Chicago Feds Announce Mortgage Fraud Busts In Five Separate Cases; 37 Individuals, Four Businesses Face Felony Charges

From the Office of the U.S. Attorney (Chicago, Illinois):

• Forty-one defendants are facing federal charges relating to various mortgage fraud schemes in five separate cases(1) made public today by federal law enforcement officials. In some of the schemes, the defendants were charged with falsely inflating the values of dilapidated homes in urban areas. Other schemes feature a twist where defendants were charged with deals involving million-dollar condominiums in a Chicago high-rise and sprawling homes in affluent suburbs. A total of 37 individuals and four businesses, including a title company that closed on allegedly fraudulent loans, are facing new federal charges relating to mortgage fraud in five separate cases in Chicago, federal law enforcement officials announced today. The defendants include a vice president of the title company, mortgage brokers, loan officers, real estate investors, appraisers and an attorney. Together the cases involve more than $48 million in fraudulently-obtained mortgages issued by various lenders and secured by scores of residential properties in the Chicago area, including two in the suburbs of Wheaton and Glenview. As a result, the various lending companies suffered millions of dollars in losses after the loans went into default and the properties were foreclosed upon.

For the entire U.S. Attorney press release, see: Forty-One Defendants Charged in Five New Area Mortgage Fraud Cases; Two Schemes Involve Expensive Condos and Suburban Homes.

(1) For the charges in the five cases, see:

• U.S. v Beck, et al. Indictment,
• U.S. v Lisnek, et al. Indictment,
• U.S. v. Askar, et al. Indictment,
• U.S. v. Okulaja, et al. Indictment,
• U.S. v. Luckett Information.

Florida Attorney Group Formed To Spread Accurate Foreclosure Information On Legal Rights For Homeowners, Effective Litigation Defenses For Advocates

The Florida Bar News reports:

• A group of Florida bankruptcy and foreclosure attorneys have founded The Florida Foreclosure Defense Bar Association to help families facing foreclosure find accurate information about their legal rights and to provide lawyers engaged in helping Floridians fight for their homes with access to up-to-date information about the most effective legal defenses being used statewide.

• “The number of Florida residents — and other people who own property in Florida — facing foreclosure is staggering,” said Michael Wasylik, a partner with Ricardo, Wasylik & Kaniuk and the president of the fledgling FFDBA. “We created the FFDBA to provide homeowners and others facing foreclosure with the information they need to fight back and protect their homes, and to help the attorneys who represent them provide the best possible legal counsel.”

• Wasylik said the FFDBA will organize seminars and town hall meetings about how to cope with the threat of foreclosure, such as the one hosted by U.S. Rep. Robert Wexler, D-FL, in April. The FFDBA also plans to provide property owners and the legal community with advice online and in print. [...] For more information about the FFDBA, visit www.FFDBA.org.

Source: Foreclosure Defense Bar launched.

(1) Along with Wasylik, other founding members of the FFDBA include Jason Ricardo and Ron Kaniuk of Ricardo, Wasylik & Kaniuk; Jeffrey H. Tromberg of Florida Debt Relief Center; Lori Patton of Law Office of Lori Patton, P.A.; Todd Budgen of Budgen Law Group; Dawn Rapoport of Rapoport Law Group; Shannon Stankiewicz of Hutchison Mamele & Coover; and Kevin Hoyes of Kevin M. Hoyes, P.A. President Wasylik also holds the office of treasurer, while Tromberg serves as vice president and Budgen as secretary.

Phones Start Ringing At Brooklyn DA's Deed Scam, Mortgage Fraud Unit

In Brooklyn, New York, WNYC Radio 93.9 FM reports:

• [Brooklyn District Attorney] Charles Hynes says his new mortgage and real estate fraud unit has opened more than 80 investigations since March, leading to the indictment of eight people. [...] Hynes says the new unit was created with $875,000 of federal funding, and is investigating cases of mortgage fraud, refinancing fraud, predatory lending, deed theft and foreclosure rescue scams. The unit has received hundreds of calls since establishing a hot-line earlier this year.

Source: New Unit in Brooklyn DA's Office Cracks Down on Real Estate Fraud.

See also, Brooklyn Daily Eagle: The Senator and the Prosecutor: Fighting Mortgage Fraud in Brooklyn.

The Rush Is On By Lenders, Servicers Looking To Dodge California's New 90-Day Foreclosure Moratorium

In Southern California, the Orange County Register reports:

• Bank of America, Citigroup and EMC Mortgage Corp. are among seven companies that have received permanent exemptions to California’s 90-day foreclosure moratorium, which began last week. More than 20 other lenders and loan servicers, including Wells Fargo and JPMorgan Chase, have received a temporary exemption while they wait to learn if it will become permanent.

For more, see 7 lenders escape state foreclosure moratorium.

Arizona Firms Selling Allegedly Bogus Loan Modification Services & "Loss Mitigation Consultant" Business Opportunities Faces Federal Civil Charges

The Federal Trade Commission recently announced:

• At the request of the Federal Trade Commission, a federal court has halted a bogus mortgage foreclosure prevention operation that misrepresented both the “loss mitigation” services it offered and the earnings potential of the business opportunity it sold. The FTC seeks to end this deceptive scheme and make the defendants give up their ill-gotten gains.

• According to the FTC’s complaint, the defendants(1) sold “loss mitigation” services to homeowners at risk of foreclosure, falsely claiming they could prevent foreclosure in 97 percent of cases and misrepresenting that they would make a full refund if they failed. Before performing any loss mitigation services, the defendants required homeowners to pay the equivalent of one month’s mortgage payment. Their contracts instructed homeowners not to contact lenders or their contract and its money-back guarantee would be voided. In some cases the defendants’ consultants told homeowners to stop making their mortgage payments while the defendants were working on their cases.

• The FTC alleged that, contrary to the defendants’ claims, they completed loan modification in only about 6 percent of cases and routinely failed to return consumers’ repeated telephone calls. In numerous instances, the defendants had not contacted the consumers’ lenders or had made only non-substantive contacts with them, resulting in late fees, penalties, and other costs for the homeowners. After failing to secure loan modifications, the defendants also failed to honor their refund policies.

• The FTC’s complaint also alleges that the defendants sold a “loss mitigation consultant” business opportunity for up to $1,500, falsely claiming that purchasers (“consultants”) could earn various amounts, including up to $6,000 per week, by referring homeowners to them and by recruiting new consultants. In fact, throughout the defendants’ entire operation, no consultant has earned that much money.

For the entire press release, see FTC Stops Foreclosure Prevention Marketers Who Misrepresented Their Services and Misled Business Opportunity Buyers.

For the relevant court documents in this case, see:

• Complaint for Injunctive and Other Equitable Relief,
• Stipulated Preliminary Injunction Order as to All Defendants,
• Ex Parte Temporary Restraining Order Against Defendants Freedom Foreclosure, Loss Mitigation Training Center, and Jeffrey Segal and Order for All Defendants to Show Cause Why a Preliminary Injunction Should not Issue.

(1) According to the civil lawsuit, the defendants are:

• Freedom Foreclosure Prevention Services, LLC, 1234 S. Power Road, Mesa, Arizona 85206. Freedom Foreclosure also used a maildrop located at 70 S. Val Vista Drive, Suite 3, #420, Gilbert, Arizona 85296,
• Loss Mitigation Training Center of America, LLC, - uses a maildrop located at 70 S. Val Vista Drive, Suite 3, #420, Gilbert, Arizona 85296 as its registered office address. In addition, it directs correspondence to the physical address of 1234 S. Power Road, Mesa, Arizona 85206. It also does business as Mastermind Consulting Group.
• Jeffrey C. Segal, and
• Michael R. Workman.

State AG Probe Focuses On Central Florida Man With Involvement In Dubious Sale Leaseback, Foreclosure Rescue Deals

In Central Florida, the St. Petersburg Times reports:

• For scores of desperate Tampa Bay homeowners, it seemed like a lifeline — Gideon Rechnitz would help bring their mortgage payments up to date and save their homes from foreclosure. But now the Florida Attorney General's Office is investigating whether Rechnitz misrepresented himself and his St. Petersburg-based companies in a foreclosure rescue scheme that enabled him to acquire dozens of houses at below-market value.(1)(2)

***

• As the St. Petersburg Times reported last year, Rechnitz, 62, told homeowners that investors would buy their houses, make the payments and stop the foreclosure proceedings. The sellers could then rent back their homes with an option to repurchase them in two years. In an interview for that story, Rechnitz said that he explained all facets of the "program" and even videotaped closings to make sure the sellers understood. But many homeowners were confused by the documents he asked them to sign and could not meet the stringent rental and buyback conditions.

***

• Rechnitz said in the fall that his foreclosure rescue business had slowed considerably in 2008 because it was harder to find people [...] with substantial [home] equity. But as home­owners who got 100 percent financing now struggle to renegotiate their mortgage terms, state records show he recently started a new company — Loan Modification Enterprises.

For more, see Attorney general investigating fraud in foreclosure 'rescue' operation.

(1) According to the story, the current investigation is not the first involving Rechnitz. The Florida Bar conducted a probe involving conduct that could constitute the unauthorized practice of law in connection with an alleged "rescue" of a Bradenton home. Rechnitz admitted no wrongdoing, but later signed a cease-and-desist affidavit. In the 1980s, the Federal Trade Commission sued Rechnitz for deceptive trade practices in connection with timeshare marketing program. He admitted no wrongdoing, but agreed to refund $1.25 million to customers. He reportedly also lost his Florida real estate license. He also reportedly faces two lawsuits in Sarasota County, including one by 71-year-old Yolanda Rodriguez, who claims that in 2006 Rechnitz improperly evicted her and her deaf brother from their home, which he acknowledged in a deposition was worth far more than the $150,000 Rodriguez owed on her mortgage, according to the report.

(2) In May, a Washington State jury hammered a foreclosure rescue operator similarly suspected of ripping off the home equity of financially strapped homeowners in a civil lawsuit brought by the Washington Attorney General's office (see Pay time for notorious foreclosure rescue scammer - Attorney General announces major victory in state’s case with Washington man who promised help but took homes). The jury found that the business practices engaged in by the operator violated the state Consumer Protection Act. See Washington AG Scores Big Win In Bogus Equity Stripping, Land Trust/Sale Leasebacks & Surplus Ripoffs; Foreclosure Rescue Operator Tagged For $4.2M.

Two Lawmakers Ask Fannie, Freddie To Ease The Squeeze On Available Financing For New Condo Units

The Wall Street Journal reports:

• Two Democratic lawmakers are calling on Fannie Mae and Freddie Mac to relax recently tightened standards for mortgages on new condominiums, saying they could threaten the viability of some developments and slow the housing-market recovery.

• In March, Fannie Mae said it would no longer guarantee mortgages on condos in buildings where fewer than 70% of the units have been sold, up from 51%. Fannie Mae also won't purchase mortgages in buildings where 15% of owners are delinquent on condo association dues or where one owner has more than 10% of units, which the firm sees as signals that a building could run into financial trouble. Freddie Mac will implement similar policies next month.

• In a letter to the chief executives of Fannie and Freddie, Reps. Barney Frank, the Massachusetts Democrat who is chairman of the House Financial Services Committee, and Anthony Weiner (D., N.Y.) warned that the 70% sales threshold "may be too onerous" and could lead condo buyers to shun new developments. The legislators asked the companies to "make appropriate adjustments" to their underwriting standards for condos. [...] Tighter lending standards are also creating hurdles for condo owners who want to sell their units.

For the rest of the story, see Changes Urged to Rules on Condo Loans.

Virginia Accountant Charged In Alleged Mortgage Scam; Accused Of Creating Letters Containing Bogus Info To Assist Straw Buyers Obtain Home Loans

In Northern Virginia, The Washington Examiner reports:

• Federal authorities have accused a Virginia accountant of writing false letters verifying the incomes of homebuyers who were caught in a mortgage fraud scheme that caused banks to lose about $3 million when their homes went into foreclosure. Maria E. Conrad would receive up to $400 each from loan officers at E-Star Lending for the letters she wrote supporting its clients’ loan applications, court documents said. In December, the owner of E-Star Lending, Gohar Mirza, was sentenced to 5 years and 3 three months in prison and ordered to pay back the $3 million he caused lenders to lose when the houses purchased by his straw buyer scheme went into foreclosure.

***

• The conspirators required help from accountants to support the false information in the loan applications, charging documents said. [...] The postal inspector wrote that he interviewed a sales representative from one of the swindled lenders. The representative said letters from accountants could “make or break” loans from self-employed customers.

For more, see Accountant accused of role in mortgage fraud.

Arizona Minister's Real Estate Deals Attract Interest From State, Federal Investigators; 23 Of 26 Purchases Went Into Foreclosure

In Phoenix, Arizona, The Arizona Republic reports:

• A Valley preacher with a worldwide ministry and his wife bought multiple upscale homes with deceptive loan applications, according to a state case accusing a mortgage firm of illegal practices. Clint Rogers, head of Mesa-based Clint Rogers Ministries, and Angela Faith Rogers are not accused of any wrongdoing in the complaint filed by the Arizona Department of Financial Institutions, which seeks to shut down Scottsdale-based Global Mortgage. The mortgage company handled many of the couple's purchases and is accused by the state of using illegal and improper procedures. But the couple's purchases of more than two dozen homes in Arizona over two years are documented in records turned over by the state to federal investigators charged with looking at mortgage improprieties.

***

• Property records show that they bought homes that the sellers had purchased hours, days or weeks earlier for thousands of dollars less than what Clint and Angela Rogers had paid for them. That generated hundreds of thousands of dollars in profits for the sellers. Of 26 homes bought by the minister and his wife, at least 23 went into foreclosure. All were sold for less than what banks lent to the couple, mostly through trustee sales.

For more, see Minister's home purchases questioned in state mortgage case.

Hawaii Feds Accuse Three Of Arranging For Fraudulent Financing In Foreclosure Rescue Schemes

In Honolulu, Hawaii, the Honolulu Advertiser reports:

• Another mortgage fraud criminal case has been filed in federal court, this one accusing more people affiliated with Accel Mortgage LLC with conspiracy to commit mail, wire and loan fraud. Charged in the case are Carla Dutro, identified by the U.S. attorney's office as the regional manager of Accel, Maria "Gerlie" Guillermo, Maui branch manager of the company, and Alfred Ulat, a tax return preparer. Accel owner Welton Kalani and Audra Palomares, a loan processor with the company, were charged in an earlier fraud case filed here in April. The government alleges in the new case that Dutro, working with Kalani and others, "facilitated fraudulent real estate transactions involving homes facing foreclosure."

Source: Another mortgage fraud case in court (More people linked to Accel Mortgage face federal charges).

(1) According to the story, Dutro processed loan applications and "submitted materially false supporting documentation to lending institutions," the government charged. Dutro allegedly submitted bank statements on behalf of borrowers "that she had materially altered" to inflate the net worth of the borrowers, the government alleged. Guillermo and Kalani allegedly "structured fraudulent loan transactions" and helped prepare false documents from accountants and tax return preparers, according to the U.S. attorney's office. Ulat allegedly was paid $100 to $150 for submitting "false statements concerning the employment and tax returns of loan applicants."

City Judge Orders Wells Fargo To Clean Up Its Mess Of Foreclosed Homes Throughout Cleveland; Bans Sales Of Homes Under $40K That Violate Local Codes

In Cleveland, Ohio, The Washington Independent reports:

• For neighborhoods fighting the blight and deteriorating property values caused by foreclosed properties that banks abandon or unload on speculators, this is big news: A housing court judge in Cleveland has ordered Wells Fargo to clean up the foreclosed houses it owns in Cleveland. In the preliminary injunction he issued Thursday, Judge Raymond Pianka also required Wells Fargo to prove its foreclosed properties are up to city building and housing codes before the bank can sell any of them for less than $40,000, Cleveland.com reports. Pianka will decide at some point whether to make the injunction permanent.

For more, see Cleveland Neighborhoods Win a Round in Fight Against Banks Over Foreclosures.

See also, The Cleveland Plain Dealer: Judge Raymond Pianka orders Wells Fargo Bank to bring foreclosed properties up to code in Cleveland. BetaVacantForeclosure

Cook County Sits On $18M In Foreclosure Sale Surplus Funds Owing To Approx. 1,900 Ex-Homeowners; $460K In Unclaimed Cash Awaits One Former Owner

In Chicago, Illinois, the Chicago Sun Times reports:

• Call it a green lining on the cloud of the mortgage foreclosure crisis. Homeowners who handed the keys over to the bank may actually have some money coming their way, and in Cook County, a new online system may help nearly 2,000 property owners get their due. The Cook County Clerk of the Circuit Court is holding approximately $18 million in mortgage foreclosure surplus funds -- profits generated when the bank sells a property for more than what the original owner owed the lending institution.

• The county has identified about 1,900 onetime owners who are owed money as a result of foreclosure sales in the last decade, and Circuit Court Clerk Dorothy Brown has launched a campaign to get the word out. In one case, a property owner could collect $460,000, she said. So many people turn the keys over to the bank and don't look back -- and that's why the money has accumulated, Brown said.

***

• Go to www.cookcountyclerkofcourt.org and head to the mortgage surplus search engine, which will allow you to put in your name. If there's a match, begin the process of petitioning the court for your money. Cook County residents can also visit the clerk's accounting office for more information.

For more, see Homeowners who gave up might get foreclosure refund.

Condo Living Begins To Get Ugly In Some Complexes Where Non-Delinquent Unit Owners Are Left On The Financial Hook By Their Deadbeat Neighbors

In Miami, Florida, The Miami Herald reports:

• Well into the second year of South Florida's foreclosure crisis, deadbeat condo owners are taking a heavy toll on associations [...]. Owners in or facing foreclosure often stop paying their condo fees that are needed to pay for essential utilities and services. That leaves other residents on the hook to pay the difference. Some can't cover the shortfall. As a result, the water has been shut off. And the lights. Trash is piling up and lawns are ragged. Many are going without property insurance in the depths of hurricane season.

• In condos, those who pay their bills and those who don't live cheek to jowl, fraying nerves throughout the building. Some condo owners are acting out. It's getting ugly. The frustration is fed by a legal system that affords considerable protections to delinquent owners -- too many protections, in the eyes of some of those who are current with their payments. And so, some associations are meting out their own punishment. Public humiliation is in vogue. At least two condominiums -- The Collins in Miami Beach and Island Place in North Bay Village -- and probably far more, post lists bearing the names of owners who are behind on fees. "I don't see it as a bad practice, myself,'' said Jenny Huertas, a resident of The Collins who hopes it will keep her assessments from going up. "I guess it's a way to embarrass them and get their attention that they need to take action.''(1) After appealing to nonpayers' sense of fairness failed, Eduard Sotolongo, a board member at Island Shores condo, said he started aggressively calling the towing service to haul away their cars when parked in guest spots or other unauthorized spaces.

For more, see Condos squeeze deadbeat residents (It's a mad, mad world in condo land, where those who pay their maintenance fees and those who don't live cheek to jowl, harboring bitter resentment).

See also, WFOR-TV Channel 4: Condo Associations Fight Back Against Deadbeats.

(1) While it may seem like a good idea to some to post "deadbeat lists" to embarrass unit owners into paying their delinquent maintenance fees, such a practice, when targeting owner-occupants (either full-time or part-time residents) appears to be a violation of the Florida Consumer Collection Practices Act (Sections 559.55-559.785, Florida Statutes, which provides, in pertinent part:

• Prohibited practices generally.--In collecting consumer debts, no person shall [... p]ublish or post, threaten to publish or post, or cause to be published or posted before the general public individual names or any list of names of debtors, commonly known as a deadbeat list, for the purpose of enforcing or attempting to enforce collection of consumer debts [...]. F.S. 559.72(14).

It is arguable whether this statute prohibits posting a deadbeat list of unit owners who rent out their units as investments in that this statute only applies to the collection of "consumer debts" (as opposed to debts incurred in connection with "business" or "investment" transactions), which the Florida Statute defines as follows:

• "Debt" or "consumer debt" means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment. F.S. 559.55(1).

Fires In Vacant Homes On The Upswing?

The Associated Press reports:

• Fires in vacant homes rose 11 percent to 21,000 in 2006 — the latest year for which figures are available — while all home fires rose just 4 percent, the National Fire Protection Association reported in April. More than four of every 10 vacant building fires were intentionally set, the group reported. Some of that is arson for financial reasons. But in neighborhoods of sagging homes worth little, fires are often set by vandals, the homeless or people seeking revenge.

• The threat grows as empty homes multiply, said John Hall, the NFPA's division director for fire analysis and research. Vacant homes nationwide topped 19 million earlier this year, up from 15.7 million in 2005, according to the Census Bureau. "The best way to prevent vacant building fires is to prevent vacant buildings," the NFPA concluded.

For more, see Fire moves into houses abandoned by foreclosures (Fire Moves Into Houses Nation's Foreclosure Crisis Left Abandoned - But Not Always Empty).

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

Over A Dozen Tenants Put Out Onto Street Without Notice As Landlord Is Accused Of Housing Violations & Suspected Of Stealing Electric & Water Service

In Pinellas County, Florida, the St. Petersburg Times reports:

• At least 15 residents of a west Oldsmar apartment building were evicted Friday morning with no prior notice after Pinellas County sheriff's deputies said their landlord violated housing codes. The residents, who said they first learned of the eviction about 9:30 a.m., had to pack their things in the morning heat without lights or air conditioning after a TECO employee cut off what deputies said was stolen electricity. Many said they knew nothing about the allegations of power and water theft leveled against landlord Lawrence Ayers, who charged them $125 weekly to cover rent and utilities.

• Electrical connections at 3616 Meriden Ave. were jerry-rigged to bypass meters, causing "imminent danger to the residents," said Safety Harbor Fire Marshal Richard Brock. Though the eviction notices allowed residents 30 days to vacate, officials would not let people stay or delay the disconnection of power lines due to "personal safety concerns" like the potential for a fire, Brock said.

***

• Ayers has not been arrested and utility-theft charges have been referred to the State Attorney's Office. [...] Ayers was arrested three times in the past five years for failing to appear in court on housing violation charges dealing with electricity and accumulation of trash, according to Pinellas jail records. He has entered into 11 mortgage foreclosure cases with seven different companies, court records show.

For the story, see Residents evicted from Oldsmar apartment building; landlord accused of code violations. RentSigmaSkimming

Mass. Family With Young Children Pockets $10K Settlement From Real Estate Agents Accused Of Violating State Anti-Discrimination, Lead-Based Paint Laws

From the Office of the Massachusetts Attorney General:

• Attorney General Martha Coakley’s Office obtained a consent judgment against Geoffrey Wells, doing business as (d/b/a) Harvard Real Estate of Brookline, and one of his employees, David Ravalli, accused of violating state antidiscrimination and lead paint laws by refusing to show a property to a family because they had young children. The judgment, [...] requires the brokers to pay the family $10,000 and prohibits them from discriminating against any person who seeks or applies for housing because they have children or otherwise discriminating against any person in violation of state and federal fair housing laws.

***

• The consent judgment resolves a complaint filed in October 2007 in Norfolk Superior Court, alleging that Geoffrey Wells, d/b/a Harvard Real Estate of Brookline, through its agent David Ravalli, refused to show an advertised unit to a mother of two young children and tried to steer her to other properties. The complaint alleges that the discriminatory treatment was confirmed by two testers from the Fair Housing Center of Greater Boston.(1)

For the entire press release, see AG Reaches $10,000 Settlement with Brookline Real Estate Brokers for Discrimination.

(1) Information for Massachusetts residents who believe they've been discriminated against in any way in violation of federal and state anti-discrimination laws in connection with housing sales or rentals or in housing lending and insurance is made available online by the Fair Housing Center of Greater Boston in the following languages:

• Spanish, Arabic, Chinese, Haitian Creyole, Khmer, Portuguese, Russian, Somali, Vietnamese, and last, but certainly not least, English.

Cleveland Housing Court Judge Begins Belting Lenders With Contempt Citations For Failing To Answer For Code Violations On Dilapidated Foreclosures

In Cleveland, Ohio, The Plain Dealer reports:

• One day last month, Cleveland Housing Court Judge Raymond Pianka waited for absentee owners facing charges that they neglected their property to come and explain why they shouldn't be held in contempt. The mostly out-of-town companies had been no-shows at previous hearings, and now it looked as if they would be missing again, despite Pianka's summons.

• Court staff checked the hallway and called the companies' names. But nobody answered. Pianka found them in contempt of court and fined them $1,000 a day until they appeared before him, ratcheting up the financial stakes for far-flung owners in a city scarred by vacant and dilapidated housing. For Cleveland's lone housing judge, this contempt hearing was an unprecedented legal move during an unprecedented housing crisis that is further eroding neighborhoods across the city.

For more, see Cleveland Housing Court judge gets tough, holds absentee landlords in contempt who fail to appear.

Go here for other posts on Judge Pianka's hammering of deadbeat lenders in Cleveland Housing Court. BetaVacantForeclosure

WV Non-Profit Law Firm Expands Assistance For State Predatory Mortgage Victims In Foreclosure By Launching New Office

In Charles Town, West Virginia, The Journal reports:

• Mountain State Justice Inc., a Charleston-based agency, has opened a new office in Clarksburg in an attempt to better serve clients in the state's eastern and northern counties. The nonprofit group opened its first office in 1996, to help provide legal assistance to low-income individuals facing problems related to consumer issues, health care and other matters, said attorney Nathan Fetty. Recently though, the focus has changed, as calls flooded in from people hoping to keep their home out of foreclosure.

• "The foreclosure work has really picked up since all the economic troubles have broken loose," Fetty said. "The vast bulk of our work right now is foreclosure work. It's 95 percent of what we do right now."

• Potential clients, especially those who believe they have fallen prey to predatory lending practices, phone in to Mountain Justice. If the agency representatives think they might be able to provide assistance, Fetty said the individuals are asked to come in for an in-person meeting. Until now, he said that meant a five- to six-hour drive to Charleston for clients living in the eastern and northern portions of the state.

***

• That is why Mountain State Justice decided to open a second office. Using grant funding from the Institute for Foreclosure Legal Assistance, the agency was able to open a new office earlier this month.

For more, see Nonprofit law firm expands state’s service (Mountain State Justice says bulk of caseload foreclosure assistance).

Unwitting Tenant Rents Foreclosed Home, Then Gets Evicted Days After Moving In; Full Rent Refund Obtained After Local Media Reporter Intervenes

In West Palm Beach, Florida, WPBF-TV Channel 25 reports:

• It's not what Marie Jean-Pierre envisioned for the week she took off work. She planned to be moving in, not moving out, too. Jean-Pierre rented a four-bedroom home in the gated Terracina community from a woman named Micki O'Callaghan. Jean-Pierre knew it was in the beginning stage of foreclosure. But she said O'Callaghan promised it would all be OK and that maybe the Jean-Pierre family could even buy the home. [...] She said the notice went up on the front door the day after she moved in.

***

• [WPBF-TV Channel 25 reporter Cathleen] O'Toole tried to ask O'Callaghan about Jean-Pierre's $800 in rent Thursday. Instead, O'Callaghan shut the door on her. [...] The pre-school teacher did get her rent back and a lesson she never wanted. "Don't just go anywhere, saying you got the place, here take it, like that, because I learned a big lesson from this. Believe me," said Jean-Pierre.

For the story, see Renter Forced Out Same Week She Moved In (Eviction Notice Plastered On Door Day After Woman Moved In).

For other posts involving the problems tenants face in homes in foreclosure, go here, go here, go here, go here, and go here. RentSigmaSkimming

Stiffed Condo Associations Now Target Deadbeat Lenders With "Unpaid Maintenance Fee" Lien Foreclosures On Units Already Seized By Banks

In Sunny South Florida, The Wall Street Journal reports:

• As more condominium owners default on home loans, the amount of unpaid dues owed to condo associations is piling up. To collect the arrears, some condo boards have begun foreclosures on units already seized by banks. While it is common for banks to foreclose on properties, any entity with a lien on a property can do the same. That includes condo associations, which have used the tactic to collect from owners who don't pay dues -- or to oust them.

For more, see Condo Boards Take On Lenders (Chasing Unpaid Dues, Associations Are Foreclosing on Units Seized by Banks) (requires subscription; if no subscription, try here, then click link for the story).

In related posts on the legal battles being waged by condominium associations in buildings loaded with foreclosures and non-maintenance-fee-paying unit owners, see:

• Miami Judge Gives Struggling Condo Associations New Tool In Battle Against Rent-Skimming Unit Owners Delinquent On Maintenance Fees,
• Miami Judge Orders Foot-Dragging Lender To Foreclose & Take Title To Condo Or Start Paying Maintenance Fees.

Florida Man Accused Of Using Bogus Deeds, Adverse Possession Claims In Alleged Massive Foreclosed Home Hijacking Scam Faces New Charges

In West Palm Beach, Florida, The Palm Beach Post reports:

• Carl Heflin, 51, of suburban West Palm Beach was arrested June 4 and charged with organized scheme to defraud and committing a criminal process under color of law. [Wednesday] morning he was marched back into a courtroom at the Palm Beach County Jail to face burglary and grand theft charges related to his "elaborate scheme," which authorities said affected dozens of foreclosed homes in the Westgate neighborhood and surrounding areas.

• Heflin, who worked a short stint as a West Palm Beach police officer in the 1980s, used bogus warrant deeds and a junk legal justification he called "adverse possession" to seize and plunder as many as 30 houses, which he then would rent out to unsuspecting tenants, said Detective Michael Antinoro of the Palm Beach County Sheriff's Office. The scheme netted about $6,000 a month in rent, Antinoro said.

Reportedly, there are at least 25 victims in this alleged massive house-stealing scam west of West Palm Beach.

For more, see West Palm Beach ex-cop charged with hijacking foreclosed homes, now charged with burglary, too.

Go here, Go here, 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.

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

Federal Regulator Urges Caution When Considering Reverse Mortgages

The Washington Post reports:

• If you watch TV during insomniac hours, you've probably caught some of the commercials for reverse mortgages. [...] But there's much more to know about these highly complicated and often very expensive forms of credit. And [last week], one of the government's banking regulators, Comptroller of the Currency, John C. Dugan, warned that tougher oversight may be necessary. "While reverse mortgages can provide real benefits, they also have some of the same characteristics as the riskiest types of subprime mortgages -- and that should set off alarm bells," Dugan said in a speech to a banking group.

***

• Under the right circumstances, a reverse mortgage can be a fine way for the elderly to remain in the homes and neighborhoods they love, while using their equity to make needed repairs, keep up with rising property taxes or to supplement their monthly cash flow. [...] But consider these elements of risk: Elderly homeowners, (a group that frequently has been targeted by financial scammers), large pots of home equity, confusing financial/legal documents, big up-front fees, and the potential for profit. There is plenty of opportunity for things to go wrong.

For more, see Regulator Warns Public About Reverse Mortgages. reverse mortgage yak

Colorado Couple Arrested For Using Stolen IDs To Rent Expensive Homes From Property Owners For Use As Indoor Pot Farms

From the Front Range of Colorado, The Denver Post reports:

• Expensive homes in three Front Range counties have allegedly been rented by a couple who have used them to grow marijuana, according to the Arapahoe County Sheriff's Department. The suspects were identified as Brian Wayne Coplen, 24, and Melissa Violet Haraldson, 21. The couple are accused of renting high-end homes in Arapahoe, Douglas and El Paso counties, often using stolen identities to shield themselves and to obtain the necessary utilities to carry out their marijuana-growing operations. Authorities know of at least five properties where the couple grew marijuana, according to Sgt. Larry Etheridge, spokesman for the South Metro Drug Task Force.

For more, see Arapahoe sheriff: Pair rented houses to grow pot.

Go here and Go here for other posts on marijuana grow houses. pot grow ops beta

Bomb Squad Called In To Clear Out Volatile Chemicals Stumbled Into By Bank Reps In Vacant Home Recently Foreclosed On

In Montgomery County, Ohio, the Dayton Daily News reports:

• The Dayton Bomb Squad has removed two chemicals from a vacant home on Evansville Avenue [Wednesday] afternoon and is trucking them out to be destroyed. At 4:40 p.m., two canisters containing potassium chlorate and aluminum powder were loaded onto a Harrison Twp. dump truck full of sand, which will be driven to a range on Gettysburg Avenue the squad uses to dispose of hazardous chemicals and ordnance. The chemicals were discovered about 1:18 p.m. in a back room of the home [...] by bank representatives who were at the property following a bank foreclosure, Montgomery County sheriff’s Maj. Scott Landis said Wednesday, June 17.

For more, see Bomb Squad removes volatile chemicals from Harrison Twp. house. DeputyEvictionTheta

New Jersey Man Accused Of Fraudulently Pocketing $75K+ In Mortgage Loan Proceeds Secured By Unwitting Father-In-Law's Vacation Home

In Bergen County, New Jersey, Examiner.com reports:

• A 68-year-old car salesman ripped off his father-in-law to the tune of $150,000 by impersonating him, authorities said [...]. Besides obtaining more than $75,000 through various accounts and leases, Jerome A. Singer of Ridgewood also took out a $75,000 mortgage on his father-in-law's Long Beach Island vacation home by posing as him, Bergen County Prosecutor John L. Molinelli said. Singer of Ridgewood was arrested [...] after the victim notified detectives of what was going on, the prosecutor said. The thievery began sometime in 2003 and ended last year, he said. Singer, who worked at Ramsey Mazda, is charged with theft by deception and criminal impersonation.

Source: Posing as father-in-law, he rips off $150,000.

Go here, Go here, 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. DeedContraTheft

New Orleans Feds Convict Local Woman Accused Of Using Forged Deed To Apply For & Obtain SBA Disaster Loan, HUD Grant

A recent press release by the Office of the U.S Attorney in New Orleans, Louisiana announced the conviction of Barbara Simmons Dowl on a five-count indictment by a Federal jury for theft of government funds, false statements and wire fraud.

Dowl was accused of filing a bogus quit claim deed, naming her as owner to property she once owned but lost to the City of New Orleans for failure to pay real estate taxes, and then applying for and obtaining a Small Business Administration disaster loan of $75,000, and a $132,000 federal grant under the Road Home Program from the United States Department of Housing and Urban Development.

For the press release, see New Orleans Woman Convicted For defrauding Louisiana Road Home And Small Business Administration. TheftOfDeedMeta

Builder Convicted Of Pocketing Customer Cash For Homes Never Constructed

In Prince George's County, Maryland, The Washington Post reports:

• A District Heights builder who was accused of collecting more than $1 million from banks and home buyers for homes that were never constructed has been convicted of 16 counts of theft and other violations. Leon T. Coleman, 40, promised to build homes in Kings Grant, a new subdivision in Upper Marlboro. Instead, prosecutors said, he pocketed $206,000 and used some of the rest to buy land and pay closing costs. Now many buyers face foreclosure on the land. Coleman, who ran Opportunity Investment Group, was convicted late Monday in Prince George's County Circuit Court and faces as much as 30 years in prison. His attorney, Sloane R. Franklin, said he expects the verdict to be appealed.

Source: Builder Convicted in House Scam. StiffingContractorsTheta

Central Oregon Squatters In Vacant Foreclosures A Problem Getting Out Of Hand, Say Local Cops, Real Estate Agents

In Bend, Oregon, KTVZ-TV Channel 21 reports:

• As more houses in Central Oregon and nationwide fall into foreclosure and sit empty, a new problem is creeping up: Squatters are breaking in and doing drugs, lighting fires, leaving a mess - and police are having a hard time finding them all. Squatters in Bend are either transients looking for shelter or kids looking for a place to party, officers said Monday. Police and local Realtors agree the problem is getting out of hand, now that the housing bubble has burst.

For more, see Bend foreclosures on the rise; squatters take advantage (Homes often trashed, need extensive cleaning, repairs).

Go here for posts on squatters moving into vacant homes, foreclosures. squatter foreclosure zebra

Mandatory Mediation For Indiana Homeowners, Foreclosing Lenders Begins July 1

In Marion County, Indiana, The Indianapolis Star reports:

• Indiana homeowners facing foreclosure are starting to see benefits of new legal protections and counseling along with millions of dollars in new federal grants. On July 1, a new state law takes effect requiring mediation between homeowners and lenders in foreclosure cases. It's the first such requirement in the state, although Marion County passed a rule in March requiring settlement conferences between lenders and homeowners before a foreclosure will be approved.

For more, see New rules, programs aid Hoosier foreclosure candidates.

Federal Jury Convicts San Antonio Woman Of Bilking Homeowners In Foreclosure Of Upfront Fees In Exchange For Bogus Promises Of Help

In San Antonio, Texas, the San Antonio Express News reports:

• A San Antonio woman accused of bilking $100,000 from several people who thought she could help stop foreclosure on their homes was convicted Wednesday of all 14 charges she faced. Rosario Castro Divins [aka Rosie Divins], 54, showed little emotion after hearing the guilty verdicts to seven counts of criminal contempt and seven counts of mail fraud. Jurors took an hour and a half to find her guilty.

***

• After the verdict, U.S. District Judge Fred Biery ordered Divins jailed, citing her criminal past and her new conviction as reasons for keeping her off the streets pending sentencing in September.

• Representatives of seven families testified during her trial that, after falling behind on their mortgages, they paid her money after receiving a direct-mailed ad that purported to stop foreclosure. Four of the victims said they ended up losing their home, while three said they wound up saving their houses through other means — such as working with the Veterans Administration, filing for bankruptcy or negotiating with the lender.

• All said they did not know she had been ordered repeatedly by bankruptcy judges to stop claiming she could stop foreclosures. Had they known that, they said, they would never had paid her money and chosen another course.

For more, see Businesswoman convicted for defrauding homeowners.

For the U.S. Attorney (Western District - Texas) press release, see Federal Jury Convicts San Antonio Woman Of Criminal Contempt And Mail Fraud In Foreclosure Prevention Scheme.

For the indictment, see U.S. v. Divins.

Go here for earlier posts on this alleged foreclosure rescue scam. loan modification

75-Year Old Chicago Woman Fights To Get Back Home Ripped Off In Straw Buyer, Equity Stripping Foreclosure Rescue Scam

In Chicago, Illinois, WLS-TV Channel 7 reports:

• A Chicago woman is battling to keep the home she has owned for 40 years. Lessie Towns is a victim of mortgage fraud, and she could lose her home, despite the fact she has never missed a mortgage payment. Towns, who is 75 years old, raised five children as a single mother in her South Side home. Four years ago, she was astonished to discover that her home was in foreclosure. She says she was current with her payments, although her lender had changed hands. Then came a cold-call visit from a lender who knew about the pending foreclosure.

***

• She signed what she thought was a refinancing agreement with Oak Brook based Trust One Mortgage. She was regularly making payments until she found the company's south suburban office empty and padlocked. Then, Lessie Towns discovered she no longer owned her home. It had been sold, investigators say, at least twice to straw buyers who made a profit.

***

• Last month, [the Illinois Dept. of Financial and Professional Regulation] revoked the licenses of Trust One Mortgage and its owner, Paul Shelton, saying the alleged fraud scheme involved Lessie Towns and at least 13 other homeowners. Towns was back in court Friday in the fight to keep her home. [...] Her attorney is optimistic Towns will win the fight to keep her home, but it's been a very emotional fight for the homeowner who technically does not own her home. [...] Lessie Towns' effort to stay in her home is set for a court ruling July 14.(1)

For the story, see Chicago owner loses home in mortgage scam.

(1) Any attempt by the financially strapped homeowner to successfully void her unwitting title transfer, as well as the subsequent title transfers (and any mortgage liens created incident thereto) to subsequent purchasers and encumbrancers could turn on whether the subsequent purchasers and encumbrancers can be charged with inquiry notice of the alleged fraud and/or any other unrecorded rights (ie. equitable mortgage) the scammed homeowners can establish that they had at the time of the relevant conveyances.

Under Illinois law, the continued open and visible possession of the home by the scammed homeowners after being duped by the foreclosure rescue operator may be sufficient to charge those subsequently acquiring title and security interests in the home with notice of the fraud, and thereby disqualifying them from bona fide purchaser status. An Illinois appeals court ruling in Life Savings & Loan Association v. Bryant, 125 Ill. App. 3d 1012, 81 Ill. Dec. 577, 467 N.E.2d 277 (1st Dist. 1984) addresses this point:

• Illinois courts have uniformly held that the actual occupation of land is equivalent to the recording of the instrument under which the occupant claims interest in the property. (Bullard v. Turner (1934), 357 Ill. 279, 192 N.E. 223; Beals v. Cryer (1981), 99 Ill. App. 3d 842, 426 N.E.2d 253). The open and visible possession of land by the equitable owner is sufficient to charge a mortgagee with notice of the rights of such owner, and the mortgagee will take subject to the rights of the person in possession. Williams v. Spitzer (1903), 203 Ill. 505, 68 N.E. 49.

Likewise, citing heavily to the Illinois state case law, a Federal bankruptcy court in In re Cutty's-Gurnee, Inc., 133 B.R. 934 (Bankr. N.D. Ill. 1991) made this observation on the effect of continued possession on subsequent purchasers and encumbrancers:

• It is clear that where a physical inspection of the property would reveal an adverse interest or where there is a party in possession other than the record title owner, the subsequent lien claimant has a duty to inquire of the possessor as to his interest and is charged with knowledge of the facts discoverable from such an inquiry or inspection. Miller [v. Bullington], 381 Ill. [238] at 244, 44 N.E.2d [850] at 853; Burnex Oil Co. v. Floyd, 106 Ill. App. 2d 16, 23, 245 N.E.2d 539, 544 (1st Dist. 1969); In re Ehrlich, 59 Bankr. 646, 650 (Bankr. N.D. Ill. 1986).

Go here for more on the effect of continued possesion on bona fide purchaser/encumbrancer in Illinois.

For cases that support the proposition that possession of real estate by one other than the seller is enough to trigger this imposition of the duty to inquire as to possible unrecorded rights of the possessor, see Bona Fide Purchaser Doctrine, Possession Of Property By Occupants Other Than The Vendor & The Duty To Inquire.

Brooklyn Family Scammed Out Of Home In Foreclosure Rescue Scam

In Brooklyn, New York, WNYC Radio 93.9 reports on the story of Robert Pascall, a local homeowner who accuses three men of milking his two-family Brownsville home out of its equity and tricking him out of the deed in a foreclosure rescue, equity stripping sale leaseback scam. The home had been in the family for decades. In all, 13 family members were evicted and the home currently is vacant. They are all bow packed into a one room basement apartment in the Bronx.

The non-profit legal services firms are overwhelmed and can’t take on too many deed scams because the cases are complicated and time consuming. Robert Pascall said he was turned way from the few agencies he approached for help. He says the Brooklyn District Attorney also rejected his case.

For the story, see Housing Scam Artists Defraud Brownsville Residents.

Title Insurance Heavyweight Forks Over $300K, Drops NJ Malpractice Suit Against Buyer's Lawyer For Allegedly Failing To Unearth $2.7M Federal Tax Lien

The New Jersey Law Journal reports:

• A venerable title insurance company has done something unusual in New Jersey, and lawyers aren't likely to applaud. Chicago Title Insurance Co. filed a malpractice claim against a homebuyer's attorney, saying he acted without diligence and owes a piece of the $300,000 the company paid to save a policyholder's home. The Bergen County suit charged Albert Birchwale, of Basile, Birchwale & Pellino in Ridgefield, N.J., failed to investigate a previous sale in the chain of ownership to make sure there was no potential federal estate tax lien.

***

• On Friday, Chicago Title said through its lawyer that the company had decided to voluntarily dismiss the case, Chicago Title Insurance Company v. Birchwale, Ber-L-483-09, but didn't backtrack from the position that the claim has merit.

• The case reminds lawyers that rubber-stamping title commitments can be dangerous, particularly in northern New Jersey, where buyers' attorneys often act as title companies' proxies. It also raises the question of whether title insurers should be added to the list of potential malpractice plaintiffs to be feared by attorneys and their legal malpractice carriers.

The problem started when the executor of a deceased prior owner of the property in question falsely certified that no estate taxes were due when it sold to a subsequent purchaser ("Danton"). The issue reared its head when the IRS filed suit seeking $2.7 million in back taxes against the estate and sought to enforce its lien against the subject property. At the time, it was valuing the property at more than $500,000, and the current owner ("Jhang") (who acquired his ownership from Danton) had only $310,000 of title insurance (presumably equal to the purchase price that Jhang paid Danton for the property). There was concern that the $310,000 title insurance policy wouldn't cover the lien. Ultimately, however, the IRS reportedly settled the lien for $300,000.

For the rest of the story, including what the title insurer and the buyer's attorney say what they should and shouldn't have done to avoid this near-miss of a horror story for the unwitting real estate purchaser, see Insurer Blames N.J. Lawyer for Blot on Title (Suit shows that rubber-stamping title commitments can be dangerous).

Go here for other posts involving legal issues related to title insurance. title insurance legal issues

Free Legal Help For Washington State Low & Middle Income Homeowners In Danger Of Foreclosure Available Thru State Bar Association

In Seattle, Washington, The Seattle Times reports:

• The Washington State Bar Association has launched a program to provide free legal help to low- and middle-income people in danger of losing their homes to foreclosure. Homeowners who call a toll-free number will be referred to volunteer attorneys in their communities who are trained to deal with foreclosure-related issues.

• The bar association started recruiting and training lawyers for the program May 1, said Judy Berrett, director of member and community relations. So far, more than 270 have signed up. The statewide program began accepting clients this week.

***

• Free foreclosure legal aid already is available to homeowners whose annual incomes fall below 200 percent of the federal poverty level through the nonprofit, government-funded Northwest Justice Project, a partner in the bar association's initiative. The new program will serve homeowners with incomes as high as 400 percent of the poverty level, or about $88,000 for a family of four.

• But Lily Sotelo, of the Northwest Justice Project said the program will indirectly help homeowners of all income levels, by boosting the number of lawyers with expertise in such areas as predatory lending and foreclosure-rescue scams.

For the story, see Free legal aid available for low-, middle-income homeowners facing foreclosure (Many homeowners facing foreclosure can get free legal help from a program launched this week by the Washington State Bar Association).

Information for Lawyers:

• Training Videos and Resources,
• Frequently Asked Questions - General,
• Frequently Asked Questions - Conflicts of Interest.

Brooklyn Man Accused Of Dressing In Drag To Impersonate Dead Mom To Collect Her Benefits Checks & Steal Back Brownstone Previously Lost To Foreclosure

In Brooklyn, New York, the New York Daily News reports:

• He may be the ultimate mama's boy. A Brooklyn man is accused of donning a wig, nail polish and dresses to impersonate his dead mom and collect $115,000 in Social Security and rent subsidies. For six years, Thomas Prusik-Parkin hoodwinked a stunning array of government agencies with his elaborate charade - using a cane, heavy makeup, fake ID and a phony "nephew," law enforcement sources said. The 49-year-old was busted late Monday and will be arraigned [Wednesday] on grand larceny, forgery and conspiracy charges linked to a deed and mortgage fraud scheme.

***

• In 1996, Irene Prusik deeded the [family] home at 492 Sixth Ave. to her son, according to city records. He took out a $200,000 mortgage to bankroll a real estate investment business that failed. He stopped making mortgage payments, the house went into foreclosure and it was bought by Samir Chopra in 2003.

• To hold onto the brownstone and avoid eviction, Prusik-Parkin posed as his mother to file a suit alleging that he had forged the 1996 deed transfer, investigators allege. He even filed an affidavit from a nonexistent son. In essence, investigators say, he sued himself to prove that he didn't have the title to the home and that Chopra - who also thought Irene Prusik was still alive - couldn't have legally bought it.

• Prusik-Parkin deeded the house back to his mother last year. Then he took out a mortgage for almost a million dollars in her name in April, collecting some $300,000 of the loan. That same month, Chopra convinced a Brooklyn judge the home really did belong to him, and the Prusik "family" was evicted in May.

For the story, see Cops: Brooklyn man impersonates dead mother to collect $115,000 in Social Security, rent subsidies.

See also:

• Brooklyn District Attorney's press release: Kings County District Attorney Charles J. Hynes Announces Indictment In Real-Estate Theft, Social Security Fraud And Impersonation (Con Artist Posed As His Own Deceased Mother ),
• Brooklyn Daily Eagle: Son, Posing as Dead Mother, Sued Himself in Alleged Scam. TheftOfDeedMeta