Residents In Uninsuired, Fire-Damaged Bronx Apartment House In Foreclosure Lack Cooking Gas For Thanksgiving Dinner; Heat, Hot Water Recently Restored

In The Bronx, New York, NY1 reports:

• Residents of a Bronx building that was damaged by a fire this past summer may have to cook their Thanksgiving dinner on hot plates as they continue to wait for repairs to be made. Tenants of 2285 Sedgwick Avenue say they have been without cooking gas for months. They say the trouble started after a fire broke out in the University Heights building back in July. Residents only recently had their heat and hot water restored. "It's like living in a cave. And this New York, it's supposed to be the best city in the world. Well, cold showers will change your opinion very quickly," said one resident.

• "Since there's no gas we got to buy food from outside. It's coming to a stage that we not able to be able to pay for food," said another resident. The building also went into foreclosure and there's no insurance on it. Tenants say they were told it could be four to six months before the gas in their stoves comes back. NY1 was unable to locate the owner for comment.

For more, see Four Months Later, Bronx Tenants Still Unable To Cook.

California Woman Gets Five Years For Using Forged Documents To Swipe, Mortgage & Sell Widow's Home Out From Under Her

From the Office of the San Bernardino County, California District Attorney:

• [J]udge Rod Cortez sentenced Oralia Hidalgo, 46, of Colton to prison for real estate fraud related crimes.(1) [...] In July 2003, Hidalgo forged the victim’s name on a Grant Deed illegally taking title to a residence in Colton. The signature of the victim's husband was also forged on the Grant Deed. The husband had died approximately two years prior to the forgery. The defendant encumbered the property and subsequently sold it for $125,000. The defendant falsified several real estate deeds and forged the signature and stamp of a notary public. The fraudulent deeds were later recorded at the San Bernardino County Recorder's Office. The issue of restitution has been reserved for an upcoming hearing.

For the DA's press release, see Colton Woman Sentenced to Prison for Real Estate Fraud.

(1) According to the DA's press release, Hidalgo was ordered to serve five (5) years in the California state prison system. The defendant was found guilty on nine (9) felony counts ranging from forgery, grand theft, filing of false instruments, and a grand theft enhancement, which were filed by the San Bernardino County District Attorney’s Real Estate Fraud Unit.

Elderly Parents Accuse Daughter Of POA Abuse; Suit Says Woman Pocketed Cash By Mortgaging Family Residence, Moved 90-Year Old Couple Into Nursing Home

In Chicago Illinois, the Chicago Tribune reports:

• An elderly couple are suing their daughter, accusing her of cheating them out of their South Side home and moving them to a nursing home. Overton and Bernice Williams, both born in 1917, say in their lawsuit that they are "unsophisticated in legal matters." They had lived in the home with their daughter, whom they say they trusted "implicitly as to all their financial affairs." In 2006, the daughter sought and received power of attorney for her parents, the lawsuit states. In 2008, the daughter took out a home equity loan on the house and pocketed the money, it says. The daughter then placed her parents in a nursing home, the suit states. The couple are suing their daughter, Leshia Williams, and EquiFirst Corp. The couple say their son later took them to live with him in Alaska. They want their house back and want their daughter to return the loan money.

Source: Elderly couple sue daughter, say she cheated them out of their Chicago home (Daughter moved couple in their 90s to a nursing home, lawsuit says). DeedContraTheft FinancialAbuseOfElderlyAlpha

Straw Buyer Gets 30 Days In Scam To Steal Home Out From Under 93-Year Old, Now-Deceased Alzheimer's Victim

From the Office of the Queens District Attorney:

• Queens District Attorney Richard A. Brown [...] announced that a 32-year-old Long Island woman who acted as a “straw buyer” to steal the Jamaica, Queens, residence of a 93-year-old Queens man suffering from Alzheimer’s disease has been sentenced to thirty days in jail and five years’ probation, during which she must appear at mortgage fraud forums and educate people on the ramifications of being a “straw buyer” and why being one is a crime. This is believed to be the first prosecution and conviction of a straw buyer in a mortgage fraud scheme in Queens County.

***

• District Attorney Brown said that, according to trial testimony, [straw buyer Rebecca] Tharpe assisted Alexandra Gilmore, an acquaintance, in stealing the Jamaica, Queens, residen[ce] of 93-year-old Artee McKoy, a retired barber with diminished mental capacity, between August and September 2005 by acting as a “straw buyer” to purchase the property. McKoy’s signature was forged on a contract of sale – between him as the seller and Tharpe as the buyer – that was then used, along with other false information, to obtain a mortgage on the property. The house was eventually sold for $395,000, of which Tharpe received the benefit of $102,000 (a “seller’s concession” and a seller’s purchase money mortgage – none of which Mr. McKoy had consented to) and Gilmore received more than $200,000 in proceeds, including a $97,000 check that had been made payable to McKoy and an additional $130,000 which she secured by setting up a real estate company and falsely claiming to have been owed the money from a previous mortgage loan on the property.(1)(2)

For the entire Queens DA press release, see “Straw Buyer” Sentenced To Jail In Mortgage Fraud Scheme (Must Give Lectures On Being a Straw Buyer At Mortgage Fraud Forums As Part Of Sentence).

See also, New York Daily News: Con artist turns teacher as punishment.

(1) According to the Queens DA, Gilmore, 37, formerly of 14 East Grove Street in Massapequa and presently of 1550 Clark Street in Pittsburgh, Pennsylvania, pleaded guilty to two counts of second-degree grand larceny as a hate crime earlier this year and was sentenced to two to six years in prison.

(2) Some guidance to those seeking an approach to undoing home equity ripoffs like this one can be found in a couple of 2008 Brooklyn, New York lower court rulings favorable to the scammed homeowners. See Brooklyn Court Rulings Void Deeds & Subsequent Mortgages Used To Drain Home Equity In Bogus Sale Leaseback Foreclosure Rescue Scams. For a couple of other New York cases dealing with voiding/cancelling deeds, see:

• Marden v. Dorthy, 160 N. Y. 39, 54 N.E. 726; (NY 1899),
• Ameriquest Mtge. Co. v Gaffney, 839 N.Y.S.2d 203, 41 A.D.3d 750 (App. Div. 2d Dept., 2007),
• Olympus Servicing, L.P. v Lee, 2007 NY Slip Op 50833(U), 15 Misc 3d 1124 (April 23, 2007).

(If there is a problem accessing any of these cases, drop me a note at HomeEquityTheft@yahoo.com and I'll email them to you.)

Further, any attempt to wipe out the mortgage obtained by the scammers on the stolen home may be met with the lender's assertion that it did not knowingly participate in the scam, and had no knowledge of it, thereby entitling it to the protection of the recording statutes as a bona fide purchaser / bona fide encumbrancer. For considerations in attempting to overcome a claim/defense of bona fide purchaser by the lender by imputing constructive notice on the lender (assuming that the deed conveyance did not involve a forgery; in the case of a forgery, the deed would be considered void ab initio (ie. void from the outset) - and, accordingly, would render a subsequent mortgage granted in reliance on the forged deed void as well), see footnote 2 of an earlier post, Staten Island DA Charges NJ Man w/ Felony Grand Larceny In Alleged Sale Leaseback, Foreclosure Rescue Ripoff That Victimized 86-Year Old Homeowner.

See also, Bona Fide Purchaser Doctrine, Possession Of Property By Occupants Other Than The Vendor & The Duty To Inquire.

New Mexico Man Faces 13 Counts In Alleged Home Hijacking Scam; Targeted Houses In Foreclosure, Unwitting Tenants Seeking Rentals, Say Investigators

In Albequrque, New Mexico, KRQE-TV Channel 13 reports:

• A purported landlord who used foreclosed homes to scam unsuspecting tenants will face charges once he is located, according to Albuquerque police. Last summer KRQE News 13 interviewed three women who said they rented houses from Ernest Garcia. But according to police Garcia had broken into foreclosed homes which he then pretended to own while collecting cash from would-be tenants.

***

• Now a grand jury has indicted Garcia on 13 counts including fraud, forgery and burglary. "It's a scheme that I don't think any of us have ever seen before and certainly one that is propelled by the economy," Pat Davis, a spokesman for Bernalillo County District Attorney Kari Brandenburg, said. [...] But there's one problem. Investigators don't know where to find Garcia. A warrant is out for his arrest, and he has a court hearing scheduled Thursday in an aggravated DWI case. If he shows, he will be arrested. Garcia has a criminal history dating back to 1989 that includes burglary, forgery and conspiracy.

For the story, see Indictment: Fake landlord duped tenants (Passed off foreclosed homes as his). KappaPhonyLandlordScam

Financial Problems At Some Assisted Living & Continuing Care Communities Raise Worries For Senior Residents & Their Families

Newsweek reports:

• The recession is hitting elderly people where they live, literally. Financial problems have been mounting at a number of assisted living and continuing care communities, forcing some facilities into bankruptcies and inflicting new worries on residents and their families who thought their life plans were comfortably set.

***

• In some cases, residents may find that the sizeable deposits they made to get their apartments in the first place have disappeared. [...] That's what happened to the 170 people who lived in Covenant at South Hills in Lebanon, Pa. Their deposits went up in smoke when their facility was sold in bankruptcy to Concordia Lutheran Ministries, which did not take on that liability. Several are now suing B'nai Brith Housing, the original operator of Covenant.

For more, see Bankruptcies Hit Retirement Communities (Elderly residents who thought they'd secured their futures are finding their homes and savings at risk).

State Budget Cuts Drive Group Facility For Mentally Ill Into Foreclosure, Forcing Patients From Their Long-Time Home

In Chillicothe, Ohio, The Columbus Dispatch reports:

• A state budget cut forced one of Rob Stanley's group homes for the mentally ill into foreclosure - and pushed "Sheriff Bob" off the front porch where he had sat nearly every day for 15 years waving and smiling at passers-by on Paint Street. Of all the groups affected by state budget rationing, the mentally ill may been hit the hardest.

***

• Small group homes like Stanley's are one of the last refuges for mentally ill adults turned out of state hospitals. Stanley had 10 residents in two group homes. When two moved out, he was unable to replace them because budget cuts froze funding for new residential state supplemental payments. As a result, he lost $1,548 a month, couldn't pay his mortgage, and watched as the sheriff padlocked the front door on his home at 104 S. Paint St.

• The residents, some of whom had lived there since the early 1990s, had to move elsewhere; two were able to move to Stanley's other home. But Robert Chester, 88, affectionately known as "Sheriff" by fellow residents and people who recognized him from his regular spot on the front porch, had a particularly hard time adjusting. "It was the most horrible thing I've every gone through in my life," Stanley said. "It was like losing your child."

• Stanley fought to hold back tears when he said he feels he let the residents down. "This was their home. They were settled in." [...] Mental-health "drop-in centers," where many people with mental illness spend their days, are closing or greatly reducing hours. Most programs providing help with housing, education and employment already have fallen by the wayside, officials said.

For the story, see Mentally ill are losing some of their last refuges.

L.I. Judge Gives Foreclosing Lender Verbal Horse-Whipping As He Wipes Out Mortgage Debt, Cancels Lien For "Repugnant, Shocking, Repulsive" Conduct

In Riverhead, New York, Suffolk County trial judge Jeffrey Arlen Spinner gave plaintiff IndyMac Mortgage Services, division of OneWest Bank F.S.B., and its Regional Manager of Loss Mitigation, Karen Dickinson, one hell of a beat-down last week in a home foreclosure ruling in which he wiped out the mortgage holder's security interest in the subject home, cancelling the debt and apparently leaving a financially strapped homeowner with a mortgage-free home in the process. In doing so, the judge cited the "harsh, repugnant, shocking and repulsive" conduct of the plaintiff during the course of the foreclosure action.

The court ruling sets forth the judge's descripition of the plaintiff's conduct that got it in hot water; the following excerpt addresses Justice Spinner's legal basis for taking the action he did (citations to legal authority omitted for ease of reading, bold text is my emphasis):

• Since an action claiming foreclosure of a mortgage is one sounding in equity, [...] the very commencement of the action by Plaintiff invokes the Court's equity jurisdiction. While it must be noted that the formal distinctions between an action at law and a suit in equity have long since been abolished in New York [...], the Supreme Court nevertheless has equity jurisdiction and distinct rules regarding equity are still extant, [...] . Speaking generally and broadly, it is settled law that "Stability of contract obligations must not be undermined by judicial sympathy..." [...] . However, it is true with equal force and effect that equity must not and cannot slavishly and blindly follow the law, [...] . Moreover, as succinctly decreed by our Court of Appeals in the matter of Noyes v. Anderson 124 NY 175 (1890) "A party having a legal right shall not be permitted to avail himself of it for the purposes of injustice or oppression..." [...].

• In the matter of Eastman Kodak Co. v. Schwartz 133 NYS2d 908 (Sup. Ct., New York County, 1954), Special Term stated that "The maxim of "clean hands" fundamentally was conceived in equity jurisprudence to refuse to lend its aid in any manner to one seeking its active interposition who has been guilty of unlawful, unconscionable or inequitable conduct in the matter with relation to which he seeks relief." [...] .

• In attempting to arrive at a determination as to whether or not equity should properly intervene in this matter so as to permit foreclosure of the mortgage, the Court is required to look at the situattion in toto, giving due and careful consideration as to whether the remedy sought by Plaintiff would be repugnant to the public interest when seen from the point of view of public morality, [...]. Equitable relief will not lie in favor of one who acts in a manner which is shocking to the conscience, [...], neither will equity be available to one who acts in a manner that is oppressive or unjust or whose conduct is sufficiently egregious so as to prohibit the party from asserting its legal rights against a defaulting adversary, [...]. The compass by which the questioned conduct must be measured is a moral one and the acts complained of (those that are sufficient so as to prevent equity's intervention) need not be criminal nor actionable at law but must merely be willful and unconscionable or be of such a nature that honest and fair minded folk would roundly denounce such actions as being morally and ethically wrong, [...]. Thus, where a party acts in a manner that is offensive to good conscience and justice, he will be completely without recourse in a court of equity, regardless of what his legal rights may be, [...].

• An objective and painstaking examination of the totality of the facts and circumstances herein leads this Court to the inescapable conclusion that the affirmative conduct exhibited by Plaintiff at least since since February 24, 2009 (and perhaps earlier) has been and is inequitable, unconscionable, vexatious and opprobrious. The Court is constrained, solely as a result of Plaintiff's affirmative acts, to conclude that Plaintiff's conduct is wholly unsupportable at law or in equity, greatly egregious and so completely devoid of good faith that equity cannot be permitted to intervene on its behalf. Indeed, Plaintiff's actions toward Defendant in this matter have been harsh, repugnant, shocking and repulsive to the extent that it must be appropriately sanctioned so as to deter it from imposing further mortifying abuse against Defendant. The Court cannot be assured that Plaintiff will not repeat this course of conduct if this action is merely dismissed and hence, dismissal standing alone is not a reasonable option. Likewise, the imposition of monetary sanctions [...] is not likely to have a salubrious or remedial effect on these proceedings and certainly would not inure to Defendant's benefit. This Court is of the opinion that cancellation of the indebtedness and discharge of the mortgage, when taken together, constitute the appropriate equitable disposition under the unique facts and circumstances presented herein.

• After careful consideration, it is the determination of this Court that the indebtedness evidenced by the Adjustable Rate Note [...] in the original principal amount of $292,500.00 made by Diana J. Yano-Horoski in favor of IndyMac Bank F.S.B. should be cancelled, voided and set aside. In addition, the Mortgage which secures the Adjustable Rate Note, given to Mortgage Electronic Registration Systems Inc. As Nominee For IndyMac Bank F.S.B. [...] and recorded with the Clerk of Suffolk County [...] should be cancelled and discharged of record. Further, Plaintiff, its successors and assigns should be forever barred and prohibited from any action to collect upon the Adjustable Rate Note. In addition, the Judgment of Foreclosure & Sale granted on January 12, 2009 and entered on January 23, 2009 should be vacated and set aside and the Notice of Pendency should be cancelled and discharged of record. For this Court to decree anything less than the foregoing would be for the Court to be wholly derelict in the performance of its obligations.

For Justice Spinner's court ruling, see Indymac Bank F.S.B. v Yano-Horoski, 2009 NY Slip Op 52333(U), November 19, 2009.

For media reports on this court ruling, see:

• New York Law Journal: Judge Blasts Bank's Foreclosure Conduct and Cancels Mortgage (A lender's "unconscionable, vexatious and opprobrious" conduct in attempting to foreclose on a Long Island home has prompted a state judge to cancel the mortgage on the property),
• New York Post: Judge blasts bad bank, erases 525G debt (Judge KOs 525G mortgage to slap bank),
• ABC World News Tonight: Judge Rescues Struggling Couple From Foreclosure (New York Judge Cancels Mortgage in Thanksgiving Surprise; Bank Will Appeal).

Thanks to Rob Harrington for the heads-up on this court ruling. EpsilonMissingDocsMtg

IndyMac Intent On Foreclosing On 89-Year Old Widow, Despite Two Court Orders Telling Them To Stop

In Oakland, California, Courthouse News Service reports:

• Indymac Bank and its successor, One West Bank, keep trying to foreclose on an elderly widow's house despite two court orders telling them to stop, the 89 year-old woman says in Alameda County Court, Oakland. She says stress from the repeated threats of foreclosure made her husband depressed and may have contributed to his death. Irene Jones says foreclosure proceedings on her Oakland home were halted twice, first by an order restraining Indymac from foreclosing in February 2008, then by a second order invalidating Indymac's foreclosure proceedings in March 2009. Nonetheless, Jones says Indymac and One West notified her they would begin foreclosing again in October.

***

• She demands quiet title and damages of $350,000 for elder abuse, negligence, distress and suffering, punitive damages, and an injunction telling the bank to stop trying to take away her house.

For the story, see Bank Won't Quit Demands on Elderly Widow.

For the lawsuit, see Jones v. One West Bank F.S.B., et al.

New Video To Provide Instruction On Navigating HAMP

PMI Mortgage Insurance Company recently announced:

• PMI Mortgage Insurance Co. [...] introduced a new video to help homeowners experiencing financial hardship understand the benefits of the Home Affordable Modification Program (HAMP) and how they can take advantage of this important program. HAMP is the national loan modification program offered in the Obama Administration’s Homeowner Affordability and Stability Plan which mortgage servicers are implementing broadly to bring long-term affordability to homeowners struggling to keep their homes. Navigating the Home Affordable Modification Program, one of the first videos available for homeowners, explains the benefits, eligibility requirements and types of adjustments that can be made to mortgage loans. The video also provides a realistic example of a couple’s experience before-and-after receiving a HAMP modification.

***

• Navigating the Home Affordable Modification Program is divided into two parts. Part I is a basic orientation for viewers who may not have heard of HAMP, the objectives of the program, how to determine if your loan is owned by Fannie Mae or Freddie Mac, and how to find out if you qualify. Part II discusses the information homeowners need to provide their mortgage servicer, demonstrates how affordability is achieved through a realistic example, and the steps homeowners need to take to ensure success in modifying their loan.

For more, including links to the video, see PMI Introduces New Video To Help Distressed Homeowners (Navigating the U.S. Treasury's Home Affordable Modification Program (HAMP)).

More On Class Action Seeking To Void Foreclosure Sales Due To Alleged Sheriff's Office Screw-Up; Some Auctions Didn't Even Take Place: Plaintiff

In Detroit, Michigan, The Michigan Citizen reports:

• Over 40 Wayne County homeowners have filed a $10 million class action lawsuit that could invalidate tens of thousands of mortgage foreclosure sales executed while Warren Evans was Sheriff. The lawsuit is a significant step in a long battle led by Yvonne Cross, the owner of several family properties in Detroit. It was filed by Bloomfield Hills attorney Paul J. Nicoletti.

***

• “In addition to the technicalities listed in the lawsuit, such as the fact that Evans’ subordinates were not authorized to sign deeds of sale, we are contending that sheriff’s auctions were not even held in many cases,” said Cross. “The sales should be null and void, and the original property owners should still own their homes under the law.”

• Cross herself won back ownership of her home [...], which originally belonged to her grandmother. She obtained an affidavit from Attorney Kate Ben-Ami of the sheriff’s office stating that no sheriff’s auction had been held on the date and time specified in the sheriff’s deed. She has obtained similar affidavits regarding other properties, including one in Macomb County. Cross has also filed actions with the state’s attorney grievance commission against six attorneys from the law firm of Trott and Trott who were involved in the sale of her grandmother’s home.

For the story, see Fight against foreclosures gaining momentum (Michigan, Kansas, Massachusetts cases set precedents).

For an earleir story, see The Detroit News: Lawsuit claims Wayne County foreclosures were illegal. EpsilonMissingDocsMtg

Ratings Agency Analyst On MBS Offerings: "We Rate Every Deal - It Could Be Structured By Cows & We Would Rate It" - CEO Admits "Drinking The Kool Aid"

From the Office of the Ohio Attorney General:

• Ohio Attorney General Richard Cordray [...] filed a lawsuit against Standard & Poor’s, Moody’s and Fitch, three national agencies that are responsible for providing accurate credit ratings of investments. The lawsuit, filed in United States District Court for the Southern District of Ohio on behalf of five Ohio public employee retirement and pension funds, charges the rating agencies with wreaking havoc on U.S. financial markets by providing unjustified and inflated ratings of mortgage-backed securities in exchange for lucrative fees from securities issuers.

***

• Public statements and testimony indicate that rating agency executives and analysts knew their ratings of mortgage-backed securities were wrong. Indeed, one rating agency analyst admitted that the market for mortgage-backed securities was “little more than a house of cards” with a much higher risk of devaluation than indicated by the purported investment-grade “AAA” rating. Another rating agency analyst said that “we rate every deal. It could be structured by cows and we would rate it.”

• Raymond McDaniel, CEO and Chairman of Moody’s, described the ratings frenzy: “What happened in ’04 and ’05 … is that our competition, Fitch and S&P, went nuts. Everything was investment-grade. It really didn’t matter… No one cared because the machine just kept going.” McDaniel added that Moody’s also “[drank] the Kool-Aid.”

• “This misconduct has caused immense harm to Ohio police officers, firefighters, teachers, government workers, investors and retirees,” said Cordray. “Our lawsuit against these rating agencies is another step toward holding Wall Street accountable for its wrongs.”

For the Ohio AG press release, see Cordray Sues National Rating Agencies for False and Misleading Ratings.

For the lawsuit, see Ohio Police & Fire Pension Fund, et al. v. Standard & Poor's Financial Services LLC, et al.

For a summary of securities litigation managed by the Ohio Attorney General’s Office, see Holding Wall Street Accountable (Protecting Investors, Retirees, Workers and Families).

(1) Attorney General Cordray noted his reasons for bringing this lawsuit: “The rating agencies were central players in causing the worst economic crisis in Ohio since the Great Depression. The rating agencies assured our employee pension funds that many of these mortgage-backed securities had the highest credit ratings and the lowest risk. But they sold their professional objectivity and integrity to the highest bidder. The rating agencies’ total disregard for the life’s work of ordinary Ohioans caused the collapse of our housing and credit markets and is at the heart of what’s wrong with Wall Street today.”

Western Missouri Feds Flag Title Agency Owners For "Illegal Dip" Into Clients' Escrow Cash; Used Check Kiting Scam To Conceal $2.6M Racket: Grand Jury

From the Office of the U.S. Attorney (Springfield, Missouri):

• Matt J. Whitworth, United States Attorney for the Western District of Missouri, announced [...] that the owners of Guaranty Title, formerly headquartered in Nixa, Mo., have been indicted by a federal grand jury for participating in a $2.6 million conspiracy to commit bank fraud, wire fraud and money laundering. Richard G. “Rick” Burton, 59, of Nixa, and Kathy Cyrena Allen, also known as Kathy Stanton, 66, of Sarcoxie, Mo., were charged in a 19-count indictment returned by a federal grand jury in Springfield [...].(1)

• The federal indictment alleges that Burton and Stanton, through their companies, conspired to defraud financial institutions of more than $2.6 million through a series of illegal financial transfers related to stolen escrow payments. The indictment also alleges that Burton and Stanton attempted to conceal their criminal activities through a substantial check-kiting scheme.

For the rest of the U.S. Attorney press release, see Owners of Guaranty Title indicted for $2.6 million bank fraud, wire fraud, money laundering conspiracies.

(1) According to the press release, Burton and Stanton were the co-owners of Guaranty Title Company of Southwest Missouri, Guaranty Title Company d/b/a Guaranty Title and Closing Company, and Guaranty Properties, Inc. The companies provided real estate title and closing services. Guaranty’s main office was located in Nixa, with at least 10 branch offices located in Aurora, Branson, Mount Vernon, Ozark, Springfield and Republic, Mo. EscrowRipOffKappa

Ineffective "Whac-A-Mole" Approach To Battling Loan Modification Scams Leads Housing Non-Profit To Launch National Consumer Education Campaign

The Columbus Dispatch reports:

• Preventing people from getting ripped off by mortgage loan modification scams is like playing Whac-A-Mole. "You knock them down in one place, and they pop up in another," said Ohio Attorney General Richard Cordray of the illegal operations. "They're a nimble and savvy group, and they target vulnerable, desperate people." The best way to put these scammers out of business is to educate homeowners, said Cordray and other local, state and federal officials who gathered [last week] at the Statehouse to roll out the Loan Modification Scam Alert campaign.

***

• "We can't afford to wait any longer," said Kenneth Wade, executive director of NeighborWorks America, a national nonprofit organization created by Congress, and the sponsor of the scam-alert campaign. "Loan-modification scams have reached epidemic proportions. There are thousands of fraudulent companies out there making a mint," he said. Homeowners in distress should avoid every company that asks for a fee in advance, guarantees it can stop a foreclosure or modify a loan, or says to stop paying the mortgage company and start paying it instead, Wade said. "The best defense is information, education," he said. "That stops these scammers in their tracks."(1)

For more, see Scammers prey on at-risk homeowners.

See also, The Waco Tribune Herald: New program shines light on shady mortgage scams:

• Congress asked NeighborWorks America to develop a public education campaign, which was unveiled locally Wednesday with the help of NeighborWorks Waco, the local branch of the national community development organization. The focal point of the campaign is a new Web site, www.LoanScamAlert.com. It contains information about what loan modification scams are, how to spot them and stories from victims. The site also has information about how homeowners can get free assistance if they are facing foreclosure or other mortgage pressures. “We know that knowledge is the best defense,” said Celine Thomasson, a public affairs employee for NeighborWorks America.

See also, NeighborWorks America press release: NeighborWorks Fight Against Loan Modification Scams Kicks Off in Ohio.

For customizable materials to fight loan modification scams in your community (available in 5 languages), see Scam Alert Partner Toolkit.

----------------

(1) It wouldn't hurt if law enforcement starting bringing criminal prosecutions against these rackets (ie. theft by deception, theft by failing to make required disposition of funds, theft by misapplication of funds, deceptive business practices, obtaining money/property by false pretenses, securing writings by deception, conspiracy, engaging in a pattern of corrupt activity, organized scheme to defraud, exploitation of the elderly/vulnerable adult, theft from an at-risk adult, mail fraud, wire fraud, etc.).

There appears to be a reluctance to criminally prosecute these loan modification rackets (the preference appears to be to go after them with civil lawsuits brought by government agencies - ie. Federal Trade Commission, state attorneys general, etc.), possibly based on the mistaken belief that the operators insulate themselves from criminal liability by reason of the contractual nature that these arrangements take with the victims. The notion that the scammers can insulate themselves from criminal charges by using legal contracts to disguise their scams as legitimate arms-length business transactions with consumers is not only incorrect, but borders on the ridiculous. Courts have addressed the issue of whether the terms in a business contract between two parties can operate to restrict law enforcement from prosecuting a crime in relation to said contract. See People v. Frankfort, 114 Cal. App.2d 680, 251 P.2d 401 (Cal.App. 2nd Dist., Div. 2; 1952):

• Defendants insist these contracts insulate them from this prosecution because they contain the statement that they constitute the entire agreement between the parties, that the Spa Corporation is not bound by any representations outside the contract, that no salesman is authorized to make any additional or contrary representations, and that the club member has read and understands what he is signing. The simple answer to this argument is that "The People prosecuting for a crime committed in relation to a contract are not parties to the contract and are not bound by it. They are at liberty in such a prosecution to show the true nature of the transaction." (People v. Chait, 69 Cal.App.2d 503, 519 [159 P.2d 445]; People v. McEntyre, 32 Cal.App.2d Supp. 752, 760 [84 P.2d 560]; People v. Jones, 61 Cal.App.2d 608, 620 [143 P.2d 726]; People v. Pierce, supra p. 605.)

Followed in People v. Nesseth, 127 Cal.App.2d 712; 274 P.2d 479 (Cal App. 2nd Dist., Div. 2; 1954).

Report Reveals Questionable Real Estate Deals For Once-Respected, Now-Convicted University Administrator

In Nashville, Tennessee, The Tennessean reports:

• She's a university administrator. A nurse. A grandmother. A grifter. And now, a felon. The strange separate lives of Pamela Gail Holder collided in a federal courtroom in Nashville last week. Holder, who once chaired the nursing programs at both Middle Tennessee State University and the University of Tennessee at Chattanooga, faced four felony charges of bank and wire fraud.

• Her defense, laid out by her attorney, character witnesses and even one of her sons, was that she was a victim who had been bullied and verbally abused by her husband. Fred Rudder Holder, the defense argued, was a con man who brainwashed his cowed wife into going along with his schemes. The court heard her defense, then convicted her on all four counts and sentenced her to a year and a day in prison.

• She and her husband, who died in 2008, had used the name and good credit history of a woman who makes less in a year than Holder earned in one semester. They used it to buy diamond jewelry and a $1.5 million home for themselves. When they couldn't make the payments, the home went into foreclosure and the creditors went after the name on the loan payments — the so-called straw buyer.

• But what didn't come up in trial were the other times she's apparently done the exact same thing.(1)

For more, see MTSU professor left trail of deceit, shady dealings (Fraud conviction is just the latest in decade of duplicity).

(1) Over the past decade, Pam Holder has headed the MTSU nursing program, served as interim associate dean for the College of Basic & Applied Sciences and headed the online nursing degree program for the Tennessee Board of Regents, according to the story. At the same time, Pam and Fred Holder reportedly went through two bankruptcies and were hauled into small-claims court almost two dozen times by angry creditors, which forced the university to garnishee part of Holder's paycheck to repay part of her debts. The past decade also saw the Holders move into and out of more than a half-dozen homes in Middle Tennessee, some with seven-figure price tags, the story states.

Hanky Panky On Courthouse Steps Alleged At Phoenix Foreclosure Sales As Last-Minute Price Drops In Opening Bids Become More Common

In Phoenix, Arizona, The Arizona Republic reports:

• When foreclosure homes come up for public auction in Phoenix, a minimum opening bid is set and bidding is open to anyone. At least that is the way it's supposed to work. But a Republic investigation into the daily public auctions held on the Maricopa County Courthouse steps and at some local law offices suggests a growing number of homes are sold for less than the posted opening bid.

• Prices on some foreclosure homes are being dropped below the opening bid just hours or even minutes before the auction. Buyers aware of the "drop bids" scoop up the houses before other bidders know about the price drops. Drop bids violate the state's foreclosure sale laws, say the state's leading court-appointed foreclosure-trustee attorneys.

***

• Why lenders would drop prices at the last minute, instead of posting a lower opening bid the day before as required by law, is unclear. Drop bids compromise what was intended to be a fair and transparent way for lenders to foreclose on homes and liquidate them, as well as a way for people to obtain homes at sometimes bargain prices. The practice of drop bids hurts a number of parties [...]

For more, see Illegal housing bidding on rise (Many flouting law at foreclosure auctions).

NYS To Expand Protections To Homeowners Facing Foreclosure; Upfront Fees For Loan Modification, Distress Property Consulting Services Now Banned

In Albany, New York, The Associated Press reports:

• The state Legislature has passed a bill that will give New York state homeowners and renters more protection during foreclosures. It will expand the mandatory 90-day pre-foreclosure notice to all types of home loans -- not just subprime mortgages -- so all homeowners are given information and time to take action.(1)

• Gov. David Paterson introduced the bill. It will allow the Banking Department and the Division of Housing and Community Renewal to find and help homeowners facing foreclosure. It also creates new protections for renters living in foreclosed properties, allowing them to remain for the remainder of their lease or 90 days -- whichever is longer. The bill also protects homeowners by barring brokers who perform distressed property consulting services from accepting upfront fees.(2)

Source: NY passes new foreclosure protections.

See also, The New York Times: Foreclosure Protections for All.

Thanks to Bill Collins of Crossroads Abstract, Rochester, NY for the heads-up on the pending legislation.

(1) The required pre-foreclosure settlement conference will now be available to all homeowners as well, not just to high-interest mortgagors.

(2) The law also requires mortgagees to maintain the properties up to code if vacant, or abandoned by the owner and occupied by the tenant, such obligation beginning on the date the mortgagee obtains the foreclosure judgment in court. The bill now awaits the governor's signature.

Murder Suspect Accused Of Killing Wife Now Charged With Using Forged Docs To Swipe Adjacent Cemetery Plot So He Could Be Buried Beside Her

In Bedford County, Pennsylvania, The Associated Press reports:

• A man accused of murdering his wife has been charged with forging documents to steal a cemetery plot so he could be buried beside her. Bedford County District Attorney William Higgins contends the alleged scam is 39-year-old John Gerholt's latest effort to harass his late wife, Karen, and her relatives. [... ] Gerholt's defense attorney, Thomas Dickey, denied that his client is harassing his late wife's family. "This is just another sign of his true love and devotion to his wife, albeit deceased," Dickey said.(1)

***

• Higgins said Gerholt has placed newspaper ads mourning his wife's passing on her birthday, on Valentine's Day, and on the anniversary of her death. He called the ads an effort to win public sympathy and further harass his wife's relatives. The anniversary ad says, "I won't stop looking for you until I meet up with you again in Heaven." [...] "He's letting her know that he's going to track her down in heaven, and be buried next to her," Higgins said. "That's the way we see this and it's extremely disturbing."

For the story, see DA: Pa. Man Scammed Burial Plot By Wife He Killed (DA: Pa. Murder Suspect Scammed To Get Burial Plot Next To The Wife He's Accused Of Killing).

(1) According to the story, Gerholt is accused of shooting his 24-year-old wife twice with a sawed-off shotgun as she left for a break at the McDonald's where she worked near Everett, about 90 miles east of Pittsburgh. District Attorney Higgins is reportedly pursuing the death penalty because Karen Gerholt had a protection-from-abuse order against her husband, and because John Gerholt allegedly endangered others outside the restaurant. Gerholt, of Mount Union, was already jailed when the forgery and theft charges were filed. DeedContraTheft

Attorney BS Leads Homeowner Seeking Foreclosure Defense To Unwittingly Find Himself In Bankruptcy Court?

In Westchester County, New York, The Journal News reports:

• When the Yonkers home where his parents lived was threatened with foreclosure, Domingo Hernandez went to White Plains lawyer Christopher Cabanillas to fight the proceedings. Cabanillas told him that his firm had a "special program" designed to hold off foreclosure proceedings for up to two years. The "special program" used a legal defense against foreclosure combined with modification of the mortgage loan. Hernandez agreed to a $7,500 retainer for Cabanillas and the special program and on March 9 gave the lawyer $1,250. But instead of a "special program," Cabanillas put Hernandez in bankruptcy, filing a petition for Chapter 7 bankruptcy in White Plains on Oct. 1 — all without Hernandez’s knowledge or permission. Those charges are contained in papers filed by Hernandez in U.S. Bankruptcy Court in White Plains that seek sanctions against Cabanillas.

• "At no time did attorney Christopher Cabanillas or anyone at the law firm Cabanillas and Associates advise, suggest, or otherwise tell me that filing a false petition was part of their ‘special program’ or that filing for bankruptcy would be part of defending me in the foreclosure matter," Hernandez wrote in court papers. He has a new lawyer, and she filed papers asking for the withdrawal of the bankruptcy filing.(1)

For more, see Owner of Yonkers home says lawyer put him in bankruptcy without permission.

For follow-up story, see Judge: Lawyer wrongly submitted bankruptcy documents.

(1) Reportedly, the petition was filed by attorney Cabanillas without Hernandez’s required signature. According to the story, the U.S. Trustee’s Office, which oversees compliance with bankruptcy laws, has filed papers in the case recommending that Cabanillas be sanctioned. "The Cabanillas Firm has engaged in egregious conduct that directly impacts on the integrity of the bankruptcy system by filing a Chapter 7 petition without obtaining a signature of its client prior to filing the petition," wrote Greg Zipes, a lawyer for the U.S. Trustee’s Office in Manhattan. Zipes said the filing was "not an isolated case of misconduct by the Cabanillas Firm."

In a letter to Cabanillas, he noted two other cases where bankruptcy petitions "do not appear to meet professional standards." In an e-mail to Zipes filed with the court, Hernandez’s new lawyer, Linda Tirelli, said Hernandez "comes across as a very calm, level-headed person but is clearly upset about having the petition filed unbeknownst to him." The e-mail also says Hernandez never met the lawyer from Cabanillas’ firm, Jan Hudgins-Riley, listed as his attorney on the filing, never saw or signed the petition and never retained Cabanillas’ firm for bankruptcy purposes. Tirelli said in the e-mail that Hernandez would likely need to file a Chapter 13 bankruptcy — which provides for a scheduled repayment of debts — rather than a Chapter 7 filing — which requires liquidation of petitioners’ non-exempt assets.

Financially Failing Chicago Condo Bldgs. Struggle To Stay Afloat; Unit Owners Begin Invoking State Law To Take Possession Of, Rent Out Delinquent Apts

In Chicago, Illinois, Chicago Public Radio WBEZ 91.5 FM reports on the plight of a 27-unit condo building in Chicago’s Washington Park neighborhood that is almost completely empty and the effort by three determined unit owners to keep the building from being condemned. In view of most of the units being foreclosed or abandoned, and some inhabited by squatters, the three are fighting back, armed with the Illinois Condominium Property Act which allows them to obtain a court order to take possession of the units if the owner stops paying monthly assessments. They aren't alone in fighting battles throughout the city to save their financially failing condo buildings from going under.

• It was [local attorney Ebony] Wilkerson’s idea to file for possession to rent out the units to shore up the building’s finances. And she put them in touch with a wife-and-husband team called Haus Financial Services that helps condo associations manage their books. For this building, they’re cleaning up and finding renters for the units. It’s the first ray of hope for these three owners in a great big empty building that’s suffering the effects of the global banking meltdown.

• And they’re not alone. Angela Maurello of the non-profit Community Investment Corporation has been working on this for years. Her program acts as a receiver on behalf of the city for distressed condo buildings. "Oh there’s hundreds because we already have 200 of the ones we have, so I’d say there’s got to be 400, 500 of these buildings in the city. This is a serious problem," [Maurello said]. And that means lots more condo owners [...] trying to shoulder the expense of a whole building without help from their neighbors. Maurello calls these fractured buildings and says many are clustered in South Side neighborhoods like Washington Park. But they’re also scattered throughout the city.

For more, see Condo Owners Struggle to Salvage an Almost-Empty Building.

In a related story from Chicago Public Radio, see Untangling Mortgage Fraud in Chicago Condo Buildings:

• All over Chicago, but especially in South Side communities like Washington Park and Woodlawn, people are coping with half-empty and sometimes completely vacant condo buildings. How did they get that way? Why did so many units go into foreclosure all at once? In some cases, the reason can be traced to mortgage fraud. But untangling that web of financial transactions and unearthing the reasons behind a building’s collapse are difficult and time-consuming.

Another Homeowner Falls Thru The Cracks; Conflicting Statements, Lack Of Straight Answers From Loan Servicer Leads To F'closure For Bakersfield Family

In Bakersfield, California, KBAK/KBFX-TV reports:

• In October, Eyewitness News told the story of a woman who was trying to save her home from foreclosure. Unfortunately, the situation has only gotten worse for her, [...]. "I've been in that home for 10 years," said homeowner Linda Harness. "Now, I have to uproot my kids and start over with a business?"

• Harness is frustrated, and with good reason. Her home is being foreclosed. But the most frustrating part is that Harness said she doesn't know how it happened. A few months ago, Harness contacted her lender, Aurora Loan Services, about going from an adjustable mortgage to a fixed rate. "I made sure the payment was on time," Harness recalled after being enrolled in the program. "I was so happy when they said we can resolve this."

• But in mid-September, ALS told Harness she didn't qualify for the program. So Harness enrolled in another program, or so she thought. "On October the first, they knocked on my door and said my house was in foreclosure," she said. Eyewitness News tried asking ALS about what happened, but it said its policy is to not talk to the media about their clients. Harness called, again, to try and get a straight-forward answer. But after numerous attempts to save her home, Harness' house has been foreclosed, and she's now wondering what to do next.

For the story, see Woman loses foreclosure fight; others have hope.

Indiana AG Files Suit To Force Landlord To Remediate Lead Paint Hazard In Rental Home

From the Office of the Indiana Attorney General:

• [I]ndiana Attorney General Greg Zoeller filed a first-of-its-kind lawsuit against two Evansville landlords who allegedly ignored multiple warnings to correct a lead-paint hazard in a rental house that could endanger the health of any occupants living there, including children. The Indiana Attorney General's Office and the Vanderburgh County Health Department filed suit under environmental laws to halt a public nuisance.

• "This is the first time the Attorney General's office has brought such a suit on behalf of a county, but the case could be a template for other counties to follow in taking action when landlords refuse to correct lead-paint hazards," Zoeller said.(1) [...] Exposure to lead-paint chips and dust is especially hazardous to the neurological development of young children and can result in brain damage and learning disabilities.

***

• The lawsuit, [...] seeks an injunction ordering the landlords to remediate the nuisance. Remediation techniques may include removal of the paint from the house by a licensed contractor or encapsulation of the lead-based paint by properly repainting it with latex paint. The suit also seeks reimbursement of the government's costs, attorneys' fees and other relief.(2)

For the entire Indiana AG press release, see Attorney General Zoeller files suit to correct lead-paint hazard (Landlord ignored county's warnings; now state takes action).

For the Indiana AG's Complaint to Compel Remediation of Lead Hazard, see State of Indiana v. Bryan.

(1) According to the complaint, the landlords own a house, built in 1918, in Evansville that they lease to tenants. During a lead-screening program for children in January 2008, a child of the tenant tested positive for an elevated blood-lead level. The Vanderburgh County Health Department alerted the tenant and also collected samples of paint, soil and dust that tested positive for lead. The county health department sent warnings to the landlords at both addresses on file for them in January and February 2008, instructing them that the lead-based paint in the rental house was a health violation requiring remediation measures. The county received no response and the landlords appear to have made no attempt to remediate the hazard by repainting or removing old paint. The Vanderburgh County Health Department in February 2009 issued a $50 fine the landlords never paid. Due to the lack of cooperation by the landlords, the county health department enlisted the assistance of the Attorney General's office in bringing the lawsuit.

(2) The Indiana AG press release states that because of potential health hazards, lead paint has been banned for use in residential homes since 1978. Lead paint continues to be a problem in the pre-1978 homes usually found in older, low-income neighborhoods, however. Under the federal Residential Lead-Based Paint Hazard Reduction Act of 1992, owners must disclose any lead-paint hazards prior to selling or renting any pre-1978 home, according to the press release.

Landlords Discriminating Against Families w/ Young Kids In Attempt To Skirt State Lead Paint Clean-Up Requirements Continue Feeling Mass. AG Wrath

From the Office of the Massachusetts Attorney General:

• Attorney General Martha Coakley’s office obtained a consent judgment against a Boston-based realty company, and its agent, resolving claims that the company refused to rent an apartment to a tester from the Boston Fair Housing Commission posing as a woman with a three-year old child whose presence would require abatement of lead paint hazards under state law. The consent judgment orders the defendants to pay a total of $5,000 to the Commonwealth of Massachusetts and the Boston-based Lead Action Collaborative and bars the defendants from future acts of discrimination.(1)

According to the AG press release, the Massachusetts Anti-Discrimination Act prohibits real estate companies, agents, landlords and others involved in property rentals, from discriminating against families. In addition, the Massachusetts Lead Paint Statute requires landlords who rent to families with children under the age of six to abate lead hazards in a rental unit in order to prevent lead poisoning. It is illegal to discriminate against families with children in order to avoid compliance with the lead paint law.

For the Massachusetts AG press release, see Coakley Enters into Settlement to Address Alleged Discrimination Against a Woman and Her Young Child by a Boston Real Estate Company.

--------------------

In a separate case from the Office of the Massachusetts Attorney General:

• Attorney General Martha Coakley’s Office has obtained a consent judgment in a housing discrimination case against the owner of a three-unit building located in Everett, who is accused of violating state anti-discrimination laws for refusing to de-lead an apartment after learning that a long-time tenant was pregnant. The judgment requires the landlord to pay the victim $10,000 and prohibits her from discriminating against any person because they have a child, whose presence would trigger her obligations under the lead paint laws, or otherwise discriminate against any person in violation of state and federal fair housing laws.(2)

For the Massachusetts AG press release, see Coakley Obtains Consent Judgment Against Everett Landlord for Discriminating And Retaliating Against Family with a Young Child to Avoid Lead Paint Obligations.

(1) According to the complaint, the fair housing tester inquired about an apartment advertised on Craigslist. After the tester informed the agent that she had a three-year old child, the agent refused to show her the apartment unless she agreed to sign a waiver that purported to absolve the owner of the unit from liability due to any lead paint found in the apartment.

(2) According to the complaint, the tenants notified the landlord several months advance that they were having their first child and were worried about possible lead hazards, but she refused to do an inspection or remove any lead hazards before or after the child was born. The tenants then complained to the Everett Board of Health, who ordered her to comply with the lead paint laws. After receiving the order, she allegedly called the tenants and yelled at them and threatened to increase their rent. Days later, the landlord sent them a letter with a 50 percent rent increase as retaliation for reporting her to the city. The rent increase was directed only at the tenants who complained. She failed to abate the lead until one year after first being informed of the impending birth, and only after being ordered to do so by the Board. The tenants were forced to live in fear that their child would get lead poisoning and had to dramatically alter their lives to avoid harm to their child.

Cook County Foreclosure Court Mediation Scores $3M In Funding; Mortgage Workout Effort Based On Philadelphia Pilot Program

In Chicago, Illinois, Northwestern University's Medill Reports report:

• The Cook County Board passed a $3 million budget amendment Thursday to fund a foreclosure prevention program. The program calls for court mediation in the presence of a judge between borrowers and lenders negotiating to modify housing loans. The measure also would help fund free legal and housing counseling as well as door-to-door outreach.

• The court mediation program is based on a pilot program in Philadelphia that has been lauded by community organizations nationwide. Action Now, Brighton Park Neighborhood Council and other organizations have been lobbying for a similar Chicago program since last year. “It’s a huge victory and a step in the right direction that our members have worked so hard for,” said Aileen Kelleher, Action Now spokesman. [...] Funding for the amendment will come from a recent real estate sale to the Forest Preserve Department and a shift of funds from another County project.

Source: Passage of $3 million foreclosure prevention program hailed as a 'huge victory'.

Massachusetts AG, Alleged Violators Resolve Charges Of Race/Ethnicity Based Discrimination In Separate Incidents Affecting Housing Rights

From the Office of the Massachusetts Attorney General:

• Attorney General Martha Coakley’s Office obtained a Final Consent Judgment yesterday 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. The judgment [...] includes a civil rights injunction prohibiting 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 10 feet of the victims. A violation of the order is a criminal offense 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 ten years in State Prison.(1)

For the AG's press release, see Coakley Obtains Final Consent Judgment Against Holyoke Brothers for Harassment and Intimidation of Neighbors.

-----------------

In a separate case from the Office of the Massachusetts Attorney General:

• Attorney General Martha Coakley’s Office reached a settlement with a Dorchester property owner resolving allegations that he made racially discriminatory statements to an African American woman seeking to rent an apartment he had advertised to the public. The Assurance of Discontinuance, filed in Suffolk Superior Court, against Robert Gallo, Sr., resolves allegations that the defendant violated state and federal anti-discrimination laws and requires him to pay $25,000 to the victim.(2)

For the AG's press release, see Coakley’s Office Reaches $25,000 Settlement with Dorchester Property Owner for Allegedly Making Racially Discriminatory Statements.

------------------

(1) The AG's press release states that, according to the complaint, filed July 8, 2009, the Jedrzejczyks repeatedly and regularly harassed the victims using racial slurs and threats over the course of the past three years. The defendants’ actions 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 last spring when the victim responded to racial slurs being directed at her by imploring Jesse Jedrzejczyk to leave her alone. In response, Jedrzecjcyk threatened, “I will never leave you alone until you move. If you don’t move, I’ll move you!” The Commonwealth’s lawsuit alleged the Jedrzejczyks’ bias-motivated harassment has seriously interfered with the victims’ ability to live and feel safe at home.

(2) The AG's press release states that, according to the prospective tenant’s complaint, which was filed with the Boston Fair Housing Commission and referred to the Attorney General’s Office, Gallo allegedly told the woman when she attempted to rent his apartment that he was told by neighbors to make sure he rented to the right people and that it was an influential area where only certain people lived. The complaint further alleged that Gallo told the woman that she would have no friends in the area and that he was just looking out for her safety. Testers from the Fair Housing Center of Greater Boston subsequently tested the property and were allegedly subjected to discriminatory statements, including the defendant telling the white tester:

• "the people around here are all white"
• "they don't want someone who is yellow or dark-skinned"
• "I could not in good conscience have someone in here who was not white"
• "Just don't get too much of a tan...you could get too dark and that would not work"
• "I like you and your manners and your shade, so you are my first choice"

Massachusetts Man Gets 2 To 4 For Again Ripping Off Elderly Stepfather; Earlier Swindle Caused Victim To Lose Home To Foreclosure

In Peabody, Massachusetts, The Salem News reports:

• Confronted by a Peabody police detective with evidence that he'd once again ripped off his elderly stepfather, Steven Fishman, 22, tried to explain himself. "It wasn't drugs or any of that," Fishman told Detective Robert Church. "It's kind of, I kind of get a thrill out of doing it."

• Fishman pleaded guilty [...] to six counts of identity fraud and one count of felony larceny from a person over 60 and was sentenced to two to four years in state prison by Salem Superior Court Judge Timothy Feeley. That's less than half the time sought by prosecutor Marcia Slingerland, who explained to Feeley that it wasn't the first time Fishman had stolen from the 77-year-old man.

• In fact, Fishman was on probation at the time for another series of thefts that emptied his stepfather's bank account — and cost him his home, when he could no longer make the mortgage. Despite the crimes, which forced the elderly man to move to an apartment [...], he took Fishman back in to live with him after Fishman was let out of jail in 2008. Fishman repaid his stepfather by again bleeding the elderly man's bank account dry, stealing nearly $10,000 with a series of electronic transactions that were discovered only after the victim got an overdraft notice from his bank.

For more, see Man gets 2-4 years in prison for thefts from his stepfather.

Connecticut To Clobber Foreclosed Homeowners With Real Estate Conveyance Tax?

In Hartford, Connecticut, the Hartford Courant reports:

• Losing a property to creditors will get more painful next year: Some homeowners in foreclosure will be hit with a new tax. Foreclosures sales have been exempt from Connecticut's real estate conveyance tax for years, but the General Assembly is ending that break Jan. 1. The state is making the change to help close gaps in its budget, and cash-strapped municipalities are eager to get their share of the new revenue, too. But several state lawmakers say they're already dissatisfied with the change."I really believe that this is pouring salt into the wounds," state Rep. William Hamzy, R-Plymouth, told colleagues at a meeting of the banks committee Tuesday.(1)

For more, see Connecticut Plan To Lift Tax Exemption In Foreclosures Stirs Debate.

(1) I suspect that failure to pay the conveyance tax will result in an immediate lien against the foreclosed home, which will make it impossible for the foreclosing lender to transfer clear title to a subsequent purchaser until fully satisfied. So even if the foreclosed homeowner is legally liable for payment of the tax, it will actually be the foreclosing lender who will satisfy the lien when it unloads the property onto the next buyer in the chain of title (the lender will then probably be allowed to tack on the amount paid on account of the lien onto any deficiency balance owed by the foreclosed homeowner - at which point, it will have to wait for the homeowner to "hit the lottery" in order to get paid, assuming he/she hasn't already obtained a debt discharge by filing for bankruptcy).

$55M+ Former "Lions' Den" Sold At Auction For $583K; Judge Wonders Whether Environmental Problems The Reason For NFL Team's Lack Of Success

In Oakland County, Michigan the Detroit Free Press reports:

• An Oakland County Circuit Court judge is to decide by Monday whether this week's sale of the Pontiac Silverdome for $583,000 to a Toronto-based developer will go through. Judge Edward Sosnick heard arguments Wednesday from an attorney representing Silver Stallion Development Corp., which hopes to block the sale to Andreas Apostolopoulos in trust for a corporation to be formed from Toronto.

***

• Attorney David McGruder, representing Silver Stallion, told Sosnick that his clients had spent money on environmental studies and had deposited $100,000 in earnest money. "We've expended money, time and effort," McGruder said. Sosnick, known for his laconic courtroom wit, said: "Was the environmental problems the reason why the Lions could rarely win?" That prompted laughter in the crowded courtroom.

For more, see Judge to decide by Monday on Silverdome (Former bidder fights sale to Toronto trust).

See also, The Christian Science Monitor: New tale of Detroit’s woe: Pontiac Silverdome sold for $583,000 (Pontiac, Mich., sold the 80,300-seat Silverdome for $583,000 Wednesday. The former home of the Detroit Lions cost $55.7 million to build in 1975).

Consumer Advocate's Effort To Wipe Out Delinquent Mortgage Debt Held By Lenders Unable to Prove Right To Foreclose About To Begin In Florida

In Jacksonville, Florida, the Jacksonville Business Journal reports:

• The house at 12920 Mt. Pleasant Road is a modest ranch-style home. The man in it is John McCampbell, a 61-year-old car mechanic who lives with his two children and fiancée. He took out a $156,000 mortgage from the now-defunct Washington Mutual, which foreclosed on his home in 2004 after he lost his job. But when the lender was unable to produce the deed to prove it had a right to foreclose, McCampbell beat the foreclosure and remains there today.

• Now McCampbell and his Fort Caroline home are poised to make history in foreclosure defense with an experimental legal approach that would wipe out his mortgage debt and hand him a clean deed. It’s called a “quiet title,” where the court establishes a party’s title to the property to remove or “quiet” any challenges or claims to it.

• It sounds like an impossible endeavour. But April Charney, a Jacksonville Area Legal Aid attorney, has spent the past four years teaching lawyers across the country the legal framework of this foreclosure defense. With an average of 3,000 foreclosures filed every month in Jacksonville alone, there’s no shortage of lawyers tapping her expertise.

***

• Before asking the court to quiet a title, a foreclosure must be dormant for five years. That brings Charney to a critical juncture in many of her early cases where the five years is at or near its expiration. She’ll be seeking multiple quiet titles in 2010, including one for McCampbell, her client.(1)

For more, see Lawyer's foreclosure defense of 'quiet title' faces tests.

(1) A January, 2009 post (see Using Statute Of Limitations To Wipe Out Lenders' Right To Foreclose A Mortgage?) referred to a December, 2008 story reported on msnbc.com which alluded to Charney's intent to apply the Florida statute of limitations (see Sec. 95.11(2)(c), 95.281(1)(a), Florida Statutes) to terminate a foreclosing lender's right to foreclose when her clients' cases became ripe for such an attack:

• Charney said that in a number of her cases, once there is no longer an ability for the loan servicer to profit, the foreclosure “just goes to sleep, and unless I’m going to pursue it, nobody’s setting hearings, nobody’s pursuing anything to get it to trial.”

• After five years, which is the statute of limitations to enforce a contract in Florida, she can try to help her clients own their homes mortgage-free, Charney said. The first opportunity for her to help clients do that may arise next year.

• And that legal limbo is where the lion’s share of her cases stand now, Charney said. So far this year, she has achieved two “workouts” and lost two cases. “Many, many, many” of the rest are in sleep mode or getting a single filing each year by plaintiffs’ attorneys just to keep them alive.

For the msnbc.com story, see 'Angel' of foreclosure defense bedevils lenders (Florida attorney trains hundreds of others to help troubled borrowers) (for the entire story on one web page, try here). EpsilonMissingDocsMtg

Stiffed Employees Sound Alarm On S. Calif. Upfront Fee Loan Modification Outfit; Offices "A Ghost Town" - Hundreds Of Homeowners May Be Left Hanging

In Mission Viejo, California, NBC Los Angeles reports:

• Hundreds of homeowners who turned to an Orange County mortgage modification company for help may be in jeopardy themselves and don't know it. The company appears to have shut down. Company insiders say they have come forward to warn the public because they're afraid people will lose their homes.

• Greenleaf Legal Services in Mission Viejo may bill itself as "loan modification experts," but during a recent visit, the place was a ghost town. Some offices were empty, others had stacks of client files apparently waiting to be worked on, and telephone message lights were blinking at every desk. Greenleaf clients said they're still waiting for their calls to be returned.

***

• While [...] customers say they aren't getting messages returned, some employees say they're not getting paychecks. Two workers say they haven't been paid in weeks. Both asked to conceal their identities because, they say, they're going to the authorities with their concerns. One employee said, "it's been over a month," since he was last paid. And since people aren't being paid, another insider said, "What is basically happening is files are not being worked at this time." [...] According to an insider, people paid up to $1,500 to $3,500 upfront. Greenleaf clients all over the country, including more than a dozen in California, said they paid as much as $3,500 and haven't seen results.

***

• Greenleaf never registered with [the California Department of Real Estate] to do modifications and never posted a $100,000 bond as required by law, according to the Attorney General's office.

For more, see Hundreds Could Lose Homes as OC Loan Company Goes Dormant (A local loan-modification company is going out of business, potentially leaving hundreds of homeowners in jeopardy of losing their homes).

Trouble Hits 200+ Would-Be NC Homebuyers As State Investigates Now-Defunct "Rent To Own" Outfit Suspected Of Pocketing Rents, Stiffing Lenders

In Raleigh, North Carolina, WTVD-TV Channel 11 reports:

• [Sherry] Williams moved into the Raleigh home in March. Not only is it her family's home, but it's their livelihood as she runs a licensed day care out of it. She found the home through a company called Saving Carolina. "We don't have perfect credit. This was a program that helped people. We thought it was a great opportunity to own a house," said Williams.

• Williams says it was rent to own with 100 percent owner financing available. She gave Saving Carolina $3,000 down payment and her monthly payments were $1,650 a month, which each month she says she sent to Saving Carolina. "They were handling the mortgage for the homeowner and we would send the money to them and they would send it directly where it needed to go," she explained.

• Saving Carolina acted as the middle man. They found homeowners who wanted to rent out their home. In turn, Saving Carolina would find renters for those homes, and offer them as rent to own. Williams thought all was going well until after 6 months of making her monthly payments to Saving Carolina, she got a shocking letter in the mail from the bank. "The house was in jeopardy of being foreclosed because it was a few months behind and the owner needed to get in touch with the bank," she recalled.

• Williams called the owner of the home. She says he told her he doesn't have the payments as Saving Carolina was supposed to be making them. So she called Saving Carolina, "have no idea where they are. The numbers have been disconnected. We're just kind of locked in - just praying the sheriff doesn't come and say you guys need to get out," said Williams. Williams isn't alone.

• "I think it was 282 families that this has affected. I personally have seen 50 families," a former worker at Saving Carolina told ABC11. She asked not to be identified.(1) [...] Another man who also worked for Saving Carolina and also didn't want to be identified says Saving Carolina made their money by collecting rent to own payments, but didn't always send them into the mortgage company.

For more, see Troubleshooter: Rent to own.

(1) Reportedly, besides ABC11 looking into Saving Carolina, two former workers along with Williams say an investigator with the North Carolina Commissioner of Banks has interviewed them. rent to own lease purchase option scams yellowstone

Riverside County DA, Feds Announce Bust In Alleged Mortgage Fraud, Securities Scam; Losses Estimated At $140M+ Involving 249 Homes

In Riverside County, California, the Southwest Riverside News Network reports:

• The head of an investment company described by authorities as a “con man” who bilked victims out of millions of dollars, much of it coming from real estate fraud in Murrieta and Temecula, has been charged with nearly 250 criminal counts, prosecutors announced Thursday. James Benjamin Duncan, 38, known in some circles as “James the Cash King,” has been charged with 249 felonies, including conspiracy, elder abuse, grand theft, securities fraud and identity theft, Riverside County District Attorney Rod Pacheco announced at an afternoon news conference Thursday.(1) [...] The defendants are being held in lieu of millions of dollars in bail. Before they can be released, Pacheco said, the defendants must prove their bail money was obtained legally.

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• According to a news release, the crimes include the selling of fraudulent securities leading to a loss of more than $17 million, as well as mortgage fraud leading to a loss of $124.5 million throughout Riverside County. The defendants carried out similar schemes in other areas of California and Arizona, authorities said. [... Pacheco] estimated there were 249 homes impacted in Riverside County, with the majority in Murrieta (150) and Temecula (47). Those losses cannot be measured, he said.(2)

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• In plea agreements also filed [...] in United States District Court in Los Angeles, Christopher J. Oetting, 47, of Palm Desert; Linda Brooks, 54, of Murrieta; and Steven Kayden, 51, of Cathedral City; all have agreed to plead guilty to federal charges related to their roles in one or more investment schemes.(3)

For more, see Criminal charges filed in massive Temecula and Murrieta real estate fraud case (James Benjamin Duncan, 38, known in some circles as "James the Cash King," was charged with 249 felonies).

See also, The Press Enterprise: Seven accused of defrauding Inland home investors of millions.

(1) Others reportedly involved in the case have also been charged, including Hendrix Moreno Montecastro, 37; Helen Moreno Pedrino, 47; Maurice McLeod, 37; Charlie Sung Muk Choi, 34; Cindi Gayle Kelly, 33; and Thuan Nhan Du, 33.

(2) I suspect that the criminal probe in this case evolved out of the class action civil lawsuits (and the local Southern California media reports thereon) alleging a racketeering conspiracy filed against this outfit a few years ago by some of the victims who claim to have been screwed over. See:

• The Press Enterprise (2-12-2007): Investors file federal fraud lawsuit (HUNDREDS AFFECTED: Two Rialto residents say they sustained losses of more than $600,000),
• The Californian / North County Times (1-6-2007): Suit alleges massive mortgage scam,
• The Californian / North County Times (1-14-2007): Real-estate investors bought on faith.

(3) Presumably, this trio have been declared the winners of the "race to the prosecutor's office" - whoever gets there first and rats out the other guys gets the best deal when sentences are handed out.

Unwitting Purchase Of Home Subject To Demolition Order Has Family Pleading With City For Extension Of Time To Correct Violations

In Beaumont, Texas, the Southeast Texas Record reports:

• Three Beaumont residents have filed a request for injunctive relief against the city of Beaumont, alleging they are in danger of losing their home because the city will not grant them an extension to perform repairs. Flor Escamilla, Flor Uribe and Fernando Uribe claim they purchased a property at 2280 Laurel in Beaumont from Bruce Brosnahan on May 6. However, when they bought the house they claim they didn't realize that the city of Beaumont had notified Brosnahan that the home would be condemned because of its substandard and dangerous state, according to the complaint filed Nov. 6 in Jefferson County District Court.

• When they did discover that the property was due to be demolished, the plaintiffs' sister and daughter appeared before Beaumont City Council to request an extension of time to repair the property, the suit states. Granting the extension, the Beaumont City Council allowed the plaintiffs until Nov. 12 to repair the property, the complaint says. Realizing that they probably could not finish the required fixes by Nov. 12, the plaintiffs requested an extension to finish the repairs. However, Beaumont City Council denied their second request because the previous owner had already been granted an extension, they claim.

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• The plaintiffs say they have already taken steps to repair the property and will continue to fix it up to Beaumont city codes if they are granted an extension. The plaintiffs are seeking a temporary restraining order that immediately orders the defendant to stop any action of demolishing the property and to be prevented from taking any bids on demolition.

For the story, see Beaumont homeowners seek TRO to stop home demolition.

Feds Bag Fugitive In Malaysia; Man Accused Of Running Utah, Colorado Home Hijacking, Rent Skimming Scams Targeting Properties In Foreclosure

In Denver, Colorado, KUSA-TV Channel 9 reports:

• The man 9Wants to Know exposed for running one of the most sophisticated rental schemes in Colorado is under arrest after U.S. Marshals took him into custody in Malaysia and flew him to Los Angeles [...]. 9Wants to Know has learned FBI agents in Denver are now investigating his rental scheme, and plan on presenting their findings to federal prosecutors in Colorado.

• Gordon Miller has been on the run since 2005 when Utah federal prosecutors charged him with running a very similar scheme that took money from Utah residents. He's lived in Malaysia for at least the past nine months. When 9Wants to Know showed U.S. Marshals in Utah that Miller was still running another operation in Colorado, U.S. Marshals worked with the State Department who revoked Miller's U.S. passport due to his fugitive status stemming from the 2005 case, according to Utah Supervisory Deputy U.S. Marshal Mike Wingert. Without a valid passport, the Malaysian government picked him up on immigration violations, Wingert said. U.S. Marshal Deputies then took him into custody and flew him to Los Angeles. [...] It is likely that Miller will then be brought to Utah to face his charges.

For more, see Man behind alleged rental scheme arrested in Asia.

(1) 9Wants to Know discovered Miller recently targeted Coloradans using the name Greg Castle. 9NEWS exposed how Miller/Castle searched bankruptcy records to find people having trouble paying their mortgage. He then sent letters and left phone messages to convince those homeowners they had to move out of their homes. Several homeowners told 9Wants to Know they believed the letters and voicemail messages were coming from someone working on behalf of their mortgage companies. Once homeowners moved from the homes Miller put rental ads on Craigslist.