SW Fla. Alleged Rent-To-Own Straw Buyer Scam Leaves Would-Be Buyers Booted From Homes, Investors w/ Ruined Credit, Foreclosing Lenders Holding The Bag

In Fort Myers, Florida, The News Press reports:

• A Fort Myers real estate sales associate was arrested Thursday and charged with 61 counts related to a multimillion dollar mortgage fraud scheme in Southwest Florida. Mark Wallen, 38, [...] was booked into the Lee County Jail [...] and is being held on $100,000 bond, state attorney’s office spokeswoman Samantha Syoen said.

• The state alleges Wallen worked with a group of real estate professionals(1) who were filing fraudulent loan applications - taking advantage of those with both good and bad credit - and getting more than $3 million from fees and defaulted loans. [...] Investigators with the Florida Department of Law Enforcement have said that between 2002 and 2004, Fort Myers-based Alternative Home Finance would find renters with bad credit ratings and allow them to pick out a house to rent and eventually own. The company would then allegedly find people with good credit and take out multiple loan applications in the name of one borrower while falsifying applications. After collecting money from a bank, they would allow the house to go into foreclosure, leaving renters without a home, borrowers with bad credit and banks to foot the bill.

For the story, see Fort Myers man charged in mortgage fraud scheme.

(1) Reportedly, the State Attorney's Office filed charges in January against five people — Trinity Hansen, James Dalonzo, Jeremy Hatlee, Paul Bosnyak and Brian Chili. Of those, Dalonzo has yet to be arrested. Hansen, who runs Safe Harbor Title Co. of Fort Myers, was formerly engaged to Wallen. The State Attorney's Office alleges Hansen, Dalonzo, Hatlee, Bosnyak and Chili worked as part of the scheme with Christopher Kim Jack, Erich Heckler and Erling Hall. Heckler was a fugitive until he was picked up last month in Costa Rica (see Private investigator who caught Lee County fugitive talks to WINK News (Eric Heckler was on the run for over one year)). rent to own lease purchase option scams yellowstone

South Florida Non-Profit Legal Services Offices Score $700K In Countrywide Lawsuit Settlement Cash To Fund Foreclosure Defense Efforts

From the Office of the Florida Attorney General:

• Attorney General Bill McCollum and The Florida Bar Foundation [...] awarded approximately $700,000 in grants to several South Florida non-profit organizations to fund free foreclosure legal defense work. A total of $4 million will be available statewide over two years to fund attorneys and paralegals who will provide free legal assistance to homeowners facing foreclosure. The grants were funded by the Attorney General’s settlement with Countrywide Financial last October. [...] Legal Aid Service of Broward County, Inc. will receive $340,000 in grant funding; the Cuban American Bar Association, the Spanish American League Against Discrimination, Inc., and the Legal Services of Greater Miami, Inc. in collaboration with the Haitian Lawyers Association will each receive $85,000; Legal Services of Greater Miami, Inc. will also receive an additional $104,700 in funding.

For the Florida AG press release, see Attorney General Presents $700,000 in Grants Through Mortgage Foreclosure Defense Fund.

Justice Department Continues Effort In Targeting Housing Discrimination Against Individuals With Disabilities

From the U.S. Department of Justice:

• The Justice Department [...] filed a lawsuit against the developer of the Riverwalk Condominiums, a condominium apartment complex in Post Falls, Idaho, for violating the Fair Housing Act by constructing apartments that do not have required accessibility for individuals with disabilities.(1) The lawsuit, filed in federal court in Idaho, charges that Riverwalk Condominiums LLC, the developer of the 36-unit condominium complex on Greensferry Road, failed to comply with the Fair Housing Act accessibility provisions which apply to 18 ground-floor units. [...] "Architectural barriers can be as big an obstacle to the housing rights of people with disabilities as an outright refusal to rent to them," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division.

For the Justice Department press release, see Justice Department Files Lawsuit Alleging Disability-Based Housing Discrimination Against Idaho Condominium Developer.

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• The Justice Department [...] announced an agreement with the former owners and managers of Valley View Apartments in Longview, Wash., to settle allegations that they violated the Fair Housing Act by intentionally discriminating against an individual with a disability. Under the settlement, which must be approved by the U.S. District Court for the Western District of Washington, the defendants must pay a total of $35,000 to the complainant.

• The lawsuit originated from charges filed by the Department of Housing and Urban Development (HUD) on behalf of a tenant of Valley View Apartments. In 2004, the tenant, who has a mobility impairment that limits his ability to enter or exit a car, asked to use two contiguous parking spaces in the apartment complex’s lot until a handicap accessible space became available. The complaint alleged that the former owners and managers of the apartments, John E. and Shirley L. Price, violated the Fair Housing Act when they intentionally discriminated against the tenant by refusing his request and by initiating retaliatory eviction proceedings. The complaint also alleged that the tenant’s request was reasonable and necessary to afford him an equal opportunity to use and enjoy his dwelling.

For the Justice Department press release, see Justice Department Obtains $35,000 in Disability-Based Housing Discrimination Settlement with Apartment Complex in Longview, Washington.

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• The Justice Department [...] announced that the operator and manager of the Rathbone Retirement Community in Evansville, Ind., has agreed to pay up to $116,000 to resolve a housing discrimination lawsuit. The November 2008 lawsuit alleged that the defendants violated the Fair Housing Act by prohibiting the use of motorized wheelchairs and scooters in residents’ apartments and in the home’s common dining room during meals. [...] The agreement, which must be approved by the U.S. District Court for the Southern District of Indiana, requires Rathbone Retirement Community Inc. and its resident manager Norma Helm to pay a total of $70,000 to three former residents. It also requires them to establish a $25,000 settlement fund for others who may have been injured by the policy and pay the government a $21,000 civil penalty. The agreement requires the defendants to provide fair housing training for employees, adopt nondiscrimination and reasonable accommodation policies, and maintain and submit records to the United States for the two-year term of the agreement.

For the Justice Department press release, see Justice Department Resolves Disability Discrimination Lawsuit Against Indiana Provider of Retirement Housing.

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(1) Among other things, the complaint alleges that the public and common use areas are not accessible to people with disabilities; the routes to some units are not accessible; some kitchens and bathrooms are not fully usable by people in wheelchairs; and electrical outlets and environmental controls are mounted too high or too low for access by people in wheelchairs. The lawsuit also alleges that the defendants’ conduct constitutes a pattern or practice of discrimination or a denial of rights to a group of persons.

Cross Burning Incident Results In Federal Felony Charge Against Indiana Man For Interfering With The Housing Rights Of Another

From the U.S. Department of Justice:

• The Justice Department announced that Bruce Mikulyuk, of Mishawaka, Ind., has been indicted by a federal grand jury for charges stemming from a cross burning in September 2007. Mikulyuk made his first court appearance [...] in South Bend, Ind. A trial has been scheduled for Nov. 3, 2009. Mikulyuk was charged with one count of interfering with the housing rights of another and one count of using fire in the commission of a felony. According to the indictment, Mikulyuk burned a cross at the home of an African American man and white woman and returned later with a knife and made threats.

For the Justice Department press release, see Indiana Man Indicted for Cross Burning.

Mass AG Files Suits, Obtains Civil Rights Injunctions Involving Discrimination, Harassment Allegations Affecting Victims' Housing Rights

From the Office of the Massachusetts Attorney General:

• Attorney General Martha Coakley’s Office has obtained a civil rights injunction against a Norwood woman, Deborah May, based on allegations of her repeated and severe harassment and intimidation of a gay neighbor.(1) The order [...] prohibits May from threatening, intimidating, or coercing the victim or anyone else in the Commonwealth on the basis of their actual or perceived sexual orientation. It further prevents May from contacting or communicating with the victim or his family and requires her to stay at least 500 yards from his place of employment.

For more, see Attorney General Martha Coakley Obtains Civil Rights Injunction Against Norwood Woman for Severe Harassment and Intimidation of Neighbor.

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• Attorney General Martha Coakley’s Office obtained a civil rights injunction against two Holyoke brothers, Jesse and Roman Jedrzejczyk, who are accused of harassing, threatening and intimidating their neighbors, a single mother and her two six year-old daughters. The adult victim is a political asylee to the United States who, in 2001, fled political persecution in Haiti out of fear for her life.(2) The order [...] prohibits the Jedrzejczyks from threatening, intimidating or coercing the victims, or anyone else in the Commonwealth, because of their actual or perceived race or ethnicity. The order also prohibits the Jedrzejczyks from knowingly coming within ten feet of the victims.

For more, see AG Obtains Civil Rights Injunction Against Holyoke Brothers for Harassment and Intimidation of Neighbors.

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• Attorney General Martha Coakley’s Office obtained a civil rights injunction against a Pittsfield woman, Tammy L. Haddad, accused of harassing, threatening and intimidating a family living next door on the basis of their race.(3) The order [...] prohibits Haddad from threatening, intimidating or coercing the victims, or anyone else in the Commonwealth, on the basis of their actual or perceived race. The order further prevents Haddad from knowingly coming within 20 feet of the victims and their family and or within 500 yards of the place of employment of the victims.

For more, see Attorney General Martha Coakley Obtains Civil Rights Injunction Against Woman Accused of Racial Harassment and Intimidation of Neighbors.

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According to AG Coakley's office, violations of the above-referenced orders are criminal offenses punishable by a fine of up to $5,000 and two and a half years in a House of Correction, or if bodily injury results from such a violation, a $10,000 fine and up to 10 years in State Prison. Among AG Coakley's comments when making the above announcements:

• “Bias-motivated conduct, such as the harassment and intimidation we allege in this case, are devastating to victims not only because of the immediate physical and emotional harm they cause, but because feelings of fear, anxiety and profound loss of personal security often last far longer than the incident. Beyond their impact on individual victims, hate crimes and other forms of bias-motivated activity are very detrimental to communities, and this type of behavior will not be tolerated.”

• “All Massachusetts residents are entitled to live in their homes and raise their families free from the type of bias-motivated harassment and intimidation alleged [...]. Victims and their communities suffer when racial harassment goes unchecked, and this type of behavior will not be tolerated.”

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(1) According to the complaint, Deborah May allegedly continually harassed the victim who is a tenant in the apartment building where May also resides. In November 2007, May allegedly began spreading false rumors that the victim is a sexual predator and pedophile. The complaint further states that six months later, May complained to her landlords about the victim’s display of a gay pride flag outside of his apartment and had the flag removed. Soon thereafter, on multiple occasions, May screamed anti-gay epithets at the victim in the presence of other tenants and physically confronted the victim in the yard of his home. The complaint further alleges that on August 31, 2008, May made a baseless report to the Norwood Police Department falsely claiming that the victim had exposed himself. As a result of May’s alleged pattern of harassment and intimidation, the victim feared for his safety and well-being at home and was forced to alter his daily routine and other behavior in order to avoid May.

(2) According to the complaint, the Jedrzejczyks repeatedly and regularly harassed the victims using racial slurs and threats over the course of the past three years. The defendants’ actions have caused the victim to become concerned for her personal safety after threats were made to break her windshield. In addition, a “For Sale” sign was placed in front of her house. The intimidation culminated recently when the victim responded to racial slurs being directed at her by imploring Jesse Jedrzejczyk to leave her alone. In response, Mr. Jedrzejczyk threatened, “I will never leave you alone until you move. If you don’t move, I’ll move you!” The Commonwealth’s lawsuit alleges the Jedrzejczyks’ bias-motivated harassment has seriously interfered with the victims’ ability to live and feel safe at home.

(3) According to the complaint, Haddad allegedly engaged in a campaign of racial harassment and intimidation by regularly directing racial epithets and racist imagery against her African-American neighbors. The complaint further alleges that Haddad filed baseless complaints with law enforcement agencies against one of the victims and repeatedly interfered with her neighbor’s property. The Commonwealth alleges that Ms. Haddad’s bias-motivated acts significantly interfered with her neighbors’ right to use and enjoy their home free from harassment and intimidation.

Bad Timing Leaves Central Florida Residents Without Financing On Newly Constructed Homes As Lower Values Lead Lenders To Back Out Of Loan Commitments

In Central Florida, The Tampa Tribune reports:

• Every day, Mary McCarthy must drive past the finished dream home in her front yard to the mobile home where she has lived for 20 years. The new home was finished in February, but she can't move in. The home is not legally hers, though it sits on her property. The best she can do is open the front door and feel the rush of the air conditioning that she is paying for so mold won't grow inside.

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• McCarthy's empty home is a symbol of poor timing amid the worst mortgage crisis in decades. As property values plummet, those caught midway through new home construction learn an awful fact: They can't find a lender willing to give them a loan. The three-bedroom, 1,800-square-foot home is in limbo. Just before the closing, the lender backed out, saying the home was no longer worth the original loan amount.(1) The builder hasn't been paid and has sued the lender. McCarthy can't find another lender willing to give her a loan and now faces liens on the one-acre property.

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• All this sounds familiar to Carol Robinson of Ocala. She, too, decided to build a home on land where she lives in a mobile home. When her lender, Ocala National Bank, shut its doors in January, the lender that took over did not want her construction loan. Instead of going through a builder, Robinson had hired subcontractors to do all the work, one part of the home at a time. The home is now 60 percent complete, and she doesn't have the money to finish it.

For the story, see Dream of new home turns into a nightmare.

(1) Reportedly, as home values continue to fall, lenders increasingly are deciding not to fund loans for new homes - even those that are partially or completely finished - because they're worth so much less than the originally agreed upon loan amounts.

Home Interior Ruined After Roofers Begin, Stop Repairs On Wrong House, Leaving Premises Open To Elements, Says Suit

In Galveston, Texas, The Southeast Texas Record reports:

• A Tiki Island man claims workers started roof repairs on his house by mistake while he was out of town, and then left his home exposed to the elements when they learned of their error. Paul Rice is suing Kevin Mitchell of Montgomery, doing business as South Texas RES-COM, and Galveston Flooring Co. in Galveston County District Court for wrongfully performing repairs to the roof of his house.

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• [T]he suit claims the workers did not go to their client's home, but to Rice's house by mistake. "Galveston Flooring's employees began said work on the wrong home - that owned by plaintiff, Paul Rice, while he was out of town," the original petition says. Rice says by that the time Galveston Flooring realized it had made a mistake, a large section of his roof had been stripped of shingles but did nothing to rectify the error. He claims the un-shingled roof allowed water and debris to enter his home, ruining the interior.

For the story, see Suit claims roofers worked on wrong house then left job unfinished.

Arizona AG Files Suit Against California-Based Alleged "Property Tax Reduction" Racket

From the Office of the Arizona Attorney General:

• Attorney General Terry Goddard [...] announced that he has filed a lawsuit and obtained a temporary restraining order to stop the perpetrators of an alleged fraud that claimed a homeowner’s property qualified for a "property tax reduction review." The official-looking advertisement appeared to be an attempt to scam homeowners who were looking to reduce their property tax bill.(1) [...] Goddard’s office and county assessors across Arizona have received hundreds of complaints regarding the solicitation since they became aware of it at the beginning of [August]. The offer, which requests a $189 processing fee, is not affiliated with any government entity. According to court documents, the document attempts to appear official and contains a "notice number" and deadline for prompt processing.

For the entire Arizona AG press release, see Terry Goddard Files Lawsuit to Stop Alleged Property Tax Scam.

For more from the Arizona AG:

• Lawsuit - State of Arizona, v. McConville, et al.,
• Maricopa Couty Assessor's Affidavit.
• AG Goddard Warns Consumers to Beware of Bogus Property Tax Offer,
• For a sample "property tax reduction" solicitation, see (Sample side 1), (Sample side 2).

(1) The lawsuit names Property Tax Review Board, Inc., a Granada Hill, Calif.-based company; Property Tax Review Board’s President and CEO Michael McConville, of Simi Valley, Calif., and Carmen Mercer, of Tombstone, owner of the Post Office box included in the solicitation.

Florida Woman Sick Over Living In "Chinese Drywall Prison;" Sunk Life Savings Into Now-Worthless House; Safer To Live In Car, Says Doc

In Port St. Lucie, Florida, WPTV-TV Channel 5 reports:

• Gloria Berson loved her house. She had the kitchen she always wanted and big plans to turn it into her private paradise. "It was our dream home," she says. Then things started getting weird. The AC blew and the pipes turned black. The TV started losing its color. The jewelry and silverware turned splotchy. All symptoms that the 26-hundred square feet of drywall in this home came courtesy of China.

• "We're stuck in a beautiful toxic house," says Berson. Then she started getting sick. She has nose bleeds and she's constantly tired and she wonders what her house is doing to her while she sleeps. "Nobody knows what the long term side-effects are going to be. It could be brain tumor, heart attack. Who knows what it's going to do to me."

• Berson is currently fighting with her insurance company, but they told her they'd never heard of Chinese drywall prior to her claim. She's also involved in a class action lawsuit against her home builder and the drywall manufacturers. That suit however could take years. The problem for Berson is she's got nowhere to go. Before she was laid off, she'd sunk her life savings into the place. Now, it's worth nothing. She can't sell it. She can't afford to leave it. All that's left for her is foreclosure, but even then, she'll be homeless. That leaves her with few options, except for the advice her own doctor gave her. "He said you'd be safer living in your car. I'm thinking about it."

Source: This prison made of drywall.

Man Faces Charges Of Ripping Off Senior After Promising To Help Him Get Out Of Reverse Mortgage

In Kansas City, Missouri, the Kansas City Star reports:

• Police have arrested a man accused of cheating a senior citizen out of $4,000. Anthony C. Washington faces charges of forgery, theft and financial exploitation of the elderly. Washington allegedly promised to help a 78-year-old man out of a reverse mortgage but instead stole his checks and cash. Officers arrested Washington Friday when he appeared for a hearing at the Jackson County Courthouse. His bond has been set at $150,000.

Source: Man arrested in alleged theft from elderly.

Home To HUD Regional Office Falls To Foreclosure; Can Eviction Of Federal Housing Agency Be Next?

In Atlanta, Georgia, The Atlanta Journal Constitution reports:

• In another troubling sign for commercial real estate, a downtown office tower housing the Atlanta HUD office was sold at a foreclosure auction this week for $7 million. [...] The Atlanta regional office of the U.S. Department of Housing and Urban Development is the sole occupant of the 17-story Marietta Street building. HUD’s mission includes overseeing programs to help homeowners avoid foreclosure. A HUD Atlanta spokesman said more than 400 people work in the building. “There has been no interruption to the operation,” said Joseph Phillips. “We are continuing to operate as usual.”

For the story, see Atlanta HUD office building sold at foreclosure auction.

Ex-Cowboy "Hitting Machine" Hit With Indictment With Eight Others In Alleged Straw Buyer Mortgage Scam Involving $20M+ In Fraudulently Obtained Loans

In Dallas, Texas, The Dallas Morning News reports:

• Former Dallas Cowboys linebacker Eugene Lockhart Jr., known in his playing days as Mean Gene the Hitting Machine, was arrested Thursday after being indicted on charges related to an alleged mortgage fraud scheme, federal prosecutors said. Lockhart, 48, and eight others(1) allegedly arranged approximately 54 home closings that resulted in the funding of $20.5 million in fraudulent loans between 2001 and 2005, according to the indictment. The indictment detailed transactions in Murphy, Rowlett, Plano and McKinney in which it said the defendants profited by arranging mortgages based on inflated sale prices.

For more, see Former Cowboy Eugene Lockhart Jr. indicted in suspected mortgage fraud scheme.

For the U.S. Attorney (Dallas, Texas) press release, see Former Dallas Cowboys Football Player, Eugene Lockhart, And Eight Others, Charged In Mortgage Fraud Scheme (Federal Indictment Charges Conspiracy, Bank Fraud and Wire Fraud).

(1) The other eight defendants named in the indictment are: Lendell Beacham, 50, of DeSoto, Texas; William Randolph Tisdale, Jr., 45, formerly of Dallas, but currently serving a federal sentence on unrelated charges; Hubert Jones, III, 39, of Garland, Texas; Patricia Ortega Suarez, 55, of Dallas; Suzette Switzer Hinds, 45, of Dallas; Michael Anthony Caldwell, 49, of Arlington, Texas; Donna Lois Kneeland, 45, of Grand Prairie, Texas; and Bryan J. Moorman, 67, of Mesquite, Texas.

Ex-Met, Phillie "Nailed" With Accusation By Creditor Of "Foreclosure Stripping" Home

In Los Angeles, California, Bloomberg News reports:

• Lenny Dykstra, who helped the New York Mets win the World Series in 1986, was accused of taking goods from his home including a $40,000 French stove two weeks before a bankruptcy judge appointed a trustee to oversee his finances. Fixtures and furniture were “removed and presumably sold” by the former Major League Baseball All-Star, who filed for bankruptcy in July, according to court papers filed by the mortgage lender Index Investors LLC, a creditor in the case.

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• Dykstra was “apparently in the process of stripping furnishings, fixtures and equipment from the estate property,” Index Investors said in an Aug. 19 court memorandum, “doubtlessly to fuel his lifestyle at the expense of his creditors.”

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• He filed for bankruptcy to stop Index Investors from holding “a scheduled illegal foreclosure sale,” he said. The lender subsequently asked the court to let it start foreclosing, and to convert Dykstra’s Chapter 11 proceedings to a Chapter 7 liquidation.

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• Dykstra, 46, known as “Nails” by fans for his aggressive playing style, became an entrepreneur after injuries ended his career, opening a chain of car washes, a subscription Web site that offered stock picks and The Players Club.

For more, see Ex-Met Dykstra Accused of Taking $40,000 French Stove. foreclosure fixture stripping apple

Sarasota House Flipper Faces Grand Theft Charge In Alleged "Foreclosure Stripping" Incident

In Sarasota, Florida, the Sarasota Herald Tribune reports:

• Mark P. Riley, one of the Sarasota area's most successful property flippers, was arrested Friday, accused of gutting a home that he could no longer afford. Riley, 48, and his domestic partner, Richard Waid, 49, were arrested on charges of grand theft related to the disappearance of appliances from their former Lakewood Ranch home.

• For years during the real estate boom, Riley and Waid traded in million-dollar houses and condos and drove a $300,000 Mercedes. But when the real estate market cooled and Riley and Waid stopped paying their mortgages, they gutted their home and left the bank to foreclose on a multimillion-dollar house stripped bare, according to a Manatee County Sheriff's Office incident report.(1)

For the story, see Housing flipper facing charges (One of the Sarasota area's most successful property flippers is accused of gutting a home that he could no longer afford).

Go here for Mark Riley arrest report.

(1) Officials with First Bank of Florida, which bought the house out of foreclosure, discovered the items missing in April. Granite counter tops and cabinets had been taken from the kitchen. In the bathrooms, toilets were stripped from the floor. Ceiling fans, a wet bar and a kitchen island were missing. Thieves took doorknobs off doors, tore the trim off the walls and walked away with the carpet. Bank officials filed an incident report in April saying about $150,000 in appliances and other items were stolen. The men were arrested Friday.

Phoenix-Area Authorities Get Serious About "Foreclosure Stripping" As Probes, Prosecutions Begin To Pile Up

In Phoenix, Arizona, KNXV-TV Channel 15 reports:

• Maricopa County Attorney Andrew Thomas announced Tuesday that there has been a significant increase in the number of people charged with gutting vacant or foreclosed homes in Maricopa County. The act, known as “home stripping,” has been on the rise in neighborhoods and dramatically reduces property values, according to Thomas. Multiple cases of home stripping are currently undergoing prosecution and some have led to hefty jail time.(1) [...] "The real estate market is tough enough without neighborhoods having to contend with this new form of blight,” says Thomas. “These prosecutions are important to hold these offenders accountable and to protect property owners in the affected neighborhoods."

Source: County attorney cracks down on 'home stripping' crimes.

(1) Alonzo Patterson, 48, was arrested in February after police reportedly caught him stealing copper piping out of a vacant Phoenix home and intending to sell it as scrap. Patterson was convicted on charges of burglary and possession of burglary tools in July and was sentenced to about 10 years in prison. Police reportedly caught Phillip Mora, 33, after he stripped copper wires and tubing from an empty home in Phoenix. According to authorities, Mora caused more than $14,000 in damage to the home and is facing charges of burglary and aggravated damage. Mark Sydnor, 54, was arrested in April by the FBI Mortgage Task Force after he was reportedly accused of selling countertops, cabinets, and plumbing fixtures on Craigslist from a foreclosed Scottsdale home. According to authorities, Sydnor told undercover police that he frequently removed and sold items from homes and gave the homeowner two-thirds of the proceeds. Sydnor pleaded guilty to defrauding a secured creditor and awaits sentencing. Realtor Kailash Bhatt, 43, was also arrested by the FBI in April and charged with defrauding a secured creditor and theft. Bhatt allegedly sold kitchen fixtures from an Anthem home on Craigslist. And Randolph Guzman, 42, was arrested in April, charged with theft, after offering two air conditioning units on Craigslist from a home in foreclosure in Surprise. Guzman allegedly told the FBI that the house was in foreclosure and he was trying to recoup his losses.T homas said these are only the tip of the iceberg when it comes to the piling amount of cases involving home stripping. foreclosure fixture stripping apple

South Carolina Woman Faces Charges Of Using Relative's Social Security Number To Obtain Credit; Victim Finds Out When Rejected For Home Loan

In Greenwood, South Carolina, The Index Journal reports:

• Greenwood woman is charged with stealing a relative’s identity and using her Social Security number to make several large purchases and racked up more than $29,500 in debt. Dixie Lee Nelson, 53, [...] is charged with identity theft and financial transaction card forgery.

• According to the police report, Nelson’s relative went to apply for a home loan on July 31 and was told she already had things in her name and she had a poor credit score. After further research, the victim found out Nelson had “gotten credit at a number of places and was buying a house, car and had a credit card.” Nelson used her own name, but the victim’s Social Security number. One of the fraudulent accounts was $5,973 and the other was $23,535.

Source: Woman faces identity theft, forgery charges.

California AG Obtains $1M Judgment Against "Fast Cash" Lender Accused Of Loan Shark Tactics

From the Office of the California Attorney General:

• Attorney General Edmund G. Brown Jr. [...] forced CashCall, Inc., an Anaheim-based fast-money lender, to stop using "loan shark tactics" in collecting debt, including abusive calls at all hours of the day and night and empty threats of law enforcement action.(1) The court-ordered judgment also forces CashCall to stop misleading consumers with deceptive advertising and pay $1 million in civil penalties and legal expenses. CashCall used former child actor Gary Coleman as its television spokesman. "CashCall preyed on consumers desperate for cash, charging triple digit interest rates and using loan shark tactics to collect on their debts," Brown said. "This judgment forces CashCall to stop harassing its customers and should serve as a warning to consumers to be wary of fast-money lenders."

For the entire Cailfornia AG press release, see Brown Forces Predatory Lender to End Illegal and Abusive Debt Collection Practices.

For the lawsuit & judgment, see:

• People v. Cash Call, Inc. - Lawsuit,
• People v. Cash Call, Inc. - Judgment.

(1) Brown contends that CashCall used illegal and abusive debt collection practices when customers were unable to make on-time payments, in violation of California Business and Professions Code Section 17200. These practices included:

• Making excessive and verbally abusive telephone calls at all hours of the day and night;
• Causing borrowers to incur bank fees by repeatedly trying to collect payments despite knowing there were insufficient funds in the borrowers' accounts;
• Threatening to initiate law enforcement and wage garnishment proceedings against borrowers without any basis for doing so;
• Improperly discussing private financial information with borrowers' friends, colleagues and neighbors;
• Failing to honor borrowers' requests to cancel automatic withdrawals from checking accounts; and
• Continuing to contact borrowers by phone after receiving requests to only contact them in writing.

Posing As Cops, Threatening Arrest Or Physical Harm, Abuse & Humiliation All In A Day's Work For Debt Collection Group, Says NY AG In Lawsuit

From the Office of the New York Attorney General:

• Attorney General Andrew M. Cuomo [...] announced that his office has filed a lawsuit seeking to shut down a Buffalo-based debt collection operation consisting of 13 debt collection companies run by Buffalo residents Omar Smith, Narvell Benning and Keith Marshall (collectively, the "Benning-Smith Group”).(1) [...] According to the more than 850 consumer complaints filed with the Office of the Attorney General, the Federal Trade Commission and the Better Business Bureau, the Benning-Smith Group's employees violated state and federal law by routinely posing as law enforcement officials and threatening to arrest or to physically harm consumers unless they made arrangements to pay the company immediately. Additionally, the Benning-Smith Group made abuse and humiliation a trademark of their collection practices by verbally abusing consumers and, in some instances, sexually harassing them. To date, the Attorney General’s investigation has identified more than a thousand instances in which the Benning-Smith Group breached state and federal statutes.(2)

For the New York AG press release, see Attorney General Cuomo Sues To Shut Down Buffalo-Based Debt Collection Operation That Illegally Harassed And Threatened Consumers Nationwide (Employees Used Verbal Abuse and Sexual Harassment to Intimidate Consumers Into Paying Debts; Latest Action in Cuomo's Ongoing Probe into Unlawful Debt Collection Practices).

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For another story on debt collectors using threats of criminal prosecution to collect debts, see Public Citizen: California Court Approves Class-Action Lawsuit Against Debt Collector Accused of Abusive Tactics (Suit Says Company Wrongly Threatened Consumers With Criminal Prosecution):

• ACCS [American Corrective Counseling Services, Inc.] uses its contract with local prosecutors to send out letters on official stationary, threatening consumers who have written bad checks with criminal prosecution or jail unless they pay collection fees. Many of these consumers were threatened with criminal charges, even though no prosecutor had reviewed their cases and ACCS, as a private debt collector, lacks the authority to make such threats. Go here to read the documents in the case.(3)

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(1) According to the NY AG, the Benning-Smith Group operated under several names, including: Abrams, Burke & Associates; Benning and Smith Acquisitions, Inc.; Brady and Caruso, LLC; DebtPayments.com; DebtPayments.com, LLC; Fredericks, Goldstein & Zoe; Graham, Noble & Associates Bookkeeping; Graham, Noble & Associates LLC; Graham, Beagle & Associates LLC; Kingman, Cole and Associates, LCC; Marshall and Ziolkowski Enterprise, LLC; Marshall Ziolkowski Acquisitions, LLC; Lansky, Goldstein, Zoe; OLS Payment Services; and University Debt Collection.

(2) According to the press release, Attorney General Cuomo’s investigation revealed that collectors regularly demanded payment for non-existent debts or substantially inflated the amount owed on an actual debt. Using their false law enforcement identities, collectors coerced and cajoled terrified consumers into agreeing to make payments. Frightened at the prospect of arrest and humiliation, consumers authorized withdrawals from their checking accounts, sent Western Union moneygrams and/or money orders out of fear. In one instance, a Benning-Smith collector kept repeating the name of a consumer’s daughter, describing various sexual things he would do to her unless the debt was paid. Another collector told a female consumer that if both she and her husband would engage in sexual acts with him, he would pay their debt himself. Collectors routinely called consumers “drunks,” “scumbags,” “deadbeats,” and, in one instance, “a low-life piece of trash.”

(3) Public Citizen Litigation Group, attorney for the debtor, describes this case as one that "challenges arrangements under which local prosecutors rent their name and authority to private debt collectors, who use false threats of prosecution to coerce people who have written bad checks to pay various fees. The fees are then split between the debt collectors and the prosecutors."

Vacant Land Affinity Fraud Fleeces 1,000+ Miami-Area Haitians Out Of $10.6M, Say Feds; Bogus Deeds, Closing Docs Used To Make Phony Sales Look Legit

In Miami, Florida, the South Florida Business Journal reports on a recent federal indictment in an alleged affinity fraud targeting members of the local Haitian community:

• Three South Floridians have been indicted in a land scheme that authorities say defrauded more than 1,000 mostly Haitian victims out of some $10.6 million. Daniel Stephen, 42, of Miami Shores; Clotilde Jean, 43, of Miramar; and Patricia DePons, 53, of Miami Shores, were charged with conspiracy to commit mail fraud and mail fraud for their participation in a scheme to sell vacant land, according to a news release from the acting U.S. attorney for the Southern District of Florida. The case involved the sale of property in North Florida and Georgia by First Loan Solution, a company owned and operated by Stephen and his partner, Jean.

• According to the indictment, Stephen, Jean and other First Loan Solution employees sold land to members of the Haitian community in Miami-Dade County using advertisements on Haitian radio, leaflets in the community, bus trips to North Florida and direct solicitations of the buyers. In some cases, neither Stephen nor First Solution owned the land that was being sold. In other cases, buyers were told they were purchasing individual parcels of land on which they could build when, in fact, they were purchasing land with other buyers through a limited liability company, and could not build individually on the property, according to the news release.

• DePons is alleged to have conducted the closings on the sales, and collected money from the buyers. At the closings, DePons allegedly issued fraudulent warranty deeds and closing [statements]. The buyers never received title to the land nor, in most cases, refunds.

Source: South Floridians charged in land scam.

For the U.S. Attorney press release, see Three Charged In Multi-Million Dollar Vacant Land Fraud Scheme.

Cook County Sheriff Faces Federal Suit For Slowdown In Tenant Evictions; Local Landlord Feels Squeezed By Lenient Approach To Booting Problem Renters

In Cook County, Illinois, NBC Chicago reports:

• What made him a star has now made him a defendant. With so many rental properties in foreclosure last year, Cook County Sheriff Tom Dart for a time halted evictions. It was his contention that many tenants who had been paying their rent were being unfairly removed from their homes, when it was, in fact, their landlords who had not been paying mortgages and were the real culprits. That firm stance led Time Magazine to honor Dart as a "leader and revolutionary," but Lyons landlord Mike Slinkman says the pace at which tenants are now being evicted is wreaking havoc on his business.

***

• Slinkman is so serious that he and his father plan to file a federal lawsuit Wednesday claiming what Dart and a Cook County Judge have done to his business is unconstituitional, that apartment evicitions have slowed to a crawl and that the Judge's order to halt evictions in bad weather has been taken to an extreme.

• "It's running us out of business," Slinkman said. "We're on the brink of not making it, in large part because we can't get our product back." Slinkman and his father own 50 buildings -- roughly 700 units -- in Cook County, but right now they say that so many of their tenants are behind in rent that their cash flow is down $20K to $25K per month.

• The apartment owners claim the overcrowded apartment of one deadbeat tenant at their property in Lyons and a BBQ held in the lviing room at another building in Justice are also jeopardizing the the lives of the rest of their tenants.

For the story, see Landlord: Pace of Evictions Wreaking Havoc on Business (Property manager to sue Cook County Sheriff Tom Dart).

In a related story, see The Southtown Star: Too much compassion exists in Cook County (Landlord Mike Slinkman claims that Cook County Sheriff Tom Dart's political grandstanding is threatening to put him out of business).

Texas AG Seeks $4.6M From "Debt Settlement" Outfit For Allegedly Ripping Off Consumers, Violating State Registration & Bond Requirements

From the Office of the Texas Attorney General:

• Texas Attorney General Greg Abbott [...] took legal action to recover $4.6 million that a bankrupt “debt settlement” company wrongly withheld from its clients in Texas and other states. In June, Debt Relief USA Inc. of Addison filed for bankruptcy protection in the Northern District of Texas. As a result, more than 2,500 financially distressed customers did not receive the debt relief they were promised. In fact, debtors’ problems were exacerbated by the bankruptcy because some of Debt Relief USA’s clients received no assistance and are now being pursued by collection companies.

For the entire Texas AG press release, see Attorney General Abbott Pursues Restitution for Texans from ‘Debt Settlement’ Company in Bankruptcy Court (Bankrupt Debt Relief USA said to hold $4.6 million in client funds).

For the Texas AG lawsuit, see State of Texas v. Debt Relief USA Inc.

Moderate Income Housing Plans For Half-Finished, Half-Empty Condo Projects Cluttering NYC Skyline Face Complications

In New York City, The New York Times reports:

• As a rising number of half-finished and half-empty condo projects clutter the skyline, state and city officials have begun developing programs to turn hundreds of these apartments into moderate-income housing. But those efforts have proved far from easy. With budgets tighter than ever, there are few financial incentives to entice developers and lenders. And there are the practical challenges of selling apartments to buyers for far less than what their neighbors paid, not least among them possible complications for market-rent buyers, whose mortgages often depend on the building’s financial status.

For more, see City Seeks to Turn Stalled Projects Into Moderate-Income Housing.

Florida Judge Removes Himself From Foreclosure Case After Making Intemperate Remarks To Lender's Attorney Who Missed Several Court Hearings

In Volusia County, Florida, the Daytona Beach News Journal reports:

• Tensions over how some lawyers from far and wide are handling large numbers of foreclosures for banks came to a head in DeLand on Monday when a veteran judge removed himself from a case after complaints about his comments [to bank attorney Farzad Milani].(1) Circuit Judge John Doyle, who has been hearing a growing number of foreclosures in West Volusia since he was assigned the mortgage dispute cases in January, was asked to step aside from [one] case [...].

***

• The judge explained Monday about 20 percent of those losing their homes were showing up in court, but some attorneys representing the banks weren't. The result would be canceled or delayed hearings. [...] Like other local judges, Doyle was allowing attorneys representing banks from across the state the option to "appear" by telephone, but sometimes they wouldn't answer his calls. [...] He said many of the firms representing banks, which he called "foreclosure mills," hire young attorneys fresh out of law school who handle cases for a flat fee. "They are being trained that it's not a big deal to miss a hearing," the judge said. "Well it is, and if you miss one, relief will be granted against your client."

• After the incident with Milani last month, the judge decided to stop allowing hearings by telephone in the 3,000 pending foreclosure cases before him. [...] Milani missed several hearings and could not be reached by phone when called, Doyle said. "He was the fellow that broke the camel's back." [...] It will be up to another judge to decide whether Milani should be held in contempt for not showing in court.

For the story, see Judge steps down in foreclosure case.

(1) At an earlier hearing, the judge told attorney Farzad Milani, who was representing the bank, "that he would not do his work while (Milani) sits in his office in Fort Lauderdale smoking his Cohiba cigars and drinking his lattes," according to court records. Doyle also told Milani, according to motion for the judge's recusal filed in court, that he was going to "make an example of him and do whatever he could to have him disbarred." Attorneys for Milani said the judge made "inferences of a racial or ethnic bias" against Milani.

Daughter, Son-In-Law Convicted Of Scamming Alzheimer's-Afflicted Widowed Mom Into Borrowing $350K Against Home & Using It Towards Luxury Home Purchase

In Clackamas County, Oregon, The Oregonian reports:

• Ask Clara Philpot how she's doing, and she'll answer with a beaming smile and a hearty "Fantastic." Ask the 87-year-old who is president or the name of the dog napping in her lap and she can't say. Philpot, who was diagnosed with Alzheimer's disease in 2002, also can't explain how or why she borrowed almost $1 million to finance a luxury home in Sherwood and immediately deeded half to Gayla and Jeff Ross, a daughter and son-in-law who took care of her.(1) After looking at the evidence, however, a Clackamas County jury took less than two hours to find Gayla Ross guilty of aggravated theft and first-degree criminal mistreatment.

• Ross now faces prison. She will be sentenced Sept. 8 along with her husband, Jeff Ross, a former Washington County sheriff's deputy who was convicted of first-degree criminal mistreatment. Philpot's net worth now is zero -- she gets by on Social Security -- and she could soon be homeless. The debt on the Molalla house she and her husband bought 43 years ago, and once owned free and clear, now exceeds the property's value, and she hasn't made a mortgage payment for two years.

For more, see Stealing from mom and dad in Oregon (if link expires, try here).

For story update, see King City woman gets prison time for bilking elderly mother (A King City woman convicted of taking her elderly mother's money was sentenced Tuesday in Clackamas County Circuit Court to 16 months in prison and ordered to pay more than $441,000 in restitution) (if link expires, try here).

(1) Under Gayla Ross' direction, Clara Philpot took out a $352,000 mortgage on her Molalla home. Ross used that money as a down payment on a home in Sherwood and obtained a $609,000 mortgage in Philpot's name, the story states. The day after the deal closed, Philpot reportedly transferred a 50 percent interest to the Rosses. Legally, Philpot had sole responsibility for mortgage payments that exceeded $5,600 a month -- more than four times her monthly income. Within a week, one of Philpot's relatives anonymously notified state welfare workers about the deals, and the Sherwood house was lost to foreclosure. FinancialAbuseOfElderlyAlpha

Lenders, Mortgage Servicers Flout Local Health & Safety Ordinances When Dealing With Foreclosed Homes, Say Housing Advocates

The Washington Independent reports:

• As bank-owned foreclosed properties pile up across the country, from abandoned houses in hard-hit neighborhoods to empty big box retail stores in failed strip malls, the fight over holding someone responsible for the brick and mortar mess left behind by the mortgage crisis continues to heat up. More than two years into the crisis, local authorities still are slapping banks, servicers and speculators with fines ranging from $30,000 to even $90,000 for ignoring orders to take care of foreclosed and vacant properties under their control.

***

• Some of the same servicers the Obama Administration is urging to complete more loan modifications [...] are walking away entirely from vandalized homes, or failing to fix broken windows, get rid of junked cars, clear trash, repair damaged roofs and gutters, or even demolish a condemned house, all of which can be violations of local housing codes. And housing courts keep hearing persistent arguments from servicers that they’re merely temporary custodians who can’t alienate investors by spending money to bring properties up to code.

• “They may think it’s unfair, but the law provides that if you have ownership of a property, you take care of it,” said Cleveland Housing Court Judge Raymond Pianka,(1) who regularly fines lenders $5,000 a day for properties that don’t comply with city codes. “There’s no provision to exempt corporations. I’m not going to treat them any differently than the individual property owners who come into my courtroom in wheelchairs and walkers.”(2)

***

• “From my experience, servicing of properties in the inner city, particularly in African-American neighborhoods is either non-existent or erratic,” said Kermit Lind, a Cleveland State University law professor who specializes in housing and foreclosure issues. And, he added, “servicers have testified under oath that they receive instructions to stop maintaining properties and walk away. Servicers have complained that they cannot afford to bring their properties up to code and still make money selling them, and that their investors will not allow them to comply with local laws.” Lind had little sympathy for the plight of servicers, noting archly that “any reasonable person should see that compliance with local building and housing codes protecting the health, safety and welfare of taxpaying neighbors should be subordinated to the duties and responsibilities of servicing and pooling agreements concocted on Wall Street.”

For more, see Lenders, Servicers Fight Anti-Blight and Property Laws (Housing Advocates Say Industry Is Skirting Health and Safety Ordinances, While Taking Taxpayer Money).

(1) Go here for other posts on Judge Pianka's hammering of deadbeat lenders and mortgage servicers in Cleveland Housing Court.

(2) Reportedly, Judge Pianka said some banks and servicers finally are catching on, showing up in his courtroom to answer to violations and repair properties. He’ll often forgive the big fines if a firm cleans up its property. (Court records show Pianka reduced a $30,000 fine for U.S. Bank to $3,000, after the bank brought a house into compliance.) But a recent court docket also gave a glimpse of continuing disputes, from the speculator from Dubai, who bought six properties, sight unseen, off Craigslist, and hasn’t fixed them up, to a real estate company that purchased REO worth only $1,000, and already has racked up $50,000 in fines. BetaVacantForeclosure

Relatives Charged w/ Selling Home From Out From Under Elderly Oregon Widow; Used POA To Pocket $235K Sale Proceeds, Cash Out Bank Accounts, Annuities

In Portland, Oregon, The Oregonian reports:

• Shortly after two women gained power of attorney from a dying 83-year-old relative, they took all of her possessions and sold her house of 56 years, police said. The pair pocketed the $235,000 from the house sale and cleaned out the elderly woman's bank accounts and savings, sharing the money among themselves and family members, police and prosecutors say.(1) They also arranged and pre-paid for her funeral. However, Evelyn Roth made an amazing recovery and had no idea what her relatives were up to.

• Now the two suspects, Roth's cousin Virginia Ann Kuehn, 66, and her niece Kathleen Sue Jingling, 53, face a 35-count felony indictment charging them with first-degree criminal mistreatment, aggravated theft and first-degree theft. They've pleaded not guilty. [...] "They robbed me blind," Roth said. "Everything was for money, just to get money, money, money. That's not the way it should be." Roth said she pursued criminal charges because she's lost her savings and all her possessions to relatives who betrayed her trust.

For more, see Dying woman recovers, says relatives "robbed me blind" (if link expires, try here).

(1) Police said the two women cleaned out $35,000 in Evelyn Roth's checking account and also cashed her two annuities totaling $88,000. FinancialAbuseOfElderlyAlpha

Two Sentenced For Roles In Theft Of $126M In Client Funds Held In Connection With Real Estate Tax Free Exchange Transactions

From the U.S. Department of Justice:

• Two former employees of Edward H. Okun, who was sentenced to 100 years in prison on Aug. 4, 2009, after a three-week jury trial, were sentenced [...] for their roles in a scheme to defraud and obtain approximately $126 million in client funds held by The 1031 Tax Group LLP (1031TG).

***

• According to the plea agreement and statement of facts, [Lara] Coleman and others(1) used 1031TG and its subsidiaries in a scheme to obtain millions of dollars of client funds by false pretenses. [...] In the plea agreement and statement of facts, Coleman admitted that 1031TG falsely represented that it would hold client funds solely to complete the clients' [Section] 1031 exchanges.(2) Coleman admitted that after obtaining clients’ exchange proceeds with that false promise, she and others misappropriated approximately $132 million in client funds to support the lavish lifestyle of the owner of 1031TG, pay operating expenses for the owner’s various companies, invest in commercial real estate and purchase additional qualified intermediary companies to obtain access to additional client funds. In addition, Coleman admitted that she lied to federal investigators about statements she made in 2006 to internal attorneys for Investment Properties of America about the amount of money she and others had misappropriated.

For the Justice Department press release, see Two Virginia Residents Sentenced for Their Role in Scheme to Defraud Clients of Funds Allegedly Held in Trust.

(1) Coleman was sentenced to 10 years in prison and ordered to pay full restitution. In addition, Robert D. Field II was sentenced to five years in prison and was ordered to pay full restitution for his participation in the conspiracy.

(2) Section 1031 of the Internal Revenue Code allows investment property owners to defer the capital gains tax that would otherwise be due on properties sold, if the proceeds are used to purchase new property in a specified time frame. To facilitate such exchanges, investment property owners deposit the proceeds from the sale of their property with qualified intermediaries and sign exchange agreements, which include various promises by the qualified intermediaries to clients regarding the safekeeping of exchange funds in trust. EscrowRipOffKappa

Nebraska Couple Loses Home After Being Duped By Nationwide Loan Modification Racket

In Lincoln, Nebraska, the Lincoln Journal Star reports:

• One night in February, [Denise and Kevin Barret] saw a television ad for the Federal Loan Modification Law Center, a very official-sounding entity that promised it could reduce homeowners' payments while saving their homes from foreclosure. So the Barrets called the number and were told that for an initial payment of $995 the company could renegotiate the couple's delinquent mortgage and get them a better interest rate and more affordable payments. It sounded like a good deal, and the company at the time had a reasonable rating with the Better Business Bureau, Denise Barret said. So the Barrets signed up.

***

• While purporting to be helping the Barrets, the Federal Loan Modification Law Center was racking up complaints all over the country. In April, the Federal Trade Commission filed a federal lawsuit against the company, alleging it misrepresented that it could obtain a loan modification or stop foreclosure in all cases. The complaint also alleged that the company falsely claimed in radio and TV ads to be affiliated with the federal government.(1)

• Nabile "Bill" Anz, managing attorney for Federal Loan Modification and one of the people named in the FTC's complaint, told the Orange County Register in April that the company may have been aggressive, but it had obeyed the law. Since then, Anz seems to have changed his tune. On Aug. 4 he voluntarily resigned from the California State Bar Association, with charges pending against him.

• According to a news release, the bar filed an application in July to have Anz declared "involuntarily inactive," alleging he failed to perform for clients of the Federal Loan Modification Law Center and failed to refund fees to clients of the business. The news release said Anz admitted the misconduct that was alleged in the application. Some states have also taken action against Anz and his company.

For more, see Caught in foreclosure relief scam, a couple loses their home.

(1) Go here for links to the FTC press release and some of the relevant court documents filed in the lawsuit against Federal Loan Modification Law Center. Reportedly, Mike Cameron, an attorney with the Nebraska Department of Banking and Finance, said the department has fielded a couple of complaints about the Federal Loan Modification Law Center. Cameron said that because the company is already the subject of an FTC investigation, he refers complaints to the federal government.

Central Florida Legal Aid Office Scores $84K In AG Cash To Fund Foreclosure Defense Effort For The Poor

From the Office of the Florida Attorney General:

• Attorney General Bill McCollum and The Florida Bar Foundation today awarded $84,000 to the Legal Aid Society of the Orange County Bar Association, Inc. to be used for a new foreclosure defense assistance program.(1) The program is funded by money obtained by the Attorney General through a settlement with Countrywide Financial. A total of $4 million will be available over two years to fund additional lawyer and paralegal positions devoted to providing free assistance to homeowners facing foreclosures who cannot afford legal defense. “With these funds, we can provide direct legal assistance to Central Florida homeowners trying to save their homes,” said Attorney General McCollum.

For more, see McCollum: Orange County Legal Aid to Get $84,000 Through Mortgage Foreclosure Defense Fund.

(1) Orange County, Florida residents who need legal assistance to avoid foreclosure may contact the Orange County Bar Association's Legal Aid Society at 407-841-8310 or visit the website at http://www.legalaidocba.org. Assistance is also available in several languages, including Spanish and Creole.

Brooklyn Foreclosure Intervention Seminar: Settlement Conferences & Advanced Foreclosure Defense Techniques

In Brooklyn, New York, the Brooklyn Daily Eagle announces:

• Thurs. Sept. 10, CLE: Foreclosure Intervention: Settlement Conferences & Advanced Foreclosure Defense Techniques, 6-8 p.m.: Speakers: Jaime Lathrop, director, and Jennifer Sinton, deputy director, both of South Brooklyn Legal Services' Foreclosure Prevention Project. Approved for (2) CLE credits toward Professional Practice. Free for attorneys who accept a pro bono assignment through the Volunteer Brooklyn Bar Association's Volunteer Lawyers Project before April 5, 2010. Held at the Brooklyn Bar Association, 123 Remsen St. For information or to register, contact Jessica Spiegel, pro bono coordinator: (718) 624-3894 x4.

• Tues. Sept. 22, Public Education Foreclosure Program, 6 p.m.: Free and open to the public. Sponsored by the Brooklyn Bar Foundation. Held at the Brooklyn Bar Association, 123 Remsen St. For information, see the BBA’s web site: http://www.brooklynbar.org/.

Source: Upcoming Events in the Legal Community: August 31, 2009.

More On The City Of Baltimore v. Wells Fargo "Ghetto Loans" Predatory Lending Case

In a recent interview with Democracy Now!, Wells Fargo whistleblower and ex-subprime loan officer and sales manager Elizabeth Jacobson speaks out on some of the predatory lending practices allegedly engaged in by her former employer.(1)

I) On the incentives for Wells Fargo loan officers to allegedly bulldoze every would-be borrower into a subprime loan:

• I was at Wells Fargo for nine years, and I originated loans. Wells Fargo had two separate divisions: the prime division and the subprime division. And you could not originate prime loans if you were in the subprime division. So that’s what I did for nine years at Wells Fargo, is originate the subprime loans.

• In the beginning years at Wells Fargo when I started, there was no filter system. So, if you had somebody come into your office and you could sell them a subprime loan, even if they qualified for a prime loan, that’s what you did. The compensation worked out that you had a huge incentive to put people into a subprime loan. Even the prime loan officers would make as much money on a [...] subprime loan, referring it over to the subprime division, that they would make doing a prime loan. So there was an incentive for the prime loan officers to refer the business to the subprime side.

II) On her company training putting borrowers into exploding adjustable rate mortgages:

• Well, when I was hired by Wells Fargo, I had never worked in the mortgage industry at all. I had been a paralegal. So I took everything that Wells Fargo was telling me, that this is the way things were done. I didn’t question the fact that we were putting people in a 55 percent debt-to-income ratio and that we were only qualifying them based on the two years at the lower interest rate. The whole goal was, every two years you’re going to refinance that loan. So, it was sold as a two-year loan. These people were never intended to be in the loan for thirty years.

III) On her experience on the question of allegedly seeking the assistance of African American churches in Baltimore to target their members for subprime loans:

• A lot of this was information that I would receive on conference calls as a sales manager. And people on the call, the management there, would encourage the loan officers, the subprime loan officers, to go into Baltimore city and target the churches, the African American churches, to get a relationship going with the minister or the reverend at the church and try to get that person to schedule some sort of meeting. They would call it a “wealth-building seminar” to get the parishioners of the church to attend. And any loan that was funded by Wells Fargo, whether a purchase or a refinance, $350 would then be donated to the church. And so, that was the incentive for the church to want to have these seminars there.

• But what would happen is the only loan officers that would attend these seminars were generally the subprime loan officers. And on these conference calls, at one point, somebody made a joke who happened to be a white loan officer and said, “Well, will I be able to go to these seminars?” And they were told right there on the conference call, unless you were of color, you could not attend these conferences, these wealth-building conferences. So it seemed me—Wells Fargo didn’t come right out and say this; this is just what I saw—is that they wanted the African American Wells Fargo loan officers to sell loans to the African American community.

IV) On her resignation from her position as sales manager and top producer in the subprime division at Wells Fargo (originating approximately $55 million a year in subprime loans):

• I happened to see a news report with the CFO of Wells Fargo, and he was questioned about the subprime division and denied at that point that Wells Fargo even had a subprime division. So here he is, the chief financial officer, where the subprime loans were supposed to be paying for the fixed costs of the company, and he’s denying that Wells Fargo even did subprime loans. That was just the final straw of total disillusionment, and then I put my resignation in.

For the transcript of the interview, and link to view the television interview, see Former Wells Fargo Subprime Loan Officer: Bank Targeted Black Churches as Part of Predatory Subprime Lending Scheme.

(1) Earlier this summer, Jacobson filed a sworn affidavit with a federal court in support of the city of Baltimore’s lawsuit against Wells Fargo for pushing high-interest, subprime loans onto African Americans in Baltimore and the Maryland suburbs, leading hundreds into foreclosure. She and another whistleblower allege Wells Fargo targeted African Americans for subprime loans and routinely steered customers qualified for prime loans toward subprime loans.

The Federal lawsuit and earlier media reports on the Baltimore City predatory lending action against Wells Fargo indicate that Jacobson and fellow whistleblower Tony Paschal allege, in sworn affidavits filed in Federal court, that:

• Wells' "Subprime managers joked that Prince George's County was the 'subprime capitol of Maryland'" (see Jacobson Declaration, at paragraph 26), Wells' loan officers targeted black ZIP codes (see Paschal Declaration, at paragraph 10) and churches (see Jacobson Declaration, at paragraph 27), used software to “translate” marketing materials into African-American vernacular (see Paschal Declaration, at paragraph 11), referred to subprime loans in minority communities as “ghetto loans” and to borrowers as “mud people” (see Paschal Declaration, at paragraph 8), use of the words "nigger" in referring to African Americans and "'hoods" and "slums" in speaking on how African Americans live (see Paschal Declaration, at paragraph 16; see also Paschal Declaration - Exhibits B and C for email exchange in which Tony Paschal addresses these points with two Wells Fargo higher-ups - one supervisor actually acknowledged in one of the emails the use of the racial slur), and loan officers joked that, in making these subprime loans, they were “riding the stagecoach to Hell” (see Jacobson Declaration, at paragraph 31).

For the Federal lawsuit (including affidavits, evidence, and other court filings ) and earlier media reports, see:

• Lawsuit - First Amended Complaint (filed June 1, 2009): Mayor and City Council of Baltimore v. Wells Fargo Bank N.A. et al., (links to a 12 MB+ "zip" folder containing a total of 24 court documents filed in Federal court, including the first amended complaint, and the above-referenced declarations and evidence from Jacobson and Paschal, declarations from Baltimore residents living near vacant Wells Fargo foreclosures that describe the state of these properties and the conditions that contribute to injury to the City by increasing the costs incurred by City departments and decreasing the City’s property tax revenues); link to "zip" folder also available on the home page of Relman & Dane, the law firm representing the City of Baltimore.
• The Maryland Daily Record: Ex-workers allege race-based loan approach at Wells Fargo,
• The New York Times: Bank Accused of Pushing Subprime Deals on Blacks.

New York Times Profiles Brooklyn Trial Judge Known For Holding Lenders' Feet To The Fire When Seeking Mortgage Foreclosure

The New York Times recently ran a profile on Brooklyn, New York trial judge Arthur M. Schack, a jurist who has developed a reputation for being a thorn in the side of those foreclosing lenders and their attorneys who, in cases over which he presides, persist on filing court papers that are filled with errors and omissions, and who otherwise come to court unprepared to prove that they actually own the promissory note secured by the mortgage they seek to foreclose.

• [Justice Schack] has tossed out 46 of the 102 foreclosure motions that have come before him in the last two years. And his often scathing decisions, peppered with allusions to the Croesus-like wealth of bank presidents, have attracted the respectful attention of judges and lawyers from Florida to Ohio to California. At recent judicial conferences in Chicago and Arizona, several panelists praised his rulings as a possible national model.

***

• Justice Schack, like a handful of state and federal judges, has taken a magnifying glass to the mortgage industry. In the gilded haste of the past decade, bankers handed out millions of mortgages — with terms good, bad and exotically ugly — then repackaged those loans for sale to investors from Connecticut to Singapore. Sloppiness reigned. So many papers have been lost, signatures misplaced and documents dated inaccurately that it is often not clear which bank owns the mortgage. Justice Schack’s take is straightforward, and sends a tremor through some bank suites: If a bank cannot prove ownership, it cannot foreclose.

For more, see A ‘Little Judge’ Who Rejects Foreclosures, Brooklyn Style.

In a somewhat related story, see New York Magazine: Brooklyn Judge’s Influences Include Obscure Bruce Willis Movies.

For an earlier post on Justice Schack, with links to over 30 of his court rulings in which he bounced unprepared foreclosing lenders and their lawyers out of his courtroom, see Brooklyn Trial Judge Nixes "Rubber Stamp Method" Of Adjudicating Foreclosures; Lenders, Lawyers Lacking Legal Standing To Bring Actions Get Bounced.

Enabling "Buy & Bail" Scams, Breaking Into Foreclosed Homes All In A Day's Work For Las Vegas Real Estate Agents??? Everybody's Doing It, Says One

In Las Vegas, Nevada, the Las Vegas Sun reports:

• A Las Vegas real estate agent who landed a prominent role in a Time magazine cover story is being scrutinized by state licensing officials because of her comments, has left her employer and is lying low. The story by Joel Stein in the Aug. 24 issue, “Less Vegas,” is a high-spirited and high-altitude view of the troubles facing Las Vegas, which he calls both “our most American city” and “an entire city of John Dillingers.”

• In the story, Brooke Boemio — “a bouncy, sweet, recently remarried 31-year-old mom” — is cast as one of the Dillingers. She helps Stein break into a foreclosed home and brags about helping clients who are underwater on their mortgages buy a second house on the cheap and stop making payments on their first mortgages, pressuring the bank into selling the houses for a loss.

• Everybody’s doing it, she says in the story. In fact, she said, she did it herself. Since the story appeared, Boemio and her employer have, in the words of Coldwell Banker Wardley Real Estate President Jeff Sommers, “parted ways.”

***

• The buy-and-bail tactics described in the story, he said, are serious allegations and “really just in direct opposition to everything in our policies.” [...] When the story was published, it referenced a video on Time’s Web site titled “Breaking and Entering,” of Stein and Boemio entering an unoccupied home on the west side of town. Since then, the video has been removed from the Web site for what Time spokeswoman Betsy Burton described as “some sensitivity with various issues.”

For more, see Unflattering Time magazine story puts agent in hot water (Since bragging to magazine about unethical practices she’s off job, under scrutiny).

For the Time magazine article, see Less Vegas: The Casino Town Bets on a Comeback (the description of the above referenced scams begins on page 2 of the story).

For more on "Buy & Bail" real estate scams, see:

• The Wall Street Journal: Some Buy a New Home to Bail on the Old (Fannie Plans Rules To Avoid Practice Described as Fraud),
• ABC News: In Foreclosure? Buy a Second Home ('Buy and Bail' Is the Answer Some People Have Found to Threat of Losing Home),
• Las Vegas Review Journal: Buying & Bailing: Walking away from 'underwater' mortgage has pitfalls. BuyAndBail

South Florida Landlord To Cough Up $200K+ In Settlement With Feds Over Civil Charges Of Race Discrimination In Apartment Rentals

From the U.S. Department of Justice:

• The Justice Department [Thursday] announced an agreement with the owner of College Square Apartments, in Davie, Fla., to settle allegations of discrimination against African Americans. Under the consent decree, approved [Thursday] in U.S. District Court in Miami, the defendants must pay a total of up to $140,000 to victims of discrimination(1) and a civil penalty of $74,000 to the government.

• The lawsuit, filed in August 2008 and later amended, alleged that the property manager at the time, Don Murroni, acting under the direction of Craig Forman, the president and sole shareholder of C.F. Enterprises, falsely told African Americans that no apartments were available and discouraged African Americans from applying. Murroni also allegedly offered to waive the application fee or other costs for white applicants, and told white testers that a selling point of College Square Apartments was the absence of black tenants. The allegations were based on evidence obtained through the Department’s fair housing testing unit, where individuals present as potential renters to gather information about possible discriminatory practices. [Thursday's] settlement resolves the government’s claims against C.F. Enterprises and Craig Forman.(1)

For the entire Justice Department press release, see Justice Department Settles Race Discrimination Allegations Against Davie, Florida, Apartment Complex.

(1) Individuals who believe that they may have been victims of housing discrimination at College Square Apartments should call the U.S. Justice Department at 1-800-896-7743 extension 992.

Cuyahoga Prosecutor Indicts 1st 12 In Alleged $14M+ Cleveland-Area Mortgage Fraud Operation

In Cleveland, Ohio, WKYC-TV Channel 3 reports:

• The first 12 defendants(1) in a $14.7 million mortgage fraud case were indicted by the Cuyahoga County Prosecutor on offenses involving homes located at 615 North Main Street in Chagrin Falls, 2105 Woodstock Road in Gates Mills, Port Clinton and Toledo, among others. These defendants, including individuals from Wickliffe, Chesterland and Mayfield Village, were indicted on mortgage fraud offenses including engaging in a pattern of corrupt activity, a first degree felony, according to Cuyahoga County Prosecutor Bill Mason's office.(2)

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• According to Mason's office, these twelve defendants and three companies -- The Equator Group, Century 21 Homestar Realty, and Homestar Title Agency -- were indicted for engaging in a pattern of corrupt activity that secured $14,766,515 in fraudulent loans used to purchase seven homes in Cuyahoga, Ottawa and Lucas counties. [...] Six of the seven houses fell into foreclosure.

For more, see Prosecutor: 12 indicted in $14 million mortgage fraud case.

(1) The defendants include: Deborah Brazalovics, 56, of Wickiffe; Paul Brazalovics, 33, of Wickliffe; Anthony Geraci, 39, of Mayfield Village; Richard Kilfoyle, 50, of Chesterland; William Werner, 39, of Cleveland; Andrew Fishman, 35, of Hollywood, FL; James Trungale, 40, of Austin, TX; Diane Marciel, 48, of Woodland Hills, CA; Susan Alt, 56, of Santa Monica, CA; Joanne Schmidt, 56, and her husband, Howard Schmidt, 56, both of Agoura Hills, CA; and Charlotte Gill, 38, of Southwest Harbor, ME.

(2) Reportedly, the investigation was conducted by the Cuyahoga County Mortgage Fraud Task Force operating under authorization of Ohio Attorney General Richard Cordray and Ohio's Organized Crime Investigations Commission.