More On Metro Dream Homes

(original post 9-23-07)
Another story came out in The Washington Post on the POS Metro Dream Homes investment program that promised to pay the mortgages of its approximately 900 participants and operates in Maryland, Washington, D.C., and Virginia (and reportedly in some other states). According to the story:

• Some Dream Homes members are still willing to sign their names to sworn affidavits and to appear en masse at a courthouse to defend their participation. They're not victims, they say.

[...]

• According to members who have contacted [Washington Post columnist Elizabeth Razzi], Dream Homes is not making participants' mortgage payments for September and October. For participants who have three or four or even five properties in the program, that's a whole lot of dough they will have to pay this month to remain current on their debt.

The position of Metropolitan Grapevine, the parent organization, is that participants shouldn't expect the payments to be on time, the way a landlord does. For more, see Neighbors Bear Dream Homes' Risk.

For story update, see Federal Court Denies "Dream Homes" Request To Lift Cease & Desist Order (10-2-07).

Go here for other posts on Metropolitan Grapevine / Metro Dream Homes.

Northern California Prosecutors Get "No Contest" Pleas In Foreclosure Rescue Scam

In Stanislaus County, California, The Modesto Bee reports:

• Two men who swindled homes from vulnerable families by posing as Christian do-gooders avoided trial and state prison with a plea deal Wednesday, and agreed to make restitution to some victims. Lonni Ashlock, 56, of Waterford and Ronald Buhler, 26, of Riverbank entered no contest pleas to six felony counts and were sentenced to one year in Stanislaus County Jail. They may be eligible for alternate work programs, Judge Hurl Johnson said.

• The plea bargain negated most of the 50 felony counts they would have faced at a trial scheduled to begin next month. Those counts stemmed from cases involving 12 families.
  A Bee review showed Ashlock and Buhler acquired at least 142 properties from owners facing foreclosure in four counties. They were charged only in Stanislaus County.

[...]

• The men gained the trust of owners about to lose their homes at public auction, sometimes by praying with them, then duped them into signing over deeds, witnesses said at their preliminary hearing last fall. Several continued paying rent but eventually were evicted. Those who say they were victims include an 86-year-old woman with dementia, a 66-year-old schizophrenic, a woman with brain lesions and several other disabled people, according to court documents and testimony.

• "They took away people's dignity. How are they going to get that back? There is no amount of money," said John "J.J." Martin, one of 28 former clients who sued Ashlock and Buhler. Though the men formally admitted to swindling six families, they agreed in the plea deal to make restitution to 20. Some are among those with active civil lawsuits against Ashlock and Buhler; Martin is not.

[...]

• Of the 20 to receive restitution, 12 no longer live in the homes they lost to the men. The remaining eight were not evicted, but all face foreclosure, attorneys said.

[...]

• Ashlock specifically pleaded no contest to violations of the Home Equity Sales Act, which protects homeowners from deceiving pitches. Buhler pleaded no contest to two identical counts plus four counts of theft by false pretenses.

[...]

• [One victim] said he lost the home his parents had hoped would stay in the family forever. He since has suffered two heart attacks, brought on by stress, he said.

According to an earlier Modesto Bee report, the men and their companies have been named in at least 27 lawsuits in Stanislaus, San Joaquin and Merced counties (see Plea deal for men accused of fraud?).

For more, see 2 plead guilty to swindling homeowners (One year in jail, restitution for 20 families mark deal).

For prior posts on this story, see:

• Plea Deal In The Works For Foreclosure Rescue Operators?,
• California Judge Decides to Proceed to Trial in Matter of Accused "Deed Thieves".

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

Queens Brokerage Suspected Of Mortgage Fraud; Faces Administrative Charges

In New York City, The Daily News reports in an I-Team Special Investigation reports on allegations that real estate brokerage 2000 Homes arranged for the purchase by a local woman of a Queens home for $538,000 even though the brokerage knew she had bad credit and "lived on an amalgam of government subsidies". The brokerage also reportedly had the woman sign a blank loan application and listed her as a $9,000-a-month "marketing manager" for a company owned by her loan officer's husband, even though she has no full-time job. The woman is now facing foreclosure. According to the story:

• [The woman's] mess is increasingly common among vulnerable low-income borrowers, facilitated by questionable brokers like 2000 Homes, a Daily News investigation has found.

[...]

• With an office in Queens Village and 20 licensed brokers, 2000 Homes has been fined $3,900 for violating regulations aimed at curbing aggressive sales tactics, officials say. Next month, the company faces a hearing and possible loss of its real estate broker's license in the 2005 sale of a home in St. Albans, Queens, records show.

For the whole story, including the stories of a couple of others who were allegedly duped by 2000 Homes, see Queens woman victimized in brokers' mortgage scam.

Homeowner Files Suit Against Wachovia, World Savings For Deceptive "Option ARMs"; Seeks Class Action Status

The San Francisco Business Times reports:

• A lawsuit filed against Wachovia Corp.'s mortgage unit and World Savings Bank in Oakland alleges the bank was less than honest in explaining its option-adjustable-rate mortgages to consumers, according to the Charlotte Business Journal. That "campaign of deceptive conduct and concealment" led customers to lose their homes through foreclosure, contends the suit, which seeks class-action status. It was filed Aug. 30 in federal court in San Jose.

[...]

• The suit claims the bank did not disclose the actual interest rate on its loans, which were often raised "immediately and significantly" after closing. It also says if borrowers made payments at the teaser rate, the principal on the loan would actually increase, which is called negative amortization.

For more, see Wachovia sued over option-ARM mortgages. For a copy of the lawsuit, either:

• Drop me a line at HomeEquityTheft@yahoo.com (please put "Mandrigues v. World Savings, Inc." in the "Subject" line) and I'll e-mail it to you, or
• Go here for a direct link to the lawsuit (39 pages - $2.40); on the U.S. Courts' PACER website. PACER registration required.

For another lawsuit, filed in a Charleston, South Carolina Federal Court, involving "Option ARMs," see World Savings, Wachovia Sued Again For TILA Violations; Class Action Status Sought.

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For links to media stories of other refinancing homeowners who lost equity in their homes and found themselves in or near foreclosure as a result of these or other types of exotic mortgages, see Subprime Refinancing Leaving Some Homeowners Financially Strapped.

Go here for other posts on homeowners suing lenders to undo subprime / predatory loans. undo mortgage loans TILA alpha

IRS Shows Foreclosed Homeowners How To Dodge Income Tax On "Cancellation Of Debt" Income

Possibly in response to the recent letter sent to them by three U.S senators (see Tax relief urged for families who lose homes- Marketwatch, 9-14-07), the Internal Revenue Service issued an Information Release last week (IR-2007-159, Sept. 17, 2007) announcing a new section of their website intended to get the word out that under current Federal income tax law, "special relief provisions can often reduce or eliminate the tax bite for financially strapped borrowers who lose their homes." According to the IRS:

• Under the tax law, if the debt wiped out through foreclosure exceeds the value of the property, the difference is normally taxable income. But a special rule allows insolvent borrowers to offset that income to the extent their liabilities exceed their assets.

Of particular note in the IRS Information Release is this caution to foreclosed homeowners:

• The IRS urges borrowers to check the Form 1099-C carefully. They should notify the lender immediately if any of the information shown on their form is incorrect. Borrowers should pay particular attention to the amount of debt forgiven (Box 2) and the value listed for their home (Box 7).

(Editorial Note: I think the secret is coming out that foreclosing mortgage lenders are really screwing up badly in preparing the Form 1099-C notices that they are issuing to foreclosed homeowners.)

For more on the IRS Information Release, see IR-2007-159 - Special Web Section Unveiled for Homeowners Who Lose Homes; Foreclosure Tax Relief Available to Many.

To go to the new IRS section on their website, go to Questions and Answers on Home Foreclosure and Debt Cancellation.

For related articles on this new information, see:

• IRS Says Foreclosures, Short Sales Can Be Less Taxing (Realty Times),
• Your Money: Beware tax bite after losing your home (USA Today) - which, buried near the end of the article, suggests that foreclosed homeowners should consider challenging the lender's fair market value of the home which, when mortgage debt is forgiven, will be reported to them on Form 1099-C. It urges foreclosed homeowners to contact the lender immediately if not in agreement with the information on the 1099-C, saying, "If the lender was in a hurry to unload your home, it might have sold it for less than the fair market value."
• IRS Publication 4681: Canceled Debts, Foreclosures, Reposessions and Abandonments.

Go here for other posts on dodging the income tax on a short sale / foreclosure sale (including handy links to IRS forms and publications related to this subject). short sale income tax

Home Equity Investment Program Goes "Belly Up" Leaving 800 Customers On The Hook

In Lancaster County, Pennsylvania, Lancaster Online reports:

• Creative refinancing contracts devised by a Reading-based mortgage broker have unraveled, leaving 800 customers on the hook for higher payments and possible foreclosure on their homes. Wesley A. Snyder filed for Chapter 7 bankruptcy protection Tuesday for OPFM Inc., which he operated as Personal Financial Management ... and five subsidiaries including Image Masters Inc. OPFM attorney Dexter Case said Wednesday the company worked with Image Masters, its investment subsidiary, to refinance homeowners and invest proceeds.

Arrangements were made where homeowners would refinance their mortgages and give the equity to the mortgage broker promoting the investment program. The money was then to be invested, with the investment income to be applied to the loans to accomplish an early mortgage payoff. Reportedly, the money wasn't invested, according to the attorney for the promoter.

(The investment program sounds a little like the POS Metro Dream Homes / Metropolitan Grapevine investment program based in Laurel, Maryland.)

For more, see Mortgage firm goes bust (Homeowners trying to invest equity get stung) (if link expired, try here).

For story update, see:

• Lawmaker Tries To Help Strapped Homeowners (WGAL-TV Channel 8 - 10-9-07),
• Mortgage holders put on hold (Judge gives OPFM until Nov. 2 to declare assets, identify creditors) (10-9-07),
• Suit seeks to void 800 'Ponzi' mortgages (9-28-07),
• Mortgage-scam victims fighting to keep homes (Overflow crowd of 200 meets in Mountville) (9-27-07),
• Mortgage firm failure could hit hard here (800 homeowners seen facing financial crisis) (9-24-07; if link expired, try here).

Go here and go here for other posts and links to earlier media reports on the Pennsylvania Ponzi scheme involving Wesley Snyder, OPFM, Image Masters.

Defunct Florida Title Insurance Agency Required Employees To Put In "Chinese Overtime"

The Saint Petersburg Times ran another story on the escrow scandal involving the now-defunct Gulf Coast Escrow and its owners, Cheryl L. Wehlau and her husband, John T. Wehlau. According to the story:

• Loan closers worked 12-hour days, weeks on end without time off. Processors prepared loan packages, napped on cots, splashed water on their faces, then went back to work to meet the volume of loans. [The Wehlaus] even insisted employees do what they called "Chinese overtime" -- paid not at time-and-a-half, but at half-wage.

[...]

• The Wehlaus had a secret reason for maintaining high productivity at Gulf Coast, according to state investigators: They were stealing millions from escrow accounts under their trust, laundering the cash through shell corporations and spending it on an extravagant lifestyle. The stolen funds were replaced by money coming in for new mortgage loans, investigators said, but if the flow of new money was interrupted, the scheme faced collapse.

[...]

• An audit revealed an escrow account that should have held $9.4-million contained just $1.5-million. More than $7.9-million had vanished. [...] Each was charged with 25 felonies: theft from escrow accounts, grand theft and money laundering.

For more, see Title business boomed, but the cash vanished (Life was hard but lucrative at Gulf Coast, until the owners were charged with stealing millions).

For story update, see Search for title company's millions leads to employee (Much of $7.9-million looted from Gulf Coast Title remains missing) (St. Petersburg Times - 10-11-07).

Go here for other posts on this story.

Go here for other stories involving misappropriated or unaccounted for escrow funds.

Texas Apartment Building Foreclosure Forces Unexpected Tenant Move

Media stories from Arlington, Texas are reporting on a residential apartment building that has been foreclosed on by the mortgage lender and is kicking out all the tenants.

The Fort Worth Star-Telegram reports:

• Residents at some central Arlington apartments are looking for new homes and answers this week after learning their complex was foreclosed and they must move out by the end of the month. [One tenant] said Thursday that she received a letter from management on Sept. 4 giving her 30 days to move out of the Grey Stoke Apartments on Rogers Street. She said she moved into the complex with her teen-age son three months ago and did not know the apartment was in financial trouble. Other residents ... said they never received a letter and that apartment managers are not giving tenants any information.

CBS11TV (Dallas - Fort Worth) reports:

• CBS 11 News went to the complex where residents said they were angry, frustrated, and confused. They say they never knew the owner was having financial problems until they got eviction notices. [...] Problems began when property owner Stephen Gould, of New Hampshire, stopped making mortgage payments on the Greystoke Apartments. The complex went into foreclosure and the bank Aurora Loan Service took over and decided all residents must go.

For more, see:

• Apartment foreclosure forces residents out (Star-Telegram) (if link expired, try here),
• Arlington Apartment Residents Being Evicted (CBS Channel 11),
• Go here to watch the Channel 11 video report, Bankrupt Apartments.

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here. unwittingly equity skimming beta

Dream Turning Into Nightmare For One New Homebuyer Couple

In Elk Grove, California, KCRA-TV Channrel 3 (Sacramento) reports:

• Last May, Jason and Gina Rossow fulfilled their dream of buying their first home in a brand-new subdivision under construction in Elk Grove. "Yeah, we were super excited," said Gina Rossow. But now across the street are weeds. An entire field is empty with just debris. And around the corner there are unfinished homes. The Rossows' dream is slowly creeping toward nightmare. "We're just confused," Jason Rossow said. What's causing confusion, concern, and unwelcome news is a closed sign that's on the Dunmore Homes sales office door. All construction was halted last month, and contractors filed roughly $5 million in liens against Dunmore Homes.

For more, see Homebuilder's Closed Office Worries New Homeowners (Residents: Homebuilder Won't Return Our Calls).

Woman Facing Foreclosure Torches Home; Faces Arson Charge

In Gaines Township, Michigan, The Grand Rapids Press reports:

• Sheryl Christman allegedly had a plan that would give her what her mortgage company wouldn't -- a way out. Four days shy of losing her 3-year-old home to foreclosure, Christman, 38, allegedly set the $150,000 residence on fire Sept. 1, Kent County sheriff's officials said. Authorities say Christman, who has no prior criminal record, torched the home ... as a way to gain insurance money, but fire investigators immediately were suspicious of a blaze that appeared to have quickly roared out of control.

[...]

• Foreclosure arson is becoming an issue across the state and country, Grand Rapids fire investigator Pablo Martinez said. He recently attended a conference for fire investigators and nearly each person there had probed potential repossession fires.

For more, see Fire allegedly set to avoid foreclosure.

For story update, see Woman pleads no contest to arson of her own home.

For other stories on fires & foreclosures, go here and go here. foreclosure arson yak zebra

Man Facing Foreclosure Dies In House Fire

In Burien, Washington, KIRO-TV Channel 7 (Seattle) reports:

• A reclusive Vietnam veteran who had recently received notice of foreclosure on his Burien house was found dead after a fire at his home of more than 20 years early Wednesday morning, firefighters and neighbors told KIRO 7 Eyewitness News.

[...]

• The man, whose identity hasn't been released, died alone in a back room of the house, firefighters said. The cause of the fire is under investigation. King County fire investigators were seen sifting through the rubble and arson dogs were brought to the scene.

For more, see Investigators Gather Clues To Cause Of Fatal Fire, or watch the KIRO-TV Channel 7 video report. zebra

Another Vacant Foreclosure Goes Up In Flames; Arson Suspected

In Fall River, Massachusetts, SouthCoastToday.com reports:

• Investigators are eyeing arson as the cause of a Wednesday morning blaze that gutted an abandoned house, police said. Officials have ruled out accidental causes as the reason for the fire, which caused about $200,000 in damages to a multifamily house ... just before 1 a.m., police spokesman Sgt. Thomas Mauretti said.

According to the story, the vacant home is either currently in foreclosure, or has already been foreclosed by Fannie Mae. For more, see Arson eyed in Fall River fire. zebra

Subprime Refinancing Leaving Some Homeowners Financially Strapped

The following links are to a collection of recent articles on homeowners who are now finding themselves in or near foreclosure as a result of signing mortgage refinance loan documents that they apparently didn't understand.

1) Jacksonville, Florida - A 70-year-old Atlantic Beach, Florida widow has retained the services of Jacksonville Area Legal Aid to fight the foreclosure of her home by Ameriquest, who refinanced her mortgage three times since 2001, promising to help her lower her interest rate and monthly payments. In fact, her original payment has more than doubled. She charges that Ameriquest took advantage of a sick widow who didn't finish high school and is unable to understand financial contracts. See Beaches woman caught in a foreclosure cycle (But her lawyer says Ameriquest took advantage of her).

2) San Francisco, California - A Bay Area man is nearing foreclosure as a result of an "Option Arm" refinance of his home mortgage through Countrywide, who allegedly told him that his payments would be cut by about half; the payments actually went up by about $300. Further, he charges that someone originating the loan inflated his stated income by double on the loan application, notwithstanding the fact that he only produced pay stub verification for half the amount. See Bay Area Complaints Pile Up Against Countrywide, or watch TV report, CBS 5 Investigates: The Mortgage Blues.

3) Marin County, California - A disabled Marin County woman has retained an attorney to fight a foreclosure of, what her attorney calls, "an outrageous subprime loan." All she wanted was some money to fix her home of 30 years, and now she's on the verge of losing it. She is currently suing lender New Century Financial and mortgage broker PrimeWest, among others, seeking damages for negligence and fraud. See Homeowners unwittingly face foreclosure.

4) Detroit, Michigan - The problem of subprime refinancing is illustrated by the story of one family who lost their home to foreclosure on a refinanced mortgage that they were reportedly told that the payments would start at $504 a month, and would rise no higher than $569. Despite the broker's reassurances, the family's house payments reached $900. See Risky loans rock area: Metro Detroit is No. 1 in subprime mortgages (High-interest loans tied to growing foreclosure rate).

5 - South Windsor, Connecticut - Another Ameriquest horror story. A couple who wanted some money to do kitchen renovations and pay down some debt say they ended up getting locked into a skyrocketing adjustable mortgage, in which their payment went from $1,600 per month to $2,200 in a little more than a year. See Family Struggles With Skyrocketing Mortgage (Nearly 2 Million Expected To Lose Homes To Foreclosure This Year), or watch WFSB-TV Channel 3 report.

6- Fort Worth, Texas - One more Ameriquest story; another refinance for some cash to do some home improvements. The homeowner reportedly wound up with a loan from Ameriquest that didn’t even give him enough money for the repair, but almost doubled his monthly payments over the next few years. The homeowner had sued Ameriquest for mortgage fraud. Currently, the homeowner is dead. His brother thinks that the worry over his bad loan with Ameriquest and its extremely serious consequences was a factor in his brother's demise. Apparently, the brother had overcome a serious drinking problem years before, but the problems he had with the loan and his house caused him to stumble again. He died about a year ago from cirrhosis of the liver, caused in part by excessive drinking. According to his brother, “He was a mess in his last few months of his life. This whole problem with his house physically drained him. It dragged on and on."

Reportedly, the case against Ameriquest is still pending, though it is in limbo, according to the attorney handling the case. The homeowner left no will and had no assets besides the house; the brother said he couldn’t afford the legal bills for court hearings that would be required for him to be appointed executor of the estate, so at this point there is no one to keep the case going. See Too Little, Too Late (Predatory lending action is helping some, but the worst may still be ahead).

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P.S. - Ameriquest has agreed pay out $325 million to borrowers across the country to settle class-action suits brought by attorneys general in 49 states and has gone out of business.

7) Suffolk County & Westchester County, New York - see The American Dream Foreclosed.

8) Metro Cincinnati, Ohio - see America's "most affordable" shows strain of tough times.

Go here for stories of other victims of subprime refinancing. victims subprime refinancing alpha

Phil Hill Gets 28 Years In Metro Atlanta Straw Buyer, Flipping Scam

The Atlanta Journal Constitution reports:

• On Friday, a federal judge in Atlanta sentenced [Phillip E.] Hill to 28 years in prison and ordered him to pay more than $41 million in restitution for running a conspiracy that involved loan officers and real estate appraisers and racked up $112 million in fraudulent loans, of which Hill himself pocketed a cool $14 million, said prosecutors. The sentencing came six months after a jury found Hill and nine others guilty of the scam. They used "straw purchasers" to obtain loans on properties where corrupt appraisers had inflated their values, a fraudulent transaction known as a "flip." The "straw purchasers" were then paid in kickbacks out of proceeds from the excess loans. Prosecutors said the scheme involved the sale of more than 50 homes and 250 condominiums in eight Atlanta-area condo complexes.

For more, see Broker sentenced to 28 years for mortgage fraud in Atlanta.

Go here for other posts on the Phillip E. Hill property flipping operation.

Anatomy Of A "Cash Back" Home Flip That Ended In Foreclosure

The Bakersfield Californian provides a detailed analysis of a property flip that ultimately ended in foreclosure that involved associates of the now defunct Crisp & Cole real estate company in Bakersfield, California. Included in the story are links to the actual recorded property records used in the transactions. For more, see How one flip unfolded.

Go here for other posts and links to stories on the David Crisp / Carl Cole alleged flipping operation.

California Cops Raid Mortgage Company; Records Confiscated

In Grass Valley, California, TheUnion.com reports:

• Law enforcement agents seized documents Friday from the office of a Grass Valley mortgage company after an eight-month investigation identified suspicious real-estate loans and investments. Officials from the California Department of Justice, the Grass Valley Police Department and the Nevada County District Attorney's office removed documents from Loan Sense, a Grass Valley office owned by Tom Hastert, a lawyer who also owns a real estate company.

[...]

• Grass Valley police, the D.A.'s office, state officials, the FBI, the California Department of Real Estate and the California Bar Association have been investigating Hastert since January. [...] "I feel he has committed fraud, larceny and embezzlement. He has used his position as an attorney to gain trust with people and encourage them to invest their money with him," [one investor] alleged.

Most of the investors were elderly people trying to invest their retirement money, according to a Grass Valley police spokesperson. For more, see Raid on mortgage company in fraud probe.

For story updates, see:

• Loan Sense accounts remain frozen (Hastert’s brother has yet to submit paperwork) (1-28-08),
• Hearing today in fraud probe (Judge to consider freeing up frozen loan accounts) (10-18-07),
• Investors vent anger amid fraud probe (With mortgage company's accounts frozen, lenders and borrowers demand answers) (10-5 -07),
• Investors, DA to meet in loan fraud probe (10-3-07).

Title Insurance Underwriter To Cover Some - But Not All - Customer Losses In Florida Treasure Coast Escrow Scandal

In Vero Beach, Florida, TC Palm reports:

• Insurance underwriters for a title company owned by Vero Beach attorney Ira C. Hatch Jr. will compensate customers that lost money with the now-defunct company, a spokeswoman for the Florida Department of Financial Services said Thursday. Lawyers Title Insurance Corp. and Attorneys' Title Insurance Fund said they would pay claims by businesses that used Coastal Title Services [a title insurance agency], said spokeswoman Nina Banister. The agreement does not apply to customers of Coastal Escrow Services [an escrow company], Banister said.

[...]

• Banister said escrow companies are usually part of a title agency, real estate agency or a mortgage broker, but that a licensed attorney can separately operate an escrow business. The Florida Department of Financial Services launched an investigation into the title company after Hatch shut down it and Coastal Escrow. "My understanding is it (Coastal Escrow) should have been attached to a title company, and part of the investigation is why did he have them separate?" Banister said.

For more, see Insurance group to reimburse clients of Coastal Title Services.

For recent related stories, see:

• Realty group feels effects of Coastal Escrow collapse (TC Palm - 10-28-07),
• Hatch asks court to dismiss lawsuit against him in Vero Beach (TC Palm - 10-26-07),
• Former Hatch colleague speaks (Kevin Doty strongly denies involvementin Escrow case involving missing $4M) (TC Palm - 10-21-07)
• Hatch escrow case proceeds slowly in Vero Beach (TC Palm - 10-20-07),
• Ira Hatch going to court this morning (TC Palm - 10-19-07),
• Hatch's wife wants $215,000 returned from police (TC Palm - 10-9-07),
• Coastal Escrow suits mount (TC Palm - 10-6-07),
• Hatch seeks to have lawsuit frozen until investigation completed (TC Palm - 10-1-07),
• Marjorie Hatch's accounts unfrozen after Vero Beach police seize money (TC Palm - 9-25-07),
• Hatch probe may take months (TC Palm - 9-25-07),
• Records suggest Ira C. Hatch, family lived comfortable life (TC Palm - 9-24-07),
• Hatch's wife seeks bank accounts in Vero Beach (TC Palm - 9-21-07),
• Ira C. Hatch's attorney will meet with state attorney’s office today (TC Palm - 9-20-07),
• Go here for other posts and links to other media reports on this story.

Go here for other stories on misappropriated or unaccounted for escrow funds. sneaky slick escrow agents alpha

Ohio Man Sentenced In Mortgage Scam That Left Some Unwitting Straw Buyers In Foreclosure Or Bankruptcy

The Cincinnati, Ohio office of the FBI reports:

• Nicholas St. Nichols, age 54, of Dayton, was sentenced in United States District Court here to one year and one day in federal prison for his role in a mortgage fraud scheme to sell homes at inflated prices to a buyer who believed she was merely selling him her credit. Nichols was also fined $4,000 and ordered to pay restitution to victims.

[...]

• St. Nichols and Todd Armstrong, a 43 year old Bellbrook resident sentenced in July to twelve months and one day imprisonment, were originally indicted for the scheme in July 2005. Eventually, each entered guilty pleas to one count of mail fraud. The victims in both cases included financial institutions that were conned into making loans in excess of the true market value of the homes, along with individual buyers who were scammed into believing they were merely selling their credit for investment purposes rather than actually buying homes or taking out mortgages in their names.

[...]

• Buyers were usually given $1,000 and led to believe they were merely selling their credit when, instead, they were unknowingly purchasing homes and left holding the bag on under-secured loans. Most of the buyers ended up in foreclosure actions ... . Armstrong acted as the mortgage broker in 14 fraudulent sales, according to the plea entered in his case.

For more, see FBI Press Release - Second Man Sentenced In Dayton Area Mortgage Fraud Scheme (Selling Personal Credit to Investment Brokers Results in Fraudulent Home Loans).

NJ Feds Convict Two In Mortgage Scam

In Northern New Jersey, The Star-Ledger reports:

• Two women tied to a multi-million dollar mortgage scam involving luxury properties in several wealthy suburbs were found guilty [Thursday] on charges of bank fraud and conspiracy. A jury deliberated about two hours before returning guilty verdicts against Jamila Davis, 30, of Teaneck, and Brenda Rickard, 54, of Montclair in U.S. District Court in Newark. The two were charged with inflating the value of at least eight homes in exclusive neighborhoods in Alpine, Cresskill and Saddle River -- obtaining mortgages and secondary financing that far exceeded the value of houses that sold for $2 million or more.

For more, see Guilty verdict in luxury home mortgage scheme. For earlier reports on this story, see:

• Montclair woman indicted for bank fraud (The Montclair Times - 7-8-05),
• Woman held in $30M mortgage scheme (The Record - 6-30-05).

Sacramento-Area Mortgage Fraud Suspects Still Working In Lending Business, Despite State Cease & Desist Order

The KCRA 3 (Sacramento, California) mortgage fraud investigative reports involving over 20 homes - over $9 million of real estate - in Elk Grove continues as KCRA updates us on the whereabouts of Jim Martin and Gabriel Viramontes, two of the suspected ringleaders in an alleged scam that has left eight investors facing foreclosure on all the homes:

• Despite a cease-and-desist order issued by the state, it appears two of the targets of our investigation are now operating through a loophole in the law that's allowing them to continue processing loans. [...] Although the state issued a cease-and-desist order, [Jim] Martin is still operating as a loan officer in Northern California. KCRA 3 found Martin online solciting loans and working for Set To Go Inc. Martin admits he never told that company he's under federal investigation. Despite that cease-and-desist order issued by the state, Martin isn't breaking the law because he is operating through a loophole that allows him to work under another company's license.

• Martin's former business partner, Gabriel Viramontes, is also operating under that loophole and is working at Folsom Lake Mortgage. Viramontes is also under a cease-and-desist order.

Reportedly, a California state senator is ready to introduce legislation to close the loophole that the KCRA 3 investigation has amply illuminated. For more, see:

• Mortgage Lenders Apparently Operating Through Loophole (Despite Cease-And-Desist Order, Officers Still Working), or go here to watch Josh Bernstein's KCRA 3 report (including one on one interview with Jim Martin),

• Mortgage Fraud Investigation Leads To Call For Legislation (Loan Officers Accused Of Working Through Loophole In Law), or go here to watch the KCRA 3 report.

Go here for other posts on the KCRA 3 mortgage fraud investigation.

Third Defendant Cops Plea In Alleged $100M Minnesota Mortgage Fraud Investigation

The Minneapolis Star-Tribune reports:

• A stay-at-home mom from Ohio admitted in federal court Thursday that she let participants in an alleged mortgage fraud conspiracy use her name and credit so they could buy 46 properties in some southern Twin Cities suburbs. Melissa D. Smith, 43, admitted that between 2004 and January of this year, she misled lenders who called to check on her income, never put any of her own money down on the properties, and allowed people working with a home builder to sign her name on real estate and loan documents. On occasion, individuals working for the home builder gave Smith checks with instructions to pay down her credit card debts so she could continue to borrow money, according to her plea agreement.

• Court documents identify the home builder orchestrating the scheme only as "Company A." The Star Tribune confirmed through property records and sources that it is Parish Marketing and Development Corp. of Eagan. Investigators suspect Parish Marketing used straw buyers, including some relatives, to buy multiple homes at inflated prices. The scheme unraveled as the housing market slowed, new buyers could not be found and houses ended up in foreclosure.

Reportedly, lenders were duped into lending around $100 million in mortgages, resulting in losses estimated at around $50 million. Smith reportedly admitted to being paid $2,000 for each transaction that she participated in.

For more, see Ohio woman says she lent her name to fraud (Melissa D. Smith, the third to plead guilty in the case, admitted helping to buy $20 million in metro properties) (if link expired, try here).

Go here for other posts on home builder Parish Marketing and the ongoing investigation.

Florida Cops Arrest Alleged Ringleader In Mortgage Scam That Duped "Rent To Own" Tenants, Straw Buyers, Lenders

WBBH-TV Channel 2 (Fort Myers, Florida) reports:

• One of the alleged ringleaders of a major mortgage fraud scheme has been arrested and denied bond. Eric Heckler faces 16 counts of mortgage fraud, ... 17 counts of defrauding a financial institution and one count of racketeering. In March 2006, ten people were charged in the alleged scheme that took advantage of the hot Southwest Florida real estate market (see Ten charged in alleged mortgage scam).

The alleged scam involved paying straw buyers with good credit a $5,000 fee to purchase homes at inflated prices in transactions in which the alleged scammers pulled cash out of the deal. The operators then rented the homes on a "lease with option to buy" basis to tenants with bad credit with the understanding that after reestablishing their credit, the tenants would be able to buy the homes. Those charged in the operation allegedly pocketed the rent and stiffed the lenders out of their mortgage payments, allowing the homes to go into foreclosure, and leaving the tenants, the straw buyers, and the mortgage lenders all holding the bag.

The total haul over the two years the scheme operated was about $3.8 million. For more, see Fugitive charged in mortgage fraud operation arrested.

Go here for other posts on "rent to own" scams.

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here. rent to own lease purchase option scams zebra unwittingly equity skimming beta

Minnesota Prosecutors Charge Developer, Mortgage Broker, & "Straw Buyer" Recruiter In Alleged Flipping Scam

Three people have been charged by Hennepin County prosecutors in a property flipping, mortgage fraud scam, according to media reports out of Minnesota.

The Minneapolis Star-Tribune reports:

• Three people associated with a suburban developer have been charged with racketeering and theft in a case alleging mortgage fraud based on property-flipping. The Hennepin County attorney's office filed eight charges each against the three defendants: Scott R. Rosenlund of Chaska, president of 10Spring, a home building and development company; Celeste Skaar of Orono, owner of New Day Capital, a mortgage brokerage; and Shinon Lindberg of Greenwood, who allegedly recruited straw buyers for the flipped properties.

KARE-TV Channel 11 reports:

• Prosecutors say the take was more than $2.5 million, and the scheme went on and on until one straw buyer from New Prague called foul after he put in $250,000 and got nothing in return. [...] The three have each been charged with one count of Racketeering and seven counts of Felony Theft by Swindle over $35,000.

The Pioneer Press reports that those who were recruited as the "straw men" in the real estate purchases were left owing millions of dollars.

For more, see:

• 3 people charged in mortgage fraud case (Three people associated with a suburban developer have been charged with racketeering and theft in a case alleging mortgage fraud based on property-flipping),
• Three charged in multi-million dollar bank fraud scam,
• Go here for KARE-TV Channel 11 video report.
• Three charged in real estate fraud case.
• Real estate deal sounded too good to be true. It was. (Three charged with massive mortgage scam that left victims owing millions).

Go here for other posts on this story.

Foreclosure Rescue Sale Leaseback Deals Are Usurious Equitable Mortgages, Says Massachusetts AG's Civil Lawsuit

A motion was filed earlier this week by the office of Attorney General Martha Coakley to amend a complaint it filed accusing a foreclosure rescue group of engaging in equity stripping transactions that victimized 26 Massachusetts homeowners facing foreclosure.

In the proposed amended complaint, a Brockton, Massachusetts based attorney / foreclosure rescue operator is being accused, among other things, of engaging in transactions that constituted usurious equitable mortgages.

The lawsuit, which was filed in a Boston Federal Bankruptcy Court, accuses attorney Alec G Sohmer of arranging at least 26 foreclosure rescue transactions involving homeowners facing foreclosure and their homes which, based on their sales prices in the transactions, were valued at close to $10 million. The deals, which also involved the transfer of the homes into trusts, were allegedly consummated with the participation of four additional individuals:

• Jennifer Sohmer, the wife of defendant Alec Sohmer,
• Andrew P. Palmer, an attorney who allegedly served as the closing attorney on behalf of each lender in each of the Sohmer transactions at issue in this case,
• Shaun M. Ellis, an attorney who on several occasions, allegedly referred his clients to Sohmer for foreclosure rescue assistance andreceived a referral fee from Sohmer on at least two occasions, and
• Edward de la Flor, who acted as mortgage broker for eleven Sohmer transactions, while an employee of Carteret Mortgage Corporation.

Companies named as defendants were:

• Carteret Mortgage Corporation, a mortgage company involved in originating loans in eleven of the transactions in question, and
• Timeless Funding, Inc., an allegedly uncapitalized corporation that Sohmer used to offer foreclosure rescue "services" to financially distressed homeowners. According to the lawsuit, Timeless Funding was a sham invented by Sohmer to mislead consumers into believing that Sohmer had arranged financing for them from a mortgage lender.

The alleged home equity ripoff in the 26 transactions, as stated in the complaint, "ranged from $11,946 to $107,093 and averaged $43,973 per transaction, which on each occasion represented the homeowners' home equity "accessed," and then sapped, by Sohmer."

In addition to claims of equitable mortgage and usury, the lawsuit alleges the following:

• Unfair and Deceptive Acts and Practices in Violation of G. L. c. 93A, Sec. 2 ,
• Violations of the Massachusetts Consumer Credit Cost Disclosure Act, and Federal Truth-In-Lending Laws,
• Violations of Massachusetts and Federal Law Applicable to High Cost Mortgage Loans, and
• Fraud.

The 49 page proposed amended complaint sets forth in detail how the alleged scheme is said to have worked and how each defendant allegedly participated. For more, see:

• Commonwealth of Massachusetts vs. Sohmer, et al. - Motion To Amend Complaint
• Commonwealth of Massachusetts vs. Sohmer, et al. - Proposed Amended Complaint

Go here for earlier posts & any available updates on this case.

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.). equitable mortgage yak

More On Settlement Between Mass AG & Mortgage Lenders In Equity Stripping Deals

The Office of Massachusetts Attorney General Martha Coakley announced earlier this week that it reached a settlement with five mortgage lenders or servicing companies that provided financing in foreclosure rescue, equity stripping transactions involving Massachusetts attorney and foreclosure rescue operator Alec G. Sohmer. The settlement, along with a motion to approve the settlement, are currently pending in a Massachusetts Federal Bankruptcy Court.

For a copy of the motion, see Motion To Approve Settlement Agreement (15 pages).

To obtain a copy of the settlement agreement entered into by the five mortgage lenders with the Massachusetts AG's office, you can either:

• drop me a line at HomeEquityTheft@yahoo.com and I'll email you a copy (be sure and put "in re Alec G. Sohmer" in the message line), or
• go here for the direct link to the settlement agreement (click link for Part 2 - "Settlement Agreement - 39 pages" - $2.40) on the U.S. Courts' PACER website. PACER registration required.

Go here for the Massachusetts AG Press Release.

Go here for other posts on this case.

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

Florida Authorities Shut Down One Foreclosure Rescue Operator, Investigate Another

In two separate reports, Fox Channel 13 in Tampa, Florida reports that Florida authorities have shut down one upfront fee foreclosure rescue operator earlier this week and are investigating another.

According to one report:

• State consumer services investigators Monday ordered a Clearwater-based company that promises to assist homeowners with foreclosures to close its doors. Agents said the outfit is unlicensed. Foreclosure Assistance Solutions is also at the center of several fraud investigations. According to court papers, clients claim the company takes a $1,200 to $2,000 fee but does nothing to help them settle their mortgage paperwork.

In another report:

• Florida's Attorney General confirmed Tuesday it is investigating Mortgage Assistance Solutions. The company's owner, a California Attorney, said his company provides an affordable service. "It's not a fraud," said Michael Thomas Stoller [the company owner]. [An alleged ripoff victim] said Mortgage Assistance Solutions' sales pitch closely mirrors that of another Clearwater company, Foreclosure Assistance Solutions. State agents shut down Foreclosure Assistance Solutions on Monday, saying it was not licensed to do telemarketing.

Reportedly, both companies are located just two miles apart in Pinellas County, Florida, but they are not linked. For more, see:

• Company accused of exploiting the desperate,
• Second company accused of mortgage scam,
• Go here for Fox Channel 13 TV video - Part 1,
• Fox Channel 13 TV video - Part 2

Editorial Note

It sure looks like the Florida Attorney General's office got "caught with their pants down" on this story. Both of these companies have been doing business in Florida for quite some time, but it took lawsuits by the Attorneys General in Ohio, Illinois, and Texas against these foreclosure rescue operators in order to get Florida authorities to start doing something. It sounds like they used a technicality to shut down one company ("unlicensed telemarketing"), and have reportedly commenced an investigation on the other company.

The Florida AG had active investigations on both these companies at one time, but those investigations ended up being closed out without any mention in the AG's newsletters. Reportedly, they settled one case by making the company refund $80,000 to the homeowners. Compared to some other states, Florida authorities seem to be "a little late" when it comes to investigating and prosecuting (either by civil lawsuit or criminal prosecution) foreclosure rescue scams, especially considering that Florida ranks right near the top in the country in the number of new foreclosure filings. Hopefully, they will pay attention to what some of their colleagues are doing in other jurisdictions (ie. Ohio, Massachusetts, Illinois, Texas, Washington State, and Washington, D.C.) and then reevaluate the priority that they place on foreclsoure rescue scams.

California Cops Investigating Rash Of "Fractional Interest" Deed Transfers

In California, The San Jose Mercury News reports:

• Fraud investigators are looking into what they say is "a recent rash of perplexing filings" of deeds for 1 percent interests in San Jose area homes. Investigators with the Santa Clara County District Attorney's Office searched the San Jose offices of Mariposa Mortgage, following up on a complaint from a home buyer who said her signature was forged on one such deed.

[...]

• The case is one of several that are drawing the attention of investigators. A search warrant affidavit by an investigator for the district attorney, John Valenzuela, describes a recent discussion among fraud investigators of these kinds of filings involving the transfer of 1 percent interests in property. Many of the deeds involved properties in which a former agent for the San Jose real estate brokerage named Su Casa was involved, either as owner or agent.

For more, see County probes deed filings (One Percent Interests Recorded, Mariposa Mortgage Searched).

Massachusetts AG, Five Mortgage Lenders Reach Settlement In Alleged Foreclosure Rescue Scams

From The Massachusetts Attorney General's Office:

• Attorney General Martha Coakley has filed a proposed settlement with the U.S. Bankruptcy Court in Boston with five mortgage lenders that funded loans which facilitated fraudulent foreclosure rescue transactions orchestrated by Brockton attorney Alec Sohmer. The Attorney General, together with the Chapter 7 trustee in Sohmer’s bankruptcy case, have requested bankruptcy court approval of the settlement, which impacts 26 residential properties that are part of Sohmer’s bankruptcy case. On Monday, the Attorney General filed a Motion to Amend the Complaint to add the closing attorney who conducted the transactions, another attorney who referred distressed homeowners to Sohmer in exchange for a fee, and a mortgage broker who arranged financing for many of the deals.

• Under the terms of the proposed lender settlement, filed late last week, the lenders will pay restitution to the homeowners victimized by Sohmer’s fraudulent scheme by reducing the outstanding mortgage liens on the homeowner’s properties. As a result of these transactions, 26 homeowners transferred title of their homes to Sohmer. Under the terms of the agreement, the original homeowners can reclaim their property by paying a reduced mortgage obligation instead of the inflated mortgage loan arranged by Sohmer. In total, across 26 properties, the settlement would provide approximately $1 million in reduced mortgage obligations.

• The lenders agreeing to the settlement to date are: First Horizon Home Loans; Option One Mortgage Corp.; Wells Fargo Bank, N.A.; America Brokers Conduit; and Ocwen Loan Servicing, LLC. Additional lenders may participate in advance of an October 15th hearing before the Bankruptcy Court.

For more, see the Massachusetts AG Press Release - Attorney General Martha Coakley Reaches Settlement With Five Mortgage Lenders Involved In Foreclosure Rescue Transactions; Expands Case To Include Four New Defendants.

See also, Coakley gets 5 to setttle, cites other loan brokers (Boston Herald).

For copies of the court documents referenced in the press release, see:

• Commonwealth of Massachusetts vs. Sohmer, et al. - Motion To Amend Complaint.
• Commonwealth of Massachusetts vs. Sohmer, et al. - Proposed Amended Complaint.
• Go here for a copy of the Motion To Approve Settlement Agreement.

To obtain a copy of the settlement agreement entered into by the five mortgage lenders with the Massachusetts AG's office, you can either:

• drop me a line at HomeEquityTheft@yahoo.com and I'll email you a copy (be sure and put "in re Alec G. Sohmer" in the message line), or
• go here for the direct link to the settlement agreement (click link for Part 2 - "Settlement Agreement - 39 pages" - $2.40) on the U.S. Courts' PACER website. PACER registration required.

Go here for other posts on this case.

"Foreclosure Investment" Ponzi Scheme Promoter Gets 12 Years In Federal Pen

The Atlanta Business Chronicle reports:

• U.S. District Judge Beverly B. Martin on Monday sentenced Atlantan Gene A. O'Neal, 36, to 12 years in jail for running a Ponzi scheme that defrauded investors out of more than $20 million. O'Neal's jail term will be followed by three years of supervised release. He will be liable for more than $20 million in restitution to the more than 1,000 victims of his fraud. O'Neal ran a scheme to defraud investors in Pinnacle Development Partners LLC, a purported real estate investment fund he founded and based in Atlanta.

For all the details, see Pinnacle Development Partners founder heading to jail.

Nebraska Farmers Lose Farms To Foreclosure; Ex-Bank President Under Indictment

A recent story in The Grand Island Independent (Grand Island, Nebraska) tells the stories of two Nebraska farmers, each of whom lost their family farm to foreclosure, allegedly due to unethical conduct committed by former Gibbon Exchange Bank President Scott Hobson in the course of his employment at the bank.

Hobson is currently under Federal indictment facing eight counts of fraud, four counts of making false entries in books, reports and statements of the Gibbon Exchange Bank, and one count of making a false statement to the Federal Deposit Insurance Corp. An excerpt from the story:

• According to the indictment, Hobson entered into loan agreements and loaned money to inflate his own loan portfolio with the bank. When the loans weren't paid, he took money out of third parties' accounts, without their knowledge, and made payments on creditors' loans. Hobson is also charged with falsifying documents to cover up the transactions.

• The indictment lists [both farmers] as victims, saying Hobson either made transactions on their accounts without their knowledge or executed false financial statements for loan collateral.

A pretrial conference in the case is scheduled for this Friday, where it is expected that either a trial date or a time for a plea agreement will be set. For more, see Families say banker's unethical practices cost them their land.

For a copy of the grand jury indictment, see Indictment - U.S. v. Hobson.

Bankrupt Lender Gives Maryland Tax Collector Rubber Checks For Mortgage Tax Escrow Payments; Homeowners Could Be Left On Hook

In Frederick County, Maryland, The Frederick News-Post reports:

• Frederick County government is urging residents to check their tax statements after a national mortgage company sent bad checks containing the escrowed tax payments of 12 property owners. Problems started in mid-August when the county tried to cash three checks from American Home Mortgage Investment Corp. totaling $60,000 in escrowed tax payments, said Lori Decker, director of the county's treasury department.

[...]

• Decker has heard reports of similar problems in Prince George's County and jurisdictions in Pennsylvania. The county sent letters to the 12 affected property owners notifying them their taxes still need to be paid -- even though they had been making payments to American Home to cover their tax bills. The bad checks would have paid taxes ranging from $2,000 to $9,000 per property owner, Decker said. And that's just one set of payments. It's possible property owners owe more than the checks covered.

For more, see Bankrupt mortgage company fails to pay taxes for 12 property owners.

For story update, AHM Deflects Blame on Bounced Checks (The Associated Press - 9-27-07).

Upstate NY County Refuses To Give Back Home Even After Homeowner Forks Over Back Taxes

WETM-TV Channel 18 in Elmira, New York reports:

• A Schuyler County man has been ordered to leave his home after he didn't pay his property taxes. But even though he's since paid off his debts, county lawmakers say they are not obligated to give him back his home.

[...]

• [He] assumed that as long as he paid his back taxes in full before the property went to auction, he could get the property back. [...] He would have been right, up until Monday night [Sept. 10]. That's when county lawmakers passed a new resolution which states that when the county seizes a property, lawmakers are not obligated to hand it back over to the former owner if that person pays their back taxes.

• [He] paid off the almost $7,000 he owed in back taxes to the county on Friday [Sept. 7]. But it was three days later that the county passed their new resolution. According to some county officials, [he] was not "grandfathered in" because at the time the resolution was passed, the county still held the deed to the Montour House. [He] was never promised that he would get it back.

For more, see Village of Montour Falls Wants to Buy Montour House, County Evicts Former Owner.

Editorial Note

The upstate New York city of Lockport also made the news recently for a similar situation (see Lockport owners are not allowed to pay back taxes, keep property). One difference, however, was that in the Lockport story, city officials reportedly refused to accept the money for the back taxes from the property owner in exchange for a redemption of the property.

If I'm reading the Schuyler County story correctly, the county officials actually accepted the homeowner's money for the back taxes to the tune of $7,000, but still refuse to give him back his house.

Metropolitan Grapevine Update

For anyone wondering what happened to the Maryland-based Metropolitan Grapevine story (ie. allegations of impropriety, investigations by Maryland and Virginia state authorities, temporary injunctions, pending court hearings, etc.), Washington Post columnist Elizabeth Razzi (the columnist covering the story for The Post) stated in last Sunday's Post:

• "Columns about Metropolitan Grapevine and its we-pay-your-mortgage Metro Dream Homes program generated a flood of e-mail and phone calls, and I plan to revisit that topic soon."

I guess there's nothing more going on with this story. Go here for the quote.

For story update, see Federal Court Denies "Dream Homes" Request To Lift Cease & Desist Order (10-2-07).

Go here for other posts on Metropolitan Grapevine / Metro Dream Homes.

More On Collapse Of Florida Escrow Company; Over $3M Estimated In Missing Real Estate Deposits

(revised 9-19-07)
On Florida's Treasure Coast, TC Palm reports:

• Realtors and brokers in Indian River County are in a closed door meeting at the Quail Valley Boat House discussing the collapse of Ira C. Hatch’s Coastal Escrow Services Inc.
  About two dozen Realtors are in attendance. [...] Hatch shut down Coastal Escrow Services earlier this month, leaving real estate agents, businesses and consumers without their deposits on real estate transactions and property leases. The Vero Beach Police Department has estimated that more than $3 million is not available to customers. No charges have been filed against Hatch or any of his associates and no one has been arrested.

For more, see Realtors, brokers in Indian River Co. meeting on collapse of escrow service.

See also, Former Hatch customers sue for $222,750 (TC Palm - 9-18-07).

In a related story regarding today's disbarment hearing regarding Ira Hatch's law license, see Florida Supreme Court to hear Hatch disbarment. Go here for a copy of Ira C. Hatch's consent to disbarment filed with the Florida Supreme Court.

Go here for other posts on this investigation.

Go here for stories on other alleged escrow agent mishandling of funds. sneaky slick escrow agents alpha

Maryland Foreclosure Rescue Group Facing Civil Suits In Alleged Equity Stripping Scam

A real estate group is facing charges of equity stripping in connection with the so-called "foreclosure rescue" sale and leaseback of homes of several Maryland homeowners, according to allegations set forth in three civil lawsuits filed by the homeowers. The following defendants are named in one or more of the lawsuits which accuse them either of (1) taking unfair and illegal advantage of the financially strapped homeowners involved, or (2) playing some part in assisting the foreclsoure rescue operator to carry out the alleged "rescue" scheme:

• Harry L. Borden, National Investors Realty Management, LLC, Dale Ross, Pioneer Realty, Inc., Michael Yette, MJ Investors, Realty Executives Main Street USA, John J. Harrison, John J. Harrison Company, Inc., Relocation Management, LLC, Joshua J. Harrison, bankruptcy attorney John D. Burns, Esq., The Burns Law Firm, LLC, real estate agent Jeannette Gray and Title 2000, LLC.

• Mortgage lenders Resource Mortgage, Lehman Brothers Bank, FSB, and Aurora Loan Services, who provided the mortgage financing as part of two of the foreclosure rescue transactions, were also named as defendants.

In one case, Hurley vs. Borden, et al., et al., the homeowners allegedly had $316,322.89 in equity in their home, yet they only received $37,968.00 for their equity at settlement of the "foreclosure rescue," equity stripping transaction (see First Amended Complaint - page 20, paragraph 29).

In the second case, Tillery vs. Borden, et al., the homeowners allegedly had $185,631.21 in equity in their home, yet they only received $25,143.83 for their equity (see Complaint - page 23, paragraph 28).

In the third case, Mackall v. Yette, et al., the homeowners allegedly had at least $117,000 in equity in their home, yet received absolutely nothing for their equity (see Complaint - page 14 paragraph 24).

The homeowners are seeking to void the title transfers and void the mortgages placed on their homes in the equity stripping transaction, as well as seeking actual damages and significant punitive damages.

Representing the homeowners in each of the three cases is attorney Stan Brown, of Largo, Maryland. Go here and go here for more on Stan Brown.

For the longer version of this post, see Another Maryland Foreclosure Rescue Group Facing Civil Lawsuits.

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

HSBC Accused Of Racial Bias In Subprime Lending Practices; Class Action Status Sought

Reuters reports:

• HSBC Finance has been accused in a federal lawsuit of using a subprime lending unit [Decision One] to unfairly target U.S. blacks for extra mortgage fees and charges not paid by white borrowers. [...] Her lawsuit claims HSBC and Decision One use a discretionary pricing policy that has a widespread discriminatory impact on black borrowers.

[...]

• [The] lawsuit, filed in U.S. District Court in Boston, seeks class-action status against HSBC Finance and Decision One, which are part of London-based banking giant HSBC Holdings Plc. The lawsuit said tens of thousands of people could be in the purported class.

[...]

• University of Massachusetts economist Jim Campen's study of 2005 lending activity in Massachusetts showed that a number of lenders, including Decision One, were more likely to provide high-cost loans to blacks and Hispanics than whites.

• He said the subprime mortgage market continues to resemble a used car lot, with the selling price and other charges often negotiated individually and salespeople often having financial incentives to obtain the highest price possible.

Among those representing the plaintiff is attorney Gary Klein, with Roddy Klein & Ryan of Boston, Massachusetts. For more, see HSBC Subprime Unit Accused of Overcharging Blacks.

For a copy of the lawsuit, see Allen vs. Decision One Mortgage Company, LLC, et al.

Go here and go here for other posts on alleged race bias in real estate transactions. race bias predatory lending

Florida AG Urged To Follow Massachusetts AG's Lead On Foreclosure Rescue

The Miami Herald reports:

• "A Broward legal aid organization is urging Florida Attorney General Bill McCollum to adopt emergency measures to curb foreclosure prevention scams, arguing the fraud has reached epidemic proportions and shows no sign of slowing down. Legal Aid Service of Broward County asked Florida's attorney general last week to enact regulations similar to the plan Massachusetts Attorney General Martha Coakley instituted in her state in June. Coakley did not wait for legislative action but claimed authority under that state's existing laws to issue regulations aimed at ending home-rescue frauds. The Broward group similarly wants swift legal action and says McCollum has the authority to do it under Florida's Deceptive and Unfair Trade Practices law or through an executive order from the governor. The group also seeks reform by Florida legislators."

For more, see Plan urged to halt foreclosure scams (Advocates for victims of foreclosure prevention scams are turning to Florida's attorney general for help). (If link expired, try here.)

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

Editorial Note

The Florida Attorney General already has the authority to prosecute (either through civil or criminal action) the "sale leaseback" type of foreclosure rescue scams. When applying the "substance over form" rule, these sale leaseback foreclosure rescue arrangements are generally nothing more than disguised loans; and in most cases, they are disguised usurious loans.

For the Florida usury statute, see Chapter 687, Florida Statutes - Interest and Usury. For links to Florida case law supporting the proposition that these deals are nothing more than disguised loans, see Florida AG Investigating Foreclosure Rescue Operators ("Editorial Note").

For a court case illustrating exactly how an Attorney General in an another jurisdiction went about establishing that the sale leaseback transactions of two foreclosure rescue operators were nothing more than disguised loans, and then succeeded in criminally prosecuting them for charging interest on the disguised loans in excess of the maximum amount allowed by law, see Browner v. Dist. of Columbia, 549 A.2d 1107 (D.C. 1988).

For links to stories from around the country where foreclosure rescue operators are being criminally charged for engaging in fraudulent equity stripping arrangements that are typically structured as sale leaseback transactions, see Foreclosure Rescue - For Criminal Prosecutors Only.