Monday, October 27, 2008

California Woman Wins Race To Prosecutor's Office; Cops Plea In Upfront Fee Foreclosure Rescue Scam; Agrees To Testify Against Two Alleged Co-Scammers

In Monterey County, California, the Salinas Californian reports:

  • One of three defendants in a Gonzales foreclosure scam made a plea deal Friday to charges including felony conspiracy to defraud, the Monterey County District Attorney’s Office said. All three defendants were accused of scamming more than 55 people in Monterey County of at least $100,000.

  • Maria de Lourdes Ponce of Gonzales and Santa Cruz residents Fabian Olivares Casillas and Melissa Garcia were arrested in August, said John Hubank, a deputy district attorney with the consumer and environmental protection unit, on suspicion of taking thousands of dollars from homeowners after promising to save their homes from foreclosure.

Source: Plea deal in foreclosure scams against 55 Monterey County residents.

See also, The Monterey County Herald: Guilty plea in fraud case.

For the Monterey County DA's press release announcing the original charges, see District Attorney files felony charges filed against foreclosure scam artists.

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

Reports Of Hedge Fund Threats Against Loan Servicers Making Loan Modifications Outrage Lawmakers

In Washington, D.C., Politico reports:
  • Barney Frank is not happy with hedge funds. Specifically, he and other top House Democrats are “outraged” that some hedge funds are telling mortgage service companies not to modify distressed mortgages with the help of the government program Frank helped craft.

  • The New York Times reports that at least two hedge funds told servicers they might take action against them if the servicers participated in the government program to help homeowners avoid foreclosure. The program, which became law in July, just took effect at the beginning of October.

  • Frank (D-Mass.) and four other Democratic members of his Financial Services Committee wrote an angry letter to the CEOs of the hedge fund companies named in the article, Braddock Financial Corporation and Greenwich Financial Services. The lawmakers wrote that they “strongly urge” the companies to reverse their position on the modification issue and informed each CEO that they’re scheduling a Nov. 12 hearing at which both will be asked to testify.

For more, see Frank threatens financial industry, calls hearing.

See also:

Poconos Mortgage Suit Set For Trial; 100+ Home Buyers Allege Being Defrauded By Lender, Builder

In Harrisburg, Pennsylvania, The Morning Call reports:

  • A federal lawsuit filed six years ago(1) alleging that more than 100 home buyers were defrauded by JP Morgan Chase Bank and a Poconos builder will finally go to trial in February. U.S. District Judge Christopher C. Conner on Friday set a Feb. 2, 2009 trial date in Harrisburg. Conner scheduled the trial date after denying yet another bid by Chase to dismiss the case, saying the record supports the conclusion that Chase aided the alleged scheme.

***

  • The suit claims that Chase took part in the alleged scam by ignoring its usual underwriting guidelines in approving mortgages for [homebuilder Gene] Percudani's customers, many of whom were people with poor credit from the New York area.(2) [...] Saddled with mortgages higher than the real value of their homes, many of the home buyers were unable to sell or refinance their mortgages and were forced into bankruptcy and foreclosure while others suffered financial hardships, according to the suit.

***

  • Chase Manhattan Mortgage, a division of JP Morgan Chase, denied the allegations, saying in court documents that Percudani was a rogue builder who duped Chase into making the loans.

For more, see Poconos mortgage suit set for February (Lawsuit alleges 100 buyers defrauded by bank and builder).

(1) Filed in 2002, the suit alleges that Tannersville homebuilder Gene Percudani, Chase Manhattan Mortgage, Stroudsburg appraiser Dominick Stranieri and several others engaged in widespread fraud by selling homes in Monroe County at inflated prices through several of Percudani's companies, including Raintree Homes, Why Rent? and Chapel Creek Mortgage; according to the story.

(2) According to the story, the mortgages, once approved by Chase, were quickly sold to the secondary market, typically Freddie Mac and Fannie Mae. After learning of the alleged fraud in 2001, Freddie Mac investigated and subsequently forced Chase to repurchase its Percudani mortgages. Freddie Mac also placed Percudani on its ''exclusionary list,'' which barred Percudani from doing business with Freddie Mac.

Feds, 23 States Join In "Operation Clean Sweep" In Attempt To Nail Credit Repair, Loan Modification, Debt Relief Operators

From the Florida Attorney General's Office:
  • Attorney General Bill McCollum [last week] announced Florida’s participation in a collaborative effort targeting credit repair operators, many of which deceptively claim they can remove any and all negative information from consumers’ credit reports.

  • The Federal Trade Commission (FTC) and 23 states joined forces in Operation Clean Sweep, a nationwide initiative to address this consumer protection issue. “Whether through credit repair, debt management, debt settlement, or interest rate reduction schemes, it is unacceptable to deceptively convince consumers facing financial distress to part with their money,” said Attorney General McCollum. Collectively, the FTC and the states took actions against 36 companies engaged in potentially deceptive or misleading conduct.

For more, see Florida Joins FTC, States Targeting Credit Repair Operations in "Operation Clean Sweep."

See also: Palm Beach Post: Claims of debt fraud soaring (Until he can persuade lawmakers to impose rules, Florida Attorney General Bill McCollum hopes lawsuits his office has filed and its investigations "send a message to this industry that preying on consumers in financial distress will not be tolerated.").

For the Florida AG's recent press release on a recent civil suit filed in this regard, see Broward Foreclosure Debt Mitigation Company Sued for Deceptive Practices.

Sunday, October 26, 2008

Mortgage Loan Modification Companies Beginning To Draw Attention From Feds, Lawmakers

In Modesto, California, The Modesto Bee reports:
  • The Justice Department is gearing up to probe potential scams targeting distressed homeowners in the San Joaquin Valley. On Friday, Rep. Dennis Cardoza, D-Merced, urged Attorney General Michael Mukasey to investigate mortgage-reduction schemes marketed in the region.(1)

  • For an upfront fee, homeowners are being told their monthly mortgage payments can be renegotiated. At best, the homeowners may end up paying for work that's available for free. At worst, they'll pay for work that isn't done at all.

***

  • The questionable solicitations come in different ways. Phone calls offering mortgage negotiation services have been ringing through the San Joaquin Valley for several months. [...] Official-looking letters are arriving in valley mailboxes, some citing congressional bill numbers or phone numbers for a "loss mitigation department."

  • And Thursday in Modesto, some homeowners attended a workshop in which they were asked to pay $3,500 to get their mortgage woes resolved. Typically, the companies offer to renegotiate a mortgage in exchange for an upfront fee amounting to one month's mortgage payment, or more.

For more, see Loan-help schemes scrutinized (Claims to fix mortgages for fee set off red flags for the feds and Cardoza) (may require free registration).

(1) It may be that, in California, the services marketed by these operators may already be regulated under the state law regulating the conduct of foreclosure rescue operators who provide mortgage consulting services to financially distressed homeowners. The law, among other things, specifically prohibits the collection of an upfront fee. For the law, see California Mortgage Foreclosure Consultants Act - Section 2945 through Sction 2945.11 of the California Civil Code, as recently amended this year by AB 180, Mortgages: foreclosure consultants.

Arizona BBB Warns Of Possible Loan Modification Scams

The Better Business Bureau of Greater Arizona reports:
  • In today’s economy, most homeowners would welcome a lower interest rate on their mortgage, which could result in a lower monthly payment. This has opened the door for loan modification companies to take advantage of consumers more than ever.

  • Better Business Bureau is receiving reports from concerned Arizona consumers who are being solicited by unknown companies offering to help them reduce the interest rate on their mortgage loan.

  • The majority of the consumers being targeted by phone tell us they have never been late on their payments and are not even close to facing foreclosure,” said Matthew Fehling, President/CEO of BBB. “Consumers are being advised by these companies to stop making their mortgage payments and negotiate a lower interest rate. This is a definite red flag,” added Fehling.

For more, see BBB Warns Consumers about Loan Modification Phone Calls.

L.A. Official Calls For Stop To Illegal Foreclosure Evictions; Lender Accused Of Stiffing Booted Tenants Out Of $7K "Relo Fee" Required By City Law

In Los Angeles, California, CBS 2 reports:
  • Los Angeles City Council President Eric Garcetti called Friday on Countrywide Home Loans to stop the practice of evicting tenants from apartment buildings that have gone into foreclosure. The councilman pointed to the case of Johnny Lee, who lives in a triplex in Echo Park. Following foreclosure, Countrywide allegedly pressured Lee to leave the apartment and offered him a $2,000 relocation fee. City law requires a $7,000 fee in such cases, according to Garcetti.

  • A representative for Countrywide was not immediately available for comment. "It's really frustrating, and I feel like I was duped," Lee said. "I had no idea that this was illegal and that I had a right to stay or to a minimum amount of money. In fact, I was told I would have to be out within 30 days and didn't have the right to any money, even my security deposit," he said. "I encourage others in this situation to learn more about their rights as tenants."

  • In a letter to Countrywide, Garcetti said the Calabasas-based company attempted a similar eviction earlier this year in South Los Angeles. "Months later, it appears that Countrywide and its agents continue to violate city law by illegally pressuring tenants to vacate foreclosed properties and offering relocation fees below what is required by law," Garcetti wrote. "I am writing to ask that your company cease and desist illegal foreclosure-related eviction practices immediately. In addition, Countrywide must bring its eviction practices and guidelines into compliance with the city's Rent Stabilization Ordinance."

Source: Councilman To Countrywide: Stop Illegal Evictions.

See also: Countrywide to EP tenants: get moving. BetaTenantRentSkimming

Connecticut Renter Facing Foreclosure Eviction Invokes New Bailout Law In Attempt To Fight Off Fannie

In Hartford, Connecticut, The Hartford Courant reports:
  • Four days after Evelyn Colon paid the September rent for her Hartford apartment, a U.S. marshal knocked on the door. He handed her a notice that she had to be out in a month. Fannie Mae, the huge mortgage financier, had foreclosed on her building and was evicting Colon and two other tenants.

  • Colon is now fighting her eviction in what her attorneys believe is the first court challenge in the country to use a provision(1) deep within the government's $700 billion bailout legislation to seek protection for renters facing eviction after foreclosure. She will be able to stay in her apartment while the case is litigated.

***

  • Colon's attorneys at Greater Hartford Legal Aid Inc., an agency that helps low-income clients, are arguing that Fannie Mae became a federal agency when it came under the control of the Federal Housing Finance Agency Sept. 7 and is therefore bound by the financial services bailout legislation.

For the rest of the story, see Hartford Tenant Fights To Stay In Home After Foreclosure (if link expires, try here or try here).

See also, WTNH-TV Channel 8: Renter fights back against foreclosure:

  • "Basically we've asked the court to throw this case out, the eviction, out of court, or, if the court doesn't feel comfortable doing that, to kind of put things on pause until the Treasury or another federal agency, perhaps the F.H.F.A. (Federal Housing Finance Agency), issues a policy statement saying what does the language in the Bailout Bill mean," said Stephanie D'Ambrose from Greater Hartford Legal Aid.

(1) Section 109(b) of the Federal bailout bill may require the U.S. Secretary of the Treasury to work with the F.H.F.A. and other government entities to permit tenants like Evelyn to remain in their apartments after foreclosure. BetaTenantRentSkimming

War Stories From the Predatory Lending Battlefield

The Chicago Sun Times recently published four stories on Chicago homeowners who have been allegedly ripped off by predatory lenders and who have taken to the courts to save their homes. For the stories, see:
  • Alleged mortgage scam lands in Obama's backyard (Tommie and Louise Harris, who live behind the Obamas, say they're victims of a mortgage repair scam that nearly cost them their Kenwood home of 44 years. They recently won a federal court settlement against a broker who they say sweet-talked them into taking on mortgage debt that rose from $142,000 to $500,000 in less than a year);

  • Loan to fix garage leaves her owing $154K (Alzheimers' patient Rosa Dailey, 66, has filed a federal lawsuit against CitiMortgage, a subsidiary of CitiResidential, which bought out Argent Mortgage. She's fighting foreclosure on the home her parents bought in 1972);

  • How she wound up $125K in debt (At 90, Anna Nelson has spent some of her last months worrying about paying a mortgage on a home she has lived in for more than 40 years. Her lawyer, William Spielberger, said she has been targeted because of her trusting nature -- and age. "The fact is that there was a great deal of money that was loaned, and she never got it," Spielberger said);

  • Predators target minorities, elderly ('VICIOUS CYCLE' Before they know it, they're buried in debt -- but a federal court ruling offers new hope; Dorothy Davis, 76, has taken her case to federal court, where a judge just ruled she can sue Wells Fargo -- the bank that bought her loan -- on the claim that she was targeted because she's minority).

String Of Suspected New Haven Arsons In Foreclosed Homes Raises Concerns For Mayor

In New Haven, Connecticut, WTNH-TV Channel 8 reports:
  • Desperate times lead to desperate measures, as the saying goes, and the city of New Haven is worried home foreclosures may have some people turning to arson. [...] "My fear, frankly, is if you get a block front full of vacant houses, if out don't intervene you'll soon have 6 or 8 vacant houses on that block and they become targets of theft, and then they become targets of arson," [Mayor John DeStefano] said.

  • Three suspected arsons in as many weeks at houses in foreclosure [...] have the city concerned if foreclosures numbers continue to rise arson rates will too.

For more, see Mayor fears foreclosures may lead to arson. ArsonForeclosureAlpha

Saturday, October 25, 2008

Party Crews Using Vacant Foreclosures To House Teen Bashes

In San Bernardino County, California, the Victorville Daily Press reports:
  • Foreclosed homes have been linked to a multitude of problems, including mosquito-infested pools and ponds. They have become targets of metal thieves and squatters. Now, authorities have seen the vacant homes turned into party spots.

  • We have had reports of party crews throwing parties inside empty houses,” said Roxanne Walker, spokeswoman for the San Bernardino County Sheriff’s Department Hesperia station, but stated that the number of reports are down in recent months. Other law enforcement agencies, though, are still dealing with the problem that empty homes have become places for teens to congregate and throw parties.

For more, see Vacant homes attract partyers.

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

Two Active Duty Marines Lose Rented Home While Overseas As Landlord Succumbs To Foreclosure

In Imperial Beach, California, KGTV Channel 10 reports:
  • A South Bay home is where two servicemen used to live. While they were overseas, they kept paying rent to a homeowner whose property was under foreclosure. [...] The property owner said she accepted the [Marines' rent] payments because she believed the bank would negotiate a new loan. However, Realtor Marilyn Swartz said the tenants were never notified. "Unfortunately, these young men were not made aware of that because the previous owner did not contact them," said Swartz. [...] The two Marines are still on active duty in Iraq and Afghanistan.

For the story, see Are Some Renters Paying Rent On Foreclosed Homes? BetaTenantRentSkimming

Cash-Strapped Pennsylvania Woman Cops Plea To Embezzling $300K+; Used Money To Pay Mortgage In Foreclosure, Other Expenses, Says DA

In Norristown, Pennsylvania, The Reporter Online reports:

  • Faced with a pending mortgage foreclosure and rising credit card bills, a woman embezzled more than $300,000 from the Plymouth medical supply company for which she worked. Linda Faye Smith, 46, [...] pleaded guilty in Montgomery County Court to felony charges of theft of movable property, theft by failure to make required disposition of funds received and forgery [...]. At the time of the theft, Smith's home was threatened with mortgage foreclosure, according to authorities.

  • "She used the money to pay her mortgage, credit card bills, car insurance and other personal expenses," alleged Assistant District Attorney Robert Sander. [...] "This is the type of case that we're seeing more of lately, where people in positions of trust in companies violate that trust and embezzle from them," said Sander, who prosecutes economic crimes.

For more, see Woman pleads guilty to embezzlement.

Beware Of Mother Nature As She Poses Threat To Vacant, Foreclosed Homes

In Rochester, Minnesota, KAAL-TV Channel 6 ran a story that should serve as a reminder to lenders and mortgage servicers nationwide that, as the cold weather season approaches, they should begin winterizing (dumping anti-freeze into the plumbing pipes, among other things) all the vacant, foreclosed homes they're stuck with and haven't been able to unload before Mother Nature begins to wreak havoc on them by freezing up and destroying all the copper plumbing pipes(1) contained in these houses (and likely to be followed by flooded basements, moldy drywall, soggy carpets, etc. after the thaw).
  • The calls [plumbing contractor] Paul Link and his team are getting are mainly from bankers and realtors...hiring him to winterize foreclosed properties in the area. "If the house is not heated, it's going to freeze up and all the pipes will freeze and break and even if the water is shut off the water in the pipes will still freeze and break,” says Link.

For more, see Winterizing Foreclosed Homes.

Go here for more on freezing pipes in vacant homes.

(1) Assuming the copper thieves haven't already gotten to them. frozenpipetheta

100 Madagascar Hissing Cockroaches, 3 Turtles Among Pets Found During Foreclosure Eviction

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

***

  • Neighbors won't miss the constant barking and foul odor coming from this house, "We've called animal control before on them for having too many dogs. I heard they had 11 dogs or what not, and it smells all the time -- every single day, horrible smells." Some animal control officers say they could barely tolerate the home's strong smell of urine, feces and mold.

For more, see Sad Sight Found at Foreclosed Home (read story) (watch KLAS-TV video) (watch slideshow).

Go here and go here for other posts on police incidents during home evictions. DeputyEvictionTheta

Medical Examiner Called In To Assist In Eviction At Foreclosed Funeral Home

In Pontiac, Michigan, The Associated Press reports:
  • Even the dead can't escape foreclosure in suburban Detroit. Five bodies and the cremated remains of 22 people have been removed from the House of Burns Memorial Chapel, a funeral home in Pontiac. They were delivered to the Oakland County medical examiner's office for storage early Friday. The medical examiner's administrator, Robert Gerds, said some of the cremated remains date to the 1990s.

Source: No rest for dead at foreclosed Mich. funeral home.

See also, USA Today: Bodies removed from foreclosed funeral home. SheriffDeputiesForeclosureAlpha

Friday, October 24, 2008

Texas Man Sues To Void Deed In Alleged Land Swindle

In Beaumont, Texas, The Southeast Texas Record reports:
  • A Jefferson County man has filed suit against a Beaumont couple and the woman's mother, claiming their conspiracy against him has forced him to lose property that belongs to him. Glen Ray Waldrop claims he is the owner of 3.27 acres located [...] in Beaumont.

  • He entered into what he believed to be a contract for deed with Jeff Allen and Theresa Ann Theal in May 2001, according to the complaint filed Oct. 21 in Jefferson County District Court. In the contract for deed, Waldrop believed the Theals would purchase the property through monthly installments, the suit states.

***

  • In fact, the document Waldrop signed was a general warranty deed, transferring ownership of the property to the Theals, he claims. [...] Waldrop knew nothing about the general warranty deed or [the mother's] role until the Theals ceased their monthly payments in April 2007, the suit states.

For more, see Disabled man claims he was swindled out of property by local couple.

Go here, go here, go here, and go here for other posts related to deed theft by forgery, swindle, etc. DeedTheftAlpha

Iowa Widow Seeks To Stop Foreclosure, Void Deed & Mortgage; Claims Now-Deceased Husband Forged Her Signature On Legal Documents

In Polk County, Iowa, the Des Moines Register reports:
  • Ed Boesen's widow says she has rights to two commercial properties because her husband forged her signature on a loan document and a property transfer document. Maureen Boesen is asking a judge to clear the titles on two properties despite more than $5 million worth of defaulted loans on them.

  • Lawyers for Maureen Boesen, as well as James Monroe, attorney for the Boesen estate, made the claim in Polk County District Court in response to two lawsuits filed by lenders against Boesen's estate. The lawyers contend Ed Boesen forged his wife's signature on a mortgage document on one of the properties and on a deed transfer on the other.

  • "Maureen Boesen asserts she owns the property and that the signatures on documents are without her authority," a motion filed last week by her lawyers says. As a result, neither loan is valid, the lawyers claim.

For more, see Boesen widow alleges forgery.

Go here to compare Mrs. Boesen's actual signature with those that were allegedly forged.

For story update (2-5-09), see Foreclosure on Boesen property to proceed.

Go here, go here, go here, and go here for other posts related to deed theft by forgery, swindle, etc. DeedTheftAlpha

Trashouts, Brown Grass, Green Pools & Other By-Products Of The Foreclosure Crisis

From the Inland Empire in Riverside County, California, KCET.org reports:
  • SoCal Connected tracked down some surreal sights associated with the [foreclosure] crisis - a company that specializes in removing whatever people leave behind in their foreclosed homes. The process is called a “trashout” - a term the company came up with because it perfectly describes what happens. Everything that’s left is dumped in a trailer and taken to the landfill.

  • Then there’s the guy who started a business to spray-paint dead lawns. That’s right. He paints brown lawns green. We also tag along with a couple of code enforcement officers who are spending more and more of their time having to drain slimy, abandoned pools.

  • Finally, we meet a typical couple who bought their first home, thinking it was a great investment and tax write-off. Now the place is worth only half of what they paid for it and their neighborhood has almost as many vacant homes as occupied ones.

  • One of the code enforcement guys sums up the problem in a single sentence - “You know you’re in trouble when the lawns are brown and the pools are green!

For the story and the accompanying video report, see Foreclosure Alley.

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

Apparent I.D. Theft Victim Dragged Into Court As Home Titled In Her Name Is Subject To Foreclosure, Code Enforcement, Criminal Charges; FBI Probe

In Louisville, Kentucky, WAVE-TV Channel 3 reports:
  • A long-time eyesore in the Highlands is tied up in the foreclosure process, a civil lawsuit, criminal charges and a FBI investigation. Monday, the woman whose name appears on the title of the Highland Avenue property appeared in court. [... H]er attorney says she is an innocent victim of fraud, tangled up in this legal mess.

  • Portia Rankin appeared with her attorneys in Jefferson District Court Monday afternoon. While it is her name that appears on the title for the property at 1308 Highland Avenue, one of her attorneys, Matt Stein, says she doesn't own the property. In fact, Stein says she has never even seen it.

  • Stein says Rankin is an innocent victim of fraud and has been left holding the bag with the home in foreclosure and inspection fees and fines piling up.

For more, see Attorney says woman on title of dilapidated home doesn't own property.

"Eviction-Proof" NYC Tenants Warned Against Cash-Strapped Corporate Landlords Looking To Force Them Out & Replace Them With The More Affluent

In New York City, Columbia University's Columbia Spectator reports:
  • For years, the Mirabal Sisters Cultural and Community Center has led workshops to teach local tenants to organize and take landlords to court for harassment. But at a convention last week, the usual presentations on tenants’ rights and navigating city agencies took on new urgency.

  • As the financial crisis moves north from Wall Street to West Harlem and Washington Heights, Garrett Wright of the Urban Justice Center reminded attendees of the tactics landlords used to replace lower-income tenants with “white, yuppie residents” during the housing market’s peak in the last few years, such as neglecting repairs and attempting to evict rent-stabilized tenants.(1)

  • Activists told tenants to brace themselves for more of the frivolous lawsuits and harassment experienced during the housing boom. Landlords are beginning to default on loans they took out to purchase their buildings, and today, unlike in recent years, “they really need the money,” organizer Rolando Rodriguez said.

For more, see Wall Street Crisis Impacting Rent-Stabilized Housing.

(1) Rent-stabilized tenants are those tenants in New York City rent-regulated apartment buildings who, so long as they use their apartments as their primary residence, don't sublease to another, and basically don't destroy the place, can for all practical purposes stay in their apartments for the rest of their lives, subject to what most landlords feel is a modest annual rent increase (the determination of which is made by a third party and completely out of the landlord's control). For those tenants whose rent is way below market value, this presents a great deal for them and, accordingly, make them targets for some landlords looking to force them out and replace them with higher paying tenants.

After Losing Son In Iraq War, NYC Mom Fights To Keep From Losing Home To Foreclosure Of Alleged Predatory Mortgage; Media Probes Into Loan Servicer

In Queens Village, New York, American News Project reports:
  • Last week, ANP reported on the foreclosure of Jocelyn Voltaire in Queens Village, NY and the impending auction of her house. Since the report aired, a national grassroots effort to save her home was launched. In this piece, we report on the outcome of said initiative and delve deeper into a connection between Jocelyn's mortgage company [Litton Loan Servicing] and Goldman Sachs.

For more (video only), see Foreclosed Mother Keeps Home ... For Now.

See also:

Thursday, October 23, 2008

South Florida Man Pleads Guilty In Straw Buyer Scam; Allegedly Lied On Loan Applications For $10M+ In Mortgages Involving At Least 20 Homes

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

  • A Coral Springs man pleaded guilty Tuesday in Fort Lauderdale federal court to charges he lied on applications for more than $10 million in mortgage loans. Anthony Dehaney, 57, admitted he used straw buyers and bogus records to purchase at least 20 Broward properties between January 2003 and August 2006 — including a $1.4 million Coral Springs home. Prosecutor Jeffrey Kay said Dehaney worked with a Fort Lauderdale title agent to make it appear that other individuals were taking out the loans. Dehaney, an ex-teacher, ultimately filed forged bankruptcy petitions on behalf of some straw buyers to stall foreclosure proceedings, Kay said.

Source: Guilty plea in fraud case.

See also, U.S. Attorney (Miami, Florida) press release: Leader Of $10 Million Mortgage Fraud Scheme Pleads Guilty:

  • Co-defendants Marcia Mestre and Angela Manalaysay pled guilty on September 3, 2008 and are scheduled to be sentenced on December 12, 2008. Defendant Dehaney is scheduled to be sentenced on December 30, 2008. The remaining defendants Howard Gaines, Beverly Ireland and Donna Patricia Grant are scheduled to go trial on November 17, 2008 at the Fort Lauderdale Federal Courthouse.

Oregon Regulators Slap Mortgage Firm With Ban, $70K Fine; Routine Exam Finds 150+ Violations Of Lending Laws

In Oregon, the Statesman Journal reports:
  • State regulators have banned mortgage broker NLC of OR Inc. from making home loans after a routine examination found more than 150 violations of mortgage lending laws. NLC received the lowest possible score during a state review of its operations in 2006, said officials with the Oregon Division of Finance and Corporate Securities. The Houston-based company formerly was known as National Lending Corp.

For more, see Mortgage broker is fined $70,000, banned from doing business in Oregon (A routine state review finds more than 150 violations).

(1) According to the story, Oregon's examination of NLC found that it "failed to diligently supervise and adequately control its loan originators and failed to file required notices with (state regulators) and failed to make and keep required business records," state official said in a statement. Record-keeping problems were found in documentation of criminal background checks for employees, state officials said. Other omissions were noted in records for key loan documents, such as Truth in Lending Act disclosures, according to the state.

Professional Conflicts Of Interest An Obstacle For Some Attorneys In Pro Bono Foreclosure Fight

American Banker reports:
  • As the mortgage crisis deepens, lawyers around the country are volunteering to help distressed homeowners avoid foreclosure, but those with the most relevant experience often face the potential for conflicts of interest involving lender clients. [... G]etting involved has [...] created a delicate situation for some of the largest law firms, which have the most staff to contribute to such projects — but often represent major lenders.

***

For more, see Homeowner Legal Aid Programs Address Conflicts.

Mtg Company To Cop Guilty Plea Under Threat Of Jail Time For Housing Code Violations On Foreclosed Home Unloaded On Unwitting Couple

In Lockport, New York, the Lockport Union-Sun & Journal reports:
  • A mortgage company called into city court over housing code violations will take a plea deal conditioned on its promise not to dump a financial penalty on the house’s new owners.

***

  • [American General Home Equity initially] wouldn’t agree to fines and refused to plead guilty to anything at its Sept. 2 court date, insisting on a trial instead. Only then did the mortgage company acknowledge the court case to the [new owners], they said, in a phone call from a representative warning them they’d better show up for the trial because they were on the hook, too, as per the contract. The couple went public with their dilemma soon after.

  • Behind the scenes, city officials angered by the mortgage company’s apparent dodging maneuver pressed [local prosecutor Matthew] Brooks to keep pursuing the company while also shielding the [new owners]. Ultimately, city attorneys said, the pointed suggestion made to American General is that when the time arrived for sentencing in the case, community service, or jail time, could be handed down to a company executive just as easily as fines on the corporation.

For more, see Plea deal spares Harvey homeowners.

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

Extortion Sting Results In Charges Against Maryland Man For Allegedly Trying To Squeeze $5K From Winning Bidder At Foreclosure Sale

In Elkton, Maryland, The Associated Press reports:
  • The Cecil County Bureau of Investigation has charged an Edgewood man with extortion for allegedly demanding money from the winning bidder in a home foreclosure auction. Authorities say 48-year-old Frank Wilhelm telephoned the winning bidder one day after the auction and threatened to challenge the sale unless he was paid $5,000. Lt. Bernard Chiominto says challenging the sale would have frozen the bidder's payment, possibly for months.

  • Wilhelm was arrested last Thursday in Perryville, after the winning bidder contacted police and helped them set up a sting. According to Chiominto, Wilhelm told investigators that he had heard that winning bidders "usually pay up" when threatened with a contested auction sale.

Source: Edgewood man faces extortion charge.

Upstate NY County Looks To Wrestle Away Mineral Rights From Tax-Delinquent Property Owner Who Has Since Paid Arrearage

In Broome County, New York, the Binghamton Press & Sun-Bulletin reports:
  • The story begins with Sarah Vroman, owner of about 25 acres in the Town of Sanford, fallen on hard times and unable to pay her taxes. After two years, her bill had reached $6,460. So, earlier this year, Broome County began foreclosure. Soon after, as the saying goes, the plot thickened.

  • XTO Energy came to town. The Texas company seeking to tap promising natural gas reserves in Vroman's town offered property owners more than $2,400 per acre up front and 15 percent royalties on production for their mineral rights. Vroman suddenly held the prospect of a $60,000 payday, with the possibility of more in royalties.

  • Knowing the deal would save her property, Vroman appealed to county officials. They told her it was too late to stop foreclosure, but they eventually worked out a deal allowing her to buy back the property ... minus the mineral rights.

  • That decision has been characterized by several town leaders as a mean-spirited money grab. County officials defend it as the fiscally responsible thing to do in the interest of taxpayers and the greater public good.

  • Meanwhile, legislators are reviewing policy dealing with the Vroman case and the issue in general as the value of mineral rights skyrocket with expectations of the Marcellus Shale becoming a world-class energy producer.

  • The Vroman controversy comes in the context of a recommendation by Kevin Keough, the county's director of real property, to keep mineral rights on foreclosed property of more than 5 acres. "As we all know, the gas issue is on the front burner here in Broome County," said Keough, who sees seizing mineral rights on foreclosed property as a no-brainer.(1)

For more, see Landowner, Broome vie for mineral rights (Foreclosed property may bring $60K payday).

For story update (11-21-08), see Ad-hoc group will settle county mineral-rights dispute (Landowners, county vie for cash windfall).

See also:

(1) In a recent press release, New York Attorney General Andrew Cuomo Cautions Consumers About The Potential Pitfalls Of Oil & Gas Leases in an attempt to keep New Yorkers from being screwed over by oil & gas exploration companies. He may need to issue another press release warning against overzealous county officials as well. Go here for other posts on dealing with exploration comapnies over your mineral rights. MineralRightsAlpha

Wednesday, October 22, 2008

Disbarred Florida Attorney Gets 10 Years For His Part In Alleged Sale Leaseback, Foreclosure Rescue Scam That Defrauded 50+ Homeowners

In Tampa, Florida, WTSP-TV Channel 10 reports:
  • A federal judge has sentenced a disbarred lawyer to ten years in prison on his guilty plea to a mortgage scheme that stole the equity from more than 50 homeowners. Graham Daniel Kligerman, 34, of Clearwater, was also ordered to pay $6.5 million in restitution. The U.S. Attorney's office said Kligerman was part of a mortgage foreclosure rescue scheme that defrauded more than 50 homeowners.

For more, see Disbarred lawyer sentenced in mortgage fraud.

See also:

Go here for criminal prosecutions of foreclosure rescue operators and home equity scammers.

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.).

Florida Woman Charged With Engaging In Alleged Rent To Own Scam On Homes She Didn't Own

In Palatka, Florida, the Putnam County Sheriff's Office recently announced:
  • A 35 year-old Putnam County resident has been arrested for selling two homes, two homes she did not own and had no legal interest in. Monique Watts, also known as Monique Gallimore and Monique Parker, of [...] East Palatka was arrested [...] following two investigations into her illegal activity and is still under investigation into a third suspect property transaction. [...] One of the investigations began on the 23rd of September, 2008 when a 37 year-old Palatka woman reported that she had just found out that a home she thought she was renting to own was sold to her by a person who didn't even own it.

For more, see Woman Arrested for Selling Houses She Didn't Own.

San Diego City Attorney Keeps Promise; Files Predatory Loan Suit Against Third Home Mortgage Lender

In San Diego, California, Legal Newsline reports:
  • Following lawsuits against Countrywide Financial Corp. and Washington Mutual, San Diego City Attorney Mike Aguirre filed a suit on Tuesday taking on a third home mortgage lender for its alleged predatory lending practices. The latest suit, filed in the San Diego Superior Court is against Wachovia, parent company of Golden West Financial Corp., which the bank bought in October, 2006. The lawsuit asserts that Golden West sold loans without proper consideration or verification of a buyer's ability to pay, including selling risky loans that would have rapidly escalating payments.

For more, see San Diego City Attorney sues Wachovia.

Lawmaker To Attempt To Lift State Homestead Exemption Limit To Attract Wealthy To Move To Nevada

Buried at the end of a story on a proposed new law to safeguard Nevada tenants unwittingly renting homes from landlords in foreclosure, the Las Vegas Sun reports:
  • [L]egislators and local governments so far have asked that 633 bills be drafted for introduction next year. [One] recent request comes from Assemblyman Morse Arberry, D-Las Vegas, who wants to remove the cap of $550,000 on homestead exemptions.(1)

  • The law protects the forced sale [except for mortgage foreclosures] of a home whose value is up to $550,000 to recover a debt if the property has been designated as a homestead. The 2007 Legislature raised the homestead exemption from $350,000 to $550,000.

  • And Arberry said he is working on a bill to eliminate the cap as a way to attract rich people to locate in Nevada. Otherwise if these affluent people had a $1 million home that was designated as a homestead, it would be shielded from judgments to collect any debt [except home mortgages and certain other debts].

  • The present law provides that if the home is worth more than $550,000, a judge must appoint three independent appraisers to value the home. If it exceeds the homestead exemption permitted, the judge must decide whether any part of the property can be sold to satisfy the debt without “material injury” to the home. If the judge decides the property can not be divided, than [sic] he can order home sold and the money divided between the creditor and the homeowner.

For the story, see Bill to protect renters in foreclosure cases.

(1) If successful, Nevada will be eligible for induction into the Homestead Exemption Hall of Fame, joining the great states of Florida, Texas, Oklahoma, Kansas, and Iowa who likewise impose no dollar limit on the amount of home equity (ie. loosely defined for homestead exemption purposes, as home value less existing home mortgages, unpaid real estate taxes, IRS tax liens, and unpaid home improvement costs - check the relevant state law for the exact specifics) a state resident can play "keep away" with when fending off unsecured general and judgment creditors seeking repayment of debts they've been stiffed on. There are, however, limitations based on property size, such a limit may depend on whether the home is located within or outside of an incorporated municipality (or, in the case of Texas, whether state law considers the homestead to be an "urban homestead" or a "rural homestead").

2008 Chicago-Area Foreclosures Could Top 42,000

In Chicago, Illinois, the Chicago Tribune recently ran a few stories related to the increased burdens being placed on the Cook County court system resulting from dealing with the wreckage of the sub-prime mortgage crisis. For the stories, see:

See also, Chicago Public Radio: Cook County Hires More Judges to Cope with Foreclosure Crisis (The tens of thousands of home foreclosures in Cook County are forcing the courts to increase staffing).

Tuesday, October 21, 2008

DC AG Settles Civil Suit With Title Closing Agent In "Money Store" Equity Stripping, Sale Leaseback Foreclosure Rescue Scam

In Washington, D.C., the Office of the District of Columbia Attorney General announced:
  • Acting Attorney General Peter Nickles announced [yesterday] that the District has entered into a consent order with a title settlement company and its principal which participated in the Metropolitan Money Store mortgage rescue scam. The companies, Regional Title & Escrow, LLC and RTE Title LLC, and their principal, Valeria Tomlin, are permanently prohibited from performing settlement services in the District and will pay $575,000 to homeowners in the District of Columbia and Maryland who were stripped of title and substantial equity in their homes. The settlement is subject to approval by the DC Superior Court.

  • The District’s complaint alleged that Tomlin and her title companies performed settlement services and otherwise participated in mortgage loans they knew were not bona fide. In entering into the consent judgment, Tomlin and her title companies denied that they engaged in wrongful conduct.

[...]

  • The complaint also alleges that Metropolitan Money Store conducted a major mortgage rescue scam in which it targeted 25 homeowners in the District of Columbia. As part of a “Foreclosure Reversal” scheme, Metropolitan Money Store and others falsely promised to help the homeowners avoid foreclosure, keep their homes, and repair their damaged credit. Metropolitan Money Store then diverted proceeds from purported sales of these homes to itself and related companies.

For the D.C. AG's press release, see District Announces Agreement With Title Settlement Company in Mortgage Rescue Scam.

Go here and go here for other posts on the alleged Metropolitan Money Store foreclosure rescue scam. joyjackson

NJ AG Targets 39 In Suits Alleging Equity Stripping, Sale Leaseback Scams; Involved $13.5M In Bogus Loans & 48 Homeowners Screwed Out Of $3M+, Says AG

In Bergen County, New Jersey, The Star Ledger reports:
  • Forty-eight New Jersey property owners have lost more than $3 million in home equity through "foreclosure rescue" schemes operated by Vest Financial and JP Global Property Management Inc., according to civil lawsuits filed by the state Attorney General's office.

  • The lawsuits accuse the two companies, as well as 37 mortgage loan providers, mortgage industry employees, lawyers and others of violating the state's Consumer Fraud Act and the Racketeer Influenced and Corrupt Organizations Act. The state is seeking restitution for the property owners, penalties and permanent bans to keep them offering similar schemes to others.

***

  • [New Jersey Attorney General Anne] Milgram said the companies preyed on desperate homeowners behind on their mortgages by persuading them to sell their properties to third-party investors as part of complex "sale and lease-back" schemes. [...] Vest Financial and JP Global never followed through on their promises. Instead, Milgram said, the companies stripped the homes of their equity value through the scheme and left the homeowners with no means to pay rent and with ruined credit histories.

For more, see State accuses firms of running predatory 'foreclosure rescue' schemes.

See also: Legal Newsline: Milgram: Foreclosure rescue schemes nothing but fraud ("Milgram says the defendants used predatory foreclosure rescue schemes to convince homeowners to sign over their homes, obtained at least $13.5 million in fraudulent loans and stole at least $3 million in homeowner equity.").

From the New Jersey Attorney General's office:

Go here for 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.).

(1) The Defendants in this lawsuit are: Vest Financial, formerly of Paramus; Metropolitan Mortgage Services, Inc., of Cliffside Park; Alex Armani of Cliffside Park; Sohrab Moussavian of Englewood; Anthony Scordo III of West Orange; Felix Nihamin, an attorney who resides in Franklin Lakes and practices in New York City; Francis A. Ciambrone, an attorney with law offices in Paramus; Rhys A. Herrmann, of Belleville; JP Global Property Management LLC of Bloomfield; Peter H. Eckhardt, Jr. of Livingston; Philip Altieri of Flemington; Kristopher Pilone of Manalapan; DBK Realty Investments LLC of Edison; Tom A. Andriopoulos of Washington Township (Bergen County); Settlement Source, LLC of Edison; Vivian M. Ruiz of Hillsdale; and Glen B. Thompson, New York City.

(2) The Defendants in this lawsuit are: JP Global Property Management; Jeremy P. Sorvino of Waldwick; Jeffrey M. Malen of Ringwood; Peter Eckhardt, Jr.; Christopher William Eckhardt of Washington Township, (Bergen County); Anthony Scordo III of West Orange; Nihamin; Michael J. Andalaft, an attorney with law offices in Cedar Grove; Capital Hill Mortgage, Inc.; Stanley Capital Mortgage Company, Inc. of Englewood Cliffs; Rhys A. Herrmann of Belleville; Brendan Joseph Flynn of Fort Lee; Maryann E. Sorvino of Ridgewood; Frances B. Benna of Elmwood Park; Vincent F. Latorre of Kenilworth; Jennifer R. Kortman of Livingston; Rebecca A. Kortman of Chatham; William McVeigh of Wharton; Mauricio V. Almeida of Colonia; and Thompson.

Lenders Lawyers' Failure To Return Phone Calls Forces Already-Strained Florida Court To Impose Formal Conciliation Process In Home Foreclosure Actions

In Sarasota, Florida, the Herald Tribune reports:
  • As more and more Florida homeowners slip into foreclosure, the law firms handling the cases for the banks have become harder to reach, those familiar with the system say. Homeowners and their attorneys, and even judges, cannot get a call back, making it impossible to dispute a debt or work out deals other than foreclosure until the case is in front of a judge. "The lenders are just not talking to them," Chief Circuit Judge Lee Haworth said.

  • Now, Haworth and other 12th Judicial Circuit court judges are going to force those law firms to meet with the homeowner within 45 days for a frank discussion on alternatives to foreclosure. Those discussions could center around refinancing, forgiving part of the debt or clarifying the amount required to reinstate or pay off the loan.

  • The Homestead Foreclosure Conciliation Program will start in December. It aims to keep people in their homes and reduce the strain on the court system from foreclosure cases, which are on pace to double this year compared with 2007. The program applies only to property registered as a primary residence under the homestead exemption. Local bar associations and legal aid organizations agreed to provide some attorneys to assist those homeowners during the meeting at no cost.

  • The law firms representing lenders are also required to notify any homeowner of the program, contact them and invite them to participate. The large increase in foreclosures has strained almost every part of the foreclosure process, from serving legal papers to finding courtroom time. Coming to a solution within 45 days would avoid protracted legal battles and reduce the number of cases going through the system.

  • Those long legal battles seem to be the only way to get law firms representing banks to return calls, Miami-based foreclosure attorney Rick Neustein said. "Most of the time they don't want to talk to us until they see this thing is being hotly contested," Neustein said. "They don't get serious until we're defending the foreclosure for nine months."

  • Haworth said the main issue is only a small number of law firms handle the foreclosure cases for the banks for small legal fees, so they want to put as little time as possible into a case.(1) If the law firms do not comply with the new order, they will face courtroom sanctions that would cost them money, since it would take their attorneys more time to handle the cases.(2)

For the story, see Lenders told they can't hide (if there's a problem with this link, try here).

For more on the new foreclosure procedural rules in Florida's 12th Judicial Circuit, see:

Go here for Notice To Attorneys Filing Foreclosure Actions in Florida's 12th Judicial Circuit.

Go here for other posts on the foreclosure mediation program in Florida's 12th Judicial Circuit (Manatee, Sarasota, and Desoto Counties).

(1) Go here for more on so-called Assembly Line, Foreclosure Mill Lawyering in foreclosure actions.

(2) According to the story, the law firms for lenders would not be able to settle the case through a summary judgment, a quick resolution to cases. The lender attorneys would no longer be able to appear at hearings over the telephone. And that lender's cases would be assigned the lowest priority for court hearing times, which may delay the case for an extended period. ForeclosureMillAttorneysAlpha

NJ To Take Statewide Approach To Mandatory Mediation Program In Owner-Occupied Home Foreclosure Actions, State Chief Justice Says

The New Jersey Judiciary announced:
  • [New Jersey Supreme Court] Chief Justice Stuart Rabner [last week] announced the roll-out of a statewide Judiciary program to assist homeowners in foreclosure actions. The program will provide mediators to help homeowners and lenders negotiate with one another and try to work out agreements to avoid foreclosures.

  • Chief Justice Rabner said, “While the courts must remain neutral in all foreclosure matters, it is in everyone’s best interest to have a forum where homeowners facing foreclosure have the opportunity to negotiate to save their homes. Our goal is to get lenders and borrowers to meet at the table and work out a mutually beneficial arrangement. I encourage continued cooperation among the courts, lenders, borrowers, and the bar as we address the increasing number of foreclosure actions in New Jersey in today’s difficult economic times.”

  • Under the program, the courts will require mediation in all cases in which homeowners contest owner-occupied foreclosure actions. Volunteer mediators will meet with eligible homeowners and their lenders in an effort to resolve the foreclosure action and renegotiate the terms of mortgage agreements.

For more, see Judiciary Announces Foreclosure Mediation Program to Assist Homeowners at Risk of Losing Their Homes.

How Long Has A Home Been Abandoned? Just Count The Discarded Take Out Menus Collecting On Front Doors & Stoops

In New York City, The New York Times reports on a working-class neighborhood in South Jamaica, Queens just north of Kennedy Airport where about 28 percent of the homes have been in some phase of foreclosure since 2004, and its census tract leads the city in foreclosure filings. This excerpt describes how area residents become aware of how long homes have been abandoned by their owners:
  • The telltale signs that a house is empty come not from a bank or real estate agent, but pizzerias and Chinese takeout restaurants: The length of time a house has been abandoned can be measured by the number of old menus, fliers and junk mail that collects on doors and stoops.

For the story, see Door to Door, Foreclosure Knocks Here (may require free registration).

Rebuilding Cleveland: Learning From Other Cities

In Cleveland, Ohio, The Cleveland Plain Dealer reports:
  • With the real-estate catastrophe having devalued, crippled and partially emptied whole neighborhoods of Northeast Ohio, it's time to ask, "What next?" Local recovery strategies range from selective demolitions to artistic boarding projects. But creating side lots in Shaker Heights and painting pies onto boarded-up windows in Slavic Village is not going to be enough, experts say.

For more, see Strategies For Rebuiding Cleveland: What can be learned from other cities.