Thursday, September 17, 2009

Illinois AG Brings Civil Suit Alleging Deceptive Practices In Equity Stripping, Home Repair Scam That Duped 36 Chicago Homeowners

In Chicago, Illinois, the Chicago Tribune reports:
  • The Illinois attorney general's office filed suit in Cook County Circuit Court on Tuesday against a Chicago man and five home repair and mortgage companies for allegedly defrauding 36 Chicago homeowners, including two who lost homes to foreclosure. The complaint charges Mark Diamond and several companies to which he is linked with coordinating a scheme to strip almost $1.3 million in equity from the homes of elderly and African-American homeowners on the city's West and South Sides.(1) The actions allegedly violated the state's consumer fraud act.

***

  • The suit charged that Diamond offered to refinance mortgages at lower interest rates or lower monthly payments and encouraged homeowners to take equity out of their homes for repairs, with the work performed by the affiliated companies. After persuading homeowners to sign the checks over to Diamond, he pocketed a portion of the funds instead of completing the repairs, the state said. The state also accused Diamond of putting homeowners into mortgages they could not afford and, in some cases, forging consumers' signatures on loan documents. As a result, 12 consumers have defaulted on their mortgages and two people have lost their homes to foreclosure, the state said.

Source: Chicago man and five companies are sued in consumer fraud case (Lawsuit says Mark Diamond defrauded elderly and African-American homeowners on the city's West and South Sides).

For the Illinois Attorney General press release, see Madigan Cracks Down On Chicago Mortgage And Home Repair Fraud Scheme ($1.3 Million Swindled from Elderly, African-American Homeowners in Subprime Loan Scam).

(1) According to the story, also named in the suit were three home repair and remodeling companies, United Construction of America Inc., United Residential Services and Real Estate Inc., and Skyway Builders #1 Inc.; and two finance companies, OSI Financial Services Inc. and Harbor Financial Group Ltd. Diamond is president of United Residential Services and OSI Financial Services and "fronts for all the companies," the lawsuit reportedly said. StiffingContractorsTheta

Miami Man Gets 88 Months For Role In Impersonating Unwitting Homeowners & Ripping Off Their HELOC Accounts

From the Office of the U.S. Attorney (Alexandria, Virginia):
  • Henry “Uche” Obilo, age 30, of Miami, Fl., was sentenced to 88 months in prison, followed by three years of supervised release, for his role as a leader in a home equity line of credit fraud scheme(1) that has been linked to more than $36 million in attempted fraud and almost $11 million in actual losses. To date, investigators have identified more than 180 victims. Obilo was ordered to pay restitution of $577,149.33.

***

  • According to court records, Obilo and other co-conspirators used fee-based web databases to search for potential victim account holders with large balances in home equity line of credit (HELOC) accounts. This information included name, address, date of birth, and social security number. [...] Armed with a victim’s personal information, the conspirators, [...] called the victim’s financial institution, impersonated the victim, and transferred the majority of the available money from the HELOC account into an account from which a wire transfer could be sent. The conspirators would then wire transfer hundreds of thousands of dollars to domestic or overseas accounts controlled by members of the conspiracy.(2)

For the U.S. Attorney press release, see Miami Man Sentenced to 88 Months in $11 Million Bank-Fraud Conspiracy.

(1) Others involved in the scheme include: Abel Nnabue, age 34, of Dallas, who was sentenced to 54 months on Jan. 30, 2009; Precious Matthews, age 27, of Miami, who was sentenced 51 months on Feb. 13, 2009; Brandy Anderson, age 31, of Dallas, who was sentenced to 2 years of supervised probation and 40 days of community confinement on Feb. 20, 2009; Ezenwa Onyedebelu, age 21, of Dallas, who was sentenced to 37 months on Feb. 27, 2009; Daniel Orjinta, age 43, of Nigeria, who was sentenced to 42 months on March 6, 2009; Paula Gipson, age 34, of Dallas, Texas, who was sentenced to 15 months on Sept. 4, 2009. The conspiracy’s ringleader, Tobechi Onwuhara, age 30, of Dallas, has an outstanding warrant for his arrest and remains a fugitive. Information about Onwuhara is available on the America’s Most Wanted website: http://www.amw.com/fugitives/brief.cfm?id=59947.

(2) The conspirators used caller-ID spoofing services, prepaid cell phones and PC wireless Internet access cards, and transferred victims’ home telephone numbers in order to impersonate the victim and avoid identifying themselves, according to the U.S. Attorney's office.

NC AG On Loan Modification Foreclosure Rescue Scammers: "These Creeps Are Out There, Crawling Out From Under Rocks & Taking People's Money"

In Greenville, North Carolina, The Daily Reflector reports:
  • State Attorney General Roy Cooper on Tuesday warned local homeowners and business leaders to be wary of home mortgage assistance scams, one of several topics he covered at a luncheon hosted by the Greenville-Pitt County Chamber of Commerce at the Brook Valley Country Club.

***

  • His office is trying to push buyers and lenders to work complicated financial issues out together through the use of qualified counselors, he said. [...] However, since scammers know counselors are being used, they are presenting themselves as such to borrowers, getting money up front and not helping them, Cooper said. His office has tackled about 130 foreclosure scams, he said.

  • You know that these creeps are out there, crawling out from under rocks and taking people's money,” Cooper said. The attorney general's office received seven scam complaints in 2007, 82 in 2008 and 353 scam complaints this year, he said. North Carolina was one of the first states to make it illegal to take money up front for home mortgage foreclosure counseling, and state attorneys are using the law in courts now to try to end the scams, Cooper said.

Source: AG Cooper visits with chamber, Boys & Girls Club.

Trial Begins For Central Florida Couple Accused Of Swiping Home Out From Under Elderly Widow Who Unwittingly Signed Deed

In New Port Richey, Florida, The Suncoast News reports:
  • Prosecutors call it a case of deceit, deception and greed. Defense attorneys say it's simply a case of an elderly woman who spent her way into financial ruin and had to be rescued. Who's right?

  • A jury will answer that question during the trial of Joseph and Cynthia Clancy, who are accused of bilking Eloise Mudway, now 92, out of her house and assets between 2001 and 2005. Testimony began Tuesday and the trial is expected to last through Friday. The Clancys are charged with one count each of grand theft from a person over the age of 65 and face up to 30 years in prison if found guilty.

***

  • Much of the state's case rests on the contention that the couple stole Mudway's 2,900-square-foot home out from under her by having her unknowingly sign a quit-claim deed in May 2004. The Clancys still live in the house [...], a home that Mudway and her husband purchased in 1980. The house is now listed in Cynthia Clancy's name. Mudway has lived with another local family since 2005.

For more, see Trial begins for Pasco couple accused of bilking woman.

See also:

Wednesday, September 16, 2009

Kansas Supreme Court Leaves MERS, 2nd Mortgage Holder Holding The Bag; OK's Foreclosure Sale By First Mortgagee Despite Lack Of Notice To Either Firm

Housing Wire reports:
  • A ruling by the Kansas Supreme Court determined Mortgage Electronic Registration Systems (MERS)(1) was not a “necessary party” in a mortgage foreclosure proceeding initiated by a first lien holder. [...] The court’s ruling involves a case where MERS was listed as the mortgagee of a second-lien mortgage originated by Millenia Mortgage Corp. When the primary lien holder, Landmark National Bank went to court to seek foreclosure action, MERS wasn’t notified. Although Millenia was notified, it already sold its interest in the loan to Sovereign Bank.

  • Representatives from the second lien loan were not present at the hearing. The lower court allowed Landmark to proceed with the foreclosure and sell the property at sheriff’s sale. In response, Sovereign and MERS attempted to vacate the judgment, which was denied by the trial court. The ruling to deny the motion was upheld by the state’s court of appeals and later, its supreme court. In its ruling, the supreme court said that MERS was not a “contingently necessary party.”

  • It added since Sovereign Bank didn’t register its interest with the county’s register of deeds, it had no rights in the foreclosure proceeding.(2)

For more, see Court Ruling Upholds Foreclosure Sale Despite MERS’ Appeal.

For the Kansas Supreme Court ruling, see Landmark Nat'l Bank v. Kesler, No. 98,489, 2009 Kan. LEXIS 834 (August 28, 2009), affirming Kansas Court of Appeals in Landmark Nat'l Bank v. Kesler, 40 Kan. App. 2d 325, 192 P.3d 177, 2008 Kan. App. LEXIS 138 (2008).

(1) MERS acts as the representative for lenders and services in county land records for mortgages registered with the company. MERS keeps track of the loan, even when servicing rights are traded or sold, and notifies lender and servicer clients of action against the property.

(2) The proceeds of the foreclosure sale in this case exceeded the amount owed to the foreclosing first mortgage holder. The balance of the proceeds, after distribution of the amount owed to the foreclosing lender (generally referred to as the surplus funds or the overage, among other descriptive references), is then typically distributed to any subordinate lienholders in an amount not to exceed the balance of their claims; the remainder, if any, then goes to the foreclosed upon homeowner. Interestingly, according to the facts as laid out in the Kansas Supreme Court’s ruling, it appears that the foreclosed upon homeowner walked off with the entire foreclosure sale surplus; neither MERS nor the second mortgage holder participated in the distribution of these proceeds. EpsilonMissingDocsMtg

Vegas Man Claims "Adverse Possession" In Attempt To Justify Hijacking, Then Renting, Vacant Home In Foreclosure

In Las Vegas, Nevada, KTNV-TV Channel 13 reports:
  • The foreclosure captial of the country is becoming a hot bed for scam artists, but one family in the Valley is taking action to try to take back its home from a man who may have rented it out illegally. You could liken it to squatting without the tenants knowing they're squatting.

***

  • Steven Humes thought he had found a great deal on Craigslist to rent a house when he moved to Las Vegas a couple of months ago, but what he really found may have been a great scam. "They gave us a key; we went inside; we looked at the property, and decided 'oh this is great, loving it, 735 a month, loving it, great,'" says Steven.

  • John Bartlett also had a key, as well he should. He owns the home, even though it's going into default, but much to his surprise, when he went with a real estate agent to show it, his key didn't work. That's because a so-called property manager had changed the locks and rented out a home he didn't have rights to. [...] Action News went to the property manager's office, but he wasn't there, and the secretary wouldn't call him. Days later, he did call, then e-mailed, saying the house was abandoned, and that he claimed it under an old law known as adverse possession.

For the story, see Foreclosure flim-flam, or right to rent? KappaPhonyLandlordScam

Bogus Loan Fees, Failure To Act In Good Faith Among Allegations In Elderly Ohio Couple's Attempt To Fight Foreclosure Of Home Of 40+ Years

In Stark County, Ohio, The Canton Repository reports:
  • A mediator has been asked to resolve a foreclosure dispute that has come close to chasing a North Canton couple in their mid-80s from their home. Stark County Common Pleas Court Judge Taryn Heath referred a foreclosure against William and Bette Hammen to the Community Mediation Center. Representatives for the Hammens and their mortgage company are scheduled for an Oct. 29 hearing. The couple has been on the verge of losing their house several times during the past 18 months.

***

  • CitiMortgage launched foreclosure proceedings in February 2008 because the Hammens hadn’t paid their mortgage. [...] Since then, the couple has been declared incompetent, assigned a guardian and received legal aid. That has helped them begin to turn the tables on the foreclosure process.

  • Heath moved the Hammens’ case to mediation after lawyers argued that lenders broke federal lending laws, assessed “illegal, improper or excessive” loan fees, and failed to act in good faith when creating a $100,000 mortgage and a home-equity loan for the couple in 2006. The Hammens have lived in the house since 1965. They didn’t have a mortgage until 2002, according to court filings. But since 2002, the couple has entered into three standard mortgages and three open-ended mortgages.

For the story, see North Canton couple’s foreclosure referred to mediator.

Queens Co-Op Board Of Directors Accused Of Taking Out $12M In Mortgages On Building Without Unit Owners' Consent

In Elmhurst, New York, the New York Daily News reports:
  • Shareholders of an Elmhurst co-op are locked in a legal tug of war with its board of directors, accusing it of taking out $12 million in mortgages without their knowledge. Shareholders of the Continental, at 87-10 51st Ave., said they only found out about the two $6 million loans when they got court papers in June warning that the co-op was heading into foreclosure because of an unpaid bill. "We didn't know about either mortgage," a shareholder told the Daily News, speaking on condition of anonymity. "There have been no financial statements and no meetings."

For more, see Legal battle looms at Continental co-op over 12M in mortgages: Shareholders say without approval.

Tuesday, September 15, 2009

Wells Fargo Cans Squatting Senior VP For Using $12M Beachfront REO As Party House

In Malibu, California, The Los Angeles Times reports:
  • Moving to contain a public relations mess, Wells Fargo & Co. fired a top executive accused of using a bank-owned Malibu beach house to entertain her family and friends. Cheronda Guyton, a senior vice president responsible for commercial foreclosed properties, broke company rules barring personal use of bank property, Wells Fargo said in a statement Monday. The Times reported last week that Guyton had been spotted by neighbors spending time at the Malibu Colony home with her family this summer. At a party in August, guests were ferried to the beach house from a yacht, residents of the enclave said.

***

  • Wells Fargo's quick action after The Times' report last week reflects the bank's recognition that the case could become a liability, especially in light of its acceptance of federal bailout money, ethics experts said.

***

  • Wealthy real estate shoppers who had gotten wind of the house being held by the bank said they were frustrated they could not offer to buy it. Local real estate agents said they began to get calls from eager would-be buyers -- but the house wasn't for sale.

For more, see Wells Fargo fires executive accused of using bank-owned Malibu home (Cheronda Guyton, a senior vice president responsible for commercial foreclosed properties, had been seen by neighbors using the Malibu Colony house lost by victims of Bernard Madoff's Ponzi scheme).

See also:

Home Lost To Foreclosure Despite Loan Servicer's Failure To Complete HAMP Review, Says New Hampshire Couple

In Franklin, New Hampshire, New Hampshire Public Radio reports:
  • About a month ago, homeowners Sharon Gagnon and her husband were facing foreclosure. But they sought help from a HUD certified housing counselor, and got a modification with Chase Bank under the federal Making Home Affordable Program. Gagnon had recently sent in her signed authorization with a check when a real estate agent came by and told her she didn’t own her house anymore.

***

  • According to Gagnon and her counselor, Chase bank, a unit of JP Morgan Chase, accepted the modification and the check that Gagnon sent. But the bank then sent the check back with no explanation of why they were doing it. In the meantime, Sharon Gagnon got another surprise in early August. And the next thing I know is there’s an eviction notice on the door, from the sheriff, telling us we need to be out by September 15th.

***

  • Under the HAMP [Home Affordable Modification Program] regulations you’re not allowed to proceed on a HAMP eligible family on a foreclosure or scheduled sale date without having the HAMP review completed and foreclosures have continued to proceed as if everything is normal and there’s no need to do the HAMP review. A spokesman for JP Morgan Chase says the company won’t comment on this story, except to say the Gagnon case is under investigation. Gagnon’s attorney, Peter Wright at Franklin Pierce Law Center, says his team is already working on trying to keep the family in their home.

For more, see A Franklin Family Facing Eviction Thought They Had Saved Their House.

Punishing Attorneys Offering Bogus Loan Modification Help To Financially Strapped Homeowners A Priority For Incoming State Bar President

In Los Angeles, California, The Los Angeles Times reports:
  • Crooked lawyers have long besmirched the profession's image, but the scale of their involvement in the loan modification scandals plaguing California homeowners has taken an unprecedented toll, the incoming president of the State Bar of California says. The proliferation of complaints against lawyers who said they could help rescue clients threatened with foreclosure has hurt tens of thousands of people and confronted the bar with a mounting and costly disciplinary burden, said Howard Miller, a partner with the Los Angeles plaintiffs' firm of Girardi & Keese. "There are at least hundreds, and perhaps more, perhaps thousands, of lawyers in California who deliberately reached out to obtain money from people at the most vulnerable point in their lives and, as near as anyone can tell, did nothing to help them," Miller said, vowing to make a priority of punishing such misdeeds during his yearlong tenure.

***

  • Miller was a key supporter of a new rule of professional conduct requiring attorneys to tell clients if they don't carry malpractice insurance. [...] The estimated tens of thousands who lost nonrefundable deposits to unscrupulous lawyers advertising their loan-modification services could have benefited from the knowledge that those attorneys were, for the most part, uninsured, Miller said.

For more, see New head of State Bar of California assails mortgage modification scammers (Los Angeles attorney Howard Miller lambastes lawyers who claimed to be offering help to homeowners facing foreclosure but did nothing except take their money).

Massachusetts Regulators Asleep At Wheel During Recent Subprime Era?

In Boston, Massachusetts, New England Cable News reports:
  • Where were Massachusetts banking regulators as the subprime mortgage crisis exploded all around them? That question is the focus of a special investigation by the New England Center for Investigative Reporting at Boston University - a collaborative effort that includes NECN, WBUR radio, The Boston Globe and Banker and Tradesman. Did state regulators protect the public or fall asleep at the wheel?

For more, see Mass. regulators lag New England in disciplining brokers and lenders.

See also, The Boston Globe: Few Mass. brokers hit for abuses (Mortgage lending regulators lag peers in other N.E. states).

City Concerned About Effect On Tenants From Unwinding $5.4B Purchase Of 11,000+ Unit Apartment Complexes Gone Bad

In New York City, The New York Times reports:
  • Three years ago, the sale of the 110 red-brick apartment buildings at Stuyvesant Town and Peter Cooper Village in Manhattan represented the most expensive American real estate deal in history.(1) Now the buyers are running out of time and money. Jerry I. and Rob Speyer and their partner, BlackRock Realty, who paid $5.4 billion for the quiet middle-class redoubt near the East River, have seen the property lose more than half of its value, and the income from rent — down 25 percent from its peak — covers less than half of their debt payments. Real estate analysts say they expect that by December, the partnership will run out of an additional $890 million set aside for apartment renovations, landscaping and interest payments, and that the owners are at “high risk” of default on $4.4 billion in loans.(2)

***

  • Stuyvesant Town and Peter Cooper Village are in trouble. City officials have been monitoring the looming crisis and how it might affect a complex that has served as an oasis of affordability in Manhattan for middle-class New Yorkers. Some 6,875 of the 11,227 apartments at the complexes are rent regulated. “We are absolutely keeping an eye on it,” said Rafael E. Cestero, the city’s housing commissioner. “It’s an iconic complex.” Referring to the people who were part of the original real estate transaction, he went on, “Those folks are going to take their lumps. We are looking at how we can ensure that the rent-stabilized units and the families that live there and families that could live there in the future could be insulated from the unwinding of this deal.”(3)(4)

For the story, see Buyers of Huge Manhattan Complex Face Default Risk.

(1) The residential complex, the largest of its kind in New York City, covers approximately 80 acres, or a full 10 city blocks, between First Avenue and Avenue C, and 14th Street and 23rd Street, and consists of 110 apartment buildings comprising 11,200 units, which house at least 20,000 people.

(2) The purchase of Stuyvesant Town and Peter Cooper Village was one of the more scrutinized of its deals in recent years, the story states. The winning bid presumed the partnership could increase profits by renovating and deregulating apartments, but the owners have been unable to quickly convert apartments to market rates.

(3)Residents are increasingly concerned that the maintenance of the buildings is slipping, even as they are getting hit with a flurry of potential charges for major capital improvements,” said Daniel R. Garodnick, a city councilman who lives in Peter Cooper Village.

(4) The underwater landlords in this story have gone to the New York Court of Appeals (the state's highest court) to appeal a recent state intermediate appellate court ruling that could result in them having to pay more than $200 million to repay the tenants in these complexes for illegal rent increases over the last four years in connection with improperly deregulating more than 3,000 apartments while receiving special property tax breaks from the city. See:

Monday, September 14, 2009

Head Of Maryland-Based Foreclosure Rescue Firm Gets 78 Months For Role In Peddling Bogus Equity Stripping Sale Leasebacks To Homeowners In Foreclosure

From the Office of the U.S. Attorney (Maryland):
  • U.S. District Judge Deborah K. Chasanow sentenced Michael K. Lewis, age 57, of Takoma Park, Maryland today to 78 months in prison, followed by three years of supervised release, for conspiracy and bankruptcy fraud arising from a scheme in which he and his conspirators offered to help financially vulnerable individuals save their homes from foreclosure, and instead defrauded homeowners and mortgage lenders, announced United States Attorney for the District of Maryland Rod J. Rosenstein.

***

  • According to his plea agreement, [...] Lewis aired television advertisements that targeted financially vulnerable individuals, representing that he could improve their credit, save their homes from foreclosure and assist them with bankruptcy. [...] Lewis specifically targeted individuals who owned and had equity in their homes, but were facing foreclosure on their homes because of their inability to make monthly mortgage payments. The goal of Lewis and his co-conspirators was to steal the homeowners’ equity out of their property by inducing the homeowners to sell their property to Earnest Lewis and converting sale proceeds to the use of the conspirators. Lewis and his co-conspirators did this by fraudulently representing to the homeowners that their “lease/buy-back program” would help the homeowners to keep their homes. Lewis and Winston Thomas, a senior loan officer with a mortgage lender, told the homeowners that the “good credit” of Earnest Lewis would be used to temporarily refinance their homes, that they had to sign their homes over to Earnest Lewis and that they could repurchase the homes in roughly one year, or once they regained their financial footing. During the interim, they could remain in their homes only by paying inflated “rent” and fees by having their bank accounts directly debited to an account belonging to co-conspirator Cheryl Brooke’s company “In the House Technologies.” Brooke then made payments to Earnest Lewis and Thomas, with the remaining funds being used by Michael K. Lewis and Brooke for their personal benefit.(1)

For the entire U.S. Attorney press release, see Leader of Mortgage Fraud Scheme Sentenced to 6 ½ Years in Prison - Targeted Victims with TV Ads.

See also, WBAL-TV Channel 11: Lewis Gets 6.5 Years In Prison For Mortgage Fraud (Michael K. Lewis Convicted Of Defrauding People Out Of Homes).

(1) Earnest Lewis, age 52, of Takoma Park, Maryland, was sentenced to 54 months in prison, for his role in the scheme. Cheryl Brooke, age 52, of Upper Marlboro, Maryland, and Winston Thomas, age 43, of New Carrollton, Maryland pleaded guilty to their participation in the scheme and face a maximum sentence of 20 years in prison for the conspiracy to commit wire fraud. Michael K. Lewis Financial Diet

Texas Judge Slams Foreclosure Rescue Operator With 350 Months For Pocketing Upfront Fees In Scam Offering False Promises Of Foreclosure Help

In San Antonio, Texas, the San Antonio Express News reports:
  • A San Antonio woman who defrauded several people out of more than $70,000 in foreclosure-rescue scams got a hard lesson Friday. After reportedly telling a victim a Spanish phrase along the lines of “Payback's a (expletive),” Rosario Castro Divins was sentenced to nearly 30 years in prison for her scams, the comment and misbehaving in jail. The comment came during a break in Divins' trial in June, and its recipient — one of her fraud victims — took it as a threat, the victim and a witness testified Friday.

  • The 350-month sentence imposed by U.S. District Judge Fred Biery was an exclamation point on a case that screamed a question even Biery asked: Where were state and local authorities when Divins was dishing out various forms of fraud for more than 30 years? The judge also ordered restitution, but acknowledged it wouldn't be likely any victim would be repaid.

  • An investigation by the San Antonio Express-News found disinterested police agencies, Texas attorneys general, assistant district attorneys and others nudged aside complaints as civil matters between Divins, 55, and her victims. Some of the homeowners ultimately lost their houses while other managed to stave off foreclosure through no help from Divins.

***

  • Biery noted it wasn't until Divins' shenanigans spilled into federal bankruptcy court that she finally was caught. The FBI investigated her after she was found in contempt in bankruptcy court and violated orders to stop her misleading, direct-mail foreclosure-rescue ads. Biery also read her 32-year criminal record of harassment, stalking and threats, including one case where she called one person 50 times. “Other than that, you've been a model citizen,” Biery said, sarcastically. [...] Biery said he admonished her for taking advantage of desperate people who shared her cultural, ethnic and religious background and trusted her.

For the story, see Woman sentenced to almost 30 years for fraud.

For the U.S. Attorney press release, see San Antonio Woman Sentenced To Federal Prison For Criminal Contempt And Mail Fraud In Foreclosure Prevention Scheme.

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

Bond-Posting Pals Allowed To Reclaim Homes Previously Forfeited When Bailjumping Friend Fled Country As Brooklyn Federal Judge Lets Them Off The Hook

In Brooklyn, New York, the New York Post reports:
  • Pals who posted bail for a shady former Credit Suisse broker who fled to Spain are off the hook for backing the crook, a federal judge ruled [Wednesday]. Brooklyn Federal Judge Jack Weinstein let Julian Tzolov's friends reclaim their homes after prosecutors agreed to seize only the broker's assets to cover his $3 million bail bond. Tzolov, 36, was captured on the southern coast of Spain in July after a month-long manhunt and agreed to testify against his partner in crime, longtime friend Eric Butler. [Wednesday's] ruling was an about-face for Weinstein, who, when he first learned in June that Tzolov was missing, angrily told prosecutors that the friends should "lose everything."

For more, see Judge bails Tzolov pals.

For the earlier story on this bailjumping broker leaving his friends holding the bag, see Broker Fugitive Tzolov Leaves Friends Homeless.

Brooklyn Trial Judge Known For Slamming Sloppy Lenders In Foreclosure Actions Featured On CBS Evening News

In Brooklyn, New York, the CBS Evening News recently featured state trial judge Arthur M. Schack, a jurist who has developed a reputation for booting foreclosing lenders and their attorneys for sloppy, error-filled filings in foreclosure proceedings:
  • He's rejected more than 40 of the 100-plus foreclosure filings that have crossed his desk in the last two years because of what some call "small" errors in the bank's paperwork, from incorrect dates and signatures to unclear proof of ownership. "About half of the cases in the last two years you've thrown out for what some would describe as a procedural - small issue, " [correspondent Seth] Doane said. "I don't think it's a small issue when somebody lives in a house and you're going to disrupt their lives and take away their home," Schack said.

For the story, see N.Y. Judge Takes on Foreclosures (Arthur Schack Looks beyond the Routine Process for a Chance to Help the Little Guy).

To watch the story, see Fighting Foreclosure.

Battle Against Rent Skimming Florida Condo Investors Intensifies As Blanket Receivership Court Orders Become Broader In Scope

The South Florida Sun Sentinel reports on how the fight being waged by condo associations across South Florida and the state by seeking court-ordered, blanket receiverships against deadbeat investor/unit owners continues to heat up:
  • The first blanket receivership order was petitioned by the Association Law Group and signed in March by a Miami-Dade County judge on the behalf of the Oaks at Miami Gardens. Since then dozens have been signed or are pending in county courts throughout South Florida, as well as Orange and Seminole counties, attorneys say.

  • And as the practice spreads throughout the state, the blanket receivership orders also seem to broaden in scope. Last month, [professional receiver Seth] Heller was appointed as the receiver in Seminole County for an Orlando condo association, the first blanket receivership order outside South Florida. The order provides receivers like Heller with more authority compared to previous receivership orders granted in South Florida, including the authority to collect money from rent-paying tenants as well as those who don't pay rent but live in a unit owned by an investor in foreclosure (blanket receiverships are not used for owner-occupied units).

  • Whether a relative or friend of the investor, a non-rent paying tenant could be ordered by Heller to pay fair market rent to be turned over to the association. The Orlando order also now allows receivers to collect rent the moment an investor is delinquent, no 30 or 60 day late notices from the association necessary. And the order specifically reminds tenants that they could face jail and contempt of court charges for not complying with a receiver's order and not appearing in court to explain why.
For the story, see Condo associations turn to receivers to fight deadbeat investors (New weapon in the fight against delinquent owners).

Sunday, September 13, 2009

Wells Fargo Exec Spotted Squatting, Throwing Lavish Bashes At Lender-Owned, $12M Oceanfront REO Once Owned By Madoff Victims, Say Neighbors

In Malibu, California, The Los Angeles Times reports:
  • Bernard L. Madoff's massive fraud stunned some of the wealthy denizens of Malibu Colony, especially when a couple devastated by the scheme surrendered their oceanfront home to Wells Fargo Bank. But some neighbors say the real shocker came when they saw one of the bank's top executives spending weekends in the $12-million beach house and hosting eye-catching parties there.

  • What's more, Wells Fargo spurned offers to show the property to prospective buyers, a real estate agent said. "It's outrageous to take over a property like that, not make it available and then put someone from the bank in it," said Phillip Roman, an 18-year Colony resident who lives a few homes away from the property. Residents identified the house's occupant as Cheronda Guyton, a Wells Fargo senior vice president who is responsible for foreclosed commercial properties.

For more, see Wells Fargo exec used Malibu Colony home lost by Madoff-duped couple, neighbors say (A top bank executive was seen spending weekends and hosting parties in the $12-million beach house. The bank says it will 'conduct a thorough investigation of the allegations' by neighbors) (if link expires, try here).

For story update, see The Wall Street Journal's Deal Journal Blog: Wells Fargo Responds to Malibu Foreclosure Flap (Wells Fargo released a statement responding to the escalating flap over allegations that one of its senior executives was partying in a $12 million Malibu pad that the bank had taken from a struggling home owner).

Lender Erroneously Forecloses On Home Earlier Sold In Short Sale; Soon-To-Be-Married Couple Say Thieves Took Wedding Gifts, Leave Behind Beer Cans

In Novi, Michigan, WDIV-TV Channel 4 reports:
  • A metro Detroit couple set to be married in nine days said the house they purchased is now at the center of police investigation because of a foreclosure mixup. And to top it off, thieves broke into the house and stole thousands of dollars in wedding gifts.

  • Rachel Kozma, 24, and her fiancé purchased the Novi house in late August through a short sale. But the Dunbarton Pines subdivision house was apparently never taken off the foreclosure list. Kozma said she and her fiancé started doing improvements to house like painting and new tile. When she returned Wednesday to the house she found a notice on the front door stating the home had been winterized as part of the foreclosure process.

  • Kozma said she went around the house and noticed that several items were missing, including several wedding gifts and even her wedding band. Kozma said she even found beer cans, cigarette butts and chicken bones that the thieves had allegedly left behind.

For more, see Wedding Gifts Stolen From Novi House (Couple Says House Involved In Foreclosure Mixup).

Judge Allows Prosecution Of California Man Accused Of Using Forged Deed To Steal Home To Continue

In Santa Cruz, California, the San Jose Mercury News reports:
  • A man accused of taking ownership of a home that wasn't his knew the real story behind the Ben Lomond property when he moved in this spring, according to testimony in court Tuesday. The computer of Daniel Judd, formerly of Saratoga, contained records identifying the property's legitimate owner as Pleasanton couple Tom Decker and Maria McArthur, an inspector with the District Attorney's Office testified. The computer also contained what is thought to be a forged deed granting ownership to Judd, according to the inspector.

***

  • Santa Cruz County Superior Court Judge Paul Marigonda ruled [...] there was sufficient evidence for prosecutors to proceed with three felony charges against Judd. The counts involve the falsification of documents in connection with an alleged scheme to take possession of the Santa Cruz Mountains home.(1)

  • The case came to light when Decker and McArthur, who bought the three-bedroom Hubbard Gulch Drive house in 2007 as a place to retire, returned from a vacation in April to find their locks re-keyed, their furniture moved to the garage and Judd living there.

For the story, see Attorney: Computer records suggest Judd's involvement in Ben Lomond home heist.

(1) Reportedly, Judd's attorney maintained his client's innocence. According to Ken Azevedo, Judd bought the home in early April from another man, Santa Cruz resident Ray Tate, unaware that Tate did not have a legitimate claim to the property. Tate, too, faces charges of forgery as well as illegally obtaining property. DeedContraTheft

Water Shutoff, Deteriorating Conditions In Central Florida Apartment Complex Facing Foreclosure May Force Tenants Onto Street

In New Smyrna Beach, Florida, the Daytona Beach News Journal reports:
  • With only a trickle of water coming from their faucets, tenants of a Wayne Avenue apartment complex find themselves drowning in a sea of foreclosure red tape and unpaid water bills. As sprinklers rain H2O onto the golf course across the street from their residence [...], Melvin Brown and his son depend on drips to fill buckets they use to flush their toilets or take a sponge bath after the city's Utilities Commission turned off their water Aug. 24 because their landlord didn't pay the bill.

***

  • Property owner Robert Fiorenzi said he is as much of a victim of circumstance as his tenants. "Being in foreclosure I am losing money and cannot cover my bills," the New Smyrna Beach resident said. [...] The utility insist[s ...] he pay the entire $5,400 due for July, as well as late fees, penalties and surety bond payments, which total almost $8,300, according to Utilities Commission records.(1)

***

  • When the issue came to the attention of Mayor Sally Mackay, she pleaded with her fellow city commissioners to intervene, something they weren't willing to do. [...] Mackay said she didn't want the situation to deteriorate to a point where residents will have to be put out of their apartments because of health concerns.

For the story, see Tenants left dry over unpaid water bill.

(1) According to a Utilities Commission e-mail, 20 of the 45 apartments in the multifamily complex are occupied, although landlord Robert Fiorenzi said the figure is closer to 10, according to the story. Because a single water meter -- billed to the landlord -- serves the complex, renters are left dry because they aren't able to pay their bills individually.

"Grave-Robbing" Florida Man Used Forged Deed To Steal Dead Man's Home, Say Cops

In Panama City, Florida, The News Herald reports:
  • Police arrested Timothy James Benson, 52, on one count of forgery, one count of uttering a forged instrument and grand theft. The arrest stems from an investigation into the theft of a parcel of property and the house on that parcel, according to a news release from the Panama City Police Department.

  • On March 13, Benson forged a deed for the property located at 2705 E. First Court, police said. On March 20, he presented the forged document to the Bay County Clerk of Courts as a true and legal document to obtain the property. The rightful owner of the property died on July 14, 2008, and could not have signed the document on March 13, police said.

Source: Police: Man forged deed, dead owner's signature. DeedContraTheft

Saturday, September 12, 2009

Seattle-Area Man Faces Multiple Charges Of Pocketing Tenant Deposits From Would-Be Renters On Homes Belonging To Others

In King County, Washington, The Seattle Times reports:
  • Paul Bakovich, who was arrested last month after authorities said he took nearly $4,300 in deposits from seven people he allegedly scammed into believing he owned rental properties, has been arrested again -- for allegedly using the same ruse. Bakovich was charged on Sept. 2 with four counts of second-degree theft in the most recent incident. He was already facing three counts of second-degree theft filed on Aug. 26.

  • Bakovich, 36, was arrested on Aug. 22 for fraudulently claiming to be a landlord and taking thousands of dollars in deposits from would-be renters, according to charging papers. He wasn't caught until one potential renter looked his name up on the Internet and found warnings from other people who had been scammed. But by that point the renter, a woman who was interested in a Redmond home, was out $900.(1) Soon after bailing out of jail on Aug. 27, Bakovich alleged tried to collect money from another person interested in the Redmond home, according to charging papers filed in King County Superior Court. [...] Bakovich is now being held at the King County Jail on $60,000 bail.

For more, see Alleged phony landlord in trouble again.

(1) Reportedly, the woman met Bakovich after seeing a Craigslist ad for a three-bedroom house in Redmond for $885 per month. The house was in foreclosure and was never owned by Bakovich. KappaPhonyLandlordScam

Arizona Vendor Of Items Stripped From Foreclosed Homes Faces Sentencing This Month; Used Craigslist, Consignment Shop, Estate Sales To Unload Goods

In Fountain Hills, Arizona, The Arizona Republic reports:
  • A Fountain Hills man will be sentenced later this month for stripping foreclosed homes of their appliances, a crime which officials say is rapidly on the rise. Mark Sydnor, 54, was a middleman in the sale of items from foreclosed homes, according to a fraud task force investigating that and similar crimes. He sold anything that could be knocked out of the home - like cabinets, counters, doors - and would sell them on Craigslist, on online sales site. Whatever Sydnor couldn't sell over Craigslist he would sell at his consignment shop - also in Fountain Hills - or in estate sales, authorities said, keeping keep 25% of the profit and giving the rest to the owners of the home.

For more, see Fountain Hills man in appliance thefts to be sentenced. foreclosure fixture stripping apple foreclosure stripping

Housing Discrimination Based On Race, National Origin, Familial Status All On Massachusetts AG Radar

From the Office of the Massachusetts Attorney General:
  • Attorney General Martha Coakley’s Office filed a housing discrimination complaint against two Somerville property owners for allegedly refusing to rent an apartment to a prospective tenant and his family on the basis of their race and national origin. The complaint [...] alleges that Jardelina and Olivero Costa of Somerville violated state anti-discrimination and consumer protection laws by refusing to rent to a prospective tenant and his family because they are of Indian national origin. [...] The complaint alleges that in September 2008, the prospective tenant and his cousin inquired at a local real estate company about a Somerville apartment, owned by the Costas, advertised for rent on the Internet. After viewing the apartment with the real estate agent, the prospective tenant returned to the real estate office to provide the deposit required by the owners to secure the rental property. The complaint alleges that at this time the real estate agent relayed a conversation she had with the Costas, in which they told the agent that they did not want to rent to the family because they were of Indian national origin and “their food stinks.”

For the AG's press release, see AG Coakley Files Suit Against Somerville Property Owners in Housing Discrimination Case.

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  • Attorney General Martha Coakley’s Office reached a settlement with a Dedham real estate company and one of its employees, resolving allegations that they unfairly discriminated against a prospective homebuyer, causing her proposed home purchase not to go forward. The Assurance of Discontinuance [...] against Discover Real Estate Corporation and its employee, Virginia E. Bethoney, alleges that the company and the employee violated state anti-discrimination laws by denying an African-American woman the opportunity to negotiate the purchase of a home in Dedham. “It is against the law to deny someone the opportunity to purchase a home because of their race,” said Attorney General Martha Coakley. [...] According to the allegations in the prospective buyer’s complaint filed with the Massachusetts Commission Against Discrimination, the real estate company failed to communicate the seller's response to the prospective buyer's offer and refused to negotiate with the prospective buyer's broker. Under Massachusetts law, it is illegal to refuse to negotiate the sale of property with a person due to the person’s race.

In addition to other sanctions contained in the settlement, the alleged violator agreed to pay the victim $2,500 in damages.

For the AG's press release, see AG Coakley Reaches Settlement with Dedham Real Estate Company Resolving Allegations of Unlawful Real Estate Broker Practices.

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  • Attorney General Martha Coakley’s office obtained a consent judgment against ABG Residential, a Cambridge-based realty company, and its agent, Georgina Zala, resolving claims that the company refused to rent an apartment to a couple because they had a nine-month old child whose presence would require abatement of lead paint hazards under state law. The consent judgment [...] orders the defendants to pay $3,500 to the couple and bars the defendants from future acts of discrimination. [...] It is illegal [in Massachusetts] to discriminate against families with children in order to avoid compliance with the lead paint law.

For the AG's press release, see AG Coakley Settles with Cambridge Real Estate Company That Discriminated Against Family with Young Child.

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  • Attorney General Martha Coakley’s Office has filed a lawsuit against Cornerstone Corporation, a for-profit property management company that manages the Roxse Homes residential housing development in Boston, alleging that the company and one of its employees discriminated against a tenant because she is a foster parent. Under state and federal law, it is illegal to discriminate against a person based on his or her familial status which can include foster parent relationships. “It is a violation of state and federal law to discriminate against foster parents because of the familial status or composition of their family,” said Attorney General Coakley. “Foster parents serve a critical need in supporting the care, welfare and safety of children across the Commonwealth.”

  • According to the complaint, the tenant had been a licensed foster parent for the Massachusetts Department of Children and Families for many years and had lived in Roxse Homes with her family, including foster children, since 2006. The complaint alleges that despite knowing that the tenant was a licensed foster parent, the defendants falsely accused the tenant of operating a day-care center in her apartment in violation of the lease and later twice threatened to evict her and her family unless she ceased such activity.

For the AG's press release, see AG Coakley Sues Boston Property Management Company and its Manager for Discrimination Against Foster Parent.

Florida AG, Developer Settle Civil Rights Allegations Of Violating State Fair Housing Act Accessibility Standards

From the Office of the Florida Attorney General:
  • Attorney General Bill McCollum [...] announced that his office has obtained a settlement for a Central Florida couple resolving allegations of civil rights violations related to their condominium. Under the settlement, Brevard County developer Tricon Development Corporation paid $15,000 in civil damages to Josephine and Dominic DeRusso, which included the cost of retrofitting the couple’s home. [...] The lawsuit alleged that Tricon had failed to meet the Florida Fair Housing Act’s accessibility standards when it developed the DeRusso’s condominium in Indiatlantic, Florida. Mrs. DeRusso is disabled and needed her home and certain common areas made accessible.

***

  • The DeRussos asked the Attorney General to file the lawsuit to enforce the provisions of the Fair Housing Act following an investigation and reasonable cause determination by the Florida Commission on Human Relations. In addition to paying civil damages to the DeRussos and retrofitting their home, Tricon will make several modifications to the common areas at Topaz Oceanfront Condominium. The modifications include installing grab bars in the appropriate locations at the pool area and adapting the threshold at a door connecting the pool area and the pool restrooms.

For the Florida AG press release, see McCollum Obtains Civil Rights Settlement for Central Florida Couple.

Home-Based Meth Labs A Threat To Health & Pocketbook

From the Rim Country of Central Arizona, The Payson Roundup reports:
  • Health and law enforcement officials across the country are becoming increasingly alarmed at the number of homes being sold that were once used as meth houses or laboratories. The problem developing is that former homes where meth was either used or manufactured are in fact health hazards to anyone currently residing in them due to the residual poisons that were soaked into the walls, window treatments and flooring.(1)

***

  • In 2005, nearly 17,000 homes were seized by authorities (many ending up in foreclosure) and unknown to those subsequently purchasing these homes, the families inhabiting them are exposed to the dangers of the toxic chemical waste left behind. While at this time there are no federal guidelines for cleanup of these materials, in 12 states (Arizona included), it is illegal to occupy a dwelling before it’s been decontaminated. However, in most states there are few protections in place.

  • Fourteen states (including Arizona) require property owners to disclose if the property offered was a former drug house and 13 states (Arizona being one of them) have actually established a guideline for cleanup. The cost of cleaning and decontaminating a former meth lab is astronomical. It can cost anywhere from $30,000 to $100,000 to complete. Unfortunately, with no federal assistance in place, the price tag is up to the property owner to absorb.

  • Right now there are literally tens of thousands of contaminated residences across the United States. Living in one of these former drug houses can very easily cause a family to face financial ruin between having to pay for any possible cleanup, developing health-related illnesses and having to throw away any personal possessions that can’t be cleaned. Add to that the cost of acquiring another residence and then moving. It is a nationwide nightmare.

For the story, see Meth houses need to be decontaminated.

In a related story, see The National Law Journal: Meth Lab Residue in Homes Triggers Litigation (Lawsuits over contaminated homes focus on failure to disclose issue).

(1) Reportedly, for every pound of meth that is cooked in a home, five to seven pounds of chemical waste products are created. From this waste, a variety of long term health problems can occur including but not limited to: headaches, blisters, damaged lungs, liver or kidneys. meth lab yak

Friday, September 11, 2009

"Zombie Debt" Buyers Now Required To Produce Documentation Tracing Their Ownership As Part Of Collection Lawsuits Brought In NC Under New State Law

In Raleigh, North Carolina, the Asheville Citizen Times reports:
  • Companies that buy up unpaid debt and pressure consumers to pay it off are being targeted under a new state law that requires them to prove the people they're chasing actually owe them money. Supporters say the regulations appear to be the first in the nation to target debt buyers.

***

  • Advocates who pushed for the regulations on debt buyers say the collectors scare consumers into paying up, even if the debt has been paid or a statute of limitations for collection has expired. “These people would send them money, and they’d never mark the debt paid, and they’d sell it to somebody else,” said state Sen. Martin Nesbitt, D-Buncombe, “and lo and behold, here they’d come again.”

  • In other cases, the collectors simply pursue the wrong person, Attorney General Roy Cooper said. Cooper said a worsening economy has led more companies into the debt buying business, where they can pay pennies on the dollar to buy up debt that businesses like credit card companies have given up on collecting. They use “very aggressive tactics to try to collect this money,” he said.

  • The law requires documentation as part of any lawsuit tracing how the debt has changed hands. It mandates 30 days written notice before a lawsuit. When debt buyers receive a payment, they must issue a detailed receipt. Violators can face fines up to $4,000.

For the story, see NC cracks down on debt buyers. zombie debt zeta

Title Agent Gets 7 Years For Looting $3.4M From Escrow; Used Phony Docs, "Ponzi" Approach To Conceal Scam Involving 16 Properties With Unpaid Liens

From the Office of the U.S. Attorney (Baltimore, Maryland):
  • U.S. District Judge Catherine C. Blake sentenced Deborah Williams, age 57, of Pasadena, Maryland, the owner of [Day Title, Inc.,] a Severna Park title company, [...] to 84 months in prison followed by two years of supervised release for mail fraud related to a scheme to divert settlement funds to her own benefit, [...].

***

  • According to her plea agreement, [...] Williams used for her own benefit settlement funds from real estate closings that were deposited in Day Title’s escrow account and were intended to pay off the lien holders on those properties. [...] Williams attempted to conceal her illegal transactions by falsely representing on the settlement documents that her company had paid off lien holders, [...] In fact, Williams either initiated stop payments of payoff checks that had been disbursed or intentionally failed to mail the payoff checks to the lien holder.

  • Day Title’s failure to make the payoffs to the lien holders was not detected until sellers began receiving delinquency notices from their mortgage companies. The time delay between the settlement and the date when Day Title made the payoffs to the lien holders allowed Williams to replenish the escrow account with proceeds from new unrelated real estate settlements.

  • A title insurance company that had issued policies through Day Title began to receive claims from lien holders who had not been paid off and conducted an audit of Day Title. The title insurance company found over 16 properties where Williams had not paid off the lien holder. The company paid out a total of $3.443 million to these entities, as required under the title insurance policies that guaranteed that the buyer was receiving a title free of prior liens.

For the U.S. Attorney press release, see Pasadena Title Company Owner Sentenced to over 7 Years in Prison for Defrauding Lenders of over $3.4 Million (Diverted Real Estate Proceeds to Personal Use and Created False Settlement Documents). EscrowRipOffKappa

Connecticut Woman Charged With Ripping Off Her 89-Year Old Mother Of Home, Cash

In Ansonia, Connecticut, WTNH-TV Channel 8 reports:
  • An Ansonia woman was arrested [last week] for allegedly violating the court-ordered fiduciary duties for her 89-year-old mother. Donna D. Kingston, 61, allegedly withdrew more than $72,000 by closing a CD account and withdrawing funds from her mother's bank account in May and June 2007. Less than $4,500 was left in the bank account, the warrant states.

  • In May 2008, Ms. Kingston quit-claimed full ownership of her mother's Ansonia home to herself. Although the deed allowed the mother life use of the property, she has repeatedly demanded the return of her home and assets without result. Kingston was charged with three counts of larceny.

Source: Woman accused of stealing from mother. DeedContraTheft FinancialAbuseOfElderlyAlpha

Ailing Senior Loses Home To Foreclosure Despite Paying $3K To Foreclosure Rescue Operator To Resolve Mortgage Problem

In Tauranga, New Zealand, The New Zealand Herald reports:
  • An ailing retired man has lost his home of 22 years and thousands of dollars after agreeing to have his mortgage handled by a supposed charitable trust. [... Don Clark, 65,] first fell into debt after a vicious assault in 2006 left him with serious head injuries and impaired vision. He was unable to work for 18 months. Still suffering from chronic headaches two years later, he tried to resolve his escalating mortgage problem to reduce the stress on his health.

  • A friend recommended Hamilton-based group Home Rescue, which offers help to homeowners who have lost their income or are facing foreclosure from the bank. [...] But despite paying the group $3000, his finance company Liberty Financial took him to court in July, and repossessed the house he had been living in since 1987. Home Rescue did not return his calls. The trust, which he gave power of attorney for his house, did not appear for him in court, and his property was forfeited.

For more, see Ill man blames charitable trust for losing home.

See also, Bay of Plenty Times: Bashing victim loses house.

Foreclosure Flood Means Brisk Business For Phoenix-Area "Home Strippers" - Craigslist A Favored Outlet For Unloading Loot

In Phoenix, Arizona, The Arizona Republic reports on the recent rash of "foreclosure stripping" incidents taking place in the area:
  • Julie Halferty, a special agent who oversees the Phoenix FBI Mortgage Fraud Task Force, said no one knows exactly how many foreclosed houses in the Valley have been stripped by former owners, neighbors or strangers. Those who work in real estate believe the number is in the thousands. "Without question, probably 85 to 90 percent of houses on the market under $200,000 have been stripped," said Tempe real-estate agent Kim Baker. "Appliances are the most commonly poached item, but plumbing fixtures and faucets, ceiling fans, light fixtures, water heaters and air-conditioning units are fair game" in the eyes of the strippers, she said. Halferty said she and her fellow FBI agents "haven't been able to quantify it, but we know it is rampant."

***

  • "Take a look at Craigslist," [one real estate agent] said. "It's full of things that have been stripped out of houses." Halferty said Craigslist.org tipped the fraud task force to the extent of the problem. "It is so blatant," Halferty said. "People would advertise that they were selling cabinets in a foreclosure sale."

For the story, see Theft of fixtures becomes major risk in foreclosures.