The Capistrano Insider

Attorney Generals Going After Mortgage Fraud

this just in:

Attorneys General of California and Nevada Announce Mortgage Investigation Alliance

LOS ANGELES -- Attorneys General Kamala D. Harris of California and Catherine Cortez Masto of Nevada today announced that their states have entered into a joint investigation alliance designed to assist homeowners who have been harmed by misconduct and fraud in the mortgage industry.

By forging this alliance, California and Nevada will combine investigative resources, including litigation strategies, information, and evidence gathered through their respective ongoing investigations, assisting each state as it pursues independent prosecutions.

This alliance will link the offices' civil and criminal enforcement teams, speeding along the full, fair and adequate investigation of wrongdoing in the two states, which have experienced similar foreclosure and mortgage fraud crises.

"The mortgage crisis is a man-made disaster that has taken a heavy toll on the country, but it saved its worst for California and Nevada," said California Attorney General Kamala D. Harris. "The mortgage crisis is a law enforcement matter, and we will prosecute to hold accountable those who are responsible and also protect the homeowners who are targeted for fraud. I am delighted that California and Nevada are entering into this alliance to leverage the best results for our investigations and look forward to forging similar collaboration with other states."

"I am pleased to join forces with General Harris to fight against fraudulent mortgage and foreclosure practices that continue to devastate lives, homes, and the economy in Nevada and California," said Nevada Attorney General Catherine Cortez Masto. "This strong partnership will allow our states to make an even more concerted effort to hold fraud perpetrators accountable and ensure law-abiding homeowners receive justice."

By most objective measures, California and Nevada have been the states hardest hit by the nation's foreclosure crisis. In October 2011, Nevada and California ranked first and second, respectively, for the percentage of their housing units that entered the foreclosure process, reflecting a parallel surge in foreclosures in the two states. One in every 180 Nevada properties entered the foreclosure process in October, and one in every 243 California homes received a filing that month. In 2010, California led the nation with a total of 546,669 foreclosure filings (4 percent of the state's housing units), while Nevada led the nation with 9.4 percent of its homes receiving a foreclosure filing (totaling 106,160 units).

The crisis in these Western states is similar because both states share a foreclosure system in which a bank can foreclose on a borrower's home without court oversight, also called "non-judicial foreclosure." The collective result has created a rich opportunity for predators, leading both states to make mortgage-related law enforcement action a top priority.

In May 2011, Attorney General Harris formed a Mortgage Fraud Strike Force, now composed of nearly 40 attorneys and investigators, that has launched a wide series of investigations and litigation. The Mortgage Fraud Strike Force has instigated legal actions in cases including a fraudulent multi-million dollar "mass joinder" lawsuit operated by the law firm Kramer and Kaslow, and the arrests earlier this month of three top officers of a Stockton real estate company who took thousands of dollars in up-front loan modification fees and made false promises to assist struggling Central Valley homeowners with lowering their mortgage payments.

In 2007, Attorney General Masto formed the Nevada Mortgage Fraud Strike Force that launched a wide series of investigations and litigation into areas including violations of the law related to mortgage lending, servicing, and foreclosure practices and the creation, rating, marketing, sale, and management of mortgage backed securities. The Nevada Mortgage Fraud Strike Force has taken action against predatory "mortgage rescue" companies and individuals claiming to offer services to stop foreclosures. Last month, the Strike Force announced the indictments of Gerri Sheppard and Gary Trafford, who led a massive robo-signing scheme which resulted in the filing of tens of thousands of fraudulent documents. Nevada is also suing Bank of America and its subsidiaries, including Countrywide, for violations of a Consent Judgment for mortgage servicing and mortgage origination irregularities.

The Mortgage Investigation Alliance is the product of weeks of discussion between Attorneys General Harris and Masto regarding the most effective and efficient means of achieving justice for their respective states. Today's announcement formalizes an agreement reached between the two officials last week.

Distrito: What to Expect from the Capistrano Council?

The question of whether to put Distrito La Novia on the ballot for a referendum was delayed at the last City Council meeting at the request of the developer. He was out of town.

The Capistrano council's decision comes down to whether to set the election on the mixed-use-equestrian project or just rescind approvals. The developer, Advanced Real Estate Services, can also ask the approval be rescinded, then go ahead with a 440-home project already approved.

My sense is that many people don't believe the developer will build the housing project and that a successful referendum would mean the 100-plus acres would remain undeveloped. I've talked to a couple of people who heard as much at signature-gathering tables for the referendum.

And yes, some people probably believe the houses will be built and would rather have them than the new project.

But what to expect from the council? Sure, Mark Nielsen and Lon Uso didn't get re-elected and they both supported the project. But as I've mused over before, the two of the three elected -- Larry Kramer and John Taylor -- support Distrito, too.

Here's two letters appearing in this week's edition of The Capistrano Dispatch.

Whose Property Rights?

—Renee Taylor, San Juan Capistrano 

When someone buys a home in a residential neighborhood they don't have an automatic right to rezone it into another use such as a Bed and Breakfast. The same applies to commercial property such as the Distrito/Meadows. 

The developer has a right to request a rezone, but City Council also has the right to deny the rezone if the project does not offer adequate benefit to the city and its residents. The prior City Council chose to approve the Distrito rezone for their own individual reasons, but ignored the residents’ property rights and the effect it would have on their quality of life. Citizens collected 3,400 signatures to qualify the final decision to be determined by our town’s voters. If the current City Council doesn't rescind the approval of this project it could cost as much as $80,000 to place this issue on a special election. 

Due to the current city's financial situation and citizen distrust, wouldn’t it make more sense to rescind the prior city council's approval of this rezone? This action would accomplish two things: first, it would save the city a lot of money they don't currently have and secondly, it would send a message that the new City Council has heard the voices of the people instead of just the developer! It would send a message that a new council does represent them and is fiscally responsible. Or they can continue the practices of the past council and continue this very divisive issue. Will it be a new day for San Juan Capistrano or just a new good old boy's club? 

Public Vote Not Necessary

—Judy Morgan, San Juan Capistrano 

The City Council has delayed making a decision whether to spend $85,000 for a special election or to completely rescind their vote on the controversial Distrito/Meadows project and save voter’s money. 

A referendum was successfully mounted by San Juan residents after the City Council approved a high density development on La Novia and San Juan Creek Road. Nearly double the required number of signatures was collected by residents in a little over three weeks. That should tell the City Council that something is very wrong with their decision. The residents in our special town are sophisticated and smart. They appreciate the unique character we are fighting to preserve. 

Many residents clearly oppose this project which would have a negative impact on both our quality of life and the very character of our town. If this was a good project for San Juan Capistrano why are so many residents prepared to fight this referendum to the bitter end? Why did double the required voters sign the referendum? Why does the developer want to ruin the character of our special town? Why does the City Council want to push a project that is divisive with the residents? Why doesn’t the developer just develop the project somewhere else, where they will want him? With the greater majority of residents against this project, it is likely that even if it got built it will not be successful. 

The proposed development is only one decision by the City Council of San Juan Capistrano in a long line of misguided and fiscally irresponsible actions. But this development has become the line in the sand for a substantial number of our citizens. Enough. This will not stand. Some council members have worked closely with the developer for years and have pushed this decision through in spite of strenuous and vocal opposition. They obviously think they can force their wishes upon us. They have forgotten who they work for. They work for the citizens of our town and not for the developers. 

They should listen to the will of the people and rescind this decision at the next session of the City Council. A costly special election is not in our town’s best interest. This project doesn’t belong here.

Capistrano Woman on Channel 4 News Tonight

Louise Gaiser, featured in The Capistrano Dispatch in November for her efforts to tutor kids in the garage of her mobile home, is getting a little flak from her HOA. Channel 4's Vikki Vargas has the story at 5:30 tonight.

Here's our earlier story.

This is the Sort of Thing that Scares City Officials...

From the State Attorney General's Office

PLEASANTON - Attorney General Edmund G. Brown Jr. and the City of Pleasanton have reached a precedent-setting agreement ending Pleasanton's restrictions on new housing and opening the way for jobs and new housing to be located close to each other.

"This agreement clears the way for new jobs, less congested freeways and cleaner air," Brown said. "It requires homes to be built closer to where people work to reduce long commutes and create a more neighborly urban environment."

Tuesday night, the Pleasanton City Council voted unanimously to accept the agreement.

In 2006, the nonprofit group Urban Habitat filed a lawsuit challenging Pleasanton's housing cap, which placed a permanent limit of 29,000 housing units in the city. Brown intervened in the case in 2009 and argued the housing cap violated state law by promoting urban sprawl and clogging the freeways with unnecessarily long commutes.

In March 2010, the Alameda County Superior Court ruled in the Attorney General's favor.

In the settlement approved last night, Pleasanton agreed to remove restrictions on new housing and to accommodate affordable housing adjacent to the city's BART station. Along with creating jobs and fulfilling the city's share of regional housing, the new development will enable workers to live within walking distance of a major transit hub.

While Pleasanton has been a magnet for new employment, housing has lagged far behind the number of new jobs, despite ample land for development, including property adjacent to the Pleasanton BART station. In the last decade, the number of new jobs nearly doubled - from 31,683 to more than 58,000. Unable to find affordable housing within the city, some workers were forced to commute two hours per day or more. One study found that 79 percent of workers lived outside of Pleasanton.

Brown has taken an active role in encouraging local governments and businesses to help the state reach its greenhouse gas reduction goals. He has commented on several dozen environmental review documents, including those created for the General Plans of cities and the regional transportation plans of counties, as well as for projects related to oil refineries, cement plants, and dairy expansions. Brown has also reached path-breaking settlements with the County of San Bernardino and the City of Stockton, which required them to develop plans to ensure sustainable growth with a reduced carbon footprint.

No Surprise: Whispering Hills Sues School District

The dispute between Whispering Hills and Capistrano Unified School District has finally landed in court. This is over $6 million the developer says the school district owes it from the construction/land sales of San Juan Hills High School.

The district and developer have been fighting in letters over when the district was supposed to repay a $6 million bridge loan the developer made the district when Whispering Hills sold CUSD the land for San Juan Hills High.

According to the suit, the loan was supposed to be repayed when the district formed the CFD for the area. But the district says the CFD has not been funded -- no houses have been built --

Here's a copy of the suit.