Tuesday, November 11, 2008

Fannie, Freddie Announce Loan Modification Program

Bloomberg News reports:
  • Fannie Mae and Freddie Mac, the largest U.S. mortgage-finance companies, will accelerate anti- foreclosure efforts with a new loan modification program designed to cut monthly payments for struggling homeowners.

  • Fannie and Freddie, operating under a government conservatorship, will target loans in which borrowers are at least 90 days delinquent and have high loan-to-income ratios, officials from the Treasury and the Federal Housing Finance Agency said today at a press conference in Washington. The companies may offer reduced interest rates and longer terms of as much as 40 years to trim monthly payments.

For more, see Fannie, Freddie Boost Effort to Minimize Foreclosures.

In a related story, see Politico: Schumer not satisfied with new loan mod program.

  • Sen. Chuck Schumer (D-N.Y.) is not impressed with the new mortgage modification plan unveiled today by industry and the Bush administration. Instead, he said lawmakers need to change the bankruptcy code to allow judges to reduce mortgage payments and keep people out of foreclosure, a proposal that industry fought to defeat several times this past year.(1)

(1) According to Politico, Shumer made the following statement: "These voluntary plans sound nice, but they don't do the job. No amount of incentives for investors can change the fact that a program like this will only really work if Fannie and Freddie hold the whole loan, which is true in too few cases. When the loan is chopped up into a million pieces and any investor can block a modification from happening, a program like this will only scratch the surface of the mortgage crisis. The only viable solution, and it is one we will take up under President-elect Obama, is to modify the bankruptcy code."

Countrywide, Bank Of America Face Possible Lawsuits From Investors Over $8.4B Loan Modification Settlement

The Charlotte Observer reports:
  • Countrywide Financial Corp.'s agreement last month, which requires it to relax the terms of some 400,000 mortgages, was good news for struggling homeowners. But a New York law firm says the settlement(1) isn't fair to the people who invested in Countrywide's mortgage-backed securities, and it's trying to drum up interest in challenging the settlement.

***

  • The law firm, Grais & Ellsworth, will hold a meeting this morning in New York for securities investors interested in taking legal action against Countrywide and its parent, Charlotte's Bank of America Corp.

***

  • Grais & Ellsworth may challenge the settlement because it says Countrywide is violating its agreements with securities investors. According to the law firm, those agreements require Countrywide to repurchase any loans that it modifies or any loans that violate standards on predatory lending. Countrywide has not said that its loans were unlawful.

For more, see Investors might fight settlement (Loan workouts hurt the investors who bought Countrywide's securities, New York law firm says).

(1) Last month, Bank of America settled the litigation by agreeing to $8.4 billion worth of mortgage modifications with measures such as reducing interest rates or waiving late fees. MortgageServicingIssuesAlpha

Citi Unveils Loan Modification Program; $20B+ In Workouts Expected; Only Applies to Loans It Owns - Excludes Loans It Services For Others

The New York Times reports:
  • Citigroup on Monday joined a growing list of financial institutions offering to modify the terms of mortgages for distressed borrowers, unveiling a program to help thousands meet their monthly payments while reducing the bank’s potential for larger losses as the economy erodes.

  • About 136,000 mortgage customers are expected to qualify for the program, resulting in the workouts of over $20 billion of loans. [...] All kinds of mortgages will be eligible for modification, not just the most toxic types, like negative amortization loans.

***

  • Like those at the other banks, Citi’s plan addresses only loans that the bank owns and not the mortgages that it services on behalf of bond investors who own mortgage-backed securities. Banks have less leeway in changing the terms of loans packaged into securities, because contracts that govern them can be very restrictive.

For more, see Citigroup Offers to Ease Mortgage Terms. MortgageServicingIssuesAlpha

Investigative Report Uncovers Unhappy Customers Of Central Florida "Sale Leaseback" Foreclosure Rescue Operator

In Central Florida, the St. Petersburg Times recently ran an investigative report on a local foreclosure rescue operator promoting sale leaseback arrangements to homeowners facing foreclosure in which title and all rights to the home would be transferred to a so-called "family trust'' with an unrelated trustee.

  • [O]f the 106 people who signed up for [owner of Foreclosure Prevention Corp. Gideon] Rechnitz's "foreclosure prevention program,'' nearly half lost their homes anyway. Many were confused by the legal documents he asked them to sign and were unable to meet the stringent rental and buyback conditions.(1)

***

  • The most complex — and confusing — part of the program was the transfer of ownership. Instead of simply selling to Rechnitz, the homeowner signed a warranty deed that gave title and all rights to a "family trust,'' with Rechnitz or his Garco Inc., listed as trustee. That meant Rechnitz could sell the property or do anything else he wanted with it.

  • Keeping the seller's name on the trust also was a major benefit to Rechnitz. The bank might not realize the property had been sold, and thus Rechnitz could make payments without triggering a due-on-sale clause, requiring the mortgage to be immediately paid in full.(2)

For more, see Homeowners' safety net really wasn't.

(1) According to the story, closing statements obtained by the Times show that the homeowners received no money from the sale, partly because they were assessed extra fees that included several thousand dollars for "preforeclosure administration'' that went to Profitmax — a company of which Rechnitz, 61, is the sole officer and director. Reportedly, sellers were also assessed a fee of as much as $3,000 that went to Recnitz' associate Thomas S. Cook for "foreclosure intervention.'' Cook sometimes notarized the legal documents himself even though state law forbids notary publics from notarizing transactions in which they have a financial interest, the story states. At least one homeowner's closing statement shows he was assessed $31,415 for "reinstatement'' and $6,100 in fees to Cook and Rechnitz, according to the report.

(2) Based on the details in the story describing the sale leaseback deals with some of the homeowners facing foreclosure, the deals described therein could be ripe for recharacterization as equitable mortgages (and, possibly in some cases, usurious equitable mortgages), even if no fraud on the part of the foreclosure rescue operator is proved. (Go here for posts on some of the case law on equitable mortgage and usury in Florida).

Further, as of October 1, 2008, the recently passed Florida Foreclosure Fraud Protection Act (HB 643) creates a rebuttable presumption that any foreclosure rescue transaction in Florida involving a lease option or other type of repurchase agreement is an equitable mortgage (see Florida Statute Sec. 501.1377(6)).

Queens DA: I.D. Theft Leads To Sale Of Home Out From Under Unwitting Elderly Stroke Victim; Suspects Allegedly Pocketed $95K

From the Queens County, New York District Attorney's office:
  • Queens District Attorney Richard A. Brown [last week] announced that a brother and sister are charged with stealing the identity of a 68-year-old Jamaica, Queens, man who had been disabled as a result of a stroke and then secretly selling his house out from under him and pocketing the profits.

***

  • The District Attorney identified the defendants as Shawn Corcas, 38, of [...] St. Albans and Patricia Corcas, 55, of Rosedale. The siblings were arraigned [last week] on an indictment [...]. They are charged with second-degree grand larceny, third-degree grand larceny, second-degree criminal possession of stolen property, third-degree criminal possession of stolen property, first-degree falsifying business records, second-degree falsifying business records, first-degree identity theft and second-degree identity theft.

For more, see Brother And Sister Charged With Fraudulent Sale Of Disabled 68-Year Old Queens Man's Home.

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

"Prove It" Say Florida Builders Accused Of Grand Theft; Allegedly Pocketed $475K In Customer Deposits While Failing To Deliver Completed Homes

In Vero Beach, Florida, TC Palm reports:
  • Two developers of a unfinished subdivision north of Vero Beach pleaded not guilty to criminal charges of first degree grand theft of $475,000 in deposits from customers, according to court records. Construction of Eagle Trace Phase II was stopped last year, leaving empty lots and unfinished concrete block walls.

  • And developers Richard Rendina, 60, of Palm Beach Gardens, and Stephen Siegel, 72, of Boca Raton, are out of jail — under $500,000 bail each. Prosecutors allege they improperly took deposits from 11 customers who paid on homes, according to court files.

For more, see Two developers plead not guilty to theft charges in Eagle Trace case (Prosecutors claim Richard Rendina, Stephen Siegel took $475,000 in construction deposits).

For other posts on homeowners left in the lurch due to actions by builders/contractors, go here, go here, go here, and go here. StiffingContractorsZeta

Monday, November 10, 2008

Consumers Take It On The Chin With Recent Federal Appeals Court "Truth In Lending" Rulings

1) Law.com reports:
  • A provision in the Truth in Lending Act that excuses minor inaccuracies on the part of lenders is not an "affirmative defense" that must be specifically raised by the defendant, but instead is a "general defense" that cannot be waived, the 3rd U.S. Circuit Court of Appeals has ruled.

  • The ruling in Sterten v. Option One Mortgage Corp. could prove to be a significant boon to banks by relaxing the rules for reaping the benefits of a TILA amendment that was designed to prevent creditors from being subject to "extraordinary liability" for small disclosure discrepancies.

For more, see 3rd Circuit: Truth in Lending Act Provides Unwaivable Defense (Panel rules 'tolerances for accuracy' provision is not an affirmative defense).

For the court ruling, see Sterten v. Option One Mortgage Corp. (3rd Cir., 11-4-08).

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

2) Jurist's Paper Chase (University of Pittsburgh School of Law) reports:

  • The US Court of Appeals for the Ninth Circuit [recently] ruled that the federal Truth in Lending Act does not provide for statutory relief for a lender's failure to conspicuously disclose certain information about a loan to the borrower and to give the borrower certain information before offering the loan.

For more, see Ninth Circuit rules subprime borrower due no damages for lender disclosure failures.

For the court ruling, see McDonald v. Checks-N-Advance, Inc. (in re Ferrell) (9th Cir., 8-22-08).

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

3) In a story posted here in October, the National Law Journal reported:

  • In a boon for the mortgage lending industry, a federal appeals court has said the Truth in Lending Act does not allow for rescission of mortgages on a class action basis. The 7th U.S. Circuit Court of Appeals, in a 2-1 decision [...], averts the potential of significant damages for creditors accused of violating disclosure requirements in some of the exotic mortgage vehicles that exacerbated the mortgage market meltdown and has Congress contemplating ways to restore credit market confidence.

  • The Circuit decision joins an earlier ruling by the 1st and 5th Circuits and one California state appellate court that have held that the Truth in Lending Act (TILA) does not allow claims for rescission in a class action format.

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

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

Slicing & Dicing Left Building Loan Compromised, Says Trump In Suit Seeking $3B Damages From Lenders After Refusal To Extend Debt On Chicago 'Scraper

The Wall Street Journal reports:
  • Donald Trump filed suit against the lenders on his unfinished Chicago skyscraper, plunging the project into legal turmoil and highlighting the credit crunch's pervasive effects on real estate. Mr. Trump is suing to extend a $640 million senior construction loan on the 92-story Trump International Hotel & Tower from a group of lenders led by Deutsche Bank AG. [...] Mr. Trump asked for $3 billion in damages.(1)

***

  • Deutsche Bank originated the construction loan in 2005 and sold off most of it to others, retaining less than $10 million of exposure on that loan. The suit alleges [among other things] that Deutsche Bank compromised the senior construction loan by selling pieces off to "so many institutions, banks, junk bond firms, and virtually anybody that seemed to come along," that the lending group is unable to come to a consensus on how to deal with the matter.(2)

For more, see Trump Files Suit Against Lenders (Developer Seeks to Extend $640 Million Loan on a Chicago Skyscraper).

In a related Wall Street Journal story, see In Chicago, Trump Hits Headwinds.

In a related story in The New York Times, see Trump Sees Act of God in Recession.

Editor's Note:

If anyone has a digitized copy of this lawsuit, please don't hesitate to e-mail me a copy of it, if it's not too much trouble. The lawsuit's index number is 026841/2008, filed in NYS Supreme Court - Queens County last Thursday (November 8).

(1) Possibly seeking a "home court" advantage in the litigation, Trump filed the lawsuit, not in Chicago where the skyscraper is being built, but in New York State supreme court in Queens County, NYC.

(2) This appears to have left Trump similarly situated with the thousands of average homeowners facing foreclosure who, arguably, have had their home loans equally compromised by similar "slicing and dicing" that has left bits and pieces of their loans in the hands of a myriad of investors scattered around all over the place.

NYC Senior Clipped Out $3K After Loan Modification Firm Fails To Renegotiate Home Mortgage

In Mill Basin, Brooklyn, WABC-TV Channel 7 reports:
  • Evadne is a senior citizen and living on a fixed income. She was worried she would lose her home, so she paid RSR Asset Management nearly three thousand dollars to contact her lender, Washington Mutual, to try to lower her mortgage.

***

  • "But then once he got the money," [Evadne's grandson Andre Henry] says, "I feel nothing was done." Despite paying three grand for help, her mortgage stayed the same. And that fee? It was non-refundable. And Andre says, RSR Asset Management gave him no answers. "You leave a message, no one calls back. So what are we to do? This is $3000 here we're talking about," said Andre.

***

  • So, [7 On Your Side] went to the Garden City offices of RSR Asset Management to find out what happened with Evadne's case. But, we never got past the receptionist and numerous calls went unanswered. [...] And as for Evadne's mortgage? After [7 On Your Side] contacted her lender they worked out a fixed rate mortgage at a rock bottom interest rate, saving her hundreds each month.

For more, see Senior saved from foreclosure. New York City

More On Florida AG's Lawsuit Against Loan Modification Firm

In Fort Lauderdale, Florida, WSVN-TV Channel 7 reports on the recent state Attorney General's lawsuit against Outreach Housing, a locally-based loan modification company accused of using unfair and deceptive practices to clip homeowners out of thousands of dollars in upfront fees to renegotiate mortgage terms with their lenders. According to the report, the firm claimed that most mortgages in South Florida were made in violation of some Federal laws and can be undone,(1) and blames its current problems on a couple of attorneys it retained to help its customers.(2) Some of the unsatisfied alleged victims are interviewed, as well as a company representative.

For the WSVN Channel 7 story transcript & link to its video report, see Home Heartache.

(1) According to their website, "Through the efforts of Outreach Housing, a dedicated network of professionals will pursue restitution for thousands of homeowners faced with foreclosure by outlining the TILA and RESPA violations that occurred at the lenders level—bottom-line this effort will allow the homeowner to stay in their home."
(2) According to another local media report, the lawsuit also accuses Outreach Housing of engaging in the unauthorized practice of law. Go here and go here for other posts on issues relating to attorneys, loan modifications, and the unlicensed/unauthorized practice of law.

Sunday, November 09, 2008

North Miami Mayor Seeks Court Adoption Of Foreclosure Diversion Program To Save Himself, Others From Losing Homes

In the City of North Miami, Florida, WFOR-TV Channel 4 reports:
  • North Miami's mayor is pushing Miami-Dade courts to create a mortgage foreclosure diversion program to help those on the verge of losing their homes. Mayor Kevin Burns counts himself as one of those who needs the help. Burns says he owes more than $279,000 on the three-bedroom home he shares with his partner, a stay-at-home-dad to their 7-year-old daughter. The mayor says if they can't come up with the money, the home will go up for public sale in January.

For the story, see N. Miami Mayor In Foreclosure, May Lose Home.

Ohio Legislature Attempting To Slither Proposed Industry-Friendly Debt Settlement Statute Into Law?

In Columbus, Ohio, a column in The Cleveland Plain Dealer describes "a House-passed bill, pending in the Senate Finance and Financial Institutions Committee, to let "debt settlement" companies charge Ohioans fees of up to 20 cents per $1 of debt." Reportedly, the Governor and the current state treasurer (and now attorney general-elect) have serious reservations about this proposed law, passed in the state house of representatives by a 93-0 vote, and is opposed by the current state attorney general.

The columnist warns:(1)
  • The bill is pending at a dangerous time of year - for consumers - at the Statehouse. Legislators soon begin a post-election "lame-duck" session. Hot-button bills slither through lame-duck sessions because retiring or defeated ("lame duck") legislators, who can pass laws through Dec. 31, won't face voters again.

For more, see Debt 'rescue' bill would charge Ohioans for something they can do themselves.

(1) According to the Plain Dealer columnist, Thomas Suddes:

  • The Ohio General Assembly may prove again what a judge ruled long ago: "No man's life, liberty or property are safe while the Legislature is in session."

Caught With Their Pants Down?

A Southern California city councilman and a Fort Worth, Texas-area college district chancellor were recently featured in possibly embarrassing stories in which both were described as submitting mortgage loan application papers in connection with a purchase of a second house where each declared that they intended to use as a primary residence. Reportedly, neither actually moved in and each continued to use their first home as their primary residence.
  • The Orange County Register: [Newport Beach, California] City Councilman Steve Rosansky signed loan documents agreeing to live in a now-rundown house as his "principal residence" for at least a year, records show, but never moved in, according to neighbors. The councilman declined to explain the discrepancy, but real estate experts say it is common for buyers to sign "principal residency" clauses on income properties to obtain lower interest rates.

For more, see Newport councilman may have breached loan agreement (Steve Rosansky's deed calls for house to be principal residence, but neighbor says he's never lived there, and he's publicly called it investment property).

  • Fort Worth Weekly: It would have been a long commute. Four years ago, Tarrant County College District Chancellor Leonardo de la Garza and his wife Virginia bought a four-bedroom, three-bath house with a brick and rock façade on the shore of a lake in Sugar Land, about 280 miles from his college office.

  • The couple, who still owned a home in Arlington, did not declare the new house a “second home” on the loan agreement. They promised in the deed of trust to live in it as their “principal residence” beginning within 60 days following the filing of the deed and for a year thereafter. Lying about occupancy to a lender underwriting a home loan is a federal crime, though one often winked at by authorities, according to experts in real estate law.

For more, see House-Proud.

Operators Of Senior Housing Complexes Not Immune From Foreclosure

Some assisted care housing for senior citizens have not escaped the wrath of the foreclosure problem, recent media reports indicate. Hopefully, resolutions can be reached to minimize the disruptions to the elderly residents and their families.

  • Eugene, Oregon - The Register-Guard: An arm of the giant Credit Suisse bank has reached into west Eugene to attempt to foreclose on — and seize cash from — the 14-acre Alpine assisted living, memory care and retirement cottage complex on Barger Drive west of Highway 99. The move is another example of how the global financial crisis is hitting home as the Salem-based Sunwest Management company that runs 57 senior housing facilities in Oregon struggles under the weight its own real estate debt. For more, see Owner of senior homes sued.

  • Tahlequah, Oklahoma - Tahlequah Daily Press: A senior assisted living facility in Tahlequah is the subject of a foreclosure action filed Thursday afternoon in Cherokee County District Court. For more, see Foreclosure filed against nursing home.

  • Spokane, Washington - KXLY-TV Channel 4: More than 100 Spokane seniors are wondering if they'll have to find a new place to live while their retirement complex faces foreclosure. For more, see For more, see Retirement complex to be auctioned.

  • Edina, Minnesota - Minneapolis Star Tribune: Residents of the new Gramercy Club of Edina senior housing complex plan to relocate to a Hennepin County courtroom [...]. Their purpose: to defend their right to stay in their homes. [... E]ach 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. 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). Assisted Living

Former Owner Jailed For Code Violations On Home Lost In A Foreclosure Sale That Occurred A Month Before Citations Were Issued

In Greenville, South Carolina, The Greenville News reports:
  • Derick Smith says he went to the police station this week to get a record proving to a prospective employer that his criminal history is clean, but instead found himself in jail on charges that he violated a Greenville property upkeep ordinance on a home he no longer owned.

  • The 37-year-old Easley man spent four hours in jail on Election Day before his parents put up the $1,277 bond to free him after an officer at the police station arrested him on a January bench warrant, he said.

  • A day later, Smith said, he presented court records to officials showing that the bank had reclaimed the Keat Street home last November -- a full month before city building codes officers cited him for "international house codes violations."

  • Afterward, a judge ordered his bond refunded and the $500 fine dropped. "They treated me like I was a piece of crap," Smith said Friday. "They can do anybody in the world like this."

For the story, see Man jailed in property upkeep case on home he no longer owned.

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

Mass AG Files Housing Discrimination Suit Against Property Owner For Imposing Unauthorized 55+ Age Requirement On Residents

The Massachusetts Attorney General announced last month:
  • Attorney General Martha Coakley’s Office has filed a housing discrimination and consumer protection lawsuit against the owner of Swift’s Beach Manufactured Home Community (Swift’s Beach), located in Wareham. The complaint [...] alleges that Swift’s Beach violated housing and discrimination laws by preventing a home owner from selling his manufactured home to prospective buyers who were under the age of 55.

  • The complaint also alleges that Swift’s Beach violated state consumer protection laws by attempting to impose an unauthorized over-55 age requirement for park occupants.

For more, see AG Coakley Files Lawsuit Against Manufactured Housing Community for Housing Discrimination.

Saturday, November 08, 2008

Bronx Tenant Nabbed Stiffing Landlord; Agrees To Cough Up $11M In Back Rent

In New York City, the New York Post reports:
  • The New York Yankees have agreed to fork over $11 million to the city in back rent - money the team probably would have preferred to spend on an ace starting pitcher for next season. The team underpaid the city the equivalent of Mike Mussina's salary between 2003 and 2006, according to an audit by City Comptroller William Thompson.

For more, see $11M Ballpark Figure (Yankees Can't Slide On The Rent).

HUD Issues Clarification On "Nonrecourse" Component In Reverse Mortgages

Syndicated real estate columnist Tom Kelly writes:
  • [T]he U.S. Department of Housing and Urban Development’s Home Equity Conversion Mortgage (HECM) program, the nation’s most popular reverse mortgage with a market share of at least 85 percent to 90 percent, often is marketed with the statement, “the senior can never owe more on her HECM loan than her house is worth at the time the loan is paid back.”

  • FHA recently announced the nonrecourse(1) description in all its reverse mortgages may not be fully accurate in all circumstances.

For more, see ‘Nonrecourse’ loan clarification for reverse mortgages.

(1) According to HUD, nonrecourse means that although a borrower will always owe the entire loan balance, if the borrower (or estate) does not pay the balance when due, the mortgagee’s remedy is limited to foreclosure. The borrower will not be personally liable for any deficiency resulting from the foreclosure. While the home must be sold or foreclosed to satisfy the debt, no assets, other than the home, will be used to repay the debt. reverse mortgage yak

Suspect Charged With Giving Phony Lien Satisfaction To Escrow Company Arrested Again For Using Bogus Credit Docs, Rubber Checks To Buy Vehicle

The San Bernardino County District Attorney annouced earlier this week that, Bayandre Valentine Lewis, 34, who currenly faces a charge related to real estate fraud, was arrested again at the Rancho Cucamonga Courthouse on an unrelated charge of vehicle theft.

  • Lewis, who in 2006 operated a now defunct mortgage brokerage called Baylyfe Mortgage in Upland, Ca., is currently accused of supplying a forged satisfaction of lien document to an escrow company during a refinance transaction in order to circumvent the payment of a civil judgment.

  • Prosecutors allege that in late July 2008, while he was out of custody on a bail bond, Lewis provided false credit documentation and checks with insufficient funds to Crown Toyota in Ontario in order to secure the purchase of a used 2008 F350 pick-up. The amount financed was in excess of $40,000.00. Lewis refused to return the vehicle for several weeks, and it was ultimately located and repossessed from [a] mall parking lot on October 8, 2008. [...] His bail was set at $525,000.

For the DA's press release, see Rancho Cucamonga Man Arrested for Vehicle Theft.

Waiting List Up To 25 As Chicago-Area Animal Rescue Farm Forced To Turn Away Foreclosure Pets

In Tinley Park, Illinois, The Southtown Star reports:
  • [S]everal residents who lost their homes to foreclosure now are renting and couldn't keep their dogs. That's left Dazzle's Painted Pastures animal rescue farm [...] with a slew of new friends, so many there's now a waiting list and a call for donations.

***

  • The dogs started coming in around May. One by one, owners tearfully dropped off their best friends. Now there's a waiting list of up to 25 dogs. "It breaks my heart to tell people I cannot take their dogs," Hamill said. "They're crying on the phone." Hamill said she gets seven to eight calls a day from people who need to drop off their four-legged pets.

For more, see Homeowners drop off dogs to animal rescue farm (Now farm needs donations, has waiting list).

For a similar story from Boston, Massachusetts, see WCVB-TV Channel 5: Shelters Overwhelmed By Abandoned Pets (Foreclosure Crisis Hits Local Pet Owners).

For other posts on foreclosure pets, go here, go here, and go here. ForeclosurePetsAlpha

Cash Strapped Fort Wayne Man Gets 8 Years For Torching Home In Foreclosure

In Fort Wayne, Indiana, the The Journal Gazette reports:
  • Setting his house on fire in an attempt to prevent foreclosure led Tuesday to an eight-year prison sentence for a 36-year-old Fort Wayne man. Kevin J. Griffin, of the 500 block of Dayton Avenue, pleaded guilty to arson in October, admitting setting fire to his home in April.

***

  • Days [after the torching], Griffin's wife said that when she called their mortgage company after the fire to check on the insurance, she found out the house was in foreclosure because no mortgage payments had been made for 20 months. Griffin was in charge of paying the bills and never told her about being behind on the payments, according to court documents.

For more, see Foreclosure prompts arson, divorce, sentence.

For other stories on fires & foreclosures, go here, go here, go here, go here, and go here. ArsonForeclosureAlpha

'Operation Growing Pains' Shuts Down 36 South Florida Indoor Pot Farms; Nab 39 Suspects, Seize $9M In Product

In Miami, Florida, WFOR-TV Channel 4 reported last week:
  • Nearly $9 million worth of marijuana won't make it to the streets of South Florida following a drug sweep in Miami-Dade County. Miami-Dade police teamed up with agents from the Drug Enforcement Agency for "Operation Growing Pains" which targeted dozens of suspected hydroponics labs.

  • In total, the two agencies took down 36 so-called 'grow houses' and made 39 arrests. More than 1,500 plants were confiscated that equaled more than two-thousand pounds of pot. The street value of all that marijuana is nearly $9 million. Police also confiscated eight firearms, $23,000 in cash as well as other drugs including ecstasy and cocaine.

Source: 'Operation Growing Pains' Nets $9 Million In Pot (Miami-Dade Police Teamed Up With DEA For County-Wide Drug Sweep, 36 Grow Houses Busted, 39 Arrests).

Go here to watch WFOR-TV video: $9 Million In Pot Seized In Hydroponic Lab Sweep.

Go here and go here for other posts on Marijuana Grow Houses. pot grow ops beta

Friday, November 07, 2008

Six Loan Servicers Agree To 60 Day "Cooling Off" Period On Maryland Foreclosures

In Annapolis, Maryland, The Washington Post reports:

  • Responding to the surge in mortgage delinquencies, Gov. Martin O'Malley will announce an agreement today with six loan service companies to provide help to homeowners before they lose their properties.

***

  • HSBC, Ocwen, GMAC ResCap, Litton Loan Servicing, AmeriNational Community Services and Citi, which handle nearly a quarter of the mortgage loans in Maryland, have agreed to a "cooling-off period" with homeowners facing foreclosure. During that time, foreclosure actions and the accrual of fees and penalties will be halted for 60 days.

For more, see Md., Lenders Make Deal To Assist Homeowners.

See also:

3rd Defendant In "Money Store" Foreclosure Rescue Scam Pleads Guilty; Seven Remain

In Greenbelt, Maryland, WTOP Radio reports:
  • Federal prosecutors say a Hyattsville woman has pleaded guilty to conspiring to defraud homeowners facing foreclosure. Thirty-one-year-old Carlisha Dixon leaded guilty on Thursday to conspiracy in a scheme that falsely promised to help homeowners keep their homes and repair their credit. Dixon is the third defendant to plead guilty and one of 10 people charged in the scheme.

  • Dixon worked for a company that helped Lanham-based Metropolitan Money Store offer foreclosure consultation and credit services to homeowners with financial problems. Prosecutors say she acted as a straw buyer and fraudulently signed loan documents. Prosecutors attribute $200,000 to $400,000 in losses in the conspiracy to Dixon.

Source: Woman pleads guilty in foreclosure fraud scheme.

See also, U.S. Attorney (Maryland) press release: Third Defendant Pleads Guilty in Metropolitan Money Store Mortgage Fraud Scheme (Ten Defendants Now Charged in Scheme to Take Title of Homes from Financially Distressed Homeowners and Secretly Use Home Equity for Personal Benefit).

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

Go here for criminal prosecutions of foreclosure rescue operators. joyjackson

Cash-Hemorrhaging Bond Insurers Drag Lenders Into Court For Mortgage Underwriting Shenanigans

Forbes reports:
  • The housing crisis is not over for bond insurer MBIA. The company is still losing money on dodgy mortgage-backed securities that it insured at the height of the U.S. housing bubble. [...] The bond insurance industry has been hemorrhaging losses as the credit crunch worsens and the financial products the companies insured have plunged in value.

***

  • MBIA has taken legal action against two loan sellers and servicers, and filed a claim against a third, regarding certain defaulting bundles of second-lien mortgages. The insurer is alleging that certain past loans do not meet eligibility requirements for its protection and that it should therefore not be liable for losses.

  • [Bond insurer Ambac Financial Group], which was also forced to fortify its reserves against bad residential mortgage loans, said it expects to pull in at least $500.0 million in legal damages related to underwriting shenanigans such as this.

For the story, see Second Mortgages Sting MBIA.

San Antonio Homeowner Alleges Scam As She Pays $10K In Failed Attempt To Save Home From Foreclosure

In San Antonio, Texas, WOIA-TV Channel 4 reports on a local homeowner facing foreclosure who allegedly was scammed out of $10,000 by a woman with a history of approaching cash strapped individuals with offers to save their homes.
  • [Homeowner Janie] Anderson had gotten a letter from Rosie Divins saying she could help them keep their home. The letter said the Anderson family didn't have to go into foreclosure. Divins claimed she had a way to save their home. Janie Anderson and her husband owed the mortgage company $3,600 dollars.

  • But, in the end, they wound up giving Divins $10,000. [...] Eventually, the bank foreclosed and Anderson and her husband had to get out.

  • The News 4 Trouble Shooters found out Janie Anderson is not alone. According to bankruptcy court records at the federal courthouse, at least two other families say Divins did the same thing to them. They claim she charged them thousands of dollars, but they still lost their homes.

  • This, despite the fact, that a judge told her in 2000 to stop offering people help. [...] The judge said Divins was charging an excessive fee and providing legal services without a law license.

For more, see Family Loses Home and Blames Local Businesswoman.

Foreclosed 600 Unit Houston Apartment Complex Leaves Tenants Outraged, In Limbo

In Houston, Texas, FOX 26 reports:

  • A foreclosure on the property of a north Houston apartment complex is leaving its residents in limbo. Residents say they had heard rumors of problems plaguing La Casita Apartments, rumors that appeared to be confirmed when they saw employees at the management office packing up their files and moving out. [...] Officials said the property's lienholder is working to place an interim management team, and Mayor Bill White's office will try to expedite the process so the residents of the 600-unit complex can remain in their homes.

For more, see Complex Residents Left in Limbo After Property Gets Foreclosed.

See also:

1) KPRC-TV Channel 2: Meeting To Be Held About Mass Eviction:

  • The La Casita Apartments, [...] is in foreclosure and the residents are being evicted. When the residents were told their water and lights would be turned off in a day or two, hundreds of outraged residents gathered outside in protest on Wednesday.

2) The Houston Chronicle: City helps halt evictions (Quick action helps 1,000 residents of N. Houston apartment complex from losing homes). BetaTenantRentSkimming

NYC Tenant Evictions Soar As Landlords Lose Homes To Foreclosure

In New York City, the Daily News reports:
  • The staggering rise in foreclosures and home evictions across the outer boroughs has created a new group of innocent victims - renters. A Daily News investigation shows that from Staten Island to South Jamaica, renters have been given just weeks to find new digs, while unscrupulous landlords collect rents for homes they no longer own.

For more, see Evictions soar as banks foreclose on landlords during credit crisis. BetaTenantRentSkimming

HUD Charges NY Co-Ops With Disability Discrimination For Alleged Attempt To Enforce "No-Pets" Rule On Residents Needing Animals For Emotional Support

The U.S. Department of Housing and Urban Development recently brought non-criminal, administrative charges against downstate New York housing cooperatives in two unrelated cases:

Case #1:
  • The U. S. Department of Housing and Urban Development announced [...] that it has charged The Townsend House Corp., a private cooperative in New York City, with housing discrimination for refusing to allow a family to obtain an animal that provides emotional support for their autistic child.

***

  • After receiving documentation from doctors confirming the child's disabilities and need for an emotional support animal, the co-op agreed to permit the parents to obtain a dog for their son, but subject only to the terms contained in a Pets License Agreement, which was drafted specifically for this family. The parents alleged that the agreement contained unreasonable restrictions.(1)

For more, see HUD Charges New York Co-Op With Discriminating Against Family Of A Disabled Child.

Case #2:

  • The U. S. Department of Housing and Urban Development announced [...] that it has charged the owners and board of directors of an apartment building in Rockville Centre, New York, with housing discrimination for refusing to allow a woman with disabilities to keep a pet for emotional support.

***

  • Mary Pasko,(2) who suffers from arthritis and depression, lived with her daughter Joan Anzelone at the 20-unit building. Ms. Anzelone wrote a letter to the [co-op association] requesting a waiver of its no-pet policy to allow her mother's dog Coco to reside with them as an emotional support animal for her mother. The request was denied and Anzelone was given three weeks to remove Coco.

  • The board also threatened to pursue legal action and deny parking privileges if the dog was not removed within that time frame. When the family's attorney offered to provide physician statements, the request was again denied and the board of directors later initiated legal action against Ms. Anzelone.

For more, see HUD Charges New York Landlords With Discriminating Against A Disabled Resident.

(1) According to the HUD press release, in addition to requiring the parents to obtain insurance providing liability coverage of $1,000,000.00, the Agreement imposed other discriminatory terms, including a ten-pound weight limit; a limit on how long the service animal could be left alone in the apartment; and a requirement that the dog be muzzled when in the co-op's common areas. HUD's investigation confirmed that the Agreement contained unreasonable restrictions that in effect denied the reasonable accommodation to the child, the press release stated.

(2) According to the charges, Pasko is a 90 year old woman with physical and mental disabilities, including heart disease, hypertension, arthritis, and depression. Her physical impairments coupled with her depression pose substantial limitations on her ability to care for herself, the charges allege.

Thursday, November 06, 2008

Schwarzenegger Proposes 90 Day Foreclosure Moratorium For California

In Sacramento, California, the San Francisco Chronicle reports:

  • Gov. Arnold Schwarzenegger proposed a new plan Wednesday to induce lenders to modify home loans to help struggling borrowers avoid foreclosure. [...] Schwarzenegger suggests imposing a 90-day stay for the foreclosure process for owner-occupied homes that have received notices of default. Lenders could be exempted from the stay by proving they have an "aggressive modification program" to keep borrowers in their homes.

  • The loan modifications would be modeled on the approach used by the Federal Deposit Insurance Corp. to help borrowers of the failed IndyMac Bank.

***

  • [State officials] said the proposal would increase loan modifications by removing loan servicers' fears that they could be sued by the investors who actually own the mortgages, and by getting the majority of companies involved in working out loans, so no one company need fear it is the only one taking such actions.

For more, see Governor proposes plan to avert foreclosures.

See also, Los Angeles Times: Schwarzenegger proposes 90-day freeze on pending home foreclosures (The plan is part of an economic stimulus package the governor expects to put before lawmakers to spur loan workouts).

Mortgage Servicers Fearing On Oncoming Foreclosure Moratorium?

An article from American Banker makes the following observation on the trouble mortgage servicing companies may face if a 90-day federal moratorium is imposed on foreclosures:
  • With pressure mounting for Congress to enact a 90-day moratorium on home foreclosures, mortgage servicers are warning that the move could have the perverse effect of prolonging the housing downturn.

***

  • Pooling and servicing agreements typically require that servicers advance all the principal and interest payments, as well as tax, insurance, maintenance, and foreclosure costs, to investors regardless of whether the borrower is paying. Servicers get reimbursed for expenses incurred while a loan is delinquent but only after the property goes into foreclosure, so getting repaid can take nine months to a year.

  • A foreclosure moratorium would indefinitely extend the advances that servicers pay to investors and come as borrowing facilities that servicers rely on to make advance payments are strained by the liquidity crunch.(1)

For more, see Why Foreclosure Relief Worries Many Servicers.

Go here for other related posts on mortgage servicing issues.

(1) According to the story, the chief financial officer of a New York buyer and servicer of distressed loans likened the state of the servicing industry to the "I Love Lucy" episode in which Lucy is furiously grabbing chocolates off a fast-moving conveyor belt. "The borrowers are just piling up, and servicers are inundated and overwhelmed with calls they can't answer, short sales they can't complete, and not enough staff," he said. "They need more manpower." MortgageServicingIssuesAlpha

Another Defendant In Alleged "Bait & Switch" Predatory Loan Scam Takes Plea, 3 Year Prison Sentence

In San Bernardino, California, the San Bernardino Sun reports:

  • Hassine, 25, was originally charged with 47 counts, including conspiracy, grand theft, forgery and filing false documents. As part of the plea bargain, Hassine wrote a four-page letter to the court and admitted that $2.5 million was taken from victims.

  • Hassine is the fourth defendant to plead guilty in the case, leaving as remaining defendants Tarzana-based Lifetime Financial owner Eric Pony, 26, his sister Paulette Pony, 24, and Jacob Shawn Franco.

***

  • The investigation is ongoing, prosecutors have said, and there could be hundreds of other homeowners who have fallen victim to a bait-and-switch scheme by operators of Lifetime Financial.

For the story, see Defendant in predatory mortgage case takes plea bargain.

The California Attorney General has filed a parallel civil lawsuit against this alleged mortgage fraud operation:

Go here for earlier posts & any updates on this story.

Lender Forced Into Shopping Center Development Business After Foreclosing On Eleven Unfinished Projects Scrambles To Preserve Financial Stake

The Wall Street Journal reports:
  • Mezzanine lender Dominion Capital Management LLC didn't anticipate developing shopping centers when it lent $170 million to developer Premier Properties USA Inc. But that is what Dominion is doing since Premier fell into bankruptcy court last spring.

  • Dominion, a small lender based in Atlanta, foreclosed in April on Premier's 11 shopping centers, which were in varied stages of development. With them, the lender inherited a pile of problems: anxious first-mortgage holders; millions of dollars in contractors' liens; and one new center where allegedly faulty construction forced retailers to vacate.

For more, see Real-Estate Slump Thrusts Lenders Into Unfamiliar Roles (Dominion Capital, 'Not a Developer,' Finds Itself Filling In for a Fallen Builder).

Hazard Reporting Co., Real Estate Firm Settle RESPA Charges; Allegedly Used Sham Entities To Hide Kickbacks, Cheat Consumers; Will Pay Up To $35M

From the Department of Housing and Urban Development ("HUD"):
  • The U.S. Department of Housing and Urban Development [recently] announced that it has settled its federal lawsuit under the Real Estate Settlement Procedures Act (RESPA) against Property I.D. Corporation, a large hazard reporting company in California, Realogy Corporation, Cendant Corporation (now known as Avis Budget Group, Inc.) and Coldwell Banker Residential Brokerage Corporation.(1)

***

  • HUD alleged that Property I.D. Corporation of Los Angeles made improper payments to large real estate brokers in California based on the referral of consumers to Property I.D. Such referral-based payments are kickbacks and prohibited under Section 8 of RESPA.

***

  • In return for these referrals, the brokers were paid through quarterly payments, $25 per report, or one-quarter of the total report's cost. The sham affiliated businesses did not provide hazard disclosure reports to non-referred customers and shared in profits based solely on the number of referrals made to Property I.D.

For more, see HUD Settles Lawsuit With California Hazard Reporting Company And Real Estate Brokerage (HUD also wins ruling giving it authority to recover illegal profits).

Go here for other HUD Settlement Agreements With Alleged RESPAViolators.

(1) A settlement in a related federal class action lawsuit requires the companies to pay up to a combined $35 million dollars, much of it to California consumers who purchased hazard disclosure reports as far back as 1996.

Wednesday, November 05, 2008

Lawsuit Alleges Rent-To-Own, Rent Skimming Scam Led To Foreclosure

In Augusta, Georgia, The Augusta Chronicle reports:
  • Regina Preetorius blames the real estate market crash. A class action lawsuit filed in federal bankruptcy court says something else caused people who did business with her company, S.D.A. & Associates, to lose their investments and face eviction papers -- fraud.

***

  • [Juan Valencia and Decia Bostic-Valencia] got kicked out of a house in south Augusta last year despite putting nearly $16,000 down, paying $4,000 to "loan broker" Fred Climer and making 12 monthly payments of $976, the lawsuit says. They thought that they were working toward home ownership in a rent-to-own, bond-for-title deal, [their attorney Jack] Long said. Unbeknownst to them, the complaint alleges, S.D.A. took their money while letting an outstanding mortgage on the house go unpaid, leading to foreclosure.(1)

For more, see Fraud involved in home deals, lawsuit claims.

Go here for other posts and updates on this story.

For more on problems with "Rent To Own" and Lease / Option real estate deals, go here and go here.

(1) According to the story, the lawsuit names Mrs. Preetorius, her husband, Charles "Greg" Preetorius, and Mr. Climer as defendants and seeks to create a class of plaintiffs who fell into predicaments similar to the Valencias. rent to own lease purchase option scams yellowstone

Nevada AG Charges Three In Alleged Refinance Scam; 69 Year Old Victim Left Facing Possible Foreclosure

From the office of the Nevada Atttorney General:
  • Attorney General Catherine Cortez Masto, announced today the arrests of Roxanne Lynette McCoy and Shanease Renee Bauman, employees of Proserve Mortgage. The arrests were made in connection with an alleged scheme involving the submission of forged loan application documents to a bank for a mortgage loan, after being informed by the victim, Jeri Cooper, age 69, that she could not afford the loan and did not want to complete the loan application process. A third suspect, Laticia Renee Carter, also a Proserve Mortgage employee, remains at large.

***

  • The State alleges that, as a result, the elderly victim is being held responsible for payment of the loan and now faces possible foreclosure.

According to the Nevada AG's press release, the Defendants are each charged with multiple felonies including:

  1. one count of Forgery,
  2. one count of Obtaining Signature by False Pretenses,
  3. one count of Theft, and
  4. one count of Mortgage Lending Fraud.

For more, see Attorney General Announces Arrests In Mortgage Loan Scam Against Senior Citizen.

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

Lehman Maintained Squeaky Clean Image In Subprime Mess By Hiding Behind Sleazy Sub?

In New York City, The Village Voice published an investigative report on how Lehman Brothers, the so-called "white shoe" Wall Street investment banking firm maintained its squeaky clean image as it made huge profits in the filth and the sludge of the subprime sewer.
  • [I]t was a sweet proposition while it lasted. But like any racket, the subprime business had its seamier side. And for that, Lehman kept its squeaky-clean image by turning to a less holy subsidiary. Call her Aurora.

  • When the mortgage market collapsed and the huge investment bank failed last month, it dragged other financial markets down with it. Lehman's executives walked away with buckets of cash.

  • But buried beneath the bank, way down at the bottom of the pile, are people like Brooklyn lawyer Philip Grant and Bart Christofferson, an excavator in Utah. They live 2,000 miles apart, but they have one thing in common: They were both worked over by a Lehman Brothers subsidiary called Aurora Loan Services.

For more, see Wall Streetwalkers: The Sleazy Lehman Brothers Subsidiary (Lehman Brothers maintained its squeaky-clean image by relying on its seamier subsidiary. Just call her Aurora).

Go here for the entire story on one web page.

Bringing Equity Strippers To Justice May Be Tough Row To Hoe

In Minneapolis, Minnesota, Minnesota Public Radio reports:
  • There's no running count being kept, but observers agree that most of the tens of thousands of Minnesotans scammed by equity strippers, predatory lenders and mortgage fraudsters have not gotten justice. The record for those who try is mixed.

For more, see Thousands of foreclosure scams yield a small number of criminal charges.

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.).