Connecticut AG Closing In On Legal Action In Predatory Lending Scheme

In Connecticut, TheDay.com reports:

• "Connecticut Attorney General Richard Blumenthal said Friday that his office has had preliminary discussions with the chief state's attorney and is close to taking legal action in a local predatory lending scheme that has affected dozens of individuals, many of them Hispanic. Those individuals now are facing foreclosure and ruined credit after they were approved for home loans they could not afford based on false information."

TheDay.com ran a story last Sunday (Predatory Lending Shatters Dreams Of Dozens Of First-Time Home Buyers) reporting that in a number of transactions it reviewed, houses that consumers purchased appear to have been sold at inflated prices, and false information may have been used to qualify buyers for high-interest, variable loans in the sub-prime housing market. Reportedly, "[e]ach transaction involves the same group of individuals — [loan originator] Jose Guzman; Elizabeth Athan Real Estate, which employs Guzman's daughter, Isaura Guzman; New London lawyer Alan Messier and Trumbull lawyer Maurizio Lancia."

Reportedly, AG Blumenthal's office received additional complaints from homeowners since last Sunday's article and that his office is building a case and is close to initiating legal action. For more, see Predatory Lending May Draw Legal Action By AG (Blumenthal Asking People Who May Be Victims To Call Him).

Go here for other posts on this investigation.

Arizona Feds Get 38 Count Indictment Against Alleged Mortgage Fraud Ring

The Arizona Republic is reporting that a 38 count indictment was handed up by a Phoenix federal grand jury charging twelve people with conspiracy, money laundering and fraud for their roles in an alleged mortgage fraud ring stretching from Arizona to Nevada to California.

The defendants are accused of using phony incomes, Social Security numbers, bank accounts and assets to get loans for upscale homes and luxury cars, defrauding lenders out of $8 million in the process. Those indicted are:

• Lutrell Maurice Sharpe, 39, (the alleged ringleader) , Charles Dozzell, 63, of California, and Arizona residents Alonzo Love, 33; Breanna Carmela Davis, 25; Misti Lenoir-Stewart, 28; and Autumn-Leigh Bruce, 24; Nevada residents Micah Bowens, 38; Jennifer Sue Sellers, 29; Marcus V. Dozzell, 33; Gina Marie Greco, 37; and Kristy Lynn Murdock, 28.

According to one official familiar with the case, the case began about 18 months ago with a tip about people borrowing huge amounts of money for homes and cars even though they had no jobs. For more, see Suspects indicted in loan scheme (12, including ex-con, tied to ring in 3 states).

For story update, see Mortgage Fraud Leaders Sentenced To Prison.

Indiana Feds Indict Fort Wayne Mortgage Broker

In Indiana, the Journal Gazette reports that Justin L. Stuckey, a Fort Wayne mortgage broker, has been indicted on federal wire fraud charges as part of fraudulently obtaining $5.5 million in mortgages that resulted in nearly 150 home foreclosures. The indictment, handed up by a federal grand jury on Thursday, follows a civil lawsuit filed 16 months ago by nationwide mortgage lender ABN Amro Mortgage Group in an Indiana Federal Court against Stuckey and several others involved in the deals. Both cases allege Stuckey, as owner and operator of Maximum Mortgage in Fort Wayne, obtained fraudulent loans through ABN Amro for investors buying rental properties from landlord Rex Wells and Wells’ company, Alliance Property Management. For more, see:

• Fraud charges filed in sale of 55 houses
• Current Criminal Indictment (May 24, 2007) - U.S.A. vs. Stuckey
• Prior Civil Lawsuit (January 26, 2006) - ABN Amro vs. Stuckey, et al.
• Journal Gazette story on earlier civil lawsuit Mortgage fraud alleged in 149 transactions (Lawsuit blames price scheme; novice investors go bust)

Wisconsin Mortgage Broker Agrees To Plead Guilty & Cooperate; Feds Continue Investigation

In Wisconsin, The Janesville Gazette reports:

• "Federal prosecutors say a Lake Geneva mortgage broker swindled lending companies out of more than $4 million through the sales of 19 Walworth County properties. James J. Lytle, 33, used "straw buyers" and fraudulent loan applications to obtain properties, collect seller fees and then let the properties go into foreclosure, often at a loss to the banks, according to a plea agreement he signed May 15. Lytle is expected to plead guilty June 27 to a charge of wire fraud, a felony punishable by up to 20 years in prison and a $250,000 fine."

As part of the plea agreement, Lytle will cooperate (and possibly earn a "get-out-of-jail-free card") with investigators and testify before a grand jury if there are others charged. For more, see:

• Real estate scheme unravels
• Plea Agreement - U.S.A. vs. Lytle

Michigan Feds Get Guilty Plea In Mortgage Fraud

HomeTownLife.com reports that Scott Edward Ashley has been sentenced to more than four years in prison after pleading guilty to defrauding three banks of nearly $4 million in a mortgage scheme. Ashley, of Canton, Michigan and who is deaf, living off of disability benefits, and who, with his wife, reported a joint income of less than $25,000 per year from 1998 to 2001, obtained $3.8 million in home financing in 2002 by claiming he earned more than $1 million annually and that he had made a $1.3 million down payment on a Bloomfield Hills home. For more, see Man headed to prison for $4m mortgage scam.

California Regulators Seek To Strip Mortgage Broker Of License

In California, media articles report that the California Department of Real Estate is trying to bar local broker Hendrix Montecastro from the industry, accusing him and his company, Stonewood Consulting Inc., of arranging inflated real estate appraisals in order to pocket huge commissions.

Montecastro already faces a number of civil lawsuits from investors accusing him of sucking them into a massive mortgage scam. Montecastro and a half dozen other defendants have been accused of running a real estate investment scheme that led the investors to buy multiple houses and that Montecastro then squeezed millions of dollars out of the resulting home equity. The investors claim to have been left holding the bag, owning houses with unaffordable mortgage payments. For more, see:

• State agency targets mortgage brokerage (North County Times)
• State targets Murrieta real estate broker (The Press-Enterprise)
• Details emerge in alleged scam (The Press-Enterprise)
• Go here for prior posts on Hendrix Montecastro / Stonewood Consulting.
  ackerman

NYS Consumer Advocates Propose Laws To End Abusive Home Lending Practices

New Yorkers for Responsible Lending, a statewide consumer-oriented coalition, unveiled proposed new legislation this week in Albany, New York to end abusive subprime lending and foreclosures. The coalition, comprised of 131 civic and community groups from across New York State, called on state legislators and the governor to pass the bill this legislative session before any more New Yorkers lose their homes. For more, see Groups Call on State Lawmakers & Governor to End Abusive Subprime Lending.

NY AG Files Suit In Buffalo Home Flipping Scam

New York Attorney General Andrew M. Cuomo announced on Wednesday the area’s first major house flipping lawsuit against

• "East Coast Capital (ECC), LLC and others of defrauding unknowing investors through an elaborate Ponzi scheme involving over 50 properties throughout Buffalo. In the scheme, high returns are paid to investors with money paid from other investors instead of actual profits from the real estate venture. ECC duped investors by promising high returns if they invested in distressed real estate by providing mortgages that – also unknown to the investors – grossly exceeded the market value."

For more, see:

NY AG's Press Release - East Coast Capital’s Ponzi scheme netted over $2 million while blighting Buffalo neighborhoods

The Buffalo News - Cuomo suit alleges plan to defraud investors in ‘house flipping’ scam (no longer available online).

S. Florida Church Members Victimized By Foreclosure Rescue

WFOR-TV Channel 4 in South Florida recently ran a story about Broward County victims of an equity stripping, foreclosure rescue scam who, according to their attorney George Castrataro with the non-profit law firm Legal Aid Service of Broward County, were targeted by National Forecloure Management at the homeowners' place of worship. Reportedly, one of the church members worked for the foreclosure rescue operator and referred other members having financial trouble to the operator. The church itself reportedly had no involvement in the scam. The company running the scam is reportedly out of business and the company owners, including someone listed on corporate public records as Wyman Roberts, can't be found.

Go here and click screen to watch the Channel 4 story.

To read the online story, see Church Members: We Were Scammed Out Of Our Homes.

See Editor's Note in Florida AG Investigating Foreclosure Rescue Operators for comment on the legal issues of usury and equitable mortgage in a Florida foreclosure rescue, sale leaseback transaction.

Go here for available case law for fighting foreclosure rescue operators in Florida.
equitable mortgage yak

S. Florida Cop Charged With Stealing Dead Uncle's Home Equity

The Miami Herald is reporting that Leon K. Lewis, a 22-year Miami-Dade corrections officer, was charged this week with first degree grand theft, forgery and uttering a forged document. The charges were made in connection with an alleged forgery of Lewis' uncle's signature to take a mortgage out on the uncle's North Miami-Dade home, according to authorities. The uncle has reportedly been dead 13 years. For more, see Corrections officer arrested in mortgage fraud.

Washington Foreclosure Rescue Victim Fights Back

In Washington State, KIRO-TV Channel 7 in Seattle reports a story of a Lynwood family facing forecloure who was approached by a forecloure rescue operator with an offer to help them "save" their home through a sale leaseback arrangement. In such an arrangement, the operator takes title to the home, and the financially strapped homeowner rents it back with an agreement to buy it back from the operator in the near future. Unfortunately, things didn't work out as expected.

Seattle Attorney Melissa Huelsman has filed a complaint on behalf of the family against the operator contending the entire deal was set up to fail from the beginning. For more, see Hazards Of Foreclosure Rescues.

Go here for Channel 7 video describing types of foreclosure rescue.

Editor's Note

Washington State is one of the states that I know of that appears to have plenty of case law (albeit somewhat old) that could support the proposition that these foreclosure rescue, sale leaseback arrangements are nothing more than secured loans / equitable mortgages that are "clothed" or otherwise "disguised" as an absolute transfer of title. As such, the financially strapped homeowner would still be treated as the "true owner", even though leagl title may have been purportedly transferred to a rescue operator through the execution of a deed. Further, the only way that a rescue operator could get ownership and possession of the home in this context is through a foreclosure sale, and not through eviction. Unfortunately, many operators are getting away with obtaining possession through eviction, only because there are not enough private attorneys around with the expertise to handle these types of cases. Hopefully, the Washington State Attorney General's office takes a look at this.

In one case with what seemed to be an egregious fact pattern, the Washington State Supreme Court refused to rule that a sale buyback arrangement was anything other than an equitable mortgage. The court stated, "To hold otherwise would permit the exaction from [the property owner] of usurious interest or defeat his equity of redemption and force him to relinquish his rights in the real property without consideration, which would be unconscionable." Phillips v. Blaser 13 Wn.2d 439, 125 P. 2d 291 (Wa. 1942)

For a summary of some of the Washington State court cases that treat financing arrangements that require financially strapped homeowners to sign away the deed to their home as nothing more than secured loans / equitable mortgages, see:

• Equitable Mortgage Doctrine In Washington State
• Equitable Mortgage Defense In Homeowner-Tenant Evictions - Part 8

equitable mortgage yak

New Jersey Bill S-2699 Regulating Foreclosure Rescue To Be Considered

Buried at the bottom of an article on PoliticsNJ.com is a reference to proposed New Jersey Senate Bill S2699, the Foreclosure Consulting and Anti-Fraud Act, which deals with the regulation of foreclosure rescue activities and which apparently says, among other things, "that only licensed, non-profit debt adjusters can provide foreclosure consulting services in New Jersey." According to the bill's sponsor:

• "Right now, we've got rogue operators advertising on telephone poles with empty promises to help debt-ridden families save their homes from foreclosure. [...] Unfortunately, these scam artists are taking advantages of families in crises and we've got to put a stop to it fast."

Go here for more on the regulation of foreclosure consultants in NJ.

Editor's Note

The New Jersey Assembly also has a bill it is considering, Assembly Bill A4214, the Foreclosure Rescue Fraud Prevention Act regarding the regulation of foreclosure rescue activities.

Washington State Feds Get Convictions In Foreclosure Sale Bid Rigging Scam

The Yakima Herald Republic reports that "A former auctioneer who was the key figure in a bid-rigging scandal that ensnared several Yakima businessmen was placed on three years of probation Tuesday."

Reportedly, Bacil "Base" Shirley was caught in a bribery investigation of a Federal government employee, who was wearing a wire, in connection with manipulating bids for foreclosed U.S. Department of Agriculture properties. Once caught red-handed, Shirley then apparently "bought" a "get out of jail free card" from the Feds by agreeing to cooperate with them in the investigation, prosecution, and conviction of three Yakima, Washington bid-rigging businessmen who specialize in the purchase of foreclosure properties as rental investments or for resale. The businessmen were Doug Lemon, Walter D. Nelson, and Ronald G. Frank.

For more, see Ex-auctioneer gets probation in bid rigging.

Editor's Note

Bid rigging at foreclosure sales is an issue I haven't been able to find any recent reports on (until the one referenced above). It may simply be that this method of ripping off homeowners in foreclosure of their home equity doesn't happen anymore (I doubt it), possibly because most foreclosures that make it to the courthouse auction currently involve homes that are worth less than what is owed on them (ie. they're "upside down"), or it may be that it isn't high on law enforcement's list of priorities.

In any event, the U.S. Department of Justice has investigated and brought prosecutions in the past. What follows are links to some pretty old USDOJ Press Releases where the Justice Department announced prosecutions & convictions in connection with foreclosure sale bid rigging in New York City and Northern Virginia.

• Two Northern Virginians Indicted In Real Estate Bid Rigging Scam,
• 25 NY Real Estate Brokers Plead Guilty To Rigging Bids At Queens County Courthouse Foreclosure Auctions,
• Northern Virginia Real Estate Speculator Indicted In Bid Rigging Scam,
• 12 Individuals Plead Guilty To Bid Rigging At Real Estate Foreclosure Auctions At Brooklyn Courthouse,
• Tenth Individual Charged In N. Virginia Real Estate Auction Bid Rigging Investigation.

Other foreclosure sale / bid rigging stories:

• AG Cooper unravels Triangle real estate bid rigging scheme (Investigation finds illegal payoffs that deflated public auction prices),
• Man pleads gulty in bid-rigging foreclosed property sales,
• Former New York Bar Association Vice President pleads guilty in foreclosure sale bribery case.

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Another Civil Lawsuit Filed In Alleged S. California Mortgage Scam

In Southern California, the North County Times is reporting that a sixth lawsuit has been filed that accuses Murrieta resident James Duncan of fraud on the order of tens of millions of dollars. According to the article:

1) Plaintiffs in the six lawsuits have alleged that a group run by Duncan and Murrieta-area resident Maurice McLeod encouraged clients to borrow on credit cards and liquidate retirement funds in order to invest with the group.

2) Several dozen clients of Stonewood Consulting, a target of the earlier lawsuits, bought as many as five houses apiece using 100 percent financing, according to publicly available property records.

3) Temecula attorney Richard Ackerman, who is representing plaintiffs in four of the six lawsuits, said lenders are foreclosing on a total of more than 100 houses, hollowing out neighborhoods in the Copper Canyon area of western Murrieta and other neighborhoods around the SCGA golf course in eastern Murrieta.

4) Duncan, McLeod and former Stonewood chief executive Hendrix Montecastro haven't responded to dozens of requests seeking comment since the first lawsuit was filed Jan. 5.

5) No criminal charges have been filed in the matter.

For more, see Sixth lawsuit alleges money laundering.

Go here for prior posts on this story.
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Jobless Subprime Originators Drifting To Reverse Mortgage Market

Reuters reports:

• "Between 12,000 to 15,000 displaced mortgage lenders may begin to seek employment in the growing market for reverse mortgages, an increasingly popular home equity loan for homeowners who are 62 years old or older, Goldman, Sachs & Co. and Wells Fargo Home Mortgage executives said at a mortgage conference."

This prospect has some bankers concerned that a rapid growth in this market may make it vulnerable to the fraud and increased litigation that has plagued the subprime market. One observer, a vice president at Goldman, Sachs & Co. in New York, asks:

• "As you look at what's going on in the subprime market, are those the types of folks who are really appropriate for pursuing reverse mortgages?"

For more, see Ex-subprime loan officers eye booming senior market.

Go here for other posts on reverse mortgage problems.

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

Ex-NY Attorney Charged In Mortgage Scam

In Westchester County, New York, the North Country Gazette is reporting:

• "A disbarred Harrison attorney has been charged with grand larceny and identity theft involving the sale of property. Rafael Pantoja, 48, of Lake St., Harrison, has been arranged on a 14 count indictment which included one count of first degree grand larceny, three counts of second degree grand larceny, six counts of first degree identity theft, all felonies, and other related charges."

For more, including the details of his alleged conduct, see Disbarred Attorney Arrested In Mortgage Scam.

Federal Appeals Court Reverses New York Mortgage Fraud Conviction

Ruling that a New York Federal trial judge should have recused himself in the case, the U.S. Court of Appeals for the 2nd Circuit today reversed the convictions of Robert J. Amico and Richard N. Amico, two brothers convicted in the largest case of mortgage fraud ever prosecuted in western New York. For more, see Judge tosses Amico verdicts (The Rochester Democrat and Chronicle).

Go here for the appeals court decision - U.S.A. vs. Amico.

For story update, see Brothers plead guilty to mortgage fraud (10-3-07).
(updated 10-11-07)

Mortgage Bankers, Brokers Pointing Finger Of Blame At Each Other For Subprime Woes

The Associated Press reports:

• "The heads of trade groups representing mortgage bankers and brokers traded barbs Tuesday over who's to blame for the housing market's woes. The head of the mortgage banking industry's trade group claimed brokers profited from a home loan boom but didn't do enough to examine whether borrowers could repay."

In response, the head of the National Association of Mortgage Brokers reportedly said,

• "It is truly unfortunate [Robbins] has attempted to shift blame away from Wall Street, federally chartered banks, state-chartered lenders and underwriters for the subprime situation we find ourselves in today."

The mortgage broker head also added that, based on the testimony at congressional hearings, "most residential mortgage loans are quickly sold into the secondary market -- in fact most lenders are really just brokering the transaction but afraid or ashamed to admit it." For more, see Mortgage bankers, brokers squabble (Each blames other for subprime woes) (Chicago Tribune)

NY AG Investigating Mortgage Fraud; Focus On Illegal Pressure On Appraisers

Bloomberg.com is reporting:>

• "New York Attorney General Andrew Cuomo issued a subpoena to the real estate appraisal unit of First American Corp. in his investigation of whether mortgage brokers pressured appraisers to inflate property values."

The unit, eAppraiseIT LLC, reportedly appraises up to 15,000 homes a year in New York. For more, see New York Subpoenas First American Appraisal Unit.

For story update, see First American Issued Phony Appraisals, Charges NY AG; Execs Knew It & Did It Anyway, Says Suit.

Go here for other posts on the NY AG's investigation of First American / eAppraiseIT.

Virginia Foreclosure Rescue Operator Targeted In Lawsuits

The Virginian-Pilot reported this week that "At least three lawsuits have been filed against mortgage company D and D Home Loans and others by people who say the broker tried to trick them out of their homes."

Virginia attorney Tanya Bullock has filed the actions on behalf of all three plaintiffs, and claims in court papers that the company's actions "expose a classic foreclosure rescue scam." The transactions involved are apparently the "sale-leaseback" variety, where the operator takes title to the home in foreclosure and promises the homeowner the chance of repurchasing it in the future.

One victim reportedly said that references to Scriptures and Christian values by D and D President Warren Mike Robinson inspired trust. Said the victim, "I'm African American. They're African American and look successful. I felt as if I was in the hands of my people."

One of the lawsuits, originally filed in a Virginia state court and subsequently removed to a Virginia Federal Court, alleges violations, makes legal claims and requests relief based on the following:

• Equitable mortgage doctrine, Federal and state Real Estate Settlement Procedures Act, Federal Truth in Lending Act ("TILA"), Federal Home Ownership Equity Protection Act ("HOEPA"), Federal Reserve Board Regulation Z, fraud, intentional misrepresentation, and deceit, breach of contract, breach of fiduciary duty and negligence, conversion, unjust enrichment, breach of the implied covenant of good faith & fair dealing, conspiracy, constructive trust & resulting trust, several other state law claims.

For more, see Three plaintiffs say firm tried to dupe them out of homes.

(I had problems uploading the plaintiff's complaint that is currently in Federal court; if you want a copy, let me know at HomeEquityTheft@yahoo.com and I'll e-mail it to you.)

(This is an updated version of a post originally appearing on May 21, 2007.) equitable mortgage yak

Recent 1031 Exchange Intermediary's Bankruptcy Filing Highlights Lack of Industry Oversight & Regulation

A recent article on the Florida Association of Realtors website reports:

• "The bankruptcy of a national 1031 exchange firm has jeopardized some real estate deals. It’s also highlighted a problem in the like-kind exchange system – a lack of federal oversight on this legal way to shield capital gains from the IRS."

For more, see 1031 exchange firm declares bankruptcy.

For those investors who are thinking of getting rid of one intermediary and transferring their investment funds to another, see Can I fire my Qualified Intermediary...?

Washington Weeding Out Loan Officers; Reject List "Resembles Criminal Court Docket"

The Seattle Post-Intelligencer reports:

• "Until recently, just about anybody could operate a loan office in Washington. But after the state required loan officers to become licensed this year, its growing rejection list has come to resemble a criminal court docket."

For more, see Licensing process thins loan officer ranks as past crimes come to light.
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Feds Getting Guilty Pleas In K.C. Mortgage Fraud Conspiracy

Media articles report that James E. Coleman, a certified public accountant, and James R. Rhoades, both of Kansas City, Missouri, pleaded guilty in a Missouri Federal Court yesterday for their roles in a conspiracy to commit mortgage fraud. The conspiracy allegedly involved former Jackson County Executive Katheryn Shields and her husband, Phillip Cardarella, who were among those indicted for their alleged roles in the scheme.

Last week, real estate appraiser Jeremy A. Plagman, of Lee's Summit and who did business as JET Appraisals, pleaded guilty to his role in the conspiracy.

Reportedly, the organizer of the alleged scheme, Raymond Zwego Jr., will change his not guilty plea to a plea of guilty on May 31. Other defendants with change-of-plea hearings include Larry Barshaw and his wife, Linda M. Thompson-Barshaw, set for Friday, and Michael Rodd on May 31.

In addition, Katheryn Shields’ latest attempt to avoid a mortgage fraud trial in June collapsed yesterday when her request to dismiss the indictment against her was denied. The four remaining defendants — Shields, Cardarella, Monty J. Kinman and Rick A. Peterson — will apparently be going to trial, which is scheduled to start on June 4. For more, see:

• Two more plead guilty in mortgage fraud case (Kansas City Business Journal)
• Shields’ request is denied (The former county executive had sought dismissal of a mortgage fraud indictment) (The Kansas City Star)

(revised 5-22-07; 10:30 am)

Florida AG Investigating Foreclosure Rescue Operators

According to the website of the Florida Attorney General's office, there are at least three active public consumer-related investigations of foreclosure rescue operators by the Florida AG's Economic Crimes Division. The investigations, which the AG's office says are civil - not criminal - in nature, involve the following foreclosure rescue operators:

• Case Number: L05-3-1161 - Family Trust Financial Services, Financial Solutions, Family Trust, Lee Heath, Richard Wilson (Tampa)
• Case Number: L05-3-1167 - Foreclosure Assistance Solutions a/k/a Foreclosure Assistance Services (Clearwater)
• Case Number: L06-3-1014 - Mortgage Assistance Solutions, LLC (Dunedin)

Florida residents victimized by a foreclosure rescue operator can file a complaint here.

Editor's Note

As I have mentioned in the past, there is plenty of case law in Florida (and other places as well) that allows courts to recharacterize these sale-leaseback foreclosure rescue deals as secured loans / equitable mortgages. Further, if the profit on a foreclosure rescue, sale leaseback that a court recharacterizes as a loan or equitable mortgage exceeds 18% per year, the loan violates Florida's civil usury statutes (Section 687.03, Florida Statutes). If the profit exceeds 25%, the deal violates Florida's criminal usury statutes (Section 687.071, Florida Statutes). Profit in excess of 45% per year can result in felony charges. For more on this, see:

• Equitable Mortgage & Usury In Sale Buyback Deals In Florida
• More On Equitable Mortgage & Usury (Florida)
• Equitable Mortgage Doctrine In Florida
• Go here for more on Florida equitable mortgage / disguised loans / usury and related claims
• Chapter 687, Florida Statutes - Interest and Usury

For more information on cases throughout the country on recharacterizing sale-leaseback arrangements as secured loans / equitable mortgages, see The Home Equity Theft Reporter Cases & Articles. equitable mortgage yak

Atlanta-Area "All-Broad Fraud Squad" Battling Mortgage Fraud

The New York Times recently ran a story of three Atlanta, Georgia area women, concerned that mortgage fraud was threatening their towns, "got together to write down license plate numbers of suspicious cars in their neighborhoods, scour public documents for housing titles and deeds and seek the help of local law enforcement. At first they were ignored, written off as bored housewives. Today, the three women — Ann Fulmer, Alicia Sheppard and Julia Barrette — are helping train F.B.I. agents, speaking to lending associations across the country and lecturing college students on how to identify mortgage fraud."

To read more of the three women, who call themseves the All-Broad Fraud Squad, see Mortgage Fraud Is Up, but Not in Their Backyards.
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First Line Of Defense Against Mortgage Fraud Is Neighborhood Itself

In Texas, WFAA-TV Channel 8 in Dallas / Fort Worth is reporting on the story of Jocelyn Sapp, a local resident who tracked a number of questionable real estate deals in one residential neighborhood on her computer and contacted authorities with her information. Her efforts resulted in the indictment of three men by the Collin County Grand Jury this past Thursday. For more:

• Go here to watch the WFAA Channel 8 report, by Byron Harris
• For the online report, see Three indicted in McKinney mortgage fraud.

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Virginia Foreclosure Rescue Operator Targeted In Lawsuits

The Virginian-Pilot today reports that "At least three lawsuits have been filed against mortgage company D and D Home Loans and others by people who say the broker tried to trick them out of their homes."

Virginia attorney Tanya Bullock has filed the actions on behalf of all three plaintiffs, and claims in court papers that the company's actions "expose a classic foreclosure rescue scam."

One victim reportedly said that references to Scriptures and Christian values by D and D President Warren Mike Robinson inspired trust. Said the victim, "I'm African American. They're African American and look successful. I felt as if I was in the hands of my people."

For more, see Three plaintiffs say firm tried to dupe them out of homes.
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More On South Florida Foreclosure Rescue Operator Jack Moussa

The South Florida Sun-Sentinel has an investgative report today on foreclosure rescue operator Jack Moussa and his company, Florida Housing Council. This is the second media report recently done on Moussa and his firm; the first being one done by South Florida TV station WSVN-TV Channel 7 (for prior post on Moussa and the Channel 7 report, see More Foreclosure Rescue Victims Fighting Back).

Today's story reports that Florida Housing Council and Moussa have faced seven lawsuits -- one was settled, six are pending -- in Broward, Palm Beach and Miami-Dade county courts in the past three years alleging fraud and deceptive practices.

Hollywood, Florida attorney David Silverstone, who recently settled a case against Florida Housing Council and has another pending, states "I think the Florida Housing Council is taking advantage of people who are in a desperate situation. They are saying one thing and then presenting papers that show something else. It's hard for even an attorney to get through these documents."

For more, see:

• Beware: Foreclosure 'rescue' firms could take title to your home
• S. Florida families learn bitter lessons about trying to save homes (no longer available online).

Go here for other posts on the foreclosure rescue activities of Jack Moussa and Florida Housing Council.

Editor's Note

There is plenty of case law in Florida (and other places as well) that allows courts to recharacterize these sale-leaseback foreclosure rescue deals as (possibly usurious?) secured loans / equitable mortgages. Go here for more on the Florida case law on equitable mortgage (some of which also addresses usury) to consider how the case law may be applied to foreclosure rescue transactions structured as a sale leaseback, or variations thereof, with a right to buy back the property in the future. Contained at this link are, among others, the following two posts:

• Equitable Mortgage & Usury In Sale Buyback Deals In Florida
• More On Equitable Mortgage & Usury (Florida). equitable mortgage yak

NY AG Conducting Investigation On Appraiser, Mortgage Broker

Bloomberg News reports that the New York Attorney General's office is conducting, what one subject of the investigation, calls "a rather large, broad, sweeping request for enormous amounts of information on everyone we work with.'' Subpoena were issued to Manhattan appraiser Mitchell, Maxwell & Jackson Inc., and Manhattan Mortgage Co., a mortgage broker.

For more, see New York State Subpoenas Appraiser, Broker in Probe.
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Foreclosure Crisis Hitting Chicago Hard

In Illinois, WBBM-TV, - CBS 2 in Chicago reports on the local foreclosure crisis (over 7000 Chicago area homeowners defaulting on loans in April alone), and the effects it is having entire communities, whether it be the local government or surrounding homeowners. Reported is the story of one area homeowner whose adjustable rate mortgage will jump from 7% to 13% in one year, and who is now receiving assistance from Neighborhood Housing Services of Chicago in restructuring her loan.

Neighborhood Housing Services of Chicago is a charter member of the NeighborWorks® America network. Reportedly, their counselors now spend almost half their time on foreclosures.

Go here and then click "Play" to watch the CBS2 report.

To read the online report, see Forced Out: Foreclosures Hitting More Homeowners.
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Texas AG Shuts Down Real Estate Skimming Scam

Texas Attorney General Greg Abbott has obtained a permanent injunction from a Texas state court prohibiting Roberto Flores and his Galindo Trust from entering into what appears to be a form of equity skimming deals with consumers. Further, the court imposed fines against the defendants of over $1.4 million and must also pay restitution to the harmed consumers.

According to the lawsuit, Flores purchased houses on 15 lots in Austin, Texas from Shriners Hospital, obtaining owner financing for $432,000. He then began selling off the homes to consumers on contracts for deed, quoting downpayments of between $2,000 and $5,000. He would offer the consumers owner financing for the balance, without paying off the existing mortgage to Shriners Hospital, the original owner, and without telling the consumers of the existing lien to Shriners. Ultimately, he found himself collecting the payments from his buyers (the consumers) on the owner financing he provided to them while, at the same time, stiffing Shriners Hospital on the owner financing Shriners had provided Flores on the original sale. For more see:

• Court Shuts Down Austin Real Estate Scam; Orders Defendants to Pay $1.4 Million (Galindo Trust sold homes without disclosing liens; many consumers faced foreclosure)
• State of Texas vs. Galindo Trust, Flores, et al. (copy of lawsuit)
• Permanent Injunction
• Copy of "Super Owner Financing Program" used by Flores and Galindo Trust in cheating consumers

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Tennessee Cops Pursuing Suspected Equity Skimmer

WMC-TV Channel 5 in Memphis, Tennessee reports that Horn Lake police are looking for a man who they claim has conned four area homeowners facing foreclosures into signing over their homes. The cops claim that the man targets vacant houses and sets up renters collecting large monthly rent payments until the bank forecloses on the house. For more, see Con artist swindles homeowners out of property.
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Another Tennessee Man Tricked Into Signing Over Home

WMC-TV Channel 5 in Memphis, Tennessee reports that a man named Jim Boyd tricked a local homeowner into signing over a quitclaim deed on his house to him. Now, the mortgage payments aren't being made and the homeowner is getting calls from the mortgage company and the home is going into foreclosure. For more, see Man scams Mid-South homeowner out of property.
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AG Blumenthal Starts Investigation In Qustionable Real Estate Deals

TheDay.com in New London, Connecticut reports that Connecticut Attorney General Richard Blumenthal is beginning an investigation on the seemingly questionable real estate deals involving a New London area group.

TheDay.com has an investigative report about local real estate agent Isaura Guzman and her father, loan officer Jose Guzman, who are at center of complaints of questionable practices in local real estate transactions. Reportedly, Isaura Guzman "was selling multifamily homes for Elizabeth Athan Real Estate LLC in some of New London's most rundown neighborhoods for as much as twice the appraised values listed in the city's tax records. The houses would enter the Multiple Listing Service — a property-listing service for Realtors — and would sell or be listed as a pending sale within 24 hours."

In addition, TheDay.com reports that the name of Alan Messier, a real estate attorney in New London appears on dozens of housing transactions that were reviewed as representing the buyer and Maurizio Lancia, an attorney in Trumbull, Connecticut, has represented the sellers in many of Guzman's transactions. Lancia is also listed by the Secretary of the State's Office as agent for JG Investments, Jose Guzman's firm. For more, see:

• Predatory Lending Shatters Dreams Of Dozens Of First-Time Home Buyers (New London realty agent, loan officer at center of complaints of questionable practices )
• Blumenthal Starts Investigation Of Mortgage Cases

Go here for other posts on this investigation.

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SW Florida Banks In Danger Of Being Stiffed On $57.5 Million In Construction Loans

In Southwest Florida, The News-Press reports:

• "Area banks are racking up millions of dollars in bad debt, thanks to the softening real estate market in Southwest Florida. Five Southwest Florida banks had a combined $57.5 million in outstanding construction and land loans that weren't being paid, according to records from the Federal Deposit Insurance Corp. for the first quarter of 2007."

Included in the article is the story of a retired couple who bought four properties — two in Lehigh Acres and two in Cape Coral — when the market was hot and now find themselves in a financial quagmire. Three of the homes were bought from First Home Builders (go here for more on First Home Builders and others).

For more, see Bad loans saddle area banks (Housing bust fuels 207 percent rise).

Central Florida Foreclosure Rescue Operator Under Investigation

The St. Petersburg Times has a story today of Peter J. Porcelli, a Central Florida foreclosure rescue operator who, along with two companies he set up, are reportedly being scrutinized by state and federal investigators for possible violations of law.

According to The Times, the two Clearwater businesses that Peter Porcelli set up -- the Safe Harbour Foundation (purportedly a non profit foundation) and Silverstone Lending -- "reportedly worked hand-in-glove to target desperate homeowners facing foreclosure and enticed them into short-term, high-risk loans that may violate Florida laws".

The Times found that the purported non profit foundation is not listed among exempt charities on the IRS Web site or registered with the state of Florida.

The Times describes Porcelli's past history, including the fact that he was indicted two months ago on conspiracy and fraud charges involving an unrelated credit card scam that targeted 165,000 victims. He pleaded guilty Friday to all 19 counts.

For more, see Facing new fields of fraud (Guilty in one scam, an Oldsmar man is scrutinized in a high-risk loan scheme that preyed on those facing foreclosure).

Go here for other posts on Peter Porcelli.

Home Repair Scam Review

The home improvement / home repair related highlights for the week:

• Indiana man accused of taking over $22,000 to build a pool and not doing the work (see Owner of Schererville business charged with theft of $22K),
• Man charged with contractor misapplication of payments and felony theft of more than $31,000 in home improvement scam (see Man arrested in fraud, identity theft),
• Contractor who failed to perform work for customers sentenced to four years on probation, ordered to pay restitution (see 4 years' probation for home contractor - Windows America owner faces $28K in restitution, $1M-plus more in claims),
• Illinois man, facing criminal charges in at least three counties, still in the home-repair business, racking up angry clients (see This Bad Boy sure has some nerve),
• New Jersey contractor ordered to pay $4,300 to blind senior citizen whose home was left with unfinished repairs (see Ex-contractor pays restitution),
• Home Depot customer asks for a new kitchen; Home Depot sends a sex offender (see Home Depot Rescreens Workers Sent Into Homes - Team 5 Investigates Updates Report That Led To Nationwide Changes)

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Weekend I.D. Theft Blotter

This week's identity theft related stories:

• Victim had identity stolen when he was seven years old; didn't realize it until 10 years later when he applied for his first job (see Teens increasingly the target of identity theft),
• Ex-credit bureau worker sought by authorities in I.D. theft case (see Former Equifax Employee Accused Of Identity Theft, or watch WSB-TV Video report),
• Alleged I.D. thief accused of changing named beneficiary in the victim's 401K plan (see Identity Theft: Police: Glenville man affected),
• Woman victimized by her former house cleaner (see Woman faces sentence in identity theft),
• Four alleged house to house mail thieves arrested in suspected I.D. theft ring, police discover more than 500 pieces of mail in vehicle (see 4 accused of stealing mail in Yorba Linda - Brea police find hundreds of pieces of mail in vehicle after a resident reports an SUV stopping house to house),
• Murder suspect convicted under someone else's name; authorities discover true identity before sentencing (see Toussaint Davis now faces identity theft charge),
• Records for thousands of Indianapolis Public Schools students accidentally posted to the Internet, exposing confidential information to anyone surfing Web (see IPS accidentally releases records),
• Video - ATM Cash Machine Skimming Scam (on youtube.com)

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