Foreclosure Investors Often Get More Than They Bargain For
Over two dozen occupants in this foreclosure. Go here for story.
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Welcome to The Home Equity Theft Reporter, a blog dedicated to informing the consumer public and the legal profession about Home Equity Theft issues. This blog will consist of information describing the various forms of Home Equity Theft and links to news reports & other informational sources from throughout the country about the victims of Home Equity Theft and what government authorities and others are doing about it.
In an interview, Dann suggested that he might add investment banks and credit-rating firms to an existing lawsuit Ohio currently has against New Century Financial Corporation, or it may start new litigation, possibly using Ohio's civil version of the federal Racketeer Influenced and Corrupt Organizations Act. For more, see Ohio Attorney General Targets Wall Street for Lending.
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The named defendants in the lawsuit are Insider Real Estate and its founder, real estate broker Christopher Scanlan.
For more, see Madigan Sues McHenry County Real Estate Broker (Attorney General Asks Court to Shut Down Business and Order Company to Reimburse Victims).
See Daily Herald story, State says Crystal Lake broker committed fraud.
Editor's Note
It looks like Illinois is serious about eliminating the abuses that are not uncommon in the foreclosure investing industry. The Illinois' Mortgage Rescue Fraud Act, a statute that targets abuses in the foreclosure investing industry went into effect on January 1, 2007. Now it appears that Illinois will be targeting those who promote the "weekend foreclosure seminars", typically conducted in ballrooms at area hotels, by invoking the state's Consumer Fraud and Deceptive Business Practices Act and the Business Opportunity Sales Law. In this case, the Illinois AG alleges that the seminar operator violated these laws by "making false promises to consumers regarding their chances of success and the potential profitability involved in locating and selling property in the pre-foreclosure real estate market."
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Editor's Note
In reading over both the Indictment and the Craig Plea Agreement, it seems that, because the homeowners signed away their homes to the defendants without realizing they were doing so, the Government took the position that the homeowners (and not the defendants) were still the "true owners" of the homes when the defendants applied for the loans from Washington Mutual. Accordingly, when the defendants submitted the loan applications to WaMu holding themselves out as the "true owners" of the homes, that assertion was treated by the Government as a "false statement made on a loan or credit application" (even though legal title was signed over to the defendants at that point), and served as a partial basis for the criminal prosecution.
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To watch the previous KCRA Channel 3 Elk Grove mortgage fraud TV reports by Josh Bernstein (no longer available online):
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This comes on the heels of U.S. Senate Banking Committee Chairman Christopher Dodd's emphasis that increased regulatory oversight and voluntary reforms by lenders are preferable to legislation.
For more, see Congress debates mortgage reforms.
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Go here to watch KLAS-TV report by investigative reporter Colleen McCarty.
(revised 5-12-07)
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Those named in the state disciplinary actions are:
For more, see Blagojevich Administration officials take action against massive mortgage fraud ring.
See also Chicago Tribune story, 17 penalized in 'mortgage flipping'.
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I suspect that many financially strapped homeowners losing their homes may, in fact, be insolvent. I also suspect that, because there doesn't seem to be much written about the insolvency exception (or the other exceptions, either) to the general rule, it is probably being overlooked by many people. To read more about all the exceptions and exclusions to the general rule that subjects an individual to income tax on the amount of debt that is forgiven, see:
If you need assistance in determining whether or not you qualify for one or more of the exceptions or exclusions, I highly recommend retaining the services of an experienced tax professional who knows something about doing some basic tax law research (ie. tax attorney, CPA, or Enrolled Agent; this is not a job for your average tax form preparer). And be prepared to show the tax pro copies of the three references listed above, just in case.
Go here for other posts on this subject.
(revised 5-9-07; 1:12 pm)
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