Sunday, May 03, 2009

Arizona Feds Being Flooded With Thousands Of Complaints On Loan Modification Scams

In Phoenix, Arizona, KNXV-TV Channel 15 reports:
  • At a time when families are losing their homes to foreclosure, others are seeing a way to prey on their desperation. And right now the FBI is inundated with loan modification fraud schemes.

***

  • "I've never seen these levels of fraud in the 12 years I've been in Arizona," said Julie Hafferty, Special Agent in charge of Arizona's mortgage and fraud division with the FBI. Hafferty says they're getting thousands of complaints to investigate. Homeowners have paid out $500 to $5,000 dollars hoping to save their homes with more affordable payments, but in return were robbed.

For more, see Valley FBI office swamped with loan modification scams.

Another Prospective Tenant Falls Victim To Phony Landlord Scam

In Dale City, Virginia, Newschannel 8 reports:
  • A local family who thought they had found the perfect home ended up losing more than $1,000 to an accused scam artist. The five-bedroom house on a quiet Dale City street was everything Patricia Keith had always wanted. "Well, it was a dream," she said. But despite putting down more than $1,000 in a security deposit and first month's rent, Keith never had the chance the call the house home.

  • Sources say 24-year-old Armeca Wright is now facing fraud charges for trying to rent a house that didn't belong to her. "It took us awhile to actually scrape our money together," said Keith. "We've been homeless since 2007." [...] This is yet another negative by-product of the foreclosure crisis. Con artists break into and try to pawn off vacant and abandoned homes to unsuspecting people.

For the story, see Virginia Woman Scammed While Trying to Rent Home.

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

More On Property Owners Being Tricked Or Deceived By Scammers Into Signing Documents

The following California cases appear to support the proposition that criminal prosecutions for forgery can be properly brought against those (ie. equity stripping, foreclosure rescue operators and others) who trick or deceive financially strapped homeowners into unwittingly signing over interests in their homes through grant and trust deeds (cases available online courtesy of Findlaw.com; fre registration may be required):

People v. Martinez, (2008) 161 Cal. App. 4th 754; 74 Cal. Rptr. 3d 409:
  • Nevertheless, a forgery conviction can be based on a document with a genuine signature. "[F]orgery is committed when a defendant, by fraud or trickery, causes another to execute a . . . document where the signer is unaware, by reason of such trickery, that he is executing a document of that nature." (People v. Parker (1967) 255 Cal.App.2d 664, 672.)

  • Defendant argues that this rule applies only where the "fraud or trickery" consists of an affirmative misrepresentation regarding the nature of the document. He concedes that Michiel may have "signed the . . . trust deed without understanding what she was signing," but he argues that he "did not make any material affirmative misrepresentations to her."

  • Preliminarily, even assuming defendant is correct about the law, there was sufficient evidence that he did, in fact, affirmatively misrepresent the nature of the trust deed. Michiel testified that defendant "provided [her] with a number of documents to sign to try and help [her] with [her] financial problems . . . ." (Italics added.)

***

  • In sum, there was evidence that defendant presented Michiel with a stack of documents to be signed and that he affirmatively misrepresented to her that their purpose was to help her with her financial problems and/or help her file a bankruptcy.

  • Separately and alternatively, however, even assuming there was no evidence that defendant affirmatively misrepresented the nature of the trust deed, he could still be found guilty of forgery. People v. Parker, supra, 255 Cal.App.2d 664 involved strikingly similar facts. There, the defendants (Parker and Ex) sold aluminum siding to a number of homeowners. They gave each purchaser a stack of papers, including a trust deed, and they indicated where the purchaser should sign. Occasionally, they affirmatively misrepresented the nature of the trust deed; for example, they told two couples that the papers consisted of a "purchase order," plus several "copies" thereof. (Id. at p. 668 [Edwards and Helland transactions].) Most of the time, however, they simply failed to disclose that the papers included a trust deed. (Id. at pp. 667 [Kinsfather transaction], 668-669 [Buss transaction], 669 [Dick transaction], 669-670 [Longoria transaction], 670 [Kincaid transaction].) The appellate court held that there was sufficient evidence of forgery in connection with each and every sale (see id. at pp. 665-666): "The crime of forgery is committed when a defendant, by fraud or trickery, causes another to execute a deed of trust or other document where the signer is unaware, by reason of such trickery, that he is executing a document of that nature." (Id. at p. 672.) "Clearly, from the evidence in this case appellants are guilty of the forgeries as charged . . . . [Citations.]" (Ibid.)
People v. Parker, (1967) 255 Cal.App. 2d 664:
  • The crime of forgery is committed when a defendant, by fraud or trickery, causes another to execute a deed of trust or other document where the signer is unaware, by reason of such trickery, that he is executing a document of that nature. In Buck v. Superior Court, supra, (an aluminum siding case) 232 Cal.App.2d 153, it is stated at page 162: "Where a person who has no intention of selling or encumbering his property is induced by some trick or device to sign a paper having such effect, believing that paper to be a substantially different instrument, the paper so signed is just as much a forgery as it would have been had the signature been forged. [Citations.] ... The crime of forgery is complete when one makes or passes an incorrectly named instrument with intent to defraud, prejudice, or damage, and proof of loss or detriment is immaterial. [Citations.] Whether the instrument forged has independent value is unimportant; the crime is complete when the act is done with the requisite intent." (See also Buck v. Superior Court, supra, 245 Cal.App.2d 431, 436-437 [54 Cal.Rptr. 282]; People v. Carson, 240 Cal.App.2d 477, 480 [49 Cal.Rptr. 653].)

  • Clearly, from the evidence in this case appellants are guilty of the forgeries as charged and of the grand theft as charged. (See Buck v. Superior Court, supra; People v. Bresin, 245 Cal.App.2d 232, 237-238 [53 Cal.Rptr. 687]; Buck v. Superior Court, supra, 232 Cal.App.2d 153, 162.) [255 Cal.App.2d 673].

Buck v. Superior Court, (1966) 245 Cal.App.2d 431, 436-437; 54 Cal.Rptr. 282:

  • That the crime of forgery is committed when a defendant, by fraud or trickery, causes another to execute a deed of trust or other document, where the signer is unaware, by reason of such trickery, that he is executing a document of that nature, is now settled by Buck v. Superior Court, supra, (1965) 232 Cal.App.2d 153.

People v. Carson, (1966) 240 Cal.App.2d 477, 480; 49 Cal.Rptr. 653:

  • The issue is settled in Buck v. Superior Court, supra, 232 Cal.App.2d 153, 161- 162, where the court said: "Where a person who has no intention of selling or encumbering his property is induced by some trick or device to sign a paper having such effect, believing that paper to be a substantially different instrument, the paper so signed is just as much a forgery as it would have been had the signature been forged. [Citations.] An encumbrance may be the subject of forgery. [Citation.] The crime of forgery is complete when one makes or passes an incorrectly named instrument with intent to defraud, prejudice, or damage, and proof of loss or detriment is immaterial. [Citations.] Whether the instrument forged has independent value is unimportant; the crime is complete when the act is done with the requisite intent."

Buck v. Superior Court, (1965) 232 Cal.App.2d 153:

  • Where a person who has no intention of selling or encumbering his property is induced by some trick or device to sign a paper having such effect, believing that paper to be a substantially different instrument, the paper so signed is just as much a forgery as it would have been had the signature been forged. (Conklin v. Benson, 159 Cal. 785, 791 [116 P. 34, 36 L.R.A. N.S. 537]; Wright v. Rogers, 172 Cal.App.2d 349, 362 [342 P.2d 447].) An encumbrance may be the subject of forgery. (Conklin v. Benson, supra, page 792.) The crime of forgery is complete when one makes or passes an incorrectly named instrument with intent to defraud, prejudice, or damage, and proof of loss or detriment is immaterial. (People v. McAffery, 182 Cal.App.2d 486, 493 [6 Cal.Rptr. 333]; People v. Morgan, 140 Cal.App.2d 796, 800 [296 P.2d 75].) Whether the instrument forged has independent value is unimportant; the crime is complete when the act is done with the requisite intent."

People v. McAffery, (1960) 182 Cal.App.2d 486, 493, 6 Cal.Rptr. 333:

  • The crime of forgery (Counts I, II and III) is committed when one makes or passes a false instrument with intent to defraud, the element of loss or detriment being immaterial (People v. Morgan, 140 Cal.App.2d 796, 800; 296 P.2d 75).

Wright v. Rogers, (1959) 172 Cal.App.2d 349, 342 P.2d 447:

  • "Where a person who has no intention of selling his property is induced by some trick or device to sign a paper having such effect, believing that paper to be a substantially different instrument, the paper so signed is a forgery." (People v. Nesseth, 127 Cal.App.2d 712, 718-720, 274 P.2d 479.

People v. Morgan, (1956) 140 Cal.App.2d 796, 800; 296 P.2d 75:

  • That crime is committed when one makes or passes a false instrument with intent to defraud. "The crime of forgery consists either in the false making or alteration of a document without authority or the uttering (making use) of such a document with the intent to defraud. (Pen. Code, § 470.) Whether the forged instrument is one of a particular [140 Cal.App.2d 801] name or character or, if genuine, would create legal liability, is immaterial; the test is whether upon its face it will have the effect of defrauding one who acts upon it as genuine." (People v. McKenna, 11 Cal.2d 327, 332 [79 P.2d 1065].) "In the case of a forgery of an instrument it is not necessary that the forged writing create a valid and legally enforcible obligation in order to constitute the making of it a forgery. It is sufficient that it may possibly deceive another and was prepared with intent to deceive and defraud another. Where the writing alleged to have been forged shows on its face that it might be the means of fraud, no averments of extrinsic facts to show how this could be are necessary." (People v. Brown, 101 Cal.App.2d 740, 742 [226 P.2d 647].) Failure to consummate the intended fraud is not of the essence. (People v. Horowitz, 70 Cal.App.2d 675, 688 [161 P.2d 833].)

People v. Nesseth, (1954) 127 Cal.App.2d 712, 718-720; 274 P.2d 479:

  • Mr. Justice Fox' statement in People v. Frankfort, 114 Cal.App.2d 680, 700; 251 P.2d 401, is here appropriate: "... The fact that the documents were read would not make it inherently improbable that other, different and additional representations were made by the salesmen.

  • "Defendants insist these contracts insulate them from this prosecution because they contain the statement that they constitute the entire agreement between the parties, that the Spa Corporation is not bound by any representations outside the contract, that no salesman is authorized to make any additional or contrary representations, and that the club member has read and understands what he is signing. The simple answer to this argument is that 'The People prosecuting for a crime committed in relation to a contract are not parties to the contract and are not bound by it. They are at liberty in such a prosecution to show the true nature of the transaction.' ... The practical wisdom of the rule is illustrated in this case. Upon at least three occasions prospective purchasers complained to defendant Nudelman that the written agreement did not seem to conform to what they had been told, whereupon he assured each party, in effect, that everything would be taken care of and he need not worry."

***

  • That the foregoing facts constitute forgery is evident. Section 470 of the Penal Code provides in part as follows: "Every person who, with intent to defraud, ... falsely makes, alters, forges, or counterfeits, any ... writing obligatory, ... contract ... is guilty of forgery."

  • That the correct rule is that the procuring of a genuine signature to an instrument by fraudulent representations constitutes forgery is supported by these well reasoned authorities: State v. Shurtliff, 18 Me. 368; Commission v. Foster, 114 Mass. 311 [19 Am.Rep. 353]; Gregory v. State, 26 Ohio St. 510 [20 Am.Rep. 774]; State v. Farrell, 82 Iowa 553 [48 N.W. 940]; Williams v. State, 213 Ala. 1 [104 So. 40]; Williams v. State, 20 Ala.App. 337 [104 So. 38]; Horvath v. National Mortg. Co., 238 Mich. 354 [213 N.W. 202, 56 A.L.R. 578]; Turner v. Nicholson, 115 Okla. 56 [241 P. 750]; Julia Oil & Gas Co. v. Cobb, 128 Okla. 260 [262 P. 650].

  • This rule appears to be supported by Conklin v. Benson, 159 Cal. 785, where the court says, at page 791 [116 P. 34, 36 L.R.A.N.S. 537]: "There is no foundation in the facts above set forth for the conclusion that the papers signed by plaintiff were forgeries, and absolutely ineffectual even to serve as a basis for the application of the doctrine of estoppel. The theory of the learned judge of the trial court appears to have been that all of these papers, including the deeds of the Monache lands to the United States, were in effect forgeries and absolutely void. The idea underlying this apparently was that plaintiff was so deceived in the matter of executing these instruments as to bring her within the doctrine of certain cases which substantially hold that where a person who has no intention of selling or encumbering his property is induced by some trick or device to sign a paper having such effect, believing that paper to be a substantially different instrument, the paper so signed is just as much a forgery as it would have been had the signature been forced. These decisions are not such as to sustain plaintiff's claim in this regard. The distinguishing feature between all such cases and the case at bar is that here plaintiff fully understood and believed that she was signing papers which, when delivered, would convey all her interest in the Monache lands. She intended to execute papers having this effect. The difference between the papers she thought she was signing, according to the evidence, and the papers she actually signed, was merely one of detail and in no degree material, one set of papers having precisely the ultimate effect of the other, the conveyance of her interest in this land. Her real and only complaint upon her own testimony was her failure to personally receive full payment for her land claimed to have been occasioned by reason of the failure of her agent to place the papers in escrow, to be taken up as payments were made, and the delivery thereof to Benson without payment first having been made. ..."

People v. Frankfort, (1952) 114 Cal.App.2d 680, 700; 251 P.2d 401:

  • The fact that the documents were read would not make it inherently improbable that other, different and additional representations were made by the salesmen. Defendants insist these contracts insulate them from this prosecution because they contain the statement that they constitute the entire agreement between the parties, that the Spa Corporation is not bound by any representations outside the contract, that no salesman is authorized to make any additional or contrary representations, and that the club member has read and understands what he is signing. The simple answer to this argument is that "The People prosecuting for a crime committed in relation to a contract are not parties to the contract and are not bound by it. They are at liberty in such a prosecution to show the true nature of the transaction." (People v. Chait, 69 Cal.App.2d 503, 519 [159 P.2d 445]; People v. McEntyre, 32 Cal.App.2d Supp. 752, 760 [84 P.2d 560]; People v. Jones, 61 Cal.App.2d 608, 620 [143 P.2d 726]; People v. Pierce, supra, p. 605.) The practical wisdom of the rule is illustrated in this case. Upon at least three occasions prospective purchasers complained to defendant Nudelman that the written agreement did not seem to conform to what they had been told, whereupon he assured each party, in effect, that everything would be taken care of and he need not worry.

People v. Brown, (1951) 101 Cal.App.2d 740, 742; 226 P.2d 647:

  • In the case of a forgery of an instrument it is not necessary that the forged writing create a valid and legally enforcible obligation in order to constitute the making of it a forgery. It is sufficient that it may possibly deceive another and was prepared with intent to deceive and defraud another. Where the writing alleged to have been forged shows on its face that it might be the means of fraud, no averments of extrinsic facts to show how this could be are necessary.

People v. McKenna, (1936) 11 Cal.2d 327, 332; 79 P.2d 1065:

  • The crime of forgery consists either in the false making or alteration of a document without authority or the uttering (making use) of such a document with the intent to defraud. (Sec. 470, Pen. Code.) Whether the forged instrument is one of a particular name or character or, if genuine, would create legal liability, is immaterial; the test is whether upon its face it will have the effect of defrauding one who acts upon it as genuine. (People v. Gayle, 202 Cal. [11 Cal.2d 333] 159 [259 P. 750]; People v. Thorn, 138 Cal.App. 714 [33 PaCal.2d 5]; People v. Munroe, 100 Cal. 664 [35 P. 326, 38 Am.St.Rep. 323, 24 L.R.A. 33].) A deed which conveys no title may be the subject of forgery. (People v. Baender, 68 Cal.App. 49 [228 P. 536].)

Go here for other posts on forgery & forged documents involving genuine signatures. ForgeryGenuineSignatureKappa

84 Year Old New Jersey Woman Among Those Targeted In Alleged Equity Stripping, Sale Leaseback Scam

In Bayonne, New Jersey, The Jersey Journal reports:
  • An 84-year-old Bayonne woman is among the victims of two Union City companies that promised to help homeowners facing foreclosure save their homes, officials say. But instead of saving people's homes, the companies purchased the houses at deep discounts, saddled the owners-turned-tenants with even bigger monthly payments, and in a number of cases, including that of the Bayonne woman, evicted the previous owners, officials say.(1)

  • "The unifying thread among these cases is that the defendants not only stole people's money, they stole their hope," said state Attorney General Ann Milgram last week in announcing the lawsuit, filed in Hudson County Superior Court, that details at least four cases.

For more, see STATE A.G. SAYS LOAN CREEPS STOLE HOMES (Lawsuit targets alleged mortgage swindle).

For the lawsuit, see Milgram v. Property Solutions of NJ Inc., et al.

(1) According to the lawsuit, the defendants offered to help save the victim's home by paying the balance of the homeowner's delinquent mortgage and then entering into a sale leaseback agreement with the victim, officials said. But the monthly lease payments were often far higher than the mortgage payments the homeowner couldn't make in the first place and they were typically required to buy the home back within 90 days at a far higher price than the defendants' paid, officials said. Named as defendants in the lawsuit are Property Solutions of N.J, Inc. and PSRE Holding Company, LLC, both of Union City. Also named are individual defendants Edward Toledo, the president of Property Solutions and a member of PSRE, Leon Toledo, the vice-president of Property Solutions, and Raymond Vega, the company treasurer and a member of PSRE. foreclosure rescue

Undercover Cops Bag Arizona Man Facing Foreclosure In Alleged Attempt To Strip Home Of Fixtures, Appliances & Unload Them Using Craigslist Ad

In Maricopa County, Arizona, The Arizona Republic reports:
  • A Maricopa County grand jury indicted Kailash Bhatt, a local real estate agent, in connection with stealing various housing fixtures from a foreclosed house and reselling them. He was charged April 21 with theft and defrauding secured creditors.

  • According to the legal report, Bhatt took fixtures — including kitchen cabinets, a granite counter top, a double oven, microwave and dishwasher — from a foreclosed Anthem home that he owns and attempted to sell them on Craigslist.

  • Bhatt was arrested after accepting $2,000 of a deal totaling $9,000 from an undercover FBI Mortgage Task Force agent posing as a buyer, the report said. He intended to sell the fixtures from his home, violating a contract he signed with the mortgage company in control of the foreclosed property.

Another report on this story points out that the indictment represents the first of its kind involving a crime that local real estate professionals say is rampant. Disgruntled homeowners forced into foreclosure strip their properties before vacating them.

For more, see Real estate agent accused of stealing, selling home fixtures.

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

Saturday, May 02, 2009

Foreclosure Mediation Program To Begin In Washington County

In Washington County, Pennsylvania, the Observer Reporter reports:
  • In an attempt to reduce the number of people who lose their homes because of mortgage foreclosure, Washington County President Judge Debbie O'Dell Seneca this week set up a program to avert what she called a "crisis." The judge calls her plan the Mortgage Foreclosure Diversion Program. It's up to creditors to notify those whose mortgage payments are in arrears of the new program.

For more, see County judge offers program to prevent foreclosure 'crisis.'

California Police Chief To Slap Cuffs On Negligent Bank Officials Over Blighted Foreclosed Homes?

In Indio, California, The Wall Street Journal reports:
  • Officials at a Citigroup Inc. office in St. Louis placed a call to this desert town recently. The bank had caught word that Indio was coming after the lending giant with fines and threats of criminal charges. The offense: an algae-infested swimming pool at 79760 Eagle Bend Court.

  • Citigroup wound up in charge of the foreclosed home, one of thousands of such properties it was managing across the country. But last year, Indio passed a law that allowed it to charge banks with a criminal misdemeanor if they allowed a home to fall into disrepair.

  • "If I need to do it, I'll say, 'Mr. Bank President, if you don't come and take care of your property, we're going to come arrest you and take you to court in California,'" says Brad Ramos, Indio's long-serving police chief.(1) The hard-line approach is part of this town's attempt to gain leverage over some of the nation's largest lenders.

***

  • Mr. Ramos has organized his department to focus on this new type of crime. Uniformed officers make weekly sweeps through subdivisions, casting about for infractions like dead landscaping.

For more, see Banker: 'What'd I Do Wrong, Officer?' Cop: 'You've Got Algae in the Pool, Sir' (Fearing Blight, a California Town Makes It a Crime to Neglect Foreclosed Homes).

(1) According to the story, the City of Indio clipped Citigroup for a $3,450 fine. The bank also promptly sent a cleaning crew to remove the algae and otherwise clean the pool. BetaVacantForeclosure

Evictions, Foreclosure, Consumer Debt To Be Addressed By NYC Legal Outreach Pro Bono Effort

In New York City, The New York Law Journal reports:
  • With foreclosures and evictions on the rise and consumers increasingly saddled with debt, New York City officials are enlisting attorneys to volunteer their time for a new pro bono effort. Approximately 40 representatives from pro bono organizations, the court system, several bar associations and city law schools gathered [last week] at City Hall to kick off "NYC Legal Outreach."

  • "This bottom line . . . is to figure out a way to harness pro bono legal help to those who really need it," Corporation Counsel Michael A. Cardozo told the group. [...] The city does not want to "reinvent the wheel" but rather "galvanize" more volunteers and add the "mayor's bully pulpit" to existing efforts, Mr. Cardozo said.

***

  • Specifically, NYC Legal Outreach will focus on four "key" service areas: evictions, foreclosures, consumer debt and immigration, all areas that have mushroomed as a result of the financial crisis.

For more, see City Launches Program to Boost the Ranks of Pro Bono Attorneys.

Framingham Legal Services Group Scores $20K For Post-Foreclosure Eviction Defense Project

In Boston, Massachusetts, the Boston Business Journal reports:
  • The Boston Bar Foundation has awarded $185,000 in grants to eight nonprofits that all work to prevent homelessness, the organization said Tuesday. Organizations that received grants include the [...] Metrowest Legal Services’ Post-foreclosure Eviction Defense Project, which received $20,000, [...].

Source: Boston Bar Foundation awards $185k.

Florida Statewide Volunteer Legal Program To Help Homeowners Avoid Foreclosure Nearing 1,000 Attorneys

In Tallahassee, Florida, the Miami Daily Business Review reports on the Florida Attorneys Saving Homes ("FASH") program, a pro bono effort to help financially strapped Florida homeowners nearing, but not yet in, foreclosure avoid the loss of their homes.
  • [F]ASH has expanded to about 1,000 volunteer lawyers statewide and organized a roundtable discussion [last] week in Tampa with lending representatives. [...] “The demand has been so overwhelming that we’re in need of more lawyers,” said Adele Stone, a partner with Atkinson Diner Stone Mankuta & Ploucha in Fort Lauderdale who is on the FASH steering committee. One stated goal of the roundtable was to get more lawyers familiar with the principals of foreclosure defense.

***

  • A lot of pro bono attorneys are using this time to gain familiarity with a new area of law. That way they can expand their practice” in the recession, said Jennifer Newton, the program’s director and a staff attorney with Florida Legal Services. The program operates out of Florida Legal Services in Tallahassee and is funded through The Florida Bar Foundation.

***

  • Not everyone in mortgage distress is eligible for the program. A home already in foreclosure isn’t eligible, and homes must be homestead property to be eligible. [...] FASH is one of many foreclosure public service programs involving lawyers across the state.

For more, see Mortgage Crisis: Program helps keep owners from losing homes.

Mother Nature Forces Family From Home Of 30+ Years As Slow-Moving Landslide Victimizes Over A Dozen Others; Lender Left Holding Worthless Mortgage

In North Salt Lake, Utah, KSL-TV Channel 5 reports:
  • A slow-moving landslide has been described as a nightmare that has lasted more than 10 years, and it is finally forcing a North Salt Lake family to move from their longtime home. The floor and the walls are cracking, paint is bubbling and beams are breaking in Dauneen Abel's house. She and her family have watched their home, their investment, fall apart piece by piece.

  • "It's like the house is being squeezed together, because everything is coming up in the middle," Abel said. Her home on Springhill Drive and more than a dozen others in North Salt Lake are victims of a slow-moving landslide. After battles with the city and the state, there was nothing more Abel could do but go into foreclosure.

  • "I don't mind leaving the house. I'm going to have a hard time leaving my friends," she said. She's lived in the home for more than 30 years and raised all four children there, but activity in the past few months has made her realize it's time to go. [...] State geologists estimate the ground in this area is now moving at a rate of 2 inches a week, almost 9 feet a year.

For more, see Landslide forces couple to give up on home.

Obtaining Mortgage Loan On Condo Unit May Depend On Neighbors' Financial Stability

The Washington Post reports:
  • Benjamin Chiang nearly lost the chance to refinance his condominium when his lender discovered that many other people in the building were behind on their condo dues. "It made me a little peeved that my loan depended on the credentials and behavior of my neighbors," said Chiang, who bought his Arlington home eight years ago.

  • Condo owners share more than roofs and lobbies these days. They also share one another's financial burdens. New mortgage industry policies are forcing lenders to look more closely at the makeup of entire complexes before extending loans to prospective buyers or to people who want to refinance.

For more, see New Condo Loan Rules Put More Scrutiny on Neighbors.

Friday, May 01, 2009

Maryland Lawmaker Accused Of Scamming Homeowner In Foreclosure Dodges Bullet As Unfavorable Jury Verdict Limits Liability To $11K

In Anne Arundel County, Maryland, The Baltimore Sun reports:
  • An Anne Arundel County jury ruled Thursday that a state delegate will have to pay $11,000 to a woman who signed her home over to him, but that he did not intentionally defraud her. Del. Tony McConkey, a Severna Park Republican, said that the ruling was "a complete vindication." "It couldn't have turned out any better," he said.

  • In September, Anne Arundel Circuit Judge D. William Simpson found that McConkey, a real estate agent, violated a state law intended to protect homeowners in foreclosure in his dealings with Theresa Milligan over her Pasadena condominium. The jury found that McConkey should pay Milligan $28,000 for the loss of her home and $6,000 in other damages. But they also ruled that Milligan should pay $23,000 to McConkey for breaking her contract with him. Milligan's attorneys, Peter A. Holland and Michael Morin, had asked the jury to grant her as much as $1.5 million for the loss of the home and emotional distress. The single mother of three, who has been staying with her brother since losing the condominium, is "devastated" by the ruling, Morin said.(1)

Source: $11,000 awarded in McConkey case.

See also, WBAL-TV Channel 11: Jury Decides Against Delegate In Mortgage Case.

(1) According to this story, the case remains open as the homeowner's attorneys said they plan to ask the court to make McConkey pay their attorney fees. Attorney Michael Morin said they also plan to argue Milligan should not have to pay McConkey back the $23,200 because it was part of an illegal contract.

Bankruptcy Cramdown Legislation To Force Home Mortgage Modifications Fails In Senate

The Wall Street Journal reports:
  • A measure to allow bankruptcy judges to rework mortgages of strapped homeowners failed in the U.S. Senate Thursday, clouding its chances of becoming law. The defeat is a setback for the Obama administration, which had championed the measure as a central plank of its plan to right the housing market.

***

  • The measure would allow bankruptcy judges to reduce the principal amount of mortgage loans for struggling borrowers - a process dubbed "cramdown." Currently, mortgages on vacation properties, but not primary residences, can be reworked by bankruptcy judges.

For more, see Bill To Let Judges Rework Mortgages Fails In US Senate (subscription required; if no subscription, go here, then click link for story).

Foreclosure Rescue Operator Gets 60 Days In Jail Amid Ongoing SC AG Suit Alleging UTP Act Violation & Criminal Probe Into Unauthorized Practice Of Law

In Horry County, South Carolina, The Horry Independent reports:
  • A Lexington, N.C., man, who is listed as a defendant in more than 40 mortgage foreclosures in Horry County court, was sent to jail recently on contempt of court charges. Horry County jail logs show Robert Steve Jolly, 59, was still in jail [Wednesday] morning, two weeks into his 60-day sentence. Jolly was in Horry County court for a hearing recently that covered several topics.

  • The S.C. Attorney General’s Office has filed a civil suit against Jolly,(1) asking a circuit judge to stop him from preying on people who have fallen behind on their mortgage payments. Also, according to Horry County court documents, Circuit Judge Michael Baxley summoned Jolly to court at the same time on a Notice of Hearing and Rule to Show Cause. According to the document, the purpose of that hearing was to take testimony and hear argument on whether Jolly or anyone acting on behalf of Robert Jolly & Associates should be dismissed from all presently pending cases before the court as a result of allegations of the unauthorized practice of law and/or taking of action to undermine the administration and interest of justice.

***

  • Mark Plowden, spokesperson for the Attorney General’s Office, said the investigation began on the civil side, not the criminal side. “Now this office has a two-pronged attack against Jolly. There are these civil proceedings that you see before you, but there’s also a parallel criminal investigation ... The criminal investigation will be into unauthorized practice of law,” Plowden said, adding that the criminal investigation is not as far along as the civil one.

For more, see State Attorney General mounts fight for distressed borrowers.

Go here and Go here for other posts on issues relating to foreclosure rescue activities and the unlicensed/unauthorized practice of law.

(1) The story reports that the Attorney General’s Office claims Jolly has violated the South Carolina Unfair Trade Practices Act, and that, according to the lawsuit, Jolly began seeking out financially distressed South Carolina homeowners and titleholders to real property in March of 2007, offering to help them avoid foreclosure of their homes. Jolly encouraged homeowners to give his company a quitclaim deed, or a similar document, giving him rights to their property, according to the lawsuit. In exchange, he promised to pay off their mortgages and, in turn, they agreed to make monthly payments to Jolly & Associates to pay down their debt, according to the lawsuit. The idea was to keep homeowners from facing foreclosure. The lawsuit claims that Jolly is neither a real estate agent nor a lawyer licensed in the state of South Carolina; and that Jolly received payments from the homeowners, but didn’t pay their rightful mortgage companies, which actually put the homeowners farther behind in their payments than they already were.

In a case with a similar fact pattern (see Ohio Man Guilty Of 26 Counts In Foreclosure Rescue, Rent Skimming Scam; Allegedly Conned 14 Homeowners Into Belief He Would Renegotiate Home Loans), Licking County, Ohio prosecutors obtained guilty verdicts last November against a foreclosure rescue operator who allegedly deceived homeowners into signing over deeds to their homes on the premise that he would negotiate with their mortgage companies to avoid defaulting on their home debts while collecting rent thereon. He allegedly failed to make the mortgage payments while pocketing the collected rent, allowing homes to go into foreclosure. He was reportedly convicted of nine counts of grand theft, 13 counts of securing writings by deception and four counts of theft. UnauthPractOfLawTheta

Ohio AG Targets Loan Modification Firm Accused Of Pocketing Upfront Fees In Exchange For Empty Promises

In Conneaut, Ohio, WKYC-TV Channel 3 reports:
  • The companies promise to rescue you from losing your home. Instead, they take your money and do nothing. Just ask Carol Jenkins of Conneaut. She and and her late son, Robert Curtis, trusted James Van Putten and his local company, Please Save My Home, to rescue them from foreclosure. "He was in town here, so I trusted him," Jenkins said. But she and her son soon discovered Van Putten's promises were empty ones. "I never got any phone calls back from him whatsoever,'' Jenkins told Channel 3 News. "By this time, we had already paid him the $650 (fee), so we didn't have any money to send to our mortgage company."

***

  • [Ohio Attorney General] Richard Cordray has filed suit against Van Putten and his Conneaut company on behalf of dozens of customers in nine counties who say they were swindled.

For more, see Foreclosure rescue scams target most vulnerable.

For the Ohio Attorney General press release on this case, 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.

Sleazy Tactics Alleged By Washington State AG In Civil Suit Against Debt Collector

From the Office of the Washington State Attorney General:
  • The Attorney General’s Office is suing an Everett-based collection agency accused of harassing, threatening and cussing at consumers. Representatives of Topco Financial Services, Inc., allegedly called debtors names such as “loser,” scum,” “plight on society,” “no good,” “lowlife,” “deadbeat,” “worthless,” or “terrible parents,” as well as profane names not suitable for print. That kind of language isn’t just abusive – it’s illegal. It’s also the type of unfair business practice that can make it harder for legitimate collectors who play by the rules to do their job.

***

  • The state’s complaint(1) submitted [...] to Snohomish County Superior Court accuses the company, president Tracey Austell, of Mill Creek, and secretary/treasurer Harry Packer, of Desert Hot Springs, Calif., of violating the state’s Consumer Protection Act.

For the entire press release, see Debt collector to consumer: “&#$%*!” (Attorney General sues Everett collection agency for harassment, threats).

For the lawsuit, see State of Washington v. Topco Financial Services, Inc., et al.

In a related post, see Tough Economy Triggers Sleazy Collection Practices As Threatening, Humiliating MySpace Messages, Profanity Alleged In Civil Suits.

(1) The complaint states, among other things, that while attempting to collect on debt, Topco or its representatives frequently have used harassing, threatening, intimidating, embarrassing and offensive language, including (see Complaint - paragraph 7.2(a) thru (e)):

  • Disparaged debtors with comments including, “You got yourself into this [profanity] situation,” and “What kind of mother is she to raise a daughter like you?
  • Threatening to “bi*ch slap” a debtor.
  • After having been informed by a debtor that she was undergoing tests for possible cancer, representatives allegedly replied, “Aren’t you dead yet? I’m going to collect the money from you dead or alive,” and “Why don’t you just die from cancer because you are a low-life deadbeat?
  • Using offensive language by calling debtors names, including, but not limited to: "worthless f**king loser, "piece of sh*t," "bi*ch," and "dumb a**."

Denver Man With Unaffordable Mortgage Strips House, Sells Fixtures On Craigslist, Walks Away, Then Apologizes After Bank Obtains Restraining Order

In Denver, Colorado, KUSA-TV Channel 9 reports:
  • The man 9Wants to Know caught stripping fixtures in his home ahead of foreclosure and then yelled at our team from his front doorway, now says he's sorry. "Our intentions were never to strip the house, but after the treatment of the bank towards us it was a decision made out of hurt, anger and stress not knowing it was an illegal act," wrote Jesse Adams in an e-mail to 9Wants to Know.

  • Adams and his wife, Heidi Hayes, put an ad on Craigslist offering the kitchen sink, countertops, cabinets and toilets for sale. Hayes is the registered owner of the home. The two say they were married earlier this month after leaving the house and moving to the Las Vegas area.

***

  • Oklahoma based MidFirst Bank, which loaned Hayes the money for the home, got a judge to issue a restraining order keeping Adams and Hayes out of the house after 9Wants to Know told MidFirst Bank of our investigation. MidFirst Bank says it is considering its legal options.

For more, see Man who stripped home's fixtures apologizes,

See also, Everything must go: Sales cost taxpayers thousands:

  • It is not your typical "everything must go" garage sale. A new trend called pre-foreclosure or foreclosure sales offer deals for some, but often costs taxpayers thousands of dollars, according to mortgage experts and real estate agents interviewed by 9Wants to Know. The sales offer everything from the kitchen sink to countertops, cabinets, toilets, the hot water heater and the furnace from a home. Homeowners hold the sales ahead of foreclosure in an attempt to make money before they leave the house.

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

Thursday, April 30, 2009

Free Foreclosure Self-Defense Seminar For Financially Strapped Homeowners Upcoming In Miami

In Miami, Florida, the South Florida Caribbean News reports:

  • Miami-Dade County Commissioner Audrey M. Edmonson understands the housing crisis our country, state, and county is going through. Therefore, she is co-sponsoring along with the Miami-Dade Housing Finance Authority and Miami-Dade Affordable Housing Foundation Inc a FREE foreclosure legal assistance seminar to help those homeowners who are in any stage of foreclosure. Attendees will learn about their rights and legal defenses available. The event will be held Saturday, May 2 at the American Legion Post, located at 6445 N.E. 7th Ave, from 9 a.m. to 1 p.m. [...] Attorneys who specialize in foreclosure cases will answer questions and meet with homeowners one-on-one FREE of charge.

For more, see Miami-Dade County Commissioner co-sponsors a free foreclosure legal assistance seminar.

Maryland Lawmaker Accused In Equity Stripping Foreclosure Rescue Scam Tells Jury He Was "Doing The Lord's Work"

In Anne Arundel County, Maryland, The Baltimore Sun reports:
  • A state delegate from Anne Arundel County, who is being sued for damages by a Pasadena woman who claims he tricked her into signing over her home, told a jury Wednesday that he was "doing the Lord's work." In his closing arguments, Del. Tony McConkey, a Severna Park Republican and real estate agent who is a law school graduate and represented himself in court, said that he was trying to help the woman save her home from foreclosure and that he never "knowingly and willfully broke the law."

  • Attorneys for Teresa Milligan asked the jury to award her $1.5 million for damages for the loss of her condominium and pain and suffering. "This is the American Dream we're talking about," Peter A. Holland said in his closing arguments. "She is always going to feel the humility, the indignity and the shame of this."

  • Holland is representing Milligan with Michael Morin. Milligan, a mother of three, has been living with a brother since losing her home, according to court testimony. Anne Arundel County Circuit Judge D. William Simpson ruled in September that McConkey had acted wrongly in transfering ownership of the condominium to himself.(1) The jury began deliberations Wednesday evening and is expected to reach a verdict Thursday morning.

Source: Delegate denies tricking woman out of home (McConkey says home transfer was 'doing the Lord's work').

See also, WBAL-TV Channel 11: Delegate Defends Self In Mortgage Trial (McConkey Accused In Foreclosure Rescue Scheme).

(1) Another recent Baltimore Sun story reports that Milligan's civil suit against McConkey alleges "foreclosure rescue fraud," a violation of a homeowner protection law that he voted for in 2005. In January 2006, Milligan said, McConkey offered to help her save her condo from foreclosure and to help her obtain a loan to make payments, according to court testimony. Milligan signed ownership of her condominium over to McConkey, but then called him within the allotted three days to say that she had changed her mind, according to her testimony in Anne Arundel County Circuit Judge D. William Simpson's courtroom Tuesday. Eight months later, McConkey filed the original contract that Milligan had signed and began the paperwork to have her removed from the home, according to court documents.

Oregon To Sponsor Day-Long Event For Homeowners Facing Foreclosure

In Portland, Oregon, The Register Guard reports:
  • [D]ozens of nonprofit housing counselors, state consumer affairs specialists and lender representatives will gather Saturday at the Portland Memorial Coliseum to help Oregonians in danger of foreclosure. The state-sponsored, daylong event is designed to ease considerable confusion about mortgage rescue plans and to simplify the lives of about 10,000 Oregon borrowers who are in danger of losing their houses. [...] Admission to Saturday’s Home Ownership Preservation Event is free. Hours are 10 a.m. to 7 p.m. [...] For information, check www.dfcs.oregon.gov/HOPE.html or call (866) 814-9710.

For the story, see State to sponsor housing help event Counselors and workshops will offer advice for Oregon residents facing foreclosure.

City Of Los Angeles Votes To Ban All Upfront Fees Charged By Loan Modification Firms

In Los Angeles, California, the Los Angeles Times reports:
  • The Los Angeles City Council voted Tuesday to make it illegal for so-called mortgage consultants to charge an upfront fee for services when helping distressed homeowners try to modify their payments. Mayor Antonio Villaraigosa touted the law as the first of its kind in the nation and said it was a tool to "help residents keep a roof over their heads."

  • State law already prohibits mortgage consultants from demanding upfront fees from homeowners who are in default, the first stage of foreclosure. The new Los Angeles law, which the council approved unanimously, will apply those protections to all homeowners.

For more, see L.A. council votes to tighten rules on mortgage consultants (A new city ordinance will bar the consultants from demanding upfront fees from any homeowner -- not just those in default, who are protected under state law).

Mass AG Gets Injunction Against Loan Modification Firm Accused Of Violating State Consumer Protection Act, Foreclosure Rescue Regs

From the Office of the Massachusetts Attorney General:
  • Attorney General Martha Coakley’s Office has entered into a stipulated preliminary injunction with three defendants for their alleged inappropriate business practices in offering loan modification assistance. Under the terms of the order, [...] Loan Modification Group Corporation, Mitigation LLC, and the companies’ principal, Daniel H. Fox must place $50,000 into an escrow account to be used to satisfy any judgment that the Attorney General may receive against them. Additionally, the defendants must cease collecting up-front fees and must contact all existing Massachusetts customers within 10 days to let them know about the court’s order.

***

  • The complaint [...] 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 guaranteed a loan modification that would improve the homeowner’s financial situation dramatically and save the home from foreclosure. Through the defendants' solicitations and advertisements by telephone, emails and various websites, they claimed to be attorney-based, loan modification experts who could guarantee drastically reduced interest rates.

For the entire Massachusetts AG press release, see AG Coakley Obtains Preliminary Injunction Against Company Accused of Violating Foreclosure Rescue Regulations.

California Mortgage Lenders Using Short Sales To Seek Deficiency Judgments On "Non-Recourse" Purchase Money Home Loans?

In San Diego County, California, North County Times reports:
  • [B]orrowers can face deficiency judgments at any point on certain types of loans. But California law allows special privileges for what is known as "purchase money" loans, or the original loan used to purchase the home. On such mortgages, a bank cannot legally sue the borrower for nonpayment. The bank's only means of recouping the loan is to foreclose on the house. Therefore, a homeowner late on payments on a purchase money loan cannot face a lawsuit ---- even if the owner put no money down.

  • But all bets are off if the borrower refinanced the mortgage. Especially on home equity lines of credit, lenders can sue the borrower for the unpaid amounts following either foreclosure or short sale.

  • However, lawyers said, if the borrower negotiates a short sale, the bank might issue a contract that says it will agree to sell the house and release the borrower from the "trust deed," the contract saying the borrower must pay back the loan in full. Lenders might include a clause in a short sale contract that releases the lien but creates the possibility for a lawsuit to collect debts at a later date, said John Brady, a San Diego attorney.

  • Effectively, lenders will try to transform a purchase-money loan into one in which the bank can sue to collect, Brady said."They're being sneaky," he said. "They're trying to keep the door open to be able to collect on any deficiency."

For the story, see Lawyers say lenders set stage to collect on 'short sales' (Foreclosure may be better option for some struggling homeowners).

Loan Modification Employees Reveal Inner Workings Of One California Outfit Accused Of Ignoring State Cease & Refrain Order From State Regulators

In Fair Oaks, California, The Huffington Post reports:
  • [S]uperior Properties, formerly 2nd Chance Negotiations, operates by soliciting an upfront fee from homeowners facing foreclosure in return for legal counsel, a lower principal on their mortgage, and a "100% money back guarantee."

***

  • 2nd Chance Negotiations attracted over 1,000 customers before the California Departments of Corporations (DOC) and Real Estate (DRE) issued separate desist and refrain orders on March 24. The joint investigation that led to the desist orders stated that the business was "not licensed and/or legally authorized" to perform its promised services, nor to collect fees in advance -- fees that ran as high as $6,000.

  • Former employees say 2nd Chance co-founders Christopher Mesunas and Michael Garcia were largely undeterred by the legal orders to cease operations. According to Deborah O'Campo, who served as one of five negotiators at 2nd Chance from February 10 to April 1 of 2009, the company only ceased operations for 48 hours before reopening under a new name, Superior Properties.

***

  • [Michael] Buckalew was one of 22 salespeople in the Northern California office. There were only five caseworkers who negotiated new loans. Buckalew claimed he didn't notice the disparity until later, when he saw that cases were coming in "by the truckload." "[2nd Chance] had affiliates that would bring us cases every week," Buckalew told The Huffington Post. "They would come in and unload a hundred cases at a time. They had three to five hundred new files per month and they never expanded their negotiating capacity the whole time I was there."

  • Deborah O'Campo said the five caseworkers were overwhelmed, which made it difficult to get results. "I cannot recall even one success story," O'Campo said. "When I left, there might have been only two [mortgage negotiations] that were headed in the right direction as far as almost getting approved."

***

  • Buckalew said the company's sales practices aroused his suspicious from the beginning. He said that he and the entire 22-person sales staff were allowed to charge whatever price they could convince their client to pay. "Did you ever see Boiler Room? Working in the sales room kind of felt like that," said Buckalew.

  • According to Buckalew and O'Campo, it was company policy for sales people to receive a 100 percent commission on charges over $1,500. Buckalew said he closed cases at an average of $2,500, but he knew salesmen who charged potential clients twice as much.

For more, see Mortgage Vultures Dupe Cash-Strapped Homeowners.

Wednesday, April 29, 2009

300+ Lawyers Volunteer To Assist In Mandatory Foreclosure Mediations In Nevada Expected To Begin In August

In Carson City, Nevada, the Las Vegas Review Journal reports:
  • About 340 lawyers have volunteered to serve as mediators to work with lenders to keep Nevadans from losing their homes to foreclosure, Nevada Chief Justice Jim Hardesty said [this week]. Hardesty told the Assembly Ways and Means Committee that he expects mediation hearings will begin in August and that as many as 3,000 Nevadans a month will seek mandatory mediation to work out loan modifications that allow them to remain in their homes.

For more, see Lawyers volunteer as mediators to help in foreclosure crisis.

First Defendant Cops Guilty Plea In Alleged $70M Metro Dream Homes Ponzi Scheme

From the Office of the U.S. Attorney (Maryland):
  • Carole Nelson, age 50, of Washington, D.C., pleaded guilty [Tuesday] to money laundering in connection with her participation in a massive mortgage fraud scheme which promised to pay off homeowners’ mortgages on their “Dream Homes,” but left them to fend for themselves, announced United States Attorney for the District of Maryland Rod J. Rosenstein.

For more, see First Defendant Pleads Guilty in $70 Million “Dream Home” Mortgage Fraud Scheme.

For the indictment, see U.S. v. Williams, et al.

Go here for earlier posts on Metro Dream Homes.

Foreclosure Rescue Operator Violated State Consumer Fraud Act By Using Bogus Sale Leasebacks To Strip Equity From Homeowners, Says NJ AG In Civil Suit

From the Office of the New Jersey Attorney General:
  • Attorney General Anne Milgram announced [...] the filing of a lawsuit charging three individuals and two corporate defendants(1) with mortgage fraud. The defendants are charged with promising to help distressed homeowners keep their homes but, instead, acquiring their properties at exorbitant discounts, binding the victims to predatory “sale-leaseback” agreements and, typically, evicting them before selling their homes to other buyers. [...] Filed last Thursday in Superior Court in Hudson County, the state’s two-count lawsuit charges each defendant with violating the Consumer Fraud Act through unconscionable commercial practices, deception, false promises and misrepresentations.(2)

***

  • According to the state’s lawsuit, the [defendants] typically operated by contacting homeowners in foreclosure either shortly before, or shortly after, their homes were auctioned at sheriff’s sale. The defendants would promise to save consumers’ homes by paying off the balance of their delinquent mortgages either before the sheriff’s sale, or within the redemption period following the sale.

  • Using this approach, the defendants bypassed the typical sheriff’s sale process and acquired homes for the “pay-off amount” of the foreclosed mortgages – an amount that was usually far lower than what the properties would have sold for at sheriff’s sale. As part of the ostensible “solution” offered to victims, the defendants would enter into a sale-leaseback agreement with them that provided a chance to repurchase the home, but on grossly unfavorable terms. For example, the contracts typically required consumers to repurchase their homes within 90 days, and at prices significantly higher than what the defendants had paid to acquire the properties.

For the entire New Jersey AG press release, see Attorney General Sues Foreclosure Rescue Company (Defendants Accused of Making False Promises to Gain Houses at Discounts).

For the lawsuit, see Milgram v. Property Solutions of NJ Inc., et al.

(1) Named as defendants in the lawsuit are Property Solutions of N.J, Inc. and PSRE Holding Company, LLC, both of Union City. Also named are individual defendants Edward Toledo, the president of Property Solutions and a member of PSRE, Leon Toledo, the vice-president of Property Solutions, and Raymond Vega, the company treasurer and a member of PSRE. In addition to the appropriate penalties and consumer restitution, the state’s lawsuit seeks to permanently enjoin the Toledos, Vega, Property Solutions and PSRE from engaging in future foreclosure-related real estate acquisition or foreclosure rescue services.

(2) The Arizona Attorney General's Office has also recently targeted a foreclosure rescue operator with a civil suit alleging the use of bogus sale leasebacks to strip the home equity from financially strapped homeowners. For more on the Arizona case, see:

Mass AG Reaches Settlement With Loan Modification Firm Accused Of Violating State Consumer Protection Act, Illegally Pocketing Upfront Fees

From the Office of the Massachusetts Attorney General:
  • [Last week], Attorney General Martha Coakley’s Office entered into a settlement with Express Modifications, Inc., d/b/a “Loan Mods By Lawyers, Inc.,” and its owner David J. Gotterup, who ran prominent advertisements in a local newspaper earlier this year offering to help homeowners avoid foreclosure. The settlement resolves allegations that the advertisements were unfair and deceptive, in violation of the Massachusetts Consumer Protection Act, because they gave the false impression that Express Modifications would provide the homeowner with the services of an attorney, guarantee a loan modification and improve the homeowner’s financial situation dramatically and save the home from foreclosure.

***

  • The Attorney General’s investigation of the company and its operations also revealed that the company demands a $1,500 up-front fee before providing services to help homeowners avoid foreclosure. Such advance fees are illegal under regulations issued by the Attorney General’s Office in 2007 to combat various unfair business practices that target homeowners facing foreclosure.

For the entire Massachusetts AG press release, see AG Coakley Enters into Settlement with Company Accused of Deceptively Advertising Foreclosure Relief Services and Soliciting Illegal Advance Fees.

Washington State AG Brings Civil Rent Skimming Charges Against Previously Convicted Operator

From the Office of the Washington State Attorney General:
  • The Washington Attorney General’s Office is suing a convicted equity skimmer a second time, claiming the Colfax man and his wife ran a real estate investment business that misled distressed homeowners and property investors. Attorney General Rob McKenna and Assistant Attorney General Jack Zurlini filed new documents [...] in Spokane County Superior Court that accuse Anthony and Alicia Napier of skimming equity from distressed homeowners in Eastern Washington and misleading investors. It’s alleged their dirty deals left a trail of victims – families who lost their homes, renters who never recouped security deposits and investors who never saw profits.

***

  • The state’s civil complaint lays out a pattern of deceptive practices involving the Napiers starting around 1995, when Anthony Napier was involved in a criminal equity-skimming scheme. He was convicted of equity skimming, first-degree theft and third-degree theft in September 1998 in Spokane County Superior Court. He was released from jail after serving part of a 12-month sentence.

***

  • We’re now alleging that only a short time after he was criminally convicted of equity skimming and had a civil judgment entered against him, Anthony Napier formed a new company, Principle Direct Investments, LLC,” Zurlini said, “and along with his wife started a new business venture in which they once again engaged in illegal activities that are also in violation of the judgment.”

For the entire Washington State AG press release, see Attorney General sues Colfax couple for equity skimming (Eastern Washington families lost their homes to felon and his wife).

For the lawsuit, see State of Washington v. Napier, et al. RentSigmaSkimming

Elderly Woman Faces Loss Of Mortgage-Free Home As Zombie Debt Scavenger Gets Lien On Premises; Failure To Update State Homestead Exemption The Problem

In New Orleans, Louisiana, WWL-TV Channel 4 reports:
  • Imagine someone who has paid off their house and owns it outright, losing that home because of an old credit card debt. Unfortunately for Shirley Simmons, she doesn't have to imagine. It's a real fear she's been living with since the sheriff seized her home two months ago so it could be advertised and sold.

***

  • Simmons, a 78-year-old retired Jefferson Parish teacher, owes $15,000 on an old credit card bill. Now, a firm that bought that debt for pennies on the dollar (ie. "zombie debt") from the bank has gone to court to take away her home. “They’re having the sheriff sell her house on May 27 so that they can get their $15 thousand and put her out on the street, if need be,” said Simmons’ attorney, William Cherbonnier.

***

  • Attorney Cherbonnier said what makes this possible is Louisiana's homestead exemption from seizure and sale. [...] Right now Louisiana's homestead exemption from seizure and sale only protects $25,000 of a home's value. [...] Cherbonnier said people shouldn't lose their homes over debts like these, and they don't in a number of other states, including Florida and Texas. Both of those states protect the full value of a person's home.

For more, see Lawmakers want to stop credit card companies from seizing homes.

Go here for other posts on zombie debt. zeta

Texas Couple Sues Mortgage Servicer For Alleged Refusal To Fork Over Insurance Proceeds To Repair Hurricane Damage

In Jefferson County, Texas, The Southeast Texas Record reports:
  • A Jefferson County couple is suing their mortgage company for allegedly failing to endorse insurance proceeds for hurricane damage. Paul and Anitra Henson filed a lawsuit April 17 in Jefferson County District Court against Homeq Servicing, a loan services company. They say they forwarded insurance proceeds of $32,518.88 to Homeq and asked the company to endorse the checks so the Hensons could repair their home, which was damaged after Hurricane Ike.

  • Homeq contacted the Hensons and asked them to sign documents in order to have the insurance proceeds released, the complaint says. However, the Hensons allege the packet of information asked them to do things that were unacceptable, such as to find a contractor who would sign a waiver of all current and future liens. "Plaintiffs informed Defendant that this was unacceptable and they will not be able to find someone to sign this in order to complete the work," the suit states. The Hensons say they cannot begin repairs on their home until Homeq releases the insurance proceeds. However, Homeq has yet to release any proceeds. The couple alleges Homeq is guilty of breach of contract and conversion and violated the Texas Deceptive Trade Practices Act.

For the story, see Local couple sues loan company for withholding insurance payments.

Tuesday, April 28, 2009

Florida AG Warns Against Falling For Chinese Drywall Remediation Scams

From the Office of the Florida Attorney General:
  • Attorney General Bill McCollum [last week] issued a consumer advisory to Florida homeowners affected by Chinese drywall, encouraging them to avoid scams related to the situation. At least two types of fraudulent activity involving the defective drywall have been reported to the Attorney General's Office by individuals in the building industry: bogus tests to determine the presence of the product and quick cure remedies which falsely claim to remove the corrosive properties of the product. The Attorney General cautioned homeowners not to fall victim to these scams and others which may develop.

For the entire press release, see McCollum: Con Artists Taking Advantage of Chinese Drywall Concerns.

"Dream Homes" Program A Ponzi Scheme, Say Maryland Feds As Five Charged In Alleged Theft Of $70M+ From 1000+ People; One Def't Positioned To Cop Plea

In Greenbelt, Maryland, The Washington Post reports:
  • It was a mortgage fraud and a Ponzi scheme, and it was, prosecutors say, a moneymaker. In just a couple of years, the Dream Homes Program stole at least $70 million from more than 1,000 people, many of them in Prince George's County, by promising to pay off their mortgages in exchange for investments of at least $50,000, prosecutors said.

  • After the operators were shut down by the Maryland attorney general in 2007, federal officials began investigating Metro Dream Homes. [Monday], the Justice Department announced that the company's owner and four other people have been charged with participating in a massive fraud.

***

  • Charged in the case are Andrew Hamilton Williams Jr., 58, of Hollywood, Fla., who was the founder and owner of Metro Dream Homes; Michael Anthony Hickson, 46, of Commack, N.Y., chief financial officer; Isaac Jerome Smith, 46, of Conyers, Ga., president; Alvita Karen Gunn, 31, of Hanover, vice president of operations; and Carole Nelson, 50, of the District, chief financial officer of a related company.

  • All of the defendants but Nelson were charged in an indictment unsealed yesterday, accusing them of conspiracy, wire fraud, conspiracy to commit money laundering and other offenses. Nelson, who is accused of wire fraud, was charged in a criminal information, a court document that can be filed only with the defendant's consent, typically as part of a plea agreement.

For more, see Major Mortgage Fraud Is Alleged (U.S. Charges 5; Many Victims Are From Pr. George's).

See also, The Free Lance Star: FEDS: 'DREAM' IS SCHEME (Federal grand jury indicts four in Dream Homes case):

  • Using such names as Metropolitan Grapevine LLC, Metro Dream Homes and POS Dream Homes (known collectively as MDH), they are accused of getting home buyers and homeowners to invest in a program that seemed too good to be true.

For story update, see First Defendant Pleads Guilty in $70 Million “Dream Home” Mortgage Fraud Scheme.

For the indictment, see U.S. v. Williams, et al.

Go here for earlier posts on Metro Dream Homes.

Crafty Mortgage Lenders Sneaking "Deficiency" Clauses Into Short Sale Contracts?

In San Diego, California, North County Times reports:
  • A "short sale" might not be the end of a homeowner's problems. The practice, which has exploded in popularity as homeowners struggle to pay their mortgages, is supposed to allow a borrower to sell a home for less than the mortgage amount, walk away, and avoid a credit-killing foreclosure.

  • Not so fast, say local real estate attorneys. Lenders appear to be inserting language into short sale contracts that allow them to sue for any "deficiency," or the amount lost by a bank by selling a home for less than the mortgage ---- opening the door to collection agencies and court judgments that can run into the hundreds of thousands of dollars for some North County homeowners.(1)

***

  • Attorneys say such clauses mean that a borrower's troubles might not end with the short sale ---- the lender could sue the borrower for a deficiency at a later date or turn over the unpaid debt to collectors after the short sale closes. Indeed, under some conditions borrowers may face fewer troubles by letting their properties fall into foreclosure.

For more, see Lawyers say lenders set stage to collect on 'short sales' (Foreclosure may be better option for some struggling homeowners).

(1) Reportedly, one real estate agent who specializes in short sales said about 50 percent of the short sale contracts he has seen include the language before he requests its removal. The North County Times reports that it obtained a short sale contract issued by Countrywide Financial Corp., which together with parent company Bank of America services roughly 20 percent of the mortgages in the nation. The contract warned the homeowner, who owned a house in El Cajon, that Countrywide "may pursue a deficiency judgment for the difference in the payment received and the total balance due ... " The owner, who is still negotiating with the lender, declined through a lawyer to comment.

New Jersey Man Charged With Illegally Pocketing Proceeds From $400K Loan Using Wife's Grandmother's Home As Collateral

In Hoboken, New Jersey, The Jersey Journal reports:
  • A Rutherford man has been charged taking out a $400,000 loan against the home of his wife's grandmother -- and the 83-year-old only learned of the scam when foreclosure notices began arriving, officials said. A two-month investigation led to yesterday's arrest of John Airey, 37, on the charges of forgery, identity theft and theft by deception related to the Willow Terrace property, Hudson County Prosecutor Edward DeFazio said yesterday. [...] Airey took out the loan in his own name, DeFazio said, and apparently had no intention of repaying the loan.

  • The victim's lawyer filed a civil action seeking to set aside the fraudulent mortgage and Superior Court Civil Division Judge Thomas Olivieri forwarded the matter to the Prosecutor's Office in February, triggering the criminal investigation, DeFazio said.

For more, see Hoboken 83-year-old scammed out of home; granddaughter's husband charged (John Airey is accused of using the Hoboken home of his wife's grandmother as collateral for a $400,000 loan he never repaid) (if link expires, try here).

Florida Attorney & Loan Modification Firm Join Forces To Provide Services To Financially Distressed Homeowners

In Naples, Florida, the Naples Daily News reports:
  • Marc L. Shapiro, P.A., Attorney at Law, announced his firm’s expansion of distressed real property consumer services with an affiliation with Asset Resolution Services Inc. The combination of services is intended to streamline the loan modification, asset protection, foreclosure defense and short-sale negotiation services of the two entities.

  • Asset Resolution staff members will now act as legal representatives of the law firm for matters of mortgage loan modifications, deed-in-lieu services and real property short-sale negotiations. Clients of Asset Resolution will also have direct referral access to the attorney’s legal staff for financial protection planning, foreclosure defense, bankruptcy and related legal representation.(1)

For more, see Law firm expands distressed real property consumer services.

Go here and Go here for posts on the potential perils relating to attorneys and non-attorney loan modification firms joining forces to provide foreclosure-related rescue services.

(1) The Florida Bar recently issued this Ethics Alert in which it responded to numerous calls from lawyers regarding the formation of joint business endeavors with nonlawyers to provide loan modifications, short sales, and other foreclosure-related rescue services on behalf of distressed homeowners. The State Bar of California's Committee on Professional Responsibility and Conduct has also issued their own Ethics Alert regarding the interaction between attorneys and non-attorneys in joint business endeavors when providing loan modifications and other foreclosure-related rescue services. UnauthPractOfLawTheta

Another San Diego Complex Linked To Condo Conversion Marketer Deluged By Foreclosures; Investors Left With Ruined Credit

In San Diego, California, The San Diego Union Tribune reports:
  • A wave of loan defaults that has swamped a 42-unit Linda Vista condo-conversion project makes it the fourth complex in the county linked to a Bay Area man to be overwhelmed by pending foreclosures. Kearny Mesa Townhomes, at 7555 Linda Vista Road, was converted from apartments by Diamond House Development, a company linked to James McConville of Fremont. About 35 units in the complex are in the process of being taken back by lenders.

  • Investors who bought into the Linda Vista complex and have now seen their credit badly damaged described an arrangement similar to the one McConville allegedly used in three condo conversions in North County.(1) The San Diego Union-Tribune reported on those deals earlier this month.

For more, see Linda Vista condos tied to alleged scheme (Fourth local complex drowning in defaults).

See also, Renters become unwitting victims in condominium mortgage scheme.

(1) According to the story, at all four properties, investors with good credit were recruited to take out mortgages to buy units owned or found by McConville. They were to receive a fee, usually $5,000 to $10,000 per unit. McConville would rent out the units and make mortgage payments. In some cases, investors said they were promised that the units would be transferred out of their names within a few months. In other instances, investors expected to share a percentage of the profits when the units sold.

Monday, April 27, 2009

Hawaii Feds Bag Five Suspects In Another Alleged Sale Leaseback, Foreclosure Rescue Scam

In Hawaii, the Honolulu Advertiser reports:
  • Five people(1) were arrested by the FBI yesterday in connection with an alleged foreclosure bailout scheme that took hundreds of thousands of dollars from local lenders and residents and cost some their homes.

***

  • According to court documents, those arrested promised to help struggling homeowners stave off foreclosure if the homeowners agreed to a "sham" sale. They allegedly told the owners they could remain in their homes and that their title would be returned to them after a set period of time. The scheme involved offering "straw purchasers" $12,000 to $15,000 per transaction to act as new title holders. But the proceeds were allegedly funneled into fake escrow accounts and the new loan would go into default. The amount of the new loan was more than the old loan and the properties went into foreclosure, according to court documents.

For more, see FBI arrests 5 in alleged mortgage fraud scheme (All plead not guilty in skimming of loan funds).

For the indictment, see U.S. v. Kalani, et al.

(1) Bobby W. Wood, owner of Asian Pacific Funding; Stephen Balino, owner of New Horizons Financial; Welton Kalani, owner of Accel Mortgage LLC; Carlton Yim, co-owner of Walter P. Yim and Associates; and Audra Palomares, a processor with Accel Mortgage LLC, are accused of multiple counts of mail fraud, wire fraud, money laundering, and making false statements on a loan application. All five pleaded not guilty.

MERS: "A Corporate Cloak" To Obscure Identity Of Predatory Lenders, Cushioning Them From Fallout From Their Reckless Practices?

The New York Times reports:
  • [A]lthough the average person has never heard of it, MERS — short for Mortgage Electronic Registration Systems — holds 60 million mortgages on American homes, through a legal maneuver that has saved banks more than $1 billion over the last decade but made life maddeningly difficult for some troubled homeowners.

  • Created by lenders seeking to save millions of dollars on paperwork and public recording fees every time a loan changes hands, MERS is a confidential computer registry for trading mortgage loans.

***

  • If MERS began as a convenience, it has, in effect, become a corporate cloak: no matter how many times a mortgage is bundled, sliced up or resold, the public record often begins and ends with MERS. In the last few years, banks have initiated tens of thousands of foreclosures in the name of MERS [...] confounding homeowners seeking relief directly from lenders and judges trying to help borrowers untangle loan ownership.(1) What is more, the way MERS obscures loan ownership makes it difficult for communities to identify predatory lenders whose practices led to the high foreclosure rates that have blighted some neighborhoods.

***

  • To a number of critics, MERS has served to cushion banks from the fallout of their reckless lending practices. “I’m convinced that part of the scheme here is to exhaust the resources of consumers and their advocates,” said Marie McDonnell, a mortgage analyst in Orleans, Mass., who is a consultant for lawyers suing lenders. “This system removes transparency over what’s happening to these mortgage obligations and sows confusion, which can only benefit the banks.”

For more, see Tracking Loans Through a Firm That Holds Millions.

For posts that reference the failure of mortgage lenders and their attorneys to file the proper paperwork when bringing foreclosure actions, Go Here, Go Here, Go Here, Go Here, Go Here, Go Here, and Go Here.

(1) According to the story, the potential for confusion is multiplied when the high-tech MERS system collides with the paper-driven foreclosure process. Banks using MERS to consummate mortgage trades with “electronic handshakes” must later prove their legal standing to foreclose. But without the chain of title that MERS removed from the public record, banks sometimes recreate paper assignments long after the fact or try to replace mortgage notes lost in the securitization process. This maneuvering has been attacked by judges, who say it reflects a cavalier attitude toward legal safeguards for property owners, and exploited by borrowers hoping to delay foreclosure. Last February, a State Supreme Court justice in Brooklyn, Arthur M. Schack, rejected a foreclosure based on a document in which a Bank of New York executive identified herself as a vice president of MERS. Calling her “a milliner’s delight by virtue of the number of hats she wears,” Judge Schack wondered if the banker was “engaged in a subterfuge.” See Bank of NY v Myers, 2009 NY Slip Op 50159(U) [22 Misc 3d 1117(A)] (February 3, 2009). EpsilonMissingDocsMtg