Saturday, September 22, 2007

Phil Hill Gets 28 Years In Metro Atlanta Straw Buyer, Flipping Scam

The Atlanta Journal Constitution reports:
  • On Friday, a federal judge in Atlanta sentenced [Phillip E.] Hill to 28 years in prison and ordered him to pay more than $41 million in restitution for running a conspiracy that involved loan officers and real estate appraisers and racked up $112 million in fraudulent loans, of which Hill himself pocketed a cool $14 million, said prosecutors. The sentencing came six months after a jury found Hill and nine others guilty of the scam. They used "straw purchasers" to obtain loans on properties where corrupt appraisers had inflated their values, a fraudulent transaction known as a "flip." The "straw purchasers" were then paid in kickbacks out of proceeds from the excess loans. Prosecutors said the scheme involved the sale of more than 50 homes and 250 condominiums in eight Atlanta-area condo complexes.

For more, see Broker sentenced to 28 years for mortgage fraud in Atlanta.

Go here for other posts on the Phillip E. Hill property flipping operation.

posted by Home Equity Theft Reporter at 11:18 AM

Anatomy Of A "Cash Back" Home Flip That Ended In Foreclosure

The Bakersfield Californian provides a detailed analysis of a property flip that ultimately ended in foreclosure that involved associates of the now defunct Crisp & Cole real estate company in Bakersfield, California. Included in the story are links to the actual recorded property records used in the transactions. For more, see How one flip unfolded.

Go here for other posts and links to stories on the David Crisp / Carl Cole alleged flipping operation.

posted by Home Equity Theft Reporter at 10:47 AM

California Cops Raid Mortgage Company; Records Confiscated

In Grass Valley, California, TheUnion.com reports:
  • Law enforcement agents seized documents Friday from the office of a Grass Valley mortgage company after an eight-month investigation identified suspicious real-estate loans and investments. Officials from the California Department of Justice, the Grass Valley Police Department and the Nevada County District Attorney's office removed documents from Loan Sense, a Grass Valley office owned by Tom Hastert, a lawyer who also owns a real estate company.

[...]

  • Grass Valley police, the D.A.'s office, state officials, the FBI, the California Department of Real Estate and the California Bar Association have been investigating Hastert since January. [...] "I feel he has committed fraud, larceny and embezzlement. He has used his position as an attorney to gain trust with people and encourage them to invest their money with him," [one investor] alleged.
Most of the investors were elderly people trying to invest their retirement money, according to a Grass Valley police spokesperson. For more, see Raid on mortgage company in fraud probe.

For story updates, see:

posted by Home Equity Theft Reporter at 10:01 AM

Title Insurance Underwriter To Cover Some - But Not All - Customer Losses In Florida Treasure Coast Escrow Scandal

In Vero Beach, Florida, TC Palm reports:
  • Insurance underwriters for a title company owned by Vero Beach attorney Ira C. Hatch Jr. will compensate customers that lost money with the now-defunct company, a spokeswoman for the Florida Department of Financial Services said Thursday. Lawyers Title Insurance Corp. and Attorneys' Title Insurance Fund said they would pay claims by businesses that used Coastal Title Services [a title insurance agency], said spokeswoman Nina Banister. The agreement does not apply to customers of Coastal Escrow Services [an escrow company], Banister said.

[...]

  • Banister said escrow companies are usually part of a title agency, real estate agency or a mortgage broker, but that a licensed attorney can separately operate an escrow business. The Florida Department of Financial Services launched an investigation into the title company after Hatch shut down it and Coastal Escrow. "My understanding is it (Coastal Escrow) should have been attached to a title company, and part of the investigation is why did he have them separate?" Banister said.

For more, see Insurance group to reimburse clients of Coastal Title Services.

For recent related stories, see:

Go here for other stories on misappropriated or unaccounted for escrow funds. sneaky slick escrow agents alpha

posted by Home Equity Theft Reporter at 9:13 AM

Ohio Man Sentenced In Mortgage Scam That Left Some Unwitting Straw Buyers In Foreclosure Or Bankruptcy

The Cincinnati, Ohio office of the FBI reports:
  • Nicholas St. Nichols, age 54, of Dayton, was sentenced in United States District Court here to one year and one day in federal prison for his role in a mortgage fraud scheme to sell homes at inflated prices to a buyer who believed she was merely selling him her credit. Nichols was also fined $4,000 and ordered to pay restitution to victims.

[...]

  • St. Nichols and Todd Armstrong, a 43 year old Bellbrook resident sentenced in July to twelve months and one day imprisonment, were originally indicted for the scheme in July 2005. Eventually, each entered guilty pleas to one count of mail fraud. The victims in both cases included financial institutions that were conned into making loans in excess of the true market value of the homes, along with individual buyers who were scammed into believing they were merely selling their credit for investment purposes rather than actually buying homes or taking out mortgages in their names.

[...]

  • Buyers were usually given $1,000 and led to believe they were merely selling their credit when, instead, they were unknowingly purchasing homes and left holding the bag on under-secured loans. Most of the buyers ended up in foreclosure actions ... . Armstrong acted as the mortgage broker in 14 fraudulent sales, according to the plea entered in his case.
For more, see FBI Press Release - Second Man Sentenced In Dayton Area Mortgage Fraud Scheme (Selling Personal Credit to Investment Brokers Results in Fraudulent Home Loans).

posted by Home Equity Theft Reporter at 8:21 AM

NJ Feds Convict Two In Mortgage Scam

In Northern New Jersey, The Star-Ledger reports:
  • Two women tied to a multi-million dollar mortgage scam involving luxury properties in several wealthy suburbs were found guilty [Thursday] on charges of bank fraud and conspiracy. A jury deliberated about two hours before returning guilty verdicts against Jamila Davis, 30, of Teaneck, and Brenda Rickard, 54, of Montclair in U.S. District Court in Newark. The two were charged with inflating the value of at least eight homes in exclusive neighborhoods in Alpine, Cresskill and Saddle River -- obtaining mortgages and secondary financing that far exceeded the value of houses that sold for $2 million or more.

For more, see Guilty verdict in luxury home mortgage scheme. For earlier reports on this story, see:

posted by Home Equity Theft Reporter at 8:19 AM

Friday, September 21, 2007

Sacramento-Area Mortgage Fraud Suspects Still Working In Lending Business, Despite State Cease & Desist Order

The KCRA 3 (Sacramento, California) mortgage fraud investigative reports involving over 20 homes - over $9 million of real estate - in Elk Grove continues as KCRA updates us on the whereabouts of Jim Martin and Gabriel Viramontes, two of the suspected ringleaders in an alleged scam that has left eight investors facing foreclosure on all the homes:

  • Despite a cease-and-desist order issued by the state, it appears two of the targets of our investigation are now operating through a loophole in the law that's allowing them to continue processing loans. [...] Although the state issued a cease-and-desist order, [Jim] Martin is still operating as a loan officer in Northern California. KCRA 3 found Martin online solciting loans and working for Set To Go Inc. Martin admits he never told that company he's under federal investigation. Despite that cease-and-desist order issued by the state, Martin isn't breaking the law because he is operating through a loophole that allows him to work under another company's license.

  • Martin's former business partner, Gabriel Viramontes, is also operating under that loophole and is working at Folsom Lake Mortgage. Viramontes is also under a cease-and-desist order.

Reportedly, a California state senator is ready to introduce legislation to close the loophole that the KCRA 3 investigation has amply illuminated. For more, see:

Go here for other posts on the KCRA 3 mortgage fraud investigation.

posted by Home Equity Theft Reporter at 4:19 PM

Third Defendant Cops Plea In Alleged $100M Minnesota Mortgage Fraud Investigation

The Minneapolis Star-Tribune reports:
  • A stay-at-home mom from Ohio admitted in federal court Thursday that she let participants in an alleged mortgage fraud conspiracy use her name and credit so they could buy 46 properties in some southern Twin Cities suburbs. Melissa D. Smith, 43, admitted that between 2004 and January of this year, she misled lenders who called to check on her income, never put any of her own money down on the properties, and allowed people working with a home builder to sign her name on real estate and loan documents. On occasion, individuals working for the home builder gave Smith checks with instructions to pay down her credit card debts so she could continue to borrow money, according to her plea agreement.

  • Court documents identify the home builder orchestrating the scheme only as "Company A." The Star Tribune confirmed through property records and sources that it is Parish Marketing and Development Corp. of Eagan. Investigators suspect Parish Marketing used straw buyers, including some relatives, to buy multiple homes at inflated prices. The scheme unraveled as the housing market slowed, new buyers could not be found and houses ended up in foreclosure.

Reportedly, lenders were duped into lending around $100 million in mortgages, resulting in losses estimated at around $50 million. Smith reportedly admitted to being paid $2,000 for each transaction that she participated in.

For more, see Ohio woman says she lent her name to fraud (Melissa D. Smith, the third to plead guilty in the case, admitted helping to buy $20 million in metro properties) (if link expired, try here).

Go here for other posts on home builder Parish Marketing and the ongoing investigation.

posted by Home Equity Theft Reporter at 10:53 AM

Florida Cops Arrest Alleged Ringleader In Mortgage Scam That Duped "Rent To Own" Tenants, Straw Buyers, Lenders

WBBH-TV Channel 2 (Fort Myers, Florida) reports:
  • One of the alleged ringleaders of a major mortgage fraud scheme has been arrested and denied bond. Eric Heckler faces 16 counts of mortgage fraud, ... 17 counts of defrauding a financial institution and one count of racketeering. In March 2006, ten people were charged in the alleged scheme that took advantage of the hot Southwest Florida real estate market (see Ten charged in alleged mortgage scam).

The alleged scam involved paying straw buyers with good credit a $5,000 fee to purchase homes at inflated prices in transactions in which the alleged scammers pulled cash out of the deal. The operators then rented the homes on a "lease with option to buy" basis to tenants with bad credit with the understanding that after reestablishing their credit, the tenants would be able to buy the homes. Those charged in the operation allegedly pocketed the rent and stiffed the lenders out of their mortgage payments, allowing the homes to go into foreclosure, and leaving the tenants, the straw buyers, and the mortgage lenders all holding the bag.

The total haul over the two years the scheme operated was about $3.8 million. For more, see Fugitive charged in mortgage fraud operation arrested.

Go here for other posts on "rent to own" scams.

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here. rent to own lease purchase option scams zebra unwittingly equity skimming beta

posted by Home Equity Theft Reporter at 10:31 AM

Minnesota Prosecutors Charge Developer, Mortgage Broker, & "Straw Buyer" Recruiter In Alleged Flipping Scam

Three people have been charged by Hennepin County prosecutors in a property flipping, mortgage fraud scam, according to media reports out of Minnesota.

The Minneapolis Star-Tribune reports:


  • Three people associated with a suburban developer have been charged with racketeering and theft in a case alleging mortgage fraud based on property-flipping. The Hennepin County attorney's office filed eight charges each against the three defendants: Scott R. Rosenlund of Chaska, president of 10Spring, a home building and development company; Celeste Skaar of Orono, owner of New Day Capital, a mortgage brokerage; and Shinon Lindberg of Greenwood, who allegedly recruited straw buyers for the flipped properties.

KARE-TV Channel 11 reports:

  • Prosecutors say the take was more than $2.5 million, and the scheme went on and on until one straw buyer from New Prague called foul after he put in $250,000 and got nothing in return. [...] The three have each been charged with one count of Racketeering and seven counts of Felony Theft by Swindle over $35,000.

The Pioneer Press reports that those who were recruited as the "straw men" in the real estate purchases were left owing millions of dollars.

For more, see:

Go here for other posts on this story.

posted by Home Equity Theft Reporter at 9:25 AM

Thursday, September 20, 2007

Foreclosure Rescue Sale Leaseback Deals Are Usurious Equitable Mortgages, Says Massachusetts AG's Civil Lawsuit

A motion was filed earlier this week by the office of Attorney General Martha Coakley to amend a complaint it filed accusing a foreclosure rescue group of engaging in equity stripping transactions that victimized 26 Massachusetts homeowners facing foreclosure.

In the proposed amended complaint, a Brockton, Massachusetts based attorney / foreclosure rescue operator is being accused, among other things, of engaging in transactions that constituted usurious equitable mortgages.

The lawsuit, which was filed in a Boston Federal Bankruptcy Court, accuses attorney Alec G Sohmer of arranging at least 26 foreclosure rescue transactions involving homeowners facing foreclosure and their homes which, based on their sales prices in the transactions, were valued at close to $10 million. The deals, which also involved the transfer of the homes into trusts, were allegedly consummated with the participation of four additional individuals:
  • Jennifer Sohmer, the wife of defendant Alec Sohmer,
  • Andrew P. Palmer, an attorney who allegedly served as the closing attorney on behalf of each lender in each of the Sohmer transactions at issue in this case,
  • Shaun M. Ellis, an attorney who on several occasions, allegedly referred his clients to Sohmer for foreclosure rescue assistance andreceived a referral fee from Sohmer on at least two occasions, and
  • Edward de la Flor, who acted as mortgage broker for eleven Sohmer transactions, while an employee of Carteret Mortgage Corporation.

Companies named as defendants were:

  • Carteret Mortgage Corporation, a mortgage company involved in originating loans in eleven of the transactions in question, and
  • Timeless Funding, Inc., an allegedly uncapitalized corporation that Sohmer used to offer foreclosure rescue "services" to financially distressed homeowners. According to the lawsuit, Timeless Funding was a sham invented by Sohmer to mislead consumers into believing that Sohmer had arranged financing for them from a mortgage lender.

The alleged home equity ripoff in the 26 transactions, as stated in the complaint, "ranged from $11,946 to $107,093 and averaged $43,973 per transaction, which on each occasion represented the homeowners' home equity "accessed," and then sapped, by Sohmer."

In addition to claims of equitable mortgage and usury, the lawsuit alleges the following:

  • Unfair and Deceptive Acts and Practices in Violation of G. L. c. 93A, Sec. 2 ,
  • Violations of the Massachusetts Consumer Credit Cost Disclosure Act, and Federal Truth-In-Lending Laws,
  • Violations of Massachusetts and Federal Law Applicable to High Cost Mortgage Loans, and
  • Fraud.

The 49 page proposed amended complaint sets forth in detail how the alleged scheme is said to have worked and how each defendant allegedly participated. For more, see:

Go here for earlier posts & any available updates on this case.

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

posted by Home Equity Theft Reporter at 9:02 AM

More On Settlement Between Mass AG & Mortgage Lenders In Equity Stripping Deals

The Office of Massachusetts Attorney General Martha Coakley announced earlier this week that it reached a settlement with five mortgage lenders or servicing companies that provided financing in foreclosure rescue, equity stripping transactions involving Massachusetts attorney and foreclosure rescue operator Alec G. Sohmer. The settlement, along with a motion to approve the settlement, are currently pending in a Massachusetts Federal Bankruptcy Court.

For a copy of the motion, see Motion To Approve Settlement Agreement (15 pages).

To obtain a copy of the settlement agreement entered into by the five mortgage lenders with the Massachusetts AG's office, you can either:

Go here for the Massachusetts AG Press Release.

Go here for other posts on this case.

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.).

posted by Home Equity Theft Reporter at 9:01 AM

Florida Authorities Shut Down One Foreclosure Rescue Operator, Investigate Another

In two separate reports, Fox Channel 13 in Tampa, Florida reports that Florida authorities have shut down one upfront fee foreclosure rescue operator earlier this week and are investigating another.

According to one report:
  • State consumer services investigators Monday ordered a Clearwater-based company that promises to assist homeowners with foreclosures to close its doors. Agents said the outfit is unlicensed. Foreclosure Assistance Solutions is also at the center of several fraud investigations. According to court papers, clients claim the company takes a $1,200 to $2,000 fee but does nothing to help them settle their mortgage paperwork.

In another report:

  • Florida's Attorney General confirmed Tuesday it is investigating Mortgage Assistance Solutions. The company's owner, a California Attorney, said his company provides an affordable service. "It's not a fraud," said Michael Thomas Stoller [the company owner]. [An alleged ripoff victim] said Mortgage Assistance Solutions' sales pitch closely mirrors that of another Clearwater company, Foreclosure Assistance Solutions. State agents shut down Foreclosure Assistance Solutions on Monday, saying it was not licensed to do telemarketing.

Reportedly, both companies are located just two miles apart in Pinellas County, Florida, but they are not linked. For more, see:

Editorial Note

It sure looks like the Florida Attorney General's office got "caught with their pants down" on this story. Both of these companies have been doing business in Florida for quite some time, but it took lawsuits by the Attorneys General in Ohio, Illinois, and Texas against these foreclosure rescue operators in order to get Florida authorities to start doing something. It sounds like they used a technicality to shut down one company ("unlicensed telemarketing"), and have reportedly commenced an investigation on the other company.

The Florida AG had active investigations on both these companies at one time, but those investigations ended up being closed out without any mention in the AG's newsletters. Reportedly, they settled one case by making the company refund $80,000 to the homeowners. Compared to some other states, Florida authorities seem to be "a little late" when it comes to investigating and prosecuting (either by civil lawsuit or criminal prosecution) foreclosure rescue scams, especially considering that Florida ranks right near the top in the country in the number of new foreclosure filings. Hopefully, they will pay attention to what some of their colleagues are doing in other jurisdictions (ie. Ohio, Massachusetts, Illinois, Texas, Washington State, and Washington, D.C.) and then reevaluate the priority that they place on foreclsoure rescue scams.

posted by Home Equity Theft Reporter at 9:00 AM

California Cops Investigating Rash Of "Fractional Interest" Deed Transfers

In California, The San Jose Mercury News reports:
  • Fraud investigators are looking into what they say is "a recent rash of perplexing filings" of deeds for 1 percent interests in San Jose area homes. Investigators with the Santa Clara County District Attorney's Office searched the San Jose offices of Mariposa Mortgage, following up on a complaint from a home buyer who said her signature was forged on one such deed.

[...]

  • The case is one of several that are drawing the attention of investigators. A search warrant affidavit by an investigator for the district attorney, John Valenzuela, describes a recent discussion among fraud investigators of these kinds of filings involving the transfer of 1 percent interests in property. Many of the deeds involved properties in which a former agent for the San Jose real estate brokerage named Su Casa was involved, either as owner or agent.
For more, see County probes deed filings (One Percent Interests Recorded, Mariposa Mortgage Searched).

posted by Home Equity Theft Reporter at 7:27 AM

Wednesday, September 19, 2007

Massachusetts AG, Five Mortgage Lenders Reach Settlement In Alleged Foreclosure Rescue Scams

From The Massachusetts Attorney General's Office:
  • Attorney General Martha Coakley has filed a proposed settlement with the U.S. Bankruptcy Court in Boston with five mortgage lenders that funded loans which facilitated fraudulent foreclosure rescue transactions orchestrated by Brockton attorney Alec Sohmer. The Attorney General, together with the Chapter 7 trustee in Sohmer’s bankruptcy case, have requested bankruptcy court approval of the settlement, which impacts 26 residential properties that are part of Sohmer’s bankruptcy case. On Monday, the Attorney General filed a Motion to Amend the Complaint to add the closing attorney who conducted the transactions, another attorney who referred distressed homeowners to Sohmer in exchange for a fee, and a mortgage broker who arranged financing for many of the deals.

  • Under the terms of the proposed lender settlement, filed late last week, the lenders will pay restitution to the homeowners victimized by Sohmer’s fraudulent scheme by reducing the outstanding mortgage liens on the homeowner’s properties. As a result of these transactions, 26 homeowners transferred title of their homes to Sohmer. Under the terms of the agreement, the original homeowners can reclaim their property by paying a reduced mortgage obligation instead of the inflated mortgage loan arranged by Sohmer. In total, across 26 properties, the settlement would provide approximately $1 million in reduced mortgage obligations.

  • The lenders agreeing to the settlement to date are: First Horizon Home Loans; Option One Mortgage Corp.; Wells Fargo Bank, N.A.; America Brokers Conduit; and Ocwen Loan Servicing, LLC. Additional lenders may participate in advance of an October 15th hearing before the Bankruptcy Court.

For more, see the Massachusetts AG Press Release - Attorney General Martha Coakley Reaches Settlement With Five Mortgage Lenders Involved In Foreclosure Rescue Transactions; Expands Case To Include Four New Defendants.

See also, Coakley gets 5 to setttle, cites other loan brokers (Boston Herald).

For copies of the court documents referenced in the press release, see:

To obtain a copy of the settlement agreement entered into by the five mortgage lenders with the Massachusetts AG's office, you can either:

Go here for other posts on this case.

posted by Home Equity Theft Reporter at 9:33 AM

"Foreclosure Investment" Ponzi Scheme Promoter Gets 12 Years In Federal Pen

The Atlanta Business Chronicle reports:
  • U.S. District Judge Beverly B. Martin on Monday sentenced Atlantan Gene A. O'Neal, 36, to 12 years in jail for running a Ponzi scheme that defrauded investors out of more than $20 million. O'Neal's jail term will be followed by three years of supervised release. He will be liable for more than $20 million in restitution to the more than 1,000 victims of his fraud. O'Neal ran a scheme to defraud investors in Pinnacle Development Partners LLC, a purported real estate investment fund he founded and based in Atlanta.
For all the details, see Pinnacle Development Partners founder heading to jail.

posted by Home Equity Theft Reporter at 9:06 AM

Nebraska Farmers Lose Farms To Foreclosure; Ex-Bank President Under Indictment

A recent story in The Grand Island Independent (Grand Island, Nebraska) tells the stories of two Nebraska farmers, each of whom lost their family farm to foreclosure, allegedly due to unethical conduct committed by former Gibbon Exchange Bank President Scott Hobson in the course of his employment at the bank.

Hobson is currently under Federal indictment facing eight counts of fraud, four counts of making false entries in books, reports and statements of the Gibbon Exchange Bank, and one count of making a false statement to the Federal Deposit Insurance Corp. An excerpt from the story:
  • According to the indictment, Hobson entered into loan agreements and loaned money to inflate his own loan portfolio with the bank. When the loans weren't paid, he took money out of third parties' accounts, without their knowledge, and made payments on creditors' loans. Hobson is also charged with falsifying documents to cover up the transactions.

  • The indictment lists [both farmers] as victims, saying Hobson either made transactions on their accounts without their knowledge or executed false financial statements for loan collateral.

A pretrial conference in the case is scheduled for this Friday, where it is expected that either a trial date or a time for a plea agreement will be set. For more, see Families say banker's unethical practices cost them their land.

For a copy of the grand jury indictment, see Indictment - U.S. v. Hobson.

posted by Home Equity Theft Reporter at 8:11 AM

Bankrupt Lender Gives Maryland Tax Collector Rubber Checks For Mortgage Tax Escrow Payments; Homeowners Could Be Left On Hook

In Frederick County, Maryland, The Frederick News-Post reports:
  • Frederick County government is urging residents to check their tax statements after a national mortgage company sent bad checks containing the escrowed tax payments of 12 property owners. Problems started in mid-August when the county tried to cash three checks from American Home Mortgage Investment Corp. totaling $60,000 in escrowed tax payments, said Lori Decker, director of the county's treasury department.

[...]

  • Decker has heard reports of similar problems in Prince George's County and jurisdictions in Pennsylvania. The county sent letters to the 12 affected property owners notifying them their taxes still need to be paid -- even though they had been making payments to American Home to cover their tax bills. The bad checks would have paid taxes ranging from $2,000 to $9,000 per property owner, Decker said. And that's just one set of payments. It's possible property owners owe more than the checks covered.

For more, see Bankrupt mortgage company fails to pay taxes for 12 property owners.

For story update, AHM Deflects Blame on Bounced Checks (The Associated Press - 9-27-07).

posted by Home Equity Theft Reporter at 8:11 AM

Upstate NY County Refuses To Give Back Home Even After Homeowner Forks Over Back Taxes

WETM-TV Channel 18 in Elmira, New York reports:

  • A Schuyler County man has been ordered to leave his home after he didn't pay his property taxes. But even though he's since paid off his debts, county lawmakers say they are not obligated to give him back his home.

[...]

  • [He] assumed that as long as he paid his back taxes in full before the property went to auction, he could get the property back. [...] He would have been right, up until Monday night [Sept. 10]. That's when county lawmakers passed a new resolution which states that when the county seizes a property, lawmakers are not obligated to hand it back over to the former owner if that person pays their back taxes.

  • [He] paid off the almost $7,000 he owed in back taxes to the county on Friday [Sept. 7]. But it was three days later that the county passed their new resolution. According to some county officials, [he] was not "grandfathered in" because at the time the resolution was passed, the county still held the deed to the Montour House. [He] was never promised that he would get it back.
For more, see Village of Montour Falls Wants to Buy Montour House, County Evicts Former Owner.

Editorial Note

The upstate New York city of Lockport also made the news recently for a similar situation (see Lockport owners are not allowed to pay back taxes, keep property). One difference, however, was that in the Lockport story, city officials reportedly refused to accept the money for the back taxes from the property owner in exchange for a redemption of the property.

If I'm reading the Schuyler County story correctly, the county officials actually accepted the homeowner's money for the back taxes to the tune of $7,000, but still refuse to give him back his house.

posted by Home Equity Theft Reporter at 8:06 AM

Metropolitan Grapevine Update

For anyone wondering what happened to the Maryland-based Metropolitan Grapevine story (ie. allegations of impropriety, investigations by Maryland and Virginia state authorities, temporary injunctions, pending court hearings, etc.), Washington Post columnist Elizabeth Razzi (the columnist covering the story for The Post) stated in last Sunday's Post:
  • "Columns about Metropolitan Grapevine and its we-pay-your-mortgage Metro Dream Homes program generated a flood of e-mail and phone calls, and I plan to revisit that topic soon."

I guess there's nothing more going on with this story. Go here for the quote.

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

Go here for other posts on Metropolitan Grapevine / Metro Dream Homes.

posted by Home Equity Theft Reporter at 8:04 AM

Tuesday, September 18, 2007

More On Collapse Of Florida Escrow Company; Over $3M Estimated In Missing Real Estate Deposits

(revised 9-19-07)
On Florida's Treasure Coast, TC Palm reports:
  • Realtors and brokers in Indian River County are in a closed door meeting at the Quail Valley Boat House discussing the collapse of Ira C. Hatch’s Coastal Escrow Services Inc.
    About two dozen Realtors are in attendance. [...] Hatch shut down Coastal Escrow Services earlier this month, leaving real estate agents, businesses and consumers without their deposits on real estate transactions and property leases. The Vero Beach Police Department has estimated that more than $3 million is not available to customers. No charges have been filed against Hatch or any of his associates and no one has been arrested.

For more, see Realtors, brokers in Indian River Co. meeting on collapse of escrow service.

See also, Former Hatch customers sue for $222,750 (TC Palm - 9-18-07).

In a related story regarding today's disbarment hearing regarding Ira Hatch's law license, see Florida Supreme Court to hear Hatch disbarment. Go here for a copy of Ira C. Hatch's consent to disbarment filed with the Florida Supreme Court.

Go here for other posts on this investigation.

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

posted by Home Equity Theft Reporter at 1:51 PM

Maryland Foreclosure Rescue Group Facing Civil Suits In Alleged Equity Stripping Scam

A real estate group is facing charges of equity stripping in connection with the so-called "foreclosure rescue" sale and leaseback of homes of several Maryland homeowners, according to allegations set forth in three civil lawsuits filed by the homeowers. The following defendants are named in one or more of the lawsuits which accuse them either of (1) taking unfair and illegal advantage of the financially strapped homeowners involved, or (2) playing some part in assisting the foreclsoure rescue operator to carry out the alleged "rescue" scheme:

  • Harry L. Borden, National Investors Realty Management, LLC, Dale Ross, Pioneer Realty, Inc., Michael Yette, MJ Investors, Realty Executives Main Street USA, John J. Harrison, John J. Harrison Company, Inc., Relocation Management, LLC, Joshua J. Harrison, bankruptcy attorney John D. Burns, Esq., The Burns Law Firm, LLC, real estate agent Jeannette Gray and Title 2000, LLC.

  • Mortgage lenders Resource Mortgage, Lehman Brothers Bank, FSB, and Aurora Loan Services, who provided the mortgage financing as part of two of the foreclosure rescue transactions, were also named as defendants.

In one case, Hurley vs. Borden, et al., et al., the homeowners allegedly had $316,322.89 in equity in their home, yet they only received $37,968.00 for their equity at settlement of the "foreclosure rescue," equity stripping transaction (see First Amended Complaint - page 20, paragraph 29).

In the second case, Tillery vs. Borden, et al., the homeowners allegedly had $185,631.21 in equity in their home, yet they only received $25,143.83 for their equity (see Complaint - page 23, paragraph 28).

In the third case, Mackall v. Yette, et al., the homeowners allegedly had at least $117,000 in equity in their home, yet received absolutely nothing for their equity (see Complaint - page 14 paragraph 24).

The homeowners are seeking to void the title transfers and void the mortgages placed on their homes in the equity stripping transaction, as well as seeking actual damages and significant punitive damages.

Representing the homeowners in each of the three cases is attorney Stan Brown, of Largo, Maryland. Go here and go here for more on Stan Brown.

For the longer version of this post, see Another Maryland Foreclosure Rescue Group Facing Civil Lawsuits.

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.).

posted by Home Equity Theft Reporter at 8:57 AM

HSBC Accused Of Racial Bias In Subprime Lending Practices; Class Action Status Sought

Reuters reports:
  • HSBC Finance has been accused in a federal lawsuit of using a subprime lending unit [Decision One] to unfairly target U.S. blacks for extra mortgage fees and charges not paid by white borrowers. [...] Her lawsuit claims HSBC and Decision One use a discretionary pricing policy that has a widespread discriminatory impact on black borrowers.

[...]

  • [The] lawsuit, filed in U.S. District Court in Boston, seeks class-action status against HSBC Finance and Decision One, which are part of London-based banking giant HSBC Holdings Plc. The lawsuit said tens of thousands of people could be in the purported class.

[...]

  • University of Massachusetts economist Jim Campen's study of 2005 lending activity in Massachusetts showed that a number of lenders, including Decision One, were more likely to provide high-cost loans to blacks and Hispanics than whites.

  • He said the subprime mortgage market continues to resemble a used car lot, with the selling price and other charges often negotiated individually and salespeople often having financial incentives to obtain the highest price possible.

Among those representing the plaintiff is attorney Gary Klein, with Roddy Klein & Ryan of Boston, Massachusetts. For more, see HSBC Subprime Unit Accused of Overcharging Blacks.

For a copy of the lawsuit, see Allen vs. Decision One Mortgage Company, LLC, et al.

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

posted by Home Equity Theft Reporter at 8:53 AM

Florida AG Urged To Follow Massachusetts AG's Lead On Foreclosure Rescue

The Miami Herald reports:
  • "A Broward legal aid organization is urging Florida Attorney General Bill McCollum to adopt emergency measures to curb foreclosure prevention scams, arguing the fraud has reached epidemic proportions and shows no sign of slowing down. Legal Aid Service of Broward County asked Florida's attorney general last week to enact regulations similar to the plan Massachusetts Attorney General Martha Coakley instituted in her state in June. Coakley did not wait for legislative action but claimed authority under that state's existing laws to issue regulations aimed at ending home-rescue frauds. The Broward group similarly wants swift legal action and says McCollum has the authority to do it under Florida's Deceptive and Unfair Trade Practices law or through an executive order from the governor. The group also seeks reform by Florida legislators."
For more, see Plan urged to halt foreclosure scams (Advocates for victims of foreclosure prevention scams are turning to Florida's attorney general for help). (If link expired, try here.)

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.).

Editorial Note

The Florida Attorney General already has the authority to prosecute (either through civil or criminal action) the "sale leaseback" type of foreclosure rescue scams. When applying the "substance over form" rule, these sale leaseback foreclosure rescue arrangements are generally nothing more than disguised loans; and in most cases, they are disguised usurious loans.

For the Florida usury statute, see Chapter 687, Florida Statutes - Interest and Usury. For links to Florida case law supporting the proposition that these deals are nothing more than disguised loans, see Florida AG Investigating Foreclosure Rescue Operators ("Editorial Note").

For a court case illustrating exactly how an Attorney General in an another jurisdiction went about establishing that the sale leaseback transactions of two foreclosure rescue operators were nothing more than disguised loans, and then succeeded in criminally prosecuting them for charging interest on the disguised loans in excess of the maximum amount allowed by law, see Browner v. Dist. of Columbia, 549 A.2d 1107 (D.C. 1988).

For links to stories from around the country where foreclosure rescue operators are being criminally charged for engaging in fraudulent equity stripping arrangements that are typically structured as sale leaseback transactions, see Foreclosure Rescue - For Criminal Prosecutors Only.

posted by Home Equity Theft Reporter at 8:51 AM

Monday, September 17, 2007

Texas AG Sues Upfront Fee Foreclosure Rescue Operator; Assets Frozen

National upfront fee foreclosure rescue operator Foreclosure Assistance Solutions of Clearwater, Florida has been sued again by a state Attorney General. Last month, it was sued by Ohio Attorney General Marc Dann (see State of Ohio vs. Foreclosure Assistance Solutions - doing business as Second Chance Mortgage). Now, it's the Texas Attorney General.

From the Texas Attorney General's Sept. 14 press release:

  • Texas Attorney General Greg Abbott today charged a business with operating an unlawful foreclosure rescue scam that targeted struggling Texas homeowners. As a result, the 408th District Court issued a temporary restraining order and froze assets belonging to three businessmen who organized the scheme. According to court documents, the defendants fraudulently advertised that they could save homeowners from imminent foreclosures.

  • The defendants named in the petition are: Foreclosure Assistance Solutions, LLC of Florida, and its principal operators, Herb Zerden and Adolfo Quintero, as well as J.W.W. Services, Inc. of California and owner John Woodruff. Under the temporary restraining order, the defendants must stop falsely soliciting distressed homeowners immediately. Although the temporary restraining order only applies in Texas, homeowners nationwide are protected by the state’s asset freeze.

[...]

  • Homeowners who contacted Foreclosure Assistance Solutions were urged to sign a $1,200 contract immediately. Under the contract, Foreclosure Assistance Solutions strictly prohibited homeowners from contacting their lenders. After homeowners paid the fee, they rarely heard from the company’s representatives again. When homeowners repeatedly called the company for answers, they were ignored. As a result, many homeowners still lost their homes to foreclosure.

[...]

  • The Attorney General seeks court-ordered restitution for homeowners who were harmed by the defendants’ acts, as well as civil penalties of up to $20,000 per violation of the Texas Deceptive Trade Practices Act. Additionally, the Attorney General requests up to $5,000 per violation for the defendants’ failure to register the business as one that conducts telephone solicitations.
For more, see Texas AG Press Release - Attorney General Abbott Charges Foreclosure Rescue Firm with Operating Unlawful Scam (Court freezes assets of Foreclosure Assistance Solutions).

Go here for a copy of the Texas AG's lawsuit - State of Texas vs. Foreclosure Assistance Solutions, et al.

Go here for Texas AG's temporary restraining order against Foreclosure Assistance Solutions.

Go here for a sample of a solicitation used by Foreclosure Assistance Solutions to allegedly dupe homeowners in foreclosure.

Go here for a promotional video used by Foreclosure Assistance Solutions.

See Ripoff Report for links to other complaints against Foreclosure Assistance Solutions.

posted by Home Equity Theft Reporter at 6:40 AM

Illinois AG Sues Upfront Fee Foreclosure Rescue Operator

From a September 14, 2007 Illinois Attorney General Press Release:

[...]

  • Madigan's suit alleges that Florida-based Mortgage Assistance Solutions, LLC, and its managing member Michael Thomas Stoller, of Beverly Hills , California , defrauded desperate Illinois homeowners who enrolled in its “Fresh Start” program by falsely promising to negotiate with the homeowners' lenders to reduce their mortgage payments or save their homes from foreclosure. The company requires an upfront enrollment fee but, in the end, provides homeowners with little or no help.

[...]

  • Madigan's complaint describes how the defendants, in some cases, solicit homeowners by taking advantage of their fear of losing their homes with postcards that read, “YOU WILL LOSE YOUR HOME IF YOU DON'T CALL NOW!!!!” When contacted by potential customers, Mortgage Assistance Solutions refuses to discuss the specific programs available until they receive a $1,200 payment from the homeowners.
[...]
  • The Attorney General is asking the court to order restitution for the defrauded homeowners and to order the defendants to stop all deceptive business practices. The suit also seeks a civil penalty of $50,000 and additional penalties of $50,000 for each violation found to have been committed with the intent to defraud.
For more, see Madigan Utilizes New Law To Sue Mortgage Rescue Company (Attorney General Seeks to Shut Down Business and Obtain Restitution for Distressed Homeowners).

Go here for stories on Mortgage Assistance Solutions and its "Fresh Start" program dealing with homeowners facing foreclosure in Tennessee and Massachusetts.

See Ripoff Report for links to complaints against Mortgage Assistance Solutions.

posted by Home Equity Theft Reporter at 6:37 AM

Two Unsatisfied Homeowners vs. Fairbanks Capital; One Claims Home Sold Out From Under Him; Other Files $13.5M Racketeering & Corruption Suit

A story from the West Coast features the mortgage servicing company accused of predatory practices formerly known as Fairbanks Capital Corporation (now known as Select Portfolio Services - "SPS"). The East Bay Express (San Francisco Bay Area) tells the story of a local man who lost his home to foreclosure on a mortgage that was being serviced by Fairbanks.
The story describes the experiences of the Bay Area homeowner who lost his home that had been in his family since 1911, when his maternal grandfather bought the property, and that he ultimately inherited. According to the homeowner, the mortgage servicing practices engaged in by Fairbanks was the cause both of putting him into foreclosure and of the ultimate losing of the long time family home. From the article:
  • [The homeowner] is still deciding whether to proceed with a lawsuit against Fairbanks/SPS. Lawyers are typically shocked when they hear his story, he says: "First they don't believe it. Then, when they see exactly what happened, they [still] can't believe that this happened. And then we are being advised, 'You have a case that you can win hands down, but it's going to cost you a half-million dollars in legal fees to win it, so you might want to cut your losses and run.'"
Included in the article is a reference to another Fairbanks "customer" - one who has sued the company for its practices. Mike Dillon also had his experiences with Fairbanks when it attempted to foreclose on his Manchester, New Hampshire home in 2003.

He successfully obtained a permanent injunction preventing Fairbanks / SPS from taking any further action to foreclose on his home. In June, he took the next step and filed a racketeering and corruption suit to the tune of $13.5 million against Fairbanks / Select and five other companies connected to his mortgage.

For the whole story, see Stolen Property? (An unscrupulous mortgage-collection firm sold Jim Hultman's Berkeley home out from under him, leaving behind a feud and an eyesore).

See also this message board on this story.

For more on Fairbanks Capital Corp. / Select Portfolio Services, see Mike Dilllon's website, GetDShirtz.com.

For information on predatory mortgage servicing, generally, see the Mortgage Servicing Fraud website.

There have also been several complaints referring to Fairbanks/SPS appearing on Ripoff Report:

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

posted by Home Equity Theft Reporter at 6:35 AM

Fairbanks Capital Screwing Mortgage Lender Too, Says Lawsuit

The mortgage servicing company formerly known as Fairbanks Capital Corporation (now known as Select Portfolio Services - "SPS") appears to have gained much of its notoriety by being accused of screwing individual homeowners through alleged predatory mortgage servicing practices.

However, at least according to the allegations contained in one lawsuit filed in an Austin, Texas Federal Court, Fairbanks has also been alleged to be screwing the owners of the mortgages held in one securitization pool that it services. Some of the allegations involve Fairbanks' conduct after the ownership of a consumer's home is acquired through foreclosure.

Among the allegations are: (1) self-dealing in connection with money it indirectly received (ie. kickbacks???) for real estate commissions, commissions on "force placed" insurance, property inspections, and broker price opinions; (2) allegedly setting up what the lawsuit describes could be straw or dummy companies for this purpose (see Plaintiff's First Amended Complaint - page 18, paragraph 38), and (3) "manufacturing" homeowner defaults, thereby driving homeowners into foreclosure.

In addition, the lawsuit alleges that, when selling foreclosed property ("REO"), a compensation arrangement was set up between Fairbanks and the real estate broker that, with respect to property in the $70K to $120K range, "[n]either the broker nor Fairbanks had any incentive to sell REO property for more than $60,000.00, demonstratably leading to fire-sale prices when the objective appraisals before and after the sale supported a much higher price." (see Plaintiff's First Amended Complaint - page 18, paragraph 39; and also footnote 4 contained therein).

A summary of these points and the names of the entities allegedly set up and controlled by Fairbanks / SPS can be found on the website, GetDShirtz.com (beginning about a third of the way down the page).

For a copy of the entire lawsuit containing all the allegations and a description of how Fairbanks / SPS allegedly structured their business transactions in the conduct of their mortgage servicing business, see Ellington Credit Fund, Ltd. vs. Select Portfolio, Inc., et al. (Plaintiff's First Amended Complaint - 19 counts - 52 pages, 2.35 MB approx.) - available online courtesy of Michael Dillon and GetDShirtz.com.

Go here for other posts on the company formerly known as Fairbanks Capital Corporation.

Go here , go here , and go here for posts on questionable mortgage servicing practices. questionable mortgage servicing practices tactics zebra
For consumer complaints referring to Fairbanks Capital/Select Portfolio Services appearing on Ripoff Report:

posted by Home Equity Theft Reporter at 6:31 AM

Mortgage Lenders Issuing Botched 1099s To Foreclosed Homeowners For "Debt Cancellation" Income, Say Senators

MarketWatch.com reports:
  • The IRS should ensure that families who are losing their homes to foreclosure get accurate tax bills and have a chance to negotiate the size of the bill as well as a fair payment plan, three U.S. senators said Friday. "The agency has plenty of authority to treat taxpayers reasonably in these situations," said Sen. Charles Grassley, R-Iowa, in a statement. "It needs to use that authority to serve taxpayers." Grassley sent a letter urging the changes to Treasury Secretary Henry Paulson. The letter was also signed by Sens. Gordon Smith, R-Ore., and Pat Roberts, R-Kans. Grassley, the top Republican on the Senate Finance Committee, said families are being hit with "huge" tax bills.

[...]

  • "If the IRS issues simple procedures for taxpayers to file an offer in compromise -- and undertakes a significant program of outreach to taxpayers, practitioners and lenders -- much good can be accomplished immediately," the senators wrote to Paulson.

[...]

  • Separately, Grassley and the others wrote that lenders are providing taxpayers inaccurate 1099 forms for the amount of debt forgiveness. "The IRS should be aggressively educating lenders, practitioners and affected taxpayers to ensure that accurate 1099s are being provided," they wrote.

----------------
For one story illustrating the problem homeowners may face after losing a home to foreclosure when a foreclosing mortgage lender issues an incorrect Form 1099 in reporting the amount of "debt cancellation income" from a foreclosure sale, see Foreclosing Mortgage Lender Screw-Up Results In Whopping IRS Tax Bill For Ex-Homeowner.

Go here for selected posts with information to assist homeowners, accountants, and income tax preparers in minimizing or altogether avoiding any income tax on "cancellation of debt" from foreclosure or "short sales."

(Editorial Note: Hopefully, all this becomes moot if Congress passes a law that President Bush recently proposed that, as I understand it, would provide a blanket elimination of any homeowner income tax liability on "cancellation of debt" from foreclosures and short sales. But until Congress acts, be informed that current law already allows a homeowner who has lost a home to foreclosure (or sold a home using a "short sale") to reduce or possibly eliminate completely the income tax in many situations, notwithstanding all the incomplete or incorrect information being reported by some "real estate experts" to the contrary.) short sale income tax

posted by Home Equity Theft Reporter at 6:30 AM

Some Foreclosing Lenders Conducting Illegal Tenant Evictions In Oakland

A story in Northern California's Inside Bay Area is reporting that lenders who have acquired ownership of homes in foreclosure may be illegally evicting tenants or telling them to move in direct violation of a local ordinance that prohibits the practice in many cases. According to the story:

  • Across Oakland, scores of renters ... are being served eviction notices or being told to move out as banks take over buildings from defaulting landlords. Yet Oakland's tough rental laws exclude foreclosure as a legal reason to evict tenants, except in rare circumstances. These banks, or the brokers representing them, appear to be ignoring city law or hoping tenants don't know about them. "We are getting quite a bit of evidence that there are many violations of Measure EE" — the city's voter-approved renters' rights ordinance, City Attorney John Russo said earlier this month. "The banks foreclose and the landlords take off."

  • Tenants caught in between the banks and their errant landlords may face difficult straits, he said, including eviction. In some cases, building utilities have been turned off because landlords stopped paying the bills.

[...]

  • Measure EE, the "just cause" eviction ordinance passed in 2002, specifies when eviction may occur. Except in dwellings built since 1980, the owner cannot evict rent-paying tenants who abide by rental agreements unless the owner occupies at least a third of the building or intends to move into the unit or move family into the unit. The measure also says landlords must abide by lease agreements unless tenants fail to pay rent, damage property or breach some other portion of a rental agreement.

For more, see Mortgage crisis hurting tenants (Some renters illegally evicted from buildings in foreclosure) (if link expires, try here - courtesy of FindArticles.com).

See also, Oakland City Attorney: Foreclosures Shouldn’t Force Evictions (KCBS Radio - 740 AM).

Measure EE available online courtesy of the Oakland Association of Realtors. unwittingly equity skimming beta

posted by Home Equity Theft Reporter at 6:25 AM

Sunday, September 16, 2007

Oakland Woman Scammed Out Of $1,365 Security Deposit; Unwittingly Rented Home In Foreclosure - Now Faces Eviction

In Northern California, Inside Bay Area reports:
  • Tina Bryson was nine months pregnant when she leased an apartment in April on Congress Avenue in East Oakland. Little did she know the apartment she rented was in foreclosure. Two months after her baby was born, Bryson received an eviction notice from the lender taking over the building, telling her she had 30 days to move out. By then, her landlord — wth Bryson's $1,365 deposit in hand — were nowhere to be found. "This guy tells me that the house was in foreclosure before I rented it," a frightened Bryson said last month, balancing a pile of legal papers on one knee and a baby on the other. She is half-packed to move but does not know to where.

For more, see Mortgage crisis hurting tenants (Some renters illegally evicted from buildings in foreclosure).

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

posted by Home Equity Theft Reporter at 9:41 AM

Tenants Face Eviction Due To Landlords' Failure To Pay Water Bill

In Ocala, Florida, the Ocala Star-Banner reports:

  • The threat of dry water taps is nothing new to the residents of Busbee Quarters, but if Ocala Electric Utility doesn't receive a large check soon, those who haven't moved out will soon be sent packing. The city sent a final letter to both tenants and property owners on Friday, telling them that water flowing to the apartments will be cut off if an outstanding water bill for more than $7,600 is not paid by Sept. 24. City ordinances require occupied homes to have running water to prevent unsanitary conditions.

Collection is problematic because two outdated master water meters serve all 60-plus units, which means that residents cannot be billed individually for water consumption. Complicating the matter further is that the rented units are all individually owned, so that if the city forces the tenants to leave, the rental income to the individual owners will stop and leave them vulnerable to possible foreclosure.

In addition, there apparently is no homeowner association to handle the payment of the buildings' common expenses on behalf of the owners. The water service is in the name of just one of the owners, an investment company. The company has been paying the entire bill for all the unit owners, then receives reimbursement from the other owners for their share of the water bill. Reportedly, the investment company claims it has fallen behind on the water bill owed to the local utility because it has been getting stiffed by some of the other unit owners for their share of the water bill.

For the rest of the story, see Tenants at risk of losing water, homes (Busbee Quarters again behind on utility bill).

posted by Home Equity Theft Reporter at 9:40 AM

Ohio Mortgage Fraud Indictments Involved Two Cases Of Equity Skimming, Leaving "Rent To Own" Tenants With Homes in Foreclosure

In the recent mortgage fraud indictments in Cuyahoga County, Ohio involving four homes in the city of Solon, at least two of the cases involved an alleged combination of a straw buyer fraud coupled with a "lease / option" or "lease / purchase" scam.

In one case ("the third Solon case"), accused straw buyer Estelle Jackson, 63, of Bedford, fraudulently bought a house by lying about her employment and income. Once title was in her name, she allowed Frederick Watkins, a licensed mortgage broker at Premier Funding of Ohio, Inc. to lease with the option to buy this property to unsuspecting renters who paid Watkins approximately $27,000 before they realized it was a scam. These unsuspecting renters thought their payments were sent to the lender to pay the new mortgage loan. Watkins kept this money and he never paid the mortgage in Jackson's name. Jackson received $31,000 for her role as straw buyer.

In another case ("the fourth Solon case"), Ogbonnaya Edeh, 49, of Cleveland, fraudulently obtained an $850,000 loan in the purchase of a home. He never made a down payment, never saw the inside of the house before the purchase, and never lived in it. He lied about his employment and income, and received $31,000 for his role in the scam.

After Edeh purchased this house, he allowed Stephen Holman and Jeffrey Brown of Buckeye Lending, Inc. to lease the home to a tenant on what appears to have been a "lease-to-own" basis. The tenant made rent payments that were intended to pay the new mortgage and these payments were to count toward buying the home. However, the tenant lost his $6,000 initial down payment and $22,600 in lease payments before realizing it was a scam. Neither Brown nor Holman applied any of the rent money towards the mortgage payments.

Both of these homes are currently in foreclosure. For more, see Cuyahoga County Prosecutor's Press Release - Four Mortgage Fraud Cases Indicted - Solon.

Go here for other posts on "rent to own" scams.

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here. rent to own lease purchase option scams zebra unwittingly equity skimming beta

posted by Home Equity Theft Reporter at 8:17 AM

South Carolina Real Estate Deals Leaves "Rent To Own" Tenants & Straw Buyers Holding The Bag

WSPA News Channel 7 in South Carolina reports on a Simpsonville real estate operator named Buy Now Properties, who reportedly peddles a "lease-to-own" (rent-to-own) program and who, according to the story, has a number of unsatisfied customers.

One customer says she paid $4500 down, plus monthly rent to Buy Now Properties, and now she's getting letters, first saying her lease was transferred to one company, then to the actual property owner, which the customer says she didn't know existed. That letter says she must now pay a much higher rent or buy the house, neither of which she can afford.

A similar story was told by a couple involving a $3,000 downpayment. Kathy Barrett, President of the local Better Business Bureau, says it has heard the same story from more than a dozen tenants of Buy Now Properties.

In addition to the alleged screwing over that the tenants are claiming, it appears that the "lease-to-own" program may have been part of a larger operation also involving a "straw buyer" investment program. According to the story:

  • This situation not only affects credit-challenged people trying to buy the homes. It affects people with good credit who tell us they agreed to let Buy Now Properties pay them thousands of dollars to use their credit to buy the homes.

  • They say Buy Now Properties was supposed to use the tenants' rent to pay the mortgages. Some say they have 12 to 15 homes in their names and gave us bank statements showing some mortgage payments that were not made. They say the homes are going into foreclosure. Said Barrett, "The investors we've talked so far have been devastated, many are telling us that they're probably going to have to file bankruptcy."
The picture that's been painted here is that Buy Now Properties arranged for straw buyers to buy homes and agreed to manage the homes by placing tenants into the homes by offering a "lease-to-own" program. It collected monies from the tenants to be applied to the straw buyers' mortgage payments, but apparently mortgage payments have reportedly gone unpaid.

The story is silent as to whether Buy Now Properties pocketed any money when arranging the initial home purchases by the straw buyers. This sounds like the beginning of a painful mess.

For more, see Buy Now Properties: From Lease to Loss.

For story update, see Consumer Investigation: Warrant issued in Buy Now Properties case - An arrest warrant has been issued and a lawsuit has been filed against Douglas E. Johnson, who runs the rent-to-own home company, Buy Now Properties, in Simpsonville.

Go here for other posts on "rent to own" scams.

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here. rent to own lease purchase option scams zebra unwittingly equity skimming beta

posted by Home Equity Theft Reporter at 8:17 AM

Missouri Couple Unwittingly Lease Options Home In Foreclosure, Now Faces Eviction

KSDK-TV Channel 5 in St. Louis, Missouri reports the story of a couple who paid about $1,900 for a lease option to purchase a St. Louis home. They paid a first month's rent of $700, last month's rent of $700 and $500 for the option to purchase the property. It turns out that three weeks after they signed the deal, the landlord lost ownership of the home in a foreclosure sale. To add insult to injury, before the couple received the eviction notice from the mortgage lender, the now-former owner came around and collected one additional month of rent.

The man who sold the house is Wali Furqan, who lives around the corner from the house. He also owns rental properties in the area. For more, see Buyer Beware! Seller May Not Own It.

Go here to watch the KSDK-TV Channel 5 report.

Go here for other posts on "rent to own" scams.

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here. rent to own lease purchase option scams zebra unwittingly equity skimming beta

posted by Home Equity Theft Reporter at 8:12 AM

Colorado Woman Gets Probation In House Flipping, Equity Skimming Scheme That Stiffed "Rent To Own" Tenants

Judith Smith (aka Katzenberg), 23, who was implicated in a combination property flipping / equity skimming scam that reportedly shattered the lives of its victims avoided jail and received a three-year deferred sentence, is prohibited from working in the mortgage field, or at any other job where she would be privy to sensitive customer information, and must do 60 days of house arrest.

Smith was one of five people indicted by a Pueblo grand jury under the Colorado Organized Crime Act. Each originally was charged with theft, conspiracy, forgery, criminal possession of a forged instrument and offering a false document for recording.

In addition to bilking investors in a real estate scam involving buying homes in foreclosure, getting inflated appraisals, and selling them for more than their actual values:
  • They also were accused of selling homes on a rent-to-own basis, then allowing the original notes to lapse into foreclosure or reselling the homes to second buyers while the rent-to-own contracts were still in effect.

Smith's former employer at Trinity Benefits Group, Maurice Goring, is still awaiting disposition of his case. Goring, 41, is set to face trial in October.

Appraiser Alvin Jack Woolford, 57, pleaded guilty to misdemeanor forgery in exchange for a deferred sentence. Charges against two other defendants were dismissed. The three and Smith have all agreed to testify against Goring at trial. For more, see Woman avoids prison term for fraud scheme.

Go here for other posts on this case.

Go here for other posts on "rent to own" scams.

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here. rent to own lease purchase option scams zebra unwittingly equity skimming beta

posted by Home Equity Theft Reporter at 8:11 AM

Twin Cities Area Tenants Forced To Move Due To Landlord's Mortgage Problem

KARE-TV Channel 11 (Minneapolis - St. Paul, Minnesota) reports on the story of two tenants who are being forced to move as a result of their landlord's inability to pay the mortgage - with the property going into foreclosure. Go here to watch the KARE-TV Channel 11 report. To read the online story, see Foreclosure shock wave felt in housing courts.

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

posted by Home Equity Theft Reporter at 8:10 AM

Tenants Get The Boot After Landlord Lets Building Go Into Disrepair, Foreclosure

WOOD-TV Channel 8 in Grand Rapids, Michigan reports:
  • Eight families living in a Wyoming [Michigan] apartment complex have until Friday night to find a new place to live after the city condemned their building last week. Inspectors say the Taft Avenue complex is unsafe and unsanitary. The problems at the 16-unit facility include leaky pipes, electrical wiring in disarray and cockroach infestation.

Reportedly, the landlord told city officials that the premises was in foreclosure. For more, see Wyoming apartments condemned, tenants kicked out.

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

posted by Home Equity Theft Reporter at 8:10 AM