Federal Appeals Court Reverses New York Mortgage Fraud Conviction

Ruling that a New York Federal trial judge should have recused himself in the case, the U.S. Court of Appeals for the 2nd Circuit today reversed the convictions of Robert J. Amico and Richard N. Amico, two brothers convicted in the largest case of mortgage fraud ever prosecuted in western New York. For more, see Judge tosses Amico verdicts (The Rochester Democrat and Chronicle).

Go here for the appeals court decision - U.S.A. vs. Amico.

For story update, see Brothers plead guilty to mortgage fraud (10-3-07).
(updated 10-11-07)

Mortgage Bankers, Brokers Pointing Finger Of Blame At Each Other For Subprime Woes

The Associated Press reports:

• "The heads of trade groups representing mortgage bankers and brokers traded barbs Tuesday over who's to blame for the housing market's woes. The head of the mortgage banking industry's trade group claimed brokers profited from a home loan boom but didn't do enough to examine whether borrowers could repay."

In response, the head of the National Association of Mortgage Brokers reportedly said,

• "It is truly unfortunate [Robbins] has attempted to shift blame away from Wall Street, federally chartered banks, state-chartered lenders and underwriters for the subprime situation we find ourselves in today."

The mortgage broker head also added that, based on the testimony at congressional hearings, "most residential mortgage loans are quickly sold into the secondary market -- in fact most lenders are really just brokering the transaction but afraid or ashamed to admit it." For more, see Mortgage bankers, brokers squabble (Each blames other for subprime woes) (Chicago Tribune)

NY AG Investigating Mortgage Fraud; Focus On Illegal Pressure On Appraisers

Bloomberg.com is reporting:>

• "New York Attorney General Andrew Cuomo issued a subpoena to the real estate appraisal unit of First American Corp. in his investigation of whether mortgage brokers pressured appraisers to inflate property values."

The unit, eAppraiseIT LLC, reportedly appraises up to 15,000 homes a year in New York. For more, see New York Subpoenas First American Appraisal Unit.

For story update, see First American Issued Phony Appraisals, Charges NY AG; Execs Knew It & Did It Anyway, Says Suit.

Go here for other posts on the NY AG's investigation of First American / eAppraiseIT.

Virginia Foreclosure Rescue Operator Targeted In Lawsuits

The Virginian-Pilot reported this week 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." The transactions involved are apparently the "sale-leaseback" variety, where the operator takes title to the home in foreclosure and promises the homeowner the chance of repurchasing it in the future.

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."

One of the lawsuits, originally filed in a Virginia state court and subsequently removed to a Virginia Federal Court, alleges violations, makes legal claims and requests relief based on the following:

• Equitable mortgage doctrine, Federal and state Real Estate Settlement Procedures Act, Federal Truth in Lending Act ("TILA"), Federal Home Ownership Equity Protection Act ("HOEPA"), Federal Reserve Board Regulation Z, fraud, intentional misrepresentation, and deceit, breach of contract, breach of fiduciary duty and negligence, conversion, unjust enrichment, breach of the implied covenant of good faith & fair dealing, conspiracy, constructive trust & resulting trust, several other state law claims.

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

(I had problems uploading the plaintiff's complaint that is currently in Federal court; if you want a copy, let me know at HomeEquityTheft@yahoo.com and I'll e-mail it to you.)

(This is an updated version of a post originally appearing on May 21, 2007.) equitable mortgage yak

Recent 1031 Exchange Intermediary's Bankruptcy Filing Highlights Lack of Industry Oversight & Regulation

A recent article on the Florida Association of Realtors website reports:

• "The bankruptcy of a national 1031 exchange firm has jeopardized some real estate deals. It’s also highlighted a problem in the like-kind exchange system – a lack of federal oversight on this legal way to shield capital gains from the IRS."

For more, see 1031 exchange firm declares bankruptcy.

For those investors who are thinking of getting rid of one intermediary and transferring their investment funds to another, see Can I fire my Qualified Intermediary...?

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.
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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:

• Two more plead guilty in mortgage fraud case (Kansas City Business Journal)
• Shields’ request is denied (The former county executive had sought dismissal of a mortgage fraud indictment) (The Kansas City Star)

(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:

• Case Number: L05-3-1161 - Family Trust Financial Services, Financial Solutions, Family Trust, Lee Heath, Richard Wilson (Tampa)
• Case Number: L05-3-1167 - Foreclosure Assistance Solutions a/k/a Foreclosure Assistance Services (Clearwater)
• Case Number: L06-3-1014 - Mortgage Assistance Solutions, LLC (Dunedin)

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:

• Equitable Mortgage & Usury In Sale Buyback Deals In Florida
• More On Equitable Mortgage & Usury (Florida)
• Equitable Mortgage Doctrine In Florida
• Go here for more on Florida equitable mortgage / disguised loans / usury and related claims
• Chapter 687, Florida Statutes - Interest and Usury

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.
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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:

• Go here to watch the WFAA Channel 8 report, by Byron Harris
• For the online report, see Three indicted in McKinney mortgage fraud.

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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.
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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:

• Beware: Foreclosure 'rescue' firms could take title to your home
• S. Florida families learn bitter lessons about trying to save homes (no longer available online).

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:

• Equitable Mortgage & Usury In Sale Buyback Deals In Florida
• More On Equitable Mortgage & Usury (Florida). equitable mortgage yak

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.
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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.
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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:

• Court Shuts Down Austin Real Estate Scam; Orders Defendants to Pay $1.4 Million (Galindo Trust sold homes without disclosing liens; many consumers faced foreclosure)
• State of Texas vs. Galindo Trust, Flores, et al. (copy of lawsuit)
• Permanent Injunction
• Copy of "Super Owner Financing Program" used by Flores and Galindo Trust in cheating consumers

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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.
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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.
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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:

• Predatory Lending Shatters Dreams Of Dozens Of First-Time Home Buyers (New London realty agent, loan officer at center of complaints of questionable practices )
• Blumenthal Starts Investigation Of Mortgage Cases

Go here for other posts on this investigation.

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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:

• Indiana man accused of taking over $22,000 to build a pool and not doing the work (see Owner of Schererville business charged with theft of $22K),
• Man charged with contractor misapplication of payments and felony theft of more than $31,000 in home improvement scam (see Man arrested in fraud, identity theft),
• Contractor who failed to perform work for customers sentenced to four years on probation, ordered to pay restitution (see 4 years' probation for home contractor - Windows America owner faces $28K in restitution, $1M-plus more in claims),
• Illinois man, facing criminal charges in at least three counties, still in the home-repair business, racking up angry clients (see This Bad Boy sure has some nerve),
• New Jersey contractor ordered to pay $4,300 to blind senior citizen whose home was left with unfinished repairs (see Ex-contractor pays restitution),
• Home Depot customer asks for a new kitchen; Home Depot sends a sex offender (see Home Depot Rescreens Workers Sent Into Homes - Team 5 Investigates Updates Report That Led To Nationwide Changes)

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Weekend I.D. Theft Blotter

This week's identity theft related stories:

• Victim had identity stolen when he was seven years old; didn't realize it until 10 years later when he applied for his first job (see Teens increasingly the target of identity theft),
• Ex-credit bureau worker sought by authorities in I.D. theft case (see Former Equifax Employee Accused Of Identity Theft, or watch WSB-TV Video report),
• Alleged I.D. thief accused of changing named beneficiary in the victim's 401K plan (see Identity Theft: Police: Glenville man affected),
• Woman victimized by her former house cleaner (see Woman faces sentence in identity theft),
• Four alleged house to house mail thieves arrested in suspected I.D. theft ring, police discover more than 500 pieces of mail in vehicle (see 4 accused of stealing mail in Yorba Linda - Brea police find hundreds of pieces of mail in vehicle after a resident reports an SUV stopping house to house),
• Murder suspect convicted under someone else's name; authorities discover true identity before sentencing (see Toussaint Davis now faces identity theft charge),
• Records for thousands of Indianapolis Public Schools students accidentally posted to the Internet, exposing confidential information to anyone surfing Web (see IPS accidentally releases records),
• Video - ATM Cash Machine Skimming Scam (on youtube.com)

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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.
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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.
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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.
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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.
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"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.
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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.
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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.
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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.
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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.
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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.

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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:

• U.S. Attorney Press Release
• Eugene man pleads guilty to mortgage fraud (The Oregonian)

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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).
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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.
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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
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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).
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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).

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