miami dade county mortgage fraud task force minutes november 7 2007

MIAMI-DADE COUNTY FINAL OFFICIAL MINUTES

Mayor’s Mortgage Fraud Task Force

Stephen P. Clark Government Center 18th Floor Conference Rooms 3 & 4

111 NW 1st Street Miami, Florida 33128

Wednesday, November 7, 2007 As Advertised

Harvey Ruvin, Clerk

Board of County Commissioners

Kay Madry Sullivan, Director Clerk of the Board Division

Scott Rappleye, Commission Reporter (305) 375-5108

Clerk’s Summary and Official Minutes Mayor’s Mortgage Fraud Task Force

November 7, 2007

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CLERK’S SUMMARY AND OFFICIAL MINUTES MAYOR’S MORTGAGE FRAUD TASK FORCE

November 7, 2007

The Mayor’s Mortgage Fraud Task Force convened in a meeting on November 7, 2007, at 10:00 a.m. in the 18th Floor Conference Rooms 3 & 4 of the Stephen P. Clark Center, 111 NW First Street, Miami, Florida. The following members were present: Chairman Glenn Theobald, Mr. Luis Andre Gazitua, Miami-Dade Police Department Sergeant Richard Davis, Miami-Dade Police Department Lieutenant Cynthia Machanic, Ms. Nancy B. Hogan, Mr. Robert Cohen, Mr. Raul Ballaga, Ms. Cathy Grimes Peel, Mr. Tom Dixon, 11th Judicial Circuit Court of Florida Judge Maria Korvick, Mr. Robert Rosenau, Mr. Michael Lipsitt, Mr. Fred Kerstein, Mr. William Kostrzewski, Ms. Lisa Vila, Mr. James Gueits, Mr. Sol Genet, Mr. Jeff Hearne, Ms. Danielle Blake, Mr. Brian Piper, Mr. Anthony Dimarco, Mr. Ted Conner, 11th Judicial Circuit Court of Florida Judge Celeste Muir, Mr. Carlos Guzman, Mr. Zach Korbin, Mr. Marcus Saiz, Mr. Robert Otero, Mr. John Schofield, Mr. Andy Madson, and State of Florida House Representative Carlos Lopez-Cantera. The Honorable Harvey Ruvin, Clerk of the Circuit and County Courts, and Deputy Clerk Scott Rappleye were also present.

1. Introductions Chairman Theobald called the meeting to order at 10:17 a.m. He asked that Task Force members introduce themselves. Following the introductions, it was moved by Ms. Hogan that the September 19, 2007, Task Force meeting minutes be approved. This motion was seconded by Mr. Ballaga, and upon being put to a vote, passed unanimously.

2. Opening comments by Chairman Chairman Theobald noted the mortgage fraud issue undertaken by the Task Force was tremendous; that it was negatively impacting the local, state and national economy. He pointed out that former Federal Reserve Chairman Alan Greenspan had indicated Miami and Las Vegas were the top two epicenters for mortgage fraud. Chairman Theobald noted Mayor Carlos Alvarez assembled this Task Force after the State Legislature passed the Mortgage Fraud Bill. Since the September 19, 2007 Task Force meeting, the Mayor held a press conference concerning mortgage fraud and 13 individuals were indicted and the mortgage fraud case load had doubled since the Task Force was created and publicized, Chairman Theobald noted. He presented statistical information to support his claims regarding the increase in mortgage fraud since 2004. In concluding, Chairman Theobald expressed his appreciation to the Task Force members and the Committee Chairs for their efforts, and noted the Task Force had received positive responses from the media and public.


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3. Guest Speaker, Honorable Harvey Ruvin, Clerk of the Courts Chairman Theobald noted the Honorable Harvey Ruvin, Clerk, Miami Dade-County Circuit and County Courts, would report on initiatives underway by the Clerk’s Office to prevent mortgage fraud. Mr. Ruvin expressed appreciation to the Mayor for his leadership and initiative in efforts to combat mortgage fraud. He noted both mortgage and deed fraud had a negative impact on the local economy and attributed to the chaos caused by sub-prime mortgages and to declining confidence in the real estate market in South Florida. One year after being elected as the Clerk of the Courts, he was contacted by a reporter from ABC “Primetime” News regarding the falsification of quit claim deeds for vacant lots owned by foreigners. He clarified that pursuant to Florida State Statute, the Clerk’s Office had to record certain documents that appeared complete; and that record keeping was not a process of verifying authenticity of a document or a signature. Mr. Ruvin clarified the basic function of recordation was to provide notice to property buyers that an encumbrance may exist or that the title may be defective. He noted when this problem was initially presented to him, he proposed to solve the quit claim deed problem by immediately sending a notice that a quit claim deed had been filed as well as a copy of the quit claim deed to the last recipient of the tax notice for the property in the quit claim deed. Mr. Ruvin noted that in 1994, implementing this proposed solution would have cost $2 million per year. He stated that he met with representatives from the mortgage industry to present this proposed solution, and that the representatives responded that they were not worried about mortgage fraud; and that they simply built it into their premiums. Mr. Ruvin explained that the Clerk’s Office applied modern technology to the Recorder’s Office; and that modern technology had simplified and reduced the cost to combat fraudulent quit claim deeds through notifying people. He noted in May 2006, the Clerk’s Office implemented a database that was interfaced with the Property Tax Collector’s Office and this automated a system that generated a notice when a quit claim deed was filed and this notice was sent, in the form of a postcard, to the recipient of the last tax bill for the subject property that a quit claim deed had been filed to change the title for the property; referring the property owner to the Clerk’s Website; and referring these individuals to the Economic Crimes Division for additional questions. A total of 47,000 notices were generated and mailed since this system was implemented, Mr. Ruvin noted. Mr. Ruvin stated that he was apprised that many owners had responded; that a number of fraud cases had been uncovered as a result; and that this solution provided a window of opportunity to apprise owners that they were being defrauded. He explained that this pro-active approach to send information to the public for quit claim deeds was part of the solution to mortgage fraud. Mr. Ruvin noted he was committed to working with members of this Task Force and State and Federal officials to prevent mortgage fraud.


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Responding to Chairman Theobald’s inquiry regarding other counties in Florida using this same notification system, Mr. Ruvin clarified this County was the only county in Florida, and maybe one of few in the country, using this system. He noted after he had appeared on “Primetime” and suggested this solution, the City of Philadelphia contacted him and implemented it, notwithstanding the financial costs. Mr. Dixon commended Mr. Ruvin for the work done by the Clerk of the Courts to automate real estate records. In response to Mr. Cohen’s question regarding the impact of electronic technology on the cost of this method, Mr. Ruvin noted the original notification system included more people, more postage, and more printing; and that electronic technology had lowered the cost to $35,000-$40,000 per year. He clarified that this method was for quit claim deeds only. Mr. Cohen explained that transactions made by deeds that were not supported by a financial source caused trouble. He clarified that if a warranty deed was recorded to transfer a house and no new mortgage was recorded, then it was suspect. He suggested that the Clerk’s Office broaden its efforts to target all transactions involving any conveyance, including warranty deeds and mortgage satisfactions. Mr. Cohen concurred that the solutions to Mortgage Fraud needed to include electronic or automatic notification to the lenders and the other participants in the mortgage transactions that did not include forged signatures and that did not expect honesty.

4. Committee Reports BUSINESS PARTNERSHIP Mr. Otero noted the Business Partnership Committee endeavored to develop a Code of Conduct. He pointed out that he distributed a copy of the Code of Conduct and asked that Task Force members vote to approve this proposed document. Chairman Theobald clarified that the proposed Code of Conduct would apply to individuals in the mortgage industry. Pursuant to Chairman Theobald’s request for an explanation of this proposal, Mr. Otero noted this proposed Code of Conduct was a public statement of principles, values, and behaviors that was expected of professionals. He proceeded to read Sections 1.3, 1.4, and the definition of “professionals” in Section 2.1, of this proposal. Chairman Theobald expressed appreciation to the Committee for working diligently to prepare this proposed Code of Conduct. He asked that Task Force members analyze this proposal, and noted that the Task Force would vote to accept it at the next Task Force meeting.


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EDUCATION COMMITTEE Ms. Hogan noted that Ms. Danielle Blake was the new co-chair for the Education Committee; and that Mr. Robert Perdigon, President, Perdigon Title; Mr. Doug Dewitt, Realtor; and Mr. Phil Full, Magistrate, Property Appraiser’s Office, were newly appointed Committee members. Ms. Hogan pointed out the Mortgage Fraud Complaint Form was completed. She explained that the Committee attempted to compose a user friendly and accessible form. She noted the Committee was working on a consumer piece that the Committee intended to finish before December 31, 2007. Ms. Hogan noted the Committee felt the police needed to implement a routing system to avoid frustrating the community by telling them that the police had no resources to investigate reported mortgage fraud cases. She apprised the Task Force that realtors expressed concern regarding property values being listed much higher than the actual value used during closing. She pointed out several mortgage fraud seminars that would be held shortly. Ms. Hogan clarified that the fraud artists were developing new methods, which corrupted the tax data and frustrated appraisers. She stated any piece of education would enhance the Committee. Chairman Theobald noted a few complaint forms had already been submitted online. Responding to Ms. Hogan’s comments regarding a police routing system, he explained that BankUnited met with the Office of the Attorney General of Florida; and that an 800 number would be included in a statewide mortgage fraud task force initiative; and that the statewide task force would divide the State into the same seven regions used by the Domestic Security Task Force. REGULATORY COMMITTEE Mr. Cohen noted the Regulatory Committee was analyzing the state of regulatory enforcement and what changes would be helpful. He pointed out that many helpful regulations existed; however, they were not enforced due to a lack of allocated resources. He stated the notification system presented by Mr. Ruvin needed to be expanded to provide self-executed regulations. Mr. Cohen noted the Committee would meet Monday, November 12, 2007, to discuss more automated methods that could be implemented that would provide lenders, sellers, and prospective homeowners information to identify they had walked into a bad situation. Chairman Theobald noted the County’s efforts to work with the State of Florida Department of Business and Professional Regulation to immediately suspend licenses of individuals arrested for mortgage fraud. He pointed out the violators usually had multiple different companies and licenses; and that they would work under another person’s license after they were released from jail. Mr. Cohen pointed out the importance of a nationwide underwriter. He noted immediate action needed to happen if an underwriter pulled out.


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LEGISLATIVE COMMITTEE Chairman Theobald noted a number of items were suggested as potential legislation; and that one was to help reduce residents’ taxes by allowing the Property Appraiser’s Office to disregard the artificially inflated property values identified by the Miami-Dade Police Department (MDPD). He clarified the impact of this suggestion would be pursuing the mortgage fraud artists and preventing taxes and insurance from increasing without the intrinsic value of the property increasing. Chairman Theobald also noted the Legislative Committee considered potential legislation concerning predatory lending. He explained predatory lending was when purchasers used sub-prime or alternate aid financing, which would eventually require refinancing. He clarified that state regulations governing predatory lending existed, but these regulations did not include criminal penalties. Representative Lopez-Cantera noted he was committed to continue filing legislation regarding mortgage fraud. He stated home values should decline if mortgage fraud was eliminated. Mr. Corbin noted State of Florida Senator Gwen Margolis expressed her apology that she could not attend this meeting for medical reasons. He identified the two unresolved issues regarding quit claim deeds as 1) how to enforce verification, and 2) who would initiate enforcement efforts. Mr. Corbin stated Senator Margolis thought the Task Force should develop comprehensive legislation to combat quit claim deeds and include it in the County’s legislative package. He pointed out the existing laws were not enforced well and noted he questioned whether the lack of resources or the ambiguity of the laws accounted for the poor enforcement. Mr. Corbin suggested the Task Force prepare an explanation for the existing laws being poorly enforced. LAW ENFORCEMENT Miami-Dade Police Department (MDPD) Sergeant Davis commended Mr. Cohen for his ideas regarding law enforcement; however, he, as well as Mr. Kerstein, Mr. Lipsitt, and Mr. Pipe, had identified some loopholes in the existing laws that needed to be closed; and that he would like to meet with the Regulatory Committee to discuss those loopholes. Sergeant Davis noted the MDPD was investigating some houses listed with inflated sales prices, as noted by Ms. Hogan in her report. In addition, he noted the Police Department was in the process of developing a tracking system to capture all information on the houses and the individuals involved in mortgage fraud crimes to provide information on what cases each municipal police department was investigating. The MDPD would provide the number of quit claim deed cases, mortgage fraud cases, and real estate fraud cases that were being investigated, Sergeant Davis noted. He pointed out the MDPD was providing continuous training to its employees. Mr. Davis noted a meeting would be held before the end of November 2007, to discuss this matter with all statewide law enforcement personnel.


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Chairman Theobald noted the Mayor announced 11 arrests at the October 2007 Press Conference, and that the 11 arrests only represented the tip of the iceberg. He pointed out that Mr. Robert Parker, Director, Miami-Dade Police Department, had committed more resources to combat mortgage fraud.

5. Announce upcoming press conference Chairman Theobald announced that the Mayor would hold another press conference at 10:00 a.m., on December 5, 2007, at the Miami-Dade Police Headquarters.

6. Open Forum/Public Comments Mr. Rosenau, Chief, Florida Department of Financial Services, provided an overview of the Office of Financial Services. He noted the Office had 54 dedicated investigators with almost 500 cases, of which, 1/3 were mortgage related. He pointed out that the mortgage problem was multi faceted and more than one agency needed to collaborate to address it effectively. Chairman Theobald commended Mr. Lipsitt for his contributions. Following further discussion, Judge Korvick noted Judge Muir and she broadcasted their first Spanish radio program, with the assistance of Mr. Ira Price and Major Pichardo, to alert the public on mortgage fraud. She explained that the 11th Judicial Circuit would provide continuing legal education lectures to prepare all judges for the influx of new mortgage fraud cases. Chairman Theobald said he would commit to publicizing mortgage fraud to prevent it from occurring. Mr. Stephen Lewis, Legal Services of Greater Miami Representative, expressed appreciation to Judge Korvick for the Courts’ response to Mortgage Fraud. He pointed out that a mortgage often foreclosed during a title dispute and both parties lost the property. He suggested the Task Force consider a mechanism to temporarily stay mortgage payments during title disputes. He commended Mr. Ruvin for the Clerk’s Office’s online records system, which allowed a user to perform a public record search on every transaction involving an individual and a company. Following Mr. Guzman’s comments referencing a recent Miami Herald article concerning the State Attorney’s Office’s Seniors Spoof Program and the Office’s efforts to educate senior citizens, Ms. Hogan asked Mr. Guzman and Judge Korvick to provide her with vital information concerning the people and groups mentioned in their comments. Ms. Blake expressed appreciation to the Education Committee for providing the Mortgage Fraud Complaint Form.


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In response to Ms. Blake’s questions regarding the deadline for reporting mortgage fraud, Mr. Saiz noted mortgage fraud could be reported anytime throughout the year. He explained that the Legislature needed to provide the Property Appraiser, through the Florida Statute, authority to disqualify certain sales from the analysis process, upon being notified by law enforcement agencies that a sale was fraudulent. Mr. Saiz explained the hearing process for the Value Adjustment Board. Following Ms. Blake’s request that the Legislative Committee consider adding an exception for mortgage fraud to the Value Adjustment petition deadline, Rep. Lopez-Cantera noted a grace period could be added to the statute language. Ms. Elena Carpenter, 3112 Commodore Plaza, Publisher, Miami Monthly Magazine, appeared before the Task Force. She asked to whom the public could report mortgage fraud and/or submit complaint forms. She questioned whether the Task Force would consider whether the law enforcement agencies had adequate resources and manpower to combat mortgage fraud. Responding to Ms. Carpenter, Chairman Theobald clarified the Complaint Form would go to the MDPD Economic Crimes Bureau, and the Bureau would forward the case to the proper agency for that specific location. He noted that if the proper agency did not have the resources to process the Complaint Form, the MDPD would process the case. He pointed out that the County had doubled the number of detectives and that number would increase on November 12, 2007. Ms. Carpenter noted numerous realtors and professionals expressed concern regarding the lack of attention given to their mortgage fraud complaints. Chairman Theobald explained that law enforcement was not well prepared for mortgage fraud when it occurred. He clarified that mortgage fraud was often not reported because the buyer, seller, and realtor were happy with the transaction. Following further discussion regarding the public reporting mortgage fraud and the commitment of law enforcement agencies, Mr. Cohen noted the realistic time frame to process a complaint form and to arrest and prosecute violators would be six months. Mr. Clarke Jones, 7840 SW 54 Avenue, questioned how many of the 400 cases on file were being prosecuted. Chairman Theobald noted he could not provide an exact number; however, the details would be provided at the December 5, 2007, Press Conference. Responding to Mr. Jones’ question concerning whether the Task Force would identify individuals guilty of mortgage fraud in the past and prosecute them, within the Florida Statute of Limitations, Mr. Cohen noted the people committing mortgage fraud today were the same people who committed it a few years ago.


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Mr. Ken Sapp appeared before the Task Force and suggested the Task Force consider creating a form of oversight or auditing for the real estate profession. He questioned what could be done to identify and stop perpetrators while they were in business. Mr. Cohen stated he thought the mission statement of the Task Force was to eliminate the guilty parties while they were in business and to deter future mortgage fraud. Chairman Theobald pointed out the new Mortgage Fraud law addressed the issue of fraudulent real estate transactions that were conducted outside the jurisdiction of the law enforcement agency responsible for that property by allowing law enforcement agencies to press charges in other counties. Ms. Natalie Jackson, 13230 NW 7th Avenue, Vision to Victory Human Services/Destination HOME, appeared before the Task Force. She expressed appreciation for the complaint form. She noted she would follow up to ensure that the complaints filed by her clients were processed. Ms. Jackson noted Vision to Victory provided home buyer education workshops. Mr. Dixon noted the victims of mortgage fraud were the lenders. He questioned why lending companies did not attend today’s meeting (11/7). Mr. Cohen pointed out everyone in the County were victims. He clarified that lenders were the out-of-pocket victims, and that homeowners were victims because of the impacts of mortgage fraud. He noted that the impacted lenders went out of business. Mr. Dixon clarified that major banks were suffering tremendous financial losses; and that they should report mortgage fraud. Mr. Schofield pointed out the banks held only 20 percent of mortgage loans. He noted the real estate market used sophisticated financial structures that decreased the impact on banks. Following further discussion regarding the impact of mortgage fraud on banks and the reporting aspect of Mortgage Fraud, Mr. Ruvin noted the Clerk of the Courts was pursuing online foreclosure auctions. He pointed out that online foreclosure auctions would provide audit trails that could help the situation. Mr. Carballo pointed out the complaint form needed to include as much information as possible, including all documents that supported the claim to enable the MDPD Economic Crimes Bureau to conduct a thorough investigation and to expedite the process. Mr. Dimarco noted the banks approached mortgage fraud seriously.


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7. Closing/Next meeting Chairman Theobald announced the next Mayor’s Mortgage Fraud Task Force Meeting would be January 16, 2008, from 10:00 a.m. to 12:00 p.m. He also noted Mayor Alvarez would hold a Mortgage Fraud Press Conference December 5, 2007, 10:00 a.m., at the Miami-Dade Police Department Headquarters. It was moved by Mr. Dixon that this meeting of the Mayor’s Mortgage Fraud Task Force be adjourned. This motion was seconded by Mr. Otero. Hearing no objections, the meeting adjourned at 11:57 a.m.

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Glenn R. Theobald, Chairman Mayor’s Mortgage Fraud Task Force

miami dade county mortgage fraud task force minutes november 7 2007

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