Wednesday, January 17, 2007

Atlanta Trial of 12 In Alleged Flipping Scheme Begins

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A trial of twelve defendants accused of engaging in a "straw buyer" mortgage fraud using a flipping scheme involving over 300 homes and condos in metro Atlanta began yesterday in Atlanta Federal Court. The trial, crowded with the twelve defendants and their attorneys, was described as resembling a "business seminar."

Click here to read the full story as reported by the Atlanta Journal Constitution at ajc.com.
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Tuesday, January 16, 2007

Baltimore Woman Unwittingly Signs Over Home Title, Gets It Back After Fraud Investigation

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In this 2006 story, a Baltimore area woman, struggling with cancer and mounting medical bills, was strapped for cash and facing foreclosure. In an attempt to save her Middle River, Maryland home and get some money to pay her medical bills, she entered into a transaction with a company (that turned out to be a local foreclosure rescue operator) whereby she thought she was signing for a home equity loan but, in fact, was signing away her home. Ultimately, the company gave the house back after a year long ordeal and following a state department of labor licensing and regulation investigation.

'There are so many people who are cash-poor but equity-rich in their homes,' said Phillip R. Robinson, a consumer protection attorney and executive director of Civil Justice Inc., a network of solo, small firm and community based lawyers in Baltimore that handles predatory real estate cases in Maryland & Washington, D.C. (as well as provide services for local attorneys).

Attorney Michael Morin, who represented the victim, reportedly stated that the mortgage fraud in the area has gotten to the point that he's seeing 'hobby con artists,' people doing it in their spare time.

Sources for this story:

Woman Unknowingly Sells Her House (5-24-06; Channel 11 / Baltimore)
Woman Gets Home Back After Fraud Investigation (9-25-06; Channel 11 / Baltimore - read story and watch/listen to video)
State warns of foreclosure 'consultants' (9-26-06; Baltimore Sun)
Foreclosure Rescue Fraud Prevention Slide Show

Additional Resources:

Click here for new Maryland law regulating foreclosure rescue purchasers & consultants ( see Subtitle 3 - Protection of Homeowners in Foreclosure)

Click here to find Maryland consumer protection attorneys who are members of the National Association of Consumer Advocates (NACA).

Click here to find Maryland Non-Profit Legal Services Providers.

Click here for Maryland's Peoples Law Library (legal & self help information).
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Mortgage Fraud Increasing, Reports FBI

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New FBI statistics indicate a continuing increasing trend in mortgage fraud cases. Reportedly, the FBI had 938 pending mortgage-fraud investigations as of early January, compared with 818 at the end of September and 721 in September 2005. The bureau also estimates that the actual number of cases was closer to 36,000 for the year ended Sept. 30, compared with 22,000 the previous year.

To read more, see this New York Times article, appearing in The Detroit News online presence, detnews.com.
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Monday, January 15, 2007

Theft Of Client Funds Concerns Connecticut Bar Association

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A report published yesterday in The Advocate (Stamford / Fairfield County, Connecticut) discusses what staff writer John Nickerson describes as a "[a] spate of attorney arrests and convictions for stealing client funds in the area and across [Connecticut]".

Two officials, working together "to determine why up to $20 million in client funds have been misappropriated statewide over the past three years" describe it as "the middle-aged white guy scenario" since many of the approximately 20 Connecticut attorneys alleged to have stolen money from their clients over the last couple of years fit that description.

Included in the list of specific incidents detailed by this article are:

  • a case of an attorney, hired by a husband & wife to protect their interests while they refinanced their existing mortgage, who never paid off the original loan when the money came in (to read more, see 2003 Grievance Committee Decision).

Reportedly, the Connecticut state legislature will be considering a law this year requiring that attorneys who hold money for clients be bonded.

One official stated, "few clients have been taken to the cleaners by their lawyers in part because of the Connecticut Client Security fund set up in 1999. The account, which has paid out more than $7 million in claims since its inception, is funded by each lawyer practicing in the state."

As should be obvious (and as pointed out in this article), all attorneys should not be "painted with the same brush" (readers of this blog know that the property owners in the equitable mortgage cases reported on recently were only able to get their unfortunate transactions voided through the effective representation of competent legal counsel). Additionally, in many states, non-attorneys are allowed to conduct real estate closings and handle the exchange of money; a homeowner's home sale proceeds are no less at risk in these cases.

To read the entire article, see:

Thefts have bar seeking new reforms

Click here for other blog posts on theft of home sale proceeds.

theft of home sale proceeds

Predatory Mortgage Servicing Destroying The American Dream?

(revised 3-11-07)
Predatory Mortgage Servicing is one type of home equity theft that seems to be flying under the radar. A May, 2005 report titled Private Property Rights Deferred: Has Predatory Mortgage Servicing Destroyed the American Dream has found that mortgage servicing fraud and abuse by unscrupulous mortgage companies and their agents is stripping working families of home equity and, in certain instances, pushing homeowners into foreclosure because of the failure to properly account for monthly mortgage payments in favor of excessive fee income.
To read more on this report, by Rawle Andrews Jr., Esq., and Leroy Jones, Jr., JD of the law firm of Andrews & Bowe, PLLP:

  1. Private Property Rights Deferred: Has Predatory Mortgage Servicing Destroyed the American Dream
  2. The Seven (7) Deadly Signs of Predatory Servicing
  3. Five Stages of Foreclosure Fraud
  4. Stark v. EMC Mortgage (a case that details the egregious conduct committed by one mortgage servicing company against homeowners)
  5. Congrtaualtory Letter from Congressman John Conyers (D-Mi.)

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

Sunday, January 14, 2007

Atlanta Area Attorneys Comment On Predatory Lending

Howard Rothbloom, a Marietta, Georgia bankruptcy and consumer protection attorney (click here for website) and Atlanta area consumer protection attorney Bill Brennan, a predatory lending expert with the Atlanta Legal Aid Society comment about predatory lending in Georgia in an article appearing in Creative Loafing Atlanta.

To read the entire article, see:

Sharks patrol these waters
(Predatory lenders prey on the weak while Georgia consumer laws remain shallow)

Click here for a list of Georgia consumer protection attorneys who are mebers of the National Association of Consumer Advocates (NACA).

Click here for low cost Legal Aid Service Providers in Georgia.
http://HomeEquityTheft.blogspot.com

Tree Trimmer Caught Clipping Customers, Pleads No Contest

In this 2004-2005 story, an unlicensed Northern California landscaper pleaded guilty to embezzling 3.1 million from five mostly elderly customers, four of whom took out multiple mortgages on their homes to invest money with him and were ultimately left facing foreclosure.

According to authorities, they suspected this scam artist of using his landscaping business as a front to get acquainted with his victims, establish trust with them, and then seek out their money to invest in a side business he had, talking at least four of them into borrrowing money against their home equity and "invest" it with him in exchange for a promise that he would keep up the payments on the loans.

Reportedly, when the arrest was initially made, police alleged that there were at least ten victims who were scammed, but the media reports indicated that some of them were ashamed and embarrassed to talk about it with investigators.

To read the media reports on this story, see:

Businessman faces prison for embezzling $3.1M from elderly - Silicon Valley/San Jose Business Journal (5-27-05)

Sheriff's deputies arrest Saratoga man, charge him with elder fraud - Saratoga News (11-3-04)

Landscaper is accused of clipping seniors - San Francisco Chronicle at sfgate.com (10-29-04)

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

Saturday, January 13, 2007

Moore v. Cycon Enterprises, Inc. & Flack v. McClure - Equitable Mortgage Cases

http://HomeEquityTheft.blogspot.com
Re: Moore v. Cycon Enterprises, Inc., (Case No. 1:04-CV-800), 2006 U.S. Dist. LEXIS 57452 (W.D. Mi. 2006) (unpublished)

For those readers recently attempting to find the name of legal counsel who successfully litigated the equitable mortgage issue for the property owner in this case, it was attorney Phillip C. Rogers, Grand Rapids, Michigan. Mr. Rogers is a member of the National Association of Consumer Advocates.

I referred to this case in two earlier posts, December 17, 2006 and January 2, 2007.

In addition, the Illinois equitable mortgage case Flack v. McClure, 206 Ill. App. 3d 976, 565 N.E.2d 131, 151 Ill. Dec. 860 (Ill. App. Ct. 1990) is now posted here, for those recent visitors looking for this case.

Click here for a list equitable mortgage posts on this blog.

Oregon Appellate Court Invokes Equitable Mortgage Doctrine In Sale-Leaseback Deal

http://HomeEquityTheft.blogspot.com-Foreclosure Rescue...
The Oregon Court of Appeals invoked the "equitable mortgage" doctrine in order to re-characterize a sale-leaseback deal between an investor and a property owner as a secured loan in a 2005 case.

Representing the property owner in this case was attorney Jim Petersen.

Click here to read a more extensive post on this Oregon court decision.

The Oregon Judicial Department website has made the full text of the case available online. Click the link below.

Case Law Citation:

Swenson v. Mills, 198 Ore. App. 236, 108 P.3d 77, (Or. Ct. of App. 2005)

Click here for a list of other equitable mortgage posts on this blog.
http://HomeEquityTheft.blogspot.com-Foreclosure Rescue...

Friday, January 12, 2007

Philadelphia Congressman To Propose Mortgage Assistance Law

http://HomeEquityTheft.blogspot.com
U.S. Congressman Chaka Fattah of Pennsylvania will reintroduce the Homeowners' Emergency Mortgage Assistance Act (HEMA) this month which would establish a program to assist homeowners experiencing unavoidable, temporary difficulty making payments on mortgages insured under the National Housing Act (FHA-insured mortgages).

See this report at earthtimes.org for more information.
http://HomeEquityTheft.blogspot.com

NYS Home Equity Theft Prevention Act Update

http://HomeEquityTheft.blogspot.com
An alert reader of this blog has brought to my attention that, in addition to the statute that is contained at Section 265-a of the NYS Real Property Law, the New York State Home Equity Theft Prevention Act also has made modifications in Section 595-a of the NYS Banking Law, and has also added Section 1303 to the NYS Real Property Actions & Proceedings Law.

A) To obtain the provisions of the new law that are contained in Section 595-A of the NYS Banking Law:

Step 1:

Click here to begin your search. Then, click link for "Laws of New York."

Step 2:

Then,


  1. scroll down and click link for "BNK" - Banking,
  2. then scroll down and click link for "Article 12-D" - Licensed Mortgage Bankers,
  3. then scroll down and click link for "Section 595-A" - Regulation of mortgage brokers, mortgage bankers and exempt organizations
  4. See paragraphs (e), (f), (g), and (h), which are the relevant provisions regarding the new law, effective February 1, 2007.

B) To obtain the provisions of the new law that are contained in Section 1303 of the NYS Banking Law:

Step 1:

Repeat Step 1, above.

Step 2:


  1. scroll down and click link for "RPA" - Real Property Actions and Proceedings,
  2. then scroll down and click link for "Article 13" - Action To Foreclose A Mortgage,
  3. then click link for "Section 1303" - Foreclosures, Required Notices, which contain the provisions relevant to the new law, effective February 1, 2007.
C) To obtain the balance of the new law (that is contained in Section 265-a of the NYS Real Property Law), I refer you to my January 4, 2007 post or my December 24, 2006 post.

I wish to express my thanks to the alert reader of this blog for this valuable contribution.

In conclusion, an article on this new law (apparently) aimed primarily at NYS real estate attorneys titled Home Equity 'Theft', by NY real estate attorney Bruce J. Bergman (originally published on October 11, 2006 in the New York Law Journal), is available at accessmylibrary.com (free, but a "no-hassle" registration is required). Among other points, the article raises issues that may be of interest to attorneys representing either side in a foreclosure action as well as title insurance underwriters.

Click here for other articles on the new law.
http://HomeEquityTheft.blogspot.com

Attorney Charged With Theft of 300K+ Home Sale Proceeds

http://HomeEquityTheft.blogspot.com
Another New York attorney has been charged with the theft of home sale proceeds, as reported in this report on The Mortgage Fraud Blog, presented by The Prieston Group. The total proceeds of the home sale, belonging to his elderly client, were approximately $470,000. He paid $310,000 to his client with what turned out to be a "rubber check" before finally being arrested by Westchester County, New York authorities.

Click here for Westchester Conty District Attorney Press Release

For prior posts involving the alleged theft of home sale proceeds by attorneys, see:

Westchester DA Nabs Attorneys For Alleged Theft Of "Home Sale Proceeds"

FBI Investigate NY Attorney For Alleged $600,000+ Theft Of Home Sale Proceeds
http://HomeEquityTheft.blogspot.com

Equitable Mortgages & "Deeds Absolute Given As Security" For Loans

HomeEquityTheft.blogspot.com
Recent posts have referred to what I have learned is a centuries-old real estate law doctrine of "Equitable Mortgage." It is a doctrine that has been created and applied by the courts in cases where money lenders would attempt to disguise a loan as a sale with a simultaneously executed lease back or buy back agreement, generally intended as an attempt to evade usury laws as well as to evade the hassle of having to go through the foreclosure process, thereby purportedly destroying the redemption rights of property owners. Based on the recent cases I've reported on, it seems that this doctrine has and can be successfully used to void home sales by financially strapped homeowners to foreclosure rescue operators. I expect that there will be more attorneys taking on cases such as these in defending the rights of victimized homeowners.

I have put together a description of what generally is meant by the "equitable mortgage" doctrine, specifically within the context of a "deed, absolute in form, given as security" by a property owner for a loan, which has been the legal issue involved in the recent equitable mortgage posts.

Because of space limitations, I have posted the description here, for those of you who are interested.

Click here to search for other posts on this blog on equitable mortgages.
http://HomeEquityTheft.blogspot.com

Thursday, January 11, 2007

Ohio Senior Scammed, $67K in Home Equity Lost

A Cleveland mortgage agent pleaded guilty yesterday of conning a 72 year old Garfield Heights woman out of $67,400 through a home loan scam, and faces up to 8 1/2 years in jail according to a report in The Mortgage Fraud Blog presented by The Prieston Group.

The prosecution was handled by Assistant County Prosecutor Michael Jackson of the Office of Cuyahoga County Prosecutor Bill Mason.

The victim has a civil lawsuit pending against the mortgage agent and her employer.

To read The Plain Dealer (Cleveland, Ohio) report on this story, see Law and Order, and then scroll down to Loan agent robbed woman, 72.

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

Utah High Court Reinstates Foreclosure Scammer's Conviction

http://HomeEquityTheft.blogspot.com
The original conviction of a man accused of an upfront fee, mortgage refinance scheme was upheld by the Utah Supreme Court recently. The man was convicted of defrauding over thirty homeowners facing foreclosure, whereby he promised them refinancing options in exchange for an up front fee of at least $400, purportedly to be used for credit reports & appraisals. The money was actually used for his living expenses and he did not perform any of the promised services.

For more details, including links to the original reports, court decisions, and other relevant links, see this report on The Mortgage Fraud Blog, presented by The Prieston Group.

http://HomeEquityTheft.blogspot.com

NACA Class Action Litigation Guidelines Available Here

http://HomeEquityTheft.blogspot.com
The Class Action Guidelines, revised in September, 2006, have been issued by the National Association of Consumer Advocates, and is available at the link below for those attorneys with an interest in consumer protection litigation.

http://HomeEquityTheft.blogspot.com