Tuesday, July 17, 2007

Connecticut Woman On Alleged Financial Fraud Rampage Arrested By Cops

The Bristol Press reports that Lori Wadman of Southington, Connecticut has been arrested by police on suspicions that she charged more than $20,000 on fraudulent credit card accounts she opened in her mother's name. According to sources for the story, Wadman had previously:
  • (1) allegedly stolen money from community services, (2) been arrested in February after she allegedly stole about $225,000 from her employer by forging business checks, and (3) reportedly, took money from her husband's construction business and took her husband's share of their home equity by refinancing the mortgage on their home without his consent.

For more, see Police: Woman charged with credit-card fraud (no longer available online).

Virginia Homeowner Hauls Foreclosure Rescue Operator Into Court

While working on a post last week on New York City foreclosure rescue operator Home Savers ConsultingaCorp., I stumbled into a pending foreclosure rescue lawsuit against a Virginia rescue operator also using the "Home Savers" moniker. The lawsuit, being litigated in a Norfolk, Virginia Federal Court, is captioned Clemons vs. Home Savers LLC, and White and Selkin, and has been filed by Virginia Beach attorney Tanya Bullock of the firm Bullock & Cooper, PC on behalf of the plaintiff.

Among the causes of action asserted in the lawsuit are (1) equitable mortgage, (2) violations of the Federal Truth In Lending Act, Home Ownership & Equity Protection Act, and Federal Reserve Board Regulation Z, (3) breach of fiduciary duty & negligence, (4) fraud, intentional misrepresentation and deceit, (5) conversion, (6) unjust enrichment, (7) breach of the implied covenant of good faith & fair dealing, (8) violations of Federal & Virginia Real Estate Settlement Procedures Acts, (9) constructive trust and resulting trust, (10) action to quiet title, (11) violation of Virginia Mortgage Broker Lender Act.

For a copy of Clemons vs. Home Savers LLC, et al., drop me a line at HomeEquityTheft@yahoo.com and I'll e-mail you a copy.

Go here for information on other foreclosure rescue litigation filed by the law firm Bullock & Cooper. equitable mortgage yak

Baltimore Realtor Group Criticizes Last Minute Ground Rent Ejectment Suits

The Baltimore Sun reported last week:
  • "Leaders of the Greater Baltimore Board of Realtors, which for years served as an advocate for ground rent owners, are criticizing some of them for rushing to seize houses of delinquent rent-payers ahead of a recent change in state law and are proposing to help affected homeowners. The Realtors are talking with the Community Law Center in Baltimore about using their charitable foundation to help pay for review of ejectment lawsuits to ensure that they were conducted properly and that fees are "reasonable.""

One official with the Greater Baltimore Board of Realtors is quoted, "It's one thing if someone is going to collect on a debt and collect what they're owed, but this is more like robbery. To lose all the equity [in one's home] they've accrued over all those years is just wrong."

For more, see Rush to ejectment criticized (Realtors reduce support for ground rent owners).

For links to the entire series of stories on the Maryland ground rent issue reported by The Baltimore Sun, see The Sun's ground rent series.

Go here for other posts on the Maryland ground rent issue.

Alabama Feds' Mortgage Fraud Investigation Focus On Orlando Businessman

The FBI is investigating convicted Florida cocaine dealer Robert B. Guest Jr. for alleged mortgage fraud in and around Montgomery, Alabama involving the purchase and subsequent resale of "100 houses," according to a story in the Montgomery Advertiser. Federal agents have reportedly conducted searches of the offices of Betts Realty and Appraisal Service and real estate brokerage Jerri Baker Real Estate LLC in Montgomery for records of home sales involving Guest. According to the story:
  • "Acting through several companies, Guest is suspected of buying 100 homes, mostly in Montgomery, obtaining misleading appraisals and then reselling the rental properties within six months at two or three times the price he paid, according to a sworn statement by FBI agent Christopher P. LaCarter. [...] Each investor was required to put down 20 percent of the purchase price and the rest was financed through the home mortgage unit of Countrywide Financial Corp., a Fortune 500 company. [...] After the home sales closed, according to the FBI affidavit, Guest refunded the down payments to the investors. So Countrywide ended up funding the full price of the homes. Unhappy investors, realizing they cannot resell the homes for anywhere near what they paid, have begun filing lawsuits in Montgomery County Circuit Court. To date, the fraud suits claim economic losses of $1.4 million."
For more, see FBI inquiry involves area home sales.

The Subprime Bait & Switch

An opinion article appearing in In These Times expresses a not-so-flattering point of view of the subprime mortgage lending industry, the tactics employed by some loan originators that has left the subprime mess that we deal with today, and the inherent problems that are very difficult to regulate. Among the points mentioned are (1) the misrepresentation of a loan’s characteristics, such as the concealment of a fixed rate “teaser” period that adjusts upward after two years, (2) the use of bait-and-switch tactics to lure in potential borrowers, (3) the targeting of low-income and minority communities, and (4) “perverse compensation incentives” for “hazardous” loan products. For more, see The Subprime Bait and Switch (Under the guise of extending home ownership to all, predatory lenders undermine community reinvestment).

Monday, July 16, 2007

More On The Boston Alleged Discrimination / Subprime Lending Lawsuit

The lawsuit filed by three African-American mortgage borrowers accusing Countrywide Home Loans Inc. of racial discrimination in a Boston Federal Court last Thursday also names as defendants Countrywide Bank (a division of Treasury Bank, N.A.), Countrywide Correspondent Lending, Full Spectrum Lending, Inc., Loans For Residential Homes Corp., and Summit Mortgage LLC.

Representing the plaintiffs is attorney Gary Klein with the Boston, Massachusetts consumer protection law firm Roddy Klein & Ryan, the Chicago, Illinois law firm Miller Law LLC, the Long Island firm of Lerach Coughlin Stoia Geller Rudman & Robbins LLP, of Melville, New York, and the Boston office of the firm Hagens Berman Sobol Shapiro LLP, based in Seattle, Washington.

For a copy of the lawsuit, see Miller, et al. vs. Countrywide, et al.

Go here, Go here and Go here for more on recent Countrywide problems with consumers.

Go here and go here for other posts on alleged race bias in real estate transactions. race bias predatory lending countrywide pressure yak

More On The NAACP Alleged Discrimination / Subprime Lending Lawsuit

The NAACP Federal lawsuit filed last Wednesday in an effort to stop those lenders from engaging in what it calls "systematic, institutionalized racism in making home mortgage loans" specifically names the following lenders; Ameriquest Mortgage Company, Fremont Investment & Loan, Option One Mortgage Corporation, WMC Mortgage Corporation, Long Beach Mortgage Company, Citigroup, Inc., BNC Mortgage, Inc., Accredited Home Lenders, Inc., Bear Sterns Residential Mortgage Corporation, d/b/a Encore Credit; First Franklin Financial Corporation, HSBC Finance Corporation, Washington Mutual, Inc.

For a copy of the lawsuit, see NAACP vs. Ameriquest Mortgage Corporation, et al., made available online courtesy of the NAACP.

For the NAACP press release, see NAACP Files Landmark Lawsuit Against Major Home Mortgage Companies For Discriminatory Lending.

Go here and go here for other posts on alleged race bias in real estate transactions. race bias predatory lending

88 Year Old "Mother Branch" Threatened With Foreclosure Of Home; Countrywide Subprime Loan Suspected

In California, a column by Patty Fisher in the San Jose Mercury News reports:
  • "For more than 50 years, Onedia Branch has handed out clothing, food, hope and prayers to needy people in East Palo Alto, operating her own community charity from her house on Farrington Way. But these days Mother Branch, as everyone calls her, is the one asking for hope and prayers. Less than a year after she refinanced her house and put herself on the hook for loan payments she couldn't afford, the 88-year-old woman is in danger of losing her house and becoming yet another casualty of the subprime mortgage market that targets the elderly, the naive and those with poor credit."

A manager at Redwood Financial, the firm which originated the mortgage, reportedly refused to speak to the Mercury News on the record. Also, several calls to Countrywide, the mammoth lender that took over the loan, reportedly went unreturned.

For more, see Mortgage mess snares savior of East Palo Alto community.

For story update, see East Palo Alto humanitarian avoids eviction (8-17-07 - Palo Alto Online News).

Postscript

Countrywide was sued last Thursday in a Boston Federal Court for alleged racial discrimination in connection with the conduct of its subprime mortgage lending business. In December, 2006, it also reached a settlement with the New York Attorney General in which the company must monitor its lending practices to prevent discrimination against blacks and Latinos.

Go here for more on these cases.

Federal & State Authorities Investigating Maryland Foreclosure Rescue Scam

The Washington Post reports:

  • "Federal and state authorities are investigating an alleged foreclosure-recovery scam that stripped hundreds of home buyers of millions of dollars in equity in their homes, according to a law enforcement source and a defendant named in a class-action lawsuit."

The matter being investigated involves the foreclosure rescue operator subject of the Maryland class action lawsuit reported in other posts. Among those targeted in the class action are Metropolitan Money Store Corp. of Lanham, the main defendant in the suit as well as Sussex Title LLC, Fordham and Fordham Investment Group of Lanham, and RTE Title LLC in Largo and Kurt Fordham and his wife, Joy Jackson.

Sussex Title, according to its part owner, Steve Norman, is cooperating with state and federal law enforcement authorities.

For more, see Alleged Home Investment Scam Probed (2nd story from top).

North Carolina Court Shuts Down "We Buy Homes" Equity Skimming Operation

The North Carolina Attorney General's Office reports:

  • "Attorney General Roy Cooper today announced the end to a scheme by a Charlotte company that promised to buy homes from people who needed to sell quickly but instead left them vulnerable to foreclosure. 'This scam hurt both homeowners and people who hoped to become homeowners,' said Cooper. 'We’ve put a stop to their phony ‘We Buy Homes’ promises so no more consumers will be caught up in this scheme.'"
Cooper has put a stop to a scheme by Charlotte Home Solutions and its manager William Keaton that purported to buy homes and then resell them to buyers with poor credit. Cooper previously won a consent judgment against Keaton’s partner Steven Huff in May. They, along with David McBride began doing business as Charlotte Home Solutions in September 2002.

They advertised their business through signs, mass mailings to targeted neighborhoods and a website that promised to buy consumers’ homes. The rent skimming / equity skimming allegedly occurred when they allegedly took title to property from the original owner without paying off an exsiting mortgage, subsequently rented the home to a tenant with an option to purchase, and then, while pocketing the rent payments unwittingly made by the tenants, they failed to make mortgage, tax and homeowner’s association payments on the homes, leading in some cases to foreclosure proceedings against the original owners. When the homes were foreclosed on, the tenants were also forced to leave and lost their deposit and their option to purchase a home.

Charlotte Home Solutions also used trust agreements when taking title to the homes (possibly under the mistaken belief that doing so avoids triggering the "due-on-sale" clause that may have been contained in the existing mortgage, or possibly, they were just trying to keep the mortgage lenders from finding out that the original owners transferred all their legal and equitable interests in the property). While the press release is silent as to this point, I must assume that the operators also used "assignments of beneficial interests" in connection with the trust agreements when having the original owner transfer his/her home to them.

For more, see AG Cooper ends Charlotte “We Buy Homes” scam (Charlotte Home Solutions scheme put homeowners in foreclosure, renters out on the street).

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here. alpha

CBS News On The Maryland Foreclosure Rescue Class Action Suit

(originally posted 7-13-07)
The CBS Evening News ran a report, by investigative reporter Armen Keteyian, on Friday about the alleged foreclosure rescue, equity stripping scam in Maryland allegedly perpetrated by Joy Jackson, her husband Kurt Fordham, and the people at Metropolitan Money Store. Keteyian speaks with some of the victimized homeowners in the report.

Currently, Metropolitan Money Store is out of business, the company is under investigation by the state, and is the subject of a huge class action lawsuit charging “the single largest mortgage scam in Maryland history.” Also, when Keteyian went out to look for Jackson and Fordham at their home for an interview, they were nowhere to be found. Reportedly, "the only trace of them were photos of their $800,000 wedding last year. It was an over-the-top, Hollywood-style affair at which they gave away cash, a Porsche and — in a final insult to folks like those CBS News interviewed — a house."

Go here to watch the CBS Evening News Report - Maryland Foreclosure Rescue Class Action.

To read the online story, see Victims Of A Foreclosure "Rescue" (CBS News Shows How A Growing Scam Is Exploiting Homeowners In Foreclosure).

To read the post by Armen Keteyian on his CBS News blog, see Foreclosed: "You Wanted To Cry".

Go here for other posts on the Maryland foreclosure rescue class action lawsuit.

Milwaukee Prosecutors Have Their Eye On Foreclosure Rescue Operators

(oroginally posted 7-13-07)

A Milwaukee Journal-Sentinel blog reports:
  • "While tracking the developments of a previous story she reported on a widow fighting eviction [in a foreclosure rescue arrangement], Journal Sentinel reporter Marie Rohde has found that the district attorney's office has taken a pronounced interest in similar situations of late. Assistant District Attorney David Feiss told Rohde that his office and the Milwaukee Police Department have been swamped with complaints from people who are crying fraud in situations that bear some similarity to what is alleged in that case. A number of businesses have sprung up to "rescue” homeowners facing eviction. Some of the homeowners have found that they are loosing [sic] the equity they have in their homes and are facing eviction anyway. Although Feiss would not talk about specific cases, he told Rohde that his office is looking into mortgage rescuers and allegations that some home appraisals were inflated by the rescuers."

For more, see Eviction-related fraud prosecutions coming soon?

Sunday, July 15, 2007

New Hampshire Homeowner Continues Fight With Mortgage Servicer

The Concord Monitor ran an interesting article today on the continuing battle of New Hampshire homeowner Michael Dillon against the mortgage servicing company fomerly known as Fairbanks Capital Corp., which, after it was charged several years back by the Federal Trade Commission with conducting illegal foreclosures, collecting unwarranted fees and other predatory lending practices that resulted in a $40 million settlement, has since changed its name to Select Portfolio Services.

The battle began in 2001 when Dillon received a letter from Fairbanks Capital Corp. informing him that his mortgage loan was in default and that ultimately resulted in an attempt by the mortgage lender to foreclose on his Manchester home even though he says he made the payments he owed.

According to the article:
  • "This spring, Dillon filed a new lawsuit against Select Portfolio Services and five other national companies that played a role in handling his mortgage. This time, he is seeking damages, and the charges - which include conspiracy and racketeering - are far-reaching. [Attorney Walter] Maroney and Dillon argue in the suit that Select Portfolio Services engaged in unfair and deceptive servicing practices that resulted in high interest rates, unwarranted penalties, and illegal foreclosures. The other companies, including Merrill Lynch and LaSalle National Bank, were aware of that pattern and failed to do anything about it, they argue. The case is scheduled to be heard in federal court in Concord next spring."
Former New Hampshire Consumer Protection Bureau chief Walter Maroney of Manchester represents Mr. Dillon in the legal proceedings. Maroney recently left the Concord law firm of Gallagher, Callahan & Gartrell last month after seven years as a partner to start his own one-man consumer protection law firm.

As a part of his battle:
  • "Dillon spends his spare time poring over contracts between mortgage servicers and the holding companies that own the loans, learning the intricacies of the industry most homeowners have never heard of, let alone attempted to understand. He maintains a website about his travails with links to some of his court documents and congressional testimony on subprime lending."
For more, see Taking on an industry (After a mortgage lender tried to foreclose on his home, Michael Dillon made it his mission to set the record straight on his own).

Consumers victimized by predatory mortgage servicing and others can find Mr. Dillon's website at GetDShirtz.com.

Go here for prior posts on this story.

Go here , go here , and go here for posts on questionable mortgage servicing practices. questionable mortgage servicing practices tactics zebra

Baltimore Sun Follow-Up On Local Cab Driver Who Lost Home To Foreclosure Despite Never Missing Payments

The Baltimore Sun reports:
  • "Efforts are under way in Howard County to help Kwaku Atta Poku, the Columbia cab owner who lost his home to foreclosure through no fault of his own, but for now he and his family continue to struggle financially."

For more, see Foreclosure only part of family's troubles (Howard residents reach out as stress, bad credit hurt cab owner's efforts).

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

Lenders Stuck With 2500+ Modesto-Area Homes Since January

"It's becoming a pretty substantial problem." So says Rafael Rodriguez, supervisor for Modesto, California's Neighborhood Preservation Unit. In a recent story, The Modesto Bee reports that over 2,500 homes have been repossessed by lenders since January in the Northern San Joaquin Valley area of California. According to the story:
  • "Rodriguez said many abandoned properties pose fire, safety and health hazards as weeds grow, trees die and untreated pools become breeding grounds for mosquitoes and pests. Unsecured vacant homes also attract vandals and vagrants. After foreclosure, Rodriguez said it is extremely difficult to track down the legal owners and convince them to maintain the property. "We can't seem to get even to first base with some banks," said Rodriguez, recalling the runaround his staff often gets when trying to contact the responsible parties. "They're not being good neighbors.""

The article describes the plight of one home, a six-bedroom house on nearly one acre sold for $1.75 million less than two years ago in one of Modesto's most prestigious neighborhoods, which has since been foreclosed on by an out-of-state lender and now sits as a vacant, uncared for mess that has been described as a blight in the neighborhood that has raised safety concerns.

For more, see Abandoned and left to rot (After foreclosure, properties become neighborhood eyesores).

See also, Hunting Kern mosquitoes (All-out effort aims to keep disease carriers at bay), describing Kern County, California's war on mosquitos being attributed in large part to "the outbreak of foreclosures." (reported in The Bakersfield Californian).

Race Discrimination Alleged In Subprime Predatory Lending Lawsuit Filed In Boston; Class Action Status Sought

The Boston Globe reports:
  • "Three African-American mortgage borrowers from Boston accused Countrywide Home Loans Inc. of racial discrimination in a federal lawsuit yesterday, saying the nation's largest home lender charged them more for subprime mortgages than it charged white borrowers in similar financial situations. The lawsuit ... contended Countrywide violated federal housing discrimination laws because the black homeowners in Boston paid higher fees to the network of agents that generate Countrywide's new customers. The company, the suit said, uses an "unchecked, subjective surcharge" that adds to the total costs of loans for its customers, and black borrowers, it contended, paid more than whites. The suit seeks class-action status and more than $100 million to reimburse black customers of Countrywide and its subprime subsidiary, Full Spectrum Lending Inc., including about 10,000 in Massachusetts."

This lawsuit, filed by Massachusetts attorney Gary Klein on Thursday in a Boston Federal Court, comes on the heels of a suit filed on Wednesday by the NAACP in a Los Angeles, California Federal Court in which it sued a dozen subprime lenders for "systematic racism," charging blacks were 30 percent more likely to pay higher interest rates than whites (see NAACP suit targets mortgage lenders - Rights group alleges whites offered better terms than blacks on home loans).

Reportedly, similar litigation alleging discrimination in predatory lending practices against Argent Mortgage Co. and Wells Fargo Bank is also pending in Cleveland, Ohio (see Sue The *astards! - What To Do About Mortgage Brokers And Lenders Who Don't Play Fair?).

Last December, the New York Attorney General reached a settlement with Countrywide in which the company must monitor its lending practices to prevent discrimination against blacks and Latinos (see New York AG Press Release - 12-5-06).

For more, see Borrowers sue subprime lender, allege race bias (Countrywide denies blacks were charged more in fees).

For a copy of the Boston Federal lawsuit, see Miller, et al. vs. Countrywide, et al.

Go here, Go here and Go here for more on recent Countrywide problems with consumers.

Go here and go here for other posts on alleged race bias in real estate transactions. race race bias predatory lending countrywide pressure yak

Mass. AG "Persuades" Subprime Lender To Stop Foreclosures For 90 Days

The Boston Herald reports:
  • "Fremont Investment & Loan has agreed to stop foreclosure proceedings on all of its mortgages in Massachusetts for 90 days while [Massachusetts Attorney General Martha] Coakley’s office reviews the loans. If the attorney general’s office finds evidence of loans “tainted by unfair and deceptive lending practices,” it will then seek to block the California-based subprime lender from foreclosing on the mortgages in question. At that point, the AG’s office may seek a new payment plan for the homeowner or other relief."
Reportedly, as many as 2000 Massachusetts homeowners will be benefitting from this arrangement. For more, see A foreclosure truce: Fremont AG pact gets homeowners 90 days.

Pending Foreclosure Due To Lender Screw Up Threatens Massachusetts Homeowner

The Ipswich Chronicle reports that a dispute based on a miscommunication involving an Ipswich, Massachusetts homeowner and the mortgage company who had recently acquired their mortgage loan has resulted in a foreclosure sale being scheduled for August 13. The trouble first started when the homeowner received a letter from their new mortgage company, GMAC, that stated they owed $4,300 on a forced placed insurance policy purchased by GMAC. The homeowner said when the home was purchased a year earlier, it was mandatory that there be an insurance policy in place before they could close on their purchase, and there was one. As far as the homeowner knew, they had made all required payments and were not notified of any problem prior to receiving the $4,300 bill.

The homeowner was then told that it had missed mortgage payments, which her lawyer has since proved were paid all along. The homeowner also said a payment that she made to the company in February of 2006 was actually mailed back to her with no explanation.

How GMAC resolves this matter remains to be seen. For now, the family lives with its life disrupted and with a cloud of uncertainty over their heads. For more, see Family fights foreclosure.

Servicemembers' Civil Relief Act Gives Protection To Financially Strapped Members Of U.S. Military

The Navy Compass reports:
  • "Are creditors trying to repossess a service member's car? Are creditors attempting to foreclose on a home? If so, the Servicemembers' Civil Relief Act (SCRA) could help give a member some valuable time by halting proceedings and affording them an opportunity to work out new payment plans with their creditors."
For more on this legal protection available for members of the U.S. military, see The SCRA and protection from creditors.

Go here for other posts on Servicemembers' Civil Relief Act.

Saturday, July 14, 2007

Four Marylanders Indicted In Alleged I.D. Theft Scheme Involving Personal Data Stolen From Mortgage Company

(modified 8-17-07)
The Dundalk Eagle reports that, according to a U.S. Attorney press release, a Maryland federal grand jury last week indicted Sherrel Peters, 30, of Dundalk, Maryland along with three others, Nekia Ishawn Hunter, 28, Lavon Caldwell, 25, and Faye Marie Jones, 51, all of Baltimore. The four are reportedly accused of using personal identity and financial information stolen from mortgage applicants to make fraudulent purchases, including cars. Peters was also reportedly charged separately in Baltimore County with identify theft. For more, see Dundalk Woman Indicted In Identity Theft Scheme, and U.S. Attorney Press Release.

For story update, see Woman, 29, pleads guilty in identity theft scheme (Baltimore woman opened false credit accounts, spent more than $400,000).

NY Attorney Going To Prison For Ripping Off Aunt & Leaving Her Homeless

In Westchester County, New York, The Journal News reports:
  • "Annette Rivera made plans to buy their dream house in Riverdale even as she was grieving over the death of her husband, Latin jazz great Ray Barretto. But on the closing date last October, most of the $860,000 she needed was missing. She had put it in escrow with her lawyer and niece, Shelley Ann Rivera. But the woman she once loved as a sister had kept the escrow money for herself and absconded to Las Vegas. Annette Rivera, her son and several of their friends were in Westchester County Court [July 11] as the suspended lawyer was sentenced to one to three years in state prison and ordered to repay $700,000 she still owes her aunt."
The victimized aunt stated in court that she (1) developed ulcers and other medical problems from the stress, (2) has been unable to pay for her son's college education, (3) was living with her son in her niece's home but had to leave when it was foreclosed upon, and (4) along with her son, are now homeless, relying on friends for loans to cover legal bills and places to stay.

For more, see Lawyer with penchant for gambling sentenced in theft from aunt.

For a prior story, see Attorney pleads guilty to defrauding her aunt of cash (Mid Hudson News).

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

Friday, July 13, 2007

The Next Big Mortgage Fraud Scheme No One Knows About

An online article at Best Syndication describes what sounds like a mortgage fraud scheme reportedly unknown to most people that is "clothed" as a mortgage principal reduction program and involves refinancing an existing mortgage every three months, doing it with a different lender, and splitting the yield spread premium, or YSP, with the borrower on each refinance. I don't know what to make of this, but if your interested, see The Next Big Mortgage Fraud Scheme, No One Knows About.

Three Indicted In Massachusetts Alleged I.D. Theft / Attempted Home Theft

Massachusetts U.S. Attorney Michael J. Sullivan, along with a slew of other Federal and State law enforcement officials have announced the indictment of Andre Lamerique, 25, of Sharon, Massachusetts, Judy Bonas, 51, of New York City, and Carmella Lassegue, 25, of Hyde Park, Massachusetts, for conspiracy and identity fraud for fraudulently obtaining mortgage financing in connection with the fictitious sale of a Dorchester residence that they did not own.

They are alleged to have attempted to sell a home from out from underneath the owner without the owner's knowledge, trying to pocket more than $420,000 from a mortgage company in the process. The "closing agent" who handled the phony sale was actually an undercover Massachusetts state trooper who was part of a sting operation conducted by law enforcement. For more, see U.S. Attorney Press Release - Three people Indicted On Fraud Charges In Connection With Bogus "Sale"Of Dorchester Property.

Editorial Note:
If I'm not mistaken, the prosecution of these three suspects in connection with the alleged incident has been going on since January. I'm trying to figure out exactly what the July 11, 2007 announcement and corresponding press release was all about. Go here for the other posts on this story.

More On Maryland Foreclosure Rescue Class Action Lawsuit

The Daily Times recently ran a story on the class-action civil lawsuit that has been filed against several Prince George's County businesses on behalf of hundreds of homeowners who say they lost millions of dollars in equity through an elaborate foreclosure rescue, equity stripping scheme.

Phillip Robinson, a lawyer and executive director of Civil Justice Inc., a Baltimore nonprofit group that helped prepare the lawsuit, said that most of the advertising for the mortgage foreclosure rescues was done on street signs and on radio and television stations that catered to black residents.

Attorney Stan Brown, who represents about 20 Prince George's plaintiffs, said he obtained an injunction last month to stop his clients' homes from going into foreclosure. Go here for more on attorney Stan Brown.

For more on the story, see Homeowners sue mortgage companies, alleging fraud, and Mortgage Companies Sued in Pr. George's (Homeowners Say They Were Cheated of Equity) (reported in The Washington Post).

For earlier post on this story, see Class Action Lawsuit Filed Against Maryland Foreclosure Rescue Operators.

Brooklyn Attorney Charged In Straw Buyer Scheme

EmpireStateNews.net reports:
  • "Federal and New York officials Thursday announced the arrest of Brooklyn attorney, Alexander Kaplan, on charges of participating in a multimillion-dollar sub-prime mortgage fraud scheme. The arrest was made based on a Complaint filed in Manhattan federal court. The allegations against Kaplan relate to charges contained in a superseding Indictment, unsealed Wednesday in Manhattan federal court, charging 26 other individuals with participating in a wide-ranging scheme to commit mortgage fraud by submitting to sub-prime lenders loan applications and supporting documents that contained false information and material omissions."
Among those charged in the superseding indictment are three New York brokerage firms, Northside Capital, AGA Capital and its successor Lending Universe, and AGA Capital owner Galina Zhigun.

For more, see Brooklyn attorney charged with multi-million dollar sub-prime mortgage fraud scheme.

See also, Brooklyn Attorney Charged In Mortgage Fraud Scheme (North Country Gazette).

For an earlier post on this story, see NYC Feds Charge 26 In $200 Million Straw Buyer, Identity Theft Mortgage Scam.

Louisiana Feds Get Guilty Plea In Straw Buyer, House Flipping Scam

The Times -Picayune reports:
  • "As part of a plea deal with the government, Calvin Davis admitted to three felony charges: conspiracy to commit mail fraud, filing false loan paperwork and income tax evasion. He is scheduled to be sentenced Nov. 8. [...] Davis is the sixth person to plead guilty to charges related to the "house flipping" scam. His guilty plea comes on the heels of the recent grand jury indictment of Michael O'Keefe Jr., owner of Citywide Mortgage Co. and son of former state Sen. President Michael O'Keefe. Michael O'Keefe Jr. was indicted June 18 and is accused of defrauding the federal government into guaranteeing $600,000 in Citywide loans to unqualified borrowers."

Davis admitted to purchasing blighted or run-down properties and obtaining fraudulent appraisals that boosted the homes' values after minimal repairs were made. Straw buyers were then recruited by him to purchase the houses at their inflated prices. Phony employment and credit documents and tax returns were used to dupe mortgage lenders into providing the straw buyers with financing. Three of the straw buyers -- Timothy Falls, Dennis LeBlanc and Dennis Addison -- admitted in court to lying about their income, credit and the value of the houses they intended to buy and a fourth participant, Robert Green, pleaded guilty in April to charges that he prepared the false tax returns. Michelle Cochran, an underwriter for Citywide Mortgage, pleaded guilty to approving the fraudulent applications.

For more, see Abuse of loan program admitted (False information was filed with HUD).

Go here for related posts on Calvin Davis.

Bidders Passing On Foreclosure Sales - Leaving Homes On Lenders Laps

In California, The Mercury News reports on a story that is becoming more and more common throughout the country - a segment of residential real estate that is a "growing category in the housing market: homes that fail to sell at foreclosure auctions and are repossessed by lenders." According to the article:
  • "In May, $2.8 billion worth of California real estate went up for sale in foreclosure auctions, according to ForeclosureRadar.com, a Discovery Bay company that sells foreclosure information to subscribers. Of that amount, about $2.6 billion worth failed to find buyers, and so became bank-owned. The figures represent the total value of the outstanding loans that went up for auction."
Based on this, I raise the following question:
  • Can we expect our neighborhoods to be flooded with billions of dollars of vacant (and possibly boarded up) homes, possibly with untended pools (mosquitos?) and uncut high grass and weeds (rats, snakes, etc.?), attracting an occasional vandal or two (to swipe appliances, copper tubing, and other assorted items of value from the home), thereby helping drive neighboring property values that much further into the ground than they already are?

For the story, see Once rare in valley, lender-owned homes on the rise.

In a related story, NBC Nightly News had a report last night on California and how hard hit it has been with foreclosures. Among other things, reporter George Lewis speaks with one concerned homeowner whose home is surrounded by empty, untended foreclosed homes. For more, watch the NBC Nightly News report, California Hit Hard With Foreclosures.

See also, The Newest Homeowners: Big Banks (The Motley Fool - reported on MSNBC).

Home Improvement Rip Offs Made Easy

In New Jersey, two articles recently appeared in the Herald News that report on how some savvy, but unscrupulous contractors, often times in concert with a crooked mortgage broker or loan officer, rip off homeowners by selling home improvement jobs in which the contractor steers the financing to a third party lender. The rip off takes place when, after the lender pays the contractor most or all of the price of the job upfront, the contractor proceeds to perform shoddy work on the home. Since the contractor is already paid in full and the homeowner's debt is to the third party lender, they are unable to "hold back" part of the contract price that is a common remedy used when the homeowner owes the money directly to the contractor. According to one of the stories:
  • "Contractors can help homeowners find financing to pay for their renovations, and a segment specifically target low-income residents. Too often, experts say, some of these companies steer customers into a second mortgage with above-average interest rates, huge fees and terms homeowners don't understand. These loans typically get sold to another bank without the borrowers' knowledge. If a customer stops paying the contractor because of poor work, the new loan holder will require reimbursement of the full loan amount, setting up a homeowner for possible foreclosure -- the loss of their home. Contractors, however, have a win-win setup. Home repair provides a powerful incentive for someone to take out a loan. Once the financing comes through, the contractor often gets the bulk of payment before work starts. A contractor's fingerprints rarely show up on mortgage documents. And if a client sues, lawyers often find it difficult to prove criminal intent by the company."

For more, see:

For more on homeowners left in the lurch due to actions by builders/contractors, go here, go here, go here, go here, and go here. StiffingContractorsTheta

California CSLB "Stings" More Unlicensed Contractors

The Associated Press reports that California authorities have arrested five unlicensed contractors as part of an undercover sting operation recently conducted in the aftermath of the Angora fire in South Lake Tahoe, California. According to the report:
  • "Investigators posed as people whose homes were destroyed during last week's fire, that destroyed 254 homes and 75 other structures. They invited suspected unlicensed contractors to bid on debris removal and various reconstruction projects."

The sting operation was conducted by investigators with the California Contractors State License Board ("CSLB") in cooperation with the California Department of Insurance, and the El Dorado County district attorney's office and sheriff's department. For more, see Five arrested in undercover Lake Tahoe contractor sting.

Thursday, July 12, 2007

NAACP Files Subprime Lending Suit; Seeks Class Action Status

The Associated Press reports:
  • "The NAACP sued a dozen mortgage lenders Wednesday, claiming the companies discriminated against blacks by steering them into higher-interest subprime loans while giving more-favorable loan terms to white borrowers. The lawsuit, which seeks class-action status, was filed in U.S. District Court in Los Angeles. It demands a court order barring the lenders from discriminating against blacks and compelling them to comply with fair-housing and credit laws. Among the defendants named in the suit are Ameriquest Mortgage Co., Citigroup Inc., HSBC Finance Corp. and Washington Mutual Inc."

A similar suit is currently being litigated in Cleveland, Ohio (see Cleveland Fair Housing Lawyer Files Predatory Lending Class Action Lawsuit).

For more on the NAACP lawsuit, see Mortgage lenders discriminated against blacks, NAACP suit alleges.

For a copy of the lawsuit, see NAACP vs. Ameriquest Mortgage Corporation, et al., made available online courtesy of the NAACP.

For the NAACP press release, see NAACP Files Landmark Lawsuit Against Major Home Mortgage Companies For Discriminatory Lending.

Go here and go here for other posts on alleged race bias in real estate transactions. race bias predatory lending

NYC Foreclosure Rescue Operator Sued Again

New York City foreclosure rescue operator Home Savers Consulting Corp. has again been named in a civil lawsuit, again filed in a Brooklyn Federal Court, and again alleged to have engaged in a foreclosure rescue, equity stripping transaction. The home purportedly "being saved" in this case is in Staten Island. The lawsuit, filed on June 29, names Garth Celestine, Phil Simon, Ophelia Ray (bird dog), Krishna Maharaj, Courtney Callender (straw buyer), Blackacre Title Agency Corp., The New York Mortgage Co. LLC., and several "John Does" and unamed entities as additional defendants.

Among other things, it is alleged that:

1) Ophelia Ray, working as a bird dog for Home Savers, first made face-to-face contact with the homeowners by showing up at the plaintiffs' front door, and "quoted from the Bible and professed to be a religious person who sincerely wanted to help the [plaintiffs],

2) Home Savers obtained well over $100,000 out of the equity in the plaintiffs' home, giving them $12,000, and pocketing the difference,

3) The plaintiffs thought they were getting a mortgage with payments prepaid for a year, but in June, the plaintiffs were served with an eviction notice.

The complaint sets forth the following causes of action:
  • (a) equitable mortgage - Section 320 of the New York Real Property Law; (b) numerous violations of the Federal Truth In Lending Act and its implementing regulations (Regulation Z), (c) violation of the Federal Real Estate Settlement Procedures Act, (d) violation of New York Deceptive Pratices Act - Section 349 of the General Business Law, (e) fraud, (f) civil conspiracy to commit fraud, (g) aiding and abetting fraud, (h) conversion, (i) quiet title action - Article 15 of the New York RPAPL (ie. void the mortgage and any other claims that may have arisen as a result of the transaction in question).
Representing the plaintiffs / homeowners in this lawsuit are Christopher D. Lamb, and Sarah T. Gillman, of Counsel, for The Legal Aid Society of New York (Staten Island).

For a copy of the lawsuit, see Harvey vs. Home Savers Consulting Corp., et al.

Go here for other posts on Home Savers Consulting Corp. equitable mortgage yak

The High Cost Of "No Closing Cost" Mortgages

Another "Beazer Homes" investigative report appeared in the Charlotte Observer recently. This time, The Observer talks about Beazer's reported use of so-called "no closing cost" mortgage loans in financing their home sales. More specifically, the focus is on Beazer's reported practice of arranging for no-cost mortgages for its homebuyers through its mortgage affiliate, which reportedly charged a higher rate of interest for providing such a loan without informing the homebuyer, and collected yield spread premiums in the process . For more, see `No closing costs' add up fast (When Beazer offers incentives, homebuyers think they'll save money. Some don't.).

Go here for other posts on so-called no cost mortgages.

Go here for other posts on the Charlotte Observer's investigative reports on Beazer Homes.

Cleveland Fair Housing Lawyer Files Predatory Lending Class Action Lawsuit

The Cleveland Free Times recently featured fair housing attorney Ed Kramer and his firm, Housing Advocates Inc., of Cleveland, Ohio. Regarding Kramer's predatory lending, foreclosure clients, the report states:
  • "[T]here was an unmistakable pattern: Nearly all were poor people of color, and all had been locked into unaffordable loans, with high interest rates and exorbitant broker fees."
Kramer determined that there was no way to represent everyone in need, and that the problem wasn't going away and couldn't be solved on a piecemeal basis. According to the story:
  • "So, after 32 years of applying state and federal fair housing statutes to defend clients against unfair housing providers, Kramer decided it was time to use the same laws differently. In April, Kramer turned plaintiff and filed a class-action complaint that goes past individual brokers and at the banks and mortgage companies that, he says, paid the brokers to target African Americans. The suit represents a tectonic shift in how predatory lending cases are handled. Case-by-case approaches have left attorneys and investigators unable to detect larger patterns of racially motivated lending. But now, Kramer's new approach, and pricing data available only since 2004, has emboldened a host of players - all separately coming to the conclusion that it's time to switch targets: to the banks and investment firms."

Kramer's firm itself filed the suit against Argent Mortgage Co., reputed to be the biggest subprime lender in Cleveland, in addition to Wells Fargo Bank. Reportedly, the Fair Housing Act allows organizations to file complaints if the discrimination in question is taxing their resources.

The article also describes the efforts of Ohio Attorney General Marc Dann, who is pursuing both criminal and civil actions through the statewide Predatory Lending Task Force which he created. He is also using Ohio's racketeering statutes and working with other law enforcement agencies and coordinating cases around racketeering charges.

For more, see Sue The *astards! (What To Do About Mortgage Brokers And Lenders Who Don't Play Fair?)

Go here and go here for other posts on alleged race bias in real estate transactions. race bias predatory lending

California Man Ordered To Pay $100K In Illegal Deal With Homeowner Facing Foreclosure

(original post 7-12-07; revised 7-14-07)
The Monterey Herald reports that Robert Janssen, of Abbey Management, Inc., has settled a civil lawsuit filed against him by the consumer protection unit of the Monterey County, California District Attorney's office. Without admitting to wrongdoing, Janssen agreed to a judgment of $47,588 in civil penalties and $52,412 in restitution — his profits from a transaction involving the home of a woman facing foreclosure in which he apparently attempted to execute an "equity sharing", foreclosure rescue agreement with her. Janssen's lawyer, criminal defense attorney Richard Rosen, said his client settled to avoid protracted litigation and the threat of criminal prosecution. For more, see Man settles real estate charge (Sold house without Realtor's license).

Wednesday, July 11, 2007

Michigan ACORN "Subprime" Protestors Storm Washington Mutual Subsidiary; Cops Called In

The Detroit News reports:
  • "Police had to quell a sit-in Tuesday afternoon after angry protesters complaining about lending practices stormed into a mortgage office [in Livonia, Michigan]. More than a dozen members of the Association of Community Organizers for Reform Now descended on an office of Long Beach Mortgage about 4:30 p.m. They chanted "predatory lender, criminal offender." The company is the sub-prime branch of Washington Mutual Mortgage Co."

For more, see Livonia:Protesters storm mortgage firm.

NYC Feds Charge 26 In $200 Million Straw Buyer, Identity Theft Mortgage Scam

The Financial Times reports:
  • "US officials charged 26 people with conspiracy and fraud, alleging in a criminal indictment unsealed on Tuesday that they used invented purchasers, stolen identities and inflated appraisals to fraudulently obtain subprime mortgages on more than $200m in property in and around New York City. Those who have been charged include real estate appraisers, a loan settlement agent, mortgage brokers and loan processors in addition to people who purchased the property. They allegedly conspired to lie to a series of lenders to obtain mortgages between 2004 and 2007."

Among those charged are three New York brokerage firms, Northside Capital, AGA Capital and its successor Lending Universe, and AGA Capital owner Galina Zhigun.

Among the victimized mortgage lenders include Countrywide Financial, New Century Financial, Washington Mutual and National City Corporation. For more, see:

U.S. atty indicts 26 for mortgage fraud in New York (Reuters).

Retired NY Judge Reportedly Left Homeless & Broke By Guardianship Process

The Brooklyn Daily Eagle reports on what sounds like a cesspool that may exist in the guardianship process in New York. The story involves a retired judge with a once-sizable estate who was declared incapacitated by a state court and whose estate was placed under the supervision of a court-appointed guardian. Since that time, the retired judge's bones sound like they were picked clean. By the time a Brooklyn, New York District Attorney's criminal investigation found that there was no evidence of criminal wrongdoing, the story reports that "the once-proud judge was left homeless, without the ability to pay his own utility bills."

For more, see Were Funds Pilfered from a Retired Judge’s Estate? (Supporters Say Accounting Should Reopen Criminal Probe).

For story update, see Watchdog Group Looks at Brooklyn Court’s Handling of Retired Judge’s Estate (Brooklyn Daily Eagle - 9-14-07) - which reports:
  • A respected judicial watchdog group that maintains a Web site and a paid subscription service has taken on one of the more intransigent cases to have appeared on a court docket in recent years — the guardianship case of retired Civil Court Judge John Phillips, whose supporters have cried foul over the way his once vast estate has been mishandled by a series of court-appointed attorneys, experts and judges over the years. Go here for more.
For additional reporting on the story of the alleged ripoff of the judge's assets by court-appointed guardians, see Fallen Guardian Angels - by Leah Nelson (reported in Judicial Reports).

Go here for other posts on this story.

Go here for other posts on the escapades of the public administrator's offices in New York City. daily eagle retired judge granny-snatching racket

Another Upstate NY Straw Buyer Cops Plea In "Andersen" Affair

EmpireStateNews.net reports that Mark Slagen, 53 of Schenectady, New York pleaded guilty in an Albany, NY Federal Court to conspiring in a mortgage fraud scheme with the currently-under-indictment Anthony Andersen and others. Slagen admitted in substance that he acted as a straw borrower in the charged scheme, allowing Andersen to use his name and personal information to obtain loans secured by real estate in the upstate New York cities of Troy and Rensselaer. For more, see Man pleads guilty in mortgage fraud scheme.

Go here for other posts on this alleged mortgage fraud scheme.

Denver Pastor Accused Of Duping Church Members Into Being Straw Buyers

Two former members of a Denver, Colorado church claim that they unwittingly participated in a real estate straw buyer scam orchestrated by their pastor, Rev. Harold Hicks, of Mount Carmel Community Baptist Church, according to an investigative report by the Rocky Mountain News. One straw buyer reportedly ended up buying seven rental properties for about $845,000, according to public records. The total monthly mortgage payments on the seven properties are about $6,000 and are now in foreclosure. According to the story:

  • "An investigation by the Rocky Mountain News into claims made by [the unwitting straw buyers], shows that on several occasions in 2005 Hicks used his power of attorney to sign real estate documents that contained false information. The two women maintain that Hicks provided the false information on the documents and that they signed them because they trusted him as their pastor. Doing so, they said, led to ruinous financial consequences."
The article states that one of the houses in foreclosure is currently being used as a crack house. No criminal charges have been brought, although the state Division of Real Estate has reportedly taken steps to revoke the license of the appraiser who valued the properties involved and fined him $22,500.

For more, see Signing on faith (Ex-church members say pastor misused trust to conduct shady real estate deals).

Go here for updates on this Rocky Mountain News investigation.

SEC Investigating Alleged $100 Million Mortgage Fraud

The alleged mortgage fraud scam that reportedly occurred in Murrietta, California and the surrounding area and that is the subject of a number of civil lawsuits is now the subject of an investigation by the Securities Exchange Commission, according to media reports. Reportedly, evidence obtained by the plaintiffs in the civil lawsuits is being shared with the SEC by plaintiffs attorney Richard Ackerman. Those individuals who are of interest to the SEC and the plaintiffs in the civil lawsuits are:
  • James Duncan, Maurice McLeod, Chris Oetting, companies linked to Steve Kayden and Dennis Dewitt Jr., Hendrix Montecastro and his Murrieta mortgage brokerage, Stonewood Consulting Inc.

The alleged scam reportedly left unwitting investors with close to $100 million in mortgage debt. For more see:

Feds probing investment ring (North County Times)

SEC investigating alleged Inland scam (The Press Enterprise)

Go here for other posts on this alleged mortgage fraud.