New York Passes Home Equity Theft Prevention Act

Legislation regulating the industry that is referred to as either the "foreclosure rescue", “foreclosure assistance”, or "foreclsoure bailout loan" industry – companies that target financially strapped people in foreclosure and promise to rescue them from losing their homes, was passed in New York this summer, according to this article and summary of the new law written by attorney Kirsten Keefe of the Empire Justice Center, a statewide, non-profit law firm in New York represnting poor and low income people on a wide variety of issues.

The legislation was signed into law on July 26, 2006 and will go into effect on February 1, 2007.

For a copy of the New York's Home Equity Theft Prevention Act, click here. (Then, click link for "Laws of New York," then scroll down and click link for "RPP" - Real Property, then click link for "Article 8" - Conveyances and Mortgages, then scroll down and click link for "265-A" - Home equity theft prevention.).

For two examples of the types of cases that led to the passage of the New York law, click here or here.

See 1-12-07 Post For Updated Information On This New Law.

revised 1-12-07

Alleged "House Thief" Indicted, Announces Brooklyn DA

The Brooklyn, NY District Attorney has announced the indictment of a married couple (a 2/3 owner of a home) for allegedly using a forged deed and other forged documents to steal the ownership of their now-89 year old 1/3 co-owner and his wife, as reported in this report from The Prieston Group's The Mortgage Fraud Blog.

For the Brooklyn DA's Press Release, click here.

Servicers Squeeze Homeowners With Predatory Practices

One form of home equity theft, which I earlier mentioned in this blog, in this post, is called mortgage servicing abuse, which is discussed in this BusinessWeek Online article, reported on MSNBC.com.

The article mentions one case of a homeowner in foreclosure that was charged with $18,000 in late charges and attorney fees, on top of the past due mortgage payments.

In another, a mortgage servicer claiming that it hadn't received 19 payments from a homeowner miraculously found the payments after an investigator from the U.S. Department of Housing and Urban Development ("HUD") showed up and started looking into the matter.

Relative to other tactics used by predatory lenders, one industry expert stated, "predatory servicing has attracted little attention, yet in many respects it is more vicious and the adverse consequences are more far-ranging."

This article makes reference to a $40 million fine imposed by HUD in 2003 on one mortgage servicer for its abusive practices, to which one California law professor observed, "The FTC hoped by nailing Fairbanks it would send a message to the whole industry. It hasn't yet."

According to consumer lawyers, "the system preys on the ignorance of borrowers and creates an opportunity to add false fees and charges not authorized by law or their mortgage contract".

One attorney refers to those companies engaged in mortgage srvicing abuse as "foreclosure factories".

One case that consumer attorneys may find of some interest is the lawsuit brought by a Texas consumer lawyer who obtained an $11.5 millon jury verdict on behalf of his client, a widowed grandmother, after finding that the loan servicer engaged in fraudulent practices in servicing her home-equity loan.

For the full story, and for anyone wanting an easy-to-read primer on this form of "home equity theft" (one that hasn't received the attention that other forms have) , you are urged to read the BusinessWeek Online article: The ‘foreclosure factories’ vise

Click here for slide show

Go here , go here , and go here for posts on questionable mortgage servicing practices. questionable mortgage servicing practices tactics zebra

Michigan AG Pursues "Home Equity Strippers"

Michigan Attorney General Mike Cox announced his intention to pursue legal proceedings, in a civil action, against a company accused of home equity stripping in connection with complaints made by at least two Michigan residents, according to this Press Release issued by his office.

According to the Press Release, in one instance, the accused are alleged to have bought and sold the same home without paying off the mortgage of the selling party, while at the same time they attempted to collect land contract payments from the buying party.

As a result, the buyers may now face eviction, and the sellers may owe mortgage obligations for a home they no longer own. The sellers may also face threats of foreclosure, mounting late fees, and damage to their creditworthiness.

To see the AG's notice of intent to sue (16 pages), detailing all the factual allegations in this matter, click here.

For the AG's Consumer Alert, Home Lending And Foreclosure Rescue Scams, click here.

Court Date Postponed for Man Accused of Victimizing Tracy Couple

The man accused of victimizing the Tracy, California couple in a reverse mortgage home equity scam (reported in my December 10, 2006 post) has been postponed to early January, according to this report in the Tracy Press.

The suspect, who reportedly got the homeowners to unwittingly sign over their home of 30 years in a transaction they believed to be a reverse mortgage, was arrested for suspicion of forgery, grand theft, financial elder abuse and conspiracy and was originally scheduled to enter a plea this past Tuesday.

Authorities report that there may be at least two other homeowners that may be considered victims, and there may be other arrests involving the notaries and the individuals currently holding title to the homes belonging to the homeowners.

(I suspect authorities are currently attempting to work out a plea deal either with the suspect or with his alleged confederates in exchange for cooperation in obtaining convictions.)

In a related story, see Arrest puts reverse mortgages in spotlight, also reported by the Tracy Press.

Go here for other posts on reverse mortgage problems.

Go here , go here , and go here for other posts on elder financial abuse. zeta zebra

Wisconsin Homeowner Claims Deception In "Foreclosure Rescue" Transaction

In this February, 2006 report on jsonline.com (Milwaukee Journal Sentinel), a Milwaukee man claims deception when he sold his home to a foreclosure rescue operator coupled with an agreement to lease back the home and a right to repurchase the home after a certain period of time. The "rescue" operator denied any wrongdoing.

Home Sellers Stiffed On 22 Sales in "Skimming" Scam

Two Indiana men have reportedly been engaged in what can be decribed as "equity skimming" activity over a 12 year period and involving 22 homes, according to this transcript of a TV broadcast report, on theindychannel.com (WRTV6 - Indianapolis).

Court records found by WRTV6's Rafael Sanchez, Call 6 for Help reporter, indicate that two men have purchased 22 homes, using a legal device known in Indiana as a "land contract" (in other states, it is known as a contract for deed, conditional sales contract, installment sale contract). Under this arrangement, the men would take immediate possession of the home with the agreement calling for monthly payments to be made by them to the home seller; the home seller, in turn, would continue making his/her payments on any existing mortgage until the entire purchase price is fully paid.

While the two men never had a problem with taking immediate possession of the homes, they rarely bothered to make the monthly payments that they agreed to make, according to the report.

They, in esssence, have been living practically free for 12 years and have been collecting rent on some of the homes and would continue doing so until they were forced to relinquish the homes by court orders.

Click here for the full story

Click here to watch the Video Report (approx. 4 minutes)

Story also reported here on MortgageFraud.org

Go here for other posts on this alleged scam involving Joseph L. Stanley and Steven Harris.