Tuesday, March 30, 2010

Unwitting Mortgage Cosigner Takes Hit On Credit Report After Daughter, Son-In-Law Subsequently Modify Loan Payments, Despite Never Being In Default

In Cherry Hill, New Jersey, The Philadelphia Inquirer reports on Roseann Ippoliti, a local woman who recently took a big hit on her credit in connection with a mortgage she had cosigned for her daughter and son-in-law to facilitate a home acquisition, despite the fact that the loan payments were always timely made.

The problem arose from the desire of the daughter and son-in-law to subsequently refinance the mortgage so that they could relieve Roseann from any personal liability on the acquisition loan.
  • Rather than leave her in a potentially vulnerable financial situation, Ippoliti said, her son-in-law decided to refinance the mortgage to put the house in his name. He contacted Wachovia and was told to apply for a mortgage modification instead. He did, it was approved, and his payments dropped to $1,100 a month from $2,159.

***

  • Because Ippoliti's name remained on the modified mortgage, she needed to sign the modification document. But, she said, her son-in-law was told her signature was unnecessary - that his signature, as occupant of the property, was enough.

  • In November, Ippoliti received a letter from Bank of America notifying her of a routine periodic review, "to ensure that they feature the most appropriate credit line" on her credit card. That review resulted in a drop in her credit line to $3,400 from $13,000 "because I had a major derogatory record on my credit file," which Bank of America identified as "a mortgage being delinquent." (Ippoliti has mortgages on houses in Cherry Hill and Cape May, and both are current.)

  • It was then her daughter and son-in-law told her about the mortgage modification, explaining they didn't do so before because they weren't delinquent and Wachovia said it didn't need her signature. They had no idea how the words mortgage modification are viewed by creditors.

For the story, see Cosigner bitten by refi mistake.

NYC To Offer Free Legal Support In Mandatory Settlement Conferences For Homeowners In Foreclosure

In New York City, Crain's New York Business reports:
  • The city announced [] that it will be offering free legal support for New Yorkers at risk of losing their homes to foreclosure. The new program will be offered through NYC Service, which was launched last year by Mayor Michael Bloomberg to provide volunteer services to different sectors across the city suffering from the recession. The program will train and dispatch 300 volunteer attorneys to expand the legal services already provided by nonprofits to homeowners facing foreclosure.

***

  • The program, dubbed NYC Service Legal Outreach, will provide homeowners legal assistance during the mandatory settlement conference, which is when the homeowner and bank meet to negotiate alternatives to a foreclosure. Under a recently passed New York state law, these conferences are required before foreclosures can proceed.

  • The city hopes to recruit 300 volunteers over the next three months. One hundred of those volunteers will be stationed at courthouses to screen homeowners, while the other volunteers will be matched with individual homeowners and represent them through the foreclosure settlement process.

  • Volunteers do not need real estate law expertise because they will be trained and supervised by Empire Justice Center, Legal Services NYC, The Legal Aid Society and the City Bar Justice Center. The Center for NYC Neighborhoods, a non profit created three years ago to assist distressed homeowners, will direct homeowners to the program.(1)

For more, see City to offer legal aid to those facing foreclosure (Mayor launches program to train and dispatch 300 volunteer attorneys; vows “no family facing the loss of their home should be without representation").

(1) For a Center for NYC Neighborhoods report on how the court-based “mandatory settlement conference” process in New York foreclosure actions has yet to live up to expectations, see LOCKED OUT: Little Relief for NYC Homeowners in the Foreclosure Settlement Process ("Of the nearly 800 settlement conferences reviewed during this study, only 3% resulted in any kind of settlement").

NY Appeals Court Dismisses Lender's Lawsuit; Says Bank Failed To Strictly Comply With State Anti-F'closure Rescue Ripoff Law When Filing Legal Action

In Brooklyn, New York, The New York Law Journal reports:
  • Failure to give proper notice to a homeowner under New York's foreclosure fraud law is a defense that can be raised at any time, a Brooklyn appeals court has ruled in a decision of first impression at the state appellate level.

  • In dismissing a foreclosure suit against homeowner Alan Silver, a panel of the Appellate Division, 2nd Department, held that the lender seeking to foreclose had the burden of showing strict compliance with the state's Home Equity Theft Prevention Act.

  • The act, codified in Real Property Law §265-a, requires that a homeowner be served with a foreclosure notice on a separate, colored page with a "bold, twenty-point type" title and "bold, fourteen-point type" in addition to a summons and complaint. Enacted in 2007, the law aims to curb foreclosure-related schemes that encourage homeowners in financial distress to sign over their houses to buyers who promise to pay off the debt but disappear once they have the title.

  • In reversing Supreme Court Justice Karen V. Murphy in Nassau County, N.Y., a four-judge appeals panel in First National Bank of Chicago v. Silver, 18539/07, disagreed with the bank's argument that complying with the statutory notice requirement was a "red herring." "We hold that this is a condition precedent which is the plaintiff's burden to meet, and which does not have to be raised as an affirmative defense in the answer," Justice Anita R. Florio wrote for the panel. Justices Mark C. Dillon, Ruth C. Balkin and John M. Leventhal joined the opinion.

***

  • In reversing the lower court, Florio observed that lower courts had consistently interpreted the notice provision "as a mandatory condition" that required the foreclosing party to show "compliance therewith and, if it fails to demonstrate such compliance, the foreclosure action will be dismissed."(1)

For more, see N.Y. Court Places Burden on Bank of Showing Notice of Foreclosure.

For the court ruling, see First Natl. Bank of Chicago v Silver, 2010 NY Slip Op 02511 (NY App. Div. 2nd Dept., March 23, 2010).

Go here for the standard, statutorily-required foreclosure notice required by New York's Home Equity Theft Prevention Act that the lender failed to serve on the homeowner when initiating this foreclosure action and which proved to be its undoing.

(1) Reportedly, Jeffrey D. Buss of Smith, Buss & Jacobs in Yonkers, N.Y., represented Silver and his wife pro bono. In an interview, Buss said that "it was a real pleasure" to inform his clients, a couple in their 80s, that the case had been dismissed, the story states. Buss said the bank could re-file the case but would have difficulty proving standing, according to the story.

Judge Addresses Attorney BS When Imposing Sanctions Against Lawyer For Role In Attempt To Revoke Valid Loan Modification Agreement

In Oakland, California, U.S. Bankruptcy Judge Randall J. Newsome recently found himself addressing the conduct of an attorney representing IndyMac Bank (OneWest Bank) for her role in attempting to improperly scrap a valid loan modification agreement between the bank and a homeowner facing foreclosure, and which resulted in an unappreciated waste of the judge's time.
  • [W]hen attorneys come before the court and play "fast and loose" with the truth, or rely on the bureaucratic obfuscations of their clients to dodge commitments they have made, this court is required to act to protect the integrity of its processes. If the court cannot rely on and trust the authority and words of the lawyers that appear before it, it cannot effectively handle the increasingly heavy volume of work confronting it, thus risking systemic collapse. That trust has been breached in this adversary proceeding, and the remedy of judicial estoppel perfectly suits the facts presented.

  • Accordingly, the defendants are hereby adjudged to have accepted the July 1, 2009 [loan modification] agreement signed by the [homeowner ...], and are fully bound by the terms thereof. The terms of that agreement supercede and replace any and all terms that are inconsistent therewith in any and all notes and deeds of trust previously executed by the parties, their successors and assigns.

  • As for the issue of sanctions, the defendants' failure to appear at status conferences and respond in timely fashion to court orders alone amply support a finding of bad faith in the conduct of this litigation. The total indifference shown towards the court's processes, the waste of judicial resources that resulted, and the misleading statements made to both the court and plaintiffs' counsel, constituted willful misconduct. In re DeVille, 361 F.3d 539 (9th 662 Cir.2004); see also U.S. v. McCall, 235 F.3d 1211, 1217 (10th Cir.2000).

For the ruling, see In re Clawson, 414 B.R. 655 (Bankr. N.D. CA, Oakland Div. 2009).

Thanks to Deontos .is for the heads-up on the court ruling.

Woman Accused By Siblings Of Using POA To Swipe Dying Father's Home; DC Court Of Appeals Orders Civil Trial On Allegations Of Forgery

A recent court ruling by the District of Columbia Court of Appeals may provide some insight for those who:
  • find themselves in a situation where an individual uses a power of attorney ("POA") to improperly convey title to real property belonging to another, and
  • seek to void/invalidate or otherwise undo the improper conveyance, and any transfers or mortgaging of the subject property occurring thereafter.

The abbreviated facts of the case, adapted from the ruling, follow:

  • On November 4, 2005, a frail, seriously ill (with pancreatic cancer) Willie Smith purportedly executed a document naming his daugter, Mary Smith, as power of attorney.

  • Eleven days later, asserting power of attorney for her father, Mary Smith purportedly executed a deed transferring title to the home of her dying father to herself for the consideration of ten dollars.

  • The next day, Willie Smith died intestate and was survived by eight children.

  • About one year later, in November, 2006, Mary Smith obtained a loan secured by a deed of trust (ie. mortgage) on her now-deceased father's home for $220,000.

  • Subsequently, after Mary Smith defaulted on the loan, Wells Fargo Bank, which had come to hold the note secured by the deed of trust, foreclosed on the property and eventually purchased it at a foreclosure sale.

  • At some point after the loan to Mary Smith and prior to the foreclosure sale of the home, Daral Smith, who is Mary Smith's brother and one of Willie Smith's surviving children, as well as several other siblings, sued both Mary Smith and Wells Fargo in a quiet title action, alleging that the conveyances to and from Mary Smith (and any conveyances following from them) were invalid because the power-of-attorney instrument did not authorize Mary Smith to convey the property to herself and because, in any event, the instrument was a forgery.

Ruling that there was no genuine issue of material fact to be determined that would require a trial, the lower court granted summary judgment in favor of Wells Fargo, (1) having stricken the affidavits that the brothers & sisters submitted to oppose summary judgment on the forgery issue, and (2) finding that Wells Fargo was a bona fide purchaser for value without notice of any defect in title (a "BFP").

On appeal, the District of Columbia Court of Appeals:

  • affirmed the lower ruling that, given the specific facts of this case, Wells Fargo (the foreclosing lender who wound up holding the loan on the home) was entitled to the protection of the recording statutes as a bona fide purchaser; and

  • reversed the lower court ruling on the forgery issue, saying that "the trial court erred in striking the affidavits that plaintiffs submitted in support of their forgery claim, and likewise erred in granting summary judgment, because the affidavits raised a material factual issue as to whether there was a forgery affecting the chain of title."

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

The court reviewed the POA, the terms contained therein, the surrounding facts of the case, and the case law precedent that it applied. It observed that the underlying deed to Mary Smith and the deed of trust in favor of her mortgage lender would be void ab initio if the POA was a forgery, or if the POA was valid but Mary Smith exceeded the authority it gave her as attorney-in-fact when she conveyed the property to herself. It concluded that:

  • the POA, assuming it wasn't a forgery, gave Mary Smith apparent authority (as opposed to actual authority) to convey the property as she did, and implied that in the event she did not have actual authority, the title conveyed would, at worst, be considered voidable (as opposed to void ab initio). In that case, Wells Fargo would be entitled to the protection of the recording statutes as a bona fide purchaser, which would preclude its deed of trust from being voided/invalidated by the court, and

  • the POA, assuming it was a forgery, would result in Mary Smith's title and Wells Fargo mortgage being void ab initio, in which case Wells Fargo would not get bona fide purchaser protection and, accordingly, would be left holding the bag with a deed of trust that would be subject to being voided/invalidated by the court.

Accordingly, the D.C. Court of Appeals booted the case back to the lower court to allow for a trial to determine whether or not the POA purportedly given to Mary Smith by her father was a forgery.

For the ruling, see Smith v. Wells Fargo Bank, 09-CV-77 (D.C. Ct. of App., March 25, 2010).

Monday, March 29, 2010

Short Sale "Flopping" Among Current Real Estate Scam Techniques Getting Attention From Feds

In Phoenix, Arizona, BusinessWeek reports:
  • [Financial Fraud Enforcement Task Force] members were in Phoenix to hear about emerging trends in mortgage fraud from professionals who work in the real estate and mortgage industry, and community organizers and lawyers who help homeowners struggling to keep their homes. Members include senior Justice Department prosecutors, FBI officials and officials with the Department of Housing and Urban Development.

***

  • Real estate professionals who briefed task force members outlined new and emerging fraud trends, including the "flopping" of short-sale properties. That's a technique where someone gets two price opinions from brokers, giving the low one to the bank arranging a short sale of a home nearing foreclosure and the high one to a potential buyer, said Holly Eslinger, president of the Arizona Association of Realtors.

  • Such techniques can net an unscrupulous buyer tens of thousands of dollars while shorting the bank and homeowner and taking advantage of the subsequent buyer, she said.

Source: US AG brings more money to fight AZ mortgage fraud.

Pennsylvania B'kruptcy Court Voids Sale Leaseback Scam; Victimized Homeowners' Continued Possession Leads To Invalidation Of Subsequent Deed, Mortgage

A recent ruling of a Federal bankruptcy court in Philadelphia, Pennsylvania provides a roadmap for one way in which a sale leaseback, equity stripping foreclosure rescue scam can be undone or unwound, invalidating both the initial title transfer (that was coupled with a contemporaneous leaseback of the premises with a repurchase option) by the victimized homeowner to the foreclosure rescue operator, as well as subsequent conveyances to others.

In a nutshell, the facts are as follows:

  • Homeowners (husband & wife) transfer property to a trust formed and controlled by a local foreclosure rescue operator ("Operator"),
  • Homeowners remain in possession of the property pursuant to a leaseback agreement which includes a right to repurchase the home at some future time,
  • Operator then sells property to 3rd party buyer,
  • 3rd party buyer gets a mortgage loan from bank to finance purchase.
  • Throughout the relevant time period, Homeowners maintained clear, open and exclusive possession of their home.

In ruling that Homeowners were entitled to undo this scam, U.S. Bankruptcy Judge Eric L. Frank found, among other things:

  • Operator violated the Pennsylvania Unfair Trade Practices and Consumer Protection Law ("UTPCPL)" by running this scam,

  • Homeowners were entitled to the remedy they requested - the invalidation of the deed to Operator and have their title restored, returning them to the position they were in immediately before they were scammed,

  • The transfer of title by Homeowners to Operator, while not void ab initio, was nevertheless voidable by reason of the violations of the UTPCPL,

  • The subsequent title transfer by Operator to 3rd party buyer was subject to invalidation because the buyer, by reason of the fact that Homeowners maintained clear, open and exclusive possession of their home, had constructive notice of the scam and, consequently, was not a bona fide purchaser entitled to the protection of the state recording statutes,(1)

  • The subsequent mortgage involving the 3rd party buyer and the mortgage lender used in financing the subsequent purchase was subject to invalidation because the lender, by reason of the fact that Homeowners maintained clear, open and exclusive possession of their home, also had constructive notice of the scam and, consequently, was not a bona fide purchaser entitled to the protection of the state recording statutes.

  • Homeowners' were entitled to recover attorneys’ fees and costs from Operator.

However, Judge Frank did go further to find that, to the extent that the proceeds of the loan from the mortgage lender were applied to paying off Homeowners' existing mortgage in default, delinquent real estate taxes, and similar type expenses that in some way directly benefitted Homeowners, the mortgage lender was entitled to an equitable lien on the home for the amounts paid thereon. By granting the equitable lien on the home to the lender, Judge Frank refused to allow Homeowners the enjoyment of the significant windfall resulting from the payoff of the existing liens encumbering the property immediately before the scam was executed.

The mortgage lender, however, was not entitled to the protection of an equitable lien on the home for the amount of the excess proceeds, including any amounts pocketed by Operator, paid for closing costs, etc.

For the ruling, see In re Fowler, Chapter 13, Bky. No. 07-11692ELF, Adv. No. 07-00139ELF (Bankr. E.D. Pa. March 3, 2010).

(For those looking for a quick, easy read, don't bother clicking the link to this case. The ruling is 90+ pages and frankly, there's no way to fully address, in one blog post, all the facts and circumstances, and the related points of law, that Judge Frank exhaustively - and exhaustingly - covers.)

Representing Homeowners in the litigation in this case was The Regional Bankruptcy Center of Southeastern PA, Havertown, PA. (In detailing the events that transpired during the relevant times leading up to the lawsuit, Judge Frank noted in his ruling that Homeowners obtained pre-litigation legal assistance from Community Legal Services of Philadelphia).

(1) For more Pennsylvania case law on this point, see:

For other states, see Bona Fide Purchaser Doctrine, Possession Of Property By Occupants Other Than The Vendor & The Duty To Inquire.

Paralegal Gets Three Years For Role In Sale Leaseback Foreclosure Rescue Ripoff Targeting Financially Distressed Homeoners In Brooklyn, The Bronx

From the Office of the U.S. Attorney (New York City):
  • PREET BHARARA, the United States Attorney for the Southern District of New York, announced that MARINA DUBIN, a real estate paralegal, was sentenced yesterday to two concurrent three-year prison sentences in connection with her involvement in a multimillion-dollar, sub-prime mortgage fraud scheme and another foreclosure rescue scheme.(1)

For the press release, see Paralegal Sentenced In Manhattan Federal Court To three Years In Prison For Role In Multi-Million Dollar Mortgage Fraud And Foreclosure Rescue Scheme.

(1) The foreclosure rescue scheme targeted homeowners whose homes, primarily in Brooklyn and Bronx, New York, were in foreclosure or facing foreclosure, by offering them a plan to "save" their homes. The proposed plan included the refinancing of the homeowners' debt with new, larger mortgages. Because the distressed homeowners typically had poor credit and were not eligible to refinance their debt at favorable terms, the defendants induced them to "sell" their homes to straw buyers, who would apply for loans to be used to "save" the home. The defendants promised that once the straw buyer obtained the mortgage, the proceeds would be used to pay off the homeowners' old debt and make one year's worth of payments on the new loans. The homeowners were told that, during that year, they could continue to live in their homes and work on improving their finances and credit. Finally, the defendants explained to the homeowners that, at the end of the year, the title to their homes would be returned to them by the straw buyers, with their credit repaired and their homes saved. There were also cases in which the defendants did not explain to homeowners that the plan to "save" their home required them to deed their house to a third party and did not obtain permission to deed the homes to others. In such cases, the defendants effectively stole the property of the homeowners by forging the homeowners' signatures on various documents that transferred the homes to straw buyers without the homeowners' knowledge.

NY AG Tags Two Loan Modification Outfits In Civil Suits For Failing To Provide Promised Services

From the Office of the New York Attorney General:
  • Attorney General Andrew M. Cuomo [] filed lawsuits against two loan modification companies for engaging in nationwide foreclosure rescue scams. The lawsuits were filed against National Modification Service (“National Modification”) and its founder Joseph Romano, and Infinity Mitigation Corporation, Infinity Funding Group (“Infinity”), and their owner and principal Neil Singer. The companies and their owners prey on homeowners facing foreclosure by claiming that they can save their homes, but often fail to provide the services promised. National Modification is based in Farmingdale, New York and Infinity is based in Bohemia, New York.(1)

For the New York AG press release, see Attorney General Cuomo Sues Two New York Companies For Defrauding Homeowners In Nationwide Foreclosure Rescue Scam (Cuomo Sues National Modification Service and Infinity Mitigation Services for Illegally Charging Homeowners for Loan Modification Services That Were Not Performed; Cuomo Also Shuts Down Two Other Companies in New York in the Latest Stage of his Ongoing Investigation into Foreclosure Rescue Companies).

(1) The lawsuits against National Modification (go here for lawsuit) and Infinity (go here for lawsuit) allege that the companies charged homeowners up-front fees of several thousand dollars, a violation of New York law. In addition, the companies used misleading advertising and made false representations to customers, including unsubstantiated claims of over a 90% success rate and guarantees that they would be able to convert an adjustable-rate mortgage to a lower, fixed-rate mortgage. The lawsuits also allege that the companies promised a 100% money-back guarantee but then failed to provide refunds to customers that they scammed, often even refusing to answer the customers’ calls.

Sunday, March 28, 2010

"Business Deals Gone Bad" Defense Lets Thief Off w/ Handslap; Some Screwed Over Scam Victims To Get 41 Cents On Dollar Restitution; Others Get Stiffed

In Kennewick, Washington, The News Tribune reports:
  • A Richland real estate developer pleaded guilty Thursday to first-degree theft after being accused of bilking Tri-City residents out of $380,000 they had given him for real estate investments.(1) Armen Lucius B. Weishaar, 49, could be sentenced next week in Benton County Superior Court to up to 90 days in jail and ordered to pay $80,000 in restitution.

  • That reflects only a portion of more than $500,000 he is accused of collecting in potentially fraudulent property dealings from people in the Tri-Cities, Western Washington and Arizona.(2) As part of a plea agreement, five Benton County theft charges against Weishaar will be dropped. He originally pleaded innocent to six counts involving two couples and four individuals.

  • It's not an ideal outcome, said Benton County Prosecutor Andy Miller. But it was acceptable to most of the Tri-City residents who accused Weishaar of taking their money to invest in real estate but never completing the transactions or returning the cash. [...] The guilty plea gives Weishaar a felony record, which victims wanted, Miller said. It could help protect those he might do business with in the future.

  • Miller believed Kennewick police did a good job of investigating allegations and that he had "a very defensible case." But the prosecution still had to prove Weishaar made the deals with criminal intent and that they were not just business deals gone bad [aka "business deals gone bad" defense], Miller said. Neither Miller nor Weishaar's attorney, Sal Mendoza, were sure a jury wouldn't find Weishaar guilty on all charges or innocent of all charges, they said.

For the story, see Richland developer pleads guilty to $380,000 real estate scam.

(1) Some of the alleged victims dipped into retirement money or used home equity to invest with Weishaar, prosecutor Miller said.

(2) According to the story, the $80,000 in restitution will be split only among the Tri-City victims, according to the prosecutor. In addition to the $380,000 Weishaar was accused of taking in Tri-City deals, he also has been accused of taking $124,000 from people in Western Washington and Arizona, the story states. The agreement to pay restitution apparently stiffs the remaining alleged victims.

Unpaid Water Bills Could Lead To Home Condemnation, Resulting In Big Hit For Foreclosing Lenders

Buried in a recent story from Grand Rapids, Michigan on rent-skimming landlords facing foreclosure who are stiffing the local utility on their water bills resulting in water shut-offs is the following excerpt reported by WOOD-TV Channel 8. Those water shut-offs should be of some concern to lenders, who face taking a big hit on account of possible action by local officials arising from the lack of water to the premises being foreclosed:
  • The city can condemn an occupied property with no water and undoing that action will take more than simply paying the bill. "We require that that property be brought up to, once it's condemned, brought completely 100% up to code before it can be occupied again," said Virginia Million with the Grand Rapids Housing Commission. That means everything up to code, from electricity to structure, often a tall task on an older property.(1)

Source: Landlord not paying bills? Move (Read the lease before you sign).

(1) Depending on how old the structure is, the cost of bringing a property up to the current building code could cost a small fortune. In real estate markets where that cost exceeds the value of the property, the foreclosing lender could find its loan collateral rendered worthless. Once the property is condemned, it is no longer a question of doing the necessary repairs or otherwise curing whatever the problem was that gave rise to the condemnation. A new certificate of occupancy is necessary which, as the story points out, requires that the home be completely brought up to meet the current building code - not the one in effect when the home was built (which could be 50+ years ago in many places). This means that, in addition to fixing things that need fixing, the property owner will now have to also fix things that, prior to the loss of the certificate of occupancy, didn't need fixing.

Self-Proclaimed "Soverign King" On The Loose In Memphis Hijacking Possession Of & Claiming Title To Vacant Homes In Foreclosure

In Memphis, Tennessee, WREG-TV Channel 3 reports on Michael Cobbs, a self-proclaimed soverign king who is running around town hijacking physical possession of vacant homes and claiming title to them:
  • When [Jonah Asher] arrived [at his newly-purchased home], he noticed 'No Trespassing' signs in the yard, the locks were changed, and deeds posted in the windows saying Michael Cobbs owned the property. "Oh it's my house, because I can claim an abandoned home!" Cobbs said. Cobbs didn't pay for the house, because he says, he doesn't have to. "These is abandoned homes, every foreclosure is. If people knew what we knew right now, it'd be the end of American society, because these banks, these realtor companies, they're very evil," Cobbs said.

  • Cobbs says man-made laws don't apply to him, because he's sovereign. He filed papers with the Shelby County Register of Deeds declaring that he is exempt from federal, state, and local laws. "This guy thinks he's a sovereign king and he can take what he wants when he wants, and nobody can do anything about it," Asher said.

  • "This guy is talking bout I think I'm a sovereign king, I am a sovereign king! And he gonna find out. Yahweh gonna put him out of his house in Mississippi," Cobbs said. Cobbs says he follows the teachings of Yahweh ben Yahweh, the leader of a black supremacist movement. "We study real deep. We learned all of this from Yahweh Ben Yahweh," Cobbs said.

***

  • Cobbs says he filed deeds on six properties across Shelby County - from a $500,000 home in Collierville to a $4.6 million motel on Mount Moriah. Cobbs says, he's not done yet. "This ain't the only home I'm gonna take, I'm bout to take over everything I can!" Cobbs said.

  • Asher's doing what he can to keep Cobbs out of this house, by changing the locks and boarding up the windows, trying to protect what he's paid for. Cobbs says nothing -- not even a court order -- will keep him away. "Soon as the police and cops leave, we'll be bound to come, and kick the place back in, and take control of it again," Cobbs said. Both sides will have their day in court next week.

  • Meanwhile, we're told the Shelby County Attorney's Office and the District Attorney's Office have launched a criminal investigation into Michael Cobbs.

Source: Man Takes Homes Without Paying For Them.

In a related story, see NC3 Investigates: House Stealing Scheme.

Ex-NFLer, Family Win $150K Jury Award In Premature Foreclosure Lockout Case; "Trashout" Firm Accused Of Dumping Trophies, Sports Momentos In Landfills

In Forsyth County, North Carolina, the Winston Salem Journal reports:
  • A Forsyth County jury awarded about $150,000 in compensatory damages to a former running back for the Cincinnati Bengals and his family, who filed a lawsuit after their family home in Davie County was foreclosed on and some of their possessions were dumped in landfills.

***

  • The case involved Chris Perry, who grew up in Davie County and was a standout running back at the University of Michigan, and his mother, Irene Perry. In 2008, they, along with two others, sued several businesses and people, including Jerry W. Blackwelder, GRP Financial Services and Triad Residential LLC. They alleged in the lawsuit that the defendants took items, including trophies and other sports paraphernalia that Chris Perry had gotten throughout his athletic career, and threw them into landfills in Davie and Davidson counties.

For more, see Forsyth jury awards damages to former Cincinnati Bengals player and his mother.

Mix-Up Over American Indian Artifacts At Home In Foreclosure Results In Alleged Civil Rights Violations, False Imprisonment Suit Against Cops, Others

In Merced, California, the Merced Sun Star reports:
  • A Burbank couple is suing the city of Merced, three police officers, an area real estate company and a real estate agent, alleging civil rights violations, false imprisonment and the infliction of emotional distress, among other claims. In the lawsuit filed Feb. 26, Fred Mosbey III and his wife, Tracy Hardy-Mosbey, claim the officers and a representative of real estate company London Properties prevented the couple from removing American Indian artifacts from a home previously owned by Tracy Hardy-Mosbey's mother.

***

  • The home was under the threat of foreclosure in 2008. Mosbey said he thought he was working with his mortgage company to stop the foreclosure when his brother-in-law, Antonio Rushing, passed by the house and saw eviction papers stuck on the door. "We had no intentions of losing the house and no intentions of stuff happening like it did happen," Mosbey said.

For more, see Couple files suit after scuffle at distressed home (Retrieval of American Indian artifacts at center of action).

Saturday, March 27, 2010

Elderly Residents In Mobile Home Park In Foreclosure May Face The Boot With No Place To Go

In Minerva, Ohio, the Canton Repository reports on the Minerva Hillside Terraces, a somewhat dilapidated 20-unit mobile home park owned by a landlord facing foreclosure in which the residents, many of whom are reportedly elderly, live on fixed incomes, and face the boot:
  • On Jan. 28, Huntington National Bank, which holds the property’s mortgage, filed for foreclosure. [Landlord David] Audino owes the bank at least $385,000 for two promissory notes he signed in 2001 and 2003 and a note he signed as owner of Dylan Homes in 2003.(1) Residents didn’t know what to expect. “What are we supposed to do? Do we have so many weeks? Or so many days? It’s a constant worry on us,” [resident Martha] Tucker said.

  • While Tucker may live in a mobile home park, she isn’t exactly mobile. Tucker lives on a fixed income of $776 a month and says she has little money left over after bills. “Right now, I couldn’t come up with a penny if I had to,” she said.

  • Harry Hagan, who moved to Minerva Hillside in 1985, said his trailer would need expensive repairs before it could be moved. Otherwise, he said, “It would fall apart on the road.” And he doesn’t believe the repairs would be worth it. “It would cost me more to move than what the trailer is worth,” he said. “One trailer is worth $1,500, but to move it would be $5,000.”

  • The good news is that Huntington hasn’t indicated it plans to close the park, said Attorney Dawn Spriggs of Community Legal Aid in Canton,(2) who represents seven residents at Minerva Hillside. Instead, the bank has appointed a receiver to operate the park while the foreclosure is pending and to help improve the park’s financial condition. “His job is to write a report after a period of time to basically recommend what to do with the park,” Spriggs said. “He has to weigh the liabilities and assets.”

  • The bad news, Spriggs said, is that the bank could sell the property, and Minerva Hillside’s new owners could decide to use the land for something other than a mobile home park. And residents can do little to stop it, she said. None of them signed a lease with Audino when they moved in.

For the story, see Minerva trailer park residents fear they're losing their homes.

(1) Reportedly, Audino, who has owned the park since 2001, had also stopped paying the water and sewer bills for the park. He owed the village more than $7,000 in past-due charges and county health officials have deemed the park a public health nuisance, the story states.

(2) Community Legal Aid Services, Inc. is a non-profit Ohio law firm serving the legal needs of low income and senior Ohioans in Columbiana, Mahoning, Medina, Portage, Stark, Summit, Trumbull, and Wayne Counties.

Two Cop Pleas To Using Stolen Personal Information To Mortgage Home Out From Under Elderly Couple; Pocketed $65K, Left Unwitting Victims In F'closure

In Las Vegas, Nevada, the Las Vegas Sun reports:
  • Two men pleaded guilty to felony theft charges in connection with a scam in which an elderly couple’s home was mortgaged without their knowledge, Nevada Attorney General Catherine Cortez Masto’s office said []. The couple found out their home, which they owned outright, had been mortgaged when they received a foreclosure notice for not making payments, the attorney general’s office said.

  • Thomas Gentile, 56, of Las Vegas, and Justin Sabo, 30, of Huntington Beach, Calif., each pleaded guilty to one count of theft of an amount over $2,500. A third man, Julio C. Martinez, 61, of Las Vegas, pleaded guilty to a gross misdemeanor in connection with fraudulently notarizing documents that allowed Sabo and Gentile to complete the transaction, Cortez Masto’s office said.

  • The Attorney General’s Mortgage Fraud Task Force learned that between January and March last year, Sabo and Gentile fraudulently obtained personal information about the couple to obtain a $65,000 mortgage on property they owned. The man was Gentile’s former employer, the attorney general’s office said. The couple had paid cash for their home and didn’t have a mortgage, authorities said. The couple contacted the attorney general’s office when they received a notice of foreclosure for nonpayment.

For the story, see 2 plead guilty in mortgage scam with elderly victims.

For the Nevada AG press release, see Guilty Pleas In Mortgage Scam Against Senior Citizens.

L.I. DA Bags Mortgage Broker For Duping Mother-In-Law Into Signing Land Documents, Leaving Her Facing Foreclosure On Home She Unwittingly Purchased

From the Office of the Nassau County, New York District Attorney:
  • Nassau County District Attorney Kathleen Rice announced [] that a Woodbury man faces up to 15 years in prison after tricking his mother-in-law into signing various real estate documents that allowed him to steal more than $600K from several financial institutions and left her facing civil lawsuits in addition to foreclosure proceedings on a nearly-$1 million home she had no idea she owned.(1)

  • John Tuozzo, 44, was arrested [] by DA Investigators and charged with two counts of Grand Larceny in the Second Degree, three counts of Falsifying Business Records in the First Degree and Scheme to Defraud in the First Degree. He faces up to 15 years in prison if convicted.(2)

For the entire press release, see Woodbury Man Dupes Mother-in-Law, Steals $600K in Real Estate Scam (Tuozzo had mother-in-law sign documents for near-million dollar mortgage and multiple lines of credit).

(1) John Tuozzo and his wife divorced in 2009, and the property, which is owned solely by Tuozzo’s now-ex-mother-in-law, is being foreclosed on, the Nassau County DA press release states. Reportedly, she is also being sued civilly by several financial institutions for the balance of the money owed after a foreclosure sale.

(2) This case was investigated by the Nassau County District Attorney’s Crimes Against Real Estate Unit (CARE). Created in March 2009, CARE handles everything from mortgage fraud and foreclosure rescue scams to identity theft, senior fraud, and the investigation of unlicensed brokers and lenders, according to the DA's press release.

Florida Woman Dupes Senior Into Signing POA, Then Drains Victim's Home Equity With Reverse Mortgage, Loots Bank Accounts, Say Cops

In Palm Beach County, Florida, The Palm Beach Post reports:
  • Evelyn Dick, authorities say, persuaded a 71-year-old North Palm Beach woman to let her get a reverse mortgage on the woman's home, then pocketed more than $34,000. Dick, 50, of suburban West Palm Beach, is charged with grand theft of between $10,000 and $50,000 on a person older than 65.

***

  • The woman has told North Palm Beach police Dick befriended her about six months ago. She said Dick urged her to apply for food stamps and had her sign a document. The woman said Dick took her to the TD Bank at 316 Northlake Blvd. and had her stay outside. The woman said she later realized the document was a power of attorney and Dick had moved all the money out of her bank account.

  • She said Dick also had obtained a reverse-mortgage. She then withdrew $25,000 and $14,000, a police report said. The woman said she discovered the scam when the U.S. Department of Housing and Urban Development mailed mortgage papers to her and contacted a lawyer who told her to call police, the report said.

Source: Suburban West Palm Beach woman charged with defrauding 71-year-old.

See also, WPTV-TV Channel 5: Woman arrested in reverse mortgage scheme.

Grandson Gets 30 Months For Using Forged POA To Fraudulently Obtain Mortgage On Unwitting Senior's Home, Draining $93K In Equity In The Process

In St. Charles, Missouri, Suburban Journals reports:
  • Scott P. Richmond, 38, of O'Fallon, was sentenced [] to 30 months in prison for his participation in two fraud schemes, according to a new release from the U.S. Attorney's Office for Eastern Missouri. Between April 1 and May 31, 2007, Richmond falsified mortgage documents and used a forged power of attorney to mortgage his grandfather's home in St. Charles, according to the statement. Richmond told the lender his grandfather wanted the check representing the loan proceeds, $93,085, to be made payable to him.

For the story, see O'Fallon man sentenced for role in fraud schemes.

NJ AG Charges Two In Alleged POA Abuse In Ripoff Of 88-Year Old Relative, Resulting In Victim's Eviction From Assisted Living Facility For Unpaid Rent

In Trenton, New Jersey, MyCentralJersey.com reports:
  • A Franklin school board member and her husband, the township's Republican Party chairman, plan to defend against charges that they stole $100,000 from an elderly relative while overseeing her financial accounts, their attorney said. Nancy and Robert LaCorte were charged in a five-count state grand jury indictment handed up Wednesday, authorities said.(1)

***

  • State Attorney General Paula Dow said the relative, an 88-year-old woman, had granted a power of attorney over her financial accounts to Nancy LaCorte, 49, whose name was added to the victim's checking account. The relative's pension and Social Security checks were directly deposited into the account, and LaCorte was required to use the funds for the relative's benefit. Robert LaCorte, 57, a licensed insurance agent, is accused of using $162,552 from the victim's Individual Retirement Account without her knowledge to open two annuity accounts with a life insurance company, Dow said. He allegedly earned more than $11,000 in commissions for opening the accounts. The defendants stole a total of about $100,000 from the annuity accounts and two bank accounts by making withdrawals and transfers to their personal accounts, Dow said.

***

  • [State attorney general spokesman Peter] Aseltine said the victim, who lives in the Bronx, was evicted from an assisted living facility in Avalon because she was unable to pay her rent, raising suspicion of another relative. That relative discovered that money was missing from the victim's account and took over power of attorney after December 2007, Aseltine said.

For the story, see Franklin couple charged with stealing $100,000 from elderly relative.

For the New Jersey Attorney General press release, see Somerset County Couple Indicted on Charges They Stole $100,000 from an Elderly Relative.

(1) The couple faces charges of conspiracy, theft by unlawful taking, theft by failure to make required disposition of property, misapplication of entrusted property and money laundering, the story states.

Woman Holding POA Charged w/ Theft Of $10K+ From Care Facility-Bound Woman; Nursing Home Officials Call In Cops After Getting Stiffed On Care Expenses

In Evansdale, Iowa, WFC Courier reports:
  • An Evansdale woman has been arrested for allegedly misusing more than $10,000 of another person's money. Kathy Jean Helmrichs, 63, of 537 River Forest Road, was given power of attorney for a woman who lives at Manor Care nursing home in Waterloo. Authorities allege Helmrichs didn't pay her ward's nursing home bill and instead spent thousands of dollars on herself, according to court records. Officials at Manor Care called Waterloo police when they became suspicious in April.

For the story, see Evansdale woman arrested in theft case.

Nursing Home Employee Gets Off With Handslap After Copping Plea To Ripping Off 90+ Year Old Couple With Dementia

In Lowestoft, Suffolk (UK), The Lowestoft Journal reports:
  • A former worker at a Lowestoft sheltered housing complex has been given a suspended prison sentence after admitting stealing money from an elderly couple with dementia. Lowestoft magistrates court heard [] that the manager at Levington Court in London Road South, Lowestoft, worked with police to set up video surveillance after a report of cash being taken from one of the bedrooms at the centre, which provides sheltered and very sheltered accommodation. Stephen Nelson, of Northgate in Lowestoft, was later identified from video footage and admitted two offences of theft totalling £100.

  • Mitzy Bond, prosecuting, said that the serial numbers of notes belonging to the victims, who were both in their 90s, were recorded so that they could be traced. She said that when Nelson's home address was searched by police earlier this month after he was identified on the video footage, a £20 note stolen from the victim's wallet was found. He also admitted stealing another £80 from the couple on an earlier occasion.

For the story, see Lowestoft care worker stole from couple with dementia.

Apartment Building Managers Face Theft Charges After Scoring POA From 94-Year Old Tenant, Then Ripping Him Off For $700K+, Say Cops

In Columbus, Ohio, The Columbus Dispatch reports:
  • A nurse and a part-time kindergarten teacher have been charged with the theft of more than $700,000 from a 94-year-old North Side man. Deborah Johnson, 53, of Columbus, the nurse, and Anita Esquibel, 68, of Columbus, the teacher, are accused by Columbus police of stealing more than $700,000 from Peter Svaldi. The two met him at an apartment building near Graceland Shopping Center, said Kevin Craine, attorney for Svaldi's newly appointed guardian. The women were the property managers, said the guardian, Lorelei Lanier.

  • The women gained Svaldi's trust, then bought real estate, a car and jewelry with money they took from his accounts after gaining power of attorney, Craine said. "I think this stuff happens a lot more than anybody knows, through power of attorney," Craine said. "I don't know the circumstances how he gave them power of attorney, but he definitely gave it to them. In the wrong hands, it can become a license to steal. "The bank deserves a lot of credit for its vigilance," he said.

For the story, see 2 women accused in rip-off of senior (94-year-old man lost $700,000, police say).

See also, WBNS-TV Channel 10: Women Charged With Stealing Hundreds Of Thousands From 94-Year-Old:

  • Police said the man met Johnson and Esquibel because they lived in the same apartment complex. [...] Since the man has no relatives who live nearby, investigators said the theft was almost undetected, until a bank officer noticed the large transactions and called police, Connelly reported.

  • Craine said his client is still confused as to exactly what happened to his money. "It took a while for him to understand that a significant portion of his assets had been taken from him, and in fact the psychologist in his evaluation likened it to a grieving process," Craine said.

Convicted Embezzler Now Accused Of Ripping Off 86-Year Old Dementia-Stricken Next-Door Neighbor; Cops Believe Suspect Forged Victim's Name On POA

In Flint, Michigan, The Associated Press reports:
  • A convicted embezzler out on parole who snagged more than $9 million in business tax credits from the state of Michigan was charged [] with defrauding an 86-year-old neighbor with dementia. A judge set bail for RASCO CEO Richard A. Short at $9.2 million. Short, 57, faces 24 counts of embezzlement, obtaining money under false pretenses and other charges in connection with money and possessions taken from the elderly woman.

***

  • Prosecutors brought the latest charges after finding that Short took money out of the bank account of an elderly woman who lived next door to him. Genesee County Sheriff Robert Pickell said police think Short forged the elderly woman's name on a power of attorney form dated last September. [...] In the latest case, Leyton said it appears Short stole thousands of dollars from the victim as well as items from her home. The woman had lived next door to Short in a mobile home park but moved to a Flint nursing home in January.

***

  • Pickell called Short a "predator," saying the elderly woman's dementia was so advanced, "she thought the (police) investigator was her child." [...] He said police also are investigating Short's interactions with other elderly residents in the Westwood Heights mobile home park where he lives in Genesee County's Mount Morris Township.

For the story, see Embezzler who got tax credit faces more charges.

Friday, March 26, 2010

Judge Offers Upfront Fee Loan Modification Scammers Reduced Jail Sentence In Exchange For $38K+ "Upfront" Payment Of Victim Restitution

In Santa Ana, California, City News Service reports:
  • Two women pleaded guilty Wednesday to loan-modification fraud and are expected to be sentenced to a year in jail next month if they make $38,340 in restitution, one of their attorneys said. Mary Alice Yraceburu, 46, of Riverdale and Marianne Curtis, 68, of Costa Mesa pleaded guilty to 71 counts each of grand theft, illegally accepting upfront fees, attempted grand theft and conspiracy to commit a crime, according to Orange County court records.

  • Orange County Superior Court Judge Robert Fitzgerald offered the pair, who operated a company called Foreclosure Freedom, a year in jail in exchange for the guilty pleas and paying back their victims, Yraceburu’s attorney, Diane Bass said. They must make restitution when they are scheduled to be sentenced April 9, Bass said.

  • State Attorney General’s Office prosecutor Angela Rosenau initially offered the two six years in prison and then lowered it to three years in prison, Bass said.

For the story, see Loan-mod scammers face year in jail if victims are paid back.

Brooklyn Judge Bags Foreclosure Mill Law Firm Representing Both 1st & 2nd Mortgage Holders In Legal Action In Violation Of Conflict Of Interest Rule?

In Brooklyn, New York, Kings County Supreme Court Justice Arthur M. Schack is at it again, denying another foreclosing lender seeking foreclosure because of screwed up paperwork. In addition, Justice Schack makes this observation regarding the attorneys of record representing the foreclosing 1st mortgagee and the 2nd mortgagee:
  • Finally, for reasons unknown to this court, Ms. Bechakas, the attorney of record for subordinate mortgage defendant MERS, as nominee for FIRST FRANKLIN FINANCIAL CORP., failed to disclose to the Court that she is employed by plaintiff's counsel, Steven J. Baum, P.C.

  • My March 17, 2010 examination of the Office of Court Administration's Attorney Registry reveals that Ms. Bechakas, admitted in the Fourth Department in 1991, lists her business address as "Steven J. Baum, P.C., 220 Northpointe Pkwy, Ste G., Amherst, NY 14228-1894." As noted above, Steven J. Baum, P.C. is the attorney for plaintiff LASALLE. The Court is concerned that the simultaneous representation by Steven J. Baum, P.C., of both plaintiff LASALLE and subordinate mortgage defendant MERS, as nominee for FIRST FRANKLIN FINANCIAL CORP., is a conflict of interest in violation of 22 NYCRR § 1200.24, the Disciplinary Rule of the Code of Professional Responsibility, entitled "Conflict of Interest; Simultaneous Representation," in effect when plaintff LASALLE moved in December 2008 for a judgment of foreclosure and sale.

For the ruling, and a discussion of the applicable New York law, see Lasalle Bank N.A. v Smith, 2010 NY Slip Op 50470(U) (March 22, 2010).

For links to over 30 of Justice Schack's court rulings in which he bounced unprepared foreclosing lenders and their lawyers out of his courtroom for sloppy an/or non-existent paperwork, see Brooklyn Trial Judge Nixes "Rubber Stamp Method" Of Adjudicating Foreclosures; Lenders, Lawyers Lacking Legal Standing To Bring Actions Get Bounced.

Go here for other posts on Justice Schack.

Seattle Jury Convicts Mortgage Scam Head Of 30 Felonies; Led Owner Financing Ripoff That Left Unwitting Home Sellers Holding Worthless Notes

From the Office of the U.S. Attorney (Seattle, Washington):
  • WILLIAM S. POFF, 37, of Marshall, Michigan, a former resident of Washington State, was convicted [] in U.S. District Court in Seattle of 30 felony counts of conspiracy, bank fraud, wire fraud, and money laundering offenses. POFF is one of five people(1) arrested in June 2009, in connection with a mortgage fraud scheme that cheated banks and property sellers out of more than several million dollars. [...] In all, between 2005 and 2008, the conspirators used straw buyers to purchase and resell properties, obtaining more than 80 loans totaling more than $18 million.

***

  • The conspirators did not just damage banks and financial institutions. Innocent sellers were harmed when they agreed to loan the buyer a portion of the purchase price [ie. owner financing], to be paid back over time.(2) The sellers did not know that the conspirators had already obtained 100 percent financing from commercial lenders. When payments were not made and properties fell into foreclosure, and then were sold for less than the total of all loans secured by the property, the sellers holding private notes were left with nothing.

For the U.S. Attorney press release, see Former Washington Resident Convicted Of Multiple Counts Of Conspiracy, Bank Fraud, Wire Fraud, And Money Laundering In Mortgage Fraud Scheme (Loan Originator Forged Documents, Defrauded Banks and Sellers in Scheme).

(1) The other four already entered guilty pleas in the case: Humberto A. Reyes-Rodriguez, a/k/a Tony Reyes, 43, of Federal Way, Washington, Alexis Ikilikyan, a/k/a Haikanush Ikilikyan, 30, of Auburn, Washington, Micki S. Thompson, 55, of Tacoma, Washington, and Mario A. Marroquin, 39, of Kent, Washington.

(2) This technique for draining the home equity out from under the unwitting home sellers comes right out of the pages of the old "no money down" real estate acquisition books that have been around for decades. As described in these books, you implement this technique by:

  • Finding a seller with a home that is free & clear of any mortgages,
  • Convincing the home seller to hold a 2nd mortgage for, say, 40% of the purchase price that will be subordinate to a contemporaneously-obtained 1st mortgage,
  • Obtaining the 1st mortgage for, say, 80% of the purchase price.

Since the amount of the 1st mortgage proceeds needed to pay off the home seller equals only 60% of the purchase price (remember, he/she has already agreed to hold a 2nd mortgage for the 40% balance), the excess proceeds from the 1st mortgage, equal to 20% of the purchase price, winds up in the buyer's pocket (less closing costs). The buyer walks out with this 20% in cash, along with the deed to a property that immediately finds itself underwater by 20% (80% 1st mortgage plus 40% seller-held 2nd mortgage = 120% loans-to-value).

Foreclosure Rescue Scam Mastermind Found Guilty Of Dozens Of Felonies; Ran Upfront Fee Land Grant Scheme, Sale Leaseback Rent Skimming Racket

In San Diego, California, XETV-TV Channel 6 reports:
  • The mastermind of a scam in which about 400 homeowners in San Diego and Riverside counties were tricked into paying nearly $2 million in fees in hopes of beating foreclosure was convicted Tuesday of dozens of felonies. After an eight-week trial, 63-year-old William Hutchings was found guilty of 160 counts of conspiracy to commit grand theft, grand theft, rent skimming and deceitful practices by a foreclosure consultant. [...] Five of Hutchings' co-defendants -- including his wife and ex-wife -- have pleaded guilty, and four are set for trial on May 18, said Deputy District Attorney Stephen Robinson.

  • In the scam, which ran from January 2007 to May 2008, the defendants acquired grant deeds to homes in foreclosure, based on untrue or misleading statements that they would prevent homeowners from losing their homes through foreclosure, prosecutors said.(1)

For more, see Foreclosure Scheme Ringleader Convicted of 160 Charges.

(1) According to the story, two methods were used for inducing owners of residences in foreclosure to participate in a so-called land grant program, prosecutors said. One method required homeowners to pay a one-time fee of up to $10,000 to put their property in a land grant. The second method was a lease-back scheme in which homeowners paid the defendants $500 or more and then transferred their property via land grant deeds to the defendants for no consideration and then made monthly payments, purportedly to rent their homes back. In both scenarios, homeowners were eventually foreclosed upon and evicted and retained no legally recognized title to their property, prosecutors said.

Use Of Rubber Check To Pay Off Home Seller's Mortgage Leaves Buyer Facing Foreclosure On Prior Owner's Loan; Title Insurer Steps In To Defend

In Kingsland, Georgia, WTLV NBC-12 and WJXX ABC-25 report:
  • Tom Bloomer lives in a quiet, suburban community in Kingsland and said he purchased his house in May 2008. But now, Bloomer said he's found out some information about his home that has him upset. "I stumbled across the fact that my house was on a foreclosure list and is scheduled to be sold on April 6," Bloomer said.

  • Bloomer said he has paid his mortgage payments consistently to his lender, Bank of America, and he was surprised to see that Wells Fargo Bank has filed foreclosure against him. "I've talked to the attorneys for Wells Fargo and they say they have rights to the house," said Bloomer. Bloomer is asking 'how could this be?'

  • He was told the person who sold him the house almost two years ago gave Wells Fargo a worthless check(1) and now the bank is foreclosing to collect that debt. [...] Attorney Kevin Yackel said the foreclosure is temporarily on hold. "Bloomer was not provided proper notice as required by Georgia law," he said.

  • Yackel also said the [title insurance] underwriter is now pursuing a defense to keep Bloomer in his home. Yackel said Stewart Title has presented the documents from the sale/purchase to show that this is a wrongful foreclosure.(2)

For the story, see Kingsland Man Facing Wrongful Foreclosure; Seller Closed with Worthless Check.

(1) It was probably the agent who handled the title closing for the sale who sent Wells Fargo the hot check.

(2) When purchasing a title insurance policy when buying a home, not only does the insurance company agree to indemnify you in the event the title is defective (up to the face amount of the policy), it also agrees to defend you when your title is subjected to a challenge from another party claiming to hold a competing interest in the property (as in this story), and also agrees to pick up the tab for the legal fees and costs associated with such a defense.

(For those prospective real estate purchasers who choose to work with real estate agents in their search for a property, and you want to "test" the agents to see if they know what they are doing, ask them whether you need title insurance in the event you "pay cash" for the home. Every once in a while, you'll come across a "genius" who'll tell you that if you don't need financing to buy the home, you can get away without having to buy title insurance, thereby saving the cost of the premium, thereby reducing your closing costs. If you come across an agent who tells you this, do yourself a favor and get rid of him/her and find someone else. And keep this story in mind when doing so!)

Thursday, March 25, 2010

Massachusetts AG Scores $3B In Loan Modifications For Homeowners Nationwide In Settlement Of Countrywide Lawsuit

From the Office of the Massachusetts Attorney General:
  • As part of her office’s ongoing initiative to combat predatory lending practices that contributed to our nation’s economic crisis, Attorney General Martha Coakley [] reached a significant settlement with Countrywide Financial Corporation (Countrywide) that will provide an estimated $18 million in loan modifications for Massachusetts homeowners, $3 billion in loan modifications for homeowners across the country, and a $4.1 million payment to the Commonwealth. Countrywide is now owned by Bank of America.

For the entire Massachusetts AG press release, see AG Coakley Secures $3 Billion in Loan Modifications for Homeowners Nationwide in Agreement with Mortgage Lending Giant Countrywide ($18 million in relief for Massachusetts homeowners; $4.1 million payment to Commonwealth).

For copies of the Massachusetts AG's lawsuit against Countrywide and the settlement filed by the Attorney General's Office, see:

BofA To Begin Cutting Loan Balances On Underwater Homes? Massachusetts AG "Arm-Twists" Lender Into Agreeing To Offer Debt-Reduction Workout Plan

The Wall Street Journal reports:
  • Under pressure by Massachusetts prosecutors, Bank of America Corp. said Wednesday it would reduce mortgage-loan balances as much as 30% for thousands of troubled borrowers, in what could presage a wider government effort to encourage banks to offer debt reduction to ease the mortgage crisis.

***

  • The bank's move is part of an agreement to settle claims over certain high-risk loans made by Countrywide Financial, which the bank acquired in mid-2008. The Massachusetts Attorney General's office, which was negotiating with the bank, said it was prepared to file suit had the agreement not included principal reductions.(1)

For more, see BofA Bows to Pressure to Cut Loan Balances.

See also:

(1) For the Massachusetts Attorney General press release, see AG Coakley Secures $3 Billion in Loan Modifications for Homeowners Nationwide in Agreement with Mortgage Lending Giant Countrywide ($18 million in relief for Massachusetts homeowners; $4.1 million payment to Commonwealth).

For copies of the Massachusetts AG's lawsuit against Countrywide (now owned by Bank of America) and the settlement filed by the Attorney General's Office: see

Lender VP Blows Whistle On Employer On Loan Mods; Says Bank Not Interested In Working Out House Payments; Homeowners Get Runaround On Toll-Free Number

ABC World News reports:
  • A vice president for one of the nation's biggest banks claims customers looking for help in lowering their mortgage payments are often told to call an 800 number -- where he says representatives then give homeowners the runaround. David Muir gets answers from a vice president of one of the biggest banks. The bank executive spoke to ABC News on the condition that ABC News not show his face or name him, because he feared coming forward would cost him his job.

For more, see Whistle-Blower: Banks Give Homeowners the Runaround (800-Numbers Lead to Runaround as Banks Refuse to Modify Mortgages).

Title Insurer's Escrow Officer, Local Office Supervisor Played Roles In Pulling Off $30M Fraud, Says Convicted Mastermind Who Headed Scam

In San Diego, California, BusinessWeek reports:
  • Employees of Fidelity National Financial Inc.’s Chicago Title Corp. unit helped carry out a $30 million fraud, the convicted mastermind of the scheme said at the start of a civil trial against the title insurer. Rollo “Rick” Norton, a financial planner who pleaded guilty to mail fraud in connection with the scam, told a San Diego Superior Court jury that an escrow officer and a local office supervisor at Chicago Title knew what they were doing was wrong and “I was part of it.”

  • Chicago Title and Chicago Title Insurance are accused, together with Norton, of conspiracy and fraud by 19 people who say they lost their investments in a San Diego condominium project through sham real estate transactions. The investors claim insiders at Chicago Title helped Norton prepare and sign fraudulent documents.

For more, see Chicago Title Assisted San Diego Fraud, Mastermind Tells Jury.

BofA Files Suit To Pin Title Insurer With $500M+ In Loan Losses For Providing Unconventional Lien Protection Plan

The Los Angeles Times reports:
  • During the subprime loan era, it's well documented that lenders took all kinds of shortcuts -- such as failing to verify borrowers' employment or income -- to sell mortgages. Now Bank of America Corp., the nation's biggest mortgage lender, is saying the nation's second-largest title insurer did much the same thing and should be on the hook for more than $500 million in losses.

  • In a lawsuit filed earlier this month, BofA alleged that First American Corp. in Santa Ana relied on home buyers to tell them about liens on their properties and other matters, rather than conducting traditional title searches. The shortcut was part of a program called QuickClose that BofA said in its suit did not require "title searches in connection with loans processed under the program." The bank said in the suit that the insurer has not made good on more than 5,000 mortgages it was supposed to protect.

***

  • The bank's efforts to curb its losses in the mortgage fallout are indicative of what's going on in the industry, said banking analyst Bert Ely. "Every time you have a disaster everybody sues everybody else, and mortgage financing was a disaster," he said. "You have lots of losses floating around, and companies are looking to others to eat their losses."

***

  • The title insurance policies that First American sold to Bank of America were uncommon in the industry, Ely said. "The American Land Title Assn. has openly opposed these types of lien protection plans," Ely said. "First American was offering a product that at least more than a few in the industry weren't comfortable with."

For the story, see BofA seeks to pin losses on title insurer (The banking giant sues First American Corp., alleging that it failed to do proper title searches. That led to $500 million in mortgage losses, the suit says).

Atlanta Man Cops Plea In Attempt To Use Stolen IDs To "Buy" His Own "Underwater" Investment Homes In Short Sale Scam

In Atlanta, Georgia, The Atlanta Journal Constitution reports:
  • An Atlanta man pleaded guilty Tuesday to bilking the FDIC of $2.2 million in a bogus real estate short-sale scheme. Brent Merriell, 37, admitted in federal court to lying to the FDIC and selling 14 homes he owned facing foreclosure to identities he’d stolen, court authorities said.

***

  • When he defaulted on all 14 home loans in October 2009, Merriell put the homes on the market as a short sale, asking the FDIC to forgive $2.2 million in loan payoffs so his “buyers” could purchase them at a greatly reduced price.

***

  • But Merriell tried to give forged and counterfeited sales contracts and loan commitment letters – generated from seven stolen identities – to the FDIC to complete the sales. He was arrested before the sales went through and before his actions could affect the credit of his seven victims, authorities said.

For the story, see Atlanta man guilty of "cheating FDIC" in short sale scam.

Wednesday, March 24, 2010

FTC, California & Missouri AGs Slam "Lawyer Renting" Loan Modification Racket; Score $980K In Seized Assets, Put Outfit Out Of Business

The Federal Trade Commission announced:
  • The operators of a mortgage foreclosure “rescue” company will be banned from selling mortgage relief services under a settlement with the Federal Trade Commission and the states of California and Missouri, which sued them in 2009 as part of a federal-state crackdown on mortgage loan modification and foreclosure relief scams.

  • Boasting a “proven track record” and the “highest standards of business ethics,” U.S. Foreclosure Relief Corp., George Escalante, Cesar Lopez, and Adrian Pomery falsely claimed they helped 85 percent of their clients get their loans modified, and that they would get loan modifications to make consumers’ homes much more affordable, according to the FTC complaint. They also allegedly violated state laws against charging advance fees for foreclosure consulting services. The court immediately barred the practices and froze the defendants’ assets.(1)

  • The FTC has added as defendants H.E. Servicing, Inc., Brandon L. Moreno, and his law firm, Cresidis Legal, and charged all of the defendants with two more law violations: falsely claiming a lawyer would negotiate the terms of consumers’ home loans, and falsely promising refunds if they failed. The settlement order resolves the case against the original defendants and H.E. Servicing. The case continues against Brandon L. Moreno and Cresidis Legal, a professional corporation.

For the FTC press release, see Defendants Banned from Mortgage Foreclosure 'Rescue' Business (Surrendered Cash, Jewelry, and Vehicles for Consumer Refunds).

For earlier post on this story, see Report: Loan Modification Firm Used Craigslist To Round Up "Lawyer Renting" Prospects; "Rents" Ranged Between $125-$300 Per File.

For links to available court documents, see FTC, et al. v. U.S. Foreclsoure Relief Corp., et al.

Go here for other posts on "lawyer renting" loan modification rackets (ie. a loan modification outfit that uses an attorney or law firm as a "front" for its activities where the attorney does little or no work, and has little or no contact with the financially distressed client desiring a loan modification, typically used to avoid prohibitions under law against clipping homeowners for upfront fees).

(1) According to the press release, the order imposes a $8.6 million judgment against George Escalante and his two companies, U.S. Foreclosure Relief and H.E. Servicing. The judgment will be suspended except for $980,000 in cash, jewelry, and vehicles that Escalante and his companies have surrendered to lenders or the court-appointed receiver. The order also imposes $3.3 million and $3.4 million judgments against Cesar Lopez and Adrian Pomery, respectively, which will be suspended due to their inability to pay. The full amount will become due immediately if they are found to have misrepresented their financial condition.

For information about refunds to victims, please visit the court-appointed receiver’s Web site, http://www.heservicingreceiver.com.

Minnesota AG Tags Two Out-Of-State Outfits With Civil Suits Alleging Upfront Fee Loan Modification Ripoffs

From the Office of the Minnesota Attorney General:
  • Minnesota Attorney General Lori Swanson today filed two lawsuits against separate out-of-state mortgage modification companies for violating a 2009 state law that prohibits companies that offer to negotiate or modify the terms or conditions of an existing home mortgage from requesting advance payments from homeowners. These are the first lawsuits filed under the new law.

  • Homeowners who contact their lenders to modify their mortgages often face unreturned phone calls, lost paperwork, and other red tape. This and the bad economy have created an opening for mortgage modification companies to swoop in and take advantage of people,” said Attorney General Swanson.

  • The lawsuits were filed against: American Modification Consultants, LLC of Philadelphia, Pennsylvania, d/b/a American Mitigation Consultants; and INQB8 LLC of Scottsdale, Arizona, d/b/a Discount Mortgage Relief.(1)

For the Minnesota AG press release, see Attorney General Swanson Files Two Lawsuits Against Mortgage Modification Companies For Violating New State Law (Lawsuits Are First Ones Filed Under 2009 Law Designed To Protect Consumers From Abuses By Mortgage Modification Companies).

(1) The lawsuits allege that the companies violated Minnesota law by charging advance fees to homeowners and then failed to deliver the promised services. American Mitigation Consultants charged homeowners advance fees of up to $1,250; and Discount Mortgage Relief charged homeowners advance fees of up to $3,000, according to the Minnesota AG's press release.

Minnesota Regulator Initiates Action Against Unlicensed Loan Modification Operator; Says Outfit Failed To Pay Promised Refunds On Failed Workouts

In St. Paul, Minnesota, Finance & Commerce reports:
  • The Minnesota Department of Commerce has initiated civil disciplinary action proceedings against a St. Louis Park firm for allegedly offering loan modification services without a license. Last week, the department sent a “notice of and order for hearing” to Todd Jacobson of LMS and Associates, listed to an office on Wayzata Boulevard in St. Louis Park. A prehearing conference is scheduled for May 5 before an administrative law judge.

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  • Over a six-month period last year, the Department of Commerce charges, the firm sent out invoices for roughly $251,000 on 105 files and collected nearly $139,000. The Department of Commerce contends that the firm was not doing what it said it could do: “The Department’s investigation revealed that Respondent was not successful in performing the services as represented and failed to issue refunds as represented in the contracts that the customer signed.”

For the story, see Allegations aimed at local loan-mod firm (Commerce department says company had no license).

Loan Servicer Cries Foul; Says Its Being Squeezed By Hedge Fund's Attempt To Jam Foreclosure Suit On 11,000 Unit Complex

In New York City, the New York Post reports:
  • The company that controls troubled Manhattan apartment complex Stuyvesant Town-Peter Cooper Village told hedge fund Appaloosa to back off [], saying the New Jersey bondholder has no right to try to scuttle the property's foreclosure proceedings.

  • In a brief filed with Manhattan federal court, CW Capital -- which represents holders of the $3 billion defaulted mortgage -- argued that the hedge fund must gain the support of 25 percent of bondholders to have a say in the foreclosure.

  • CW also accused Appaloosa of trying to hold up the foreclosure to "maintain its stream of payments" on its bonds, which were bought "at a steep discount" when it was clear foreclosure was coming.(1) Late last month, David Tepper's hedge fund filed a motion to stop recent foreclosure proceedings on StuyTown, saying the move would hurt its investment.

Source: CW Capital: Back off, Appaloosa.

For the follow-up to this story, see The New York Observer: Hedge Fund to Special Servicer: Stop the ‘Revisionist History’ On Stuy Town:

(1) Until the foreclosure process is completed, the loan servicer is typically required to continue coughing up monthly payments to the investors in the mortgage backed securities, despite the fact that it no longer collects the mortgage payments from the complex's defaulting landlord. The longer the foreclosure process drags out, the longer the loan servicer gets squeezed.