Tuesday, May 22, 2007

Washington Weeding Out Loan Officers; Reject List "Resembles Criminal Court Docket"

The Seattle Post-Intelligencer reports:
  • "Until recently, just about anybody could operate a loan office in Washington. But after the state required loan officers to become licensed this year, its growing rejection list has come to resemble a criminal court docket."
For more, see Licensing process thins loan officer ranks as past crimes come to light.
.

Feds Getting Guilty Pleas In K.C. Mortgage Fraud Conspiracy

Media articles report that James E. Coleman, a certified public accountant, and James R. Rhoades, both of Kansas City, Missouri, pleaded guilty in a Missouri Federal Court yesterday for their roles in a conspiracy to commit mortgage fraud. The conspiracy allegedly involved former Jackson County Executive Katheryn Shields and her husband, Phillip Cardarella, who were among those indicted for their alleged roles in the scheme.

Last week, real estate appraiser Jeremy A. Plagman, of Lee's Summit and who did business as JET Appraisals, pleaded guilty to his role in the conspiracy.

Reportedly, the organizer of the alleged scheme, Raymond Zwego Jr., will change his not guilty plea to a plea of guilty on May 31. Other defendants with change-of-plea hearings include Larry Barshaw and his wife, Linda M. Thompson-Barshaw, set for Friday, and Michael Rodd on May 31.

In addition, Katheryn Shields’ latest attempt to avoid a mortgage fraud trial in June collapsed yesterday when her request to dismiss the indictment against her was denied. The four remaining defendants — Shields, Cardarella, Monty J. Kinman and Rick A. Peterson — will apparently be going to trial, which is scheduled to start on June 4. For more, see:

(revised 5-22-07; 10:30 am)

Florida AG Investigating Foreclosure Rescue Operators

According to the website of the Florida Attorney General's office, there are at least three active public consumer-related investigations of foreclosure rescue operators by the Florida AG's Economic Crimes Division. The investigations, which the AG's office says are civil - not criminal - in nature, involve the following foreclosure rescue operators:
Florida residents victimized by a foreclosure rescue operator can file a complaint here.
Editor's Note
As I have mentioned in the past, there is plenty of case law in Florida (and other places as well) that allows courts to recharacterize these sale-leaseback foreclosure rescue deals as secured loans / equitable mortgages. Further, if the profit on a foreclosure rescue, sale leaseback that a court recharacterizes as a loan or equitable mortgage exceeds 18% per year, the loan violates Florida's civil usury statutes (Section 687.03, Florida Statutes). If the profit exceeds 25%, the deal violates Florida's criminal usury statutes (Section 687.071, Florida Statutes). Profit in excess of 45% per year can result in felony charges. For more on this, see:
For more information on cases throughout the country on recharacterizing sale-leaseback arrangements as secured loans / equitable mortgages, see The Home Equity Theft Reporter Cases & Articles. equitable mortgage yak

Atlanta-Area "All-Broad Fraud Squad" Battling Mortgage Fraud

The New York Times recently ran a story of three Atlanta, Georgia area women, concerned that mortgage fraud was threatening their towns, "got together to write down license plate numbers of suspicious cars in their neighborhoods, scour public documents for housing titles and deeds and seek the help of local law enforcement. At first they were ignored, written off as bored housewives. Today, the three women — Ann Fulmer, Alicia Sheppard and Julia Barrette — are helping train F.B.I. agents, speaking to lending associations across the country and lecturing college students on how to identify mortgage fraud."

To read more of the three women, who call themseves the All-Broad Fraud Squad, see Mortgage Fraud Is Up, but Not in Their Backyards.
.

First Line Of Defense Against Mortgage Fraud Is Neighborhood Itself

In Texas, WFAA-TV Channel 8 in Dallas / Fort Worth is reporting on the story of Jocelyn Sapp, a local resident who tracked a number of questionable real estate deals in one residential neighborhood on her computer and contacted authorities with her information. Her efforts resulted in the indictment of three men by the Collin County Grand Jury this past Thursday. For more:
.

Monday, May 21, 2007

Virginia Foreclosure Rescue Operator Targeted In Lawsuits

The Virginian-Pilot today reports that "At least three lawsuits have been filed against mortgage company D and D Home Loans and others by people who say the broker tried to trick them out of their homes."

Virginia attorney Tanya Bullock has filed the actions on behalf of all three plaintiffs, and claims in court papers that the company's actions "expose a classic foreclosure rescue scam."

One victim reportedly said that references to Scriptures and Christian values by D and D President Warren Mike Robinson inspired trust. Said the victim, "I'm African American. They're African American and look successful. I felt as if I was in the hands of my people."

For more, see Three plaintiffs say firm tried to dupe them out of homes.
.

More On South Florida Foreclosure Rescue Operator Jack Moussa

The South Florida Sun-Sentinel has an investgative report today on foreclosure rescue operator Jack Moussa and his company, Florida Housing Council. This is the second media report recently done on Moussa and his firm; the first being one done by South Florida TV station WSVN-TV Channel 7 (for prior post on Moussa and the Channel 7 report, see More Foreclosure Rescue Victims Fighting Back).

Today's story reports that Florida Housing Council and Moussa have faced seven lawsuits -- one was settled, six are pending -- in Broward, Palm Beach and Miami-Dade county courts in the past three years alleging fraud and deceptive practices.

Hollywood, Florida attorney David Silverstone, who recently settled a case against Florida Housing Council and has another pending, states "I think the Florida Housing Council is taking advantage of people who are in a desperate situation. They are saying one thing and then presenting papers that show something else. It's hard for even an attorney to get through these documents."

For more, see:

Go here for other posts on the foreclosure rescue activities of Jack Moussa and Florida Housing Council.

Editor's Note

There is plenty of case law in Florida (and other places as well) that allows courts to recharacterize these sale-leaseback foreclosure rescue deals as (possibly usurious?) secured loans / equitable mortgages. Go here for more on the Florida case law on equitable mortgage (some of which also addresses usury) to consider how the case law may be applied to foreclosure rescue transactions structured as a sale leaseback, or variations thereof, with a right to buy back the property in the future. Contained at this link are, among others, the following two posts:

NY AG Conducting Investigation On Appraiser, Mortgage Broker

Bloomberg News reports that the New York Attorney General's office is conducting, what one subject of the investigation, calls "a rather large, broad, sweeping request for enormous amounts of information on everyone we work with.'' Subpoena were issued to Manhattan appraiser Mitchell, Maxwell & Jackson Inc., and Manhattan Mortgage Co., a mortgage broker.

For more, see New York State Subpoenas Appraiser, Broker in Probe.
.

Foreclosure Crisis Hitting Chicago Hard

In Illinois, WBBM-TV, - CBS 2 in Chicago reports on the local foreclosure crisis (over 7000 Chicago area homeowners defaulting on loans in April alone), and the effects it is having entire communities, whether it be the local government or surrounding homeowners. Reported is the story of one area homeowner whose adjustable rate mortgage will jump from 7% to 13% in one year, and who is now receiving assistance from Neighborhood Housing Services of Chicago in restructuring her loan.

Neighborhood Housing Services of Chicago is a charter member of the NeighborWorks® America network. Reportedly, their counselors now spend almost half their time on foreclosures.

Go here and then click "Play" to watch the CBS2 report.

To read the online report, see Forced Out: Foreclosures Hitting More Homeowners.
.

Texas AG Shuts Down Real Estate Skimming Scam

Texas Attorney General Greg Abbott has obtained a permanent injunction from a Texas state court prohibiting Roberto Flores and his Galindo Trust from entering into what appears to be a form of equity skimming deals with consumers. Further, the court imposed fines against the defendants of over $1.4 million and must also pay restitution to the harmed consumers.

According to the lawsuit, Flores purchased houses on 15 lots in Austin, Texas from Shriners Hospital, obtaining owner financing for $432,000. He then began selling off the homes to consumers on contracts for deed, quoting downpayments of between $2,000 and $5,000. He would offer the consumers owner financing for the balance, without paying off the existing mortgage to Shriners Hospital, the original owner, and without telling the consumers of the existing lien to Shriners. Ultimately, he found himself collecting the payments from his buyers (the consumers) on the owner financing he provided to them while, at the same time, stiffing Shriners Hospital on the owner financing Shriners had provided Flores on the original sale. For more see:
.

Tennessee Cops Pursuing Suspected Equity Skimmer

WMC-TV Channel 5 in Memphis, Tennessee reports that Horn Lake police are looking for a man who they claim has conned four area homeowners facing foreclosures into signing over their homes. The cops claim that the man targets vacant houses and sets up renters collecting large monthly rent payments until the bank forecloses on the house. For more, see Con artist swindles homeowners out of property.
.

Another Tennessee Man Tricked Into Signing Over Home

WMC-TV Channel 5 in Memphis, Tennessee reports that a man named Jim Boyd tricked a local homeowner into signing over a quitclaim deed on his house to him. Now, the mortgage payments aren't being made and the homeowner is getting calls from the mortgage company and the home is going into foreclosure. For more, see Man scams Mid-South homeowner out of property.
.

Sunday, May 20, 2007

AG Blumenthal Starts Investigation In Qustionable Real Estate Deals

TheDay.com in New London, Connecticut reports that Connecticut Attorney General Richard Blumenthal is beginning an investigation on the seemingly questionable real estate deals involving a New London area group.

TheDay.com has an investigative report about local real estate agent Isaura Guzman and her father, loan officer Jose Guzman, who are at center of complaints of questionable practices in local real estate transactions. Reportedly, Isaura Guzman "was selling multifamily homes for Elizabeth Athan Real Estate LLC in some of New London's most rundown neighborhoods for as much as twice the appraised values listed in the city's tax records. The houses would enter the Multiple Listing Service — a property-listing service for Realtors — and would sell or be listed as a pending sale within 24 hours."

In addition, TheDay.com reports that the name of Alan Messier, a real estate attorney in New London appears on dozens of housing transactions that were reviewed as representing the buyer and Maurizio Lancia, an attorney in Trumbull, Connecticut, has represented the sellers in many of Guzman's transactions. Lancia is also listed by the Secretary of the State's Office as agent for JG Investments, Jose Guzman's firm. For more, see:

Go here for other posts on this investigation.

.

SW Florida Banks In Danger Of Being Stiffed On $57.5 Million In Construction Loans

In Southwest Florida, The News-Press reports:
  • "Area banks are racking up millions of dollars in bad debt, thanks to the softening real estate market in Southwest Florida. Five Southwest Florida banks had a combined $57.5 million in outstanding construction and land loans that weren't being paid, according to records from the Federal Deposit Insurance Corp. for the first quarter of 2007."

Included in the article is the story of a retired couple who bought four properties — two in Lehigh Acres and two in Cape Coral — when the market was hot and now find themselves in a financial quagmire. Three of the homes were bought from First Home Builders (go here for more on First Home Builders and others).

For more, see Bad loans saddle area banks (Housing bust fuels 207 percent rise).

Central Florida Foreclosure Rescue Operator Under Investigation

The St. Petersburg Times has a story today of Peter J. Porcelli, a Central Florida foreclosure rescue operator who, along with two companies he set up, are reportedly being scrutinized by state and federal investigators for possible violations of law.

According to The Times, the two Clearwater businesses that Peter Porcelli set up -- the Safe Harbour Foundation (purportedly a non profit foundation) and Silverstone Lending -- "reportedly worked hand-in-glove to target desperate homeowners facing foreclosure and enticed them into short-term, high-risk loans that may violate Florida laws".

The Times found that the purported non profit foundation is not listed among exempt charities on the IRS Web site or registered with the state of Florida.

The Times describes Porcelli's past history, including the fact that he was indicted two months ago on conspiracy and fraud charges involving an unrelated credit card scam that targeted 165,000 victims. He pleaded guilty Friday to all 19 counts.

For more, see Facing new fields of fraud (Guilty in one scam, an Oldsmar man is scrutinized in a high-risk loan scheme that preyed on those facing foreclosure).

Go here for other posts on Peter Porcelli.

Home Repair Scam Review

The home improvement / home repair related highlights for the week:

.

Weekend I.D. Theft Blotter

This week's identity theft related stories:

.

Saturday, May 19, 2007

More On Tennessee Two In House Swindling Scam

According to a report by WTVF-TV Channel 5 in Nashville, Tennessee, the alleged house swindle by Jeffery Bratcher and Annette Dutton of Pinnacle Builders required a $35,000 every two weeks by the victims, an elderly retired Murfreesboro couple, until they paid for a newly built $219,000 home. Reportedly, when the victims went to the closing of title, they found out that nothing was paid for and the bank had a mortgage against it. The Tennessee Bureau of Investigation claims that Pinnacle Builders stiffed both the bank on a construction loan, as well as the subcontractors who built the house. The house ended up being auctioned off, and the victims ended up buying the house again at the auction, this time for $160,000. Apparently, the victims knew Bratcher since he was a child. Said one of the victims, "We knew the kid since he was this high. He came into our house like he was a grandson when he was little."

Go here to watch the WTVF Channel 5 video report, by reporter Chris Cannon.

To read the online story, see Builders Swindle Retirees Who Pay Twice For House.
.

New Hampshire State Senate To Consider House Bill 365 On Foreclosure Rescue

In New Hampshire, an amended version of House Bill 365, which proposes new laws regulating foreclosure rescue transactions, has reportedly been drafted, according to an opinion piece in the Concord Monitor. Among the reported provisions are strong rules:
  • prohibiting unfair transactions and requiring disclosures to homeowners,
  • allowing remedies under the state Consumer Protection Act to deter the rescuers,
  • that anticipate the growing variety of scams.

The New Hampshire Senate Commerce, Labor and Consumer Protection Committee is scheduled to hold a hearing on House Bill 365 Tuesday morning. For more, see Pass this law to stop foreclosure predators (People facing loss of their homes need protection).

Go here for other posts on House Bill 365.
.

Class Action Lawsuit Filed Against Beazer Homes USA

Two law firms have recently announced the filing of a class action lawsuit against Beazer Homes USA on behalf of all persons or entities who purchased or acquired the common stock of Beazer Homes USA, Inc. during the period from July 28, 2005 through and including March 27, 2007.

Beazer was the subject of a number of media reports by the Charlotte Observer and others regarding inquiries relating to, among other things, mortgage fraud in connection with new home purchases made by its customers and shoddy construction of some of its homes. See other posts on Beazer Homes.

For the law firm press releases, see Milberg Weiss & Bershad LLP Press Release, and Chitwood Harley Harnes LLP Press Release.

For a post on the Lawyers and Settlements website, see Beazer Homes Foreclosures.
.

Increasing Insurance Premiums Stressing Senior Homeowners

While home foreclosure is a crisis for people who can’t meet exorbitant mortgage payments, soaring insurance rates are hitting seniors particularly hard, according to an article in the Queens Chronicle. According to the Manhattan-based Insurance Information Institute, home insurance rates have steadily climbed in the last several years. The trend is especially strong in coastal areas and in high-priced markets like the New York metropolitan area, where the estimated value of all property is $1.9 trillion. It would be the second most expensive area in the country, behind Florida, to rebuild after a hurricane. For more, see Higher Insurance Rates Trouble Senior Citizens.
.

"Lifeline Refinance" Program Available To Maryland Homeowners With Exotic Mortgages

Marylanders who may be facing financial difficulties after purchasing homes with "exotic" mortgages may be eligible for the State of Maryland's Lifeline Refinance mortgage program. The program is administered by the Community Development Administration ("CDA") of the Maryland Department of Housing and Community Development, and offerred through CDA-approved lenders. For more, see www.morehouse4less.com.

According to a Baltimore Sun piece, the program was established last June and has been set up to provide $20 million in relief for borrowers falling behind on loans with adjustable rates and balloon payments. According to the report, however, no one is taking advantage of it; fewer than a dozen people have applied, even though the program can serve 100. For more, see Forestalling foreclosures.
.

New Jersey Creating Rescue Fund For Homeowners Stuck With Subprime Loans

In New Jersey, the state Department of Community Affairs and the state Housing and Mortgage Finance Agency are developing a new refinancing program to help some New Jersey homeowners facing trouble after financing their homes with subprime mortgages, according to NorthJersey.com. The state is in the process of working out the program details, and officials say that the program, to be called "Rescue," could be up and running as early as July 1. For more, see Plan could rescue troubled homeowners.
.

Pennsylvania To Create Mortgage Rescue Fund

Bizjournals.com reports that Pennsylvania state legislators have announced that the state would be starting a mortgage rescue fund for problem home mortgages and are calling on subprime lenders to agree to a voluntary moratorium on foreclosures. For more, see Pa. fund announced for subprime borrowers.
.

Friday, May 18, 2007

More On Equity Holding Corporation And Its Foreclosure Rescue Deals

WCVB Channel 5 in Boston, Massachusetts recently did a story on foreclosure rescue operator Equity Holding Corporation and its business activities in offering complicated trust arrangements to "rescue" Massachusetts homeowners facing foreclosure.

Go here to watch the Channel 5 report (by Team 5 investigative reporter Kelley Tuthill).

Go here for prior post on this story, Foreclosure Rescue Operator Targeted In Massachusetts Lawsuits; One Victim Successfully Gets Back Home.
.

Another South Florida Homeowner Falls For Foreclosure Rescue

WPEC-TV Channel 12 in West Palm Beach, Florida reports that a local homeowner facing foreclosure thought he was getting some help to save his home when Charles Reynolds, owner of Foreclosure First Aid, came to his house. According to the report:
  • "Reynolds offered him $6,000 to get his mortgage back on track. All he had to do was sign a few pieces of paper. What he didn't realize is that he also signed a deed transferring ownership of the house to a trustee, a man named Darryl Prosser. [The homeowner] is now suing Charles Reynolds hoping to save his house."

For more, see Foreclosure Scam.
.

Tennessee Two Indicted In House Theft

In Tennessee, The Murfreesboro Post reports that, according to a state court indictment:
  • "Two Murfreesboro residents were indicted on theft and misappropriation of a contract after they were accused of stealing a house from a couple and failing to pay for labor and repairs."

Indicted were Jeffrey Bratcher and Annette Dutton. For more, see Two suspects indicted for stealing house, repair funds.

.

Oregon Loan Officer Caught Submitting False Loan Applications

Loan officer Mark Todd Harless, of Eugene, Oregon pleaded guilty to using fraudulent information to obtain mortgage loans, according to the Oregon U.S. Attorney's Office. According to reports, "He listed three customers as managers of a Eugene children's clothing store, earning at least $3,000 a month. Hareless' girlfriend owned the store, and none of his customers worked there." For more, see:

.

Thursday, May 17, 2007

Do Mortgage Companies Really Want To Know If Someone Is Trying To Rip Them Off?

I hope so. But in a recent article by mortgage fraud expert Ralph Roberts, he tells of a story he was involved in where a whistleblower brought him over 50 files which, in his judgment, proved the existence of an ongoing fraud against one mortgage lender. When he tried to contact the lender by phone with the information, the company did not have any interest in his information and, in essence, told him to "get lost."

He hastens to add that most lenders are very cooperative when he calls. They want to know when they are the targets of ripoff artists. However, he does report that he encounters far too many lenders who simply drop the ball on fraud prevention. He compares it to having a cash register wide open, with nobody watching the store.

For more, see Who’s Watching the Store? (reported at RISMedia.com).
.

1031 Exchange Intermediary Files Bankruptcy; $Millions Unaccounted For

The San Jose Mercury News is reporting that the 1031 exchange intermediary:
  • "1031 Tax Group of Richmond, Va., which operated in San Jose as 1031 Advance, filed for bankruptcy in New York City over the weekend. But even before then, it had become the subject of investigations by the U.S. Postal Service and U.S. Attorney's Office in Virginia."

Millions of dollars of investors money that was being held by the 1031 exchange intermediary for reinvestment by the investors is reportedly missing. One couple trusted the company with $10.6 million, and another investor had over $3.3 million of her investment money held by the company.

A 1031 exchange (a reference to Section 1031 of the Internal Revenue Code) is a method by which real estate investors may defer capital gains taxes if they sell and buy property within a 180 day time period. To delay paying taxes, investors must place the money with an independent third party - a trust company, title company, or an entity referred to as a qualified intermediary, until the deal is done. In these transactions, such independent third parties hold onto the money until the investor identifies the new property and closes escrow.

For more, see Real estate firm's collapse worries investors.

For a prior post on another 1031 exchange intermediary alleged to have misappropriated real estate investors' money, see 1031 Exchange Accomodators, Others Accused in $80 Million Theft.
.

Another Pittsburgh-Area Senior Victimized; FBI Probing Mortgage Broker

KDKA-TV Channel 2 in Pittsbutgh, Pennsylvania is reporting that the FBI is investigating the lending practices of mortgage broker Carnegie Financial Group in Carnegie, Pennsylvania.

KDKA has been doing investigative reports on victims of this mortgage broker's lending practices recently. Last week, it was about an elderly couple who are losing their home to foreclosure (see Subprime Refinance Threatens Loss of Retired Pittsburgh-Area Couple's Home). In this report, an 82 year old woman is the victim of an unsuitable mortgage for which an inflated appraisal from a bogus appraiser was used. Reportedly, comparable sales for more expensive neighborhoods were used to estimate the value of the victim's home. Further, the appraiser who purportedly did the appraisal, Edward Underhill, was actually deceased when the appraisal was written. His son, Chester Underhill, was convicted earlier this year of passing himself off as his dead father and using his father’s appraisers license to conduct illegal and inflated appraisals to get commissions.

For more, see FBI Probes Carnegie Mortgage Lender.

Go here to watch the KDKA Channel 2 report (then click Play), by investigative reporter Andy Sheehan.

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

Disrepair, Housing Violations, Foreclosure Threaten Elderly Buffalo Homeowners

In New York, The Buffalo News is reporting a story of elderly area homeowners who are unable to make unaffordable home repairs to maintain their homes and are at risk of losing them. The story of one senior is featured where her home is in such bad shape that the insurance was cancelled. The mortgage company, unable to find an insurance company to underwrite a policy for the home, has commenced a foreclosure action.

According to the article, there are no statistics available on how many local senior citizens have lost their houses because they cannot pay for repairs, but staff members for Buffalo nonprofit groups say the problem is prevalent — and may even be growing.

One staff attorney at the non profit law firm Legal Services for the Elderly, Disabled, or Disadvantaged of Western New York, has just started handling housing violation cases for the organization's clients. She says that her clients come to her terrified.

At Old 1st Ward Community Center, a Buffalo non profit that administers grants for home repairs, it reports that it has a waiting list of more than 90 people — more than half of them senior citizens.

For more, see Cost of upkeep puts older residents at risk of losing homes (Maintenance, loss of insurance put senior citizens at brink of foreclosure).
.

Nine Face Federal Indictment In Texas Mobile Home Mortgage Fraud

The Houston Chronicle reports that nine Conroe, Texas area residents were arrested yesterday in connection with an alleged mortgage fraud scheme involving loans made to unqualified mobile-home buyers. The scheme reportedly involved making purchase transaction appear as refinancings so that buyers could avoid downpayment requirements, and also involved the use of inflated appraisals, according to the indictment. Those indicted are :
  • Mobile home seller Keith Raybon, owner of Emerson Manufactured Homes; Michael Davis, an Emerson employee; Michael David Grimes Sr., an Emerson employee; Jeannie Nelson, a mortgage broker and executive vice president of Royal Lion Mortgage; Hollys Devayne Heasley, who ran an appraisal business; Holly Heasley Arbuckle, an employee of Heasley's company; Patricia Lennon, who ran Ameristar Residential Appraisal Services; Heather Adams, an employee of Old Republic Title Co. of Conroe; and Kandy Powell, who was a Royal Lion employee.

For more, see Nine arrested in mortgage fraud case (Authorities say loans made to buyers who weren't qualified).

.

Wednesday, May 16, 2007

Legislation Ending Tax On Mortgage Debt Forgiveness Introduced In U.S. Senate

An article in The Enquirer (Cincinnati, Ohio) reports:
  • "Two U.S. senators from two states hit hardest by the rising tide of foreclosures introduced legislation Tuesday to change current law that forces individuals to pay income tax when they have part of their mortgage loan forgiven or are forced to foreclose because of inability to pay their mortgage."
The Internal Revenue Service currently taxes any loan forgiveness as "income."

For more, see Senators: Tax must end (Call it unfair to those in foreclosure).

For a prior story about similar legislation introduced in the U.S. House of Representatives, see The Tax Man Will Care About Your Forgiven Debt.

Go here for other posts on avoiding income tax on "cancellation of debt" on short sales and mortgage foreclosures. short sale

KING5-TV Investigative Report On Seattle Mortgage Fraud

In Seattle, Washington, KING5-TV reports of two brothers who trusted friend/mortgage broker/realtor Andrew Vaughey, on whose advice they bought three properties. Now, the brothers are going broke trying to keep up with the mortgage payments.

According to the report, the KING 5 Investigators have uncovered that Andrew Vaughey lied to the banks to get the brothers into loans they couldn't afford. They took loan documents to a forensic document examiner, who reported that the evidence is overwhelming that the brothers' signatures were forgeries. A KING 5 background check on Vaughey revealed that he was a former stockbroker who got "kicked out of the industry two years ago for allegedly "defrauding customers" and trying to "harass and intimidate" a securities investigator."

One more discovery made by KING 5 was that Vaughey was reportedly the true owner of the properties that the brothers purchased. The brothers are now suing Vaughey and his associates.

For more, see Investigators: Mortgage Scheme Traps Buyers.

Go here to watch the KING 5 TV report, by investigative reporter Susannah Frame.
.

Minnesota Foreclosure Rescue Equity Stripping Still Going On

City Pages reports on the story of a husband and wife in Minnesota who were victimized by a foreclosure rescue operator in an equity stripping deal victim. They did business with operator Joshua Schultz and his associates and reportedly ended up getting clipped for $22,250 in consulting and service fees, as well as a few thousand more in other closing costs. Another $31,000 went to the investors. When the couple received their first monthly bill, it was for about $250 more than what was promised. Currently, the homeowners, as well as others, are suing Schultz to get their home back.

Minnesota's anti-equity stripping statute, Section 325N, was passed in 2004 to stop the foreclosure rescue abuses in Minnesota. According to the article, however, the most creative equity strippers appear to have found a loophole that is creating problems for local attorneys representing homeowners in these cases.

In addition, according to one local attorney, some equity strippers just simply ignore the law altogether, confident that their victims will be too embarrassed to ask for help; and she estimates that only one in 20 victims seeks legal assistance.

For more, see Steal This House.

For The Record
The article states that Minnesota was the first state in the country to pass an anti equity stripping statute, passing its law in 2004. In fact, California was the first state in the country to pass their anti-equity stripping statutes, passing its laws a quarter of a century earlier. See California Home Equity Sales Contract Act which regulates foreclosure purchasers and can be found at Section 1695 through Section 1695.17 of the California Civil Code, and California Mortgage Foreclosure Consultants Act, which regulates foreclosure consultants and can be found at Section 2945 through Sction 2945.11 of the California Civil Code.
.

Retired Minnesota Couple Lured Into Ponzi Scheme; Lose Home

In Minnesota, the Forest Lake Times reports on the story of a formerly retired couple who, looking to enhance their retirement income, ended up investing in what turned out to be a multi-state Ponzi scheme offered by Neulan D. Midkiff, a local man who led the Shiloh Church. The investment returns on their initial investment (mostly financed with their home equity) appeared to be so great and they were riding so high that they proceeded to finance additional investments with Midkiff, as well as substantial improvements to their home, with more of their home equity.

To make a long story short, the investment returns abruptly stopped, the couple filed bankruptcy, and Pastor Midkiff had his assets frozen by the Securities and Exchange Commission and was indicted by a Federal grand jury. The couple lost their retirement home and are no longer retired. They are now both looking for work and new housing.

For more, see Retirement dream now a nightmare.
.

Foreclosure Rescue Group Had Ties To Friend's Church, Says Victim

CourierPostOnline.com reports the story of an Arizona foreclosure rescue victim who did business with a rescue group that had ties to her friend's church. According to Felecia Rotellini, superintendent of the Arizona Department of Financial Institutions, "The foreclosure rescue groups are getting creative in how they try to befriend the homeowner. But ultimately, it's financial exploitation." For more, see Foreclosure 'rescue' scams exploit more homeowners.
.