Friday, February 02, 2007
Finding Equitable Mortgage Court Cases On The Internet
Five "Flippers" Sentenced For Fraud By Federal Judge
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Thursday, February 01, 2007
Foreclosure Rescue Operator Ordered To Return Homes To A Dozen Victims
In addition, the operators were also ordered to pay approximately $378,000 in attorneys' fees to the lawyers for the victimized homeowners for violations of the state's Consumer Protection Act.
In this case, the homeowners all testified that the operators offered to loan them money to stop foreclosure so that they (the homeowners) could keep their homes, but never disclosed that the operators were actually taking title to the homes. The operators testified to the contrary, asserting that the terms of the transaction were fully explained to each plaintiff and that each plaintiff understood that he or she was conveying title to the home to defendants. In ruling in favor of the homeowners, the court made a specific finding that the homeowners' testimony was credible and that of the operators was not.
One notable point in this case is the illustration of a well-known legal rule regarding the signing of a contract and how it applies in a case like this one. This legal rule, as described by the Nebraska high court, is this:
- “[o]ne who signs an instrument without reading it, when he can read and has the opportunity to do so, cannot avoid the effect of his signature merely because he was not
informed of the contents of the instrument.”
Having said that, the Nebraska high court went on to state:
- "[t]he general rule that one who fails to read a contract cannot avoid the effect of signing it applies only in the absence of fraud [...] Restated, the rule that one who signs a contract is bound by its terms does not apply where the controversy is between the parties and the execution of the instrument was induced by fraud."
A second point worth noting is that this case illustrates another method of attacking foreclosure rescue transactions. Unlike the equitable mortgage cases reported elsewhere on this blog (in which proof of fraud is not necessary), the homeowners' action in this case were based on allegations of fraud, civil conspiracy, unjust enrichment, rescission, and violations of Nebraska’s Consumer Protection Act and Uniform Deceptive Trade Practices Act (and importantly for private practice attorneys that are considering handling these types of cases, the $378,000 fee award was based on an attorney fee provision contained in the state Consumer Protection Act, and also involved the application of a "contingency fee" or "lodestar" multiplier that increased the "lodestar amount" (the base fee) by 30 percent).
Sources:
Rising foreclosures fuel fraudulent offers of aid (Seizures, byzantine terms spring from promises to help owners keep homes) (MSNBC website)
High Court Slams Foreclosure Scamsters, (WOWT, Channel 6 News - Omaha, NE)
Eicher v. Mid America Financial Investment Corp.. 270 Neb. 370, 702 N.W.2d 792 (2005) (made available online by Findlaw.com)
Counsel For Homeowners:
Mark C. Laughlin, Andrea F. Scioli, and Tamara D. Borer, of Fraser, Stryker, Meusey, Olson, Boyer & Bloch, P.C.,
Catherine Mahern, of Milton R. Abrahams Legal Clinic (Creighton Legal Clinic - Creighton University School of Law)
D. Milo Mumgaard, of Nebraska Appleseed Center for Law in the Public Interest
(revised 4-23-07) equitable mortgage zebra
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Lawyer Nailed In Shady "Cash Back" Land Deal
The invetigation, conducted by disciplinary officials with the Connecticut Bar Association, only determined one thing: that the attorney, acting in his capacity as closing agent in a real estate transaction, falsely reported the sale price of a West Haven, Conn., property and deserved punishment.
What was not determined, however, was the degree of culpability of everyone involved in the transaction.
All parties signed off on a HUD-1 closing statement that reflected a sale price of $505,000 and that the purchaser received a $378,750 mortgage. The warranty deed, however, reflected a sale price of $285,000. The buyer reportedly walked away with an additional $79, 000 in his wallet, and the other parties involved in the deal received their fees based on the $505,000 amount. An existing $65,000 second mortgage (which turned out to be the big "monkeywrech" in the deal; more later) was also left off the closing statement.
Other Reported Facts:
1) The lawyer characterized his conduct as nothing more than sloppy oversight. Through counsel, the lawyer essentially blamed his paralegals (who presumably handled all the closing "paperwork") for the errors. He is also accusing the buyer of "inappropriate conduct."
2) The buyer, owner of a local appraisal company, reportedly also served as appraiser in the transaction, according to disciplinary officials.
3) An "unsigned addendum" exists expressing an agreement between seller and buyer that seller would only get $285,000 from the sale, with the balance going to "closing cost repairs." It also states that both seller and buyer agreed to use one attorney in the closing.
4) The seller, an attorney himself as well as an accountant, is blaming the buyer and the suspended attorney for the mess. While he reportedley acknowledged signing the incorrect documents and knew of the "unsigned addendum," he described himself as "a distracted seller going through a contentious divorce [who] just wanted to finish the entire process," according to the article.
5) The lawyer has been a defendant in five civil suits charging malpractice since 2004, of which two were dismissed (possibly settled out of court???).
6) A private individual who held the $65,000 second mortgage (the mortgage constituted the deferred sale price of an accounting business sold by the individual to the property seller in this story, unrelated to the real estate deal in question) attempted to enforce a 50% "shared equity" clause in the mortgage based on the "inflated" $505,000 price of the home. When the parties in the transaction failed to "pay up," the individual, through counsel, filed a grievance against both the attorney and the seller (presumably, this was the grievance that initiated the Connecticut Bar investigation resulting in all these facts coming out).
For the whole story, see Conn. Attorney Suspended for Shady Land Deal
To read another story about Connecticut Bar Association investigations of attorneys, see Theft Of Client Funds Concerns Connecticut Bar Association.
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Usurious Loans Masquerading As Sale Leasebacks ?
equitable mortgage zebra
Indianapolis Feds Get Mortgage Fraud Indictment
A confederate has been charged with one count of identity theft, relating to an incident when police intervened during an attempt by him to get a $32,000 car loan using a phony Wisconsin driver's license. To read more, see Two charged with identity theft, reported by The Indianapolis Star at IndyStar.com.
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Vista Man Faces 12 Years For Conspiracy Convictions
The conspiracy charges related to grand theft, false pretenses, forgery and filing a false document. Three co-defendants were also convicted of some of the charges, and received acquittals on others.
The man, through his company, offered prospective homebuyers a 20 percent return on any investment and a program wherein each participant could buy a newly built home for an upfront investment of $7,500. No homes were ever built.
To read more, see Several guilty verdicts in First Latino case
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Boston Mortgage Scammers Sentenced In Federal Court
The successful investigation was a "joint venture" involving the FBI, the U.S. Postal Inspection Serrvice, and the Massachusetts State Police. To read more, see U.S. Attorney Press Release, Four Sentenced for Bank Fraud and Aggravated Identity Theft, Reports U.S. Attorney, distributed by PRNewswire-USNewswire.
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Wednesday, January 31, 2007
Los Angeles Attorneys Catch Section 1695 Violations; Save Owners Home Equity
Foreclosure Rescue Victim's Case Tossed Out Of Court
See Long Island Couple Lose Home, "Skimmer" Convicted for previous coverage of this story.
Tuesday, January 30, 2007
Admitted Flipper "Earns" Federal "Get Out Of Jail Free Card"
He earned his "Get Out Of Jail Free Card" because of "[his] role as a cooperating witness in overlapping mortgage fraud and public corruption cases" which resulted in convictions against a dozen defendants in the real estate fraud cases, with an additional 33 people either being convicted or pleading guilty in the overlapping public corruption probe.
To read more, see the article in The Republican, reported at MassLive.com, Tax defendant spared prison.
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Labels: mortgage fraud flipping
Mortgage Fraud In Central Florida Home Building Operation Suspected
A situation that has been described as a "$110 million residential loan dilemma" is currently facing Coast Bank and St. Petersburg-based homebuilder CCI Homes, according to an article in the Bradenton Herald at Bradenton.com.
Sarasota attorney Alan Tannenbaum has reportedly been contacted by about 100 potential clients and anticipates representing at least 50 to 75 who claim to have lost money in the deal. He says the way investors were approached to buy homes constitutes investment fraud. He is representing clients in a potential class action suit against two other companies that worked on investor packages linked to the residential home development.
At least two other attorneys are representing groups of investors whose homes were being built by CCI.
Reportedly, some investors were promised a portion of the home sale price in exchange for allowing their credit scores to be used to obtain construction loans on homes being built by CCI. Bank loans totaling $110 million to 482 borrowers were made and, to date, "[a]bout half of those "homes" still amount to empty lots" according to a recent SEC filing.
To read more, see Coast Bank loan holders may file lawsuit.
For a more recent story on Coast Bank, see Coast Bank discloses SEC inquiry (Bradenton Herald - 8-11-07).
The Equitable Mortgage Doctrine, The Truth In Lending Laws, Usury & Foreclosure Rescue
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Monday, January 29, 2007
Unwitting Title Transfers & Foreclosure Rescue Tactics
There is also a permanent link to this index in the sidebar to the right of the screen, under the caption Search For Blog Posts On, labeled Unwitting Title Transfers.
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Iowa Bankruptcy Court Calls Conditional Sale Contract An Equitable Mortgage
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Pittsburgh Area Neighborhoods Victimized By Flipping Scam
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Sunday, January 28, 2007
Two Fraud Investigators Charged With Mortgage Fraud
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Massachusetts Cops Probe Attorney Involvement In Loan Scams
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Accused Equity Skimmer Commits Suicide; Attorney's Law License Suspended
When authorities arrested him after a 15 month investigation on March 30, 2005, he was accused of collecting nearly $153,000 in excess of the mortgage payments and more than $86,000 in down payments and monthly rent but did not pay off debts on the homes that he promised the original sellers he would pay. The bogus deals reportedly involved 19 Polk County homes.
Less than two weeks after he was arrested, local authorities arrested an attorney for his role in the fraudulent transactions. The attorney acted as the title agent and closed loans on a few, but not all, of the real estate transactions involved.
About a year later, after having his bail revoked for contacting the victims of his alleged fraud and after a four hour standoff, the real estate operator fatally shot himself in front of Polk County Sheriff's deputies who were attempting to execute an arrest warrant to take him into custody. He was reportedly distraught about the prospect of going to prison for up to 30 years and facing an order to pay restitution (roughly estimated at between $700,000 to $800,000) to the scam victims on account of the charges he was facing.
After pleading guilty for his role in the transaction, the attorney was sentenced to five years probation. At the time of sentencing the attorney had already fully paid the amount of victim restitution attributed to his role (just under $115,000).
According to an e-mail reportedly sent by the attorney to The Ledger after his sentencing, there were apparently 40 or so victims that may never see any compensation for their losses in this scam.
The attorney was ultimately suspended by the Florida Supreme Court from practicing law in Florida for three years, according to the Florida Bar.
Sources:
Head of firm arrested, reported in The Mortgage Fraud Blog, The Prieston Group, based on an article appearing in The Ledger, (3-31-05)
Lakeland Lawyer Is Arrested In Inquiry, The Ledger (5-11-05)
Standoff With Deputies Ends With Suicide, The Ledger (5-2-06)
Officials: Death Won't Stop Case, The Ledger (5-3-06)
Lawyer Receives 5 Years' Probation, The Ledger (7-15-06)
Polk Attorney Reprimanded, The Ledger (1-12-07)
Lawyer Loses License for Real Estate Fraud, The Ledger (1-13-07)
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North Carolina Mortgage Fraud Links
Convicted Mobile Home Mogul Gets 75 Months, $7.5M Restitution Order
Vance County mobile home operator was sentenced after pleading guilty in March to mail and bank fraud and money laundering while selling mobile homes and preparing falsified mortgage documents. See:
Donald Gupton to face punishment today (1-24-07)
Gupton sentenced to 75 months in prison, $7.5 million restitution (1-25-07)
Man sentenced in mortgage scheme (1-25-07)
2) Fayetteville, North Carolina
Banks commissioner cites fraud, ID theft in revoking loan officer's license (1-25-07)
A Fayetteville mortgage loan officer's license was revoked for allegedly falsifying documents in connection with mortgage loan closings and for allegedly stealing and using the financial identities of her customers to fraudulently obtain loans for her personal benefit in their names.
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Saturday, January 27, 2007
Boston Cops, Feds Sting Alleged Home Thieves
The suspects have been alleged to have stolen the woman's identity to buy three other properties prior to the attempted "sale" of the victim's own home.
The alleged mortgage fraud involved the use of phony drivers' licenses, falsified W-2 forms and other phony financial paperwork using the victim's identity.
The suspects are believed to be part of a "sophisticated interstate identity theft ring", according to authorities. A series of additional arrests in connection with this identity theft ring is expected next week.
To read more, see these reports by the Boston Herald, at BostonHerald.com:
Bid to swindle ex-nun thwarted: Three nabbed in home scam (1-26-07)
More busts expected in identity theft, home-sale scam (1-27-07)
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Foreclosure Rescue Tactics: An Outline
His outline is based on the National Consumer Law Center's report, DREAMS FORECLOSED: The Rampant Theft of Americans’ Homes Through Equity-stripping Foreclosure 'Rescue' Scams.
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Equitable Mortgage - Table Of Posts
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