Monday, December 22, 2008

Nothing Civil In Civil Court As Schoolyard Brawl Breaks Out Between Attorneys In Rival Class Actions; Colleagues Jump Into Fray To Bust Up Donnybrook

In New Orleans, Louisiana, The Times Picayune reports :
  • Two attorneys competing for clients, prestige and a bounty of legal fees opened a hearing at Orleans Parish Civil District Court [last week] with a schoolyard brawl that shocked the buttoned-up crowd and ended with one led away in handcuffs on charges of contempt.

  • The courtroom was filled with the early morning murmur of shuffled papers and crinkled newspaper when fisticuffs broke out between attorneys Madro Bandaries and J. Robert Ates, who were pushing rival class-action suits about the late handling of insurance claims.

For more, see Brawl erupts between two lawyers at civil court.

Texas Legal Aid Firm Files Suit Alleging Developer Tricked Seven Families Into Signing Over Deeds To Property They Just Agreed To Buy

In San Juan, Texas, The Monitor reports:
  • Seven families are suing a developer, saying he tricked them out of the property they had just agreed to purchase. The lawsuit against William Schwarz alleges he used deceptive practices to trick low-income, Spanish-speaking families into signing the titles to their property over to him the same day the families made down payments on the land.

  • None of the families mentioned in the suit have lost their homes at this point, but the developer is moving in that direction, said Corinna Spencer-Scheurich, an attorney for the South Texas Civil Rights Project who filed the suit on behalf of the families. She said the closing documents they signed could allow the developer to evict them from the property at any time.(1)

***

For more, see Lawsuit filed against developer alleges fraud.

See also, Texas Civil Rights Review: STCRP Attorney: Warranty Deeds Cheat Colonia Residents.

(1) According to the story, area community organizers have been meeting with families in two local subdivisions to try to determine how widespread the practice may have been, Spencer-Scheurich said. She suspects hundreds of families were affected.

Denver Pastor Charged In Flipping Scam; Used Two Unwitting Churchmembers As Straw Buyers On 8 Homes Ultimately Ending In Foreclosure, Say Authorities

In Denver, Colorado, KMGH-TV Channel 8 reports:
  • A Denver pastor, indicted for alleged mortgage fraud, turned himself into authorities late Thursday. The indictment alleges that Harold Joe Hicks used surrogates to purchase property and then falsified mortgage applications to get lower interest rates.

  • "He would bring nearly completed mortgage applications... and (would) have the surrogate buyer simply sign off without reading it," said Lynn Kimbrough of the Denver District Attorney's office.

  • Pastor Harold Joe Hicks, 64, of Mount Carmel Community Baptist Church was formally charged, Thursday, with eight counts of theft and eight counts of forgery.(1) The two surrogates listed in the indictment attended Mt. Carmel. According to court documents, Hicks told both Richard Martin and Sherri Wrightsil that he would rent the properties, pay the mortgages, taxes, insurance and other expenses.

For more, see Grand Jury Indicts Pastor In Alleged Mortgage Fraud Scheme (Eight Properties Purchased Through Surrogates End Up In Foreclosure).

See also:

  • Rocky Mountain News: Minister indicted on 16 counts (Harold Hicks accused of stealing $80,000 in mortgage scheme) - "It is one of the most heinous examples of real estate fraud I've ever seen," said Jim Spray, a mortgage fraud expert familiar with details of the Hicks case. "To use his level of trust and abuse it severely, and hurt people so deeply that it shatters their faith . . . heinous doesn't even describe it."

  • Rocky Mountain News (July 7, 2007): Signing on faith (Ex-church members say pastor misused trust to conduct shady real estate deals).

(1) It should be noted that the forgery charges relate to the signatures appearing on the allegedly fraudulent mortgage applications used to obtain the loans. According to the indictment, the signatures are alleged to be the authentic signatures of the unwitting straw buyers; Pastor Harold Joe Hicks, while accused of filling out the mortgage applications with fraudulent information, has not been accused of actually signing these documents. Notwithstanding, he is facing the forgery charges in connection with those signatures.

Regardless of whether forgery convictions are obtained against Hicks, this case should serve as a reminder that, in Colorado as well as in some other states, the act of forgery need not be done by the hand of the person being charged; fraudulently procuring the signature of another to an instrument which the signer either has no intention of, or is otherwise tricked into, signing constitutes forgery on the part of the procurer in some states. It is sufficient that the forgerer caused or procured it to be done. See also:

  • May 27, 2008 post (1): New York Court Decisions A Reminder That Viable Forgery Claim May Arise When Homeowner Is Tricked Into Signing Deed; and
  • May 27, 2008 post (2): California Appeals Court Says Genuine Homeowner Signature On Instruments In Foreclosure Rescue Scheme Not A Bar To Scammer's Forgery Conviction.

By the way, in the State of Ohio, the crime of tricking someone into signing any writing that either conveys an interest in property, or creates a monetary obligation, is called "Securing Writings by Deception." Sec. 2913.43, Ohio Rev. Code. ForgeryGenuineSignatureKappa

Little Known Defense In Foreclosures Of FHA-Insured Mortgages Highlighted In Florida Homeowner's 4-Year Fight To Save Home

In Jacksonville, Florida, MSNBC.com reports on the story of Vickie Lewis, an area homeowner fighting a foreclosure action filed against her by Washington Mutual, and who has been living with the uncertainties of being in foreclosure limbo for the last four years.
  • [F]or the past four years, Lewis, 48, has seen her name on dozens of legal documents and spent hours in court as her mortgage holder, Washington Mutual Bank, pursued foreclosure on the only home she has ever owned. And she has no more idea now than when this began where or how it all might end.

***

  • Lewis is one of scores of clients represented by [April] Charney, an attorney with Jacksonville Area Legal Aid who has developed numerous foreclosure defenses that have kept many of the troubled borrowers she represents in their homes for years.

  • Charney’s defense of Lewis has been based largely on claims that Washington Mutual did not follow federal regulations by offering her a “reasonable opportunity to get current” and “a face-to-face meeting” before three monthly mortgage installments went unpaid, among other requirements.(1)

  • According to court filings, prior to foreclosure, WaMu never discussed any options with Lewis other than demanding all back mortgage payments in full.(2) The bank is now demanding the entire balance, which had since ballooned by thousands of dollars with the addition of “illegal and outrageous” charges for attorney’s fees, collection costs and insurance, the filings allege.

For more, see When foreclosure limbo becomes a lifestyle (Like millions in U.S., Florida woman lives with housing uncertainty). (For the entire story on one web page, try here).

(1) These requirements apply to FHA-insured mortgages. According to the story, the FHA program is intended to provide a chance at home ownership for low-income and credit-challenged buyers. There’s a built-in expectation that FHA borrowers may have more trouble staying current on their payments than so-called prime borrowers, and so the borrowers pay hefty insurance premiums that protect the lenders for the life of the loan. Because of this, the FHA demands that lenders follow its extensive rules about dealing with borrowers who are in default.

(2) According to the story, Charney said lenders’ disregard for federal loss mitigation procedures and default loan servicing rules is just one sign of a larger problem: a mortgage-lending industry that ran wild for years under scant government review, inflating appraisals, overstating borrowers’ credit and income and creating such a maze of trusts and securities that the ownership of millions of mortgages is now almost impossible to establish.

Ohio AG Files Suit Against Loan Modification Firm For Violations Of State Consumer Statutes; Homeowners Clipped For Upfront Fees Averaging $650

From the Ohio Attorney General's Office:
  • The Ohio Attorney General filed a lawsuit [last Friday] to stop a foreclosure rescue business from continuing to victimize consumers throughout the state. The lawsuit, filed in the Cuyahoga County Court of Common Pleas, alleges that James R. Van Putten, doing business as “Please Save My Home” in Conneaut, Ohio, violated Ohio’s consumer protection laws by engaging in unfair and deceptive practices. The complaint alleges violations of the Consumer Sales Practices Act, the Telephone Solicitation Sales Act, and Debt Adjusters Act.

  • Van Putten obtained the names of homeowners in foreclosure from court records and used direct mail to solicit his services. The mailing stated: “Regardless of your present mortgage or loan situation, we will be able to assist you by arranging a repayment plan to bring your loan current” and “Call Today & Save Your Home.”

  • Van Putten then entered into contracts through which he promised to save the consumers’ homes from foreclosure by obtaining and providing loan modifications, legal representation, and forbearance agreements. Consumers paid, on average, $650 for Van Putten’s services. The Attorney General’s investigation found that consumers did not receive the promised services.

For the press release, the accompanying lawsuit, and copies of the correspondence and contract used by the foreclosure rescue operator (Exhibits A thru D), see Mortgage Rescue Company Sued for Consumer Fraud.

Illinois AG, Cook County SA Say Firm Filed Phony Mechanics Liens & Started Foreclosure On Homeowners Refusing To Be Squeezed

From the Office of the Illinois Attorney General:
  • Attorney General Lisa Madigan and Cook County State’s Attorney Anita Alvarez [Wednesday] both filed lawsuits against a Chicago mechanic’s lien filing service for filing invalid liens against property owners and for intimidating homeowners either to pay debts they don’t owe or to overpay for debts incurred with contractors.

***

  • According to the Attorney General’s complaint, Contractor’s Lien Services (CLS) and its founder, Steve Boucher, analyze, prepare and file mechanic’s liens on property on behalf of general contractors and subcontractors. CLS allegedly misrepresents to contractors that it has valid cause for filing mechanics liens against homeowners when, most often, those contractors do not actually have valid claims under state laws.

  • CLS also allegedly files liens without the knowledge of some contractors and, in other instances, CLS files liens against homeowners when contractors have not performed work at the properties in question.

  • After filing foreclosure liens, CLS allegedly files foreclosure actions against consumers who don’t pay off the debts. Some contractors claim that CLS collects money on behalf of contractors but then fails to redistribute the collected debts to them.

For the Illinois AG press release, see Attorney General Madigan, State's Attorney Alvarez Sue Chicago Lien Filing Service For Fraudulent Practices.

For what sounds like a similar matter recently resolved by the Massachusetts Attorney General's Office, see Mass AG: Firm Agrees To Remove Mechanics Liens On Houses (Resolves Complaints By Paid-In Full Homeowners Of Improper Squeezing By Contractor, Supplier).

Go here for other posts on suspected mechanics lien scams. StiffingContractorsTheta MechanicLienScamTheta

Sunday, December 21, 2008

Attorney Accused Of Pocketing Closing Funds Due To Lien Holders Seeks "Free Pass" From Prosecution As Psych Pros Contest Competence To Stand Trial

In Pittsburgh, Pennsylvania, the Tribune Review reports:
  • Two mental health experts had differing opinions Wednesday on whether a once-prominent Fayette County trial attorney is competent to stand trial on theft charges.

  • Adam Sedlock, a Uniontown psychologist, testified [...] that crippling physical ailments have reduced Mark F. Morrison of Hopwood to functioning at the level of a seventh-grader. He said Morrison's condition is permanent and he will never be able to assist in his own defense.

***

  • Morrison, 51, is accused of stealing about $99,000 in mortgage-settlement payments from two elderly Hopwood couples.(1) Instead of settling outstanding mortgages on the two properties, Morrison allegedly paid off smaller mortgages and diverted most of the money.

For more, see Ex-attorney Morrison's ability to face theft trial disputed.

For story update (1-15-09), see Morrison ruled competent to stand trial.

Go here, Go here, Go here, and Go here for other stories of trust account / escrow account theft of funds.

(1) Reportedly, Morrison is charged with two counts each of:

  • theft by failure to make required disposition of funds received,
  • forgery,
  • tampering with records or identification, and
  • misapplication of entrusted property. EscrowRipOffAlpha

Arrest Warrant Issued For Unlicensed California Contractor Suspected Of Illegally Slapping Phony Mechanics Liens On Homes In Foreclosure

In Vallejo, California, the Vallejo Times Herald reports:
  • A $30,000 arrest warrant has been issued for a Benicia man who officials believe has been trying to profit illegally from Vallejo's foreclosure crisis. A team from the Solano County District Attorney's Office and Vallejo Police Department on Wednesday went to arrest James Paul Jones in the Vallejo home he's been occupying and found him gone, said Deputy District Attorney Laura Undlin.

  • Jones, 53, also known as James King and King James, is suspected of contracting without a license and filing false or forged documents, Undlin said. The false document charge is a felony, she said.

  • Jones has filed mechanic's liens against several foreclosed Vallejo homes he claims to have done work on for which he wasn't paid.(1) [...] Reached by phone Friday, Jones appeared surprised to hear about the warrant, and insists he's done nothing wrong.(2)

For the rest of the story, see Man trying to cash in on foreclosures, officials say.

Go here for other posts on suspected mechanics lien scams.

(1) If Jones actually did what he is suspected of doing, he possibly felt that having the mechanics liens would facilitate a claim on his part to all or part of any surplus funds generated by a subsequent foreclosure sale, in the event the home sold at auction for more than what was owed to the foreclosing lender.

(2) Reportedly, in one case, Jones seems to have contracted for $40,000 worth of water damage repairs with a relative of Jones's who owned the property before it was foreclosed on, according to Deputy DA Undlin. Jones is then said to have then filed a $75,000 mechanics lien six days later. "We don't believe that such extensive work could be done in six days, and, in fact, we have a witness that says he saw work being done for six to eight weeks after the lien was filed," Undlin said. StiffingContractorsTheta MechanicLienScamTheta

New Los Angeles Ordinance Prohibits All Tenant Foreclosure Evictions Until Property Is Sold To New Owner

In Los Angeles, California, CBS2 reports:
  • Renters whose residences have gone into foreclosure cannot be evicted until the property is sold to a new owner under a city law signed Friday by [Los Angeles] Mayor Antonio Villaraigosa. The one-year ordinance, spearheaded by Council President Eric Garcetti, will impact 300,000 apartment buildings and single-family homes. [...] Renters [in Los Angeles] who are being evicted as a result of foreclosure were urged to contact the city's Housing Department at (866) 557-RENT.

For the story, see Mayor Passes New Rental Foreclosure Law. ThetaTenantRentSkimming

Pittsburgh Assisted Living Retirement Community Faces Foreclosure; 150 Elderly Residents Paying $300K To Get In Face Loss Of Home, Investment

In Pittsburgh, Pennsylvania, KDKA-TV Channel 2 reports:
  • Some local senior citizens who thought they were set to live out their golden years in the lap of luxury are facing a frightening reality. The assisted living community where they live, Covenant at South Hills, is in foreclosure and they may lose their homes and considerable investments.

  • Residents paid a $300,000 deposit to get into the community and pay a $3,000 monthly living fee for upscale living conditions and quality extended medical care.

***

  • Now, seven years after it opened, Covenant is only 40 percent occupied and the non-profit board that runs the facility can't pay the bills.

For more, see South Hills Senior Living Community In Foreclosure.

For story update, see:

Colorado Regulator Brings Administrative Charges Against Two Alleging Cash Back, Mortgage Scam Involving $45M In Fraudulent Loan Activity

In Denver, Colorado, the Rocky Mountain News reports:
  • The state's Division of Real Estate has sent "notices of charges" to two brokers the agency claims are the masterminds behind a $45 million Front Range mortgage fraud scheme.

  • Erin Toll, director of the real estate division, alleges the two brokers would sell homes at inflated values based on an inflated appraisal. Then, at closing, a large sum of money would be given to a management company with the understanding that they would improve the home.

  • The management company instead would return the money to the buyer, minus a commission. No payments were made on the house, and banks are ending up holding the bag in a foreclosure. The brokers are Jerrold Minney and Steven Scott Werner.

For more, see State accuses two brokers of mortgage fraud scheme.

Man Facing Foreclosure Jerked Around In Attempt To Reinstate Loan; Servicer Allegedly Pocketed $3,200 Payment, Then Failed To Honor Workout Agreement

In Cincinnati, Ohio, the WCPO-TV Channel 9 reports on the story of Yusuf Salaam, an area homeowner who fell behind in his mortgage payments, and the alleged jerking around he received from his loan servicer. According to the story:

  • Salaam's case began when he got behind in his mortgage payments and sought help. He got it by calling the foreclosure prevention phone-a-thon in June. [The Home Ownership Center of Greater Cincinnati] Program Manager LaKicia Roseman was assigned to the case.

  • Roseman got in touch with [loan servicer American Servicing Company] and worked out a new loan with the help of over $3,200 from the Ohio [Home] Rescue Loan Fund. The deal was signed in July. However, ACS allegedly refused to accept Salaam's payments and held on to the Ohio check.

  • Legal Aid Attorney Elizabeth Tull was brought in to file suit to have ACS honor its agreement. "If we weren't in Mr. Salaam's case, his house would have went to sheriff's sale," Roseman said.

For more, see Foreclosure Prevention Fraud Worries Home Experts.

For story update, see: WCPO-TV Helps Roselawn Family Keep Their Home:

  • [T]hanks to WCPO-TV, the Home Ownership Center and Legal Aid, [Yusef Salaam's] wish came true. After months of wrangling, Salaam has a new mortgage with a monthly payment that is $133 less than before.

Saturday, December 20, 2008

Another Foreclosure Screw-Up As Lender Approves Short Sale, Then Locks Out New Owner From Home A Week After Moving In

In Fort Wayne, Indiana, The Journal Gazette reports:
  • [First-time homebuyers Brian and A.J. Spitznaugle] had arranged what is known as a short sale, an increasingly common transaction these days. The owner of the house was in default on the mortgage, so the bank that held the mortgage, Chase, agreed to sell the house to the Spitznaugles for slightly less than was owed.

***

  • Slightly more than a week [after the closing], the couple got the shock of their lives. Brian Spitznaugle arrived at the house on a Saturday morning to find it cold and dark. The bank, it turned out, had contracted with a company named Safeguard Property Management, which in turn hired a company called B&CG Services to go to the home, turn off the water and electricity, drain the pipes, winterize the home and padlock it shut. Oh, and before workers left, they’d rifled through all the boxes in the garage.

For more, see Bank sells house, locks out buyers.

Go here for other posts on improper foreclosure lock-outs and other lender screw ups. ForeclosureLockOuts

Foreclosure Eviction At Wrong Home Avoided As Typo On Paperwork Discovered At 11th Hour

In Bakersfield, California, KBAK-TV Channel 29 reports:
  • A Bakersfield man was just hours away from being kicked out of his house, and it was all over a minor mistake on an eviction order. A finance company in San Diego had one wrong number in the address on the eviction form.

  • Manuel Aleman has lived at 2102 North Inyo Street for decades. The house is owned by Aleman's brother, and he always pays the rent. It's across the street from 2101 North Inyo Street, and that's a house apparently in foreclosure, and the bank apparently wants those tenants out.

For the rest of the story, see Bakersfield man nearly evicted due to typo. ForeclosureLockOuts

Second Mortgage Holder Grabs Bank Accounts, Garnishes Wages Of Florida Grandmother Facing Foreclosure

In Stuart, Florida, WPBF-TV Channel 25 reports on the story of a financially strapped grandmother with two mortgages on her home. Facing foreclosure on the first mortgage, her bank accounts were unexpectedly grabbed and her wages garnished by the holder of the second mortgage.

For the story, see Grandmother Faces Garnished Wages Due To Foreclosure (Woman Raising Grandson Has Bank Accounts Seized). Go here for the WPBF-TV video.

The Foreclosure Squeeze Continues For Condominium / Homeowner Associations

The continued squeezing of the operating funds of condominium & homeowner associations as a result of financially strapped unit owners (many of whom may be facing foreclosure) failing to pay their required maintenance fees continues, as evidenced by these stories:

  • HOAs cry foul over foreclosures (Break banks get on back dues hurts associations, they say by the numbers): Local homeowners' associations and condo boards say banks are unfairly getting a break on how much back dues they have to pay when they take back a home in foreclosure. That's resulted in financial pain for some associations and helped drive others to the brink of collapse. "We are $33,000 in arrears as of this month," the president of one association said. As a result, the mostly elderly owners were recently hit with a $350 special assessment. Reportedly, in one community, only about 30 of the development's 112 units have owners who are still paying their condo fees.

  • Homeowners group pays price of foreclosures (Greenbrook residents left to pay for upkeep of abandoned homes): Not only are residents paying to keep some abandoned homes looking trim, but the same residents also face unpaid dues from the former neighbors who walked away.

  • The Condo Crunch (Sales Are Slow, Prices Are Falling, Dues Are Overdue. How Are Associations Coping?): Complaints about condominium living used to involve mainly squabbles about noise levels and pet policies and simmering resentment over a new paint color for the lobby. But the economic downturn is forcing condo owners to turn their attention to money matters that make one resident's budget crunch everyone's problem.

Recent U.S. Department Of Justice Housing Discrimination Actions

The following links are to announcements by the Civil Rights Division of the U.S. Department of Justice of recent civil & criminal housing discrimination actions over the last 3+ months:
  • November 26, 2008: West Virginia Man Indicted on Federal Civil Rights Charges for Allegedly Burning a Home - Daryl Lee Fierce, 69, of Charleston, W.Va., was indicted by a federal grand jury for using fire to intimidate and interfere with a person’s housing rights because African-American and biracial individuals visited the person in her home.

  • November 13, 2008: Justice Department Resolves Lawsuit Alleging Race Discrimination at Roseville, Michigan Apartment Complex - Owners and managers of a Michigan apartment complex agreed to pay up to $170,000 (including $75K to 3 victims, and $40K into a fund for additional victims that may come forward) resolving a lawsuit brought by DOJ; they allegedly engaged in a pattern or practice of discrimination against African-American applicants for tenancy.

  • November 7, 2008: Justice Department Sues Evansville, Indiana Retirement Home for Discriminating Against Persons with Disabilities - DOJ sues the owners and managers of a retirement home for not allowing residents with disabilities to use motorized wheelchairs or scooters in the dining hall or in their apartments and for forcing out two tenants who used motorized wheelchairs.

  • November 5, 2008: Justice Department Files Fair Housing Lawsuit in South Dakota - DOJ sues the owners and managers of three Sioux Falls, S.D., apartment buildings, alleging that they violated the Fair Housing Act when they refused to rent apartments to families with children, and when they told tenants and prospective tenants that they did not rent to African-Americans.

  • October 9, 2008: Justice Department Settles Fair Housing Lawsuit Alleging Discrimination by Lancaster, Penn. Apartment Owner, Managing Agent Against Persons with Disabilities - Former owner and managing agent of an apartment complex have agreed to pay up to $60,500 to resolve a DOJ lawsuit alleging discrimination against persons with disabilities. According to the complaint, the defendants refused to rent an apartment to a man who is visually impaired and uses a guide dog.

  • September 30, 2008: Justice Department Settles Lawsuit with Louisiana Landlord Alleging Discrimination Against Families with Children - Owner and manager of apartment complex agreed to pay up to $145,000 to resolve claims that they discriminated against families with children in violation of the Fair Housing Act. According to the Department’s complaint, they had and exercised a policy of refusing to rent second floor units to families with children and discouraging families with children from renting at the complex.

  • September 29, 2008: Justice Department Files Lawsuit Alleging Disability-based Housing Discrimination at Seven Nashville-Area Complexes - DOJ sues Murphy Development, LLC, for failing to provide required accessible features for persons with disabilities at developments with more than 375 covered ground floor units.

  • September 26, 2008: Winder, Georgia Public Housing Authority Settles Race Discrimination Housing Complaint with Justice Department - The Housing Authority for the City of Winder, Ga., agrees to pay up to $490,000 to resolve allegations that it engaged in a pattern or practice of discriminating against African-American tenants and housing applicants.

  • September 18, 2008: Justice Department Sues Owners and On-Site Manager of Kansas City Apartment Complex for Race Discrimination and Retaliation - DOJ sues the owners and operators of an apartment complex, and against the former on-site manager of the complex, for violating the Fair Housing Act by discriminating against African-Americans on the basis of race, and by retaliating against a former employee of the complex for aiding and encouraging tenants to exercise the rights granted by the Fair Housing Act.

  • September 8, 2008: Justice Department Sues Bloomingdale, Georgia Landlord for Sexual Harassment and Race Discrimination - DOJ sues Darwin Kenneth Morgan and his company DK Morgan Consolidated LLC, for violating the Fair Housing Act in the rental of mobile homes and mobile home lots. The complaint alleged that Morgan refused to rent to inter-racial couples, made statements indicating a racial preference, and misrepresented the availability of units because of the race or color of the prospective tenants. The complaint also alleged that Morgan subjected female tenants and prospective tenants to unwanted verbal and physical sexual advances, granted and denied tangible housing benefits based on sex, and took adverse action against female tenants when they refused or objected to his sexual advances.

  • September 4, 2008: $1 Million Judgment in Sexual Harassment Case Against Cincinnati Landlord - James G. Mitchell and Land Baron Enterprises, a corporation that owned many of the properties that Mitchell managed -- agreed to pay $890,000 in compensation to 12 women who Mitchell sexually harassed and $110,000 in a civil penalty to the United States. The complaint alleged that the defendants subjected female tenants to unwanted verbal sexual advances and unwanted sexual touching; entered the apartments of female tenants without permission or notice; granted and denied tangible housing benefits in exchange for sexual favors; and took adverse action against female tenants when they refused or objected to his sexual advances.

More From The Periphery Of The Foreclosure Crisis

The following links lead to an assortment of stories related to foreclosures from around the country:
  • Gillette man found guilty for threatening letters: A Gillette, Wyoming man was found guilty of 6 counts for threatening a federal judge and other officials over the seizure of his home. Prosecutors say Laurence Eustelle Wolff in August sent threatening letters to a judge, a federal prosecutor, an IRS official and a sheriff. The letters threatened the four with a deadly standoff if anyone tried to seize his home. Court records alleged the 60-year-old didn't pay federal taxes between 1988 and 1995 and owed more than $613,000 in back taxes. In July, a judge ordered the foreclosure of Wolff's home to pay off the taxes.

  • Owners vandalizing homes after foreclosure: A Little Elm, Texas homeowner facing foreclosure reportedly got into a "cash for keys" bidding war with the foreclosing lender's representative. The owner turned down $2,000. On the day before the sale, the owner decided to take the cash. The lender's rep told him to take a hike - it was too late. The owner proceeded to vandalize the home.

  • Local realtors help abandoned pets (Take steps to ensure "No Pet LeftBehind"): In West Springfield, Massachusetts, the "No Pet Left Behind" project created by local realtors is working in conjunction with the Animal Shelter Renovations to raise money to build a no-kill shelter in western Massachusetts. Their goal is to place the animals into permanent homes and to save the pets' lives. "These animals are being left behind in these abandoned homes to fend for themselves and in a lot of cases they're starving, dehydrated, sometimes they're being found dead. We are really trying to work hard to save these animals," said realtor April Cantell.

  • Exotic birds fall prey to foreclosure crisis: In Seattle, Washington, a real estate agent discovers two bedraggled cockatiels nearly starved to death. Many owners try to take their exotic birds to an animal shelter but reportedly, the exotic birds are difficult to care for, and most shelters are not equipped to house birds because they are built to handle mainly dogs and cats, who are also being abandoned in large numbers because of foreclosures.

  • Vacant home fires a ‘sign of the times’ (Home foreclosures could be behind increase in suspected arsons): Officials believe a Gainesville, Georgia vacant house fire, which melted vinyl siding on an occupied home next door, was caused by a human act. The two prevailing theories are that a homeless person or neighborhood kids started the fire, either intentionally or unintentionally. "This could be a sign of the times to come," Deputy Fire Chief Jerome Yarbrough said. He fears that with a deepening recession, more homes left vacant from foreclosures and evictions will be burned by vagrants or vandals. And when firefighters show up, they don’t always know if there are occupants who need rescuing. "I have concerns because this type of property fire here is the kind that gets firefighters hurt," Yarbrough said. "I expect to see more of these if the economy gets worse."

  • Carbon monoxide victims living in foreclosed home expected to recover: All eight people poisoned by carbon monoxide from a gas generator running in a home near Redwood City, California where the power had been cut off are expected to recover, authorities said today. They were among 12 members of an extended family and friends who were renting in the home that authorities said was in foreclosure proceedings.

  • Foreclosure vandalism on the rise: In Killeen, Texas, fire marshals suspect a group of vandals set a vacant home on fire. The suspects reportedly kicked down the front door of the foreclosed home, shattered the windows and set the living room floor on fire. According to Killeen fire marshals this isn't the first time a foreclosed home has been vandalized. Five foreclosed homes have been vandalized in Killeen this month.

  • Tempe police keep watch on vacant homes in foreclosure: The foreclosure crisis has become so big even the Tempe, Arizona Police Department is now concerned. Patrol officers have been given a list of more than 300 foreclosed homes in the city. The patrol officers have been asked to keep an eye on the homes and to look for anything suspicious.

Friday, December 19, 2008

Putnam County, Ohio Now Offers Free Legal Assistance For Qualified Homeowners Facing Foreclosure

In Ottawa, Ohio, LimaOhio.com reports:
  • Putnam County Common Pleas Judge Randall Basinger and the Putnam County Bar Association have announced the formation of a referral system to provide free legal assistance for homeowners facing foreclosure in Putnam County. The Putnam County Bar Association will be working with the existing Putnam County Foreclosure Task Force to provide free legal advice to individuals unable to afford counsel after a foreclosure has been filed. [...] Homeowners may contact the task force at 419-523-6200.

For more, see Putnam group forms system to avoid foreclosures.

NYS Bar To Make Foreclosure Defense Training Seminar Available Online

In connection with a recent foreclosure defense training seminar for attorneys recently held in Queens, the New York State Bar Association announced:
  • [F]or attorneys who were not able to attend, the program will be recorded, and course materials will be made available both online and to all local bars and legal service offices throughout the state to help train more attorneys to handle residential foreclosure cases.(1)

The NYSBA also issued this reminder:

  • A new law that took affect on September 1, 2008 entitles all New York homeowners with subprime loans in foreclosure to mandatory court settlement conferences that provide a forum for the lender and the borrower to meet together with a mediator with the ultimate goal of achieving a workable resolution to avoid foreclosure.

For more, see NYSBA press release: State Bar Association Program Increases Number Of Pro Bono Attorneys To Assist Homneowners Facing Foreclosure (Free Continuing Legal Education Seminar Provides Training for 250 Volunteer Attorneys to Help Represent Homeowners in Foreclosure Settlement Conferences).

(1) For the cost conscious and/or CLE-obsessed, the recent Queens seminar was free, and attendees pocketed 8 continuing legal education credits, according to the press release.

Florida Legal Aid Attorney Earning National Reputation For Foreclosure Defense Both As Advocate For Clients & Trainer For Other Lawyers

In Jacksonville, Florida, MSNBC.com reports:
  • [April] Charney, a lawyer with the Jacksonville Area Legal Aid agency, is quickly developing a national reputation as a champion of homeowners facing foreclosure and a serious adversary for those attempting to take possession of those homes. Her encyclopedic knowledge of contract law, debt-collection practice, securitized mortgages, the trusts that hold them and the agreements that govern the trusts have put her at the forefront of the rapidly expanding specialty of foreclosure defense.

  • While carrying her own load of 70 to 100 foreclosure cases as a legal aid attorney, Charney, 51, also has become one of the nation’s top trainers of other lawyers eager to learn how to serve the growing clientele spawned by America’s mortgage meltdown.(1)

For more, see 'Angel' of foreclosure defense bedevils lenders (Florida attorney trains hundreds of others to help troubled borrowers).

(1) According to the story, about 1,500 lawyers have attended her daylong classes on foreclosure law so far, 80 to 200 at a time. She has taught in Ohio, California, Minnesota, South Carolina, Missouri and throughout Florida. She offers the classes at cost with the help of local bar associations and aid groups and requires that all students perform 20 hours of pro bono legal work in their communities.

Upstate NY Foreclosure Rescue Operator Files For Ch. 11 Bankruptcy Protection; Over 40 Current Sale Leaseback Deals Listed On Petition

In Albany, New York, the Daily Gazette reports:
  • Geoffrey Goldman over the past two years portrayed himself as a savior in the foreclosure crisis. He made a living by buying homes from cash-strapped owners who wouldn’t be kicked out after sales closed and could even buy the properties back under leaseback agreements. “We’re helping more people than ever,” Goldman said in an April 2007 press release.(1)

  • Now Goldman is in need of help. Two of his real estate leaseback businesses filed Tuesday for Chapter 11 reorganization in U.S. Bankruptcy Court. His Rivertown Investments and its real estate holding company, Momentum Properties, recently closed after falling victim to downturns in the housing and credit markets, according to documents filed with the Albany court.

***

  • The liquidation of those assets could cast into limbo the former homeowners who entered leaseback agreements with Rivertown. Rivertown lists in its Chapter 11 petition more than 40 leaseback agreements in New York, New Jersey and Pennsylvania.

For more, see Real estate leaseback company files for bankruptcy.

See also, Albany Times Union: Lease-back plan for homes fails (Owner of dozens of properties files for bankruptcy protection).

For story update, see Rivertown bankruptcy case dismissed.

(1) The article reports that under Rivertown’s leaseback program, according to the 2007 press release, homeowners sold their homes because they were on the verge of foreclosure or too far behind on payments to reinstate their mortgages. Sellers used proceeds from the sale to pay off their mortgages, then made rental payments to Rivertown so they could continue living in their homes, which they ultimately hoped to buy back. Rivertown Financial

Minnesota Men Convicted In Straw Buyer, Home Flipping Mortgage Fraud Scam Involving $100M In Fraudulently Obtained Loans

In Minneapolis, Minnesota, the Minneapolis Star Tribune reports:
  • Two metro-area men have been found guilty of racketeering and multiple counts of theft in Hennepin County District Court for their role in one of the state's largest mortgage fraud cases, worth approximately $100 million. Shinon Lindberg, of Greenwood, and Scott R. Rosenlund, of Chaska, were convicted by a Hennepin County jury Thursday. [... Mortgage broker Celeste] Skaar pleaded guilty this spring to one count of racketeering.

For more, see Two guilty in mortgage fraud (The scheme used straw buyers to purchase homes in the southwest metro at inflated prices).

For story updates, see:

Go here for earlier posts on this story.

"Money Store" Suspects In Sale Leaseback, Foreclosure Rescue Scam Continue To Fall

In Greenbelt, Maryland, The Associated Press reports:
  • A Fort Washington woman has pleaded guilty in a scheme to defraud homeowners facing foreclosure. Jennifer McCall, 47, pleaded guilty in federal court Thursday to conspiracy to commit mail and wire fraud.

  • McCall was the chief executive officer of Metropolitan Money Store, a company that claimed to provide help to people in danger of losing their homes. But prosecutors say the company left homeowners worse off by draining equity out of the properties and imposing exorbitant transaction fees. Prosecutors say McCall is responsible for a loss of more than $16 million dollars.

McCall is the fifth defendant in this case to cop a guilty plea.

Source: Md. Woman Pleads Guilty In Mortgage Fraud Scheme.

See also, U.S. Attorney (Maryland) press release: CEO Of Metropolitan Money Store Pleads Guilty In Mortgage Fraud Scheme (Conspirators Took Title of Homes from Financially Distressed Homeowners and Secretly Used Home Equity for Furs, Jewelry and Other Personal Benefits, Defendant Caused Over $16 Million in Losses).

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

Utilities Shutoff In Rental Building Facing Foreclosure Force Tenants To Take Over Landlord's Unpaid Bills

In Miami, Florida, The Miami Herald reports:
  • [M]ore than once over the past year, tenants of [a recently abandoned and in foreclosure] 11-unit Liberty City complex had come home to find the water shut off. Eventually, they stopped paying rent and took the matter into their own hands, forming a kind of rudimentary condo association to manage the property at 1575 NW 69th St.

  • South Florida's foreclosure crisis is creating unique hardships for renters in some apartment buildings. Unlike tenants of condos and houses, apartment dwellers rely on landlords to collect garbage, keep up the premises and make repairs. The cost is included in the monthly rent.

  • So when a landlord enters foreclosure, those services often stop, leaving residents without vital utilities and sometimes in unsafe conditions. They may be forced to move. Low-income renters sometimes have nowhere to go.

For more, see Foreclosure crisis creates unique hardships for apartment renters (South Florida apartment renters can face grim living conditions when their landlords enter foreclosure and stop paying bills. Some are taking matters into their own hands). ThetaTenantRentSkimming

Ist Mortgage Loan Modifications May Hit Road Block When Second Mortgages, HELOCs Are Involved

Dow Jones Newswires reports:
  • Abu Hafizuddin inthe Village of Huntley, Ill., has applied to get his mortgage modified after missing payments. But more flexible terms may still not save him from foreclosure. The problem is that he's behind on another set of payments tied to his property: his home-equity loan.

***

  • Home-equity loans are a stumbling block in efforts to stall or prevent foreclosures, a crucial step in halting the downward spiral of the financial crisis. Loan modifications to prevent foreclosure require the cooperation of owners of the loans. Investors in home equity loans can have conflicting interests from those that hold the first or primary mortgage, so getting both sets of investors to agree on modifying loans is a challenge.

For more, see Home-Equity Loans Are Stumbling Block In Mtge Modifications.

See also:

"No-Deficiency" Laws Give Homeowners "Get Out Of Jail Free" Card When Walking Away From Unaffordable Mortgages In Some States

The Associated Press reports:
  • Mortgage law experts say the incentive to walk away from a home loan is highest in states that have anti-deficiency statutes, which prohibit lenders from suing borrowers for additional funds after foreclosure.

  • "These anti-deficiency laws make a huge impact on foreclosure rates because they are basically 'get out of jail free' cards," said Todd Zywicki, a law professor at George Mason University [...].

  • This handful of non-recourse mortgage states includes the high-foreclosure states of California and Arizona, which not coincidentally also are leaders in the numbers of mortgage walkaways.

For the story, see Walkaways highest in 'non-recourse' states.

Active Servicemembers Entitled To Waiver Of Prepayment Penalty On Home Mortgages In Some Cases As DOJ Completes Homecomings Probe

From the Civil Rights Division of U.S. Department of Justice:
  • The Justice Department [Monday] announced the resolution of its investigation of Homecomings Financial, LLC (Homecomings), under the Servicemembers Civil Relief Act (SCRA). The SCRA suspends or modifies certain civil obligations of individuals serving on active duty in the military.(1)

***

  • Homecomings and GMAC Mortgage, LLC now will waive prepayment penalties upon request on residential mortgage loans obtained by active duty servicemembers who receive permanent change of station orders to bases 30 miles or more from their current residences.(2)

For the DOJ press release, see The Justice Department Resolves Investigation Under Servicemembers Civil Relief Act of Homecomings Financial, LLC.

(1) According to the DOJ press release, the Civil Rights Division has reviewed numerous allegations of SCRA violations (ie. foreclosure on home mortgage loans without court orders, waivers of prepayment penalties on home mortgage loans, termination of residential lease agreements), has brought one suit under SCRA, and has resolved a number of allegations without the need for litigation. Servicemembers and their dependents who believe that their SCRA rights have been violated should contact the nearest Armed Forces Legal Assistance Program office. Please consult the military legal assistance office locator at http://legalassistance.law.af.mil and click on the Legal Services Locator.

(2) According to the press release, this modified policy applies to all loans on owner-occupied properties serviced by Homecomings or GMAC Mortgage, LLC with respect to which one of the following entities retains the contractual right to receive the prepayment penalty: Homecomings or GMAC Mortgage, LLC or either entity's affiliates, including, but not limited to, the Residential Funding Company, LLC and GMAC Bank.

Thursday, December 18, 2008

NY Governor Stiffs State Court Judges On Pay Raise Despite Sharp Spike In Caseload; Legal Aid Programs Also Get The Shaft

In Albany, New York, the New York Law Journal reports:
  • Governor David A. Paterson praised the Judiciary for making an austere spending request even while the courts confront an influx of foreclosure, personal debt and other cases related to the "greatest economic and fiscal challenge of our lifetime."

  • However, Mr. Paterson did not include [in the state budget] a raise for judges, whose salaries have not increased since January 1999, in the spending plan he submitted yesterday to the Legislature.

***

  • The budget [also] does not contain money, other than that to be provided by the Interest on Lawyer Accounts (IOLA) program, for civil legal services for the poor.

For the story, see Paterson Praises Courts' Budget, Passes on Judges' Raise.

Colorado Slaps Subpoenas On 13 Loan Modification Firms; Creating Fear To Squeeze Cash From Consumers Concerns State Regulator

In Denver, Colorado, The Denver Post reports:
  • The Colorado Division of Real Estate has issued subpoenas to 13 mortgage loan-modification companies in Colorado, California and Arizona.(1) "Our concern is that there appear to be fly-by-night operations that are soliciting Colorado consumers who appear to be in trouble," said Erin Toll, director of the division. [...] "This is a brand-new cottage industry. These loan-modification companies are springing up like wildfire."(2)

***

  • Toll said many solicitations are misleading. At the top of one company's solicitation is "Notice & Demand" in large type, making it appear to be an official document. Some solicitations appear to be from the U.S. Department of Housing and Urban Development until the small print at the bottom of the page. "What we're hearing from consumers is they feel threatened when they get these notices," Toll said.(3)

Toll added that it's illegal even to solicit Colorado residents for loan modifications without being a state-licensed mortgage broker.

For more, see Loan-modification firms subpoenaed.

For story update (12-19-08), see The Denver Post: 3 more loan-modification firms subpoenaed (All are based in California. Such companies may be preying on desperate homeowners).

(1) According to the story, among the paperwork the division wants are documents used for marketing to Colorado consumers; lists of borrowers who have attempted loan modifications and the status of their cases; bank statements; copies of checks; and lists of mortgage lenders or mortgage services the companies have worked with.

(2) Problems occur, Toll said, when the companies or individuals charge large up-front costs, usually one month's mortgage payment, plus a fee of several hundred dollars, then fail to return the borrowers' money when they are unable to renegotiate the loan.

(3) Using written communications that simulate either official court documents, or documents issued by a Federal or state government agency, for the purpose of extracting money from a consumer are the types of deceptive practices that have been declared illegal when done in the debt collection context. See Fair Debt Collection Practices Act, § 807(9), § 807(13). The false representation or implication that a company is vouched for, bonded by, or affiliated with the United States or any State has also been declared to be an illegal practice in the debt collection context. FDCPA, § 807(1). It sounds to me that some of the loan modification people using these types of deceptive practices may be grifters formerly in the debt collection industry who have simply "grifted" into a new line of work.

Cook County Chief Judge Seeks Cash For Courts As Chicago-Area Foreclosure Filings Skyrocket; Current Funding To Process Cases Falling Short

In Chicago, Illinois, WBEZ Radio 91.5 FM reports:
  • The sky-rocketing number of home foreclosure cases has the Chief Judge of the Cook County Circuit courts trying to muster up more cash. Judge Tim Evans is looking for an extra $8 million to run the court system next year [...].

***

  • Evans says some of the requested money would pay 7 new support staff to help judges dealing with home foreclosure cases. EVANS: "I have had to reassign 14 of our judges to full time duties just dealing with foreclosure cases alone." Evans says in 2005, there were about 16,000 foreclosure cases in Cook County. This year there have been almost 44,000.

For the story, see Evans: Cash for Courts?

State Budget Cuts Leading To "De Facto" Foreclosure Moratorium?

In Tallahasse, Florida, The Associated Press reports:
  • Florida courts already are jammed with more criminal and foreclosure cases due to the sagging economy, but the backlog will get only worse if their budgets are cut again, judges told lawmakers Wednesday.

***

  • Courts have cut back on support personnel such as clerks, security and staff lawyers. Prosecutors and public defenders also are short-handed. Circuit Judge Belvin Perry of Orlando, chairman of the Trial Court Budget Commission, said that has resulted in backlogs for civil dockets as courts must give priority to criminal cases, particularly those involving violence. Criminal defendants also have the right to demand speedy trials, so judges must put aside other cases to do those first, Perry said.

  • He said a [Governor-requested] 10 percent cut would mean that "all civil cases in the state of Florida would virtually be suspended."

For the story, see Judges: More Fla. budget cuts mean court backlogs.

FTC, Pennsylvania Lender Settle Race Bias Charges; Borrowers' Credit Risk Didn't Warrant Higher Loan Costs, Say Feds

In Horsham, Pennsylvania, the Philadelphia Inquirer reports:
  • Gateway Funding Diversified Mortgage Services L.P., a Horsham mortgage lender, has settled federal allegations that it charged African Americans and Hispanics higher prices for loans than it did white borrowers, the government said yesterday.

  • "We are not admitting that we did it," said Bruno Pasceri, president and chief executive officer of Gateway. "I can tell you we certainly do not discriminate against anybody. I'm glad it's over."

***

  • The FTC found that Gateway loan officers charged several thousand African American and Hispanic consumers more - in higher interest rates and higher up-front charges - than was warranted, given the borrowers' credit risk.

  • The settlement payment was set at $200,000, even though the FTC had alleged $2.9 million in damages to consumers. The FTC said it allowed the lower payment because of Gateway's "inability to pay."

***

  • Irv Ackelsberg, a consumer attorney with Langer, Grogan & Diver P.C. in Center City, said millions of borrowers were paying more than they should be, feeding the nation's foreclosure problem.

For more, see Horsham lender settles discrimination case.

From the Federal Trade Commission in the matter of FTC v. Gateway Funding:

Go here, Go here, and go here for other posts on alleged race bias in real estate transactions. DiscriminationPredatoryLendingAlpha

Disbarred Lawyer Convicted Of Forging Lien Release, Satisfaction Of Mortgage On Loans Secured By His Property Wins Termination Of Sentence

In Naples, Florida, the Naples Daily News reports that, after serving 3 years of house arrest, a disbarred real estate attorney has been relieved of having to serve the 12 additional years probation originally contained in his sentence in connection with a January, 2005 no contest plea to two counts of grand theft of more than $100,000 and forgery. The ruling allows David Szempruch to reapply for his license to practice law. With respect to these charges, the story recounts:
  • [S]zempruch was first criminally investigated after a complaint from a woman who loaned him $130,000 for a real estate investment. Under an agreement, Szempruch gave Dorothea Cardin the mortgages on two properties he owned and she received an initial check for $1,650, but it bounced. She then determined he’d forged a partial release of her mortgage and the satisfaction of a mortgage for another woman, Jeanne Lyster.

  • Investigators determined Szempruch used part of the $130,000 loan to cover a $190,000 shortfall in his escrow account, which was supposed to contain funds for a [...] condominium closing.

  • He’d taken out two mortgages on property he owned [...] after borrowing $200,000 from Lyster, securing about $148,000 of that by making Lyster the mortgage lienholder. But prosecutors said he forged her signature on paperwork he filed with the Clerks of Courts that said those mortgages had been satisfied.

For the story, see 'Humiliated' and disbarred Naples attorney pays off debt, judge ends his probation.

Mass AG: Firm Agrees To Remove Mechanics Liens On Houses; Resolves Complaints By Paid-In Full Homeowners Of Improper Squeezing By Contractor, Supplier

From the Office of the Massachusetts Attorney General:
  • Attorney General Martha Coakley’s Office has entered into a settlement agreement with [...] National Lumber Company resolving a civil investigation into National Lumber’s placement of liens on the homes of at least ten Massachusetts consumers totaling approximately $260,000, as well as National Lumber’s business relationship with Taunton-based home improvement contractor Dennis Bartel (“Bartel”) and Bartel’s companies New Dimensions Construction Services and New Dimensions Construction, LLC . [...] National Lumber has agreed to remove all liens placed on Massachusetts residential properties where National Lumber was seeking to recover monies for labor and/or materials it had supplied to Bartel and New Dimensions.

***

  • The Attorney General’s Office began investigating Bartel in 2005, after receiving complaints from Massachusetts consumers alleging, among other unfair conduct, that Bartel, through his home contracting businesses, executed contracts and took payments for home improvements and failed to either commence or complete the projects. Bartel allegedly also failed to pay National Lumber for the materials for which the consumers had prepaid.

***

  • The Attorney General’s Office received complaints that National Lumber, a subcontractor for Bartel, was placing liens on the homes of Massachusetts consumers to assist Bartel in leveraging payments from these consumers even though the consumers claimed not to owe additional monies to Bartel.

  • The Attorney General’s Office also investigated allegations that National Lumber's liens exceeded the amount owed for materials and that National Lumber extended credit to Bartel, despite his payment delinquency, with the intention of placing these liens to recover from the consumers the monies due from Bartel.

For more, see the Mass AG press release: AG Coakley Reaches Agreement with Lumber Company to Remove Liens Placed on Consumers’ Property for Monies Owed by Contractor.

For a similar sounding alleged scam in Illinois, see Attorney General Madigan, State's Attorney Alvarez Sue Chicago Lien Filing Service For Fraudulent Practices.

Go here for other posts on suspected mechanics lien scams. StiffingContractorsTheta MechanicLienScamTheta

IRS To Stop Dragging Its Feet On Subordination, Discharge Requests Involving Homeowner Federal Tax Liens In Attempt To Speed Up Loan Mods, Short Sales

From an Information Release issued by the Internal Revenue Service:
  • The Internal Revenue Service [this week] announced an expedited process that will make it easier for financially distressed homeowners to avoid having a federal tax lien block refinancing [or modification] of mortgages or the sale of a home.

  • If taxpayers are looking to refinance [or restructure an existing mortgage] or sell a home and there is a federal tax lien filed, there are options. Taxpayers or their representatives [...] may request that the IRS make a tax lien secondary to the lien by the lending institution that is refinancing or restructuring a loan [known as subordination]. Taxpayers or their representatives may request that the IRS discharge its claim if the home is being sold for less than the amount of the mortgage lien [ie. short sales] under certain circumstances.(1)

  • The process to request a discharge or a subordination of a tax lien takes approximately 30 days after the submission of the completed application, but the IRS will work to speed those requests in wake of the economic downturn.

For the rest of the information release, see IR-2008-141, IRS Speeds Lien Relief for Homeowners Trying to Refinance, Sell, Dec. 16, 2008; or go here to listen to audio file - Tax Lien Relief.

(1) To apply for a certificate of lien subordination, people must follow directions in Publication 784, How to Prepare an Application for a Certificate of Subordination of a Federal Tax Lien. There is no form but there must be a typed letter of request and certain documentation.

To apply for a tax lien discharge, applicants must follow directions in Publication 783, Instructions on How to Apply for a Certificate of Discharge of a Federal Tax Lien. There is no form but there must be a typed letter of request and certain documentation.

Requests should be mailed to one of 40 Collection Advisory Groups nationwide. See Publication 4235 for address information.

Wednesday, December 17, 2008

"Hope for Homeowners" A Hopeless Program?

NBC Nightly News ran a story tonight on the "Hope for Homeowners" program created by Congress this summer to help those financially strapped individuals facing the loss of their homes. Reportedly, the results of this program so far have been dismal.

For the story (video only; running time, including 30 second commercial, about 3 minutes), see Foreclosure fix bogus, HUD says.

Missouri "Contract For Deed" Operator Hit With C&D Order By Securities Regulator, Preliminary Injunction By State AG

In Springfield, Missouri, the Springfield News Leader reports:
  • The Missouri Securities Division [yesterday] issued a cease-and desist order against Greenleaf Companies of Springfield, its subsidiary and owners Eric Gagnepain and Scott Dasal prohibiting them from offering their real estate investment program, said Ryan Hobart, spokesman for the Missouri Secretary of State’s office.

***

  • Greenleaf came under public scrutiny after many of the houses the company brokered recently were lost — or threatened to be lost — to foreclosure.

***

  • Greenleaf commissioned the construction of hundreds of investment houses and solicited investors — both in Missouri and out of the state — to take out loans and purchase those homes. In exchange for the use of their good credit, Greenleaf promised the investors at least $10,000 in returns after three years.

  • Greenleaf hoped to sell the homes to those with blemished credit histories, letting them move in first on a contract for deed. Greenleaf would collect monthly payments and forward enough to investors to cover their monthly obligations, such as loan principle, interest, taxes and insurance.

  • Without enough buyers and adequate income, Greenleaf has been unable to pay its investors, who in turn are defaulting on their mortgages, triggering foreclosures not only in Greene County but Branson, northwest Arkansas and south of Kansas City.

For the story, see State orders Greenleaf to cease and desist operations.

See also:

Go here for other "contract for deed" problems involving Greenleaf Companies.

Solicitors For Loan Modification Firms "Loitering" At Free Foreclosure Prevention Seminars Seeking New Business Get The Boot

Buried in a recent story on loan modification firms in The Sacramento Bee is this blurb on how some of the companies are reportedly attempting to drum up business:
  • [L]ast week, vendors passed out postcards for modification firms at a free Hope Now foreclosure-prevention workshop in Sacramento. State and Consumer Services Secretary Rosario Marin said solicitors always stalk such free events "and we boot them out."

For the story, see Beware of mortgage rescue solicitors.

Foreclosure Rescue Scammer Convicted On State Charges Now Faces Federal Bankruptcy Fraud Allegations Involving Fractional Interest Deed Transfers

In Oakland, California, the San Francisco Chronicle reports:
  • A Livermore business owner is facing federal charges for allegedly taking advantage of the mortgage crisis by running an elaborate foreclosure rescue scam, court records show. Sonia Alburez, 37, [...] is accused of inducing homeowners desperate to avoid foreclosure to transfer an interest in their properties to what turned out to be sham companies. She was charged Friday with four counts of bankruptcy fraud in U.S. District Court in Oakland.(1)

***

  • She claimed that her company, Community Home Saver Program, could delay or stop foreclosure proceedings so long as homeowners transferred an interest in their properties as a gift to one of several companies and paid fees, authorities said.

  • But her customers didn't realize that the companies in question were fictitious and bankrupt, authorities said. Alburez is accused of filing fraudulent bankruptcy petitions for properties in Fremont, San Ramon, Vallejo and Modesto from January to March to delay foreclosure proceedings.

For more, see Livermore woman charged in foreclosure scam.

See also: this report on the use of abusive bankruptcy court filings in connection with foreclosure rescue scams.

Go here for other posts on fractional interest deed transfer, foreclosure rescue bankruptcy scams.

(1) According to the story, Alburez and Verena Silva pleaded no contest earlier this year in Alameda County Superior Court in a similar case. Prosecutors said the women bilked more than a dozen homeowners of $1,500 to $2,500 a month in exchange for a plan the two allegedly said would save homes from foreclosure. Instead, the victims still lost their homes, as well as the money they paid Alburez and Silva. According to an earlier story, they were found guilty of two felony counts each of foreclosure rescue fraud and grand theft. loan modification

Washington Woman Faces Forgery, Theft Charges In Alleged Refinancing Scam; Accused Of Using Stolen Notary Stamp, Abusing POA In Scheme To Pocket $32K

In Bremerton, Washington, the Kitsap Sun reports:
  • A Bremerton woman was charged with forgery and theft [...] after an investigation found she'd stolen a notary stamp and taken more than $32,000 through refinancing schemes where she served as a power of attorney, according to documents filed in Kitsap County Superior Court.

  • Ebony L. Washington, 33, was found by a Bremerton police detective to have refinanced an Arsenal Way duplex twice with power of attorney given to her by a 46-year-old Bremerton man.

For more, see Woman Accused of Pocketing $32K in Refinancing Schemes.

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

Legal Aid Effort In Connecticut Has Nationwide Effect As Fannie Persuaded To Reverse Course On Foreclosure Evictions; Freddie Expects To Follow Suit

In Hartford, Connecticut, The Hartford Courant reports:
  • What began with a single mother in Hartford fighting her eviction has led to a policy change by Fannie Mae allowing renters to remain in their homes after their landlords are foreclosed on, a switch that could help thousands of renters across the country.

***

  • Legal Aid lawyers in Hartford — and subsequently, New Haven — began fighting tenant evictions by Fannie Mae in Housing Court after Congress passed a financial market bailout bill containing provisions protecting tenants in good standing from eviction.

***

  • The [Emergency Economic Stabilization Act of 2008] applies to federal agencies that control mortgages. Legal Aid lawyers argued that provisions in the law(1) pertained to both Fannie Mae and Freddie Mac because they were taken over by the federal government. The policy change — Freddie Mac said Monday it expects to follow suit — will have vast implications for renters because Fannie Mae and Freddie Mac guarantee or own half of the country's residential mortgages, which apply to buildings that house one to four families.

For the story, see Hartford Renter's Fight Leads To Fannie Mae Policy Change (Renter Wins Fannie Mae Fight) (if link expires, try here).

See also:

(1) See Section 109(b) of the Emergency Economic Stabilization Act of 2008, which, they argue, requires Fannie Mae "to permit bona fide tenants who are current on their rent to remain in their homes under the terms of their lease." ThetaTenantRentSkimming

Cleveland Housing Non-Profit Files Suit Stalling Sales Of 36 Foreclosed Homes; Seeks Order Directing Lenders To Either Repair Or Demolish Structures

In Cleveland, Ohio, The Cleveland Plain Dealer reports:
  • A Cleveland nonprofit group thinks it has found the legal tool needed to stop banks from dumping dilapidated, foreclosed properties back into the real estate market for pennies on the dollar.

  • Cleveland Housing Renewal Project Inc., a subsidiary of Neighborhood Progress Inc., sued Deutsche Bank and Wells Fargo Bank in Cleveland Housing Court on Monday to prevent the banks from selling 36 foreclosed homes in Cleveland.

  • The complaints accuse the banks of creating a public nuisance for having failed to maintain the homes, all of which are vacant and in poor condition, after taking them at sheriff's sales.(1)

  • The lawsuit asks that the banks be ordered to either repair the homes to make them livable or demolish them. Housing Court Judge Raymond Pianka granted the group's request for a temporary restraining order that stops the banks from selling the homes for at least two weeks.

For the story, see Cleveland Housing Renewal Project sues Deutsche, Wells Fargo banks over sale of foreclosed homes (Judge halts sales of foreclosed homes) (if link expires, try here).

(1) According to the story, attorneys for Cleveland Housing Renewal say Deutsche Bank, Wells Fargo and other banks have sold several thousand dilapidated, foreclosed properties here in the last few years, some for as little as $1,000. Most of these sales have been made to out-of-town buyers who have done nothing to improve the properties before selling them again. BetaVacantForeclosure

Tuesday, December 16, 2008

Use Of "Facebook" Approved For Serving Legal Notice, Rules Australian Court

In Canberra, Australia, The Associated Press reports:
  • A court in Australia has approved the use of Facebook, a popular social networking Web site, to notify a couple that they lost their home after defaulting on a loan.

  • The Australian Capital Territory Supreme Court last Friday approved lawyer Mark McCormack's application to use Facebook to serve the legally binding documents after several failed attempts to contact the couple at the house and by e-mail.

  • Australian courts have given permission in the past for people to be served via e-mail and text messages when it was not possible to serve them in person.

For more, see Australia OKs Facebook for serving lien notice.

Downtown Chicago Condo Developers Stuck With Slow Moving Inventory Lean On Lenders' Leniency To Avoid Falling Into Default, Foreclosure

In Chicago, Illinois, Crain's Chicago Business reports:
  • Chicago's downtown condominium developers got all the loans they wanted during the real estate boom. Now they're asking lenders for something else: time.

  • A growing number of high-rise developers, including Donald Trump, have sought or already received extensions on construction loans coming due. Absent any breathing room from banks, developers that have been slashing prices but still sit on stacks of empty condos face loan defaults. Foreclosure may be unavoidable for the weakest projects.

For more, see High-rise headache.

Second Wave Of Mortgage Defaults On The Horizon?

CBS' 60 Minutes ran a story Sunday night reporting:
  • [A]s correspondent Scott Pelley reports, it turns out the abyss is deeper than most people think because there is a second mortgage shock heading for the economy. In the executive suites of Wall Street and Washington, you're beginning to hear alarm about a new wave of mortgages with strange names that are about to become all too familiar. If you thought sub-primes were insanely reckless wait until you hear what's coming.
To watch the report (12:29), see A Second Mortgage Disaster On The Horizon? (60 Minutes: New Wave Of Mortgage Rate Adjustments Could Force More Homeowners To Default).

Go here to read the transcript of the 60 Minutes' story.