Monday, October 29, 2007

Feds Seize Business Records Of Baltimore-Area Foreclosure Rescue Operator

In Baltimore, Maryland, WBAL-TV Channel 11 reports:

  • The WBAL TV 11 News I-Team has learned that state and federal investigators have seized property of a Maryland man who claims he can help reduce your debt. Michael K. Lewis advertises on television, and he said in his ads that his mission is to help people get you out of financial debt. But he's currently under investigation, and one of his former network members said that she recruited others but quit because she didn't make any money. Court records show that federal agents seized documents, papers and computers from Lewis last week. Lewis was accused of illegally filing bankruptcies for clients -- an accusation he denies.

  • In July, 11 News aired a story about Claretta Taylor and her fight to keep her home. She said she called Lewis after seeing his TV ad, and she got on his MKL financial diet that includes paying bills on time and monitoring spending. To stay out of foreclosure, Taylor said she agreed to sell her Baltimore city home to Lewis' brother, Earnest. Lewis told her that in a year, when her cash flow improved, she was to buy back the house. That didn't happen.
For more, see Feds Seize Alleged Shoddy Businessman's Belongings (Former Network Member Says She Made No Money).

Go here to view WBAL-TV Channel 11 video report (link no longer available).

Go here for other posts on Michael. K. Lewis.

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.).

More On Foreclosures Forcing Tenants From Homes; Section 8 Tenant Rights Being Violated

Recent stories on the problems facing tenants as a result of their landlords being foreclosed on:

Minnesota - Minneapolis Star Tribune - Wave of foreclosures hits renters (When landlords face foreclosures, tenants often lose their housing. Rights and leases can extend for months after a sale, but many families are scrambling and some are finding themselves homeless).

Massachusetts - Boston Herald - Foreclosures hit tenants (Activists: New owners trample on renters’ rights). Activists are warning about “cash for keys” and other schemes designed to trick Section 8 subsidized housing tenants into moving out of homes recently sold at foreclosure auctions. Under federal law, Section 8 tenants with proper leases can’t be immediately tossed out of their units because of a change in ownership, experts say. “Federal laws trump state laws, so (Section 8 tenants) can stay,” said Rafael Mares, an attorney at Harvard Law School’s WilmerHale Legal Services, which is helping tenants during the current foreclosure crisis. Even if a tenant’s Section 8 lease has expired, federal law requires that property owners must prove they’re being economically harmed by having a tenant remain in a building, said Mares.

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

Minnesota Builder Reportedly Stiffing Subs; At Least 4 Have Six-Figure Claims Against Parish Marketing

(original post 10-28-07)
Part of the fallout of the collapse of Twin Cities-area homebuilder Parish Marketing and Development, owned by Michael Parish, is the devastating effect it is having on the subcontractors who did work for Parish who are owed significant sums, but are now in the process of being royally stiffed by the builder. Up until now, media articles have reported that homebuyers purchasing vacant Parish homes under land contract and "rent to own" arrangements have been stiffed in that Parish reportedly pocketed all their money without applying any of it to the mortgages on the homes they were purchasing.

Now, according to a recent story in the Minneapolis Star Tribune, at least four contractors are owed six-figure sums for construction work they did for Parish and the chances of recovery of even some part of the amounts owed are not good. Excerpts from the story:
  • The Parish case, one of a string of mortgage-fraud schemes surfacing across the Twin Cities area and the nation, highlights the extent of much damage a single builder can create. For example, [Brian] Jones [owner of North Oak Enterprises Inc. of Wyoming, Minn., an interior trimming contractor], who says he's owed $45,000, expects to lay off his three employees next month -- his first layoff in 17 years of business. And Kyle Elfering, the owner of a small framing business in Stacy, Minn., said he's already laid off half his workforce since Parish stopped building. He's seeking $230,000 in back pay from Parish.

  • [Brad] Alness [owner of Phase Electric in Bloomington] said it will take years to recover the $298,000 in unpaid bills from Parish. "That represents more than all of our profits for the entire year," he said. "It's huge." Twice this past year, builders have failed to pay Pamela Jewison, co-owner of Allied Excavating, for work on area homes. Her unpaid bills: $155,000. Her complaints to the Minnesota attorney general's office have been unanswered, she said. "We're talking about people's lives here," she said. "There are people out there who won't be able to survive this."

  • Several contractors said they were lured by promises of steady work as other builders were scaling back. In just four years, Parish built 125 homes at "Prague Estates," a project in New Prague. Most of those homes are in foreclosure, according to Le Sueur County officials. Brian Jones, the trimming contractor, recalls a meeting last year with [Parish son-in-law, Christopher] Troup. "He said, 'I'll have 100 houses a year for you guys to do,'" Jones said. "In this market, that was salvation."

  • At least four contractors said Parish owes them six-figure sums. Minnesota Concrete Structures said in a recent lawsuit that Parish failed to pay it $692,484.65.
For more, see Parish collapse leaves contractors stuck with unpaid expenses (It may take years for some contractors to recover from the state's largest case of mortgage fraud).

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

Massachusetts AG Takes Action On Foreclosures

Earlier this summer, Attorney General Martha Coakley unveiled a multi-faceted plan to tackle the foreclosure crisis in Massachusetts. Unfortunately, homeowners facing foreclosure often find themselves in a vulnerable position and may become targets for foreclosure rescue schemes and dishonest lenders. The Attorney General's plan includes steps to stop foreclosure rescue schemes, stop deceptive mortgage practices, and provide assistance to residents facing foreclosure.

Go here for links to recently issued regulations targeting foreclosure rescue operators (940 CMR 25.00: Foreclosure Rescue Transactions and Foreclosure-Related Services) and to the new regulations targeting brokers & lenders (940 CMR 8.00: Mortgage Brokers and Mortgage Lenders).

Go here for Pro Bono Foreclosure Assistance Hotline.

Sunday, October 28, 2007

Maryland’s System For Home Foreclosures Tramples Due Process, Argues Appeal

From Public Citizen Litigation Group, the litigating arm of the consumer advocacy group Public Citizen:

  • Maryland resident Joyce Griffin lost her house in a foreclosure sale because she never received notice until it was too late for her to save her home. Her case is a stunning example of how predatory subprime lenders, high-volume foreclosure mills, and a hands-off legal system can combine to wreak havoc on people's lives.

  • Griffin's mortgage company, the now-defunct Ameriquest, tricked her into refinancing the home she owned, when, after her fiancé died, she'd simply wanted to have his name taken off the mortgage. When the single mother could no longer make the increased mortgage payments, a "foreclosure mill" law firm representing Ameriquest quickly began foreclosure proceedings. After they made a bare-bones and unsuccessful effort to notify her of any pending action, Griffin lost her home when it was literally auctioned off on the courthouse steps. She never learned that her home had been sold until the new owner tacked a note on her door.

  • Griffin immediately hired a lawyer to block the sale, arguing that the notice procedures violated her constitutional right to due process, but the court upheld the lender's actions. Public Citizen and Baltimore-based Civil Justice Inc. are appealing that decision. We argue that the 2006 decision in Jones v. Flowers — a case that Public Citizen argued in the U.S. Supreme Court — means that additional reasonable steps must be taken to notify a property owner if a foreclosure notice is returned as unclaimed by the post office. But the lawyers who conducted the foreclosure of Ms. Griffin's house say they can ignore undelivered letters and do not have to make any effort to follow-up before selling someone's house.

  • If Griffin had been a defendant in a small-claims case, a property tax foreclosure, a federal tax foreclosure, or even a tenant in an eviction proceeding, the law would have required that the documents be served in person, sent via restricted certified mail (complete only upon delivery) or be posted by mail-and-nail notification in which the mailed documents are also posted directly on a dwelling's door. Even in a routine debt collection action, Ameriquest's mishandling of Griffin's case would have violated her constitutional rights. The Constitution demands more when someone's home is at stake.
Source: Description Of Pending Case in Griffin v. Bierman, et al. in the Maryland Court of Special Appeals.

In a separate press release, Public Citizen attorney Deepak Gupta noted:

  • People are waking up to the reality of predatory subprime mortgages, but what they may not yet realize is the one-two punch of shifty loans and shiftier foreclosure firms that can knock them right out of their homes.
For the entire press release, see Homeowners Facing Mortgage Foreclosures Denied Constitutional Right to Proper Notification.

To view the appellate brief in this case filed last week on behalf of the homeowner, see Brief - Griffin v. Bierman, et al.

Representing the homeowner in this case are: Deepak Gupta, Micahel T. Kirkpatrick, and Brian Wolfman, with Public Citizen Litigation Group (Washington, DC); Phillip Robinson, with Civil Justice Inc. (Baltimore, MD); and Scott Borison, with Legg Law Firm, LLC (Frederick, MD).

For background information on this story from The Washington Post (12-21-07), see The Pain of Foreclosure (For Joyce Griffin and Thousands of Others Who Face Losing Their Homes, Sadness and Uncertainty Overshadow a Season of Cheer).

Go here and go here for other posts on foreclosures involving faulty notifications to property owners. foreclosure faulty notice

OPFM, Image Masters Collapse Claims Victims All Over Eastern Pennsylvania

For those following the Wesley A. Snyder, OPFM, Image Masters mortgage investment scandal, there is a another story on it today in the Allentown Morning Call. An excerpt from the story:
  • The devastation in the wake of the collapse of the company and five affiliated businesses is being documented all across eastern Pennsylvania. The majority of the borrowers are from Berks and Lancaster counties, but dozens also live in Lehigh, Northampton, Montgomery, Carbon and Schuylkill counties.
For more, see Valley borrowers caught in Berks firms' bankruptcy (Collapse left some with mortgage payments 70 percent higher).

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.

Non-English Speaking Parkinson's Sufferer Loses Home In Foreclosure Of $20K Home Equity Loan

The San Francisco Chronicle reports:
  • Hong Zhang Lin lost his home in Oakland's Fruitvale District in a foreclosure auction this month. The 44-year-old former construction worker, who is disabled by Parkinson's disease, can barely believe it. He's not a subprime borrower, he has a huge amount of equity in the home, and he has made all his mortgage payments on time. The four-bedroom house, which Lin and his two brothers bought in 1992, is worth about $500,000; he only owes $94,000 on the mortgage. But he evidently stopped making the $135 monthly payments on a $20,000 home-equity loan. The loan was with the bank division of Countrywide Financial, the same lender that carries his primary mortgage (Editor's Note: Lin was current on his primary mortgage). Countrywide initiated foreclosure proceedings and sold the house to investors for a bargain price of $190,300 at an Oct. 2 auction on the Alameda County Courthouse steps.

For more, see Face of foreclosure crisis - Chinese-speaking Parkinson's sufferer.

For story, see Foreclosed Oakland home returned to family.

Editor's Note: The problem here may be, in large part, due to the apparently miserable notice requirements that exist in California in connection with foreclosing mortgage lenders' obligation to provide notification to homeowners of pending foreclosures. The foreclosure notification requirements in the state of Maryland, a state with arguably the most homeowner hostile foreclosure process in the country, are currently in the process of being challenged in a Maryland appeals court by the Public Citizen Litigation Group, as being in contravention of a policy set forth by a recent decision of the U.S. Supreme Court that dealt with the constitutionality of notification requirements in foreclosures sales (see Due Process Being Trampled By Maryland’s Home Foreclosure System, Argues Appeal). Given the situation that happened in this story with the Parkinson's disabled homeowner (and given that no "red flag" went up at Countrywide, which held both mortgages on the home - one of which was current), maybe someone should make an assessment of the constitutionality of the California foreclosure notice requirements, which would allow a case like this to happen.

Some Central Florida Pet Shelters "Bulging At The Seams" From Foreclosures

In Central Florida, the Charlotte Sun-Herald reports:
  • A little known part of the fallout from the record pace of foreclosures of homes has been the impact on pet owners. "For the last two months, we've received an unprecedented number of telephone requests and e-mails from people pleading for us to take their dogs and cats," said Elise M. Matthes, president of Sarasota in Defense of Animals. "It is heart-wrenching. Most of those who contact us are losing their homes and moving into rentals, where pets are prohibited. They are severely distraught people because there is no "no-kill" shelter or sanctuary in the county that will take pets," Matthes said. "Most area shelters are bulging at the seams with excess dogs and cats."

For more, see Pets becoming mortgage foreclosure victims.

Go here for more on pets and foreclosures.

Another Judge In Hot Water

In Broward County, Florida, the South Florida Sun Sentinel reports:
  • The Judicial Qualifications Commission filed formal misconduct charges against Broward County Judge Terri-Ann Miller on Wednesday accusing her of misleading voters to think that she was an incumbent judge when she successfully ran for election last year. The commission accused Miller, in documents filed Wednesday, of distributing campaign materials "calculated" to wrongly imply she was a sitting Broward judge when she was not. Her campaign material included a photo of her wearing a judicial robe and using words that implied she was the incumbent, the commission charged. [...] The state watchdog agency said Miller "made a continuing deliberate effort to misrepresent your qualifications for office ... which cumulative misconduct constitutes a pattern and practice unbecoming a candidate for and lacking the dignity appropriate to judicial office, with the effect of bringing the judiciary into disrepute."

For more, see Broward judge accused of misconduct.

Go here to view Notice of formal charges against Judge Terri-Ann Miller.

For a quick summary on some of the problems Broward County, Florida judges seem to have avoiding perceptions of impropriety, see the Postscript after the post, Egregious Conduct By South Florida City In Violation Of State Homestead Exemption Laws Threatens Loss Of Home.

Go here for other posts on naughty judges. naughty judges

Saturday, October 27, 2007

Recent Central Florida Copper Theft Stings Nail Eight

In Manatee County, Florida, the Bradenton Herald reports:

  • Targeting the "middleman" in a recent spree of copper thefts, the Manatee County Sheriff's Office on Wednesday arrested seven people on charges of buying stolen metal. The arrests at two scrap yards and two private homes - where detectives had received tips that illegal activity was taking place - culminated a six-week sting operation dubbed "Operation Hot Wire." [...] "This was an effort to go after the middleman, the people buying stolen copper," said Manatee County Sheriff Brad Steube. "We told these people this stuff was stolen, and they took took it anyway."

  • Two years ago, copper was being sold for about $1 per pound. On Wednesday, copper closed at $3.45 per pound in trading on the New York Mercantile Exchange. The price increase has fueled a nationwide epidemic of copper theft from businesses and residences, according to sheriff's Sgt. John Andrews.

  • Manatee County has been hit so hard, the sheriff's office this summer assigned two detectives solely to investigate copper thefts. Most recently, thefts of copper and brass backflow preventers have frustrated victims and investigators. A backflow preventer keeps wastewater from being sucked back into water supplies.

  • In September, someone was brazen enough to steal the backflow preventer from the rear of the sheriff's office's headquarters, leaving employees without water for hours.

  • Accounts from search warrants in the sheriff's office "Operation Hot Wire" have buyers showing detectives how to take brand new wire and make it look used by soaking it in acid.

For more, see Copper sting snares seven, and 'Hot Wire' copper theft sting detailed.

------------------

In another recent Central Florida metal theft sting, The Lakeland Ledger reported:

  • The selling of stolen metal - a growing problem in Polk County - landed the owner of a recycling company in jail ... . Jerome Hayes, 43, of St. Cloud, was arrested by Polk County Sheriff's Office undercover detectives after he purchased items from them that were made to look like stolen property, a press release from the office said. [...] In the last year, the Sheriff's Office has investigated hundreds of cases of stolen copper wire in unincorporated Polk County.

For more, see St. Cloud Man Arrested in Stolen Metal Sting.

Go here for other posts on copper & metal theft. copper metal theft zebra

$20 Copper Theft In Vacant Home Leads To Owner's Death

In Onawa, Iowa, KCCI-TV Channel 8 (Des Moines) reports:
  • A $20 copper theft in August led to the death of an Iowa man, and local authorities said ... that they need the public's help to solve the crime. Earl Thelander, 80, died in late August after an explosion in a home he owns outside of Onawa. His son, Doug, said his father was preparing the property for a new renter. In the process, someone raided the inside of the home, police said, stealing wiring and tubing and cutting a gas line into the home. Doug Thelander said his father aired out the gas smell in the house for almost three hours the next day, then plugged in a fan to move the air around. "He said, 'Doug, I didn't smell anything, but that spark there was just a tremendous explosion,'" Thelander said, recalling one of his last conversations with his father. Earl Thelander had second- and third-degree burns over 80 percent of his body. He died in a hospital four days later. "It's tough to watch. It's tough to watch somebody like that just fade away," Doug Thelander said.

For more, see Man Dies After $20 Copper Theft (Onawa Police Seek Informants) (if link expires, try here).

Go here for other posts on copper and other metal thefts. copper metal theft zebra

Temporarily Vacant Rental Home Hit By Copper Thieves Posing As Repairmen

In Jackson, Mississippi, WLBT-TV Channel 3 reports:

  • A south Jackson property owner warns you to be on the look out for copper thieves pretending to be repairmen. It is a costly crime which damages property and contributes to the decline of many neighborhoods. Mike Crook has owned a rental house ... for over five years. Until recently he has not had a problem with break ins while waiting for a new family to move in. But the damage he said thieves did while robbing the residence is almost unbelieveable. "I was shocked they took the toilet and the water heater," said Crook.

  • But the Ridgeland resident was most surprised the third time thieves stole copper from the rental house. In just about three weeks Crook said the vacant house has been robbed of copper wiring from the air conditioning unit, plumbing and other appliances.
For more, see Copper Thieves Pose as Workmen at Vacant Houses.

Go here for other posts on copper and other metal thefts. copper metal theft zebra

Copper Thefts Putting Lives In Danger

In Great Britain, The Argus reports:
  • Thieves risked causing a huge gas explosion after they ripped copper piping connected to the mains supply off walls of houses. Firefighters were called to properties ... after neighbours smelled gas leaks. Police believe the thefts are down to the high price currently being offered for copper by scrap merchants.

[...]

  • A spokeswoman for company Scotia, which has responsibility for the gas network in the South, said: "There has been a recent spate of problems happening to households where the copper pipe that comes out of the gas meter has been ripped off the wall to be sold for profit. Our involvement is that we go out to make everything safe as the pipes are owned by the householders. We are only called because it's an uncontrolled gas leak as the pipes are ripped off the walls. It's an extremely dangerous situation because they are just ripping the pipes off the wall. It just takes somebody to throw a cigarette away or smoke near it for it to be an issue of safety."

For more, see Copper theft puts lives in danger.

Go here for other posts on copper and other metal thefts. copper metal theft zebra

Active Gas Line Cut In Abandoned Home; Copper Thieves Suspected

In Attleboro, Massachusetts, The Sun Chronicle reports:

  • Thieves looking for copper plumbing could have accidentally cut a propane gas line inside an abandoned house on County Street Monday night. Detective James Cote said Tuesday that evidence in the abandoned duplex ... indicates thieves broke into the duplex looking for copper tubing, and cut the line not realizing it was an active gas line. [...] The detective said the duplex, which is at least 50 yards from the nearest house, has been abandoned for some time.

  • The leak ... was reported about 6:15 p.m. Monday by a Bay State Gas employee who was working in the area, according to police. Police and fire officials had to evacuate three nearby homes for about an hour and close a section of County Street around the area of the leak.
For more, see Police: Gas line could have been cut by thieves.

Go here for other posts on copper and other metal thefts. copper metal theft zebra

Friday, October 26, 2007

Victims Of A $43 Million California Real Estate Ponzi Scheme Being Victimized Again; This Time By The Federal Bankruptcy Process

Excerpts from a recent story in the San Jose Mercury News:
  • After losing nearly all of his savings in a Bay Area real estate scam, Mel Nashban's life quickly fell apart. The retired trucking company owner suffered through a divorce, was forced to sell his Carmel home and found himself living on $1,040 a month in Social Security income. Now, Nashban, 79, and many of the dozens of other elderly victims who lost a combined $43 million to scam artist Michael Schneider, feel they are being victimized again - this time by the bankruptcy process.

  • Schneider pleaded no contest in July to 173 felony counts for his role in swindling dozens of elderly victims in Santa Clara and Santa Cruz counties. And now his assets - liquidated for about $11.3 million, according to court documents - remain tied up in a lengthy bankruptcy court proceeding that underscores the growing concern about a system designed to divvy up the scraps when an enterprise goes bad.

  • At the rate attorneys and trustees are racking up fees, the fraud victims fear they have already lost any chance of recouping even a small portion of their losses.
For more, see Scam victims fight in bankruptcy court to regain some lost money (Bankruptcy assets go to legal fees). (if link expired, try here).

See also, Where the money is going.

Pennsylvania Cash Back Mortgage Fraud Scammer Gets 14 Years In Federal Pen

The Lancaster Intelligencer Journal reports:
  • Mickey Allen Weicksel, a former Lancaster real estate investor who obtained about $4 million in kickbacks through a real estate scam, was sentenced Tuesday to 14 years in prison. Federal District Judge Barclay Surrick in Philadelphia also sentenced Weicksel, 40, to serve five years probation after his release from prison and ordered him to pay $750,324 in restitution. Weicksel was convicted in March 2006 of 14 counts of wire fraud, three counts of bank fraud and one count of conspiracy to commit money laundering. Weicksel will join his former business partner, Barrylee Paul Beers, in federal prison. Beers, who previously pleaded guilty to wire fraud, bank fraud and conspiracy to commit money laundering, is serving a four-year prison term.
The scam involved (1) submitting false information to lenders to fraudulently obtain mortgage loans, (2) receiving "cash back" at closing from the sellers whose property was being purchased, and (3) use of a bogus repair company used to falsely create or inflate repair costs on the purchased properties when in fact no significant work had ever been done, according to prosecutors. The money being paid for the purported repair costs came out of the mortgage loan proceeds and were, in effect, the "kickbacks" paid to the scammers.

Beers and Weicksel purchased more than 100 properties in the Lancaster area. For more, see Man gets prison for house scam.

North Dakota Feds Charge Title Abstractor With Forging Title Opinions

In Fargo, North Dakota, WXMC-TV Channel 13 reports:
  • A Cando woman is accused in an elaborate scheme in which she allegedly used a fake law degree and a fictitious employee to forge real estate title opinions. Twenty-seven-year-old Diane Slaubaugh (SLAY'-baw) has pleaded not guilty in federal court in Fargo to 36 felony counts, including wire fraud and identify theft. Her trial is scheduled to begin December 10th. Authorities say Slaubaugh and her abstract company, Midland Services, forged the name and initials of Fargo attorney Brenda Rosten on 34 separate title opinions. A title opinion is a document prepared by an attorney that indicates the ownership and outstanding liens for a property. Assistant U.S. Attorney Jan Morley says what it boils down to is identity fraud. Slaubaugh's attorney had no comment.

Source: Woman accused of forging real estate title opinions.

Minnesota Groups Providing Help To Mortgage Fraud Victims; Training To Attorneys Representing Them

The Minneapolis Star Tribune reports on the ongoing efforts in Minnesota that are aimed at addressing the many layers of the housing crisis in which mortgage fraud has played a significant role. For a list of organizations involved in these efforts, providing assistance both to homeowners victimized by mortgage fraud and foreclosure rescue scams, as well as to Minnesota attorneys by providing them training to represent individual homeowners in foreclosure, see Mortgage fraud victims deserve our help (Government does its part to prosecute unscrupulous brokers and predatory lenders. But there are ways the community can aid those hurt by this unnatural disaster.).

Short Sales: A Pain In The Neck? (Part 2)

For more "short sale anecdotes" describing the difficulties that some claim to be experiencing in consummating a short sale, see Real Estate Investors and Agents Decry Short-Sale Process, posted at Mortgage News Daily.

For an earlier post on Mortgage News Daily on short sale problems, see What Is Happening Out There?

Crooked Qualified Intermediaries Hurting The 1031 Exchange Industry

The Denver Post recently ran a story on what could happen to you if, in the course of doing a tax free, Section 1031 exchange of real estate (in order to defer tax liability on the appreciatioon of investment real estate), you entrust the proceeds of your sale with a qualified intermediary who turns out to be a crook. If your interested, see Legal tax deal could cost you.

Go here for other posts on 1031 exchange ripoffs.

Thursday, October 25, 2007

Texas AG Slams Another Upfront Fee Foreclosure Rescue Consultant; Obtains TRO & Asset Freeze

From the Office of the Texas Attorney General:
  • Texas Attorney General Greg Abbott [yesterday] obtained a temporary restraining order and asset freeze against an unlawful Texas-based foreclosure rescue operation targeting struggling homeowners in the state and across the country. According to court documents, Southern Residential, LLC, and its director and manager, Edward Casey, fraudulently advertised that the company could save homeowners from imminent foreclosure. The enforcement action also names affiliated defendants National Homeowners Assistance, Stephanie Casey, Matthew Casey and Linda McCann. Under the temporary restraining order, the defendants must stop falsely soliciting distressed homeowners immediately. Although the order only applies in Texas, homeowners nationwide are protected by the asset freeze. [...] Last week, Attorney General Abbott secured a temporary injunction against Foreclosure Assistance Solutions, a Florida-based “foreclosure rescue” scheme that targeted Texans who fell behind on their mortgage payments.

For the rest of the Texas AG's press release, see Attorney General Abbott Takes Legal Action Against Foreclosure Rescue Firm's Unlawful Texas Operations (Clients of Southern Residential urged to call their lenders immediately).

For links to documents, etc. in this case, see:

Ringleader In Colorado Straw Buyer / Rent Skimming / "Rent To Own" Scam Convicted Of Racketeering

The Pueblo Chieftain reports:
  • A real estate mogul will trade his upscale lifestyle of luxury cars, fine dining and posh homes for a stretch in the big house. Maurice Goring, 41, was convicted Tuesday 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.

  • Goring enlisted acquaintances he met at church to serve as the listed owners on distressed properties he purchased. Goring then pocketed the mortgage loan proceeds, often taking out a second mortgage immediately at closing. He let the houses lapse into foreclosure. In the process, he ruined the credit of the people who agreed to serve as the registered owners of the homes.

For more, see Goring guilty of racketeering (Former real estate professional faces up to 48 years in prison).

For story update, see Man gets 10 years in real-estate scam.

Go here for other posts on Maurice Goring.

Miami Mortgage Fraud Prosecutions Of Title Insurance Agents Expected To Increase

In Miami-Dade County, Florida, the South Florida Daily Business Review reports:
  • Title insurance agents, the last people most home buyers and sellers see before a deal closes, are increasingly among the first being prosecuted for mortgage fraud. That is raising questions among prosecutors and investigators about agents’ training, employee supervision and whether agents should play a bigger role in stopping fraud. “I’m seeing an increase in them being involved in the whole [fraudulent] transaction and with knowledge of how bad the situation is,” said Sgt. Richard Davis of the Miami-Dade Police economic crimes division. Davis, a member of the new multi-agency mortgage fraud task force in Miami-Dade County, said arrests of more title agents are imminent.

For more, see More title insurance agents being prosecuted for mortgage fraud (if link expired, try here).

South Florida Condo Speculators Filing Suits To Wiggle Out Of Purchase Contracts

In the Greater Fort Lauderdale area, the South Florida Sun Sentinel ran a story yesterday on the trend of real estate speculators who entered into contracts to purchase real estate in developments that were being constructed at the height of the real estate boom that are now looking to back out of the deals because the reversal in the real estate market is making it impossible for them to profitably flip their purchase contracts. Many are going to court seeking the court's blessing, as well as a court order directing the developer to return the contract deposits. Excerpts from the story:
  • Brad Hunter, director of the South Florida region for Metrostudy, a housing market research firm, said more lawsuits are being filed because "there is a lot of buyer's remorse out there. Naturally people will be looking for ways to get out."

  • About 40 percent to 60 percent of buyers are trying to wiggle out of their contracts, said Gary Poliakoff, a Fort Lauderdale attorney, referring to a dozen projects in South Florida that his firm represents, ... . "The claims and the suits are namely a means for an end for investor-buyers to get out of deals where they weren't able to realize the profits they expected, but it doesn't mean the reasons are legitimate," Poliakoff said. Developers are not budging, Poliakoff said, because they "built the buildings on the reliance that the buyers are ready, willing and able to close."

  • John Mike, chairman of the Realtors Association of the Palm Beaches, said those most upset are buyers who had no intention of living in their properties. "A lot of those condos, unfortunately, were bought by speculators with the same business plans — to flip their properties, and unfortunately that has created a glut of units. Now we are seeing a large number of people trying to get their money back by hiring lawyers."
For more, see Housing slump has South Florida condo investors heading for the exits (Suits mount as condo investors seek money back) (if link expired, try here).

Go here for other stories on real estate speculators looking to back out of purchase contracts. zebra

Federal Court Takes Jurisdiction Of Alleged Mortgage Investment Scam Class Action Suit

In Philadelphia, Pennsylvania, the Lancaster Intelligencer Journal (Lancaster Online) reports:

  • Some homeowners who owe much more than they thought they did due to alleged mortgage broker fraud by OPFM Inc. lost one form of temporary relief Wednesday but gained another. A federal judge in Philadelphia Wednesday took charge of the case and tossed a temporary injunction that had shielded about 800 customers from mortgage debts discovered when OPFM filed for bankruptcy Sept. 18.

  • Instead, a new agreement allows mortgage customers to pay 75 percent of the higher mortgage payments, or the original payment, whichever is higher, and mortgage companies promised not to foreclose if the payments are made.

  • U.S. District Judge James T. Giles made the decision after taking jurisdiction of a class-action lawsuit filed Sept. 25 in Berks County court. The suit seeks to void mortgages of 25 lenders named in the suit. The mortgages were brokered by Personal Financial, allegedly without the knowledge of the customers, who thought they were signing on for lower mortgages.

For more, see Federal judge takes OPFM suit (Revises deal for homeowners who allege mortgage broker fraud).

See also, WGAL-TV Channel 8, which reports:
  • Wednesday morning a federal judge in Philadelphia threw out a ruling that had temporarily protected homeowners who had been affected by the sudden closure of Personal Financial Management, a local mortgage company. The judge then directed attorneys representing homeowners and the mortgage companies to come up with an agreement that can be overseen by the federal court. The judge's decision supersedes a Berks County judge's ruling two weeks ago that had temporarily protected homeowners from being forced to make higher payments.

For more, see Judge Tells Homeowners, New Mortgage Holders To Work Together.

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.

Wednesday, October 24, 2007

Michigan Man Gets 4 Months In Jail For Pocketing Proceeds Of Foreclosure Rescue Deal

In Grand Rapids, Michigan, WOOD-TV Channel 8 reports:
  • Tony O'Neal is in the Kent County Jail starting a four-month sentence for cashing a check belonging to a couple whose home was facing foreclosure. O'Neal brokered a deal in which Carl and Dreama Henderson sold their threatened home to a third party, who rented it back to them. In the process, the Hendersons were supposed to get some $30,000 back from the equity in their home. O'Neal offered to cash the check for them. He kept the money. [...] The Hendersons trusted O'Neal. He worked for a major national mortgage company at the time, and did foreclosure rescue deals on the side. Last fall the Hendersons asked Target 8 Investigators to look into the matter. They also contacted Grand Rapids police detectives. They caught up with O'Neal in December and got a warrant charging him with larceny by conversion.

O'Neal was sent to jail for four months, put on probation for four years and ordered to repay the Hendersons some $27,000. Aside from the proceeds of the cashed check illegally pocketed by O'Neal, no word on how much more the Hendersons got ripped off on the actual foreclosure rescue deal itself. For more, see Man jailed for 'foreclosure rescue' theft.

Go here to watch the WOOD-TV Channel 8 video report.

Editor's Note: In a prior post, a foreclosure rescue, sale leaseback transaction was described involving a homeowner facing foreclosure that took place in the same general area of Western Michigan as this story. In that case, the homeowner sued the foreclosure rescue operator and successfully voided the foreclosure rescue transaction. For more, see Foreclosure Rescue Operator Violates Federal Law, State Usury Law. Representing the homeowner in that case was attorney Phillip C. Rogers, of Grand Rapids, Michigan. Maybe the homeowners in this case should look into getting an attorney to pursue voiding the foreclosure rescue transaction altogether.

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.).

Texas AG Obtains Temporary Injunction Freezing Foreclosure Rescue Operator's Assets Indefinitely

An emergency restraining order obtained by Texas Attorney General Greg Abbott in September which froze the assets belonging to upfront fee foreclosure rescue operator Foreclosure Assistance Solutions of Clearwater, Florida was replaced last week by a temporary injunction issued by a Texas state court. Under the court order, Foreclosure Assistance Solutions, and its principal operators, Herb Zerden and Adolfo Quintero, as well as J.W.W. Services, Inc. of California and owner John Woodruff, are prohibited from targeting and deceiving Texans who fall behind on their mortgage payments. The temporary injunction issued last week extends the initial September order, securing approximately $750,000 in fees that the defendants charged more than 700 Texans who paid for its services. The monies will remain frozen pending further orders from the court. For more, see Texas AG Press release, Attorney General Abbott Halts Foreclosure Rescue Scam's Unlawful Texas Operations (Clients of Foreclosure Assistance Solutions urged to call their lenders immediately).

For related court documents filed against Foreclsoure Assistance Solutions, see:

Go here for other posts on Foreclosure Assistance Solutions.

FBI, NY AG's Office Attend Buffalo Tax Foreclosure Sale; Warn "No Flipping Allowed!"

In Buffalo, New York, The Buffalo News reports:
  • Buffalo’s annual foreclosure auction is attracting more than just buyers looking for bargains this year. The three-day sale of troubled properties also attracted the FBI and the state attorney general’s office. “We’re keeping track of who’s doing what,” said Kathleen Lynch, coordinator for the city’s Anti-Flipping Task Force. The task force, formed to combat the practice of real estate flipping, joined several law enforcement agencies Monday in monitoring the first day of the auction in the Buffalo Niagara Convention Center. [...] One of the tools the task force is using this year is an affidavit all buyers are required to sign. The document is designed to prohibit a buyer from selling his property for a profit of more than 20 percent during the first six months of ownership. The goal is to curtail flipping, the practice of buying low-priced housing and quickly selling it at inflated prices without making improvements to the property.

For more, see Foreclosure auction has a warning: No flipping (if link expired, try here).

See also, Flushing out flippers (WKBW-TV Channel 7, Buffalo, NY). Go here to watch WKBW-TV Channel 7 video report.

Frank Proposes Bill Targeting Institutions That Securitize Mortgages

Financial News Online reports:
  • A congressman has proposed a bill to punish any institution that securitizes mortgages as Washington renews its scrutiny of Wall Street before next year’s elections. Congresman Barney Frank, chairman of the House Financial Services Committee, has co-sponsored the bill, which would hold financial firms liable if they securitize loans that violate minimum lending standards. Borrowers could sue to recover the cost, if Frank’s bill passes. The bill would also cut out lending arrangements that many have blamed for this summer’s credit squeeze, including abolishing penalty charges for borrowers who make their payments early and penalizing brokers who push consumers toward high-cost loans. Frank said he hopes to push the bill through before the end of the current Congressional session.

The proposed legislation is contained in bill H.R. 3915 - The Mortgage Reform and Anti-Predatory Lending Act of 2007. For more, see Congress takes aim at securitizations ahead of elections.

Countrywide Proposes To Refinance Or Restructure Up To $16 Billion In Loans

Reuters reports:

  • Countrywide Financial Corp , the largest U.S. mortgage lender, on Tuesday offered to refinance or restructure up to $16 billion of adjustable-rate mortgages through the end of 2008. The lender said its program may help about 82,000 borrowers who face higher payments stay in their homes. It announced the program as pressure mounts on the mortgage industry from politicians and consumer groups worried about rising foreclosures to clean up lending excesses, and make only home loans that consumers can afford in the first place.

For more, see Countrywide to modify $16 billion mortgages.

Recent political pressure in the form of proposed bankruptcy law changes that would force lenders to accept loan modifications in connection with homeowners filing Chapter 13 bankruptcy (see More On Proposed "Forced Mortgage Modifications" In Chapter 13 Bankruptcy) may be having an influence on Countrywide's position. The recent Countrywide protests by consumer activists may also be having an effect (go here for Countrywide under attack). The proposed Federal class action lawsuit against Countrywide alleging race discrimination might also be contributing (or could it be that Countrywide is just posturing to take the heat off?). countrywide pressure zebra

Tuesday, October 23, 2007

Feds Confirm Raid Of Home Of Pennsylvania Mortgage Broker

Lancaster Online reports:
  • The U.S. Postal Inspection Service confirmed Monday that it has raided the home of Wesley A. Snyder, the president of a bankrupt mortgage-brokerage business that has saddled 800 homeowners with tens of thousands of dollars of additional, unexpected mortgage debt. Oriey Glenn, the acting inspector in charge of the Philadelphia Postal Inspection Service, said items were taken during an Oct. 12 raid involving Snyder's companies Personal Financial Management Inc. and Image Masters, which operated offices in Lancaster and Berks counties. [...] No fewer than five agencies — the postal inspectors, the Pennsylvania Securities Commission, the state Department of Banking, the state attorney general's office and the U.S. Attorney's office — are investigating Snyder's businesses.

For more, see Mortgage broker raided (Postal inspectors seize items from home of Wesley Snyder).

For story update, see Judge Tells Homeowners, New Mortgage Holders To Work Together (WGAL-TV Channel 8, 10-24-07).

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.

Twin Cities-Area Builder Charged With Mortgage Fraud Conspiracy

The Minneapolis Star Tribune reports:

  • An alleged mortgage fraud conspiracy that pocked some southern Twin Cities suburbs with foreclosures and led to an estimated $50 million in losses on nearly 200 houses has boiled down in criminal charges to a much smaller number: $114,465.60. That's the amount the government alleges that Parish Marketing and Development Corp., founder Michael Parish of Eagan and son-in-law Christopher Troup laundered from the conspiracy. [...] Michael Parish and his wife, Ardith, were charged quietly Thursday along with their company and Troup in an alleged mortgage fraud conspiracy that ran from 2003 through last May. [...] So what happened to the rest of the estimated $50 million in losses?

  • Government prosecutors aren't commenting yet. The defendants agreed to be charged directly by the U.S. attorney's office in lieu of an indictment. Additional information may emerge Nov. 2, when the defendants are scheduled to be arraigned and enter guilty pleas.

For more, see Developer Parish is charged (Longtime home builders Michael and Ardith Parish are expected to plead guilty in an alleged mortgage fraud conspiracy that has pocked some southern Twin Cities suburbs with foreclosures and led to an estimated $50 million in losses on nearly 200 houses).

See also, Developers expected to plead guilty in mortgage fraud case (KARE-TV Channel 11, The Associated Press).

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

Fla. Foreclosure Rescue Operator, Others Tagged With Federal Lawsuit; Allege RICO, Criminal Usury, Conspiracy, TILA Violation; Seek To Void Mortgages

The St. Petersburg Times reports:
  • Calvin Lewendowski, a 55-year-old Sarasota house remodeler, turned to the Safe Harbour Foundation last year after he was promised the nonprofit would save his home from foreclosure. Instead, Lewendowski found himself in the jaws of a loan shark. Safe Harbour referred Lewendowski to a second company, Silverstone Lending, which used illegal fees and usurious interest to take away the home, an action Lewendowski called cold-blooded.

  • On Friday [October 12], Lewendowski and other victims struck back, filing a $40-million federal lawsuit against 18 individuals and companies, including Safe Harbour, Silverstone Lending and Peter C. Porcelli, a Clearwater businessman who operated the lending business despite being banned by a federal judge in 2004 from offering such credit products to consumers.

  • The lawsuit, filed in Tampa by attorney Michael A. Wasylik, tracks a St. Petersburg Times investigation of the questionable loan operation published in May. The suit accuses Porcelli and his associates of engaging in racketeering by making false promises through the mail in order to obtain borrowers' homes through fraud.

  • The suit alleges that Porcelli and others arranged bailout loans with usurious rates as high as 500 percent, violated truth-in-lending laws and charged illegal brokerage or servicing fees.

  • The plaintiffs seek millions in actual and punitive damages, an injunction declaring usurious loan deals unenforceable and an order restoring ownership of homes to the original owners.
For more, see Victims strike back at shady lenders (The companies promised foreclosure protection only to wind up taking the homes themselves).

For a prior St. Petersburg Times story on Peter Porcelli, who currently awaits an October 29 felony sentencing on an unrelated scam, see Facing new fields of fraud (Guilty in one scam, an Oldsmar man is scrutinized in a high-risk loan scheme that preyed on those facing foreclosure) (5-20-07).

Editor's Note: The typical equity stripping, foreclosure rescue transaction generally involves a home sale by a financially hard-up homeowner, coupled with a leaseback of the home, and an option to repurchase it at a future date. According to the lawsuit (paragraphs 46 through 54) filed in this case, however:
  1. the money advanced by the foreclosure rescue operator actually took the form of a loan, and not a home sale with leaseback and repurchase option,
  2. while most homeowners needed only a few thousand dollars to avoid foreclosure, loans were arranged that incorporated finance charges, origination fees, and underwriting fees that doubled or tripled the size of the loan,
  3. the charges and fees were received by the operators and the others involved in the alleged conspiracy,
  4. in some cases, the loans arranged had effective annual interest rates of 500% or greater. In all cases, they exceeded the 45% threshold set in Fla. Stat. Chapter 687 for criminal usury,
  5. in addition to the criminally usurious interest rates, the loans incorporated a purchase option for the benefit of the lender, effective upon the default of the borrower; the option purchase price was calculated by subtracting the current equity in the home from the estimated value of the home, thereby allowing the purported option purchaser to obtain all the equity in the home by simply paying off any liens senior to its own, with little or no money going to the homeowner. Because of the criminal usury, the homeowners found it difficult or impossible to avoid default, thereby triggering the lender’s option and effectively forfeiting all of the homeowner’s equity. One member of the alleged conspiracy was an attorney who aided the operators in enforcing these purchase options by filing lawsuits for specific performance in state court against the financially strapped homeowners.

To view a copy of the lawsuit, see Heise, et al. vs. Porcelli, et al. (U.S. District Court, M.D. Fla.).

Representing the homeowners is Michael Alex Wasylik, Esq., with the law firm Ricardo & Wasylik PL, Dade City, Florida.

For story update, see Scam artist wants a break (Peter Porcelli says he deserves leniency for his cooperation).

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.).

Federal Court Order Freezing Assets In Pennsylvania Mortgage Investment Program

As reported in earlier media reports and posts, a Pennsylvania Federal Court has issued an order freezing the assets of Wesley A. Snyder, who operated a self-described Equity Slide/Wrap-Around-Mortgage program, in which he is alleged to have scammed 800 investors out of millions of dollars. Snyder operated through companies named Image Masters and OPFM, Inc., among others.

To view the Federal Court documents recently filed in this case, see:

The temporary restraining order freezing Snyder's assets expires on November 2, 2007. A hearing in which the U.S. Attorney's office seeks to replace the temporary restraining order with a preliminary injunction is scheduled for October 30, 2007, at 1:30 pm.

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.

Chase Manhattan Participated In Builder Fraud, Says Lawsuit

The Morning Call (Allentown, Pennsylvania) reports:
  • The Chase Manhattan Mortgage Corp. helped create and implement a promotional program for a Pocono home builder that fraudulently qualified hundreds of unwitting customers for mortgages they couldn't afford, according to new claims filed in federal court as part of a lawsuit.

  • Chase also paid a $6,000 kickback to Tannersville developer Gene Percudani for every mortgage it approved under the program, the new documents allege, amounting to a $1.8 million payoff. Filed Wednesday by attorneys representing nearly 100 plaintiffs, the documents were in response to a motion by Chase to dismiss the suit. Chase has previously maintained it was duped by Perdudani.

  • ''We have direct evidence that the home builder told Chase what it was doing, and Chase approved it,'' said Mark Cukor, one of several attorneys representing the plaintiffs.

For more, see Chase Manhattan aided fraud, suit says (Papers in 2002 action say lender was part of Pocono builder's scam).

Reading Fine Print A Must When Bidding At Auction

In Miami, Florida, CBS4 TV reports, among other things, the story of one winning bidder who reportedly got a great deal on a brand new condo which, along with 19 others, was being unloaded at a real estate auction by a local builder, only to find out that the builder exercised a clause in the fine print forcing the buyer to close within ten days or forfeit his deposit. Fortunately for the buyer, who had been planning on financing his purchase, he reportedly was able to close on the sale, but believed that he got such a good deal that the builder, by exercising the clause in the purchase documents, was trying get out of the sale and screw him out of a $32,000 deposit in the process. The buyer warns to read all the fine print if your're thinking of bidding at these auctions. For more, see Not All Foreclosure Auctions Are What They Seem.

Go here to watch the CBS4 TV report, Read Fine Print If Going To A Foreclosure Auction.

Go here for other posts related to the Miami condo market problem.