Wednesday, March 07, 2007

Elderly Risk Losing Homes In Reverse Mortgage Trap

The elderly "looking to cushion their retirement with reverse mortgages are at risk of losing their homes", according to an investigative report prepared by one consumer watchdog. The investigation "found glaring deficiencies in product information and vague default clauses that could be triggered by minor oversights."

To read more, see Elderly risk losing homes in reverse mortgage trap, in The Sydney Morning Herald.


California Reverse Mortgage / Annuity Scam Legislation

The State of California passed (in September, 2006) an amendment (SB 1609) to their existing statute that protects the elderly who obtain reverse mortgages (Cal. Civil Code Section 1923 et. seq.) in a further attempt by the state to stop home equity theft by unscrupulous lenders through the use of reverse mortgage scams. The key provision in the 2006 amendment prohibits lenders from requiring the purchase of an annuity by an elderly borrower when obtaining a reverse mortgage. For more information, see:

Editorial Note:

California may be the first state in the United States to have a statute specifically addressing the prevention of home equity theft by the unscrupulous use of reverse mortgage scams when its statute when into effect in 1998. I don't know of any other state that has such a statute (if anyone knows otherwise, please let me know).

Unless I'm mistaken, California was also the first state in the country (in 1979) to pass statutes specifically addressing the prevention of home equity theft by unscrupulous foreclosure rescue operators, covering both:

Inasmuch as the other 49 states apparently failed to follow California's lead on regulating foreclosure rescue operators back in 1979 (it wasn't until a quarter century later when the State of Minnesota passed their anti equity stripping statute, Section 325N in 2004, expiring on 12-31-2009, that other states began to fall into line on regulating foreclosure rescue), I wonder if California will again be ignored on the issue of addressing home equity theft through reverse mortgage scams.

(If past is prologue, maybe we should just wait and see what Minnesota does on reverse mortgage scams before other states decide to fall into line on this issue as well. If so, we can all "set our alarm clocks for the year 2023"; 1998 + 25, if my math is correct.)

Go here for other posts on reverse mortgage problems.

Go here , go here , and go here for other posts on elder financial abuse. zeta zebra elder financial abuse

Tuesday, March 06, 2007

Subprime Mortgage Lender New Century Dumped From S&P Index

After a particularly rough last week or so, subprime lender New Century Financial Corporation will get to spend until the close of business Wednesday on Standard & Poor's S&P SmallCap 600 index, at which point it will be replaced by Ruth's Chris Steak House Inc. The announcement was made late Monday after New Century's shares took another beat down, this time to the tune of almost 70%, closing at $4.56.

Source: Ruth's Chris to join S&P SmallCap 600, reported at BusinessWeek.com
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Subprime Mortgage Trouble Portends "Bright Future" For Some Foreclosure Rescue Operators

There are certain foreclosure rescue operators who must be relishing all the bad news coming out of the subprime mortgage market. It is the subprime market that, among other things, allowed many less than credit worthy people buy homes with very little downpayment. It is the subprime market that allowed themselves to be victimized by the mortgage fraud groups who scammed mortgage lenders with straw buyers, fraudulent stated income (liars' loans) mortgage applications, and bogus appraisals. With the increase in delinquency rates, and the possibility that those rates will be sustained (or be even increased) in the indefinite future, there appears to be ample opportunity for generating new business for one branch of the foreclosure rescue industry.

Inasmuch as it appears that an increasing number of the current delinquencies (and I anticipate even more in the future) are occurring in connection with property where the property owner has little or no equity in their homes (in fact, they may owe more to the mortgage lender than what the property value is), the operators that I'm referring to are not those who seek out high equity, distressed property who offer financially strapped homeowners sale leaseback arrangements that are coupled with a buy back option.

The operators I'm referring to are the "upfront fee" type of operators and the "equity skimmers", neither of whom needs to find "high equity" homeowners in financial distress in order to do business.
Upfront Fee Operators

The "upfront fee" operators, often calling themselves "mortgage consultants", "mortgage workout specialists", and others who use self-styled titles, promise to provide "consulting services" to homeowners facing foreclosure in dealing with mortgage lenders in exchange for fees that are paid at the outset of the relationship.

See, for example:

1) Madigan, Lawmakers Take On Mortgage Foreclosure "Rescuers", (Illinois) which, among other things, describes one case where an operator charged financially distressed homeowners between $350 and $900 for services in negotiating with their mortgage lender.

2) Owner of “My House Saver” Ordered to Make Refunds at Attorney General Request (Indiana)

3) AG Cooper shuts down foreclosure fraudsters (North Carolina) Click here for WCNC-TV news report

4) Former appraiser convicted of defrauding 30 people (Utah)

5) Womans court appearance in Debt Consildation case (Pennsylvania)

6) Get Gephardt: Equity Skimming Crooks Sentenced (Utah) Click here for Channel 2 TV Report

7) $250,000 Fine Levied Against Fraudulent Foreclosure "Rescue" Business (Illinois)

The Equity Skimmers

The equity skimmers, generally, are those who convince the homeowner to sign over their home, promising them that they will pay off the existing mortgage, and then proceed to either (A) rent out the property and pocket the rental proceeds and tenant security deposits, or (B) resell the property on an installment payment "land contract" (aka installment sale contract, contract for deed, wrap around mortgage, etc., depending on the part of the country you are in) and pocket the monthly payments received from his/her buyer. In either case, the operator fails making the existing house payments until the mortgage lender ultimately takes ownership of the property after a foreclosure sale.


Combination of Upfront Fee and Equity Skimmer Operator

Some operators have actually combined the "upfront fee" approach with a form of "equity skimming" where, in addition to taking an upfront fee, they convince the homeowner to remit monthly payments to them under the false pretense that those monies are being applied to a "payment plan" designed to cure or reinstate the defaulted mortgage (without the need to actually talk the homeowner into signing over the title to their home). In some of the cases listed below, the operators actually filed multiple, false bankruptcy petitions in the Federal Bankruptcy Court for the purpose of stalling the ultimate foreclosure sale of the property so that the operator can continue collecting the monthly payments from the homeowners for as long as possible.

See, for example:

1) Detroit Man Gets 3 Years in Foreclosure Scam (Michigan), which also involved the abuse of the Federal Bankruptcy Court system.

2) Press Release - U.S. Attorney, (S.D. Cal.), (California), another bankruptcy fraud case.

3) Springboro Man Indicted In "Operation Truth Or Consequences" National Action Bankruptcy Fraud (Ohio), also involved bankruptcy fraud.

4) Mortgage Scam Puts Dozens of Dallas Homeowners on the Streets (Texas)

Conclusion

Over the last few years, given the high rates of property appreciation, the upfront fee and the equity skimming operator scams have not been as prevalent since it was preferable for an operator to just position itself to get most or all of the equity appreciation in the property from a homeowner facing foreclosure by offering a sale leaseback program that I have referred to in other posts.

But because of the general downturn in real estate values, and the increase in delinquencies in mortgages secured by property with little or no equity, it seems clear to me that the use of the sale leaseback programs will diminish somewhat in the next couple of years and, instead, the "upfront fee" operators and the "equity skimmers" will be "coming out of the woodwork."

So, the next time you hear a story about the troubles in the subprime mortgage market, don't think that there isn't any connection between it and the foreclosure rescue industry. (Also, don't be surprised if you begin noticing some of the mortgage brokers and loan officers who were once fraudlently peddling subprime mortgage loans "drift" into the foreclosure rescue business as "mortgage consultants", "mortgage workout specialists", or equity skimmers.)

By the way, for another story on the subprime mortgage disaster, see Mortgage Crisis Spirals, and Casualties Mount, reported in yesterday's New York Times.

and Lenders take beating in subprime fallout, reporting that New Century Financial Corporation lost 60% of its market value yesterday.
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Monday, March 05, 2007

Trying To Recover A Home After A Foreclosure Rescue, "Equity Stripping" Transaction

It is quite common for a financially distressed homeowner (for purposes of this post, I am only considering a homeowner with a "significant" amount of equity in their home) to be approached by, and subsequently do business with, someone promising to help the homeowner "rescue" his/her home from foreclosure. In doing so, the homeowner's title to the home quite commonly ends up in the "home rescuer's" name, or possibly, in the name of some third party stranger.

Sometimes, the homeowner is fully aware that they are signing over their home title; other times, they sign it over unwittingly. Sometimes, the "home rescuer" procures the title either through fraud or forgery. The transaction typically also involves an oral or written understanding that leaves the homeowner believing that they will be entitled to buy back their home within a certain time period.

There are times when the "home rescuer", either after or simultaneously with taking title to the property of a financially strapped homeowner, proceeds to "strip the equity" from the property either:

(A) by getting a mortgage on the property for more than what is currently owed and where the rescuer pockets the difference, or

(B) by selling the property to a third party (who may finance the purchase with a mortgage) and where, again, the rescuer pockets the excess proceeds,

in either case, while the homeowner maintains possession of the home, both before and after the equity stripping.

See, for example:

1) Homeowner gets hard lesson in foreclosure rescue plans (Texas)
2) Madigan Sues Another Mortgage Foreclosure "Rescuer" (Illinois)
3) Attorney General Abbott Files Emergency Action Halting Bogus Foreclosure Rescue Operation (Texas)
4) Three Defendants Added To Federal Indictment In Foreclosure Scam Targeting Homeowners In Default (California)
5) Mortgage fraud cases multiply, hit more homeowners (California)
6) False Hopes - Inland homeowners facing foreclosure encounter scams under guise of refinancing (California)
7) State sues mortgage companies in homeowners scam (Illinois)


For those attorneys who represent homeowners in situations like this and who are trying to find an approach to undo the legal mess that their clients might find themselves in, see Exercising Options To Buy, Rights Of Intervening Interests, Notice, Bona Fide Purchaser, Duty Of Inquiry, & Other Stuff, which attempts to raise some legal issues that may be of some value in formulating such an approach.

I am not suggesting that there is some "magic trick" in getting back the homeowner's property in this type of situation. However, I am clearly suggesting (as I think I have suggested in my posts on the "equitable mortgage doctrine") that, in some but not all cases, there are certain issues of real property law that could potentially benefit the homeowner in getting their home back in certain situations that, probably because the financially strapped homeowner cannot afford legal counsel, appear to be going unaddressed. I say this based on the numerous media reports that I have seen (and on some of which I have posted blog entries throughout this blog).

Further, even if the legal mess can't be completely undone, the financially strapped homeowner's legal rights under local real estate law might create enough leverage to negotiate a satisfactory financial settlement by and among (A) the homeowner, (B) the rescue operator, (C) the subsequent purchaser and/or encumbrancer, and (D) possibly also the title insurance company who may have insured the title to the home for the subsequent purchaser and encumbrancer when they acquired their interests in the home from the rescue operator. equitable mortgage zebra

Killer Cop Caught In Attempt To Fleece Grandmother Out Of Home

In another story about a grandchild wanting to fleece their grandmother out of her home (see my 3-3-07 post on the other story), ex-Las Vegas police officer Ron Mortensen, who is currently serving a life sentence for first-degree murder, has been charged with trying to bilk his mentally incompetent grandmother out of her million dollar home in California to pay for his appeal, according to a media report by the Las Vegas Review-Journal, reported at reviewjournal.com. He and a co-defendant have been charged with exploitation of the elderly, forgery and theft.

To read more, see Plotting From prison: Killer cop faces more charges (Mortensen accused of trying to bilk grandmother out of home)
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Sunday, March 04, 2007

Mortgage Fraud Lawsuits Targeting Arizona Industry Players, Homebuyers

Mortgage brokers, appraisers, real estate agents, title firms and home buyers have been targeted in dozens of civil lawsuits filed in Arizona within the past few months by big lenders and Wall Street investors, according to a recent article in The Arizona Republic, at azcentral.com.

The allegations of mortgage fraud include charges of "cash back" deals to lying about income on loan documents. The suits are believed by some to represent the beginning of the fallout from mortgage fraud in Arizona.

Civil lawsuits alleging mortgage fraud are welcomed sources of information, according to one regulator. These suits often confirm matters that regulators may already be investigating, and could portend criminal charges by law enforcement agencies.

"The discovery, deposition and documents from civil litigation of cash-back deals will clearly show criminal conduct. Private lawyers will be able to package up these cases for prosecutors and criminal trials," according to attorney Michael Manning, who represents several plaintiffs involved in the lawsuits.

To read more, including some details from specific lawsuits, see Lawsuits targeting mortgage schemes.
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It's "Deja Vu All Over Again!", More New York Attorneys In Hot Water

Before I start this post, I want to acknowledge that there is not even a remote connection between these stories and real estate in general, much less home equity theft in particular. And all suspects in criminal proceedings are presumed innocent until found guilty by a jury in a court of law (or unless they plea bargain the case out).
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However, as Head Blogmaster, and since today is Sunday and nobody comes by on Sundays anyway, I can't help myself but to choose to exercise a little "editorial license" and post this blog entry anyway (special thanks to #8, Yankee great Yogi Berra for coining such a great line that I felt compelled to borrow for the title to this post, and one more thing, will somebody (preferably someone with a little political influence) in the great state of New York please give the New York State Bar Association a "wake up call"?). Now, on to the post.

DA Hynes Announces Indictment

On Friday, Brooklyn District Attorney Charles Hynes announced the indictment of attorney Moses Osayamwen on charges that he stole $15,000 from a client he represented in a personal injury matter, according to an online article on EmpireStateNews.net.

As a result of injuries received in a car accident, attorney Osayamwen obtained a $34,000 settlement on behalf of his injured client from the driver’s insurance company. The indictment reportedly charges that attorney Osayamwen kept the money, while leading his client to believe the settled suit was still pending. The check from the insurance company was made out to both Osayamwen and his client. Osayamwen allegedly forged his client's name on the check in order to access the funds.

For more, see Civil defense attorney indicted.

Judicial Commission Recommends Censure

In another story about a New York attorney who also happens to be a judge (and completely unrelated to this blog), the New York State Commission on Judicial Conduct has determined that Cathryn Doyle, a judge of the Surrogate’s Court, Albany County, should be censured, according to another online article on EmpireStateNews.net.

In connection with an investigation that the Commission was conducting, they found that Judge Doyle gave testimony that showed “a lack of candor”, “repeatedly minimized and distorted” her knowledge of the matter being investigated, and
  • "[f]ound that the judge engaged in misconduct by giving “shifting and evasive” responses to questions, which “violated her duty to be forthright and cooperative.” The Commission stated: “In our view, a judge’s obligation to testify truthfully and forthrightly…is not satisfied by responses that are ‘overly technical,’ incomplete or otherwise misleading.”"
Interestingly, however, the recommendation of the Commission's Administrator that the judge be removed from office was rejected by the Commission, citing a mitigating factor that is set forth in the article.

For more, see Judge should be censured, says state commission.
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Why Subprime Mortgage Lenders Are In Trouble

In a recent BusinessWeek.com article, an industry analyst asserts that one reason why the subprime mortgage market has gone into a steep decline is "[a] sudden but little-noticed shift in lenders' strategy that occurred at the end of 2005: Lenders went from competing for customers on price (by lowering rates) to competing for customers on easy terms (by lowering lending standards). As a result, the conclusion is that "[t]he subprime loans that were originated in 2006 that are turning out to be shockingly weak."

The expectation is that "[t]he pool of foolish loans they made in 2006 will continue to haunt them for some time to come."

To read more, see
Why Subprime Lenders Are In Trouble
(New analysis suggests that subprime lenders lowered their lending standards last year as they competed for business)

For other BusinessWeek.com articles on the troubles in the subprime mortgage market, see
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Kansas Towns Giving Away Free Land

For those of you looking for some inexpensive land to build your homestead and are willing to move to any one of a number of rural Kansas towns, you might want to check out KansasFreeLand.com, where they are giving away the land for nothing, according to an article in the Lexington Herald-Leader, reported at lexington.com.

According to the article, there are also towns in Nebraska and North Dakota that are offering similar deals.

One Kansas town has plans to offer free commercial land to entrepreneurs who build a business there, and according to the website, there are three towns that are already offering free land for commercial construction. See Free Commercial Land.

To read more, see Struggling rural areas tout free land to lure new residents.

Editor's Note:

What the article doesn't tell you is that Kansas has one of the most liberal homestead laws in the country. Homestead laws are those laws that generally prohibit a forced sale of a person's homestead by a creditor to pay most debts, which might be an additional reason for some to relocate to Kansas.
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Saturday, March 03, 2007

Subprime Mortgage Lender Target Of Criminal Inquiry

New Century Financial Corp., the second largest U.S. subprime mortgage lender, has reported that it is the subject of a criminal probe into trading in New Century securities as well as accounting errors, according to an online article at MarketWatch.com.

In addition to the criminal inquiry, which is being conducted by the U.S. Attorney's Office for the Central District of California, it has also been reported that both the Securities and Exchange Commission and the regulatory arm of the New York Stock Exchange are looking into the company.

New Century stock was hammered by almost 25% in after-hours trading Friday at about $11, after a 7% fall during the regular session to $14.65.

According to the article, "New Century slashed its forecast for loan production earlier this year because early-payment defaults and loan repurchases have led to tighter underwriting guidelines. The company also said that it has to restate most of its results from 2006 because of mistakes in how it accounted for losses on repurchased loans."

As of now, however, there does not appear to be any official reports of company insiders and others attempting to illegally dump their holdings in New Century stock in view of the anticipated future troubles in the subprime mortgage market; nor does there appear to be any credible reports that company officials have intentionally engaged in "creative accounting" in order to hide the company's losses when they found themselves stuck having to repurchase the bad loans they made. Matters are currently only in the investigative stage at this time.

To read more, see:
New Century says it faces criminal probe
(Subprime-mortgage lender warns it will likely breach lending covenant)

For an article describing the relationship between the subprime mortgage lenders and the large banks who provide them with the necessary financing to enable the making of subprime loans, see Big banks control fate of subprime lenders (Merrill, J.P. Morgan pull back in credit crunch at low-end of mortgage market)

Postscript:

In what appears to be a class action attorney "race to the courthouse" against New Century Financial Corporation, see these recent press releases:

  • Dreier LLP Files Class Action Lawsuit Against New Century Financial Corporation
  • Brower Piven Announces the Filing of a Class Action Lawsuit Against New Century Financial Corporation
  • Green Welling LLP Files Class Action Suit Against New Century Financial Corporation
  • Click here for links to press releases of several other recent class action lawsuits commenced against New Century Financial Corporation.

(These four links no longer available online. 10-19-07)

Florida Woman Accused Of Fleecing Her Grandmother, Home Equity Drained, Property Foreclosed

Dana Guarscio, a 41-year-old Sarasota woman is in jail, accused of stealing every penny from her 88 year old grandmother, according to a report by WTSP-TV Channel 10, reported at tampabays10.com. In addition to being accused of emptying her grandmother's bank account and selling all her belongings, Sarasota Sheriff's detectives say Guarscio drained the equity from the woman's home, forcing the bank to foreclose and sell it.

The elderly woman has since had a stroke and is in a nursing home. See Woman accused of fleecing her Grandmother (no longer available online).

See also:
  • Charge: Woman ripped off grandma (Sarasota County deputies say suspect took her grandmother's house and her money and sold her belongings) (Sarasota Herald-Tribune).
    revised 3-3-07 (9:05 p.m.)

Go here , go here , and go here for other posts on elder financial abuse. zeta elder financial abuse alpha

Missouri Regulators Create Task Force To Study Equity Stripping & Mortgage Fraud Solutions

The Missouri Department of Insurance, Financial Institutions and Professional Registration has created a special task force aimed to discourage mortgage fraud by educating both industry participants and the consumer public in recognizing the signs of mortgage fraud, according to an Associated Press article reported in the bellevillenewsdemocrat.com.

Department director Doug Ommen stated that the task force will "look at this issue from all sides to come up with commonsense solutions to prevent consumers from being stripped of their equity or facing foreclosure."

To read more, see New task force, legislation take aim at mortgage fraud.
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Friday, March 02, 2007

Fremont General To Unload Subprime Mortgage Operations

Reportedly prompted by the receipt of a proposed cease and desist order from the Federal Deposit Insurance Corporation earlier this week, Fremont General Corp. announced Friday that it intends to sell its subprime residential real estate lending business.

Fremont General's stock price was down 16% in after-hours trading Friday after taking a 24% hammering on Wednesday.

To read more, see Fremont General to sell subprime residential business, reported at MarketWatch.com.

For another Fremont story earlier this week, see Fremont Shares Tumble After Postponement Of Q4 Result.

Click here for other recent stories on Fremont General Corp. at MarketWatch.com.
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Atlanta Federal Trial Reaching Conclusion

The Atlanta Federal Court trial of alleged mortgage fraud operator Phillip E. Hill, Sr. and others, involving over 150 charges of mail and wire fraud, false applications, money laundering and conspiracy in connection with an alleged property flipping, "straw buyer" operation, is finally reaching a conclusion after almost seven weeks of testimony from over 80 witnesses, according to an article in The Atlanta Journal Constitution, reported at ajc.com.

Of the co-defendants tried in this case, two have already received directed aquittals from the trial judge on Thursday. Five of those originally charged by the Federal grand jury avoided trial by pleading guilty before the start of the court proceedings and testified on behalf of the prosecution. Jury deliberations leading to the final verdict on Hill and the remaining co-defendants are set to begin on Monday.

To read more, see Alleged fraud kingpin called hapless but honest (link no longer available).

To read earlier reports on this story, see

Click here for Federal Grand Jury Indictment of Philip E. Hill, Sr., et. al. (approx. 2 MB) (link no longer available).

Go here for other posts on the Phillip E. Hill property flipping operation.
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Subprime Mortgage Lender's Stock Price Gets Hammered

More bad news in the sub-prime mortgage market as shares of mortgage lender Fremont General Corp., the parent company of subprime mortgage lender Fremont Investment & Loan, fell sharply on Wednesday, a day after the company said it would postpone the release of its fourth quarter and full-year 2006 results, which were previously scheduled for Wednesday, according to an article in TradingMarkets.com. It also said that it would not file its annual Form 10-K report for the year 2006 by its March 1 deadline. The company did not give any reasons for the postponement.

This comes at time when "subprime mortgage lenders are struggling with rising delinquencies and defaults, as slowing home price appreciation makes it more difficult to refinance. Lending margins have narrowed, and investors are forcing many lenders to buy back soured loans at a loss", according to the article.

Three weeks ago, the stock price Fremont's larger sub prime mortgage lending rival New Century Financial Corp. took a beating of more than 36%, "[a] day after the company delayed its fourth quarter and full year 2006 results, projected a net loss for the fourth quarter and said it would restate results for the first three quarter of 2006 that would result in the reduction in net earnings for those periods."

Fremont's announcement comes on the heels of Freddie Mac's announcement that it would tighten its mortgage lending underwriting guidelines on "exotic" home loans.

The signs of trouble in the industry continue.

To read the full article, see Fremont Shares Tumble After Postponement Of Q4 Result.

For other links to stories on the troubles in the subprime mortgage market, see

revised 2/2/07 (12:26pm)

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Thursday, March 01, 2007

Illinois Attorney General Files Suit Against Foreclosure Rescue Operation

Illinois Attorney General Lisa Madigan has filed a civil lawsuit against three companies who allegedly promised to rescue more than a dozen struggling homeowners, then scammed them out of tens of thousands of dollars in home equity, according to an article in the Chicago Tribune at chicagotribune.com.

The companies, Eyes Have Not Seen Inc.; Creative Financial Solutions; and Mutual Trust Funding, formerly known as Greater Investment Solutions, allegedly lured victims by offering to help make mortgage payments, and then persuaded them to put the title to their homes in other people's names. Other defendants are Charles T. White Jr., Debra Gray and Darius K. Monroe.

To read more, see State sues mortgage companies in homeowners scam.

For the Illinois AG Press Release, see Madigan Files Suit To End Mortgage Rscue Scheme.

Illinois Federal Grand Jury Indicts Loan Officer

Loan officer James L. Boyle was indicted on 22 counts of mortgage fraud in an Illinois Federal Court on Tuesday. The charges include 10 counts of making false statements in the jurisdiction of a federal agency, 11 counts of making false statements to cause the Department of Housing and Urban Development ("HUD") to insure a loan and one count of interstate carrier fraud, according to a report by the Beloit Daily News, at BeloitDailyNews.com.

According to the indictment, Boyle used phony mutual fund and brokerage account statements, "Gift Affidavit" forms, pay stubs, employment verification forms on behalf of prospective borrowers to obtain HUD-insured loans from area mortgage lenders.

To read the article, see Roscoe man faces 22 counts of fraud.

Click here for 22 count indictment, U.S. vs. Boyle.
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Add One More To The List Of New York Attorneys In Hot Water

Gwenerva Cherry, a Manhattan attorney and name partner with the firm Cherry and Marshburn has been indicted on charges of stealing $500,000 from individuals involved in real estate transactions, according to an article in the North Country Gazette, at NorthCountryGazette.org. She has been charged with second and third degree grand larceny and first degree scheme to defraud. To read more, see DA: Manhattan Attorney Stole $500,000.

See also:

(Editor's Note: I hope that some day soon the New York State Bar Association starts initiating administrative proceedings against some of its members before criminal charges are brought against its members. I hope I'm wrong, but my suspicion is that the state Bar Association only acts when reports of criminal charges are made public. In my view, the more time that passes before the state Bar Association starts initaiting and reporting on investigations of its members, the longer they maintain the appearance to the general public that they are all "asleep at the wheel".

Maybe they should impose bonding requirements on attorneys handling real estate transactions. I reiterate, however, that I hope I'm wrong, but even if I am, the New York State Bar Association still looks terrible with all these recent media reports coming out on some of its wayward members that reflects poorly on the entire profession, in my humble opinion.)

For those ripped off by an unscrpulous New York attorney and want to try getting some of your money back, check out The Lawyers Fund for Client Protection of the State of New York.
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More Bad News For The Sub Prime Mortgage Market

Another sign of the trouble facing the subprime mortgage market showed itself this past Tuesday when the Federal Home Loan Mortgage Corporation ("Freddie Mac"), one of the largest buyers of home mortgages, said that it would tighten lending standards and stop buying certain kinds of risky home loans made to borrowers with weak, or subprime, credit records, according to an article in The New York Times.

The move comes as default rates are rising, mortgage loan originators are starting to go under, and investors in bonds backed by mortgages are pulling back.

The subprime mortgage market consists of "exotic" home loans that let people buy homes with little down, "rough" credit histories, and/or without verifying their incomes ("liars' loans").

The article observes that "[F]reddie’s announcement is confirmation to other investors in mortgages that a segment of the market that was once Wall Street’s darling finds itself in the doghouse."

The new, stricter standards go into effect for loans written on or after September 1, 2007.

To read more, see Freddie Mac Tightens Standards.

To read the Mortgage Bankers Association response to Freddie Mac's announcement of its new subprime guidelines, see MBA Questions Freddie Mac’s New Underwriting Standards for for Subprime Lending.

For other links to information on the troubled sub-prime mortgage market, see Sub Prime Mortgage Market Compared To "The Titanic".

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