In Ohio, as in many other states, mortgage fraud schemes are prevalent, especially in today’s world of distant lending and mortgage brokering practices.

Q:       What is mortgage fraud?

A:        Mortgage fraud can include many different schemes such as falsifying loan applications, using straw buyers (having an individual complete a transaction for someone who may not qualify for a loan or is barred from entering into the loan), making false or inflated appraisals, accepting kickbacks and using fictitious identities.

            One type of mortgage fraud is called “fraud for housing, or “fraud for property,” and is typically committed by borrowers. In this type of fraud scheme, a borrower may provide false information about employment, income or assets in order to qualify for a loan. For example, a borrower may fabricate income or falsify assets in mortgage application documents in order to qualify for a larger loan than he or she can afford.

            The second area of mortgage fraud is called “fraud for profit.” Sometimes known as industry insider fraud, this is the most common type of mortgage fraud. These schemes are often more intricate and involve a group of people, each of whom plays a different role. 

Q:       Who is typically involved in mortgage fraud schemes?

A:        According to fbi.gov, industry insiders are estimated to be involved in 80 percent of all reported mortgage fraud cases. Most “fraud for profit” is initiated by a seller, lender, real estate broker or closing agent (or all of them acting together). For example, mortgage brokers may partner with a loan processer or collude with an appraiser to inflate a property’s value. Appraisers may also play a part in fraud for profit, either by being gullible or bribable. Appraisers may expect to receive a kickback or even simply a steady stream of business. 

            Typically borrowers are unaware of “for profit” schemes, although they can be involved.  For example, a borrower may “flip” or help “flop” a piece of real estate or launder money. As long as the borrower is walking away with some sort of profit fraudulently obtained, the borrower may potentially be prosecuted for aiding and abetting a fraud.

Q:       How do incidents of mortgage fraud typically get investigated?

A:        Mortgage fraud investigations are generally conducted after government investigators become aware of mortgage fraud after analyzing Suspicious Activity Reports (SARs). SARs are filed by federally insured financial institutions, many of which are uncovered and reported during foreclosure proceedings.  Most mortgage fraud investigations (once triggered by the filed SARs) are investigated by both state and federal authorities who use shared efforts such as multi-jurisdictional task forces.

Q:       What happens if someone is convicted of mortgage fraud?

A:        Federally and in Ohio, mortgage fraud crimes are prosecuted under a variety of statutes (there is no specific mortgage fraud criminal statute per se). Federal prosecutors may look to bank fraud, money laundering, wire fraud or falsification statutes, while state prosecutors may look to various theft offenses.  The economic loss or damage is determined through the culmination of the loan transaction and can quickly climb into the millions of dollars. Determining sentencing for someone associated with mortgage fraud takes into account monetary loss as well as the wrongdoer’s criminal history.

            Fraud for housing is rarely prosecuted. Instead, a borrower who used fraudulent methods to obtain a loan is penalized by losing the home and becoming a subprime borrower for the next four to seven years.

Q:       If I believe I may have information regarding a mortgage fraud scheme, or have questions about a certain transaction, what should I do?

A:        Speak with an attorney who practices in this area. An attorney will likely investigate to learn the details of the transaction and determine the best way for you to proceed. If your participation was not intentional, your attorney will assist you in separating yourself and your actions from those responsible for the scheme. If you are a professional (for example, a real estate agent), then your lawyer may engage an expert to show that you acted within your profession’s standards.

This “Law You Can Use” consumer information column was provided by the Ohio State Bar Association. It was prepared by Columbus attorney Karl H. Schneider, a partner of Maguire & Schneider, LLP. Articles appearing in this column are intended to provide broad, general information about the law. Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney.

Q:       What is a “right of first refusal”?

            A:        A right of first refusal is a right to match an offer to purchase property. Let’s say that you put your home up for sale, knowing that your neighbor, Sally, might be interested in buying it. You might choose to give Sally the right to match any purchase offer you may receive for your home.

Q:       How does a “right of first refusal” work?

A:        Let’s say you decide you want to sell your home to your friend, John, for $200,000 under certain conditions. However, since you gave your neighbor Sally a right of first refusal to purchase the home, you must first offer it to Sally under the same terms as those you offered to John before you can sell it to John. If Sally exercises her right of first refusal and follows through with the purchase, John will not be able to buy your home.

Q:       When I draft a right of first refusal, what issues should I cover?
A:        You should address these issues: 

·       Cleary identify what real estate is subject to the right of first refusal.  Suppose you give Sally a right of first refusal for your home as well as the lot next to it. The right of first refusal agreement should address what will happen if, for example, a potential purchaser, such as John, wants to buy only the home and not the next-door lot, and what the price will be.

·       Non-cash offer.  A right of first refusal should address what will happen if, for example, a potential purchaser wants to exchange his home for yours. In this case, Sally, who holds a right of first refusal, cannot match such an offer. The right of first refusal should say exactly how much Sally must pay in cash to match a non-cash offer.

·       Timing.  It is important to carefully draft provisions about when rights of first refusal can be exercised. For example, you should notify Sally within a certain number of days after you receive another offer, and Sally should have an opportunity to exercise her right within a certain number of days. You should also make it clear how Sally will be notified (such as by mail or in person). You should also specify the date of closing, or require Sally to close on whatever date a potential buyer might specify in an offer. The right of first refusal also should have a termination date. After that date, Sally would no longer have the right of first refusal.

Q:       Is a right of first refusal transferable?

            A:        Unless you’ve said, in writing, that Sally cannot transfer her right, then Sally may transfer it to a third party. So, as the property owner, you should state specifically that the right is personal only to Sally, or that Sally can transfer the right of first refusal to a third person. A right of first refusal also should be drafted so that it is binding upon entities or trusts that you own or have an interest in. For example, it could state that, if you transfer your property to a company you own and that company receives an offer to purchase, Sally may still exercise the right of first refusal. You should also state what happens upon your death, as an owner. For example, it may state that the right of first refusal will terminate when you die. Otherwise, the right of first refusal may continue to apply to whoever inherits the home.

Q:       What happens if Sally declines to exercise her right of first refusal?

            A:        Some rights of first refusal provide, for example, that if Sally accepts the right but is unable to complete the transaction, she will no longer have the right in the future. Others provide that the right continues if the property is sold to another party. If the right of first refusal document says nothing about this issue, then there may be differences of interpretation.

Q:       What if either Sally or I change the terms of the purchase?

            A:        Typically, slight variations to the offer by you, as owner, and Sally, who exercises her right of first refusal, are acceptable. In general, you and Sally may not “materially vary” from the terms of the original offer. Obviously, the meaning of “materially vary” may be disputed.

            A carefully drafted right of first refusal addresses most of the issues listed above. However, many rights of first refusal are not complete and specific. Even a well-drafted right of first refusal is subject to dispute, as are most agreements that anticipate future matters.

This "Law You Can Use" column was provided by the Ohio State Bar Association. It was prepared by Avon attorney Marsha L. Collett of Wickens, Herzer, Panza, Cook & Batista Co. Articles appearing in this column are intended to provide broad, general information about the law. Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney.

Q:       What laws cover student educational records?

A:        Student education records are protected by federal law, the Family Educational Rights and Privacy Act (FERPA), and Ohio’s student privacy law (Ohio Revised Code § 3319.321). These laws are similar in application, with some minor differences.

Q:       What do the laws require?

A:        FERPA and Ohio’s student privacy law have two primary functions in common. Both laws: 1) guarantee parental access to education records, and 2) prohibit the disclosure of education records to third parties without parental consent.

Q:       What is considered an “education record?”

A:        An “education record” includes records which: 1) contain information directly related to a student, and 2) are maintained by a school. This could include birth certificates, names of parents, immunization records, grades, disciplinary records, etc.

Q:       How is access to education records guaranteed?

A:        Both FERPA and Ohio’s student privacy law require schools to provide parental access to the education records of children under age 18. Parents have the right to see everything in the student’s education record, except information about other students or information protected by another state or federal law. Schools must comply with a request for access within a reasonable period of time, but in no case more than 45 days after the request.

Q:       How are education records protected from third parties? 

A:        Both laws prohibit the disclosure of “personally identifiable information” in education records to third parties without the prior written consent of the parent. Personally identifiable information generally includes any information that would make the student’s identity traceable.

Q:       Are there exceptions that allow disclosure without consent?

A:        Yes. Several exceptions allow disclosure without parental consent. For example, schools may release records to school officials with “legitimate educational interests,” such as disclosure of student records to the student’s teacher or to an in-school therapist treating the student.

            Other exceptions allow schools to release education records to a school where the student is transferring, to persons acting with a subpoena, or to health and safety personnel during an emergency.

Q:       What is directory information?

A:        Through its policies, school districts may designate certain student information as “directory information.” Directory information generally includes information that could be found in a school yearbook, playbill or athletic program, such as a student’s name, address, telephone listing, date and place of birth, major field of study, participation in officially recognized activities and sports, dates of attendance and graduation, and awards received.

            Directory information may be disclosed without prior written consent. School districts must provide public notice of designated categories of directory information and allow a reasonable time for parents to “opt-out” of the release of this information.

Q:       Do students have rights to review their educational records before they turn age 18?

A:        Not really. Although both laws allow elementary and secondary schools to give students under age 18 the right to inspect and review their own educational records, the schools are not required to give minors this right. Parents, however, must be allowed to inspect and review their minor children’s education records.

Q:       Does a student have the right to view his or her records at age 18?

A:        Yes. All rights granted to parents under FERPA and Ohio law transfer to the student when the student reaches age 18, or when the student starts attending a postsecondary institution. This includes the right to access education records and to consent to the release of education records.

Q:       Can the parents of a college-age student access their child’s education records?

A:        Maybe. A postsecondary institution may provide parents with access to their child’s education records, without the child’s consent, if the parents claim the student as a dependent for IRS tax purposes. A college or university may also notify parents of students under age 21 if the student has violated any law or policy concerning the use or possession of alcohol or a controlled substance.

Q:       What schools are required to comply with these student record laws?

A:        The federal FERPA law applies to all educational agencies receiving federal funds under any program administered by the U.S. Department of Education. This includes all public school districts and most private and public postsecondary institutions. Some private schools may not receive funds from the U.S. Department of Education and, therefore, may not be subject to FERPA. Ohio’s student privacy law only applies to public schools in Ohio.

Q:       Does divorce affect a parent’s right to see his or her child’s educational records?

A:        A parent who is separated, divorced and/or not the student’s residential parent is permitted access to any records under the same terms and conditions as the residential parent, provided that the parents are not subject to any parenting agreement or court order to the contrary. Separated, divorced and/or non-residential parents may also provide the written parental consent to release records, barring a written parenting agreement or court order to the contrary.

This “Law You Can Use” column was provided by the Ohio State Bar Association (OSBA). It was prepared by Columbus attorney Mark A. Weiker of Albeit Weiker, LLP. The column offers general information about the law.  Seek an attorney’s advice before applying this information to a legal problem.

Q:       The more I hear about teens “sexting” each other the more concerned I am. What exactly is sexting?

A:        Sexting is generally understood as creating, sending, receiving or showing sexually-oriented content, including images and words, via cell phone, email, social media or other online communications. Studies suggest as many as one-fourth or more of all teens are directly involved in sexting, while as many as half have seen inappropriate “sexts” of one kind or another.

Q:       Is sexting a crime?

A:        Between consenting adults (individuals over age 18), sexting is not a crime, although sexting-related misunderstandings or aggressive behavior can lead to criminal or civil liability for harassment, invasion of privacy and other offenses.  Whenever sexting involves a minor, i.e., someone under 18, it is a crime. This is true whether the child accepted a “sext,” sent or forwarded it, received and kept it, posted it, or showed it to someone else on a school bus. The fact sexting might be shared between “consenting” minors does not mean it is okay.

Q:       How can a minor know what kind of message would be considered “sexting”?

A:        A Supreme Court justice once famously remarked that he couldn’t define obscenity, but he knew it when he saw it. While the definition of “sexting” may vary depending on who is evaluating the message, people generally agree that sharing any kind of nude images of persons under 18, whether or not their faces are visible, are improper. 

Q:       If sexting is a crime, should the police be called?

A:        Yes. In Ohio, it is a crime to create, reproduce, advertise, buy, sell or possess any sexual material involving a minor. Someone who sexts can be charged with pandering, obscenity involving a minor, child endangerment, possessing nude images of a child, harassment and bullying, and other crimes. If a girl sends a picture to her boyfriend, both can be charged with sexting. If the boyfriend then forwards the image to his buddy, the buddy can be charged. Charges can be brought under both state and federal law, and children and their parents can also be sued based on sexting-related behavior.

Q:       Are kids really prosecuted for child porn over this?

A:        Prosecutors use their discretion, so they may or may not prosecute minors for child pornography, but it can happen. In the Cleveland suburb of Macedonia, several middle-schoolers were caught in December of 2014 engaging in a competition to see who could obtain the most nude photos of female classmates. During the competition, six girls sent nude images of themselves to boys.  Although no one involved was charged with a crime, the students were put in a diversion program. They were ordered to clean the police station and police cars, and warned to stay out of trouble for a year.  However, in August of 2014 the Ohio Court of Appeals for Wood County upheld the conviction in juvenile court of M.W., who sexted images of himself having sex with a girlfriend.  M.W. was found guilty of violating R.C. 2907.321, pandering obscenity involving a minor, a second degree felony, and was ordered to register as a Tier I juvenile sex offender.

Q:       Does Ohio law specifically prohibit sexting? 

A:        No. Although many states have laws specifically addressing sexting between minors, some concerns expressed by both law enforcement and free-speech advocates have thus far prevented proposed sexting laws from being enacted in Ohio. The only laws currently on the books are those governing child exploitation. In addition, Ohio lawmakers passed a bill requiring schools to have policies and procedures for handling harassment, intimidation and bullying, including cyber-bullying.

Q:       What can I do to help prevent my minor child from becoming involved in sexting?

A:        First, make sure you warn your child about the potential consequences of sexting. Also, contact your school, talk to other parents, look online for help, or call the National Center for Missing & Exploited Children’s 24-hour hotline at (800) 843-5678 for more information. If you have evidence of teen sexting close to home, don’t hesitate to call the police. Police and prosecutors will use their discretion regarding prosecution, and they have the experience and resources to help minors appreciate the seriousness of the matter without making things worse.

This “Law You Can Use” consumer information column was provided by the Ohio State Bar Association. It was prepared by Timothy J. Puin, of counsel for the Cleveland firm of Janik LLP. Articles appearing in this column are intended to provide broad, general information about the law. Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney.

The Internal Revenue Service offers an assortment of online services, including features that help taxpayers understand how the Affordable Care Act will affect them at tax time.

Q:       Will the Affordable Care Act impact my tax return?
A:        This year’s tax return will include new questions to include provisions of the Affordable Care Act (ACA). Most taxpayers (about three-fourths) will just check a box to verify that they have health insurance coverage, but some taxpayers will have to take some additional steps. Visit IRS.gov/aca to learn about the premium tax credit, the individual shared responsibility requirement and other tax features of the ACA. The individual shared responsibility requirement included in the Affordable Care Act is new to the Form 1040 this filing season.

Q:       What does the ACA require taxpayers to do?

A:        The Affordable Care Act requires that all taxpayers and each member of their families have qualifying health insurance coverage for each month of the year, or qualify for an exemption or make an individual shared responsibility payment when filing the federal income tax return. Some moderate-income taxpayers may also qualify for financial assistance to help cover the cost of health insurance purchased through the Health Insurance Marketplace. Taxpayers will fall into one or more of the following categories:

·       Check the box. Most taxpayers will simply check a box on their tax return to show that each member of their family had qualifying health coverage for the whole year. No further action is required. Qualifying health insurance coverage includes coverage under most, but not all, types of health care coverage plans. Taxpayers can use the chart on IRS.gov/aca to find out if their insurance counts as qualifying coverage. 

·       Exemptions. Taxpayers may be eligible to claim an exemption from the requirement to have coverage.  Eligible taxpayers need to complete the new IRS Form 8965, Health Coverage Exemptions, and attach it to their tax return.  Taxpayers must apply for some exemptions through the Health Insurance Marketplace. However, most of the exemptions can be obtained from the IRS when filing a return.

·       Individual Shared Responsibility Payment. Taxpayers who do not have qualifying coverage or an exemption for each month of the year will need to make an individual shared responsibility payment with their return. Examples and information about figuring the payment are available on the IRS Calculating the Payment page.

·       Premium Tax Credit.  Taxpayers who bought coverage through the Health Insurance Marketplace should receive Form 1095-A, Health Insurance Marketplace Statement, from the Marketplace by early February. This form should be saved because it has important tax information. Taxpayers who should receive the form but haven’t received it by early February should contact their Marketplace. The IRS does not have access to this information.

           
            Taxpayers who got advance payments of the premium tax credit must file a federal income tax return. These taxpayers need to reconcile their advance payments with the amount of premium tax credit they’re entitled to based on their actual income. Some may see a smaller or larger tax refund or tax liability than was expected. Use IRS Form 8962, Premium Tax Credit (PTC), to calculate the premium tax credit and reconcile the credit with any advance payments.

            The IRS has set up a special section at IRS.gov/aca with more information about the Affordable Care Act and the 2014 income tax return.

Q:       Can taxpayers receive help in meeting the health care requirement?
A:        Low- and moderate-income taxpayers can get help meeting this health care requirement and filing their return for free by visiting one of the more than 12,000 community-based tax help sites staffed by more than 90,000 volunteers that participate in the Volunteer Income Tax Assistance and Tax Counseling for the Elderly (VITA/TCE) programs. To find the nearest site, use the VITA/TCE Site Locator on IRS.gov.

            The IRS also reminds taxpayers that a trusted tax professional can also provide helpful information about the health care law. A number of tips about selecting a preparer and national tax professional groups is available on IRS.gov.

The information for this “Law You Can Use” column was provided by the Internal Revenue Service. It was prepared by the Ohio State Bar Association. Articles appearing in this column are intended to provide broad, general information about the law. Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney.