Thursday, December 13, 2012

Detroit Couple Finds Their Recently-Purchased Home Reduced To Rubble As County Auctioned Tax-Foreclosed Real Estate To Public Despite Knowing Properties Were Slated For Demo

In Detroit, Michigan, the Motor City Muckraker reports:
  • Artists Kristine Diven and Micho Detronik thought they found the perfect home in Detroit. The fixer-upper was spacious with a second-floor balcony, a new roof and beautiful fireplaces. The east-side house needed a little work – new bathtubs, doors and electrical wiring.

    But less than a month after getting the house at a Wayne County foreclosure auction, the couple were shocked Thursday when they found rubble in the place of their two-story brick house on Berkshire.

    Turns out, the Michigan Land Bank, an economic development engine for the state, has demolished an estimated 20 houses that were purchased at the recent auction. It planned to raze even more.

    Even worse, the Michigan Land Bank and Wayne County Treasurer’s Office knew homes were being auctioned off even though they were slated for demolition, the Motor City Muckraker has discovered.
***
  • What’s also disturbing about the demolition is the quality of houses that have been razed or are on the demo list. Many are large, gorgeous homes that only need a few repairs.

    With more than 40,000 vacant houses, the city is rife with homes that have been burned or are falling over. It’s unclear why the state would target homes that can be fixed up, rather razing houses that are a danger to the public.

Feds Score Asset Freeze, Temporary Halt Of Operations Of Two Outfits Alleged To Be Running Nationwide Loan Modification Racket

From the Consumer Financial Protection Bureau (Washington, D.C.):
  • The Consumer Financial Protection Bureau [] announced actions to halt two alleged mortgage loan modification scams it believes ripped-off thousands of struggling homeowners across the country. In total, these operations took in more than $10 million by charging consumers for services that falsely promised to prevent foreclosures or renegotiate troubled mortgages.
***
  • At the request of the CFPB, U.S. District Court Judges in the State of California have ordered a halt to both operations, the Gordon Law Firm and the National Legal Help Center, and frozen their assets while the CFPB moves forward with the cases. The case involving the National Legal Help Center was initially referred to the CFPB by the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and Treasury’s Office of Financial Stability, which have coordinated closely with the Bureau throughout the investigation.

    “It is absolutely unacceptable for unscrupulous con artists to take advantage of our nation’s housing crisis by targeting homeowners looking for help from TARP’s Home Affordable Modification Program,” said Christy Romero, Special Inspector General for TARP (SIGTARP). “We thank the CFPB for protecting homeowners. SIGTARP will continue to stop these scams and educate homeowners that mortgage modifications through HAMP are free.”

    The CFPB is targeting loan modification operations that attempt to disguise their false promises of relief for struggling homeowners with claims that they are performing legal work or are a law firm. The Bureau is also particularly concerned with schemes that attract victims with false claims that they are endorsed by or represent the government. These tactics are used by mortgage relief scams to attract victims, add credibility to their schemes, or exploit certain legal exemptions for the practice of law.
For more, see Consumer Financial Protection Bureau halts alleged nationwide mortgage loan modification scams (Operations targeted financially distressed consumers in danger of losing their homes).

Referral From Bay State High Court's Attorney Ripoff Reimbursement Fund Leads To Indictments For Now-Twice Disbarred Attorney Accused Of Ripping Off Client Cash Intended For Mortgage Loan Payoffs

From the Office of the Massachusetts Attorney General:
  • A former Tewksbury attorney has been arraigned in connection with stealing more than $400,000 from multiple clients, one of whom is disabled, Attorney General Martha Coakley announced []. The defendant allegedly stole money which had been entrusted to him by clients seeking help to pay off mortgages or as part of the probate of an estate.

    Raymond Paczkowski, Jr., age 77, of Tewksbury, was arraigned [] in Middlesex Superior Court on one count of Larceny over $250 from a Disabled Person and seven counts of Larceny over $250 (7 counts). At the arraignment, Paczkowski pleaded not guilty and was released on personal recognizance, with the condition that he have no contact with the victims.

    In 2010, the AG’s Office began an investigation after the matter was referred from the Tewksbury Police Department and the Massachusetts Clients' Security Board of the Supreme Judicial Court, which manages a fund that is supported, in part, by annual fees paid by members of the bar.

    The Clients’ Security Board distributes fund money to members of the public who have sustained a financial loss caused by the dishonest conduct of a member of the bar acting as an attorney or a fiduciary.(1)

    Paczkowski worked as an attorney specializing in conveyancing and probate work, and also did some work with insurance claims and litigation. In 2008, authorities allege that Paczkowski began stealing from several of his clients.

    According to investigators, Paczkowski received $75,000 in 2008 from a disabled client in order to pay off a mortgage on her home. Several months later, however, the client received a letter indicting that the loan was still outstanding. It is alleged that Paczkowski never gave the money to the lender and instead stole it for his personal use.

    Authorities further allege that Paczkowski took money from several other clients who had sought help in paying off their mortgages. In one case, a client gave Paczkowski $175,000, with the intent that Paczkowski immediately use those funds to pay off the existing mortgage on his property. The client, however, continued to receive monthly mortgage statements and it is alleged that Paczkowski stole the money instead of paying off the clients’ mortgage.

    In other instances, Paczkowski allegedly stole money from clients who had hired him to assist with the handling or disposing of estate property after experiencing a death in the family.

    In one case, a client who assumed the full title to his mother’s property after she passed sought Paczkowski’s assistance in paying off a mortgage in order to refinance. The client’s mother owed roughly $109,000 to the company that held a mortgage on the property and Paczkowski allegedly received $158,100 from a new lender. According to investigators, Paczkowski forwarded the proceeds to the client, but failed to pay off the original mortgage company. Authorities allege that the client realized the theft when he received multiple late notices on his mother’s mortgage statement.
***
  • On November 24, 2010 Paczkowski was disbarred, after having been administratively suspended that October. Paczkowski had previously been disbarred in August 1985 for conduct similar to the present allegations.
For the Massachusetts AG press release, see Former Tewksbury Attorney Arraigned in Connection with Stealing More Than $400,000 from Clients (Defendant Allegedly Stole Money Entrusted to Him by Clients for His Personal Use; Also Allegedly Stole from Disabled Client).

(1) For similar "attorney ripoff reimbursement funds" established to reimburse clients who have suffered a loss due to the dishonest conduct of attorneys in other states and Canada, see:

Wednesday, December 12, 2012

WV Supremes: OK To Include $600K In Court-Awarded Legal Fees, Litigation Costs Before Tripling Total Damages When Calculating Punitives Under State UDAP Statute

In Charleston, West Virginia, The West Virginia Record reports:
  • An attorney involved in a recent state Supreme Court decision is pleased the court decided attorneys fees can be applied when calculating punitive damages.

    Jim Bordas, of the Wheeling firm Bordas and Bordas, said the court was right to affirm Ohio County Circuit Court Judge Arthur Recht’s 2011 decision. Recht awarded almost $600,000 in attorneys fees and litigation costs, then used that amount to help determine the amount of punitive damages owed to Lourie Brown.

    “We… consider it to be a significant victory for the Browns and consumers throughout the State of West Virginia that the Supreme Court found that the attorneys fees that the Browns were awarded as a result of the tremendous amount of work done by their attorneys can be considered as part of the ratio when analyzing the appropriate amount of punitive damages to be awarded,” Bordas said.

    On Feb. 17, 2011, Recht awarded more than $2.1 million in punitive damages – an amount that represented three times the amount of compensatory damages, attorneys fees and litigation costs combined. He had awarded almost $500,000 in attorneys fees and $100,000 in litigation costs.

    He followed a 1991 decision to calculate the amount of punitive damages. Recht wrote the Quicken Loans case was “one of the more confusing, confounding and complex cases both factually and legal that has ever been before” him. Quicken Loans did not challenge the amount of attorneys fees.

    On Nov. 21, the state Supreme Court, in an opinion authored by Justice Thomas McHugh, found that Quicken Loans committed fraud and violated various provisions of the West Virginia Consumer Credit and Protection Act in a mortgage loan with Brown,(1) an Ohio County resident.

    Brown had responded to a pop-up advertisement on her computer in May 2006 and submitted an online application in an effort to consolidate debt and lower monthly payments. She was contacted by Quicken Loans.

    Brown alleged the company gave her a larger loan than necessary after an inflated appraisal and lied about refinancing after the loan was in place. Eventually, she defaulted on the loan.

    Recht agreed with her argument, and he added attorneys fees and costs in with the compensatory damages awarded to arrive at the $2.1 million figure. The Supreme Court affirmed that decision, with McHugh writing that attorneys fees and costs awarded under the WVCCPA should be included in the formula.

    With a $700,000 settlement from two other defendants, Brown’s total recovery was nearly $3.7 million – a figure that didn’t sit well with Quicken Loans given the cost of the loan was $145,000.

    The court, though, found Quicken did not disclose an “enormous” balloon payment of more than $100,000.

    The case was remanded for a new calculation of damages.

    The court agreed with Quicken that it should receive a $700,000 credit for the settlement between Brown and the other defendants – the appraiser and appraisal company. Most likely, the credit will offset the compensatory damages awarded, leaving a balance of zero.

    That credit, however, will not apply to any punitive damages. As to the punitive damages issue, the court ruled Recht did not conduct a “meaningful and adequate” analysis under the 1991 decision.
For the story, see Bordas: Quicken Loans ruling a win for consumers.

For the court ruling, see Quicken Loans, Inc. v. Brown, No. 11-0190 (WV. November 21, 2012).

For an earlier post, see WV High Court Says Quicken Loan Terms "Unconscionable", Violate State UDAP Statute, But Nixes Mortgage Cancellation & Directs Lower Court To Reconsider Screwed Over Homeowners' $2.8M Damages Award.

(1) The Consumer Credit and Protection Act is West Virginia's version of the state laws that prohibit unfair and deceptive acts and practices in trade and commerce (generically referred to as state UDAP statutes).

For more on UDAP statutes across the U.S., see Consumer Protection In The States: A 50-State Report on Unfair and Deceptive Acts and Practices Statutes.

Foreign Outfit Armed With Eminent Domain Power Scores Favorable Appeals Court Ruling In Effort To Grab Property From Texas Landowners For Pipeline Construction

In Beaumont, Texas, The Southeast Texas Record reports:
  • The Ninth Court of Appeals affirmed on Nov. 29 a ruling that denied summary judgment against TransCanada Keystone Pipeline – a foreign company armed with the power of eminent domain.

    TransCanada had filed a petition for condemnation against Rhinoceros Ventures Group Inc. and Batson Corridor, asserting that it is the owner and economic operator of the Keystone Pipeline System, which includes the Keystone Gulf Coast Section, court papers say.

    According to TransCanada, Gulf Coast is a common carrier pipeline that, upon completion, will extend from across Texas from Fannin County to Nederland in Jefferson County. The entity claims it enjoys common carrier status, giving it the right to take land from landowners for the construction of its pipeline.

Feds Confirm Bad Holiday News To Family Facing Foreclosure: She's Been Victimized By Nationwide Loan Modification Scam

In Omaha, Nebraska, WOWT-TV Channel 6 reports:
  • An Omaha mother of five opened something that was hardly a holiday gift. It was an email from federal authorities confirming she's a victim of a mortgage scam. Now the family is fighting to keep their home.

    Estes family members are victims of a bad call by a loan modification company. “They've taken our money and not done anything they said they would do,” says Melissa Estes.

    The family paid 1st American Law Center of Oceanside, California $3,500 to negotiate a lower monthly rate with their lender and advised Melissa to stop mortgage payments until that was done. It was bad advice because the lender never agreed and is threatening foreclosure. “I just hope and pray they will let us slowly pay so we would be able to remain in this house.”

    The 1st American Law Center has been exposed by consumer advocates and busted by federal authorities. “It’s justice to know they won't be dong that to anyone else." But justice doesn't pay the mortgage.

    The victims of this loan scam are now getting threatening calls from their mortgage company. Still, they don't want their children to feel victimized as well so they promise gifts will be under the Christmas tree this year.

Tuesday, December 11, 2012

Scammer Gets 12 Years For Running Mortgage Elimination Racket That Purported To Invalidate Loans Through Lawsuits Against Lienholders

From the Office of the U.S. Attorney (San Francisco, California):
  • Sergio Gutierrez was sentenced [] to twelve years in federal prison after a jury convicted him of running a scheme in which he defrauded victims by telling them to stop paying their mortgages, United States Attorney Melinda Haag announced.
***
  • Gutierrez defrauded investors by falsely telling them that they would be able to own their homes outright if they paid him for documents that he claimed would dispute the validity of their mortgages that various banks held on their properties.

    The lawsuits filed by the victims were dismissed by various courts throughout California, and most of the victims ended up losing their homes through foreclosure. Gutierrez’s purported mortgage elimination program specifically targeted victims who had little or no ability to read or write English. From 2008 to 2009, Gutierrez received more than $89,000 from individual victims who paid him for this program.

Florida Supremes Spank Four Lawyers For Playing Fast & Loose With Clients' Trust Account Cash; Belt Another For Actions Related To Loan Modification/Foreclosure Litigation Cases

The Florida Bar News reports that the Florida Supreme Court in recent court orders disciplined the following five attorneys for allegedly either playing fast and loose with their clients' trust account money, or for conduct in connection with loan modification/foreclosure litigation cases:
  • Delaila Jannette Estefano, 3850 Bird Road, Suite 901, Miami, suspended for 90 days, effective retroactive to March 9, 2009, following an October 24 court order. (Admitted to practice: 1999) From January 2007 through September 2008, due to a lack of timely deposits, there were some instances in which Estefano’s trust account had insufficient funds. Estefano also failed to maintain proper trust account records, and she failed to follow proper trust accounting procedures. (Case No. SC12-1676);
    ..............
  • Howard Joseph Milchman, 9900 W. Sample Road, Suite 300, Coral Springs, suspended until further order, effective 30 days from an October 17 court order. (Admitted to practice: 1987) According to a petition for emergency suspension, Milchman appeared to be causing great public harm by misappropriating trust funds or property. In one matter, Milchman used the estate of one client as a source of funds to make a restitution disbursement of more than $45,000 to another client, similar to a Ponzi scheme. In multiple instances, he has not applied funds entrusted to him for specific purposes. (Case No. SC12-2106);
    .................
  • Clarence Edward Porch, Jr., 2674 S.E. Willoughby Blvd., Stuart, suspended for 91 days, effective 30 days from an October 9 court order. (Admitted to practice: 1969) For three months, Porch accepted clients from a nonlawyer company that he knew was not an approved lawyer referral service. Porch failed to supervise nonlawyer employees and failed to review any work they did regarding loan modification and foreclosure litigation cases. Porch also purchased leads of prospective clients’ names and paid an employee to call those prospective clients. (Case No. SC12-1674);
    ..............
  • Gene Stuart Rosen, 1550 N.E. Miami Gardens Drive, North Miami Beach, suspended until further order, effective 30 days from an October 9 court order. (Admitted to practice: 1974) According to a petition for emergency suspension, Rosen appeared to be causing great public harm by misappropriating and/or diverting funds entrusted to him and by breaching his fiduciary duties with respect to the handling of those funds held in trust. (Case No. SC12-2003);
    ...............
  • Kelly Earlise Speer, P.O. Box 172067, Tampa, suspended until further order effective immediately, following an October 11 court order. (Admitted to practice: 2006) Speer was held in contempt for failing to comply with the terms of a December 14, 2011, court order. Speer was ordered to respond to The Florida Bar regarding a trust account overdraft inquiry of September 8, 2011. (Case No. SC11-1866).
Source: The Florida Bar News: Disciplinary Actions (December 15, 2012).

Settlement Of Race-Based Discrimination Complaint To Cost Wisconsin Landlord $57,500; Manager Allegedly Told Black Renters No Apartments Were Available While Telling Whites Otherwise

From the U.S. Department of Justice (Washington, D.C.):
  • The Justice Department announced [] that the manager and owner of the Geneva Terrace Apartments Inc. in La Crosse, Wis., have agreed to pay $57,500 to settle a lawsuit alleging they violated the Fair Housing Act by discriminating against African-Americans who were seeking to rent apartments at the complex.

    The complaint, filed in the U.S. District Court for the Western District of Wisconsin on Oct. 26, 2011, alleged that Nicolai Quinn, the manager of the apartment complex, told prospective African-American renters that apartments were not available when they were, while telling prospective white renters that there were apartments available.
***
  • As alleged in the complaint, in 2009 and 2010, Quinn told an African-American couple who were interested in renting an apartment in Geneva Terrace that there were no apartments available, even though the complex had posted a sign advertising vacancies.

    The couple found it suspicious and asked a white friend to contact the complex. Quinn told the white friend that he had available apartments.

    The couple then reported their experience to the Metropolitan Milwaukee Fair Housing Council (MMFHC),(1) a nonprofit fair housing organization. MMFHC conducted fair housing tests, which confirmed that Quinn was telling African Americans that apartments were not available while showing available apartments to white persons.

    The couple also filed a complaint with HUD, which conducted an investigation and, after issuing a charge of discrimination, referred the matter to the Department of Justice.

    Under the terms of the settlement, which is subject to approval by the U.S. District Court, the defendants will pay the complainants $47,500 in damages.(2)   Defendants will also pay a civil penalty of $10,000 to the United States. Defendant Geneva Terrace Apartments LLC will also develop and maintain non-discrimination housing policies and attend fair housing training.
For the Justice Department press release, see Justice Department Settles Lawsuit Against Wisconsin Landlord and Former Manager for Discriminating on the Basis of Race.

For the lawsuit, see U.S. v. Geneva Terrace Apartments, Inc. (go here for the settlement agreement).

(1) The Metropolitan Milwaukee Fair Housing Council is a private, non-profit, membership-based organization that promotes fair housing throughout the State of Wisconsin by combating illegal housing discrimination

(2) This amount is inclusive of the couple's attorney fees.

Monday, December 10, 2012

L.A. Man's Identity Hijacked, Used In Foreclosure Rescue Bankruptcy Scam; Petition Filed Under His Name & Used To Dump Eight Homes In Foreclosure On Opened Case

In Los Angeles, California, KPCC Radio 89.3 FM reports:
  • Software systems engineer Ajamu Azibo seems to have it all. He's young and healthy, with a great job at UCLA, a happy marriage, and dreams of owning a house someday.

    But during a coffee break on campus he recalled the day, five months ago, when everything seemed to fall apart. He'd been waiting for a call to hear whether he qualified for a new car loan.

    "I was sitting at work; I got a phone call from my car company, from the loan. And they asked me if I planned on going forward with the bankruptcy that I'd filed on June 22nd. This was completely out of the blue, I hadn't gone to the court to file, so I had no idea what they were talking about," Azibo said.

    He rushed to the federal courthouse in downtown Los Angeles and asked whether someone had filed for bankruptcy under his name. A clerk handed him a folder with documents containing signatures that were not his.

    The report listed that he was single and that he owned a Honda Accord, a property in San Diego and another in Carson. None of that was true. He discussed this with one of the agents at the bankruptcy court-and soon they realized that someone else had filed for him. Unfortunately, the court told him, his case is typical.

    Maureen Tighe is a federal bankruptcy court judge for the Central District of California.

    "We had a lot of people coming to court saying 'there's been a bankruptcy filed on my name, and I've never authorized the bankruptcy filing. And once you got talking to the person, they usually had some sort of a foreclosure problem. And they had consulted one of these outfits that do loan modifications, or foreclosure rescue," Tighe says.

    Azibo hadn't sought a loan modification, or a foreclosure. But he remembers meeting four years ago with a friend of a friend, a man who identified himself as a lawyer. This person suggested that Azibo could solve his money problems by filing for bankruptcy. Without thinking twice about it, he gave the man his name and Social Security number, and the rest is history. No one knows if this same man is responsible for Azibo's bogus bankruptcy filing.

    Since the summer, Azibo has become the victim of yet another scam: a bankruptcy hijacking. That's when a third party fraudulently files for a loan, or property, on behalf of someone's bankruptcy case without his or her knowledge. Turns out that somebody dumped eight different properties facing foreclosure on Azibo's open bankruptcy case. That further complicated his financial record.

Clock Begins To Tick On 300+ Seniors Who Face Decision To Either Voluntarily Abandon Their Homes Or Get The Boot As Mortgage Holder Refuses To Modify Loan Secured By Land Underlying Mobile Home Park

In Martin County, Florida, The Palm Beach Post reports:
  • Betty Johnson, 73, has lived in Ocean Breeze Park in Martin County for many decades, longer than she can remember. Her little mobile home in the back corner of the 55-and-older community is full of knickknacks, and little sailboats she painted herself decorate the side of the home.

    But next year could be her last in the 45-acre, riverfront community after the Ocean Breeze Park Homeowners Association filed for bankruptcy in August.

    She and about 350 other residents learned Friday they could have until Nov. 30, 2013 to leave their homes if the HOA accepts a deal presented by the mortgage lenders.

    "I've been here a long, long time," Johnson said. "I don't know what the hell is going on here, but it's got me very upset."

    She's not alone in her frustration, as was evident at the meeting Friday attended by more than 100 residents where the HOA board members broke the news and had three police officers there to keep the peace.

    The lenders and owners of the property, Gary Hendry, Cathie Teal and Marcia Hendry-Coker, are descendants of the original property owners Harry and Queena Hoke, who founded the park in 1938.

    About 130 residents, including Johnson, united to buy the property from the Hoke descendants in 2008, but the cost proved too much, resulting in more than $20 million in debt.

    Hendry, Teal and Hendry-Coker offered Aaron Wernick, bankruptcy attorney for the HOA, the deal that would allow residents to stay on the property until the end of November 2013 while still paying rent, mortgages and property taxes. Then, the residents must leave or risk eviction.

    "What kind of heart do these people have?" Diane Kim, 56, shouted out at the meeting. Wernick said, "We proposed every which way to try to keep this a park and they were firm. They just want the property back."

    Wernick's words were met with the angry mutters and occasional community outcries during the hour and a half HOA meeting. "I love it here, and I'm not moving!" said Frank Unterberger, 84, who has been living in Ocean Breeze Park as a snowbird for 35 years. "It's sad, really, to think about it," said Ruth White, 79, who has lived in the park for 25 years.

    The final decision to dismiss the bankruptcy, which protected the community from foreclosure, is Dec. 16. If the HOA board accepts the deal from the lenders, the clock begins ticking for residents to find other living arrangements within a year. If the deal is turned down, residents could face eviction even sooner.

    Harry Bartlett, president of the Ocean Breeze Park Homeowners' Association, said he wished things had turned out differently. "This board has tried their very best," Bartlett said. His voice cracked as he spoke the last words before the meeting adjourned. "I'm sorry."

Phoenix Renter Out $500 After Stumbling Into 'House Sitting' Scam That Purportedly Offers Cheap, Short Term Rentals Of Vacant Homes In Foreclosure

In Phoenix, Arizona, KTVK-TV Channel 3 reports:
  • A Phoenix woman said she thought she was getting a great deal on a rental home, but the deal turned into a financial loss. She lost $500 over the whole deal.

    Nicole Abreu said she was looking for a house to rent and came across a Craigslist ad indicating Valley homes for rent for as little as $500 with no credit check. Just move in.

    Abreu said she called and eventually met with Sydnee Bollwinkel and even gave her $500 for a home that was reportedly available in Glendale. "We were trying to find a place that was big enough for all of us," Abreu said.

    But, after forking over $500, some guy claiming to be Bollwinkel's assistant called her. "He was like, 'Oh, we made a mistake, that house has been rented so you have to pick a new one,'" Abreu recalled. Abreu said she tried but Bollwinkel never responded to her and she remains out $500.

    After refusing to return 3 On Your Side's phone calls and emails, we showed up at Bollwinkel's doorstep in Gilbert, but she bolted and threatened to call the police.

    According to paperwork Bollwinkel had given Abreu, Bollwinkel claims to run a company that works with a group of investors who allow her to rent out vacant homes that are facing foreclosure or short sale.

    Tenants, like Abreu, are reportedly allowed to be "house sitters" for the vacant homes in exchange for cheap rent, at least until the homes sell or are auctioned off -- homes like the one in Glendale that Abreu was initially interested in for only $500 a month.

    3 On Your Side went to that home and caught up with the actual owner of the house, who was shocked and said, "I've never listed this house for rent."

    The homeowner told 3 On Your Side that his house at one time was facing foreclosure, but he was able to save his house and never moved out and he certainly never gave anyone permission to move in. "That's a pretty scary thought that somebody's trying to rent out my house without my knowing it," he said.

    Bollwinkel and her husband, Derek, have been hot water before. In fact, an Avondale Police report details how "the suspects rent out a house, which they have no right to rent..."

    Bollwinkel was never charged, but her husband was convicted and is currently on probation for the scheme.

    Abreu said something needs to be done. By the way, Abreu isn't the only who says she lost money, other consumers have contacted 3 On Your Side with similar complaints. As for now, Abreu continues to look for a house to rent.

Sunday, December 09, 2012

CPA Gets 12 Months For Writing Fraudulent Letters To Dupe Banks Into Funding Equity Stripping Sale Leaseback Ripoffs

From the U.S. Department of Justice (Washington, D.C.):
  • Barrington Coombs, 58, of Weston, Fla., was sentenced [] to serve a year and a day in prison for his role in a foreclosure rescue scheme that victimized desperate homeowners on the brink of losing their homes, the Justice Department announced.
***
  • According to the indictment and evidence presented at trial, two of Coombs’ accomplices, Lisa Wright and Cathy Saffer, operated Foreclosure Solution Specialists (FSS) from 2006 to 2009. FSS targeted homeowners facing foreclosure, advertising that it could assist those homeowners in remaining in their homes.

    When contacted by distressed homeowners seeking assistance, FSS misrepresented to those homeowners that their homes would be sold to investors. According to the indictment and evidence presented at trial , FSS also claimed that customers could remain in their homes after the sales and promised them an opportunity to repurchase the homes at a later date. Rather than selling the homes to legitimate investors, FSS designed sham sales to straw purchasers whom they paid to participate in the scheme.

    According to the indictment and evidence presented at trial, FSS paid Certified Public Accountant Barrington Coombs to write a fraudulent letter that vouched for the false information on various loan applications. Lenders relied on Coombs’ fraudulent letter in deciding to fund the loans.

    “The individual sentenced today lent his credibility as a professional accountant to a foreclosure scheme and, in doing so, caused lenders and consumers to suffer substantial losses,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division.
***
  • Coombs is the last member of the scheme to be sentenced. In November 2012, the two individuals who operated FSS were sentenced. Lisa Wright was sentenced to a 66 month term of imprisonment, while Cathy Saffer received a sentence of 60 months.

    Mortgage transactions completed by FSS drew equity out of the homes, which FSS’ principals pocketed for their own purposes. After doing so, FSS allowed the loans to go into foreclosure. Homeowners ultimately lost all of the equity in their homes, and most of the victims were forced to move out of their homes.
For the Justice Department press release, see Florida CPA Sentenced for Role in Foreclosure Scheme (Scheme Resulted in Many Victims Losing Their Homes).

NYS Regulator Orders Loan Servicer To Hire Watchdog To Ensure Compliance With Its Mortgage Servicing Reform Promises

From the Office of the New York State Department of Financial Services:
  • Superintendent Benjamin M. Lawsky [] announced that the Department of Financial Services is requiring Ocwen Financial Corporation to hire a monitor to ensure that the company complies with an agreement to reform its mortgage servicing practices. The action was taken after an examination by the Department found indications of Ocwen violating the agreement. The monitor will be in place for two years.

    Ocwen is one of the largest mortgage servicers and has been growing rapidly, servicing more than 764,000 residential mortgages nationally as of August. In New York, the company services more than 40,000 residential home loan accounts held largely by distressed homeowners

    “It is not enough to have banks and mortgage servicers sign agreements promising to reform their businesses. The best unrealized reforms won’t protect homeowners. To protect homeowners facing the risk of losing their homes, we must ensure that the companies are actually living up to their promises,” Superintendent Lawsky said.

    “Following complaints about Ocwen’s servicing practices, we conducted a targeted exam of Ocwen’s performance and discovered gaps in the company’s compliance. The Department is requiring the company to hire a monitor so that we can be sure that the reforms are implemented and homeowners have a real chance to avoid foreclosure.”
For the NYS Department of Financial Services press release, see Cuomo Administration Requires Major Mortgage Servicer To Install Monitor To Ensure Promised Reforms Are Implemented (Exam Finds Indications that Problems Remain at Ocwen).

Go here for the new Consent Order.

Thanks to Bill Collins of Frontier Abstract for the heads-up on the story.

Saturday, December 08, 2012

Bay State AG Tags Contractor In Civil Suit For Allegedly Using Bogus Promises To Rip Off Elderly Homeowners & Violating Earlier Entered Judgment, Permanent Injunction

From the Office of the Massachusetts Attorney General:
  • The Commonwealth has filed a lawsuit against a contractor from Hanover, alleging that he violated a prior court order by soliciting and entering into a home improvement contract with elderly consumers, Attorney General Martha Coakley announced [].

    In a contempt action filed Monday in Suffolk Superior Court, the AG’s Office alleges that Richard Myers – operating under the name of Atlantic Restoration Company – violated a final judgment and permanent injunction entered in February 2011 that prohibited him from soliciting or engaging in any home improvement contracting work.

    According to the AG’s Office, from at least December 2011 to January 2012, Myers violated the terms of the permanent injunction by soliciting and entering into a home improvement contract with two elderly consumers who paid him $3,000 for mold remediation and the replacement of flooring within their home. Myers failed to complete the job and refused to provide the consumers with the materials he purchased on their behalf.

    “We allege that this contractor continues to steal thousands of dollars from consumers for renovations he failed to complete, putting the safety and well-being of residents at risk,” AG Coakley said.

    The complaint is seeking consumer restitution and civil penalties in the amount of $10,000 per violation to be paid by Myers, as well as disclosure by Myers of the identities of any additional victims of his conduct.

    In November 2006, the AG’s Office sued Myers, alleging he violated the Home Improvement Contractor Act by illegally engaging in home improvement work on a suspended license, failing to perform agreed-upon work or apply for required building permits, requesting excessive cash advances, and failing and refusing to refund homeowners’ payments for work not performed.

    In February 2011, a final judgment was entered against Myers, requiring him to pay more than $291,000 in consumer restitution, $300,000 in civil penalties and more than $125,000 in fees, and permanently enjoining him from soliciting or engaging in home improvement contracting work in the Commonwealth. Myers has not paid any portion of the judgment.
For the Massachusetts AG press release, see AG Coakley Sues Hanover Contractor for Soliciting Elderly Homeowners with Illegal Home Improvement Contract (Defendant in Violation of Prior Court Order; AG’s Office Seeks Consumer Restitution).

Alabama AG To City Water Authority: Cough Up Refunds For Improperly Clipped Cash From Buyers Of Foreclosed Homes To Pay Off Ex-Owners' Unpaid H2O Bills

In Fayetteville, Alabama, The Daily Home reports:
  • The Fayetteville Water Authority has been refunding residents for unlawful charges they received after moving into foreclosed homes. The authority charged new residents of foreclosed homes the water bill balance previous owners left unpaid.

    To have their water meters turned on, new residents had to first pay in full the balance of the previous owners.

    “Our attorney advised us and the ruling was made that it was legal,” said Fayetteville Water Authority chairman Doug Blair. “And the people that made the foreclosures didn’t agree with us so we asked for the attorney general’s opinion and it didn’t come back in our favor.”

    Blair said the water authority was advised by its attorney, Barry D. Vaughn, that what they were doing was legal, but after customers came in with complaints against the charges, they sought the opinion of state Attorney General Luther Strange.

    In a letter from Vaughn to Strange on behalf of the Fayetteville Water Authority, the following question was posed: “If a bank forecloses on a house and the water meter has been locked off for non-payment under the rules and regulations of the Water Authority, is it lawful and does the Water Authority have the right to refuse to unlock the meter at this residence until the bill has been paid?”

    In a formal opinion letter sent back to Vaughn, Strange concludes: “The Fayetteville Water Authority cannot deny or discontinue water service to a new owner of property purchased at a foreclosure sale for the delinquent charges of a former owner.”

    “We’re not out to do people wrong and do things unlawful,” Blair said. “I said that if we were wrong we would make amends for it.”

    The water authority has already taken steps to amend the situation, which involves refunding a total of about $7,000 to residents that were charged for the previous owner’s water bill balance.

    Reimbursements were listed as “foreclosure refunds” and approved recently at the water authority’s meeting.

    The refunds ranged from $330.48 to $19.08 for a number of residences, businesses and banks in the area.

    “We’re not there to do wrong and we assured our water customers that if what we were doing was not lawful we would do what was correct and that’s what we’re doing,” Blair said.

Homebuyers At Tax Foreclosure Sale Sue City Over Plans To Give Their Recently-Purchased Dilapidated Homes The Wrecking Ball Treatment; Say Some Properties Weren't Listed On Pre-Sale Demo List

In Jackson, Michigan, MLive reports:
  • A group of residents has decided to fight Jackson City Hall.

    The group filed a lawsuit against the city, hoping to halt demolition on homes the residents purchased at the Jackson County tax foreclosure auction Sept. 27. A pre-trial hearing has been set for June 28 before Circuit Court Judge Richard LaFlamme.

    As part of that lawsuit, the plaintiffs also filed a request or preliminary injunction in Jackson County Circuit Court Friday. They're asking a judge to issue an order to prevent the city from tearing down the six houses.

    “Because the city will not work with us we have felt forced to seek an injunction and take legal action in order to protect our investments and our futures,” said Monika Schwab, one of the plaintiffs.
***
  • Other plaintiffs in the case include Troy and April Jordan, Branden Benson and Pam Fero. Schwab said she is hoping others in the same situation will join with the group.

    Jackson City Manager Pat Burtch said the city cannot move forward with the demolition on the homes until after the pre-hearing trial.

    Although these homes were purchased at the county tax foreclosure auction, they are located in the city of Jackson, and therefore governed by not only city housing codes but state building codes.
***
  • Schwab bid on and won three lots with homes on them. She paid $100 for 1222 Maple Ave., $550 for 1045 S. Jackson St. and $400 for 111 Stanley St. [...] Two of the lots were already scheduled for demolition by the city before she bid on them in September. Auction-goers were warned that some of the parcels up for bid could be scheduled for demolition or have already been demolished.

    But, the home on Maple Avenue was added to the city’s demolition list the day before the auction and she had no idea. The same thing happened to Troy Jordan who is part of the group that filed the lawsuit.
***
  • Troy and April Jordan have eight children. They bid on and won a lot with a home on it at 809 S. Blackstone Street. In September, Troy Jordan was thrilled that he was able to purchase his first home and looked forward to making necessary repairs and moving his family in.

    His home was also added to the city demolition list the night before the auction.

    Jordan was shocked when he heard the news because he checked the city list to make sure he wouldn’t be bidding on a house that was scheduled to be demolished. It wasn’t listed.

    After approaching the city for permits, Jordan was again shocked to find out how much the repairs would cost. His repair estimate came in at $76,543 and he was hoping to do some of the work himself, cutting down on the costs. “Because I’m not a contractor they won’t give me permits,” Jordan said.

Heat/Hot Water-Lacking Renter Sues Foreclosing Bankster For Failure To Provide Essential Landlord-Associated Services

In Chicago, Illinois, WBBM-TV Channel 2 reports:
  • Remember the winter of 2010-11, and the Groundhog Day blizzard that dumped more than 21 inches of snow on Chicago? Rochelle McIntosh remembers it all too well. “I was abused. I was abused,” she said.

    CBS 2’s Mike Parker reports McIntosh came home to her West Side apartment that winter after major surgery, and found out she had no heat and no hot water.

    “It was miserable. It really was. It affected my self-being as Rochelle McIntosh, as an intelligent human being,” she said.

    It turned out her apartment building had gone into foreclosure, and was now owned by New York-based HSBC Bank.

    She has sued she is now suing HSBC, claiming they ignored her complaints about no heat and no water, until the spring, when the city of Chicago levied hundreds of dollars in Housing Court fines against the bank.

    “The mortgage foreclosure mess has gotten so many people jammed up, and is so impersonal,” McIntosh’s attorney, Edward Campbell, said. “Tenants, who are innocent parties, who have absolutely no fault of their own … they can just get railroaded.”

    The Lawyers’ Committee For Better Housing said, between 2009 and 2011, almost 17,000 apartment buildings were hit by foreclosure in Chicago; one out of 10 tenants were affected.

    “We found that more apartment building units are impacted by foreclosure than single-family and condominium units,” said Patricia Fron, the group’s building programs administrator. The findings don’t surprise her, given all the calls she gets each day from renters in foreclosed apartment buildings.

    The group’s legal director, Mark Swartz, said “I think that banks open themselves up to a lot of liability if they don’t maintain buildings, and treat tenants respectfully.” Swartz pointed out, when a bank forecloses on an apartment building, it legally becomes the landlord.

Financially Strapped Homeowner Admits To Hatching Plot To Abduct Attorney, Hold Him For Ransom To Score At Least $30K To Save Home From Foreclosure

In East St. Louis, Illinois, the St. Louis Post-Dispatch reports:
  • A man trying to avoid foreclosure on his home acknowledged in federal court Tuesday in East St. Louis that he hatched a plan to abduct and hold a lawyer, living in Granite City, for ransom.

    But the defendant, Brett L. Nash, 46, refused to admit what prosecutors claimed earlier this year — that he had considered various murder plots, including a hot-tub electrocution that he would blame on the victim’s cat.

    As part of Nash’s guilty plea to a charge of solicitation of a crime of violence, prosecutors agreed to drop other charges, which included murder-for-hire.

    Nash spent several months, beginning in late 2011, trying to persuade his wife to help him, court documents say.

    The intended victim, whom Nash considered wealthy, had a romantic interest in Nash’s wife, a former dancer he had known for several years and who had a key to his house.

    Nash needed at least $30,000 to avoid losing the couple’s home, near Pontoon Beach, to foreclosure, his plea says.

    But his wife refused to help, despite the arguments and physical violence it spawned, the document says.

    He admitted pulling out some of his wife’s hair and threatening to leave it at the crime scene.

    So Nash turned to a fellow union member and barge deckhand who also had a criminal record, officials said. That man notified authorities.

Friday, December 07, 2012

Retired Maine Attorney Scores $100K Award In Recognition Of Foreclosure Defense Volunteer Work

In Portland, Maine, the Morning Sentinel reports:
  • In April 2008, Thomas Cox joined the Maine Volunteer Lawyers Project to fight against unfair foreclosure practices.

    His reward for his services? $100,000.

    Cox, the retired attorney who uncovered the practice of "robo-signing" and other illegal practices in the mortgage industry, was one of five people honored Wednesday with the 2012 Purpose Prize, which recognizes people older than 60 who work toward the public good and rewards them with $100,000.

    It's a stunning turnaround for a man who once was a lawyer for Maine banks, helping with debt collection and foreclosures.

    "I feel more alive and vital than I think I've ever felt," Cox, 68, said Wednesday. "I couldn't feel more satisfied with my work right now."
***
  • [I]n the past four years, he's uncovered scores of cases in which mortgage lenders wrongly kept customers delinquent and foreclosed on homes using improper accounting, illegal fees and an "egregiously inflated" forced-place insurance. "Some of the practices that were being used were truly incredible," he said.
For more, see Portland lawyer, who works for free, rewarded with $100K prize (Thomas Cox helped "blow the lid" off foreclosure fraud by some of the country's biggest banks, saving tens of thousands of homes).

Single Mother Of Two Unwittingly Moves In, Pays $8K Deposit For Home In Foreclosure; Now Faces Boot; Slick Operator Who Pocketed Cash Dodges Media Camera, Denies All Accusations

In Kansas City, Missouri, WDAF-TV Channel 4 reports:
  • A young mom thought she was buying her dream home. But a few days after moving in, she learned the house was in foreclosure and her $8,000 deposit to Jim Daniels of Three Door Properties had disappeared.

    Angenette Hollins, a hard-working, single mom of two, put $8,300 down on a spacious southeast Kansas City ranch house. She described it as “a nice, large house that me and my children wouldn’t grow out of.”

    Or so she hoped. But days after moving in, Hollins got a letter in the mail saying her dream home was in foreclosure and would be sold on the courthouse steps.

    “My heart just dropped,” she said. “I didn’t what was going on with me and my kids. Where were we going to stay?”

    She called the attorney handling the foreclosure, who told her that her purchase of the home was never legal because the man who sold her the house had no authority to do so.

    Who was that man? Jim Daniels of Three Door Properties in Kansas City. Hollins called Daniels and demanded to know what went wrong with the sale.

    “I asked him when I sat down and met with him, ‘are you a con man? You can’t show me anything on this house,’” she recalled. “You say you own this house and you don’t own it, and you are holding on to my money.’”

    She said Daniels insisted he did own the home, but told her he would return her money, but only if she first moved out of the house. No longer trusting Daniels, she refused.

    She’s not the only person who doesn’t trust him.

    Lori Bath and her husband bought a house from Daniels in May. It still doesn’t have a working furnace despite Daniels’ repeated promises. Their attempts to reach Daniels are rarely successful. “We’ve called a lot,” said Bathe. “Every day, sometimes up to 20 times a day.”

    We tried to track down Jim Daniels, or anyone from Three Door Properties. The company operates out of a room in the back of this adult daycare center on Hickman Mills Road. But no one was there when we came calling. So we visited another address linked to the Three Door Properties, a private home, and left a business card. A few days later, Jim Daniels called us, declining to talk on camera and denying everything.(1)
For more, see Mom Fights to Keep Home Sold to Her Under Shady Circumstances.

(1) The business practice described in the story sounds similar to one that recently got a slick Detroit, Michigan-area real estate operator pinched by the Feds. See:
As a reminder to those who mistakenly assune that these apparent ripoff deals are nothing more than civil cases, it is clear that all the sophisticated paperwork in the world (ie. business/purchase contracts, leases, closing statements, etc.) isn't enough to permit scammers to insulate themselves from criminal prosecution when they target their victims with legitimate-looking business propositions when screwing their victims over. Criminal prosecutors have the authority to "pierce through" such attempts to disguise a blatant criminal real estate ripoff as a common, legitimate business deal.
Clear precedent exists for such a "pierce through" approach to overcome any objections that will certainly arise when the scammers make the argument that the arrangement was just a civil transaction that, if challenged, should be done with a civil lawsuit, not a criminal prosecution. See, for example:
  • People v. Frankfort, (1952) 114 Cal.App.2d 680, 700; 251 P.2d 401:

    The simple answer to this argument is that "The People prosecuting for a crime committed in relation to a contract are not parties to the contract and are not bound by it. They are at liberty in such a prosecution to show the true nature of the transaction." (People v. Chait, 69 Cal.App.2d 503, 519 [159 P.2d 445]; People v. McEntyre, 32 Cal.App.2d Supp. 752, 760 [84 P.2d 560]; People v. Jones, 61 Cal.App.2d 608, 620 [143 P.2d 726]; People v. Pierce, supra, p. 605.)

  • People v. Jones, (1943) 61 Cal.App.2d 608, 620 [143 P.2d 726]:

    Defendant argues that the deal with each "seller" was a civil transaction; [...] Cloaked in the draperies of his corporation and pretending to act in its behalf, he boldly approached his unsuspecting victims.

    [***]

    Although each deal in its incipiency bore the color and trappings of a normal, civil contract, yet when subjected to a postmortem it exhaled the stench and disclosed the carcass of a fraud. (People v. Epstein, 118 Cal.App. 7, 10 [4 P.2d 555].) There appears no sign of good faith at any turn. Each taking and appropriation was a grand theft.

    The use of the corporate name and the promises made in accomplishing his purpose were a camouflage of such common variety that no excess of genius was required to discern the fraud. Parol evidence of all that occurred was admissible to show the intention of defendant. (People v. Robinson, 107 Cal.App. 211, 221 [290 P. 470].)

Financially Strapped Homeowner: Wells Fargo Wiped Out My $250K Home Equity By Losing My Loan Modification Docs Over & Over, Then Forcing Foreclosure Sale

In San Francisco, California, the San Francisco Chronicle reports:
  • Larry Faulks says his bank robbed him of over a quarter of a million dollars.

    By selling Faulks' San Francisco house at a foreclosure auction, Wells Fargo wiped out all his equity, he said. Unlike most struggling homeowners, Faulks, 59, was not underwater on the home his family bought in 1962; it was worth considerably more than he owed on it.

    Wells Fargo says it tried to work with Faulks but couldn't find a way to avoid foreclosure, as his income was too limited.

    Outside legal experts who reviewed his case said it highlights how California law doesn't safeguard the rare homeowners with equity in a foreclosure.
***
  • In Faulks' case, after an illness and failed surgery left him too disabled to continue his work as a technical writer, he sought a loan modification on his mortgage, which carried a sky-high interest rate of 8.2 percent.

    Once he could no longer afford his payments in spring 2010, he embarked on a two-year quest in which he submitted multiple applications, faxed in reams of paperwork, spent hours on the phone, attended in-person counseling events, contacted politicians, housing counselors and government agencies - all to no avail.

    "The bank lost document after document and then claimed I never sent them, and forced me to repeatedly start over," he said.
***
  • At a foreclosure auction in May, a real-estate investment company called DMG Asset Management bought the house for $705,000. That was a bargain compared with its apparent value.

    The house, built by famed developer Joseph Eichler and on a level lot in Diamond Heights, is surrounded by homes that sell for over a million dollars. Online real estate site Zillow pegs its value at $1 million; DMG's attorney said it's worth $950,000 to $975,000.

    Faulks' mortgage was $574,627. After adding in missed payments and late fees, his total debt was $691,914. As is required by law, he was sent $13,086 for the difference between the $705,000 auction sales price and his debt. Wells also offered him $20,000 in relocation assistance.

    But that amount is dwarfed by what he might have netted on the open market. If he had sold the home himself for $1 million, he would have been able to pay the bank everything he owed and walk away with a nest egg of at least $250,000.