Current FBI Subprime Probe Of 14 Firms May Expand

Reuters news service reports:

• The FBI's investigation of 14 corporations in a crackdown on improper subprime lending could expand to other companies, but the complex probes may take some time before any charges are brought, a federal law enforcement official said on Wednesday. "Like any white-collar crime investigation, these are very complicated, time-consuming investigations involving the examination of numerous records and interviews of various people. They don't happen in a short period of time," the FBI official said. FBI officials told a briefing on Tuesday the investigations covered corporations across the financial services industry, ranging from mortgage lenders and investment banks to developers and subprime lenders.

***

• [FBI spokesman Bill] Carter said the FBI around the country has 34 mortgage fraud task forces and working groups that include other federal agencies and state and local law enforcement officials.

For more, see FBI's subprime crackdown may expand to more firms.

See also, The New York Times: F.B.I. Opens Subprime Inquiry.

California Legislature Nixes Proposed Foreclosure Bill

In California, The Associated Press reports:

• California's state senate narrowly defeated a bill Wednesday that targeted the growing problem of foreclosed homes sitting vacant for months, drawing squatters and creating blight. Lenders would have been fined $1,000 a day for not maintaining vacant properties, and they would have had to give four months' notice before mortgage payment increases of 10 percent or more. "The purpose of this bill is very simple: to keep people in their homes," said the bill's sponsor, Don Perata, a Democrat from Oakland and the Senate leader.

***

• Thieves have looted empty homes, stripping them of electrical appliances or valuable copper wiring and pipes that can be sold as scrap. In Sacramento last month, one household was robbed in the midst of moving out of a foreclosed property.

For more, see California Foreclosure Bill Fails.

Feds vs. NY AG: Lending Fraud Probe Turf Battle Emerging?

The Wall Street Journal reports:

• Tensions are beginning to rise between state and federal authorities as the number of agencies investigating mortgage fraud continues to grow. New York Attorney General Andrew Cuomo is in a tussle with the Office of Federal Housing Enterprise Oversight, the federal regulator that oversees mortgage giants Fannie Mae and Freddie Mac. Their dispute is over who should be the investigating allegations of fraudulent appraisals and mortgage fraud.

• The interaction of state and federal oversight has long been a political hot potato. Friction is expected to increase as rising number of participants -- including the Justice Department and Securities and Exchange Commission -- probe the mortgage area.

For more, see Tensions Rise in Lending Probes (subscription may be required - if no subscription, go here). OFHEO

Another Subpoena For Countrywide; Florida AG Probes Servicing Practices, Possibly "Sticking People" In Bankruptcy, Lending Practices

The Wall Street Journal reports:

• Countrywide Financial Corp. confirmed yesterday that it received a subpoena from the Florida attorney general seeking information on its business practices. The subpoena adds to the problems for the Calabasas, Calif., lender, which has drawn the ire of bankruptcy judges, borrowers and consumer groups for months. Florida Attorney General Bill McCollum is seeking information on how Countrywide handles borrower payments as well as materials related to sales practices and standards for making loans. Mr. McCollum is also investigating whether Countrywide has charged excessive fees to borrowers in the foreclosure process. In an interview, he noted that even bankruptcy judges have flagged these fees and expressed concern that Countrywide "may be sticking people at the end of the process."

For more, see Subpoena Deepens Countrywide's Woes (subscription required; if no subscription, try here, then click link for story, then "refresh" browser if needed).

NJ Legislator Seeks Subpoena Power To Probe Foreclosure Rescue Industry

In New Jersey, PolitickerNJ.com reports:

• Assemblyman Neil M. Cohen [yesterday] announced the introduction of legislation that would give an Assembly panel subpoena powers to investigate the largely unregulated and potentially exploitative foreclosure consultant industry that has cropped up in the wake of the nation's subprime mortgage lending meltdown. "We will need these broad powers to get to the bottom of what's happening in New Jersey's foreclosure consultant industry," said Cohen (D-Union), chairman of the Assembly Financial Institutions and Insurance Committee. "It's very likely that shysters and scam artists are bilking New Jersey homeowners on the brink of foreclosure out of their hard-earned equity."

For more, see Cohen Seeks Subpoena Power to Investigate Foreclosure Consultants (Measure Would Aid Assembly Financial Institutions and Insurance Committee In Thorough Examination of Largely Unregulated Industry).

Go here to view the pending state foreclosure rescue legislation (which is a reintroduction of a bill from the last legislative session), New Jersey Assembly Bill A281 - Foreclosure Rescue Fraud Prevention Act.

Massachusetts Lawyers Claim Foreclosure Rescue Regs Forcing Them To Turn Away Certain Cases

Massachusetts Lawyers Weekly reports:

• Lawyers complain that a new [Massachusetts] regulation designed to protect property owners from corrupt foreclosure-rescue schemes is unfairly preventing them from representing clients in need of their services. Until [Massachusetts] Attorney General Martha Coakley clarifies whether her office truly intended to bar lawyers from accepting retainers in certain foreclosure cases, a number of practitioners told Lawyers Weekly they begrudgingly will continue to turn away would-be clients. "There aren't too many lawyers out there who are going to take on a case if they can't accept an advance fee from a potential client," said Peter T. Clark of Mansfield. "This is a big problem right now because, right or wrong, that's how a lot of lawyers who do not want to face significant sanctions are reading these regulations."

For more, see Lawyers: unclear foreclosure regs forcing them to turn down business (Claim that new rule bars acceptance of retainers in certain types of cases).

Hawaii Lawmakers Considering Foreclosure Rescue Legislation

In Honolulu, Hawaii, KHNL-TV Channel 8 reports:

• Homeowners facing foreclosure are susceptible to scams that promise to rescue their home. A new bill would provide some protection. But state officials are warning people the best protection is to stay alert and aware. [...] Stephen Levins at the Department of Commerce and Consumer Affairs says, "There's a real problem in Hawaii with people trying to steal equity out of homeowners. They generally target people facing foreclosure." [...] Lawmakers are hearing a bill (House Bill 3104 and Senate Bill 3026) that would help protect consumers.

For more, see New Bill Would Protect Against Mortgage Fraud.

To view the pending companion bills, see:

• HB 3104 (bill status) (bill text), and
• SB 3026 (bill status) (bill text).

Oregon Couple, Others Victimized In "Craigslist" Rent Scam

KPTV Channel 12 in Oregon reports:

• An Oregon City couple said a Clackamas mortgage company scammed them out of their hard-earned cash. And the company has received other complaints as well. Lynn and Ed King-Wohlhuter said they found an advertisement on Craigslist.org, claiming a Clackamas company was willing to buy homes and allow perspective buyers with poor credit to buy the homes back on lease options. The couple said they borrowed $3,000 after the company’s representative said he would buy them a house in Georgia so they could be closer to family. But the couple said after paying the money, the company’s owner refused to return their calls and never made good on the deal. They said they may now lose everything.

For more, see Couple Claims Mortgage Company Scammed Them Of Thousands.

Go here for other posts on tenant victims of rent scams. unwitting tenant rent scam zebra

Real Estate Agent's Alleged Disclosure Failure Lands In Litigation

The NBC Today Show ran a story on, and an in-studio interview with, a California homebuyer last Friday who is suing her real estate agent for the agent's alleged failure to disclose market value information during the homebuying process that, according to the homebuyer, resulted in overpaying in the purchase of her home by as much as $105,000.

While NBC appears to sell this story as a lawsuit based on buyer's remorse, it seems clear to me that the reality is that the lawsuit is based, at a minimum, on the alleged professional negligence on the part of the real estate agent for failing to meet the legal duties he/she has to the buyer. Typically, the real estate agent has an obligation to disclose to the homebuyer upon first substantive contact whether he/she (the agent) will be representing the homebuyer (as a Buyer's agent - with heightened legal duties to the buyer), or the seller (as a Seller's agent - with lessened legal duties to the buyer) in the real estate transaction.

In this case, it appears (as too often happens) that there may have been some confusion as to what capacity in which the real estate agent was operating. If the agent was operating as a Buyer's agent, and the allegations in the lawsuit prove true, he/she may have a serious problem.

For more, see Home buyer who overpaid sues real estate agent (With housing boom going bust, will more purchasers follow suit?) (Go here to watch video).

For a related story, see Real Estate Agents' "Well-Kept Secret" Creates Havoc For Homebuyers.

Real Estate Agents' "Well-Kept Secret" Creates Havoc For Homebuyers

A 2007 article appearing in International Real Estate Digest reports on the potential financial loss homebuyers face when retaining the services of the wrong real estate agent:

• When Joel Stern of Silver Spring, Maryland was ready to buy a new home he did not know about a well-kept secret in the real estate industry, a secret that can wreak financial and emotional havoc on a home buyer at the most crucial point of his real estate transaction. The secret is that only one out of every three agents provides the mandatory disclosure form that spells out whom the agent represents in the transaction at first meeting or early in the process.

• Two thirds of the agents defy their state laws, which generally require them to provide disclosure, in writing, at their first substantive meeting with a potential client. The general counsel for National Association of Realtors, Laurie Janik, said she was 'so extremely disappointed' in the findings from research the association undertook in 2005 to learn just how the agents were performing in the marketplace.

Syndicated real estate columnist Kennth R. Harney has pointed out in a past article on Mr. Stern's situation that:

• When agents fail to provide the written disclosures mandated by most states, clients may be misled into paying too much, foregoing contractual protections such as contingency clauses, and generally ending up dissatisfied with the outcome of the transaction. Some buyers or sellers end up angry enough to sue.

In Mr. Stern's case, he reportedly found out two weeks after receiving an accepted purchase offer that the Buyer's agent he thought he had was actually working for the seller on the home he chose to purchase. He only found out when his brother, with 40+ years experience in commercial real estate, looked over the paperwork and found that the agent waited until the contract signing to declare her status on the legally required printed agency disclosure form as a seller's agent, according to the story. Further, it turns out that the contract Stern signed was for a home listed by his buyer's agent boss (who also happened to be the agent that Stern had his then-current home listed for sale with), and waived his contingency to sell his own home first, the story states.

Stern currently has a lawsuit pending in a Maryland appeals court against brokerage firm Weichert Realtors as well as the agents involved in which he seeks the return of a $34,000 deposit that he lost in the deal, and $300,000 in punitive damages.

For more, see The Well-kept Secret That Harms Home Buyers.

See also, Kenneth R. Harney: Agents Falling Short On Disclosure.

For recent court cases involving real estate agents being successfully sued (or successfully reversed an unfavorable ruling) in connection with a breach of fiduciary duty and/or failure to satisfy a variety of disclosure requirements, see:

• Washington, DC: Jenkins v. Strauss, 931 A.2d 1026; (D.C. 2007),
• California: Michel v. Moore & Associates, 156 Cal. App. 4th 756; 67 Cal. Rptr. 3d 797; (Cal. App. Ct. 2007),
• Louisiana: Waddles v. LaCour, 950 So. 2d 937; (La. App. Ct. 2007),
• Vermont: Vastano v. Killington Valley Real Estate, 2007 VT 33; 929 A.2d 720 (Vt. 2007),
• Washington State: Ruebel v. Camano Island Realty, Inc., No. 58533-9-I, (unpublished) (Wn App. Ct. 2007).

For a related story, see Real Estate Agent's Alleged Disclosure Failure Lands In Litigation.

Investors Beat Out Of $6M, Company Looted, Say SW Florida Suits

In Lee County, Florida, The News Press reports:

• Real estate agent Samir Cabrera sold a piece of land on Daniels Parkway to a group of investors minutes after he bought it himself in April 2006, cheating the investors out of $6 million and then looting what was left until the property was in foreclosure, two lawsuits allege.They paint a picture of self-dealing, a phony promissory note and fraudulent business practices at the height of the real estate boom in Lee County. But Cabrera’s lawyer says his client did nothing wrong and the deal went sour only because the real estate market turned bad. The case is coming to a head as the two sides spar over whether Cabrera and the companies he controls should be able to go forward with a deal to sell what’s left of the property.

For more, see Lawsuits allege fraud in land deal gone bad (Investors cheated of millions, they say) (if link expires, try here).

To view one of the lawsuits, see Mengle v. Cabrera GP, LLC.

Go here for earlier posts on Samir Cabrera.

Subprime Resets Crushing Southern California Towns

In Southern California, North County Times reports on the tough times two towns are going through as a result of mortgage foreclosures flooding the area. Reportedly, one out of every 17 homes in in the northeast section of the city of Oceanside entered foreclosure last year. 30 miles northeast and across the Riverside County line in the city of Murrieta, one of every nine homes entered the foreclosure process last year.

• Many of the foreclosed families here said they were sent into foreclosure when their subprime loans graduated from the initial "teaser" rate -- a low interest rate generally offered for only the first two or three years of a 30-year mortgage -- to a higher adjustable interest rate.

For more, see Foreclosure mess emptying Oceanside neighborhoods, hurting those who've stayed.

Alleged $1.28M Mobile Home Investment Swindle Nothing More Than Unrepaid Loans, Says Fraud Suspect

In Bartow, Florida, The Ledger reports:

• Pamela Akins Pitts admits she owes a few people money from some failed mobile home sales deals. But she says she does not owe the $1.28 million for which she has been charged with defrauding nine people."These people were my friends," said she recently during an interview in the Polk County Jail. [...] Arrested Dec. 21, Pitts, 48, is sitting in jail facing charges of scheming to defraud more than $100,000, three counts of grand theft over $100,000, two counts of grand theft over $20,000, grand theft over $300, and violation of Florida's money laundering act.

For more, see No Fraud, Just Loans, She Says.

Inflating Sales Prices & Home Values Gets Pennsylvania Mortgage Broker 37 Months

In Pittsburgh, Pennsylvania, The Associated Press reports:

• A mortgage broker who prosecutors say cost lenders between $400,000 and $1 million was sentenced to more than three years in federal prison. William D. Edgar, 49, of Verona, operated America's Mortgage Outlet in Monroeville. Besides serving 37 months in prison, U.S. District Judge Gary Lancaster ordered Edgar to pay $174,000 in restitution. He pleaded guilty to conspiracy and bank and wire fraud last year and has already repaid $90,000.

For more, see W. Pa. mortgage broker sentenced in scam.

CBS News "60 Minutes" On The Subprime "House Of Cards"

CBS News' 60 Minutes ran a story last night on the problems in the housing and financial markets that are reverberating throughout the country. The story begins:

• It was another nervous week for the world's financial markets and for Wall Street. In the last six months, Americans have seen their investments shrink, their property values plummet, and the country edge closer towards a recession. At the heart of the problem is something called the subprime mortgage crisis, which began last summer and continues to ricochet through the economy. It sounds complicated, but it's really fairly simple. Banks lent hundreds of billions of dollars to homebuyers who can't pay them back. Wall Street took the risky debt, dressed it up as fancy securities, and sold it around the world as safe investments. It sounds like a shell game or Ponzi scheme; in some ways it was, a house of cards rife with corruption, greed, and negligence.

The story is set in Stockton, California, referred to as "the foreclosure capital of America."

For more, see House Of Cards: The Mortgage Mess (read transcript) (watch video).

Go here to watch Steve Kroft's Reporter's Notebook for his observations on this story.

NY AG Slaps Subpoena On Mortgage Quality Control Reviewer; Firm To Cooperate, Gets Limited Immunity From Prosecution

The New York Times reports:

• A company that analyzed the quality of thousands of home loans for investment banks has agreed to provide evidence to New York state prosecutors that the banks had detailed information about the risks posed by ill-fated subprime mortgages. Investigators are looking at whether that information, which could have prevented the collapse of securities backed by those loans, was deliberately withheld from investors.

• Clayton Holdings, a company based in Connecticut that vetted home loans for many investment banks, has agreed to provide important documents and the testimony of its officials to the New York attorney general, Andrew M. Cuomo, in exchange for immunity from civil and criminal prosecution in the state.

***

• The Clayton agreement is the latest development in Mr. Cuomo’s efforts to uncover abuses in the mortgage business. In November, he sued a subsidiary of First American, a real estate services company, accusing it of inflating appraisals in an effort to secure business from Washington Mutual, the nation’s largest thrift.

For more, see Loan Reviewer Aiding Inquiry Into Big Banks. Cuomo OFHEO Fannie Mae Freddie Mac

Minneapolis-Area Community Sues Foreclosing Lender Over Vacant Home/Neighborhood Eyesore

The Minneapolis Star Tribune reports:

• A north Minneapolis neighborhood is taking on mortgage giant CitiMortgage in a test case attempting to make careless lending an act for which lenders can be held liable in Minnesota. The lawsuit filed Wednesday for the Hawthorne neighborhood reflects a growing national effort to hold lenders legally responsible for the damage caused by shaky loans that go to foreclosure.

***

• In Hawthorne, the lawsuit alleges that CitiMortgage used "negligent and improvident lending practices" to finance the purchase last March of a two-story white frame house on 31st Avenue. N. The neighborhood wants to buy the house from CitiMortgage for a redevelopment project but said it can't get a response. Meanwhile, the lawsuit alleges, the property has become a neighborhood eyesore that has attracted housing tags and 911 calls. It is seeking damages, a monitored alarm system and compliance with the city housing code.

Reportedly, CitiMortgage bought back the property at an October sheriff's auction, but since that time, the house has remained empty, and the police have responded to calls for burglaries and a fire at the premises. The housing tags were for unmowed grass and weeds and rubbish.

For more, see Neighbors sue lender over house left vacant (A north Minneapolis neighborhood aims to hold a lender accountable for alleged careless lending with action that could break new legal ground).

Chicago $29M Condo Conversion/Straw Buyer/Mortgage Fraud Scam Gets Broker Nine Years

The Chicago Sun Times reports:

• Mohammad "Mike" Taghie Kakvand, the ringleader in a mortgage scheme that resulted in abandoned, crime-ridden Chicago apartment buildings, was sentenced Tuesday to nine years in prison. Kakvand bought 33 apartment buildings in Rogers Park and on Chicago's South Side between 1997 and 2004, but didn't renovate them. Units were sold as rehabbed condos at inflated prices, using straw buyers who defaulted on $29 million in loans. The plot displaced renters, and left decaying buildings prone to squatters, drug dealers, fire and water damage.

***

• "The damages caused not only to the lending institutions, but to the community, are immeasurable," said U.S. District Judge William Hibbler, who ordered Kakvand to pay $8.4 million in restitution.

For more, see Slumlord gets 9 yrs. ('I know many people were harmed,' Kakvand tells judge).

See also, Broker in mortgage scam gets 9 years.

Renters Face Eviction Despite Making All Payments; Evidence Points To Possible Rent Skimming, Lease Option Scam

In Shelby, Tennessee, the Shelby Times-Gazette reports:

• Several Shelbyville families [...] are suddenly faced with losing the roofs over their heads -- even though they have been making their house payments on time. The families claim they have been victimized by several individuals from Murfreesboro who are purchasing properties from American Value Homes and setting up two-year leases with purchase option agreements. They claim they were led to believe that the money they were paying was going toward the purchase price of their homes. But instead, the money was apparently not paid to the finance companies and the homes that the families are living in are now being placed in foreclosure and auctioned off by banks.

• What makes matters worse for the families is that they say none were ever informed about the foreclosures. They only learned of their situation when auction notices were published by the Times-Gazette, or when the bank told the occupants they had seven days to get out.

For more, see Fraud claimed in home deals.

For other posts involving rent skimming (aka equity 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

New Hampshire Foreclosures Driving Increase In Consumer Bankruptcy Filings, Say Local Attorneys

In New Hampsrire, The Union Leader reports:

• Personal bankruptcy filings in New Hampshire jumped significantly last year, and bankruptcy attorneys say the mortgage crisis is driving much of that increase. [...] Richard Gaudreau, a Salem attorney who specializes in consumer bankruptcy law, said the mortgage crisis is driving the increases in both Chapter 7 and Chapter 13 bankruptcy filings. [...] Gaudreau said he's been turning away clients. "I don't have the staff or the time to handle everybody who needs to file," he said. [...] Concord attorney Mary Stewart is also handling more Chapter 13 bankruptcies. "It's because of housing," she said. "They're in default on their mortgages and they're trying to catch up. It's people who have paid their bills all their lives, and they're humiliated to be sitting in my office. It's not deadbeats. It's happening to people who never thought they would be here."

***

• Peter Wright is the director of the Consumer and Commercial Law Clinic at Franklin Pierce Law Center in Concord, which offers free legal help for low-income individuals. "We are seeing an unusually high number of requests for bankruptcy to help the client avoid foreclosure," he said. [...] Londonderry attorney Nancy Michels said most bankruptcy cases she's currently handling are mortgage-related; some people are "just walking away" from their homes.

For more, see Mortgaged first, then bankrupt.

"Brisk Business" At Boston-Area Animal Shelters

In Massachusetts, The Boston Globe reports on the strain being felt by Boston-area animal shelters as home foreclosures are causing increasing numbers of people to give up their pets:

• Across the region, dogs and cats are arriving at shelters in growing numbers, as their owners face foreclosures and head to temporary homes, such as rental units or relatives' houses, where pets are not permitted or may not be welcome.

***

• In the last three months, owners displaced by foreclosures surrendered some 30 animals, including a Chihuahua this week, at the Animal Rescue League of Boston. At the Brockton MSPCA Shelter, officials estimate that half of the dozen dogs brought in for surrender this month were from foreclosed homeowners. At the Worcester Animal Rescue League, so many dogs and cats from foreclosed homes have been surrendered, including 10 cats last week, that the director created a policy that permits the animals to remain in the shelter at no cost for 90 days while their owners search for pet-friendly housing. If the owners are not able to find suitable homes in the time period, the animals go up for adoption.

***

• Most troubling, shelter officials say, are pets deserted by homeowners in the upheaval of foreclosure and found later by neighbors and strangers who can't relay their medical and family histories.

For more, see Owners lose home, and pets suffer, too.

For more on foreclosures and family pets, go here, and go here. petsII and foreclosures

Cleveland Repossessions Affect More Than The Foreclosed Homeowner

In Cuyahoga County, Ohio, The Cleveland Plain Dealer blog reports:

• The thousands of families forced out of homes are only the most obvious casualties. Next-door neighbors are stuck with the empty houses that attract scrap-metal thieves and drug dealers. And because of the blight, some of the neighbors often can't sell their own houses for enough to start over somewhere else. Municipal governments face a lose-lose scenario. Millions of dollars in property values disappear as families abandon houses. Then governments must spend millions tending the neglected properties -- mowing lawns, picking up trash and demolishing structures. Just about every institution feels a pinch. School officials fret about eroding tax bases, banks lay off hundreds of workers, and home builders scale back construction plans. Real estate agents watch sale prices plummet. A cup of coffee now sells for more than some houses.

• More than 120 houses in Cleveland are being offered to the city for a buck apiece because the U.S. Department of Housing and Urban Development can't find other buyers.

For more, see The Foreclosure Crisis: What it means for Northeast Ohio.

Texas Real Estate Appraiser Gets 5 Years For Defrauding Lender; Ordered To Fork Over $2.3 Million

In Arlington, Texas, The Dallas Morning News reports:

• An Arlington real estate appraiser has been sentenced to five years in prison after participating in what U.S. Attorney Richard Roper called a widespread North Texas home scam that cost Countrywide Home Loans millions of dollars. In August, Gandhi Ben Morka, 52, was found guilty on a charge of conspiracy to commit wire fraud, four counts of wire fraud and two counts of mail fraud after a weeklong trial. In addition to the five-year sentence handed down Tuesday, he must repay $2.3 million. Mr. Morka was accused of working with seven others who were indicted in May 2005 on mortgage fraud charges – Sean Cung-Kim Nguyen, Dai Quoc Nguyen, Xuyen Thi-Kim Nguyen, Tam Nguyen, Myna Tran, Hong Thanh Duong and Cuc Kim Tran. Mr. Roper's office said that most of those seven have been convicted and sentenced to prison.

For more, see Arlington real estate appraiser sentenced to 5 years for fraud (Scam cost Countrywide millions, U.S. attorney says).

Vegas-Area Cops Going Undercover To Nail Fraudsters

In Las Vegas, Nevada, KLAS-TV Channel 8 reports:

• As the number of home foreclosures in the valley increases, so do the number of people getting ripped off by fraudulent companies. But Thursday, Metro Fraud investigators gave new details about their plans to crackdown on companies preying on people trying to save their homes.

***

• Metro Investigators [...] are sending a warning -- fraud investigators are going undercover to crackdown and protect people from this ballooning white collar-crime.
  "We've already got it set up to apply for mortgages. We are looking to go after those committing fraud and victimizing our citizens. They can expect to see us and the FBI taking them away in handcuffs," said [Metro Fraud Lt. Bob Sebby].

For more, see Metro Warns of Growing Real Estate Fraud.

Family, Friends Come Forward In Bail Out Attempt For Akron-Area Mortgage Fraud Suspect

In Akron, Ohio, the Akron Beacon Journal reports:

• Five family members and friends of former Evergreen Corp. President David B. Willan offered their homes and property Tuesday to back a signature bond that defense lawyers are requesting for Willan's release from the Summit County Jail. Willan, 37, is charged with multiple first-degree felonies in a 147-count Summit County indictment alleging widespread Akron-area mortgage fraud. He has been held in lieu of a $3 million bond since his Dec. 19 arrest. His lawyer, William Whitaker, said at Tuesday's hearing that Willan's business was taken over in bankruptcy court and that he no longer has any assets to finance a flight from prosecution.

For more, see Family, friends offer property, homes for ex-Evergreen president's jail release.

Go here for other posts on the Akron-area 147 count mortgage fraud indictment.

Angry Volunteer Firefighters Sound Off At Arson Sentencing Of Financially Strapped Homeowner Seeking Quick Cash

In Windsor, Ontario, The Windsor Star reports that 28-year-old William Donald Rushlow was sentenced in Ontario Superior Court Wednesday to a year in jail for torching his home to collect the insurance proceeds. According to the story, the evidence at trial showed that he paid off his delinquent insurance premium the day before he set fire to his house. Deeply in debt, Rushlow sought to walk off with $297,000 from the fire. In sentencing Rushlow, the judge claimed that she was greatly influenced by the victim impact statements filed by the volunteer firefighters called to put out the blaze:

• Many of the firefighters wrote that they felt a trust had been violated when they discovered that they had put their lives on the line, not in service to a fellow citizen in trouble, but to a man hoping to cash in on his insurance policy. Firefighter Cindy Feurth stated she felt "very afraid" as she risked her life to crawl on her stomach up a set of stairs to bring a water line into the flames. "It angers me now to know it was intentional," she said. "I do not appreciate putting my life at risk ... for someone else's financial gain."

Reportedly, he was convicted on five of the six arson and fraud-related charges after more than four weeks of trial in which he pleaded not guilty and defended himself without the help of a lawyer. The trial also revealed on three prior occasions, Rushlow filed successful insurance claims totalling almost $24,000 for fire losses to cars he owned. For more, see Lakeshore man who set fraudulent blaze sent to jail.

Editor's Note: Getting only a year in jail after forcing prosecutors to go to trial in a case resulting in convictions on five (presumably all felony) charges might go a long way not to deter, but to encourage, others in "arson for insurance cash" schemes.

Suspicious Blaze Hits Vacant Vero Home; Evidence Points To Foreclosure Problem

In Vero Beach, Florida, TC Palm reports:

• Authorities are calling a fire at a unoccupied home in Vero Lake Estates on Monday suspicious. Firefighters and the Indian River County Sheriff's Office responded to 911 calls about the blaze at 10 p.m. Monday at 8715 103rd St. Flames from the blaze were rising as much as 15 feet above the single-story home, said a deputy who arrived before firefighters. [...] Authorities said they found an empty garage, a sparse collection of furniture and a mostly empty refrigerator in the home after the fire was extinguished. Furniture, such as dressers, was in the bedrooms, but little clothing was found, the report said. Mail found inside the kitchen indicates the home may be in foreclosure, the Sheriff's Office report said.

For more, see Fire at empty Vero Lake Estates home deemed suspicious.

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

Realtors-Turned-Animal Rescuers Seek Adoptive Homes For Four-Legged Foreclosure Victims

In East Contra Costa County, California, KGO-TV Channel 7 reports:

• People aren't the only ones losing their homes to the worsening mortgage crisis. Here in the Bay Area, pets are being abandoned when their owners are forced to move out. However, a group of realtors in East Contra Costa County has taken it upon themselves to offer these animals a helping hand.

For more, see Canine casualties of the mortgage crisis.

For more on foreclosures and family pets, go here, and go here. petsII and foreclosures

Akron Animal Shelter Affected By Area Foreclosures

In Akron, Ohio, the Akron Beacon Journal reports:

• The Humane Society of Greater Akron, which rescues ill, injured, abused or neglected animals, is struggling to house 200 dogs and 200 or so cats in a facility designed for only 125 animals, said new executive director Karen Conklin. She has issued a plea for adoptions. The animals ''just keep coming,'' she said this week inside the ramshackle shelter -- a former barn attached to a two-story building on Quick Road in Boston Township. [...] Conklin speculated that the the high foreclosure rate is contributing to the overcrowding. She theorized that pet owners are forced to move into properties that don't allow pets. ''Our humane officers are definitely seeing people leaving animals behind'' in foreclosed properties, said Conklin [...] .

For more, see Akron area Humane Society shelter packed with dogs and cats.

For more on foreclosures and family pets, go here, and go here. petsII and foreclosures

WaMu Blacklisted Real Estate Appraiser For Refusing To "Play Their Games," Says Suit

A Washington Post story appearing in the Chicago Daily Herald reports:

• [A] California appraiser has filed suit against the country's largest thrift institution, Washington Mutual Bank, charging that she was blacklisted for refusing to provide favorable appraised values despite declining market conditions. The suit by Jennifer Wertz comes just two months after the state of New York sued an appraisal management company, First American eAppraiseIT, for allegedly giving in to pressure from Washington Mutual to inflate property values for loan applications -- thereby contributing to ongoing mortgage market losses. EAppraiseIT and LSI, a unit of Fidelity National Information Services, were also cited in Wertz's suit as contractors to WaMu.

***

• Pamela Crowley, an appraiser in Cape Canaveral, Fla., said the California suit should be a siren in the night for lenders. "They have threatened and taken so much business away from competent and ethical appraisers who refused to play their games that now we have nothing to lose. We are going to fight, and we're going to tell everybody what's been going on."

For more, see Suit blows whistle on bank-influenced appraisals.

DA Paperwork Screw-Up Lands Mortgage Fraud Indictments Of 28 "Down The Drain"

KHOU-TV Channel 11 in Houston, Texas reports:

• A new grand jury is now on the job in a high profile mortgage fraud investigation. The original indictments of 28 people in this case were thrown out after a paperwork mistake at the DA’s office. That error sent all the grand jury work from the last two months down the drain. The new grand jury is deciding whether to indict the suspects in the mortgage fraud case again.

Source: Newly formed grand jury hearing mortgage fraud case.

See also:

• Dismissed Cases Get New Grand Jury,
• Medina grand jury debacle hampers other cases (Tossed indictments may harm huge mortgage fraud case).

For story update, see

• 29 reindicted in mortgage probe,
• Legally Speaking: Twelve Angry Men (and Women).

Watch Out For Reverse Mortgage Scams, Says Florida AG

From the Office of the Florida Attorney General:

• Attorney General Bill McCollum [yesterday] issued a consumer advisory warning Florida’s senior citizens about a mortgage-related scam that may target them directly. As he unveiled legislation this week to combat mortgage “foreclosure rescue” scams, the Attorney General also cautioned senior citizens about scams associated with reverse mortgages, a type of home equity loan frequently abused by con artists and scammers. These loans are often popular options for senior citizens because they offer a cash source which can help meet unexpected medical expenses, supplement social security and more.

***

• Unfortunately, as the popularity of reverse mortgages grows, so does the potential for fraud. Predatory lenders, unscrupulous loan agents and dishonest brokers may target senior citizens who may be anxious about their financial security. Deceptive practices and allegations of high-pressure sales tactics are being more frequently encountered as senior citizens are being taken advantage of under the guise of a helpful and legitimate reverse mortgage. Borrowers also run the risk of being steered into inappropriate loans and annuities by sales agents and insurance brokers who could be working together without disclosing that relationship to the borrower. Attorney General McCollum noted that reverse mortgages can serve a purpose when financed through legitimate lenders.

For more, see Florida AG News Release: Seniors Should be Wary of Reverse Mortgages Scams.

For other posts related to reverse mortgages, go here , and go here. reverse mortgage yak

Public Hearing Today On Washington State Foreclosure Rescue Bill

In Washington State, the following blurb is buried at the end of a page in The Olympian:

• A bill requested by Attorney General Rob McKenna aimed at preventing mortgage-foreclosure scams is scheduled for a public hearing. The Senate Committee on Consumer Protection and Housing will hear SB 6431 at 8:30 a.m. The bill would help reduce foreclosure-rescue schemes that include an option to allow the original homeowner to buy or lease back the property from a buyer, McKenna said. [...] The law would require that a written contract with terms be completed, signed and dated by the homeowner and the purchaser before the property's transfer; allow the foreclosed homeowner to cancel the contract within five days; and require that the purchaser demonstrate the former homeowner is able to meet the terms of the contract, including making interest and lease payments.

Source: McKenna Bill Heard.

Go here for SB 6431 (bill history, links to relevant documents) (entire text).

Go here for companion bill HB 2791 (bill history, links to relevant documents) (entire text).

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For story update (3-14-08), see Washington State Passes Foreclosure Rescue Legislation; Currently Awaits Governor's Signature.

"For Profit" Foreclosure Rescue To Be A Felony, Says Proposed Virginia Statute

In Richmond, Virginia, the Daily Press reports:

• Del. G. Glenn Oder has introduced legislation to prohibit people from participating in or servicing foreclosure rescues for profit. A violation would be a felony. Oder, R-Newport News, said he is working with the lenders, real estate investors, HOME [Housing Opportunities Made Equal of Virginia Inc.] and other stakeholders to ensure that the legislation doesn't unwittingly outlaw legitimate efforts to help financially squeezed homeowners. [...] The bill likely will be considered by a House of Delegates committee next Tuesday. It's one of several introduced in the 2007 General Assembly as a result of problems in the housing market, including the subprime mortgage collapse that has led to a spike in foreclosures.

***

• One of the most common foreclosure rescue scams is a lease-buyback arrangement, according to HOME. The troubled homeowner surrenders title with the aim of renting the home and buying it back later. But the rent is usually so high that the deal is unworkable, and the homeowner loses the property to the "rescuer."

***

• Del. Sal Iaquinto, R-Virginia Beach, also has introduced legislation addressing the problem. His bill would require foreclosure rescuers to fully disclose their services, allow homeowners to rescind a contract and authorize the attorney general to enforce violations. Iaquinto's bill is well-intended but does not go as far as Oder's, which is modeled after a Massachusetts law, [HOME spokesperson Helen] O'Beirne said. She said the two bills may be merged before reaching the House floor.

For more, see Bill would make foreclosure scams a felony.

For Del. Oder's proposed law, see HB 408 (summary and status report) (full text),

For Del. Iaquinto's proposed law, see HB 947 (summary and status report) (full text).

March 13, 2008 update:

Go here for the current version of HB 408 (summary and status report) (full text), which, as of 3-13-2008, has been passed by the House and Senate and awaits the Governor's signature.

More On The Torching Of Financially Strapped Texas Supreme Court Justice's Home

The Southeast Texas Record ran a column recently on the unusual case of the financially strapped, Texas Supreme Court Justice David Medina who, along with his wife, was indicted recently in connection with a fire to their home that fire investigators called arson. Fire investigators grew suspicious when they discovered the use of an accelerant to set the blaze, coupled with Medina's financial problems, including a mortgage foreclosure action against him that was settled only about six months before the home was torched.

The story took an interesting twist when, within one day of the indictment, the Harris County (Houston) District Attorney sought and obtained a dismissal of the indictment. The story also describes the reaction to the decision to dismiss the indictments by the foreman and assistant foreman of the grand jury that handed them down, as well as the possible "fire" they face for going public with their reaction to the dismissals (grand jury deliberations are supposed to be secret).

For more, see A Judicial Career Up in Flames? The Strange Case of David Medina.

See also:

• KHOU-TV Channel 11 (Houston): Prosecutor: Accusations of payback in Medina case 'a crock',
• Texas Lawyer (appearing on law.com): Foreman: Grand Jury Wants to Make Presentation on Medina Investigation to Incoming Panel ('You've got 12 angry jurors,' says foreman).
  
  

Go here for other posts on David Medina. foreclosure arson xerox