Summary of Lawsuits Against Foreclosure Rescue Operator Metropolitan Money Store

(original post - 9-7-07)
Recently, I reported in a post that the lawsuit filed by the Attorney General for the District of Columbia against foreclosure rescue operator Metropolitan Money Store and friends was the second lawsuit filed against them. I have since learned that there are currently four lawsuits (or probably what I should say, is that there are four lawsuits that I know of) against them. In addition to the DC Attorney General's suit and the suit filed in a Maryland Federal Court as a class action, two additional cases are currently being litigated (again, at least two that I know of):

1)

Brown and 32 others vs. Fordham, Jackson, Metropolitan Money Store, and 46 others

In this case, a group of 33 Maryland homeowners who did business with Metropolitan Money Store filed suit against it and 48 other parties (including Joy Jackson, Kurt Fordham and a number of straw buyers, loan originators, appraisers, settlement / title insurance agents, title insurance underwriters, and mortgage lenders) on May 30, 2007 in a state court in Prince George's County, Maryland. The plaintiffs have since obtained an injuncton to stop the scheduled foreclosure sales for the 33 plaintiffs' homes; and an Amended Complaint (amending the initial filing) was filed on August 22.

Representing the 33 homeowners in this case is attorney Stan Brown of Largo, Maryland. For a copy of the amended lawsuit, see Brown, et al. vs. Fordham, Jackson, Metropolitan Money Store, et al.

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2)

Winston vs. Daniels, Fordham & Fordham, Metropolitan Money Store et al.

In this case, a District of Columbia homeowner who did business with Metropolitan Money Store filed an 18 count complaint against it and 8 other parties on August 22, 2007 in the District of Columbia Superior Court. Among the counts are alleged violations of:

• (1) DC consumer protection statutes, (2) DC statutes prohibiting the charging of interest above a certain interest rate (ie. usury, failure to obtain license), (3) Federal racketeering ("RICO") and racketeering conspiracy statutes, (4) Federal consumer lending statutes & regulations (ie. Truth In Lending Act, Home Ownership & Equity Protection Act, Regulation Z), and (5) Real Estate Settlement Procedures Act ("RESPA").

The lawsuit also makes claims of, or requests for:

• (1) equitable mortgage, (2) fraud, (3) conversion, (4) breach of fiduciary duty, (5) slander of title, (6) unjust enrichment, (7) breach of contract, (8) gross negligence, (9) respondeat superior, (10) declaratory judgment, and (11) quiet title.

Representing the DC homeowner in this case are co-counsels Stan Brown of Largo, Maryland, and Dawn Jackson, with Baylor & Jackson, PLLC, of Washington, D.C.

For a copy of the lawsuit, see Winston vs. Daniels, Fordham & Fordham, Metropolitan Money Store et al.

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Go here for blog posts on, and links to, the other two Metropolitan Money Store cases (that I know of).

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.). equitable mortgage yak

Virginia Declares 90 Day Halt To Metropolitan Grapevine's Investor Solicitations

(original post - 9-7-07)
The Washington Post reports:

• "The state of Virginia has joined Maryland in blocking Metro Dream Homes from offering homeowners mortgage-free living through a complex investment program, citing concerns about potential consumer "harm and economic loss." The Virginia State Corporation Commission late Wednesday issued a temporary injunction to stop the company from soliciting investors for 90 days, pending a Sept. 18 hearing. The order follows a similar action by the Maryland Attorney General's office on Aug. 15. In that case, the company is scheduled to file an answer to the allegations by Monday. [...] Metro Dream Home operates under a number of names, including POS Dream Homes, Metropolitan Grapevine and Metro Dream Homes of Fredericksburg; it lists business addresses in Maryland, Virginia and the District."

(An important point to highlight here is, just as in the Maryland action, the Virginia action is merely a temporary halt in the company's investor solicitation activities pending a court hearing. As of yet, there has been no formal findings of wrongdoing in either the Virginia or Maryland matter.)

For more, see Va. Joins Md. in Halting Mortgage Firm's Program.

Company officer Andrew Williams prepared a videotaped response back in August defending the firm after The Washington Post first published stories on this matter. To view Mr. Williams' response, see (no longer available online):

• High Bandwidth - go here.
• Low Bandwidth - go here.
• Dial-Up - go here.
• Radio - go here.

For recent articles on Metro Dream Homes, see:

• State halts mortgage program (Laurel company ordered to stop soliciting business),
• Is this dream deal for real? (Fredericksburg Dream Homes promises a dream that may be a nightmare),
• Is his 'Dream' house turning into nightmare? (Spotsylvania County home owner is embarrassed to discover Metro Dream Homes wasn't what it seemed),
• Dream Homes offers refunds (Metropolitan Grapevine fires back at the Maryland attorney general's order to cease operating),
• Go here for other posts on Metro Dream Homes.

Long Island DA Convicts Foreclosure Rescue Operator In Equity Stripping Scheme

The North Country Gazette reports:

• "A Queens man who attempted to steal the homes of two victims by engaging in an elaborate real estate foreclosure rescue scam, has been convicted following trial.
  Alton Lawson, also known as Lamont Lawson, 45, ... has been found guilty of second and third degree grand larceny and first degree scheme to defraud. He will be sentenced on Oct. 23."

• "According to prosecutors, Lawson and two co-defendants, Chester W. Matthews 56 of ... Richmond Hill and Reginald Johnson, 32, of ... Brookhaven, worked in concert to defraud a 45 year old woman from Roosevelt and a 80-year-old female Hempstead resident, who were both homeowners that were having financial difficulties. Each victim received unsolicited visits from Lawson who told them he could help them save their houses by refinancing. The Nassau County district attorney’s office said that 'through deceit and misrepresentation, Lawson tricked the victims into selling their houses to Matthews for $295,000 and $320,000.' "

Matthews served as a "straw buyer" for Lawson in the two transactions and was paid a total of $37,500 for his part as a dummy buyer; Johnson acted as the mortgage broker on one deal, was paid $10,715 for his services, and reportedly provided a fraudulent mortgage application that was submitted to a mortgage lender.

In one deal, the financially strapped homeowner received nothing for her equity, while Lawson pocketed mortgage proceeds totaling $46,383.54. In the other deal, the homeowner received only $150,555.10 of the mortgage proceeds for her equity, while Lawson pocketed the balance of $110,500.

Ultimately, Lawson, in the name of straw buyer Matthews, had begun eviction proceedings to evict each homeowner.

Sentencing for Lawson, the only one of the three to go to trial, is scheduled for Oct. 23. As of late Friday afternoon, the status of the charges against Matthews and Johnson could not be determined. For more, see Queens Man Convicted In Foreclosure Scam.

For the original release announcing the arrest of the three participants, see Nassau County DA Press Release (11-1-05).

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

Straw Buyer Suing South Florida Foreclosure Rescue Operator

Lawsuits against foreclosure rescue operators typically take the form of civil lawsuits pitting the financially strapped homeowner who signed away a home with the operator, or criminal charges where the government alleges the commission of a crime by the operator (see Foreclosure Rescue - For Criminal Prosecutors Only).

A recent article in the South Florida Sun Sentinel reports on the story of an investor, who apparently participated as a straw buyer in a foreclosure rescue "opportunity," who is suing the operator who put the rescue deal together. Straw buyer Matthew W. Anderson has sued well-known South Florida foreclosure rescue operator Jack Moussa, along with companies he controls, Equity Investment Capital Management, and Florida Housing Council, on Aug. 23 in a state court in Broward County, Florida.

Also named in the suit is Star Enterprises and its owner Rose Moussa (Jack Moussa's ex-wife), Jerome Weinstein, and the financially strapped homeowners who had sought help from Moussa and Florida Housing Council in the first place. According to the story:

• "The latest suit alleges that Weinstein and the Moussas conspired to defraud Anderson as they solicited him to put more than $80,000 into real estate investments. Anderson, who's seeking unspecified damages in the civil lawsuit, claimed the investments did not yield any profits."

Moussa and Florida Housing Council have been sued by South Florida homeowners in recent years, alleging fraud and deceptive practices. They have been accused of creating the impression that Florida Housing Council is a federally funded agency that helps homeowners in financial distress.

For more, see Delray Beach investor sues Broward foreclosure rescue firm (Investor's lawsuit follows actions by homeowners).

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

For links to stories involving criminal prosecutions of foreclosure rescue operators, see Foreclosure Rescue - Criminal Prosecutions.

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

Failing To Report Bogus Transaction Is Criminal, Says Prosecutor

According to a recent article in The Modesto Bee, Stanislaus County, California real estate fraud prosecutor Marlisa Ferreira emphasized recently in a talk to a group of real estate professionals that everyone involved in scam transaction can be held criminally liable. Whether its predatory lending practices that rip off naive buyers to bogus loan applications that dupe lenders, she urges real estate professionals who witness such fraud to blow the whistle on their colleagues.

• "Letting a suspicious transaction proceed is not just unethical, it's illegal, the deputy district attorney explained: 'If you know the deal is hinky and you do it anyway, you're aiding and abetting a crime.' "

The article lists nine red flags for real estate agents, mortgage brokers, and escrow agents to watch out for that could signal a bogus real estate transaction.

The bottom line here appears to be: if you see something going down in a real estate deal that isn't kosher and "do nothing", you may find yourself being admitted into one of our fine state correctional facilities (ie. prison) where you may find yourself wearing those bright orange prison overalls and picking up garbage on the side of the road. For more, see Realty agents tipped to scams, liability (Prosecutor cautions pros with the red flags of fraud).

Editorial Note

"Doing nothing" in a situation like this can apparently also qualify you for admission into a fine Federal corrections facility as well. See, for example, Mississippi Man Gets 2 Year Prison Term For "Doing Nothing" In Mortgage Fraud Scam, where a man pleaded guilty to failing to alert authorities to a scheme he knew others were involved in.

See also, California Foreclosure Rescue Operator Gets Five Years In Federal Prison, where two straw buyers got into hot water for failing to report to authorities criminal conduct by another in a foreclosure rescue scam that they all had some participation in.

The Federal crime of "doing nothing" in this context is formally known in the statute as Misprision of felony, can be found at Title 18, Section 4 of the U.S. Code, and apparently applies only to failure to report illegal conduct that constitutes a felony (as opposed to a misdemeanor).

Wisconsin Supreme Court Justice Facing Ethics Charges

In another reminder that the "robed arbiters" who operate out of our hallowed halls of justice, sitting on their perches far above everyone else, are just as equal as the rest of us (maybe even less so) and can be just as good at doing stupid things as anyone, the Wisconsin State Journal reports:

• "Wisconsin Supreme Court Justice Annette Ziegler committed misconduct by presiding over cases in which she had a conflict of interest, the Wisconsin Judicial Commission said in a complaint filed Thursday. But the commission, along with a contrite Ziegler, said the state's newest justice should receive no more than a public reprimand from her colleagues on the Supreme Court."

For the rest of the story, see Commission faults Ziegler, asks for only reprimand.

For story updates, see:

• Panel widens Ziegler conflict of interest probe (Wisconsin State Journal - 9-27-07),
• Supreme Court reprimands Ziegler (The Associated Press - 5-28-08).

Go here for other stories on questionable conduct by members of the judiciary. naughty judges

California Vacant Foreclosure Goes Up In Flames

The Modesto Bee reports:

• "A suspicious fire Friday afternoon destroyed a vacant two-story house east of Turlock that neighbors said was the site of a methamphetamine laboratory bust a year ago. [...] Bill Rossi, 60, lives nearby and owns the almond orchards that surround the destroyed house. He said the house had been vacant since authorities raided it and found a meth lab operation in an upstairs room. Rossi said the home continued to serve as a hangout for drug users and transients who would break in. [...] He said the home had gone through several owners before it was placed in foreclosure."

Witnesses reported seeing two men leaving the property on bicycles shortly after the fire started. Arson has not been ruled out. For more, see Fire destroys Turlock home, site of meth lab.

Go here for some methamphetamine information resources.

Go here and go here for other posts on home based meth labs. meth lab zeta zebra

California Cat House In Foreclosure Smelled Like Gigantic Kitty Litter, Say Neighbors

Channel 10 News in Sacramento, California reports on the story on a home in foreclosure in Orangevale in which over a dozen cats were rescued and the bodies of at least four deceased cats were also found. According to the neighbors living next door:

• "Within the last three months it's been horrific. [...] Anytime the wind blew it would just blow this horrible, horrible, gigantic kitty litter smell. It was just disgusting. It was really that bad of a smell. It would just make your eyes water."

The owner, who left the home three months ago after living there for sixteen years, had been the founder and head of an animal rescue and adoption organization called Cats About Town Society. For more, see Cat Rescuer May Face Animal Abuse Charges.

Go here for Channel 10 TV report.

Go here for more on pets and foreclosures.

California Cities Ponder Plans To Tackle Foreclosure Neglect

The Modesto Bee reports on the struggle facing city officials with the problem of dealing with neglected, vacant homes that are either in foreclosure, or that have already been foreclosed and are now owned by the mortgage lender.

• "The Northern San Joaquin Valley is ground zero in the foreclosure crisis: San Joaquin County ranks first in the nation, followed by Merced County in second place and Stanislaus County in fourth. The homes are left vacant by the bank. Their lawns go yellow. Their swimming pools turn dark. And sometimes, vagrants move in. The homes sometimes become not only a blight and drain on home values, but also a danger."

For more, see Forgotten homes: Cities ponder what to do with properties in foreclosure (Leaders considering ordinances to tackle neglect after foreclosure).

More On Alleged $50M Minnesota Straw Buyer Mortgage Fraud; Claims At Least Two More Equity Skimming Victims

The Minneapolis Star Tribune reports:

• "Carrie and Corey Karau thought they were buying their dream house 20 months ago when they and their five children moved to a bucolic neighborhood in New Market, Minn. But $30,000 in payments later, the couple discovered the house they thought they owned under a "contract for deed" from home builder Parish Marketing and Development Corp. of Eagan had been sold to someone else and was in foreclosure. The house they planned to live in for the rest of their lives was about to be repossessed. "How do you explain something like this to your kids?" asked Carrie Karau. "That's the hardest part." The Karaus are among dozens of people in the Twin Cities' southern suburbs caught in what state regulators believe is the largest case of mortgage fraud in Minnesota history."

• "The government said the alleged mortgage fraud involves nearly 200 properties, $100 million in mortgage proceeds and as much as $50 million in losses. Some straw buyers bought more than 50 properties, according to court records."

Reportedly, sources close to the investigation say that, in addition to Parish Marketing, more than a dozen real estate professionals who allegedly inflated property values and falsified documents are part of the investigation.

For more, see Mortgage fraud infiltrates suburbs (Hundreds of fraudulent transactions -- and shattered lives -- have been exposed) (Story also available here on MSNBC.com).

Go here for other posts on this ongoing investigation.

Go here for other posts on "rent to own" scams. rent to own lease purchase option scams zebra unwittingly beta

Novice Real Estate "Tycoon" Duped Into Being Straw Buyer In Flipping Operation; Now Has Ten Homes In Foreclosure

The St. Petersburg Times reports:

• "Jill Jackson, a single mom and apartment renter with an annual take-home pay of about $24,000, managed to go on an incredible real estate buying binge last year. In the span of 10 weeks, she bought 10 properties. She did not put a single penny down, borrowing the price for all 10 by signing for mortgage loans totaling $1.84-million. The investment plan seemed too good to be true. And it was."

The "investment plan" that enabled her to amass her portfolio (now all in foreclosure) in such a short time was presented to her by Investors Outlet, a Tampa company run by William Ondra Joel II, 27, a former $8-an-hour worker at a Tampa mental health center who got into real estate after seven arrests on drug charges. For more, see Home buying spree snaps (A year after a woman bought 10 overpriced properties, she's not the only one hurting).

Elderly California Man Falls For Sweepstakes Scam; Borrowed Against Home To Make Payments, Now Facing Foreclosure

The Sacramento Bee reports on the story of a 74 year old man who got sucked into a sweepstakes scam that used a series of official-looking letters that convinced him he had won $450,000, but left him out $125,000, behind on his mortgage payments, and facing foreclosure. According to the story:

• "The [initial letter's] letterhead read "American Federal Direct Consumer Protection Agency" and bore an official-looking seal. [...] Over the months, [he] received dozens more faxed letters, some that purported to be from the U.S. Department of Homeland Security, the Internal Revenue Service, the Sacramento County grand jury and Sacramento Mayor Heather Fargo. The faxes had letterheads that appeared to be copied from government Web sites. They instructed [him] to pay various fees and taxes, generally in amounts of $2,000 or $3,000, before he could receive his lottery winnings. [...] By the time Williams realized last week that it was all a scam, the 74-year-old great-grandfather said he had sent about 40 wire transfers totaling $125,000 to Costa Rica and other locations. He borrowed the money using his Florin-area home as collateral and took cash advances on his credit cards."

For more, see Sweepstakes scam fleeces Florin-area man (The 74-year-old paid about $125,000 and took out a home loan).

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

Ohio AG Gets Indictment Of Man In Alleged Refinancing / Deed Theft Scam

From the Ohio Attorney General's office:

• "Attorney General Marc Dann and the Franklin County Prosecutor’s office have secured the indictment of Christian Lambright for defrauding an 81 year old Columbus resident. Lambright’s indictment by the Franklin County Grand Jury on felony counts of Theft, Securing Writings by Deception, and Money Laundering follows a three week investigation by the Ohio Organized Crime Investigations Commission mortgage fraud task force."

• "The victim in this case and her family had discussed refinancing her home with Lambright, who said he was a loan officer for a local mortgage broker. Instead of preparing refinancing paperwork, it is alleged that Lambright concocted a scheme to have the property transferred into the name of his own mother. It is also alleged that Lambright stole money from the closing proceeds."

• "Investigators say Lambright picked the victim up at her home in late June without her family’s knowledge. Authorities say he then took the woman, who had recently been released from the hospital, was on medication, and could not walk without a walker, to a local fast-food restaurant where he arranged for the paperwork to be signed."

For more , see Ohio AG Press Release - Attorney General Marc Dann’s Organized Crime Investigations Commission busts Columbus man for mortgage fraud (Man preyed on elderly victim soon after hospital visit).

For grand jury charges, see Indictment - State of Ohio vs. Lambright.

See also, Local man indicted for mortgage fraud (Business First of Columbus).

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

Go here, Go here, go here, go here, and go here for other posts related to deed or refinancing scams by forgery, swindle, etc. deed theft zorro yak elder financial abuse alpha

Florida Cops Arrest Real Estate Broker For Swindling House Title From Owners

TC Palm reports:

• "Larry Eugene Smith claimed he could help solve the problems of a couple who wanted to sell their Port St. Lucie [Florida] home. Instead, he allegedly swindled [the couple] out of their house ..., claiming he bought the property for $10."

• "St. Lucie County sheriff's deputies arrested Smith, 53, Tuesday at the home he moved into with his girlfriend after he persuaded the [couple] to sign a purchase agreement for their home and power of attorney and warranty deed over to him in order for him to sell the house. Smith was charged with first-degree grand theft and taken to the St. Lucie County Jail, where he remained Friday evening."

• "According to a sheriff's report, Smith convinced the couple to move out of the home, telling them "it was better to show the house when it was staged" and he would take photos of it and market it, ..."

After the owners moved out, Smith moved in.

For more, see Letters from All Florida Mortgage Centers may be a scam, St. Lucie deputies report.

Fighting Florida Grandmother Sues Shoddy Roofer; Collects $3K Refund

The Pensacola News Journal reports on the story of Leenora Nix, an 84 years old Florida woman who got ripped off by a local roofer for a crappy roofing job on her home. After first going to a lawyer, then complaining to state consumer protection agencies, and not getting any satisfaction, she sued the roofer herself, and obtained a money judgment against him. Last month, she was notified that the local Clerk of Court had received $3,053 in payment for her lawsuit. For more, see Hell hath no fury like a grandmother with a shoddy roof job.

$2.6 Million NJ "Cat House" Foreclosure Sale Voided; "Duped" Buyer To Get Back Deposit

(revised 9-14-07)
The Bergen Record reports:

• "The restaurateur who bought a Saddle River [New Jersey] home just days before 150 cats were found to be living there in filth will be allowed to back out of the sale, a Superior Court judge ruled Friday. Michael Acciardi, 47, agreed to pay $2.6 million for the 20-room house on Burning Hollow Road at a sheriff's sale on Aug. 10. Four days later, authorities acting on a tip from a DHL courier rescued the first of the cats -- and six dogs -- that were found roaming the interior of the house, which was strewn with pet food and animal feces. [...] Presiding Chancery Court Judge Peter E. Doyne ... cit[ed] a report from a Union City claims adjuster that estimated the total repair bill at $2.25 million. Doyne approved Acciardi's petition to be relieved from his obligation to buy the house. Acciardi said the bank wanted to keep his security money of $420,000 for the $2.6 million sale. Instead, he said, it has to give him his money back within five days."

The quote of the day, from Michael Acciardi, "I'm pretty well versed at buying and selling homes ... but this was a case of total surprise and shock. It's somewhat of a lesson. Hopefully people can learn from the mistake that I've made."

(The lesson I think Mr. Acciardi is referring to here is very simple - and is something I intimated at in my August 26 post: If you have the right money, and you have the right attorney, and you get the right judge, anything is possible in court. Congratulations to Michael Acciardi.)

No word on whether the mortgage lender will appeal the decision. For more, see Cat squalor voids sale of house.

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See also, Case of Pet-Ridden House Nudges Law on Setting Aside Foreclosure Sales.

Go here for other posts and links relating to the Saddle River Cat House.
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Editorial Note:

If there is anybody out there who has a digitized copy of the judge's ruling in this case, and wishes to share it with the world, I'll gladly make it available online. It is something that I'm sure that many of the readers of this blog might find interesting. I can be reached at HomeEquityTheft@yahoo.com.

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In conclusion, I will point out that this case, even if it's not considered binding precedent under New Jersey law for others seeking to void a real estate transaction, should be of considerable interest to attorneys representing financially strapped New Jersey homeowners who find themselves caught up in foreclosure rescue scams and go to court seeking to void a transaction based on equitable grounds, which was done here.

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After all, if someone with the apparent business and financial sophistication of Michael Acciardi, who by his own admission, "is pretty well versed at buying and selling homes," can get a real estate transaction like this one voided based on equitable grounds, a financially strapped homeowner with little or no business or financial sophistication and who is in the process of getting his/her home equity ripped off in a foreclosure rescue scam should, at least in theory, find it equally as easy to void the foreclosure rescue transaction.

Mortgage Lenders May Be Own Worst Enemy In "Short Sale" Negotiations

A recent article in Realty Times points out two problems that could be the cause of insufferable delays with mortgage lenders involved in short sale situations:

1. dealing with out-of-state short sale representatives and appraisers, and
2. the lack of smooth interaction between their employees in the "short sales department" and the "foreclosure department."

For two cases that illustrate how these problems can play out, see Lenders' Worst Enemy in the Short Sale Arena.

For another story addressing the common problem of delay in the short sale negotiating process, see Foreclosures become more than some bargain for (Buyers seeking quick deals on bank-owned homes are losing out to the industry backlog).

Minnesota Feds Score Second Guilty Plea In Alleged $50 Million Mortage Scam

The Minneapolis Star Tribune reports:

• "Kristopher Robbins, 27, became the second defendant this week to plead guilty and agree to cooperate with the government's investigation and prosecution, which may involve as many as 200 homes and $50 million in losses. Robbins, a closing agent and licensed notary public, admitted that he participated in scores of fraudulent real estate transactions on behalf of a home builder described in court records only as "Company A." His lawyer, Jerry Strauss, said in an interview that Company A is Parish Marketing and Development Corp. of Eagan."

For more, see Closing agent pleads guilty in home fraud (It was the second plea related to an alleged scheme by Parish Marketing that may involve 200 metro-area homes and $50 million) (if link expire, try here).

Go here for other posts on this ongoing investigation.

Florida Escrow Company Abruptly Closes Down; $ Millions May Be Missing

WPTV Channel 5 in West Palm Beach, Florida is reporting on the abrupt closing of Vero Beach escrow company, Coastal Escrow Services. Reportedly, a fax went out from the company to area real estate agents last week stating that it ceased doing business as an escrow company and not to send them any more deposits. The company is said to have managed millions of dollars at any particular time and their is speculation that there may be people who will be taking a severe financial beating if the worse comes to pass and the funds are not accounted for. Vero Beach Attorney Ira Hatch, who owns the company, could not be reached for comment. For more on this part of the story, see Real Estate Fraud.

In addition, TC Palm is reporting that:

• "Two lawsuits have been filed in Indian River County Circuit Court against Ira C. Hatch's defunct firm Coastal Escrow Services Inc. seeking in excess of $700,000. The lawsuits claim that the company has refused to return clients' deposits and bounced checks."

There may be hundreds of victims missing deposits placed with Hatch's escrow business; the missing deposits are being estimated to be in excess of $3 million. For more on this part of the story, see Defunct escrow business owner Hatch sued for deposits.

For copies of the lawsuits, see:

• Michael Thorpe Real Estate Inc. vs. Coastal Escrow Services, Inc. (class action status sought),
• Allen vs. Coastal Escrow Services, Inc., et al.

For related stories, go here for questions raised over attorney Ira Hatch's past; or go here for investigation into Coastal Title Services by the Florida Department of Financial Services and The Florida Bar, or here for a number of related issues.

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

Massachusetts Attorney / Escrow Agent Pockets Loan Proceeds Meant For Lienholders

The Worcester Telegram & Gazette News reports that a guilty plea to income tax evasion and two counts of wire fraud was entered in a Boston Federal Court by disbarred attorney Alan Mason, 61, who operated Alan Mason Legal Services Inc. in Worcester.

It is alleged by prosecutors that Mason defrauded at least 10 lenders and Stewart Title, a real estate title insurance company, of more than $6.2 million between June 2001 and June 2006 while acting as an escrow agent for real estate transactions. Despite the plea agreement, Mr. Mason disputes that he received more than $1 million from the fraud or that it involved 10 or more victims.

Allegedly, some of the loan proceeds from real estate transactions that were intended to pay previous lien holders of properties was pocketed by Mason, leaving Stewart Title, for which Mr. Mason was an agent, on the hook for the unpaid liens requiring payment to cure the defective titles to the properties. For more, see Lawyer admits to tax evasion (Fraud counts included in plea).

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

Florida Builder Accused Of Pocketing Loan Proceeds & Stiffing Subs; Homebuyers Pay Twice For Same Work

The Daytona Beach News-Journal reports:

• "Several Palm Coast residents say they hired Canterbury Estates Homes Inc. to create their dream homes, many of them on Lewiston Court in Palm Coast. But the company has left them scrambling to pay the people doing the work. At least a half dozen people who contracted homes from Canterbury said they filed complaints against the company's owners with the Flagler County Sheriff's Office. At least two contractors said they have filed complaints with the State Attorney's Office against Canterbury."

• "Stephen Rende, owner of Rende roofing, a longtime Palm Coast business, said this is the first time his company has ever had to file criminal complaints against a builder. Homebuyers like Anthony Rappa say Canterbury's owners, Herbert Heron and Noel Richardson, didn't pay the subcontractors who worked on their homes. Rappa and several others say Heron and Richardson took money from them either directly or from their bank-drafted construction loans, which should have been used to pay subcontractors."

One Palm Coast resident said he has spent 80 to 90 hours each week for the last few months finishing the construction of his new home that was left unfinished by the builder. For more, see Flagler builder investigated over liens, bad checks.

Go here for earlier posts on criminally implicated homebuilder Canterbury Estates Homes.

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

"Brand New" vs. Used - Beware Of Bad Builders

For those who view purchasing a newly constructed home as a superior choice over buying a resale (used home), you might want to check out these two stories (both in Florida, coincidentally) of homebuyers whose buying experiences have turned into disasters.

Palm Beach County, Florida

The South Florida Sun Sentinel reports of some owners of one- and two-year-old homes in one development are scared to stay in their townhouses when it rains because water seeps in behind fuse boxes. They point to water stains around leaky windows and report mold spreading inside new walls. One woman holds up a picture of a toilet that trickled water onto her front porch with every flush — spoiling the pleasure of walking through the front door of the first home she owned. Examples of other complaints are:

• plumbing problems, such as bathtubs leaking into downstairs ceilings; leaky windows and doors and the spread of mold,
• electrical issues such as outlets that don't work and lights that dim when the air conditioning is running,
• one homeowner complained that she would get a shock while washing dishes if one of the kitchen switches was turned on,
• another homeowner complained that a retaining wall behind her home is made of stacked bags of cement mix, instead of a poured concrete wall or one reinforced with other supports.

A group of the owners, frustrated by a builder who they say failed to fix problems at their 64-home neighborhood have launched a new kind of attack: They have teamed up to try to stop one of their developers from getting approval for 48 new homes more than a mile away. They have been showing up at county meetings to oppose the builder's plans for a new project.

For more, see Angry owners target builder after leaks, mold plague PBC townhouses.

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Lake County & Polk County, Florida

WFTV Channel 9 in Orlando, Florida reports that hundreds of would-be homeowners bought into three new neighborhoods being offered by one builder in Lake and Polk counties. After three years, not a single home has been built, and reportedly, the builder has started selling homes in a new project. The Florida Department of Law Enforcement is investigating builder Platinum Properties' owners David Weiker and Larry Maloney. For more, see:

• Home buyers wait years, but lots are still empty,
• No Homes Built In Subdivision, Developer Under Investigation,
• Video: Developers Could Face Jail Time After FDLE Investigation,
• Controversial Developer Is Selling Homes For New Subdivision.
• Central Florida Builder In Foreclosure Facing Homebuyer Lawsuits For Failure To Deliver Homes.

For a message board organized for those who have bought into the unbuilt development to air out their complaints, see PlatinumPropertiesOwners.com.

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

Minnesota Builder, Straw Buyers Possibly Involved In Equity Skimming Scam

Buried in the recent Minneapolis Star Tribune article describing communities that may have been subjected to a possible $50 million mortgage fraud conspiracy involving about 200 newly constructed houses are the following excerpts indicating the possible existence of equity skimming by the builder and the straw buyers (where property owners find tenants to unwittingly rent homes that are in, or about to go into, foreclosure - the landlord pockets the rent while failing to pay the mortgage payments; the tenants ultimately find themselves being evicted from the homes, even though all rent payments were made):

• "As the case unfolds, the Prague Estates development remains pocked with empty houses. Neighboring owners are irate about the effects of the foreclosures on home values, while renters, concerned that their homes may be put up for auction, are unsure whether to stay or move."

• "Matthew Phyle, 38, thought he found the home of his dreams when he and his family rented one of the Prague Estates houses in June. The house was nearly 3,000 square feet and carried monthly payments of just $1,200. But less than a month after Phyle signed a two-year lease, a Scott County sheriff showed up at his door with a foreclosure notice. Phyle said he called Michael Parish [of builder Parish Marketing & Development] for an explanation and was told, "Nothing in life is guaranteed." Phyle, who has four children, decided to move to south Minneapolis before the school year started. "This has completely turned my life upside down," he said."

see Alleged mortgage conspiracy led to $50 million in losses (A plan using "straw buyers" and falsified loan data resulted in a rash of foreclosures in southern suburbs) (if link expired, try here).

Go here for other posts on this ongoing investigation.

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

Georgia Mortgage Company Owner Gets 10 Years In Mortgage, Bankruptcy Fraud & Identity Theft Scam

The Atlanta Business Chronicle reports:

• "Donna Renae Woods Lawrence, 43, of Decatur, was sentenced Thursday ... to 10 years in prison followed by three years of supervised release and was ordered to pay $2.9 million in restitution for mortgage fraud and bankruptcy fraud. [...] Lawrence used her company, Assurety Mortgage, and a stolen social security number to obtain loan origination and underwriting authority from the U.S. Department of Housing and Urban Development (HUD) for FHA guaranteed loans. She then originated hundreds of both FHA guaranteed and conventional loans with false income and employment information, including some where she was the borrower but used a stolen social security number and pretended to be her own twin sister. [...] Lawrence filed seven separate bankruptcy petitions to stay foreclosure on a number of the fraudulently acquired properties, with four of the petitions filed under the social security numbers of others. When HUD first learned of this problem and suspended Lawrence, she formed a second mortgage brokerage firm, Accurate Mortgage Group, and originated an additional 98 fraudulent loans."

Also sentenced with Lawrence were (1) Kerwanna Lashon Bennett Woods, 33, of Atlanta, (one year and six months in prison, three years of supervised release, $503,150 in restitution on a charge of bankruptcy fraud); and (2) Gwendolyn Reshell Woods, 41, of Decatur, (three years of probation beginning with six months of house arrest, restitution of $238,079 on a charge of conspiracy to commit mortgage fraud.

For more, see Three metro women punished for fraud.

Builder Faces 30 Years In Conviction For Grand Theft, Contracting Without License

The News Herald (Panama City, Florida) reports:

• "Steven Palmer faces more than 30 years in prison when he's sentenced [September 11] for grand theft of more than $100,000 and contracting without a license. Jurors convicted Palmer [last month] after a two-day trial of taking $600,000 from a project he had contracted to do with Ashley Griffin to build a home in the Cook's Bayou area. Griffin paid Palmer $950,000 from December 2004 to Nov. 30, 2005, but the work done during that time amounted to about $350,000."

Palmer's situation is exacerbated by the fact that the contract period went through a hurricane season in which a state of emergency was declared. For more, see Contractor convicted, faces 30 years.

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

Minnesota Feds Estimate $50 Million In Losses In Alleged Mortgage Fraud Conspiracy

The Minneapolis Star Tribune reports:

• "Authorities revealed in federal court Wednesday that they are investigating allegations of a mortgage fraud conspiracy involving about 200 houses in several southern Twin Cities suburbs. The investigation is tied to a rash of foreclosures in New Prague and New Market, and possibly other suburbs, and some people who were renting the houses have been evicted. The government estimates losses of more than $50 million."

• "The foreclosures are rooted in the sale of homes by Eagan builder Parish Marketing and Development to a small group of investors, according to the company's attorney. Loan documents were allegedly falsified to make the buyers appear as if they qualified for the mortgages when they did not."

• "[Ramiz Yousef Saadeh, a] 30-year-old loan officer for U.S. Bank[,] pleaded guilty Wednesday in federal court in Minneapolis to one count of conspiring to commit mail fraud in connection with the alleged mortgage fraud. Saadeh said that at the direction of a homebuilder identified in court only as "Company A," he provided mortgage brokers with falsified financial data from 2004 through May of this year. The information was used so that "straw purchasers" could obtain loans under false pretenses to buy the homebuilder's properties."

Parish Marketing and Development and its principals, Michael and Ardith Parish, have not been criminally charged at this time. An official in the U.S. Attorney's office in Minnesota said "the investigation is ongoing and we are unable to comment further at this time."

For more, see:

• Alleged mortgage conspiracy led to $50 million in losses (A plan using "straw buyers" and falsified loan data resulted in a rash of foreclosures in southern suburbs) (if link expired, try here).
• For a summary of how the events happened in this story, according to those familiar with the transactions, see From bought to rented to foreclosed (if link expired, try here).

Go here for other posts on this ongoing investigation.

Indianapolis Landlord Charged In Alleged Equity Skimming Scheme; Deutsche Bank Chairman Listed As Potential Witness

The Indianapolis Star reports that Marion County prosecutors filed welfare fraud and theft charges Wednesday against Brent E. Perkins, 27, in an alleged scam involving his being accused of a failure to make mortgage payments on a house he rented to a tenant even as the U.S. government sent $4,045 in rent checks to him on behalf of the tenant under the Federal Section 8 subsidized rental housing program. Perkins may have been involved in a flipping operation where he reportedly purchased six Indianapolis properties that all ended up in foreclosure, according to the story.

The article points out a possible subplot to this story:

• "[T]he Perkins case stands out because Marion County prosecutors could subpoena as a witness Josef Ackermann, chairman of Deutsche Bank, the largest bank based in Germany. Deutsche Bank is not charged with a crime, but it acted as trustee for some of Perkins' lenders. Housing officials say the German bank could provide insight into the lending process. Ackermann's name appears on the prosecution's list of possible witnesses. "What we're seeing is properties are being flipped four and five times, being bought and sold over and over again, and still the banks keep making the loans," said Rufus "Bud" Myers, executive director of the Indianapolis Housing Agency, which manages the city's Section 8 program."

For more, see Landlord accused in fraud, theft case (Steakhouse employee charged with failing to pay mortgage on Section 8 property).

Feds Get Guilty Pleas In Two Unrelated Alleged Mortgage Fraud Rings

In Illinois, the Rockford Register Star reports:

• "A 45-year-old Rockford woman pleaded guilty Tuesday in federal court to being part of conspiracy to boost mortgage and real estate commissions by falsifying documents so unqualified buyers could receive mortgage loans from the Federal Housing Authority. Rhonda Torossian is the fourth person out of five charged in the scheme to plead guilty, according to Patrick Fitzgerald, U.S. attorney for the northern district of Illinois. The fifth, Cesar Arenas, 43, a Rockford Realtor, goes to trial in October."

For more, see Rockford woman pleads guilty to mortgage fraud.

-----------------

In Missouri, the St. Louis Business Journal reports:

• "Dack Daugherty pled guilty Tuesday to conspiracy and money laundering in connection with a south St. Louis-operated mortgage fraud ring, according to U.S. Attorney Catherine Hanaway's office. Daugherty admitted to defrauding lenders of more than $500,000, which he agreed to pay back, and laundering the proceeds of the plot through a local credit union. According to Daugherty's plea agreement, he and others, who were not named in the release, arranged for the fraudulent purchase of 52 properties."

For more, see Daughtery pleads guilty to money laundering. See also, St. Louis Post-Dispatch - Man admits fraud in home-buying scheme.

Go here for U.S. Attorney Press Release.

New Hampshire "Sleeping Judge" Accused Of Helping Hubby Hide Assets From Creditors

The New Hampshire Union Leader reports:

• "A Superior Court judge, accused of fraudulently hiding her husband's assets from creditors, has been placed on paid administrative leave by the state Supreme Court. Patricia Coffey, who presides in Rockingham County Superior Court, was placed on leave as of 4 p.m. [August 29], pending the outcome of formal charges filed against her by the Judicial Conduct Committee (JCC). [...] Coffey allegedly compromised the integrity of the judiciary by creating a trust so creditors could not get at the assets of her husband, [disbarred attorney] John Coffey."

Reportedly, one of Mr. Coffey's creditors is The Professional Conduct Committee, who is looking for him to cough up the cash to cover the legal fees related to his disbarment in 2005 for exploiting an elderly client suffering from dementia. He was accused of taking the woman's Rye cottage as payment for $50,000 in legal bills.

Reportedly, Judge Coffey has had her own problems. Last year, she was accused of nodding off while on the bench, charges that she was cleared of. However, while the conduct committee found there was no "credible evidence" she ever actually slept during any trial or hearing, a report of the case states that a number of "credible" people described to an investigator several instances where they saw Coffey "nodding off" - brief periods of time when her eyes closed, her head fell forward or to the side and she appeared "fighting to stay awake."

For more, see Put on leave, judge denies fraud charges.

For more examples of alleged less than impeccable conduct by members of the judiciary:

• Go here for a recent post listing the questionable conduct of several members of the judiciary in one Florida county,
• or here for indictment of Pennsylvania Appeals Court judge for allegedly fleecing insurance companies of $400,000+ ,
• or here for Ex-judge convicted for taking cash bribes and gifts from attorney.

Go here for story updates on this post.

Go here for other stories on questionable conduct by members of the judiciary. naughty judges

Countrywide Promoting Its Foreclosure Prevention Strategies

Countrywide Financial recently issued a press release that begins as follows:

• "Help is readily available for homeowners who are experiencing difficulty meeting their monthly home loan mortgage payment. Countrywide Financial Corporation (NYSE:CFC), through its Home Ownership Preservation Program, recommends several strategies that may enable borrowers to manage their mortgages, avoid foreclosure and preserve their most valuable asset, their home.

Go here for the rest of the press release - Countrywide’s Home Ownership Preservation Program Offers Foreclosure Prevention Strategies (Countrywide borrowers avoid foreclosure 70 percent of the time when they engage in loan workouts.).

For more on Countrywide, see:

• Countrywide to Cut About 900 More Jobs - will cut about 900 more jobs nationwide, following the elimination of about 500 positions last month,
• Countrywide to Cut Up to 12,000 Jobs - will cut as many as 12,000 jobs in a bid to slash costs and cope with soaring foreclosures and defaults, the company said Friday [9-7-07].

District Of Columbia vs. Metropolitan Money Store

(original post - 9-4-07)
As reported here last week, a second civil lawsuit has been filed against foreclosure rescue operator Metropolitan Money Store (Joy Jackson, Kurt Fordham, et al.), this time in the D.C. Superior Court by the Washington, D.C. Attorney General (the first lawsuit was filed in a Maryland Federal Court seeking class action status).

Go here for the D.C. Attorney General Press Release - AG Singer Sues Metropolitan Money Store, Others, Alleging They Stripped More Than $2 Million In Equity From DC Homeowners.

For a copy of the D.C. Attorney General lawsuit, see District of Columbia vs. Metropolitan Money Store, et al. (available online courtesy of Mayor Adrian Fenty, and DC Attorney General Linda Singer).

For a copy of the first lawsuit, see Proctor, et al. v. Metropolitan Money Store, et al. (available online courtesy of Legg Law Firm, LLC.).

Go here for other posts on Metropolitan Money Store.

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

Metropolitan Money Store Class Action Website

(original post - 9-4-07)
The attorneys for the plaintiffs suing foreclosure rescue operator Metropolitan Money Store (involving Joy Jackson, Kurt Fordham and others and which seeks class action status) in a Maryland Federal court have set up a website to allow homeowners who have been taken advantage of by Metropolitan Money Store and others to voice their concerns, share information and get information about the pending lawsuit that was filed as a class action. For more, check out the Metropolitan Money Store Class Action Website.

For a copy of the class action lawsuit filed in Maryland, see Proctor, et al. v. Metropolitan Money Store, et al. (available online courtesy of Legg Law Firm, LLC.).

Go here for other posts on Metropolitan Money Store.

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

AG Coakley Puts "For Profit" Foreclosure Rescue Operators Out Of Business In Massachusetts

(original post - 9-4-07)
From the office of the Massachusetts Attorney General:

• "Attorney General Martha Coakley has filed a regulation with the Secretary of State’s Office that permanently bans for-profit foreclosure rescue transactions in the Commonwealth. The Massachusetts Consumer Protection Act authorizes the Attorney General to promulgate regulations to identify unfair or deceptive conduct that violates the act. The new regulation prohibits predatory, for-profit foreclosure rescue transactions. Foreclosure rescue transactions between family members or arranged by a non-profit community or housing organization are not banned under this regulation. The new regulation also makes it an unfair or deceptive act to market foreclosure-related services without a precise description of how the promoter will assist persons in avoiding or delaying foreclosure. The regulations define a “Foreclosure Rescue Transaction” as a transaction designed to avoid foreclosure and where the homeowner transferring the property maintains an option to reacquire the home by maintaining a legal interest in the home."

For more, see Mass AG Press Release - Attorney General Martha Coakley Permanently Bans Foreclosure Rescue Transactions.

See also, Coakley bans foreclosure rescue scams (Swapping help for house title called exploitive) (The Boston Globe - 9-5-07).

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

Connecticut AG Files Suit In Predatory Lending, Mortgage Fraud Scam

TheDay.com reports:

• "Attorney General Richard Blumenthal and state Banking Commissioner Howard F. Pitkin today served a lawsuit against New London loan officer Jose Guzman and his associates, accusing him of leading “an extensive predatory lending scheme” that violated the Connecticut Unfair Trade Practices Act and state banking law. Also named in the suit are Royal Financial Services, LLC, in Trumbull, First Source Mortgage Solutions, Inc., in Branford, Elizabeth Athan Real Estate, LLC, in Shelton, J.G. Property Management & Investment, LLC, of New London and Attorney Maurizio Lancia, of Trumbull. Cutting Edge Contracting of Norwich, of which Brian Guimond is the sole proprietor, according to court documents, is also named in the suit."

For more, see New London Loan Officer Sued for Leading Predatory Lending Scheme, and State Suit Alleges Predatory Lending (Guzman, associates accused in scam that targeted Hispanics).

See also, Fighting To Keep Their Homes (Borrowers Victimized By Predatory Loans Look For Ways To Stay).

For AG Press Release, see Blumenthal Sues Brokers, Realtors And Others For Vast Predatory Lending Scheme.

For a copy of the lawsuit, see State of Connecticut vs. Royal Financial Services, LLC., et al.

Go here for other posts on the investigation of the named defendants.

Central Florida Man Charged In Alleged Home Improvement Scam

The Tampa Tribune reports:

• "Frank Edmund Donofrio, the Seminole man who has been accused by at least a dozen Pinellas County residents of failing to properly renovate their property and of setting them up with high interest loans to pay for the work, was arrested in Tampa last week. Donofrio, 41, was charged with grand theft and acting in the capacity of a contractor without a license. The charges were the result of his dealings with a Tampa homeowner."

In addition to the current legal matter, Donofrio reportedly also has hanging over his head (1) a pending 2005 criminal case for a charge of grand theft in connection with another contract, and (2) a civil case in which he was sued by almost a dozen homeowners for shoddy work and for setting them up with high interest loans (some have since agreed to undisclosed financial settlements, but four are proceeding with the suit). For more, see Controversial renovator charged with grand theft (Civil and criminal charges are not new for Frank Donofrio, who took over his parents' business).

For other articles on the alleged escapades of Eddie Donofrio, see:

• Renovator pleads no contest to theft (Frank Donofrio must pay $13,200 in restitution to a St. Petersburg homeowner. He still faces lawsuits related to other incidents).
• Remodeler faces new complaints (A couple accuse him of shoddy work at a steep price) (St. Petersburg Times, 1-28-2007),
• Home renovator wants to settle suit (Ed Donofrio sends checks to at least two couples. They say it's not nearly enough) (St. Petersburg Times, 2-13-2005),
• State investigators home in on renovator ("Eddie" Donofrio says he is trying to satisfy clients who complained of incomplete and incompetent work) (St. Petersburg Times, 4-18-2004),
• In a fix (Homeowners were promised affordable home improvements, but say they were delivered high payments, shoddy work and stress), (St. Petersburg Times, 3-21-2004).

Go here for other stories of contractors stiffing customers.

contractors stiff subs customers alpha

Abandoned Homes Raise Public Safety & Health Risks

An East Valley Tribune (Phoenix, Arizona) article appearing on MSNBC reports:

• "Cash-strapped homeowners facing foreclosure are abandoning their homes in higher numbers and leaving behind potential public safety and health risks. City code enforcers and county health officials are saying many of the vacated houses are showing up in newer high-end subdivisions historically immune to such trends. [...] Once homeowners pack up and leave, the vacated houses create problems that include the overall appearance of the neighborhood and more serious health hazards. Green stagnant pools can become breeding grounds for mosquitoes that can carry West Nile virus. Empty homes can become flop houses for squatters and vandals. Unkempt yards are eyesores for neighbors that can also bring property values down. [... One] Mesa police officer ... said he has seen abandoned homes used for parties by teenagers and for criminal activity such as drug dealing."

For more, see Abandoned homes let health risks move in.

Deceptive Use Of Federal Government Insignia Lands Lender In Hot Water

KPIX-TV Channel 5 in San Francisco reports:

• "The Monterey County District Attorney's office ordered the mortgage company Lending First Home Loans, Inc. to pay $15,000 in civil penalties for charges relating to fraudulent loan advertising, according to the district attorney's office. The company may be subject to a permanent injunction, as it reportedly sent unsolicited fliers featuring federal government insignia to Monterey County residents even though the company offered only private loans. [...] The civil suit that resulted from the investigation alleges that Lending Home Loans, Inc. illegally deceived consumers by withholding that the loan promotion was not government sponsored or endorsed."

For more, see Monterey: Mortgage Company Ordered To Pay $15,000 In Fraud Lawsuit.

Coping With The Income Tax Hit On "Short Sales" & Foreclosure Sales

A recent syndicated column in the Los Angeles Times gives a layperson's explanation of how the income tax law operates when a homeowner receives the benefit of a cancellation of debt when he or she sells a home on a short sale (when the sale price is less than what is owed to the mortgage lender), or when the home is sold in foreclosure and the sale proceeds are less than the homeowner's outstanding loan balance.

Also mentioned are several of the exceptions to the general rule that income from the mortgage lender's cancellation of debt is taxable to the homeowner, including the bankruptcy exception and the insolvency exception that have been discussed here in prior posts.

Also meriting attention in the column were the options that may be available to a taxpayer to pay off the tax if they have no cash to pay it (IRS Offer-In-Compromise - see IRS Form 656 & Instructions (44 pages - 3.3 MB); and Payment Plans, Installment Agreements - see IRS Form 9465).

For more on the syndicated column, see Look out for tax hit after home loss; Tax hit could follow home loss (President Bush proposes a temporary exemption. Here's a Q & A on how that might affect homeowners in distress).

Go here for prior posts on dodging the income tax on short sales and foreclosure sales.

For further information from the government on avoiding the income tax in these situations under current law, see:

• Section 108 of the Internal Revenue Code,
• IRS Publication 4681: Canceled Debts, Foreclosures, Reposessions and Abandonments,
• IRS Form 982 (this is the actual form used to claim the amount of the cancelled debt reported on Form 1099 that is to be excluded from your taxable income),
• IRS Form 1099-C (includes instructions to debtor). IRS Publication 4681

Hollywood, Florida Cops Flush Out Alleged Toilet Part Pilferers

The South Florida Sun Sentinel (among other media outlets) is reporting on three suspects who have been apprehended and charged with stealing about $2,000 worth of commercial toilet flush valves at a state park in Broward County, Florida. According to the story:

• "Detectives are investigating whether the suspects are responsible for a string of similar thefts throughout south Broward County. Valves from toilets and urinals have disappeared since May at parks and fast-food restaurants, rendering the restrooms useless."

Reportedly, the global shortage of copper, aluminum, nickel and other materials found in the stolen parts has driven up demand and prices for all metals worldwide (and is apparently driving the thefts of metal plumbing parts). Brass devices that prevent backflow on water lines is also growing in popularity as a theft target. For more, see Police flush out suspects who stole toilet parts from parks, restaurants (if link is expired, try here).

Go here for posts on copper & other metal thefts.

See also, WFOR-TV Channel 4 TV report - Thieves Caught Stripping Bathroom Toilet Fixtures.

Theft of metal parts (as well as other items of value) is not unheard of in the context of abandoned, vacant foreclosed homes. See this Minnesota story on thieves breaking into vacant homes and ripping off the copper tubing; or this Indiana story which, among other things, involved stripping homes of their siding, copper wiring, appliances, metal fixtures and anything else salvageable. With the inventory of vacant foreclosed homes littering the landscape on the upswing, I suspect that my coming across more of these metal and appliance stripping stories will also be on the upswing. copper metal theft zebra