized lawsuit will likely have a bigger impact.

Last year, a group led by the National Low-Income Housing Coalition sued Fannies and Freddies regulator, the Federal Housing Finance Agency, to lift the agencys suspension of mandatory funding to affordable housing programs. In a separate decision this week, a federal judge dismissed the lawsuit, citing standing and jurisdictional concerns.

At the center of the lawsuit was the National Housing Trust Fund, which was created by Congress in 2008 to support state and local efforts to build affordable rental housing and provide homeownership opportunities for low-income families. As originally envisioned, the Housing Trust Fund and another important community development program, the Capital Magnet Fund, would receive funding through a modest assessment on Fannies and Freddies ongoing business. FHFA suspended those obligations when Fannie and Freddie were put into conservatorship a month later, and the Housing Trust Fund has sat empty since its inception.

For the past year, the FHFA has cited the ongoing lawsuit to defend its near radio-silence on the issue. When FHFA Director Mel Watt was asked about the Housing Trust Fund at a recent event in North Carolina, he evaded the question. Notably, Mr. Watt did not mention the issue in his first major policy address earlier this year, and neither the Housing Trust Fund nor the Capital Magnet Fund was referenced in the agencys five-year strategic plan released in August. The agency did, however, include a strategic priority of supporting Americas renters with a focus on the affordable and underserved segments of the market.

As the FHFA stalls on the issue, Americas renters face a growing housing insecurity crisis. According to the Harvard Joint Center for Housing Studies, more than one in four renter households pay at least half of their monthly income on housing — an unprecedented number. Many of these families are forced to make toxic choices — between paying rent or buying groceries, between keeping the lights on or buying medicine — often with severe health and other consequences. Meanwhile, due to recent budget cuts, federal funding for rental assistance programs covers only a small fraction of the families who need it.

We cannot address this crisis without additional resources. Both Fannie and Freddie have been profitable since 2012 and have returned more money to taxpayers than they initially received in the bailout. According to the National Low-Income Housing Coalition, if Fannie and Freddie had been required to fund the programs in 2012 and 2013, a total of $760 million would have gone to communities to support more affordable housing.

The FHFA can take a meaningful step toward ending housing insecurity by lifting their suspension on funding the Housing Trust Fund and the Capital Magnet Fund. Now that the lawsuit has been dismissed — and since we now know that the governments relationship with Fannie and Freddie will not be changing anytime soon — its time for the FHFA to make good on Fannies and Freddies legal obligations.

John Griffith is a senior analyst and project manager at Enterprise Community Partners, a national affordable housing organization. Andrew Jakabovics is the senior director for Policy Development and Research at Enterprise Community Partners.