Wednesday, June 11, 2008

Two Decade Old City Lawn Mowing Lien, Clerical Error Create Heartache For Homeowner

In Garland, Texas, The Dallas Morning News reports:

  • It will be a while longer before Maria Gutierrez finishes paying off her little house on Glenfield Drive. The terms are easy, about $300 a month, which is pretty much all she and her adult daughter, a disabled dialysis patient, can afford.

  • So she lies awake at night worrying about the $2,000 [$272.95 plus 20 years of accrued interest] the city says she must pay or risk losing her home. She's scared. That figure stems from a 20-year-old mowing lien incurred before Mrs. Gutierrez had ever laid eyes on the little clapboard house.

For more, see Garland homeowner shouldn't have to pay for mistake she didn't make.

For story update, see Garland woman won't lose home over 20-year-old lien.

Editorial Note:

This story serves as another reminder of the importance of obtaining a title insurance policy when buying an interest in real estate. code enforcement lien

Shaq To Rescue Orlando Homeowners Facing Foreclosure?

In Orlando, Florida, the Orlando Sentinel reports:

  • Shaquille O'Neil says he wants to build a legacy -- literally -- in Orlando. The NBA star said he is working on plans for real-estate-development projects in Orlando, with an eye toward helping those who are facing foreclosure on their homes. "I want to come in not to kick them out, but to work with them and save them so they can stay in their homes," O'Neal told the Orlando Sentinel during an impromptu stop Tuesday at Orlando City Hall.

  • Attorney Mark NeJame, who arranged the visit along with longtime friend and Realtor Curtis Cooper, said the star center wants to buy the mortgages of homeowners who have slipped into foreclosure because of high interest rates. He would sell the homes back to those troubled buyers with more affordable terms, hoping to make a small profit.

For more, see Shaq: I can help homeowners fight off foreclosure.

See also, Shaq's Heart Still Here. . .With Town He Deserted.

Day One Of Philly Foreclosure Diversion Program "A Madhouse"

In Philadelphia, Pennsylvania, The Philadelphia Inquirer reports on the first day of the implementation of the local court's Residential Mortgage Foreclosure Diversion Pilot Program, a program that housing advocates around the nation reportedly say is among the most innovative they've seen, because it involves the court, consumer advocates and mortgage lawyers.

  • It was a madhouse in City Hall courtroom 676 yesterday. There began day one of a court pilot program to help financially troubled homeowners avoid foreclosure by talking - talking directly to the lawyers who represent lenders and working out deals, on the spot, to begin paying regularly or to give up and move on.

  • Gone was the usual silent, churchlike decorum, replaced instead with knots of lawyer volunteers conferring in corners with brand-new clients, ever-growing stacks of files piled precariously on tables, mortgage lawyers answering calls on cell phones, and dazed-looking homeowners hoping that out of all the chaos would emerge a way for them to keep foreclosed homes that had been destined for a sheriff's sale. And it will continue today and the rest of the week.

For more, see Homeowners offered relief in Philadelphia program.

Go here for other posts on the Philadelphia Residential Mortgage Foreclosure Diversion Pilot Program.

Texas Cops Seek Alleged Scammer For Renting Out Homes He Doesn't Own To Tenants

In Desoto, Texas, WFAA-TV Channel 8 reports:
  • [P]olice are looking into a former mayoral candidate who they say is renting homes he doesn't even own. Officers showed up in a DeSoto neighborhood to search a home for information on Morris Mosley. [...] Now there's a warrant out for his arrest. Investigators say he broke into multiple homes that are in foreclosure or up for sale and rented them out for profit. "To go into someone else's home and then rent it to someone else when you don't have the property - that's pretty bold," said Corporal Ted May from DeSoto Police.

For more, see Former mayoral candidate accused of illegal renting.

For the story of one homeowner facing foreclosure who vacated her home while putting it up for sale, only to find illegal tenants living in the home (and who allegedly rented the home from Morris Mosley) when she stopped by to check on it, see DeSoto woman finds people living in her house.

Go here and go here for other posts on tenant victims of rent hoaxes. unwitting tenant rent scam yacht

New York Closing Agent Charged With Pocketing $500K Earmarked For Existing Mortgage Payoffs

In Suffolk County, Long Island, Newsday reports:
  • An Islip Terrace woman who worked as a title insurance agent has been indicted after she swindled at least two homeowners out of $500,000, Suffolk prosecutors said.Christina Cidoni, 43, was arrested on May 28 and charged with second-degree grand larceny, according to Suffolk County District Attorney Thomas Spota.

***

  • According to prosecutors, Cidoni swiped and cashed several multi-thousand dollar checks in 2003 while working on two deals for Fidelity National Title Insurance Co. of New York. Typically, such insurance provides lenders and homeowners peace of mind while a title transfer is pending. Instead of safeguarding those checks -- which were earmarked to pay off mortgages -- Cidoni cashed and spent them, prosecutors said. Cidoni also is accused of allegedly pilfering $15,000 in an escrow account, and of writing a bad check for title insurance computer software.

For the story, see Title insurance agent charged with larcenies.

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

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

Denver Pastor With History Of Civil Lawsuits Accusing Him Of Swindling People Out Of Homes & Savings To Cop Plea In Insurance Fraud Case

In Denver, Colorado, The Rocky Mountain News reports:
  • The Rev. Acen Phillips, a longtime activist in Denver's black community, is expected to plead guilty in an insurance fraud case Thursday under a deal that will allow him to avoid jail. Colorado Attorney General John Suthers had charged Phillips with 12 felony counts of forgery, theft and attempted theft involving more than $575,000 from AIG Life Insurance Co.

***

  • The cases highlight a career in which Phillips has been known for controversy almost as much as for outspokenness. A review of court documents shows a string of nearly 30 civil lawsuits against him [plus another 12 cases listed under the name "Acen Phillips" where it could not be immediately confirmed whether they can be linked to the pastor]. Most of those suits - including the active AIG suits - claimed that Phillips and his business associates either defaulted on loans or swindled people out of their homes and savings.

***

  • Phillips is linked to at least seven civil lawsuits in the metro area filed against D.T.P. Ministries from 1984 to 1991, according to a courts database and the lawsuits themselves. Two other suits with a slight variation on the name - D.P.T. Ministries - also list Phillips. The D.T.P. suits tell similar stories: That Phillips, working with others, used his status as minister to gain trust and trick people out of their homes.

For the story, see Pastor expected to plead guilty (Acen Phillips would get no jail time under deal in insurance fraud case).

Use Of Builder Bailout Scams To Unload Unsold Inventory Become More Discreet

Buried in an article in the San Francisco Chronicle is a description of how some builders, looking to dump accumulated inventory that they are having trouble peddling, are using discreet methods to accomplish that end.
  • [B]uilders used to give away microwaves. Now, says Jenny Brawley, fraud investigations manager at Freddie Mac, they give away cars, swimming pools, two years' worth of homeowner association dues, four years of mortgage payments, even five years of guaranteed rental income.

  • These incentives not only are built into the inflated purchase price, they are not disclosed to the loan officer or the appraiser. "In fact," says Brawley, "there is an organized effort to conceal them" from lenders, who end up providing loans for more than the property is worth. The fraud specialist also is seeing a lot more involvement in these types of schemes from real estate agents. "They're the ones shopping these loans to lenders," she said.

For the story, which describes other general, non-builder related, real estate frauds, see Mortgage fraud burgeoning with new twists.

Governor To Sign Ohio Foreclosure Law Requiring Deed Recording Within 14 Days Of Judge's Sign-Off; Allowing Courts To Perform Mediation

In Ohio, The Cincinnati Enquirer reports:
  • Gov. Ted Strickland is expected to sign state legislation this week requiring sheriffs to automatically record deeds within 14 days of a judge signing off on a foreclosure sale. The goal: to stop homes – and some homeowners – from ending up in a legal limbo in which, on paper at least, no one owns the home. When that happens, properties deteriorate, lawns go unmowed and cities don’t know who to cite. Sometimes the former owners get socked with fines or bills, even after they’ve lost the property.

***

  • Revisions made when the Senate passed the bill last month would allow courts to perform mediation and permit an open house on vacated or abandoned properties – a move designed to boost sale prices and preserve neighboring property values.

  • [Strickland’s Ohio Foreclosure Prevention Task Force] expressed concern about a paper-filing game often played by lenders who buy back the properties on which they’ve foreclosed. Until a deed with the new owner’s name is filed with the county recorder, code enforcers can’t hold anyone responsible for deteriorating properties. And vacant homes can attract crime and other problems, pushing down a street’s property value.

For more, see Housing limbo to shorten (Strickland to sign bill ending deed delays).

In a related post, see Foreclosing Lender Fails To Record Title To Ohio Home, Leaving Former Owner On The Hook For Criminal Building Code Charges.

Go here for other posts on code violation & other problems associated with homes in legal limbo. responsibility code violations foreclosure

Tuesday, June 10, 2008

Three Face Forgery, Other Charges For Allegedly Duping 87 Year Old Woman Into Signing Away Home, Using Straw Buyer To Pocket $775+K In Home Equity

In Pomona, California, the Los Angeles County District Attorney announced last week:
  • A church bishop and two others are due to be arraigned Monday on six felony counts each for allegedly duping an 87-year-old Claremont woman into signing over the grant deed to her home. [...] Defendant Leroy Dowd, 71, is charged [...] with two counts of grand theft, two counts of offering a false or forged instrument for recording, one count of identity theft and one count of forgery. Bessie Mae Moore, 61, and Alexander Trevino, 31, both of Los Angeles, also are charged in the complaint. The charges carry aggravated white-collar crime and excessive-taking enhancements.

***

  • Dowd – a self-ordained bishop who operated the now-defunct Triumph Church of God [...] in Los Angeles – met the victim through church in December 2006. He allegedly told the elderly woman that he could help her secure widow’s benefits from Medicare and Social Security. Under this guise, he allegedly tricked her into signing over the grant deed to her $800,000 home, which was paid in full.

  • Eight days later, Dowd sold the house to Moore, who is believed to have posed as a straw buyer. Moore obtained financing through Trevino, a loan officer at MortgageQwest in Glendale. Trevino allegedly falsified the financial information in Moore’s loan application and was able to obtain 100 percent financing. At closing, Dowd allegedly walked away with more than $775,000, prosecutors said.

For more, see the LA County DA press release: Church Bishop, Two Others Charged In Theft of Elderly Woman’s Home.

Florida Legal Services Firm Inundated With Foreclosure / Bankruptcy Clients; Campaign On To Raise Operating Funds

In Jacksonville, Florida, the Jacksonville Daily Record reports:
  • [Jacksonville Area Legal Aid executive director Michael] Figgins and his staff are inundated with clients seeking relief from bankruptcy and foreclosure. While the latter is grabbing the headlines these days, both issues are related and both mean standing room-only when JALA hosts its bankruptcy and foreclosure clinics.

  • While JALA’s clients face life-altering problems, Figgins is facing issues of his own: budget cuts from everywhere and not enough attorneys and staff to handle the number of cases JALA takes in on a weekly basis. Help is on the way, though, and it’s through a public/private partnership between the City, a banker and a publicist. If that sounds like a campaign in the making, you’re right. However, no one is seeking office. The goal is to raise $1 million for JALA.

For more, see Getting tough on foreclosure.

State Law Imposing Fiduciary Duties In Foreclosure Rescue Deals Has Some Washington State Real Estate Agents Howling

In Seattle, Wasshington, a blog on the Seattle Post Intelligencer reports:

  • It appears that most of the complaints about the [recently passed Washington State] equity skimming law are originating with representatives of real estate agents. [...] The reason for this is that the law impresses new duties on the agents and with the new duties the prospect of liability. Over the years there has been a good deal of marketing to get you to think of real estate agents as "real estate professionals." This law they believe is taking this idea too far.

  • The crux of this concern is that real estate agents might be characterized as "distressed home consultants" who the new law says owe a fiduciary duty to the the distressed home owner, someone facing foreclosure.

For the rest of the story, see What Are Real Estate Agents Complaining About?

See also, New law worries county Realtors.

For a related article on the new Washington State foreclosure rescue statute, see No Whining About the New Equity Skimming Legislation.

Brooklyn DA Indicts Man In Alleged Deed Theft Victimizing Dead Property Owner

In New York City, the Kings County District Attorney's Office recently announced the indictment of George Marks, 40, on several charges of Grand Larceny, and six counts of Falsifying Business Records in the First Degree. According to the Brooklyn DA's press release:
  • The indictment against Marks charges that he forged a deed claiming ownership of the deed to 243 E. 54 Street and 5501 Church Avenue, in East Flatbush, and then tried to sell the building. The actual owner had died, and her son was in the midst of sorting out her will and estate, when, in 2006, Marks filed deeds claiming he was the actual owner, according to the indictment. Supporting tax documents discovered in the investigation showed that Marks claimed to have paid $20.00 for both properties, then valued at more than $1 million. While the deed forms were backdated to show that they had been filled out before the owner died, dates printed in the margins showed that they were not created until after her death.

  • Marks is also charged with trying to sell 243 E. 54 Street to a married couple, in December 2006. The indictment alleges that he accepted a $10,000 down payment from the couple, but when questions about the deed arose, they requested their money back. Marks has not returned the payment. The indictment further charges that, in December 2006, Marks sold 243 E. 54 Street to a straw buyer, for $495,000, allowing Marks to keep the money generated in the sale and maintain ownership of the building.

Go here for the Brooklyn DA's press release.

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

Homeowner In Foreclosure Struggles Through Maze Of Legal Complexities In Attempt To Save Home

In Robertson County, Tennessee, The Tennessean reports on a four year ordeal experienced by a local homeowner who learned the hard way how difficult it is to straighten out mortgage problems, given the complexity of how mortgages are originated, sold (and resold), and serviced (and how servicing rights can be sold and resold). His problems began in 2004, when he refinanced his home loan with Ameriquest.

For more, see Borrowers who get behind struggle to regain footing (Homeowners who deal with foreclosure often face a tangled web of legal fights).

NBC Nightly News On Loan Modifications For Homeowners Facing Foreclosure

The NBC Nightly News ran a story last night on the difficulty homeowners facing foreclosure are having getting loan modifications of their home mortgages. Mentioned in the story is Iowa Mediation Service’s Mortgage Mediation Program, a joint program of the Iowa Attorney General’s Office and Iowa Mediation Service, which works with borrowers and lenders dealing with mortgage, refinancing, and foreclosure concerns.

To view the report, and the Nightly News web-only extras, see Hard Times.

Foreclosure Prevention Counselors Letting Lenders Off The Hook?

A recent article on CNNMoney.com gives an informative description of:
  • [t]he complicated and time-consuming foreclosure prevention process. Working together are mortgage servicers - the companies that manage the loans - and the borrowers, with foreclosure prevention counselors often acting as go-betweens.

For more, see The trick to getting a mortgage fixed (Foreclosure prevention is a messy business -- more art than science. Here, an inside look at why some people get a loan workout and others don't).

Editorial Note:

Unfortunately, what is not included in the article (and implicitly points to a weakness in the negotiating process for the financially strapped homeowner - the lack of participation of competent legal counsel on his/her behalf) is the need to remind lenders of the legal problems they face in connection with the enforcement of the loan agreement if a loan modification satifactory to the homeowner can't be worked out in the event:

  • the loan violated any applicable state predatory lending and/or consumer protection laws (see Fighting Back Against Foreclosure - New York Judge Denies Foreclosure Based on Alleged Predatory Lending),

  • in attempting to collect on the loan, the Federal Fair Debt Collection Practices Act (or any applicable state debt collection statutes) has been violated (see Un-Fairbanks - How West Haven sisters fell victim to a national mortgage scam, and how it could happen again).

Loan counselors who are not attorneys are obviously not in a position to practice law. Consequently, (unless working in conjunction with an attorney experienced in negotiation and familiar with the relevant legal issues ) they are unable to raise these issues during the loan workout negotiation process and will likely result in homeowners unwittingly overlooking the leverage they possibly (some may say probably) have in reaching the best possible deal they can with their mortgage lender.

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

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

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

Monday, June 09, 2008

NYC Feds Get Guilty Pleas From Two In Equity Stripping, Foreclosure Rescue Scam

In New York City, The Associated Press reports:

  • One company billed itself as a white knight that could rescue desperate homeowners from foreclosure. The other passed itself off as an honest brokerage that helped wealthy New Yorkers get mortgages to buy $1 million apartments. In reality, both firms dealt primarily in fraud, according to prosecutors.

  • Two Brooklyn mortgage specialists pleaded guilty to federal conspiracy charges this week in a pair of loosely related cases that cost banks millions of dollars and led to some people losing their homes.

  • Maurice McDowall, the owner of a "foreclosure rescue" company called Lost and Found Recovery, copped to an indictment accusing his firm of persuading scores of struggling families to enroll in a program to "save" their homes by temporarily signing them away to someone else. Mortgage broker Aleksander Lipkin admitted criminal wrongdoing in both that case and a separate fraud in which his firm, Lending Universe, used bogus paperwork to arrange more than $200 million in loans they knew would probably never be repaid.
For more, see 2 plead guilty in NY mortgage frauds targeting homeowners.

See also:

Go here for other posts on foreclosure rescue operator Maurice McDowall.

Go here for other criminal prosecutions of foreclosure rescue operators.

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.).

Foreclosure Rescue Statute May Prohibit Attorneys From Taking Upfront Fees In The Course Of Representing Florida Homeowners Facing Foreclosure

A recent article by Central Florida attorney Michael Alex Wasylik, of the firm Ricardo & Wasylik, PL, points to an apparent flaw in the newly passed Florida state statute, The Foreclosure Rescue Fraud Prevention Act of 2008.

The flaw relates to the ability of attorneys, engaged in a typical attorney-client relationship with a Florida homeowner facing foreclosure, to charge and collect upfront legal fees from those clients. The law prohibits "foreclosure rescue consultants" from charging and collecting upfront fees for "foreclosure-related rescue services" to homeowners facing foreclosure.

A reading of the plain language of the new statute appears to include (or ensnare) attorneys among those prohibited from charging upfront fees for their services. (See Section 501.1377(2)(b), Florida Statutes, for definition of the term "Foreclosure-rescue consultant.")

Further, the definition of the term "Foreclosure-related rescue services" in Section 501.1377(3) appears broad enough to include those services typically provided by attorneys in the course of defending clients in foreclosure actions, as well as those services in connection with Federal bankruptcy proceedings. In addition, Section 501.1377(2)(b) enumerates six persons or entities that are specifically excepted from the definition of the term "Foreclosure-rescue consultant"- attorneys are not included on the list.

Based on the reading of the plain language of the statute, it appears that a Technical Corrections Bill by the Florida legislature is in order to correct, what appears to be, an inadvertent but obvious flub in the drafting of the statute that ostensibly prohibits attorneys from charging upfont legal fees from homeowners that they represent in foreclosure-related legal proceedings.

For more, see New Florida Law May Hurt Homeowners in Foreclosure (New Section 501.1377 may make it impossible for homeowners to find lawyers to represent them in foreclosure or bankruptcy proceedings).

Postscript: The same issue was raised in Massachusetts in a January, 2008 article in connection with the state Attorney General's foreclosure rescue regulations - see Massachusetts Lawyers Weekly: Lawyers: unclear foreclosure regs forcing them to turn down business (Claim that new rule bars acceptance of retainers in certain types of cases).

More On Florida's Recently Passed Foreclosure Rescue Statute

In Southwest Florida, The News-Press ran an article by local attorney William Edy in which he provides a summary of the recently passed Florida statute, The Foreclosure Rescue Fraud Prevention Act of 2008, a law which provides strict regulation of the activities of foreclosure rescue operators in connection with homeowners facing foreclosure.

For more, see New foreclosure-rescue legislation on way.

Baltimore Tax Sale Investor Cops Plea, Agrees To Cooperate With Feds In Bid Rigging Probe

In Baltimore, Maryland, an editorial in The Baltimore Sun notes:

  • Federal investigators looking into Baltimore's tax-sale auctions have found their canary. Steven L. Berman, a veteran real estate investor from Pennsylvania, has agreed to cooperate with U.S. Justice Department prosecutors as part of a guilty plea in a bid rigging scheme. Mr. Berman is not just any canary. He has participated in tax-sale auctions in the city and five counties for several years and should be intimately familiar with the system, its vulnerabilities and payoffs.

***

  • Federal prosecutors allege the bid rigging scheme involving Mr. Berman occurred over several years. They say a handful of tax-sale regulars, including Mr. Berman, cut secret deals to avoid bidding against each other, benefiting from the lack of competition as they purchased sale certificates in volume.

For more, see Tax-sale shenanigans.

Sunday, June 08, 2008

Foreclosures & The Property Managers Of Last Resort: Municipal Code Enforcement Agencies

In Central Florida, the Orlando Sentinel ran a commentary on the increased workloads faced by local code enforcement agencies by reason of the vacant homes that are in various stages of foreclosure, and what some municipalities have done in other parts of the country to combat similar battles.
  • Droughts are good for one thing. They help hide the empty homes. Now summer rains are rejuvenating dried lawns. And all the houses abandoned over the winter and spring are about to reveal themselves. "I expect all that thirsty St. Augustine to go nuts and the complaints to go up," says Mike Rhodes, Orlando's code-enforcement chief. "Some are homes that sold six months ago for a half-million dollars. Now we are sending people to mow the yard." Adds Bob Spivey, his counterpart at Orange County, "It's an epidemic. We are the property managers of last resort. It's a bad situation. It's in every type of neighborhood."

For more, see Grass is often greener, taller when other side of fence is foreclosed (if link expires, try here).neighborhood destruction from foreclosures kappa

NH Feds, State AG Announce Formation Of New Hampshire Mortgage Task Force

In Concord, New Hampshire, The Associated Press reports:
  • Several state agencies are working with federal authorities to investigate mortgage fraud in New Hampshire. The New Hampshire Mortgage Task Force was announced Thursday by U.S. Attorney Tom Colantuono and [New Hampshire] Attorney General Kelly Ayotte. Their offices are working with the FBI, the U.S. Secret Service and other federal agencies to respond to the housing market crisis caused by the rising rates of foreclosures.

  • The task force already is investigating cases of suspected mortgage fraud in New Hampshire. Officials say the group will focus primarily on large-scale institutional fraud, but it will consider allegations of any type of fraud related to the granting, marketing or servicing of home mortgages.

For the story, see N.H. announces new mortgage fraud task force.

See also, U.S Attorney Press Release - Mortgage Fraud Task Force Established.

Thanks to the The Manchester Mortgage-Servicing Giant Killer, Mike Dillon of GetDShirtz.com for the tip on the story.

Unbuilt Troubled "Trump Tower Tampa" Project Faces Foreclosure; Famed Builder Said To Have Merely Licensed Named To Local Developer

In Tampa, Florida, recent media articles report that the local Trump Tower Tampa condominium project that carries the name of famed developer Donald Trump has not only never gotten off the ground, but now faces foreclosure. Many who bought in are clamoring for their deposits back. In addition, they reportedly bought in to the project believing that Donald Trump was actually involved in the project only to reportedly learn that the contrary is true. Trump is claimed to have merely licensed his name to a local developer for millions of dollars and, reportedly, sued after allegedly being stiffed out of over $1 million in unpaid licensing fees, as this excerpt indicates:

  • As the start of construction was delayed over and over again, details about Trump's arrangement with SimDag/RoBEL LLC came to light, especially as Trump was being blamed for many of the tower's problems. In early 2007, he confirmed what had only been rumor before. Trump was not a developer in the project nor was he an investor. In fact, the developer, Tampa-based SimDag, was paying him millions of dollars to use his name, and he was still out more than $1 million of it.

For more on this story, see:

For story update, see:

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 yelbow

Mass AG Brings Civil Charges Against Man Who Allegedly Fraudulently Obtained Mortgages & Allowed Them To Go Into Default

From the Massachusetts Attorney General's Office:
  • Attorney General Martha Coakley’s Office has filed a lawsuit against an Adams investor who allegedly obtained inflated loan proceeds by fraudulently procuring mortgages on multi-family homes and commercial buildings in Adams, Greenfield, North Adams, and Pittsfield. The lawsuit, filed in Suffolk Superior Court, alleges that Richard E. Doherty devised a scheme by which he submitted false qualifying information and documentation to obtain mortgage loans for property purchases and refinances. Doherty then failed to repay the mortgages and allowed the houses to fall into foreclosure. Doherty, 63, was served notification of the lawsuit [last week]. The Attorney General’s Office is seeking civil penalties, restitution, attorneys’ fees, and disgorgement of ill-gotten gains from Doherty.

For more, see Attorney General Martha Coakley Files Lawsuit Alleging Significant Mortgage Fraud in Western Massachusetts (Alleged Fraud Caused Numerous Properties to Fall Into Foreclosure).

For more details on the alleged scheme as set forth in the Massachusetts AG's lawsuit, see Complaint - Commonwealth of Massachusetts v. Doherty.

FBI Investigates Chicago Builder Who Left Country; Possible Sham Sales Probed

In Chicago, Illinois, the Chicago Sun Times reports:
  • A brash Chicago builder who returned home to Lithuania as unpaid debts accumulated here has drawn the interest of the FBI, two sources said. The sources said FBI agents are asking about the activities of Andrius Augunas, whose plans for remaking parts of the Near South Side ended in a tangle of liens and foreclosures.

  • Augunas was the president of Rokas International Inc., which has ceased operations. The investigation apparently is connected to FBI probes into mortgage fraud and is looking at the possibility of "sham" sales of condominiums in Rokas projects.

  • Plaintiffs in cases against him say the developer left for Lithuania earlier this year and has not been seen since. On April 29, he filed for personal bankruptcy protection under Chapter 7 of the code.

Among the creditors Augunas has reportedly stiffed include First DuPage Bank, which gave him three loans totaling $27.8 million for a condo building he never started.

For more, see FBI probing bankrupt developer ($79 MILLION IN DEBT - He fled U.S. after plan to remake Near South Side collapsed).

Go here for other posts on Andrius Augunas.

Alabama Woman Faces Forgery Charges In Alleged Deed Theft

In Demopolis, Alabama, The Clark County Democrat reports:
  • Annetta Thedford Rowser, 57, has been arrested on a number of charges relating to a property deed. Rowser represented a woman who presented a forged land deed. The deed was allegedly signed by the woman's father with an "x," however it was originally dated for Aug. 23, 2000, six months after the man had died.

  • Rowser, of Demopolis, and her accomplice allegedly marked through the original date and changed the date on the deed to April 1, the day before the man died. Rowser was charged with forgery, second degree and deceptive business practices. Her bond was set at $9,000.
Source: Demopolis woman charged with forgery, deceptive business practice.

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

Saturday, June 07, 2008

Record Foreclosures Strain Social Services

The Associated Press reports:

  • From pet rescue centers and financial counselors to homeless shelters and food banks, social service providers are feeling the weight of the U.S. foreclosure crisis on a daily basis.

  • In Palatka, Fla., Mike's Dog House pet shelter turns away each week about 10 homeowners who are facing foreclosure around the U.S. because it has no more room. In Cleveland, roughly 200 beds were added in an already-strained homeless shelter system, partly because of fears that foreclosures on landlords will render renters homeless and send them to the streets. And in Orlando, Fla., staff at the Destiny Foundation in Central Florida are being approached by all kinds of people who fear foreclosure and other economic worries.

  • "We've seen people coming in who were losing literally everything ... They're lost, in a daze, trying to figure out what to do," said Scott George, who heads the foundation, which provides counseling, a food bank, a free medical clinic and other social services. "We've been inundated and it's a huge concern for us because it's overwhelming. And it doesn't seem to be going away any time soon."

For more, see Record foreclosures strain social services.

Empty Jail May Begin Taking In Federal, Out-Of-State Prisoners To Avoid Risk Of Foreclosure

In Hardin, Montana, The Associated Press reports:
  • A state judge has ruled that a $27 million jail in Hardin can accept federal or out-of-state prisoners - offering potential relief for a project beset by difficulties since its completion last July. The publicly financed but privately operated jail has sat empty because it has no contracts for inmates to fill its 464 beds. With no money coming in, the city has been forced to dip into a contingency fund to cover payments on its construction bonds. Those bonds went into default last month, and the jail risks foreclosure if it remains empty.

For more, see Judge: Montana jail can take out-of-state inmates.

Green Spray Paint A Quick Fix For Brown Lawns

Buried in a story in The Los Angeles Times is a note on how some locals in Temecula, California, are dealing with the "brown lawn" problem affecting the flood of area foreclosures:
  • [A]t first glance, the house looked like so many others in Temecula: five bedrooms, mushroom-colored stucco walls, a seven iron away from a dapper golf course where two men prepared to tee off. A closer look at the lawn, however, revealed that it was dead and crunchy -- and had been spray-painted green.

  • The paint came courtesy of neighbors, in the hope that it might be less evident to passersby that the house was empty -- foreclosed and left to the elements, with no running water, no electricity and little chance of new occupants any time soon.

For the story, see Housing downturn is a jolt to upscale Temecula.

Five Year Old Drowns In Pool Behind Vacant Home In Foreclosure

In Avon, Indiana, WRTV Channel 6 reports:
  • A 5-year-old girl drowned [last] Saturday afternoon in a swimming pool behind a vacant home that is in foreclosure, police said. [...] Police said the home where the child's body was found is two doors down from the home at which the children were staying.

***

  • Neighbors told deputies that the home where the child drowned had been vacant for about four months. The swimming pool was covered, but the cover had caved in under about 5 feet of water. Neighbors told police that the pool had been in that condition for a while and that they were concerned about the safety of children in the area because the back yard had only a partial fence.

For more, see Child Drowns In Pool Behind Foreclosed Home (Grandmother Finds 5-Year-Old Girl In Pool).

Editorial Note:

No word whether the foreclosing mortgage lender and/or the mortgage servicing company will be tagged with a wrongful death lawsuit.

More On Tenants Facing Foreclosure Evictions

Some links to recent stories on unwitting tenants getting evicted as a result of their landlords pocketing their rent while not making the mortgage payments, thereby allowing the properties to go into foreclosure:
  • Atlanta, Georgia: WXIA-TV Channel 11 - Housing Crisis Hits Apartment Dwellers (story of a single mother with three kids who, along with 17 other families, will be evicted from an apartment building abandoned by the landlord; she unwittingly paid the landlord six months rent in advance),

  • Palm Beach Gardens, Florida: The Palm Beach Post - Landlords fall into foreclosure, leaving tenants in shock, lurch (a single mother with two young kids who last month signed a lease for a townhouse; only two weeks after she had signed the lease, a man knocked on her door and delivered a mortgage default notice from the landlord's lender. The landlord hadn't made a mortgage payment in eight months.),

  • Venice, Florida: WWSB-TV Channel 7 - Venice couple evicted with no notice (couple who had been renting their house for more than two months, never missing a payment, are padlocked out of the home; everything they own is outside, covered with tarps. Along with their belongings, two cats and a dog are homeless now).

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

More On One Of The "Burning" Issues In The Foreclosure Crisis

The following links are to recent stories on fires in foreclosures:

  • Fort Wayne, Indiana: The Journal Gazette - Arson charged amid foreclosure (homeowner reportedly admits torching home two days before a scheduled April 17 foreclosure sale; reportedly said he didn't know how to tell his wife that he was 20 months behind on the house payments),

  • Traverse City, Michigan: Traverse City Record Eagle - Man allegedly lit house on fire (homeowner charged with arson; reportedly told fire investigator the property was in foreclosure; records show he had inherited the property from his father but couldn't keep up on the mortgage payments; The property was insured, and he allegedly filed a claim after the fire). foreclosure arson whale

Kern County To Charge $1K Per Head "Cover Charge" At Unauthorized Teen Beer Bashes In Vacant / Foreclosed Homes

In Kern County, California, The Bakersfield Californian reports:
  • Kern County supervisors approved a $1,000 fine on individuals caught participating in an illegal party on private property. The nuisance fine was triggered by a rash of teen-powered parties in homes left vacant or abandoned by Kern County’s high foreclosure rates. The penalty “applies to any party held on any property without the permission of the owner,” said County Counsel Bernard Barmann. Each person caught at such a party would be subject to the $1,000 fine, Sheriff Donny Youngblood said.

For the story, see It'll cost you $1,000 each to party at an empty house.

Go here for other posts on teen parties in vacant / foreclosed homes. teen parties vacant homes

Foreclosure Bus Tours Killing Toll Brothers; Developer Wants Practice To Stop

In Palm Beach County, Florida, a Palm Beach Post blog reports:
  • High-end homebuilder Toll Brothers has been an especially creative player in the blame game. Robert Toll never misses a chance to blame the nattering nabobs of negativism in the media, rising oil prices or nasty-NIMBY local politicians for the housing downturn. In today’s quarterly earnings call, he found a new scapegoat: Realtors and investors leading foreclosure bus tours, something that has become common practice in South Florida.

***

  • To his credit, Toll did eventually get around to pointing the finger of blame at his own company. “We bought our own BS,” he said of the outlandish expectations that accompanied the peak of the housing boom.

For more, see Toll Brothers: Stop those foreclosure bus tours! You’re killing us!

Wisconsin Ex-Prosecutor In Hot Water; Faces Forgery / I.D. Theft Charges; Alllegedly Obtained Mortgage, Other Loans In Daughter's Name

In Eau Claire, Wisconsin, the Leader Telegram reports:
  • Forty years ago, Paul L. Kelly sat in the prosecutor's seat in Eau Claire County Court. On Friday, he sat in the defendant's chair, wearing an orange jail-issue jumpsuit with his wrists and ankles cuffed. Kelly, 68, [...] faces 66 felony charges of identity theft and forgery with more than a third of those counts carrying a maximum punishment of up to 15 years in prison and a $10,000 fine.

***

  • Kelly claimed to have power of attorney for his daughter [...] while she lived in Colorado. He purchased a 1972 Oldsmobile Cutlass convertible for $7,459, took out a mortgage from First Federal Savings Bank for $128,250 in her name, another loan from the Bank of Augusta for $7,200 to pay for a 1995 Ford conversion van and then filed Chapter 13 bankruptcy on her behalf.

  • Kelly tried to get a $56,000 loan to purchase property [...] by claiming that he had power of attorney for his grandson. At the time, the child was 8 years old, but Kelly used his social security number and said his grandson was a 25-year-old construction worker and forged W-2s and employment records.

For more, see Ex-D.A. in court again.

Friday, June 06, 2008

Philly Sheriff Best Known For The Law He Won't Enforce (To Foreclosing Lenders' Dismay)

In Philadelphia, Pennsylvania, The Wall Street Journal reports:
  • Sheriff John Green has spent 37 years in law enforcement. But these days he's best known around town for the law he won't enforce. With the economy soft and thousands of Philadelphians delinquent on their mortgages, Sheriff Green this spring refused to hold a court-ordered foreclosure auction. His move raised eyebrows on the bench and dropped jaws among lenders and their attorneys, who accuse him of shirking his duty to enforce legal contracts.

***

  • It also prompted a sweeping, court-endorsed deal, scheduled to go into effect next week, that aims to help homeowners avoid foreclosure. Even as Congress moves forward with a federal plan that could insure up to $300 billion in refinanced mortgages, Mr. Green's unilateral approach has pushed Philadelphia to the leading edge of local responses to the national crisis.

For more, see He's Taking Law Into His Own Hands To Help Broke Homeowners (Trouble Is, He Is the Law; Philly's Sheriff Green Doesn't Do Foreclosures, to Lenders' Dismay).

Go here for other posts on the Philadelphia Residential Mortgage Foreclosure Diversion Pilot Program.

Orange County Seeks To Unload Unsold 18%-Yielding Tax Certificates To The Public On First Come, Fisrt Serve Basis

In Orange County, Florida, the Orlando Sentinel reports:

  • Orange County wants to give people a second chance to pay someone else's overdue tax bill. [...] The first sale, last week, was a bit of a bust. In the past, investors pounced on every chance to earn modest interest rates by purchasing tax certificates through online auctions. But buyers balked last week and bid nothing on 3,277 tax certificates in Orange and almost 15,000 throughout Central Florida. Orange County governments could lose $5 million in unpaid taxes.

***

  • In hopes of stemming the losses, Orange's tax collector's office plans to have an unprecedented second sale -- possibly on Wednesday -- through the same online service that conducted Orange's bidding at the annual auction last week. [...] The sale will differ from the auction because winning certificate buyers will each get an 18 percent return. It will be first-come, first-declared-the-winning-bidder, said Joe Giovanelli, technology manager for the Orange tax collector.
***
  • Counties across the state this week reported similar losses. Some of the hardest hit counties were inland with Leon and Marion selling only about half of their certificates, according to a report from the Grant Street Group, which helps conduct the sales. Highlands sold even less.
For more, see Tax auction reprise: come buy someone else's debt (After last week's bust, Orange County is planning a 2nd sale -- but with a twist).

City Of Philadelphia To Implement Second Program To Assist Financially Strapped Homeowners With Subprime ARMs

In Philadelphia, Pennsylvania, The New York Times reports:

  • Philadelphia announced a program on Wednesday to reduce the number of people who are forced from their homes because they cannot afford the payments on an adjustable-rate subprime mortgage.

***

  • Mayor Michael Nutter said the program, in which the city is investing $2 million to pay for legal services and people to counsel homeowners, is intended to solve payment problems before they reach foreclosure. Mr. Nutter urged people to contact the city before they receive a foreclosure letter from their lender.

For more, see Philadelphia Will Try to Reduce Foreclosures.

Editorial Note:

Unlike Philadelphia's Residential Mortgage Foreclosure Diversion Pilot Program, which was recently designed and implemented by the local judiciary in Philadelphia County to help those homeowners who are already in the legal process of foreclosure (and without regard to whether those homeowners have adjustable or fixed rate mortgages), this more recent program announced by Mayor Nutter targets those homeowners who are not yet in foreclosure but who face onerous terms (and onerous changes in the terms) of their subprime adjustable rate home mortgages.

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

Closing Agent Gets 6+ Years For Illegally Pocketing $4.6M In Refinancing Proceeds Earmarked For Mortgage Payoffs From At Least 14 Transactions

In Pennsylvania, the Philadelphia Daily News reports:
  • A Bryn Mawr businessman was sentenced to 6 1/2 years in jail yesterday for his role in a scheme to bilk homeowners, finance companies and title insurers in connection with mortgage refinancings. Jay Berger, 56, of Bryn Mawr, apologized to the government, his family and victims, saying he had "destroyed" his family and his reputation and "betrayed" those with whom he worked.

***

  • Authorities said Berger bilked homeowners, finance companies and title insurance companies out of approximately $4.6 million between April 2000 and December 2004. Court papers said Berger acted as a mortgage broker, settlement agent and title insurance agent for real-estate refinancings. Berger or his assistants would attend closings related to loan refinancings. Lending institutions would wire money to an account in Berger's name and he was obligated to pay off the original mortgage.

  • Authorities said that in at least 14 instances, Berger did not pay off the first mortgage, as the homeowner, the first mortgage company, the new mortgage company and the title insurance company expected him to do. Instead, he would make some mortgage payments on the first mortgage but keep the bulk of the money for himself.

For more, see Bottom line for Main Line bilker: 6 1/2 years in jail.

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

County Recorder's Spelling Error May Cost Family Its Home As Homebuyer Fails To Buy Title Insurance

In Zanesville, Ohio, The Columbus Dispatch reports:
  • A spelling error by a government worker might cost Andy Mateja his house. [...] When Mateja bought his house, he paid for a title search that found no liens on his property. It turns out that wasn't true.

  • JPMorgan Chase had placed a $150,000 lien on the house in 1998, when it was owned by Dr. Subbarayudu Koppera. But the lien was mistakenly entered into the public record under the name Koppepa, so it did not show up when the title company searched for liens by the owner's last name.

***

  • In buying the house, Mateja did not take out title insurance that would have protected him from claims against a previous owner. Now JPMorgan Chase is going after the Matejas' house. The Matejas have countersued the bank and Koppera. The case is scheduled to go to court June 19.

For more, see Clerk's error jeopardizes family's home (Undetected lien against seller haunts buyer).

For story update, see:

Go here for other posts involving legal issues related to title insurance. title insurance legal issues

Nevada Lawmakers Address Assertions Of Illegal Court Orders Affecting Tenants In Foreclosure Evictions

In Las Vegas, Nevada, the Las Vegas Review Journal reports:
  • Some justice courts may be evicting tenants in foreclosed rental houses without providing the required three-day notice, a lawyer told a legislative subcommittee Monday. The Legislative Commission subcommittee on mortgage lending and housing heard the testimony Monday in a session at the Sawyer building in Las Vegas. Steve Kilgore, deputy director of the Henderson constable's office, told the panel that justice courts issue orders for him to evict renters immediately from houses that have been foreclosed.

For more, see Courts said to act too hastily (Officials may not be following the law in evicting tenants). equity skimming unwittingly digamma

Neighborhoods Around the Country Struggle With Abandoned Home Blight

The following links are to some recent stories on homewowners and local government officials around the country who find themselves fighting the blight in their neighborhoods caused by vacant, abandoned homes.

12 Of 20 Homes In Foreclosure In Upscale Development Create Mini Ghost Town

In Las Vegas, Nevada, KTNV-TV Channel 13 reports:
  • The perfect example of America's mortgage meltdown can be seen in one Southwest Valley neighborhood. Nearly 75% of the homes inside one gated community [...] are in foreclosure and that is creating a virtual ghost town.

***

  • Action News talked to Penny Rodgers and her husband who still live in the community. "We expected it to be nice cozy neighborhood," explained Penny. Recently, 12 of the 20 homes in her development went under foreclosure, trading in their new neighbors for foreclosure signs and lock boxes. Most of the people who blew in and blew out of the neighborhood did not pay their home association dues and did not bother to fix what was broken.

For more, see Foreclosure Crisis Leading To A Vegas Ghost Town. neighborhood destruction from foreclosures kappa

Thursday, June 05, 2008

Ratings Agencies Sign Settlement Agreement With NY AG In Subprime Mortgage Probe

Reuters reports:

  • Moody's Investors Service and other rating agencies have signed an agreement with the New York Attorney General Andrew Cuomo addressing rating practices, including fees, Moody's President Ray McDaniel said on Thursday. The New York Attorney General is expected to sign the agreement later on Thursday, said McDaniel, speaking at a Moody's investors conference in New York.

Source: Moody's says has signed agreement with NY AG.

See also:

Texas AG Sues Nine In Alleged Deed Theft From 40+ Dead Homeowners; Accusations Include Illegal Foreclosure Rescue

In Fort Bend County, Texas, FortBendNow.com reports:

  • Five Fort Bend County residents and four associates have been accused of a scheme to steal homes from families of recently deceased homeowners. A statement from Texas Attorney General Greg Abbott said the nine "orchestrated a complex residential real estate scheme by relying on forged and backdated signatures on fraudulent deeds and trusts," and "fraudulently obtained titles to at least 40 Houston-area properties, which were subsequently sold to other conspirators and unsuspecting buyers." Abbott filed a lawsuit against the nine, and named Edward Charles Gray, of [...] Fresno, and James Lanier King of Houston as ringleaders in the alleged scheme.

***

  • The lawsuit accuses Gray of operating "an illegal foreclosure rescue scheme" in which he offered to help homeowners prevent foreclosure. In one case, he allegedly convinced an elderly woman to pay him $350 a month and temporarily transfer her home title to him. Then, according to the suit, Gray got the woman to sign a warranty deed transferring the home to another defendant, Erik Lamont Campbell, whose address is listed at the same [...] Fresno home as Gray.

  • A spokesman for Abbott said Wednesday that no criminal charges have been filed in the case, and thus none of the defendants has been arrested.

For more, see AG Sues 5 Fort Bend Residents Over Scheme To Steal Dead People's Homes.

From the Texas Attorney General's Office:

California Homeowner Seeking Home Equity Refinancing Gets Cleaned Out In Equity Stripping Deal

In American Canyon, California, the Los Angeles Times reports:

  • Three years ago, Donna Robbins tried to use her soaring equity to remodel her house in this Napa Valley community.Instead, she says she got cleaned out. Robbins claims that friends from church who ran a finance company agreed to arrange a home equity loan to pay for a new kitchen, bathrooms and landscaping.

  • As with most financial transactions, there were papers to sign. But Robbins says that what she was told were loan documents were in fact papers that transferred the title to her property. These new owners subsequently defaulted on the mortgage, according to public property records and a lawsuit Robbins filed in Napa County Superior Court. Now, the house she had inherited from her parents is in foreclosure and Robbins is facing eviction, along with her boyfriend and their seven children.

For more, see Compounding the pain (Allegations of mortgage fraud are on the upswing).

Summit County Enacts Rule Designed To Eliminate Sloppy Practices By Foreclosing Lenders & Their Attorneys

The Summit County, Ohio judiciary has recently adopted a local rule in mortgage foreclosure actions requiring the foreclosing lender's attorney to file a 14-point certification (known as a Certificate of Readiness) along with the lawsuit initiating the foreclosure action. Among the certifications that the lender's attorney is required to make is the following:
  • The Plaintiff has in its custody and control the original note and mortgage, and said documents are available for inspection upon order of the Court.

In addition, the foreclosing lender's attorney no longer has 60 days to file with the court the required property title report (known as the Preliminary Judicial Report - serves as evidence of the state of the record title of the real property in question). The Preliminary Judicial Report is to be filed contemporaneously with the lawsuit and the attorney's 14-point Certificate of Readiness.

If the foregoing are not filed together when initiating a foreclosure action, the Summit County Clerk of the Courts has been ordered to reject the action for filing.

It will be interesting to see how lenders' counsel deal with the 14-point cerification when promissory notes have been lost, assignments of mortgages have gone unrecorded and that are dated on a date subsequent to the filing of the foreclosure action, and other well reported screw-ups that foreclosing lenders have heretofore been getting away with in foreclosure actions.

For more on the Summit County, Ohio court rule, effective June 1, 2008, together with the standard form Certificate of Readiness containing all 14 points that lenders' attorneys are now required to certify to the court when filing foreclosure actions, see Order - In re: Certificate of Readiness For Foreclosure Actions Filed In The Court of Common Pleas - General Division.

Many thanks to William A. Roper, Jr. for the heads-up on the new rule. missing mortgage foreclosure docs beta SloppyForeclosuresAlpha

Deceptive Real Estate Practices, Exorbitant Interest Rates Alleged In Attempt To "Steal" Property

In Worcester, Massachusetts, the Worcester Telegram & Gazette reports:
  • The owner of [a] Boston Hill property joined a growing list of businessmen and developers yesterday who have accused David G. “Duddie” Massad and Commerce Bank and Trust of operating a criminal enterprise that engaged in loan sharking, racketeering, extortion, fraud and conspiracy.

  • Charles T. Sanderson III of Kingston, who owns the 118-acre Boston Hill property that straddles Shrewsbury, Westboro and Northboro, charged in federal court papers that Mr. Massad, of Westboro, his daughter, Pamela Massad of Westboro, Commerce Bank and Trust Co., and Gemstone Investment Company of Worcester operated a criminal organization that used illegally high interest rates and deceptive real estate transactions in an attempt to steal the property from him. Mr. Sanderson also alleged that Mr. Massad’s actions forced him into bankruptcy. He asked a jury to award him $40 million in damages.

For more, see Property owner accuses Massad (Extortion, racketeering alleged).

In related stories, see:

Go here for other posts related to this story.

80 Year Old Dementia Patient Facing Foreclosure Tricked Into Signing Away Eight Parcels Of Land Worth $520K+, Says Suit

In Central Florida, WFTV Channel 9 reports:
  • A couple in Lake Mary is accused of walking into a Seminole County nursing home and tricking a woman diagnosed with dementia into signing away the rights to her property, worth more than half a million dollars. The couple is not related to the victim. The lawsuit says they didn't know her, but they found her property on a list of properties nearing foreclosure.

  • David and Laura Jane Roquemore are accused of sneaking into the secure dementia unit at the Florida Living Nursing Center two years ago and tricking 80-year-old Theolia Marin into signing multiple documents transferring eight parcels of land worth more than $520,000 [...] into their names. "They came in with prepared deeds and prepared contracts, ready to do business," said Marin's attorney Kyle Fletcher.

For more, see Couple Accused Of Tricking Woman With Dementia Into Giving Away Property.

Central Florida Tax Certificate Auction A $20M Bust?

In Central Florida, The Orlando Sentinel reports:

  • Millions of tax dollars that Central Florida governments were counting on may never arrive. And thousands of struggling homeowners may get another shove toward foreclosure. It's all because last week's sale of tax certificates was a giant bust. For the first time, investors didn't snap up tax certificates, which local governments auction off to recoup unpaid taxes.

***

  • Losses from last week's auctions were still being added up Tuesday but are expected to total more than $20 million for cities, counties and schools, all of which were already reeling from statewide tax cuts and downturns in property values. [...] Throughout the region, tax collectors said they were surprised that bidders changed course this year and rejected nearly 15,000 tax certificates. [...] The certificates sold out in the past. But this year bidders rejected more than a third of late tax bills in Lake County. Osceola and Volusia counties reported similar numbers.

***

  • Because officials have never dealt with such a mass of unpaid taxes, they are not certain how much will ever be repaid.

For more, see Tax-auction bust could cost $20M.