Tuesday, December 01, 2009

One Underwater Homeowner's Experience With A Short Sale Flipping Operator

In Seneca, South Carolina, the Sarasota Herald Tribune reports:
  • DAN EGGER MAY HAVE LOST HIS job and is now underwater on his $500,000 mortgage, but the 41-year-old former telecommunications salesman is not desperate. A resident of Seneca, a small city in the northwest corner of South Carolina, Egger said he was approached by a real estate investment firm earlier this month that wanted to flip his house. [...] At first, the deal looked good to Egger. But he began to dig into the details and ultimately decided to pass.

***

  • All across America, people like Egger are being approached by investors looking to make a profit by buying properties inexpensively from banks through short sales and reselling them to end buyers at a profit. In some cases -- where investors lie to banks about what properties are worth -- the deals can be considered fraudulent, and Fannie Mae and the FBI have sent out warnings about unscrupulous operators.

  • What bothered Egger most was that the companies he was dealing with were a hodgepodge of entities in a slew of states.(1)

For more, see One man's time with the real estate flippers (Dan Egger was approached by real estate investors trying to convince him to let them flip his house in Seneca, S.C. To their surprise, he declined their offer after he found he was dealing with a hodgepodge of entities in several states).

(1) Go here for the string of e-mails that were sent back and forth between South Carolina underwater homeowner Dan Egger and Dennis Funk, a sales representative who was trying to convince Egger to sell his house to the flipping operator he was representing through a short sale.

Go here for the Short Sale Package (28 pages) homeowner Dan Egger was presented with by the short sale flipping operator and declined to enter into.

Recent NY Court Foreclosure Ruling Wiping Out Mortgage Debt Not Expected To "Open The Floodgates" Against Lenders

In Suffolk County, New York, Newsday reports:
  • A Suffolk judge's decision to wipe out the mortgage debt of a foreclosed-upon East Patchogue couple may send a message to predatory subprime lenders that unless they work to save their customers' homes, they stand to lose everything, some real estate attorneys said. "This case shows the change in the tide as to the sentiment about mortgage foreclosures in general," said Woodbury bankruptcy attorney Craig Robins, who called Suffolk County Court Judge Jeffrey Spinner's decision "a good demonstration that courts are not going to tolerate this type of conduct by the mortgage companies anymore."

***

  • Robins said such improper and irresponsible practices were not isolated to IndyMac. But, while Spinner's decision could create important case law that will likely be cited by homeowners' attorneys in future foreclosure proceedings, Robins said he did not think it should "open the floodgates" for similar decisions.

  • "I do see a lot of the irresponsible practices that mortgage lenders commit frequently, but I think what sets this case apart was that there were several irresponsible practices in this one case," said Robins, adding that Spinner "used this case to send a loud warning to all mortgage companies . . . that they better shape up and get their act together."

For the story, see Foreclosure ruling sends message to lenders (requires paid subscripition to Newsday; those without a subscription can try here).

Debt Collection Law Firm Faces Hot Water For Dragging Wrong Person Into Court; Resists Judge's "Suggestion" To Compensate Victim For Lost Day's Pay

In Brooklyn, New York, The New York Times reports:

  • A person who blows off a civil court summons — even if wrongly identified — faces a default judgment and frozen bank accounts. But to date, there have been few penalties against collectors for dragging the wrong people into court. Until [Mark] Hoyte turned up last week in Brooklyn.

  • After trying to settle the case in the hallway — the 11th floor of 141 Livingston Street is an open bazaar of haggling — the collections lawyer realized he had the wrong man. He got Mr. Hoyte to sign an agreement that would end the case against him, but not against the Mark Hoyte who actually owed the $919. In front of the judge, the lawyer, T. Andy Wang, announced that the parties had reached a stipulation dismissing this Mr. Hoyte from the suit.

  • Not so fast, said the judge, Noach Dear. “Why didn’t you check these things out before you take out a summons and a complaint?” Judge Dear asked. “Why don’t you check out who you’re going after?” [...] “So you just shoot in the dark against names; if there’s 16 Mark Hoytes, you go after without exactly knowing who, what, when and where?” Judge Dear asked. [...] The judge turned to Mr. Hoyte, who works as a building superintendent, and asked him how much a day of lost pay would cost. Mr. Hoyte said $115.

***

  • The judge said he was prepared to dismiss the case and wanted Mr. Hoyte compensated for lost wages. “Your honor,” Mr. Wang said, “I’m personally not willing to compensate him.” No, the judge said; he meant that the law firm, Pressler & Pressler — one of the biggest in the collection industry — should pay the $115. He would hold a sanctions hearing, a formal process of penalizing the law firm for suing the wrong man.

***

  • He told Mr. Wang and Mr. Hoyte to come back to court in January. “If, somehow, counsel, you decide that you’re going to compensate him for his time off,” Judge Dear said, “I will reconsider sanctions.”

For the story, see Hello, Collections? The Worm Has Turned.

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

In a related story, see The Village Voice: An Unlikely Rescuer from the Jaws of Debt (By 9:30 a.m., the 11th-floor hallway of a courthouse in downtown Brooklyn is filled with tight huddles made up of people in debt and the lawyers who are after them to pay):

  • It's a scene that will be repeated over and over again in the courtroom of Judge Noach Dear, as he repeatedly dismisses lawsuits, denies attorneys seeking payment, and sends people on their way, amazed that they are free from further harassment by collection agencies. Twice on a recent morning, his rulings are met with standing ovations.

Right Of Redemption Creates 6-Month Period Of Legal Limbo For Vacant Minnesota Foreclosures, Forcing Cities To Step In With Maintenance Effort

The Minneapolis Star Tribune reports:
  • Redemption -- in Minnesota, usually a six-month period following a sheriff's sale during which the people who owned the house can buy it back -- poses a problem for cities. If a home winds up vacant or vandalized during that time, the homeowner and bank often deny responsibility, putting the burden of fixing it on the city. "It's essential for the city to [maintain a house], because in the period of exchanging ownership we have to," said Larry Lee, Bloomington's community development director. "We hire the contractor and bill the responsible owner." Then, he said, "If they do not pay, we get the money back as special assessments on property taxes."(1)

***

  • In Minneapolis, where thousands of homes have been moving through foreclosure over the past four years, the city has tried to minimize the threat to its housing stock by adding an array of stiff fees for violations. [...] Faraway banks "are draining city resources under the guise of being in the redemption period," [Minneapolis' manager of the problem property unit Tom] Deegan said. "The whole thing is to incentivize that bank to do something." Deegan hopes that the financial cost of letting a Minneapolis home linger in redemption will prompt more banks to use a new state law that allows them to petition courts for a five-week redemption period to speed along repossession of a house.

For more, see If no one owns the home, who's watching the house? (With foreclosure comes a six-month purgatory for some houses, and cities have to step in to keep them from becoming a nuisance).

(1) Michigan has a similar rule regarding a right of redemption after foreclosure sales, and probably has a similar problem.

Monday, November 30, 2009

Government Will Attempt To Shame The Shameless Into Increasing Permanent Loan Modifications

The New York Times reports:
  • The Obama administration to[day] plans to announce a campaign to pressure mortgage companies to reduce payments for many more troubled homeowners, as evidence mounts that a $75 billion taxpayer-financed effort aimed at stemming foreclosures is foundering. "The banks are not doing a good enough job,’’ Michael S. Barr, Treasury’s assistant secretary for financial institutions, said in an interview. “Some of the firms ought to be embarrassed, and they will be.’’

***

  • Barr said the government would try to use shame as a corrective, publicly naming those institutions that move too slowly to permanently lower mortgage payments. The Treasury Department also will wait until reductions are permanent before paying cash incentives that it promised to mortgage companies that lower loan payments. “They’re not getting a penny from the federal government until they move forward,’’ Barr said.

For more, see US to prod mortgage firms on lowering loan payments (Treasury will link reductions to incentives).

See also, ABC News: White House to Play 'Name-and-Shame' With Lenders (Banks Are Not Helping Enough Homeowners Facing Mortgage Problems).

Far More Underwater Homeowners Should Stiff Their Lenders, Pack Their Bags & Take A Hike, Says Study

ABC News reports:
  • Millions of Americans, whose homes are now worth significantly less than their mortgage, could be making an expensive mistake by continuing to try and pay their loan off when they should, instead, be walking away. In fact, owners are willing to keep piling money into a losing investment simply because they're ashamed to foreclose, according to a controversial new study.

  • "Homeowners should be walking away in droves. But they aren't," writes Brent White, an associate professor of law at the University of Arizona. He explains that some owners who bought at the peak of the market now owe more on their mortgage than they can ever recoup in their lifetime. Although it would make financial sense to cut losses and abandon their homes, feelings are getting in the way. "A lot of it has to do with shame, guilt and fear," says White.

***

For more, see Walk Away: Why More People Should Abandon Their Homes (Study Finds Homeowners Fight Foreclosure Even When It Doesn't Make Sense).

Central Florida Chief Judge Ramps Up Court Foreclosure Mediation Effort

In Central Florida, The Tampa Tribune reports:
  • Pasco homeowners in foreclosure could have more of a chance to keep their homes if a court system emphasis on mediation succeeds. The push began last month when Chief Judge Thomas McGrady signed an administrative order adding more prominent language about mediation into paperwork homeowners receive when they're served with foreclosure lawsuits. The drive for mediation is a response to the continued onslaught of foreclosure filings and to the inability of homeowners in foreclosure to get in touch with their lenders, McGrady said. [...] Homeowners interested in mediation can find information and a form motion requesting mediation at the Sixth Judicial Circuit's Web site, [...].

For the story, see Pasco courts move to help homeowners.

Go here for standard form Defendant's Motion for Mediation in Mortgage Foreclosure Action.

See also, Administrative Order 2008-081 (Re: Mortgage Foreclosure Actions By Institutional Lenders; 6th Judicial Circuit in and for Pasco and Pinellas Counties, Florida).

More Heat For Foreclosing Lender That Bought IndyMac Mortgages For Failing To Offer Loan Modifications

In Southern California, the Pasadena Star News reports:
  • A group of nearly 30 homeowners converged on the Pasadena offices of OneWest Bank [last] week to protest the bank's alleged refusal to modify their mortgage loans. The homeowners [obtained] their mortgage loans from IndyMac Bank, which failed last year and was seized by federal regulators. After several months of operation by the Federal Deposit Insurance Corp., the bank was taken over by OneWest Bank, a newly formed Pasadena-based federal savings bank organized by IMB HoldCo LLC.(1)

For the story, see: Homeowners demonstrate against bank in Pasadena.

(1) This is the same outfit that drew recent attention for:

(A) reportedly trying to boot an 89-year old widow from her Oakland, California home by initiating a foreclosure action against her despite two court orders telling them not to:

(B) having a Suffolk County, New York judge hit the "delete button" on the mortgage debt and lien it held on the home of a Long Island homeowner that was the subject of a foreclosure action. In cancelling the debt and the lien of the mortgage, the judge described this outfit's conduct toward the homeowner as "inequitable, unconscionable, vexatious and opprobrious" and "harsh, repugnant, shocking and repulsive":

Sunday, November 29, 2009

Electric Co-Op Stiffed By Short Sellers Of Vacant Homes Refuses To Turn On Lights For Buyer Inspections; Makes Deals Tougher To Close

In Hudson, Florida, The Suncoast News reports:
  • Withlacoochee River Electric Cooperative policies could pull the plug on potential short sales of vacant homes, a West Pasco real estate leader fears. A gray area exists when a homeowner abandons a home but the bank hasn't officially foreclosed on the property, a WREC spokesman counters. The recession also has saddled WREC with more bad debts.

***

  • About seven out of 10 residential real estate deals these days are short sales or foreclosures, broker Greg Armstrong with Coldwell Banker F.I. Grey Residential Inc. explains. [...] Withlacoochee executives have been refusing to turn on the power at a vacant house for inspectors if the previous owner left an unpaid balance. Without inspections, a sale can't be concluded, according to Armstrong.

***

  • The utility is contending with more and more bad debts as people skip out and leave unpaid electric bills, according to David Lambert, manager of member relations for the Dade City-based member-owned cooperative. Problems arise when a former owner simply walks away from a house he or she no longer can afford. "The house hasn't changed hands," Lambert said. "They still own it. It's not a foreclosed home." WREC can't turn on the power until the debt is repaid.

For the story, see Real estate leaders and utility have been at an impasse.

Senior "$CAMS" Detection Project Focuses On Identifying Nursing Home Residents With Past Due Accounts In Effort To Stamp Out Elder Financial Abuse

From the Office of the Michigan Attorney General:
  • Attorney General Mike Cox [...] announced criminal charges against six individuals accused of financially exploiting senior citizens. The charges are a result of Project $CAMS (Stop Crimes Against Michigan Seniors), an initiative to protect nursing home residents from scams, misappropriated resources and embezzlement. Operated by the Attorney General's office, along with the Office of Inspector General for the Social Security Administration, Project $CAMS uncovers potential financial exploitation by identifying nursing home residents with past due accounts. Since the project was announced in May of 2008, 43 criminal cases have been filed.

***

  • [N]ursing home residents are the most vulnerable and the least likely to be able to detect or report it. It is estimated that only one in 100 instances of victimization is typically reported.

  • Servicing 39 counties when launched in 2008, Project $CAMS currently protects seniors in over 250 nursing homes across 75 counties. The nursing home facilities participate by identifying residents who are behind in their payments and providing the Attorney General's office with relevant documentation. Nursing home arrearages as a result of thefts have been as high as $75,000. In the majority of the cases, the perpetrator was a relative.

For the entire Michigan AG press release, see Cox Charges Six for Scamming Seniors. FinancialAbuseOfElderlyAlpha

Miami-Dade Courthouse Foreclosure Sales Readying To Go Online

In Miami, Florida, The New York Times reports:
  • Buying into Miami’s foreclosure glut will soon be a whole lot easier. Seeking ultimately to eliminate a record backlog and a system that favors insiders, Miami-Dade County announced plans [...] to use online auctions for the thousands of delinquent properties that have made South Florida a center of the recession.

  • MiamiDade.realforeclose.com, the Web site, will become fully operational on Dec. 7, making Miami-Dade the largest of 12 Florida counties in the process of replacing courthouse auctions with online sales. “The goal is to make it more convenient for people to bid and to research properties,” said Harvey Ruvin, the clerk of courts. “It kind of levels the playing field.” The online system would end, or at least make digital, what many officials describe as a process steeped in speculation, trickery and, occasionally, physical conflict.

***

  • In Miami and elsewhere in Florida, scuffles have broken out as one investor tried to block another, or tried to sell a property at a higher price than he paid minutes earlier. Mr. Ruvin said that he installed cameras and a full-time police officer a few years ago to keep things under control. He said he looked forward to making the system computer-based, so bidders would make offers from home. “My approach is to serve more and more people online instead of in line,” he said.(1)

For more, see Miami-Dade Hopes Online Auctions Will Help Reduce Backlog of Foreclosures.

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

In a related story from Central Florida, see The Tampa Tribune: Pasco County moves foreclosure auctions to the Web:

  • Pasco County is moving its foreclosure auctions from the courthouse to the Internet. The county will hold its first Web site auction on Monday and phase out on-site sales by Dec. 15. The new online auction site, www.Pasco.realforeclose.com, will save money on auction costs and broaden the pool of potential buyers, the county said.

(1) Stories of novice, wanna-be real estate investors getting burned because they don't know what they're doing should begin to increase as these online auctions become more prevalent throughout the country. For examples of people screwing themselves at real estate auctions due to their own lack of knowledge and experience, see:

County Property Appraiser To Slap $458K Lien On Fla. Mansion For Allegedly Bogus Homestead Tax Exemption Claim; Calls For Criminal Prosecution

In Ft. Myers, Florida, The News Press reports:
  • The Lee County Property Appraiser’s Office will file $458,396 in liens against Charles and Barbara Parsons for back taxes and penalties as the State Attorney investigates the couple for homestead fraud. The liens will be filed Dec. 4 if the couple does not pay back taxes and penalties the county appraisers’s office says the couple owes for renting their homesteaded property for upscale getaways, business trips and weddings since 2002.

***

  • Valued at $4.5 million by the county appraiser, the property’s homestead exemption allows for the Save Our Homes benefit that caps taxable value increases at 3 percent each year. The riverfront home [...] in south Fort Myers is advertised online as the Villa Aloreon, an upscale private or corporate retreat costing as much as $19,500 per week. It’s also advertised online as the Buena Vista Center, where Barbara Parsons gives business seminars.

***

  • The state attorney’s office said it is investigating the possible fraud. It would be the most expensive such case in the county’s history. Property Appraiser Ken Wilkinson wants the state attorney to prosecute the couple. Homestead exemption fraud in Florida is a misdemeanor carrying penalties up to one year in prison and a $5,000 fine. “That would send a message,” Wilkinson said.

For more, see South Fort Myers homeowners face $458,396 in liens.

Tenants, City Call Foul On Ex-NBAer; Deteriorating Conditions Force Residents To Flee Buildings Owned By Star B-Baller Named In Slew Of "Slum Suits"

In Chicago, Illinois, the Chicago Tribune reports:
  • The Prairie Avenue apartment building -- described by the city as a slum nuisance -- sits a short drive from where Antoine Walker once dominated basketball games, a prodigy at Mount Carmel High School on his way to escaping South Side poverty to become a fabulously wealthy NBA star.

  • At one point, bricks fell off the building's facade, a hazard that went unfixed for months, city records show. Before that, a broken sewer pipe filled the basement with feces, toilet paper and other debris, creating an odor that forced families to move their children out. The angry tenants don't know Walker, 33, who reportedly earned $110 million during a 13-year pro career that included winning an NBA championship ring. But the 6-foot-9 former all-star -- known for a partying lifestyle that stretches from the golf course to the velvet-rope club -- plays a big role in their lives. His company owns the building.

***

  • Real estate investment companies that list Walker as an investor or principal -- Walker Ventures LLC and AW Realty LLC -- are the target of more than a dozen lawsuits alleging poor management of numerous properties, unpaid debts and damages caused by shoddy repair work.(1) In one case last month, the city won $950,000 in court-ordered fines against Walker Ventures. [...] Known as affable and media friendly, Walker has been elusive when it comes to many of the property accusations. The tenants haven't seen him, and lawyers have been unable to find him to serve papers.

***

  • Walker has left day-to-day operations of Walker Ventures to one of the company's two other members, Frederick G. Billings, 44, who Walker said had been a friend for 18 years. Billings, who has owned construction and tax consultant companies, is out on bond after being arrested in March on charges of running a mortgage scam in Chicago that netted him more than $700,000 in illegal loans, court records show.(2)

For more, see City targets ex-NBA star for 'slum' housing (Walker 'humbly apologizes' for 'failings of my company').

(1) According to the story:

  • On Cornell Avenue, a 13-unit building developed a mold problem so bad that a 7-month-old boy repeatedly woke up coughing, a tenant lawsuit says. The toxic fumes and a lack of heat drove all the tenants to abandon the building, which the city declared "a hulking public nuisance" before Walker Ventures eventually lost it in a bank foreclosure.
  • On Minerva Avenue, another Walker Ventures building suffers from spotty electricity and a mouse and roach infestation that resulted in its failing several inspections tied to federal rent subsidies, government records show. Shoddy conditions and a problem with squatters drove most tenants away, and this month a team of city inspectors and police found several code violations, city officials said.
  • In Country Club Hills, raw sewage leaked from bad pipes inside a condominium owned by Walker's AW Realty and managed by his mother, Diane Walker, according to a Cook County lawsuit that described how the leak destroyed the unit below.
  • Steven McKenzie, an assistant city corporation counsel, said that a number of foreclosed and now-abandoned properties have grown into neighborhood nuisances. One of the examples he cited was the Cornell Avenue building, which leaked natural gas in the vestibule as squatters were smoking upstairs, a fire hazard documented in court records.

(2) Walker reportedly said that he was unaware of Billings' other legal problems. "I wouldn't have put my reputation on the line had I known about them," Walker said. Walker said he became aware of his companies' problems only when court summonses from Chicago began arriving on his doorstep in late 2008 in Miami, where he currently lives. He said he was "saddened" by the allegations. "I was misguided into trusting other people and put my money and faith into other people's abilities," he said. Walker Ventures tenants, some of whom remembered watching Walker's buzzer-beating shots on TV, have mostly interacted with Billings about their living conditions, the story states.

Saturday, November 28, 2009

Long Term Residents In 43-Unit NJ Hotel Facing Foreclosure Claim Foul; Say Management Gave Them The Boot Without Going Thru Proper Eviction Proceeding

In Pitman, New Jersey, The Gloucester County Times reports:
  • Claiming that she and fellow residents at the [43-unit] Hotel Pitman were illegally evicted on Nov. 14, Christy Blair cites the New Jersey statutes for proof. "My husband and I were both residents of the Hotel Pitman and I say residents, not guests, because we lived there for almost 14 months," said Blair. "Many of the people living there were long-term, and according to NJSA 55:13-B-3 (h), if at least 15 percent of the rooms of a hotel are occupied by people who have lived there for more than 90 days, the law considers that property a rooming or boarding house, which means we should have the same rights as boarding house residents, including the right to be legally evicted." Instead, said Blair, residents encountered only a flier hanging in the lobby six weeks before the hotel's closure.

***

  • Another resident, Jesse Evans, says he has been living in a pick-up truck since he lost his room at the hotel. He was also unable to get back in to retrieve his possessions, he said. "A rumor started in the summer that the hotel would go into foreclosure, but we mentioned it to management and they flatly denied it," said Evans. "All that appeared was that letter mentioning economic circumstances six weeks before it closed, and that was unsigned. Based on the law (specifically, NJSA. 2A: 18-61.2), New Jersey required him to give us 18 months' notice." Evans echoed Blair's complaint about the lack of a signed notice.(1)

  • According to borough officials, the hotel will go to sheriff's sale on Dec. 9.

For more, see Pitman Hotel closing illegal, evicted claim.

For more on tenants' rights in New Jersey, see:

(1) According to the story, New Jersey Department of Community Affairs Public Information Officer Lisa Ryan confirmed the residents' reading of the law. "If at least 15 percent of the dwelling units were, in fact, occupied over 90 days, the building would have been subject to the Rooming and Boarding House Act of 1979 and to the protections accorded under the Residential Eviction Law, NJSA 2A:18-61.1," said Ryan. "The people impacted are free to seek legal representation at their local legal aid office."

"If it was considered a boarding house, those residents should be covered by the anti-eviction act. Even some hotel residents are protected by that act," said Joanne Gottesman, a clinical associate professor at Rutgers University School of Law in Camden. "It sounds like there are some good arguments that the anti-eviction act would apply to them." Gottesman said it seemed like some procedural issues were not followed, and she encouraged the residents to contact South Jersey Legal Services at (800) 496-4570 for help in determining their rights.

Life At 186-Unit Apt. Complex Hits The Skids As Landlord Defaults On Loan Payments; Services Stop, Hot Water Cut, Mold Thrives, Bats & Roaches Move In

In Columbus, Ohio, The Columbus Dispatch reports:
  • Bats in the living room and cockroaches in the kitchen scared him enough. Now, the 4-year-old cries because he can't even enjoy a warm bath before bed, said his mother, Mona Anstaett. "I'm on day 17 with no hot water," said Anstaett, who lives at Westview Gardens apartments on the West Side. "I just don't know what to do anymore." The last time she went into the office to plead for help with repairs and pests, the managers had no answers, she said, so she left in tears.

  • The Hall Road complex is in receivership. Courts, banks and a newly appointed receiver are wading through a mountain of unpaid bills and maintenance needs, trying to keep the 186-unit property viable in the wake of the owner's mortgage default. In the meantime, Anstaett and others live amid the fallout.

***

  • The rights of tenants aren't supposed to change when a property goes into default. But the law and the reality of living conditions don't always mesh as quickly as everyone would like. "This, unfortunately, is an example of what's out there," said Cynthia Rickman, spokeswoman for the Columbus Development Department. "I can't say it's the norm, but it's what can happen in foreclosure or when these properties start to change hands. Everything stops." She said code-enforcement officials have received complaints about mold, exposed wiring, roaches and a lack of hot water at Westview.

For more, see Renter has roaches aplenty, but no hot water (Living conditions deteriorate at complex after owner defaults).

Grand Rapids "Grave Robber" Cops Plea In $4.2M Cemetary Trust Funds Ripoff; Suspected Of Similar Swindle Of $20M In Indiana

From the Office of the Michigan Attorney General:
  • Attorney General Mike Cox [...] announced that Robert Earl Nelms pleaded guilty to two felonies for embezzling more than $4.2 million in cemetery trust funds from Chapel Hill Memorial Gardens in Grand Rapids, and failing to properly administer numerous funeral contracts over a three year period. "Stealing from the dead is a betrayal of the highest order," said Cox. "Families who have laid their loved ones to rest have a rightful expectation that this sacred ground will forever be protected."

***

  • In total, it is alleged Nelms stole more than $24 million from cemeteries and funeral homes he controlled in Michigan and Indiana. He did this by selling cemetery products and services but failing to deposit the required portion in trust for cemetery upkeep and consumers' use. Approximately $4.2 million dollars were from the Grand Rapids cemetery, with Nelms facing charges in Indiana for the rest.(1)

For the Michigan AG press release, see Cemetery Swindler Convicted of Felony Embezzlement.

(1) According to the press release, this is the second defendant convicted by Attorney General Cox for involvement in a major theft of cemetery trust funds. Carter Green of Nevada was convicted in Wayne County Circuit court in December of 2007 for his role in aiding co-defendant Clayton Smart. Cox alleges that Smart embezzled as much as $70 million in cemetery trust funds from 28 Michigan cemeteries. Clayton Smart is awaiting trial in Tennessee on related charges. Upon completion of that trial, Smart will be transferred to Michigan for arraignment on charges filed by Cox, the press release states. EscrowRipOffKappa

Prohibition Against Upfront Fees Fails To Stop Out-Of-State Loan Modification Racket, Leaving North Carolina Woman Out Cash, Home

In Greensboro, North Carolina, WXII-TV Channel 12 reports:
  • Susan Pifer, who drives a bus and works at Ellis Middle School, said her family lost $2,000 to a company in Arizona that claimed it would keep her and her family from losing their home. Despite paying the company, Pifer's home was foreclosed on last April. Pifer said the company promised to refund the money if it couldn't negotiate the lower payment. Pifer, who has since moved into a rental property, said the company no longer returns her phone calls.

***

  • An independent processor who worked on Pifer's loan modification said she knew of at least three other families who lost their money to the same company. According to North Carolina law, it's illegal to charge up-front for these types of services.

For the story, see Family Lost Cash, Home To Mortgage Scam (Mortgage Scam Complaints Soar In NC).

Prosecutor Drops Charges Against Woman Accused Of Forging Hubby's Name On POA In Sale Leaseback Of Family Home Resulting In Both Getting The Boot

In Bantam, Connecticut, The Register Citizen reports:
  • A criminal case brought against a Bethlehem woman for allegedly selling her family’s home without her husband’s knowledge was dismissed [...] at her husband’s request.(1) Shelley Ciriello, 55, was arrested Sept. 19 [...] and charged with second-degree forgery, for allegedly signing her husband’s name to a power of attorney to sell their marital home. Further, without her husband knowing, Ciriello reportedly agreed to rent the house from the new owner. [...] The Ciriellos were evicted from the house after rent checks for $3,767 bounced, according to court records.(2)

Source: Case dismissed for woman who sold husband's family home.

For earlier story, see Wife sold house, husband clueless.

(1) According to the story, the prosecutor said he decided to drop the charge against Ciriello after the husband agreed to adopt his wife’s property transactions. “The defendant’s husband wrote a letter indicating he didn’t want to pursue case because they are under great financial hardship and it would only further victimize him,” Supervisory Assistant State’s Attorney Devin Stilson reportedly said. “He did not want to pursue the case or testify.”

(2) According to an earlier story, Ciriello found herself in financial trouble by reportedly abusing a line of credit, using the family home as collateral. Ciriello then responded to an advertisement from a now-defunct lending company, which arranged a sale leaseback with a third party in an attempt to provide relief from the financial pressure. The lending company reportedly has since been shut down by the State of Massachusetts for offering sub-prime loans and inflating borrower assets.

Offer Of "Free Consultation" To Would-Be Client Gets Expensive For Florida Personal Injury Attorney

In a recent column, Texas attorney John G. Browning writes in The Southeast Texas Record on some oddball court cases that affirm the age-old adage that reality is often stranger than fiction. Here's one example:
  • Most people who visit a plaintiff's personal injury attorney expect to find a sympathetic ear and a champion to take up their cause, not a basis for another lawsuit. At least one person arriving at the Palm Beach, Fla., law offices of Fetterman and Associates in response to an ad proclaiming "If you are the victim of injuries... please contact us for a free consultation" didn't have far to go.

  • Robert Friedrich visited the law firm in 2003 to discuss suing someone as a result of a car accident nine days previously. During his consultation, however, he gained a whole new cause of action when the chair he was sitting in collapsed and he struck his head on another piece of furniture in the firm's conference room. Friedrich then sued the law firm as well as the company that sold the allegedly defective chair, claiming serious neck injuries.

  • In May a Palm Beach County [jury] found both defendants liable for the chair collapse, and awarded over $2.2 million in damages. For a "free" consultation, this turned out to be pretty expensive indeed for the Fetterman law firm.

For other examples, see Still Litigating In The Twilight Zone.

Friday, November 27, 2009

Homebuilder's Trade-In Offer To Prospective Buyers Sours, Leaving Them Mired In Mess

In Genesee Township, Michigan, WJRT-TV Channel 12 reports:
  • Some homebuyers are calling it one of the worst mistakes of their lives. A deal that promised the house of their dreams turned sour. [...] The pitch sounded great: Trade in your old home, trade up to a new one. "To tell you the truth, I think it's a great deal," said Carol Eberhardt from Symphony Homes during a 2007 interview. But for Tony Grubish, it was no deal at all. "It's probably one of the biggest regrets I have in my life."

***

  • Grubish says he and his then-pregnant wife filled out the paperwork and were about to move into a new Symphony home in Genesee Township. But one week before closing, the deal ran into a snag. "At the last second, they said, 'Oh, I have bad news. We can't finance you for two FHA loans," Grubish said.

  • So instead, he says, Symphony convinced him to sign a land contract for that new home. "My first instinct was to get up and walk out. But again, I had a pregnant wife who was pretty torn and distraught about it. We were pretty much led up, up until that point, to believe this was going to happen."

  • He learned Symphony wouldn't lease or buy his old house, either. Eventually, the old home slid into foreclosure, and Grubish couldn't afford the new one. Now, he says he's out roughly $25,000 and 180 points off his credit score. "I probably won't be able to get financed for at least 10 years, probably," he said. "We're throwing the thought around of even just filing for bankruptcy."(1)

For more, see ABC12 Investigates: Symphony Homes.

(1) Reportedly, Symphony Homes' headquarters in Davison is empty. That hasn't changed for months. But what has changed is the growing list of debt collection notices on the front door, according to the story. The company filed for Chapter 11 bankruptcy protection in August 2008 and had been run by two men: realtor Steve Burges and builder Don Mahoney, the story states.

Soured Investment In Alleged $4M+ Ponzi Scheme Leads To Home Foreclosure For One Victim

In Sacramento, California, The Sacramento Bee reports:
  • A Sacramento insurance agent [...] was accused of running a $4 million-plus Ponzi scheme, squandering the money on ludicrous investments while buying himself fancy cars and homes. Authorities said William Arthur Sassman II even invested customers' money with a Folsom man who has been charged with running a much larger Ponzi scheme. Sassman, 41, was arrested on 100 counts of theft and other charges.

***

  • One client, who wasn't identified, invested $200,000 in 2007, with the money supposedly going into a Mare Island real estate deal. She got $5,000 monthly payments for a while. But when she tried to cash out of the investment, Sassman told her the money had first gone into a certificate of deposit and then "had gone overseas," according to [California AG office's special agent Jason] Nichols. Sassman told the woman he had hired a lawyer to recoup her money. The woman eventually lost her home to foreclosure, Nichols wrote.

Source: Sacramento insurance agent accused of running Ponzi scheme.

Illinois AG Cracks Down On Home Repair Companies In Various Alleged Scams; One Equity Stripping Ripoff Cost Victims Nearly $1.3M, Says Lawsuit

The Office of the Illinois Attorney General Lisa Madigan has recently filed a string of civil lawsuits against home repair companies alleging various acts of misconduct perpetrated against homeowners:
  • Madigan Cracks Down On Chicago Mortgage And Home Repair Fraud Scheme ($1.3 Million Swindled from Elderly, African-American Homeowners in Subprime Loan Scam): Lawsuit filed against a Chicago man and five home repair and mortgage companies for conducting a wide-spread scheme that targets African-American consumers on Chicago’s South and West sides and has stripped nearly $1.3 million in equity from the homes of at least 36 consumers, including several who lost their homes to foreclosure.

FTC Consumer Video Warns Against Loan Modification Rackets

As part of their "consumer enlightment" program on loan modification foreclosure rescue scams, the Federal Trade Commission has put out a video intended to discourage homeowners needing help with their mortgage payments from patronizing outfits seeking upfront fees while making promises they can't keep.

For the video, see Real People, Real Stories (Avoid Foreclosure Rescue Scams) (Vea en español).

Thursday, November 26, 2009

Feds, States Unveil "Operation Stolen Hope" In Effort To Curb Upfront Fee, Foreclosure Rescue Loan Modification Rackets

The Federal Trade Commission recently announced:
  • [FTC] Chairman Jon Leibowitz, joined by [others ... a]nnounced Operation Stolen Hope as part of a continuing federal-state crackdown on mortgage foreclosure rescue and loan modification scams. The operation involves 118 actions by 26 federal and state agencies. The FTC actions were announced in Nevada, where one in every 23 homes is facing foreclosure. [...] The FTC announced six lawsuits, bringing to 28 the number of mortgage relief cases the Commission has brought since the housing crisis began.(1) Twenty-five state attorneys general and other state and local agencies announced 112 similar actions.(2)

For the entire FTC press release, see Federal and State Agencies Target Mortgage Relief Scams (FTC Leads “Operation Stolen Hope” to Stop Fraud and Help Troubled Homeowners).

(1) According to the FTC's recent announcement, the defendants in these lawsuits are alleged to have falsely claimed that they would obtain mortgage modifications that would make consumers’ monthly mortgage payments substantially more affordable. After charging large up-front fees, they often did little or nothing to help homeowners renegotiate their mortgages. Some of the defendants falsely claimed a high success rate and promised to give consumers refunds if they failed to modify their mortgages, and others misrepresented that they were affiliated with the federal government or consumers’ mortgage lenders or servicers. Each of the cases allege violations of the FTC Act. In addition, several cases allege violations of the Telemarketing Sales Rule (TSR) or the Credit Repair Organizations Act (CROA). In each case, the FTC is asking the court to stop the defendants’ deceptive claims and make them forfeit their ill-gotten gains. In five of the cases, the court already issued a temporary restraining order and froze the defendants’ assets.

The alleged rackets targeted in the FTC lawsuits, linked to the relevant lawsuit documents filed in Federal court, are:

(2) The FTC legal actions are all civil lawsuits, not criminal prosecutions. Aside from one criminal prosecution that I know of brought by the Michigan Attorney General, the legal actions brought by the various states in this newly-announced law enforcement effort all appear to be either civil lawsuits brought by state attorneys general, or adminsitrative actions/cease & desist orders brought/issued by state regulatory agencies. Inasmuch as there is no threat of jail time for the individual operators in any of these cases (except for one individual in the Michigan case), some may say that Operation Stolen Hope would be more appropriately named Operation Whac-A-Mole, since, in the view of some, only an operation involving criminal prosecution of these operators, coupled with consumer education will be effective in reducing loan modification rackets. Putting these guys out of business using civil lawsuits might shut them down - but others will just "pop up" elsewhere in the future and will operate until they get caught. See Ineffective "Whac-A-Mole" Approach To Battling Loan Modification Scams Leads Housing Non-Profit To Launch National Consumer Education Campaign.

Michigan AG Files Criminal Charges In Separate Cases Alleging Loan Modification Firms Clipped Homeowners For Upfront Fees, Then Failing To Help

From the Office of the Michigan Attorney General:
  • Attorney General Mike Cox today announced the filing of three criminal complaints and a total of 10 charges against illegal advanced fee "foreclosure rescue" operations accused of defrauding Michigan families of thousands of dollars. Global Financial Consulting Services of Dearborn Heights, Advanced Mediation Services of Midland and James Klein of Midland are accused of illegally charging homeowners facing foreclosure upfront fees for mortgage modification assistance.(1) The defendants claimed they would help homeowners by working with their lenders in an attempt to modify the borrower's mortgage. After paying the upfront fee, borrowers found that the companies could not secure a modification and were subsequently unable to get their money back.

***

  • In addition to [the above] charges, Cox announced that he has partnered with the Federal Trade Commission and delivered Notices of Intended Action (NIAs) to 13 out-of-state companies accused of illegally demanding upfront fees from Michigan consumers for loan modification services.(2)

For the entire press release, see Cox Takes Aim at Advanced Fee "Foreclosure Rescue" Scams.

(1) According to the AG's press release, Global Financial Consulting Services faces four criminal counts including two counts of charging upfront fees before services were rendered, a violation of the Credit Services Protection Act, and two counts of making misleading statements. Advanced Mediation Services and James Klein each face two counts of charging upfront fees before services were rendered, a violation of the Credit Services Protection Act, and one count of making misleading statements. Each of the charges carries a penalty of up to 90 days in jail and/or a fine of $1,000 in addition to the requirement that the companies make full restitution to each of their victims.

(2) The companies receiving NIA warnings from Cox today include:

  • 1 Global Financial, Inc., of Fort Lauderdale, FL;
  • 21st Century Legal Services and Fidelity National Legal Service, of Rancho Cucamonga, CA;
  • Best Interest Rate Mortgage, of Westmont, NJ;
  • Echo Loans & Financial Solutions, of Foothill Ranch, CA;
  • Elect Group LLC, of Oakland Park, FL;
  • Federal Home Savers, of Commack, NY;
  • Fresh Start Home Modification, of Woodbury Heights, NJ;
  • Hope N Housing, of Norwalk, VA;
  • IMC Financial, of Clearwater, FL;
  • Lifeguard Financial, of Fort Lauderdale, FL;
  • National Modification Corp., of Hauppauge, NY;
  • North American Relief, LLC, of Costa Mesa, CA; and
  • Peoples First Financial Inc., of San Diego, CA.

Pennsylvania AG Tags Four Loan Modification Outfits For Pocketing Upfront Fees, Failing To Provide Promised Foreclosure Relief

From the Office of the Pennsylvania Attorney General:
  • Consumer protection lawsuits were filed [...] against four loan modification or "mortgage rescue" businesses, along with their officers, who are accused of deceiving Pennsylvania consumers seeking help modifying their mortgage loans. "Consumers struggling with high interest rates or large loan payments were drawn to these businesses by misleading ads, deceptive websites and false promises of 'permanent changes' to their mortgages," Attorney General Tom Corbett said. "Instead, many consumers paid large up-front fees that resulted in little, if any, relief from their mortgage problems - leaving them in even worse financial situations."

For more, including a description of the charges in each lawsuit, see Attorney General Corbett announces lawsuits against four loan modification businesses accused of deceiving consumers about "mortgage rescues".

(1) According to the AG's press release, Corbett said the civil lawsuits were filed by the Attorney General's Bureau of Consumer Protection against the following businesses and individuals:

  • Foreclosure Awareness Inc., of Bensalem and Boca Raton, Florida, along with owner Michael Squillace,
  • Nationwide Foreclosure Prevention Center LLC, of Williamstown, NJ, and owner Robert P. Valentin,
  • Best Interest Rate Mortgage Company LLC, of Huntingdon Valley, PA and Westmont, NJ, as well as company President Michael J. Diplacido,
  • U.S. Mortgage Mod LLC, of Philadelphia, and owner Marc Dambrosio.

Corbett said that in addition to false or misleading claims about the ability to actually modify loans, some of the companies named in these lawsuits also allegedly:

  • used deceptive mailings to consumers designed to appear as if the correspondence came from a government agency or government-related program,
  • did not provide consumers with state-required financial disclosure information,
  • failed to inform consumers about their five-day right to cancel and accepted up-front fees without posting the necessary surety bond or trust account,
  • were not licensed by the Pennsylvania Department of Banking to handle mortgage loans or loan refinancing.

Connecticut AG Files Suit Against Out-Of-State Company Running Allegedly Bogus Upfront Fee Loan Modification Scam

In Hartford, Connecticut, the Hartford Courant reports:
  • The state is suing a South Florida mortgage rescue company that charged Connecticut homeowners tens of thousands of dollars but failed to help them avoid foreclosure. The company, FHA All Day.com, also refused to refund the fees, between $2,500 and $4,500. [...] As of Oct. 1, the state began banning companies from demanding up-front payments for mortgage help.

***

  • FHA All Day couldn't be reached for comment. FHA All Day's website said it is no longer accepting new applications. A call to a telephone number on the site yielded a recording saying the number was not accepting calls. FHA All Day was sued by the state of Florida in July.

Source: Connecticut Sues Florida Mortgage Rescue Company.

See also, Connecticut AG news release: Attorney General, DCP Sue Florida Mortgage Rescue Company For Allegedly Defrauding CT Homeowners.

Wednesday, November 25, 2009

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:

(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.