Saturday, August 11, 2007

Deceased Mother's Home In Foreclosure, Soldier Can't Get Leave To Settle Her Affairs

The Bakersfield Californian reports that a 23 year old member of the U.S. Army currently stationed at Fort Dix, New Jersey recently suffered the premature loss of his 46 year old mother. Desiring an extended hardship leave to settle his mother's affairs, the Army instead gave him a few days of emergency leave, enough time to help pack up his mother's belongings. Meanwhile, the house payments went unpaid and his family received a foreclosure notice on his mother's home (in which he also lived) in late July. For more, see Grieving soldier stuck in hardship (Sergeant couldn't get leave to save late mother's home) (no longer available online).

Editorial Note

Inasmuch as the soldier was also living in the home, and the home could conceivably now belong to him through inheritance, does anyone know if he has any rights in a case like this to stop a foreclosure sale by invoking the Federal law, Servicemembers' Civil Relief Act? Go here for other posts on the Servicemembers' Civil Relief Act.

Some Upstate NY Homeowners Losing Home Equity To GE Pollution, Says Lawsuit

The Albany Times-Union recently reported on a situation in Fort Edward, New York that, according to a lawsuit, is driving down home values in a section of town - chemical contamination emanating from a General Electric capacitor plant. Reportedly, 42 homeowners have joined in a lawsuit against General Electric and the town of Fort Edward. According to Dennis Prevost, who grew up about 120 yards from the plant and is vice president of Hudson River Citizens Along the River's Edge, a not-for-profit group that has been pushing for the plume to be cleaned up more aggressively:
  • "Here, GE is doing only what the law requires in a polluter-friendly state. Fort Edward is being treated like a red-headed stepchild."

For more, see Pollution upsets homeowners (Fort Edward residents say General Electric is moving too slowly to remove TCE, an industrial solvent).

Ex KC Councilwoman Going Solo At Federal Fraud Trial

(revised 8-15-07)
The Kansas City Star reports:
  • "Former Kansas City Councilwoman Saundra McFadden-Weaver will be the lone defendant facing trial next week on mortgage fraud charges. Her last remaining co-defendant, Emanuel M. Kind, pleaded guilty today and agreed to cooperate with prosecutors in the case against her. Kind, 52, had lived in the Lee’s Summit house at the center of the case. He pleaded guilty to single counts of conspiracy and wire fraud. Another defendant, Ricky L. Hamilton, pleaded guilty to similar charges Tuesday and also agreed to cooperate against McFadden-Weaver."

For more, see Last McFadden-Weaver co-defendant pleads guilty in fraud case.

Go here for other posts on this mortgage fraud case.

California Contractor Skips Town With Customer Deposits; One Homeowner Left Without A Home

KBAK-TV Channel 29 (Bakersfield, California) reports:
  • "At least eight families in Arvin [California] say they paid a contractor to build homes or make room additions -- and the work has never been done. The families say they paid thousands to contractor Salvador Arevelo Moreno, and he has disappeared without finishing the jobs. [...] The Salinas family paid Moreno $50-thousand dollars to tear down their old house and build a new one. The old house was demolished, but the new house has never been built."

Go here to watch the KBAK-TV report.

To read the online report, see Arvin families complain contractor did not finish jobs they paid for.

Friday, August 10, 2007

More On Milwaukee Straw Buyer Mortgage Fraud Indictments

Last week, the U.S. Attorney's Office for the Eastern District of Wisconsin announced that ten people have been indicted in a $2 million mortgage fraud scheme on allegations they tried to get loans through falsifying applications and falsely inflating property appraisals. The following ten people were charged in the indictment:
  • Michael Lock and Jerhonda McCray, of the mortgage brokerage company, World Financial Mortgage of Milwaukee, Kevin Slamann of Muskego of Excell Closing Services in Kenosha, and Chianti Clay, Monique Dunlap, Marcus Leonard, Ruben Fields, Nicole Brown, Lisa Colella (fka Lisa Geiger) and Krista Jeray, all from Milwaukee.

For a copy of the indictment, see U.S. vs. Lock, McCray, Slamann, et al. (If there's a problem accessing the indictment, drop me an e-mail at HomeEquityTheft@yahoo.com and I'll send it to you (be sure and put the words U.S. vs. Lock, McCray Slamann, et al. in the "Subject" line).

For the original The Associated Press and WTMJ-TV Channel 4 article, see 10 Indicted in $2 Million Mortgage Fraud. Go here for U.S. Attorney's Press Release.

For original Milwaukee Journal Sentinel story, see 5 accused in crime ring (Federal charges allege mortgage scam; state alleges kidnapping, racketeering).

For story update, see Mortgage broker faces parallel prosecutions (He's charged with fraud, violent crime).

For more on Michael Lock, see Alleged 'Body Snatchers' Crime Ring Busted.

Go here for other posts on this story.

San Jose Couple Charged In Alleged $8.5 Million Mortgage Fraud Flipping Scam

In California, The San Jose Mercury News reports:
  • "[F]ormer Century 21 Su Casa real estate agent [Thien Chi Vuong] and his wife [Thanh Tuyen Tran, aka Kim Tran] were arrested on charges of bilking lenders in a year-long, $8.5 million real estate scam, the latest result of an ongoing investigation of complaints against the East Side real estate brokerage. [...] According to the district attorney's office, Vuong allegedly acted as his wife's real estate agent when she bought 10 houses in San Jose last year for a borrowed $8.5 million. Vuong and Century 21 Su Casa collected commissions and fees on the deals, and Tran rented out the properties at below-market prices, the district attorney's office said in court filings. [... Su Casa] closed its doors and filed for bankruptcy in June under the weight of nearly two dozen lawsuits. [...] The criminal case stems from a civil suit filed earlier this year by Landmark Home Mortgage."

Reportedly, every one of the 10 houses were purchased with 100% financing ("no money down") and five of the properties are already in default, according to prosecutor's office. They were charged with conspiracy and grand theft in a series of real estate deals that allegedly netted them more than $500,000.

For more, see Couple accused of bilking lenders (`Flipping Scheme Alleged In East Bay Housing Market). In a companion story, see How the fraud allegedly worked.

See also, San Jose Realtor, Wife Arrested For Alleged Fraud (KPIX-TV Channel 5, San Jose, CA).

Arizona Man Sentenced In Alleged Equity Skimming, Foreclosure Rescue - Bankruptcy Fraud Scam

The East Valley Tribune reports:
  • "A Chandler man who tricked couples out of their homes and then filed bankruptcy in the couples' names was sentenced on Wednesday in U.S. District Court to 33 months in prison and ordered to pay $86,000 in restitution.Mario G. Bernadel, 48, pleaded guilty last year to two counts of fraudulently filing bankruptcy petitions on behalf of people who had no idea he was doing it."

Reportedly, prosecutors said that Bernadel persuaded two Valley married couples facing foreclosure to sign their homes over to him under the pretext that this would keep the foreclosures off their credit reports. Once he owned the homes, Bernadel rented the homes and "skimmed the rent" by pocketing the cash received from the tenants without applying any of it to the existing mortgages. The bankruptcy fraud element kicked in when he filed bankruptcy petitions in the homeowners' names without their knowledge, thereby halting the foreclosure actions and extending the period of time that he could continue skimming the rent the the homes. The foreclosure process ultimately was allowed to continue to completion, at which point the homes were foreclosed.

For more, see Chandler man sentenced for bankruptcy fraud.

See also:

Thursday, August 09, 2007

KCRA 3 TV Sacramento-Area Mortgage Fraud Investigative Reports Continue

The most recent KCRA 3 TV report on investigative reporter Josh Bernstein's Elk Grove, California mortgage fraud investigation is available here.

Mario Fellini, one of the mortgage brokers at the center of KCRA 3's investigation has surrendered his license and is no longer allowed to operate as a mortgage broker in California.

Reportedly, this action has no effect on a currently ongoing FBI and IRS investigation into the alleged falsification of more than $9 million worth of loan applications by Fellini and his business associates. KCRA 3 reports that sources close to the investigation say the investigation continues to move forward and will likely go before a grand jury in a matter of weeks. In addition to Fellini, others that have reportedly had some connection with the alleged mortgage fraud scheme are:
  • Jim Martin, Gabriel Viramontes, Joseph Gallo and Jennifer Huang; and the firms Freedom Capitol Mortgage, VFM Investment Group, and Esnian Mortgage & Realty Network.
Go here to watch the latest KCRA 3 TV report. To read KCRA 3's online report, see Mortgage Broker Under Fire Surrenders License (Offices Raided By FBI).

Go here for prior posts on the KCRA 3 investigation, which include links to KCRA 3 Josh Bernstein's previous investigative reports on this alleged mortgage scam.

Federal Grand Jury Investigating Central Florida Foreclosure Rescue Operator

The Orlando Sentinel reports:
  • "A federal grand jury is investigating an alleged "foreclosure rescue" scheme that targeted Hispanics across Central Florida, leaving scores of homeowners facing eviction. Federal investigators said this week that they are taking aim at a now-defunct Tampa company known as 4 Solutions Inc., which allegedly siphoned off hundreds of thousands of dollars in homeowner equity from dozens of families. The company is accused of luring homeowners into deals that promised to prevent foreclosure, but instead duped them into giving up their homes. [...] Anthony Suarez, an Orlando lawyer representing more than two dozen of the homeowners, said the lost home equity for his clients could top $900,000."

Reportedly, 4 Solutions closed its doors when the grand-jury investigation started several months ago. In one case, a husband and wife who were victimized were never in danger of foreclosure. They wanted to tap into their home equity to help pay the mortgage while the wife was on pregnancy leave.

For more, see Hispanics feel victimized after 'foreclosure rescue'.

For a Tampa Tribune story on 4Solutions, see Foreclosure Prevention Company Is Under Investigation (8-4-07):

  • Carmen Maria Oliveri was arrested by Tampa police June 7 on charges of 'grand theft of $100,000 or more' and 'organized fraud over $50,000.' According to the arrest report, in August 2005, Carmen Maria Oliveri 'entered into a scheme to defraud' a homeowner. The report states that 'Jose and Carmen Oliveri presented terms of a loan without disclosing to the victim that he was signing over the rights to the property' to 4 Solutions. The company sold the property without the person's knowledge.

Go here for 4 Solutions website (no longer available online).

Go here for other posts on 4Solutions.

Ohio AG Conducts Foreclosure Rescue Sweep; Hauls Six Upfront Fee Operators Into Court

From the Ohio Attorney General:
  • "Attorney General Marc Dann today filed lawsuits against 6 different companies for preying on Ohioans with false promises of saving their homes from foreclosure. The attorney general’s investigations produced evidence that these companies may have violated at least five different consumer laws: Consumer Sales Practices Act (CSPA), Telephone Solicitation Sales Act (TSSA), Home Solicitation Sales Act (HSSA), Debt Adjusters Act (DAA), and the Credit Services Organization Act (CSOA). “Today, along with filing lawsuits against 6 foreclosure rescue firms, I am issuing a warning to companies who think they can get away with exploiting families who face the prospect of losing their homes: Stop Now or my office will stop you,” Attorney General Dann said [on Wednesday]."

Suits were filed against the following companies doing business in six Ohio counties: American Housing Authority, Inc. (Newport Beach, California), American Housing Financial, Inc., (Phoenix, Arizona), Cary Lavensky d/b/a Home Restoration Services (Cleveland, Ohio), F.A.S., LLC d/b/a Foreclosure Assistance Solutions and Mortgage Second Chance (Clearwater, Florida), Foreclosure Solutions, LLC (Cincinnati, Ohio), Richard Pinnix d/b/a Pinnix Business Services (Shaker Heights, Ohio), United Foreclosure Managers, LLC (Youngstown, Ohio).

For more, see Ohio AG Press Release - Foreclosure Rescue Scams Sweep (Attorney General Dann Files 6 Suits Against Companies For Foreclosure Rescue Scams)., or

See also, Attorney general's office sues six foreclosure rescue companies (Cleveland Plain Dealer), and Ohio Foreclosure Rescue Scams Sweep (All American Patriots).

For copies of the newly filed lawsuits (available online courtesy of Ohio Attorney General Marc Dann), see:

Go here for other posts on Ohio upfront fee foreclosure rescue services.

Go here for other posts on American Housing Authority and Brandon Roberts.

Ohio AG Aiming Regulatory Rifle At Credit Ratings Agencies

Global Pensions reports:
  • "Three credit rating agencies could find themselves in court if the attorney general of Ohio believes there is a case to prosecute over their part in mortgage securitisation marketing. Marc Dann, attorney general of Ohio, has accused Fitch, Moody’s and Standard & Poor’s of leading pension funds to believe that triple A rated tranches of collateralised debt obligations (CDOs) were near risk free."

What part, if any, that the credit ratings agencies played in the subprime mortgage mess is an issue that Ohio AG Dann apparently would like to pursue further.

For more, see Ohio threatens ratings lawsuit.

Attorneys Gearing Up For Subprime Litigation Explosion

From Financial Week:
  • "Here come the lawyers. With the casulties mounting from turmoil in the subprime lending sector and mortgage-backed securities markets, plaintiffs’ lawyers and defense counsel are gearing up for the inevitable lawsuits. They’ll have plenty of clients to choose from. [...] Virtually every party involved in the huge Wall Street securitization machine that financed the late, great housing boom is a potential target—the lenders who originated the loans, the brokers who bought them, the underwriters who pooled them and carved them up into securities, the rating agencies that rated the securities, and the bond insurance companies that guaranteed them."

For more, see Vulture investors feed on subprime carrion: The lawyers (And don’t forget the lawyers: Suits alleging bad, bad things hit lenders, packagers, raters).

For an example of the gearing-up efforts, see American Conference Institute Organizes Subprime Litigation Conference. (DSNews - 8-13-07)

Did Homebuilders Getting Into The Mortgage Lending Business Help Fuel Subprime Problem?

BusinessWeek.com recently ran a story about how homebuilders who got into the mortgage lending business to finance their own sales has reprtedly fueled the subprime mortgage lending mess. The story states:
  • "In addition to spitting out subdivisions, many of which now stand half-empty, builders jumped into the mortgage business to a degree they never had. Wall Street provided the same encouragement it offered other lenders. Even as the housing supply began to exceed demand last year, builders kept sales brisk by pushing adjustable-rate, interest-only, and other risky loans. In some cases they attracted clientele who couldn't afford conventional mortgages. In others, builders allegedly violated federal lending standards to get customers to sign on the dotted line."

Among those homebuilders getting a mention in the story is Beazer Homes USA Inc., which is currently the subject of a Federal investigation, as well as a number of lawsuits in connection with the lending practices of its mortgage financing arm. For more, see Bonfire Of The Builders (By rushing into the mortgage business big-time, homebuilders helped fuel the housing crisis).

Go here for other posts on Beazer Homes USA.

Wednesday, August 08, 2007

Real Estate Brokerage Suspends Realtors Under Indictment

The Los Angeles Times reports:
  • "Two Beverly Hills real estate agents indicted for their alleged participation in a mortgage fraud scheme have been suspended by their employer, Prudential California Realty, and ordered not to conduct any real estate transactions until the federal case has been resolved. Joseph Babajian and Kyle Grasso are among the top-producing real estate agents in Southern California, and often work together. [...] Prudential California, whose parent is Warren E. Buffett's Berkshire Hathaway Inc., said it would transfer all of Babajian's and Grasso's listings to other agents."

For more, see Two Beverly Hills agents suspended by brokerage (no longer available online).

Go here for other posts on the indictment.

Georgia Appeals Court Recharacterizes Sale Leasebacks As Usurious Loans

A Georgia Court of Appeals recently found that transactions entered into by a finance business with customers needing "fast cash," that were structured as sale leasebacks of personal property owned by the customers, were nothing more than disguised illegal payday loans subject to usury, and not true sales of property. Implicit in the Georgia court's decision was that the "substance over form doctrine", when applied to recharacterize a sale leaseback transaction as a secured loan, operates in the same manner and without regard to whether the subject property being sold and leased back is personal property or real property.

For the long version of this post, see Georgia Appellate Court Recharacterizes Sale Leasebacks As Usurious Loans, on the companion to this blog, The Home Equity Theft Reporter Cases & Articles.

For the court decision itself, see Clay v. Oxendine, 285 Ga. App. 50; 645 S.E.2d 553, (Ga. App. Ct., 1st Div., 3-27-07).

Florida Students Being Evicted Due To Landlord's Failure To Pay!

The Independent Florida Alligator (Gainesville, Florida) reports:
  • "[University of Florida] anthropology senior Sean Reilly knew it was coming since January. And then one day in July, he said, the eviction notice was on his door. [...] It's a common occurrence - tenants don't pay and are subsequently evicted. But what's different about Reilly's eviction story, and the stories of other UF students living around Gainesville, is that his eviction came from the landlord's failure to pay, not his.

Reportedly, Reilly's foreclosed condo was owned by Jose Andrade of Weston, Florida, who at one point, owned 11 condos in the complex. He now only owns one, according to the story. The complex was a rental complex until a couple of years ago, when it was converted into condominium units, resulting in the units being sold off separately. Reportedly, the complex has gone downhill since the conversion. For more, see Property foreclosures leave tenants evicted.

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

Equity Skimming On The Rise In Massachusetts

The Boston Herald is reporting on:
  • "a growing problem in the Bay State’s foreclosure crisis: tenants who pay rent regularly, but still lose apartments when banks foreclose on landlords’ buildings."

This problem generally arises when a real estate investor who gets in over his head and can't afford the mortgage payments on an investment property decides to stop making his mortgage payments, and at the same time, gets a tenant to unwittingly remit monthly rent payments without knowledge of the loan default. The owner/landlord, resigned to allowing the bank to foreclose on the investment property, will continue to "skim the rent" from the home until the place is finally auctioned off and he/she loses the title to the home.

The problem can also occur when an investor or homeowner, after getting in over their heads on their mortgage payments, unwittingly signs over title to the home to a "professional equity skimmer" (possibly someone offering purported foreclosure rescue services ) who promises to continue to make the loan payments, and instead proceeds to find a tenant for the home, pocket the rent, and stiff the bank.

For the Boston Herald story, see Why Us?: Tenants say they’re foreclosure victims (if link expires, try here).

For other posts on tenants stuck holding the bag in foreclosure evictions, go here and go here, and go here.

Statutes specifically addressing the practice of equity skimming (aka rent skimming) exist in some states, as well as in Federal law (12 USC 1709-2). alpha

Boston Tenants Picket Deutsch Bank, Say Foreclosure Evictions Unfair

BostonNow reports:
  • "Protesters gathered outside Deutsche Bank's office in Beacon Hill [Monday], claiming the financial institution has been unfairly evicting residents of buildings in foreclosure. [...] Deutsche Bank said in a statement that it was not responsible for the evictions, saying the bank is only a "trustee" whose responsibility is "largely an administrative one." The bank said it intends to provide the tenant group with the names of those actually controlling the properties."

The tenants' gripe appears to revolve around the fact that they are being evicted from their (rented) homes, even though they have dutifully paid all the rent payments due pursuant to their rental arrangement with their now ex-landlord.

For more, see Tenants picket bank.

Massachusetts Lawmakers Considering Proposals To Protect Tenants In Foreclosure Evictions

The Boston Herald reports:
  • "State lawmakers are weighing a proposal to make banks that foreclose on rental units honor renters’ leases, aiming to help tenants caught in the middle of property seizures. A mortgage-reform bill currently before the Legislature would prohibit parties that acquire homes through foreclosure from automatically voiding tenants’ leases. Current law generally doesn’t require lenders or private investors who purchase homes at foreclosure to honor landlord-tenant agreements. Instead, as the Herald first reported Saturday, lenders who’ve been seizing Bay State rentals from landlords who fall behind have been evicting even tenants who paid rent on time."
For more, see Bill would help renters after foreclosures.

Editor's Note: The tenants who paid their rent on time and who are being evicted anyway after foreclosure are victims of equity skimming, where their prior landlord pocketed their rent without paying on the mortgage. The Massachusetts legislature should probably also consider going after those landlords and pass legislation (if they haven't already) making equity skimming illegal, the way some other states have, and similar to the law contained in the Federal statute, and then vigorously enforce it.

Tuesday, August 07, 2007

Resolving Foreclosures Thwarted By Securitization

The New York Times recently ran a story on the confusion and complications that homeowners facing foreclosure are running into when attempting to work out a financial resolution on their home mortgage obligations. According to the story:
  • "[T]he very innovation that made mortgages so easily available — an assembly line process known on Wall Street as securitization — is creating an obstacle for troubled borrowers. As they try to restructure their loans, they are often thwarted, lawyers say, by strict protections put in place for investors who bought the mortgage pools. This impasse could exacerbate the housing slump, pushing more homeowners into foreclosure. That would lead to a bigger glut of properties for sale, depressing home prices further. 'Securitization led to this explosion of bad loans, and now it is harder to unwind and modify them even where it is in the best interests of both the borrower and the investors,' Kurt Eggert, an associate professor at the Chapman University School of Law in Orange, Calif., said in an interview. 'The thing that caused the problem is making it harder to solve the problem.' Creating difficulties is the complex design of mortgage securities."

Among the problems: (1) some homeowners have problems simply identifying who holds their mortgages, (2) others find the loan servicing companies handling the loan payments are unresponsive due, in part, to the threat to their profits, (3) some lawyers say that even if facts indicate that a fraud may have been committed, the various parties protect each other by refusing to produce documents.

One Marietta, Georgia consumer protection attorney said that he has had cases where homeowners received foreclosure notices from entities that could not prove ownership of the mortgage loans in default and believes that many people are no longer living in their homes as a result of possible flawed foreclosure actions.

According to the article, "more than 60 percent of home mortgages made in the United States in 2006 went into securitization trusts." For more, see Mortgage Maze May Increase Foreclosures.

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

More On Indictments Of Beverly Hills Real Estate Agents And Appraisers

(Originally posted 8-4-07; revised 8-7-07; 8-8-07)

The Los Angeles Times reported last week on the indictments of high-profile Beverly Hills real estate agents Joseph Babajian and Kyle Grasso, with Prudential California Realty, along with appraisers Lila Rizk of Trabuco Canyon and Scott Robinson of Dana Point. They are charged with joining in a sophisticated scheme that lenders said cost them more than $40 million in fraudulent loans for homes in some of Southern California's most expensive neighborhoods.

Prosecutors filed a two part indictment. For Part 1, see U.S. vs. Babajian, et al - Part 1 (22 pages, .83 MB approx.).

Unfortunately, Part 2 of the indictment is a little too large for me to upload on this humble blog of limited resources. If you want Part 1 & 2, you can drop me an e-mail at:


and I'll be glad to send it to you (Be sure to put the words "U.S. vs. Babajian, et al - Part 1 & 2" in the subject line). Alternatively, you can go directly to the document link on the U.S. Courts' PACER website and get it there directly (link #2 - "Part II Indictment"; 63 pages; approx 2.5 MB - $2.40 cost). PACER registration required.

For the initial L.A. Times story, see Brokers to Westside elite accused of fraud (2 Beverly Hills agents and appraisers are indicted in a scam that allegedly inflated home prices and loan amounts).

For the L.A. Times follow-up story, see Two Beverly Hills agents suspended by brokerage.

Go here for the official FBI Press Release - Westside Real Estate Agents And Appraisers Indicted In Multi-Million Dollar 'Property-Flipping’ Fraud Scheme.

Go here for all posts on this story.

Federal Appeals Court Recharacterizes Sale-Buyback Arrangement As An Equitable Mortgage

In an opinion issued about two weeks ago, the U.S. Court of Appeals for the Eleventh Circuit affirmed lower court rulings in a Georgia case saying that, under the specific facts of the case, the contemporaneous execution of a warranty deed to a tract of land to a purported buyer and a contract giving the seller of the tract an option to purchase the land within a time certain was not a true sale, but rather, it created a mortgage in which the seller remained as the true owner of the property and the buyer in the arrangement was treated as a mortgage lender (the funds paid by the buyer were treated as a loan).

This case involved the application of Georgia state law and provides attorneys representing homeowners facing foreclosure, at least in Georgia (and possibly in Alabama, Florida, and elsewhere), some additional ammunition in battling foreclosure rescue operators in so-called "home rescue" or "home saver" arrangements. For the long version of this post, see Federal Appeals Court Upholds Equitable Mortgage Doctrine In Georgia Case.

For the case itself, see Christopher v. Cox (In re Cox), Case #04-1589, 11th Cir., July 27, 2007. equitable mortgage yak

Massachusetts Foreclosure Rescue Operator To Pay $10K Civil Penalty; $100K Restitution

(original post - 8-3-07)
In Massachusetts:
  • "Attorney General Martha Coakley has obtained a consent judgment in Middlesex Superior Court against Walter Ribeck, a Newburyport man who targeted financially distressed homeowners facing foreclosure. The judgment resolves an August 2006 lawsuit, which alleged that Ribeck posed as a "loan specialist" who could help destitute homeowners avoid foreclosure and keep their homes, but instead arranged transactions that would allow him to buy the home in order to re-sell it for a profit. Under the terms of the settlement, Ribeck is prohibited from engaging in foreclosure rescue transactions. The settlement further requires Ribeck to pay $100,000 in restitution to two homeowners by eliminating the profits from the transactions he arranged, and a $10,000 civil penalty."

For more, see Massachusetts AG Press Release - Attorney General Martha Coakley Obtains Consent Judgment Against Newburyport Man For Operating Foreclosure Rescue Schemes.

Monday, August 06, 2007

Representing Homeowners In Foreclosure Rescue Deals

(originally posted 8-3-07)

For those of you in the practice of law, as well as those who work with attorneys (ie. paralegals, law clerks, private investigators doing class action work, law students, and others) who are looking for a clear, cogent reference dealing with the legal issues involved in representing (or working with those who represent) victims of foreclosure rescue, sale-leaseback deals, you might want to check out the following two works that I found floating around the the Internet.

1) The first source of reference is simply identified as Chapter 11 - Foreclosure Rescue Scams that can be found on the website of CALegalAdvocates, A Project Of The Legal Aid Association Of California.

2) The second source of reference is also titled Foreclosure Rescue Scams, a 77-page work appearing on the website of the Office of the Washington State Attorney General. For the MS Word version, see Foreclosure Rescue Scams - doc.; or for the html version, see Foreclosure Rescue Scams - html.
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For the longer version of this post, see Representing Homeowners In Foreclosure Rescue Deals, on the companion blog, The Home Equity Theft Reporter Cases & Articles.

More On Arizona "Green Pools," Weeds, & Trashed Vacant Foreclosure Homes

The Arizona Republic reports:
  • "City code enforcers and county mosquito patrols across the Valley say they're seeing a spate of weeds and green pools in places they never used to: newer neighborhoods with higher-priced homes. Increasing numbers of these properties are being abandoned by cash-strapped owners, leaving messes and headaches for neighbors and municipal officials. Chandler real-estate agent Liz Morganroth said she dons a disposable face mask before she inspects new foreclosure listings but can't always escape the stench."

For more, see Homes left behind (Neighbors, communities stuck cleaning up after).

Illinois AG Brings Civil Suit Against Foreclosure Rescue Service

(revised 8-17-07)
From the Illinois Attorney General:
  • "Attorney General Lisa Madigan [last Thursday] filed a lawsuit against a mortgage foreclosure rescue company for violating Illinois ' recently-enacted Mortgage Rescue Fraud Act, as well as the Consumer Fraud and Deceptive Business Practices Act. Madigan's lawsuit, filed against American Housing Authority, Inc., a Nevada corporation, and its president, Brandon Roberts, alleges that the defendants defrauded homeowners by falsely promising to help them escape foreclosure, taking their money [$1,400] as a fee, and then failing to provide any real help. [...] In the complaint, Madigan's office asks the court to order the defendants to pay restitution to defrauded homeowners and to stop all deceptive business practices. The suit also seeks a civil penalty of $50,000 and additional penalties of $50,000 for each violation found to have been committed with the intent to defraud."

For more, see Illinois AG Press Release - Madigan Sues Mortgage Company For Deceiving Homeowners In Foreclosure (Attorney General Seeks to Shut Down Business and Obtain Restitution for Homeowners).

For a copy of the lawsuit (thanks to the Illinois AG's office), see State of Illinois vs. American Housing Authority, or if there's a problem with the link, drop me a line at HomeEquityTheft@yahoo.com (be sure and put "Illinois vs. American Housing Authority" in the "Subject" line) and I'll e-mail you a copy.

See also Illinois AG Sues Mortgage Company For Deceiving Homeowners In Foreclosure (All American Patriots).

Go here for other posts on American Housing Authority and Brandon Roberts. upfront fee

Indiana Feds Indict Closing Agent In Escrow Scam; Customer Loses Home

The Times (Munster, Indiana) reports that a federal grand jury indicted Therese Hundley, 52, of Lowell, Indiana on two counts of mail fraud, Hundley stands accused of mailing fraudulent checks worth more than $35,000. Reportedly, she operated Statewide Escrow Services in Crown Point, and, according to the story:
  • "is accused of taking money and checks for paying real estate tax and homeowner insurance bills and then not paying the taxes or the bills. Customers' insurance was cancelled, and Lake County sold a customer's home for nonpayment of taxes ..."

For more, see Lowell resident faces mail fraud charges.

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

Sunday, August 05, 2007

Ex-Real Estate Investment Guru Sentenced To 7+ Years In Tax Fraud

The Los Angeles Times reports the following out of Seattle, Washington:
  • "Former investment guru, author and speaker Wade Cook has been sentenced to more than seven years in prison and ordered to pay millions in back taxes on underreported income as part of a tax evasion case. Cook was sentenced Thursday in federal court for repeatedly defrauding the Internal Revenue Service."

Reportedly, Cook shut down his business operations in February 2003, a month after his publicly traded company, Wade Cook Financial Corp. of Tukwila, Washington, filed for Chapter 11 bankruptcy protection. His net worth had been estimated at over $200 million at one point. For more, see Investment guru sentenced in fraud.

Clearwater Couple File 13 Chapter 13s To Keep Home

WTVT Channel 13 in Tampa, Florida reports on the Joyce and Bryan Maryon of Clearwater and their odyssey in the Federal Bankruptcy Court. According to the story:
  • "Court records show they’ve taken turns filing Chapter 13 and have skipped mortgage payments while living in a large two-story home in the upscale neighborhood of Coachman Ridge. FOX 13 first took a close look at the Maryons’ bankruptcy records back in 2004. Each time one of them filed Chapter 13, it automatically stopped the bank from foreclosing on their house. But records also show the couple never followed through on a plan to pay off their debts. In May of 2004, the Maryons owed $188,000 on their home [and] had together filed Chapter 13 a total of 10 times. According to the court trustee in May of 2004, they hadn't made a payment since 1999."

Reportedly, they have since refinanced their home and, according to the story, "they now owe more than $500,000 on that same house and together have filed chapter 13 a total of 13 times."

For more, watch investigative reporter Doug Smith's Fox 13 TV news report (click screen to activate video) or, to read the online report, see Thirteen times for Chapter 13.

Go here for other posts on serial bankruptcy filings. SerialBankruptcyFilings

Are Foreclosures Flaming The Fires Of Arson?

The following stories are on homes facing foreclosure that were recently paid visits by local fire departrments.

1) In Michigan, the Midland Daily News reports that Edenville Township firefighters got a call to battle a blaze at an unoccupied mobile home home recently. Neighbors said the home was being foreclosed on and that the people who had lived there recently moved out. The cause is being investigated. Source: Maplecrest Drive house fire Thursday under investigation.

2) In upstate New York, The Post Star reports that investigators are looking into whether a dispute over ownership of a home destroyed in a fire determined to be arson played a part in the fire. At the time of the fire, the home was unoccupied for eight months and in foreclosure, according to the attorney for the foreclosing party. For more, see Fire deemed arson.

3) The Colorado Springs Gazette reports that a homeowner was charged with first-degree arson for allegedly setting fire to his Woodland Park, Colorado home on the same day he was to be evicted in a foreclosure. For more, see Man accused of burning his home (Woodland Park resident was to be evicted that day).

4) In North Dakots, The Bismarck Tribune reports that, according to a Bismarck fire investigator, a fire to a home earlier this week "may have started under "suspicious circumstances" but later said it appeared more "unusual" than suspicious." Coincidentally, however, the home was in foreclosure and was sold at auction this past Wednesday (8-1-07); the lender (Wells Fargo) got stuck taking the property back. For more, see Fire only causes smoke damage to Bismarck home.

Miscellaneous Foreclosure Related Stories

Colorado Cops Bust Boulder Beer Bash
Possession of a vacant home in foreclosure was taken over by over 30 individuals (mostly teenagers) on a recent Saturday night and used to host a keg party, according to a story in The Denver Post. Boulder County Sheriff's deputies broke up the party and cited thirty one people for trespass, twenty seven of whom, under the age of 21, were also cited for underage possession and consumption of alcohol. For more, see Boulder keg party busted.

Homeowner Facing Foreclosure Leaves 20 Pounds Of Meat In Sink Before Abandoning Home
DSNews.com reports on the experience that an Ocala, Florida real estate agent recently had when, along with a locksmith, she succeeded in gaining entry into her new listing, a bank foreclosure. One of the more "noticeable" features in the home was the 20 pounds of meat that was left sitting in the sink for a couple of months, presumably by the former owner (a house warming gift for the new owner, no doubt). For more, see REO Horror Story: Not Quite A Meat Locker.
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Foreclosure Eyesores Throughout Modesto, California
The Modesto Bee ran a story asking why some mortgage lenders that take possession of a foreclosed home let the yards become complete eyesores. For more, see Whoever holds the mortgage should clean up the yard.

Vacant Foreclosures Throughout Dallas County, Texas
WFAA-TV Channel 8 in Dallas - Fort Worth reports on the effect on neighborhoods throughout Dallas County as a result of vacant houses due to foreclosure. For more, see Foreclosures leave behind empty homes. or go here to watch the Channel 8 TV report, 'Foreclosure Crisis'.

Vacant Foreclosures In Aurora, Colorado

The Aurora Sentinel reports: "In recent years, homeowners throughout the city have lost neighbors to foreclosures, but they also fear their neighborhoods have lost value, safety and beauty as more and more empty properties inhabit each block." For more, see Nobody's home (When foreclosures come, the burden of maintenance, cleaning often goes ignored).

Homeowner Facing Foreclosure Killed In Accident At His Going-Away Party

The Grand Rapids Press reports:
  • "Gary Bregg's family threw him a farewell party as he prepared to leave Michigan to drive trucks in an attempt to save his family's home from foreclosure. But Bregg, 50, was killed ... during the party at a family member's home on Cascade Road SE when he struck a drainage ditch while riding a motorcycle about 4 p.m. Rescue efforts by family friends and medical responders were unsuccessful. Bregg was pronounced dead at the scene."
For more, see Man dies at going-away party. teen parties vacant homes