Thursday, November 01, 2007

"Cash Back" Arrangement Being Used To Purchase Central Florida Condos; Deals Raising Eyebrows Among Local Real Estate Pros

In Sarasota, Florida, the Sarasota Herald-Tribune reports:
  • As condo owners across the state bemoan a downward slide in values, an unusual situation is taking place at the Bermuda on Osprey condominium complex near downtown Sarasota. A group of Californians -- two of whom were arrested in March on charges of running a brothel in the Anaheim area -- have been snapping up units at prices that are hundreds of thousands of dollars higher than those paid during the boom. The buyers, led by John Edward Couch of San Clemente, say they will convert the 46-unit complex into a senior-living center complete with a luxurious clubhouse, communal dining room and limo service.

Reportedly, the California group has purchased 15 units out of the 46 units in the two-story walk-up building built in 1969 in transactions in which the complex owners claim to have received a little more than half of the stated price, with the balance (ie. the "cash back") being placed in an "amenity fund" controlled by the buyers to be used for future improvements. Representatives of the seller of the units claim that the amenity fund was clearly defined and disclosed to the mortgage lender on the closing statements so that there is nothing improper about the sales.

According to the story:

  • the entire complex was sold in March, 2005 for about $109,000 per unit to a tax felon now awaiting extradition from Italy on money laundering charges connected to a cocaine deal,
  • the complex was then resold nine months later to Warren Hickernell, a condo converter, for about $222,000 per unit, involving a $9.4 million loan from the Bank of Commerce,
  • the Bank of Commerce loan subsequently went into default and was bought out of its interest in the complex by an investor with prior ties to Hickernell,
  • since November, 2006, the California group has purchased 15 units at an average price of about $566,000, with about $300,000 going to the complex owner and about $250,000 or so going into the amenity fund.

Not surprisingly, eyebrows are being raised among Sarasota-area real estate observers. For more, see In Sarasota, an unusual condo deal (Group snapping up units at prices higher than during boom).

Go here for a related story on this California "investor" group.

With One Company Forced Into Bankruptcy, Virginia Real Estate Operator Soliciting Investors For New Venture

In Hampton Roads, Virginia, The Virginian-Pilot reports:
  • Even as he faces questions about millions lost in his company's investment program, CM Development President Cary McEntee is soliciting investors for a new housing business. McEntee has been posting advertisements on online classified sites, ... . The ads are similar to the newspaper listings he used to find investors for CM Development, a housing company that owned or managed more than 250 properties before it collapsed amid allegations that McEntee had failed to pay mortgages, hadn't maintained the properties and had falsified at least one bank loan. Investors forced McEntee and CM Development into bankruptcy in July.
McEntee reportedly used what sounds like a "straw buyer - house flipping" arrangement in financing his last real estate venture; The Virginian-Pilot describes the arrangement as follows:
  • [CM] Development paid investors flat fees to gain access to their credit, and used the money to buy properties in all seven of Hampton Roads' largest cities. It sold the houses repeatedly among investors, taking out bigger loans each time. About three dozen people put their names on loans for the business, with the promise that CM Development would make mortgage payments, collect rents and maintain the houses.
McEntee is reportedly soliciting investors for his new venture, looking to hit them up for $175-200K a pop for a 1 year loan offering 12-13% interest, and is utilizing Craigslist web sites in Norfolk, Richmond, New York, Raleigh, Atlanta and Detroit to communicate his requests for new cash.

To date, there have been no reported criminal charges brought by law enforcement authorities or investigations by Virginia state regulators against McEntee for running potentially improper straw buyer, property flipping arrangements or unregistered promissory note programs. Based on a prior report, equity skimming was also involved in the mess currently in the bankruptcy court as rent was reportedly being collected and pocketed by CM Development without applying those funds to the mortgage payments, real estate taxes or water bills due on the homes titled in the straw buyers' names, thereby allowing homes to go into foreclosure. Many of the units were rented through the federal Section 8 program, which helps pay rent for low-income residents. Also, tenants have complained about their inability to get back their security deposits, according to a prior report.

For more, see Head of failed real estate firm trolling for investors.

For other Virginian-Pilot coverage on CM Development and Cary McEntee, see:
Go here for other posts on CM Development and Cary McEntee.

Cops Looking To Supplement Retirement Benefits Duped Into Real Estate Flipping Scam, Says Lawsuit

In South Bend, Indiana, the South Bend Tribune reports:
  • A local real estate investor and his son, already fighting separate mortgage fraud lawsuits from African immigrants, face a new suit filed by three South Bend police officers and a former officer. The officers, Jack Stilp, James Aters, Kris Hinton and James Turnbo III, say they were looking for investment income to supplement their pensions when they decided to buy rental properties through Michael Sheneman and his son, Jeremie Sheneman, in 2003 and 2004. Instead, two of the men have filed bankruptcy.

  • Months after buying the properties, many in the same blighted neighborhoods the officers patrol on midnight shift, the officers say they learned some alarming things: The properties were worth less than what they had paid for them; the houses were in worse shape than the Shenemans had led them to believe; and the tenants already living in the houses weren't actual tenants, but rather, were paid by Michael Sheneman to pose as good tenants until the transactions were complete, their lawsuit claims.

Reportedly, the officers' lawsuit accuses the Shenemans, their company, and six other individuals of violating Indiana's racketeering law. Attorney Charles Lahey has agreed to represent them on a contingency fee basis, meaning he will only charge them a fee if he recovers damages. Lahey told The Tribune he and a paralegal researched the case for about nine months before filing the suit. For more, see South Bend officers allege mortgage fraud in lawsuit (They say they were conned while trying to supplement their retirement benefits).

For an earlier story describing others who claim to have been scammed by the Shenemans in real estate investments scams, see Mortgage maelstrom (Scheme appears to target African immigrants).

More On Wesley Snyder, Image Masters, OPFM Scandal

For those following the the media reports on the "Equity Slide / Wrap Around Mortgage" investment scandal involving Wesley A. Snyder, Image Masters, OPFM and other entities, below are links to two recent media reports related to the story:

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.

Copper Thieves Wreaking Havoc On South Florida Apartment Complexes; Theft Of 28 Backflow Preventers Reported In Last Two Weeks

In Broward County, Florida, WPLG-TV Channel 10 reports:

  • Police in Lauderhill and neighboring Lauderdale Lakes said there have been more than two dozen thefts of devices used to direct the flow of water from city pipes into apartment buildings. A total of 28 backflow preventers have been stolen from apartment complexes during the past two weeks, including eight taken from various apartments in Lauderhill during the night Tuesday. Without the devices, residents are left without water in their buildings. It also causes flooding around the pipe. Police are unsure how the devices are being removed, but they do have a few ideas as to why. "Two theories: One, they could be reselling the preventers for plumbing, maybe new construction or retrofitting, whatever projects they might be working on, but more than likely they're probably selling the metal because they're made of copper," said Lauderhill police Lt. Rick Rocco. The cost to replace the backflow preventers is between $150 and $400.

Source: Thieves Steal Water Devices From Apartments (28 Backflow Preventers Stolen In Past 2 Weeks).

Go here for WPLG-TV Channel 10 video report.

See also:

Go here for other stories on copper theft. copper metal theft zebra

Vacant Homes Make Up One-Third Of "For Sale" Residential Market In Metro Phoenix

In Phoenix, Arizona, The Arizona Republic reports:
  • At least one out of every three homes for sale across metropolitan Phoenix is empty, and owners are motivated to cut prices to sell. Many empty houses are owned by investors who can't find renters and need to sell. Others are owned by people who moved to other houses in the Valley or elsewhere and can't afford two mortgages. Some empty homes for sale are new houses that home builders are offering deals on. And a growing number of vacant houses are owned by lenders that foreclosed on the properties and want to cut their losses by selling them quickly and often cheaply. About 36 percent of the Valley homes posted on the Arizona Regional Multiple Listing Service are empty. That's almost 20,000 of the record 55,000 houses for sale now.

(Hopefully, the copper thieves and the squatters don't catch wind of all these vacant houses.)

For more, see Of Valley homes for sale, a third sit empty (20,000 vacant homes pushing prices lower).

Wednesday, October 31, 2007

Homeowner Who Never Missed A Payment Threatened With Foreclosure; Another Mortgage Lender Screw-Up (Forced-Placed Insurance) To Blame

In a letter to The Miami Herald Action Line, a homeowner writes:
  • Even though we've never missed -- or been late with -- a payment on our $78,000 mortgage, my wife and I are being threatened with default and foreclosure.
    The loan holder, EverHome, in Jacksonville, isn't telling us why; it simply says we owe $1,695.33. As best we can tell, EverHome is claiming that the money is owed for an escrow account. In August, it refused our September payment and, instead, sent us a default notice. Although we've called and sent it certified mail, it isn't responding. [...] If we can't sort this mess out, we could lose our home. Can Action Line assist us?

Action Line's response:

  • We can; your home is safe. We asked EverHome to investigate; within a couple of hours of our e-mailing it, someone from its head office called you. ''EverHome is still working through the details,'' spokeswoman Kari Scott said via e-mail a few days later. EverHome had to go back to Crown Bank to figure things out.

  • What it learned is that Crown Bank had forced-placed you with a flood insurance company. You never paid the premium because, first, Crown Bank never told you about it, and second, you don't live in a flood zone and had declined such insurance when you took out the loan. (Even if you had requested the insurance, it should have cost a fraction of $1,600.) When EverHome assumed the loan, it also assumed the nonexistent debt. In the end, it took EverHome less than two weeks to sort out what never should have happened in the first place.
Source: Mortgage payments never late, but foreclosure still looms (if link expires, try here).

Scammer Gets 13 Years In Credit Card Scam; Civil Suit & Criminal Investigation In Unrelated Alleged Foreclosure Rescue Scam Continues

The St. Petersburg Times reports:
  • Peter J. Porcelli, who made a fortune with direct mail and telemarketing and took his Tampa Bay Smokers fast-pitch softball team to two world championships, was sentenced to 13 years in prison Monday for his part in a credit card scam that victimized tens of thousands of credit-poor consumers nationwide. Porcelli, 55, of Oldsmar [, Florida] was also ordered by a federal judge in East St. Louis, Ill., to pay restitution of $11,886,317. [...] The government sought a sentence of at least 15 years, 8 months, but Porcelli was given leniency for his cooperation with a federal grand jury investigation into his lending operation in the Tampa Bay area and for his testimony against executives who ran part of the credit card fraud in Utah and Nevada.

[...]

  • Investigators are now looking at another possible credit scam that targeted down-on-their-luck consumers. U.S. postal inspectors and the Florida Department of Financial Services are investigating a nonprofit group called Safe Harbour Foundation and a mortgage company called Silverstone Lending that Porcelli operated out of the same Clearwater office. The nonprofit sought out desperate homeowners facing foreclosure and referred them to Silverstone for high-risk, short-term loans that appear to violate state laws.

  • Two weeks ago, a group of homeowners who say they were victimized by the predatory lending operation filed a $40-million federal lawsuit against Porcelli, his companies and associates, claiming they were duped by the nonprofit's misrepresentations into signing for bailout loans with illegal fees and interest rates as high as 500 percent.

For more, see Judge sends $12-million message (That's the restitution an Oldsmar man must pay for a credit scam, plus 13 years in prison).

Go here for other posts on Peter Porcelli.

Oakland Investors Return Foreclosed Home To Parkinson's Disabled Homeowner

In Oakland, California, the San Francisco Chronicle reports:
  • An Oakland home lost in a foreclosure auction this month is being returned to the family that bought the house 15 years ago. The lender who foreclosed on the home and the investors who bought it said they will give back the house because they were moved by the homeowner's plight as reported in The Chronicle and by the reaction of more than 200 Chronicle readers. Hong Zhang Lin, 44, who is disabled from Parkinson's disease and speaks only Chinese, was up to date with his primary mortgage but evidently fell behind on a $135 monthly payment for a $20,000 home equity loan. Countrywide Financial, the lender on both loans, sold the Fruitvale district bungalow at a foreclosure auction earlier this month. Lin, who owed only $94,000 on a home worth $500,000, was faced with losing his equity as well as his home.

  • Lin's family said he had not realized he was behind on his loan payments, did not know about the foreclosure and was shocked when he received an eviction order from the new owners - the only Chinese-language notice he received about the sale. Countrywide said it had followed standard procedures of calling and sending letters about the missed payments and foreclosure sale. On Tuesday, Countrywide and the foreclosure investors who bought the house said they will unwind the sale, returning the house to the Lin family. They said pressure from the media - and Chronicle readers who responded online to an article Saturday about the situation - helped inspire the solution.

Reportedly, after reviewing the media coverage in The Chronicle and on KGO-TV, the investors who bought the home at foreclosure decided to return the house for the $190,300 they had paid plus expenses and a small profit. Countrywide will refund the companies' money and pay for the expenses and profit. For more, see Foreclosed Oakland home returned to family.

For the original San Francisco Chronicle story, see Face of foreclosure crisis - Chinese-speaking Parkinson's sufferer.

Housing Authority Forcing Doctor To Sell Home; Her "Affluence" Violates Deed Restrictions

In Aspen, Colorado, The Aspen Times reports:
  • An Aspen doctor will appeal a recent court order to move out and sell her Ritz-Carlton Club affordable housing unit, her attorney said [last week]. The appeal comes after [a recent] decision by 9th Judicial District Judge Daniel Petre, who ruled in favor of plaintiff Aspen-Pitkin County Housing Authority. The ruling states that Dr. Amanda Tucker must sell her deed-restricted unit by Nov. 9. The Housing Authority sued Tucker in March 2006 in Pitkin County District Court, claiming that she didn’t meet the criteria to own the cut-rate housing. All the while, Tucker has continued to live at the townhouse, which she bought for $179,000 at a foreclosure auction in 2005.
The deed restrictions for the affordable housing unit bought by the doctor puts a $91,000 cap on yearly earnings for owners with two dependents. Additionally, their net assets cannot exceed $150,000. For more, see Doc fights to keep housing unit (Appeal expected in eviction case).

County Trust Fund Established To Fight Mortgage Fraud, Despite DA's Claim That Local Mortgage Fraud Is Non-Existent

In Bakersfield, California, CBS 29 / FOX 58 reports:
  • Concerned that the continuing rise of foreclosures in Kern County could be fraud related, [the County Board of] Supervisors unanimously adopted a resolution establishing a trust fund to investigate and prosecute real estate fraud. The plan calls for imposing a $2 fee on certain public real estate filingswith the County Recorder's office. It is expected it would raise between $230,000 and $280,000 a year.

A mortgage fraud battle in Kern County appears to be currently fought, not by local law enforcement against the bad guys, but by State Senator Dean Florez and local real estate appraiser Gary Crabtree (who say that local mortgage fraud is running rampant) against Kern County District Attorney Ed Jagels (who believes local mortgage fraud is practically non-existent). While Jagels is reported to be in favor of establishing the trust fund from which money can be drawn as fraud cases are investigated and filed, he recently expressed his position against forming a specialized real estate fraud-fighting unit within his office, reportedly saying "There is nothing more poisonous to morale [among prosecutors] than having what is in effect a grant-funded unit with nothing to do." For more, see County creates trust fund to crack down on real estate fraud.

Go here for other posts on this story.

Cleveland-Area Cops Welcome Training In Mortgage Fraud Investigations

Buried in a recent article in The Cleveland Plain Dealer was this blurb on local law enforcement receiving training in mortgage fraud investigations:
  • Mortgage fraud and related crimes have run rampant in the Cleveland area and fed the region's foreclosure mess. Federal, state and local investigators have launched a host of joint investigations. Solon [, Ohio] police, who have become schooled in the subject, are checking into as many as 50 possible cases, said Lt. Christopher Viland, head of the detective bureau.

  • Other police departments are still getting up to speed, so the Cuyahoga County prosecutor's office and state attorney general's office conducted a seminar for officers, city prosecutors and other officials Friday at the Main Library in Cleveland.

  • Shaker Heights Police Chief Walter Ugrinic welcomes the task force's help. "This is a new world for police," Ugrinic said as he left the seminar. "If we are really going to go after these, we need people who are trained to spot that stuff."

Source: Solon builder leaving construction business due to mortgage fraud connections (Admits similar schemes involving 38 properties).

Tuesday, October 30, 2007

Alleged Bangladeshi Scam Artist Cons Countrymen

In New York City, The New York Times reports on how a Bangladeshi immigrant operating a Jackson Heights, Queens mortgage company allegedly scammed his fellow countrymen, many of whom on financially unstable footing, in real estate investment and mortgage scams. Milton was recently arraigned in Queens on several counts, including identity theft, scheming to defraud and grand larceny involving at least four people. Prosecutors also charged Nira Niru, another Bangladeshi immigrant, with helping Mr. Milton in his activities, at the Jackson Heights mortgage office. An excerpt from the story:
  • Since the initial complaint against Mr. Milton and Ms. Niru, about 30 people, most of them Bangladeshi, have come forward to accuse Mr. Milton of defrauding them, according to Richard A. Brown, the Queens district attorney. Prosecutors say that they are not surprised and that the case underscores an all-too-common trend, of immigrants who prey on their own. “I think it is indeed prevalent,” Mr. Brown said. “I think it’s a case of the victims trusting individuals who share the same backgrounds and the same ethnicity as they do. These are people that they feel comfortable with.” [...] The latest prosecution follows two other cases in which people from Bangladesh have been accused by prosecutors in Queens of stealing from their countrymen, for whom Jackson Heights, with its many Bangladeshi stores and restaurants, is a cultural center.

For more, see Bangladeshis in Queens Say Their Trust in a Countryman Cost Them.

Go here for other posts on Jacob Milton.

Metropolitan Grapevine Now $300M In Debt, Operated Pyramid Scheme, Says Maryland Judge

The Free Lance-Star reports:
  • Investors hoping Metropolitan Grapevine would soon resume paying their mortgages had those hopes crushed yesterday. A Prince Georges County judge said the company, which has an office in Spotsylvania County, was operating a pyramid scheme and is $300 million in debt. In his opinion, Circuit Judge Thomas P. Smith also said that Metropolitan Grapevine President Andrew Williams, his company and a subsidiary, POS Dream Homes LLC, both of which are based in Laurel, Md., were operating an unregistered promissory-note investment program under the guise of a mortgage payment plan.

For more, see Little hope for Dream Homes' buyers (Metropolitan Grapevine was running a pyramid scheme, according to a Maryland judge).

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

South Florida Feds Charge Trio In Straw Buyer Mortgage Fraud Scheme

The U.S. Attorney's Office in Miami, Florida announced last week that Hugo Rodriguez, 52, Ronald Gordan Lichte, 65, Connie Marie Cullifer, 58, and John C. Kelly, 67 were charged for their alleged participation in a multi-million dollar mortgage fraud conspiracy. Defendant Rodriguez is a Miami real estate investor; Lichte (licensed mortgage broker), Cullifer (Lichte's loan processor), and Kelly (a straw buyer) are all from Tampa. According to a press release:
  • According to the charges, the defendants were involved in a scheme in which Rodriguez would locate luxury condominiums and residential properties that were available for purchase. Rodriguez and Lichte would then recruit and pay straw buyers, including defendant Kelly, to use their names, credit histories, and signatures on mortgage loan documents to obtain financing to purchase the properties. Rodriguez, Lichte and Cullifer would then prepare fraudulent mortgage loan applications for the straw buyers. [...] The applications also included HUD-1 settlement statements that falsely stated the straw buyers were using their own money to cover the closings. In fact, however, the straw buyers were not using their own funds to cover the closing.

For more, see U.S. Attorney's Press Release.

See also, Local investor charged in mortgage fraud (South Florida Business Journal).

Cleveland-Area Builder Cops Plea In Mortgage Fraud; Admits Participation In Scam Involving 38 Homes; Agrees To Leave Construction Business

In Cuyahoga County, Ohio, The Cleveland Plain Dealer reports:
  • A Solon builder who has been tied to mortgage fraud has agreed to get out of the construction business as part of his punishment. Edward Emery Jr. pleaded guilty Thursday to submitting a false loan application for a woman who bought a $490,000 home on Sedge Circle in Solon that he built. Emery also admitted to similar schemes involving 37 homes that he built in Solon and Glenwillow.

  • Eloise Anderson of Richmond Heights pleaded guilty to using bogus job and income information to buy the Solon house, two houses in Cleveland and another house in Pepper Pike -- closing more than $1.3 million in deals over a five-month span in 2005. Emery was not connected to Anderson's other homes, Assistant Prosecutor Michael Jackson said. [...] She planned to quickly dispose of the homes under rent-to-own deals, Jackson said.

A title company owner, a mortgage broker and two officials from another mortgage company also face charges in the case. For more, see Solon builder leaving construction business due to mortgage fraud connections (Admits similar schemes involving 38 properties).

Atlanta Man Gets 15+ Years In Federal Pen; Bilked Lenders Out Of $15M

The Atlanta Business Chronicle reports that Jeffery Alan Teague, also known as Jeffrey Allen Bryant, was sentenced Oct. 26 in an Atlanta, Georgia Federal Court to 15 years and eight months in jail and was ordered to pay $7.8 million in restitution for his role in two builder-based mortgage fraud schemes that bilked lenders out of $15 million. According to the story:
  • From 1999 to 2001, [Teague], using the name Jeffrey Alan Bryant and operating as the builder/seller Quantum Builders and Premium Property Management, defrauded mortgage lenders by obtaining more than $10 million in loans to buy non-existent and incomplete houses in Rockdale County from Bryant/Quantum Builders. The loans were obtained in the names of unqualified straw borrowers, using fraudulent appraisals with photographs of completed houses and false Certificates of Occupancy provided by Teague. After investigators found out about the scheme, Teague moved to Maryland.

  • Teague returned to Atlanta in 2006, using the name "Jeffery Alan Teague" and The Pacific Group Inc. doing business as Value Homes Ltd., and again began to arrange mortgage loans for the purchase of incomplete houses, this time in Forsyth County. Teague secured the loans from Teague/Value Homes in the names of California, New York, and Florida "investors" by providing false Certificates of Occupancy stating the houses securing the loans were "completed to code" and "suitable for occupancy," supported by fraudulent appraisals containing photographs of completed houses. Later in 2006, Teague also collected "investor" money for property he did not own in subdivisions in Fayette and Fulton counties.

For more, see Teague gets jail time for mortgage fraud.

Go here for U.S. Attorney Press Release - Teague Sentenced To Federal Prison For Sale Of Non-Existent/Partial Houses In Two Counties.

New Form Of 'Foreclosure Stripping' Scam Rearing Its Head?

KGET-TV Channel 17 in Bakersfield, California reports:

  • There's a new problem with real estate foreclosures as some residents have resorted to stripping everything from appliances to door-knobs from foreclosed homes before the houses go back to the bank.

  • A neighbor said she took digital pictures on Labor Day of a male trio backing up a red truck into the home's driveway and securing a $4600-Viking stove to a flatbed trailer. [T]he lender took [the home] back two days after the pictures were taken. [...] The agent now trying to sell the home said more than $20,000 in property has been taken.

For more, see Taking everything but the kitchen sink from foreclosed homes.

Go here to view the KGET-TV Channel 17 video report.

For a story update, see No criminal charges in case of stolen appliances (Last week, 17 News told you about a police crime report filed regarding appliances taken from a home once owned by Crisp and Cole real estate agent Jeriel Salinas. Police have since determined it was a civil matter and will not be pursuing criminal charges. The current real estate listing agent said a $4,600-Viking stove was taken from the home, along with a microwave and dishwasher.).

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

For a story on a homeowner in foreclosure being criminally charged for "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, see Homeowner In Foreclosure Charged For Trashing House Days Before Public Auction (the foreclosing mortgage lender held a security interest in the stolen items, according to the arrest warrant application).

Editor's Note: Assuming a home mortgage contains a standard "assignment of rent" provision, a mortgage lender likewise holds a security interest in any rent that may be collected from a tenant and pocketed by a landlord in foreclosure. A landlord pocketing rent in this manner without applying the money to the mortgage loan (ie. equity skimming or rent skimming) could potentially be also subject to criminal charges for theft of a security interest.

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

Florida Bar Expresses Concern About Increases In Title Closing Attorney Involvement In Mortgage Fraud

In Miami, Florida, the South Florida Daily Business Review reports:
  • The Florida Bar has joined the fight against mortgage fraud in South Florida. “There’s no doubt there are more instances of title attorneys being involved in mortgage fraud,” said William Mulligan, Bar counsel for Miami-Dade and Monroe counties. “Those frequently are situations where they have a title company or have a nonlawyer working for them doing the closings.”

For more, see Mortgage Fraud (Bar confronts an expanding crisis).

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.

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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.