City Of Buffalo Suit Over Vacant Abandoned Foreclosures The First In What May Be A Wave Of Legal Actions Against Lenders

In New York, The Buffalo News reports:

• The city is suing 28 national lenders and servicers — including two local banks — to recoup between $1 million and $2 million it estimates it will have to spend on securing and demolishing 58 vacant properties. In doing so, it’s trying to address the problem caused when no one takes care of a house. The lawsuit seeks to hold the lenders responsible, and accuses them of allowing the houses to “become so dilapidated, deteriorated, abandoned and/or decayed so as to present a danger to the health, safety and welfare of the public.”

• The lawsuit says the servicers “have failed to take appropriate action to protect or dispose of these properties,” and it says the conditions of the houses violate both city and state laws. And it asserts that the city now “has a duty to abate these nuisances by demolishing the abandoned and blighted structures.”

• “This is the first lawsuit that I would expect in a series. It’s our first strike in a wave that would obviously focus on more,” said Alisa A. Lukasiewicz, Buffalo’s corporation counsel. “This is our attempt to have banks take responsibility without walking away from properties.” The lawsuit covers a small fraction of the total number of vacant properties citywide, but sought to include a broad swath of the mortgage servicing industry among the defendants. “We considered these to be some of the most severe properties,” Lukasiewicz said. “To the extent that there are more properties, we will definitely be naming those as defendants in further actions.”

For more, see Buffalo sues lenders over abandoned houses in foreclosure (City wants them to pay for demolition when owners are forced out after foreclosure) (if link expires, try here).

To view the lawsuit, see City of Buffalo v. ABN Amro Mortgage Group Inc., et al. (3.67 MB; lawsuit also available here, courtesy of the law firm Skadden, Arps, Slate, Meagher & Flom LLP). If there's a problem with this link, email me at HomeEquityTheft@yahoo.com and I'll email it to you (please put "City of Buffalo v. ABN Amro" in the subject line).

Go here for other posts on the City of Buffalo lawsuit against lenders abandoning foreclosed properties.

Go here for other posts on vacant homes leaving its mark on neighborhoods. neighborhood destruction from foreclosures I

Countrywide Postpones 103 Foreclosure Sales In Response To Suit Accusing It Of Foreclosing On Homeowners Current On House Payments

The Wall Street Journal reports:

• Countrywide Financial Corp. voluntarily postponed 103 foreclosure sales scheduled for yesterday in Texas in connection with a private lawsuit that accuses it of trying to foreclose on homeowners who emerged from bankruptcy and were current on their mortgages. That allegation, which the company denies, is also one of the issues raised by a federal bankruptcy watchdog in suits it filed against the company last week. [...] The U.S. Trustee Program last week sued the company in three states for "bad-faith conduct" and "abuse" of the courts. In Florida, the U.S. trustee alleged that Countrywide tried to foreclose on a home after the borrowers had eliminated the company's mortgage through a bankruptcy proceeding four years earlier.

For more, see Countrywide Delays Foreclosure Sales (subscription may be required; if no subscription, try here, then click link for story, then "refresh" browser if needed).

See also, Countrywide Is Sued Again by U.S. Overseer.

• [U.S. Trustee Donald] Walton said that after a judge ruled Countrywide did not have a valid lien, it nonetheless pursued claims for nearly four years, including an attempt to foreclose, causing unnecessary delay and expense. Countrywide voluntarily dismissed its foreclosure complaint in October, the trustee said. “Countrywide’s failure to ensure the accuracy of its claims and pleadings has resulted in an abuse of the bankruptcy process and has prejudiced and will continue to prejudice, parties in interest in the bankruptcy cases in which Countrywide participates,” Mr. Walton said.

For the Florida U.S. Trustee's lawsuit against Countrywide, see Walton v. Countrywide Home Loans Inc.

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

Alleged Strong-Arming Massachusetts Mortgage Lender The Target Of Developers' Lawsuits

Stories of overreaching money lenders looking to squeeze property owners for high interest and fees, if not their real estate, are not limited to foreclosure rescue operators scamming unsophisticated homeowners, as a recent Massachusetts story in the Worcester Telegram & Gazette News reports:

• At least six real estate developers who borrowed money from a Marlboro-based investment firm with ties to prominent Worcester businessman David G. “Duddie” Massad now claim they were later strong-armed by the company under threat of financial ruin to make unusual payments, do costly favors or sign over an ownership interest in property.

• Their stories of LBM Financial LLC allegedly driving them to the brink of foreclosure or bankruptcy with exorbitant interest rates — and then taking advantage of their financial vulnerability — mirror racketeering complaints filed against LBM, Mr. Massad and others in a series of civil suits recently combined into one action in U.S. District Court.

***

• In a general scenario alleged by six developers identified by the Telegram & Gazette, [developer Bernard J.] Laverty said he first borrowed from the Marlboro firm about five years ago based in part on promises that, once he got his projects started, it would help him get a traditional bank loan at a far lower interest rate than the 16 percent charged by LBM. But the promised bank loan never came, he said, and the company stymied his efforts to refinance his debt. Mr. Laverty said he eventually fell behind on his payments to LBM, triggering a default interest rate as well as a series of penalties and fees that drove up his effective interest rate to a budget-busting 32 percent. Then came the demands, he said. “It was, ‘If you don’t do this, we’re going to do that.’ Either I agree to do whatever they say or they foreclose on all my stuff, and I’m out of business,” Mr. Laverty said. “It was a nightmare.”

***

• Worcester developers Nicholas J. Fiorillo and Robert Depietri Jr. were the first to lodge racketeering allegations against LBM, Mr. Massad, Mr. [Marcello M.] Mallegni and others in court. A federal judge last month combined their lawsuits into one megasuit seeking $118 million in damages. Mr. Fiorillo previously sued, making similar allegations, in Worcester Superior Court, but eventually lost that case.

For more, see Strong-arm tactics are alleged (LBM Financial target of complaints).

For story update, see Fourth racketeering lawsuit filed (Massad, Mallegni accused by Marshfield man).

Go here for other posts related to this story.

Editor's Note:

In "The law is a ass" department, Massachusetts has an interesting usury statute (M.G.L. Chapter 271: Section 49. Criminal usury) that, while it prohibits charging usurious rates on loans, it apparently also provides that it's okay to do so provided you give the Massachusetts Attorney General advanced notice that you're going to do it (M.G.L Ch. 271, Sec. 49(d)). As it relates to this story, it appears that LBM Financial did just that. Go here to read the LBM Financial letter telling the Massachusetts AG it will be charging usurious rates.

("The law is a ass" - quote courtesy of Mr. Bumble, from CHARLES DICKENS, Oliver Twist, chapter 51, p. 489 (1970). First published serially 1837–1839.)

North Jersey Foreclosure Rescue Operator Back In The News

In Northern New Jersey, The Record reports:

• Kevin and Jean Petterson of Rutherford fell behind on their mortgage payments in mid-2005 after Kevin, a truck driver, broke his ankle and was unable to work for several months. In 2006, facing foreclosure, the couple got a letter from a Scotch Plains company, Elite Financial Solutions, that offered to help "stop the foreclosure process!" It promised "No gimmicks or tricks." But Kevin Petterson, 41, says the company left his family worse off than before -- in deeper debt and in danger of losing their small Cape Cod. "I'm going to have to go Chapter 7 [bankruptcy],'' Petterson said.

***

• In a recent interview, Steve French, president and CEO of Elite Financial Solutions, denied any wrongdoing and said Elite Financial should not be lumped in with unscrupulous companies that strip away clients' home equity. [...] Consumer advocates and bankruptcy lawyers say the number of companies offering questionable services to distressed homeowners is on the rise in New Jersey. Phyllis Salowe-Kaye, head of New Jersey Citizen Action, said the group has been receiving more complaints about them since last fall.

For more, see Betting the house (if link expired, try here).

WABC-TV Channel 7's investigative reporter Sarah Wallace recently did an investigative report on Scotch Plains, New Jersey-based foreclosure rescue operator Elite Services and its owner, Steve French. For more on this report, see Investigating foreclosure rescue firms.

Go here to view the pending New Jersey 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, or go here and enter A281 in "Bill Search" for bill history.

For a related story, see PolitickerNJ.com: Cohen/Schaer/Spencer Bill Granting Subpoena Power To Investigate Foreclosure Consultants Advances.

"Fractional Interest" Foreclosure Rescue Operator Denied Bail In $50M Bankruptcy Fraud Case

In Topeka, Kansas, The Topeka Capital Journal reports:

• The defendant in a $50 million bankruptcy fraud case is a flight risk and won’t be allowed out on bond, a federal judge ruled Monday. “When Isaac Yass was arrested last week in Los Angeles, agents found $10,000 in cash on a counter in his apartment and four packed travel bags near the front door,” said U.S. Attorney Eric Melgren. Yass, 41, was charged in an indictment unsealed last week in Topeka with six counts of mail fraud and six counts of aggravated identity theft.

• The indictment accused him of running a scam in which homeowners who were behind on their mortgage payments paid him to hold off foreclosure by filing fraudulent bankruptcy petitions. The indictment says Yass filed petitions on behalf of fictitious people who claimed to have a fractional interest in the properties in foreclosure. The result was an automatic stay in the foreclosures, halting any further actions by creditors against the properties.

For more, see Bankruptcy fraud defendant ruled a flight risk.

Go here for other posts on foreclosure rescue scams utilizing fractional interests and bogus bankruptcy filings.

Sacramento Real Estate Fraud Unit Funding Declines As Complaints Increase

In California, The Sacramento Bee reports:

• The funding for real estate fraud investigations and prosecutions has dwindled to the lowest level since 2001 in Sacramento County, even as the two detectives who investigate the crimes say they're fielding a mounting number of complaints. In real estate fraud units, investigators' and prosecutors' salaries are funded with $2 fees paid each time certain deeds are filed in the county recorder's office. [...] The timing could hardly be worse: Eroding equity has laid bare scams that went unreported in the days of big profits and fast money. Meanwhile, new hucksters are preying on those facing hard times, detectives say.

Among some of the scams mentioned in the story:

1. foreclosure consultants offering homeowners lease-back or buyback deals,
2. squatters moving into unoccupied bank-owned homes, changing locks and hooking up the power - some just live rent-free hoping to squeeze a few bucks from the banks to leave without a lengthy eviction,
3. scammers advertising foreclosed homes as "for rent," collecting a deposit from a prospective renter, and then making themselves scarce,
4. scammers taking title to homes, filing for bankruptcy protection, delaying the foreclosure process for months or years and renting out the houses in the meantime, pocketing the cash while stiffing the mortgage holder out of its monthly payments.

For more, see Sacramento realty fraud unit's funds decline; complaints rise.

California Man Used Forged Lien Satisfactions To Clear Title To Property, Says DA

In California, the Ventura County Star reports:

• A Simi Valley resident is on trial in Ventura County Superior Court for allegedly filing and recording five false documents, and on two counts of forgery.

***

• Prosecutors allege [Aubulghasem] Ahmadpour was facing foreclosure proceedings on his Simi Valley residence, after he had defaulted on one of the loans used to finance the residence. To clear the title so he could refinance the house, [...] Ahmadpour allegedly recorded with the county Recorder's Office a false Reconveyance of Trust Deed [ie. satisfaction of mortgage], which contained the forged signatures of two people.

• In another incident, a victim was awarded judgment in Los Angeles County against Ahmadpour for $151,220. The award involved a business dispute, prosecutors said. Again, in order to clear the title to the house, Ahmadpour recorded false documents with the Recorder's Office [...], each containing forged signatures, according to prosecutors.

• In another business dispute, a third victim was awarded $113,900 against Ahmadpour at the conclusion of a civil trial. Another lien was filed against Ahmadpour's residence.
  Prosecutors said Ahmadpour recorded two false Satisfaction of Judgment documents [...]. According to prosecutors, the documents bore the forged signature of the victim, and were created for the purpose of clearing the title on the property.

For the story, see Multiple counts of fraud alleged in Simi man's trial.

Foe story update, see Man convicted of fraud is in custody.

Unsuitable Mortgage Leaves Financially Strapped Staten Island Senior Back In Foreclosure

In New York City, the Staten Island Advance reports:

• Behind the big lenders headlining the subprime crisis are smaller fraudulent players, who experts say played a role in the foreclosure crisis now gripping Staten Island and the nation. A new state law, which requires all people who originate mortgages in New York to undergo criminal background checks and fingerprinting, could help cut down on criminal behavior. It's a measure Islander Elizabeth Giammarino wishes had been in place when she dealt with two mortgage makers back in 2006.

• The same two men were recently arrested in Florida on drug charges. And one, Annadale resident Joseph Crapanzano, already had a criminal record for a real estate scam even before he promised to find a loan to help Mrs. Giammarino's mother stop foreclosure on her Great Kills home. But 75-year-old Rose Marie Giammarino only sunk deeper into debt and back into default after Crapanzano and Mark LaMassa got her an "interest only" $350,000 mortgage in 2006. The loan doubled her monthly payments and was due to be paid in full after one year -- an impossible proposition, attorneys at the Homeowner Defense Project at Staten Island Legal Services argue in court papers.

***

• Elizabeth Giammarino said she learned only on closing day that the money was coming from a private individual, not a bank. She balked at the high interest rate and monthly payments, but said she was afraid to back out because foreclosure of her mother's home was imminent. "I was at the point where I thought I had no choice," she said.

For more, see Good Faith, Bad Loans, More Misery (Woman, 75, seeking to keep her home falls victim to a system with few restraints).

Go here , here , here , here , and here for other posts on elder financial abuse. valedictorian

NY AG, Fannie, Freddie, Feds Reach Agreement Expected To Deal Major Blow To Appraiser Strong-Arming, Appraisal Fraud In Home Mortgage Lending Industry

An announcement from the New York State Attorney General's Office:

• Attorney General Andrew M. Cuomo [yesterday] announced that the nation’s two largest purchasers of home loans, Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE), have entered into cooperation agreements requiring them to only buy loans from banks that meet new standards designed to ensure independent and reliable appraisals. The agreements, among the New York Attorney General, Fannie Mae, Freddie Mac and their federal regulator, the Office of Federal Housing Enterprise Oversight (OFHEO), also create an independent organization to implement and monitor the new appraisal standards. [U.S.] Senator Charles Schumer, Chair of the Senate Banking Committee’s Housing Subcommittee, praised the agreement and the reforms which he has supported.

• “With this agreement, Fannie Mae and Freddie Mac have become leaders in transforming the mortgage industry,” said Cuomo. “Now national banks have a clear choice: immediately adopt the new code and clean up appraisal fraud in the mortgage industry or stop doing business with Fannie Mae and Freddie Mac – it is that simple.”

***

• “Today’s agreement with Fannie Mae and Freddie Mac begins to set right what had gone so horribly wrong in the mortgage industry – rampant appraisal fraud,” said Cuomo. “The integrity of our mortgage system depends on independent appraisals. Again and again our industry-wide investigation found that banks were putting pressure on appraisers to drive up the value of loans just to make a quick buck. We believe the new standards, and the new independent monitor agreed to today, can begin to erase this problem from the industry. I want to particularly thank Senator Schumer for all of his help in readying this important agreement today.”

In exchange for Fannie Mae & Freddie Mac entering into these agreements, Attorney General Cuomo has agreed to terminate its investigations into Fannie & Freddie. However, a lawsuit by the NY AG alleging widespread dubious appraisals against First American and its subsidiary eAppraiseIt is still pending, and the NY AG's industry-wide investigation into mortgage fraud continues.

In addition, an impending turf battle between the New York AG's office and OFHEO, a federal government agency, regarding the investigation into Fannie and Freddie has, by reason of these agreements, has apparenly been settled amicably (see earlier post - Feds vs. NY AG: Lending Fraud Probe Turf Battle Emerging?).

For a summary of the agreements, see NY Attorney General's Press Release: New York Attorney General Cuomo Announces Agreement With Fannie Mae, Freddie Mac, And OFHEO (Nation’s Two Largest Purchasers of Home Loans Agree to Only Buy Mortgages From Banks That Meet Requirements of New Home Value Protection Code ~Independent Institute Established with $24 Million from Fannie Mae and Freddie Mac to Implement and Monitor Code ~Senator Schumer Praises Agreement).

Go here for the OFHEO Press Release.

Click below for the Home Value Protection Program and Cooperation Agreements:

• NY Attorney General and OFHEO with Fannie Mae ,
• NY Attorney General and OFHEO with Freddie Mac.

Go here for the newly adopted Home Valuation Code of Conduct.

Thanks to Bill Collins of Crossroads Abstract, Rochester, NY for the heads-up on this announcement.

Feds Target Two More Foreclosure Rescue Operators With Civil Suits

The Federal Trade Commission announced last week:

• As part of the Federal Trade Commission’s intensified efforts to protect consumers from mortgage foreclosure rescue scams, the agency has filed two lawsuits charging six individuals and their businesses with falsely claiming that they will stop foreclosure. The FTC will seek to bar them from further violations and make them forfeit their ill-gotten gains.

***

• In the first case, Florida-based Mortgage Foreclosure Solutions, Inc., Debra Behrens, and Michael Siani are charged with falsely representing that they will stop foreclosure in all or virtually all instances, in violation of the FTC Act, which prohibits unfair and deceptive acts or practices. They allegedly claim that they can stop foreclosure regardless of consumers’ hardships or payment histories, stating in one such claim, “We are so confident of our abilities to provide you with a solution in stopping your foreclosure that we guarantee our services in writing to you.” [...] According to the FTC’s complaint, [...] the defendants allegedly charge a $950 advance fee and a $250 processing setup charge, and, after receiving consumers’ money they fail to provide updates about the foreclosure proceedings or return consumers’ telephone calls. [...] Many consumers ultimately lose their homes to foreclosure, and others avoid foreclosure only through their own efforts.

• In the second case, the defendants, all based in Texas, are National Financial Solutions, LLC, National Hometeam Solutions, LLC, United Financial Solutions, LLC, Nationwide Foreclosure Services, LLC, Evalan Services, LLC, Elant, LLC, Elias H. Taylor aka Eli Taylor, Everard Taylor aka Everardo Taylor, Emanuel Taylor, and Edwin P. Taylor, Sr. aka Ed Taylor. They are charged with violating the FTC Act by falsely representing that they would stop foreclosure in all or virtually all instances, and that they would refund most or all fees if foreclosure could not be stopped. [...] In phone calls with consumers, they also claimed that, for an up-front fee ranging from $500 to $1,200, they could stop foreclosures on specific homes and would provide options other than filing for bankruptcy [according to the FTC complaint].

For more, see FTC Sues Two Mortgage Foreclosure “Rescue” Operations.

To view the two FTC lawsuits, see:

• FTC v. Mortgage Foreclosure Solutions, Inc., et al. (U.S. District Court - M.D. Fla.), and
• FTC v. National Hometeam Solutions, LLC; et al. (U.S. District Court - E.D. Tx.).

Virginia Beach Real Estate Operator Forged Docs, Embezzled Rent Money, Manipulated Sales Prices In Alleged Flipping Scam, Says Suit

In Norfolk, Virginia, The Virginian-Pilot reports:

• Two investors claim that a failed real estate company's president repeatedly broke the law in his dealings with them. Cary McEntee of Virginia Beach-based CM Development allegedly forged documents, embezzled rent money, manipulated sales prices and committed other misconduct, according to a complaint filed Thursday in federal court by investors Paul and Scott Dadaian. The company's stated business model was to buy dilapidated houses in low-income neighborhoods, renovate them and either rent them out or sell them. An investigation by The Virginian-Pilot last year found that more than half the homes were vacant and in various stages of disrepair. Many of the occupied homes did not generate enough rental income to support themselves.

***

• These allegations are an attempt to prevent a bankruptcy court from dismissing debts from McEntee and the company. [...] At its peak, the company and its investors owned roughly 250 properties throughout Hampton Roads, many of which were sold repeatedly among investors at ever-higher prices as the local real estate market escalated. [...] Since filing for bankruptcy protection, McEntee has testified that he repeatedly falsified loan documents to make it appear buyers used their own money to make down payments when McEntee actually provided the cash himself out of the sales proceeds. The FBI has begun an investigation.

For more, see CM Development exec caused them to lose millions, investors say.

Go here for links to earlier Virginian-Pilot stories on CM Development.

Go here for earlier posts on the CM Development flipping operation.

Cleveland Housing Court Judge Hammering Foreclosing Lenders With Fines, Code Violations

In Cleveland, Ohio, a story in The Associated Press recently reported:

• Judge Raymond Pianka views his courtroom as the emergency room of the foreclosure crisis. Weary of lenders and wholesalers who don't show up to answer to housing code violations like unsecured doors and windows on foreclosed properties, he began holding trials without them. He's put 12 companies on trial in absentia and has fined most, leaving each unable to sell any properties in the area until it pays up. Rust Belt cities, already beaten down by a miserable economy before foreclosures began spiraling nationally, are moving to cut the number of houses left vacant when the mortgage can't be paid. At stake are valuable tax dollars and the survival of neighborhoods.

***

• Vacant houses, some stripped bare of aluminum siding, dot the streets, casting a gloom on their well-maintained neighbors. "It scares people," said Joyce Porozynski, a block watch member who has lived in the neighborhood most of her life.

***

• [D]estiny Ventures of Tulsa, Okla., sent Pianka's court a check for $53,036.75 a few weeks ago to cover its fine plus interest and attorney fees. [...] As a housing court judge, Pianka is on the low rung of the judicial system, a bungalow among mansions. He's heard himself referred to as a "rat court judge" at judicial conferences. He embraces the role. "Many times I feel like the mouse that roared," he said, later adding, "Finally, they're paying attention to us."

For more, see Rust Belt cities fight glut of abandoned houses (Courts getting aggressive, cities establish land banks to try to slow blight).

Go here for other posts on vacant homes leaving its mark on neighborhoods. neighborhood destruction from foreclosures I

Recent Homebuyers Left In Lurch In Unfinished Subdivisions As Arizona Homebuilder Takes A Hike; Mechanics' Liens, Worthless Home Warranties A Concern

The Arizona Republic reports:

• A Scottsdale-based home builder is walking away from its investment in a south Chandler neighborhood, leaving unfinished houses and dozens of empty lots in foreclosure - and making residents who already bought homes concerned for the future of their property. Randall Martin Homes is abandoning its property in four Valley developments, including Portello at Dobson Creek, a subdivision southwest of Queen Creek Road and Arizona Avenue.

***

• [T]he builder's lien holders will take over ownership of the vacant lots and unsold homes, which could cause a three- to five-year delay in completing the development. [...] Since they've moved in, [one recent homebuyer couple] hasn't heard from the builder, who was supposed to complete final repairs within 30 days. The only company they have heard from is a subcontractor threatening to put a lien on their house if the builder doesn't pay a $500 bill.

***

• Though this is an unusual case of a homebuilder abandoning his property, [a spokeswoman with the Arizona Department of Real Estate] said there have been other signs of troubled developers in the Valley - especially mechanics liens, like the one being threatened against the Diefenbachers, being placed against homes.

For more, see Builder walks away from Chandler development.

In related stories, see:

• Arizona Republic (2-27-08): Builder set to abandon Gilbert lots (Randall Martin lets 4 area properties go into foreclosure),
• East Valley Tribune (3-23-08): Homebuyers seek help after builder walks away.

For other posts on builders accused of stiffing customers & subs, go here and go here. contractors stiff subs customers zeta

FTC Files Suit Against Central Florida Foreclosure Rescue Operator

The Federal Trade Commission announced last week:

• In an ongoing effort to crack down on businesses that prey upon homeowners facing foreclosure, the Federal Trade Commission has charged six businesses and three individuals with violating the Home Ownership and Equity Protection Act (HOEPA), the FTC Act, and the Truth in Lending Act (TILA) by enticing homeowners into high-cost, short-term loans secured by an additional mortgage on their homes. The FTC will seek to bar the defendants from further violations, make them forfeit their ill-gotten gains, and stop collection and foreclosure actions or efforts to seize or transfer properties.

• The defendants are Safe Harbour Foundation of Florida, Inc., Silverstone Lending, LLC, Silverstone Financial, LLC, Southeast Advertising, Inc., Keystone Financial, LLC, MT25 LLC, Peter J. Porcelli II, Bonnie A. Harris, and Christopher Tomasulo.

• According to the FTC’s complaint, Safe Harbour, Porcelli, Harris, and Tomasulo target homeowners facing foreclosure with claims such as “We have all the funds available to pay your bills and save your home from foreclosure. GUARANTEED!” The Silverstone companies and Keystone then provide high-cost, interest-only, short-term balloon-payment loans secured by second mortgages on homes already subject to foreclosure.

For more, see FTC Charges Mortgage Foreclosure “Rescuers” with Deceiving Homeowners.

In a related story, see the St. Petersburg Times: Scammer in trouble again (A millionaire, already in prison for credit card fraud, is accused of foreclosure deceit).

To view the lawsuit, see FTC v. Safe Harbor Foundation Of Florida, Inc., et al. (U.S. District Court, N.D. Ill.)

This suit now makes at least three civil suits against foreclosure rescue operator Peter Porcelli and his group of associates. To view the two other lawsuits (that I know of), see:

• Complaint - Clark, et al. v. Porcelli, et al. (U.S. District Court, M.D. Fla.),
• Heise, et al. vs. Porcelli, et al. (U.S. District Court, M.D. Fla.).

Go here for earlier posts on Peter Porcelli.

Boston Approves Ordinance Requiring Registration Of Foreclosed Buildings; $300/Week Fines For Failure To Comply

In Massachusetts, The Boston Globe reports:

• The Boston City Council voted unanimously for an ordinance pressuring mortgage companies to maintain foreclosed buildings. The ordinance, sponsored by Councilor Rob Consalvo, has the support of Mayor Thomas M. Menino and will take effect as soon as he signs it. Companies will be required to register foreclosed properties with the city, identify who is responsible for maintenance, and post their contact information at the property. Companies that fail to comply or to properly maintain vacant buildings face weekly fines of $300 per property. The ordinance is an attempt to prevent the deterioration of a growing number of foreclosed, empty buildings that dot the city's neighborhoods.

Source: City Council approves rules for foreclosed properties.

In a related Boston Globe story, see Menino opens "war room" to fight foreclosures.

C. Florida Foreclosure Rescue Operator Faces Another Suit; Racketeering, Conspiracy, Criminal Usury, TILA Violations Alleged

In Central Florida, the St. Petersburg Times reports:

• Two homeowners filed a lawsuit in federal court [last] week against Peter J. Porcelli, saying they lost their homes because of his foreclosure lending scam. Philip Clark and Tania Harris say Porcelli of Oldsmar and others associated with his Safe Harbour Foundation, Silverstone Lending and Silverstone Financial companies targeted them as part of a scam to save them from foreclosure through fraudulent loans. In October, a federal judge sentenced Porcelli to 13 years in prison for his part in a credit card scam that victimized tens of thousands of credit-poor consumers across the country. He also was ordered to pay restitution of more than $11.8-million. Porcelli was indicted in March on conspiracy, wire fraud, mail fraud and money laundering charges. Prosecutors said he had a telemarketing operation that preyed on 165,141 consumers nationally and took in nearly $12-million in illegal profits.

Source: Homeowners sue over loan fraud (2nd blurb from the top).

Included in the lawsuit are allegations of:

1. civil RICO violations by a pattern of racketeering activity and through the collection of unlawful debt (18 USC § 1961 et seq.),
2. Truth In Lending Act violations (15 USC § 1601 et seq.),
3. unlawful mortgage brokering and mortgage lending (Fla Statute Chapter 494),
4. criminal usury (Fla. Statute Chapter 687), and
5. civil conspiracy.

The homeowners also seek to void all liens, mortgages, etc. currenly clouding title to their homes by reason of the alleged acts of Porcelli and his confederates. To view the lawsuit, see Complaint - Clark, et al. v. Porcelli, et al. (U.S. District Court, M.D. Fla.).

To view an earlier lawsuit against Porcelli and associates making similar allegations, see Heise, et al. vs. Porcelli, et al. (U.S. District Court, M.D. Fla.).

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

Go here for earlier posts on Peter Porcelli.

Existing Second Mortgages May Be Major "Pothole" On Road To Refinance

Syndicated real estate columnist Kenneth Harney recently wrote:

• Everybody wants to help keep people in their houses and out of financial stress and foreclosure, right? That's what the Bush administration says, and that's what top executives of major banks, mortgage companies and Wall Street investors all say. But where the proverbial rubber hits the road -- at the point where individual homeowners seek to refinance out of unfavorable loans or modify their mortgage terms -- things may look different.

For more, including how a second mortgage holder's arbitrary refusal to "subordinate" their interest in favor of a refinancing first mortgage might create an insurmountable obstacle for a homeowner seeking to lower his house payments, see Lenders' policies stymie attempts at financial help.

Alleged Dubious Liens Slapped On Homes Results In California Man Facing At Least 327 Felony Fraud, Extorion Counts

In California, ABC30 TV in Fresno recently ran a story on 41-year old Jeff McCoon of Oakhurst, a local man who is going around buying old credit card debt for pennies on the dollar, filing lawsuits against the individuals who purportedly owe the money, and then slapping liens on their homes.

The dubiousness of his business practices is refected by the fact that McCoon is currently facing 327 felony fraud and extortion counts in Southern California because of his business practices. ABC30 Action News is now reporting that prosecutors in Northern California are also on his trail and it has uncovered evidence McCoon has also done the same thing in Fresno. Reportedly, the Sacramento County District Attorney's Office will not talk unless and until they file a case.

For the story and link to the ABC30 video coverage, see Local Businessman Accused of Fraud (A Madera County man is facing criminal charges for what investigators say is an illegal way to collect old credit card debt).

Go here for other posts on zombie debt. zombie debt zeta

Philanthropic "Money Bags" Looking To Jump In & Provide Aid In Foreclosure Crisis

The Wall Street Journal recently reported:

• Some of the nation's wealthiest philanthropies are turning their attention to the growing foreclosure crisis, which some fear could usher in the type of urban blight that devastated pockets of American cities in the 1970s and 1980s. How to tackle it isn't clear. "Every big funder is out there trying to figure out how to participate in systemic responses," says George McCarthy, a senior program officer with the Ford Foundation. The problem, he says, is that "no one can figure out where the opportunity lies" and how philanthropic dollars can be spent most effectively.

***

• The impact of foreclosures on other people who live in the neighborhoods is "the part of the story that gets lost in the whole mortgage discussion," says [chief executive officer Ben] Hecht of Living Cities [a consortium of major foundations and financial institutions working to revive inner cities]. "When I go to some of these communities, it breaks your heart. Not only are the buildings boarded and abandoned, but you have people who have these homes in blue-collar neighborhoods. ... They are hard-working people. They did nothing wrong. We would like to be able to help them."

For more, see Foundations Weigh How to Allay Foreclosures (subscription may be required; if no subscription, try here, then click link for the story - and then click your "refresh" button on your browser; or just go here).

Go here for other posts on vacant homes leaving its mark on neighborhoods. neighborhood destruction from foreclosures I

NY Feds Charge Upstate "Investment Manager" Of Screwing Seniors Out Of $500K

In Rochester, New York, WHEC-TV Channel 10 reports:

• A man from Livonia is accused of bilking at least two elderly women out of nearly half a million dollars. So where did their life savings go? His name is Vincent Miller and he claims to be an investment manager but the FBI says he's a crook using elderly women to enrich himself financially. Miller, who lives in Livonia, is charged with wire fraud. Investigators say he told at least two elderly clients he was investing their money but instead took nearly half a million dollars of it and put it into his own bank account.

• The FBI says the scam came to light when the head of security at Miller's bank noticed suspicious activity in his account. Miller had been depositing large insurance checks payable to elderly widows and appeared to be using the money to cover personal expenses.

***

• In speaking with the elderly women involved in this case, both told News 10NBC they didn't want to comment publicly because they're embarrassed they lost their money.

For more, see I-Team 10 investigates: Livonia man accused of bilking elderly women.

Go here , here , here , here , and here for other posts on elder financial abuse. valedictorian

Caretaker Faces Charges Of Swiping $487K+ From Sightless Central Florida Widow

In Lutz, Florida, the St. Petersburg Times reports:

• Kay Dahman's money began disappearing in 2001. Authorities say it flowed from her account for nearly seven years, without her knowledge and against her will, into the hands of a thieving caretaker. Dahman is 93 now, widowed, childless and blind. She lost more than $487,000. A sheriff's detective said the caretaker used the money to buy a car and pay her own mortgage. The scam was discovered when Dahman's friend Teresa Bauer, helping her read her mail, found records of suspicious-looking purchases. The caretaker went to jail [last week], charged with felony theft, organized fraud and exploitation of the elderly. She is Barbara Mulert, a 61-year-old Lutz resident.

For more, see Caretaker accused of bilking blind widow (Since 2001, authorities say, the93-year-old victim has lost more than $487,000 to a friend).

Go here , here , here , here , and here for other posts on elder financial abuse. valedictorian

Ohio Woman Convicted Of Swindling One Elderly Victim; Still Faces Civil Suit For Pocketing $475K Farm Sale Proceeds From Another

In Lake County, Ohio, The News Herald reports:

• Janice Kucera smiled [last] Thursday as a Madison Township woman was convicted of befriending Kucera's octogenarian mother to get power of attorney over her. Lisa Hanusosky, 53, went on trial [last week] in Lake County Common Pleas Court on charges of taking money and a 2002 Nissan Sentra from Lucille New, now 86. New's daughter said she was relieved the jury found Hanusosky guilty of two counts of theft and one count of forgery. However, Kucera said she was disappointed they acquitted her on a fourth charge of grand theft of a motor vehicle. [...] Shortly after meeting New in 2005, Hanusosky gained access to her money and put her in a nursing home. Despite the fact that New had less than $20,000 to her name, Hanusosky wrote out checks on the victim's account to cover more than $5,000 of her own expenses and had the title of New's car transferred to her name.

In an earlier story, The News Herald reported:

• According to police, New has dementia and was not in her right mind when she met the suspect through her brother, Wadsworth Brewster, 87, who lives in Rae-Ann Nursing Facility in Geneva Township. Hanusosky also had power of attorney over Brewster and sold his farm, with Brewster's permission. After getting $475,000 from the sale of Brewster's farm, Hanusosky converted the proceeds of the sale to her own use to pay off her delinquent mortgage, according to a pending civil lawsuit filed against the suspect by the nursing home.

For more, see:

• Madison Twp. resident guilty of stealing from woman,
• Theft trial starts for Madison Twp. woman.

Go here , here , here , here , and here for other posts on elder financial abuse. valedictorian

California Elder Financial Abuse Victim Finds Life Savings Depleted; Family Member Suspected

In San Bernardino County, California, the Victorville Daily Press reports:

• Barbara Carroll, trusting her family, said she would give certain one’s blank checks. Today, her entire life savings of $30,000 has been depleted. Carroll is one of thousands throughout the state to be a victim of elder abuse — and the numbers are growing. [...] In spite of her health concerns, Carroll was one of few seniors willing to come forward with charges against her family. [...] With few options left, Carroll called [San Bernardino County's] Adult Protective Services and reported what had happened. APS assisted Carroll in filing a police report with the San Bernardino County Sheriff Department’s Apple Valley station. Carroll hasn’t heard any updates on her case since then, and hasn’t had any luck in getting an attorney to take her case.

• In the meantime, her granddaughter has since been arrested and is in jail on separate charges for stealing jewelry from her.

For more, see Financial abuse of elders on the rise.

Go here , here , here , here , and here for other posts on elder financial abuse. valedictorian

Cops, Insurance Industry Bracing For Foreclosure Arsons?

In Denver, Colorado, CBS4-TV reports:

• Law enforcement and insurance companies are bracing for a rash of arsons and fire claims as some homeowners become more desperate amidst the sagging economy and struggling housing market. Some homeowners faced with foreclosure are torching their homes for insurance money, experts said. "It's unusual, but in today's society with what's going on it's becoming more and more popular thing to do," said Kevin Dougherty, the Teller County Sheriff.

• Dougherty said Karl Mann allegedly set fire to his house in Woodland Park the same day deputies posted an eviction notice on his door. Investigators said Mann packed his stuff, poured camping fuel in the basement and set fire to the home he'd lost in foreclosure.

Among the concerns in a state like Colorado is that these home arsons could lead to wildfires. For more, see Insurance Companies Brace For More Home Arsons.

Go here for the Channel 4 video, Home Arsons Increase Amid Foreclosures.

See also, Medill Reports: Fears of foreclosure sparking arson for quick insurance cash.

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

NJ Home In Foreclosure Goes Up In Flames; Owner Goes Missing

In Cape May County, New Jersey, the Press of Atlantic City reports:

• A State Police helicopter on Thursday searched the woods around Steelmantown for a man missing since his house burned to its foundation Feb. 9. Richard Jargowsky Jr., 46, disappeared after the early morning fire, when a neighbor saw Jargowsky walking in the opposite direction of his Homestead Road home with an unidentified stranger. [...] The fire, which destroyed the two-story home, remains under investigation. Ulbrich said Jargowsky might be the only one who can say what happened. The house was under foreclosure. But Jargowsky reportedly had an agreement of sale that would have prevented a scheduled Cape May County sheriff's sale.

For more, see Search fails to find man missing since home burned. (no longer available online).

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

Iowa Couple Gets Up To Ten Years For Torching Home Lost In Foreclosure

In LeClair, Iowa, the Quad Cities Times reports:

• A couple who burned down their house lost in foreclosure, then filed a fraudulent insurance claim will spend up to 10 years in prison, a Scott County judge ruled Thursday. Lawrence and Patricia Atwood, who lived in a house on the outskirts of LeClaire, Iowa, were ordered immediately into custody after an emotional sentencing hearing before Judge J. Hobart Darbyshire. “The crime is of such magnitude it needs to serve as an example to others,” Darbyshire said after noting the recent high rate of foreclosures nationwide. He also cited the danger the fire posed to the volunteer firefighters who responded.

For more, see Atwoods get up to 10 years in case.

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

Water Shut-Offs Hurting Oakland-Area Tenants In Foreclosed Homes; Rent-Skimming Landlords Stiffing Local Utility District

In Oakland, California, the Contra Costa Times reports:

• With five kids at home, including an infant, Kimberly Isaac-Ray knows her family cannot go without water. But when her landlord went into foreclosure, and a bank took over the duplex where she lives, Isaac-Ray found herself without utilities. She was able to convince the East Bay Municipal Utility District to restore her water service after one day.

• Ida Hancox and her family weren't as lucky. They went three days without water in their foreclosed-upon apartment. Their foreclosed landlord had disappeared, and the bank stopped paying the utilities. "Tenants should not suffer because of someone else's mistake," Hancox told the board of directors this week.

• Directors agreed and set a moratorium on water utility shutoffs in any situation where a tenant is left in a foreclosed building. The moratorium will continue through March 11, when the directors plan to consider policy changes to deal with foreclosures and utility shutoffs, including changes suggested by Just Cause Oakland, a tenant group.

For more, see Group argues for tenant rights in case of landlord foreclosure (East Bay residents say their utilities were turned off because their landlords missed mortgage payments).

For story update, see Panel considers ban on water shut-off to tenants in foreclosed buildings. (3-7-2008)

For posts involving rent / equity skimming landlords who pocket rent and allow homes to go into foreclosure, go here, go here, go here, go here, and go here. equity skimming unwittingly epsilon

Builder Price Reduction Upsets Recent Homebuyers; Hurts Resale, Refinance Propsects

In Nashville, Tennessee, WKRN-TV Channel 2 reports:

• Neighbors in one Brentwood community are furious after their home builder lowered his prices on new homes by as much as $80,000. “We want them to sell what they said they’d sell and if they’re going to do this, we’re going to prohibit their sales,” said Rob Kusserow, who purchased a home in The Hills at Concord Place in Brentwood, a property developed by Centex Homes, one of the nation's largest builders. [...] “[It] kills resale. If you're a person who wants to refinance a mortgage you wouldn't be appraised at the level you owe” [said one homeowner].

For more, see Home Builder Lowers Prices, Neighbors Angry.

Overseas Internet Scammers Running Rental Hoaxes Hit Alaska; Bogus Ads Showing Up On Craigslist

In Alaska, the Anchorage Daily News reports:

• Overseas Internet scammers are including Anchorage residents among their targets in the latest scheme to hit online sites featuring classified ads, according to Anchorage police. The scam, which involves residential rental ads being listed by someone other than the property owner, has been making its way around the country for some time, but has just recently been reported here with at least three homes being fraudulently listed on Craigslist, said Detective Sgt. Ron Tidler, supervisor of the Anchorage police computer crimes unit. "I haven't come across anybody that has actually been duped by it, but sometimes people can be too embarrassed to report it," he said.

For more, see Rental hoax arrives from abroad (Internet Ads: Scammers pose as Anchorage property owners, police say).

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

Two Ohio Alligators 'Evicted' From Alleged Drug House Now Homeless, Seek New Home

In Montgomery County, Ohio, WHIO-TV Channel 7 reports:

• Animal authorities are still looking for a new home for two exotic pets seized from an alleged drug house Monday. Workers at Montgomery County's Animal Resource Center are currently caring for the alligators. The animals were discovered by U.S. marshals who were looking for a man on a probation violation. Officials said they are looking for a suitable animal rescue agency to take the animals. Alligators are illegal in Dayton.

Source: Alligators Still Need New Home.

See also WHIO Radio 1290 AM: Alligators Need a Home.

Georgia Cop Cops Plea To $80K "Drug Money" Embezzlement; Needed Extra Cash For Personal Expenses, House Payments, Avoiding Foreclosure

In Georgia, the Rome News Tribune reports:

• Former Bartow County Sheriff’s Office Captain Brenton James Garmon pleaded guilty in federal court [Wednesday] of embezzling about $80,500 from the department between 2004 and 2007. Prosecutors say Garmon used the money, which had been seized during drug investigations, to pay personal bills. At one point, they say, Garmon used some of the money to help him avoid foreclosure on his private residence.

For more, see Former Bartow officer pleads guilty to stealing $80,000.

Baltimore Non-Profit Waging Battle Against Foreclosures, Mortgage Rescue Scams

The Baltimore Sun reports:

• The attorneys in the modest office on Fayette Street are continually busy, never mind that clients find them only by word-of-mouth. They've got a service that few offer but many want: legal help for homeowners in foreclosure. [...] A foreclosure case for the borrower, [...] can look like a recipe for unbillable hours [for the homeowner's attorney] with dim hope of success. Little money from the cash-strapped clients. Little time allowed by the state's foreclosure law to prepare a case before auction. Little chance of winning.

• Civil Justice is trying to change that. It's suggesting changes in state law. It's advising private-practice attorneys who want to help homeowners. And it's litigating wrongful-foreclosure cases it thinks could in one fell swoop save homeowners' investments, pave the way for lawsuits and show attorneys how foreclosure cases can be won - profitably.

***

• Anticipating a flood of new pleas for help, Civil Justice wants to get more attorneys trained to take cases. It's organizing classes across the state. That's the way Civil Justice can make a bigger impact, [executive director Phillip R.] Robinson says, because it can never handle the cases of all the desperate homeowners who come calling. "We're pretty maxed out," he said.

For more, see Waging the fight for homeowners (Tiny nonprofit challenges foreclosures).

Go here for earlier posts on Civil Justice.

Mortgage Lenders Concerned By Nearing Federal Appeals Court Decision On Homeowner Class Actions In "Truth In Lending" Cases

(original post 2-28-08)
The Washington Post reports:

• A federal appeals court is nearing a decision on a battle between Chevy Chase Bank and a Wisconsin couple that could for the first time enable homeowners across the country to band together in class-action lawsuits against mortgage firms and get their loans canceled. The case is alarming Wall Street's biggest banks, which could bear the hefty cost of reimbursing all mortgage interest, closing costs and broker fees to groups of homeowners who uncover even minor mistakes in their loan documents.

***

• [B]y allowing plaintiffs to file class-action suits, the ruling would make it much easier and more affordable for groups of homeowners to get that relief, several lawyers and mortgage analysts said. Dozens of class-action homeowner lawsuits have been filed in California and elsewhere against the nation's largest banks. The success of these claims could turn on the decision in the Chevy Chase case.

***

• The law states that even a minuscule violation by a lender can lead to a mortgage cancellation, or rescission. For example, if the annual percentage rate calculation is off by one-eighth of a percent between preliminary and final loan documents or if a monthly payment schedule does not conform precisely to federal guidelines, some borrowers could get a refund for all they have paid to live in their homes for years. They would have to pay back the entire amount of the loan, but they could then seek a new mortgage on better terms.

• According to the inspector general for the Federal Deposit Insurance Corp., 83 percent of federally supervised banks that issued loans at the height of the housing boom in 2005 have been cited for "significant compliance violations." Lending abuses were more frequent among the tens of thousands of state-regulated banks and thrifts, such as the now-bankrupt New Century Financial, industry analysts said.

• But few homeowners have been successful in getting their loans canceled. Most people are unaware they have this right, consumer advocates said. Others have found the process too arduous and expensive, often requiring long legal battles. Chevy Chase said it negotiated two mortgage cancellations all of last year. That could change if the U.S. Court of Appeals for the 7th Circuit rules in favor of allowing homeowners to join class-action suits. Plaintiff attorneys also would have far greater financial incentive to take up such cases.

• "It's preposterous to think an individual can fight the bank on a loan," said [attorney Kevin] Demet, the lawyer for the Wisconsin plaintiffs. "And any attorney who's worth his salt does not want to pursue individual action. You could spend $50,000 to $70,000 on a case where you are going up against huge law firms that want to delay and hassle you for several years."

For more, see Door Could Open To Class Actions (When Borrowers Fight Back: Banks watch closely to see if a couple's legal struggle with their lender will launch a new front in the battle over troubled mortgages).

For stories on the Chevy Chase, option ARM class action lawsuit, see:

• The Washington Post: A Fight Over the Fine Print (Chevy Chase Bank Faces Suit Over Adjustable-Rate Mortgages),
• Milwaukee Journal Sentinel: Mortgage lawsuit may have big effect (Couple's low interest rate lasted a month).

For other posts on homeowners using Federal & state consumer protection statutes to try and undo bad mortgage loans, Go Here, and Go Here. undo mortgage loans TILA alpha

Two L.I. Women Charged With Pocketing $800K In Refinance, Forgery Scam, Says DA; 93 Year Old Alzheimer's Victim Now Faces Foreclosure

In New York City, the North Country Gazette reports:

• Two Long Island women, one of whom has since relocated to Pennsylvania, have been charged under New York State’s Hate Crime Law with stealing a total of $800,000 from a 93-year-old Queens man suffering from Alzheimer’s disease by fraudulently refinancing a property that he owned in Bayside to steal its equity and by using a “straw buyer” to steal his primary residence in Jamaica, Queens, out from under him. One of the women is also charged with stealing the elderly man’s identity to apply for credit cards in his name.

The suspects, Alexandra Gilmore, 36, formerly of Massapequa, Long Island and presently of 1550 Clark St., Pittsburgh, Pa., and Rebecca Tharpe, 30, of Brentwood, Long Island are variously charged with multiple counts of:

1. second-degree grand larceny as a hate crime,
2. second-degree grand larceny,
3. second-degree criminal possession of stolen property,
4. second-degree criminal possession of a forged instrument,
5. first-degree falsifying business records, and
6. first-degree and second-degree identity theft.

The prosecution is being handled by the Queens District Attorney's Office. For the details of the alleged scam, see:

• DA: Women Stole $800K From Disabled Man,
• Queens DA news release: Two Long Island Woman Charged Under Hate Crimes Statute For Allegedly Targeting 93-Year-Old Queens Man In $800,000 Mortgage.

Go here , here , here , and here for other posts on elder financial abuse.

Go here and go here for other posts on deed theft by forgery, swindle, etc. deed theft yahtzee whale

Crowded Jails Keep Two Convicted Foreclosure Rescue Scam Artists From Doing Hard Time

In Stanislaus County, California, The Modesto Bee reports on the story of Lonni Ashlock and Ronald Buhler, two men who last year pleaded no contest to six felony counts of ripping off troubled and vulnerable homeowners.

• Sentenced in September to a year in the county jail, these con artists have spent no time behind bars. They haven't had to eat jail food or even pick up trash as part of a work crew. To the contrary, they live at home and wear electronic monitoring ankle bracelets. The devices don't track their whereabouts -- only whether they are at home. They're supposed to leave only to go to work during a specified window of time, Stanislaus County Sheriff's deputy Royjindar Singh said.

• That stated, Ashlock and Buhler have been spotted in restaurants and movie theaters around town -- wearing their ankle bracelets, of course. That isn't part of the program, Singh said. "They're definitely not allowed to be going to restaurants for dinner, and to movies," he said. It's an honor system, Sheriff Adam Christianson said, and some of them aren't particularly honorable, or they wouldn't be in trouble in the first place. "These are two guys, in my opinion, who deserve to be in custody," the sheriff said. "We don't have the jail space. I'm as upset as anyone about this."

***

• Ashlock and Buhler preyed on people about to lose their homes to foreclosure, in some cases praying with them to get them to sign over their deeds for pennies on the dollar. [...] They scammed an 86-year-old woman with dementia, a 66-year-old schizophrenic, a woman with brain lesions and several other disabled people, according to court documents and testimony.

***

• They agreed last fall to do a year in jail for the six felony counts rather than face 50 counts and state prison time, if convicted. It already was a light sentence, considering that Bee reporter Garth Stapley found they had acquired at least 142 properties following a similar pattern. Ashlock and Buhler agreed to pay restitution to 19 and 20 families, respectively, and they've been going to court to watch their attorneys hash out how much they'll pay.

For more, see Scam artists avoid jail time, enjoy 'custody'.

Go here for earlier posts on Ashlock & Buhler.

Go here , here , here , and here for other posts on elder financial abuse. whale

Maryland Lawmakers Consider Slamming Brakes On Baltimore's "Water Bill" Foreclosures

In Maryland, The Baltimore Sun reports:

• State lawmakers are considering a moratorium on foreclosures stemming from unpaid water bills, a move that faces stiff opposition from Baltimore City officials who say that many property owners would not pay without the threat of losing their homes. Sen. James Brochin called Baltimore's tax-sale system under which homeowners face foreclosure over unpaid water and sewer bills "absolutely obscene." He said the city should rely on other means of leaning on residents who don't pay their bills, such as shutting off service or assessing late charges and liens that must be paid when a property is sold or refinanced.

***

• Increased scrutiny of tax-sale cases began after an investigation by The Sun last year showed that homeowners who owe just a few hundred dollars in municipal debts - including Baltimore City water bills - often are hit with thousands of dollars in fees from private debt collectors and can lose their homes if they don't pay. At least 400 city homes were lost over debts other than property taxes over a recent three-year period, an analysis of city tax records and court filings by The Sun found. Most stemmed from unpaid water and sewer bills, though some also included alley re-paving charges, sidewalk repairs and even fees to register rental property.

For more, see Lawmakers ponder halting foreclosures over water bills (Senator Brochin says Baltimore's system is 'absolutely obscene'). bidding

SEC Files Suit Against 3 In Alleged Scam That Sucked $11M From 75 Investors; Left Lenders With $120M In Bad Loans, 100+ Foreclosed Homes

In Murrieta, California, the North County Times reports:

• A federal agency alleged Wednesday that three Murrieta-area men sucked $11 million from 75 amateur investors they recruited through networks of church friends and military comrades and then left a trail of more than 100 foreclosed houses in their wake. The complaint, filed in U.S. District Court in Riverside by the U.S. Securities and Exchange Commission, seeks a federal court order barring James Duncan, Hendrix Montecastro and Maurice McLeod from continuing to offer the sort of investments that it alleges to be fraud.

***

• The securities commission Wednesday also demanded in the complaint that the three men repay an unspecified sum to their investors and potentially to lenders, who were left holding $120 million in bad mortgages. Some of Murrieta's most upscale neighborhoods, including Bear Creek, Copper Canyon and Greer Ranch, are dotted with foreclosed homes that the three men and their clients bought and later abandoned.

For more, see Feds take action against real estate group.

See also The Press Enterprise: SEC sues Pacific Wealth Management; investors welcome action against Murrieta group.

For SEC news release, see SEC Charges Three Promoters for Victimizing Military Families in Real Estate Investment Scheme.

Colorado AG Files Consumer Fraud Suit Against So-Called "Legal Aid" Firm

In Denver, Colorado, the state Attorney General's Office announced last month:

• Colorado Attorney General John W. Suthers [...] announced that his office filed a consumer fraud lawsuit on January 29, 2008, against Legal Aid National Services, Inc., commonly known as The LANS Corp. Also named in the lawsuit are LANS founder and president Kendrick E. White [...], White’s wife Jasmine Ewing [...], and White’s half-brother Derrich E. Brown [...], both of whom assisted with the company. [...] Although the defendants claimed that trained professionals would provide legal services, the complaint alleges that consumers were charged for legal advice by staff with little or no legal training.

Among the Colorado AG's allegations:

• [T]he defendants purposely used business names that incorporated terms such as “legal aid” in order to confuse consumers looking for free or low-cost legal services. According to the complaint, consumers who called directory assistance and requested “legal aid” were frequently provided the phone number for LANS. Throughout the country, the defendants purchased local phone numbers so that consumers believed they were dealing with a local entity when, in fact, their call was routed to the defendants’ Colorado offices. The complaint alleges that LANS’ sales representatives were trained to answer the phones with the words “legal aid” to further confuse consumers.

For more, see Attorney General Suthers Files Consumer Protection Suit Against Legal Aid Company.

Go here for Ripoff Report on Legal Aid National Services.

Colorado AG Targeting Mortgage Brokers; Files Suit Against Firm Alleging Deception In "Teaser Rate" Ads

In Colorado, CBS4-TV reports:

• The Colorado Attorney General's Office is cracking down on mortgage fraud. The target: ads from mortgage brokers. The ads have been appearing in newspapers. The attorney general's office is investigating 13 companies. One investigation involves a mortgage broker in Arapahoe County that the attorney general claims deceived, misled and financially injured Colorado consumers. The case involves people seeking new mortgages and those who were re-financing at a lower rate. They saw ads in Denver newspapers and the rates were appealing -- promising fixed rate mortgages. One ad stated, "We ask that you refrain from kissing our loan officers."

• Attorney General John Suthers said such ads are often not what they seem. "If you look at them, you would be led to believe you could get a fixed rate loan at some extremely low rate," Suthers said. His lawsuit claims the advertised rates were not fixed, but rather teaser rates that would re-adjust in one to three months. The company being sued is Wholesale Mortgage Lending in Centennial. It also goes by Jupiter Lending and numerous other names.

For more, see Attorney General Cracks Down On Mortgage Fraud.

Feds Seek Home Forfeiture From Alleged Scam Artist; Two Victims Say They Refinanced Their Homes To Invest In Phony Fund

In Sacramento, California, The Sacramento Bee reports:

• Federal prosecutors are preparing to take a Folsom man's million-dollar home away from him because, they say, he bought the home with part of at least $7 million stolen from victims of his investment fraud. In 18 months in 2006 and 2007, according to a civil forfeiture complaint filed by the prosecutors against the home, Stefan Andre Wilson collected more than $9 million from 45 investors and paid investors $2 million in purported "capital appreciation." The bulk of the balance - $5.1 million - was lost by Wilson day trading in the stock market, the complaint alleges.

***

• At least two victims interviewed by IRS agents said they refinanced their homes to make large investments in Christians in Crisis or CIC Investment Fund, the vehicle through which Wilson employed his scheme.

For more, see Folsom man's home to be seized over alleged investment fraud.

Oregon Foreclosure Rescue Operator Facing Lawsuits Alleging Dubious Sale Leasebacks, Accusations Of False Statements Made In Bankruptcy Filings

In Oregon, the Clackamas Review reports:

• A year ago, Yulanden Moore owned a two-story, three-bedroom house in Aloha with her husband, Jimmy, where they helped former prison inmates get back on their feet. But now, the Moores are the ones who are relying on the kindness of others. That’s because when the Moores fell behind on their mortgage payments last year, they signed up with a “foreclosure rescue” service that promised to turn their financial nightmare around through a complex series of financial deals. But instead of ensuring that the Moores could keep their house, the deal they signed with DK Investments gave ownership of their house over to a group of investors and had the Moores “rent” their house back. The Moores fell behind on the rent, set higher than the previous mortgage payment, and were eventually evicted.

***

• The Moores are suing Jeremy Killian, the Oregon City man behind DK Investments, and his associates, for $1.1 million in damages. In a lawsuit filed in Washington County Circuit Court in April 2007, the Moores allege that Killian’s offer of help was a ruse and that he intended all along to take their property.

***

• Two other property owners, Enrique Moreno, of Hillsboro, and Ron Knox, of Portland have filed similar suits. Killian’s former business partners have also filed a lawsuit against him, accusing him of siphoning off money into his own accounts and participating in “unlawful business practices.”

• And a lawyer at the U.S. Trustee’s office has lodged filings in Bankruptcy Court that accuse Killian of understating his assets and filing for bankruptcy to avoid the flurry of lawsuits. [...] “The debtors made misrepresentations on their bankruptcy documents and during their meeting of creditors intended to invoke the automatic stay to defeat state court litigation related to Mr. Killian’s ‘special financing business,’” [Carla McClurg, an Oregon attorney for the United States Trustee] said in bankruptcy documents. McClurg also said Killian’s operation was much larger than the three lawsuits currently filed. “This scheme involved the purchase by individual investors of at least 75 parcels of real property from homeowners faced with foreclosure and the lease-back of the property to the original homeowner with a two-year option to repurchase the real property,” she said in bankruptcy documents.

For more, see ‘We’re homeless - we lost everything’ (Families are accusing an Oregon City man of fraudulently taking their homes).

Foreclosure Rescue Scams Utilizing Bogus Bankruptcy Filings Reported In Kansas

The Kansas City Star reports:

• Federal investigators in Kansas are trying to derail a foreclosure scam that began in California and is sweeping the United States using bogus bankruptcies to dupe homeowners and lenders. The scams take advantage of the fact that a bankruptcy automatically delays home foreclosures, which are at record levels. Experts warn that homeowners who buy into the deals still end up losing their homes when the fraudulent bankruptcies are exposed. And lenders often wind up paying thousands of dollars in legal fees chasing down the phony filings. “Even though it’s all bogus, you have to track it down and prove it, and these things take time,” said Los Angeles Bankruptcy Judge Maureen A. Tighe.

***

1. Generally, the fraud works like this: Scammers approach people facing foreclosure and offer to save their property for an upfront or monthly fee. They persuade the homeowner to assign them a legal interest in the property.


2. Then the scammers — often without the homeowner’s knowledge — transfer fractional shares in the property, often 5 percent or less, to third parties. These third parties are usually fictional, investigators say, although in some cases the scam artists have recruited homeless individuals.


3. They then file bankruptcy petitions in the names of these third parties. Sometimes, as in the Kansas cases, it is in courts thousands of miles from where the property is located.


4. The scammers profit off the delays in several ways. Sometimes they reap monthly fees ranging from $250 to $850 or more from homeowners who think — because debt collectors are not calling anymore — that the foreclosure is stopped. Some homeowners may be led to think the fees are paying off their loans.


5. In other cases, the scammers take over the property and rent it for months to unsuspecting tenants, who are evicted after the ruse is discovered.

For more, see Foreclosure rescue scam makes its way to Kansas (if link expires, try here or try here). fractional interest

CBS Evening News On Florida Foreclosure Rescue Operator Now Targeted By State AG

The CBS Evening News recently ran a story on a Florida homeowner who allegedly had the title to her home scammed by foreclosure rescue operator National Foreclosure Management. Florida's Attorney General has filed suit against National Foreclosure Management for bilking at least 80 homeowners of nearly $2 million. "There are at least 20 other businesses being investigated right now, and I suspect we will unearth more as we go through this," [Florida AG Bill] McCollum said.

For the story, see Scam Leaves Homeowners Empty-Handed (A Foreclosure Scam Is Turning Mortgage Holders Into Victims) (watch video) (read transcript).

For the Florida AG's news release announcing the civil lawsuit in this case, see McCollum Sues "Foreclosure Rescue" Company, Announces Legislation to Fight Mortgage-Related Fraud.

To view the lawsuit, see Office of the Attorney General, et al. v. National Foreclosure Management, Inc., et al.

To view the bill summary, history, staff analysis of the proposed foreclosure rescue statute currently being considered by the Florida legislature, see:

• Florida House Bill 643,
• Florida Senate Bill 992,
• Florida House Bill 835,
• Florida Senate Bill 2214.