Thursday, October 18, 2007

Utah Mayoral Candidate Still In Race Despite Loss Of Real Estate License In Alleged Cash Back, Straw Buyer Scam

In Eagle Mountain, Utah, the Daily Herald reports:
  • Casting himself as the hero in a vast conspiracy, Eagle Mountain mayoral candidate Richard Culbertson insisted during a candidate debate on Wednesday that despite state investigators charging him with real estate fraud, voters must choose him to protect them from land speculators. Earlier in the day, the Utah Department of Commerce, Division of Real Estate issued a news release saying that Culbertson's real estate license had been revoked by the state's Real Estate Commission on Wednesday "over loan fraud."
  • "Culbertson forged signatures, falsified loan papers and used a straw buyer in equity skimming scheme," said state officials in a media statement. "According to the Division of Real Estate's investigation, Culbertson admitted to using a 'straw buyer' (i.e., using a false identity or the identity of another person) to purchase a home for his personal residence. He also admitted using a straw buyer to purchase other properties at artificially inflated values in order to obtain money in excess of the sales price and acquire cash at closing for his personal benefit."

According to a Division of Real Estate official, Culbertson's actions are part of a larger loan fraud ring in Eagle Mountain and the surrounding area, involving real estate agents, mortgage lenders, appraisers and members of the general public.

Culbertson has not been criminally charged. Reportedly, the Utah Division of Real Estate said they had referred Culbertson's case to federal and state authorities for review. For more, see E.M. candidate charged with fraud (Richard Culbertson says he is the victim in mortgage loan scheme, loses real estate license).

Ex-Banker/Real Estate Broker Charged With Defrauding Mortgage Lender

In Greeley, Colorado, the Greeley Tribune reports:
  • A former Greeley Realtor and banker turned himself in at the Weld County Jail on Tuesday after a grand jury indicted him for investigation of theft involving mortgage fraud. The indictment charged R. Dean Juhl, a partner with JS Real Estate, ... and once an employee of the New Frontier Bank in Greeley, with two counts of theft and one count of forgery.

  • He is accused of ... [giving] a couple almost $13,000 to put down on a house that they were going to buy from JS Real Estate. The indictment charges Juhl used the money to indicate to mortgage lenders that the couple had enough money to afford the house they were buying. [...] "(Juhl) concealed the true source of the funds," according to the indictment. [...] According to the indictment, because the couple paid (with Juhl's money) the down payment and other closing costs, the mortgage company was deceived into believing the couple could make the house payments. After the loan of $165,700 was paid by Master Financial Incorporated ["MFI"], the house payments were never made back to MFI, and the foreclosure was filed 11 months later. The indictment states JS Real Estate received the mortgage money paid by MFI. The indictment lists only MFI mortgage as the victim of the theft.

For more, see Grand jury indicts former Greeley Realtor, banker.

For story update, see Lawyers look at Juhl case in different ways (The Greeley Tribune, 11-15-07).

Traffic Stop Results In Arrest For Mortgage Fraud, Operating Indoor Pot Farm

TC Palm reports:
  • A sophisticated, elaborate marijuana grow house is being dismantled today after a 31-year-old man told officials questioning him about a warrant that he was growing pot in his home. Carlos Andres Bermudez was arrested on an outstanding warrant for mortgage fraud after he was pulled over on a traffic stop, but as Bermudez was being taken into custody, deputies noticed a strong odor of marijuana on his clothing, according to law enforcement officials. Bermudez, who faces charges including cultivation of marijuana and mortgage fraud, told deputies he was growing marijuana in his home ... . When deputies entered the home, they found more than 100 marijuana plants growing in three rooms.

For more, see The nose knows: Strong pot smell on driver leads to grow house bust in St. Lucie. (no longer available online)

Go here to watch St. Lucie County Sheriff's Office video on the indoor pot farm.

See also, Deputies discover luxurious grow house (no longer available online), and Elaborate Marijuana Grow House Discovered In Ft. Pierce.

Go here and go here for other posts on Marijuana Grow Houses. pot grow ops alpha

Florida Town Seeks Code Changes To Deal With Foreclosure Eyesores

In Cape Coral, Florida, WINK News reports:
  • Cape Coral is trying to clean up a city wide problem-foreclosed homes that are now unsightly eyesores. They hope a new ordinance will get these homes up to code in half the time. [...] If [new ordinance is] passed, code enforcement could take action after just ten days. The ordinance would also keep officers out of court and on the streets.

For more, see Cape Coral cleaning up code-violations.

Wednesday, October 17, 2007

89 Year Old Blind Widow Loses 35 Acre Farm For Failure To Pay $38; Files Suit To Get It Back

In Marissa, Illinois, the Belleville News-Democrat reports:
  • An 89-year-old, blind widow could lose her Marissa farm because she never received notice that she owed $38.08 in property taxes from 2003. On Thursday, a lawsuit was filed in St. Clair County Circuit Court on behalf of Virginia A. Juenger after a tax buyer, Prairie State Properties LLC of Belleville, purchased her delinquent tax from 2003. The company purchased the delinquent tax in 2005. On Aug. 27, Prairie State Properties filed an application for a judge to issue a tax deed to Juenger's property for the delinquent 2003 property tax of $38.08. Juenger's property is 35 acres of farmland and worth more than $100,000. The land has been farmed by a tenant farmer for several years, according to the lawsuit.

For more, see Marissa widow may lose family farm over $38 tax bill.

Florida Man Cops Plea In Combo Home Improvement Scam & Mortgage Fraud

An investigation into an alleged mortgage fraud / home improvement scam operation that hit the Tampa / St. Peterburg, Florida area which has implicated six defendants has claimed its first conviction.

The alleged ringleader, Scott Almeida, is the first of the defendants to "get to the courthouse" and successfully agree to a plea bargain with authorities, an agreement which requires him, among other things, to "cooperate with prosecutors" (ie. become a "snitch") in the prosecution of his five now former confederates. The following excerpt comes from the Office of the Florida Attorney General's Office:
  • Attorney General Bill McCollum [last week] announced that a Hillsborough County man pleaded guilty to multiple charges of racketeering, conspiracy to commit racketeering, mortgage fraud, and grand theft. Scott Anthony Almeida will be sentenced to 10 years prison at a later date for a mortgage fraud scam that victimized more than 100 individuals. As part of his plea agreement, Almeida will cooperate with authorities in both the cases pending against his co-defendants and in several active investigations. He is also prohibited from working in the mortgage or title industries.

  • The three-year investigation began when victims filed complaints about incomplete or substandard construction work being performed by construction companies affiliated with Almeida. Almeida and his associates secured mortgages for these homeowners to finance the home repair projects by submitting fraudulent documents to Argent Mortgage Company, one of the nation’s largest wholesale “sub-prime” mortgage companies. Investigators followed the trail of fraudulent applications back to the organized criminal operation which submitted nearly 130 loans to Argent which were funded for approximately $13 million.

The cases against co-defendants Orson Benn, Frank Giffone, Samuel Green, Adrienne White and Bradford Peck are still pending.

For more, see Ringleader of Mortgage Fraud Group Guilty of Racketeering, Grand Theft (Hillsborough County man organized scam involving fraudulent mortgage loans and bad contractors). Go here for the Spanish version of the AG's Press Release.

For media reports on this conviction, see:

Go here for prior posts on this alleged scam and the arrest of the defendants.

Mortgage Company Employees Charged With I.D. Theft, Grand Larceny

In New York City, The New York Times reports that investigators have arrested Jacob Milton, 41, the branch manager of the Jackson Heights, Queens office of Griffin Mortgage Company, and his sister, Nira Niru, 38, a secretary in the same office for identity theft, grand larceny and scheming to defraud.

They are accused of opening bogus charge accounts and taking out mortgage loans using the personal identification information given to them from prospective mortgage customers who applied for loans at their office, the police said. Many were seeking to become first-time homeowners. The investigation began when each of six separate victims reported that their I.D.s had been stolen. According to the story:
  • Investigators said they found a common link: all six had applied for loans at the same local mortgage office. Further investigation found still more victims, and fraud estimated to total more than $1 million, the police said. [...] The number of victims is likely to rise to at least 12 by the time the investigation is finished, the police said.

For more, see Mortgage Office Manager Charged With Identity Theft and Grand Larceny.

Accused "Rent To Own" / Straw Buyer Scam Artist On Trial; Unwitting Straw Buyers Left With Ruined Credit

(revised 10-24-07)
In Pueblo, Colorado, The Pueblo Chieftain reports on a mortgage fraud trial in progress in which the victims of the accused testified against him yesterday. The Chieftain reports:

  • Maybe they gave him too much credit. Accusers of charismatic businessman Maurice Goring testified on Tuesday at his trial that he used their good credit to buy distressed properties that he allowed to lapse into foreclosure, wrecking their financial futures. Goring, 42, is acting as his own lawyer ... . A grand jury indicted Goring on charges of theft, fraud and forgery under the Colorado Organized Crime Act.
Goring is accused of recruiting unwitting straw buyers in order to use their name and good credit to purchases homes that were in foreclosure. Goring is also accused of promising to manage the properties and to make the mortgage payments on the homes from rents collected from tenants, without the need for monetary contributions from the straw buyers. One straw buyer testified that Goring agreed to pay her between $500 and $1,500 for each home purchased in her name. While she knowingly participated in three home purchases, she claimed that her name was forged on documents to list her as the owner of at least 10 more homes. In total, 14 homes in her name ended up in foreclosure.

Goring is also accused of luring tenants on a "lease to own" basis. One tenant testified that the home he and his wife had been renting with the intent of buying changed hands at least twice between Goring's relatives and business associates while they lived there, and the price they were promised was hiked by more than $30,000. Ultimately, they were were evicted.

Most of the homes involved ended in foreclosure and his straw buyer / accusers say they were left with irreparably damaged credit ratings that have severely hampered their financial prospects for the future.

Goring is the last of five defendants left standing in this case. Two who played supporting roles in the scam have already pleaded guilty to lesser charges. Charges against two Goring employees, whose errors in judgment did not rise to the level of criminal conduct according to the prosecutor, have been dismissed. All four have agreed to testify against Goring, the alleged ringleader. For more, see:

For story update (10-24-07), see Goring guilty of racketeering (Former real estate professional faces up to 48 years in prison) (Maurice Goring, 41, was convicted on two counts of racketeering under the Colorado Organized Crime Act. He faces up to 48 years in prison. Prosecutors said Goring stole or fraudulently obtained mortgage loans totaling about $2 million.).

Go here for other posts on this case.

Tuesday, October 16, 2007

Junk Mortgages 101

A Fortune Magazine article (appearing on CNNMoney.com) provides a pretty detailed breakdown of how one particular mortgage pool containing $494 million of junk residential second mortgages has fared. This pool of mortgages was put together by the Wall Street investment banking firm, Goldman Sachs, who then sold interests in this pool to investors (certificate holders). The article begins with the following excerpt:

  • It's getting hard to wrap your brain around subprime mortgages, Wall Street's fancy name for junk home loans. There's so much subprime stuff floating around - more than $1.5 trillion of loans, maybe $200 billion of losses, thousands of families facing foreclosure, umpteen politicians yapping - that it's like the federal budget: It's just too big to be understandable.

  • So let's reduce this macro story to human scale. Meet GSAMP Trust 2006-S3, a $494 million drop in the junk-mortgage bucket, part of the more than half-a-trillion dollars of mortgage-backed securities issued last year. We found this issue by asking mortgage mavens to pick the worst deal they knew of that had been floated by a top-tier firm - and this one's pretty bad.

This story may not be for everyone. But if you're curious to know how, up until recently, it could be that practically every breathing human being capable of signing their name could qualify for a home mortgage, irrespective of bad credit, lack of cash, etc., see Junk mortgages under the microscope (A close-up of one deal shows how subprime mortgages went bad, says Fortune's Allan Sloan) (if link expires, try here).

Connecticut Attorney A Target In Mortgage Fraud Lawsuits

A recent story in The New York Times features Connecticut attorney Maurizio D. Lancia who, along with his Trumbull-based mortgage brokerage firm, Royal Financial Services L.L.C., is currently embroiled in a number of civil lawsuits alleging that he played a part in a mortgage fraud scam that duped unwitting straw buyers into buying homes that they couldn't afford using subprime mortgage financing that ultimately ended up in foreclosure.

In one case, brought by the State of Connecticut, state Attorney General Richard Blumenthal said of them and their co-defendants:
  • The defendants misled consumers and mortgage lenders into property purchases that financially destroyed dozens of homebuyers, while benefiting only the defendants, their associates and family members.”

In this case, the state of Connecticut is seeking civil penalties for violations of the Unfair Trade Practices Act and financial relief for those harmed. The co-defendants in this case include Elisabeth Athan Real Estate, L.L.C., of Shelton, CT and Jose Guzman of Waterford, CT, a former employee of Royal Financial who was recently charged with mail fraud and wire fraud by Federal investigators and prosecutors. For more, see Promises Left Buyers Destitute, Suit Says.

Go here for other posts on this mortgage fraud investigation.

Homeowners Using 401(k) Funds To Avoid Foreclosure?

The Chicago Tribune reports:
  • Despite potential tax and investment problems, more investors have been borrowing from their 401(k) plans or taking hardship withdrawals in recent months, some retirement plan providers say. [...] Indicative of some of the stress, the amount of calls to Principal Financial Group Inc. about hardship withdrawals, while small, has jumped significantly in recent months, company officials said. Not all 401(k) plans permit hardship withdrawals, but the IRS allows them for, among other things, medical or funeral expenses, purchasing a primary residence, or avoiding eviction from or foreclosure on a primary residence.

  • The number of calls asking about withdrawals to prevent a potential foreclosure or eviction doubled in August over July, said Janet Fossell, director of individual investor services for Principal. There were fewer calls in September than August, but still more than in July.

  • [One industry executive] warns people not to use their 401(k) savings if they're going to end up in bankruptcy. That's because in most plans, the 401(k) assets are protected in bankruptcy."The real issue is, what are people facing foreclosure going to do?" he said. "You don't want to tap the plan just to buy time because then you lose your home and your retirement."

For more, see Cash-strapped Americans raiding their 401(k)s.

Homeowner In Foreclosure Charged For Trashing House Days Before Public Auction

In Athens, Georgia, the Athens Banner-Herald reports:

  • The former Athens businessman at the center of a massive mortgage fraud investigation was arrested Wednesday for allegedly trashing his house in west Athens just days before the bank was to auction it off. Brian Christopher Dupree, 36, was arrested in Athens-Clarke Magistrate Court after a warrant hearing and soon was released on a $4,000 bond. Dupree was charged with three misdemeanor counts of endangering a "security interest" for removing appliances, cabinets, lighting fixtures, door knobs and other items with an estimated value of more than $25,000 from a foreclosed house on Meadowview Road. The Bank of Georgia, which foreclosed on Dupree's house, held a security interest in the stolen items, according to the arrest warrant application.
Dupree is currently also facing more serious mortgage fraud charges in an earlier, unrelated arrest in which he and nearly two dozen others were charged in an alleged $7 million mortgage fraud scheme.

For more, see Fraud suspect arrested (Damage to house).

Go here for other posts on foreclosure fixture stripping. foreclosure fixture stripping apple

Monday, October 15, 2007

Metro Dream Homes Official Locked Up For Contempt Of Court

(original post - 10-13-07)
The ongoing saga of the Laurel, Maryland-based company Metropolitan Grapevine continues. The Free Lance-Star reports:
  • The Maryland attorney general's office issued an emergency court order Monday to freeze temporarily the assets of a company that promised investors mortgage-free living. But no one was at Metropolitan Grapevine's locked Maryland offices three days later when an investigator and a receiver arrived to inspect financial records, said Raquel Guillory, the attorney general's spokeswoman. A representative from the Laurel, Md.-based company later explained that the employees didn't show up to let them in because they'd heard the assets had been frozen, she said.
A judge found that the company failed to comply with a court order allowing state officials to inspect company records and, therefore held a company official in contempt of court. The official, whose identity was not available yesterday, was handcuffed and sent to jail, according to the spokeswoman.

For more, see Dream Homes official is jailed (The Maryland Attorney General's office has frozen Metropolitan Grapevine's assets and put one of its officers in jail for contempt of court).

Go here for other posts & links to other stories on Metropolitan Grapevine / POS Metro Dream Homes.

Foreclosure Rescue Scam Leads To Civil Lawsuits, Federal Criminal Investigation; "Pilot-Straw Buyers" Left In Hot Water & Financially Ruined

The Minneapolis Star Tribune reports:
  • Some Northwest Airlines pilots were looking for ways to make up for the steep pay cuts they were facing in 2005 when they learned of a "foreclosure rescue" plan promising them extra cash while helping struggling people hang onto their homes. Two years later, the pilots' credit ratings and their finances are in ruin. Several have been sued by some of the homeowners they tried to help.

  • All told, the six pilots and one flight attendant sank more than $1.5 million into two real estate ventures, some of them taking out second mortgages on their own homes and raiding their savings for the cash. Their attorneys say they are another set of victims in the string of mortgage fraud and equity stripping cases that investigators continue to uncover in Minnesota in the housing bubble's aftermath.

  • The foreclosure venture and related real estate investments are the subject of a federal criminal investigation, and total losses could exceed $2 million.

The foreclosure rescue operators involved were Timothy Beliveau, 39, of Mound, Minnesota and his wife, Shelley Beliveau, 36, a real estate agent. Reportedly, they could not be reached for comment for the Star Tribune story, and have invoked their Fifth Amendment rights against self-incrimination in some recent civil suits, declining to testify on the advice of their attorney.

  • Court records show that the investigation is being led by the U.S. Postal Inspection Service and the Internal Revenue Service's Criminal Investigative Division. The probe spun off from an alleged equity skimming conspiracy involving Michael Fiorito, 39, of Prior Lake. Fiorito, who recently pleaded guilty in federal court, used to work with the Beliveaus, according to a source with knowledge of the case.

For more, see NWA pilots say they were misled in foreclosure venture (A Minnesota couple's investment and real-estate programs are under federal investigation) (if link expired, try here).

For story update (12-23-08), see Elderly Victim Of Equity Stripping Deal Wins Hollow Victory (Court Ruling Comes Too Late To Allow Recovery Of Home; Scammers Claim To Be Broke).

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.).

California DA Dropping Ball On Mortgage Fraud?

In Bakersfield, California, KGET-TV Channel 17 reports:
  • The fight over real estate fraud spilled onto the editorial pages and airwaves of local talk radio shows Friday. On Thursday, local appraiser Gary Crabtree wrote an opinion piece in the Bakersfield Californian newspaper accusing District Attorney Ed Jagels of dropping the ball on mortgage fraud. Crabtree said he presented a major case of mortgage fraud to Jagels a year ago, but Jagels never followed through. So, in an opinion article published Thursday, Crabtree said he had to turn to the FBI for help. [...] Meantime, bloggers have speculated for weeks about Jagels' motives for declining to take on the case. On Friday, Jagels confirmed he is friends with one of the people the FBI is investigating for mortgage fraud. Agents raided the office of Mark Newton of San Joaquin Appraisals as part of their investigation into local real estate agents David Crisp and Carl Cole.

For more, see DA accused of dropping ball on mortgage fraud; or go here to watch the KGET-TV Channel 17 report.

For a contrary opinion, see Ed Jagels is right: Fraud unit not needed (The Bakersfield Californian - 10-12-07).

For a related post, see California DA Denies Need For Fraud Unit.

For a story update, see County creates trust fund to crack down on real estate fraud (Concerned that the continuing rise of foreclosures in Kern County could be fraud related, Supervisors unanimously adopted a resolution establishing a trust fund to investigate and prosecute real estate fraud).

Go here for other posts on this story.

Builder Dumps 34 New Homes At Auction; Winning Bidders Ecstatic - Existing Homeowners Angry

The San Jose Mercury News reports on a sale last Saturday of 34 brand new homes in Manteca, California owned and built by Anderson Homes that it couldn't unload no matter how many free upgrades it offered. The auction at the Hilton Hotel in Pleasanton was one of the first in Northern California offering a whole section of new subdivision. The homes sold for way below what the builder's current asking prices are, creating many ecstatic new homeowners. That sentiment, however, is not shared by the existing homeowners in the subdivision. One homeowner estimates that the auction devalued his neighbors' homes by roughly $200,000 each compared with what many of them paid a year ago. He commented, "I lost a quarter million dollars in value. I'm screwed." For more, see Big winners, losers at auction of new Manteca homes (Those Who Got Houses Are Ecstatic, Paying Far Less Than Current Owners).

For a related story on ABC News' Good Morning America, see:

Hedge Fund Entrance Into Mortgage Servicing Business Alarms Both Consumers & Investors

(originally posted 10-12-07)
An article by The Associated Press reports:
  • Hedge funds and private equity investors are gaining a foothold in the business of mortgage loan servicing as some of the country's biggest mortgage lenders crash into bankruptcy. Their arrival on the scene has alarmed consumers and investors alike. Over the last few months several failed mortgage lenders -- including ResMae Mortgage Co., Aegis Mortgage Corp., and New Century Financial Corp. -- have sold their loan-servicing businesses to hedge funds or private-equity firms.

[...]

  • Their acquisition of loan-servicing rights, as a result, has inflamed the anxieties of many homeowners who have reported loan-servicing disruptions recently. "From a consumer perspective, it's an improvement to have these loans in a mainstream bank," said John Taylor, chief executive of the National Community Reinvestment Coalition, a collection of community groups. "It's not an improvement for them to end up in the hands of Wall Street. There isn't the conversation or the accountability." When it comes to consumer-protection regulations, Taylor said, "Wall Street has a moat around it."

For more, see Hedge Funds Enter Mortgage Arena. questionable mortgage servicing practices tactics yak MortgageServicingIssuesAlpha

Closing Attorney Admits Guilt In Flipping Scam; Cooperates With Georgia Feds

Law.com reports:
  • A Marietta, Ga., closing attorney, who has admitted he was a member of a mortgage fraud ring that federal prosecutors say included more than a dozen people, is cooperating with the government in a trial that began [last] week in U.S. District Court. On Tuesday, federal prosecutors identified real estate closing attorney James F. Stovall III ... as the lawyer who finalized as many as 50 fraudulent home sales. The sales were part of a scheme that bilked banks out of at least $20 million in 2000 and 2001, prosecutors said.

  • Stovall is the most recent Georgia attorney caught using his law practice to perpetuate mortgage fraud, ... . As a warning to other real estate lawyers, U.S. District Judge Thomas W. Thrash Jr. in 2005 sentenced disbarred DeKalb County attorney Chalana C. McFarland to 30 years in prison for her role in a mortgage fraud scheme that cost lenders more than $11.5 million ...

For more, see Lawyer to Testify in Mortgage Fraud Trial (Stovall admits involvement with ring that bilked banks in loan scheme).

Sunday, October 14, 2007

Foreclosures Hammering Providence Neighborhoods

In Providence, Rhode Island, a recent story in The Providence Journal describes the toll being taken by some of its neighborhoods as a result of the run up in prices caused by the speculators and the subprime mortgage lenders that were lending money to anyone who could breathe, followed by the crash in prices that has resulted in foreclosures, vacant homes, and vandalism. The story begins:

  • The new property owners in some neighborhoods here mark their turf with padlocks, plywood and messages such as the one scrawled on a front door in Olneyville: “Copper Gone.”
  • Vacant houses have always been easy prey for vandals, no less so when the owners are giant banks, companies representing Wall Street investors.
  • Block by city block, foreclosures are scarring the landscape in neighborhoods such as Olneyville, Elmwood and the West End, raising fears that the deteriorating real-estate market could hurt property values and undermine years of urban redevelopment efforts.

The story features the recent history of one area home:

  • "In January 2004, the listing for 25 Steere Ave. read: “BEAUTIFUL HOME WITH VINYL SIDED AND PRIVATE YARD. FINISHED BASEMENT WITH SEPARATE ENTRANCE. THIS IS A MUST SEE.”"

After being sold for $150,000; then resold for $240,000 a year an a half later, the home ended up in foreclosure, abandoned, ransacked by vandals, boarded up, and the public records now list Deutsche Bank as the owner of record (presumably as trustee for certificate holders in a mortgage pool who actually own the home and who, like the neighborhood, are also getting hammered). The home is currently listed for sale at $134,900.

  • "The broker listing now reads: “This property has a lot of potential. Priced to sell AS IS condition. Copper missing. Other work needed … Will need rehab loan, private financing or cash.”"

Reportedly, the home was twice broken into, thieves smashing windows and ripping out the copper pipes. After the second break-in, the real estate agent (no doubt to dissuade any further break-ins) scribbled “Copper gone” on the door. For more, see Foreclosures threaten Providence neighborhoods’ vitality.

In related stories, see:

  • Plywood, padlocks replace homeowners in Providence ("As more padlocks and plywood dot the landscape of neighborhoods ..., local residents and elected officials fear the foreclosure crisis could undo years of urban redevelopment efforts.") (Boston Herald - 10-15-07)

For a prior Providence post, see "Plywood Board" Gains In Popularity As "Window Treatment" In One Rhode Island Neighborhood.

San Jose Squatters Making Themselves At Home In Vacant Foreclosures

In San Jose, California, KPIX-TV Channel 5 reports:
  • [W]e visited a San Jose home that had recently been foreclosed on. After residents moved out, gangs moved in, taking over the vacant property. [...] Graffiti covers one side of the house, and around the corner, bullet holes. [...] And at another foreclosed home we found more evidence of squatters-- two blankets. A window to a bedroom was shattered. Both homes are in east San Jose. That's the area with the most homes in various stages of foreclosure in the city. [...] Real estate agent Mark Detar of Intero thinks the squatter problem is only beginning. "With an increase in foreclosures, you're going to see things like this," Detar said. "With a house being vacant, certain elements come into play."

For more, see Squatters Settle Into Foreclosed SJ Homes, or watch the Channel 5 video report, Foreclosure Squatters.

For another foreclosure squatter story, see Squatter Causes Anxiety For Neighbors (Bank Has Not Evicted The Resident). (KCRA 3, Sacramento, CA), or watch the KCRA 3 video report.

Go here for other posts on foreclosures and squatters.zebra

Watch Out For 'Rent To Own' & 'Lease Option' Scams

In an article appearing in the January, 2006 issue of Realty Times, a number of tactics that scammers use in the context of so-called "rent to own" and "lease option" real estate deals were described.
  • Problems with lease options arise when investors intentionally target consumers who are relatively unsophisticated about real estate or contract law, and who have little real likelihood of ever qualifying to purchase the property. In those cases, the promoters are essentially in the rental business and convince unsuspecting tenants to pay them fees and premium rents, plus pick up most routine property maintenance costs.

  • In Florida, consumers complained to the attorney general that the lease-option promoter included clauses in rental contracts that permitted them to be evicted -- and their option fees forfeited -- for the most minor problems, such as missing a rent payment deadline by one day or failing to keep the house broom clean.

  • Other problems surfaced in Texas, where promoters allegedly offered lease-options to lower income tenants on properties with serious title issues. In some cases, ..., promoters 'acquired' houses from owners facing imminent foreclosure by taking over their payments to lenders [and subsequently offered 'rent to own' deals to unsuspecting tenants without first addressing the legal issues with the existing mortgage lender],

  • The victims "were almost always first-time buyers who had no idea that the contract and lease they signed contained clauses that made it almost impossible for them to actually exercise the option" and acquire legal title to the house [according to one housing law expert].

For more, see "Lease Option" Real Estate Draws Scrutiny.

For more on "Rent To Own" and Lease / Option real estate scams, see "Rent To Own" Scams I. rent to own lease purchase option scams zebra; equity skimming unwittingly delta

Tenant Clipped For $17K In 'Rent To Own' Scam That Ended In Foreclosure

CBS 13 in Sacramento, California recently ran a story on a local woman who paid $17,000 to enter into a "lease to own" arrangement on an area home. Less than three months after moving into the home with her kids and making all her monthly payments, she was stunned to find an eviction notice stuck to her door telling her she had 15 days to get out of the house. Unbeknownst to her, the property owner was stiffing the mortgage lender out of its mortgage payments and allowed the home to go into foreclosure. Ultimately, the home sold at a public auction. She and her kids were forced to move, and she was out her money.

She reportedly told CBS 13 that the FBI is interested in her case and asked her to come in for an interview. In addition, the California Department of Insurance says it's investigating a number of cases involving undisclosed foreclosures across the state, according to the story.

For more, see Call Kurtis: Foreclosed Rental.

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; equity skimming unwittingly delta

Tenant In Foreclosed Home Gets Evicted, Then Gets Reprieve; Lender To Work Out Rental Agreement

In Hazelwood, Pennsylvania, KDKA-TV Channel 2 (Pittsburgh) reports on a woman with four children who found out from the local sheriff's office with only one day advance notice that they were being evicted from their rented home, inspite of being up-to-date on their rent. It turns out that the landlord was pocketing her rent money without paying the house note or the taxes and allowed the home go into foreclosure. After the sheriff's office executed the eviction of the family, the lender reportedly called the sheriff’s office later in the day to say that the family can go back into the house and work out a new rental agreement with them. For more, see Foreclosure Crisis Effects Renters Too; or go here to watch the KDKA Channel 2 report.

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here.

Go here for other posts on Police stories involving homes in foreclosures. SheriffDeputiesForeclosureAlpha equity skimming unwittingly delta

Foreclosure Forces Tenant Move; Ex-Landlord Continues Trying To Collect Rent

In San Jose, California, KGO-TV Channel 7 reports:
  • Mary Ellen Murillo has been clearing out her house in recent days. She's also begun to pack her and her five grandchildren's belongings. She's waiting for the knock on her door that will tell her she's now being evicted. [...] Murillo and her five grandchildren have lived in the house for the past six months. Last month, there was a note left on her front door. [...] She was told by a realtor last month that the house had gone through foreclosure and sold at auction. It no longer belonged to the woman who had rented it to her. Even after that foreclosure sale, that woman still came to collect the rent. When Murillo confronted her one-time landlord, she offered an excuse. "She said 'don't worry about it' - keep on giving her the payment. She's taking care of it. She says 'I've got to pay a late charge of $2,000,'" said Murillo. So far, Murillo has refused the woman's demands to pay October's rent. Now her dilemma is finding a new place. She says she is on disability and is worried she'll lose custody of her five grandkids if she doesn't get at least a three bedroom house -- a house she may not be able to afford.

For more, see Subprime Crisis Affecting Those Without Mortgages (Foreclosure Forces Renters To Move).

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

Beauty Pageant Contestant, Family, Victims Of Subprime Foreclosure Eviction

In Pawtucket, Rhode Island, The Providence Journal reports:
  • Less than a month before she’s to represent Rhode Island in the Miss American Sweetheart beauty pageant in Orlando, Fla., 8-year-old Imani Vazquez and her family are facing eviction from their apartment on Quality Hill. Imani, who won the Miss New England Sweetheart title at a regional pageant in Framingham, Mass., is handling the situation with the aplomb of a beauty queen. [...] Imani and her family are being evicted even though they have a lease and their $900-a-month rent has been paid regularly.
    The lease is up in November, however, and in August, their landlord ... lost [the home] in a foreclosure proceeding brought by Option One Mortgage Corp., the company, owned by H&R Block Inc., that gave him a $292,500 subprime mortgage. [...] She’s ... hoping that her former landlord will return the $900 security deposit she gave him a year ago, ...

For more, see Pawtucket family faces eviction.

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

Condemned Apartment Building In Foreclosure Forcing Tenants Out

In Suffern, New York, The Journal News reports:
  • A state appeals court has rejected a request to delay evictions from the Tall Oaks Apartments. [...] Suffern moved on Aug. 14 to condemn most of the complex ... after its engineers and the county Department of Health found unsafe conditions, including structural and electrical defects. An electrical fire on Aug. 8 led the village to board up entrances and windows to several apartments. [...] Electrical service was terminated to some apartments after the fire, and others were closed when the structural defects were discovered. About 20 of 40 apartments were affected. [...] The complex is to be sold at auction in about two months. The owner of the complex ... was delinquent on its mortgage and sought bankruptcy protection after the state Supreme Court in Rockland ordered foreclosure proceedings.

Representing the tenants in the eviction matter is the Legal Aid Society of Rockland County.

For more, see Suffern tenants lose appeal over evictions.

For story update, see Suffern shuts 25 units, completes closure of Tall Oaks Apartments.

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

Saturday, October 13, 2007

Ex-Con Facing Foreclosure Accused Of Torching Home; Rejects Plea Deal

In Suffield, Connecticut, the Journal Enquirer reports:
  • With more than two dozen felony convictions under his belt, Michael Paul Schook isn't unfamiliar with the criminal justice system. Yet, despite a Hartford Superior Court judge's warnings that he could face more than 20 years in prison if he's convicted of setting fire to his house to collect insurance money, Schook rejected a prosecutor's offer to serve just a fraction of that: eight years behind bars, and 10 years' special parole. Schook, 45, told Judge David P. Gold ... that he wants a trial. [...] A credit check of Schook showed the house was in foreclosure, his car repossessed, and he owed thousands to credit card companies, police say.

For more, see Longtime felon rejects plea offer in Suffield arson. yak

Foreclosures Keeping Animal Protective Services Agency Busy

Cleveland, Ohio television station Fox 8 reports:
  • Family pets are fast becoming helpless victims of the foreclosure crisis in Northeast Ohio. The Portage Animal Protective League in Ravenna answers calls almost daily for pets left locked up in foreclosed homes. "I know our number of calls has increased," P.A.P.L. Director Sheila Vandergriff said. "We're now receiving calls from realtors, construction companies going in to work on homes where people have been evicted, calls from the sheriffs office."

For more, see Foreclosure Crisis Causing More Abandoned Pets.

Go here for more on pets and foreclosures.

Two Michigan Men Arrested For Passing Rubber Checks To Rent / Buy Property

In Clayton Township, Michigan, The Flint Journal reports:
  • A Lansing man was being held on $900,000 in bonds for allegedly passing bogus checks at a local real estate office. Michael P. Klein, 31, was arraigned Wednesday on three felony counts of uttering and publishing. The judge set a $300,000 cash bond for each count. Township Police Chief Chuck Melki said Klein and a second suspect - a Flint man, 71 - were arrested Monday afternoon after passing three checks totaling more than $6,000 to rent or buy property. Police found more than $1 million in forged checks in their possession, along with a half-dozen credit cards under various names and multiple Social Security numbers, Melki said.

The men were arrested by local cops on Monday afternoon. The Flint man has yet to be charged. The FBI has been notified, and detectives have contacted Immigration and Customs Enforcement to determine whether Klein, a native of Germany and who has faced charges in at least two other states, is legally in the United States. For more, see Police arrest man on check charges.

10 Sentenced In Oklahoma Cash Back Mortgage Scam

In Oklahoma City, The Oklahoman reports:
  • The remaining people convicted in a mortgage fraud involving homes in Edmond's upscale Oak Tree neighborhood — and prominent Realtor Ann Campbell — were sentenced to prison this week in U.S. District Court in Oklahoma City. [...] Campbell, 66, of Edmond, pleaded guilty in December to conspiracy to commit wire fraud and agreed to assist prosecutors.

According to the U.S. Attorney's Office, the following were sentenced this week after being found guilty after a 12-day jury trial in April:

  • Brandon L. Baum, 32, of Joplin, Mo., (87 months in federal prison, 3 years supervised release, pay restitution - $511,735.23),
  • Gayle L. Caldwell, 39, of Edmond, Ok., (18 months in federal prison, 2 years supervised release),
  • Charles E. Caldwell Jr., 41, of Edmond, Ok., 18 months in federal prison, 2 years supervised release, pay restitution - $185,740.60),
  • Joseph Conrad Therrien, 29, of Oklahoma City, (1 year and 1 day in federal prison, 2 years supervised release, pay restitution - $59,771.48),
  • Teresa M. Therrien, 32, of Edmond, (1 month in federal prison, 90 days home detention while serving 2 years supervised release, pay restitution - $82,710.58),
  • Rusty Real Therrien, 33, of Edmond, (18 months in federal prison, 2 years supervised release, pay restitution - $82,710.58).

The following defendants pleaded guilty in separate related cases, and testified in the trial against the above six defendants:

  • Timothy J. McDaniel, 45, of Edmond, (6 months in federal prison, 2 years supervised release, pay restitution - $57,641.34),
  • Anthony Jew, 38, of Edmond, (1 year in federal prison, 3 years of supervised release, perform 104 hours of community service, pay restitution - $13,700),
  • Dalton Joe Alford, 35, of Oklahoma City, (8 months in federal prison, 2 years of supervised release, perform 104 hours of community service, pay restitution - $172,489.24),
  • Toney Charles Mykel, 40, of Edmond, (pleaded guilty to misprision of a felony; 6 months in federal prison, 1 year of supervised release, perform 104 hours of community service, pay restitution - $263,489).
For a description of how the scam went down, see 10 sentenced in Oak Tree mortgage fraud.

Homeowners' Association Battles Resident Over Property Improvement

The Union Democrat (Sonora, California) reports:
  • The Copper Cove and Lake Tulloch Owners' Association may have invited new legal action Wednesday by announcing it is imposing fines on a handicapped man who made a county-approved addition to his home in order to gain street-level access to his bedroom. Ken Gutman, 61, target of the fines, says he fears the association actually intends to use the levies as an excuse to take his home away or make him tear it down.

[...]

  • The association stirred up a nationwide hornets' nest among homeowners in 2003 when it seized the Copperopolis home of Thomas and Anita Radcliff and sold it at public auction because the Radcliffs failed to pay $120 in homeowners fees. Ultimately, the Radcliffs bought their house back in 2005 and settled their differences with the association out of court. The California Alliance for Retired Americans has called nonjudicial foreclosures "a predatory business practice" used by some homeowner associations to collect tiny amounts of money.

For more, see Homeowner fined in Copper flap.

Friday, October 12, 2007

Connecticut Feds Charge Loan Officer With Mail, Wire Fraud In Alleged Mortgage Scam

In Waterford, Connecticut, TheDay.com reports:
  • Jose Guzman, who is being sued by the Connecticut Attorney General’s office for mortgage fraud, was arrested late Thursday night at his Waterford home and charged with mail and wire fraud. U.S. Magistrate Judge Thomas P. Smith today scheduled a detention hearing for Oct. 17 and a probable cause hearing for Oct. 24. The U.S. Attorney’s Office has 30 days to file an indictment. The U.S. Attorney's Office considers Guzman a threat to flee. The Day first reported in May how dozens of individuals, many of them Hispanic, had faced foreclosure and ruined credit after they were approved for home loans based on false information.

For more, see:

For story updates, see:

  • Hearing on Loan Officer Canceled (A probable cause hearing, which likely would have revealed further details regarding the government’s case against former New London loan officer Jose Guzman, was canceled after Guzman waived his right to the hearing.) (The Day.com - 10-25-07),
  • Detained Loan Officer Is Released From Prison (Guzman, Accused Of Fraud, Released To Wife's Care After Family Helps Him Make Bond). (The Day.com - 10-18-07)

For a related story on this case, see Promises Left Buyers Destitute, Suit Says.

Go here for other posts and links to media reports on, what the Connecticut Attorney General calls, "an extensive predatory lending scheme" led by mortgage broker Jose Guzman.

M&T Bank Foreclosing On Active Duty Servicemember In Apparent Disregard Of Federal Law

A recent opinion column in The New York Daily News describes a Brooklyn, New York homeowner with 20 years of service in the Army Reserve who reportedly fell behind on her mortgage payments after she got called in for active duty. Five months after being discharged, she was twice called back. M&T Bank currently has a foreclosure action pending against her. An excerpt from the column:
  • All told, Foy was home for less than 15 months from October 2001 to December 2006 and, during that time, she lost two tenants. So, lacking rental income, she fell behind on payments again. M&T didn't want to hear about it. The bank piled on penalties - nearly $23,000 in fees - and initiated foreclosure proceedings. Foy remains at risk of losing her home. That's not how it's supposed to work. State and federal law specify that members of the armed forces are entitled to relief from civilian debts - not forgiveness, but a bit of understanding - when they run into trouble because of their military service.

For more, see A lousy way to treat a veteran.

Go here for other posts on the Servicemembers Civil Relief Act, the Federal law that provides protection for active duty servicemembers with financial difficulties arising out of their active duty. If they haven't already, servicemembers in this position should contact the U.S. military's legal officer who is assigned to their unit for consultation.

Countrywide Financial Boycott Goes National

The Boston Herald reports:
  • Mortgage activist Bruce Marks yesterday unleashed a “national boycott” targeting Countrywide Financial, a campaign that comes as the giant mortgage company teeters financially. Marks, chief executive of Neighborhood Assistance Corp. of America, led dozens of protesters, many of them Countrywide borrowers facing foreclosure on high-interest, subprime loans, on protests outside three company offices in Boston. [...] “The reason we are going after Countrywide is that they are the biggest, the most aggressive and the most resistant to restructuring loans,” Marks said.

For more, see Activist group moves to push national Countrywide boycott.

See also, Countrywide Is Assailed in Protest of Policies (New York Times - 10-12-07), - "Thursday’s protest was the second this week organized by a borrower advocacy group and aimed at Countrywide. On Tuesday, ACORN, the Association of Community Organizations for Reform Now, organized a protest in eight cities."

(The community activist group ACORN demonstrated outside Countrywide's San Bruno, California office earlier ths week - see Bay Area Activists Protest Outside Countrywide Financial (Say Company Not Helping Enough)). countrywide pressure zebra

Minnesota Feds Bag 4th Conviction In Straw Buyer Scam Investigation Centered On Homebuilder; Appraiser Cops Plea

In another story on the New Prague, Minnesota mortgage fraud investigation centered around homebuilder Parish Marketing and Development, the Minneapolis Star Tribune reports:
  • A real estate appraiser from Montgomery, Minn., admitted Thursday to inflating values on 74 homes in the southern Twin Cities suburbs in an alleged mortgage fraud scheme that authorities say bilked lenders out of $50 million. [...] Donald Todd Yeager testified that he inflated his appraisals by $50,000 to $100,000 each. Yeager said that he was paid only his standard $400 fee for each appraisal but that he went along with the alleged scheme to keep the business. [...] Yeager pleaded guilty Thursday to depriving lenders of his "honest services" as a certified appraiser, a felony.

The U.S. Attorney's office estimates the losses attributable to Yeager are between $2.5 million and $7 million and that there are between 10 and 50 victims. Parish Marketing is headed by Michael and Ardith Parish, according to public records. Neither has been charged. For more, see Montgomery, Minn., appraiser admits hyping values (Donald Todd Yeager testified that he inflated value of homes by $50,000 to $100,000 each).

Go here for other posts on Minnesota homebuilder Parish Marketing and Development.

Lawsuit Filed Alleging $40 Million Fleecing Of 800 PA Residents In Wrap Around Mortgage Scam; Class Action Status Sought

(originally posted 10-11-07)
Lancaster Online (Lancaster County, Pennsylvania) reports:
  • A couple who say they were stung by a mortgage "Ponzi Corporation" is suing the lenders that bankrolled Personal Financial Management Inc.'s alleged $40 million fleecing of 800 customers. The lawsuit, filed [three weeks ago] in Berks County court, seeks to void 800 mortgage loans that skyrocketed for customers when Personal Finance Management and five subsidiary companies filed for bankruptcy last week. [... Wesley A.] Snyder owns Personal Financial Management, also known as OPFM Inc. and Image Masters, which had offices in Berks and Lancaster counties. [...] The defendants include big-name financiers such as Wells Fargo, GMAC, Countrywide, Citicorp, HSBC, Chase Home, Wachovia and Sovereign Bank.

The investment program that the Pennsylvania residents thought they were investing in was nothing but a "Ponzi scheme," according to the lawsuit. In a classic Ponzi, or pyramid, scheme, money from new investors is used to pay off earlier investors, usually at high rates of interest.

The suit claims that the mortgage lenders either knew or should have known that the program they participated in was a Ponzi scheme. It asks the court to rule that the lenders' conduct was unlawful or negligent and seeks that all mortgage notes held by the defendants are to be voided.

Representing the plaintiffs in this case is the law firm, O'Keefe & Sher, P.C., Kutztown, Pennsylvania.

For more, see Suit seeks to void 800 'Ponzi' mortgages.

See also, Judge Halts Higher Pa. Mortgage Bills (A judge has temporarily blocked higher mortgage bills facing more than 800 homeowners following last month's bankruptcy filing by a Berks County mortgage broker and its five subsidiaries; 10-11-07).

Go here for WGAL-TV Channel 8 News coverage.

For related documents from this case, see:

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.

Illinois Prosecutor's Office Racking Up Real Estate Forfeitures

In Champaign County, Illinois, The News-Gazette reports:
  • Since June, the Champaign County state's attorney's office has succeeded in taking from their owners three homes where drug dealing was going on. The homes are now the property of the Illinois State Police and will be sold, with the proceeds divided among law enforcement. [...] It's a way to send a message to those who use and distribute illegal drugs," said Champaign County State's Attorney Julia Rietz of her office's plan to seize the assets of criminals.

When the confiscated homes are ultimately sold, mortgages and other liens on the real estate are paid first. Anything left over is divided up amongst police agencies and prosecutors' offices, according to the story.

Reportedly, the prosecutor's office had its sights on a fourth home - of a man accused of juvenile pimping, because he was allegedly using the house in the commission of a crime. They promptly scrapped the idea, however, when they learned that the house was worth less than the outstanding liens. The bank foreclosed and got stuck with the house, instead. For more, see If you sell drugs out of your home, you could lose it.

North Carolina Regulators Investigate Broker's Ties To Builder; $Millions Paid In Undisclosed Bonuses?

The Charlotte Observer reports:
  • The North Carolina Real Estate Commission has opened an investigation into Charlotte-area agency Realty Place, the commission's lead investigator said Wednesday. The moves were in response to an Observer investigation of Realty Place, which received millions of dollars in bonuses from home builders in exchange for finding buyers for their homes. Company records show - and former employees affirm - that Realty Place maintained a close relationship with home builders after vowing to protect clients from those builders. The company funneled buyers into low-priced starter-home developments, many of which are now plagued by foreclosure.
For more, see Commission investigating Realty Place agency (Also examined: If customers informed of bonuses).

For earlier article on The Observer's investigation, see Homebuyers in the dark? (N.C. rules may leave customers unaware of bonuses received by their agents).

Short Sales: A Pain In The Neck?

Mortgage News Daily describes the anectdotes being thrown around out in the field about the difficulties some are reporting in approaching and consummating a short sale. The problems all seem to focus on the slow turn-around time when dealing with the employees of the mortgage lender or loan servicer. For more, see What is happening out there?