Mortgage Lenders Getting Into The Foreclosure Business?

An Associated Press story appearing on Daily Report says:

• "Consumer advocates have begun criticizing major mortgage lenders, such as Countrywide Financial Corp. and GMAC Financial, that also have in-house foreclosure businesses. It is "mind-boggling" that in many states, people can lose their homes in foreclosure without any court hearing and that the foreclosure is done by a company with ties to the lender, says Ira Rheingold, general counsel for the National Association of Consumer Advocates in Washington."

For more, see Lenders get into foreclosure business, particularly in West.
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More Layoffs By Subprime Mortgage Lenders

Housing Wire reports that at:

• WMC Mortgage, about half of the company’s national workforce — roughly 750 employees, were given their walking papers on Thursday. For more, see WMC Gutted, Lays Off Half of Workforce.
• GMAC LLC’s Residential Capital, roughly 600 to 700 workers — or five percent of its U.S.-based employees — will be cut loose during the next few months, a GMAC spokeswoman said Thursday. For more, see ResCap To Shed 700 More Jobs Amid Subprime Turndown.

For an interesting look at the current implosion in the subprime mortgage industry, see The Mortgage Lender Implode-O-Meter.

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Subprime Mortgage Weakness Spreading to Alt-A Market?

A recent Associated Press article appearing on the Florida Association of Realtors website reports that "[t]he so-called Alternative-A mortgage sector, which loans to borrowers with better credit than subprime borrowers but not quite prime, is starting to hurt." For more, see Weakness spreads from subprime mortgage market to so-called Alt-A segment.
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More On Subprime Mortgage Lending

For a perspective on the current subprime mortgage lending emvironment from public policy expert Alex J. Pollock, a resident fellow at the American Enterprise Institute ("AEI"), see:

• Subprime Mortgage Lending Problems in Context
• Subprime Mortgage Scandals and Lawsuits Are a Certainty
• Credit Crack-Up
• Subprime Time

AEI is a private, nonpartisan, not-for-profit institution dedicated to research and education on issues of government, politics, economics, and social welfare.

Mr. Pollock served for twelve years as President and Chief Executive Officer of the Federal Home Loan Bank Board of Chicago.

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New York Judge Convicted Of Bribe Taking

In another story that has absolutely nothing to do with the subject matter of this blog (and for which I respectfully request your indulgence), EmpireStateNews.net reports that, in Brooklyn, New York, Kings County District Attorney Charles Hynes announced yesterday the conviction of former Brooklyn trial court judge Gerald Garson on charges of Bribe Receiving in the Third Degree, and two counts of Receiving a Reward for Official Misconduct in the Second Degree.

The charges were reportedly based on a relationship the former judge had with attorney Paul Siminovsky involving buying numerous lunches, dinners and drinks in exchange for favorable treatment and lucrative court appointments; and giving "gifts" of expensive cigars and $1,000 in cash which were caught on video surveillance.

For more, see Ex-judge convicted for taking cash bribes and gifts from attorney.

Go here for other stories on questionable conduct by members of the judiciary. naughty judges
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Arrest Warrant Issued For Florida Homebuilder

The Sarasota Herald Tribune reports that Florida prosecutors say they have obtained an arrest warrant for Joseph Pufta, the chief executive of Avalon Homes, a homebuilder that reportedly "[c]ollapsed last fall, leaving 50 homes unfinished and dozens of home buyers ... saddled with mortgages for homes they may never be able to finish building."

According to the article:

• "Authorities say Avalon took hundreds of thousands of dollars from banks for work that was never completed. And they say subcontractors were never paid for work done on dozens of homes, causing them to levy liens. Assistant State Attorney Kate Wallace said Pufta will be charged with 20 felony counts of misappropriation of construction funds and one count of grand theft. More charges could be filed if more families come forward, she said."

While other builders have gone "belly-up" with the downturn in Southwest Florida's building industry, it is believed that Pufta could be the first homebuilder in the area to face criminal charges.

For more, see Builder left homes undone; CEO faces arrest.

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In a related story, the Sarasota Herald Tribune reports that "The contractor who allowed Avalon Homes to use his building license says he had no idea the company was leaving its customers broke and homeless."

Based on the reported facts in the article, contractor James Leake, in effect, "rented" his contractor license to Avalon Homes for $1,000 per home site to build houses under his license. Reportedly, the city of North Port, Florida issued 92 building permits to Avalon Homes under Leake's license.

For more, see Builder costs contractor his license.

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For story update, see Avalon home builder is booked on charges ("The former head of now-defunct Avalon Homes is charged with 20 felony counts of misapplication of construction funds and one felony count of grand theft. [...] According to an arrest report released Wednesday, Avalon Homes took "several withdrawals" of money from Schaller's construction loans "and failed to complete the work that these withdrawals were designed to pay for.").

For other posts on builders accused of stiffing customers & subs, go here and go here. contractors stiff subs customers zeta

NJ Man Indicted In Alleged Home Improvement Scam

The Jersey Journal reports that Miguel Perez, owner of New Jersey home improvement firm Miaggiamar Home Designers, was indicted on four counts of theft by deception in connection with allegedly conning more than $150,000 from four victims for home improvements that weren't completed. To read the story of one victim, who spent almost $400,000, on top of the $97,000 she said she'd already paid to Perez, to finish the job, see Took Our Money And Ran (ripping off homeowners in $150G con job).
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Colorado Man Indicted In Alleged Real Estate Scam

An arrest warrant has been issued for Darin DeVoe, who was indicted by a grand jury in Weld County, Colorado last week on 11 counts of felony securities fraud and theft in connection with an alleged real estate investment scam.

According to media reports, the grand jury indictment states that DeVoe stole $2.6 million from 19 of his investors by inducing them to invest in the business of buying distressed homes. The investors claim that Devoe not only failed to provide property management services as he agreed to, "[b]ut robbed the home of the investors’ equity, leaving the homeowners with homes in disrepair and massive upside-down mortgages with no way out."

For more, see Law enforcement looking for former Ogallala resident, reported in the North Platte Telegarph.

For other stories on Darin DeVoe, see:

• Investors vs. DeVoe (Greeley Tribune),
• Suspected Con-Artist Indicted On 11 Felony Counts (America's Most Wanted Fugitive File).

Massachusetts AG Gets Preliminary Injunction Against Foreclosure Rescue Operator

Massachusetts Attorney General Martha Coakley’s Office has announced that it has obtained a preliminary injunction in Suffolk Superior Court against fifteen individuals and companies allegedly involved in mortgage fraud and a foreclosure rescue scheme; preventing them from engaging in any further foreclosure rescue transactions.

The injunction was ordered against 15 defendants:

• Leo Desire, Sr., a salesperson who works on behalf of Primary Mortgage Resource, Inc.,
• Primary Mortgage Resource, Inc., Mortgage Broker and where Desire Sr. worked,
• Valerie Hanserd, a closing attorney,
• Home Pride Management, a company that took fees for unrendered services,
• Leo Desire Jr., President and Treasurer of Home Pride Management,
• Dr. Joel Charles (d/b/a Sourie Corp.),
• Louis R. Joseph, Pierre N. Joseph and his wife Daphne Mompoint, Robens Joseph, Paul A. Joseph, Jean Joseph, Advie Charles, Neville Francis and Marie Betey Mereus, all property buyers.

For more, see Massachusetts AG Press Release.

For a Boston Herald article, see Home scheme halted: AG slams Mass. firms’ foreclosure ‘rescue’.

Florida Regulators "Sting" Unlicensed Contractors

The Pensacola News Journal reports:

• "The Department of Business and Professional Regulation completed a sting that resulted in the arrest of 11 people for performing unlicensed work.The sting was an effort by the department, the Escambia County Sheriff’s Office and the Office of the State Attorney."

For more, see 11 arrested for unlicensed work.
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Feds Nail Preparer For Phony Tax Returns Used In Straw Buyer Scam

The Times-Picayune reports that Robert Green, who was allegedly paid about $8,000 for preparing false tax documents for straw buyers who submitted fraudulent mortgage applications for federally insured loans in a house flipping scam, pleaded guilty in a New Orleans, Louisiana federal court last week as part of a deal that requires him to cooperate with the government's continuing investigation of the scam.

According to prosecutors, the mortgage fraud scheme involved local businessman Calvin Davis, who recruited straw buyers to buy his houses at inflated prices and submit fraudulent applications to obtaining financing and, further, they claim that local real estate appraiser Donald White was paid an unspecified amount for furnishing false and inflated appraisals of the property that Davis was getting rid of. According to federal court records, White and Davis have not been charged.

Prior to Green entering his guilty plea, three other participants in the scam, Dennis LeBlanc, Dennis Addison and Timothy Falls have also entered guilty pleas and await sentencing. The latter three acted as the straw buyers in the scheme. For more, see House flipping scam nets plea (N.O. man will be sentenced in July).
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Business Week On Foreclosure Rescue

BusinessWeek.com has a general article on foreclosure rescue that reports on one homeowner who paid an upfront fee to a foreclosure rescue consultant and ended up losing the home anyway; it gets comments from two foreclosure rescue operators (an upfront fee operator and a New York sale - leaseback operator), and also gets comments from two consumer advocates regarding the foreclosure rescue process.

One foreclosure rescue operator, Albany, N.Y.-based Rivertown Financial engages in sale-leaseback transactions in New York, New Jersey and Pennsylvania and its chief executive, Geoffrey Goldman, said that "There's nothing inherently sinister about sale leaseback transactions. Businesses do it all the time."

For more, see Foreclosure rescue plans pose questions, or see

Frauds compound the pain of foreclosures (Homeowners paying to save their houses and end up losing them anyway) (reported on MSNBC.com).

Editor's Note:

Based on the information in my recent posts on foreclosure rescue as well as in earlier posts, it appears that there are more cases being brought by financially strapped homeowners seeking to have sale-leaseback, foreclosure rescue deals declared to be equitable mortgages. Successfully asserting an equitable mortgage claim will recharacterize the sale-leaseback as a secured loan between the foreclosure rescue operator and the homewoner, subject to state usury laws, and possibly Federal consumer protection laws (ie. Federal Truth-In-Lending Act and the Homeowner Equity and Protection Act).

The usury point could be a significant issue in a state like Florida. Its civil usury statute (where interest exceeds 18% per year) requires a forfeiture of the right to collect interest on the loan and requires the creditior to pay a penalty of double the amount of interest actualy reserved or collected (Fla. Statute Section 687.04). Its criminal usury statutes (where interest exceeds 25% per annum), call for a forfeiture of the creditor's entire loan, in addition to those penalties commonly associated with misdemeanor and felony crimes (Fla. Stat. Section 687.071).

Further, if the transaction is tainted with elements of fraud, deception, or unfair business practices, the transaction will also be subject to the state's unfair and deceptive trade practices laws, as well as to common law claims of fraud, conspiracy, and constructive trust, among others. Also, as was the situation in one recent case I reported on, a claim for legal malpractice was brought against an attorney who was supplied by the foreclosure rescue operator to the homeowner, and who purportedly "represented" the homeowner in the transaction when the homeowner signed away his home to the operator.

Finally, in a state like New York, stringent regulations (including criminal sanctions) have been imposed in the form of the Home Equity Theft Prevention Act to protect homeowners facing foreclosure when dealing with foreclosure rescue operators, both those who purchase from the homeowner as well as those who provide fee-based "foreclosure consulting" to the homeowner. No doubt that state regulators will be out there vigorously enforcing this statute. (Other states with anti home equity theft statutes can be found in the sidebar on the right side of this page.)

Financially strapped homeowners generally may not have the sophistication in matters of business, finance, and law to appreciate the nuances of the law to be able to know his or her rights, much less find experienced legal counsel to handle cases like these. However, I think we are seeing the beginning of a legal environment where attorneys and investigators, whether from legal services firms, from private firms (both small and large), or from state and local government law enforcement and regulatory agencies, will be out there finding them, prepared to bring the appropriate legal action to vigorously enforce both the statutes regulating the foreclosure rescue industry, as well as to enforce the laws that are a product of case law which has been around for a century or two. equitable mortgage zebra

Victim Of Home Improvement Contractor To Lose Home Of 40 Years

NorthJersey.com recently reported on the story of a Paterson, New Jersey woman and her family who were victimized by a local home improvement contractor and a mortgage company in a scam that has left the homeowner in the process of losing her home of 40 years. The gist of the story is that:

• she unknowingly signed for a mortgage loan on her home,
• the contractor she hired took the proceeds of the loan and did little work,
• the work that was done lacked the necessary permits and resulted in a local building inspector stopping the work on the home,
• the basement subsequently collapsed, leaving the house sitting lopsided,
• ultimately, it was determined that the mortgage lender's appraiser had overvalued the home by $100,000.
• the homeowners also claimed that their signature was forged and earnings were inflated.

The homeowner filed a civil lawsuit against D&M Financial (the mortgage lender), and both East Coast Developers (the home improvement contractor) and John Evans (its owner) in 2003. A state court arbitrator ultimately ruled that the contractor was paid "in an apparent conspiracy with D&M" for a "predatory loan," and that D&M, the lender, was liable.

Unfortunately for the homeowner, the mortgage loan was sold several times. A state court subsequently ruled that the current holder of the loan had no knowledge of what had gone on earlier among the original parties and therefore ruled that a foreclosure action brought by the current mortgage holder could proceed.

Regarding the mortgage lender, investigations by banking regulators in New Jersey and New York of D&M Financial reportedly revealed that a few dozen banks have sued it for unloading bad loans on them. In one action brought in Brooklyn Federal Court, D&M was alleged to have been engaged in or having some connection with "vastly inflated appraisals," misstating borrowers' incomes and writing false checks for about $20 million in loans.

As far as the the contracting company and its owner are concerned, their phone number has been disconnected, they are not registered with the State of New Jersey as a home improvement contractor, and efforts to locate them were fruitless.

For the story, see Mortgage scam turns 40-year dream into a nightmare for Paterson family.

For links to Federal Court cases involving DMC Financial Corporation, see DMC Financial - Party Index (To view court documents, PACER Registration required).

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Ohio Man Charged In Home Repair Scam That Targeted Elderly, Unwitting Lenders

The Cleveland Plain Dealer reports that a joint investigation by State and Federal authorities have resulted in an indictment against Jerry Ponsky, of Chagrin Falls, Ohio and five others of nearly 90 counts of racketeering, theft, money laundering, forgery and other crimes. In essence, they are accused of using bogus home repair and financing schemes to rip off the elderly of their home equity. Authorities say that he left dozens of victims buried in debt and living in homes left derelict by unfinished repairs. According to the article, the authorities describe the scam as follows:

• "Ponsky and his collaborators would inundate run-down neighborhoods with leaflets and pin-up fliers advertising "federally guaranteed" home-improvement programs for senior citizens. When older people responded, Ponsky and his collaborators would create phony, inflated appraisals of their homes' value; use those fake appraisals to line up loans from unwitting lenders; and then pocket huge chunks of the money, leaving the victims buried in debt."
• "In some cases, Ponsky's purported "remodeling crews" would gut all or part of the victims' homes until they vanished after financing came through."

For the whole story, see Chagrin Falls man indicted for home-repair scam that preyed on elderly.

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

South Florida Feds Get Guilty Verdict In "Operation Whose House" Mortgage Fraud

Ishmael Grant, of Lauderhill, Florida, one of the lead defendants in a $10,000,000 scheme to defraud mortgage lenders, was found guilty by a jury in a Fort Lauderdale, Florida Federal Court. The joint announcement, by authorities from a number of Federal agencies involved in the case, was made late Friday afternoon (4/13/07).

The verdict was the culmination of a two week trial in which 32 witnesses testified. Grant was found guilty on one count of conspiracy to commit mail fraud, wire fraud and aggravated identity theft , three counts of mail fraud, and three counts of wire fraud.

Ishmael Grant is the eighth defendant to plead guilty or be convicted after trial in connection with “Operation Whose House.” Presently, one defendant is awaiting trial and two defendants are fugitives in a foreign country. According to the evidence produced at trial, the scam involved fraudulently obtaining over 30 mortgage loans from lenders on property throughout Broward County, Florida and involved:

• paying individuals to act as straw buyers, the submission of false documentation (ie. false loan applications, false employment verification forms, false salary statements, false bank account statements reflecting high account balances), and identity theft (ie. using false or stolen Florida’s driver’s licenses, identification cards, and social security numbers as their personal identification to buy the homes in other people's names).

For more, see the 4-16-07 USDOJ Press Release, Operation Whose House Mortgage Fraud Defendant Guilty In Mortgage Fraud Scheme.

For a local media report on the case, see Lauderhill man found guilty of multimillion-dollar mortgage fraud, reported in the South Florida Sun-Sentinel.

For earlier USDOJ Press Releases announcing the guilty pleas of other defendants, see

• Five defendants Plead Guilty To Motgage Fraud Scheme (2-23-07),
• Two More Plead Guilty In Operation Whose House Mortgage Fraud And Identity Theft Ring (3-16-07)

For a copy of the indictment in this case, see Indictment - USA vs. Patterson, Brown, McGuire, et al., (detailing the Federal Grand Jury's 47 charges against the 11 person fraud ring)

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Florida Court Rules That "Foreclosure Rescue Eviction" Not A Landlord-Tenant Matter

A Florida appellate court ruled last month that a Miami-area foreclosure rescue operator cannot evict a homeowner who signed away title to her home in a "sale-leaseback-buyback option" arrangement until a determination is made as to who the true owner of the property is and effectively ruling that the Florida Residential Landlord Tenant Act is not applicable to such a transaction unless and until such a determination favorable to the operator is made.

The case involved a situation where, at some point after a financially strapped homeowner signed away the title to her home to a foreclosure rescue operator, the operator attempted to evict her. The homeowner asserted the defense that she was the true owner. The lower court ruled that, pursuant to the applicable provisions of the Florida Residential Landlord Tenant Act, she had to pay into the court registry the rent that was called for in the leaseback of her home while the court proceedings were pending.

According to the appellate court's opinion:

• "[The homeowner] alleges she was tricked into conveying her home to Equinamics in a transaction which is impressed with characteristics of a sale, but in reality is a disguised loan secured by her home. If this is accurate, then Equinamics is not an owner of [the homeowner's] residence but rather a lender who must proceed to oust [her] via a foreclosure action."

The court then made this observation:

• "Based upon the facts of this case, it is apparent that the transaction by which Equinamics received title to the Minalla residence was not an ordinary real estate transaction. Likewise, the circumstances under which Minalla continued to remain on the property after she executed the special warranty deed to Equimanics was not possessed of the trappings of a usual landlord tenant relationship."

Ultimately, in reversing the lower court ruling to the contrary, the appellate court ruled as follows:

• "[T]here is a factual dispute in this case concerning who is the true owner of the property. Because the trial court's order requiring payments by Minalla of monies into the registry was made without conducting an evidentiary hearing concerning the nature of the transaction and who is the true owner of the residence, the court erred in imposing the payment requirement upon her."

The homeowner is being represented by attorney James A. Bonfiglio, Boynton Beach, Florida.
Minalla v. Equinamics Corp., (Fla. App. Ct., 3rd Dist. March 21, 2007) (Court decision made available online courtesy of the Florida Third District Court of Appeal)

Postscript:

The court in this case reveals the following in a footnote:

• that the homeowner has brought claims against the foreclosure rescue operator under the Federal Truth in Lending Act giving her a right to rescind under 15 U.S.C. § 1635 and Reg. Z 226.23, and damages under 15 U.S.C. § 1640 (a);
• that the arrangement is alleged to be a Home Ownership and Equity Protection Act Amendments (HOEPA) loan under 15 U.S.C. § 1602 (aa) and Reg. Z 226.31, giving right to an additional basis to rescind under § 1635 and enhanced actual damages under § 1640 (a)(4);
• that the arrangement is alleged to violate Florida's usury statute, § 687.02(1), Florida Statutes (2005);
• that the homeowner has brought a quiet title claim; and
• that the homeowner seeks declaratory relief on the basis that enforcing the arrangement as a true "sale lease option" would enforce an illegal equity skimming contract in violation of section 697.08, a third degree felony, which it claims allows Minalla civil damages as being "against public policy.

There seems to be some pretty interesting issues for Florida practitioners in this case, particularly the usury and illegal equity skimming claims coupled with the equitable mortgage / disguised loan issue. This may be a case worth keeping an eye on.
For more on attorney James A. Bonfiglio, see:

• West Palm Beach Attorney Representing "A Dozen" Foreclosure Rescue Victims; and
• Facing foreclosure? Beware of 'rescue firms' offering to help you. equitable mortgage zebra

Another NYC Foreclosure Rescue Federal Lawsuit Settled

A foreclosure rescue lawsuit brought by a couple in a Brooklyn, New York Federal Court was settled privately by the parties involved earlier this year. The homeowners in this case brought suit against foreclosure rescue operator Principle Investors Realty, and individuals Frankie L. Freeman, Edith A. Lorick, attorneys Fred D. Way, III (remember him from yesterday's posts) and Appolo Pitton, and Kevin Waite, who ultimately ended up with the title to the home. When the homeowners approached the operators for help in "saving" their home, they (the foreclosure rescue operator) allegedly proceeded to engage in an equity stripping, foreclosure rescue deal that ultimately forced the homeowners out of their home. According to the allegations contained in the lawsuit:

• "But instead of helping the Hineses save their home, Freeman induced them to transfer their deed to his associate, defendant Edith A. Lorick ("Lorick"), who took out a new mortgage on the property that exceeded the Hines's previous mortgage by more than $100,000; distributed the proceeds of the new mortgage to himself and his co-conspirators; and demanded monthly rental payments from the Hineses that he knew they could not afford. Unable to make the payments, the Hineses were forced to move out of their home."

According to the lawsuit, the property was ultimately sold for $100,000 more than the amount of the subsequent mortgage taken out by Lorick, and nearly $200,000 more than the payoff amount on the homeowners' original mortgage. The homeowners allegedly only received $10,000 in the transaction.

This lawsuit brought claims (not unlike many of the claims brought in those New York cases I reported on in yesterday's posts) against those involved for:

• Equitable Mortgage (NY Real Property Law Sec. 320),
• Violations of the Federal Truth In Lending Act,
• Violations of the Federal Real Estate Settlement Procedures Act,
• Common law fraud,
• Conspiracy to commit fraud,
• Violations of New York State General Business Law Sections 349 & 350 ("The Deceptive Practices Act"),
• Conversion,
• Unjust Enrichment and Constructive Trust,
• Legal Malpractice

Representing the homeowners in this case were attorneys from the firms Chadbourne & Parke, LLP and Patterson Belknap Webb & Tyler LLP.

For the complete lawsuit, see Complaint - Hines-Johnson vs. Principle Investors Realty, Frankie L. Freeman, et al.

Editor's Note:

It's hard not to notice that the attorneys and law firms representing the homeowners who are alleged foreclosure rescue victims are no longer only sole practitioners and attorneys from the non-profit legal services firms. Some law firms that are getting involved in these cases (such as those in this case and in the New York cases I reported on yesterday) appear to be pretty large firms that are better known for corporate law and complex litigation. Further, given the financial straits that these homeowners are invariably in, it's hard to imagine that the cases are being handled on anything other than a pro bono or contingency fee basis. It may very well be that the area of consumer protection law involving the representation of homeowners who have had business dealings with foreclosure rescue operators is becoming an emerging area of law for civil litigators.

For commentary on the emergence of this area of law, see, for example, Litigating Foreclosure Rescue Scams (An Emerging Area of Consumer Law), and my April 5, 2007 post on this point, Litigating Foreclosure Rescue Scams. equitable mortgage zebra

Washington State Assistant AG Has Eye On Foreclosure Rescue Fraud

The News Tribune in Tacoma, Washington has a story on Washington State Assistant Attorney General Dave Huey and his work in the AG's Consumer Protection Division. When asked about the type of lending fraud he is seeing today in the state, he said:

• "We’ve sort of shifted our focus to foreclosure rescue fraud, because that’s where con artists can make a living. They don’t have the inflated values anymore. So now if you’re looking to make your fortune in real estate, you have to find new ways to exploit people, and we’re seeing that in foreclosure rescue scams."

For more, see He’s got your back.

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Washington AG Charges Two In Foreclosure Rescue Scam

The Washington State Office of the Attorney General Rob McKenna has filed criminal charges against a Bellingham, Washington mortgage broker and his wife in what investigators have called a foreclosure rescue scheme to get title to a local couple’s home, according to an article in The Bellingham Herald. The state has accused Peter and Julia Torkild of theft, forgery, money laundering and use of proceeds of criminal profiteering in connection with the scheme to acquire the victims' home.

Based on the information in the article, it appears that the impetus for the criminal charges in this case was a civil lawsuit, and an investigation conducted in connection therewith, that was brought by the victims against the Torkilds last May. For all the details, see Mortgage broker faces crime charges (Couple allegedly schemed to get Lummi Island home).

If any resident of the State of Washington thinks they may have been defrauded in a mortgage or other financial transaction, contact the Washington Department of Financial Institutions ("DFI"): (360) 902-8811; or go here for Online Complaint Filing with the Washington DFI.
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NYC Foreclosure Rescue Operator Target Of Federal Lawsuits

New York City foreclosure rescue operator Home Savers Consulting Corp. and Phil Simon have been the targets of two Federal lawsuits containing allegations of equity stripping involving the use of a "straw buyer" in connection with foreclosure rescue deals.

In one case, Johnson vs. Home Savers Consulting Corp., Phil Simon, et al., the allegations in the complaint state that:

• "After applying for what they believed was a refinance loan, plaintiffs discovered that Home Savers, through document trickery, misrepresentations, and outright fraud, had caused them to transfer ownership of their home to an “investor.” Unbeknownst to plaintiffs, the “investor” then mortgaged the property with Argent Mortgage Company for $425,000—a $182,000 increase over plaintiffs’ mortgage."

Neither Home Savers or Simon bothered to answer the allegations, and a default judgment was entered against them. According to the court docket, the victimized homeowners settled the lawsuit as it related to the mortgage lender involved in the transaction who was also named as a defendant in the case; and last week, the judge in the case entered an order against attorney Fred Way for actual and punitive damages of $10,000+ for his involvement in the transaction.

The victimized homeowners in this case were represented by South Brooklyn Legal Services, Brooklyn, NY; and White & Case LLP, New York City.

In another case, Phifer v. Home Savers Consulting Corp., the allegations in the complaint state:

• "After applying for what she believed to be a refinance loan, plaintiff discovered that Home Savers, through document trickery, misrepresentations, and outright fraud, had caused her to transfer ownership of her home to Wayne Griffith, the straw buyer, a person she had never met before. Unbeknownst to plaintiff, Home Savers then arranged for the straw buyer to mortgage plaintiff's home to Fremont Investment & Loan for $415,000--approximately a $170,000 increase over plaintiff's then existing mortgage on which she owed $245,000."

Neither Home Savers nor Simon have, as of yet, bothered to answer the allegations in this case, either. The litigation is currently ongoing and a motion for a default has yet to be filed against them.

The victimized homeowners in this case are represented by Oda C. Friedheim, Legal Aid Society, Queens of Kew Gardens, NY and Noah David Lang, of Seyfarth Shaw LLP, New York City.

Go here for other posts on foreclosure rescue operator, Home Savers Consulting.

Federal Judge Imposes $10K In Damages Against NY Attorney For Involvement With Foreclosure Rescue Operator

Last week, a Federal judge in Brooklyn, New York entered a judgment for damages in the amount of $10,720.75 against New York attorney Fred Douglas Way, III, Esq., (aka Fred Way) for his involvement in an equity stripping scheme involving New York foreclosure rescue operator Home Savers Consulting Corp. and Phil Simon.

The damages broke down as follows:

• $2,500 for money that he refused to return to the victimized homeowners of a foreclosure rescue scheme,
• $7,500 in punitive damages, and
• $720.75 for the cost of serving a subpoena on him.

According to the record:

• "[W]ay [was served] with notices of court conferences, a request to enter default, and a subpoena duces tecum directing Way to produce documents and appear for deposition. The process server for the subpoena served Way at his office on November 14, 2005, after being forced to wait for forty minutes because of Way's refusal to accept service. Due to the evasion of service, the cost of service of the subpoena was $ 720.75. Way did not appear for the January 9, 2006 deposition noticed in the subpoena served upon him, nor did he produce any documents in response to the subpoena. Plaintiffs' counsel also spoke with an attorney named Domenik Napoletano on January 9 and 31, 2006, who inquired whether plaintiffs would consent to vacate the default against Way. Plaintiffs stated that they would not agree to vacate the default, and neither Napoletano nor Way moved to vacate the default, or made efforts to engage in settlement talks with plaintiffs or respond to the subpoena served upon Way. Despite the numerous notices given to Way and his clear knowledge of the action against him, Way has still failed to appear in this action. Way also has a documented history of failing to appear in other litigation against him and defying court orders."

In addition, the record reveals allegations of other cases in which attorney Fred Way may have been involved in foreclosure rescue schemes:

• "Plaintiffs also point to other litigation involving similar claims against Way. See Attie Decl. PP 27-31; Johnson-Hines v. Freeman, No. 05-cv-5173 (E.D.N.Y. November 4, 2005) (foreclosure rescue scheme in which Way allegedly acted as attorney for investor); Robinson Electrical v. Woods, Index No. 37841/05 (N.Y. Sup. Ct., Kings County) (alleging that Way steered plaintiff into a fraudulent home improvement scheme); Hinds v. Way, Index No. 48329/99 (N.Y. Sup. Ct., Kings County) (alleging that Way took and retained nearly $ 40,000 from the sale of two properties while acting as attorney for an estate)."

The victimized homeowners were represented by South Brooklyn Legal Services, Brooklyn, NY; and White & Case LLP, New York, NY.

To read the Federal Magistrate Judge's Report and Recommendation against attorney Fred Way in this case, including a recitation of the basic facts involving the foreclosure rescue operator and its conduct against the victimized homeowners, see Johnson vs. Home Savers Consulting Corp., Phil Simon, et al., Case # 04-cv-5427 , 2007 U.S. Dist. LEXIS 24288, E.D.N.Y, March 23, 2007.

To read the April 11. 2007 court order entering judgment against Way, see Amended Order - Johnson vs. Way et al.

To read the facts of the case, as alleged by the victimized homeowners, see Complaint - Johnson vs. Home Savers Consulting Corp., Phil Simon, et al.

Go here for other posts on foreclosure rescue operator, Home Savers Consulting.

Victim Of Massachusetts Foreclosure Rescue Operator Fights Back

The Boston Herald recently reported of the story of Diane Rayford, a very determined nurse, who had hundreds of thousands of dollars allegedly stolen from her by a local foreclosure rescue operator who targeted distressed homeowners facing foreclosure. The article reports that:

• "[I]t took the feisty Trinidad native two years of endless lobbying of every conceivable law enforcement agency, hundreds of phone calls and even treks to suburban police stations before authorities took action."

Her persistent efforts to get law enforcement authorities to take her seriously finally culminated last week when Massachusetts Attorney General Martha Coakley filed civil suits against 19 companies and individuals for allegedly tricking Rayford and several other Massachusetts residents into signing away their homes in a foreclosure rescue scheme.

For the rest of Diane Rayford's story, see Nurse overcomes odds in fight for home.

For the Massachusetts AG's Press Release announcing the foreclosure rescue operator lawsuits, see Attorney General Coakley Files Lawsuits Against Individuals and Businesses Involved In Foreclosure Rescue and Mortgage Fraud Ring.

For other posts on this story, see Massachusetts AG Going After Foreclosure Rescue Operators.

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Massachusetts Foreclosure Rescue Operator Allegedly Scams Cross-Section Of Boston Area Residents

The Boston Herald reports:

• "A Mattapan pastor, a Natick attorney and a Dorchester nurse were among those who lost their homes to a “foreclosure rescue scam” that targeted distressed homeowners, authorities said yesterday."

The defendants allegedly conspired to deceive homeowners into selling their homes, falsely promising that the homeowners would be able to avoid foreclosure and keep their property.

For more, see ‘Mortgage fraud’: AG sues 19, alleges foreclosure scams.
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Convicted Brooklyn Couple In More Hot Water; This Time For I.D. Theft In Real Estate Scam

Emerick Martin and his wife, Donna Martin of Brooklyn, New York were arrested again late last week; this time by local authorities on charges involving (1) an identity theft of a Queens man and (2) the use of the victim's identity to get $1.1 million in financing to buy a home in Dix Hills, Long Island, according to a Newsday article appearing online on am-NewYork.

Reportedly, it wasn't until the Martins and another engaged in a failed attempt to get an additional $180,000 by mortgaging the victim's home in Rosedale, Queens without his knowledge that their scheme was uncovered. When the victim received documents relating to this fraudulent financing attempt in the mail, he got suspicious and reported the matter to local law enforcement authorities.

Mr. Martin was sentenced to five years probation in June 2005, in connection with Federal charges against him, his wife and others involving allegations of filing of false mortgage applications. Reportedly, he was arrested on the new charges while on his way to check in with his parole officer on the old charges.

Mrs. Martin pleaded guilty in 2006 to mail fraud in that same case and was currently awaiting sentencing in Federal Court when she was arrested on the new charges. Reportedly, the Martins also engaged in a failed attempt to finance $90,000 to buy a late model Mercedes-Benz S550.

For more, see Brooklyn couple arrested for identity theft (no longer available online).

Go here for other deed theft posts. deed theft zorro

For other stories involving the use of identity theft to buy real estate, or to sell or mortgage an I.D. theft victim's home from out from under him/her, see:

• Two arrested for housing fraud,
• Homebuyers Used As Pawns In Mortgage Fraud Scheme,
• Four Sentenced for Bank Fraud and Aggravated Identity Theft, Reports U.S. Attorney,
• Mortgage Fraudsters Targeting Homes With "For Sale" Signs,
• Apple Valley man charged with identity theft and forgery,
• Florida Feds Get Guilty Pleas On Two In "Operation Whose House",
• New Arrests Made In Deed Scam,
• Boston Cops, Feds Sting Alleged Home Thieves,
• Detroit Area Law Enforcement Targeting Deed Theft With Dedicated Units.

I.D. Thieves 'Stung' In Attempted Massachusetts Home Theft Scam

In another story, this time reported by Boston, Massachusetts television station WCVB-TV Channel 5 on their website, TheBostonChannel.com, involving the use of identity theft to engage in a real estate scam to steal the home of a potential victim, the U.S. Attorney's office said Andre J. Lamerique of Sharon, Massachusetts, Carmella F. Lessegue of Boston, and Judy Bonas of New York City, were charged with using stolen I.D.s to fraudulently obtain a mortgage loan on a bogus purchase of a home in Dorchester, Massachusetts. Prosecutors allege that Lamerique orchestrated the phony sale to obtain the proceeds of a $440,000 mortgage to finance the purchase.

According to the report, "Law enforcement agencies got a tip about the scheme and used an undercover Massachusetts State Trooper to act as the attorney who was supposed to close the deal."

All three were previously arrested and charged in Massachusetts state court back in January on state charges involving the same incident. For more, see Feds Prosecuting ID Theft Home Purchase Case (Trio Charged With Using Stolen IDs In Fake Home Sale). sting
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Weekend I.D. Theft Blotter

The following recent reports involve alleged identity theft stories involving:

• a pizza delivery driver (Pizza delivery man accused of identity theft),
• a manager of an antiques business, for running up over $1,000 in charges on an account belonging to his ex-girlfriend (Police make arrest in identity theft case),
• a hospital employee who, according to police, used a hospital computer to steal social security and credit card numbers from 20 hospital patients (Guilty Plea in Identity Theft Case),
• a former Social Security Administration employee charged with illegally disclosing personal information she took off a government computer that was then used to rack up $2.5 million in credit card charges (Social Security Administration Worker Charged In Identity Theft Scheme),
• Nurse charged with stealing patient info and identity theft.

In addition, Credit Cards GB reports that a study by Visa reveals, "[t]he most common place where 40% of identity theft is found is in restaurants." The problems are caused by fraudsters who hack into the restaurant computers, which contain all of the customer details and transactions. To read more, see "Where do you think identity theft is most commonly started?"

Also, KOAA-TV in Colorado reports that Pueblo, Colorado police say that "[e]very year people learn they've fallen victim to identity theft after they file their taxes and find out they owe money for work they've never done." One identity theft victim may have had his identity stolen while he was in prison, since he recently learned he owed nearly $20,000 in back taxes for income the IRS says was earned during a period of time in which he says he spent in a state penitentiary. For more, see Pueblo man falls victim to identity theft.

Also, a Community Shred Day was held in Flint, Michigan yesterday. Dan Milliken, owner of iSHRED, an on-site document destruction company, supplied an industrial-sized document shredder, a monster machine inside a 35-foot semitrailer to promote document shredding as a way to combat identity theft. (Monster machine helps tear identity theft fears to shreds).

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