Louisiana Feds Get Indictment of Mortgage Company Owner In Alleged Straw Buyer, Flipping Scam

In Louisiana, The Times-Picayune reports:

• "Michael O'Keefe Jr., son of disgraced former state Sen. President Michael O'Keefe and owner of Citywide Mortgage Co., defrauded the federal government into guaranteeing nearly $600,000 in Citywide loans to unqualified borrowers involved in a "house-flipping" scam, according to a federal grand jury indictment unsealed Monday. [...] O'Keefe Jr. is the seventh person charged in the ongoing "house-flipping" investigation. Five of the seven have pleaded guilty, including three who admitted they were recruited by real estate investor Calvin Davis to seek the HUD-backed loans to help him unload blighted property between Feb. 1, 2001, and January 2003."

According to the details set forth in the indictment, the typical earmarks of a "flipping" scam were present here: use of straw buyers, inflated appraisals, false information on fraudulent loan applications, and phony tax returns. Among some of the other participants allegedly involved:

• Appraiser Donald White who, according to the Feds, took payments for inflating home values in his appraisals. White, who is cooperating with the government, has yet to be charged (and maybe earning a Federal "get-out-of-jail-free" card???),
• Citywide Mortgage underwriter Michelle Cochrane, an unindicted co-conspirator who, according to the government, acknowledged that she signed off on the stack of bogus paperwork in numerous cases in exchange for between $70,000 and $120,000 from investor Calvin Davis,
• Tax preparer Robert Green, who helped buyers in (and has pleaded guilty to) preparing false tax returns,
• Real estate investor Calvin Davis, an unindicted co-conspirator and has not been charged in the scam, and around whom the entire scam seems to revlove, according to the O'Keefe indictment.

For more, see Loan firm's owner accused of fraud (Ex-senator's son faces 5 fed counts).

For the actual Federal grand jury charges, see Indictment - USA vs. O'Keefe, Jr.

For an earlier report on this story, see House flipping scam nets plea (N.O. man will be sentenced in July).

Neighborhood Problems Associated With Homes In Foreclosure

A vacant, foreclosed home in Banks Township, Carbon County, Pennsylvania was destroyed in an early morning fire. About 60 firefighters from across the area responded to the fire. The home was a total loss because of water and fire damage. The cause is undetermined; officials continue their investigation. See Marshal probes cause of morning fire (Standard-Speaker, Hazelton, PA).

A vacant and abandoned home in foreclosure with an unmaintained backyard pool raises concerns for one Visalia, California neighborhood. See Neighbors bugged by mosquitos in abandoned pool (Visalia Times-Delta).

Michigan, Ohio Cities Declaring War On Foreclosure "Eyesores"

1) The News Herald reports that in Willowick, Ohio, city officials, hope they have found a solution to the eyesores created by boarded up, foreclosed homes. The City Council has unaninously passed an ordinance prohibiting lending institutions from boarding up such homes. Lending institutions that violate the ordinance could be charged with an unclassified misdemeanor punishable by a fine of up to $2,500 for each day the violation occurs. For more, see Willowick prohibits boarding up homes.

2) In an attempt to get a hold on the "tall grass" problem common with homes that are in foreclosure and/or vacant, the City Council in Westland, Michigan unanimously passed an ordinance on tall grass, according to a story in The Detroit News. The ordinance calls grass higher than 8 inches a problem and mandates it must be cut by the owner, officials said. The ordinance takes immediate effect. The move follows similar ordinances in Warren and Grosse Pointe Woods to crack down on tall grass as foreclosure rates soar in Metro Detroit. For more, see Westland cracks down on tall grass.

3) In Bowling Green, Ohio, The BG News reports that "Legislation introduced in City Council on Monday would allow the city to more quickly mow homeowners' lawns if the owner fails to respond to requests to do so". The bill sponsor reportedly said he introduced the bill to help cope with increasing foreclosures in the city, which can leave the property neglected. For more, see Proposed bill aims to tidy lawns.

Wisconsin Feds Net Another Conviction In Ongoing Mortgage Fraud Investigation

In Wisconsin, The Janesville Gazette reports that Jose Valadez has agreed to plead guilty Wednesday to a single count of federal wire fraud for using another man's identifying information and acting as a straw buyer in the purchase and financing of a home in Delavan. After purchasing the home, Valadez failed to make any payments on the mortgage loan. Reportedly, Valadez was paid $1,500 by another scheme participant for acting as the straw buyer, and the home, which ultimately went into foreclosure, now sits with weeds almost reaching to the bottom of the front windows.

This is the second man who has agreed to plead guilty in this Walworth County mortgage fraud scam. The scam involved Lake Geneva mortgage broker James J. Lytle, who has already agreed to plead guilty for his role in the scam, in which he facilitated the fraudulent sale of about 19 Walworth County properties using recruited straw buyers. For more, see Buyer charged in mortgage scam.

For story update, see Man accepts deal in mortgage fraud (The Janesville Gazette - 9-27-07 ).

Go here for other posts on this investigation.

Albany, NY Feds Indict Wife Of Accused Mortgage Fraudster

A federal grand jury sitting in Albany, New York returned a superseding indictment on Friday charging Laura Andersen with conspiring with her husband, Anthony Andersen, in a mortgage fraud scheme, according to EmpireStateNews.net.

In February, an indictment was returned against Anthony Andersen that charged him with a number of crimes involving mortgage fraud. The superseding grand jury indictment returned on Friday charged Laura Andersen, 48, with several counts of, essentially, helping her husband carrying out the alleged fraud, as well as one count of making false statements to law enforcement. For more, see Couple charged with mortgage scheme.

Go here for other posts on this story.

Disbarred Virginia Attorney Pleads Guilty To Mortgage Fraud

In Virginia, the Martinsville Bulletin reports:

• "Former Collinsville attorney Jimmie R. Lawson pleaded guilty Thursday in U.S. District Court to one federal count of mail fraud, according to the U.S. Attorney’s Office. [...] 'He pleaded guilty to using the mails to obtain money from various lending institutions by falsifying closing documents,' said [Assistant U.S. Attorney Pat] Hogeboom, summarizing the government’s evidence and Lawson’s plea. [...] The government and Lawson agreed that the losses were between $2.5 million and $5 million, Hogeboom said."Reportedly, Lawson had his law license revoked in 2005 by the Virginia State Bar Association because of allegations of reports of lying to clients, stealing client funds and using those funds in unsuccessful business ventures, forging documents, being involved in fraudulent mortgages and other allegations of less-than-upstanding conduct. He currently faces an embezzlement charge in state court, and was also successfully sued by boxer Riddick Bowe for $1.03 million, claiming that Lawson "improperly borrowed money" from an escrow account used in a home purchase.

For more, see Former Collinsville attorney pleads guilty to mail fraud.

Go here for stories on other alleged escrow agent mishandling of funds. sneaky slick escrow agents alpha

Free Foreclosure Prevention Hotline For Long Island

On Long Island, Newsday reports that the Community Development Corporation of Long Island, along with NeighborWorks America and the Ad Council, is launching a public service advertising campaign on Monday to promote a free hotline to help struggling homeowners. Callers to the hotline, 888-995-HOPE, will receive round-the-clock counseling in English or Spanish and a plan to help them manage their finances. They can also be connected to their lenders or local housing agencies, such as the CDC. For more, see Foreclosure hotline will help LI homeowners.

More On KCRA 3 Sacramento-Area Mortgage Fraud Investigation

The most recent KCRA 3 TV report on investigative reporter Josh Bernstein's ongoing Elk Grove, California mortgage fraud investigation is available here (no longer available online). Those who are being investigated by law enforcement authorities as a result of the initial KCRA investigation are Jim Martin, Gabriel Viramontes, Mario Fellini, Joseph Gallo and Jennifer Huang. The firms reportedly involved are Freedom Capitol Mortgage, VFM Investment Group, and Esnian Mortgage & Realty Network.

Go here for prior posts on the KCRA 3 investigation.

Suspended NY Attorney Pleads Guilty To Theft Of Home Sale Proceeds

Suspended Westchester County, New York attorney Chase A. Caro has pleaded guilty to one count of second degree grand larceny, a felony, for stealing $310,000 from an elderly Peekskill, NY man he represented. The money represented the proceeds of the elderly man's home. As part of a plea bargain agreement, he has agreed to pay back the money he took from this client and, in addition, has admitted to stealing more than $300,000 from the proceeds from the sale of Francesca's Pizzeria in Shrub Oak, NY from another client, which he has also agreed to pay back. He faces a prison term of up to six years when he is sentenced Oct. 29. For more, see Lawyer faces prison after admitting he stole from clients.

Missing Loan Documents Stall Foreclosure

An example of the sloppiness of many mortgage lenders (and their attorneys) in going about their obligations in bringing foreclosure actions is illustrated in a recent decision of a New York City trial court. While there is nothing necessarily remarkable about the case in terms of its value as precedent, it nevertheless highlights the importance for an attorney representing a homeowner facing foreclosure to hold the lender's feet to the fire and make sure the lender presents in court all the crucial paperwork necessary to establish its right to foreclose.

In this case, the foreclosing mortgage lender simply failed to prove that it was the legal owner of the mortgage by presenting in court the legal paperwork associated with the loan. Whether the loan documents were lost, destroyed, stolen, or merely misplaced wasn't indicated. But, according to the court, unless a foreclosing mortgage lender can demonstrate that it has all its loan documents in order showing that it is the true owner of the mortgage, it cannot proceed with its foreclosure.

This may sound like common sense. However, given the number of times these mortgages are sold and resold (and, if they get into the hands of Wall Street mortgage repackagers, the loans get sliced and diced into collateral for mortgaged backed securities), it's no surprise that the mortgage companies buying and selling these loans lose track of who actually has physical custody of the loan documents.

For a longer version of this post (including links to this case and others), see Misplaced Loan Documents Stall Mortgage Foreclosure, at The Home Equity Theft Reporter Cases & Articles.

For other posts on the sloppiness and carelessness of foreclosing mortgage lenders in keeping their loan documents and associated records in proper order (with links to the online media articles), see:

• Defending Consumers In Foreclosure Actions,
• Dillon Continues Battle Against Alleged Predatory Mortgage Servicer (see "Editorial Note").

Maryland Man Seeks Redress For Home Lost In Foreclosure Of Paid Up Mortgage

The Baltimore Sun reports:

• "Lawyers for Kwaku Atta Poku, a Columbia taxi owner who lost his townhouse to foreclosure and eviction through no fault of his own, are back in court seeking help for him.
  They asked the Maryland Court of Appeals to rule whether it was right for the Court of Special Appeals to dismiss Atta Poku's case on a technical issue rather than for substance. In addition, they want the Howard County Circuit Court to award Atta Poku the proceeds from the sale of his home as well as punitive damages."

The Ghanaian immigrant and naturalized American citizen bought a townhouse in Columbia in 2000. He refinanced the next year, but the original loan was never recorded as paid by Washington Mutual Bank, the mortgage lender who both (1) held the existing mortgage being paid off and (2) provided the refinancing proceeds. Four years later, although he made every mortgage payment, Washington Mutual foreclosed and sold Atta Poku's house before he could mount an effective legal defense.

For more, see Attorneys in foreclosure case return to court (Md. Court of Appeals asked to rule on dismissal of Howard man's plea).

For the original Baltimore Sun story (June 7, 2007), see Out of townhouse, but not by choice (Immigrant loses his dream through foreclosure).

Go here for other posts on this story, including links to media reports.

For the prior post on this story, see Maryland Man Pays Off Mortgage; Loses Home To Foreclosure Anyway.

NovaStar "Yield Spread" Class Action Lawsuit Settled

The Seattle Times reports:

• "A federal class-action lawsuit alleging that NovaStar Mortgage overcharged 1,600 borrowers was settled out of court Thursday in Tacoma with the firm agreeing to pay $5.1 million. The case centered on yield-spread premiums, a legal but controversial practice in which lenders pay independent mortgage brokers a premium to put borrowers into a loan with a higher interest rate than what they qualified for. [...] U.S. District Judge Robert Bryan ruled that NovaStar's failure to disclose its payment of yield-spread premiums was unfair or deceptive under Washington law."

Reportedly, of the $5.1 million NovaStar has agreed to pay, $3.3 million will be distributed to the homeowners participating in the lawsuit. For their successful efforts, the two Seattle law firms representing them, Bergman & Frockt and Phillips Law Group, get to pocket the remaining $1.8 million.

For more, see NovaStar Mortgage settles class action.

For class action complaint, see Pierce vs. NovaStar Mortgage Corporation.

For prior MarketWatch article on this story, see Subprime crisis shines light on mortgage brokers (Class action suit against NovaStar alleges hidden fees; lender to fight back).

Go here for posts on so-called "no-cost" mortgages, which utilize yield spread premiums to minimize borrowers' out-of-pocket cash outlays when obtaining a mortgage loan.

More On "No-Cost" Mortgage Loans

For those thinking about getting a "no-cost" mortgage loan, you may first want to read this perspective and then decide for yourself if the mortgage loan really doesn't cost you anything. See The Real Truth About “No Closing Cost” Loans.

See also, Are "No-Cost" Mortgages Actually "Cost Free"? What's a "Yield Spread Premium"?

Sacramento-Area Mortgage Fraud Investigation Continues

The saga of the alleged mortgage fraud scam that reportedly duped investors into buying homes financed with unaffordable, fraudulently obtained mortgages in Elk Grove, California continues as KCRA-TV Channel 3 in Sacramento reports that an administrative complaint has been filed with the California Department of Real Estate against Jim Martin, Gabriel Viramontes, Mario Fellini, Joseph Gallo and Jennifer Huang -- accusing them of misleading investors and lying on loan applications.

Further, KCRA reports that, according to officials, Federal indictments are expected in the coming weeks. Federal investigators have already raided the offices of Freedom Capitol Mortgage, VFM Investment Group and several other locations. At the offices of Lyon Real Estate, the brokerage where real estate agent Jennifer Huang worked, agents seized records relating to the sale of just about every house involved in the alleged scheme. Reportedly, Huang is no longer affiliated with Lyon Real Estate. The firm is not named in the complaint and is cooperating with the investigation.

Go here to watch the updated KCRA 3 TV report (by Josh Bernstein) (no longer available online).

To read online story, see KCRA 3 Investigates: Indictments Possible In Alleged Real Estate Scheme (State Files Civil Complaint Against Mortgage Company Officials, Real Estate Agent).

For the legal documents filed in the administrative action, see:

• Cease and Desist Order (against Martin, Viramontes, Esnian Mortgage & Realty Network, VFM Investment Group - 1.05 MB),
• Administrative Complaint against Joseph Gallo (0.5 MB),
• Administrative Complaint against several others (Gallo, Freedom Capital, Fellini, and Yajen Huang -- aka Jennifer Huang - 5.38 MB).

Go here for other posts and links to other articles on this story.

Idaho Homeowner Victimized By Foreclosure Rescue Operator

(orig. post 6-21-07; revised 6-23-07)
The Idaho Statesman today is reporting the story of a financially strapped homeowner who, in an attempt to save her home from foreclosure, unwittingly signed away her home in a sale -leaseback (with an option to buy back the home) deal to foreclosure rescue operator Highland Financial LLC, a Post Falls-based company with offices in the Treasure Valley, Oregon and Washington. She ultimately lost her home this month in a foreclosure sale. For more, see Idaho warns homeowners about loan-assist scams (Idaho woman said she lost her home when company misrepresented how it could help with payments).

See also, Foreclosure 'rescue' gets state's attention (The Coeur d'Alene Press).

Editor's Note:

For those of you who practice law in Idaho, what may be the leading court case on the equitable mortgage doctrine in the state of Idaho is Dickens v. Heston, 53 Idaho 91; 21 P.2d 905; (Id. 1933).

Among other things, the Idaho Supreme Court made the following observation in connection with a financially strapped homeowner who signs away the deed to his/her property in exchange for inadequate consideration where the homeowner is allowed to retain possession of the home and given a right to buy back the home in the future:

• "If the grantor was severely pressed for money at the time of the transfer, so as not to be able to exercise a perfectly free choice as to the disposition of his property, and raised the sum needed by conveying his property in fee with a right of repurchase, his necessitous condition, especially in connection with the inadequacy of the price, will go far to show that a mortgage was intended."

Fortunately for foreclosure rescue operators in Idaho, the Idaho State Attorney General's office (like the state Attorneys General in most states) are either unaware of the equitable mortgage doctrine (after all, it is a legal doctrine found in real estate law, not consumer protection law), or are unwilling to assert it because the cases may be too tough for them to make. What the foreclosure rescue operators have to watch out for, however, are the private attorneys who are familiar with this doctrine who are increasingly taking on these cases throughout the country on behalf of victimized homeowners, and who are making the case that these foreclosure rescue sale-leaseback deals are nothing more than disguised loans where the homeowner is still treated as the true owner of the home, notwithstanding a deed transfer to the contrary (and may be subject to Federal Truth In Lending Act requirements and, in states that have usury laws, these deals are subject to usury restrictions).

For more on Dickens v. Heston, see Equitable Mortgage Defense In Homeowner-Tenant Evictions - Part 7. equitable mortgage yak

Foreclosure Rescue Operators Indicted By Minnesota Feds

In Minnesota, The Star Tribune reports that Twin Cities mortgage brokers Michael Fiorito, 39, of Prior Lake, and Kristin Louise Jerde, 21, of Eagan, were indicted in a Minneapolis Federal Court this week on charges that they sought out financially distressed and vulnerable homeowners and stripped the equity from their homes using a variety of schemes. They face charges of conspiracy to commit mail fraud and four counts of mail fraud.

The indictment charges that the two suspects stripped more than $160,000 in equity from six homeowners in Mound, Duluth, Vadnais Heights and Shoreview. An official close to the investigation expects the investigation to yield additional indictments. He said about 15 victims were clipped for about $400,000, and that two or three more people may face charges.

For more, see 2 Twin Cities brokers indicted in home equity schemes (Investigators said the Twin Cities mortgage brokers took advantage of homeowners in financial trouble).

See also, Prior Lake man indicted in home equity schemes (Prior Lake American).

For Federal Grand Jury charges, see - Indictment - United States vs. Fiorito & Jerde.

Idaho AG, Department Of Finance Issue Joint Foreclosure Rescue Advisory

Idaho Attorney General Lawrence Wasden and Department of Finance Director Gavin Gee have issued a joint press release warning Idahoans about those offering foreclosure rescue services. This warning is in response to the receipt by both offices of complaints from consumers who unsuccessfully used foreclosure rescue companies in an attempt to avoid foreclosure. For more, see Attorney General and Department of Finance warn of “foreclosure rescue” schemes.

Vermont Lawyer Suspended For Three Years For Misleading Clients

In Vermont, The Times Argus reports the three year suspension from the practice of law of attorney Matthew Colburn by the state's professional responsibility board after he acknowledged misleading clients about the status of their cases. Among the incidents of misconduct that he acknowledged engaging involved a case he took in 2001 of a Morrisville family who purchased a home that was later found to have multiple structural problems, including a leaking roof, a faulty chimney and a buried pool obstructing drainage. Believing the previous owners had knowledge of the issues but failed to disclose them, the family retained Colburn to file suit. Although the suit was filed, Colburn never bothered to serve the defendants with notice of the lawsuit. The court ultimately dismissed the case in 2004 after more than two years spent waiting for Colburn to serve the defendants. Despite the dismissal, Colburn led the family into believing that the case was moving through the system, going so far as to tell them a settlement had been reached and that a check was in the mail. The family learned of the deception by accident in 2005 when a state agency, doing an investigation on an unrelated matter, discovered and informed them of the dismissal. Because of the passage of time, the family apparently has lost any legal claims it may have had against the former homeowner and is now stuck with a structurally defective home. For more, see Board suspends Montpelier lawyer.

Hawaii Feds Investigate Alleged Foreclosure Rescue Scams

In Hawaii, a couple who are recent victims of a foreclosure rescue scam has reportedly been informed by the FBI that it is investigating 200 fraud cases against Head Financial Services and Charles Head, according to a story in the The Kauai Garden Island News. According to the story:

• "[The couple] said they became victims of a mortgage solicitor who encouraged homeowners to convey their property to [Head Financial] with the promise that after one year, the couple could secure a lower-interest mortgage loan that would allow them to buy back their home. But instead of that happening, the house was conveyed to an employee of Head Financial who subsequently conveyed it to another person who became the owner, the Kaua‘i family alleges."

The victims allege that Twyus Peahu and Bunny Mattice- Clevenger were also involved and worked together to defraud them of their home.

A foreclosure sale of the home was cancelled due to questions about the ownership of the home, according to the couple's Big Island attorney, George Zweibel, a former Federal Trade Commission attorney who specializes in mortgage servicing and foreclosure rescue scams. Reportedly, he plans to file a lawsuit in state court soon against those connected with Head Financial. He, along with Honolulu attorneys Derek Kobayashi and Mihoko Ito, have recently filed a lawsuit on behalf of two other local homeowners claiming they were victimized in the same way.

For more, see Couple say they lost home to fraud.

Go here for other posts on Charles Head.

More On San Diego Man Accused Of Stealing His Grandmother's Home Equity

San Diego CityBeat published a more detailed story of Jay Ladran, the local man who has reportedly pleaded guilty to charges of elder abuse and fraud for forging his grandmother's signature in order to borrow against her her home equity. In discussing the problem of elderly ripoffs, generally, one local deputy district attorney commented that the problem lies partly in the difficulty of detecting the earliest symptoms of Alzheimer's Disease and other forms of dementia—symptoms so subtle we just refer to them as "getting old", complicated by the fact that the elderly sense their loss of faculties, which makes them less likely to report their victimhood. "We're fighting the crooks, but we're also fighting this wall of silence," deputy district attorney Paul Greenwood said.

For more, see Abusing the helpless (Pilar Ladran's grandson stole her house to pay for prostitutes).

For the initial report on this story, watch the NBC 7/39 TV report (by reporter Anne State), or to read NBC 7/39 online report, see Man Accused Of Stealing Grandma's Cash (Deputies Say Grandson Used Cash On Strippers, Prostitutes).

Another Grandmother Ripped Off

The Nelson Mail reports that a Tahunanui woman who milked her ill grandmother's estate of thousands of dollars over four years, including money set aside for a funeral, has been jailed for 18 months. Included in the ripoff were the proceeds from the sale of the grandmother's home. For more, see Woman ripped off sick grandmother.

Texas 12 Count Mortgage Fraud Indictment

Regarding the recent 12 count mortgage fraud indictment in a Houston Federal court of former NFL lineman Sean Jones, Texas real estate developer and attorney Jerome Karam, 44, of Friendswood, former loan officers Tommy Jay Trammel, 44, and David Ranostaj, 40, both of Houston, and real estate appraiser Jay Westrick, 44, of Houston, a copy of the grand jury indictment is available. See Indictment - USA vs. Karam, Jones, et al.

Go here for other posts on this story.

Class Action Lawsuit Filed Against Maryland Foreclosure Rescue Operators

The Baltimore Sun today reports:

• "Two Prince George's families filed a class action lawsuit yesterday seeking to recover millions of dollars in home equity allegedly lost by hundreds of Maryland homeowners in a foreclosure-rescue scheme. The lawsuit, filed in Prince George's County Circuit Court, claims to involve the single largest mortgage fraud in Maryland history and also seeks unspecified damages from six known and several unknown defendants. It indicates that criminal investigations are under way. [...] Named in the complaint filed yesterday are Metropolitan Money Store Corp., a Lanham company that bills itself as a foreclosure consultant and credit services business; Fordham and Fordham Investment Group Ltd. of Lanham; RTE Title & Escrow LLC of Largo; Sussex Title LLC of Rockville; Diane Jones of Capitol Heights; Leticia Nicholls of Takoma Park and other, unknown defendants."

Reportedly, state as well as federal agencies, including the FBI, are investigating.

The Maryland law firms representing the homeowners in this case are Civil Justice, Inc., a Baltimore nonprofit law firm, Legg Law Firm, LLC of Frederick and The Holland Law Firm of Annapolis.

For the whole story, see Class action alleges home equity theft (Foreclosure-rescue firms object of suit).

Go here for more on Civil Justice, Inc. Joy Jackson

New Hampshire Foreclosure Rescue Scam Bill Still Bouncing Around In The Legislature

An Associated Press report out of New Hampshire, reported in the Boston Globe, indicates that there is still some jockeying around with respect to the proposed foreclosure rescue scam legislation that has been bouncing around in the state Legislature for the last couple of months. Since the approval of a Senate bill a couple of weeks ago, the bill was subjected to further tinkering around between negotiators from the state Senate and negotiators from the state House of Representatives. Reportedly, a compromise has been reached. I suspect that, at this point, the bill will be the subject of two more votes (one in the Senate and one in the House) and, if approved by both houses of the state legislature, will then go to the governor for his approval. Among other point, violators of the recently modified proposed statute will be subject to jail time, and a financially strapped homeowner would have a legal right to recover 90 percent of any equity they lost in a pre-foreclosure sale. For more, see Negotiators reach compromise on foreclosure scam bill. See also the Nashua Telegraph, State & New England News Digest - Agreement reached on foreclosure bill)

Five Accuse Real Estate Agent In Alleged Straw Buyer Deals

On Long Island, Newsday reports the story of former local real estate agent Nayana Shah (aka Nina Shah) who is accused of duping five investors into being were straw buyers, using allegedly false statements in separate transactions involving in real estate investment financed with subprime loans. Once the market tanked, she is accused by the investors of leaving them high and dry, saddled with unaffordable mortgages, ruined credit, and, in some cases, homes in foreclosure.

She is accused of using a personal bond that was developed with the investors by being members of the same church, the Long Island Jain Center, where she was president and community leader. Reportedly, Nayana Shah's real estate license has since been canceled by New York State licensing regulators in February 2007, for reasons that are not clear. She has also filed bankruptcy. For more, see Bad real estate deals come between 'friends'.

For updates on Nina Shah, see:

• Hicksville Woman Arrested, Police Seeking Additional Info (This case stems from an ongoing mortgage fraud investigation that is being conducted by the local cops, the Nassau County District Attorney's Office and the United States Secret Service - 12-14-07 ).

Wisconsin Homeowner In Battle With Foreclosure Rescue Operator To Keep Home

In Wisconsin, the Milwaukee Journal Sentinel reports the story of one financially distressed homeowner (and his wife and four children) who has found himself embroiled in multiple court battles to stave off eviction in connection with a foreclosure rescue transaction he entered into with James A. Black, a Milwaukee police officer (who reportedly does foreclosure rescue as a sideline) and Patrick Blair, Black's investor partner, in an attempt to save his home of 17 years from foreclosure. According to the story:

• "[The homeowner] said Black bought his house for the price of his outstanding mortgage with the option for [the homeowner] to buy it back within three years - for $4,000 more than investment costs the first year, $6,000 more the second year and $8,000 more the third year. Things soured quickly. Black has twice tried and twice failed to evict Bularz for allegedly late rent payments."

Highlights from the story, as reported by the Journal Sentinel:

(1) The foreclosure rescue proposal from Officer Black appeared to be the best from a swarm of investors promising to save the homeowner from foreclosure.

(2) Officer Black may have used his status as a cop to "grease the wheels" in his attempt to make the deal and to get possession of the property. Reportedly in one instance, according to the homeowner, in attempting to make the deal in the first place, Black told him "You can trust me. I'm a police officer and want to help you."

(3) After a deterioration in the relationship based on an alleged failure to pay rent and a prior eviction attempt, the homeowner videotaped himself giving a check for the May, 2006 rent to Officer Black's partner, Blair, and getting a receipt. Quoting from the story:

• "[The homeowner] testified in a May 30 eviction hearing in Waukesha County Circuit Court that it was the second time he had paid May's rent. Black denied getting an earlier payment. Realizing that accepting a check might void the eviction effort, however, Black and Blair tried to undo the videotaped transaction, according to court testimony. Blair called the Waukesha County Sheriff's Department for help, and a deputy told [the homeowner] to return the rent receipt to Blair."

Reportedly, Black had identified himself to the deputy as a Milwaukee police officer.

(5) The homeowner ultimately prevailed in the eviction proceeding, the second eviction attempt made by Black and Blair. The judge dismissed the eviction lawsuit, ruling that homeowner's videotaped payment was made before the expiration of a five-day grace period after an eviction notice.

(6) The homeowner's attorney now says that Officer Black has given notice that a third eviction action is possible over the homeowner's alleged failure to make house repairs. The homeowner has a claim of retaliatory eviction pending against Black.

Other Points:

(7) Wisconsin state Sen. Jim Sullivan is reportedly drafting a law in Wisconsin to regulate foreclosure rescue operators.

(8) Catey Doyle, chief staff attorney at Legal Aid Society of Milwaukee, said her office is awash in homeowner complaints that foreclosure rescuers ripped them off.

For more, see From foreclosure fire into eviction frying pan (Desperate homeowners are targets of buyback plans).

Anatomy of a "Cash Back" Mortgage Scam

In Florida, the St. Petersburg Times published an investigative report of 36-year-old Jeremy Marc Morton, a convicted felon originally from the Detroit area who spent 11 years in a Michigan state prison on cocaine and attempted escape charges before moving to Pinellas County and getting into the real estate business in 2005. The specific area of the business that he got into was the "cash-back-at-closing" area, where he reportedly pocketed over $370,000 in six transactions without having his name ever appearing on documents recorded in the county public records.

The story describes how he approached one local couple, who owned six properties and from whom he agreed to buy them all. It also describes how he made use of two straw buyers, one of whom was also a convicted felon and had been just completed an eight year sentence in a Florida prison and the other being an out-of-town man from Detroit, in whose names the homes were purchased. The transactons involved inflated sales prices, mortgages in amounts that greatly exceeded the amounts paid to the sellers of the six homes, with the excess going to Morton. After the sales, Morton stayed involved with the properties by reportedly equity skimming the properties, collecting the tenant rentals while ultimately defaulting on the mortgages and letting the homes go into foreclosure, with the homes' tenants unwittingly finding themselves subject to eviction. For more, see Foreclosures follow dealmaker (Padded prices on contracts send money to a man who is not even listed as part of the transactions). alpha

Marijuana "Grow Houses" On The Network Evening News

The increased use of single family dwellings being used as marijuana "grow houses" was featured on both the NBC and ABC evening news last Thursday. When considered in the context of the current real estate market that's flooded with desperate home sellers (many of whom having little, no, or negative equity in their properties) looking to unload the homes (many of whom who may be "ripe" for an offer to rent the place for an amount sufficient to cover the payments on an "exploding" subprime mortgage as a way of avoiding foreclosure), don't be surprised if there's an indoor pot farm "coming soon to a neighborhood near you."

To watch the NBC report, from Diamond Bar, California, see Pot growers plant themselves in the 'burbs (NBC Nightly News by Peter Alexander - 6-14-07).

To watch the ABC report, see The Marijuana Fields Next Door (Cops say organized crime is sending families into the suburbs to grow marijuana) (ABC News by Jim Avila - 6-14-07).

To read the ABC online report, see Marijuana McMansions. (ABC News - 6-14-07).

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To read about the rise and fall of Mitchell Shane Estep, a former Central Florida indoor pot farming entrepreneur, who went around renting dozens of single family homes in upper middle class neighborhoods from landlords (he preferred gated commmunities) and setting up an indoor marijuana farm, or grow house, in each home, becoming a marijuana mogul in the process by the age of twenty five, see Suburbs the new hot spot for pot growers, reported by The Daytona Beach News-Journal.

Landlord-tenant pot farming litigation involving a raid by Federal agents of a rental home even recently made it onto the TV show, The People's Court (no longer available online).

• Go here for People's Court pot farm case - Part 1; and
  Go here for People's Court pot farm case - Part 2.

Go here and go here for other posts on Marijuana Grow Houses. pot grow ops alpha