Tuesday, March 11, 2008

South Florida Cops Charge 29 In "Straw Buyer Financed" Indoor Pot Farm Operation

In Palm Beach County, Florida, the South Florida Sun Sentinel reports:
  • Authorities charged 29 people Monday in connection with buying more than 25 homes, recruiting families with children to live in them and growing millions of dollars worth of marijuana in closed-door rooms with powerful lights. [...] Inside, the alleged traffickers kept exposed electrical wires, irrigation lines routed through toilets and sinks and enough chemicals, fertilizer and propane to cause explosions, [investigators said].

***

  • The group's alleged leader — Miguel Fernandez, 45, of Miami — is accused of masterminding the purchase and conversion of homes, said William Shepherd, the statewide prosecutor with the Florida Attorney General's Office. He did it by using "straw" buyers, mostly recent immigrants from Cuba, to purchase the homes, move into them and then care for the plants, officials said. Once the plants were harvested, Fernandez and his lieutenants packed the marijuana, drove it to Miami-Dade County and sold it in New York.

For more, see 29 charged in marijuana 'grow houses' around South Florida.

See also, Florida Attorney General News Release: 29 Individuals Charged with Operating Marijuana Grow Houses in Palm Beach, Miami-Dade Counties.

Go here and go here for other posts on Marijuana Grow Houses. pot grow ops alpha

Mortgage Servicers Balk At Debt Forgiveness Proposal For Home Mortgages

A Debtwire article appearing in Financial Times reports:
  • Mortgage servicers modifying loans under Hope Now are unlikely to allow principal forgiveness readily, especially when the loans have been securitized, servicers and industry analysts told Debtwire. That may lead to temporary forgiveness through the creation of soft second lien loans, said one industry consultant. In a speech before the Independent Community Bankers of America last week, Federal Reserve Chairman Ben Bernanke encouraged servicers to use principal forgiveness for loss mitigation. He argued that principal writedown makes solid economic sense in some cases, notably when stressed borrowers owe more on their mortgages than their houses are worth.

  • But servicers face strong disincentives to paring down non-performing mortgages because of potential legal exposure should RMBS investors decide they are unwilling to write down principal. What’s more, documents governing the securitization may not allow for such modifications. Even if servicers have the will to forgive debt, they may not have the systems or personnel in place to handle this type of modification.
For more, see Mortgage principal forgiveness will meet resistance from servicers.

FTC On Foreclosure Rescue Scams

The Federal Trade Commission has issued a Consumer Fact Sheet that describes the types of foreclsoure rescue scams financially strapped homeowners should be aware of. Among the points covered are: (1) How the Scams Work, (2) Phony Counseling or Phantom Help, (3) Bait-and-Switch, (4) Rent-to-Buy Scheme, (5) Bankruptcy Foreclosure, (6) Red Flags.

For more, see Foreclosure Rescue Scams: Another Potential Stress for Homeowners in Distress.

Foreclosure Action Started Despite Out Of Town Homeowner Not Having A Mortgage With Foreclosing Lender

In Central Florida, WFTV Channel 9 reports:
  • A Kissimmee homeowner was in England when he learned a Florida bank had mistakenly started foreclosure proceedings on his house. As it turns out, Denroy Bell didn't even have a mortgage with the bank, Citi-Residential. The bank admitted that it's dealing with so many foreclosures in Central Florida that it made a mistake. Bell's neighbor called him when she saw the locks being changed and the pool empty. "It was like the army came up and took over the house," Esther Goshop, a neighbor, said. Bell lives primarily in London and rents out his home when he's not in Florida. He said the bank apologized for the inconvenience. Bell wants the company to pay to clean up the pool and change the locks back.

Source: Bank Mistakenly Starts Foreclosure Process On Wrong House In Kissimmee (read story) (watch video).

Go here for other posts on foreclosure services companies who have improperly change locks, remove belongings, etc. ForeclosureLockOuts

Woman Wanted By Cops For Fraudulently Buying Five Properties Turns Out To Be 9 Year Old Child Victimized By I.D. Theft

Buried in a recent story by Reuters news service on how fraud has exacerbated the housing crisis is this excerpt:
  • In a recent case in Chicago, [...] the authorities prepared to file charges against a woman who had fraudulently bought five properties. "When we turned up to serve papers on her, we found she was 9 years old," [...]. "Her uncle had stolen her identity."

Source: Fraud compounds woes of housing crisis.

North Carolina Lawyers Volunteer Assistance To State's Low-Income Homeowners Facing Foreclosure

In North Carolina, a press release issued on Carolina Newswire by a group of North Carolina attorney groups announces:
  • More than 100 attorneys participated in a recent training designed to help them volunteer legal help to low-income families who are dealing with mortgage foreclosures across North Carolina. The training event was sponsored by the NC Academy of Trial Lawyers, which requested that its members reach out to help individual homeowners who are being threatened with foreclosure or are presently in the foreclosure process and cannot afford legal representation.

***

  • The training, "Responding to the Subprime Mortgage Meltdown: Defending Homeowners Against Foreclosure," included sessions on the foreclosure process, identification of defenses and optional bankruptcy. Participants heard private attorneys and representatives of the legal services organizations who have partnered to provide mortgage foreclosure representation. Participants are expected to provide representation on a pro bono basis for low-income families who are facing mortgage foreclosure.

Among the legal groups involved in the effort were:

For more, see Attorneys volunteer to help low-income families with mortgage foreclosure defense.

Monday, March 10, 2008

Feds Target Countrywide In Criminal Probe, According To Government Leak

The New York Times reports:

  • The federal authorities have opened a criminal inquiry into Countrywide Financial for suspected securities fraud as part of the continuing fallout over the mortgage crisis, government officials with knowledge of the case said on Saturday. The Justice Department and the Federal Bureau of Investigation are looking at whether officials at Countrywide, the nation’s largest mortgage lender, misrepresented its financial condition and the soundness of its loans in security filings, the officials said.

  • The investigation — first reported on Saturday in The Wall Street Journal — is at an early stage, said the officials, who spoke on the condition of anonymity because they were not authorized to discuss ongoing criminal matters. It is unclear whether anyone will ultimately be charged with a crime.

For more, see Countrywide Said to Be Subject of Federal Criminal Inquiry.

Missing Loan Docs Preclude Foreclosure On $1.5M Mortgage; Homeowner Continues "Living Large" 5+ Years After Default

A story in Bloomberg News late last month reported on the increasing problem mortgage companies are facing as a result of the screw-ups in the chain of custody in physically handling essential mortgage loan documents when mortgage loans are sold from investor to investor and, in many cases, end up as part of a mortgage securitization trust. Such screw-ups have resulted in an inability to physically produce the documentation (ie. promissory notes, assignments of mortgage) necessary to commence a foreclosure action when attempting to repossess real estate. The story begins with this short anectdote:
  • Joe Lents hasn't made a payment on his $1.5 million mortgage since 2002. That's when Washington Mutual Inc. first tried to foreclose on his home in Boca Raton, Florida. The Seattle-based lender failed to prove that it owned Lents's mortgage note and dropped attempts to take his house. Subsequent efforts to foreclose have stalled because no one has produced the paperwork. "If you're going to take my house away from me, you better own the note,'' said Lents, 63, the former chief executive officer of a now-defunct voice recognition software company.
For more, see Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish

For actual court cases that provide real life illustrations of the problems foreclosing lenders have faced in the past when these types of screw-ups occur, see:
  • State St. Bank & Trust Co. v. Lord, 851 So. 2d 790; (Fla. App. Ct. 4th Dist., 2003),
  • In re Shwartz, (Bankr. Ct., Mass. April 19, 2007),
  • Terwin Advisors LLC vs. Balbachan (New York Supreme Court - Queens County; April 16, 2007) (Note: For those unfamiliar with the New York judicial system, the "New York Supreme Court" is simply what the state calls its trial courts - not to be confused with the New York Court of Appeals, which is the state's "highest court."),
  • Lasalle Bank Natl. Assn. v Lamy, 2006 NY Slip Op 51534(U); 12 Misc 3d 1191(A); (New York Supreme Court, Suffolk County; August 7, 2006).

For a related post, see Foreclosure Legal Work: A Shoddy, Assembly-Line Practice?

For other posts that reference the failure of some mortgage lenders and their attorneys to file the required loan documents when starting foreclosures, Go Here, Go Here, Go Here and Go Here. missing mortgage foreclosure docs alpha

Servicer-Created "Shifting Platform Of Financial Doubt" May Lead To Unnecessary Foreclosures

In Jacksonville, Florida, a recent editorial in The Florida Times Union touches on the problem faced by many financially strapped homeowners concerning their inability to communicate directly with the acual holder of their home mortgages and their inability to rely on the intermediaries - the mortgage servicers - for reliable information:
  • April Charney, a lawyer with Jacksonville Area Legal Aid, is familiar with these scenarios and described some of the key issues: "The net effect to the borrowers is that they stand upon a shifting platform of financial doubt unable to rely upon the servicer for customer service to avoid further debt and expense. This result is driven by the fact that the servicer is conflicted by the layers of padded fees and costs that can be secretly pocketed by the servicer upon the event of the borrower's default.

***

  • With mortgages sold to a series of servicers, the link between borrower and lender is broken. It seems a basic consumer right to provide consumers with the updated status of their debt.

For more, see Foreclosure: Full disclosure, all the time.

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

NYS Legislation Calling For Moratorium On Home Foreclosures Gaining Steam

In New York City, the Brooklyn Daily Eagle reports:
  • The bipartisan remedy [being proposed by state lawmakers] – holding off home foreclosures for one year will give homeowners and lenders a chance to negotiate new terms – actually hearkens back to the Great Depression. A very similar law, says [Brooklyn Assemblyman Jim] Brennan, was proposed by then-New York Gov. Herbert Lehman in 1933, passed, and then upheld the following year by the U.S. Supreme Court. So far, the bill has picked up 74 sponsors in the state Assembly – just a few short of the “magic number” of 76 or 77 needed to get a bill rolling – and 24 sponsors in the Senate.

For more, see Brooklyn Asssemblyman’s Foreclosure Moratorium Bill Picks Up Steam.

Chicago-Area Recorder Of Deeds Offices Consider Establishing "Deed Theft" Units

In Illinois, the Chicago Tribune reports:
  • [B]eginning in 2007, [Cook County Recorder of Deeds Eugene] Moore's office began mailing postcards to homeowners when quitclaim deeds were filed, transferring interest in their properties. Some criminals had been forging owners' signatures on the deeds, transferring ownership to themselves, and then mortgaging the homes without the real owners being any wiser -- until the foreclosure notices started arriving. [...] Moore said he needs additional resources to keep up with the bad guys. So he is asking for $1 million in additional funding from the county to create a mortgage fraud task force inside his office. The squad would be made up of several sheriff's police officers trained in financial crimes and at least one full-time prosecutor.

***

  • As for what could be accomplished, Moore points to Detroit, where the register of deeds office in Wayne County, Mich., has the kind of unit he wants. Since September 2005, the Wayne County task force has opened 420 cases of suspected mortgage fraud and sent dozens of people to prison. There is a hot line for consumers and two intake workers to sort through the calls. Four sheriff's deputies investigate cases and two full-time prosecutors bring charges.

For more, see Mortgage fraud units proposed (Officials in Cook, DuPage Counties press for task forces to probe suspected falsified transfers).

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

Nebraska AG Warns Homeowners On Foreclosure Rescue Scams

In Nebraska, The Grand Island Independent reports:
  • It's a world of consumer beware. As people struggle to make house payments and keep their homes out of foreclosure, scam artists are popping up to prey on them. "If any company claims it can stop foreclosure if you sign a document appointing its representatives to act on your behalf, beware," Nebraska Attorney General Jon Bruning said. "You could lose your home and your equity." [...] In an effort to help protect homeowners, Bruning supports the Department of Banking and Finance's proposed legislation that would provide protection to homeowners dealing with foreclosure. The bill regulates foreclosure consultants and equity purchasers, plus adds a criminal penalty for violations, according to Bruning's office.

For more, see Attorney general warns vulnerable consumers to beware of scam artists.

Sunday, March 09, 2008

Rise In Foreclosures A Driving Force In Fairfax County Operating Budget Squeeze

In Fairfax County, Virginia, The Washington Post reports:
  • [A]s with most cities and counties in the region, Fairfax County relies primarily on real estate, car and sales taxes to pay for schools, police, fire protection, parks, libraries and other services. And as in most other communities, Fairfax is just beginning to feel the effects of the regional economy's downward drift. The rise in foreclosures, generated by the subprime mortgage crisis, is a driving force in the county's budget crunch. Reduced interest income resulting from lower federal rates is also a factor. So is a softening in the commercial real estate market because of a glut of empty space and flattening job growth.

For more, see Damage From Downturn May Be Worse Than Expected (Officials Say Rising Foreclosures and Drop in Spending May Force Revision of Feb. 25 Budget Proposal).

Frank Makes Case For Housing Rescue

Congressman Barney Frank (D - Mass.), chairman of the House Financial Services Committee, makes his case for a "housing rescue" in a recent Washington Post article in which he describes his basis for supporting a housing rescue, as well as the legislative initiatives his committee is working on. He remids us, in the following excerpt, that it isn't only the homeowners facing foreclosure that are feeling the fallout of this crisis:
  • The negative consequence of this cascade of foreclosures has turned out to be more damaging than predicted. Of course, individuals whose homes are foreclosed suffer the most, and in some cases it is a suffering to which their own irresponsibility contributed. If they were the only ones being hurt, the arguments for simply letting things take their course without intervention would be stronger.

  • But there are concentric circles of victims. First, the people who own homes in those neighborhoods that have a high rate of foreclosures will see their property values decline, and a spread of blight will diminish the quality of their lives. Second, communities where foreclosures cluster are hit with a double whammy -- a need for more public safety and other services to deal with the foreclosed properties as well as a drop in the tax revenue that occupied homes contribute. Third, the economy as a whole weakens as the problems spread even more widely.

Congressman Frank goes on to describe the goals of the initiatives his committee is working on:

  • Taken together, [the] initiatives will help meet three crucial objectives. First, they will allow millions of families to avoid the disaster of losing their homes. Second, they will help hard-pressed local jurisdictions avoid the cascade of deteriorating neighborhoods and abandoned homes that follow in the wake of large-scale foreclosures. Finally, they will help stem the steep and destabilizing decline in house prices that led to and is intensifying the financial crisis.

For the story, see The Case for a Housing Rescue.

Lenders Walking Away From Some Vacant Foreclosures, Sticking Taxpayers With Maintenance Bill

Bloomberg News reports:
  • The public's bill for maintaining foreclosed properties abandoned by lenders and investors may reach as much as $50 billion this year, according to Peter Sepp, vice president of the National Taxpayers Union in Alexandria, Virginia. The U.S. Congress is considering various bills to help cover some of the costs to towns and cities for securing and policing the empty homes, Sepp said. "Housing is now infecting all corners of the economy, including our local governments,'' said Mark Zandi, chief economist of West Chester, Pennsylvania-based Moody's Economy.com, an economic forecasting agency and unit of Moody's Corp. Banks or mortgage companies typically hire people to care for repossessed properties. As foreclosures increase and the value of property drops, more companies are simply walking away, Zandi said.

***

  • Cleveland Housing Court Judge Ray Pianka is cracking down on banks and lenders that neglect the homes they seize. He posts a warrant list on his court's Web site of people and companies that have failed to answer a summons or pay a fine for building code violations. [...] "Our property values and our quality of life are being decided by people in Hong Kong and Germany who don't even know where Cleveland is,'' said Pianka, who lives on a street with five foreclosed properties, including a condemned home he says is owned by Deutsche Bank.

For more, see Morgan Stanley, Lone Star Stick Taxpayers With Default Costs.

For more on Housing Court Judge Ray Panka, see Cleveland Housing Court Judge Hammering Foreclosing Lenders With Fines, Code Violations.

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

West Virginia Lawmakers OK Rule Mandating Vacant Property Registration

In Charleston, West Vvirginia, Huntington News reports:
  • A bill [...] authorizing municipalities to create a semiannual vacant property fee, registration of the property and appeal procedures has passed the legislature. It now goes to the governor for his signature. The regulation of vacant properties under state law would grant municipalities and governing bodies with the ability to cause the registration of any residential or commercial property structure that is vacant for at least six months and is “characterized by violations of applicable housing codes established by the municipality.”

For more, see Vacant Property Bill Passes Legislature (Allows for Property Liens for Fees).

Palm Beach County Feeling The Pinch Caused By Vacant Homes

In Palm Beach County, Florida, WPEC-TV Channel 12's I-Team is doing a series of "Clean It Up" investigative reports on the havoc that vacant houses, many in foreclosure or already bank-owned, are creating for neighbors, the neighborhood, code enforcement officers, and local municipalities operating on tight budgets throughout the area. Among the problems are rotting homes creating health and safety hazards, unfinished new homes abandoned by builders, overgrown landscapes attracting rats and snakes, property used as dumping grounds, and homes being broken into and used by local teens to host unauthorized, unsupervised parties.

Municipalities are feeling the squeeze on their budgets, given their limited resources for additional code enforcement, maintenance workers used to clean up and maintain the abandoned homes' exterior, and police in responding to calls involving home break-ins, burglaries, vandalism, and teen beer bashes at the vacant homes.

Go here (video only) for Channel 12's "Clean It Up" series of investigative reports.

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

Saturday, March 08, 2008

Kids Comandeer Vacant Foreclosed Home To Host Bakersrfield Beer Bash

In California, The Bakesrfield Californian reports:
  • Another unruly party broke out in a vacant Bakersfield home [last] Saturday night, and this time a youth was beaten unconscious and two others were badly hurt, according to neighbors who witnessed the attacks. The party [...] followed one night after a report of teenagers and young adults breaking into a foreclosed Southwest home to stage a large bash. Together, the events could suggest a troubling trend of young people using vacant houses to throw unsupervised parties.

***

  • Teenagers living near the house said the party was organized by a so-called party crew that scouted out the location the night before and were charging young men $3 a head to enter, and that young women got in free.

***

  • [One neighbor] said the partygoers did not appear to be gang members. “Gang members wouldn’t have thrown rocks,” he said. “They would have shot you.” [...] The house has sat empty for months, [the neighbor] said. A “for sale” sign, now knocked down, had been posted out front. [...] At a separate party early Saturday [...], about 50 teenagers and young adults broke into a foreclosed home and threw a raging party. Neighbors said police dispersed the partygoers, but not before some made off with the home’s high-end appliances.

For more, see Partiers trash second home (Vacant house selected by ‘party crew,’ three injured).

See also, KGET-TV Channel 17 report: Teens break into foreclosed home, steal appliances.

For an earlier post on kids using vacant foreclosures to host beer bashes, keg parties, etc., see Colorado Cops Bust Boulder Beer Bash.

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

Teens Using Vacant Homes To Host Weekly Beer Bashes, Pot Parties

In Loxahatchee, Florida, WPEC-TV Channel 12 reports on a group of teens going around town scouting out vacant homes to use for hosting weekly keg & pot parties. Reportedly, they circulate flyers weekly announcing the location of the next beer bash, charging entance fees at the front door. The story featured a vacant investment home owned by a local landlord that was in between tenants and listed for rent. The owner suspects that the real estate agent's lockbox placed on the front door drew the teens' attention, resulting in the home being added to their party list. When the cops crashed the party, about 100 teens took off, leaving toilets clogged with marijuana they attemped to flush away, and a general mess throughout the home.

For more (video only), see Teens Trash Vacant Home.

For a similar story of teens in Bakersfield, California using vacant homes to host parties, see Police break up party raging in foreclosed home.

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

Vacant Foreclosures Create Headaches For HOAs, Code Enforcement Officers, Real Estate Agents, Neighbors In One Arizona City

In Chandler, Arizona, The Arizona Republic reports:
  • A rapid increase in home foreclosures coupled with a wet winter have created a weed problem that has forced neighbors in Chandler to start cleaning up around vacant homes and real estate agents to work overtime to keep properties maintained. The struggle to keep up empty properties is creating a headache for homeowners associations, city code compliance offices and neighbors who live near the eyesores.

***

  • [Local Realtor Liz] Morganroth gets about three or four notices a week from HOAs or city code compliance offices, and banks often call her with properties in disrepair. That's prompted her to hire an assistant whose job is primarily property upkeep, she said.

For more, see Foreclosures leave vacant homes blighting neighborhoods.

In a related Arizona Republic story, see Homes left vacant from foreclosure concerns residents.

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

Increase In Vacant Homes A Boon For Squatters, Scam Artists, Copper Thieves

In Southern California, the Whittier Daily News reports:

  • With more than 80,000 foreclosures in California during the last quarter of 2007 setting a state record - up 115 percent over the previous year - property owners have struggled to keep squatters and thieves off their vacant properties. [Realtor Steve] Smallson said after several break-ins, his company, White House Properties, now checks more frequently on the more than 50 foreclosure properties on its to-sell list.

  • Thousands of dollars worth of copper plumbing and air-conditioning units were stolen at a three-bedroom Van Nuys house just as a buyer was going through escrow, he said. "I guess these thieves case these places, see the signs, realize that the place is vacant and jump on the opportunity," he said. Last month, at the same three-bedroom house, Smallson found a man inside enjoying three Mickey's Big Mouth malt liquor beers. The 20-something man told Smallson he was "looking at the property." "I don't know how much this happens, but it's just terrible," Smallson said.

  • Another problem that's picked up with the glut of foreclosed properties is real estate scams in which thieves "rent out" homes they don't own, often taking money from several people for the same property, said Detective Erin Camphouse, of the LAPD's Real Estate Fraud Unit. "They can take a whole lot of money really fast without having to get themselves noticed," she said of the thieves who often post on Craigslist.com or other Web sites and in community newspapers. Others will break locks at a foreclosed home and install new ones, then rent the properties to unsuspecting tenants. Sometimes those duped pay months of rent before they discover they've been ripped off.

For more, see Squatters, scams plague foreclosures.

Go here for posts on vacant homes, foreclosures and squatters.

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

Vacant Homes Keeping Cops, Copper Thieves Busy In Brockton

In Brockton, Massachusetts, Wicked Local Brockton reports:
  • A suspected copper thief caught hiding in a vacant house wound up getting bagged by police after the officers found a small cache of the metal in his duffle bag. The suspect was arrested Monday night after officers [...] went to 25 West Ashland St. to investigate a report of someone inside a foreclosed house.

***

  • This wasn’t the first time police were called to the house, [chief of detectives, Lt. John] Crowley said. The officers went there Feb. 19 after neighbors spotted someone at the house, but the officers didn’t go inside because they were sent to another, more pressing call, Crowley said. The arrest [last] week marked the latest case involving the theft of copper pipes from a vacant house, Crowley said. “It hasn’t slowed down at all,” he said. “There are so many houses that are unattended now, it is easy prey for the thieves.”

For more, see Brockton copper theft suspect bagged by loot in the bag.

For other stories on stolen copper, see Copper Thefts I and Copper Thefts II. copper metal theft yak

Copper Thieves Add Oil Burners, Hot Water Heaters To Their "Must Have" List In One Massacusetts Region

In Haverhill, Massachusetts, The Eagle Tribune reports:
  • The region has been hit by a wave of precious metal thefts as criminals attempt to cash in on a sellers market for the material at scrap yards. Recently, thieves have targeted foreclosed homes with valuable copper plumbing and other metals inside.

***

  • In Lawrence, three men were arrested Jan. 31 as they attempted to flee from a vacant three-decker in a pickup truck laden with two oil burners, three hot water heaters and assorted copper pipes, police said. In a separate incident Jan. 29, copper pipes were reported stolen during a break into a vacant home at [...] in Lawrence, and earlier in January, another 10 copper pipes were stolen from a vacant home [...]. Vacant property break-ins most often occur as thieves scavenge for copper and other valuables that get left behind. In Haverhill, a real estate agent discovered a break and theft of copper pipes at a vacant Hillside Avenue home in foreclosure. The thieves punched holes in the walls on all three floors to get at the pipes.

For more, see Police: Would-be copper thieves arrested in Haverhill.

For other stories on stolen copper, see Copper Thefts I and Copper Thefts II. copper metal theft yak

San Diego-Area Homeowner Spearheads Effort To Force Drug Dealers From Vacant Foreclosed Home

In San Diego, California, KGTV Channel 10 reports:

  • Neighbors said unwelcome guests once lived in two local homes in Sherman Heights that are now boarded up. "It was a total nightmare," said Janice Scott Wiley. Wiley lives next door and said the foreclosed homes attracted drugs, prostitution and crime. "They would sometimes sit in the back and package their drugs, and I could stand on my porch and I could look at them with the guns," said Wiley. [...] Several days of worry and anxiety went by before Wiley decided to take matters into her own hands.

***

  • With the help of San Diego police and Councilman Ben Hueso's office, the entrances to these houses have been blocked off. It is a sigh of relief for neighbors who were too scared to come forward. "She saved our lives because she got the drug addicts out of there. Nobody would do what she does because nobody wants to get involved and we're proud of her," said neighbor Shirley Carpenter. Hueso applauded Wiley's efforts. He said vacant homes are prone to crime. "There's nobody there providing any security. Anyone there providing any oversight, these are sources where a crime happens or a fire breaks out," said Hueso.
For more, see Woman Takes Action To Clean Up Neighborhood.

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

Frozen Bursted Water Pipes A Problem In Some Vacant Homes; Melting Ice Inside Home Expected To Create Mold Problems, Says City Inspector

In Omaha, Nebraska, WOWT-TV Channel 6 reports:
  • Home foreclosures that turn into neighborhood eyesores when unpaid utilities lead to broken water pipes are happening more often. Channel 6 News first reported about one such house in Bellevue. The problem has spread to Omaha. [...] "We'll send notice to the bank and give them a short time for them to correct this,” says Omaha Chief Inspector Kevin Denker, who has photos from another abandoned house in northeast Omaha with the heat turned off, but not the water. “When it warms up and this ice melts it's going to lead to more water damage on the inside, mold, mildew and then other issues."

***

  • There’s ice formed around the shut-off electrical box [in one vacant home]. MUD says the homeowner had the water turned off in January, but someone turned it back on, until neighbors complained of a flood pouring out of the windows. [...] The mortgage company will be notified to start cleanup soon because health problems aren't frozen in time. Mold will grow fast after the spring thaw.

For more, see More Pipes Bursting In Empty Houses (Unless reported by neighbors, mess goes unchecked).

Go here for more on freezing pipes in vacant homes. frozenpipetheta

One South Florida Street Hit Hard By Boarded Up Foreclosures

In South Florida, WFOR-TV Channel 4 reports on the vacant, boarded up homes on Ramona Street in the city of Miramar:
  • Foreclosures have hit this street hard. In the last year, 9 of the 37 homes on Ramona are in or near foreclosure. Homes have been left in disrepair. Windows are boarded up and the whole neighborhood suffers.

For more, see A Miramar Street Lined With Homes In Foreclosure (read story) (watch video).

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

Town Ordinance Prohibits Dying Due To Overcrowded Local Cemetery; Violators Threatened With "Severe Punishment"

In Bordeaux, France, Reuters News Service reports:
  • The mayor of a village in southwest France has threatened residents with severe punishment if they die, because there is no room left in the overcrowded cemetery to bury them. In an ordinance posted in the council offices, Mayor Gerard Lalanne told the 260 residents of the village of Sarpourenx that "all persons not having a plot in the cemetery and wishing to be buried in Sarpourenx are forbidden from dying in the parish." It added: "Offenders will be severely punished."

For more, see Cemetery full, mayor tells locals not to die.

Friday, March 07, 2008

Tax Law Change To Help Homeowners In Foreclosure Sale, "Short Sale" Situations

A column in the Lawrence Journal World & News comments:
  • New rules published by the Internal Revenue Service could save huge amounts of money for millions of financially troubled homeowners, especially those who sell for less than their bank is owed. [...] You must fill out IRS Form 982, “Reduction of Tax Attributes Due to Discharge of Indebtedness,” and include it as part of your upcoming return. Despite its formidable title, the form can actually be completed in just a few minutes. The document also must be accompanied by a 1099-C form, which the bank provides to verify the amount of debt that it forgave.

For more, see New IRS rules could help homeowners.

See also IRS Publication 4681: Canceled Debts, Foreclosures, Reposessions and Abandonments.

Go here for other posts on dodging the income tax on a short sale / foreclosure sale (including handy links to IRS forms and publications related to this subject). short sale income tax

Illinois AG Slaps Subpoenas On Countrywide, Wells Fargo In Probe Into Race Bias In Lending Practices

The Wall Street Journal reports:

  • Illinois's attorney general issued subpoenas yesterday to units of Countrywide Financial Corp. and Wells Fargo & Co., for an investigation into whether lenders have improperly steered minority borrowers into high-cost or inappropriate loans. The subpoena joins a long list of investigations by state and federal officials examining the business practices of the nation's mortgage lenders. Critics say such companies played a major role in the housing and mortgage crisis, which has led to record levels of home foreclosures.

***

  • In Illinois, Attorney General Lisa Madigan is trying to determine whether Countrywide, the nation's largest mortgage lender, and Wells Fargo, the second-largest lender, put black and Latino borrowers in subprime or other high-cost loans when they could have qualified for a lower-cost loan.

  • If the subpoenas find evidence of discriminatory lending practices, Ms. Madigan may push lenders to more aggressively modify loans to minority borrowers in financial distress so they can stay in their homes, or seek other monetary remedies in addition to changes in how loans are made, said Deborah Hagan, chief of the Illinois Attorney General's Consumer Protection Division. The investigation might be extended to other lenders, she added.

For more, see Illinois Probes Mortgage Firms (State Asks Whether Minority Borrowers Were Bias Victims) (subscription required; if no subscription, try here, then click link for story, then "refresh" browser if needed).

For Illinois AG News Release, see African American and Latino Homeowners May Have Been Steered to High-Cost Loans.

Go here and go here for other posts on alleged race bias in real estate transactions. race bias predatory lending

FDLE Investigating Investment Program Involving 303 Homes; Foreclosure Auctions Started On 65%; Lenders On The Hook For Million$

In Central Florida, The Tampa Tribune reports:
  • Hundreds of peculiar home sales and foreclosures clustered in low-income neighborhoods in south St. Petersburg have attracted the attention of the Florida Department of Law Enforcement. The deals involved unusual mortgages uncovered last summer in a Tampa Tribune investigative report. The sales are tied to a real estate investment program run by a local businessman. Several buyers complained to police that they bought the properties at inflated values.

***

  • The St. Petersburg case involves 303 property transactions. A group of 65 real estate investors went through a no-money-down investment program to purchase the homes over a five-year period. [...] When the Tribune's story ran in July, 160 of the homes were in foreclosure. Since then, 38 more have joined them, bringing the foreclosure total to 65 percent of the sales. Lenders are left on the hook for millions of dollars in failed loans.

***

  • The investment program was run by four companies owned by Tampa businessman Joseph F. Daniele.

For more, see State Joins Inquiry Of Unusual Loans.

In a related story, see Appraiser Evaluates Whether 303 Homes Are Overpriced.

Virginia High Court Revives $20M "Flood" Suit By 700 Homeowners Against City Of Newport News

In Newport News, Virginia, WVEC-TV Channel 13 reports:
  • Hundreds of Denbigh area residents will have their day in court to discuss why they think massive flooding in their area triggered by Hurricane Floyd could have been prevented by a better drainage system. While a local Circuit Court denied the case a day in court, the Virginia Supreme Court overturned the ruling. [...] Seven-hundred residents in three neighborhoods [...] are part of a $20 million lawsuit against the City of Newport News.

***

  • The suit claims the City's poor drainage system was responsible for flooding their homes, apartments, and personal property after Hurricane Floyd in 1999. [...] “Most of [the homeowners] couldn't afford to rebuild,” [one flood victim] said. “Some of them had to go into foreclosure a few people had to file bankruptcy I understand. It really put a big hardship on a lot of people - it ruined lives."

For more, see $20 million lawsuit against Newport News returning to court.

Developer Defaults & Foreclosures Hammering Bakersfield; Leaving Taxes Unpaid, Subs Stiffed

In California, The Bakersfield Californian reports:

  • Through their living room window in a new Wasco subdivision, the Villalobos family can see tumbleweeds almost tall enough to ring a doorbell clog the entryway of an unfinished home across the street. “It’s sad that we got stuck here,” said Carlen Villalobos, 25, of the house she and her husband bought last fall in Hidden Grove, a tract off Palm Avenue north of Highway 46. They live in one of eight homes completed before Sacramento developer Reynen & Bardis Communities Inc. halted construction here late last year, leaving idle partially constructed houses on many of the cul-de-sac’s dirt lots.

***

  • Reynen & Bardis is among a dozen or so developers who have defaulted on Kern projects carrying loans of $2 million or more, according to an ongoing Californian survey. The largest so far is SunCal Cos.’ default on $74 million borrowed from Lennar Corp. against 515 acres in Shafter; the property foreclosed Wednesday. It’s the first time metropolitan Bakersfield has seen such a spike in developer defaults and foreclosures, real estate professionals say, and it’s unclear what the final impact will be. In the meantime, the resulting pinch goes beyond banks. Some companies aren’t paying contractors, liens indicate, and are letting property taxes slide.
For more, see LEFT HANGING (Sacramento developer's projects sit unfinished as it deals with financial trouble).

Expected Rise In Foreclosure-Related Lawsuits Likely To Spawn More Threats Against Federal Judges, Says U.S Marshal's Service Official

USA Today reports:
  • Threats against federal judges and prosecutors are on pace to rise for the fifth consecutive year, according to statistics from the U.S. Marshals Service. In response, federal officials are expanding their surveillance efforts to include suspects who have threatened state and local authorities and who represent a possible danger to federal court officials.

***

  • "Historically, there was an expectation that you didn't mess with judges, prosecutors, jurors and police officers," says Michael Prout, the Marshals Service's deputy assistant director for judicial operations. "That tradition has been chipped away." [...] An expected rise in legal disputes related to the home foreclosure crisis likely will spawn more threats against judges and other court officials, he says.

For more, see Threats up against federal judges, lawyers.

Thursday, March 06, 2008

Countrywide, Law Firms Show Disregard For Professional, Ethical Obligations Of Legal Profession, Judicial System, Says Judge; Declines Sanctions

The New York Times reports:
  • The Countrywide Financial Corporation, the largest American mortgage lender, did not show “bad faith” in the handling of a Texas homeowner’s mortgage and will not be sanctioned merely for unprofessional and unethical conduct, a federal judge ruled on Wednesday. Countrywide and two law firms it used showed “a disregard for the professional and ethical obligations of the legal profession and judicial system,” Judge Jeff Bohm of Federal District Court said in ruling on a request by a Justice Department official to consider punishing the company for its conduct. But to impose sanctions, Judge Bohm wrote, he would have had to find “clear and convincing evidence of conduct that is in bad faith, vexatious, wanton or undertaken for oppressive reasons.”

***

  • In Texas, homesteads are sacrosanct,” the judge said in a ruling that traced how Countrywide’s corporate culture led to mistakes including a failure to properly record some payments made by [a Texas homeowner]. [...] The judge also found fault with the law firms, saying their flat-fee rate had led to a “corrosive ‘assembly line’ culture of practicing law.”

For more, see Judge Lectures Countrywide but Decides Not to Punish It in Texas Mortgage Case.

See also, Reuters: US judge won't punish Countrywide for botched case.

To view the court ruling, in which the presiding bankruptcy judge carefully rips apart Countrywide's attorneys (probably "must reading" for anyone who believes they were screwed over by Countrywide or any other loan servicer), see: In re: William Allen Parsley:

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

"Assembly Line" Lawyering, Culture Condoning Lying To The Court In Foreclosure Cases Has Bankruptcy Judge Wondering

The Wall Street Journal Law Blog reports:

  • Does flat-fee pricing foster assembly-line lawyering? That’s what U.S. bankruptcy judge Jeff Bohm suggested in a decision, entered yesterday, in a consumer bankruptcy case involving Countrywide and a Texas homeowner. While Judge Bohm declined to enter sanctions against Countrywide and its lawyers from two firms — Barrett Burke and McCalla Raymer — he wrote: “This fixed-fee business model appears to have been an overwhelming financial success. . . . Meanwhile, the profession has suffered from the ever decreasing standards that firms like Barrett Burke and McCalla Raymer have heretofore promoted. This demise must stop.”

  • The judge called problems at the firms’ culture “disconcerting” and described what he called the firms lack of care for accuracy and failure to communicate with clients. [W]hat kind of culture condones its lawyers lying to the court and then retreating to the office hoping that the Court will forget about the whole matter.” While “perfection” he said is “too much to demand, preparedness and candor are not.”

For more, see Foreclosure Legal Work: A Shoddy, Assembly-Line Practice?

For an article examining mortgage companies frequent non-compliance with law in consumer bankruptcy cases, see Misbehavior and Mistake in Bankruptcy Mortgage Claims, by Katherine M. Porter University of Iowa - College of Law.

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

Minnesota Lawmakers To Consider Imposing "Deferment" On Subprime Lenders Seeking Foreclosure

In Minnesota, the Minneapolis Star Tribune reports:
  • Minnesota homeowners facing the loss of their houses could stop foreclosures and make reduced payments for up to one year under a bill that will get its first legislative hearing today.

***

  • [Sen. Ellen] Anderson, chief sponsor of the Minnesota Subprime Foreclosure Deferment Act in the Senate, said, "It's going to offer breathing room." And, she said, "it will offer an alternative to lenders who do not want to be in the real estate business." The measure (HF3612, SF3396) would allow homeowners with subprime loans to pay roughly 65 percent of their monthly mortgage payments, deferring the remainder for one year. Homeowners would have to live on their properties during that year, and even one missed or late payment could restart foreclosures.
For more, see A freeze to keep lenders at bay? (Minnesota homeowners facing the loss of their houses could stop foreclosures and make reduced payments for up to one year under a bill that will get its first legislative hearing today).

Nebraska Lawmakers Pass Foreclosure Rescue Statute; Bill Awaits Governor's Signature

In Lincoln, Nebraska, the LaVista Sun reports:
  • A legislative bill approved Tuesday would give Nebraskans protections against companies offering to rescue them from home foreclosures. Legislative Bill 123, which passed 47-0, would prevent foreclosure consultants and equity purchasers from pressuring distressed homeowners to sign over their ownership interest. [...] The measure addresses foreclosure consultants who charge a fee to advise borrowers or to act as intermediaries with lenders, and equity purchasers, who purchase home equity to help homeowners avoid foreclosure. Violations of the bill could be prosecuted as felonies.

The bill has been delivered to Nebraska Governor Dave Heineman's office for his approval. For more, see Legislators OK foreclosure bill.

Go here to view the newly-passed statute, the Nebraska Foreclosure Protection Act.

Contested Foreclosure Actions By Financially Strapped Homeowners On The Rise

The Financial Times reports:

  • Borrowers whose properties are being foreclosed on are contesting those foreclosures in rising numbers, attorneys representing both mortgage servicers and homeowners told Debtwire. The trend could impact the performance of subprime-backed bonds, as foreclosures will take longer and be more costly, which could put downward pressure on recoveries. [...] As foreclosures in states such as Ohio, Florida and Nevada flood the courts, borrowers and their attorneys have begun finding ways to challenge foreclosures, and judges in several states have been sympathetic, said Alan Wolf, a partner with the Wolf Firm in Irvine, California, in comments made at a panel 27 February during the Mortgage Bankers Association National Mortgage Servicing Conference in New Orleans.

***

  • Challenges by borrowers are taking a variety of forms, said Edward Hyne, assistant vice president in the legal department for First Horizon Home Loans in Irving, Texas, speaking at the same 27 February panel. Some borrowers are making the case that forbearance agreements are required by law, and others that various notices servicers are required to send were not received, for example. But one defense that seems to be garnering a lot of attention from judges is the issue of standing, or whether plaintiffs may rightfully bring the foreclosure complaints to begin with, Hyne said.

  • In order for trustees acting on behalf of investors in mortgage bonds – the ultimate owners of securitized loans - to have standing to file foreclosure complaints, they must demonstrate that the trust for the securitization has ownership of the loan backed by the property being foreclosed on. But with thousands of loans that have in many cases been sold and re-sold before ultimately landing in their securitizations, the paperwork showing ownership – the assignment of the loans – often has not kept up.

***

  • Defense attorneys are organizing seminars to teach other attorneys about strategies that can be used in contesting foreclosures.

For more, see Contested foreclosures rise, could increase RMBS losses.

For related posts on contesting foreclosures, see:

Vulture Funds Looking To Buy, Work Out Delinquent Home Loans

Bloomberg news service reports how so-called vulture funds are purchasing distressed residential mortgages for as little as 50 cents on the dollar, servicing the loans themselves, and negotiating loan workout arrangements with financially strapped homeowners in an effort to turn profits from the subprime mess.
  • Once borrowers have re-established themselves, the loans can be resold in the secondary market at a 15-20 percent gain. "If you get the servicing right, you can make money from these mortgages,'' [vulture fund investor Ralph Dellacamera] says during an interview in his 33rd-floor offices in midtown Manhattan. "We win if the homeowner gets to stay in their home.''

For more, see Vulture Fund Deals With Delinquent Homeowners Lost by Subprime.

Phoenix-Area "Rent To Own" Tenants End Up Empty Handed

In Phoenix, Arizona, KNXV-TV Channel 15 reports:
  • Moving day can be hectic and a lot of work. But it can also be exciting. Owning a home was the American dream for JoAnne McCoy. Joanne signed a lease-to-buy agreement. She says she was told half her monthly rent would go towards buying the house. Leonard Boyer heard the same thing. He says he paid out in total about $33,000 towards purchase, but says the house he was living in was foreclosed on. Joanne paid out in total about $21,000 and says her owner decided not to sell. They signed contracts with Home America Property Management. A company owned by Mark Bosworth.

***

  • This foreclosure complaint isn’t the only one against Home America. Sam Wercinski is the Commissioner for the Department of Real Estate. “The number of complaints we have received are significant.” His office found 22 open investigations involving Mark Bosworth's real estate businesses, 18 of them are against Home America.

For more, see Valley real estate company investigated after tenant complaints.

For more on problems with "Rent To Own" and Lease / Option real estate deals, go here and go here. rent to own lease purchase option scams yellowstone

Maine Lawmakers Consider Foreclosure Rescue Legislation

In Augusta, Maine, the Kennebec Journal Morning Sentinel reports on the state legislature's current consideration of proposed rules regulating foreclosure rescue operators. An excerpt:
  • It's called equity stripping, and Rep. Charles Priest, D-Brunswick, wants to put regulations in place to better protect consumers. His bill would require foreclosure purchase companies to be licensed by the state. It also calls for a written contract, and requires the company to verify that the consumer can repay the debt. Homeowners who enter a contract would be required to get financial counseling, and those who do lose their homes would be entitled to at least 82 percent of the fair market value of the home. Priest said while there are reputable companies that do this kind of work, he wants to protect Mainers from those that take advantage of people. [...] Rather than ban the practice, Priest said he wants to regulate the companies.
For more, see Lawmakers targeting predatory 'equity stripping'.

Facing Several Lawsuits & Questions On Immigration Status, Chicago Condo Developer Takes A Hike

In Illinois, the Chicago Sun-Times reports:
  • Andrius Augunas used to lead the high life of a Chicago condominium builder. He drove a Bentley, draped expensive clothes over his athletic frame and bought a $4.2 million house in Winnetka. He talked boldly of remaking the Near South Side, with each plan more ambitious than the last. But his former business partners wonder if they'll ever see him again. Augunas, president of Rokas International Inc., owes them money. They say he has essentially abandoned two Near South Side projects, both embroiled in lawsuits and one of which is under construction. Plaintiffs in those cases said Augunas has returned to his native Lithuania. Opinion is divided as to whether he's fleeing his business failures or had a legitimate immigration issue.

***

  • Augunas [...] planned a 205-unit complex at 2100 S. Indiana, a mix of lofts and a high-rise. But his lender in that deal, First DuPage Bank, has sued to foreclose on the site, accusing Augunas and his companies of owing more than $12.5 million.

For more, see Builder can't be found (Facing lawsuits on Near S. Side, he may have returned to Lithuania).

See also, Crain's Chicago Business: Foreclosure suit filed on Augunas condo project.

Go here for other posts on Andrius Augunas.

Vacant Foreclosures Leaving Some Code Enforcement Officials In A Bind; $5-10K Fines Getting Some Lenders' Attention

In Redding, California, the Redding Record Searchlight reports:

  • The pool at this East Bonnyview Road home has literally popped out of the ground -- almost as if an earthquake hit -- evidence of a growing blight in Redding: foreclosed properties that have been abandoned. "The problem is finding somebody who is legally responsible once the home goes into the foreclosure action," Redding Code Enforcement Supervisor Debra Wright said.

***

  • Since January, Wright's office has posted about 20 compliance orders on foreclosed homes in Redding. That's the most in Wright's 20 years - four as supervisor - with the city. While the number of vacant and abandoned homes is up in Redding, it's dwarfed by what's happening in the rest of the state. [...] But Doug Leeper, code enforcement manager in the pricey San Diego suburb of Chula Vista, said communities like Redding need to move fast before the problem gets much worse.

***

  • Fed up with lenders seizing homes and then leaving them to rot, Chula Vista in July adopted a program that forces lenders to maintain homes they've taken back and to register the abandoned houses with the city. Leeper said in the first few months of the program, the city didn't get much cooperation from lenders. When the $5,000 and $10,000 fines started showing up on lenders' desks, however, Leeper's phone was ringing. [...] "Last week I had one gentleman come in and register 38 properties, [said Leeper]."

For more, see Abandoned homes a blight risk (Homes left vacant by foreclosure leave officials and neighborhoods in a bind).

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

Wednesday, March 05, 2008

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