This article is part of an ongoing series covering violations of real estate law. Here, the Department of Real Estate (DRE) revoked the real estate license of a broker who knowingly took a fraudulent course for their mortgage loan originator (MLO) license endorsement, violating the student Rules of Conduct and licensing requirements of state and federal law.

In August 2022, the California Department of Real Estate (DRE) decided by default decision to revoke the license of Ashrif J Hammad, a broker since 2005 operating out of Beverly Hills, California. The decision became effective November 2022.

In addition to his real estate broker license, Hammad also held a mortgage loan originator (MLO)

license endorsement with the Nationwide Multistate Licensing System (NMLS). A DRE licensee who holds an MLO endorsement assists mortgage borrowers with the application, approval and closing process.

To become an MLO, an individual needs to:

  • complete 20 hours of NMLS-approved pre-licensing education;
  • pass the nationwide SAFE Mortgage Licensing Act Exam provided by the NMLS with a 75% or higher;
  • agree to a criminal background check; and
  • complete eight hours of NMLS-approved continuing education (CE) annually.

Editor’s note — firsttuesday is approved by the NMLS to provide both the on-time and late 8-hour CE. (Course Provider No. 1400986).  

From 2017 through 2020, Hammad used Danny Yen’s Real Estate Educational Services (REES) 8-hour CE courses to complete his annual CE requirements. Yen was approved by the NMLS (Course Provider No. 1405046) to offer one in-person 8-hour course in a classroom format. However, Yen fraudulently operated a scheme in which he intentionally provided course credit to MLOs who had never attended the in-person CE course and taken any final examinations.

Yen purportedly conducted 56 in-person classes between 2017 and 2020, though had no records or evidence the classes ever took place.

Yen did not teach the in-person course, and Hammad never attended the in-person course. Nor did Hammad complete the required exam or coursework to receive course credit.

By knowingly taking the fraudulent course, Hammad violated the NMLS student Rules of Conduct (ROC), which constitutes a violation of licensing requirements under state and federal law.

Specifically, Hammad violated the following ROC agreements:

  • the enrolled student will not attempt to circumvent the requirements of any NMLS approved course [ROC 3];
  • the enrolled student will not seek or attempt to seek outside assistance to complete the course [ROC 4];
  • the enrolled student will not engage in activities contrary to good character or reputation [ROC 7]; and
  • the enrolled student will not engage in any conduct that is dishonest, fraudulent or lacking integrity. [ROC 8]

Hammad’s involvement with the education fraud scheme is grounds for the suspension or revocation of his broker license and MLO license endorsement. [Calif. Business and Professions Code §§10166.051(a), 10166.051(b), 10177(d), 10177(g), 10177(j)]

But what happened to the architect of this nefarious scheme, and the “school” which did his bidding? Read on, dear reader.

The DRE and DFPI bust up the bad guys

The DRE and the Department of Financial Protection and Innovation (DFPI) together led an exhaustive investigation into REES beginning in late 2020. The investigation became one of the largest enforcement actions in the DRE’s history.

Related article:

DRE Hot Seat: Danny Yen, owner of Real Estate Educational Services (REES), reprimanded by DRE and DFPI for conducting massive education fraud scheme

The multi-state investigation concluded in February 2022 with the DFPI issuing a Desist and Refrain Order against Yen and REES, followed by a Settlement Agreement which imposed administrative and civil monetary penalties as well as employment, teaching and course taking restrictions against Yen.

Nationally, more than 600 MLOs were identified as being involved with the education fraud scheme, including 324 DRE licensees who agreed to settlements which required them to:

  • surrender their licenses for three months;
  • pay a $1,000 fine; and
  • take pre-licensing and CE courses beyond SAFE Act requirements.

MLOs who did not agree to the settlement terms will continue to receive disciplinary actions against their licenses.

Hammad is among the first to receive a disciplinary action for his involvement with REES’ fraudulent courses — but is not likely to be the last.

The MLOs who took the fraudulent courses in flagrant disregard of ROC Acknowledgements remind the mortgage industry and licensees to be ethical and honest and to maintain integrity at all times. Working with a bad actor school which pumped out certificates of completion for an in-person course which didn’t exist is clearly neither ethical nor honest.

Fundamentally, real estate is an industry which requires its licensees to be honest, fair and truthful — both as a bare minimum for obtaining a license, and for engaging in the fiduciary role of an MLO. [See RPI e-book Real Estate Principles, Chapter 1; DRE Regulations §2758.3]

Therefore, the DRE is fulfilling its mission of safeguarding and promoting the public interest in real estate matters by enforcing disciplinary actions against those in the industry who act dishonestly.

When you flagrantly lie, repeatedly, you will get caught.

Related Video: Getting Started in Real Estate

Click here for more information on DRE eligibility requirements.

Want to learn more about real estate licensing? Click the image below to download the RPI book cited in this article.