Philly Foreclosures Of Owner Occupied Homes Postponed Again Until At Least September

In Philadelphia, Pennsylvania, The Court of Common Pleas for Philadelphia County has ordered (May 15, 2008) that the sheriff's sale of all owner occupied homes (as opposed to non- owner occupied homes) in foreclosure originally scheduled to be sold in June and July have been postponed until the Sheriff Sales scheduled for September and October, respectively, in order that the Conciliation Conference required pursuant to President Judge General Court Regulation No. 2008-01 can be held. The cancellations are made as part of the recently passed Residential Mortgage Foreclosure Diversion Pilot Program.

In the event foreclosing mortgage lenders certify that a home in foreclosure is not owner occupied (which would thereby allow a scheduled home foreclosure sale to continue) when in fact the home is owner occupied, a certification/objection procedure is provided and contained in Exhibit C of the court order for owner-occupying homeowners to use to file with the court their objections to their mortgage lenders' certifications.

Homeowner objections are to be filed on or before May 29, 2008 for the properties listed for sale on June 3, 2008 and on or before June 23, 2008 for the properties listed for sale July 1, 2008.

Go here to read the entire May 15, 2008 court order for more information.

Go here for other posts on the Philadelphia foreclosure diversion program.

Thanks to attorney Donald Marritz of Regional Housing Legal Services in Pennsylvania for the heads up on the most recent court order. diversion program

Legal Aid Groups To Testify Today At Senate Hearing

In Washington, D.C., The BLT: The Blog Of Legal Times reports:

• Faced with increased demands for legal assistance from low-income Americans, several representatives of legal aid groups will appear before a congressional panel later today to help make the case for additional funding. The Senate Judiciary Committee’s “Closing the Justice Gap: Providing Civil Legal Assistance to Low-Income Americans” will consists of two sessions.

For more, see Legal Aid Experts to Testify Today in Congress.

Go here for links to the testimony of each witness.

Go here for webcast of hearing.

Congressional Hearings Begin On Blameless Victims Of Foreclosure Crisis

In Washington, D.C., The Wall Street Journal Blog reports:

• Rep. Dennis Kucinich began the first of two days of hearings to call attention to the “largely unrecognized … and totally blameless victim — neighborhoods.” The Ohio Democrat and former Cleveland mayor heard made the case that concerns about creating a moral hazard — or rewarding risky behavior — were countered by the fact that neighborhoods weren’t at fault for the impending foreclosure boom.

For more, see Kucinich: Neighborhoods Are Blameless ‘Victims’ in Subprime Crisis.

See also, The Talk Radio News Service: Foreclosure crisis is leaving neighborhoods in ruins.

"Chairman Dennis Kucinich (D-Ohio) said that “when foreclosure leads to vacant and abandoned properties, surrounding neighborhoods and local municipalities suffer significant consequences.” Kucinich said these include:

• falling neighborhood-wide property values,
• equity loss,
• decreased rental availability,
• lowered business rates for merchants,
• increased crime from arson and vandalism,
• increased building and demolition costs,
• increased legal expenses and reliance on governmental service programs, and
• loss of tax revenue.

Kucinich called the neighborhoods “totally blameless” victims of the crisis who “had nothing to do with the transactions that resulted in the subprime mortgage meltdown.”"

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

Foreclosure Crisis A Factor In Turmoil For School Districts, Students?

The Wall Street Journal reports:

• Some school districts, hoping to control costs and prevent overcrowding, are intensifying efforts to make sure students actually live where they are registered. Districts from Florida to California are hiring private investigators, creating anonymous tip lines and imposing penalties when they believe people have registered at false addresses. The measures often are spurred by parents who feel they pay a premium in property taxes to get their children into good schools.

***

• One reason for the crackdown is the rise in home foreclosures, which may prod parents into faking addresses to keep their children at their current schools, some in the field say. "Foreclosure rates are up. Displacement is up. People are becoming homeless," says William Beitler, a private investigator specializing in address verification for school districts in the Chicago area.

***

• For families facing foreclosure, avoiding a school change is often a priority. "For us, it was huge," said Mike Bertrand, a 36-year-old father of two in Newbury Park, Calif. [...] Carmela Sanchez is desperately trying to hang on to her house so her daughters, 11 and 16, can stay in their Highland Park, Ill., schools and keep up their ballet training. [...] The bank has said she can stay in the house until at least the end of the year. If she can't work out new loan terms with her bank, she figures, she'll have to pull the kids out of school and move somewhere less expensive. "I'm petrified it will affect them," she says. "They've been through enough."

For more, see School Districts Get Tough As Home Foreclosures Rise (if link is unavailable, go here - then click link for the story; you may also have to click the "Refresh" button on the web page to get to the story).

Another Unfinished Neighborhood, More Frustrated Homeowners

In North Texas, WFAA-TV Channel 8 (Dallas/Fort Worth) reports:

• [T]he mortgage crisis has hit the Princeton subdivision hard. Two bare slabs are right next to each other, both with foreclosure signs in the yard. Neighbors there say there is a lot of unfinished work that needs to be done.

***

• The housing crisis has hit hard on subdivisions like Princeton Meadows and Forrest Grove. There are overgrown lots, abandoned homes, and angry homeowners. What really frustrates neighbors is that they are paying hundreds of dollars in fees for an unfinished neighborhood. “We give them money, and what do they do? What are they doing with our money? I don’t know,” said Gayle Wargo, homeowner.

For more, see Homeowners upset over unfinished neighborhood.

Two Year Old Found In Abandoned Building Warding Off Squatters, Thieves

In New Bedford, Massachusetts, The Standard Times reports:

• Nicole Amaral thought she was hallucinating when she saw a dog peeking out of the second story of a dilapidated building on Coggeshall Street. But the 11-year-old animal lover got her mother to stop the car. Sure enough, a dog was there, barking out a window. The family called Animal Control. They weren't the first to notice the dog. New Bedford Animal Control officers said they have gotten several calls about Berta, a 2-year-old German shepherd that has been kept at the house to ward off squatters and thieves since the building was destroyed by arson less than a year ago. The house is uninhabitable by humans, but the rules are different for dogs. "As long as (the owner) provides shelter, food and water" for the dog, it is allowed to stay in the house, Animal Control Officer Mary Ellen Barlow said. She assured concerned neighbors that the dog is well cared for. "He's in good shape," she said.

Source: German shepherd guards New Bedford house hit by arson.

Kansas Homeowner Fights Back Against Option One With Video

A video appearing on iReport.com is the work of a Kansas homeowner, and reflects the negative experience she had with H&R Block's subsidiary, Option One Mortgage Corporation, in connection with a home mortgage that she had with them. Creating the video is part of her fight against the companies. To watch the video, check out "Predator."

City Of Baltimore, Wells Fargo Slug It Out In Federal Court

In Baltimore, Maryland, The Baltimore Sun reports:

• In the latest accusation over who's to blame for hundreds of home foreclosures, city attorneys filed a motion last night in federal court saying that Wells Fargo Bank's actions are far more devious than the city's and that the court should force the lending institution to pay the city millions of dollars in lost revenue.

• The city and Wells Fargo have each blamed each other for the mortgage crisis: First, Baltimore said Wells Fargo Bank was responsible for hundreds of home mortgage foreclosures. Then, the bank shot back with allegations that the city forecloses on many more homeowners through its own tax lien programs.

• In the motion filed in U.S. District Court in Baltimore late last night, attorneys for the city argue that Wells Fargo's motion to dismiss the city's case should be ignored and that the bank's attempt to blame local government for housing problems and urban ills is "palpably false."

For more, see City says federal court should force Wells Fargo to pay for lost revenue (The two have blamed each other for hundreds of Baltimore home foreclosures).

In a related story, see Baltimore Business Journal: Baltimore alleges Wells Fargo targeted homeowners with needless refinancing offers.

To view the lawsuit, see Mayor and City Council of Baltimore v. Wells Fargo Bank, N.A., et al. (8.76 MB).

Go here for other posts referencing Baltimore's battle with Wells Fargo.

Countrywide's Mozilo "Disgusted" By Homeowners' "Form Letter" Pleas For Help; Sets Off Furor

In California, The Los Angeles Times reports on the furor set off by Countrywide chief Angelo Mozilo when he clumsily hit "Reply" instead of "Forward" on an email from a homeowner seeking help in saving his house:

• Apparently clicking "reply" when he meant to hit "forward," Countrywide Financial Corp. Chairman Angelo Mozilo ignited an online furor Tuesday by describing a mortgage customer's plea for help as a "disgusting" example of form letters inundating the Calabasas home lender. Mozilo's e-mail rocketed back to the customer, Daniel Bailey Jr., who had asked Countrywide to modify the terms of his loan so he wouldn't lose his home of 16 years.

• Much of the language in Bailey's message to Countrywide was borrowed from a form letter available at the website LoanSafe.org, a coaching service for troubled borrowers. Bailey, who says he operates a photo studio, posted his e-mailed exchange with the lender on a LoanSafe forum.

• His original e-mail was sent to 20 Countrywide addresses, including Mozilo's. Such mass e-mails have overwhelmed e-mail boxes at Countrywide, disrupting its operations and prompting Mozilo's heated response, the company said. "This is unbelievable," Mozilo said in his e-mail. "Most of these letters now have the same wording. Obviously they are being counseled by some other person or by the Internet. Disgusting." The reply touched off debate on housing websites.

For more, see Countrywide Financial Chairman Angelo Mozilo's e-mail sets off a furor (He calls a borrower's plea for help a "disgusting" example of form letters inundating the Calabasas mortgage lender).

Go here for the e-mailed exchange with Mozilo on a LoanSafe forum.

See also, The Wall Street Journal Blog: Oops! Countrywide Chairman Mozilo’s ‘Disgusting’ Email.

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

Upcoming Hurricane Season Poses Threat To Vacant Foreclosures, Unfinished / Abandoned Homes & Adjacent Neighborhoods In Coastal Areas

Housing Wire reports:

• As the hurricane season ramps up, fallout from the ongoing mortgage crisis provides a new, potentially hazardous twist; vacant properties that may be ill-prepared to handle a storm. The Institute for Business & Home Safety said Tuesday that more than half a million properties in hurricane-prone states are in some stage of foreclosure, and warned that the many thousands of foreclosed homes standing empty in coastal areas from Texas to Maine could exacerbate property damage in their neighborhoods if the wind starts to blow.

***

• IBHS notes that a house is most vulnerable to high winds when the building “envelope” is not sealed by approved forms of opening protection, such as storm shutters or reinforced garage doors. Building materials and other debris from partially completed new homes sitting unsecured along the coasts also could become shrapnel or missiles impacting nearby buildings [and people].

For more, see Half a Million Foreclosed Properties Face Hurricane Damage.

Flood Of Foreclosures, "For Sale" Signs Hitting Working Class Northeast Neighborhoods Hard

The extent to which the residents in Northeast working class neighborhoods are being hurt by foreclosures and the high level of housing inventory currently on the market is described in three recent articles on the state of affairs of neighborhoods in The Bronx (New York), Newark (New Jersey), and New Bedford (Massachusetts). For more, see:

• The New York Daily News: Foreclosures affect Bronx homeowners,
• The Newark Star Ledger: The mortgage crisis' block of despair,
• The Standard Times (New Bedford): Neighbors cope with blight of vacant houses.

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

Guidance From Tax Man On Loan Mods Welcome News For Mortgage Servicers

Housing Wire reports:

• In clarification that market participants said will further embolden servicers to modify mortgages that are likely headed for trouble, the Internal Revenue Service on Monday outlined the tax effects on securitized mortgages that have been modified to avoid foreclosures. Under Revenue Procedure 2008-28, the IRS said that it will not challenge the tax status of securitization vehicles when a servicer modifies a loan — even a performing loan — so long as the modification fits within the new scope outlined by the government agency.

***

• Many servicers have been looking to work with borrowers proactively, ahead of potential default activity, but have been unsure about whether doing so might jeopardize the favored tax status of a particular securitization trust. The reason is tied to IRS rules regarding the favorable tax treatment of REMICs, which mandate not only a static pool requirement but a “passive management” requirement that has served to essentially limits servicers’ ability to modify loans to only those situations where a default is deemed imminent — in other words, to those situations where borrowers have already become delinquent on their payments.

***

• The guidance from the IRS dovetails with January clarification from the Securities and Exchange Commission that suggested fast-tracking loan modifications would not jeopardize the so-called QSPE election, which allows the off-balance sheet treatment of REMICs and other securitization trusts.

For more, see IRS Issues Guidance on Loan Modifications.

Go here for IRS Revenue Procedure 2008-28.

Go here for other related posts on mortgage servicing issues. MortgageServicingIssuesAlpha

Voluntary Foreclosures On The Rise?

Forbes reports:

• To the distress of many banks and investors, American borrowers are increasingly viewing voluntary foreclosure as a practical financial decision, stripped of its taboo. Perhaps a bigger problem is that banks don't want to talk about the problem and they don't appear to know what to do about it. As long as it persists, there will be downward pressure on home prices, especially in overbuilt markets where the supply of housing already outstrips demand.

***

• In mid-April, Chief Risk Officer Don Truslow of Wachovia acknowledged the troubling trend during a conference call: "I don't know where the tipping point is, but somewhere when a borrower crosses the 100.0% loan-to-value, somewhere north of that . . . their propensity to just default and stop paying their mortgage rises dramatically and really accelerates up."

• Even more disconcerting, Truslow added that the trend was "almost regardless" of borrowers' creditworthiness. Lender's are beginning to report that loan-to-value ratios are better indicators of the likelihood of default than borrowers' FICO scores, a widely used metric of creditworthiness developed by Fair, Isaac. (See "Subprime In Sheep's Clothing")

For more, see Deadbeat Homeowners Hit The Road.

Non Profit Law Firm To Offer Predatory Mortgage & Mortgage Foreclosure Clinic

In Watsonville, California, The Salinas Californian reports:

• The Watsonville Law Center is offering a legal-advice clinic to help counter predatory lending practices against low-income communities in Santa Cruz and Monterey counties. The Predatory Mortgage and Mortgage Foreclosure Clinic will be held Thursday [May 22, 2008] with volunteer attorneys giving free legal advice to low-income clients who believe they have been victims of predatory home loans and are facing mortgage foreclosure.

Information: 722-2845, www.watsonvillelawcenter.org.

Source: Law center holding mortgage advice clinic.

Another Alleged Foreclosure Rescue, Equity Stripping Scam Victim Points Finger At Head Brothers

In Lawndale, California, The Daily Breeze reports on the story of an area couple who say they were ripped off out of their home equity in an alleged foreclosure rescue scam by a guy named "Mike" and "Mike's" brother. According to the story:

• "Mike" was Jeremy Michael Head, 30, of Huntington Beach. He is now awaiting trial on a 13-count indictment for mail fraud, money laundering and other related offenses. Head and 15 others were indicted Feb. 28, charged with fraudulently taking $6.7 million.

• Head's brother, Charles Head, was the alleged ringleader of the scheme. He was indicted a second time on March 13 with six others. He is accused of orchestrating an "equity stripping" scheme that netted $5.9 million. More than 300 known victims and 150 homes were involved in the fraud, said Lauren Horwood, a spokeswoman for the U.S. Attorney's Office.

For more, see Lawndale couple counts cost of home fraud (Clark family hoped to reduce payments, but refinancing became nightmare).

Go here for other posts on the Head nationwide foreclosure rescue operation.

Court Bans Flipper From Real Estate Business In Iowa

In Des Moines, Iowa, The Associated Press reports:

• A Des Moines real estate investor accused of consumer fraud has been banned from doing business in Iowa. A Polk County District Court judge on Monday ordered John Davis to stop selling, renting, leasing or investing in real estate in Iowa. The order resolves a consumer fraud lawsuit filed by the Iowa attorney general's office against Davis and his companies in 2006. Davis, who agreed to the terms of the order, also was ordered to pay $30,000 to reimburse consumers.

***

• Iowa Attorney General Tom Miller says the lawsuit alleged that Davis sold homes at highly inflated prices to customers with average or below average credit scores. He says Davis also used phantom down payments to help customers get mortgages. Miller says all the loans cited in the lawsuit ended in foreclosure.

Source: Court bans real estate investor from doing business in Iowa.

From the Iowa Attorney General's Office:

• Consent Judgment,
• Original lawsuit (filed 10-5-06),
• Press release.

Fairfax, Prince William Consider Homebuying Programs Targeting Foreclosed Homes

In Northern Virginia, The Washington Post reports:

• Fairfax County is developing a program to allow as many as 100 first-time home buyers to purchase foreclosed houses at cut rates to bolster the county's affordable-housing efforts and help prevent the region's mortgage crisis from causing neighborhood decline. Dubbed the Silver Lining program, county housing officials have proposed spending as much as $6.4 million over two years to help such middle-income professionals as teachers, police officers and firefighters afford the region's housing.

***

• Although Fairfax has not been hit nearly as hard by foreclosures as neighboring Prince William and Loudoun counties, the number of foreclosures has risen dramatically as a result of the subprime mortgage crisis -- from 198 in 2005 to 4,527 in 2007. Most of the foreclosures are clustered in Springfield, Herndon, Centreville and the Route 1 corridor. The situation has raised concerns about depressed property values, a decline in maintenance and higher rates of crime, including vandalism.

***

• A similar proposal will be considered today in Prince William, where county staff will present a program to supervisors that would make low-interest loans available to county employees to encourage them to buy houses there.

For more, see Fairfax May Offer Deal On Foreclosed Homes.

Squatters Pocketing Money Renting Out Homes They Don't Own; Others Hit Up Lenders In "Cash For Keys" Deals

Reuters reports:

• [S]quatting is on the rise across the United States as foreclosures surge, eviction notices mount and homes go unsold for months, complicating the worst U.S. housing slump in a quarter century and forcing real-estate brokers to enlist the help of law enforcement and courts to sell empty houses.

• In some regions, squatting is taking on new twists to include real-estate scams in which thieves "rent out" abandoned homes they don't own. Others involve "professional squatters" who move from one abandoned home to another posing as tenants who seek cash from banks as a condition to leave the premises -- a process known by real-estate brokers as "cash for key."

For more, see As homes foreclose in U.S., squatters move in. unwitting tenant rent scam yacht

Boston Feds Indict Eleven For Allegedly Tricking Lenders Out Of $10.6M In Mortgages Using Straw Buyers, I.D. Theft

In Boston, Massachusetts, The Boston Globe reports:

• The Justice Department yesterday charged two Boston lawyers, seven mortgage brokers, and two others with fraudulently obtaining more than $10.6 million in loans using straw buyers or stolen identities to purchase 21 properties in the Boston area. Federal officials said it is the biggest mortgage fraud in Massachusetts since the 1980s.

• During the height of the housing boom in 2005 and 2006, the lawyers and brokers allegedly falsified information about borrowers and inflated the purchase price of homes by as much as $250,000 to fool mortgage lenders and banks into loaning them more money, according to the charges filed yesterday in US District Court in Boston. The ring netted about $1.7 million in profit. [...] At least 14 of the 21 properties involved have been seized by lenders, according to county deed records.

***

• Two Boston lawyers, Eric L. Levine, 55, of Brookline and J. Daniel Lindley, 59, of Jamaica Plain were involved in all the transactions, according to court papers. [...] Seven of those charged worked for New England Merchants Corp. in Arlington: Ernst Appolon, Ralph Appolon, Daniel Appolon, Andre Junior Lamerique, Widner LaMarre, Jermaine Blake, and Samuel Jean-Louis. The remaining defendants are Latoya Haltiwanger, a broker with Topdot Mortgage, and Quincy resident Jean Noriscat. Daniel Appolon and Jean-Louis have not been arrested.

For more, see 11 are charged in $10.6 million loan-fraud scam.

From the Boston U.S. Attorney's Office:

• Indictment - U.S. v. Levine, et al.,
• Press release - Eleven Indicted In Mortgage Fraud Ring.

Pending Pennsylvania Legislation May Cause Concern For Foreclosing Lenders, Servicers

In Pennsylvania, DSNews.com reports:

• A Philadelphia attorney says a piece of legislation that made it through the state House in April could significantly impact the way servicers and lenders do business in Pennsylvania. Michael McKeever, with the law firm of Goldbeck, McCafferty & McKeever, issued an advisory to inform attorneys and lenders about some of the changes that would result if a series of five house bills make it into law—specifically House Bill (H.B.) 1083 [go here for bill information]. McKeever told DSNews.com that H.B. 1083 has "two features that will impact the foreclosure process."

For more, including consequences to mortgage servicers for improper application of payments under HEMAP homeowner assistance loans, see Pending Legislation May Impact Pennsylvania Default Attorneys/Lenders.

South Bend Cop Admits Role In Straw Buyer Mortgage Scam Involving 190 Houses

In Indiana, the South Bend Tribune reports:

• A South Bend police officer has admitted to a mortgage loan scam that involved 190 houses in the South Bend area and bilked lenders out of hundreds of thousands of dollars. Sgt. Robert Culp, a 17-year veteran of the department, was relieved of duty with pay Friday, pending the adjudication of his case, a South Bend police spokesman said. Culp, 43, of New Carlisle, who works in the Metro Special Operations Section, was involved in a scheme between 2003 and 2007 to buy dilapidated houses and sell them at two or three times their actual value, according to federal court documents.

For more, see Officer pleads guilty to bank fraud (Was involved in mortgage loan scam involving 190 houses).

More On Discount Mortgage Investors Buying Delinquent Loans

Bloomberg News reports:

• The way out of the worst U.S. housing slump since the 1930s goes through Angel Gutierrez. Gutierrez buys bad mortgages a dozen at a time for a fraction of their face value from lenders overwhelmed by the highest number of defaults in 23 years. When he goes door to door to negotiate lower payments for homeowners or pay them to move so he can sell the house, he's speeding up the recovery by establishing a price for the homes and flushing out the least reliable borrowers.

For more, see Recovery From Worst Housing Slump Since 1930s Comes With Angel.

Crime Stoppers' Calls On The Increase As Financially Strapped Tipsters Look To Pocket Needed Reward Cash

The New York Times reports:

• To gas prices, foreclosure rates and the cost of rice, add this rising economic indicator: the number of tips to the police from people hoping to collect reward money. [...] Cities and towns from Detroit to Omaha to Beaufort County, N.C., all report increases of 25 percent or more in the first quarter, with tipsters telling operators they need the money for rent, light bills or baby formula.

***

• [M]any programs report a substantial increase in Crime Stopper-related arrests and recovered property, as callers turn in neighbors, grandchildren or former boyfriends in exchange for a little cash.

***

• Some people have made a cottage industry of calling in tips. Although repeat callers do not give their names, operators recognize their voices. “We have people out there that, realistically, this could be their job,” said Sgt. Zachary Self, who answers Crime Stoppers calls for the Macon Police Department. “Two or three arrests per week, you could make $700, $750 per week,” Sergeant Self said. “You could make better than a minimum-wage job.”

For more, see As Prices Rise, Crime Tipsters Work Overtime.

South Florida Condo Bust A Boon To Investors, Out-Of-Town Buyers

The South Florida Sun Sentinel reports:

• The glut of condominiums for sale in South Florida is attracting a legion of bargain hunters. Out-of-state and international buyers are descending on the area in search of deep discounts as prices continue to crater. They want to get in now and wait out the housing slump because they think the region remains a powerful long-term draw. With the lingering real estate downturn, now in its third year, some condos are selling at 25 to 60 percent less than during the boom times, when investors hoping to "flip" units bid up prices.

For more, see Condo crunch in S. Florida good news for bargain hunters (Real estate bust is big boon for foreign buyers).

Chula Vista Code Enforcement Chief To Testify Before Congress On New Ordinance Targeting Foreclosing Lenders

In Chula Vista, California, KNSD-TV Channel 7/39 reports:

• A local ordinance, which holds lenders responsible for the condition of abandoned properties or financially distressed homes, is becoming a model for other cities. Authored by Chula Vista's code enforcement manager Doug Leeper, the city's Residential Abandoned Property Program states that violators who fail to maintain properties can be fined up to $1,000 for each day the property remains unkempt. If they don't pay, the city places a lien on the property.

• Leeper has been contacted by more than 150 cities for help in crafting new legislation to deal with the fallout of homes abandoned during the nation's foreclosure crisis, officials said. Leeper is headed to Washington, D.C., to testify before a U.S. House of Representatives subcommittee about the ordinance [this] week.

Source: Chula Vista Official Lauded For Innovative Foreclosure Ordinance (Leeper Authored Foreclosure Policy Others Now Looking To Emulate).

More On Lawsuits Accusing Some Foreclosing Lenders Of A Role In Ruining Neighborhoods

ABC News and USA Today report:

• [H]awthorne [Area Community Council] and the city of Minneapolis are pioneers in an emerging civic strategy to sue lenders and banks to recoup lost revenue and reclaim neighborhoods devastated by the mortgage crisis. Around the country, the loss of tens of thousands of homes to foreclosure is shrinking cities' tax base, straining city services such as policing, and ruining neighborhoods. [...] Cleveland, Baltimore and Buffalo also have sued lenders and banks in recent months. St. Paul has written to its lenders threatening a lawsuit if they don't fix their foreclosed properties.

• "Hundreds of cities across the United States are in the same position," says Greg Squires, a professor of sociology at George Washington University who studies urban redevelopment. "I think there will be more lawsuits. If we get an early decision in one of these cases, it will either encourage or discourage" other cities from filing suit. Alan Mallach, a senior fellow at the National Housing Institute, says the lawsuits are "a bit of a reach under the laws of most states, but & a creative court could reasonably make some law in that direction."

For more, see Cities sue home lenders (Communities Take Banks, Lenders to Court for Failing to Fix Up Foreclosed Homes) (Go here for entire story on one web page). neighborhood destruction from foreclosures zach

Fort Lauderdale SWAT Team Finds Homeowner In Foreclosure Dead From Self-Inflicted Gunshot

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:

• Police officers and a SWAT team surrounded a Coral Ridge house Thursday night to investigate a weapons complaint and later found the homeowner dead from a self-inflicted gunshot wound, officials said. For more than five hours, police descended on the neighborhood. They attempted to get the man to come out of the house in the 2100 block of Northeast 54th Court, but to no avail, said Sgt. Frank Sousa, Fort Lauderdale police spokesman. After firing gas canisters into the home, the SWAT team went inside and found the man dead at about 11:15 p.m., Sousa said. Police identified the man as Steven R. Decker, 44.

• County records list Decker as the owner of at least a dozen properties in the Fort Lauderdale area. At least two of them, including the Coral Ridge house, went into foreclosure recently, court records show. On Thursday, Decker received a notice that the Coral Ridge house was to be sold next month at an auction for foreclosed properties, according to the records.

For the story, see Police: Fort Lauderdale man shot himself inside home (SWAT team sent to house over weapons complaint).

In a related story, see ABC News / USA Today: Foreclosures Take an Emotional Toll on Homeowners (Stress, Depression, Suicide Can Accompany the Loss of a Home).

Go here for other posts on foreclosures and suicide.

Go here for other posts on Police stories involving homes in foreclosure. suicide homeowner foreclosure zeta SheriffDeputiesForeclosureAlpha

Minnesota City Temporarily Slams Brakes On New Rentals

In Columbia Heights, Minnesota, the Minneapolis Star Tribune reports:

• As more and more foreclosed single-family homes are becoming rental properties, cities are scrambling to deal with all the new "for rent" signs. But one city, Columbia Heights, has simply said, enough. For the next six months, new landlords won't be able to rent their properties because the city has stopped handing out rental licenses.

For more, see Facing foreclosure? Don't count on becoming a landlord (Columbia Heights is putting a six-month halt on new rental applications. Says The city has enough, the mayor says).

Las Vegas Firm Offers Security Services For Vacant Homes / Foreclosures Targeted By Squatters

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

• Firefighters still don't know what caused the fire at the old Alystra Casino in Henderson Tuesday night. Businesses in the area tell Eyewitness News it was a well known hang out for vagrants and teens. In fact, these squatters are blamed for destroying unoccupied properties and foreclosed homes across the valley. Now the business community sees a marketing opportunity to deal with the problem.

***

• [John] Labaum is part of new business the popped up in the wake of the foreclosure crisis. He calls it Squatter Alert. "We go through -- secure the front doors, the garage doors," he said. Labaum's startup company offers security services for foreclosed homes and vacant properties. Instead of a fence or tape, the owners call up Labaum to drive by their properties and keep an eye on things.

For more, see Squatter Alert Seeks to Protect Businesses' Vacant Buildings.

Another Home In Foreclosure Goes Up In Smoke

In Northampton County, Pennsylvania, The Allentown Morning Call reports:

• A house headed for a mortgage foreclosure sale in two weeks was destroyed by a fire in Wind Gap early Wednesday morning. Borough police, firefighters and a state police fire marshal were looking for the homeowner, Nelson Tittle, and they spent hours sifting through his charred modular home [...] to make certain he was not killed. Shortly before noon, Police Chief Craig Armitage said searchers had not found him.

***

• Armitage said the cause of the fire has not been determined by state police Fire Marshal Michael Booke. ''As of right now, I'm still marking it as under investigation,'' he said. ''I can't say where he's going to turn up or what his status is.''

For more, see Home headed to foreclosure charred (Fire officials seeking cause of Wind Gap blaze. Resident missing).

Unpaid Self-Storage Bills Causing Many Already Hit With Foreclosure To Lose Their "Stuff"

The New York Times reports:

• The foreclosure crisis is hitting yet another American locale: the self-storage center. As they lose their homes, people are turning to these humble cinderblock and sheet-metal boxes to store their stuff. But some people cannot keep up with their storage bills any better than they could handle their mortgage payments, and storage companies are auctioning off their property for a pittance.

For more, see Losing a Home, Then Losing All Out of Storage.

Spokane Lawyer Disbarred For Allegedly Looting Trust Accounts Belonging To Kids, Nieces, Nephews; Claims Cash Used In Failed Realty Investments

In Washington State, the Spokesman Review reports:

• A Spokane businessman, attorney and West Valley School Board member has been disbarred for emptying the trust accounts set up by his grandfather for the education of his nieces, nephews and his own three children. Robert N. Dompier, 53, took over $47,000 from the accounts in what investigators believe was an effort to rescue his failing real estate investments. Dompier agreed to waive a Washington State Bar Association hearing – where he could have presented evidence in his defense – and stipulate to his disbarment without admitting to the charges laid out by the bar disciplinary committee.

For more, see Spokane Valley lawyer disbarred.

Go here for the Stipulation to disbar and the Disbarment order.

Connecticut Insurance Agent Accused Of Ripping Off Elderly Of Nest Eggs

In Waterbury, Connecticut, WFSB-TV Channel 3 reports:

• A Waterbury couple claims that their insurance agent and financial advisor stole their life savings. Michael and Elizabeth Santopietro said that they trusted Tom Cipriano to help them invest their funds, but said that he took the money and spent it. The I-Team uncovered allegations that Watertown's Cipriano has taken hundreds of thousands of dollars from elderly investors.

***

• The I-Team uncovered a lawsuit filed by the estate of Elizabeth Karas-Bartolini. The suit claims that the cancer patient was convinced to make a $25,000 investment loan to Cipriano in 2006. Her lawyer said that she died without collecting any of the promised $500 monthly payments.

• Donato Mancini said that Cipriano convinced him to empty his IRA in return for a promise of 12 percent interest. He said he hasn't seen his money since. Mancini's attorney called Cipriano "immoral, oppressive and unscrupulous."

• [Cipriano's attorney, Alfred] Morrocco said that all of the loans were financial transactions among friends, although when the I-Team pressed, he admitted that he didn't know how Cipriano knew any of the people who loaned him money.

• That question is answered in the lawsuit filed by 92-year-old James Frawley and his 91-year-old wife, Eleanor. They said they had never heard of Cipriano when he called out of the blue and convinced them to loan him money.

For more, see Insurance Agent Accused Of Stealing Nest Eggs (I-Team Uncovers Years Of Allegations).

For story update, see Attorney General Picks Up I-Team Report (Blumenthal Launches Investigation Into Financial Adviser).

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

Foreclosure Services Firm Targets Wrong Home; Locks Changed, Valuables Missing, Home In Disarray

In Stockton, California, KXTV Channel 10 reports:

• Ruth Anderson came home to a mess after work recently. Somebody had turned her condo unit upside down, taking valuables and leaving the place in disrepair. "It was horrible. They took everything they needed or wanted," said Anderson. She called police. At first, Anderson couldn't get in because locks were changed and a notice left behind. The notice said her unit had been purchased by a bank at a foreclosure auction. "I'm not in foreclosure, I bought my home outright years ago," Anderson said.

• She was right. A company representing Homecoming Financial entered the wrong unit. It was supposed to inspect and re-key unit number 232. Instead went to unit 2 where Ruth Anderson lives. Field Asset Services (FAS), a national company working with banks to prepare foreclosed homes for sale, admitted fault, yet could not explain why valuables were taken from Anderson's condo. An investigation is underway. FAS is now trying to work with Anderson to settle her claim. Calls to FAS in Austin, Texas were not returned to News10 on Thursday.

To see the damage left in the propery owner's home, see Foreclosure Targets Wrong Home (watch video) (read story) (links no longer available).

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

Fort Myers Homeowner Accuses Friend Of Obtaining Deed By Deception In Foreclosure Rescue

In Fort Myers, Florida, The News Press reports:

• Just like 13,571 other mortgages in Lee County, Valerie Hamilton's was behind. But Hamilton thought she was in luck when her friend of 22 years, Beverly Harris, said Harris' husband Robert could help Hamilton avoid foreclosure. Robert Harris said the first step would be to take Hamilton's ex-husband's name off the deed. So he took Hamilton to an attorney, where she signed a form to start that process.

• According to Lee County Clerk records, the same day that Hamilton signed an agreement for legal services, she also signed a quit claim deed for her east Fort Myers home. "I was signing to get my husband's name off. ... Never did anyone say, 'You're quit claiming the house to the Harrises," Hamilton said. But three days after her ex-husband's name was taken off the deed, the Harrises filed a quit claim.

• Hamilton said she came home from work to find her belongings in the yard and men inside doing renovation work. Hamilton said Beverly Harris said she was sorry, but that the Harrises owned her house.

For more. see Beware mortgage ‘rescuers’.

Condo Associations Struggling To Pay Bills In Some Markets

The New York Times reports on the struggles that condo associations are having paying the bills in some parts of the country. The problems of two buildings in Miami, Florida are described in this story, which reinforces the fact that for condo owners, a neighbor's financial problem may well become your financial problem.

In one glassy new Miami tower:

• [N]early one in six residents in the 43-story building is battling foreclosure and their contributions to the building association are shrinking. Each of the remaining owners has had to chip in an extra $1,000 assessment and $50 more a month for cable and Internet. That is on top of [the unit owners'] $450 monthly maintenance fee. Even though [they pay] more, [the] building has broken washers and dryers and unusable exercise equipment, and [the] hallway is spotted with mold.

In another building:

• [T]he 38 foreclosures in [the] 244-unit building and the unpaid dues nearly cost the residents running water because the building could not pay its bills. The building abruptly stopped repairing its ceiling lobby and left its wiring and ducts exposed when the board ran out of money.

For more, see Collateral Foreclosure Damage for Condo Owner.

In a related story, see The Wall Street Journal: As Dues Dry Up, The Neighbors Pay (if link expires, try here).

NJ Couple Face State Charges In Alleged Foreclosure Investment Scam; Seven Bilked Out Of $1.2M, Says Prosecutor

In Monmouth County, New Jersey, The Star Ledger reports:

• A Long Branch husband and wife have been indicted on 26 counts of theft by deception, tax evasion and other charges in connection with a $1.2 million investment scam and other illegal activities, authorities said today. A Monmouth County grand jury returned the indictment Monday against Larry Kushner, 56, and his wife, Jacqueline Kushner, 43, Monmouth County Prosecutor Luis Valentin said.

***

• An investigation by the prosecutor's office and state tax officials showed Larry Kushner bilked seven investors out of $1.2 million from 2000 through 2005, Valentin said. Larry Kushner told investors the money they invested in his company, Foreclosure 911, would be used to purchase foreclosed properties in New Jersey, Pennsylvania or Delaware, the prosecutor said. Instead, he used their money for personal expenses, including several trips for himself and his family to Florida and Israel. Jacqueline Kushner served as president of Foreclosure 911, and much of the stolen money was diverted directly to her, Valentin added.

For more, see:

• Long Branch couple indicted in $1.2M investment scam,
• Monmouth County Prosecutor press release - Long Branch Couple Indicted for Million Dollar Investment Scam and Tax Evasion.

Disbarred Attorney Charged With Pocketing Clients' Escrow Money From Real Estate Closings

From the Monmouth County, New Jersey Prosecutor's Office:

• On May 5, 2008, a Monmouth County Grand Jury returned a one count indictment charging Gary Edelson, 47, of Red Bank, N.J., with second degree Misapplication of Entrusted Property.

• A criminal investigation conducted by the Monmouth County Prosecutor's Office revealed that between August 2003 and November 2005, Edelson, an attorney, failed to properly disburse over $200,000 in funds he held in escrow from fifteen separate real estate closings. On September 27, 2006, the New Jersey Supreme Court ordered Edelson's disbarment from the bar of the State of New Jersey. Additionally, over $170,000 in claims have been paid from the New Jersey Lawyers' Fund for Client Protection.

• Monmouth County Prosecutor Luis A. Valentin stated, "Edelson violated the fiduciary duty he owed his clients. As a result, he has forfeited his privilege to practice law in the State of New Jersey and he now faces serious criminal charges."

For more, see Former Red Bank Lawyer Indicted for Misapplication of Over $200,000 from Client Funds.

If a New Jersey attorney is representing you and screws you out of money or property through dishonest conduct, go to the New Jersey Supreme Court's Lawyers' Fund for Client Protection for more information.

For other states and Canada, see:

• Directory Of Lawyers' Funds For Client Protection (American Bar Association);
• Check the USA Client Protection Funds Map;
• Check the Canada Client Protection Funds Map.

Go here, Go here, and Go here for other stories of trust account / escrow account theft of funds. sneaky slick escrow agents gamma

Riverside County Approves Ordinance Requiring Mortgage Lender Registration, Maintenance Of Homes In Default

In Southern California, The Press Enterprise reports:

• Riverside County supervisors unanimously approved an emergency ordinance Tuesday requiring financial institutions to maintain homes that have fallen into foreclosure. Supervisor Marion Ashley was not present at Tuesday's meeting. Jay Orr, head of county code enforcement, said his office would work with the assessor to identify major lenders in the county, notifying them that they must register properties in default with the county. County supervisors said neighborhoods with homes in foreclosure are seeing declining property values and criminal activity in the empty homes. The ordinance went into effect immediately.

Source: Foreclosed homes must be maintained.