Tuesday, March 25, 2008

Sacramento Feds Bag 19 Suspects In Alleged Nationwide Foreclosure Rescue, Equity Stripping Scam; Over $12+M Pocketed, 100+ Homes Involved -- So Far

(original post - 3-24-08)
In Sacramento, California, media reports from KNXV-TV Channel 15 (Phoenix) and KCRA-TV Channel 3 (Sacramento), as well as an announcement by United States Attorney McGregor Scott (Eastern District, CA) report that foreclosure rescue operator Charles Head and his brother, Jeremy Michael Head, the alleged ringleaders of what prosecutors describe as a nationwide straw buyer, equity stripping, foreclosure scam operation involving over 100 homes, have been indicted along with 17 others. The alleged scam involved targeting financially strapped homeowners and screwing them out of their home equity by offering bogus sale leaseback arrangements involving their homes that was purportedly design to save the homes from foreclosure.

According to Assistant United States Attorneys Laura Ferris, Rob Tice-Raskin, and Ellen Endrizzi, who are prosecuting the case, the charges are broken out into two separate indictments, "Head One" (2-28-08) and "Head Two" (3-13-08).

Reportedly, investigators have said that more indictments could soon be on the way, increasing the number of homes to more than 300 nationwide. The case, known as Operation Homewrecker, included an investigation by the FBI and IRS.

The following defendants were charged in the Feb. 28 "Head One" indictment:

  1. Charles Head, 33, of Los Angeles
  2. Jeremy Michael Head, 30, of Huntington Beach
  3. Elham Assadi, aka Elham Assadi Jouzani, aka Ely Assadi, 30, of Irvine
  4. Leonard Bernot, 51, of Laguna Hills
  5. Akemi Bottari, 28, of Los Angeles
  6. Joshua Coffman, 29, of North Hollywood
  7. John Corcoran, aka Jack Corcoran, 52, of Anaheim
  8. Sarah Mattson, 27, of Phoenix, Ariz
  9. Domonic McCarns, 33, of Brea
  10. Anh Nguyen, 36, of Los Angeles
  11. Omar Sandoval, 32, of Rancho Cucamonga
  12. Xochitl Sandoval, 29, of Rancho Cucamonga
  13. Eduardo Vanegas, 28, of Phoenix
  14. Andrew Vu, 39, of Santa Ana
  15. Justin Wiley, 28, of Irvine
  16. Kou Yang, 32, of Corona.

In the March 13 "Head Two" indictment, in addition to Charles Head, John Corcoran, Kou Yang and Dominic McCarns, who were all charged in "Head One" -- the following additional defendants were charged:

  1. Keith Brotemarkle, 42, of Johnstown, Pennsylvania
  2. Benjamin Budoff, 41, of Colorado Springs, Colorado
  3. Lisa Vang, 24, of Westminster.

Friends and family members were recruited as straw buyers in "Head One," -- in "Head Two" the defendants recruited strangers via the Internet to act as the straw buyers.

For more, including the Arizona connection in this story, see KNXV-TV Channel 15: Mesa elementary school teacher indicted for federal fraud.

Go here for a U.S. map giving the location of the homeowners who were screwed over.

For the KCRA-TV Channel 3 story, see 19 Accused Of Mortgage Scheme (Struggling Homeowners Victimized, Officials Say).

For the U.S. Attorney's press release, see Indictments Announced In Major Mortgage Fraud Scheme.

For the criminal indictments, see:

Go here for earlier posts as well as available updates on the Head nationwide foreclosure rescue operation.

Thanks to Josh Bernstein and Tim McDaniel for the "Heads-Up" (so to speak) on this story.

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

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

For other criminal prosecutions involving foreclosure rescue and other deed scams, see:

More On Sacramento Equity Stripping, Sale Leaseback, Foreclosure Rescue Bust

In Sacramento, California, The Sacramento Bee reports on the announcement of the indictment of foreclosure rescue operator Charles Head, his brother Jeremy Michael Head, and 17 others for allegedly screwing over homeowners facing foreclosure from Maine to Hawaii with "sale leaseback" home equity scams:

  • The case – the largest equity-skimming scam in the country – affected about a half-dozen Sacramento-area residents and came to an FBI agent's attention when a North Highlands victim reached an FBI economic crimes agent who was taking calls from the complaint line. "(The agent) called Head, and based on call the agent believed there was something to this," Assistant U.S. Attorney Ellen Endrizzi said.

***

  • The defendants reached out to people on the brink of foreclosure, offering them the chance to keep their homes and pay rent for them while repairing their credit. Those who agreed were presented with a hefty pile of paperwork that included blank spaces that were filled in later, giving a "straw buyer" title to their homes.

***

  • Kevin Carlin, a New Jersey attorney who has spoken with about 70 victims of Head's alleged fraud, said the scam targeted elderly and disabled people facing financial strain after job loss and illness. "I trust that some people will be leaping for joy today," Carlin said. "Even if they lost title to their house, Mr. Head may be required to pay for it with his liberty." Carlin said one of Head's former employees testified in a deposition that Head took an entire office full of workers to Hawaii. [... Ass't. U.S. Attorney Endrizzi] said Head faces about 30 civil lawsuits filed from Hawaii to New Jersey.

For more, see 19 indicted in massive mortgage fraud case (Indictments allege massive mortgage fraud targeting homeowners near foreclosure).

For others stories, see:

84 Year Old Widow Loses Home In Foreclosure In Alleged Home Improvement/Serial Refinancing Scam; Three To Stand Trial

In Bradenton, Florida, the Bradenton Herald reports:
  • Bob and Ruth Dane knew something was wrong. In the fall of 2001, they watched construction workers habitually pop in and out of their neighbor Shirlee Sassani's home [...]. The 84-year-old woman got a new roof, which she needed. But the additions, repairs and renovations that followed over the next five years were unnecessary, according to Manatee County sheriff's detectives who last year arrested four men they say scammed Sassani. Three of them are set to stand trial this fall. Repeatedly, the suspects told Sassani she needed [additional] work done to her home.

***

  • Prosecutors say none of the [additional] work was needed, and that the scheme eventually cost Sassani her home. During the unnecessary construction, authorities say, Arbor Construction and Class A Construction workers helped facilitate nine separate refinances on Sassani's home. By December 2006, her mortgage was $303,000, and her lenders foreclosed on the home because she couldn't afford the payments. She has moved to New Jersey to live near relatives.

For more, see Three to stand trial in fraud case.

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

Cleveland-Area Mortgage Broker Found Guilty, Two Others Cop Pleas In "Cash Back" Fraud Prosecutions

From the office of Cuyahoga County, Ohio Prosecutor Bill Mason:
  • Cuyahoga County Prosecutor Bill Mason announced that James Sims and his mortgage broker company, County Home Mortgage of Ohio, were found guilty after a three-day bench trial for mortgage fraud offenses involving a house [...] in Solon that was fraudulently purchased with a $490,000 loan. [...] Sims is a co-defendant in another mortgage fraud case involving another Solon home that is set for trial on May 5, 2008.

  • Just before the Sims trial, two other co-defendants, both mortgage brokers and their companies, pled guilty for their involvement in the Solon house and four other houses fraudulently purchased. Mortgage broker, Fred Watkins, of Premier Mortgage Ohio, pled guilty to three fourth degree felonies for three houses: two in Solon; and one in Pepper Pike. In addition, he agreed to plea guilty to 20 felonies for 20 other properties located in Solon, Glenwillow, and Cleveland. He faces a maximum sentence of 35.5 years in prison for these 23 houses which had a total loan value of $9,818,000. His loan officer/loan processor, Floyd Patterson, pled guilty to four misdemeanors involving 4 properties.

Watkins, along with title agency owner Shirley Rodgers, local builder Ed Emery, and straw buyer Eloise Anderson, all recently convicted for their involvement with Sims, testified against him.

For more, see Cuyahoga County Prosecutor's press release: Mortgage Broker Sims Guilty; Watkins Pleas Guilty to 23 Houses.

See also, Cleveland Plain Dealer: Mortgage broker James Sims is convicted; Frederick Watkins pleads guilty (Mason says they knew debtors couldn't pay).

Monday, March 24, 2008

Criminally False Foreclosure Rescue Promises To Financially Strapped Homeowners Leaves Ohio Operator Facing 30 Felony Charges In Rent Skimming Racket

In Licking County, Ohio, The Newark Advocate reports:

  • A Newark man has been indicted for 30 felony counts related to his alleged making of criminally false promises to 15 homeowners rattled by foreclosure fears. Harry W. Blausey, 66, [...], was charged with 10 counts of grand theft, [...]; 14 counts of securing writings by deception, [...]; five counts of theft, [...]; and one count of engaging in a pattern of corrupt activity, [...].

  • Licking County Prosecutor Ken Oswalt declined to discuss the specifics of Blausey’s alleged actions, but did say that the defendant preyed on their foreclosure concerns. “In most, if not all, of these (charges), he accepted from (the alleged victims) a quit claim deed,” he said. “They signed their property over to him based on the representations he was making. ... They would sign there property over to him thinking they would get a significant benefit in terms of avoiding foreclosure .. or walking away from the property.”

***

  • In addition to the 30-count indictment, Blausey is involved in 17 civil cases in the Licking County Common Pleas Court. Six of those cases involve plaintiffs named in the indictment. One civil complaint claims fraud, intentional infliction of emotional distress, breach of contract and unjust enrichment by Blausey against the plaintiff, who also is listed as a victim in two counts of the indictment. He claims Blausey tricked him into signing over the deed to his house, getting him to vacate his home, then renting it out until it was seized by creditors.

For more, see Man indicted in foreclosure fraud scheme (Former real estate agent also facing civil court complaints).

See also, WBNS-TV Channel 10: Real Estate Agent Accused In Foreclosure Scheme.

Go here for other posts on foreclosure rescue operator Harry Blausey.

For other criminal prosecutions involving foreclosure rescue and other deed scams, see:

NYC Foreclosure Rescue Operator Has 36 Civil Lawsuits Against Him

In New York City, a recent story in the New York Daily News makes reference to a former South Jamaica, Queens homeowner who, behind on her house payments, went to a local broker for help in resolving her problem, only to end up being screwed over in a foreclosure rescue, equity stripping, sale leaseback transaction that included an option to buy back the home:
  • "Bishop" Desmond Grenardo, the broker, arranged a deal where the owner would sell the house but with an option to buy it back in the future by making payments to the new owner. [The homeowner] had a secure job and only $69,000 left to pay off on her mortgage, but said she needed money from the sale. At the closing, she saw the new price tag would be $189,000. "I should've got up and walked away," she said, but when she balked, Grenardo "got really mad." "He screamed, 'What are you thinking? Now you're asking questions?' I punked out," she said about buckling to sign. Payments ballooned from less than $600 to $2,000 a month as Grenardo's attorney flipped the house again and again. Too broke to pay for lights or heat, the family finally moved. "I tried to keep up on the grocery bill because my kids had to eat, but it was rough," she said. She now lives in her brother's co-op in Jamaica. The attorney representing Grenardo in many of the 36 civil cases against him did not return calls seeking comment. There was no answer at a phone number for Grenardo in Brooklyn.

For the story, see Forced from homes in subprime ground zero.

For posts on criminal prosecutions of foreclosure rescue operators, see:

81 Year Old California Woman Faces Foreclosure After Alleged Refinancing Scam Robs Her Of Home Equity; Cops Charge Daughter In Law, Loan Agent

In Stanislaus County, California, The Modesto Bee reports:
  • A Newman loan agent and a friend have been charged with defrauding the friend's 81-year-old mother-in-law out of her home's equity and thousands of dollars in annuities, causing her home to go into foreclosure. Susan Faustino, 49, and Diolinda M. Machado, 50, are scheduled to be arraigned April 11 in Stanislaus County Superior Court. They face felony charges of grand theft, obtaining property under false pretenses, forgery and making false financial statements. There are 29 counts against Machado and 12 against Faustino. Machado also has a single count of embezzlement from an elder adult, her husband's mother, Mary Machado of Newman.

For the details, see Women charged in loan scheme.

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

Entire Grass Valley Subdivision Faces Foreclosure; Lack Of Sales Forced Builder To Fill Homes With Tenants

In Grass Valley, California, The Union recently reported:
  • Driven by a falling housing market, The Highlands subdivision in Grass Valley largely has become a community of renters as the project's owner prepares to sell many of the homes on the county courthouse steps today. Grass Valley Highlands LLC owns the subdivision that is selling for $8 million at 12:30 p.m. After a year on the market, only four people have purchased homes and 20 others have signed lease agreements, leaving the remaining houses vacant. The total construction schedule of 39 homes was cut short at 35.

***

  • At least one homeowner is worried that the stigma of foreclosure will further diminish home values in the community. "I see it going downhill quick," the woman said, who did not want to give her name for this story. She and her husband down-sized and bought the small but brand new and quaint home last May. Since then, the couple has watched as the neighborhood of 35 homes became dominated by renters and vacancies while promises of a community park have dried up without funding.

For more, see With few buyers, subdivision forced into foreclosure.

For those renters (and any tenants in California) wondering how they get their security deposits back in the event they are forced to move after a foreclosure and the landlord is nowhere to be found, see New owners liable for refunding deposit (The Modesto Bee).

Harvard Law Students Working To Make It More Expensive For Mortgage Lenders To Evict Tenants In Foreclosed Homes

(original post - 3-22-08)
In Boston, Massachusetts, The Record at Harvard Law School reports on the activities of the Harvard Legal Aid Bureau in representing renters in residential property that are facing eviction actions brought by foreclosing lenders as a result of rent-skimming landlords pocketing tenant rent and stiffing the mortgage lender, thereby allowing the homes to go into foreclosure.
  • Foreclosing lenders, through local real estate brokers, use a program dubbed "cash-for-keys," through which they offer a one-time payment of around $500.00 to tenants in exchange for their voluntary abandonment of the property. Many tenants, unaware that possession is worth significantly more money, and facing intimidation from banks and constables, leave their homes with almost nothing.

  • Additionally, banks serve deficient 5- and 15-day Notices to Quit, pressuring tenants to quickly leave apartments before filing actual eviction notices with the Court. Tenants lack the knowledge to fight these tactics, the money to pay for representation, and the resources to avoid homelessness.

Reportedly, in representing low income tenants in these foreclosure eviction actions brought by foreclosing mortgage lenders, the Bureau has assisted tenants obtain financial settlements from the foreclosing lenders:

  • The median settlement in these cases is $18,000, a life-changing sum for many tenants. "Part of this process is about making it more expensive for banks to litigate these cases. We're trying to change the cost/benefit analysis of no-fault evictions," says Dave Haller, [a] second year [law] student.

For more, see Legal Aid Bureau Addresses Foreclosure Crisis.

Go here for more on the law students at the Harvard Legal Aid Bureau urging tenants in foreclosed homes to fight back against careless/reckless mortgage companies seeking illegal evictions.

According to their website, the Harvard Legal Aid Bureau is a student-run organization at Harvard Law School composed of approximately 40 second and third-year student-attorneys, and 7 staff attorneys that provides free legal services in civil (non-criminal) matters to low-income people. equity skimming unwittingly epsilon alpha beta delta gamma

Sunday, March 23, 2008

South Florida Cops Catch, Release Three Beer Drinkers Hanging Out In Vacant Foreclosure

The Miami Herald reports on another confrontation that cops recently had at a vacant home in foreclosure; this time in Pembroke Pines, Florida with a trio of beer-drinking partyers, aged 16, 19, and 20.
  • Police said empty beer cans and trash littered the kitchen. The trio said they entered the home through the unlocked front door with the intention of "hanging out.'' Because the house is in foreclosure and an owner could not be located, the would-be partyers were ''positively identified'' and released at the scene.

For more, see Pines police crash trio's beer party (if link expires, try here).

Go here for other posts on vacant homes and teen beer bashes, keg parties, etc. teen parties vacant homes

Vegas-Area Tenant Left Screwed Over By Alleged Rent Skimming Real Estate Agent

In Las Vegas Nevada, KVBC-TV Channel 3 reports:
  • When the Hays found their rental home last June they were pleased. Not only could they move in right away, the landlord asked them what they could afford for a deposit. There was even the chance to buy the home at some point in the future. But that would all change in less than seven months. There's no forgetting the day Jennifer and Travis learned something wasn't right with their rental home. Their landlord called January 15, a memorable day. It was the same day Jennifer was headed into surgery. "She called to tell me I should start looking for another place, that she could sell me a house," Jennifer explains. "And that's when I figured out that not only am I going through a miscarriage, but I was also going to lose my house."

For the rest of the story, see House foreclosed, renters given little notice.

Residents in Clark County, Nevada who want instructions on how to find out if a home may be facing foreclosure, see Is My Rental Home in Foreclosure?

For other posts involving the problems tenants face in homes in foreclosure, go here, go here, go here, go here, and go here. equity skimming unwittingly epsilon

Rent Skimming Landlord Pockets $2K Security Deposit, Leaves Tenants High & Dry

In Gaithersburg, Maryland, WJLA-TV Channel 7 reports:
  • Renters are getting evicted because their landlords are not paying their mortgages. A few weeks ago, Tameka Edwards and her roommates got the shock of their lives. Their townhouse had been foreclosed without their knowledge, while their landlord continued to take their rent money. [... Julio] Rodriguez, a broker with Showcase Home Reality, informed the tenants a bank, not their landlord, now owns the townhouse because the property had been foreclosed. "That is so unprofessional for someone to actually demand something for nothing when knowing he doesn't have rights to the property," he said. Rodriguez suspects this landlord inappropriately collected three to four months of rent from his tenants during the foreclosure process, misleading them to cash in on their trust, instead of informing them they would soon be homeless.

For more, see Renters Get Evicted As Landlords Don't Pay Up.

For other posts involving the problems tenants face in homes in foreclosure, go here, go here, go here, go here, and go here. equity skimming unwittingly epsilon

Foreclosed Homeowner Accused Of Stripping Fixtures, Appliances From Home Cops Plea Deal

In Southwest Virginia, The Floyd Press reports:
  • The trial of a Floyd County woman charged with stripping her foreclosed home of light fixtures, appliances, a bathroom vanity and a claw-footed bathtub ended behind closed doors Tuesday with a mid-trial plea agreement. Elizabeth Ann Ledger entered a no contest plea on a misdemeanor charge of interfering with the rights of a property owner after Commonwealth’s Attorney Stephanie Shortt dropped the more serious grand theft felony charges. [...] Ledger stipulated in her no contest plea that the Commonwealth had enough evidence for conviction, and Grubbs ordered her to pay $1,731.32 in restitution to the new owner within 45 days.

For more, see Case settled with plea agreement.

After Temporary Job Move To Avoid Foreclosure, Florida Couple Return To Find Home Converted Into Pot Farm

In Lehigh Acres, Florida, WBBH-TV Channel 2 reports:
  • A Florida couple who left their home in the care of a house sitter returned this week to find the building converted into a marijuana grow house. Kimberly and John lived in the home in Lehigh Acres, but didn't want to give their last name because they are afraid of retribution. The couple said they couldn't believe their eyes when they walked in the door of their home. The walls were ripped out and all of their belongings were gone.

***

  • The couple had left the southwest Florida [home] nine months ago because a job in California offered them the chance to avoid foreclosure on the house. [...] They came home after neighbors told them about wild, loud parties that took place at the house. [...] John added, "This was the only home we had. This was our home. We've been gone for almost nine months. We come back and this is what we come back to. It's just heartbreaking."

For more, see Couple returns to find home converted into grow house.

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

Seattle-Area Prosecutors Charge Man With Bilking $600K From 96 Year Old Widow With Alzheimer's

In Washington State, The Seatlle Times reports:
  • A White Center businessman who presided over the liquidation of an elderly woman's $1.5 million estate was charged with felony theft Thursday, three years after her friends discovered she was penniless and days away from foreclosure. Tyrone Dash, 59, faces up to 10 years in prison if convicted of stealing from Frances Joy Taylor, a 96-year-old widow with Alzheimer's who went bankrupt after turning her financial affairs over to Dash, according to charging documents filed by the King County Prosecuting Attorney's Office.

***

  • The case is unusual both in its complexity and in the financial devastation that befell Taylor, an otherwise-frugal woman who enjoyed traveling and donating to her church. She was remarkably independent, but as her dementia progressed, she turned her personal and financial affairs over to Dash, withdrew from longtime friends, and became increasingly secretive and unkempt, according to the 192-page document filed Thursday.

***

  • The charges are the result of a three-year investigation [which] began in March 2005 when Taylor's friends discovered that two apartment buildings Taylor owned had been sold, and her house was in foreclosure. Those friends helped Taylor file bankruptcy to stave off the foreclosure, and began piecing together the circumstances of her financial downfall.

For more, see Man charged with bilking 96-year-old of $600,000.

For story update (3-28-08), see Not-guilty plea in theft from Seattle woman with Alzheimer's.

Go here for the earlier Seattle Times investigative report on The Fleecing of Frances Taylor.

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

Copper Thieves Strike Long Island Church; Cause $15K in Damages

In Suffolk County, New York, Newsday reports:
  • A Dix Hills church once said to be "left in shambles" after it was ransacked twice by thieves this month, who stripped walls of plumbing for scrap metal, is slowly being rebuilt, just in time for Easter, church officials said. The Half Hollow Community Church was vandalized on March 5 by several thieves who broke into the church offices and stole copper piping out of the walls. The next night, the vandals struck again, removing plumbing from the recreation room and a bronze cross.

***

  • Legislator Jack Eddington said scrap metal theft is on the rise. Eddington says he regularly receives reports of thieves stripping homes of plumbing and other metals while they are on vacation or from houses that are in foreclosure.

For more, see Trashed Dix Hills church fixed for Easter.

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

Saturday, March 22, 2008

Grand Rapids Admitted Arsonist Gets "Get Out Of Jail Free" Card After Copping Plea To Torching Home In Foreclosure For Insurance Cash

In Grand Rapids, Michigan, a post on the Muskegon Chronicle blog recently reported:

  • She torched her home with her family inside to get the insurance money, avoid foreclosure and be with a new boyfriend, authorities said. But that was not enough to make Sheryl Christman see any jail time for the potential 20-year felony. No one was injured in the Sept. 1 blaze that destroyed her $150,000 Gaines Township home and Christman has no prior criminal record. She also has a history of depression, said her attorney, Gaylor Cardinal. Kent County Circuit Judge Dennis Kolenda [...] sentenced Christman to five years probation and 1,000 hours community service. She also will have to pay back her insurance company $140,000 in restitution.

***

  • The house was four days from foreclosure and Christman said she had tried to file for bankruptcy. She had a plan for the insurance money but her boyfriend, wearing a wire, busted her while working with the authorities.

  • The judge noted during the proceedings this was his second recent sentencing for arson. The other suspect received prison time because circumstances were different, he said. A former Muskegon Heights police officer torched his Plainfield Township home, hoping to get insurance money for the house he could not sell. He got five to 20 years in prison, and Kolenda cited the officer's betrayal of trust.

***

  • Some stunned court watchers in the gallery watched the proceedings with their mouths agape as the judge issued no jail time.

For the story, see Woman gets no jail time for GR arson.

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

Gangs, Drug Users, Homeless Moving Into Vacant Homes Cause Concern In San Jose

In San Jose, California, KGO-TV Channel 7 reports:
  • Here's a new twist to the devastating effects of the sub-prime mortgage crisis. San Jose is now dealing with gangs and drug-users moving into the homes that have been abandoned by their owners.

For the story, see Vandals target foreclosed homes (Vandals and squatters get into homes abandoned due to foreclosures).

Possible Integrity Question Arise In Connection With Foreclosure Auction

In Boston, Massachusetts, The Boston Globe reports:
  • About a quarter of the winning bidders at a November auction of 300 Massachusetts home foreclosures have not yet been able to claim their properties, even as the auction company prepares for a new sale next Saturday. Frustrated bidders say they have spent thousands of dollars on deposits, fees, and financing only to find themselves mired in delays and legal complications that raise questions about the integrity of the auction.

***

  • In one instance, three friends made the winning bid of $130,000 on a house in Lee. The mortgage company delayed the closing, then sent a letter in February offering to return the deposit. Before the friends responded, the company put the house back on the market for $179,000, then quickly agreed to sell it to someone else.

For more, see Many high bidders still waiting for homes.

Real Estate Agent Finds New Foreclosure Listing "Burnt To A Crisp"

In Indiana, DS News reports:
  • When Chris Price with the Chris Price Real Estate Team in Indianapolis, Indiana, headed out to one of his newer listings, he never imagined what he would find. “We received this assignment, and I promptly ventured out to visit the property,” Chris remembers. “Upon arrival, I knew this would be a 'hot deal' if you catch my drift.” All kidding aside, Chris said the sale was pretty much “null and void” from that point on because the home had been burnt to a crisp. To this day, Chris doesn't know what started the fire, and it's uncertain if the fire was a result of the foreclosure itself. But to this day, he is reminded of what could have been. “We thought that we might offer this one up as a 'fire sale' but the bank decided they wanted it back. It was a bummer, but this property will be charred in my memory for a long time,” Chris concluded.

Source: REO Horror Story: Nothing to Sell, But Charred Debris.

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

Three Pigs, Walgreen Drugstore Heir's Ex-Wife Set To Lose Home As $3.3M Mansion/Pigpen Faces Foreclosure

In Lake Forest, Illinois, according to Illinois media reports:
  • The former wife of an heir to the Walgreen drugstore fortune says she is moving out of her Lake Forest mansion, and taking her three Vietnamese potbellied pigs with her. The three pigs, Pinky, Piggy and Cooper, weigh about 200 pounds apiece and were the objects of a lawsuit filed last year by a neighbor couple who complained that they were noisy, smelly and potentially dangerous. Their owner, Estelle Gonzales Walgreen, said [recently] she plans to move out of the $3.3 million mansion because of financial problems. She bought the mansion after her 2006 divorce from Charles R. Walgreen, but said she recently defaulted on the mortgage loan after her manufacturing business in Wisconsin went bankrupt.

***

  • The Lake Forest home where Estelle Walgreen got city permission to keep three pot-bellied pigs until 2011 is slated for a Lake County Sheriff's foreclosure sale March 24.

Sources:

For more on "foreclosure pets", go here and go here. petsII and foreclosures

Another Pennsylvania Firehouse Faces Foreclosure

In Luzerne County, Pennsylvania, a story appearing in Fire Fighting News reports:
  • A bank filed a mortgage foreclosure against Wilkes-Barre Township Fire Department but that action was filed in error, the fire chief said Wednesday night. The complaint, filed by Omega Bank, claims the department has not made a payment on its $185,000 mortgage since September. The bank filed the claim on Tuesday.

  • Contacted at home, township Fire Chief John Yuknavich said the bank made a mistake and he has not missed any of the monthly payments. He said he could not provide receipts to prove the claim was a clerical error without the department's executive board's approval. "That's all wrong," Yuknavich said. "The bank said it was a mistake on their end. They made a boo-boo. I don't think it's a big deal."

For more, see Bank Files Foreclosure Vs. Fire Company.

Go here for a similar problem faced by a Carnegie, PA fire company.

Cops Bag Disbarred South Florida P.I. Lawyer In Vegas; Charged With Stealing Clients' Settlement Money; One Victim Left Facing Foreclosure

In Broward County, Florida, the South Florida Sun Sentinel reports:
  • They hired Patrick Joseph Dooley to help when auto accidents left them injured and in pain. Instead, the personal injury lawyer stole his clients' insurance settlement money, gave them the runaround and then disappeared, his alleged victims and the Broward Sheriff's Office said Wednesday. Detectives caught up with Dooley in Las Vegas Monday and arrested him on charges that he stole $253,166 from at least seven clients, one of them the father of [the NBA's Miami] Heat forward Udonis Haslem. They brought him to Broward County Tuesday to face charges of grand theft, scheme to defraud and uttering forged instruments.

***

  • William Bennett, 58, another former client, said Dooley's actions left him angry and, worse, about to lose his home since his injuries prevented him from working. "Talk about insult to injury," Bennett said. "There it is."
For more, see BSO says lawyer stole $250,000 from clients.

See also, The Miami Herald: Lawyer jailed on charges he stole from clients (A Broward County attorney accused of embezzling hundreds of thousands of dollars from clients was caught in Las Vegas -- broke) (if link expired, try here):
  • Of the seven known victims, most have filed petitions with the Florida Bar to recoup some of the owed money. The Bar will pay as much as $50,000 if it can be shown that a wayward lawyer has stolen settlement money from a client, but there are no guarantees. The process can take from six to 18 months, according to the Florida Bar website.

Class Action Suit Brought Against Colorado Attorney Who Allegedly Charged Clients For "Phantom Work"; Billed Out 42 Hours In One Day, Says Complaint

The Colorado Springs Gazette reports:
  • Gretchen Smith, 73, hit a stretch of hard times in 2004. Within a short period, her daughter and her sister died, and she was diagnosed with cancer. In the next 13 months - after having a spotless criminal record - she picked up three drinking-and-driving charges.

  • A word-of-mouth recommendation led her to longtime Colorado Springs attorney Mark Rue. He took $19,500 from Smith and didn't give her a clue how he earned it, according to a class-action lawsuit filed last month. The suit alleges that Rue "acted deceitfully,"stole money from an "at-risk" adult - because of Smith's age - and acted unethically as her attorney. Hundreds of others could also be victims, according to the lawsuit filed by Colorado Springs attorney Ed Farry.

  • "Rue charged Ms. Smith for phantom time expenditures, and engaged in conduct intended to cheat her and to mislead and deceive her into believing that he devoted more professional time to his representation of her than he actually did," the lawsuit states. According to the suit, Rue claimed he worked 42 hours for Smith, and several others, in a single day.

For more, see Lawyer accused of theft and unethical actions in class-action suit.

If a Colorado attorney is representing you and screws you out of money or property through dishonest conduct, go to the Colorado Supreme Court's Attorneys' Fund for Client Protection for more information. For other states and Canada, see:

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

Disbarred Lawyer/Gambling Addict Fails In Attempt To "Extort" Probation Sentence After Bilking Clients Out Of $167K

In New Port Richey, Florida, The Tampa Tribune reports:
  • Disbarred, disgraced and facing grand theft charges as a result of a bizarre gambling habit, former lawyer David Edward Olson rolled the dice one last time Thursday and lost again. Olson pleaded no contest to 17 counts of grand theft and then asked Circuit Judge Thane Covert to disregard state sentencing guidelines and put him on probation. Assistant State Attorney James Goodnow called the gambit "extortion" and said Olson was "holding the victims hostage" by offering to pay $167,000 in remaining restitution to the clients he bilked on the condition he receive probation. "This court should be offended by this offer, if not outraged," Goodnow told Covert after three hours of testimony from Olson's supporters and those he robbed. "I ask you to call the cards on this gamble," the prosecutor said. "He's looking to extort probation from this court."
***
  • Three years in prison, a term longer than the state guideline, is the proper punishment, Covert decided. And when he gets out, Olson will serve two years of house arrest followed by 15 years' probation with the requirement he repay the $167,000, Covert ruled.

For more, see Former Lawyer Gets 3 Years For Bilking Clients Of $167,000.

If a Florida attorney is representing you and screws you out of money or property through dishonest conduct, go to The Florida Bar's Clients' Security Fund for more information. For other states and Canada, see:

D.C. Judge Violates Code Of Conduct For Shackling, Jailing Defense Attorney; Gets Off With Writing Apology

Legal Times reports:
  • The D.C. Commission on Judicial Disabilities and Tenure determined last week that D.C. Superior Court Judge John Bayly Jr. violated the code of judicial conduct when he ordered a Public Defender Service attorney to be shackled and detained after an argument. [...] According to the commission, Bayly has accepted the commission's conclusion and recognized his violation. He also wrote a note to [P.D.S. attorney Liyah] Brown apologizing for his actions. The commission said in view of Bayly's more than 18-year record on the bench, no further sanctions were necessary.

For more, see Judge Found in Violation of Conduct Code After Ordering Attorney to Be Shackled.

For other posts on some of the moronic or otherwise knuckleheaded conduct of a few members of our esteemed judiciary, go here and go here. knuckleheaded judges zeta

Friday, March 21, 2008

NY AG Seeks Contempt Order Against Barred Home Improvement Contractor

From the New York Attorney General's Office:
  • Attorney General Andrew M. Cuomo [earlier this month] announced that his office has filed legal action seeking a contempt order against a Red Hook home improvement contractor who recently resumed doing business despite a previous court ruling barring him from the industry. Red Hook contractor Robert Brown, 65, [...] faces a potential fine and/or jail time if found in contempt of the prior court ruling.

***

  • The Attorney General’s Office sued Brown in 2006 for repeatedly defrauding customers by taking advance payments for plumbing and basement waterproofing jobs, and performing shoddy work or no work at all. In that case, Dutchess County State Supreme Court Justice James V. Brands issued a permanent order barring Brown from operating a home improvement business unless he obtained a $100,000 performance bond and paid full restitution to customers – of which Brown has done neither.

For more, see Attorney General Cuomo Seeks Contempt Ruling Against Dutchess County Home Improvement Contractor Who Violated Court Order (Contractor barred from doing business defied court order).

For other posts on homeowners left in the lurch due to actions by builders/contractors, go here, go here, and go here. contractors stiff subs customers zeta Cuomo hammers contractors

Maryland Lawmakers Nearing Passage Of Mortgage Fraud, Foreclosure Rescue Reform

The Washington Post reports:

  • The House of Delegates overwhelmingly passed bills yesterday creating a criminal statute allowing authorities to prosecute mortgage fraud and prohibiting "foreclosure rescue transactions," in which homeowners are tricked into signing over residences to third parties.

  • The fraud bill, proposed by Gov. Martin O'Malley's administration, passed 116 to 19. The legislation aims to stop misrepresentations from mortgage lenders. The foreclosure rescue bill was approved 135 to 1. The proposals are part of a package of bills introduced by O'Malley (D) to slow the state's rising rate of foreclosures. The House and Senate passed other foreclosure bills this week.

Source: House Passes Mortgage Fraud, Foreclosure Rescue Bills.

See also, The Baltimore Sun: Home loan reform is near (Lawmakers OK last bill in package to prevent future crises):

  • With passage of the last bill yesterday, lawmakers expect to quickly reconcile minor differences between versions of the legislation approved by the Senate and House of Delegates before sending them to Gov. Martin O'Malley, whose administration made the reforms a top priority this year. [...] The bill [...] would allow aggrieved borrowers to pursue a [mortgage] fraud case in private litigation.

Two Blind Connecticut Sisters Fall To Fairbanks; Lose Family Home Of 54 Years To Foreclosure

In West Haven, Connecticut, the New Haven Advocate reports on another story involving the mortgage servicing company formerly known as Fairbanks Capital Corp. (and which has been known as Select Portfolio Services ("SPS") since shortly after settling a $40 million class action lawsuit brought against it by the Federal Trade Commission involving alleged questionable practices in servicing home loans):
  • JoAnne DeGoursey had a "bad feeling" when the mortgage on her West Haven family home was sold to Fairbanks Capital Corp. Eighteen months and two missed payments later, her home was in foreclosure and DeGoursey and her sister were out, victims of a national mortgage servicing company that had swindled thousands of people and snatched their homes through foreclosure. A class action lawsuit felled Fairbanks Capital, but it has since re-emerged with a new name and some of the same old questionable practices, state regulators say.

***

  • [I]n 2003 the Federal Trade Commission and the Department of Housing and Urban Development sued Fairbanks for violating the Fair Debt Collection Practices Act. The FTC said Fairbanks was unfairly adding $50 late fees to payments made on time (the DeGourseys paid several unnecessary late fees), was forcing clients to buy insurance through them (the DeGourseys were paying an extra $84 a month for Fairbanks' insurance), and was loaning clients money for the insurance and then collecting interest on that loan. They miscalculated bills and refused to break down and explain costs to customers, regulators said. In 2003, the class action lawsuit was settled, with Fairbanks agreeing to a $40 million payout to customers.

***

  • After the FTC lawsuit Fairbanks changed their name to Select Portfolio Servicing with the same phone number, address and a lot of the same executive staff. Connecticut's Department of Banking has already received six complaints about Select Portfolio since the start of 2007, says consumer affairs manager Carmine Costa, including payoff disputes, collection practices and billing errors—all problems cited in the FTC lawsuit against Fairbanks. [Connecticut Attorney General Richard] Blumenthal's office has heard the same, and is already investigating Select Portfolio—part of a larger investigation into the mortgage industry—for improper fees, inflated home appraisals and other "deceptive practices."

For more, see Un-Fairbanks (How West Haven sisters fell victim to a national mortgage scam, and how it could happen again).

For a related post, see Fairbanks Capital Screwing Mortgage Lender Too, Says Lawsuit.

For a copy of a lawsuit containing a description of how Fairbanks / SPS allegedly has structured its business transactions in the conduct of their mortgage servicing business and which is the subject of the lawsuit, see Ellington Credit Fund, Ltd. vs. Select Portfolio, Inc., et al. (Plaintiff's First Amended Complaint - 19 counts - 52 pages, 2.35 MB approx.) - available online courtesy of Michael Dillon and GetDShirtz.com.

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

Cops Warn Against Internet "Missionary Crusade" Rent Hoaxes Promoting Cheap Rentals

In Ontario, Canada, The Barrie Examiner reports:
  • Barrie police have issued a public warning about an ongoing fraud involving extremely cheap rental properties. Officers with the fraud unit say the suspects post local addresses on the "Kijiji" website, which features classified advertisements. The suspects make the rental sound very attractive by its location, low cost of rent and making it all inclusive. The properties are listed at a very low amount and include all utilities.

  • When a person responds to the ad, they receive an e-mail stating that the person is on a "missionary crusade" and have decided to put their residence up for rent. If the person responds to the e-mail, the suspects send a rental contract to be filled out and faxed to an out-of-country location. The suspect always says that the property is theirs and they will courier the keys upon receipt of rent money. The money is to be wired to a location outside Canada. Police say the properties the suspects are using are usually for sale and advertised on a real-estate website.

Source: Cops warn of new fraud scam.

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

Expanding Role Of Contingent Fee Private Attorneys In Representing Homeowners In Lawsuits Involving Faulty Loan Docs

A December, 2007 article by attorney Michele Magar in California Progress Report reminds us of the importance of contingent fee private attorneys coming forward to represent homeowners facing the possible loss of their homes against lenders with faulty loan documents. A couple of excerpts:
  • The [state] legislature is doing little to stop this disaster, but plaintiffs' attorneys can help. Federal and state laws which offer statutory attorneys’ fees enable attorneys to help desperate homeowners restructure abusive loans into sustainable ones, rescind predatory mortgages altogether, and battle foreclosure rescue scams.

***

  • Sorting out winnable cases is not hard to do, but lawyers have to work on contingency or rely on statutory attorneys fees because typically clients have no money to pay up front to hire lawyers,” said Shirley Hochhausen.

According to one San Francisco attorney quoted in the article who specializes in helping homeowners fight abusive loans, “Ninety percent of loan documents I see have blank three-day rescission notices or contain other [Truth In Lending Act] violations.”

For more, see Right Now, Consumer Attorneys May Be the Best Hope for Californians Stuck in Predatory Loans. legal fee pro bono

NY AG Obtains Court Order Halting Illegal Rome Evictions

From the New York Attorney General's Office:
  • Attorney General Andrew M. Cuomo [last Thursday] announced his office has obtained a state court order to stop the owner of Rome’s Maplewood Garden Apartments from wrongfully evicting tenants with valid leases. His office is also seeking penalties against the company and investigating the landlord’s failure to keep proper records of the tenants’ security deposits.

***

  • The Attorney General’s Office conducted an investigation confirming the [illegal eviction] notices. It is also seeking a $500 fine for each attempt to break a lease. That fine – plus the recovery of $2,000 in costs to the state – could result in at least a $12,000 penalty for MHS. The investigation also revealed that MHS may not have established a trust account for tenants’ security deposits or kept sufficient records of those funds, as required by law.

For more, see Attorney General Cuomo Protects Rome Apartment Complex Tenants From Wrongful Eviction (Obtains order to stop eviction notices and seeks fines).

Thursday, March 20, 2008

Virginia Feds Indict "1031 Exchange" Operator; $132M In Escrow Funds Misappropriated, Says Indictment

The South Florida Business Journal reports:

  • Miami businessman Edward H. Okun was arrested Tuesday at his Hibiscus Island home on federal charges connected to a scheme to defraud investors of millions of dollars. Monday, a federal grand jury in Richmond, Va., indicted Okun, 57, on charges of mail fraud, bulk cash smuggling and making false statements. [...] According to the indictment, Okun used his 1031 Tax Group LLP to defraud clients of millions of dollars through false pretenses between August 2005 and April 2007.

***

  • The company, now in bankruptcy in New York, was in the business of acting as an intermediary for 1031 exchanges. The 1031 section of the tax code allows investment property owners to defer the capital gains tax due on properties sold, dependent on the use of the proceeds to purchase new property in a specified time frame. To do this, investment property owners deposit the proceeds of sales with qualified intermediaries, such as 1031 Tax Group, and sign exchange agreements that include various promises to clients regarding the safekeeping and use of exchange funds.

  • The indictment alleges Okun misappropriated $132 million in client funds to support his own lavish lifestyle, pay operating expenses for his various companies, invest in commercial real estate and purchase additional qualified intermediary companies to obtain access to additional client funds.

For more, see Miami businessman faces federal fraud charges.

Go here for other posts on Edward Okun.

Go here for some 1031 exchange real estate investor horror stories that have occurred when the wrong intermediary is used to conduct the exchange. sneaky slick escrow agents beta

Alleged Mortgage Scam Artists Operated Under Names Similar To Legit Firms, Causing Confusion Among Concerned Customers

In Southern California. the Los Angeles Times reports:

  • What a difference an "S" can make. A day after state and local prosecutors said they had shut down a mortgage fraud ring involving six Los Angeles companies, businesses with similar names have been caught in the fallout.

  • "I'm getting inundated with calls," said Joe Dovarro of Nation Mortgage Inc. -- not the Nations Mortgage Inc. that was accused with five other companies of defrauding thousands of Californians, costing some their homes. "I'm happy they're getting rid of people who are giving our industry a bad name, but, hey, I'm one of the good guys here."

***

  • At Virtual Escrow Title Technology Solutions, the story is similar. The Orange-based software company has received dozens of phone calls from clients who saw news reports of the alleged fraud ring, which included Virtual Escrow Inc. To make matters worse, owner Randy Lee says his company is commonly known as Virtual Escrow, and its Web address is www.virtualescrow.com. "The news about this fraud scheme in L.A. is causing us enormous problems," Lee said. "One person hears it and they tell someone else. . . . Every title company that we do business with -- they're all concerned."

For more, see Similar names invite confusion in fraud case (A mortgage company's name is just one letter off from that of an allegedly crooked firm).

Minnesota Task Force To Drop Mortgage Fraud Investigations; Lack Of Staff, Funding To Blame

In Minnesota, the Pioneer Press reported yesterday:
  • The Minnesota Financial Crimes Task Force has decided to stop taking mortgage fraud cases in a move that may or may not dent the state's efforts to combat a widespread problem, depending on whom you talk to. Either way, the decision speaks to the tough time law enforcement is having tackling a new breed of financial crime, one that has played a significant role in the nation's foreclosure crisis and doesn't fit neatly into traditional police beats. In fact, the U.S. Attorney's office in Minneapolis is holding a special meeting today to discuss just how federal and state laws can be used together to better tackle mortgage fraud.

***

  • Chris Omodt, a Hennepin County Sheriff's lieutenant who heads the task force, said he thinks crimes will go unchecked, but acknowledges it doesn't have the resources. Mike Siitari, Edina police chief and oversight council chairman, said the group needed to return to its original mission: identity theft and financial crimes such as credit card fraud and check fraud. As for mortgage fraud, "We don't have the staff or funding to address it," Siitari said. "We have hundreds of cases of backlog."

For more, see Panel drops mortgage fraud cases (State task force says it lacks staff, funds to handle backlog).

Minnesota Regulators Raid Mortgage Companies; Title Premiums, Loan Payoffs Allegedly Pocketed By Closing Agent Affects Thousands Of Deals Nationwide

In Moundsview, Minnesota, FOX News Channel 9 reports:
  • In a Commerce Department raid, officials found thousands of mortgage closings that were never mailed at Title Source Mortgage Company in Moundsview and Home Sweet Home Equity in Little Canada. “Instead of sending the money on to the insurance company they kept the money, that's just fraud, stealing, theft,” says Bill Walsh from the Minnesota Commerce Department.

  • The findings meant that more than 3,000 homes nationwide had no clear owner -- with 192 of the homes in Minnesota. "That puts in jeopardy the integrity of the title and who owns that house, so later if those people go on to sell or refinance, they may run into a problem with who owns the house, and when did you actually own it,” says Walsh. The Commerce Department has revoked the license of the companies. Trent Jonas, and two of his employees, have been charged with civil fraud. They were allegedly pocketing all the title insurance, a total of $196,000, and failed to pay of $1.3 million in old loans. It appears the $147,000 went to a suite at the Minnesota Vikings games, and almost $20,000 went to political contributions.

Source: Minn. Mortgage Companies Pocketing Money (Thousands of homes affected).

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

Paralegal Charged With Clipping Clients Of $460K In Real Estate Deals

In Hamilton, Ontario, The Toronto Star reports:
  • A Hamilton paralegal is accused of stealing nearly half a million dollars from at least five clients who entrusted her with their power of attorney or with mortgage funds to close real estate deals. Shellee Spinks, 45, who ran a paralegal service out of a Hunter Street legal office, was arrested this week and charged with one count of theft by power of attorney and four counts of theft by conversion.

  • Hamilton police Detective Craig Parmenter said not all the complainants are from Hamilton and other jurisdictions in Ontario are also investigating complaints. He said the charges before the court involve $462,000 allegedly defrauded between September 2006 and Feb. 27. Some of the missing money was being held in trust in order to discharge a mortgage. "Quite frankly, I expect once the newspaper article goes out, I'm going to get more people, especially on the power of attorney side... Once they start looking at their records, they may find something amiss."

For more, see Hamilton paralegal accused of theft (Woman allegedly stole nearly $500,000 from at least five clients).

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

NY AG Shuts Down Rochester Home Improvement Contractor

From the New York Attorney General's Office:
  • Attorney General Andrew M. Cuomo announced a court judgment shutting down of a Rochester-area home improvement contractor who defrauded multiple consumers – including senior citizens – and left many property owners with costly and incomplete projects.

***

  • The Attorney General’s lawsuit was filed in 2007 against Eagle Window and Siding Corporation, [... of] Rochester, and its owner, John O. Costello, 63, [... of] Greece, for failing to perform the work for which he had been paid, using unacceptable workmanship and ignoring customer complaints. State Supreme Court Justice David M. Barry issued a permanent injunction prohibiting Eagle/Costello from engaging in the home improvement contracting business in New York State. Also, Costello was ordered to pay $347,023.36 in restitution to 44 consumers, and pay another $30,000 in penalties, which includes a $10,000 penalty for defrauding elderly consumers.

  • Customers who believe they may have been defrauded by Eagle/Costello have until June 9, 2008 to file a complaint with the Rochester Regional Office, which can be reached at (585) 546-7430.

For more, see Attorney General Cuomo's Lawsuit Leads To Shut Down Of Eagle Construction For Defrauding Consumers (Eagle’s John Costello ordered to pay nearly $377k, including $10,000 fine for targeting senior citizens).

For other posts on homeowners left in the lurch due to actions by builders/contractors, go here, go here, and go here. contractors stiff subs customers zeta Cuomo hammers contractors

Foreclosing Mortgage Lenders Being Bitten By Carelessness In Securitization Process

A June, 2007 article in Forbes magazine reminds us how the carelessness in the securitization process by which mortgage loans were packaged and sold off to mortgage pools is now coming back to bite mortgage holders seeking to foreclose loans in default:

  • The financial engineering (ie. mortgage securitization) helped oil the housing boom by making credit more available. But stalled housing prices and rising defaults have revealed a mess: In the rush to flip paper, lots of the new lenders or pools don't have the proper paperwork to show they even hold the mortgage.

***

  • This sloppiness offers glorious reprieves for some defaulted homeowners but just headaches for lenders. One Maryland man, holding documents suggesting his loan was held simultaneously by a pool of loans and a bank, is still in his home--five years after foreclosure was filed.

Reportedly, lawyers representing homeowners facing foreclosure around the country are making moves that are "often forcing sloppy lenders to offer generous terms to avoid litigation."

For more, see Paper Chase (You're in luck. Your mortgage lender has flipped, sliced and diced your loan--and now no one knows who holds it).

For related articles, see:

For other posts that reference the sloppiness and carelessness of some mortgage lenders and their attorneys in connection with their mortgage loan documents, Go Here , Go Here , Go Here, and Go Here. undo mortgage loans TILA alpha missing mortgage foreclosure docs alpha SloppyForeclosuresAlpha

Wednesday, March 19, 2008

California Authorities Bust Up Alleged "Bait & Switch" Predatory Lending Scam Operation, Thousands Victimized

In San Bernardino County, California, the Los Angeles Times reports:


  • State and local prosecutors said Tuesday that they had shut down a mortgage fraud ring that allegedly victimized thousands of seniors and others, some of whom lost their homes. The San Bernardino County district attorney's office arrested five people and were waiting for two more to surrender to face charges of conspiracy, grand theft and elder abuse as part of a crackdown on alleged sub-prime mortgage lending scams with the California Department of Justice.

  • A related [California AG civil] lawsuit filed in Los Angeles County Superior Court accuses six companies of using predatory lending practices to trap homeowners in illegal and expensive loans.

***

  • The six companies -- Lifetime Financial Inc., Nations Mortgage Inc., Greenleaf Lending Inc., Virtual Escrow Inc., Olympic Escrow and Direct Credit Solutions Inc. -- were operated by Eric Michael Pony, 25, of Tarzana and family members, the lawsuit said. In a coordinated action, San Bernardino Dist. Atty. Michael A. Ramos announced that Pony, a former real estate salesman, was expected to turn himself in to authorities Tuesday. [...] Also expected to surrender was his sister, Paulette Pony, 23, of Tarzana, a notary public for Lifetime Financial. The California secretary of state's office lifted her license in December in connection with felony conspiracy charges and for failing to disclose a forgery conviction.

***

  • The criminal and civil actions against the Pony family members and associates and their companies are believed to be the most ambitious by law enforcement since California's once-booming housing industry was hit last year by a crippling downturn that made it difficult for tens of thousands of borrowers to pay soaring sub-prime mortgages with adjustable interest rates. Brown said it was only the first of several legal actions planned to fight mortgage fraud.

For more, see State breaks up alleged sub-prime fraud ring (5 are arrested and 2 sought, accused of victimizing thousands of Californians, some of them elderly and some who lost their homes).

For story update, see Final two suspects in real estate fraud case surrender to authorities:

  • The company used telemarketers to sell inflated real estate loans with high fees, using forged documents and crooked escrow agents and notaries. Most of the victims were elderly or did not speak English. [...] Also held are Jacob Shawn "Coby" Franco, 46, of Encino; Eli Hassine, 25, of Sherman Oaks; Carol Binnie Pencille, 57, of Granada Hills; Sibpun Ampornpet, 31, of North Hollywood; and Jason Imperial Burbidge, 35, of West Hills.).

For additional background information on this case, see:

Story update (7-22-08):

Go here for story updates.

Feds Flood Vegas In Search Of Mortgage Scams, Create Task Force

In Las Vegas, Nevada, the Las Vegas Review-Journal reports:
  • Mortgage fraud and associated predatory lending practices have become the focus of criminal investigations in Las Vegas, which is quickly emerging as the mortgage fraud capital of America. "The FBI has come to Las Vegas in droves," said Debra March, director of the Lied Institute for Real Estate Studies at University of Nevada, Las Vegas. "I've never seen this many FBI people here." The FBI has carried out a number of investigations in Las Vegas, uncovering schemes involving 14 financial institutions. Some of the tactics include artificially inflating home values and forcing desperate buyers into adjustable rate mortgages that they eventually can't afford.

For more, see LV at center of mortgage-fraud bull's-eye (Official says feds come 'in droves' to investigate chicanery).

See also, Reuters: FBI starts Nevada mortgage-fraud task force.

Mortgage/Condo Blacklists Leaving Some South Florida Unit Owners Trapped In Their Own Buildings?

In Miami, Florida, WFOR-TV Channel 4 reports:
  • South Florida often finds itself on many lists; from top places to vacation to top cities for road rage. More recently, however, the area has earned a spot on a new set of lists that could impact the South Florida real estate market for years to come. While banks will be quick to say they're not blacklists, making one could be one of the worst things that could happen to our local economy.

***

  • Mortgage brokers say these lists, which began about 15 months ago, have exploded in the last few months. Most cite South Florida's condo market as one of declining market value and high investor concentration. [...] With a limited number of interested buyers, South Florida's condo market is now being forced into a cash only market and a catch 22 for sellers. [...] Many market watchers say the real fallout won't just be sinking prices, but condo owners who become trapped in their own buildings.

For more, see South Florida's Secret Blacklists.

Go here for other posts related to the Miami condo market problem.

Appraisal On Pre-Construction Condo Leaves Buyer Out Of Luck

In Palm Beach Gardens, Florida, The Palm Beach Post reports:
  • Two years ago, Angie Cifarelli of New Jersey signed a pre-construction contract to buy a condo at the Residences at Midtown in Palm Beach Gardens. Purchase price in the contract: $404,500. Last month's appraised value of the newly completed condo: $200,000. "I was shocked," Cifarelli said.

  • A property worth less than half its value in 2006 is all you need to know about how bad the real estate market is these days. But this 50 percent drop is not just academic for Cifarelli, who wanted the Midtown condo as her vacation home. With the rock-bottom appraisal, she says she can't get a mortgage for $283,000, as planned. And she says she certainly can't go into her pocket for the balance. Cifarelli says she asked the developer either to drop the price or to let her out of the deal and give back her $80,000 deposit.

  • Ram Development's response: No, thanks. Ram told Cifarelli she signed a contract for a cash deal that was not contingent on mortgage financing. The fact that the property fell in value is, well, Cifarelli's problem.

Reportedly, Cifarelli's lawyer is looking at the possibility of voiding the deal and recovering the deposit by reason of possible violations of the Interstate Land Sales Full Disclosure Act. For more, see Appraisal on condo puts buyer in pinch.

Go here for other stories on real estate speculators and others looking to back out of purchase contracts. zebra

One Third Of North Minneapolis Vacant Foreclosures Are "Wrecking Ball" Candidates, Says Non-Profit Housing Official

In Minnesota, the Minneapolis Star Tribune reports:
  • One-third of the foreclosed houses inspected so far in north Minneapolis are candidates for demolition, according to the agency trying to rehab the state's largest concentration of empty housing. Carolyn Olson of Greater Metropolitan Housing Corporation (GMHC) said her nonprofit housing organization has been inside 157 of the hundreds of foreclosed North Side homes. It's evaluating them for fix-up and resale.

  • But many pose a range of problems, from neglect issues like rampant mold to functional obsolescence due to size or floor plan. Some simply cost too much to fix. One house the agency toured contained only 500 square feet of space -- less than a standard one-bedroom public housing high-rise apartment -- carved into four apartments. "That's probably not a keeper," Olson said.

  • Some houses have caving retaining walls. One otherwise nice triplex was covered in mold, Olson said. One reason for the neglect, Olson said, is that about two-thirds of the foreclosed homes were owned by investors rather than occupants. "Some of that has not been very well taken care of," she said.

For more, see First, a wave of foreclosures; next, the wrecking ball? (One estimate says a third of foreclosed homes in north Minneapolis should probably be demolished).

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

South Florida City May Seek Charity Money To Deal With Vacant Foreclosures

In North Lauderdale, Florida, the South Florida Sun Sentinel reports:
  • City officials typically are more inclined to stay in their comfort zone by fixing potholes, setting the tax rate, or building parks. Recognizing a dire need, North Lauderdale officials want to venture into real estate. They want to seek money from charities to buy the city's many foreclosed properties, fix them and sell them at cost, rescuing them from blight. City officials also might use that money to help struggling families pay rent.

***

For more, see North Lauderdale seeks charity money to cope with foreclosed homes (if link expired, try here).

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