Tuesday, March 13, 2007

Ohio Prosecutor Announces Two Arrests In Home Equity Theft Cases

Cuyahoga County Prosecutor Bill Mason has gotten off to a pretty fast start this year with real estate related fraud prosecutions as he announced two more indictments today, running up his totals to at two cases a month this year, involving 98 defendants, according to a story on The Plain Dealer blog, at blog.cleveland.com. The charges this year involve fraud cases totaling over $5 million in loans and 47 houses in 14 communities, according to the prosecutor's office.

Today's announcement involves two cases alleging blatant thefts of the victims' homes.

In one case, mortgage people Sammy Quick and Brian Cicerchi were allegedly approached by one victim interested in refinancing her home. They are accused of tricking her out of her title, stealing $56,000 in home equity, and then attempting to evict her.

In another case, Willard Horne Jr. of Norfolk, Virginia is accused of conning an 87-year-old Cleveland woman out of her home and $85,000.

For all the details, see Cuyahoga prosecutor presses predatory lending cases.
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Accused Pennsylvania Title Agent Testifies In Her Own Defense

Anita Peterson, a title closing agent and former owner of Mountain Valley Abstract, took the stand in her own defense Monday on the fourth day of her trial where she is accused of intentionally falsifying dollar amounts on sales records, removing other documents from files, and lying about it to a state grand jury, according to a story in the Pocono Record, at poconorecord.com. To read more, including links to prior stories in this case, see Home-sale title agent defends self in fraud trial.
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Three Sentenced In Georgia Mortgage Fraud

Three men involved in a mortgage fraud scam that cost victims over $1 million were sentenced to prison in a Georgia Federal Court yesterday, according to a story in The Augusta Chronicle at augustachronicle.com.

Stacey L. Shefton (48 months and $1.06 million restitution for wire fraud), Michael D. Dunn (51 months and $338,084 restitution for mail fraud), and Willie J. Anderson, Jr. (five years probation and $17,530 restitution for concealing the crimes of others) all avoided more serious prison time. According to an assistant U.S. Attorney familiar with the case, the crimes all occurred before before Congress increased the maximum punishment for mortgage fraud to 20 years in prison. To read more, see Three sentenced in $1.06 million fraud.
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Daughter Gets 9 Months In Jail For Stealing $93K From Mother

A Las Vegas, Nevada woman was reportedly sentenced to nine months in jail for stealing $93,000 of her mother's money while her mother was in a New Hampshire nursing home, according to a report at Foster's Online, of Dover, New Hampshire. The money represented the proceeds from the sale of the mother's property. The daughter reportedly paid back the money prior to sentencing. For more, see Daughter sentenced in theft of $93,000 from mother.
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Connecticut Lawyer In Trouble For Alleged Theft Of Realty Sale Proceeds

Peter Sivaslian, an ex-Torrington, Connecticut attorney, already facing trouble as a defendant "[i]n criminal and civil cases for allegedly stealing more than $2 million from an elderly client was arraigned Monday for an alleged theft from a second elderly client", according to a report by The Register Citizen, at registercitizen.com.

Sivaslian is alleged to have diverted $120,000 from his client's (a 90 year old widow) bank account through his own bank account and ultimately into his Oppenheimer & Company investment account. The $120,000 represents part of the sale proceeds from the sale of his client's real estate. It has also been alleged that he may have also used his client's investment account to hide $410,000 in bearer bonds.

In the earlier case, in October 2005, police searched Sivaslian's home and discovered 192 bearer bonds in his den, 163 of which authorities concluded were bought with money from the estate of another elderly client.

In the current case, an Oppenheimer & Company branch manager, being aware of the prior legal trouble Sivaslian was in, alertly contacted the cops when he (Sivaslian) showed up with the second client at Oppenheimer's Torrington branch and attempted to deposit $410,000 in bearer bonds in the second client's account.

For the rest of the details, see Attorney accused of more theft.

Click here for other posts on attorneys in potential hot water.
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Monday, March 12, 2007

Voiding Title Transfers In Foreclosure Rescue Transactions

For those involved with the legal issues in dealing with (and attempting to void) title transfers in foreclosure rescue transactions, see:

New York State Home Equity Theft Prevention Act - Contract Requirements

(revised 10-24-07)
For New York investors purchasing residential property in foreclosure, click here for a list of HETPA contract requirements made available by the New York State Association of Realtors. (link no longer available).

Click here for other blog posts on the New York HETPA.

Victim Sweet Talked Out Of Home Equity

An Ohio man was recently arrested and charged by Hamilton County, Ohio authorities with five counts of theft for allegedly using an Internet dating web site to find women he would befriend, sweet-talk, and then steal over $100,000 from them, according to an article in the The Enquirer, at Cincinnati.com.

One unemployed victim was allegedly conned out of the entire $80,000 of her home equity and, further, under the apparent belief that she was participating in legitimate real estate investment activity, was left owning three houses with total monthly house payments of about $10,000.

Reportedly, the FBI was in attendance at a recent court hearing but wouldn't say why. An Ohio county prosecutor familiar with the case suspects possible mortgage fraud (possibly a straw buyer scam?). To read more, see Con man generous, deceitful (Baker used dating Web site to find prey).
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Sunday, March 11, 2007

Colorado Neighborhood Recovering From Effects Of Mortgage Fraud

A recent article in the Denver Post at DenverPost.com tells the story of the Villas at Cherry Creek, a 100 home community in Aurora, Colorado, that is now recovering from the ill-effects of a "straw buyer", "cash back" mortgage fraud scam conducted by an organized group that resulted in mass foreclosures. The scam began about two years ago and eight people have pleaded guilty to federal crimes.

Next month, on the day five of the group members are scheduled for sentencing, neighborhood residents are planning a victory party to celebrate getting their community back.

To read more, see Villas close on better future.
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Ohio Man Gets Six Years In Mortgage Scam

Corey M. Hazel of Columbus, Ohio was sentenced on Thursday to six years in prison for a mortgage scam involving bogus appraisals, phantom home repair bills, and obtaining a home loan on an empty lot where he falsely claimed had a home on it, according to an article reported by The Columbus Dispatch, at Dispatch.com. To read more, see East Side man sentenced to 6 years in mortgage scam.
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More On Predatory Mortgage Servicing

I came across two message forums whose participants apparently have a gripe with one mortgage servicer, Americas Servicing Company, one at treemedia.com, the other at RipoffReport.com.

Go here , go here , and go here for posts on questionable mortgage servicing practices. questionable mortgage servicing practices tactics zebra

Saturday, March 10, 2007

Is Getting Identity Theft Insurance A Good Idea?

With mortgage fraud scams around involving "straw buyers" that use stolen identities, maybe so. Maybe your current homeowner's insurance policy already covers you for it. Maybe the deductible is so high that the policies are just a way for insurance companies to squeeze more money out of you. To read more about it, see What Is Identity Theft Insurance?, reported at washingtonpost.com.

To see which states have "credit freeze laws" (laws that allow you to "freeze" access to your credit report) and how to implement a freeze, see State Security Freeze Laws.
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List Of States With Credit Report "Freeze" Laws

To see which states have "credit freeze laws" (laws that allow you to "freeze" access to your credit report) and how to implement a freeze, see State Security Freeze Laws.
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Federal, State Legislatures Considering Identity Theft Laws

Federal Government
Leahy introduces new bill to combat identity theft

Alaska
Bills take on identity theft

Arizona
OK given to new defense against ID theft

California
Cox Introduces Identity Theft Protection Bill

Colorado
Bill to curb identity theft proposed

Georgia
Proposed Bill Would Support Victims of Identity Theft

Indiana
Indiana House Approves Identity Theft Protection Plan

Maryland
Unanimous Senate passes bill aimed at identity theft

Mississippi
Identity-theft protection bill moving forward

Montana
House OK's identity theft measures

New Mexico
ID theft bill permits records freeze

Oklahoma
Legislation would increase penalty for ID theft
Tougher ID Theft Penalties Headed to Okla. House Floor
Bill to Protect Victims of Identity Theft Clears Okla. Senate

Oregon
Law officials testify for ID theft bill
New legislation targets identity theft

Tennessee
Lawmaker Pushes Identity Theft Bill

Texas
Bill filed to keep public records open

Utah
House OKs bill aiding victims of ID theft

Wisconsin
New Credit Freeze Law has some complications
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Friday, March 09, 2007

Arizona Feds Get Indictment On Five In Pre-Foreclosure Scam

A federal grand jury in Arizona has indicted five people on charges of defrauding the U.S. Department of Housing and Urban Development (HUD) of about $1.9 million in an alleged scam that targeted homeowners facing foreclosure and first time homebuyers, according to an article in The Arizona Republic. The indictment charges that the group abused the HUD pre-foreclosure program that was set up to help struggling homeowners avoid foreclosure by setting up a loan workout arrangement where the homeowners would have their homes appraised and sold to get maximum equity out of their homes, as market conditions would allow. Allegedly, at least 65 home were involved and homeowners were ripped off of any equity they could have realized on the sale.

The five defendants indicted are escrow officer Trudy Peters, loan officers John Soto and Larry Smith, and HUD certified housing counselors Maria Felix and Tony Vasquez. To read more, see 5 indicted in real estate fraud case.
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FBI Raids Alaska Title Company In Mortgage Fraud Investigation; Seeks Documents

The offices of Alyeska Title Guarantee, an Alaska title insurance and closing agent, was raided by the FBI on Wednesday, according to a report by KTVA - CBS 11 in Alaska. Reportedly, the FBI was seeking information on transactions involving specific people and specific properties in Anchorage and confirmed that they took financial documents during the search, but would not identify either the documents taken or the source of the fraud allegations. No arrests, yet - the investigation continues. To read more, see FBI raid surrounding allegations of mortgage fraud.
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Eight Indicted In $14 Million Dallas Area Straw Buyer Scam

A Dallas federal grand jury has returned a 17 count indictment charging eight defendants with various charges related to a mortgage fraud scheme they operated in the Dallas area, according to an article by Pegasus News. The indictment lists the following defendants:
  • Donald L. Jones, a/k/a “Don Jones,” and Joseph B. Jackson, Sr., a/k/a “Joseph Jackson” (both of whom owned and operated Affordable Homebuilders and the YIN Group in Irving), Donald Matthew Jones, a/k/a “Mat Jones,” Daniel J. Sattizahn, Robert Patterson, Jr., a/k/a Bob Patterson, Catherine L. Dike, a/k/a “Cathy Dike,” and “Cathy Carter,” William Barnes, who owned BCT Landscaping, and Foday S. Fofanah.

For all the details, see Grand jury indicts eight on $14 million mortgage fraud scheme.

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Subprime Mortgage Trouble Spreading To "Alt-A" Market?

The trouble being experienced by the mortgage market that caters to borrowers with weak credit (subprime borrowers) may be spreading to, what the mortgage industry refers to as, the "Alt-A" mortgage market, according to an Associated Press article reported by the Florida Association of Realtors.

"Alt-A" refers to that portion of the mortgage market that caters "to people who fall in the gray area between “prime” (borrowers considered the best credit risks) and “subprime” (borrowers considered the greatest credit risks)", according to the article. Alt-A borrowers are considered less risky than subprime borrowers because of their higher credit scores.

Data from one industry analyst indicates that "the default rate for Alt-A mortgages has doubled in the past 14 months." This data, however, contrasts with recent Congressional testimony given by the head of the Federal Reserve Board.

To read more, see Mortgage defaults start to spread.
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Subprime Mortgage Lending Guidelines Proposed

Proposed subprime mortgage lending underwriting guidelines, designed to get control over the increasing number of delinquencies and foreclosures in the subprime market, have been prepared and made open for comment, according to an article in Realty Times. The guidelines are intended to focus the lenders on better assessing the borrowers' ability to repay and specifically address seven lending practices that, many believe, have been creating havoc in the market. To read more, including links to other relevant background information, see New Subprime Guidelines Open For Comment.

To read the statement, prepared jointly by the four relevant Federal government agencies, see Proposed Statement on Subprime Mortgage Lending.
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Thursday, March 08, 2007

New Century Stops Taking Loan Appliations

The bad news continues for subprime mortgage lending giant New Century Financial Corporation as they announced late today that it has stopped accepting loan applications because some of its financing sources are drying up, according to an article at MarketWatch. The company also reported that an unidentified company who bought loans from New Century that have since soured has demanded that New Century buy back the mortgages. For more, see New Century stops accepting loan applications (Subprime specialist tries to maneuver as financial backers clamp down)

For other recent news on New Century, see:

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Foreclosure Rescue Operators In The Spotlight In Boston; Eastern Massachusetts

A recent Boston Herald article, reported at BostonHerald.com spotlights the foreclosure rescue industry in Boston and across Easter Massachusetts. Reportedly, the scam has caught the attention of Massachusetts Attorney General Martha Coakley’s office. To date, two operators have already been brought to court by the AG's office with more potentially in the pipeline. The story of one homeowner is decribed, including how she successfully resisted the pressure of operators who bombarded her mailbox with solicitations after a legal notice announcing the foreclosure action was published in the local paper. To read more, see Home ‘rescuers’: Mortgage troubles attract schemers.
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Egregious Conduct By Credit Card Issuers Consistent With That Of Predatory Mortgage Servicers

(revised 3-10-07)
Top officials from the major credit card issuers testified on Wednesday which highlighted some of the egregious practices their companies engaged in that soaked consumers out of millions of dollars. Click here to see yesterday's NBC Nightly News video covering the hearing, report by Lisa Myers.

Click here to view C-Span's 3-7-07 coverage of the Senate hearings (Be sure you have the most recent version of the Real Player).

While not a home equity theft issue, per se, the egregiousness of the conduct decribed in the hearings is not inconsistent with the conduct of predatory mortgage servicers when collecting bogus fees from financially strapped homeowners, which is an issue I have reported on in the past and is a home equity theft isssue.

The obvious approach by these large financial companies appears to be to try and get away with as much as possible for as long as possible, and when Congress finally gets around to hauling them into a hearing to answer questions, they simply say they're sorry and promise not to do it again.

Now that Congress is controlled by, arguably, the more "consumer friendly" of the two major parties, I suspect that at some point they will address the problems of predatory mortgage servicing.

For previous posts on predatory mortgage servicing, and links to relevant background information, see:

For Attorneys and Law Students Only

A point that was stressed by one of the witnesses in the hearing was that the credit card issuers weren't doing anything illegal when they were soaking the consumer with high fees, increased interest rates, universal default provisions, etc. My question simply is:

  • Why aren't the credit card contracts that purportedly allow the issuers to rip off the consumers considered unconscionable "contracts of adhesion?"

My understanding is that such a claim is an equitable claim, which may not be subject to the arbitration provisions that the major financial corporations are notorious for sticking into all their credit card contracts. Accordingly, such a claim could be litigated in a court of law as a class action lawsuit, rather than as an individual case in front of an arbitrator (If I'm wrong, somebody please correct me).

Go here , go here , and go here for posts on questionable mortgage servicing practices. questionable mortgage servicing practices tactics zebra.

Equitable Mortgage Doctrine In California

For a post containing links and citations to some of the equitable mortgage doctrine cases decided by the California Supreme Court, see Equitable Mortgage Doctrine In California. These cases could be helpful for those representing homeowners who have signed away their homes to foreclosure rescue operators. See, for example, Michigan Federal Judge Orders Return Of Home By Foreclosure Rescue Operator.

(revised 3-8-07 7:22 pm) equitable mortgage zebra.

Indiana Foreclsoure Rescue Legislation Passes Senate, On To House

Senate Bill 390 (SB 390) unanimously passed the Indiana State Senate by a 49-0 vote. The bill has now been referred to the Indiana House of Representatives for consideration. To read more on this and other pending mortgage foreclosure related legislation in Indiana, see the opinion articles:

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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.

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