More On Tennessee Two In House Swindling Scam

According to a report by WTVF-TV Channel 5 in Nashville, Tennessee, the alleged house swindle by Jeffery Bratcher and Annette Dutton of Pinnacle Builders required a $35,000 every two weeks by the victims, an elderly retired Murfreesboro couple, until they paid for a newly built $219,000 home. Reportedly, when the victims went to the closing of title, they found out that nothing was paid for and the bank had a mortgage against it. The Tennessee Bureau of Investigation claims that Pinnacle Builders stiffed both the bank on a construction loan, as well as the subcontractors who built the house. The house ended up being auctioned off, and the victims ended up buying the house again at the auction, this time for $160,000. Apparently, the victims knew Bratcher since he was a child. Said one of the victims, "We knew the kid since he was this high. He came into our house like he was a grandson when he was little."

Go here to watch the WTVF Channel 5 video report, by reporter Chris Cannon.

To read the online story, see Builders Swindle Retirees Who Pay Twice For House.
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New Hampshire State Senate To Consider House Bill 365 On Foreclosure Rescue

In New Hampshire, an amended version of House Bill 365, which proposes new laws regulating foreclosure rescue transactions, has reportedly been drafted, according to an opinion piece in the Concord Monitor. Among the reported provisions are strong rules:

• prohibiting unfair transactions and requiring disclosures to homeowners,
• allowing remedies under the state Consumer Protection Act to deter the rescuers,
• that anticipate the growing variety of scams.

The New Hampshire Senate Commerce, Labor and Consumer Protection Committee is scheduled to hold a hearing on House Bill 365 Tuesday morning. For more, see Pass this law to stop foreclosure predators (People facing loss of their homes need protection).

Go here for other posts on House Bill 365.
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Class Action Lawsuit Filed Against Beazer Homes USA

Two law firms have recently announced the filing of a class action lawsuit against Beazer Homes USA on behalf of all persons or entities who purchased or acquired the common stock of Beazer Homes USA, Inc. during the period from July 28, 2005 through and including March 27, 2007.

Beazer was the subject of a number of media reports by the Charlotte Observer and others regarding inquiries relating to, among other things, mortgage fraud in connection with new home purchases made by its customers and shoddy construction of some of its homes. See other posts on Beazer Homes.

For the law firm press releases, see Milberg Weiss & Bershad LLP Press Release, and Chitwood Harley Harnes LLP Press Release.

For a post on the Lawyers and Settlements website, see Beazer Homes Foreclosures.
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Increasing Insurance Premiums Stressing Senior Homeowners

While home foreclosure is a crisis for people who can’t meet exorbitant mortgage payments, soaring insurance rates are hitting seniors particularly hard, according to an article in the Queens Chronicle. According to the Manhattan-based Insurance Information Institute, home insurance rates have steadily climbed in the last several years. The trend is especially strong in coastal areas and in high-priced markets like the New York metropolitan area, where the estimated value of all property is $1.9 trillion. It would be the second most expensive area in the country, behind Florida, to rebuild after a hurricane. For more, see Higher Insurance Rates Trouble Senior Citizens.
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"Lifeline Refinance" Program Available To Maryland Homeowners With Exotic Mortgages

Marylanders who may be facing financial difficulties after purchasing homes with "exotic" mortgages may be eligible for the State of Maryland's Lifeline Refinance mortgage program. The program is administered by the Community Development Administration ("CDA") of the Maryland Department of Housing and Community Development, and offerred through CDA-approved lenders. For more, see www.morehouse4less.com.

According to a Baltimore Sun piece, the program was established last June and has been set up to provide $20 million in relief for borrowers falling behind on loans with adjustable rates and balloon payments. According to the report, however, no one is taking advantage of it; fewer than a dozen people have applied, even though the program can serve 100. For more, see Forestalling foreclosures.
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New Jersey Creating Rescue Fund For Homeowners Stuck With Subprime Loans

In New Jersey, the state Department of Community Affairs and the state Housing and Mortgage Finance Agency are developing a new refinancing program to help some New Jersey homeowners facing trouble after financing their homes with subprime mortgages, according to NorthJersey.com. The state is in the process of working out the program details, and officials say that the program, to be called "Rescue," could be up and running as early as July 1. For more, see Plan could rescue troubled homeowners.
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Pennsylvania To Create Mortgage Rescue Fund

Bizjournals.com reports that Pennsylvania state legislators have announced that the state would be starting a mortgage rescue fund for problem home mortgages and are calling on subprime lenders to agree to a voluntary moratorium on foreclosures. For more, see Pa. fund announced for subprime borrowers.
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More On Equity Holding Corporation And Its Foreclosure Rescue Deals

WCVB Channel 5 in Boston, Massachusetts recently did a story on foreclosure rescue operator Equity Holding Corporation and its business activities in offering complicated trust arrangements to "rescue" Massachusetts homeowners facing foreclosure.

Go here to watch the Channel 5 report (by Team 5 investigative reporter Kelley Tuthill).

Go here for prior post on this story, Foreclosure Rescue Operator Targeted In Massachusetts Lawsuits; One Victim Successfully Gets Back Home.
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Another South Florida Homeowner Falls For Foreclosure Rescue

WPEC-TV Channel 12 in West Palm Beach, Florida reports that a local homeowner facing foreclosure thought he was getting some help to save his home when Charles Reynolds, owner of Foreclosure First Aid, came to his house. According to the report:

• "Reynolds offered him $6,000 to get his mortgage back on track. All he had to do was sign a few pieces of paper. What he didn't realize is that he also signed a deed transferring ownership of the house to a trustee, a man named Darryl Prosser. [The homeowner] is now suing Charles Reynolds hoping to save his house."

For more, see Foreclosure Scam.
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Tennessee Two Indicted In House Theft

In Tennessee, The Murfreesboro Post reports that, according to a state court indictment:

• "Two Murfreesboro residents were indicted on theft and misappropriation of a contract after they were accused of stealing a house from a couple and failing to pay for labor and repairs."

Indicted were Jeffrey Bratcher and Annette Dutton. For more, see Two suspects indicted for stealing house, repair funds.

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Oregon Loan Officer Caught Submitting False Loan Applications

Loan officer Mark Todd Harless, of Eugene, Oregon pleaded guilty to using fraudulent information to obtain mortgage loans, according to the Oregon U.S. Attorney's Office. According to reports, "He listed three customers as managers of a Eugene children's clothing store, earning at least $3,000 a month. Hareless' girlfriend owned the store, and none of his customers worked there." For more, see:

• U.S. Attorney Press Release
• Eugene man pleads guilty to mortgage fraud (The Oregonian)

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Do Mortgage Companies Really Want To Know If Someone Is Trying To Rip Them Off?

I hope so. But in a recent article by mortgage fraud expert Ralph Roberts, he tells of a story he was involved in where a whistleblower brought him over 50 files which, in his judgment, proved the existence of an ongoing fraud against one mortgage lender. When he tried to contact the lender by phone with the information, the company did not have any interest in his information and, in essence, told him to "get lost."

He hastens to add that most lenders are very cooperative when he calls. They want to know when they are the targets of ripoff artists. However, he does report that he encounters far too many lenders who simply drop the ball on fraud prevention. He compares it to having a cash register wide open, with nobody watching the store.

For more, see Who’s Watching the Store? (reported at RISMedia.com).
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1031 Exchange Intermediary Files Bankruptcy; $Millions Unaccounted For

The San Jose Mercury News is reporting that the 1031 exchange intermediary:

• "1031 Tax Group of Richmond, Va., which operated in San Jose as 1031 Advance, filed for bankruptcy in New York City over the weekend. But even before then, it had become the subject of investigations by the U.S. Postal Service and U.S. Attorney's Office in Virginia."

Millions of dollars of investors money that was being held by the 1031 exchange intermediary for reinvestment by the investors is reportedly missing. One couple trusted the company with $10.6 million, and another investor had over $3.3 million of her investment money held by the company.

A 1031 exchange (a reference to Section 1031 of the Internal Revenue Code) is a method by which real estate investors may defer capital gains taxes if they sell and buy property within a 180 day time period. To delay paying taxes, investors must place the money with an independent third party - a trust company, title company, or an entity referred to as a qualified intermediary, until the deal is done. In these transactions, such independent third parties hold onto the money until the investor identifies the new property and closes escrow.

For more, see Real estate firm's collapse worries investors.

For a prior post on another 1031 exchange intermediary alleged to have misappropriated real estate investors' money, see 1031 Exchange Accomodators, Others Accused in $80 Million Theft.
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Another Pittsburgh-Area Senior Victimized; FBI Probing Mortgage Broker

KDKA-TV Channel 2 in Pittsbutgh, Pennsylvania is reporting that the FBI is investigating the lending practices of mortgage broker Carnegie Financial Group in Carnegie, Pennsylvania.

KDKA has been doing investigative reports on victims of this mortgage broker's lending practices recently. Last week, it was about an elderly couple who are losing their home to foreclosure (see Subprime Refinance Threatens Loss of Retired Pittsburgh-Area Couple's Home). In this report, an 82 year old woman is the victim of an unsuitable mortgage for which an inflated appraisal from a bogus appraiser was used. Reportedly, comparable sales for more expensive neighborhoods were used to estimate the value of the victim's home. Further, the appraiser who purportedly did the appraisal, Edward Underhill, was actually deceased when the appraisal was written. His son, Chester Underhill, was convicted earlier this year of passing himself off as his dead father and using his father’s appraisers license to conduct illegal and inflated appraisals to get commissions.

For more, see FBI Probes Carnegie Mortgage Lender.

Go here to watch the KDKA Channel 2 report (then click Play), by investigative reporter Andy Sheehan.

Go here , go here , and go here for other posts on elder financial abuse. zeta elder financial abuse
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Disrepair, Housing Violations, Foreclosure Threaten Elderly Buffalo Homeowners

In New York, The Buffalo News is reporting a story of elderly area homeowners who are unable to make unaffordable home repairs to maintain their homes and are at risk of losing them. The story of one senior is featured where her home is in such bad shape that the insurance was cancelled. The mortgage company, unable to find an insurance company to underwrite a policy for the home, has commenced a foreclosure action.

According to the article, there are no statistics available on how many local senior citizens have lost their houses because they cannot pay for repairs, but staff members for Buffalo nonprofit groups say the problem is prevalent — and may even be growing.

One staff attorney at the non profit law firm Legal Services for the Elderly, Disabled, or Disadvantaged of Western New York, has just started handling housing violation cases for the organization's clients. She says that her clients come to her terrified.

At Old 1st Ward Community Center, a Buffalo non profit that administers grants for home repairs, it reports that it has a waiting list of more than 90 people — more than half of them senior citizens.

For more, see Cost of upkeep puts older residents at risk of losing homes (Maintenance, loss of insurance put senior citizens at brink of foreclosure).
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Nine Face Federal Indictment In Texas Mobile Home Mortgage Fraud

The Houston Chronicle reports that nine Conroe, Texas area residents were arrested yesterday in connection with an alleged mortgage fraud scheme involving loans made to unqualified mobile-home buyers. The scheme reportedly involved making purchase transaction appear as refinancings so that buyers could avoid downpayment requirements, and also involved the use of inflated appraisals, according to the indictment. Those indicted are :

• Mobile home seller Keith Raybon, owner of Emerson Manufactured Homes; Michael Davis, an Emerson employee; Michael David Grimes Sr., an Emerson employee; Jeannie Nelson, a mortgage broker and executive vice president of Royal Lion Mortgage; Hollys Devayne Heasley, who ran an appraisal business; Holly Heasley Arbuckle, an employee of Heasley's company; Patricia Lennon, who ran Ameristar Residential Appraisal Services; Heather Adams, an employee of Old Republic Title Co. of Conroe; and Kandy Powell, who was a Royal Lion employee.

For more, see Nine arrested in mortgage fraud case (Authorities say loans made to buyers who weren't qualified).

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Legislation Ending Tax On Mortgage Debt Forgiveness Introduced In U.S. Senate

An article in The Enquirer (Cincinnati, Ohio) reports:

• "Two U.S. senators from two states hit hardest by the rising tide of foreclosures introduced legislation Tuesday to change current law that forces individuals to pay income tax when they have part of their mortgage loan forgiven or are forced to foreclose because of inability to pay their mortgage."

The Internal Revenue Service currently taxes any loan forgiveness as "income."

For more, see Senators: Tax must end (Call it unfair to those in foreclosure).

For a prior story about similar legislation introduced in the U.S. House of Representatives, see The Tax Man Will Care About Your Forgiven Debt.

Go here for other posts on avoiding income tax on "cancellation of debt" on short sales and mortgage foreclosures. short sale

KING5-TV Investigative Report On Seattle Mortgage Fraud

In Seattle, Washington, KING5-TV reports of two brothers who trusted friend/mortgage broker/realtor Andrew Vaughey, on whose advice they bought three properties. Now, the brothers are going broke trying to keep up with the mortgage payments.

According to the report, the KING 5 Investigators have uncovered that Andrew Vaughey lied to the banks to get the brothers into loans they couldn't afford. They took loan documents to a forensic document examiner, who reported that the evidence is overwhelming that the brothers' signatures were forgeries. A KING 5 background check on Vaughey revealed that he was a former stockbroker who got "kicked out of the industry two years ago for allegedly "defrauding customers" and trying to "harass and intimidate" a securities investigator."

One more discovery made by KING 5 was that Vaughey was reportedly the true owner of the properties that the brothers purchased. The brothers are now suing Vaughey and his associates.

For more, see Investigators: Mortgage Scheme Traps Buyers.

Go here to watch the KING 5 TV report, by investigative reporter Susannah Frame.
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Minnesota Foreclosure Rescue Equity Stripping Still Going On

City Pages reports on the story of a husband and wife in Minnesota who were victimized by a foreclosure rescue operator in an equity stripping deal victim. They did business with operator Joshua Schultz and his associates and reportedly ended up getting clipped for $22,250 in consulting and service fees, as well as a few thousand more in other closing costs. Another $31,000 went to the investors. When the couple received their first monthly bill, it was for about $250 more than what was promised. Currently, the homeowners, as well as others, are suing Schultz to get their home back.

Minnesota's anti-equity stripping statute, Section 325N, was passed in 2004 to stop the foreclosure rescue abuses in Minnesota. According to the article, however, the most creative equity strippers appear to have found a loophole that is creating problems for local attorneys representing homeowners in these cases.

In addition, according to one local attorney, some equity strippers just simply ignore the law altogether, confident that their victims will be too embarrassed to ask for help; and she estimates that only one in 20 victims seeks legal assistance.

For more, see Steal This House.

For The Record

The article states that Minnesota was the first state in the country to pass an anti equity stripping statute, passing its law in 2004. In fact, California was the first state in the country to pass their anti-equity stripping statutes, passing its laws a quarter of a century earlier. See California Home Equity Sales Contract Act which regulates foreclosure purchasers and can be found at Section 1695 through Section 1695.17 of the California Civil Code, and California Mortgage Foreclosure Consultants Act, which regulates foreclosure consultants and can be found at Section 2945 through Sction 2945.11 of the California Civil Code.
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Retired Minnesota Couple Lured Into Ponzi Scheme; Lose Home

In Minnesota, the Forest Lake Times reports on the story of a formerly retired couple who, looking to enhance their retirement income, ended up investing in what turned out to be a multi-state Ponzi scheme offered by Neulan D. Midkiff, a local man who led the Shiloh Church. The investment returns on their initial investment (mostly financed with their home equity) appeared to be so great and they were riding so high that they proceeded to finance additional investments with Midkiff, as well as substantial improvements to their home, with more of their home equity.

To make a long story short, the investment returns abruptly stopped, the couple filed bankruptcy, and Pastor Midkiff had his assets frozen by the Securities and Exchange Commission and was indicted by a Federal grand jury. The couple lost their retirement home and are no longer retired. They are now both looking for work and new housing.

For more, see Retirement dream now a nightmare.
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Foreclosure Rescue Group Had Ties To Friend's Church, Says Victim

CourierPostOnline.com reports the story of an Arizona foreclosure rescue victim who did business with a rescue group that had ties to her friend's church. According to Felecia Rotellini, superintendent of the Arizona Department of Financial Institutions, "The foreclosure rescue groups are getting creative in how they try to befriend the homeowner. But ultimately, it's financial exploitation." For more, see Foreclosure 'rescue' scams exploit more homeowners.
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Foreclosure Investors Often Get More Than They Bargain For

A man checking for fire damage at a home he bought in a foreclosure auction was in for a big surprise when he inspected the home for the first time. Go here for the story.

Over two dozen occupants in this foreclosure. Go here for story.
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Ohio AG Zeroes In On Wall Street Firms For Legal Action For Subprime Debacle

Bloomberg News today reports:

• "Ohio Attorney General Marc Dann, likening the subprime lending industry to armed robbers, said he wants to sue securities firms because their bond sales enabled consumers to get mortgages they couldn't afford."

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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Foreclosure Rescue Operator Targeted In Massachusetts Lawsuits; One Victim Successfully Gets Back Home

In Boston, Massachusetts, a WCVB-TV Channel 5 investigation reveals that several lawsuits have been filed against foreclosure rescue operator, Equity Holding Corporation. Attorneys involved in the case are calling the arrangement a "rescue scheme"; a "sophisticated fraud", and in violation of state and federal consumer protection laws. Attorneys said Equity charged one homeowner what amounted to an annual interest rate of at least 68 percent.

The WCVB-TV Team 5 investigation further revealed hundreds of title transactions with Equity Holding Corporation in the Massachusetts Registry of Deeds. The largest number are in Worcester County where Team Five found half of the homeowners never got their properties back. Their homes were sold by Equity to third parties.

Attorney Kimberly Breger and her colleagues at Harvard Law School's Legal Services Center brought suit on behalf of one homeowner in which the case was ultimately settled, resulting in the homeowner getting back the deed to her home, as well as a cash settlement.

For more, see Foreclosure Rescue Scheme Turns Homeowners Into Tenants (Land Trust Agreement That Offers Help Often Costs People Their Homes).

Postscript

In the civil complaint regarding the above mentioned homeowner who got back her home, the foreclosure rescue scheme was referred to as "a sophisticated fraud intended to conceal the usurious terms under which Defendants loaned monies to [the homeowner] in an attempt to evade and avoid the mandatory disclosure and other consumer protection protections applicable to loans secured by her familiy's home."

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The homeowner brought numerous claims against the foreclosure rescue operator, including fraud, negligent misrepresentation, unconscionability, breach of fiduciary duty, civil conspiracy to defraud, and violations of the Federal RICO statute, Federal Truth in Lending Act, Federal Home Ownership and Equity Protection Act, the Massachusetts Consumer Credit Disclosure Act, the Massachusetts Consumer Protection Act, among other claims.

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For more, see Homeowner's Civil Complaint - Sharp-Hegarty vs. Beforeclosures, Equity Holding Corp., et al. (drop me a line at HomeEquityTheft@yahoo.com and I'll e-mail the civil complaint to you - be sure and put "Sharp-Hegarty vs. Beforeclosures, Equity Holding Corp., et al." on the subject line).

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The litigation took place in a Massachusetts Federal Bankruptcy Court. The Chapter 13 Trustee also brought suit to undo the same foreclosure rescue transaction. See Solomon (Ch. 13 Trustee) vs. Sharp-Hegarty, et al. (drop me a line at HomeEquityTheft@yahoo.com and I'll e-mail the civil complaint to you - be sure and put "Sharp-Hegarty vs. Beforeclosures, Equity Holding Corp., et al." on the subject line).

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For links to other cases involving foreclosure rescue operator Equity Holding Corporation in the Federal courts, see Equity Holding Corporation Party Case Index (click the case number for the Docket Sheet in each case; PACER registration required; cost = $.08/page).

Long Island Woman Gets "Sunk" By Rescuer's Tax Lien

On Long Island, New York, Newsday reports of a Rocky Point woman facing foreclosure who went to mortgage broker, Michael Clinco, for help with refinancing her home. At the purported loan closing, the broker reportedly told the woman that the deed and mortgage would have to be put in his name alone. She proceeded with the closing because Clinco reportedly told her that otherwise her house would go up for auction. Unbeknownst to the homeowner, the IRS had a $70,000 tax lien against the broker, which automatically attached to the woman's home equity immediately upon completion of the loan closing. For more, see Careful a 'rescue' doesn't sink you.
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Illinois AG Sues Foreclosure Seminar Operator

According to an Illinois Attorney General Press Release issued today:

• "Attorney General Lisa Madigan today filed a lawsuit against a McHenry County real estate broker for allegedly deceiving consumers into paying $3,500 each to participate in a three-day seminar designed to teach methods for profiting in the pre-foreclosure real estate market."

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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Sacramento Feds Get Guilty Pleas From Foreclosure Rescue Operator; Two Straw Borrowers

Christopher Craig, of Auburn, California, pleaded guilty in a Sacramento Federal Court last week to bank fraud relating to foreclosure rescue deals he entered into with a number of Sacramento-area homeowners facing foreclosure, according to a Sacarmento U.S. Attorney's Office Press Release. In addition, co-defendants Donald Edgecomb, of Trevor, Wisconsin, and Jacob Esteves, of Auburn, who allegedly acted as straw borrowers in the scam, also pleaded guilty today to misprision of a felony, admitting that they knew of Craig's felony bank fraud scheme and took affirmative steps to conceal the scheme from detection by law enforcement.

According to the Press Release, Craig admitted to a scheme in which he approached homeowners facing foreclosure, promised to loan them money, and instead, he created documents deeding away their homes. As part of the scheme, Edgecomb and Esteves acted as straw borrowers and applied for home equity loans from Washington Mutual Bank claiming falsely that they were the true owners of the properties and that there were no pending mortgages on the properties. Only part of the $1.2 million of fraudulently obtained proceeds was paid back; WaMu ultimately was stiffed on approximately $975,000.

The homes used in this scheme are located in Auburn, Lincoln, Stockton, Elk Grove, Sacramento and Manteca. Sentencing is scheduled for July 19, 2007. For more, see:

• U.S. Attorney's Press Release
• Indictment - U.S.A. vs. Christopher Craig, et al.
• Plea Agreement - U.S.A. vs. Craig (see pages 13-14)
• 'Foreclosure specialist' pleads guilty to fraud (Sacramento Business Journal)

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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California Caretaker Gets 8 Years In Theft Of Elderly Couple's Home

KGTV Channel 10 in San Diego reports that Gina Trevino, who pleaded guilty in February to bilking an elderly, vision-impaired couple out of their Encinitas, California home (worth over $500,000) while serving as their caretaker, was sentenced Friday to eight years in prison. Reportedly, Trevino also stole the victims' identity and bought two cars. Her husband, Robert Holman, allegedly participated in the scheme and has a court hearing scheduled next week and a trial set for June 5. He faces four years if convicted. The victims' daughter says civil court proceedings are still pending in an attempt to get back the title to her parents' home. For more, see Woman Sentenced For Stealing From Elderly Couple.

Go here to watch the Channel 10 Video report, by reporter Charisse Yu.

Go here for other posts on this story.
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Fraud Charges Against Florida Foreclosure Investor, Title Agency Clerk

The Palm Beach Post reports that foreclosure investor Kevin Klier, who operated Kevin Klier Real Estate, and title company employee Christine Portuese have been the subject of a year-long criminal investigation that brought the arrest of Portuese last Thursday on charges of organized fraud. Klier is expected to surrender on fraud charges this week, according to law enforcement officials. These charges were the culmination of a joint investigation conducted by the Florida Department of Law Enforcement, the Martin County Sheriff's Office and several other state and federal agencies.

Reportedly, as many as two dozen Florida homeowners facing foreclosure thought that, in selling their homes to Klier, he was going to pay off the outstanding mortgages on their homes. Klier, however, apparently took title to the homes subject to (and without paying off) the mortgages. Further, neither he nor Portuese reportedly ever bothered to tell the mortgage lenders holding the loans secured by the homes about the sales out of a concern that they (the lenders) would exercise their right to call in the entire balance on the loans.

For more, see 2 charged with fraud in 'sales' of homes.

Editor's Note

What is interesting about this story is that there is no allegation that Klier engaged in either equity skimming (where rent is "milked" from the home without making the mortgage payments), or in an equity stripping scam, or a pattern of sale-leaseback, foreclosure rescue arrangements (although a passing reference is made to a sale leaseback deal made with one financially strapped homeowner; presumably, the homeowners in the other sales simply sold the homes to Klier and moved out). Further, based on the quotes from law enforcement in the article, they seem to implicitly (and possibly, begrudgingly) acknowledge that Klier actually made all the mortgage payments and he paid off the mortgages as he sold off properties at a profit. There was no allegation of any actual damage done to any of the homeowners' credit, which would have occurred had Klier stiffed the mortgage holders and "milked" rent out of the properties.

Based on how the article reads, the possible "bad acts" involved seem to be limited to (1) not paying off the homeowners' existing mortgages when title exchanged hands, and (2) not telling the lenders holding the mortgages that the homes were sold. To the extent that Klier and Portuese in some way actually tricked or otherwise intentionally deceived the homeowners into believing that their mortgage loans would be paid off as part of inducing them into selling to Klier, they (Klier and Portuese) possibly should get hammered to some degree.

However, as far as not telling the lenders of the property transfers, I didn't (and still don't) think that there is anything criminal about that. In all the mortgages I have read (although I confess to not reading any lately), I can't recall reading anything that contractually mandates anyone to inform the mortgage lender of a property sale. The only thing I've seen that may come close is that, if the property is sold without getting the lender's approval of the new buyer assuming the existing mortgage, the lender can call in the entire balance of the loan and initiate a foreclosure action if not paid within 30 days of the call-in (ie. "due-on-sale clause").

Maybe the article is missing some additional key facts. If so, I hope that come out soon in a follow-up story. If not, I must comment that as commendable as it is for law enforcement to begin directing their focus on organized fraud committed in the context of real estate foreclosures, I hope that future investigations are directed towards those who are doing much worse things than what the two individuals described in the article allegedly did (and hopefully, the investigations don't take a whole year to complete).
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Subprime Refinance Threatens Loss of Retired Pittsburgh-Area Couple's Home

KDKA-TV Channel 2 in Pittsburgh, Pennsylvania reports of a local elderly couple, in need of money for medical bills and rising debts, who were put into a subprime loan that now threatens the loss of their home of 27 years. According to the victim, the loan was represented as having a fixed rate, only to change right before closing, and he felt pressured to sign the new paperwork under duress. An inflated appraisal may have also been involved. For more, see McKees Rocks Man On Verge Of Losing His Home.

Go here to watch Channel 2 Video report, (then, click Play) by investigative reporter Andy Sheehan.
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Cleveland Senior Loses Home To Repair Scam

WKYC-TV Channel 3 in Cleveland, Ohio reports that a 75 year old, recovering stroke victim with a fully paid off home of 50 years, fell victim to a door-to-door home repair scam that resulted in the loss of his home. Reportedly, a stranger showed up at the front door of the victim's home offering to fix up the front porch and add a little bit of carpeting. All the victim had to do was sign on the dotted line. So he did. What the victim unwittingly signed was an $80,000 mortgage that he can't remember signing and can't afford. The mortgage loan was subsequently sold, the new mortgage holder ultimately initiated a foreclosure action, and the victim's home was sold at auction. The victim is fighting to get it back. For more, see Predatory lenders target elderly man.

Go here to watch Channel 3 Video Report, by reporter Eric Mansfield.

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

Five Chicago Straw Buyers Charged In Mortgage Fraud

Daily Southtown reports that, in a Chicago, Illinois mortgage fraud investigation that resulted in charging reputed Gangster Disciples gang member Terry Faulkner with real estate ripoffs about six months ago, additional charges have been brought against five of his associates on Wednesday for fraud involving about $1.4 million of South Side home sales. The five were allegedly recruited by Faulkner as straw buyers to buy eight houses from him through the use of bogus loan applications and inflated property appraisals.

The five men charged include Keith Manning, Dartanyen Davis, and Christopher Faulkner, all convicted felons and reportedly also Faulkner's colleagues in the Gangster Disciples Gang. Also charged were Andre Blount and Elbert Simmons III. All were charged with loan fraud and forgery.

For more, see Police: Gang caught in real estate fraud (Cops 'follow the money' to five arrests).
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California Man Guilty In Death Of Uncle In Dispute Over Home

A Vallejo, California jury found Ivory Phillips Jr. guilty of first-degree murder in the slaying of his uncle, 69-year-old Ruben Andrews Jr. last Thursday, according to The Times-Herald.

Reportedly, in 1995, the victim, a Vallejo resident, bought Phillips' home in Los Angeles County and paid off the mortgage to avoid foreclosure. Then he allowed Phillips to continue living there. But in 2004, Andrews evicted Phillips for failing to pay rent. Phillips reportedly sued Andrews for fraud, and lost when he failed to show up at the hearings.

Deputy District Attorney Chris Pedersen had argued that the property in Los Angeles County was at the heart of the dispute between the relatives. He said "It's sad that someone would be so obsessed about a house that he could kill someone."

For more, see Nephew convicted of pickax murder.
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"Andy Griffith" Loses Run For County Sheriff; Wins In Court

In another post having nothing to do with this blog, a Federal judge recently ruled that a man who changed his name to Andy Griffith, and then ran for county sheriff in Wisconsin, did not violate trademark and copyright laws, nor did he violate the privacy of the actor who played Mayberry's folksy sheriff on the "Andy Griffith Show", according to The Associated Press.

The better known Andy Griffith apparently went into "Matlock" mode by initiating legal action against the lesser known Griffith in an attempt to protect his intellectual property related to the popular 1960s TV show from trademark and copyright infringement; the lawsuit was ultimately dismissed without a trial.

However, the name-changing maneuver was of little help in the election for the lesser known Griffith; the "new" Andy Griffith finished "up the track" with 7.5% of the vote. For more, see Judge: Sheriff candidate named Andy Griffith did no harm to famous actor.
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Home Repair Scam Review

The following stories involve home improvement and repair fraud:

• Illinois woman gives alleged scammer $19K for home remodel; takes off with cash (see Midlothian Woman Out $19,000 In Home Improvement Scam),
• Contractor faces 27 counts of theft by fraud, misuse of payments and exploitation of the infirm; accused of stealing over $200K from Katrina victims for incomplete, substandard work (see Post-Katrina contractor held in fraud - He's booked with stealing thousands, not doing work),
• California man nailed by CSLB for allegedly ripping off two 85+ year old women of $45,000, unlicensed contracting (see Man suspected of bilking elderly, violating contractor regulations),
• Kentucky contractor indicted on charge that he didn't complete $150,000 worth of work to a home (see Local builder indicted for taking payment without finishing job)

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Weekend I.D. Theft Blotter

The following identity theft stories appeared this week around the country:

• Harvard, Illinois bank to conduct document shredding event (see Harvard plans ID theft events),
• Is risk of I.D. theft higher if you have a common name? (see A Common Name Could Make ID Theft Easier, or watch Video - CBS4 TV, Denver; click "Play"),
• 33 states, D.C., allow consumers to place "security freeze" on credit files; more states consider similar laws (see States, Uncle Sam Combating Identity Theft),
• Links to individual laws and instructions on how consumers can file a credit freeze (see List of state laws related to data privacy),
• Texas AG sues consumer money lender for exposing customers to I.D. theft by dumping personal business records containing addresses, dates of birth, Social Security numbers, etc., in trash bins behind stores (see Attorney General sues EZCORP over identity theft),
• Document shredding event in Montgomery (see Shredding campaign targets identity theft),
• Authorities identify illegal scanning devices installed at ATMs as key in stealing personal info in recent arrest (see Men indicted in Pa. ATM identity-theft scheme),
• Federal government exposing tens of thousands to I.D. theft risk (see Recent Cases of Missing Data, and see also Identity theft continues to haunt the American people),
• Wheeling, WV AARP group sponsors document shredding event (see Group Shreds Paper To Curb Identity Theft),
• Alleged beach thief accused of stealing identities of beachgoers who left wallets inside their cars while taking a swim (see $500,000 identity theft),
• Yonkers, NY woman used 6 month temp job at Kraft Foods to "serve up" info on 100's of co-workers to I.D. theft gang (see Macaroni & Sleaze In 'Identity Theft'),
• Victims must often solve their own crimes (see ID theft takes a toll on residents, police force - In Gwinnett, victim often must solve crime)

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