Monday, January 31, 2011

A Broker Named Desire

The web page of the Massachusetts Board of Bar Overseers reports an 18 month suspension for misconduct in three real estate transactions:

The respondent was suspended for eighteen months for misconduct as a lender’s attorney in three real estate transactions from December, 2002, through March, 2004. For each transaction, the same mortgage broker, Leo Desire, referred the closing to the respondent. During the time period involved, Desire engaged in a series of “mortgage rescue” transactions with homeowners facing foreclosure, whereby the homeowners would convey their home to straws selected by Desire, Desire would obtain a loan to finance the transaction, and the homeowners would retain the right to repurchase their home pursuant to a formula set out by Desire.

For each of the three closings, the respondent prepared and signed, and had the purported buyers and sellers sign, a HUD-1 Disclosure Statement that he knew contained false and deceptive statements. Among other things, the HUD-1s misrepresented that a buyer’s deposit had been paid and that the buyer brought additional funds to the closing, failed to disclose payments to Desire (or his affiliates), and overstated the funds paid to the seller. The respondent submitted the false and deceptive HUD-1s to his lender clients.

The respondent was aware that the three transactions were straw transactions and that the original owners anticipated redeeming their ownership interests. He was also aware that the purported buyers had agreed that the original owners could continue to occupy the homes. The respondent did not inform his lender clients of these facts. He also had the purported buyers sign occupancy agreements, which he forwarded to his lender clients.

The attorney had substantial practice experience (an aggravating factor) but had not profited from the transactions beyond his standard fees (a mitigating factor). (Mike Frisch)

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