Tampa Feds Obtain Another Indictment Alleging An Equity Stripping, Foreclosure Rescue Scam; Extradition May Be Necessary For Fugitive-Suspects

In Tampa, Florida, The Bradenton Herald reports:

• The operators of an alleged foreclosure-rescue scam that was active in Manatee County are facing federal criminal charges. A federal grand jury in Tampa last week indicted Jose Oliveri and Mario Quiroz each on 22 counts of conspiracy, wire and mail fraud, and money laundering, court records show.

• The Tampa-area men were principals in 4 Solutions Inc., a Tampa company that promised to help distressed homeowners avoid foreclosure. Instead, they sold the homes to third parties, fraudulently obtained excessive mortgages and let the homes fall into foreclosure anyway, prosecutors said.

• The alleged scheme netted more than $22.5 million, according to the indictment. Quiroz, also known as Juan Mario Quiroz del Valle and Juan Mario Quiroz del Valle Buch and Oliveri, also known as Jose Alberto Oliveri-Agurto, have not been arrested. They are considered fugitives, said Steve Cole, a spokesman for the U.S. Attorney’s Office in Tampa. “It’s likely they are in Peru and we will have to extradite them if they are,” he said Tuesday.

For more, see Charges pending in alleged scam.

For the indictment, see USA v. Quiroz, Oliveri.

Go here for earlier reports (and any available updates) on 4 Solutions.

For more on an earlier successful equity stripping, foreclosure rescue scam prosecution by the Tampa Feds, see:

• U.S. Attorney Press Release (3-29-07) - Tampa Federal Jury Convicts five Persons In Home Equity/Bank Fraud Scheme,
• For the grand jury indictment, see U.S. vs. Moumneh, et al.

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.).

Despite Bank Of America/Countrywide Settlement, Some Subprime Litigation Against It Continues

In Carson City, Nevada, The Mercury News reports:

• A Reno lawyer is seeking class-action status for several U.S. District Court lawsuits alleging predatory practices by major lenders that have left his clients facing foreclosures and threatened sales of their homes. Bob Hager said Tuesday that the clients include his law partner, Treva Hearne, who is battling with Countrywide Financial representatives who moved ahead with foreclosure proceedings on three properties she owns even though she was current on all mortgage payments.(1)

***

• The [Bank Of America / Countrywide] settlement, which according to preliminary Countrywide estimates could benefit more than 11,000 Nevadans, has many troubling aspects and basically amounts to "Countrywide promising to be a kinder, gentler predatory lender and the state agreeing to it," Hager said.

• "It's a framework for the future resolution of those loans that are underperforming, but it does not deal at all in an equitable fashion with those victimized already by Countrywide," he added.

Hager reportedly said that, as part of his litigation effort, he wants to challenge a settlement announced Monday by Bank of America, which has acquired Countrywide and faces a lawsuit over alleged deceptive mortgage practices, according to the story.

For more, see Lawsuits allege predatory lending practices.

(1) According to the story, besides Countrywide, the lawsuits filed in federal court in Reno name Washington Mutual Home Loans, Impact Finance Group, Southern Pacific Mortgage Co., GRP Financial Services Corp. and IndyMac Bank. Hager said he also represents borrowers "victimized" by Wells Fargo, the article reports.

Moody's: Nearly One In Six Homeowners Are Underwater

The Wall Street Journal reports:

• The relentless slide in home prices has left nearly one in six U.S. homeowners owing more on a mortgage than the home is worth, raising the possibility of a rise in defaults -- the very misfortune that touched off the credit crisis last year. The result of homeowners being "under water" is more pressure on an economy that is already in a downturn.

***

• And having more homeowners under water is likely to mean more eventual foreclosures, because it is hard for borrowers in financial trouble to refinance or sell their homes and pay off their mortgage if their debt exceeds the home's value. A foreclosed home, in turn, tends to lower the value of other homes in its neighborhood. [...] After a housing slump that has pushed values down 30% in some areas, roughly 12 million households, or 16%, owe more than their homes are worth, according to Moody's Economy.com.

For more, see Housing Pain Gauge: Nearly 1 in 6 Owners 'Under Water' (More Defaults and Foreclosures Are Likely as Borrowers With Greater Debt Than Value in Their Homes Are Put in a Tight Spot).

Report: As Many As 54,000 NYC Tenants In Working Class Neighborhoods May Face Impact Of Foreclosure Squeeze On Private Equity Firms

In New York City, The New York Times reports:

• In recent years, private equity firms that once rarely ventured outside Midtown Manhattan began investing in Harlem, the South Bronx, East New York and other working-class neighborhoods, paying top dollar for tenement buildings in the belief they could make big profits by replacing rent-regulated residents with higher-paying tenants.

• But there is growing evidence that those investments are not paying off. Tenant advocates and bond rating agencies say that many of those firms’ properties are in danger of foreclosure because optimistic profit projections have fallen short, leaving enormous gaps between the rent rolls and mortgage payments. As many as 54,000 of the 90,000 apartments acquired in those deals, or 60 percent, are at risk, according to a new report by the Association for Neighborhood Housing and Development, a nonprofit advocacy group for low- and middle-income tenants.

***

• Tenant advocates say that the trend could lead to deferred maintenance and cuts in services, which could undermine surrounding neighborhoods. They also contend that because the loans were based on unrealistic revenue projections, rather than current rents, landlords would be able to make profits only by aggressively displacing tenants and then raising rents.

• “These predatory equity investors have dug a deep financial hole for themselves,” said Benjamin Dulchin, deputy director of the Association for Neighborhood Housing and Development. “But if policy makers allow the 54,000 affordable apartments that are at risk of default to go into financial and physical distress, then many communities will be dragged down into that hole with them.”

For more, see Mortgage Crisis Is Foreseen in Housing Owned by Private Equity Firms. TenantRentSkimmingAlpha

County Sheriff Suspends All Chicago-Area Foreclosure Evictions; Points To Problem Of Unsatisfactory Notice To Occupants As Reason

In Chicago, Illinois, the Journal Gazette reports:

• The sheriff here said Wednesday that he's ordering his deputies to stop evicting people from foreclosed properties because many people his office has helped throw out on the street are renters who did nothing wrong. "We will no longer be a party to something that's so unjust," a visibly angry Cook County Sheriff Tom Dart said at a news conference. "We have to be sure that when we are doing this - and we are destroying some people's lives - we better be darned sure we're talking about the right people," Dart said.

***

• Dart said that from now on, banks will have to present his office with a court affidavit that proves the home's occupant is either the owner or has been properly notified of the foreclosure proceedings.

***

• He talked about tenants who dutifully pay their rent, then leave one morning for work only to have authorities evict them and put their belongings on the curb while they are gone. By the time they get home, "The meager possessions they have are gone," he said. "This is happening too often."

***

• Dart said he believes banks are not doing basic research to determine that the people being evicted are, in fact, the homeowners. He said that in a third of the 400 to 500 foreclosure evictions his deputies had been carrying out every month, the residents are not those whose names are on the eviction papers. Nor, he said, are banks notifying tenants that the homes they're renting are in foreclosure. He added that when banks do learn the correct names of those living on foreclosed-upon property, their names often are simply added to eviction papers.

For more, see Chicago's Cook County won't evict in foreclosures.

See also, The New York Times: Sheriff in Chicago Ends Evictions in Foreclosures.

For more on the reported (up until now) ongoing problem of illegal foreclosure evictions in Cook County, Illinois, see:

• The Chicago Reporter: A Renter's Nightmare,
• Chicago-Area Sheriff's Office To Safeguard Against Illegal Foreclosure Evictions By Implementing New Procedure. TenantRentSkimmingAlpha

Chicago Foreclosure Education Summit To Be Held Saturday

In Chicago, Illinois, Chicago Defender reports:

• Dorothy Brown, Clerk of the Circuit Court of Cook County, along with [other local notables](1) are presenting a Mortgage Foreclosure Education Summit, on Oct. 11, from 8 a.m. to 3 p.m., at Kennedy-King College, 740 W. 63rd Street, Bldg. U.

***

• Brown has secured the services of volunteer attorneys to review foreclosure cases and provide legal advice to participants on site. An array of government, financial, legal and service agencies will be present to discuss pertinent issues and distribute practical information to those who attend the summit.

For the story, see Clerk Brown to host summit on mortgage foreclosure.

(1) According to the story, the participating governmental agencies include: Clerk of the Circuit Court of Cook County, Department of Housing Development, the Illinois Housing Development Authority, the Illinois Attorney General, the Cook County Board of Review, the Cook County Recorder of Deeds and the Cook County Assessor.

Alabama Attorneys To Kick Off Statewide Program To Assist Homeowners Facing Foreclosure

In Huntsville, Alabama, The Huntsville Times reports:

• Lawyers in Huntsville will kick off a statewide program here today to assist homeowners in danger of losing their houses because of mortgage foreclosures, according to the Alabama State Bar Association. The campaign will have a staggered rollout throughout the state, said Tom Methvin, president-elect of the bar association. The Huntsville/Madison County area is being targeted first because of the high number of reported foreclosures, he said. "The Alabama State Bar is concerned about the high number of foreclosures in the state," he said. "It's very easy in Alabama for lenders to foreclose on a mortgage and take someone's house."

***

• There are various ways distressed homeowners can receive free help from a lawyer through Legal Services Alabama,(1) Methvin said. Help negotiating with lenders is available to those of all income levels. Assistance for those who need to go to court is available only to low-income homeowners, he said.

***

• Under a public-awareness and education campaign, homeowners facing foreclosure can call a toll-free hot line at 877-393-2333. They will be connected with a legal aid attorney who will advise them about the various stages of the process and furnish free legal assistance.

For more, see Program set to help stop foreclosures (Lawyers kick off plan here to aid state homeowners).

(1) Legal Services Alabama is a nonprofit organization providing free civil legal and law-related services to low-income Alabamians in all 67 counties.

NJ AG Working On Pilot Mediation Project For Homeowners Facing Foreclosure

In Trenton, New Jersey, The Star Ledger reports:

• [New Jersey Attorney General Anne] Milgram [...] said her office was working with the Public Advocate's Office and the Department of Banking and Insurance on a pilot project that would help homeowners avoid foreclosure.

• The project, expected to start in November, would provide mediators -- volunteers from the legal community -- to help 100 homeowners negotiate with mortgage services. She said a similar program in Iowa during the early 1990s farm crisis proved effective at helping farmers keep their property. "The pilot program will be evaluated to determine the best way to expand the project -- most likely through the development of a hotline or asking lenders and housing counselors to more widely publicize the program with those who face foreclosure," Milgram said.

Source: N.J. state investigators to probe Lehman Brothers.

San Diego City Attorney To Go After Other Subprime Lenders; Asks 50 Largest Cities To Join In Litigation

Now that the $8.7 million settlement has been reached in the Countrywide subprime mortgage litigation with about a dozen state attorneys general, San Diego City Attorney Michael Aguirre is considering withdrawing his lawsuit against Countrywide brought on behalf of his city (and not included in the settlement) and has announced that he will be going after a number of other lenders, according to two media reports.

• "[W]e will be filing additional litigation stopping other foreclosures with other subprime lenders by Friday," [Aguirre] said at a Monday morning news conference. "And we will let you know on Friday who those are and what actions that are going to be taken." "What we want to do is make this universal," he said. "We want to stop every foreclosure of a subprime loan in order to provide the time and provide the forum to work those loans out so that they can go from non-perfoming to performing."

Source: San Diego Union Tribune: Aguirre close to suing other subprime lenders.

• [A]guirre said that, in light of the settlement, he would withdraw his city's litigation against Countrywide. The city attorney said he had sent letters to attorneys in the country's 50 largest cities on Monday asking them to join him in a lawsuit against seven to 10 other subprime lenders in hopes of reaching a settlement that mirrors the Countrywide deal. "On a mass basis this is going to be much more effective ... than the wholesale [federal] bailout at the top end," Aguirre said.

Source: The Recorder (reported at Law.com): Countrywide Deal Includes Reworked Mortgages.

NC Feds, State Probe Alleged Flipping Scam That Recruited Unwitting Straw Buyers Invoving 120+ Homes

In Fayetteville, North Carolina, The Fayetteville Observer reports:

• [S]tate and federal officials are investigating whether [real estate company owner Maurice Eugene] Jenkins and a lawyer working with him, Holly C. Stevens, defrauded [local resident Idrena Young] McGuire, other investors and mortgage lenders in a real estate scheme involving more than 120 homes in six counties. N.C. Attorney General Roy Cooper’s office sued Jenkins and Stevens to stop them from making fraudulent real-estate deals.

***

• Jenkins, according to Cooper, bought homes out of foreclosure for $10,000 to $70,000, then sold them to investors such as McGuire for vastly inflated prices — but without requiring a down payment or closing costs. Cooper’s office says Jenkins used the inflated sale prices and falsified the borrowers’ loan applications to trick lenders into arranging large mortgages for the buyers.

• Then he managed the rental properties, delivering a monthly payment to the investors, court papers say. But the rents he charged were far below the cost of the mortgages, let alone the profit he promised, the Attorney General’s Office said. Court papers say Jenkins covered the difference with money from new investors until the scheme fell apart in late 2007. By then, the Attorney General’s Office says, he had too few new investors bringing in new money to cover the payments due the prior investors.

For more, see Real estate scam fed on innocence, dreams.

50 Elderly Unit Owners In Senior Housing Cooperative Face Loss Of Homes As Developer Falls Into Foreclosure

In Edina, Minnesota, the Minneapolis Star Tribune reports:

• Residents of the new Gramercy Club of Edina senior housing complex plan to relocate to a Hennepin County courtroom on Tuesday. Their purpose: to defend their right to stay in their homes.

• The 50 or so people have dutifully made their mortgage and tax payments to live in the units, which opened last year at 70th Street and Metro Boulevard. But in a new dimension of the housing meltdown, each resident has been sued individually by a bank that has also filed a foreclosure suit against the Gramercy Club of Edina corporation, after it defaulted on loans worth $25 million.

• BankFirst, the South Dakota-based lender, argues that because the financially struggling building is a cooperative, not condominiums, all of the units are vulnerable to foreclosure. Now the residents, many of them retired and settled comfortably into their new digs, find themselves drawn into a legal brawl that has already cost them $100,000.

For more, see Owners of senior housing in Edina defaulted, each resident being sued (Because the owners of a new senior housing complex in Edina defaulted on loans, each resident is being sued and may be ousted).

Illinois AG Files Civil Charges Against Home Repair Contractor For Allegedly Screwing Homeowners Out Of $245K For Incomplete, Substandard, Or No Work

In Chicago, Illinois, the Illinois Attorney General's Office announced:

• Attorney General Lisa Madigan [last week] filed a lawsuit in Cook County Circuit Court against a Chicago home repair business that allegedly defrauded consumers out of more than $245,000 in down payments in violation of several Illinois consumer protection laws.

• Madigan sued A-1 Construction of Chicagoland, Inc., and A-1 President Joseph J. Schmitz and A-1 Secretary Vincent J. LaRocca for allegedly violating the [Illinois] Consumer Fraud and Deceptive Business Practices Act and the [Illinois] Home Repair and Remodeling Act by accepting thousands of dollars in down payments from Chicago-area consumers, but performing substandard or incomplete work or, in some cases, no work at all. The complaint also alleges that the defendants failed to respond to consumers’ repeated requests for refunds. Madigan said that her Consumer Fraud Bureau has received at least 10 complaints from consumers, who paid the defendants amount ranging from $4,000 to $90,000.

For more, see AG Madigan Sues Chicago Home Repair Contractor.

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

Condo Buyers Face Loss Of Deposits As Developer Faces Foreclosure

In Myrtle Beach, South Carolina, The News Sun reports:

• Millions of dollars are missing from the Atlantic Palms Resort condominium development in Myrtle Beach, including deposits from investors who never received their units, a situation real estate experts say points out a glaring weakness in South Carolina's real estate laws. While state law requires real estate agencies to put condo deposits into an escrow account, there is no such requirement if the deposits are given directly to a project's developer. That means deposits that normally would be kept safe in case a project fails could instead be lost as a developer uses the money to pay daily bills.

***

• That is what happened at Atlantic Palms, where developer Haricharan "Mike" Mishra took $2 million worth of deposits from buyers and used the money to pay construction and other costs, according to court documents. [...] Atlantic Palms now is in foreclosure, and the condo buyers could wind up losing their money.

For more, see Lax laws fall short for condo buyers (MB project's missing deposits highlight flaws).

For other posts on builders/contractors allegedly stiffing their customers, go here, go here, and go here. contractors stiff subs customers yelbow

More On The $8+ Billion Settlement In Countrywide Loan Litigation; Subprime Borrowers To Get Mandatory Loan Modifications

The New York Times reports:

• [T]he Countrywide effort is the most comprehensive, mandatory loan workout program since the mortgage crisis began last year. Congress has proposed various programs, but those measures did not make it into the final $700 billion government bailout. Since taking control of Fannie and Freddie Mac, the two housing giants, the Federal Housing Finance Agency has said it is looking at expanding modifications on the loans that Fannie and Freddie own or guarantee.

***

• Along with the direct relief, Countrywide will waive late fees of $79 million and prepayment penalties of $56 million and suspend foreclosures on delinquent borrowers with the riskiest loans. A foreclosure relief fund will be created with $150 million from Countrywide to help borrowers who are four months or more behind on their payments or whose homes have already been foreclosed on. The company will also provide $70 million to help troubled borrowers relocate to rental housing. In all, Countrywide is setting aside $8.7 billion to help borrowers.

***

• [Subprime] Borrowers whose first payment was due between Jan. 1, 2004, and Dec. 31, 2007, can participate. The loan balance must be at least 75 percent of the current value of the home, and the borrower must be able to afford the adjusted monthly payments.

• “We have created the first comprehensive, mandatory loan-modification program with the largest loan servicer in the country, and it is going to help homeowners stay in their homes,” [Illinois Attorney General Lisa] Madigan said. “We will use this model when we work with other servicers as well.” She said that approximately $185 million worth of loans in Illinois would be modified under the settlement.

***

• “This agreement demonstrates the effectiveness of states in addressing predatory lending and other consumer protection matters, proving states should not be pre-empted by federal legislation,” said Mr. Brown. The program will be administered by state officials who will examine regular reports from Bank of America. The program will begin Dec. 1 as Bank of America contacts borrowers. In the meantime, Bank of America said Countrywide customers can call 800-669-6607 to discuss their loans.

For more, see Countrywide to Set Aside $8.4 Billion in Loan Aid (free registration may be required).

See also, Legal Newsline: Bank of America begins home retention program.

Go here, Go here and Go here for more on other Countrywide lawsuits & other problems. CountrywideProblemsZeta

Foreclosure Scam Offering Phony Home Loan Document Audit Services Lands Oregon Man 5 Months In Jail

In Jackson County, Oregon, the Mail Tribune reports:

• A con man who posed as a "mortgage watchdog" was sentenced to five months in jail after being found guilty in Jackson County Circuit Court on multiple theft charges. Bart Arthur Blahosky's scam involved approaching people facing foreclosure. He told victims he would analyze their mortgage paperwork to find possible errors that could save them money when dealing with lenders.(1) He would then take the paperwork, which includes sensitive information such as Social Security numbers, bank account numbers and dates of birth, and not return. He always charged a steep fee for this service, Jackson County sheriff's Detective Sgt. Colin Fagan said.

***

• Jurors spent only 10 minutes deliberating after hearing the evidence against Blahosky in a one-day trial Thursday. They found him guilty on all counts — first-degree theft, two counts of second-degree theft and one count of attempted theft, said Bridges.

For more, see 'Mortgage watchdog' gets five months in jail.

(1) Some refer to this as a Truth In Lending Act loan document audit. rescue

Statewide Mediation Program In Foreclosure Actions Gets Off The Ground In Connecticut

The Connecticut Post reports:

• Connecticut is leading the nation in an effort to keep struggling homeowners in their homes. As a result of the growing financial crisis, the General Assembly has launched a special foreclosure mediation program through the state Judicial Branch, [...], to help homeowners who have not been able to make their monthly mortgage payments.

***

• The Legislature began the program with $2.5 million appropriated to the Labor Department from the state Banking Fund. The program is free to homeowners. [...] The program allows homeowners under foreclosure action to request mediation, a process that can lead to other options such as refinancing and restructuring of the debt, she said.

• Under the program, 12 mediators have been appointed to the state's 14 judicial districts. In addition to the mediators, who earn between $60,000 and $85,000 a year, there are seven case flow coordinators who schedule cases and ensure they are kept on track. [...] Under the law, when a lender's lawyers serve a court summons to a homeowner for a foreclosure lawsuit, the lender must attach an application for the mediation program. Once an application is filed, the program has 10 days to schedule the first mediation hearing.

For more, see Fledgling program helps combat foreclosures.

Ad Hoc Court Ordered Foreclosure Mediation Programs Beginning To Take Hold In Florida?

In Seminole County Florida, the Orlando Sentinel reports:

• [18th Judicial Circuit Chief Judge Clayton D.] Simmons signed an order earlier this summer ordering mediation in foreclosures of owner-occupied residences. "It is forcing, hopefully, some communication that wasn't going on in the past. That was our whole purpose," Simmons said. "If they don't communicate, there's no way of working it out."

***

• Judges can order mediation in any case, but there is no uniform approach being taken by Florida's chief judges to handle the influx in foreclosure filings, said Fort Lauderdale attorney Adele Stone. "Seminole [County] was one of the forerunners in this," she said.

***

• Officials in the Ninth Circuit, which includes Orange and Osceola counties, are not considering any similar action. And though officials in the Fifth Circuit, which includes Lake County, have been considering something similar, they have not implemented such. In the Seventh Circuit, which includes Volusia and Flagler counties, Circuit Judge Raul A. Zambrano said he orders lenders into mediation with homeowners in all cases in which a borrower appears in court.

For more, see Judge: Foreclosure mediation can satisfy homeowners and lenders.

Go her for 18th Judicial Circuit Foreclosure Mediation Administrative Order.

Beverly Hills Flipper Gets 14 Years In Straw Buyer Scam Resulting In $142M In Frauduletly Obtained Loans On Approx. 80 Homes; Lenders Take $40M+ Hit

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

• Charles Elliott Fitzgerald, an admitted architect of one of the largest real estate frauds in California history, was sentenced Friday to 14 years in federal prison for his part in bilking mortgage lenders of more than $40 million. Fitzgerald, 48, pleaded guilty in May to conspiracy, fraud and other charges, acknowledging that he reaped at least $5 million from the scheme, which was based in Beverly Hills and involved high-end house flips.

***

• Prosecutors said Fitzgerald and his alleged co-conspirators, including developer Mark Alan Abrams and star real estate agents Joseph Babajian and Kyle Grasso, hatched their scheme during California's burgeoning real estate boom of the late 1990s and early 2000s.(1)

***

• "I am sorry for everything that happened," Fitzgerald, who wore a white prison jumpsuit and was shackled at the waist, told the judge as his wife and six children sat at the back of the courtroom.

For more, see Mastermind in one of California's largest real estate scams gets 14 years (Charles Elliott Fitzgerald, 48, pleaded guilty in May to charges of bilking mortgage lenders of more than $40 million. The scheme was based in Beverly Hills and involved high-end house flips).

Go here for earlier posts and any available updates on this story.

(1) According to the story, Babajian, 55, Grasso, 37, and another defendant, appraiser Lila Rizk, 41, have pleaded not guilty and are awaiting trials that have yet to be scheduled. Abrams, 47, and six other defendants have pleaded guilty and will be sentenced after the remaining criminal cases play out.

$8.68 Billion Settlement In The Works In Countrywide Litigation With 11 State AGs; Loan Mods For Many Countrywide Borrowers On The Way

In Sacramento, California, Legal Newsline reports:

• With news of a billion-dollar settlement between financial giant Bank of America and attorneys general from 11 states, thousands of homeowners facing foreclosures could soon have a rebirth of opportunity to save their homes. News of the settlement leaked out of several state attorneys general offices Sunday night. Those close to the negotiations hailed the progress as a significant step toward stemming the tide of the foreclosure crisis that has caused an earthquake in the county's economic foundations.

• "This is definitely a home run," said San Diego City Attorney Mike Aguirre, one of the many city officials suing Countywide Financial Corp. over its alleged predatory lending practices. California Attorney General Jerry Brown, who led much of the negotiations with Bank of America, parent company of Countrywide, too hailed the victory of homeowners. "Unlike last week's congressional bailout," Brown said, "This loan-modification program provides real relief for borrowers at risk of losing their homes."

• Brown said the $8.68 billion settlement, with $3.5 billion going to his state, is the largest of its kind, far surpassing the $484 million settlement with Household Financial Corp. in 2002.

For more, see Countrywide clients find new life in settlement.

See also California AG press release: Attorney General Brown Announces Landmark $8.68 Billion Settlement with Countrywide:

• In addition to California, attorneys general in 10 states, including Arizona, Connecticut, Florida, Illinois, Iowa, Michigan, North Carolina, Ohio, Texas and Washington, are participating in the settlement. Attorney General Brown’s office, along with the Office of the Illinois Attorney General, led the negotiations for the states.

***

• The settlement does not include Angelo Mozilo, the former Chairman and Chief Executive of Countrywide Financial Corporation or David Sambol, formerly the President of Countrywide Home Loans and the President and Chief Operating Officer of Countrywide Financial Corporation. Brown will continue to prosecute his case against Mozilo and Sambol.

Go here, Go here and Go here for more on other Countrywide lawsuits & other problems. CountrywideProblemsZeta

Break In Chain Of Title To Mortgage Loan Temporarily Stalls Foreclosure; Bankruptcy Judge Gives Lender Until Thursday To Prove It Owns The Debt

In Savannah, Georgia, The Augusta Chronicle reports:

• An Evans woman whose business dealings set off a series of foreclosures and bankruptcies fended off eviction from her own home Thursday -- at least for now. U.S. Bankruptcy Court Judge Susan D. Barrett gave the local counsel for American Home Mortgage Servicing until next Thursday to gather information to show that through a series of sales and transfers, it is the rightful owner of Regina Preetorious' $567,000 mortgage loan.

***

• American Home Mortgage petitioned the bankruptcy court to allow it to proceed with foreclosure on the couple's Windmill Lane home. The company contends they haven't made a mortgage payment since October 2007 on the 3,540-square-feet home. The couple's bankruptcy attorney, Todd Boudreaux, contends American Home Mortgage should prove it holds the legal security deed on their home.

• Ms. Preetorious signed the original loan on Nov. 30, 2006, with Option One Mortgage Co. In January, the company's loans were placed in a trust with Wells Fargo as the trustee. On April 30, America Home acquired all the assets and interests of Option One, company attorney James Overstreet said Thursday. The contents of the trust overseen by Wells Fargo were included, he said.

• But that last step wasn't clear Thursday. There appeared to be a break in the chain of ownership, Judge Barrett said. Mr. Boudreaux said the couple is entitled to know exactly who owns their loan.

For the story, see Businesswoman avoids eviction.

Countrywide Scores Win As Miami Bankruptcy Judge Rules Against U.S. Trustee; Says Only Prosecutors Can Bring Action For Lenders' Alleged Bad Acts

In Miami, Florida, The Wall Street Journal reports:

• Countrywide Home Loans Inc. scored a victory against a U.S. government agency that sued it in three states claiming that it engaged in "bad faith conduct" that has hurt debtors in bankruptcy. In dismissing one of the lawsuits Wednesday, A. Jay Cristol, a bankruptcy judge in Miami, said the government agency, the U.S. Trustee Program, couldn't seek sanctions against the mortgage lender in bankruptcy court.

***

• In the case Judge Cristol dismissed Wednesday, the agency said Countrywide wrongly tried to foreclose on a debtor's home. The suit called for monetary sanctions, but Judge Cristol found that only federal prosecutors, not the U.S. Trustee, can bring legal action to punish bankruptcy-law violators.

For more, see Countrywide Scores Legal Win (subscription may be required; if no subscription, go here, then click link for story).

Go here, Go here and Go here for more on other Countrywide lawsuits & other problems. CountrywideProblemsZeta

Bond Insurer Sues Countrywide For Lax Standards When Making Bad Loans

In New York City, The Lower Hudson Journal News reports:

• Lax lending standards and fraud by the giant home lender Countrywide Financial Corp. contributed to thousands of home mortgages going into foreclosure during the housing bust, leading to major losses for bond insurer MBIA Inc., according to a lawsuit filed by MBIA.

• MBIA alleges in the suit that its insurance unit incurred $459 million in costs related to the bad loans at Countrywide and that additional claims exceed several hundred million dollars. MBIA seeks damages from Countrywide in the suit filed Tuesday at the New York State Supreme Court in Manhattan.

***

• MBIA’s insurance unit provided guarantees on billions of dollars of trust obligations of Countrywide mortgage-backed securities, but would have not done business with Countrywide if it had known about the lax standards, according to the lawsuit.

For more, see MBIA sues Countrywide.

See also, MarketWatch: MBIA unit sues Countrywide units over securitizations.

Go here, Go here and Go here for more on other Countrywide lawsuits & other problems. CountrywideProblemsZeta

Hung Jury Results In Mistrial In Minneapolis Flipping Trial; Prosecution Says They'll Try Again

In Minneapois, Minnesota, the Minneapolis Star Tribune reports:

• A mistrial was declared late Friday when a Hennepin County District Court jury said it was unable to reach a verdict after more than three days of deliberations in an alleged mortgage fraud ring. Susan E. Newell of Minneapolis was charged with a dozen counts of theft by swindle and one of racketeering. Prosecutors intend to try her again. Her alleged partner, Edward L. Boler, is to be tried in January. The cases were separated by a defense request to District Judge Lloyd Zimmerman shortly before the trial began.

***

• The prosecution grew out of an arson finding by county investigator Glen Miller after a house burned in January in Brooklyn Center. Miller found that the property was one of six in foreclosure and one of seven that had been purchased in a short time by Brian White.

• That led investigators to Demetrius Winston, who bought five properties in a two-week period. They say that Newell recruited the buyers and that Boler obtained mortgage loans based on fraudulent applications. Newell, Boler and each buyer split the proceeds resulting from obtaining a mortgage greater than the property's cost, according to a complaint.

For more, see Hennepin County mortgage fraud trial ends with a mistrial (A jury deliberated more than three days on the charges against Susan Newell. Prosecutors say they will retry her).

Barney Frank vs. Bill O'Reilly Over Financial Crisis

A segment on Thursday night's edition of Fox News' The Factor with Bill O'Reilly featured a spirited shouting match between the host and House Financial Services Committee Chairman Barney Frank (D-MA), one of the point people for the recently passed Emergency Economic Stabilization Act of 2008, the so-called Federal bailout bill. By the end of the shouting match, the esteemed Congressman Frank looks more rumpled than he usually does, and the ever popular Mr. O'Reilly looks like he's about to implode.

To view the video, see O'Reilly v. Frank Over Financial Crisis.

For the story from The Boston Globe, see Barney Frank battles Fox News, then oversees passage of bailout bill.

More On Federal Court Ruling Disallowing Class Action Status In TILA Case Seeking Mortgage Recission

The National Law Journal recently ran a story on the recent win by the mortgage lending industry when a Federal appeals court stripped homeowners of class action status in a Truth In Lending Act ("TILA") lawsuit seeking recission of a mortgage in which the TILA was violated.

For the story, see Mortgage Lenders Fight Off Rescission Class Action in 7th Circuit.

For the court ruling, see Andrews v. Chevy Chase Bank (7th Cir., 9-24-08).

South Florida Feds Indict Suspect In Alleged Complex Scam That Falsified Lien Status Of Homes; Deceived 3rd Party Bidders To Buy At Foreclosure Sales

Th U.S Attorney's Office for the Southern District of Florida recently announced:

• [O]n September 25, 2008, a federal grand jury returned a 22-count Indictment charging Sergej Tews in a complex fraud scheme involving the abuse of the State of Florida’s foreclosure process. Through this fraudulent scheme, Tews defrauded third-party purchasers [at court-ordered foreclosure sales] seeking to buy allegedly foreclosed properties of approximately $615,900.

***

• At the foreclosure sales, third-party purchasers, deceived by Tews’s fraudulent warranty deeds and mortgages into believing that there were no pre-existing mortgages, bid on, and sometimes purchased, the properties. As a result of his scheme, Tews received approximately $615,900 into his bank accounts. The actual, outstanding lenders have since foreclosed on the properties.

For more, see U.S. Attorney press release (2nd case summary: United States v. Sergej Tews).

Sandusky Common Pleas Court Joins Other Ohio Courts In Forming Mandatory Mediation Program In Foreclosure Actions

In Sandusky County, Ohio, WTOL-TV Channel 11 reports that the Sandusky County Common Pleas Court has joined numerous other counties throughout Ohio in setting up a mandatory mediation program in foreclosure actions.

• [C]ommon Pleas Court Judge Roger Hafford has started a foreclosure mediation program. "We can't force someone to settle. All we can do is force them to come to the program," he says. Judge Hafford says the goal of the program is to make sure someone's house isn't sold on the courthouse steps. The mediator negotiates with the lender to re-package a loan so the borrower becomes current.

***

• Judge Hafford says foreclosure mediation was set up by the Ohio Supreme Court and is now used in approximately half of the state's counties.

For the story, see Foreclosure mediation in Sandusky County may save homes.

Go here for the Ohio Supreme Court's 11-Step Foreclosure Mediation Program Model.

Change In Land Use Law, Environmental Protection Regulations Leaves Homeowner With Devalued Property & Facing Foreclosure

In Northern New Jersey, The Star Ledger reports:

• Cathy Dietz was standing in her driveway telling me how the bank was foreclosing on her Hunterdon County home and the 42 acres that surround it. That sort of thing is happening to a lot of people, but in her case the cause had less to do with what's happening on Wall Street these days than with what happened in Trenton four years ago.

• In 2004, the Legislature adopted the Highlands Act in an effort to preserve open space. But the open space it was preserving belonged to private homeowners like the Dietz family. Her land was turned from an asset into a liability. When her husband died in January, she found she couldn't meet the mortgage and she couldn't refinance either.

For more, see This foreclosure was forged in Trenton.

Shell Game In Baltimore City?

In Baltimore, Maryland, Baltimore City Paper reports on the story of a small group of people who, according to land records, bought, traded and sold each other houses here before defaulting on their loans.

• This small group of people is involved with at least 11 foreclosures--some completed, others pending--within a half-mile radius of 223 S. Madeira St. At least three of them are investors who borrowed heavily even after the real estate bubble burst and then stopped paying their mortgages. By selling several houses to [one local property buyer], one man appears to have made about $750,000.

For the story, see Shell Game: Seven Neighbors, 11 Foreclosures, and More Than a Million Dollars' Profit in One Baltimore Neighborhood.

Beware Of Phone Solicitations Offering Mortgage Help That Claim Bogus Affiliation With Local Government

In Trenton, New Jersey, The Times of Trenton reports:

• The Mercer County Clerk's Office is alerting residents to phone solicitations being conducted by a company claiming to represent the county. Clerk Paula Sollami Covello said Thursday that calls are being made from a company that identifies itself as American Modification Agency (AMA) of Uniondale, N.Y., and claims to be "working with the county clerk's office," offering to help renegotiate the terms of mortgages. "While I have no problem with a legitimate company marketing its services, I object to any reference that they are working with the county clerk's office," Sollami Covello said. "The county does not work with any specific company in this regard and we do not endorse the services of private financial entities, especially those soliciting via telephone."

Source: Mercer County clerk warns of mortgage solicitors.

Scottsdale-Area Real Estate Agents Form Foundation To Rescue Abandoned Pets

In Scottsdale, Arizona, KNXV-TV Channel 15 reports:

• A Scottsdale organization has been overwhelmed by Valley pets left behind in the foreclosure fallout. Lost Our Home Pet Foundation is made up of real estate agents who help rescue abandoned animals and find them new homes. The latest case happened Monday when eight dogs and 15 puppies were found alone at a Gilbert home. "Basically, the people that used to live there opened a bag of dog food into a drawer in the kitchen and left the gate open for the pool, so they could drink the dirty pool green water, " said Tina Eacret of Lost Our Home Pet Foundation. According to members, the foundation has taken in 60 dogs since launching in June.

Source: Abandoned dogs: Valley real estate agents to the rescue.

Cape Coral "Pool Crew" Mitigates One Public Safety Hazard Of Foreclosures

In Cape Coral, Florida, The News Press reports:

• City-hired crews are fencing off and boarding up swimming pools at homes throughout Cape Coral that have been abandoned because of foreclosures. The city is paying for the work because the pools - where fences or screened enclosures have fallen down, or have been stolen by thieves who sell the metal to recyclers - are a danger to children, said Frank Cassidy, head of Cape Coral's Code Compliance Division. So far, no children have been hurt in the abandoned pools, Cassidy said. "That's one of our biggest fears. We don't want that to happen. That's why we go to the trouble of securing them. This is a public safety issue," he said.

For more, see Cape Coral crews barricade abandoned pools (Move at city expense is to protect children).

See also, WBBH-TV Channel 2: City paying to protect pools ForeclosuresDestroyNeighborhoodsApple

90 Year Old Widow Shoots Self As Deputies Attempt To Carry Out Foreclosure Eviction; Fannie To Forgive Loan, Give Back Home In Response To Publicity

In Akron, Ohio, the Akron Beacon Journal reports:

• At the age of 90, [she] found herself in foreclosure this week, about to be forced from the home she's lived in for nearly 40 years. So, with a gun in her hand, the Akron widow apparently shot herself in the chest Wednesday afternoon as deputies were knocking on her door with eviction papers in hand. While a nation reels in financial crisis from years of mortgage abuse, [she] is recovering at Akron General Medical Center, awaiting word on where she will live when she's released. Meanwhile, city leaders say [the widow] has become Akron's ''poster child'' for victims of predatory lenders.

For more, see 90-year-old foreclosure victim apparently shoots self (Woman in hospital with wounds to chest).

See also, Kucinich mentions Akron woman's plight during House bailout debate.

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For story update, see CNN: Fannie Mae forgives loan for woman who shot herself:

• Fannie Mae said it will set aside the loan of a woman who shot herself as sheriff's deputies tried to evict her from her foreclosed home. [...] On Friday, Fannie Mae spokesman Brian Faith said the mortgage association had decided to halt action against [the homeowner] and sign the property "outright" to her. "We're going to forgive whatever outstanding balance she had on the loan and give her the house," Faith said. "Given the circumstances, we think it's appropriate." [Go here for CNN video].

See also, Akron Beacon Journal: Akron woman's foreclosure gets U.S. response (Kucinich takes plight of owner who shot herself to Congress; Fannie Mae forgives mortgage).

Go here for other posts on police incidents at foreclosed homes. SheriffDeputiesForeclosureAlpha

Federal Judge Orders Credit Bureaus To Clean Up Screw-Ups Affecting Consumers' Credit Reports In California Class Action Suit

The Wall Street Journal reports:

• [A] recent court order requires the three major credit-reporting bureaus -- Experian Group Ltd., Equifax Inc. and TransUnion LLC -- to clean up the credit files of millions of consumers who have filed for Chapter 7 bankruptcy. The problem: Old debts, which are typically forgiven by the courts in a bankruptcy filing, are still being reported as active on many consumers' credit reports. The judge for the case, David O. Carter of the U.S. District Court for the Central District of California, has given the bureaus until Oct. 1 to revamp their systems.

***

• This ruling is expected to clean up the credit files -- and potentially boost the credit scores -- of an estimated six million to 10 million people who have filed for Chapter 7 bankruptcy but still had errors in their files, according to plaintiffs' attorneys. Consumers with so-called zombie debt -- old loans they may have paid off years ago that can resurface when an aggressive debt collector erroneously demands payment -- are also likely to get some relief, if those debts also were discharged under Chapter 7 protection.

***

• The court order stems from a class-action lawsuit alleging that each of the credit bureaus violated the Fair Credit Reporting Act by failing to maintain reasonable procedures to assure the accurate reporting of debts that have been discharged in bankruptcy. The lawsuit could now move to a trial to determine liability and damages if Judge Carter decides later next month to give the damages portion of the case a class-action status.

For more, see Dealing With Debt That Refuses to Die (Court Ruling Requires Credit Bureaus To Wipe Away Bills Incurred Before Bankruptcy; Getting a New Report). zeta

Subprime Lender Casualty List

In Southern California, The Orange County Register's Mortgage Insider blog provides a casualty list of the 30 biggest subprime home lenders in 2006 (measured by dollar volume). Reportedly, 22 have gone bankrupt, shut down, been sold or been seized by Uncle Sam. Most of the survivors have scaled back.

For the list, see Subprime’s dearly departed.

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

Florida Legal Services Firm Gets $200K Grant To Open Office To Deal Strictly With Fighting Foreclosures

In Jacksonville, Florida, First Coast News reports:

• [T]hanks to a new $200,000 grant from the Jacksonville Community Foundation and the city, a new office strictly dealing with foreclosures will be opened soon by Jacksonville Area Legal Aid. "We're expecting people to come see us who are behind on their house payments, who need relief, want to know what their options are," said Michael Figgins with Jacksonville Area Legal Aid, or JALA. "They may have actually been served with foreclosure papers so we're going to focus solely on foreclosures, and saving homes in our community."

For the story, see Jax Legal Aid gets $200,000 to Fight Foreclosures.

Southern California Foreclosure Rescue Operator Faces December Sentencing In Equity Stripping Scam That Screwed Over 100+ Homeowners

In Los Angeles, California, The Downey Patriot reports:

• Martha Rodriguez, 35, of Downey is scheduled for sentencing Dec. 10 in U.S. District Court in Los Angeles for a $12 million foreclosure scheme that victimized commercial lenders and more than 100 homeowners in Southern California. [...] Included in the indictments were Edward Seung OK, of Torrance; Cynthia Valenzuela, 23, of Downey; Vladimir Stefanovic, 35, of Lancaster; and Maria G. Juarez, 36, of Reseda.

***

• The indictment alleges that the homeowners were asked by the defendants to sign documents including loan applications, trusts and grant deeds, while being assured they wouldn’t lose the titles to their homes. Rodriguez and her co-schemers promised the deed would either be held in escrow or that the title would be returned to them once their credit was repaired.

• Instead of obtaining refinancing, loan applications were submitted in the names of “straw buyers” claiming to buy the property. Some straw buyers were paid up to $5,000 for the use of their personal information. In other cases, the defendants used the personal information of others without their knowledge. The false information on the applications caused lenders to fund mortgages to the straw buyers. The defendants would then pay off the loan in default and pocket the rest of the money.

• As a result, homeowners lost the titles to their homes and lenders sustained losses when the second loan would go into default because the straw buyers failed to make the loan payments.

• Rodriguez ran the foreclosure scam while awaiting sentencing after pleading guilty to defrauding the Department of Housing and Urban Development in another loan scheme.

For the story, see Resident awaits sentencing in foreclosure scam.

Go here for earlier posts and any available updates on this foreclosure scam.

Buying Foreclosed Homes In Bulk From Banks Bad Idea For One Company Now Seeking To Unload Holdings

The Wall Street Journal reports:

• Many investors have been tempted by the idea of buying foreclosed homes in bulk from banks, at a steep discount. But the experiences of a Washington, D.C.-based property investment firm, Redbrick Partners LLC, show it can be difficult to manage a large number of single-family rental homes scattered across a metropolitan area.

• Though Redbrick was never in the business of buying foreclosed homes, the firm in recent years bought hundreds of properties in working-class areas of East Coast cities including Baltimore, Philadelphia and Trenton, N.J. It hired local managers to handle rentals and maintenance. Now Redbrick, formed in 2003, has concluded that it is too costly to manage those homes and is trying to sell most of them.

For more, see Beware the Foreclosure Allure (Redbrick's Model of Scattered Bets Is Cautionary Tale).