Investment Program Promoted By Condo Conversion Marketer To Unload Unsold Inventory Leaves Investors Holding The Bag

In San Diego County, California, The San Diego Union Tribune reports:

• [Frances] Greenspan is one of a number of investors across California who said they agreed to effectively trade their good credit for a promise of $5,000 to $10,000 per mortgage they took out. They understood that the homes purchased on their behalf would be quickly transferred out of their names, and gone would be any financial obligation.

• Instead, their names stayed on the deeds, and they remained on the hook for hundreds of thousands of dollars in loans. They claim they were lured to this scheme by James McConville, of Diamond House Development, a Fremont company whose corporate status is listed as suspended by the secretary of state.(1)

***

• Investors say they were recruited by McConville to buy into three condo conversion projects in North County [...]. In all, roughly 80 units were involved in purchases that buyers allege were arranged though McConville, and nearly all of them are in the process of being foreclosed on by lenders. Many of the condos are rented out, with some units scheduled to be auctioned off in a matter of days.

• Some investors say they recently discovered disturbing details about their transactions, based on final settlement agreements provided them by VoiceofSanDiego.org. The statements show that 3 Mac Asset Portfolio – a company with the same address as McConville's home – received a substantial “marketing fee” on individual sales.

• In several cases shared with The San Diego Union-Tribune, the fee was $180,454 on a two-bedroom unit purchased for $310,000. A more routine six percent real estate commission on a $310,000 sale would be $18,600.

For more, see Investors are duped in condo scheme (Investors say they were recruited to buy into three condo conversion projects in North County, one of which was the the 112-unit Sommerset Woods in Escondido).

For another part to this story, see Renters become unwitting victims in condominium mortgage scheme.

(1) According to the story, Greenspan said one of the investors has contacted the District Attorney's Office in Alameda County where McConville is based to report what had occurred. That office would not confirm whether an investigation is ongoing. However, Senior Deputy District Attorney William Denny reportedly said McConville was convicted of grand theft and sentenced in 1998 to five years probation. He was ordered to pay $242,000 in restitution to two lenders after admitting he diverted insurance funds owed them in connection with a fire that destroyed a hotel McConville owned in the city of Richmond, according to the story.

Arizona Feds Indict Pair In Alleged Scheme Using Homeowners Facing Foreclosure, Abusing HUD "Short Sale" Program To Pocket Illegal Profits

From the Office of the United States Attorney (Arizona):

• A federal grand jury in Phoenix returned a 19-count indictment [Wednesday] against Kenneth D. Perkins, 51, and Robert Lee Burdiak, 66, both of Gilbert, Ariz. , alleging wire fraud and false statements to the government and to financial institutions. The indictment alleges that from May 2003 through June 4, 2004, Perkins and Burdiak defrauded the Department of Housing and Urban Development (HUD).

***

• Perkins, operating through Virtual Realty Funding Corporation and Virtual Realty Company, found homeowners in default and arranged for their participation in the [HUD Pre-Foreclosure Sale Program] as their realtor. But instead of marketing their properties, he purchased them at a discount of as much as 82% of their appraised value utilizing Burdiak as a straw-buyer. The homes were then sold for a profit, sometimes on the same day. Perkins and Burdiak concealed from the lending institutions, and thus HUD, the fact that the properties had not been marketed by submitting false documents to them. Perkins acquired approximately 20 properties at a discount which resulted in HUD paying an additional sum of a substantial amount to lenders in order to cover the shortfall in the mortgage balances.

For the entire U.S. Attorney press release, see Foreclosure-Rescue Schemers Indicted.

****************

In an unrelated story from the U.S. Attorney's Office in Arizona:

• On April 8, 2009, Dustin Michael Thompson, 30, and Sean Paul McLaughlin, 29, were indicted on four counts of Wire Fraud and one count of Conspiracy to Commit Wire Fraud as a result of their involvement in a cash back mortgage fraud scheme. Thompson and McLaughlin submitted mortgage loan applications on behalf of buyers, that included friends and family members, containing false information. Following the funding of the loans, Thompson and McLaughlin received cash back that they used for personal expenses and to perpetuate the scheme. Most of the homes purchased during the conspiracy have foreclosed.

For the entire press release, see Real Estate Investor And Loan Officer Indicted For Mortgage Fraud.

Obama Administration Big Shots On The War On Foreclosure Rescue, Loan Modification Scams

U.S. Treasury Secretary Timothy F. Geithner, Attorney General Eric Holder, and Secretary of Housing and Urban Development Shaun Donovan issued a joint press release last week on combatting foreclosure rescue and loan modification scams:

• [I]n a major step [last] week, the Department of the Treasury, the Department of Justice, the Department of Housing and Urban Development and the Federal Trade Commission announced a new joint effort that cuts across federal and state governments and the private sector to combat foreclosure rescue scams. Led by the Treasury's Financial Crimes Enforcement Network, this effort creates an advanced targeting process to streamline investigations and prosecutions and provides financial institutions with a new advisory to spot and report questionable loan modification schemes.

• For American homeowners, this means that fraudulent companies will be shut down more quickly; companies that otherwise would have gone unnoticed will be identified and investigated; and the government's ability to identify and prosecute anyone involved in mortgage rescue scams will be bolstered.

For more, see Crackdown on fraud.

See also, The Washington Post: 'We Will Find You and We Will Punish You':

• There was tough talk out of Washington [last week] aimed at loan-modification scammers. Attorney General Eric Holder had this message for people and companies ripping off homeowners on the verge of foreclosure: "If you prey on vulnerable homeowners with fraudulent mortgage schemes, or discriminate against borrowers, we will find you and we will punish you."

Some Loan Modification Firms Have Their Own Financial Baggage

In Hampton Roads, Virginia, The Virginian Pilot recently did a story on some of the upfront fee loan modification firms that have recently sprouted up locally. The owner of one firm who was interviewed for the story reportedly described her business model as one where she charges from $500 to $1,500 upfront, collects basic information from the homeowner, and then passes along the file to an attorney who then tacks on an additional fee for handling the actual negotiation. When asked how many homeowners she has helped obtain successful loan modifications, she told the reporter that because her buisness was new, she hadn't helped any yet (which reportedly contradicts the testimonials from satisfied customers that appear on the firm's website).

Before she opened her loan modification firm, she owned a now-defunct subprime mortgage business that currently is a defendant in a civil mortgage fraud lawsuit, according to the story. She claimed that the suit was due to the actions of an employee and that she had no knowledge of those actions. In addition, she apparently was unable to reach successful loan modifications on her own distressed real estate, as the story reports that her recent bankruptcy filing indicates that three houses she owned were repossessed by banks, and that she offered to give up three additional properties as she liquidated her assets in a Chapter 7 bankruptcy.

For the story, see As mortgage services pop up, regulators warn of scams.

B.C. Appellate Court Sides With Victims Who Lost Homes In Deed/Refinance Scams Involving Use Of Forged Documents; Duped Lenders End Up Holding The Bag

In Vancouver, British Columbia, The Canadian Press reports:

• The B.C. Court of Appeal wants the province to come up with stricter laws forcing lenders to do a better job of vetting mortgage applicants to ensure they aren't securing property that's been stolen. In a ruling issued [last] Monday, the Court of Appeal concluded that it shouldn't be good enough for anyone lending money for a mortgage to rely only on a title search to show who is the rightful owner of a property.

• But under the B.C. Land Title Act as it is currently written, the court found that lenders have only to do a search. A lower court judge concluded that if the property shows no liens and a lender gives out a mortgage based on that search, the lender has a valid mortgage and is entitled to be repaid. In other words, even if the rightful property owners get their property back, they are still stuck paying for mortgages they didn't take out, according to the lower court ruling.

• The Court of Appeal disagreed and instead concluded that the lender — not the rightful property owner — is the one out of luck in a fraudulent mortgage scheme.

***

• The Court of Appeal was examining two cases(1) where people fraudulently had their property transferred to someone else without their knowledge. Mortgages were obtained on the properties after the fraudster went to some people for a loan based on the equity in the property. The lenders advanced the money after doing a titles search and finding no liens on the properties.(2)

• But then the fraudster disappeared and the crime was discovered after the lenders began foreclosure proceedings. The victims of the frauds went to court(3) to have the mortgages declared void, but the lower court ruled the lenders followed the rules and the owners were out of luck. However, the Court of Appeal concluded lenders must ensure their mortgages are valid by taking steps to ensure that the registered owner obtained title to the property legally.(4)

For the story, see B.C. Court of Appeal overturns ruling on mortgage fraud.

See also,The Lawyers Weekly: Fraudulent mortgages nullified by British Columbia’s top court.

Go here, Go here, Go here, Go here, Go here, Go here, and Go here for other posts related to deed or refinancing scams by forgery, swindle, power of attorney abuse, etc.

(1) Gill v. Bucholtz, 2009 BCCA 137 (April 6, 2009); Re Oehlerking Estate, 2009 BCCA 138 (April 6, 2009).

(2) The story and the cases are silent as to whether the lender obtained a title insurance policy to insure its interest in the property. (Could it may be that no such insurance is available in British Columbia? Is it possible that the burden is on the homeowner to obtain insurance covering against the risk of having the title to his/her home stolen?) In the United States, the risk that title was obtained by forged documents is generally referred to as an "off-record risk" or "hidden hazard" that is typically covered by a title insurance policy. In the case of a mortgage company that lends money on a title acquired by forgery, having acquired a title policy to insure its interest would generally entitle it to indemnification for its loss, leaving the title insurer holding the bag. For a list of 35 off-record risks, or hidden hazards, that a title insurance policy generally protects a homeowner and mortgage lender against, see Title Insurance: What Risks Does It Protect A Property Owner Against? (footnote 1).

(3) It is important to note that the victimized homeowner has the burden in these types of cases to go to court (preferably with a real estate attorney who knows what he/she is doing) and file a civil lawsuit seeking to void the forged deed and mortgage. Failure to do so will likely result in a loss of the home. For an example of what could happen when the victim fails to go to court to void the forged deed and mortgage, see Oshawa mother faces eviction after alleged mortgage scam. For a story of a victim with legal bills piling up in his effort to get back the title to his home after he had it stolen out from under him, see Scam artists steal house (Richmond RCMP are investigating what is believed to the city's first-ever case of house theft).

(4) A little over a year ago, an Ontario Superior Court addressed a similar situation - one where a then-88 year old man had his home stolen from out from under him through the use of a forged power of attorney. The scammer subsequently pocketed the proceeds from a fraudulently obtained mortgage. The Superior Court decided the case in his favor, ruling that the mortgage lender should rightfully be left stuck holding the bag. For more on this story, see:

• Reviczky v. Meleknia, et al., (2007), 88 O.R. (3d) 699 • (2007), 287 D.L.R. (4th) 193 • 2007 CanLII 56494 (ON S.C.);
• The Toronto Star: Man, 90, off hook for loan: Court (Landmark ruling lifts $300,000 burden);
• Law Times: Bank didn’t take proper steps (Mortgage fraud decision will impact real estate industry);
• The Toronto Star: House fraud decision rocks industry (Bank `did not take steps to scrutinize the power of attorney,' judge rules). DeedZetaTheft

Evicted Homeowner Claims Loan Modification Firm Collected Loan Payments, Let Mortgage Go Into Default, Bought House At Foreclosure Sale

In Ogden, Utah, KTVX-TV Channel 4 reports:

• [Ron Chavez] was evicted from his home after twenty two years. Last year he fell behind on his mortgage. [...] He turned to a loan modification specialist. [...] "I talked to an attorney who was supposed to help us out and I got offered a brochure to contact these people,” Chavez said. Chavez entered into an agreement with the company. He was told to continue paying the mortgage, but the company put the money into an escrow account. He said the company let the house go into foreclosure and then bought it below market value. For a small fee, the company [would resell] it to Chavez at a reduced price. And Chavez was supposed to get a lower mortgage payment, but he never got a chance to buy it back. He was evicted.

For the story, see Homeowners facing foreclosure duped.

Feds Begin "Lampoon" Attack On Firm Offering Free Credit Reports With Parody Advertising

The Washington Post reports:

• If you watch television, chances are you've seen the jingles where the young guy sings a campy song about his troubles with identity theft, in a bid to pitch a site called freecreditreport.com.

• Well, now the Federal Trade Commission is getting in on the act, running a series of hilarious public service announcements to point out that such services often are not free at all, and instead pointing consumers to annualcreditreport.com, a site mandated by Uncle Sam and probably the only place online consumers can truly go to get a free copy of their credit reports from each of the three major credit reporting bureaus.

Source: FTC Takes on Freecreditreport.com.

For the videos, see:

• AnnualCreditReport.com "Restaurant" public service announcement,
• AnnualCreditReport.com "Apartment" public service announcement.

Homeowner Faces Foreclosure For Continued Refusal To Use Leash When Walking Dog

In Tarpon Springs, Florida, the St. Petersburg Times reports:

• Robert Wirth Jr. may lose his house — all because of walking his dog in a deed-restricted community without a leash. What seems like a relatively minor infraction has snowballed into a protracted court battle that he claims has cost him more than $100,000 in legal fees.

***

• It all started more than seven years ago because Wirth insisted on walking his black Labrador, Cole, regularly without a leash. In January 2003, the River Watch Homeowners Association fined Wirth and his wife, Sandra L. Blaker, $1,000 for doing so. The couple didn't pay. So the association filed a lien and in April of that year foreclosed on their home to collect the debt. The case has dragged on for years. Last year, a circuit judge ordered Wirth and his wife to pay the fine, plus interest, attorney fees and other costs or the house would be sold. Wirth now owes more than $40,000, he said.

***

• Wirth remains adamant about his case and is not backing down. [...] Wirth admits he still walks Cole without a leash. [...] Meanwhile, Wirth's frustration has escalated. He said that he would shoot and kill one of the board members if things don't go his way.

***

• Foreclosure cases like Wirth's are "unusual, but not unheard of, " said Gary W. Lyons, a Clearwater attorney whose specialties include real estate law. Lyons is also aware of foreclosure proceedings that stemmed from painting homes the wrong colors or improper shingles on roofs.

For more, see Foreclosure looms over Tarpon Springs man who walked dog off leash.

See also, Tarpon Springs dog owners knew the leash rules and defied them.

Chinese Drywall Problem A "Sleeping Beast" In Thousands Of Bank-Owned Condos, Houses?

The Associated Press reports:

• At the height of the U.S. housing boom, when building materials were in short supply, American construction companies used millions of pounds of Chinese-made drywall because it was abundant and cheap. Now that decision is haunting hundreds of homeowners and apartment dwellers who are concerned that the wallboard gives off fumes that can corrode copper pipes, blacken jewelry and silverware, and possibly sicken people.

***

• Dozens of homeowners in the Southeast have sued builders, suppliers and manufacturers, claiming the very walls around them are emitting smelly sulfur compounds that are poisoning their families and rendering their homes uninhabitable. "It's like your hopes and dreams are just gone," said Mary Ann Schultheis, who has suffered burning eyes, sinus headaches, and a general heaviness in her chest since moving into her brand-new, 4,000-square foot house in this tidy South Florida suburb a few years ago. She has few options. Her builder is in bankruptcy, the government is not helping and her lender will not give her a break. "I'm just going to cry," she said. "We don't know what we're going to do."

***

• In another cruel twist, some of the very communities that have been hit hardest by the collapse of the housing market and skyrocketing foreclosure rates are now at the epicenter of the drywall problem. [Construction consultant Michael] Foreman warns of a "sleeping beast" in the thousands of bank-owned condos and houses across the country, with no one in them to complain.

For more, see AP IMPACT: Chinese drywall poses potential risks (Chinese drywall imported during housing boom causes corrosion, possible health risk).

See also, ABC News: Some China-Made Drywall Causing a Stink (Homeowners Have Complained of Sulfur Smells and Corroding Metals).

Go here for other posts on Chinese drywall.

Go here for links to recent media reports on the problems with "Chinese drywall."

Madison Man Mad That Someone Else Now Owns His Foreclosed Home Torches Premises, Say Cops; Now Faces Arson Charges

In Madison, Wisconsin, the Wisconsin State Journal reports:

• Upset that someone else was living in the town of Bristol house where he once lived, a Madison man stuffed a rag into a vehicle gas tank in the garage and set it ablaze, according to court documents. Derek C. Hightower, 24, only intended to burn the garage [...]. Instead, according to a criminal complaint filed Thursday, the fire spread and destroyed the garage, the house and three vehicles. Hightower was charged with arson. [Current owner] Irma Smith told police she bought the house in December from an investment firm after it had been in foreclosure. She intended to move in this summer.

For the story, see Prosecutors: Accused arsonist was mad someone else lived in his former home. ForeclosureHomeVacantBeta

Orlando-Area Cops Bag Suspect In Phony Landlord Scam; Accused Of Breaking Into Vacant House, Changing Locks, Renting Premises To Unwitting Tenant

In Orlando, Florida, WFTV Channel 9 reports:

• A home for rent was the perfect price in the perfect place, but there was just one problem. The landlord didn't really own it. Detectives said the self-proclaimed landlord broke into a vacant home and changed the locks. He then rented it out to a single mother. He would have gotten away with it, too, if neighbors living near the home [...] didn't get suspicious.

• Detectives said the home may not be the only vacant house the guy was using. In fact, they're concerned he may be running a similar scheme on renters all around Central Florida. It's simple enough. Put your own locks on the doors of empty homes, hand out the new keys to renters and take off with the money. Paul Mosher, 60, wouldn't say a thing about the $1,500 he swindled from an Orange County single mother. He rented her a stately Waterford Lakes home he never even had permission to enter. [...] The real owner is allowing the family to stay rent-free for another month, but that does little to calm the victim's rattled nerves.

For more, see Single Mom Swindled By Fake Landlord.

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

Ocean City Cops Warn Against Phony Landlord Rental Scam Promoted On Craigslist

In Ocean City, New Jersey, WPVI-TV Channel 6 reports:

• Police in Ocean City, New Jersey are warning of a real estate scam. Investigators say the scammers will copy online listings for legitimate real estate sales, and then re-post them on the website Craigslist as a rental. Then, they collect rental applications, along with fees. Investigators say the contact for these listings is from a foreign country. Anyone who has information about this internet scam, or feels they have been victimized, should contact the Ocean City Police Detective Bureau at (609)399-9111.

Source: Police warn of online rental scam.

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

More Homeowner Complaints On Loan Modification Firms From Around The Country

The following links are to stories on financially strapped homeowners reporting problems with loan modification companies they hired to help resolve their mortgage problems:

• Port St. Lucie, Florida: Treasure Coast homeowners should be wary of mortgage modification scams. Mateo Avila was watching a Spanish language network when he saw a commercial for Miami-based Lincoln Lending Services, which claimed to specialize in loan modifications for homeowners. He called the toll-free number in January and did exactly what the company asked. "They told me, don't pay for the house," said Avila, who stopped paying his two home loans with Aurora Bank and Countrywide in October. "They (Lincoln Lending) took $3,000, two checks for $1,500 to do a modification." After handing over the money, Avila couldn't get any straight answers from Lincoln Lending. When his lenders foreclosed on the home last month, he soon realized he'd been scammed and contacted the Mortgage Fraud Task Force of Florida Attorney General Bill McCollum. [...] Gifford resident Elizabeth McGriff got a pamphlet in the mail from The Foreclosure Relief Group and called the company after her husband's work hours were cut. State records show the company is owned by Brian Nierenberg in Fort Lauderdale. McGriff said the company told her to pay $1,995 to start a loan modification and also asked her to pay them $550 a month until the loan was modified. Nierenberg claims his business is simply a lawyer referral service and collected fees go to attorneys.

• Orlando, Florida: Warning About Foreclosure Rescue Companies. Jackie Day is struggling to pay the mortgage on her Orlando condo so she wanted to lower her monthly mortgage payments. Jackie saw an ad for "The Home Savers," a California company that by phone told her it would cut her payments. But she says Home Savers wanted her to stop making mortgage payments to qualify. "What I would have to do---is not pay my mortgage for three months. I was to send $1,500 payments." A Home Savers spokesman said the upfront fee is an attorney's retainer and is a legal charge.

• Jacksonville, Florida: Southside Foreclosure Firm Accused of Scamming Homeowners. "I thought these folks had more knowledge and different avenues to approach our mortgage company," Royce Belle, a Jacksonville homeowner who enlisted the help of National Foreclosure Counseling Services, said. "They did not." Belle's story is one state investigators say is being told and re-told all over the country by homeowners contacted by NFCS. "We recieved a letter from National Foreclosure Services stating that they were able to help us lower our payments," he tells WOKV. "The said they'd charge us $2,044 to get our mortgage modified." Belle admits he took the bait; paying the fee and hoping to clear up rising mortgage payments and keep his home. But weeks turned into months, and Belle says he never heard from NFCS. Eventually, he says, NFCS presented a re-financing plan that actually raised his monthly mortgage payment a dollar. "We told them that doesn't make any sense," he said. "Nothing changed. We told them they didn't actually do anything for us." When Belle decided to cut ties with the company and demand a refund, he claims NFCS threatened to bankrupt him. He's now suing the company in small-claims court.

• Lake Ronkonkoma, New York: Mortgage modification mess. Back in January, homeowner Jim Gentile paid $3000 to Hope Now Modifications and a south Jersey law firm to get his mortgage modified. Jim says they told him, "We can get you a fixed rate for 5 years. (And reduce it) down to 5.25% (interest rate) which is great, cuts my mortgage in half." But Jim says all Hope Now Modifications did was tell him to stop paying his mortgage. He fell three months behind on his payments. Jim says his current mortgage company said it had never even heard of Hope Now Modifications. Jim says Hope Now Modifications led him to believe they were a non-profit agency.

• Omaha, Nebraska: Mortgage Middleman Almost Costs Couple Their Home (Attempt to refinance leads to foreclosure). An Omaha couple decided to pay a middleman to help them negotiate a better rate. What they got instead was a mortgage mess. When their variable house payment jumped, the hardworking Booker family didn't think the big mortgage company would listen to them so they paid a middleman, but the first piece of advice was ill-advised. After making five payments totaling $3,000 to First Universal of Florida, which was supposed to negotiate a fixed rate with their mortgage company, the Bookers instead received notice of default from an attorney. Their house was on the brink of foreclosure.

• Indianapolis, Indiana: State targets foreclosure consultants. Homeowners are hiring foreclosure consultants to prevent banks from seizing their homes, only to find themselves swindled. Vivienne Daniels paid $392 to a company called Capitol Foreclosure (for the Indiana AG's lawsuit, see State of Indiana v. Capitol Foreclosure). "I was behind. My mother died," she said. But according to Daniels, "they did nothing." Last year, the attorney general's office took four foreclosure consultants to court. The attorney general's office won judgments against three of the companies. A fourth is awaiting trial. Vivienne Daniels got an attorney, lost some money, but kept her home. "I was real lucky. I lost about $400. It would have been bad to lose your home," Daniels said.

• Long Island, New York: Housing advocates question loan modification firms. At a recent ACORN protest of AmeriMod loan modification company in Uniondale, homeowner Claudette Broderick said the firm got her only a forbearance from her lender. Usually under forbearance, the loan is taken off the delinquency rolls and the late payments are added on top of the regular monthly ones. Broderick, laid off as a nursing assistant, said she couldn’t afford the regular $3,100 monthly bill and the forbearance would have pushed the monthly bill to about $3,600.

Another Banquet Hall In Foreclosure Shuts Down, Sending Engaged Couples Scrambling To Salvage Wedding Plans

In Holland, Michigan, WZZM-TV Channel 13 reports:

• A Holland banquet hall that WZZM 13 On Your Side investigated in March for reneging on a refund has closed. Raleigh Woods Catering and Conference Center on James Street is closed and is in foreclosure. Now, several couples who are getting married are trying to find another place to have their receptions.

• On Thursday, Tracy Kirgis and Philip Paauwe were busy looking for a caterer for their wedding. It's in five weeks. "Panicked and horrified that there isn't going to be anything else open on such short notice", says Tracy. She and her fiancee are one of several couples who had weddings booked at Raleigh Woods. [...] Tracy and Philip put down a $2,400 deposit. At this point, they're not expecting to get it back.

For more, see Holland reception hall closes.

For other stories on banquet hall foreclosures screwing up wedding plans, see:

• Intentional Torching Of Historic Inn Facing Foreclosure Forces 14 Brides To Can Wedding Reservations,
• Bride jilted by foreclosed venue (Reception hall closed just months before nuptials),
• Gorge hotel's closure puts lovebirds, creditors in limbo,
• Couple says Abbey left them stranded.

Ohio Man Facing Foreclosure Barricades Himself In Home In Standoff With Cops

In Lucas County, Ohio, the Toledo Blade reports:

• A Springfield Township man who barricaded himself in his home during a standoff with authorities that lasted three hours was indicted Tuesday by a Lucas County grand jury. Michael Swiergosz, 46, [...] was charged with two counts of felonious assault, each with firearm specifications. The grand jury did not indict him on a charge of inducing panic. Authorities said the March 10 incident was sparked by financial concerns. Mr. Swiergosz's home was in foreclosure and had been set for sheriff's sale.

For the story, see Springfield Twp. man indicted over standoff.

Go here and go here for other posts on the encounters of police and sheriff's deputies involving foreclosures and evictions. DeputyEvictionTheta

Owner Of Now-Defunct Title Company Admits Swiping Closing Proceeds Intended To Pay Off Existing Mortgages, Leaving Homeowners Facing Foreclosure

In Louisville, Kentucky, WHAS-TV Channel 11 reports:

• In an exclusive interview with WHAS11 News, the former owner of a Louisville title company admits to misappropriating mortgage money. His actions could cost a number of people their homes.

• Wavy Curtis Shain appeared in federal court Tuesday, but the court did not accept his guilty plea, pending a better explanation of the charges by the U.S. Attorney’s Office. Shain, 26, operated Derby City Title first as a title search company from 2001 to 2003, then as a closing agent from 2003 to 2007. Shain tells WHAS11’s Joe Arnold that the “money was misappropriated to keep the business open.”

***

• When Nancy Mitchem refinanced her home through Shain, she says he kept that payout for his own use -- failing to pay off her first mortgage -- setting her up for foreclosure. [...] Homeowner Joe West adds, “We can’t even go rent an apartment because our credit scores are demolished and it’s all because of what he did.”

For the story, see Former owner of Louisville title company admits misappropriating money.

Go here for interview with Wavy Curtis Shain.

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

Tennessee Mobile Home Park Residents Temporarily Dodge Eviction As Lender Cancels Landowner's Foreclosure

In Ringgold, Tennessee, WTVC-TV Channel 9 reports:

• Dozens of families in Catoosa County are breathing a sigh of relief Tuesday after a foreclosure and auction on their mobile home park is cancelled. Last month we visited the Pine Forest Mobile Home Park in Ringgold which was planned to be auctioned off because of foreclosure - leaving many residents with no where to go.

***

• After speaking with residents in March we learned many own their trailer but pay $170 monthly rent for the lot, trash and water service. They told us moving a trailer costs between $2,500 and $4,000, along with a $500 permit. They said that kind of money to move would be very difficult, if not impossible to raise since many are retired or disabled on fixed incomes. That makes residents like Anthony Lance feel "very vulnerable, most of us can not pull up stakes and move in 30 days, nobody in here is making great money."

For the story, see Trailer Park Saved, For Now At Least.

Mobile Home Park In Foreclosure Shut Down By Authorities As Unpaid Bill Results In Water Shutoff Leaving Premises Uninhabitable; Residents Get Boot

In Southport, New York, the Elmira Star Gazette reports:

• Chemung County and multiple agencies [Tuesday] are assisting displaced residents of a Southport mobile home park on Sherman Avenue after their park became uninhabitable. The town of Southport code enforcement officer and the Chemung County Environmental Health Department said the property was uninhabitable [Tuesday] after the Elmira Water Board shut off its water, according to a news release from Chemung County.

• The property, managed by White Tigers LLC of Poughkeepsie, failed to make payments to the Elmira Water Board for several months and has indicated it will be unable to pay and is facing bankruptcy and foreclosure, the news release said. The park is unlikely to reopen, the news release said. The park has 28 units with approximately 25 homes occupied, the release said.

Source: Officials scramble to help residents of Southport mobile home park.

Feds Take Closer Look At Tax Resolution Companies As Complaints Parallel Those Leveled Against Loan Modification Firms

WebCPA reports:

• The Internal Revenue Service has suspended an enrolled agent from practicing before the agency after his clients complained that he did little to help them settle their tax disputes. The IRS’s Office of Professional Responsibility suspended Richard Hargus, who worked in California for two separate, now defunct companies that specialized in tax resolution services, including the submission of offers in compromises ["OIC"] to the IRS.(1)

• Multiple taxpayers paid the companies for Hargus to resolve their income tax liabilities through the OIC program. An OIC is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. In many instances, however, Hargus’s clients either did not receive the services for which they paid him or received very little assistance with resolving their tax issues, the IRS said. [...] After an IRS investigation, Hargus admitted a lack of due diligence in these taxpayers’ situations. The IRS suspended Hargus on Monday from practice for at least 18 months.(2)

• The IRS said that it is taking a closer look at tax resolution companies, and is also litigating known OIC abuses to ensure that tax professionals fulfill their legal and ethical obligations to their clients in dealing with IRS tax matters. The IRS’s parent agency, the Treasury Department, also announced on Monday an initiative to crack down on companies that claim to help people with foreclosure prevention services, but instead charge them up front while performing few services on their behalf.

For the story, see Practitioner Suspended for Bilking Taxpayers.

For a related post on dealing with unpaid federal tax problems, see IRS To Ease Up On Squeezing Financially Stressed Taxpayers Owing Back Taxes.

(1) According to the story, Tax practitioners are subject to the regulations issued under Treasury Department Circular 230, the IRS pointed out. Circular 230 provides that a practitioner must exercise due diligence in preparing or assisting in the preparation, approval and filing of tax returns, documents, affidavits and other papers relating to IRS matters.

(2) For an IRS advisory warning taxpayers to beware of promoters’ claims that tax debts can be settled for “pennies on the dollar,” see IR-2004-17: Check Carefully Before Applying for Offers in Compromise.

Grand Theft Probe Triggered By Report Of $1M In Missing Fixtures, Appliances Stripped From Foreclosed Mansion

In Encinitas, California, the San Diego Union Tribune reports:

• After a high-profile foreclosure, the county's largest and possibly most luxurious bank-owned home is missing an estimated $1 million worth of fixtures, from antique doors to top-of-the-line toilets. So far, no suspects have been named in a grand theft probe the Sheriff's Department launched in March.

• “It's like a car up on blocks,” sheriff's Detective Steven Ashkar said. “It's been stripped.” The 16,000-square-foot Spanish hacienda-style house on 1.24 acres in rural east Encinitas cost $13 million to build and furnish. In February, it failed to sell at a bank foreclosure auction with a starting bid of $2.3 million. [...] On March 26, the bank's real estate agent [...] filed a police report citing missing “doors, windows, fixtures, toilets, cabinets and appliances,” Ashkar said.

For more, see $1 million worth of fixtures vanish from foreclosed home.

See also, ABC Good Morning America: Million-Dollar Foreclosure Theft (Recession Victim: A Vacant California Mansion Stripped of $1 Million in Fixtures).

For the Good Morning America video, see Foreclosed Homes Attract Thieves.

Go here for other posts on pre-foreclosure homeowner fixture stripping. foreclosure fixture stripping apple

Landlord Rents Home In Foreclosure To Tenant, Then Strips The Place Of Appliances, Fixtures

In Las Vegas, Nevada, KTNV-TV Channel 13 reports:

• Imagine signing a lease, moving in, and weeks later your landlord takes all your appliances. The dishwasher ripped out, refrigerator snagged and even the toilet is gone. "I don't understand this, but they took all the shelving units from inside the pantry," Melody Hosp says. This is all evidence a house in foreclosure. [...] "Evidently the property is in foreclosure and he came to remove all his appliances and all his belongings from the house. We still live here," Hosp says. Melody just moved in this month.

For more, see Woman still renting house when landlord comes in and takes appliances.

Go here for other posts on pre-foreclosure homeowner fixture stripping. foreclosure fixture stripping apple RentSigmaSkimming

Indiana AG Files Civil Charges Against Five Loan Modification / Foreclosure Rescue Firms

From the Office of the Indiana Attorney General:

• Indiana Attorney General Greg Zoeller today filed lawsuits in Boone, Clark, Delaware, Grant and Marion counties against five foreclosure consultant companies alleging violations of state laws. [...] Foreclosure consultants target homeowners threatened with default and foreclosure and receive payment for services to allegedly stop or postpone the foreclosure.

• The lawsuits filed today cite violations of three laws including the Deceptive Consumer Sales Act, Credit Services Organizations Act and the Mortgage Rescue Protection Fraud Act.

The five lawsuits filed today targeted the following companies:

1. Foreclosure Assistance, LLC, Scottsdale, AZ,
2. Homeownership Preservation Group, LLC (also known as Stop Foreclosure Save My Home), Melbourne, FL,
3. You Walk Away, LLC, Carlsbad, CA,
4. American Mitigation Group, Inc., Del Mar, CA,
5. Foreclosure Relief Agency, LLC, Monarch Beach, CA.

For the Indiana AG's press release, see Indiana Attorney General Greg Zoeller files suit against Foreclosure Consultant Companies.

See also:

• WRTV Channel 6: State Cracks Down On Foreclosure Rescue Companies (5 Companies Targeted In Initial Round Of Lawsuits),
• The Indianapolis Star: Indiana files lawsuits against 5 out-of-state foreclosure consultants (5 new lawsuits say out-of-state companies ignored laws governing how they do business).

24 Suspects In Alleged Street Gang Member-Led Mortgage Fraud Scam Could Face Hard Time As California Feds Bring RICO Charges Against Group

In San Diego, California, voice of san diego.org reports:

• Federal prosecutors on Tuesday announced unprecedented charges against individuals involved in an alleged mortgage fraud ring involving 220 properties in San Diego County, with total purchase prices topping $100 million. The 24 defendants were all charged with participating in a "corrupt enterprise" under a federal law created by the Racketeer Influenced and Corrupt Organizations (RICO) Act, which allows for charging multiple defendants with extended penalties for their participation in an ongoing crime ring.

***

• The indictment describes a network of individuals allegedly masterminded by defendant Darnell Bell, or D-Bell.(1) Bell is a documented member of the Lincoln Park street gang and had already been serving time for about a year for narcotics charges when he was arraigned on the racketeering charges in federal court [Tuesday] morning, [U.S. Attorney Karen] Hewitt said.(2)

***

• By recruiting members of their organization to cover every piece of the real estate transaction -- from appraiser to escrow to real estate agent to buyer -- the organization allegedly obtained millions of dollars in cash back and fraudulently obtained commissions and fees, according to the indictment.

***

• Because prosecutors decided to fuse the alleged actions of all 24 defendants into the overarching racketeering charge, the individuals could each face up to 20 years in prison and fines of $250,000. The alleged racketeering activity includes charges of bank fraud, money laundering and wire fraud.

For more, see Mafia-Esque Charges Brought Against Alleged Mortgage Fraud Ring.

For the Federal indictment, see U.S. v. Bell, et al.

See also the San Diego Union Tribune:

• 24 people indicted in mortgage fraud plot ($11 million netted in S.D.-area scheme),
• Links emerge among figures accused in scam (83-page indictment lays out loan scheme).

(1) Besides Bell, the lead defendants in the case reportedly are:

• Michael Ivy, 43, of San Diego, who prosecutors say negotiated the property transactions;
• Stanley Gentry, a 49-year-old licensed local real estate broker, who allegedly allowed the organization to use his broker's license to facilitate the purchases, in exchange for $10,000 a month and a cut of the commissions and fees on each deal; and
• Billie Bishop, 49, of La Mesa, an escrow officer who allegedly enabled the organization to purchase more than 100 properties.

The other defendants include several real estate professionals: Diana Jaime, 33, a public notary; Jorge Cortez, 39, a licensed real estate agent; Esteban Valenzuela, 28, a licensed real estate appraiser; Anton Ewing, 38, a CPA; and Randolph Hirsch, 43, and Dennis Tapia, 49, both registered tax preparers. Prosecutors said defendants Latashia McKinney, 35, and Marcus Dozzell, 34, rounded up some of the straw buyers. Lorena Callu, 52, worked for the organization and allegedly helped to prepare and submit loan applications. Prosecutors also name several straw buyers as participants in the corrupt enterprise: Desiree Holiday, Dexter Holiday, Keith Holiday, Gerard Holiday, Ray Logan aka Jack Nasty, David Lewis, David Lewis, Joseph Lewis, Stevie Frazier, Jorge Magana, Nicoele Watson and Daniel Williams. All of them fraudulently obtained mortgages and purchases properties on behalf of the organization, according to the indictment.

(2) According to the indictment (beginning at page 6, line 26), Bell "used his status as a long-standing member of the Lincoln Park street gang to recruit some of the "straw buyers" and to maintain discipline within the enterprise."

Manhattan DA Charges Brooklyn Man Of Using Forged POA Revocation, Bogus Deed & Mortgage In Attempt To Swipe Harlem Brownstone From Deceased Owner

From the Office of the New York County District Attorney:

• Manhattan District Attorney Robert M. Morgenthau announced [Monday] the indictment of a Brooklyn man for filing a forged deed and other fraudulent documents in an attempt to steal a Harlem brownstone. The defendant, ENRIQUE CASTILLO, also known as ENRIQUE FERNANDEZ, 52, was indicted on charges of attempted grand larceny, offering a false instrument for filing, and criminal possession of a forged instrument.

***

• [Carolyn] Todd, who died at age 57 in March 2005, was the lifelong owner of the Harlem brownstone. In January 2005, her health failing, Ms. Todd gave power of attorney to [her cousin, James] Bryant, who was then caring for her at his home in Ohio. A short time later, she conveyed the brownstone to him and his wife Debbie as joint tenants with right of survivorship. Mr. Bryant subsequently filed the deed conveying the property to him with the City Register.

• The investigation began when Mr. Bryant contacted the District Attorney’s Office in June 2008 after learning of [a] false mortgage and “Revocation of Power of Attorney.” When he was arrested in December 2008, CASTILLO was in possession of a forged social security identification card.

Go here for the Manhattan DA's entire press release.

Go here, Go here, Go here, Go here, Go here, Go here, and Go here for other posts related to deed or refinancing scams by forgery, swindle, power of attorney abuse, etc. DeedZetaTheft

Honolulu Feds Raid Four Houses, Seize Evidence In Probe Into Alleged "Royal Hawaiian Treasury Bond" Foreclosure Rescue Scam

In Honolulu, Hawaii, the Honolulu Advertiser reports:

• The FBI [Tuesday] raided four Maui homes as part of its investigation into allegations that several local companies bilked homeowners out of more than $300,000 on O'ahu, the Big Island and Maui with false promises to help them avoid foreclosure. The FBI executed search warrants yesterday at a home [...] in Wailuku, another [...] in Waikapu and two other locations on Maui. Agents seized computer records, boxes of files and other evidence.

***

• Officials said the homeowners, many of whom are Native Hawaiian, were charged between $2,500 and $10,000 to attend seminars or counseling sessions on avoiding foreclosure, and were told they would receive bonds worth $1 million that could be used to pay off the outstanding balance of their mortgage.

***

• After attending the seminars, homeowners are told that a $1 million "Royal Hawaiian Treasury Bond" will be sent to their bank with a letter explaining that it will cover the outstanding balance of their mortgage.

For more, see Homes raided in bond probe (FBI gathering evidence in scheme that targeted folks facing foreclosure).

IRS To Take Careful Look At Loan Modification Outfits Filing Bogus Applications For Non-Profit, Tax-Exempt Status

The Chronicle of Philanthropy reports:

• The Internal Revenue Service is working to help “protect the trust and confidence” in nonprofit organizations during the current economic crisis and will be watchful of possible abuse, says Lois G. Lerner, who oversees the IRS office that monitors charities and foundations. [...] “We are trying to stay ahead of the curve to curtail predatory abuse of tax-exempt organizations,” she said.

• For example, Ms. Lerner said, the IRS is seeing “a number of” applications for tax-exempt status from organizations that offer mortgage-foreclosure counseling and assistance. Ms. Lerner noted that the revenue service in the past has cracked down on many organizations that counsel people who amass big credit-card debts.

• “Based on our experience with abusive credit-counseling organizations, we are concerned that some of these [mortgage counseling] applicants may be using the guise of an exempt organization to profit from individuals who have been harmed by financial upheaval,” said Ms. Lerner. “Consequently, we are looking very closely at applications from new organizations, and at activity being conducted by established organizations.”

For more, see IRS Watches for Potential Abuses as Charities Grapple With a Bad Economy, Agency Official Says.

State Regulator Orders Loan Modification Firm To Cease Business Activities In Idaho

From the Idaho Department of Finance:

• The Idaho Department of Finance has issued a cease and desist order against a Nevada-based business, Your Credit Angel, LLC, which purports to assist distressed homeowners in avoiding foreclosure by offering mortgage loan modification services.

• "A person engaged as a third party in mortgage loan modification activities in Idaho must be licensed as a credit counselor," said Gavin Gee, director of the Idaho Department of Finance. Gee said the unlicensed activities of "Your Credit Angel" were brought to the department’s attention by an Idaho customer who reported paying an upfront fee of $1,495 to that company. The customer could not obtain a refund and reported that he got nothing for his money. In the cease and desist order, the director ordered "Your Credit Angel" to immediately stop offering mortgage modification services in Idaho without a license.

For the entire press release, see Las Vegas Mortgage Modification Company Ordered To Cease And Desist (Address is Nothing More Than a Mail Drop Box).

For the cease and desisit order, see State of Idaho v. Your Credit Angel LLC, a division of Coronwa Investments, LLC.

Oregon AG Fielding More Complaints Against Loan Modification, Foreclosure Rescue Operators

In Portland, Oregon, The Oregonian reports:

• Complaints in Oregon about [mortgage and foreclosure repair] operations are way up, according to Attorney General John Kroger's office. [...] So far this year, Kroger's office has received 209 contacts from consumers -- most of them complaints -- about mortgage repair services, department spokeswoman Jan Margosian said on Monday. That's on pace to easily surpass last year's total of 277.

• "It is mostly lack of proper disclosures, practicing law without a license and just taking folks money and not producing anything," Margosian said about the complaints. In September 2008, the office was given jurisdiction over "foreclosure consultants" and "foreclosure equity purchasers" and has opened the following investigations under that new authority: Smith & Jordan, Inc., National Homeowners Assistance Services, Turning Point Equity Group, Oregon Home Savers, LLC, and Capital Securities Mortgage, Inc.

Source: Mortgage and foreclosure repair scams in Oregon.

Brooklyn Hotline For Victims Of Deed, Mortgage, Other Real Estate-Related Fraud

In Brooklyn, New York, the Kings County District Attorney announced:

• Kings County District Attorney Charles J. Hynes [...] announced the creation of a telephone hotline victims can use to contact the District Attorney’s new Mortgage Fraud Unit. The 12-person unit will investigate deed fraud, mortgage fraud, predatory lending and other real estate-related fraud. The number is (718) 250-2311.

Source: Kings County District Attorney Announces Real Estate And Mortgage Fraud Hotline.

Go here, Go here, Go here, Go here, Go here, Go here, and Go here for other posts related to deed or refinancing scams by forgery, swindle, power of attorney abuse, etc. DeedZetaTheft

Some Law Firms Begin Temporarily Farming Out High-Priced, Surplus Junior Attorneys By Placing Them On Loan With Public Interest Practices

The Associated Press reports:

• [A]cross the country, the junior end of the law firm hierarchy has been taking the brunt of layoffs, pay freezes and furloughs as business shrinks and firms trim their payrolls. Summer associate programs are being scrapped or reduced, and many spring law school graduates who were promised positions for the fall are being asked to delay their start date for as long as a year.

• But one silver lining is the altruistic use to which some firms are putting their surplus lawyers, seconding them to defend the poor, champion worthy causes or provide full-time pro bono lawyering.

***

• Public-interest work fellowships are being offered to a handful of associates in Los Angeles and Chicago as the firm searches for productive ways of weathering the economic downturn, said Anne E. Rea, managing partner of the California offices of Sidley [Austin LLP], a global firm with 1,800 lawyers.

For more, see Law firms give associates a chance to build skills while doing good (Rather than lay off junior lawyers, some firms are lending them to public interest practices where they can handle weightier issues and gain courtroom experience).

NC Central's Foreclosure Prevention Project Offers Free Legal Counsel To Homeowners Facing Loss Of Home

In Durham, North Carolina, The Herald Sun reports:

• Homeowners facing foreclosure should know they can get free legal representation that is among the best available for their types of problems, says the leader of the Foreclosure Prevention Project at the N.C. Central School of Law.

For more, see Free legal help available to those facing foreclosure.

Indiana AG To Announce Civil Charges Against Five Loan Modification Firms

In Indianapolis, Indiana, The Associated Press reports:

• Indiana Attorney General Greg Zoeller says he will sue five foreclosure consultant companies for collecting fees in exchange for promises to keep state residents out of foreclosure.The attorney general's office said Tuesday that Zoeller will announce details of the legal action at a news conference Thursday at the Statehouse.

Source: State plans to sue 5 foreclosure consultants.

Missouri AG Files Lawsuit Against California Firm Allegedly Peddling Bogus Loan Modification Services

The St. Louis Business Journal reports:

• Missouri Attorney General Chris Koster filed a lawsuit Tuesday against an Anaheim, Calif., company that allegedly defrauded Missourians looking for help avoiding mortgage foreclosure. Koster said the company, U.S. Foreclosure Relief, took money from victims but did not provide any help.

• The suit, filed in Kansas City, seeks an injunction to stop the company from continuing to defraud consumers as well as restitution and penalties. In most instances, U.S. Foreclosure Relief charged homeowners a fee of $1,850 for its services, along with a processing fee of $500. The company also demanded payment upfront, Koster said. He urged victims of fraudulent mortgage-relief companies to call the state consumer hotline at 800-392-8222.

Source: Koster sues company over alleged foreclosure scam.

See also, Missouri Attorney General press release: Attorney General Koster files lawsuit to stop company from cheating consumers facing mortgage foreclosure.

50+ Unit Owner-Investors Accuse Condo Converter Of Pocketing Rent, Using Apartments As Loan Collateral Without Consent

In League City, Texas, The Galveston County Daily News reports:

• More than 50 investors, most from Israel, went to court last week in attempt to save condominium units from foreclosure as they sue a group of companies and people they say defrauded them in a real estate venture. The lawsuit claims the defendants kept revenue generated by the venture that should have gone to pay debt and used property owned by the plaintiffs as collateral in obtaining a loan of almost $23 million that benefited the defendants. The investors together own 114 units in Fairways at South Shore, 3045 Marina Bay Drive, in League City.(1) The former 432-unit apartment complex was converted into condominiums about three years ago.

For more, see Condos embroiled in litigation.

(1) Reportedly, the investors never intended to live in the units but instead were seeking to generate income by renting them to others, according to the lawsuit. Through agreements, the units owned by the investors were put in a rental pool managed by the defendants, according to the lawsuit.

Slow-To-Foreclose Mortgage Lenders Creating Havoc For Condo, Homeowner Association

In a column in the Naples Daily News, Florida attorney Rob Samouce writes:

• Under the current real estate economic client in Florida, many banks and other financial institutions holding first mortgages are contributing to the delinquency of condominium and homeowners’ associations’ assessment funds by stalling to initiate foreclosure actions and then by failing to timely complete their foreclosures once their cases have been filed.

***

• During this whole process, units or homes are either being trashed or run down by the delinquent owner or tenant, or are sitting empty with the possibility of being turned into mold factories because of utilities not being paid.

• In addition, no assessments are being paid by anyone on these units. This puts a financial strain on associations operating the condominium or homeowner association as most of the associations’ expenses are constant; meaning the remainder of the unit owners will be forced to pick up the assessment delinquency slack.

For more, see Banks contributing to the delinquency of associations.

Another Mortgage Servicer Screw-Up Throws Tennessee Woman's Home In Foreclosure, Despite Proof Of Payments

In Wilson County, Tennessee, WSMV-TV Channel 4 reports on another case of a mortgage lender/servicer screw-up that resulted in a homeowner being thrown into foreclosure, despite the fact that she was current on her payments and had her bank statements to prove it. Channel 4 tried to intervene in the case; however, phone calls to the lender, Saxon Mortgage, and the attorneys handling the case, Johnson and Freedman, were not returned.

For the story, see Woman's Home Foreclosed, Sold By Mistake (Mortgage Statements Show Payments Current) (read story) (watch video).

Go here and go here for other posts on foreclosure screw ups involving improperly changed locks, removal of belongings, etc. ScrewUpsLockOutsInForeclosure

FTC Announces New Lawsuits Against Upfront Fee Loan Modification Firms

On the heels of yesterday's "declaration of war" (see 'We Will Find You and We Will Punish You') by the Federal government against loan modification scams, the Federal Trade Commission announced the filing of three new lawsuits against firms it accuses of making false representations in conncetion with the improper clipping of homeowners for upfront fees, only to do little or nothing with regard to modifying their home loans. The new lawsuits involve:

• Federal Loan Modification Law Center(1) (FedMod). FedMod markets mortgage loan modification and foreclosure relief services to homeowners who are in financial distress, delinquent on their mortgages, or in danger of losing their homes to foreclosure. In radio advertisements, the FTC alleges, FedMod induces homeowners to call its toll-free number by misrepresenting that it is part of or affiliated with the federal government, although it is not.

For the lawsuit, filed in Los Angeles, California, see FTC v. Federal Loan Modification Law Center LLP, et al.

• Bailout.hud-gov.us. According to the FTC’s complaint, defendant Thomas Ryan used a foreign Internet registrar to falsely register two sites – bailout.hud-gov.us and bailout.dohgov.us. The sites were used to entice financially strapped consumers to seek mortgage loan modification services under the guise that the services were associated with, or were actually, the U.S. government, including HUD and the Treasury Department.

For the lawsuit, filed in the District of Columbia, see FTC v. Ryan.

• Home Assure d/b/a Expert Foreclosure.(2) In this case, the FTC alleges that the defendants promise consumers facing imminent home foreclosure that they can stop the foreclosure, regardless of the amount the consumer owes his or her lender. The defendants are charged with falsely claiming that they have special relationships with lenders, have helped thousands of consumers avoid foreclosure, and will provide a 100 percent satisfaction money-back guarantee. They typically charge consumers an up-front fee of $1,500 to $2,500 but, the FTC alleges, do little or nothing to help them avoid foreclosure and fail to give refunds when foreclosures are not stopped.

For the lawsuit, filed in Tampa, Florida, see FTC v. Home Assure, LLC, et al.

The FTC press release also contained a reminder of two additional lawsuits filed at the end of March against New Jersey outfits Hope Now Modifications LLC (go here for lawsuit) and New Hope Property LLC d/b/a New Hope Modifications LLC (go here for lawsuit), alleging that the defendants misled consumers about their ability to provide mortgage loan modification and foreclosure relief, and misrepresented that they were affiliated with or part of the HOPE NOW Alliance, the non-profit, HUD-endorsed organization that is a broad-based coalition of credit and home ownership counselors, lenders, and other mortgage market participants. These are the same two firms that were also recently sued by the New Jersey Attorney General for similar allegations.

The FTC notes:

• This brings to 11 the number of loan modification and mortgage foreclosure rescue scams brought by the FTC in the last year. More than 20 state law enforcers also have taken actions against companies engaged in these types of deception, including 22 brought by Illinois Attorney General [Lisa] Madigan.

• The FTC also announced [yesterday] that it has sent warning letters to 71 companies who may be deceptively marketing mortgage loan modification or foreclosure rescue services. The FTC identified these companies through a nationwide review of Internet and other advertisements and warned these companies that their ads may violate federal law. State law enforcers also have sent warning letters to companies that are potentially engaging in such illegal practices, including more than 60 warning letters sent by Attorney General Madigan.

For the entire FTC press release, see Federal and State Agencies Crack Down on Mortgage Modification and Foreclosure Rescue Scams (FTC, State Enforcers Sue Scammers, Warn Others; Announce Education Campaign Designed to Reach Borrowers Directly).

(1) The defendants in this case are: Federal Loan Modification Law Center LLP doing business as Federal Loan Modification Law Center and under other various other names; Anz & Associates, PLC; LegalTurn, Inc.; Federal Loan Modification LLC; Boaz Minitzer, Nabile "Bill" Anz, and Jeffrey Broughton.

(2) The defendants in this case are: Home Assure, LLC, B Home Associates, LLC, doing business as (dba) Expert Foreclosure, Michael Grieco, Michael Trimarco, Nicholas Molina, and Brian Blanchard. The defendants also have been the subject of law enforcement actions or investigations by the Minnesota, North Carolina, and Florida Attorneys General, according to the FTC press release.

Illinois AG Files Civil Charges Against Two More Loan Modification, Foreclosure Rescue Operators; Lawsuit Tally Now Up To 24

From the Office of the Illinois Attorney General:

• Attorney General Lisa Madigan has filed two lawsuits in Cook County Circuit Court against Chicago-area mortgage rescue fraud schemes seeking temporary restraining orders to immediately stop the defendants from providing mortgage rescue services. Madigan made the announcement as part of a press conference [yesterday] in Washington, D.C., with U.S. Treasury Secretary Timothy Geithner, U.S. Attorney General Eric Holder, Federal Trade Commission Chairman Jon Leibowitz and U.S. Housing and Urban Development Director Secretary Sean Donovan, to discuss a coordinated effort by federal and state authorities to protect at-risk homeowners from mortgage foreclosure rescue fraud.

***

• Madigan filed complaints against Centurion Loss Mitigation Group, a Chicago-based operation and its owner Carlos A. Gomez, and Cash VIP, a Melrose Park, Ill.,-based operation and its owner Fernando Rios, also known as Fernali Ferrice.(1) With these new filings, Madigan has brought lawsuits against 24 mortgage rescue fraud schemes. Of those, the Attorney General, to date, has received judgments in nine cases, including more than $1.8 million in restitution for homeowners.

For the entire Illinois AG press release, see Madigan Files Two Mortgage Rescue Fraud Lawsuits, Seeks Immediate Ban on Companies' Operations (Illinois Attorney General Joins U.S. Treasury Secretary, U.S. Attorney General, Federal Trade Commission and HUD Leaders in Coordinated Plan to Protect At-Risk Homeowners).

(1) In the Cash VIP lawsuit, Madigan alleges the defendants sell credit and foreclosure “orientation” services, which require consumers to enroll in a one-year “membership club” and pay an upfront $575 application fee, $50 enrollment fee and a monthly fee of $69-89, as well as a final “success fee” that ranges from one to two percent of the loan amount, according to the AG's press release.

Massachusetts AG Tags Four With Civil Charges In Alleged Loan Modification Scam

In Boston, Massachusetts, the Boston Business Journal reports:

• Attorney General Martha Coakley’s Office filed a lawsuit and obtained a temporary restraining order against four defendants for their alleged involvement in a foreclosure scam.

• The complaint, filed Monday in Suffolk Superior Court, alleges that Loan Modification Group Corp., Mitigation LLC, the company’s principal Daniel H. Fox and Web site operator Chris Fuelling sought to capitalize on the foreclosure crisis and prey upon Massachusetts residents facing the loss of their homes.

• In the lawsuit, Coakley’s Office alleges that the defendants offered services to assist homeowners as “loss mitigation specialists” who are able to negotiate loan modifications to avoid foreclosure. The complaint further alleges that the defendants’ business practices were unfair and deceptive, in violation of the Massachusetts Consumer Protection Act, because they solicited fees in advance of services, failed to disclose the precise details of the services offered and how they would assist homeowners in avoiding foreclosure, and would guarantee a loan modification that would improve the homeowner’s financial situation dramatically and save the home from foreclosure.

For more, see AG files suit against foreclosure scams.

For the Massachusetts Attorney's press release, see AG Coakley Obtains Temporary Restraining Order against Perpetrators of Loan Modification Scam; Warns Public About Scams Targeting Homeowners:

• [D]efendants would claim to be attorney-based, loan modification experts that could guarantee drastically reduced interest rates. In one telephone solicitation, a representative claimed that Fox’s firm was one of fourteen law firms recruited by the government to help people avoid foreclosure and help them stay in their home, when that was not the case.

Lack Of "Hard Time" On Conviction Lures Some Street Gangs Away From Drug Trade, Into Deed & Refinance Scams

Buried in a recent story in The Journal Gazette (Fort Wayne, Indiana) is this excerpt on deed and refinancing scams where perpetrators use forged deeds, stolen I.D.s, crooked notaries (or an unwitting notary and a stooge) to swipe homes, borrow against them, pocket the proceeds, and walk away undetected:

• [T]he scam is so lucrative in Chicago that street gangs found it preferable to dealing drugs, the Chicago Tribune reported. Those schemes became so sophisticated that the gangs would reportedly hire title researchers and notaries for their efforts and either invent identities for the mortgages, steal identities from others or con people into signing documents. They also found that while drug sales brought hard time if they were caught, white-collar crime such as mortgage fraud often does not.

• “Why get locked up for selling drugs when you can get involved in a mortgage, get your money and walk away?” asked Askia Abdullah, spokesman for Eugene Moor, Cook County recorder of deeds. “They had active teams doing this.”

For the story, see Mortgage fraud: It’s so simple, it’s scary.

Sleazy Practices By Process Servers Wreak Havoc On Consumers In Debt Collection Lawsuits

A June, 2008 report by MFY Legal Services, Inc. of New York City shines some light on questionable practices engaged in by process servers when serving notices of debt collection lawsuits (many brought by "debt scavengers" on debts purchased for pennies on the dollar that are beyond the statute of limitations) on defendants that, arguably, are leaving them without the properly required notification of suits against them, and offers some recommendations with regard to improving the system. An excerpt from the summary of the report's findings:

• In 2007, MFY Legal Services provided advice, counsel and representation to more than 350 clients who were being sued in debt collection cases. Of these, none had been served properly with a summons and complaint and most did not know that a lawsuit had been filed against them until their bank accounts had been restrained.

• Default judgments due to improper service wreak havoc on the lives of many of MFY’s clients, most of whom have low-income wages or rely solely on Social Security, SSI, Veterans Benefits or pensions for support.

• The civil justice system is based on the principle that defendants will have an opportunity to be heard in court before a judgment and action to collect on a purported debt is taken against them. It appears that nine out ten New Yorkers who are sued in the Civil Court of the City of New York are being denied their right to be heard because of possibly illegal process serving practices.(1)

For the entire report, see Justice Disserved (A Preliminary Analysis of the Exceptionally Low Appearance Rate by Defendants in Lawsuits Filed in the Civil Court of the City of New York).

Go here and go here for other posts on lawsuits involving faulty notifications to property owners; and here for posts on "sewer service" (a reference to the illegal process server practice of filing a sworn affidavit of proper service in court when none was actually made).

(1) According to the report, MFY staff examined a random sample of 91 consumer debt collection court files to determine the method of service. In a preliminary test, they reviewed court files of cases filed in Queens and Kings counties. Because collection companies tend to purchase a large number of index numbers at a time, they attempted to look at multiple cases handled by the same process serving company. MFY picked three process serving companies at random.

The files indicated that personal service was rarely made. Service to a person of suitable age and discretion accounted for 54 percent of the cases, while “nail and mail” service was the standard practice in 40 percent of the cases, and personal service comprised only 6 percent. Notably, process servers for two of the companies did not make personal service on any defendants, while one company managed to do so only in 18 percent of cases. Further, the type of service effected by one company in 93 percent of its cases was by “nail and mail,” while another process server company served defendants by leaving the summons and complaint with a person of suitable age and discretion in 83 percent of cases. foreclosure faulty notice SewerServiceAlpha