NJ Homeowners Claim Fraud In Sale Leaseback, Foreclosure Rescue Lawsuit; Pattern Of Activity Should Qualify As Racketeering, Says Attorney

In Central New Jersey, the Asbury Park Press reports:

• [Little Egg Harbor resident Michael] Moreno says he was stripped of nearly $70,000 in equity in the February 2006 [sale leaseback, foreclosure rescue] deal, and he faces eviction from the house he thought he saved. He also is one of two former homeowners suing [Robert] Heath and related companies in an attempt to undo deals they claim are fraudulent.(1) Their attorney, Kevin Carlin of Hamilton, said the documents on the deals list transactions that never happened, a violation of federal law. Carlin also said there are more than 40 similar real estate transactions involving Heath in the state. In the lawsuit, Carlin argues "the pattern" of activity should qualify as racketeering.

***

• Deborah and Lawrence Mayo of Brick also have joined the lawsuit against Heath, and they also claim there was a fraudulent transaction. Carlin said at least three other families have contacted him about allegedly bad deals with Heath's businesses. Two of those families already were evicted from their homes, Carlin said.

***

• "On paper it looks like a typical real estate transaction with a purchase and a sale, but when you look behind the paper — which is what courts of equity will do — what you see is that the transaction was actually the granting of an equitable mortgage; they were really just refinancing the property," Carlin said. "And they accomplished it by using an attorney who gave the appearance of a disinterested party while she was the wife of the principal [Heath]."

For more, see Eviction looming, man sues over deal (He, others say they feel cheated).

(1) According to the story, Heath's Marlboro-based company, MGT Group, would offer to sell the home back to Moreno at a later date.

71 New Charges Filed Against San Diego Suspects In Alleged "Land Grant" Foreclosure Rescue Scam

In San Diego, California, KGTV Channel 10 reports:

• Five people accused of victimizing hundreds of San Diego County homeowners in a home foreclosure rescue scam were arraigned Friday on 71 new charges, including conspiracy and grand theft. Alleged ringleader William Hutchings, 62, his wife Xiaoke Li, 45, and Shawna Landis, 36, along with Diego Gil and Edgar Martinez, now face a total of 172 charges, including felony civil code violations alleging rent and foreclosure fraud, said Deputy District Attorney Stephen Robinson. The additional charges reflect counts against new victims and so-called "rent skimming," the prosecutor said.

***

• At a hearing in May, Robinson said the defendants allegedly offered to help homeowners keep their property by placing them in "land grants," when in fact the transactions were bogus and left the victims even worse off than they were before.

• Two methods were used to get owners of residences in foreclosure to participate in the so-called land grant program, Robinson said. One method required homeowners to pay a one-time fee of up to $10,000 to put their property in a land grant. The second method was a lease-back scheme in which homeowners transferred their property to the defendants and then paid rent to stay in their homes. In both scenarios, homeowners were eventually foreclosed on anyway and evicted and retained no legally recognized title to the property. In addition to losing their homes, the victims were swindled out of hundreds of thousands of dollars, authorities said.

Source: New Charges Filed In County Foreclosure Scam.

WaMu Next In Line For San Diego As City Attorney Files Civil Suit Alleging Unlawful Lending Practices; Another Suit To Follow Against Unnamed Lender

In San Diego, California, XETV Channel 6 reports:

• City Attorney Michael Aguirre filed a lawsuit Friday against Washington Mutual, alleging that the bank engaged in unlawful subprime mortgage lending practices. The lawsuit seeks civil penalties and an injunction to stop further lender foreclosures on subprime mortgages statewide.

***

• It is the second lawsuit filed against a major mortgage lender by the San Diego City Attorney's Office in recent months. Aguirre said his office will bring another lawsuit against an undisclosed home loan company by Tuesday. [...] Aguirre sued Countrywide Financial Corp. and new parent company Bank of America in July, also alleging unlawful lending practices.

For more, see San Diego Sues Washington Mutual for Predatory Lending.

For a copy of the lawsuit, see People of the State of California v. Washington Mutual Inc.

Mississippi Homeowner Files Suit Accusing Freddie, Fairbanks Of Bad Acts; Loses Home To Foreclosure Despite Having Been Given Payment Plan, She Says

In Hattiesburg, Mississippi, the Hattiesburg American reports:

• A Forrest County woman claims Freddie Mac, the federal home mortgage corporation, unlawfully foreclosed on her property. Lisa Willis said [it] failed to return the property to her after she received a financial settlement from the corporation and agreed to a deferred payment plan on her mortgage, according to court documents filed Tuesday in U.S. District Court in Hattiesburg. Court documents state that Willis' home loan was serviced by Fairbanks Capital Corp. on behalf of Freddie Mac.

***

• Willis claims in the lawsuit, which represents only one side of the issue, that Fairbanks Capital Corp. imposed and collected "unnecessary and excessive fees and charges not authorized by the loan documents or by applicable law." [...] Willis said in the lawsuit that the foreclosure should be set aside and the property titled in her name.

For more, see Woman files lawsuit against Freddie Mac.

Failure To Decontaminate Homes Busted As Meth Labs Shocks Subsequent Homeowners

In Jefferson County, Missouri, the St. Louis Post Dispatch reports:

• Jason Dowdell and Michelle DiLorenzo thought the three-bedroom ranch along a quiet, winding Jefferson County road would be the perfect place to start their life together. They envisioned a nursery in one bedroom. Toys in the backyard. Perennials in the planters. But all that was put on hold two years later when they learned the home was contaminated with enough methamphetamine residue to be condemned in more than a dozen states.

***

• The Post-Dispatch tested five homes police busted for meth and where new families are living. [...] Months and, in some cases, years had passed since meth labs in the homes were busted, according to police reports. The tests revealed residue levels in all five homes high enough to be condemned in 13 of the 18 states.

***

• Cleanup companies along with national and local health experts say it's common for meth labs that haven't been cleaned to test positive for residue — no matter how long after police busts. "It doesn't just go away over time," said Michael Frakes, who co-owns Chicago Crime Scene Cleanup LLC, a company the newspaper commissioned to collect samples.

• The newspaper's findings shocked the residents, who said they did not know they were living in former meth labs until they were contacted by the Post-Dispatch.

For more, see Are you living in a former meth lab? (if link expires, try here).

Go here and go here for other posts on home-based methamphetamine labs. meth lab yak

Bar Associations Ramp Up Nationwide Pro Bono Efforts In Fighting Foreclosures

The National Law Journal reports:

• [L]awyers across the country are doing their share to help homeowners facing foreclosures stemming from the subprime mortgage crisis. From Massachusetts to California, bar associations have formed task forces and organized pro bono projects offering services such as hotlines and free consultations regarding foreclosures, an issue many lawyers say could only get worse.

For more, see Bar Associations Nationwide Bulk Up Pro Bono Efforts in Foreclosure Cases.

Lenders Are Failing In Obligation To Identify All Occupants In Homes When Requesting Foreclosure Evictions, Says Chicago-Area Sheriff

According to a press release from Cook County, Illinois Sheriff Thomas J. Dart's office:

• [W]hile mortgage companies are supposed to conduct a basic due diligence investigation before requesting an eviction – identifying all occupants – sheriff’s deputies are regularly finding no work done by the mortgage company in advance, leaving the identifying work to deputies working at taxpayer expense.

• “These mortgage companies only see pieces of paper, not people, and don’t care who’s in the building,” Dart said. “They simply want their money and don’t care who gets hurt along the way. On top of it all, they want taxpayers to fund their investigative work for them. We’re not going to do their jobs for them anymore. We’re just not going to evict innocent tenants. It stops today.”

***

• [Dart] wants mortgage companies to be forced to provide sufficient information to the Sheriff’s Office in order to conduct an eviction. That will provide greater notification to tenants that their building is in foreclosure and will require mortgage companies and their attorneys to do more leg work in advance of an eviction.

For more, see Cook County Sheriff Suspends Foreclosure Evictions (Move comes in wake of growing mortgage crisis).

In related stories, see:

• Illinois Attorney General Backs Sheriff's Eviction Moratorium,
• Lawsuit Withdrawn Over Eviction Orders (A mortgage lender that filed a lawsuit to force the Cook County Sheriff to evict a suburban Chicago woman from her home has withdrawn the lawsuit. Accredited Home Lenders says it's also suspending its eviction action against Shirley McFarland of Dolton from her foreclosed bungalow.). BetaTenantRentSkimming

San Bernardino Deed Theft Suspect Nabbed In Georgia

In San Bernardino County, California, the county district attorney's office recently announced:

• [H]oward Jerome Edwards was arrested by the Henry County Police Department at his residence in Locust Grove, Georgia. Edwards was arrested on the outstanding felony warrant that included charges of forgery, identity theft, and filing forged documents with the San Bernardino County Recorder’s Office.

According to the DA's office press release, Edwards and co-defendant John Foster, 50, of Riverside, forged the victim's signature on a Grant Deed and Deeds of Trust for property located in Fontana. Subsequently, Edwards and Foster sold the Fontana residence for $675,000.

Source: Man Arrested in Georgia on Real Estate Fraud Charges.

NJ Lawmakers Consider Clipping Lenders With $2K Tax When Filing Foreclosure Actions

In Trenton, New Jersey, Reuters reports:

• A panel of New Jersey legislators on Monday approved a measure to make mortgage lenders pay $2,000 before taking a homeowner into foreclosure. The measure, which is opposed by some banks, is believed to be the first of its kind. It joins a growing list of local and national efforts to stem a tide of home foreclosures.

For more, see NJ may bill mortgage lenders $2,000 per foreclosure.

See also, PolitickerNJ.com: McHose: Assembly Action Places The Response To A Crisis In The Wrong Hands.

• [T]he legislation, A-2517, establishes a “Foreclosure Prevention Revolving Trust Fund” and collects a $2,000 tax on every foreclosure action initiated by a creditor against a borrower under a covered mortgage.

More On The Squeeze Felt By Homeowner Associations Resulting From Defaulting Homeowners

Several recent media reports describe the problems foreclosures are causing on the budgets of local homeowners' associations around the country, and its effects on those association members who are current on their homes' financial obligations:

• Prince William County, Virginia: One homeowners group with almost 8,000 members, is losing $20,000 a month because of delinquent fees related to foreclosures. That amounts to $240,000 of its annual $4 million budget. See Associations Suffer as Homeowners Do (With Residents in Foreclosure or Not Paying Their Dues, Groups Face Hard Choices);

• Cook County, Illinois: Residents of a condominium complex in unincorporated Maine Township are in danger of having their gas service shut off unless they can pay the $276,000 their homeowners associations owe Nicor gas. A soaring number of foreclosures within the complex are primarily to blame for the associations' inability to pay the gas bills. About 30 percent of the 354 units in the complex are vacant due to foreclosure. See Nicor threatens to shut off gas to 53 condos;

• Miami, Florida: "I have a constant battle every month to pay a light bill, a phone bill, just the operational costs of the condominium," [condo Association President Colin] Hendrick told CBS4 Reporter Carey Codd. That's not to mention the $1,200 a month insurance bill for the building. Hendrick says the foreclosure crisis has forced the association to raise monthly fees for unit owners by about 35 percent. On top of that, they've charged thousands in special assessments to make repairs, like fixing the elevators. He says 60 percent of the unit owners are being forced to pay 100 percent of the fees. See Condo Owners Find Themselves Paying Extra Fees.

Finance Company Attempts To Collect Payments On A Paid Off Mortgage; Threatens Foreclosure, Damages Homeowner's Credit In The Process

In Saratoga Springs, Utah, KUTV Channel 2 reports:

• How would you like to pay off your mortgage, only to have some unheard of finance company ruin your credit ... And threaten foreclosure?? That's exactly what happened to a Saratoga Springs woman who decided to Get-Gephardt in desperation. The letter from M.G.C. Mortgage says the account is delinquent and they have the right to foreclose on the property...and they've reported it to our nation's credit bureaus!!!

For the rest of the story (video only), see Collections on a Paid Off Mortgage.

Mortgage, Tax Foreclosure, Poor Living Conditions Force Residents From Milwaukee Rooming House For Homeless With Psychiatric, Substance Abuse Problems

In Milwaukee, Wisconsin, the Milwaukee Journal Sentinel reports:

• The City of Milwaukee has filed suit against Tri-Corp Housing Inc. for $11,691.24 in delinquent taxes on its troubled West Samaria rooming house [...]. By today the remaining 20 residents who have been living in the rooming house for the homeless with mental health or substance abuse problems are scheduled to be moved out of the facility, said Jeanne Lowry, director of the homeless outreach nursing center for the Red Cross.

***

• The facility was closed after the Wisconsin Housing and Economic Development Authority filed foreclosure action against Tri-Corp last November when it stopped making mortgage payments. WHEDA, officials from Milwaukee County and others said it was in the best interest of the residents to close the facility because of poor living conditions and other problems, WHEDA officials said.

For the story, see City of Milwaukee sues rooming house over delinquent taxes (Tri-Corp. Housing’s West Samaria complex is emptying out).

$750K Too High A Price For Con Man In Attempt To Buy His Way Out Of Prison

In Rockland County, New York, The Journal News reports:

• A 40-year-old Pomona man who funded his philanthropy by ripping off 26 people for $2.13 million was sentenced to state prison yesterday after failing on his April promise to make a $750,000 down payment to his victims. Acting New York State Supreme Court Judge Catherine Bartlett showed little leniency to Gregg Brie when sentencing him to three to nine years in prison on his April guilty plea to second-degree grand larceny. When pleading guilty April 16, Brie agreed to pay $750,000 by [his sentencing day] to avoid prison. He then would have had several years to pay back the remaining $1.282 million to three other victims.

Brie reportedly scammed one victim by saying the money he needed for his business would help people under foreclosure repay their mortgages.

Source: 'Con man' who couldn't pay goes to prison.

Tampa Section 8 Housing Counselor Sentenced For Pocketing $486K+ In Phantom Landlord / Phony Tenant Scam

The U.S. Attorney's Office in Tampa, Florida recently announced the sentencing of former Tampa Housing Authority (THA) official CALVIN COLEMAN, age 44, to 50 months’ imprisonment, 3 years' supervised release and was ordered to pay more than $486,000 in restitution. According to the announcement:

• COLEMAN was employed as a "Section 8 counselor" with the Tampa Housing Authority ("THA"), and was responsible for administering the Housing Choice/Section 8 program. From approximately August 2003 to June 2005 COLEMAN used his position as a Section 8 counselor to pilfer over $486,000 from public funds for his personal use.

• COLEMAN, along with other former THA officials CARLTON MILES and MARIO LOVETT, recruited numerous individuals to serve as bogus landlords, even though they neither owned approved rental properties nor had leases with legitimate Section 8 approved tenants. [...] Once the landlords had received their fraudulent subsidy check, COLEMAN took a substantial "kickback" from the proceeds.(1)

For more, see: Former Tampa Housing Authority Official Sentenced in Section 8 Fraud Scheme.

Go here, go here, and go here for posts on phony landlord rent scams.

(1) Since December 2007, nineteen individuals, including former THA officials CARLTON MILES and MARIO LOVETT, have been charged with theft of federal housing subsidy payments through the bogus landlord scheme. Seventeen of those defendants have pleaded guilty to felony charges. Only four remain to be sentenced. LOVETT was previously sentenced to 18 month’s imprisonment and MILES to 24 months’ imprisonment for their roles in the scheme. PhonyLandlordScamZeta

"Bank Owned - For Sale" Signs In Front Of Vacant Homes An Invitation For Copper Thieves?

In the Inland Empire region of Southern California, The Press Enterprise reports:

• When the foreclosure notice comes and the homeowners leave, the welcome mat usually goes with them. But the sign that soon gets staked in the ground, screaming "Bank Owned," is increasingly sending a different kind of invitation than intended.

• Metal thefts from vacant, foreclosed homes have spiked noticeably in the past six months, authorities say, and now are a near-daily occurrence throughout the Inland region, from Highland to the High Desert in San Bernardino County to the hard-hit suburbs southwest of Riverside.

***

• It often comes after someone notices the sign advertising that the home has an absentee bank owner. "We've been trying to get them to stop throwing those up," said San Bernardino County sheriff's Deputy Laren Leichliter, who works with real estate agents as Highland's problem-oriented policing officer.(1) "That's a dead giveaway."

For more, see Inland foreclosed signs attracting copper thieves.

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

(1) Given how big a problem copper theft has become nationwide, I hope real estate agents who insist on putting up these types of signs that attract attention to vacant foreclosures have their malpractice / errors & omissions insurance policies paid up. copper metal theft yak

Two Preschoolers Face Foreclosure As Father Sits In Jail For Allegedly Killing Mother

In Provo, Utah, Deseret News reports:

• A bank and a title company have begun the foreclosure process on the Lehi home of David Ragsdale — where his two young children live with extended family. But the children's legal representative, guardian ad litem William M. Jeffs, is trying to get an extension for loan payments so he can sell the home and give the money to the children, not the bank.

• "(They're) foreclosing against a 4-year-old and a 2-year-old whose mother was killed and father is in jail and all I'm asking for is a little bit of extra time to sell the house," Jeffs said. "I'm willing to make partial payments in the interim. I'm not asking for any concessions on the loan, we'll pay the loan in full. All I'm asking for is a concession on time."

***

• Ragsdale can no longer make payments on the home — he's been in the Utah County Jail since Jan. 6, when police say he fatally shot his wife, Kristy, in the parking lot of an LDS meetinghouse in Lehi.

For more, see Attorney fighting foreclosure on Ragsdale home.

Word Of 10 Day Stay Comes Too Late; Woman Commits Suicide As Sheriff's Deputies Arrive At Foreclosed Home To Carry Out Eviction

In Sevierville, Tennessee, WVLT-TV Channel 8 reports:

• A Sevierville woman apparently committed suicide as Sevier County Sheriff's deputies arrived to evict her family from their home, but the family attorney and relatives are asking a big question. Should deputies have been at the home at all?

• Sevierville police say they went to the home of Jimmy and Pamela Ross on Monday to assist Sheriff's deputies in an eviction, but court documents shows a judge just Monday morning had given the Ross' at least 10 more days before they had to get out.

***

• [The family's attorney Herb] Moncier says Ross' husband Jimmie was in court Monday morning fighting his foreclosure. Moncier says while Ross was there, Sevier County deputies were arriving at Ross's Lexington Place home. But Moncier says, "It appears clear from that file that there was not a writ of possession." In fact, court documents show, at the hearing Sevier County Judge Jeff Rader gave Ross 10 days more to appeal his case.

For more, see Moncier representing family after eviction led to apparent suicide in Sevier Co. (read story) (watch WVLT-TV video report).

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

Go here for other posts on foreclosures and suicide. suicide homeowner foreclosure zeta SheriffDeputiesForeclosureAlpha

Capital One, U.S Trustee Settle Charges Of Allegedly Screwing Over Consumers Filing Bankruptcy Over Credit Card Debt

The Wall Street Journal reports:

• The U.S. Trustee Program, an arm of the Justice Department that monitors bankruptcy courts, settled with Capital One Financial Corp. on Thursday over allegations that its credit-card unit filed about 5,600 claims on credit-card debts that it wasn't entitled to and improperly received $340,000 from debtors as a result.

• The settlement marks a victory for the U.S. Trustee Program, which in recent years stepped up its investigations into potential wrongdoing by some creditors against debtors in bankruptcy, following complaints from consumer advocates, law professors and judges that debtors weren't being adequately protected. That has been a particularly hot topic amid the current nationwide foreclosure crisis, in which many homeowners have turned to bankruptcy as a way to save their homes.

For more, see Capital One in Settlement Over Card Debt (may require subscription; if no subscription, go here, then click link for the story).

Suspicious Kalamazoo Real Estate Transactions Resulting In Foreclosure Of 50+ Homes Scrutinized In Local Media Report

In Kalamazoo, Michigan, an investigative report by The Kalamazoo Gazette describes a series of suspicious real estate transactions during 2006 & 2007 by a couple of local real estate operators that reportedly resulted in over 50 homes being lost in foreclosure, leaving lenders on the hook with more than $4.7 million in bad debt, according to the story.

For the story, see:

• Buyer, seller say they made post-sale deals to fix up homes (Series of sales led to defaults, records show),
• FBI investigating Kalamazoo man for possible mortgage fraud (Rodney Hixon has a habit of overpaying for houses. Some people are wondering why).

Homeowner Facing Foreclosure Pleased With IndyMac Loan Modification; Initiative To Become Industry Blueprint, FDIC Chair Hopes

BusinessWeek reports:

• When Mark Akers got an offer from his mortgage lender in September to slash his monthly payments down to $2,500, from $4,200, he jumped at the chance. The Norco (Calif.) resident ran into trouble earlier this year after his wife got sick and he lost his job managing a factory that made doors for houses. The 53-year-old Akers could have become another foreclosure statistic if his bank, IndyMac, had not stepped forward to halve the interest rate on his fixed-rate loan to 3%, for a period of five years. In exchange, the bank will add Akers missed payments to the loan principal, hiking it to $611,000. Akers says he's grateful.

***

• Akers is one of more than 3,000 borrowers who have signed on to a fast-track loan modification program launched by IndyMac, the insolvent California-based lender seized by the feds in July. [...] FDIC Chairman Sheila Bair is hoping the IndyMac initiative will provide a blueprint for the rest of the industry.

For more, see IndyMac's Fast-Track Mortgage Modification Program (It not only can stave off foreclosures but also provide a blueprint for how the industry can tackle troubled home loans).

Pittsburgh Landlord Facing Foreclosure Leaves Tenants In A Dozen Apartment Buildings With Uncertain Future

In Pittsburgh, Pennsylvania, KDKA-TV Channel 2 reports:

• [T]here's word of a massive foreclosure on a dozen apartments buildings whose tenants who face an uncertain future. All of the buildings are owned by one landlord who owes the bank more than $2 million dollars. Sheriff sales are the end of the line in the foreclosure process. Now on the block are 11 apartment buildings sprinkled through the Southside and a few other neighborhoods and towns. All of them are currently owned by one landlord, Davin Gartley, the owner of Davin Investments, who is in default to the bank for some $2.4 million in loans.

For more, see Renters Caught In Middle Of Foreclosures (read story) (watch KDKA video).

For other posts involving the problems tenants face in rented homes in foreclosure, go here, go here, go here, go here, go here, go here, and go here. TenantRentSkimmingAlpha

Residents In Mobile Home Park In Foreclosure Get The Boot; Unfit For Human Habitation, Say Code Inspectors As Unpaid Bill Results In Water Shutoff

In Largo, Florida, WTVT FOX Channel 13 reports:

• After a week without water, the city of Largo is shutting down a mobile home park and displacing eight families for health reasons. The red tags started going up first thing in the morning -- "unfit for human habitation" -- with a deadline of Thursday at noon for families to leave. Code inspectors blamed the landlord's unpaid water bill.

***

• Court documents show the landlord's problems were more serious than an unpaid water bill. A $1.4-million foreclosure suit is pending in the Pinellas courts.

For the story, see City of Largo closes mobile home park. TenantRentSkimmingAlpha

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.