California Feds Charge Stockton Man In Multi-Million Dollar Mortgage Fraud

KXTV-TV Channel 10 in Sacramento, California reports:

• "What began with an identity theft investigation eventually led the FBI to an alleged mortgage fraud scheme involving subprime lenders and dozens of homes in Stockton. The FBI says Iftikhar Ahmad, 36, made millions by buying and selling more than 100 houses over the past eleven years. According to a complaint and supporting affidavit filed in federal court, many of the transactions involved a quick turnaround with a dramatic price increase."

Reportedly, along with straw buyers Robert Ortiz Alfaro and Manpreet Singh, Ahmad faces charges of mail fraud. Ahmad also faces money laundering charges. It is believed that Ahmad pocketed around $9 million in one 3-year period, and that some of which was sent back to his native country, Pakistan.

Court documents say the FBI suspects a number of real estate professionals of possible complicity in the scheme and have questioned or investigated a mortgage broker, loan officer, escrow officer, notary, and two appraisers, according to the story.

For more, watch

• the Channel 10 report - Part 1
• the Channel 10 report - Part 2

To read the online stories, see:

• Mortgage Fraud Bust Linked to Stockton Homes
• ID Theft Victim Helps Crack Mortgage Fraud

Las Vegas New Home Buyers Demand Return Of Deposits; Construction At Standstill

In Nevada, KVBC-TV Channel 3 reports that at least 12 people are out $3 million in deposits on the purchase of condominiums in a yet to be completed condominium project. Construction of the Spanish View Towers stopped months ago. It was supposed to be done by now. The question now is where the deposit money went. The 12 purchasers are currently represented in their dispute with the builder by local attorney Terry Coffing, who claims that his clients' deposits have have already been spent and that a future trial will determine how the funds were spent. For more, see Spanish View Towers: Will people get their money back?

Go here for other posts on new construction condo buyers backing out of contracts.

Go here for other stories of builders / contractors stiffing customers. contractors stiff subs customers alpha condo buyers back out

South Florida Condo Investor Looks To Back Out Of Purchase Contracts; Files Federal Suit

The South Florida Daily Business Review has a story that probably reflects the attitude of many luxury new condo buyers who signed contracts with builders a couple of years ago and who now, given the current market conditions in Florida, want to back out of their deals and get their deposits refunded. The story features Virginia investor John Cherin, who according to the story:

• "[b]et on South Florida’s condo market in headier days [and] is trying everything he can to get out of contracts on four Singer Island units and recover about $1.6 million in deposits. John Cherin has filed three federal lawsuits against [the developer]. [... The developer] wants to close on the sale of the units and has given no indication it will settle."

For more, see Investor sues to bail out of four WCI condos. For a copy of one of the lawsuits, see Cherin Federal Lawsuit (available online courtesy of the South Florida Business Review).

Go here for other stories on real estate speculators looking to back out of purchase contracts. zebra

Foreclosure Effect On One Orlando Locale Representative Of Many Across Country

A commentary appearing in the Orlando Sentinel reflects on a situation that exists in neighborhoods throughout the country as a result of the ongoing foreclosure fallout. The column observes:

• "Gone from our communities are scores of families that overreached pursuing the American dream. Left behind are thousands of homeowners who inherited the nightmare of declining property values and shabby vacant homes that are selling as fast as Slurpees in the Arctic in a market with a 20-month glut of homes. [...] Unfortunately, the collateral damage takes up residence in our cul-de-sacs. Code-enforcement units report spikes in complaints about overgrown yards, pools with foul green water and junky driveways. "You'd be surprised at the number of overgrown lots at [upscale Orlando communities]," says Mike Rhodes, code-enforcement manager for Orlando."

For more, see Homeownership dream lost amid weeds, pool scum.

"Plywood Board" Gains In Popularity As "Window Treatment" In One Rhode Island Neighborhood

In Rhode Island, The Providence Journal reports:

• "[In one neighborhood] in the last few months, the most popular new window dressing is a plywood board. With foreclosures mounting around the city and across the state as part of the subprime mortgage lending crisis, abandoned homes in some of the city’s low- to moderate-income neighborhoods are falling into disrepair and becoming eyesores, places for people to throw their trash and tempting targets for vandals."

For more, see Foreclosures taking toll on city neighborhoods.

Disbarred Pensacola Lawyer Gets 4 Years For $680,000+ Theft

The Florida Times-Union reports:

• "An attorney disbarred after admitting he stole more than $600,000 from clients' accounts was sentenced to four years in state prison Friday. Vincent J. Whibbs Jr., 62, pleaded no contest in July to charges of racketeering, grand theft and mortgage fraud involving the theft of $683,827. [...] The criminal investigation alleges that Whibbs not only embezzled trust-account money, but that he also bilked another client out of $150,000 to help repay the missing money, the Pensacola News Journal reported."

Ironically, this comes on the heels of the Federal Government renaming the post office in downtown Pensacola last Friday (August 10) to honor Whibbs' father, Vincent J. Whibbs, Sr., a longtime mayor and civic leader. Nearly 100 civic and business leaders and Whibbs' family and friends gathered for the dedication ceremony.

For the story on Whibbs the younger, see Disbarred Pensacola attorney gets 4 years on felony charges.

For the story on Whibbs the elder, see Post office renamed for Whibbs (Pensacola News-Journal).

California Homeowner Victimized In Refinancing Scam, Says Lawsuit

In Gilroy, California, the Gilroy Dispatch reports:

• "Wednesday, [a] Gilroy woman filed suit against her broker, E. Anthony Alfaro, and his then-employer, JD Financial Mortgage Inc., claiming Alfaro forged her signature to refinance her home, pocketed the fees, and bilked her of $26,000 deposited by her lender in her account after the refinancing, convincing her to reimburse him for the "accidentally" deposited funds. A closing statement provided by [the woman's] attorney, Judi Silverstein, shows Alfaro received at least $7,925 in fees for the June refinancing. [...] Alfaro could not be reached at any of the phone numbers or e-mail addresses he had previously given ..."

For more, see Homeowner Files Loan Fraud Suit.

NJ AG, Consumer Affairs File Suit Against "Foreclosure Surplus" Chaser

From the office of the New Jersey Attorney General:

• "The [NJ] State Attorney General's Office and the Division of Consumer Affairs have filed suit against a Gloucester County businessman who allegedly collected tens of thousands of dollars in surplus funds that homeowners otherwise would have received for a small fee after their homes were sold in foreclosure. The state's two-count complaint against Samuel E. Goodwin, III is the first action filed under the state's Consumer Fraud Act to address deceptive practices in the area of surplus funds recovery. Goodwin allegedly charged homeowners 15% to 65% of the total surplus funds to which they were legally entitled by misleading the homeowners into believing that the process to recover the funds was complicated and could not be filed by the homeowners on their own."

In New Jersey, defaulting homeowners whose homes sell at a foreclosure sale auction for more than the amount owed to the foreclosing mortgage lender (Editorial Note: currently uncommon in many areas given today's real estate market conditions; but was happening with tremendous frequency as recently as two years ago) can reportedly claim the excess or surplus funds (Editorial Note: subject to the claims of secondary lienholders) by filing a simple form available from the Superior Court Trust Fund Unit and after paying nominal fees totaling less than $100.

For more, including how a New Jersey resident can file a complaint with the state if they were subjected to a surplus funds scam, see NJ Attorney General Press Release - State Files Suit Against South Jersey Businessman Who Allegedly Engaged in Deceptive Practices Against Homeowners in Foreclosure.

Illinois AG Files Civil Suit Against Foreclosure Rescue Operator

From the office of the Illinois Attorney General:

• "As part of her ongoing efforts to target scam artists committing mortgage fraud, Attorney General Lisa Madigan has filed a lawsuit against a Michigan-based business operating a mortgage rescue scheme that strips the home equity from unsuspecting homeowners and usually causes the owners to lose their homes. Madigan filed the suit in Cook County Circuit Court against RYM Technology Holdings, LLC, an investment company which does business as RYM Tech, LLC, and its owner, Felix L. Daniel, Sr. According to the lawsuit, since at least 2003, RYM Tech and Mr. Daniel have solicited Illinois consumers to participate in their “Mortgage Reduction Program” by claiming that through this program, consumers can own their homes free of mortgage debt in five years."

Rym Tech and Mr. Daniel were among the featured foreclosure rescue operators in a July story in The New York Times, Predators Bilk Struggling Homeowners.

For more on the recent Illinois lawsuit, see Illinois AG Press Release, Madigan Continues Fight Against Mortgage Fraud (Sues Michigan Company Operating a Mortgage Rescue Scheme).

For a copy of the lawsuit (thanks to the Illinois AG's office), drop me a line at HomeEquityTheft@yahoo.com (Be sure to put "State of Illinois vs. Rym Tech" in the "Subject" line), and I'll e-mail it to you.

See also, Illinois AG Madigan Continues Fight Against Mortgage Fraud (All American Patriots).

Central Florida Builder In Foreclosure Facing Homebuyer Lawsuits For Failure To Deliver Homes

Court filings say that real estate developer Platinum Properties of Central Florida has taken in more than $22 million in deposits on at least 400 contracts on homes in Lake and Polk counties in Florida that have yet to be built or completed, according to a story in the Orlando Sentinel. At least 10 disgruntled homebuyers have filed lawsuits against the developer for its failure to deliver the homes that are past due. The Florida Department of Law Enforcement is investigating the dealings. No criminal charges have been brought at this time.

Platinum's chief executive officer, David N. Weiker Sr., says he's confident another round of financing will come through to save the properties from foreclosure, proceedings that already have begun. Reportedly, Weiker had been accused by a company officer in an unrelated 2006 lawsuit of using the deposit money:

• to buy a spa for his home, invest in other companies, buy property in Georgia, use $178,000 to pay off his home's mortgage and pay a former business associate $150,000 for some of his stock shares, among other things.

For more, see Home buyers wait years, but lots are still empty.

Go here to watch Video: Developers Could Face Jail Time After FDLE Investigation.

For other articles on this story, see:

• Controversial Developer Is Selling Homes For New Subdivision,
• No Homes Built In Subdivision, Developer Under Investigation.

Go here for other stories of builders / contractors stiffing customers. contractors stiff subs customers alpha

Another Vacant Foreclosure "Home For Squatters" Goes Up In Flames

In California, The Stockton Record reports:

• "A vacant home that had become a haven for squatters was destroyed in an early morning fire [Thursday], and investigators suspect it was caused intentionally. [...] Nobody was injured in the fire, [an investigator] said. The house was in foreclosure and had been closed by the San Joaquin County Environmental Health Department."

For more, see Fire destroys vacant home; arson suspected.

Go here for posts on vacant homes, foreclosures and squatters. squatter foreclosure zebra

Another Financially $trapped Landlord Cuts His Losses; Pockets Rent & Stiffs Bank

Tenants of landlord Rudy De La Cruz of Los Angeles have been rudely surprised recently, according to a story by KBAK-TV Channel 29 in Bakersfield, California. Tenants in two of De La Cruz' rental homes have recently discovered that, despite paying their rent every month, De La Cruz has been stiffing the lenders holding the mortgages on his properties. Moving from the homes is in the immediate horizon for them. For more, see Renters surprised by foreclosure notice.

Go here for stories of other landlords facing foreclosure cutting their losses by stopping the morgage payments while continuing to pocket the tenant rentals, go here and go here, and go here.

The California statute addressing rent skimming (aka equity skimming) and can be found at Section 890 through Section 894 of the California Civil Code. unwittingly epsilon

Missouri Federal Jury Convicts Ex K.C. Councilwoman Of Mortgage Fraud

The Kansas City Star reports:

• "A federal jury convicted former Kansas City Councilwoman Saundra McFadden-Weaver today on mortgage fraud charges, finding that she intentionally misrepresented information on loan applications for a Lee’s Summit house."

For more, see McFadden-Weaver guilty on all counts. For a prior post on this case, see Ex K.C. Councilwoman Testifies In Her Own Defense In Mortgage Fraud Trial.

Maryland AG Gets Partial, Temporary Shut Down Of "Metro Dream Homes" Operation

The Washington Post reports:

• "The Maryland attorney general took legal action yesterday against a Laurel company that offered homeowners mortgage-free living through a complex investment program. POS Dream Home, which also operated as Metropolitan Grapevine, along with its officers, was ordered to stop soliciting new business and to halt operation of its investment program pending a hearing. [...] [Maryland Attorney General Douglas] Gansler said the company failed to register with the state Securities Division, in violation of state law, and operated a program that potentially posed serious risks for investors."

It is, however, allowed to continue to run "legitimate operations", according to an AG spokesperson. For more, see Maryland Halts Firm's No-Pay Mortgage Offers.

Go here for Maryland Attorney General Press Release - Securities Division Orders Halt to Laurel-Based Mortgage Program (Charged with Securities Violations and Investment Fraud).

For story update, see Federal Court Denies "Dream Homes" Request To Lift Cease & Desist Order (10-2-07).

Go here for other posts on Metro Dream Homes.

NY Man Indicted In Alleged $10+ Million Distressed Property Investment Racket

The U.S. Attorney's Office for the Southern District of New York announced earlier this week:

• "Michael J. Garcia, the United States Attorney for the Southern District of New York, announced the indictment of Wilson James Baston, Jr., a/k/a "Wil James," a/k/a "Will James," by a Federal Grand Jury in Manhattan earlier today. The Indictment alleges that, over the past five years, Baston defrauded victims out of millions of dollars through Will James Equity Partners,Inc., which purported to be a real estate investment program which purchased distressed properties in the New York City area as investment vehicles for long and short-term investors."

For more, see the U.S. Attorney Press Release - President Of Real Estate Investment Firm Indicted On Multi-Million Dollar Fraud Charges.

NY Feds Indict 15 In Alleged Identity Theft, Mortgage Fraud Operation

15 people investigated for producing fake identification documents and using them to steal at least $10 million, were indicted by a federal grand jury in Manhattan Monday, state Attorney General Andrew Cuomo and Michael Garcia, the U.S. Attorney for the Southern District of New York, said in a statement.

Those indicted are: Tahir Ali Khan, Fayaz Ahmed, Arie Benshimon, Naveed Ali Bhindar, Syed Hassan, Muhammad Ishaq, Basharat Jarral, Nadeem Khan, Ghulam Mehmood, Shaheen Mukhtar, Qaiser Qureshi, Franklin Rodriguez, Oscar Sanchez, Syed Shah, and Pradipt Sharma.

For more, see U.S. Attorney Press Release.

For the grand jury indictment, see:

• Indictment - Part 1
• Indictment - Part 2

(If there is any problem accessing the indictment, drop me a line at HomeEquityTheft@yahoo.com - be sure to put U.S. vs. Khan, et al. in the "Subject" line - and I'll e-mail it to you.)

For story update (11-26-08), see Leader of Multi-Million Fraud Ring Pleads Guilty.

New Hampshire Tenant Ripped Off In Equity Skimming Scam

The Nashua Telegraph reports on a Nashua couple who unwittingly paid $1,650 in late July to rent an apartment in a four family building to an owner who was about to lose the building to foreclosure. It wasn't until August 7 that a city official was able to confirm that Miguel D’oleo was no longer the owner of the premises and that the new owner was the foreclosing mortgage lender. Reportedly, another tenant had also paid D'oleo for August rent. For more, see Tenants live with leaks, rats, roaches.

For posts on other stories of tenants unwittingly renting homes in foreclosure, go here and go here, and go here epsilon

Tenant Unwittingly Leases Home In Foreclosure

KVBC-TV Channel 3 in Las Vegas, Nevada reports on the story of a woman who just moved to town and spent $1,600 to sign a year long lease lease and move into a home only to find herself house hunting again after two weeks. Reason: the home is in foreclosure. "We gave him the deposit and the first month's rent and we were here a week and were getting foreclosure mail in the mailbox," said the woman. Another victim of "equity skimming." For more, see Renter affected by high foreclosure rate.

For other posts on the problem of tenants unknowingly renting homes in foreclosure, 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

South Carolina "Armchair Investing" Program Ends In Lawsuit Against Developer, Bank

In Anderson, South Carolina, nearly 20 people who had purchased homes in the now-defunct Pendleton Station mixed-use, residential development have filed suit against the real estate companies that sold the properties, the developers and companies involved in building Pendleton Station and Enterprise Bank of South Carolina, the bank that funded the project, according to a report in the Anderson Independent Mail.

The plaintiffs claim that they were directly solicited to purchase properties at Pendleton Station by developer Marshall Reddick, who reportedly developed and promoted a system called “armchair investing,” where buyers can avoid doing their own research by using his hand-picked real estate agents, builders and lenders, according to the lawsuit. For more, see Pendleton Station buyers sue over the failed project.

For a story update, see Close to Home: Pendleton Station (9-25-07).

Fire At Vacant Home In Foreclosure Ruled Arson

WFSB-TV Channel 3 in Connecticut reports:

• "Fire officials have determined that an early-morning Meriden fire was intentionally set. The fire started in the attic of a vacant home, according to officials. Dogs found some type of accelerant in the home as well as some physical evidence, according to investigators."

Source: Fire Marshal: Meriden Fire Intentionally Set (Officials Say Home Was In Foreclosure). zebra

Purchaser Of $2.6 Million Home At Foreclosure Sale Experiences Rude Surprise

(last revised 9-3-07)
North Jersey.com (The Bergen County Record) reports:

• "Animal welfare workers are still trying to capture 20 cats who are hiding in a feces-strewn Saddle River [New Jersey] home where 23 dead animals and 68 sickly cats and dogs were removed yesterday. [...] Tyco [Animal Control] staff clad in gloves and long boots are setting up traps to get the remaining 20 cats out of the house. Some are hiding behind a kitchen stove, while others are in the walls. The house ... was condemned by borough officials late yesterday, less than a week after it was sold for $2.6 million to the [former owners'] next-door neighbor at a foreclosure sale. Its size and two-acre lot helped prevent neighbors from noticing the problem ... ."

Anyone interested in adopting the surviving animals can call the Humane Society of Bergen County at 201-896-9300.

For more, see 20 cats hiding near Saddle River home.

For story updates, see:

• Couple loses bid to regain seized dogs (The Record - 9-27-07),
• Cat Count Up To 142 At NJ Mansion Bought At Foreclosure Sale For $2.6M (Bergen Record - 9-2-07)
• Bid Was Blind for a House Full of Needy Cats and Dogs (The New York Times - 8-29-07)
• Feces-soiled Mansion Sickens New Owner (Inside Edition - 8-27-07) - reports that the home is so contaminated, it may have to be torn down - (no longer available online),
• Neighbor never saw 'disgusting' interior (Bergen Record - 8-25-07),
• Watch WCBS-TV Channel 2 report,
• Cruelty charges in Saddle River (Animal cruelty charges have been filed against Cynthia and Philip Tamis, the couple who kept 23 dead dogs and cats in the multi-car garage of their seven-bedroom Saddle River, NJ home; (no longer available online)),
• Pet Cruelty Accusations Startle Upscale Enclave (The New York Times)
• It's a new day for Saddle River's neglected cats (8-21-07 - NorthJersey.com)

Go here for more on pets and foreclosures.

Ex K.C. Councilwoman Testifies In Her Own Defense In Mortgage Fraud Trial

(revised 8-15-07 - 7:06 pm; 8-16-07)
In Missouri, The Kansas City Star reports:

• "Former Kansas City Councilwoman Saundra McFadden-Weaver testified today that she never knowingly misrepresented information on loan documents she signed in 2005. McFadden-Weaver, on trial for mortgage fraud, said she never read the documents and “absolutely, completely” depended on the assurances of mortgage broker Ricky L. Hamilton that the deal was proper. [...] McFadden-Weaver was indicted on mortgage fraud charges in January and is accused of falsely stating in mortgage papers that she planned to live in a Lee’s Summit home."

For more, see McFadden-Weaver: ‘I never intended to defraud anybody’

For other recent articles & posts on this mortgage fraud case, see:

• McFadden-Weaver guilty on all counts (8-16-07)
• Jury gets case in McFadden-Weaver mortgage fraud trial (8-15-07)
• Mortgage broker testifies against former KC councilwoman (8-14-07)
• Mortgage fraud trial of ex-KC councilwoman opens (8-13-07)
• Second man pleads guilty in McFadden-Weaver fraud case (8-10-07)
• Man pleads guilty in McFadden-Weaver case (8-7-07)
• Ex KC Councilwoman Going Solo At Federal Fraud Trial (8-11-07)

Sacramento-Area Mortgage Fraud Suspect Thrown In Jail On Unrelated Charges

KCRA 3 in Sacramento, California reports:

• "One of the brokers at the center of our [mortgage fraud] investigation was convicted for molesting a 14-year-old girl last April. Now he's facing additional charges. Joseph Gallo was arrested again on July 16. He is charged with failure to report as a registered sex offender. Now he's back behind bars."

He had been on probation for the April incident and it appears that he may be serving out the remainder of his sentence as a result of this apparent probation violation, in addition to facing the new criminal charge of failure to report. By the way, the Federal mortgage fraud investigation into Gallo and his business associates spurred by KCRA 3 Josh Bernstein's investigative reports continues, with indictments reportedly expected next month.

(My guess is that now that Gallo finds himself in scalding hot water, it may be easier for the Feds to strike some type of a plea bargain deal with him where he agrees to turn on, and testify against, his business associates in the mortgage fraud investigation in exchange for a bit of leniency.)

For more, see Mortgage Fraud Suspect Faces Sex Offender Charges (Broker Failed To Report As Sex Offender After Molestation Conviction), or watch the KCRA 3 TV report.

Go here for prior posts on the KCRA 3 mortgage fraud investigative reports. Jim Martin

California Man Loses $1,500 In Upfront Fee Foreclosure Rescue Ripoff

The Visalia Times-Delta reports that an Exeter, California man facing foreclosure was ripped off of over $1,500, which represented one month's mortgage payment, by a company that approached him through a direct mail soilicitation. The company, First Gov, reportedly is a firm that the local Better Business Bureau believes is fraudulent. An attempt by the Times-Delta to reach First Gov the three phone numbers listed on its correspondence was made; two lines were disconnected. A message was left on an answering machine of the third line, which went unanswered. For more, see Exeter man conned out of a mortgage payment (Foreclosure fraud is rampant; Exeter man shares woes).

Go here for California statutes governing foreclosure rescue consultants and purchasers.

For story update, see press release: Attorney General Brown Sends Perpetrators of Loan Modification Fraud to Prison.

Homeowners Resorting To Litigation To Modify Loans In Default

The Memphis Daily News recently ran a story that discusses, in general terms, the approach that some consumer bankruptcy attorneys take in represnting homeowners facing foreclosure from losing their homes. Interviewed for the story was North Carolina consumer bankruptcy litigation attorney O. Max Gardner III.

In a nutshell, the approach starts by filing a bankruptcy on behalf of the homeowner in order to "stop the bleeding." The next step is to determine whether there may have been any failures to make the required consumer disclosures when the mortgage was originally made that violates the law (the Federal Truth In Lending Act is one such law). Another step is to review the mortgage servicing history to determine if the mortgage servicing company may have charged improper fees during the time it collected the loan payments from the homeowner (for example, imposing late charges, property inspections, appraisals, etc. - every single month).

If there is any indication that these violations may have taken place, the homeonwer's attorney can then file an adversary proceeding against the lender and mortgage servicer in order to pursue the matter further (An adversary proceeding is nothing more than a lawsuit filed in the context of a Federal bankruptcy proceeding).

The homeowner's negotiating leverage acquired by such litigation tends to make lenders and servicers "more cooperative" in negotiating a mortgage modification. One Mississippi attorney commented for the story that he has settled about a dozen of these cases in the last couple of months and still filing more. (Editorial Note: if the homeowner's claims have merit, the lender and servicer may find themselves being hit by the judge with an enormous legal bill for the homeowner's attorney fee - after all, the attorney is not doing this for nothing).

For more, see Attorneys Employ Creative Methods To Stem Foreclosures (if link expired, try here).

For another story on claiming violations of consumer mortgage disclosure laws in representing homeowners facing foreclosure, see Homeowners Invoking "Truth In Lending" Rights To Back Out Of Bad Loans.

Go here for more posts on homeowners who have refinanced into bad mortgage loans and are now using the Federal TILA to try and undo the bad loans.

Go here , go here , and go here for posts on questionable mortgage servicing practices. questionable mortgage servicing practices tactics zebra undo mortgage loans TILA alpha

Democratic Candidates Picking On Mortgage Brokers

CNNMoney reports:

• "In the wake of the subprime mess, Democratic presidential candidates are grabbing hold of the issue and offering their own solutions. And the problem, according to many of them, lies with the mortgage broker. [...] Last week, Sen. Hillary Clinton came out with a plan to address lending abuses. One of its main policy planks was to 'crack down on unscrupulous brokers.'"

In what sounds like a reasonable reponse, a mortgage broker trade group responded:

• "The entire mortgage system needs to be examined from stem to stern," the [National Association of Mortgage Brokers] said in a statement, "from the home shopping phase, bankers, brokers, and lenders, all the way to Wall Street and the rating agencies."

(Don't forget the mortgage servicing companies who, while they don't engage in predatory lending practices, may engage in predatory servicing practices and can potentially be just as effective in screwing the homeowner as anyone else in the "securitization pipeline.")

For more, see Dems take on mortgage meltdown (Clinton, Dodd, Obama and Edwards offer ways to avoid future mortgage meltdowns).

Sentencing In S. California Foreclosure Rescue Scam Postponed To December

In what possibly is one the largest foreclosure rescue criminal prosecutions ever in California (although see the Stanislaus County, CA prosecution, Plea deal for men accused of fraud?) and maybe even the country, sentencing for four of the five individuals charged in the scam has been postponed to December 17, 2007, according to a Stipulation and Order filed last Friday (August 10, 2007) in a Los Angeles Federal Court.

The scheme victimized more than 100 homeowners and allegedly caused losses of at least $12 million. It resulted in the indictments of Martha Rodriguez, of Downey, Edward Seung Ok, of Torrance, Cynthia Valenzuela, of Downey, Vladimir Stefanovic, of Lancaster, and Maria G. Juarez, of Reseda. The indictment alleged 19 counts of mail fraud and seven counts of aggravated identity theft.

Of the five, Juarez has not (as of yet) agreed to plead guilty and her trial is scheduled for November 13. Of the remaining four, Rodriguez and Valenzuela entered plea agreements with the government in February (see Seal Beach escrow operator pleads guilty in fraud case).

Since the last time I visited this case, Ok and Stefanovic have entered plea agreements with the government, according to the case docket reports. The pleas were entered in June, and are currently under seal (ie. unavailable for public consumption).

For earlier reports on this case, see:

• FBI Press Release - November 30, 2005
• FBI Press Release - July 20, 2006
• 5 People In Custody For Scamming Homeowners (Channel 2 - Los Angeles, July 20, 2006)

Go here for other posts on this story.

Income Tax On Short Sales & Foreclosure Sales; Exceptions to The Rule

(last revised 8-20-07)
A recent article appearing in The Washington Post explains how the amount of taxable income is calculated when financially strapped homeowners either lose a home to foreclosure, or sell a home for less than the existing outstanding balance on their home mortgage, known as a "short sale." Included in the article is a reference to two of the exceptions to the rule that will allow a homeowner to avoid having to pay some or possibly all of the income tax on the amount of mortgage debt that is cancelled or forgiven - the bankruptcy exception and the insolvency exception. For more, see Selling at a Loss? Here's What to Expect From the IRS.

See also:

• Lose Home, Pay More Tax (As foreclosures soar, a cruel tax rule rears its head) (Kiplinger.com),
• IRS Publication 4681: Canceled Debts, Foreclosures, Reposessions and Abandonments.

For other posts on this subject, see:

• Dodging The Income Tax On Foreclosure & Real Estate "Short Sales"
• Debt Forgiveness On "Short Sales" Not Always Subject To Income Tax
• Foreclosing Mortgage Lender Screw-Up Results In Whopping IRS Tax Bill For Ex-Homeowner

Ohio "Foreclosure Opportunist" Triples Its Upfront Fees For Its "Foreclosure Services"

The Morning Journal reports that, in what may appear to some as a blatant move by a rank opportunist to capitalize financially on the growing number of foreclosures, one long-time outfit in Erie County, Ohio has just more than tripled its upfront fees for those utilizing its services in connection with foreclosures. That outfit is none other than the Erie County Common Pleas Court, which just increased the fees it charges foreclosing mortgage lenders for filing foreclosure actions in its court from $200 to $650. Reportedly, the new fee is not out of line with what the courts in other Ohio counties charge (but the timing looks terrible). For more, see Erie County judges raise forclosure fee to $650.

Trump Mortgage Joins The Subprime Lending Graveyard

According to Financial Week:

• "Donald Trump has pulled the plug on Trump Mortgage less than two years after its launch. Plagued by bad timing and the disclosure that the firm’s chief executive had inflated his credentials, the mortgage brokerage never came close to reaching its financial goals. Another reason the company stumbled is that it expanded too quickly, instead of taking the time to build relationships with brokers and lenders."

Reportedly, "[t]he company was building a business in the subprime arena just as that market was spinning out of control." Trump will still have his name on a mortgage company as established lender, First Meridian Mortgage, has obtained licensing rights to the Trump name and will rename itself Trump Financial. For more, see Trump Mortgage, ‘You’re foreclosed’ (Weak market, bad timing, exec’s troubles doom firm).

$11 Million Georgia Bank Fraud Results In Bank Collapse, Loss Of 300 Jobs

(modified 8-17-07)
In Georgia, AccessNorthGa.com reports:

• "Ronald Walton, 58, of Buford, Georgia, was sentenced late Thursday in federal court in Newnan, Georgia, on charges relating to a multi-million dollar bank fraud scheme that resulted in the closure of a Commerce bank called 'nBank'. [...] Joseph E. White, 50, of Atlanta, Georgia; Southern Lenders Mortgage Corporation, formerly located in Newnan, Georgia; Michael Jones, 49, of Alpharetta, Georgia; and Infinity Mortgage, formerly located in Alpharetta, will be sentenced on August 17, 2007 on related charges."

Located in Commerce, Georgia, nBank ceased operations in June of 2007, after being in business for over 103 years. The closure of this financial institution resulted in the loss of approximately 300 jobs in addition to the economic loss. For more, see Buford man sentenced in $11 million fraud of 'nBank'.

For story updates, see:

• New sentences in 'nBank' fraud (8-17-07 - AccessNorthGa.com),
• Bank fraud scheme lands locals in jail (8-17-07 - Atlanta Business Chronicle)

NYS Cops Set Up "Aaron Dare" Mortgage Fraud Hotline

In Albany, New York, Capital 9 News reports that the New York State Police want to hear from you if you believe you've been a victim of mortgage fraud involving Aaron Dare. Prosecutors said the former head of the Urban League of Northeastern New York lied to get federal money to buy properties in Albany's Pastures neighborhood, scamming homeowners out of thousands of dollars. Dare was first arrested last November on felony fraud charges, pleaded guilty, and had been out on bond until he was arrested again recently for alleged real estate crimes that took place over the last nine months.

Anyone who thinks they may have been a victim of Aaron Dare's alleged scams is encouraged to call the State Police Financial Crimes Unit at [518] 786-2192. For more, see Mortgage fraud hotline set up as city receives funding for housing project.

For a recent article on the underlying real estate fraud, see Masters at persuasion (Deals end in real estate failures, bankruptcy) (reported by The Albany Times-Union) - Page 1 , Page 2 , Page 3 , Page 4 , Page 5 .

Upstate NY City To Auction Properties For Delinquent Taxes; Refuses To Accept Late Payments From Owners

The Buffalo News reports:

• "The city [of Lockport, New York] is holding a tax foreclosure auction Tuesday, and some of the owners — make that former owners — of the properties to be sold are griping that the city won’t allow them to pay off the back taxes and keep their real estate."

Reportedly, the city's position is that - according to New York law - once a judge signs the foreclosure orders, it is too late to redeem the property by paying the taxes and becomes the property of the city on an interim basis. Niagara County, on the other hand, follows a policy to accept back tax payments even on the day of the auction. For more, see Lockport owners are not allowed to pay back taxes, keep property.

Foreclosure Rescue Sample Scam Ads

For those of you who have ever wondered what the written solicitations look like that some foreclosure rescue operators send to homeowners facing foreclosure, see Sample Scam Ads (available online courtesy of the New York State Banking Department).

For more sample ads and letters, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (Appendix A - Pages 55 t0 62) - (file size - 4.61 MB).

Utah Homeowner Falls For Foreclosure Rescue

The Salt Lake Tribune reports:

• "Beth Ashby still calls the tidy beige split-entry on nearly 2 acres in South Jordan home. After all, she's the one who bought it six years ago. And she's the one responsible for paying the mortgage. But Ashby says her dream home has been taken away from her. A friend, who she says helped her get back on her feet after she fell behind on her payments, is now the rightful owner. Ashby said he convinced her to "temporarily" deed the property over to him so that he could help her refinance her adjustable-rate loan. Then, she says, he kicked her out."

For more, see Signed Away (Homeowners are warned to beware of attractive-sounding deals that involve turning over the title to a home - even temporarily. You could lose it all, and still be on the hook for the mortgage).

D.C.-Area "Cash Back" Real Estate Investment Program Offering Something For Nothing?

(revised 8-20-07)
Over the last two Sundays, The Washington Post ran stories about an outfit based in Maryland that is offering what could be described as a "cash back" real estate-based investment program that reportedly has hundreds of people enrolled in the program, with a heavy concentration in Prince George's County, Maryland. A June solicitation letter from this outfit said there are more than 700 homes in the program, according to The Post article. Last Sunday's describes the arrangement as follows:

• "Here's the pitch: There is an invitation-only group of homeowners who have signed up as partners with an organization called Metro Dream Homes, which has offices in the District. Members buy a house, sometimes for more than the asking price and without a down payment. A condition of the sale is that the seller agree to give back 10 to 15 percent of the sales price to the buyer, who in turn pays it into the coffers of Metro Dream Homes. (What does the seller get? A sale, which can be hard to come by these days.)

• Metro Dream Homes says it will invest that cash in various businesses, including automated teller machines, video advertising and other Web-based ventures that are under the umbrella of its parent group, Metropolitan Grapevine, headquartered in Laurel. Then, according to Metro Dream Homes, the profit from these businesses goes to fund the monthly mortgage payments for the homeowners, on an accelerated schedule that pays off the house in five to seven years. The company also says it will make sizable contributions to charity. After five to seven years of payment-free living, the homeowner is supposed to sell or refinance the house, with the homeowner and Metro Dream Homes sharing the equity."

Last Sunday's story also reports that: "Among the skeptical but tempted is a group of builders in the Fredericksburg area looking at the program as a way to get rid of unsold houses."

Yesterday's story took a closer look at the umbrella group for this program, Metropolitan Grapevine and its chief executive, Andrew H. Williams. Among other things, The Post reports that:

• "[The Maryland Attorney General] obtained a permanent injunction shutting down Bankcard Group Inc., a Prince George's County-based ATM and bank card business that Williams ran. The company and two of its executives, one of them Williams, were accused of violating Maryland securities laws by operating an unregistered and fraudulent automated teller machine investment program.

• According to the [2001] press release the attorney general's office put out six years ago, BGI raised as much as $3 million from at least 200 investors. The company purported to sell investors interests in ATMs, the fees generated by the machines, and shares in BGI itself, the attorney general's office said."

The Post attempted to get answers to some questions about the financing process by which the homes are purchased. According to the reporter:

• "No one involved with the organization has been able to explain to me how the home-sale transactions, made for more than the asking price and with 10 to 15 percent cash givebacks, get through the appraisal and loan-underwriting process. Some of that information is proprietary, Dream Homes executives told me."

For more, see:

• Something For Nothing Home Deals (8-5-07)
• Before Metro Dream, A 2001 Ponzi Accusation (8-12-07)
• Is his 'Dream' house turning into nightmare? (8-18-07 - The Free Lance -Star)

Go here for a Metropolitan Grapevine, LLC Press Release.

Go here for other posts on Metro Dream Homes.

New Procedural Requirements In New York State Foreclosure Actions

(originally posted 8-11-07)
As of August 1, 2007, two new requirements are effective in connection with New York State foreclosures involving residential property. On units with not more than three units, the summons must now contain a specific notice to the homeowner that, in essence, stresses the fact that a legal proceeding has been commenced that can result in the loss of his/her home. In addition, in the case of a defendant who is a natural person in a residential foreclosure who has failed to file an answer, a copy of the summons must be mailed to the individual at least twenty days before entry of a default judgment.

Presumably, homes that are sold in foreclosure actions where these new rules apply but are not complied with may be subject to being voided after the sale has taken place, thereby:

1. creating new opportunities for attack by attorneys representing New York homeowners whose homes have been foreclosed,
2. creating more paperwork for the New York attorneys (and their staff) representing foreclosing mortgage lenders, and
3. creating a new source of headaches for overworked New York title examiners who now have two more issues to consider when passing judgment on the condition of the title to a home in which a referee's deed (ie. the type of deed used in a NY foreclosure sale) appears in the chain of title (as if New York's Home Equity Theft Prevention Act hasn't caused enough headaches for them!).

For more, see New Requirements for Residential Mortgage Foreclosures (published on the Real Property Law Section Blog - New York State Bar Association).

For links to several online articles on some other legal requirements in connection with New York foreclosures, see Overview Of The New York State Home Equity Theft Prevention Act.

Thanks to Bill Collins at Crossroads Abstract - Rochester, NY for bringing the new law to my attention.

Florida Appeals Court "Bitch-Slaps" Miami Law Firm For Class Action Conduct

The Miami Herald reports:

• "Prominent attorney Hank Adorno -- already under Florida Bar investigation for his role in Miami's fire-fee scandal -- on Wednesday was blasted by the Third District Court of Appeal for what the judges called his ''reprehensible conduct'' in the now infamous case. In a unanimous opinion that upheld a lower-court decision invalidating Miami's $7 million fire-fee settlement with just seven people, the appeals court ripped into Adorno, who had represented the so-called ''lucky seven.'' The Adorno & Yoss firm stood to earn a $2 million share of the $7 million payout, while some 80,000 taxpayers got nothing."

As best as I can figure this case, a lawsuit seeking class action status against the City of Miami was settled prior to such status being granted; only the named plaintiffs shared in the proceeds of the financial settlement. However, the amount of the financial settlement appears to have been reached "as if" the case was a class action lawsuit, thereby resulting in approximately $84,000 in plaintiffs' monetary claims being settled for $7 million (no - this is not a "typo").

For more, see Judges: Miami fire-fee attorney acted reprehensibly (The Third District Court of Appeal has upheld a lower-court ruling invalidating Miami's $7 million fire-fee settlement. The appeals court also had choice words for attorney Hank Adorno.).

For a longer version of this post, including a link to the actual court case, see Florida Appeals Court "Bitch-Slaps" Miami Law Firm For Class Action Conduct, on the companion blog, The Home Equity Theft Reporter Cases & Articles.

New Hampshire Predatory Mortgage Servicing Fighter Meets The Clinton Campaign

The Concord Monitor reports on an encounter that took place between the predatory mortgage servicing industry's worst enemy, Michael Dillon, and the Senator Hillary Clinton presidential campaign at a campaign stop in Derry, New Hampshire earlier this week. Dillon is currently embroiled in a legal battle against the mortgage servicing company Fairbanks Capital Corporation (which underwent a name change to Select Portfolio Servicing after they reached a $40 million settlement with the Federal Trade Commission in a lawsuit alleging predatory servicing practices). He, too, alleges predatory mortgage servicing practices.

According to the story, Dillon felt that the Clinton campaign wanted to use him as a poster boy for evertything that's wrong with the mortgage industry, rather than specifically focus on the issue of predatory mortgage servicing. He charges that a campaign staffer subtly attempted, in his words:

• "to steer our conversation with Senator Clinton away from the actual important issue of mortgage servicing fraud . . . and towards what would rapidly deteriorate into a whining, sympathy sucking 'poor me' yetch in front of not only a United States senator but several hundred of our assumed peers."

Dillon expressed his feelings fully about the Clinton's campaign event a few days later on the blog Blue Hampshire (see Clinton Speaks, Homeowners Mourn).

For more of the Concord Monitor story, see Not exactly the poster-boy they were looking for (Mortgage critic didn't like Clinton event).

For a recent Concord Monitor article on Dillon's fight against Select Portfolio Services / Fairbanks Capital, 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).

For Dillon's website, check out GetDShirtz.com.

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

One Bakersfield Neighborhood Symbolizes Area Subprime Foreclosure Problem

Media outlets in Bakersfield, California have recently reported on one development in Oildale that has been particularly hit hard by the subprime mortgage fiasco. Two streets in the development contain 45 homes; 20 of them are reportedly in some stage of default, with six already foreclosed on. All of the homes in foreclosure were bought with subprime mortgages, according to the media reports. For more, see:

KGET-TV Channel 17

watch KGET-TV Channel 17 report, or read their online story, Housing market is all down.

KBAK-TV Channel 29

watch the KBAK-TV Channel 29 report, or read their online story, Housing crisis hits Bakersfield.

Go here for other posts on Bakersfield, California.

Possible Attorney Fraud Causes Two Lawyers To Skip Town

In two unrelated cases, media outlets have reported the following stories.

The Island Packet (South Carolina) reports:

• "A Beaufort attorney, who police say stole $2.4 million from a client, was found [last week] trying to cross the Canadian border back into the United States after being the focus of an 18-hour Coast Guard search, according to authorities. Michael Timothy Jordan, 45, whose real estate law office is in Professional Village Circle on Lady’s Island, was arrested today on a felony breach of trust charge filed with the Charleston County Sheriff’s Office, according to a release from U.S. Customs and Border Protection."

For more, see Missing attorney arrested at Canadian border (Police say Michael Timothy Jordan stole $2.4 million from a client).

See also, Missing Boater Found On Canadian Border, Charged With Fraud (WCIV-TV Channel 4, Charleston, SC).

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Law.com reports on the story of Connecticut attorney Jonathan Hoyt, who has reportedly skipped town and has been missing for about four weeks after writing a confession letter to his son, also an attorney working in the Hoyt law office, admitting to embezzling funds from the firm's clients. According to the story, the following is an excerpt from the confession letter:

• "I have embezzled funds from my clients. Like most lawyers who fall into this trap I always did it with the idea that I would repay the funds, but of course once I started down this slippery slope there was nothing but failure waiting for me at the end."

Reportedly, the letter is dated July 7, one day after attorney Jonathan Hoyt, 58, was last seen in The Hoyt Law Group's Clinton, Connecticut office, according to police. For more, see Missing Lawyer Admits Embezzlement in Confessional Letter.

For story update on Jonathan Hoyt, see Missing lawyer found dead in Iowa (Jonathan Hoyt, the once-respected lawyer who vanished in July after embezzling some $700,000 from his clients, has been found dead in a rented room in Cedar Rapids, Iowa, police report) (New Haven Register, 10-31-07).

Stories On Vacant & Abandoned Homes From Around The Country

The wire is loaded with stories on vacant and abandoned homes from all over the country, with the problems that accompany such homes. The following are links to a sample of these stories.

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Greater Sacramento, California: State issues pool alert to contain W. Nile virus (The problem is twofold - The volume of foreclosed or abandoned homes has risen as the real estate market stalls. And scores of mosquitoes in the county have tested positive for West Nile virus).

Visalia, California: Not all abandoned homes are vacant.

Lodi, California: Aerial [pesticide] spraying set for tonight in Lodi.

Port St. Lucie, Florida: Empty houses in PSL causing concerns.

Indianapolis, Indiana: Lots of empty new houses on market, expert says.

Minneapolis - St. Paul, Minnesota: Police busy with copper worth more than pretty penny (Thieves breaking into vacant homes and ripping off the copper tubing).

Knoxville, Tennessee: Foreclose and rot.

Saybrook Township, Ohio: Old buildings a worry in Saybrook.

Kennewick, Washington: Foreclosures Trouble Code Enforcement Officers (It Takes Time to Find Who's Responsible).

Metro Detroit, Michigan: The Eyesore Next Door - Neighbors plead: Clean up the blight (Cities look for new approaches).

South Beloit, Illinois: Not mowing could mean losing green (Those with unruly lawns can expect an upkeep tab taped to their doors).

Chula Vista, California: Chula Vista orders upkeep of seized homes.

Tracy, California: Foreclosures spur neighborhood blight.

Metro Chicago, Illinois: Big homes, large loans raise rate of foreclosure (Number set to triple in Highland Park).

Lockport, New York: Neighbor raises a stink over house.

Lubbock, Texas: Foreclosure Items Cause Eye Sore In West Lubbock.

Servicemembers' Rights Invoked To Postpone Foreclosure

In Pennsylvania, the Pittsburgh Tribune-Herald reports:

• "Allegheny County's acting sheriff said Tuesday he postponed the sheriff's sale of a Brookline man's home because the homeowner said he was in the military on active duty. Acting Sheriff Bill Mullen said Scott Marx called the sheriff's office to say he was in the military. His house [...] was scheduled to be sold Monday at the monthly sheriff's sale. The Servicemembers Civil Relief Act prohibits the foreclosure sale of real estate of a person on active duty, unless the creditor has obtained a court order approving the sale, foreclosure or seizure of the real estate."

For more, see Sheriff's sale delayed for serviceman's home.

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