Wednesday, November 28, 2007

Businesses Cleaning Up In Foreclosure "Clean-Up" Industry

In California, The San Bernardino County Sun reports:
  • Foreclosed homes all over the Inland Empire are turning into what Lisa Carvalho calls "trash-outs" - wooden and stucco carcasses with piles of junk left behind by former tenants. [...] It's partially Carvalho's job to get junk hauled out of these abandoned homes. [...] The company, among others, has its hands full cleaning out foreclosures in the San Bernardino and Ontario areas. Sometimes her workers stumble across gems - like prized computer parts. But it's been a potpourri of things, such as cars, computer monitors, stoves and washing machines.

For more, see Vacant houses: picking up the pieces (Business booms in collecting items left by residents hit by foreclosure).

Countrywide Subpoenaed; Possible False Foreclosure Claims Against Homeowners Being Investigated

Buried in an article in today's South Florida Sun-Sentinel is the following blurb:
  • The U.S. Trustee, the federal agency monitoring the bankruptcy courts, has subpoenaed Countrywide Financial, the nation's largest mortgage lender and loan servicer, to determine whether the company's conduct in two foreclosures in South Florida represented abuses of the bankruptcy system.

  • One of the inquiries involves Manuel Del Castillo and Maria E. Pena, Miami borrowers who filed for protection last May under Chapter 13 of the bankruptcy code. In July, Countrywide Home Loans filed a claim, saying that the borrowers owed almost $279,000. In the second case, the trustee has asked for documents relating to Countrywide's claim for almost $101,000 against William and Joyce Chadwick, borrowers in Boca Raton, who filed for Chapter 13 protection in October 2005. The borrowers in both cases objected to Countrywide's claims of what was owed.

Source: Business Briefing (4th thru 6th paragraph) (11-28-07).

See also, Foreclosure Charges by Lender Investigated (New York Times - 11-28-07) (may require subscription; if no subscription, try here).

Go here, Go here and Go here for more on recent Countrywide problems with consumers.

For more on allegedly false claims being made by home lenders and mortgage servicing companies both in bankruptcy and non-bankruptcy proceedings, see:

Go here , go here , and go here for posts on questionable mortgage servicing practices. questionable mortgage servicing practices tactics yak

39 Michigan Homeowners Lose Homes In Equity Stripping / Home Improvement Loan Scam

In Detroit, Michigan, The Detroit News reports:

  • The deceptions of Financial One LLC, a Delaware company, began with its name and didn't end until at least 39 people had lost their homes. Financial One wasn't in Delaware -- it was incorporated in Michigan. Those who walked through its doors in an office building in Lathrup Village looking for home improvement loans sometimes ended up homeless, with their equity stripped and their houses in foreclosure, according to state documents detailing the mortgage scheme.

***

  • The state issued a rare summary suspension of Financial One's license in February, citing "an imminent threat to the public welfare." Financial One's president, Johnnie Denham Jr., could not be located for comment this month by The Detroit News. An affidavit filed by state mortgage examiner Elliott Purty in support of the suspension of Financial One's license lists 39 homes -- 37 in Detroit -- where Financial One stripped $968,775 in equity out of the properties. Twenty-five of the homes are in foreclosure. "It sounds like they were making a living stealing people's houses," Day said. "They put together a group of rip-off artists to prey on people."

This story is an example that a homeowner need not be facing foreclosure to be victimized by an equity stripping scam. For more, see Equity skimming plagues region.

Editor's Note: In this case, there has been no reported prosecution of the scam artists. In a similar equity stripping / home improvement loan scam in which racketeering, conspiracy to commit racketeering, mortgage fraud, and grand theft charges were brought, see Florida Man Cops Plea In Combo Home Improvement Scam & Mortgage Fraud. foreclosure rescue

Snyder Stiffs Bankruptcy Trustee In Wraparound Mortgage Scam

In Berks County, Pennsylvania, Lancaster Online reports:
  • About 300 customers victimized by Wesley A. Snyder's multimillion-dollar mortgage scam were disappointed Tuesday when the broker failed to show up at a bankruptcy hearing in Berks County. Snyder, who is due in federal court in Harrisburg today to plead guilty to one count of mail fraud, was required to attend the meeting of creditors as part of the Sept. 18 bankruptcy filing of six of his companies, including OPFM Inc., Personal Financial Management and Image Masters. [...] Snyder's criminal attorney, Emmanuel H. Dimitriou, advised his client not to appear at Tuesday's hearing, held in the ballroom at the Inn at Reading.

***

  • Federal prosecutors have said Snyder sold "wraparound" mortgages to 811 customers over the past two decades, but forwarded $26 million less than he collected to the banks and other lenders that supplied the financing.

For more, see Snyder fails to show at hearing.

Go here for an illustration of how the refi / wraparound mortgage scam works.

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

Ex Florida Cop Going After Bogus Home Improvement Contractors

In Hernando County, Florida, the St. Petersburg Times has a story on retired Pinellas County, FL Sheriff's deputy Tim Greene, who is now bringing his cop mentality to his current job as a Field Investigator for the Hernando County Building Department and whose job description includes going after crooked, unlicensed home repair and improvement contractors. Excerpts from the story:
  • For the past 21/2 years, he's worked to catch fraudulent contractors who do business in the county without a proper license. "It's a mentality," he said. "You've got to have a mentality that people shouldn't be taken advantage of because they are young or old. What these guys are doing is wrong and illegal."

Among other things, Greene points out that, under state law, the contractor's license number needs to be on vehicles and all advertising, including business cards and phone book ads. He cautions against being confused between a contractor license number and an occupational license number, which doesn't count.

In certain cases, ex-cop Greene works directly with fraud detectives across the street at the Sheriff's Office. For more, see In pursuit of handy con men (The growing problem of unlicensed contractors has county investigators trying to root out the frauds).

Tuesday, November 27, 2007

Tampa Cops Arrest Suspect For Grand Theft & Organized Fraud In Alleged Foreclosure Rescue Scam

In a story that I apparently missed (and one that I'll file in the "better late than never" department), an August 4, 2007 article in The Tampa Tribune reported a story on a now defunct, Central Florida based foreclosure rescue operator known as 4 Solutions, its director Jose Oliveri, and a U.S. Secret Service investigation into the company for possible rescue scams that the Oliveri and the company may have engaged in.

In addition to this investigation, however, (and this is the part I missed) it appears that the local Tampa city cops jumped into the fray with their own foreclosure rescue criminal investigation, according to this excerpt buried in the article:
  • Oliveri's wife, Carmen Maria Oliveri, was arrested by Tampa police June 7 on charges of 'grand theft of $100,000 or more' and 'organized fraud over $50,000.' According to the arrest report, in August 2005, Carmen Maria Oliveri 'entered into a scheme to defraud' a homeowner. The report states that 'Jose and Carmen presented terms of a loan without disclosing to the victim that he was signing over the rights to the property' to 4 Solutions. The company sold the property without the person's knowledge. On June 7, the day of her arrest, Oliveri accepted a check for $2,400 from 'the victim,' saying they could buy back the property if they paid $30,000 and could get financing, according to the report.

For the article, see Foreclosure Prevention Company Is Under Investigation.

Go here for other posts on 4Solutions.

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.).

Counterfeit Title Insurance Company Checks Being Used In International Sweepstakes Fraud

According to a Stewart Information Services Corp. press release from Houston, Texas:
  • An international sweepstakes fraud is using counterfeit checks bearing the name of Stewart Title of Montgomery County. “Winners” are receiving a letter with a check and told they will win $62,500 if they wire $3,000 to a Canadian account for “international clearance fees.” “This sweepstakes offer is fraudulent,” said Michael B. Skalka, president, Stewart Title Guaranty Co. “Stewart has notified the appropriate authorities including the bank, and none of these checks will be honored if presented for payment. Stewart is cooperating with all criminal investigations regarding this matter.”
For more, see Counterfeit Checks Using Stewart Title’s Name Being Used in International Sweepstakes Fraud.

CBS2 Undercover Investigation Catches Foreclosure Rescue Operators In The Act

In Los Angeles, California, CBS2 investigative reporter David Goldstein conducted an undercover investigation that illustrates some of the problems faced by financially strapped homeowners trying to save their homes from foreclosure. Using an actual home in Whittier that was in foreclosure, hidden cameras, and an actress hired to play the part of the homeowner in trouble, a number of operators were recorded giving their pitch. Among those caught on video was a convicted scammer who, in addition to having a prior Federal conviction for making false statements on a mortgage loan application, was currently on probation for a state grand theft charge in 2005 in a case in which he attempted to defraud someone else out of their home. The fact that the terms of his probation prohibited him from working in the foreclosure business apparently did not deter him from plying his trade.

To view the video report, see Predators Prey On Homeowners Facing Foreclosure. For a transcript of the video, see David Goldstein Investigates Real Estate Fraud.

For an earlier undercover foreclosure rescue investigation by CBS2's David Goldstein (in April, 2007) caught on video, see Homeowners Targeted By Foreclosure Agents.

For the laws regulating the conduct of foreclosure rescue operators in California, see the California Mortgage Foreclosure Consultants Act (Section 2945 - Section 2945.11, California Civil Code) and the California Home Equity Sales Contract Act (Section 1695 - Section 1695.17, California Civil Code.

Fraudulently Obtained Mortgages Estimated At $80M+ In San Diego-Area Fraud Operation

In San Diego, California, Voiceof SanDiego reports:
  • In one of the first local cases in a national crackdown on mortgage and real estate fraud, four people connected with a San Marcos realty office have pleaded guilty to charges that they went to great and illegal lengths to secure mortgages for financially unqualified consumers, thereby pocketing more than $1 million in fraudulent commissions. [...] Alejandro and Emilio Lopez, two owners of Century 21 Eldorado in San Marcos, headed the "Lopez Team" of loan officers, loan processors and real estate agents. Ravinderjit Singh Sekhon was a loan officer there and Linda Velasquez was the office manager, acting as translator for Sekhon with Spanish-speaking clients. All four pleaded guilty earlier this month to charges related to the scheme.

***

  • With more than 200 clients wrapped up in this scheme, at $400,000 a loan, the fraudulent loans could total more than $80 million.

For more, see Mortgage Fraud Hits the Courts.

Central Florida Cash Back, Above Asking Price Deals Arouse Suspicions

In Lakewood Ranch, Florida the Sarasota Herald-Tribune reports:
  • The same group of colorful Californians who bought 15 units at the Bermuda on Osprey condo complex in Sarasota at inflated prices attempted at least three similar deals in Lakewood Ranch. Shane and Shawn Unruh approached homeowners around the River Club area in the summer of 2006. In each case, the Unruhs persuaded sellers to participate in deals paying anywhere from $95,000 to $150,000 above asking prices on the understanding that the Unruhs -- the buyers -- would get the extra money back at closing.

For more, see Manatee home deals raised eyebrows.

For more on this California "investor" group, see "Cash Back" Arrangement Being Used To Purchase Central Florida Condos; Deals Raising Eyebrows Among Local Real Estate Pros.

Foreclosure Rescue Scam Leaves Homeowner & Straw Buyer Holding The Bag

The Boston Globe reports on a foreclosure rescue operator called National Foreclosure Centers, who has left one financially strapped Massachusetts homeowner in more trouble due to an equity stripping deal, and an unwitting straw buyer in Florida holding title to five properties that are now in foreclosure. According to the story:
  • The company was run by Eric L. Turner, a Florida resident who had created a string of similar firms beginning in 2004, Florida incorporation records show: Foreclosure Solution Group, Saving the American Dream Inc., Home Savers USA Corp. and, in 2006, National Foreclosure Centers. Turner could not be reached for comment. The phone number for National Foreclosure Centers is no longer in service. The website directs visitors to a similar site for a new company called United Foreclosure Networks. People answering the phone at United Foreclosure said he worked there, but Turner did not return several messages left at the office or at his home in Plantation, Fla.

In April, the Massachusetts homeowner sued the Florida straw buyer, National Foreclosure, the closing agent, and the mortgage company that made the loan in the foreclosure rescue deal, accusing them of defrauding him out of his home and more than $100,000. The straw buyer has since returned legal title to the home to the homeowner, but the mortgage company still claims having a lien on the home. The lawsuit is continuing.

Turner, no stranger to trouble, was indicted in June on 16 counts of fraud in an unrelated case dating to 2001. He pleaded not guilty and currently awaits trial in a South Florida Federal court. In 2004, he settled civil charges in the matter brought by the Securities and Exchange Commission and agreed to pay more than $160,000 in penalties.

For more, see Default threat ignites scams (Firms prey on homeowners; A cautionary tale in Roxbury) (if link expires, try here).

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

Colorado Judge Uses Law To Legally "Swipe" Neighbors' Land

In Boulder, Colorado, The Denver Post reports:
  • Despite the surprise and outrage about a former Boulder County judge taking a neighbor's land through court maneuvers, there's nothing new about adverse possession — or even judges employing the law to net real estate.

***

  • "It's stealing with a law license instead of a gun," said Will Campbell, a Boulder resident and supporter of Susie and Don Kirlin. Former Boulder Judge Richard McLean and his wife, lawyer Edith Stevens, won one- third of the Kirlins' vacant land in south Boulder by using the law. McLean and Stevens argued that they had used part of the 4,700-square-foot lot to reach the garden and deck of their home virtually every day for 25 years. The Kirlins bought the land in 1984 and planned to build a retirement home there.

***

  • State Rep. Rob Witwer, R-Evergreen, and Sen. Ron Tupa, D-Boulder, are studying possible legislation to raise the bar to prove adverse possession. [...] "If you trespass for 18 minutes, you can be arrested," [Witwer] said. "If you knowingly trespass for 18 years, you can get the land for free. The law should not allow that to happen."

The article states that at least two other judges have also successfully pulled off similar legal maneuvers in years past. For more, see Land-seizure cases no rarity.

Go here for other posts on using the adverse possession legal mechanism to acquire title to property without having to pay for it. adverse possession alpha

Wisconsin Foreclosure Rescue Regulations Being Considered By State Legislature

In Wisconsin, an editorial in The Sheboygan Press highlights a few of the elements of the proposed Wisconsin state law intended to regulate foreclosure rescue, sale leaseback deals. In such deals, a homeowner facing foreclosure transfers title to a home to an investor, and then rents it back with an agreement to buy it back in the future. The investor provides the funds necessary to either pay off the existing mortgage, or at least catch up on the back payments, resulting in the cancellation of the foreclosure proceeding in court. While the Wisconsin legislature has yet to pass a law, foreclosure rescue legislation reportedly has bipartisan support. Currently, there are bills proposed both in the state Assembly and the state Senate. For more, see:

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.).

Monday, November 26, 2007

New Jersey Judge Relieved Of "Bench Duty" - Acted As Closing Attorney In Wide-Ranging Real Estate Fraud

In Garfield, New Jersey, the Herald News reports:
  • City Manager Thomas J. Duch has relieved Municipal Judge William C. Colacino Jr. of his responsibilities, after reports that Colacino was the closing attorney in a wide-ranging real estate fraud in Paterson. [...] Colacino has not been suspended but that could change if he is indicted, Duch said.

***

  • On Nov. 14, Mahwah real estate agent Michael Eliasof pleaded guilty to one count of conspiracy to commit money laundering. Eliasof oversaw an elaborate scheme between 2002 and 2005 to sell properties whose values were inflated to unqualified buyers. Colacino has not been named by federal prosecutors in court documents, but a review of mortgage applications and deeds by the Herald News showed that Colacino, who at one point had a private law practice, was the closing attorney on more than a dozen of those deals. [...] Last week, Colacino's assistant, Melanie Gebbia, pleaded guilty for failing to report to the Internal Revenue Service income she received in that same scheme.

For more, see Garfield removes municipal judge. See also, Garfield judge relieved of duties.

Go here for other posts on this ongoing story.

Go here for other posts on allegedly Naughty / Knuckleheaded Judges. naughty judges

Florida Couple Gets 4 Years For Stealing Land From The Dead

In Southwest Florida, The News-Press reports:
  • A Broward County couple convicted of stealing land from the dead in Lee, Charlotte and Collier counties will spend the next four years in federal prison. Howard and Sheila Henry fraudulently obtained between $200,000 and $400,000 in property from 2001 to 2005. They illegally acquired the property by forging documents and selling the land. The pair would use the Internet to find property with several years of unpaid taxes, then connect those properties to deceased people. [...] Both Henrys were convicted in federal court in Miami for charges in an unrelated real estate scheme and were sentenced late last year and early this year. They were both sentenced to less than four years and all sentences will run together.

For more, see Couple get 4 years for stealing land from dead.

Tampa-Area Real Estate Agent At Center Of Suspicious Transactions

In Tampa, Florida, the St. Petersburg Times reports a story of an anonymous letter accusing local real estate agent Lori Polin of contributing to the alleged mortgage fraud that has resulted in nine homes going into foreclosure. According to the story:
  • In a letter to Re/Max's Denver headquarters, the Pinellas Realtor Organization and many of her fellow agents, an anonymous sender claims Polin "artificially inflated" the prices of nine homes in Tampa and North Pinellas so buyers could get larger loans.

  • Most of the houses were mortgaged for far more than the actual sales price, with the buyer or a third party pocketing the difference. Except for well-documented renovations, such "cash-back-at-closing" transactions can be a sign of mortgage fraud. In one transaction, $109,000 went to a construction cleanup company although there is no evidence of any construction or cleanup up since the run-down Clearwater house sold last year.

  • That house and the others listed by the anonymous sender are all now in foreclosure proceedings, contributing to a Florida foreclosure rate that is the nation's third highest.
    "The buyers purchased multiple properties in short periods of time to avoid lenders detecting multiloan transactions and fraud," the letter charges. "Lori's contribution to this fraudulent activity has distorted property values and undermined neighborhoods."

For more, including reported details of several of the identified home sales which, on their face, doesn't paint Polin in a good light, see Unsigned letter accuses agent of mortgage fraud (Real estate agent says it may be a rival using smear tactics).

Cops "Foreclosure Evict" Right Family From Wrong Home

In Imperial, Missouri, the Suburban Journals of Greater St. Louis reports:
  • The Jefferson County Sheriff's Office is working to put a family they wrongly evicted back into their home. Ron and Sandy Page of Imperial came home Thursday to find all their belongings covered in tarps on their front lawn. Capt. Ralph Brown of the Jefferson County Sheriff's Office said the Pages had once owned the home deputies were supposed to go to, which was on the same road. "We had the right people, but the wrong address," he said. "They owned the property, but it went back to the bank. The bank wanted possession of the house."

***

  • When the sheriff's office realized the mistake, they worked quickly to get the Pages back into their home. "We hired a mover, put them up in a hotel, hired a cleaning crew and even bought them dinner," [Brown] said. Sandy Page said things were still "a little bit of a mess," but was satisfied the sheriff's office was doing everything possible to make amends.

For more, see Deputies carry out eviction order at wrong house.

NBC Nightly News On Renters Feeling The Mortgage Crunch

Last Wednesday night, the NBC Nightly News ran a report on the problems renters are facing when they unwittingly rent a place to live from a financially overextended landlord whose intent is to pocket the rent, stiff the mortgage holder out of its mortgage payments, and allow the property to go into foreclosure (referred to in some statutes as rent skimming or equity skimming). Two tenants are interviewed for the story: one is a grandmother that has already faced eviction on three separate occasions as a result of renting from three landlords who allowed their properties to go into foreclosure; the other is a family who reportedly got screwed over in a "rent-to-own" arrangement where the seller pocketed the rent without applying the funds to the mortgage payment.

To watch the news report, see Renters feeling mortgage crunch. NBC's Mike Taibbi reports from Minneapolis, Minnesota.

For other posts involving rent skimming and lease/option scams, see Tenants Unwittingly Renting Homes In Foreclosure I , II , III , and IV; and "Rent To Own" Scams I. equity skimming unwittingly gamma rent to own lease purchase option scams zebra

Sunday, November 25, 2007

Tips For Tenants To Avoid Hassles That Come When Renting From Landlords Facing Foreclosure

According to The Modesto Bee:
  • Being forced to move when a rental house is foreclosed on can disrupt renters' lives and prove costly. Housing and legal experts say there are steps renters can take to protect themselves.
For the protective steps recommended by the experts that renters can take (1) before you rent a home, (2) after you've rented a home, and (3) after foreclosure, see Tips for renters.

Note: Some of the information given in the story regarding the "notice to vacate" requirements is based on California law. Accordingly, that portion of the information may not apply to tenants outside California. Check the law of your home state for the applicable notice to vacate requirements. equity skimming unwittingly alpha beta gamma delta

Wall Street Journal On Tenants Facing Foreclosure Eviction

The Wall Street Journal reports:
  • As U.S. foreclosures soar, renters -- especially in small apartment buildings and single-family homes -- are paying a high price for their landlords' financial troubles. Across the U.S., thousands of people are being evicted.

***

  • Often, the small multifamily dwellings entering foreclosure are in older urban neighborhoods with a lower-income population. That's the same demographic, critics say, that was targeted by predatory lenders peddling mortgages with introductory "teaser" rates that reset to higher rates. "The biggest problem in this industry is that you could buy a three- or four-family home with no money down," said Anthony Rondeau, a vice president of Select Financial Mortgage Corp. in East Providence, R.I. "[Mortgage] brokers were shoving this through the system -- it didn't matter that I didn't do it, because someone else would."

For more, see Tenants Pay as Landlords Default (Foreclosures Void Leases, Bring Eviction Notices; Bigger-Building Benefit) (requires subscription; if no subscription, try here; then click link).

For posts related to tenant evictions due to foreclosure, see Tenants Unwittingly Renting Homes In Foreclosure I , II , III , and IV. equity skimming unwittingly gamma

Legal Services Agency "Inundated" With Tenants Facing Foreclosure Eviction

In Providence, Rhode Island, The Providence Journal recently ran a story on the problems local residents face when renting homes that end up in foreclosure. Among the problems is the stress being placed on a local legal services office by the increased demand of renters needing legal help and dealing with deteriorating pre-eviction living conditions:
  • The Rhode Island Legal Services office in Providence has been “inundated” with cases of tenants who are being evicted by banks involved in repossessing foreclosed houses, said Robert M. Sabel, the agency’s litigation director. “Before, it was an occasional case — once every four or five months,” Sabel said. “Now we’re seeing them daily.”
Some of the deteriorating pre-eviction living conditions for tenants caused by landlords in foreclosure are described as follows:
  • A landlord who stops paying the mortgage may fall behind on other bills. Then the faucets run dry and furnaces go cold.

For more, see Collateral damage.

For some information for Rhode Island tenants facing a foreclosure eviction, see Issues for renters facing foreclosure. equity skimming unwittingly gamma

Rent Skimming Problems In Minnesota

KTTC-TV (Rochester, Minnesota) reports on the local problems of financially overextended landlords pocketing tenant rentals while stiffing the mortgage holder out of its monthly mortgage payments:
  • Mona Hoeft with Olmsted County Housing and Redevelopment Authority says they receive tons of calls from families being tossed out on the streets including those receiving government subsidies. "Unfortunately there's not much a tenant can do other than move. There really is no protection for the tenant," says Hoeft. "It's frustrating for us to know we are paying money really for nothing. So the landlord can take that money we are paying them and use it for something besides paying the mortgage," says Hoeft.

For more, see Renters Rights. equity skimming unwittingly gamma

Tenants In Entire Building Forced Out Due To Rent-Skimming Landlord

In Rhode Island, a recent story by The Providence Journal describes the stress being placed on local social services agencies due to the increase in local residents facing financial struggles.

Among other accounts, the story tells of the actions of a local landlord that resulted in the displacement of all of his tenants (about nine rent-paying tenants) out of one building. In addition to milking the rent out of his building without paying the mortgage and the water bills, he allowed the property to fall into extreme disrepair, not to mention foreclosure. The tenants lost their water service and, shortly thereafter, local building inspectors deemed the building uninhabitable. The cops ended up coming by one day without notice and announced that the building had been condemned and ordered everyone to leave, giving them two hours to vacate the premises. The building is now locked and boarded up, awaiting further action by the city and a foreclosure sale by the mortgage holder - scheduled for December 7. For the story, see The worst of times?

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

Foreclosure Purchasers Liable For Refund Of Tenant Security Deposits In California

In California, The Modesto Bee reports on the story of a tenant in California who rented from a landlord facing foreclosure. After foreclosure, the tenant was forced to move, but was promised a refund of her security deposit by her now-former landlord. The landlord never refunded the money. According to the story, in California:
  • Civil Code Section 1950.5 states that the property's new owners "shall be jointly and severally liable with the landlord for repayment of the security" deposit. That means that if the previous owner/landlord doesn't follow the law and return the security deposit, then the new owners have to pay the tenant what is owed. In [this tenant's] case, that was $1,000.

After being contacted by The Bee, the foreclosing mortgage holder and now new owner sent the tenant a check for $1,000. For more, see New owners liable for refunding deposit. equity skimming unwittingly gamma

Some Tenants Victimized Multiple Times By Landlords Facing Foreclosure

In Northern California, The Modesto Bee reports on the problems many tenants are having with their landlords who are engaging in what some statutes call "equity skimming" (California law calls it "rent skimming"), the practice where financially overextended landlords rent out their property and pocket the rent collected from their tenants while stiffing the mortgage holder out of its monthly payments, thereby allowing the property to go into foreclosure:
  • It happened to Shari Torigian of Patterson three times in three years. Cheryl Vrba of Los Banos said it happened to her four times in four years. It is happening now to Alexis Grijalza of Modesto and her three children. Renters are being forced out of houses every day in the Northern San Joaquin Valley after homeowners default on mortgages and lenders foreclose. The result often is financial hardship for renters who had no clue their shelter was in jeopardy.

  • "It is stressful. Where are we going to stay now? We have three kids, and my baby was just born Oct. 3," lamented Grijalza, who recently learned the Vernon Avenue house she's been renting for more than a year was repossessed by lenders. The lenders insist she move, but Grijalza doesn't have a car or good credit. She's fearful she'll become homeless.

  • To convince her to move out, the lenders offered to pay her $1,500 if she'd leave in two weeks. That's called "cash for keys," a technique some lenders use to avoid the time-consuming eviction process. Many home renters say such compensation doesn't begin to cover the cost or hassle of moving.

After being screwed over three times in three years by landlords allowing their properties to go into foreclosure and before signing her next lease, tenant Shari Torigian reportedly checked out her most recent landlord's credit and references, researched public records about the home's ownership to assure it's not in the process of being foreclosed on, and insisted the owner sign a three-year lease that guarantees all her expenses will be paid if she's forced to leave.

The story also makes the following points on two laws that may provide protection to California renters in these circumstances:

  • California Civil Code Section 890-894 enables tenants to sue landlords who, during their first year of ownership, collect rent but don't pay their mortgages. Tenants can sue to recover actual damages, including moving costs and security deposits, plus attorney's fees and costs. The court also may award tenants exemplary dam-ages of at least three times the amount of actual damages.

  • California Civil Code Section 1950.5 [subsections (h) and (j)] enables tenants to sue their previous landlords and the current property owners, including lenders who get the property after foreclosure, for the return of security deposits.

For more, see A renter's dilemma: Foreclosures can hit those who don't own (Foreclosure pits unwary against landlords, lenders) (if link expires, try here).

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

Families Losing Homes Without Ever Missing Payments

The Sarasota Herald-Tribune reports:
  • In the foreclosure crisis of 2007, thousands of American families are losing their homes without ever missing a payment. They are renters in houses whose owners default on their mortgages — a large but little noticed class of casualties. [...] Many renters say they never even knew their buildings were heading for foreclosure. “This is an explosion,” said Judith Liben, a lawyer at the Massachusetts Law Reform Institute. “This isn’t business as usual. These are investors that overleveraged themselves, and the renters are collateral damage in the mortgage crisis.”

***

  • The [U.S.] House [of Representatives] on Thursday passed a broad mortgage act that includes protections for renters. The House act, which the lending industry has opposed, would require new owners to continue the leases of tenants for up to six months after foreclosure. [...] The House bill calls for new owners — usually lenders — to give tenants a 90-day notice before foreclosure, then continue leases for up to six months after. Renters without leases would have 90 days to leave the property.

Despite a lease that runs until January 2009, one of the tenants described in the story has reportedly already packed all nonessential items in their garage — everything but clothes, linens, cookware and furniture — in case they have to leave in a hurry. Said the tenant: “It’s not normal to live like this. And the worst part is not knowing if we’re going to have a note on the door tonight, tomorrow or the next day.”

For more, see As Owners Feel Mortgage Pain, So Do Renters.

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

Saturday, November 24, 2007

NY Attorney Charged With Swiping $300K Of Clients' Money

On Long Island, New York, the Nassau County District Attorney recently made this announcement:
  • Nassau County District Attorney Kathleen Rice announced today that Joseph Levine, a 59-year-old recently disbarred attorney from Hewlett, has been arrested and charged with stealing more than $300,000 from two clients he was hired to represent in legal matters during the past year. Mr. Levine is facing felony counts of Grand Larceny in the Second and Third Degrees, and two counts of Criminal Possession of a Forged Instrument in the Second Degree.

According to the allegations in one case:

Levine counseled one client to settle a personal injury lawsuit that awarded his client $300,000. He traveled to the Pennsylvania office of the insurance carrier to pressure the insurance company into cutting the check immediately because his client’s daughter was having heart surgery and needed the money. After being issued the $300,000 check by the insurance adjuster, Levine then forged the signatures of his client and her husband and deposited the check in his bank account. After three months of writing dozens of checks from his account, his balance on the account stood at a negative $139.44. To date, the client has not received any of the settlement proceeds.

Reportedly, The Lawyers Fund for Client Protection of the State of New York has reimbursed Levine’s client $250,000 since the theft. The fund was established in 1982 and serves as a reimbursement mechanism for client funds that are lost due to the dishonest conduct of lawyers licensed in New York State.

According to the allegations in a second case:

Levine received a $10,000.00 down payment on a home in May to hold on behalf of a client. The sale fell through and in response to the client's request for a return of the money, Levine suggested that he should hold on to the funds, in the hopes that he could resurrect the real estate deal. The client continued contact with Levine throughout the summer about the money but has yet to receive a refund.

For more, see DA: Lawyer Pocketed $300k from Clients (Levine stole personal injury settlement from a client trying to pay for her daughter’s heart surgery).

For those ripped off due to dishonest conduct by a New York attorney, see The Lawyers Fund for Client Protection of the State of New York.

For other states, see:

Florida Attorney Disbarred; Mortgage Money Mysteriously Goes Missing While Acting As Closing Agent In Real Estate Deals

In Pinellas County, Florida, the St. Petersburg Times reports that the Florida Supreme Court has recently disbarred attorney Richard Joseph Da Fonte of Clearwater for "conduct involving dishonesty, fraud, deceit or misrepresentation" and "application of trust funds or property to specific purpose" in connection with his involvement in two real estate deals where money went missing. According to the story:
  • In the first, he acted as the closing agent for the sale of a single-family residence. But instead of paying off two pre-existing mortgages on the property in accordance with the terms of the agreement, Da Fonte diverted $230,000 to an unknown third party, said Karen Lopez, an attorney with the Florida Bar. "We don't know where the money went," said Creston Nelson-Morrill, a Bar spokeswoman. The original mortgage holder filed for foreclosure, and while Attorneys' Title Insurance Fund managed to hold off the bank, the fund lost more than $300,000 as a result of Da Fonte's actions, according to the disbarment on consent signed by Da Fonte.

  • In the second case, Da Fonte, working as an escrow agent and closing agent, failed to disburse $715,000 earmarked as loan proceeds. The deal didn't close even though the bank and buyer, who had begun making regular loan payments, believed it had.

For more, see Lawyer disbarred, two others are disciplined (Diverted mortgage funds led to the disbarment).

See Theft Of Escrow Funds I and Theft Of Escrow Funds II for other stories of trust account / escrow account theft of funds. sneaky slick escrow agents beta

Florida Attorneys Disciplined For Playing Fast & Loose With Clients' Cash

The North Country Gazette reports that, in Florida:
  • The Florida Bar, the state’s guardian for the integrity of the legal profession, has announced that the Florida Supreme Court in recent court orders disciplined 29 attorneys, disbarring eight, suspending 13, emergency suspending two, placing three on probation and reprimanding five. Some attorneys received more than one form of discipline.

Of the 29, the following 12 have been disciplined for playing fast and loose with their clients' cash and/or property:

  • Richard Charles Bagdasarian, Boca Raton, disbarred. Bagdasarian misappropriated client funds totaling more than $1.17 million from about 41 different clients and made material misrepresentations to his clients to conceal his misappropriation and conversion to his own use of the funds.

  • Angelo Cappelli, St. Petersburg, disbarred. Cappelli was a trust officer in a bank and without the knowledge of or authorization from the bank opened an estate using a summary probate procedure. He then used his position to gain access to about $100,000 from a deceased customer’s estate and used about $75,000 of the funds.

  • Richard Joseph Da Fonte, Clearwater, disbarred. Da Fonte served as the closing agent in one real estate transaction and represented the buyer as well as acted as closing agent and escrow agent in another. In one instance, funds were diverted that were intended to pay off two pre-existing mortgages. In the other, Da Fonte failed to tell his client or the bank making the loan that the closing had not occurred. When the bank learned that the transaction had not closed, Da Fonte failed to account for the loan proceeds and to return them to the bank.

  • Chandra Parker Doucette, Boca Raton, suspended. Doucette was found in contempt of court for her failure to respond to subpoena issued by the Court, which ordered her to provide mandatory trust account records.

  • Michael T. Kovach, Inverness, the subject of an emergency suspension, pursuant to an Oct. 31 court order. Kovach has failed to respond to three subpoenas commanding him to appear for a deposition and to produce trust account records. A Bar investigation indicated that he converted client funds from his trust account for his own personal purposes.

  • Albert Scott Lagano, Melbourne, disbarred for 10 years. Lagano was found guilty of five counts related to trust fund shortages and the commingling of trust funds and operating funds of a number of clients. An audit found that, between August 2005 and November 2006, Lagano withdrew cash from his trust account or transferred to his office account a total of more than $1 million. He failed to maintain trust account records supporting these withdrawals and transfers.

  • Peter Malo, disbarred. In August 2001, Malo was disbarred by the New York state bar based on charges of commingling and misappropriation of client funds or property.

  • Joey Dean Oquist, St. Petersburg, suspended for two years. A bar auditor found evidence of shortages in Oquist’s trust account. It was determined that he failed to maintain the required cash receipts and disbursement journal and client ledger cards.

  • Anthony Vincent Scalese, Pembroke Pines, suspended, until further order of the court. Scalese failed to produce trust fund records compelled by a subpoena issued in the course of a Bar investigation into the management of his trust account and was held in contempt of court.

  • Marie Gilberte Thompson, Miami, disbarred. Thompson failed to comply with a subpoena for her trust account records. Records of a real estate transaction obtained from third parties showed that she received nearly $821,000 for payment of a mortgage loan. She failed to apply the trust funds to the specific purpose of paying off the mortgage and had insufficient funds to do so.

  • Ruben Torrence Thompson, Miami, disbarred. Thompson failed to comply with a subpoena for his trust account records. Records of a real estate transaction obtained from third parties showed that he received nearly $821,000 for payment of a mortgage loan. He failed to apply the trust funds to the specific purpose of paying off the mortgage and had insufficient funds to do so.

  • Kendrick Gerard Whittle, Miami, the subject of an emergency suspension, pursuant to an Oct. 23 court order. Whittle failed to produce bank and trust records in response to a subpoena. However, bank records show that he issued checks to himself totaling nearly $298,000 from client funds and used them to pay other clients and for personal matters such as rent, credit cards, Gables Sports Cars and Saks 5th Avenue.

Source: 29 Florida Attorneys Disciplined, Eight Disbarred. sneaky slick escrow agents beta

Friday, November 23, 2007

Freddie Mac Sued By Shareholder; Class Action Status Sought

Reuters reports:
  • A shareholder sued Freddie Mac, its chief executive and others on Wednesday, alleging the No. 2 U.S. home funding company did not take adequate steps to protect itself from problems in the mortgage industry. Scott Reimer, a shareholder, said in the complaint filed in U.S. District Court in Manhattan that Freddie Mac, Chief Executive Richard Syron and some other executives did not adequately implement risk control measures to protect the company from acquiring billions of dollars worth of mortgages with poor underwriting standards. "Moreover, the company's procedures for appraisals led to many inflated appraisals, increasing the risk of defaults," it said. "Ultimately, the company has reported billions of dollars in losses, has been mentioned in investigations by the New York attorney general and announced it must raise new capital to meet regulatory requirements."

The suit seeks class action status. For more, see Freddie Mac sued over mortgage problems.

See also, News Gets Worse for Freddie As Shareholders File Lawsuit (Mortgage Firm Accused of Deception on Risk) (The Washington Post).

Ex-Detroit Cop Charged In Mortgage Fraud, Forgery

The Detroit Free Press reports:
  • A fired Detroit police officer was charged ... with three felonies on allegations that he forged the signature of Wayne County Clerk Cathy Garrett to paperwork in an attempt to receive a mortgage loan. County officials announced forgery and other charges against D’Clarence Reynolds, 27, of Detroit, in a case that left Wayne County Sheriff Warren Evans baffled. “It’s hard to believe that anyone, particularly a former police officer, would forge the name of a county official and not think it would raise a red flag,” Evans said ... .

For more, see Former Detroit cop charged with fraud in mortgage scheme.

Phony NYC Lawyers Sentenced For Scamming Dozens In Real Estate Deals

In Staten Island, New York, the Staten Island Advance reports:
  • Their claims to be lawyers were bogus, but what's very real are the lengthy prison terms and the $14.1 million that two Staten Island brothers must repay unwitting homeowners and lenders they bilked in real-estate deals in Nassau County. James LaForte Jr. and Joseph W. LaForte fronted a Mineola, L.I., law firm that acted as attorneys for banks in real-estate transactions. Along with their parents and other conspirators, they ripped off three dozen personal clients and lending institutions of more than $14 million over the 17 months ending in August 2005, prosecutors said.

For more, see 2 brothers head to jail for duping homeowners (LaFortes must pay back $14.5 million to victims of bogus-lawyer scam).

Three Philadelphia Men Face Charges Of Stealing Homes From Out From Under Homeowners

In Philadelphia, Pennsylvania, WCAU-TV Channel 10 reports:
  • Three men involved in a real estate scam faced a Philadelphia judge [last] Friday. They're charged with forging deeds and stealing homes right out from under their owners. The NBC 10 investigators have been telling you about this unique city crime problem over the last couple of years. It's not hard to steal a house in Philadelphia. Often no one checks forged documents filed at City Hall. You say your brother gave you the house for a dollar and then take possession, NBC 10's Lu Ann Cahn reported.

***

  • In court [last] Friday, [homeowner Susan] Thompson looked at Michael Crosby, Carl Fooks and a third suspect, Charles Faust and told the judge she had never seen the men before, even though somehow her deed said she sold her house to one of them "for a dollar," she said.

For more, see 3 Men Accused Of Forging Documents, Stealing Houses For $1.

Stealing Vacant Lots Gets Disbarred Lawyer 12 Years In Pen

In Chicago, Illinois, the Chicago Tribune reports:
  • Phillip Radmer, a disbarred Berwyn attorney who created phony corporations and invented board members to steal the properties of poor churches, nonprofit groups and businesses, was sentenced Tuesday to 12 years in prison. "Mr. Radmer has ruined a lot of people's lives in this case," Cook County Circuit Judge Stanley Sacks said in imposing the sentence for theft and forgery. Representatives of six churches told the judge that the scheme forced them to spend scarce resources to untangle the mess left behind by Radmer over who rightfully owned the properties.

For more, see Ex-lawyer gets 12 years for lot thefts (Berwyn man faked real estate deals).

Go here for other posts on Phillip Radmer.

Thursday, November 22, 2007

Arkansas Manufactured-Home Company Owner Gets 2+ Years On Mortgage Fraud, Tax Charges

The Associated Press reports:
  • In addition to serving 30 months in federal prison, a Searcy woman who pleaded guilty to mortgage fraud and filing false income tax returns will have to pay $120,000 in restitution to victims. Federal Judge Susan Webber Wright sentenced 54-year-old Debby Cossitt [Monday].

Reportedly, Cossitt was owner, manager or operator of several manufactured-home sales companies in Searcy, Batesville, Jonesboro and Harrison who admitted falsifying mortgage-loan application documents to increase her business, including inflating bank balances of those buying homes, the size of down payments, and incomes. For more, see Sentence for mortgage fraud includes restitution.

Minnesota Man Again A Target In Mortgage Fraud Prosecution

In Minneapolis, Minnesota, the Minneapolis Star-Tribune reports:
  • A Minneapolis man sentenced on a federal mortgage fraud charge in 2001 now faces Hennepin County charges involving at least $1.2 million in mortgages that stretched from Bloomington to Blaine. Larry D. Maxwell, 52, was charged Monday with 10 counts in the alleged mortgage fraud, including racketeering. Also charged with nine counts of forgery, identity theft and theft by swindle was Realty Executive Advantage Plus Group. The real estate brokerage was operated from Maxwell's north Minneapolis riverfront condo.
***
  • The complaint against Maxwell lists four other uncharged conspirators in the racketeering count. They are Vickie Cox-Maxwell and Larry Scott, his wife and son and both agents of Realty Executive, mortgage broker Terrece Large of Worldwide Mortgage, Inc., where Maxwell was a loan officer, and Halisi J. Edwards-Staten, listed as the real estate broker for Realty Executive.

For more, see A second time around on mortgage fraud charges (A Hennepin County investigation continues with four others named as uncharged conspirators in the case).

Tennessee Trio Facing Federal Fraud, Conspiracy Charges In Alleged Mortgage Scam

In Middle Tennessee, Tenessean.com reports:
  • An almost two-year joint federal and state investigation has resulted in the arrest of three Sumner County men in an elaborate mortgage fraud scheme involving the purchase of 22 luxury homes in Hendersonville and Gallatin by unqualified “straw” buyers. Harold Stafford of Hendersonville and Miles Jackson Black and Jeffrey Dunn Hatchcock of Gallatin, were each charged with one count of conspiracy, 21 counts of wire fraud and three counts of bank fraud following a two-year investigation. In addition, Stafford faces 25 counts of money laundering.

***

  • According to the indictment, Stafford, the owner of Stafford Lease Group, Stafford Holding Group and Keys to Success, agreed with the builders and sellers of the 22 luxury homes to find buyers who would purchase the homes at prices that were $10,000-$165,000 more than their original asking prices. [...] The builders and sellers agreed to pay Stafford any amount of the sale that exceeded the original asking prices of the homes, federal court records show. Stafford recruited seven unqualified straw buyers with good credit histories to apply for first and second mortgages on multiple properties where the purchase price was greater than the seller’s original asking price, according to the indictment.

For more, including a detailed timeline of the alleged scam activities, see Mortgage fraud scheme results in three arrests.

For the U.S. Attorney's press release, see Three Sumner County Men Indicted For Mortgage Fraud Scheme.