Minnesota Contractor Cops Plea In Swindle Of Elderly Couple

The Star Tribune reports that building contractor Richard D. Gurewitz, of Home Update Co., pleaded guilty Monday to swindling an elderly Minneapolis couple out of $789,000 while remodeling their tiny house, which had a market value of $102,000. Authorities say that Gurewitz could account for less than $80,000 in materials and other expenses. The victims lived for the past two years with ripped-out walls, code violations and structural hazards. The husband, 79, suffers from Alzheimer's disease and is now living in a nursing home. The wife passed away in December at age 82. For more, see Contractor pleads guilty to swindling elderly couple in remodel.

Caretaker Caught Stealing Elderly Clients' Home; May Get 8 Years In Jail

An 89 year old Cardiff, California man, partially paralyzed by a stroke, and his 95-year-old wife, who was blind and suffering from dementia, contracted with a network of private home care agencies that matches clients with caretakers for home care assistance. According to an article on SignOnSanDiego.com (Union Tribune - San Diego):

• "They expected to find an honest professional to help them with household chores and other nonmedical needs. Instead they got convicted felon Gina Trevino, who stole their house just five months later by tricking the couple into placing the deed in her name."

For more, see Better protection for elderly, retirees sought.

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Flipping Deals Running Rampant In Southwest Florida

The News-Press in Fort Myers, Florida reports that "[it] has uncovered almost 70 Southwest Florida home sales in which sellers or government officials say people either were duped or appraisals inflated so people could pad their profits. Sales totaled roughly $45 million and the profits more than $10 million." Some of the deals reportedly "involved a group of business people selling homes among themselves at inflated values."

According to Douglas Molloy, chief assistant U.S. attorney in Fort Myers, "The problem is as bad as I've seen it here. We're planning to send a message that this won't be tolerated here."

For all the details set forth in this investigative report, see Southwest Florida real estate sellers beware (Schemes multiply and they subtract from industry's credibility).
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Private Sector Players Pledge Mortgage Bailout Relief

Syndicated columnist Kenneth Harney reports that major mortgage market players are expressing intentions to provide mortgage bailout relief, in an article reported in Realty Times. According to the article:

• "Freddie Mac told a Senate foreclosure-avoidance summit last Wednesday that it planned to devote $20 billion to help refinance subprime buyers facing unaffordable payment adjustments or foreclosure into fixed rate conventional loans."

• "Fannie Mae earlier had announced a new refinancing program of yet-undetermined dollar volume to reach out to ailing subprime borrowers with adjustable rates on the rise."

• "Washington Mutual announced last week that it would refinance up to $2 billion worth of subprime adjustables into 30-year fixed rate loans, and cut one half percentage point off its regular fixed rates to make the deals more affordable."

Citigroup and the Federal Housing Administration have also reportedly chimed in with their intentions to participate in the expected subprime bailout. For more, see Major Mortgage Players Pledge Foreclosure Relief; May Alleviate Fallout.
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Foreclosure Rescue A Concern In Arizona

The Arizona Republic warns of foreclosure rescue operators that make rescue offers that "are thinly veiled schemes to take control of a struggling homeowner's house and strip any equity left in it. As the number of people falling behind on their mortgages in metropolitan Phoenix has soared, so too has the number of schemes that cost homeowners their houses." For more, including the stories of two scam victims, and comments from regulators and others, see Scam takes owners' home, equity (Scheme targets owners faced with foreclosure).
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Foreclosure Rescue, Sale Leasebacks, Usury, & Substance Over Form

I came across a court case decided (in 1988) by the Court of Appeals for the District of Columbia (D.C.'s high court) that involved the prosecution and conviction of two foreclosure rescue operators for violating a D.C. law then in effect known as the Loan Sharking Act. This law (D.C. Code Ann. § 26-701 (1981)) provided in pertinent part that it was unlawful and illegal to engage in the District of Columbia in the business of loaning money upon which a rate of interest greater than 6 per centum per annum is charged on any security of any kind, direct or collateral, tangible or intangible, without procuring a license.

The principal question in this case was whether the two foreclosure rescue operators (husband and wife), according to the court, "[w]ere actually engaged in the criminal enterprise of making loans in a disguised form at legally impermissible rates and without a license."

The transactions for which the foreclosure rescue operators were prosecuted and convicted were the typical, "sale-leaseback-repurchase option" foreclosure rescue deals. While the transactions (which took place in 1981 and 1982) took the form of actual purchases of people's homes with a contemporaneous leasing back of the premises to the homeowner with an accompanying buyback option, the D.C. trial court disregarded the form of the transactions and, instead, looked to the substance of the transactions and treated the deals as disguised loans, and then applied the then-existing D.C. statute accordingly. The D.C. Court of Appeals subsequently affirmed the convictions.

While the foreclosure rescue operators insisted at their criminal trial that they were not in the business of lending money, the D.C. Court of Appeals listed a number of factors that, in their view, supported the trial judge's determination that the transactions were nothing more than disguised loans. The court's observations follow (bold text is my emphasis):

• "Each of the homeowners was drawn to the [operators] by advertising which promised the availability of "money to lend" to stop imminent foreclosure"

• "When the homeowners asked for the loans which they believed that the advertisements were describing, and then posed questions about the form of the transactions, the [operators] couched their answers to these questions in language which confirmed to the [homeowners] that they were receiving the very loans for which they had come"

• "The [operators] often simply calmed the inquiring homeowners' fears by pretending that it was usual practice, perhaps required by the accountant, to sign instruments transferring title to the homes."

The D.C. Court of Appeals then went on to make these additional observations:

• "Moreover, if the transactions were in fact sales, as [the operators] contend, they were surely most extraordinary ones. When a homeowner sells his home, which is usually his most valuable possession, one would expect at least some measure of bargaining over the sales price. Here, there was none. In each instance, what the [operators] characterize as the "sales" price bore no relation whatever to the value of the equity. It is absurd to suggest that Mrs. Carroll would knowingly sell her home, in which she had an equity of more than $ 36,500.00, for $ 8,100.00. None of the "sellers" had placed his or her home on the market or expressed the slightest interest in selling it. Each "seller" remained in possession after the purported sale, and [the operators] were indeed depicting their service as one that would enable their clients to "save" their homes from foreclosure. Although the transaction also lacked one of the common characteristics of a loan -- an evaluation of the borrower's credit -- no such investigation was needed because the home itself, which in each case was worth far more than the amount expended by the [operators], served as their security. It was therefore altogether reasonable for the trial judge to find that the depiction of each of these transactions as a sale and lease back was a transparent sham which masked an unlawful loan."

The D.C. Court of Appeals opinion cites cases from a number of states (ie. New York, Oregon, Alaska, Hawaii, Washington State, Tennessee, and California), so if any of these states is your home state, there might be something of interest in this case for you.

In conclusion, the D.C. high court, quoting from a case decided by the New York Court of Appeals (New York's high court), made the following memorable quote (among others) about usury laws:

• "The purpose of usury laws, from time immemorial, has been to protect desperately poor people from the consequences of their own desperation. Law-making authorities in almost all civilizations have recognized that the crush of financial burdens causes people to agree to almost any conditions of the lender and to consent to even the most improvident loans. Lenders, with the money, have all the leverage; borrowers, in dire need of money, have none."

For the text of the entire D.C. case, see:

Browner v. Dist. of Columbia, 549 A.2d 1107 (D.C. 1988).

For other posts on the issue of usury in the context of a sale leaseback, see:

• Usurious Loans Masquerading As Sale Leasebacks?
• Usury & Disguised Usurious Loans - Table of Posts

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Foreclosure Rescue Posts On This Blog

For a list of links to posts on foreclosure rescue on this blog, go to Foreclosure Rescue Posts.
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Alaska Mortgage Scammer Cops Plea

The Anchorage Daily News reports that

• "Kourosh Partow, an accused conspirator in a a seven-member mortgage fraud ring that operated in Anchorage since 2002, pleaded guilty to wire fraud in federal District Court on Friday morning. The six others have already pleaded guilty this year to charges in the criminal case, which involved deceiving mortgage lenders by overstating income or making other false statements on loan applications."

The real estate closings allegedly took place at Alyeska Title Company in Anchorage. For more, see Anchorage man pleads guilty to wire fraud (Mortgage Scam: Partow faces a prison term and as much as a $250,000 fine).

For story update, see Mortgage banker gets more than 2 years in prison (Associated Press - 8-27-07).

Go here for other posts on Anchorage mortgage scam.
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Weekend I.D. Theft Blotter

The following identity theft stories this week caught my eye:

• Deceased car accident victim has identity stolen within a week after death (see Even death no defense against ID theft - Survivors should contact creditors immediately),
• Jury duty I.D. theft scam (see Identity theft scam linked to jury duty),
• U.S. Senate warns against I.D. theft by income tax preparers (see Grassley Urges Tougher Sanctions Against Tax Prep 'Sharks'),
• Alabama I.D. theft victim now has hassles with tax collector (see Montgomery Woman Fights IRS Over Alleged Identity Theft),
• The emergence of the identity theft protection industry (see Is ID theft protection worth it? - Make sure services have really got you covered),
• Texas Attorney General sues CVS Pharmacy for exposing customers to I.D. theft; employees at one store threw out hundreds of customer records into a store dumpster, records that included customers' names, addresses, Social Security numbers, credit card numbers, prescriptions and doctors (see CVS Pharmacy cited for exposing hundreds of customer records),
• Hospital billing service employee and another use stolen I.D information of more than 400 patients at midwest hospitals in tax refund scam (see Man sentenced in identity theft and tax fraud),
• Alleged I.D theft ring accused of hiring waiters and waitresses to steal credit card info from restaurant customers by use of small skimming devices; ring accused of making millions of dollars of credit card charges, over 1000 victims identified (see Authorities indicted 13 in alleged identity theft ring),
• Over two dozen supermarket customers tell cops that they are victims of I.D. theft ring that tampered with a personal identification number, or PIN, keypad at check-out line (Supermarket identity theft case expands to Alameda store),
• Credit freeze laws have been passed and go into effect in 12 more states and D.C. in 2007 (see Innovative Credit Freeze Laws Tackle Identity Theft: Credit Reports Access is Reinvented),
• Local Sartell, Minnesota community group sponsors "Senior Shred Day" to promote battle against I.D. theft (see To do: Event help seniors avoid identity theft),
• Two Yakima, Washington area retailers promote "Shred Day" to highlight battle against I.D. theft (see Shredding is Key to Preventing Identity Theft),
• City of Cape Coral, Florida and Riverside Bank consider promoting regular “Shred Day” events to battle I.D. theft (see Protect yourself against identity theft),
• Washington's Law Enforcement Group Against Identity Theft is organizing 29 "Shred Day" events throughout the state to battle I.D. theft (see Free shredding offered to help prevent identity theft)

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ACORN To Kick Off National Foreclosure Prevention Campaign

Ben Hanna at YourHub.com reports that:

• "As part of a national campaign to address the foreclosure crisis, ACORN members in Denver announced their plans to conduct a large scale outreach program to find homeowners at risk of losing their home due to a predatory loan, and to organize these homeowners to fight back to save their homes and win major policy changes presented in a ten point platform."

Based on what is reported in the article, it appears that ACORN (Association of Community Organizations for Reform Now) community organizers will arm themselves with lists of homeowners in foreclosure or with subprime loans and will go door to door in the neighborhoods most affected by the problem, and involve homeowners in the group's campaign activities.

ACORN will also provide homeowners with information regarding, among other things, how to avoid foreclosure rescue scams.

ACORN has established a toll-free national hotline, 1-866-67ACORN, to take calls from homeowners facing foreclosure or suffering from predatory loans. For borrowers in Colorado, please call the ACORN office at 303-534-1948.

For more, see ACORN fights to stop foreclosure crisis.

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Washington Mutual Commits Up To $2 Billion To Help Subprime Customers Avert Foreclosure

Mortgage lender Washington Mutual has announced a commitment to refinance up to $2 billion in its customers' subprime loans at discounted interest rates in an attempt to help customers stabilize their finances and avoid foreclosure.

Under the program, WaMu subprime borrowers who remain current on their existing loans and anticipate pending payment increases may apply for new discounted fixed-rate loans or other mortgage products available to them.

A toll-free number (1-800-881-7099) is available to Washington Mutual customers who would like to inquire about this special program.

They have also joined forces with a number of foreclosure prevention groups, including the NeighborWorks® Center for Foreclosure Solutions and the Homeownership Preservation Foundation, to launch a national effort to avert foreclosures.

For more, see WaMu Commits up to $2 Billion in Assistance to Help Subprime Borrowers.
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Consumer Advocacy Group Calls For Slowdown In Foreclosure Process

According to a press release issued by the National Community Reinvestment Coalition ("NCRC"), it is recommending to Federal lawmakers "to pass legislation that provides for 60-to-90 day stays in foreclosure proceedings nationwide to ensure that homeowners situations are properly assessed prior to facing needless and expensive foreclosure actions that strip equity."

The NCRC has been working directly with subprime borrowers helping them work out problem loans with lenders and servicers. They claim, however, that "its loan workouts have turned into fast sprints against law firms involved in the foreclosures."

The NCRC also asserts that "a congressionally-mandated stay would establish uniform and reasonable time periods across all states for loan workouts that often contain multiple lending abuses, not just one or two. He presented to the committee a list of 27 abuses often found in subprime borrowers' loans."

For more, see NCRC Calls For a Congressionally-Mandated Stay To Slow Down 'Foreclosure Mills' Operated By Law Firms Seeking to Profit from Borrowers' Troubled Loans (Repeats Call For FHA Re-financing, Responsible Servicing, National Rescue Fund & Strong Anti-Predatory Lending Law)
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Mortgage Lenders Getting Into The Foreclosure Business?

An Associated Press story appearing on Daily Report says:

• "Consumer advocates have begun criticizing major mortgage lenders, such as Countrywide Financial Corp. and GMAC Financial, that also have in-house foreclosure businesses. It is "mind-boggling" that in many states, people can lose their homes in foreclosure without any court hearing and that the foreclosure is done by a company with ties to the lender, says Ira Rheingold, general counsel for the National Association of Consumer Advocates in Washington."

For more, see Lenders get into foreclosure business, particularly in West.
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More Layoffs By Subprime Mortgage Lenders

Housing Wire reports that at:

• WMC Mortgage, about half of the company’s national workforce — roughly 750 employees, were given their walking papers on Thursday. For more, see WMC Gutted, Lays Off Half of Workforce.
• GMAC LLC’s Residential Capital, roughly 600 to 700 workers — or five percent of its U.S.-based employees — will be cut loose during the next few months, a GMAC spokeswoman said Thursday. For more, see ResCap To Shed 700 More Jobs Amid Subprime Turndown.

For an interesting look at the current implosion in the subprime mortgage industry, see The Mortgage Lender Implode-O-Meter.

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Subprime Mortgage Weakness Spreading to Alt-A Market?

A recent Associated Press article appearing on the Florida Association of Realtors website reports that "[t]he so-called Alternative-A mortgage sector, which loans to borrowers with better credit than subprime borrowers but not quite prime, is starting to hurt." For more, see Weakness spreads from subprime mortgage market to so-called Alt-A segment.
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More On Subprime Mortgage Lending

For a perspective on the current subprime mortgage lending emvironment from public policy expert Alex J. Pollock, a resident fellow at the American Enterprise Institute ("AEI"), see:

• Subprime Mortgage Lending Problems in Context
• Subprime Mortgage Scandals and Lawsuits Are a Certainty
• Credit Crack-Up
• Subprime Time

AEI is a private, nonpartisan, not-for-profit institution dedicated to research and education on issues of government, politics, economics, and social welfare.

Mr. Pollock served for twelve years as President and Chief Executive Officer of the Federal Home Loan Bank Board of Chicago.

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New York Judge Convicted Of Bribe Taking

In another story that has absolutely nothing to do with the subject matter of this blog (and for which I respectfully request your indulgence), EmpireStateNews.net reports that, in Brooklyn, New York, Kings County District Attorney Charles Hynes announced yesterday the conviction of former Brooklyn trial court judge Gerald Garson on charges of Bribe Receiving in the Third Degree, and two counts of Receiving a Reward for Official Misconduct in the Second Degree.

The charges were reportedly based on a relationship the former judge had with attorney Paul Siminovsky involving buying numerous lunches, dinners and drinks in exchange for favorable treatment and lucrative court appointments; and giving "gifts" of expensive cigars and $1,000 in cash which were caught on video surveillance.

For more, see Ex-judge convicted for taking cash bribes and gifts from attorney.

Go here for other stories on questionable conduct by members of the judiciary. naughty judges
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Arrest Warrant Issued For Florida Homebuilder

The Sarasota Herald Tribune reports that Florida prosecutors say they have obtained an arrest warrant for Joseph Pufta, the chief executive of Avalon Homes, a homebuilder that reportedly "[c]ollapsed last fall, leaving 50 homes unfinished and dozens of home buyers ... saddled with mortgages for homes they may never be able to finish building."

According to the article:

• "Authorities say Avalon took hundreds of thousands of dollars from banks for work that was never completed. And they say subcontractors were never paid for work done on dozens of homes, causing them to levy liens. Assistant State Attorney Kate Wallace said Pufta will be charged with 20 felony counts of misappropriation of construction funds and one count of grand theft. More charges could be filed if more families come forward, she said."

While other builders have gone "belly-up" with the downturn in Southwest Florida's building industry, it is believed that Pufta could be the first homebuilder in the area to face criminal charges.

For more, see Builder left homes undone; CEO faces arrest.

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In a related story, the Sarasota Herald Tribune reports that "The contractor who allowed Avalon Homes to use his building license says he had no idea the company was leaving its customers broke and homeless."

Based on the reported facts in the article, contractor James Leake, in effect, "rented" his contractor license to Avalon Homes for $1,000 per home site to build houses under his license. Reportedly, the city of North Port, Florida issued 92 building permits to Avalon Homes under Leake's license.

For more, see Builder costs contractor his license.

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For story update, see Avalon home builder is booked on charges ("The former head of now-defunct Avalon Homes is charged with 20 felony counts of misapplication of construction funds and one felony count of grand theft. [...] According to an arrest report released Wednesday, Avalon Homes took "several withdrawals" of money from Schaller's construction loans "and failed to complete the work that these withdrawals were designed to pay for.").

For other posts on builders accused of stiffing customers & subs, go here and go here. contractors stiff subs customers zeta

NJ Man Indicted In Alleged Home Improvement Scam

The Jersey Journal reports that Miguel Perez, owner of New Jersey home improvement firm Miaggiamar Home Designers, was indicted on four counts of theft by deception in connection with allegedly conning more than $150,000 from four victims for home improvements that weren't completed. To read the story of one victim, who spent almost $400,000, on top of the $97,000 she said she'd already paid to Perez, to finish the job, see Took Our Money And Ran (ripping off homeowners in $150G con job).
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Colorado Man Indicted In Alleged Real Estate Scam

An arrest warrant has been issued for Darin DeVoe, who was indicted by a grand jury in Weld County, Colorado last week on 11 counts of felony securities fraud and theft in connection with an alleged real estate investment scam.

According to media reports, the grand jury indictment states that DeVoe stole $2.6 million from 19 of his investors by inducing them to invest in the business of buying distressed homes. The investors claim that Devoe not only failed to provide property management services as he agreed to, "[b]ut robbed the home of the investors’ equity, leaving the homeowners with homes in disrepair and massive upside-down mortgages with no way out."

For more, see Law enforcement looking for former Ogallala resident, reported in the North Platte Telegarph.

For other stories on Darin DeVoe, see:

• Investors vs. DeVoe (Greeley Tribune),
• Suspected Con-Artist Indicted On 11 Felony Counts (America's Most Wanted Fugitive File).

Massachusetts AG Gets Preliminary Injunction Against Foreclosure Rescue Operator

Massachusetts Attorney General Martha Coakley’s Office has announced that it has obtained a preliminary injunction in Suffolk Superior Court against fifteen individuals and companies allegedly involved in mortgage fraud and a foreclosure rescue scheme; preventing them from engaging in any further foreclosure rescue transactions.

The injunction was ordered against 15 defendants:

• Leo Desire, Sr., a salesperson who works on behalf of Primary Mortgage Resource, Inc.,
• Primary Mortgage Resource, Inc., Mortgage Broker and where Desire Sr. worked,
• Valerie Hanserd, a closing attorney,
• Home Pride Management, a company that took fees for unrendered services,
• Leo Desire Jr., President and Treasurer of Home Pride Management,
• Dr. Joel Charles (d/b/a Sourie Corp.),
• Louis R. Joseph, Pierre N. Joseph and his wife Daphne Mompoint, Robens Joseph, Paul A. Joseph, Jean Joseph, Advie Charles, Neville Francis and Marie Betey Mereus, all property buyers.

For more, see Massachusetts AG Press Release.

For a Boston Herald article, see Home scheme halted: AG slams Mass. firms’ foreclosure ‘rescue’.

Florida Regulators "Sting" Unlicensed Contractors

The Pensacola News Journal reports:

• "The Department of Business and Professional Regulation completed a sting that resulted in the arrest of 11 people for performing unlicensed work.The sting was an effort by the department, the Escambia County Sheriff’s Office and the Office of the State Attorney."

For more, see 11 arrested for unlicensed work.
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Feds Nail Preparer For Phony Tax Returns Used In Straw Buyer Scam

The Times-Picayune reports that Robert Green, who was allegedly paid about $8,000 for preparing false tax documents for straw buyers who submitted fraudulent mortgage applications for federally insured loans in a house flipping scam, pleaded guilty in a New Orleans, Louisiana federal court last week as part of a deal that requires him to cooperate with the government's continuing investigation of the scam.

According to prosecutors, the mortgage fraud scheme involved local businessman Calvin Davis, who recruited straw buyers to buy his houses at inflated prices and submit fraudulent applications to obtaining financing and, further, they claim that local real estate appraiser Donald White was paid an unspecified amount for furnishing false and inflated appraisals of the property that Davis was getting rid of. According to federal court records, White and Davis have not been charged.

Prior to Green entering his guilty plea, three other participants in the scam, Dennis LeBlanc, Dennis Addison and Timothy Falls have also entered guilty pleas and await sentencing. The latter three acted as the straw buyers in the scheme. For more, see House flipping scam nets plea (N.O. man will be sentenced in July).
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Business Week On Foreclosure Rescue

BusinessWeek.com has a general article on foreclosure rescue that reports on one homeowner who paid an upfront fee to a foreclosure rescue consultant and ended up losing the home anyway; it gets comments from two foreclosure rescue operators (an upfront fee operator and a New York sale - leaseback operator), and also gets comments from two consumer advocates regarding the foreclosure rescue process.

One foreclosure rescue operator, Albany, N.Y.-based Rivertown Financial engages in sale-leaseback transactions in New York, New Jersey and Pennsylvania and its chief executive, Geoffrey Goldman, said that "There's nothing inherently sinister about sale leaseback transactions. Businesses do it all the time."

For more, see Foreclosure rescue plans pose questions, or see

Frauds compound the pain of foreclosures (Homeowners paying to save their houses and end up losing them anyway) (reported on MSNBC.com).

Editor's Note:

Based on the information in my recent posts on foreclosure rescue as well as in earlier posts, it appears that there are more cases being brought by financially strapped homeowners seeking to have sale-leaseback, foreclosure rescue deals declared to be equitable mortgages. Successfully asserting an equitable mortgage claim will recharacterize the sale-leaseback as a secured loan between the foreclosure rescue operator and the homewoner, subject to state usury laws, and possibly Federal consumer protection laws (ie. Federal Truth-In-Lending Act and the Homeowner Equity and Protection Act).

The usury point could be a significant issue in a state like Florida. Its civil usury statute (where interest exceeds 18% per year) requires a forfeiture of the right to collect interest on the loan and requires the creditior to pay a penalty of double the amount of interest actualy reserved or collected (Fla. Statute Section 687.04). Its criminal usury statutes (where interest exceeds 25% per annum), call for a forfeiture of the creditor's entire loan, in addition to those penalties commonly associated with misdemeanor and felony crimes (Fla. Stat. Section 687.071).

Further, if the transaction is tainted with elements of fraud, deception, or unfair business practices, the transaction will also be subject to the state's unfair and deceptive trade practices laws, as well as to common law claims of fraud, conspiracy, and constructive trust, among others. Also, as was the situation in one recent case I reported on, a claim for legal malpractice was brought against an attorney who was supplied by the foreclosure rescue operator to the homeowner, and who purportedly "represented" the homeowner in the transaction when the homeowner signed away his home to the operator.

Finally, in a state like New York, stringent regulations (including criminal sanctions) have been imposed in the form of the Home Equity Theft Prevention Act to protect homeowners facing foreclosure when dealing with foreclosure rescue operators, both those who purchase from the homeowner as well as those who provide fee-based "foreclosure consulting" to the homeowner. No doubt that state regulators will be out there vigorously enforcing this statute. (Other states with anti home equity theft statutes can be found in the sidebar on the right side of this page.)

Financially strapped homeowners generally may not have the sophistication in matters of business, finance, and law to appreciate the nuances of the law to be able to know his or her rights, much less find experienced legal counsel to handle cases like these. However, I think we are seeing the beginning of a legal environment where attorneys and investigators, whether from legal services firms, from private firms (both small and large), or from state and local government law enforcement and regulatory agencies, will be out there finding them, prepared to bring the appropriate legal action to vigorously enforce both the statutes regulating the foreclosure rescue industry, as well as to enforce the laws that are a product of case law which has been around for a century or two. equitable mortgage zebra

Victim Of Home Improvement Contractor To Lose Home Of 40 Years

NorthJersey.com recently reported on the story of a Paterson, New Jersey woman and her family who were victimized by a local home improvement contractor and a mortgage company in a scam that has left the homeowner in the process of losing her home of 40 years. The gist of the story is that:

• she unknowingly signed for a mortgage loan on her home,
• the contractor she hired took the proceeds of the loan and did little work,
• the work that was done lacked the necessary permits and resulted in a local building inspector stopping the work on the home,
• the basement subsequently collapsed, leaving the house sitting lopsided,
• ultimately, it was determined that the mortgage lender's appraiser had overvalued the home by $100,000.
• the homeowners also claimed that their signature was forged and earnings were inflated.

The homeowner filed a civil lawsuit against D&M Financial (the mortgage lender), and both East Coast Developers (the home improvement contractor) and John Evans (its owner) in 2003. A state court arbitrator ultimately ruled that the contractor was paid "in an apparent conspiracy with D&M" for a "predatory loan," and that D&M, the lender, was liable.

Unfortunately for the homeowner, the mortgage loan was sold several times. A state court subsequently ruled that the current holder of the loan had no knowledge of what had gone on earlier among the original parties and therefore ruled that a foreclosure action brought by the current mortgage holder could proceed.

Regarding the mortgage lender, investigations by banking regulators in New Jersey and New York of D&M Financial reportedly revealed that a few dozen banks have sued it for unloading bad loans on them. In one action brought in Brooklyn Federal Court, D&M was alleged to have been engaged in or having some connection with "vastly inflated appraisals," misstating borrowers' incomes and writing false checks for about $20 million in loans.

As far as the the contracting company and its owner are concerned, their phone number has been disconnected, they are not registered with the State of New Jersey as a home improvement contractor, and efforts to locate them were fruitless.

For the story, see Mortgage scam turns 40-year dream into a nightmare for Paterson family.

For links to Federal Court cases involving DMC Financial Corporation, see DMC Financial - Party Index (To view court documents, PACER Registration required).

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Ohio Man Charged In Home Repair Scam That Targeted Elderly, Unwitting Lenders

The Cleveland Plain Dealer reports that a joint investigation by State and Federal authorities have resulted in an indictment against Jerry Ponsky, of Chagrin Falls, Ohio and five others of nearly 90 counts of racketeering, theft, money laundering, forgery and other crimes. In essence, they are accused of using bogus home repair and financing schemes to rip off the elderly of their home equity. Authorities say that he left dozens of victims buried in debt and living in homes left derelict by unfinished repairs. According to the article, the authorities describe the scam as follows:

• "Ponsky and his collaborators would inundate run-down neighborhoods with leaflets and pin-up fliers advertising "federally guaranteed" home-improvement programs for senior citizens. When older people responded, Ponsky and his collaborators would create phony, inflated appraisals of their homes' value; use those fake appraisals to line up loans from unwitting lenders; and then pocket huge chunks of the money, leaving the victims buried in debt."
• "In some cases, Ponsky's purported "remodeling crews" would gut all or part of the victims' homes until they vanished after financing came through."

For the whole story, see Chagrin Falls man indicted for home-repair scam that preyed on elderly.

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