Wednesday, October 10, 2007

Family Victimized By Metropolitan Money Store Loses Home, Awaits Eviction

The Washington Post reports on the story of a Prince George's County, Maryland family who recently lost their home to a bank in a foreclsoure sale as a result of an alleged refinancing scam involving now-defunct foreclosure rescue operator Metropolitan Money Store. Reportedly, the homeowners weren't even in foreclosure when they went to the company to refinance their home to pay some debts and pay for some home repairs after seeing a spot on the Black Entertainment cable television station. According to the story:
  • The couple said they didn't realize that they were signing over the deed of their home to the investor. Nor did they know they were signing away more than $100,000 in equity. The straw buyer hasn't made any mortgage payments on the [couple's] house, they said.

  • And now, said the [couple's] attorney, Phillip Robinson, the house has been foreclosed on and was recently sold to a bank at auction. "They could be kicked out any day," Robinson said. "We've asked the judge to hold off until this other case [the class-action suit] is handled." Robinson said he has been working on a case-by-case basis to keep his clients from being evicted. He has asked Maryland's attorney general to order that no one involved in the lawsuit be evicted while the case is pending.

For more, see Trying to Hold Onto Home (Metropolitan Money Store Put Their House at Risk, Md. Couple Say).

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.). joy jackson

Countrywide Locks Its Doors As Housing Activists Protest Outside Its Offices

KGO-TV Channel 7 (San Francisco, California) reports:
  • Bay Area homeowners barely hanging on because of the mortgage crisis, turned-up on the doorstep of one of the country's biggest lenders on Tuesday. They claim that with interest rates soaring Countrywide Financial is doing very little to help them keep their homes. The community activist group ACORN demonstrated outside Countrywide's San Bruno office. Countrywide responded by locking its doors. [...] Late on Tuesday Countrywide sent a response to ABC7 by saying: "Its concerned with the rising levels of delinquencies and foreclosures." They also said they are not only responding to customers, they are also reaching out to borrowers in distress. But lenders often have no authority to rework a loan by themselves. Most mortgages today are packaged and sold to investors on Wall Street in a process called securitization.

For more, see Bay Area Activists Protest Outside Countrywide Financial (Say Company Not Helping Enough). countrywide pressure zebra

Towns Taking A Beating From Foreclosure Boom

The following links are to recent stories on towns that are taking a beating as a result of the real estate bust / foreclosure boom:

  • Cleveland, Ohio (Slavic Village): The Shadow of Debt (Slavic Village Is Fast Becoming a Ghost Town. It's Not Alone) (The Washington Post - 9-30-07) (if link expired, try here).

  • Stockton, California: "Strange And Sad And Worrying" (CBS News Blog - 10-8-07) ("Houses that sold briskly as recently as a year ago for $400,000 to $600,000 now sit empty and abandoned. And there are lots of them.")

New York City Property Manager Cops Plea In Theft Of Co Op Funds

In Corona, New York, the Times Ledger reports:
  • A former property manager for a Corona cooperative apartment building pleaded guilty to stealing $163,000 in co-op funds. He is slated to be sentenced Oct. 23. Michael Burak, 63, of Manhattan was charged with grand larceny, criminal possession of a forged instrument and falsifying business records, the Queens district attorney said. He entered his plea on June 26 and faces a maximum of 15 years in prison, according to the DA.
For more, see Corona co-op owner guilty of fraud.

Georgia Feds Indict State Magistrate Judge For Lying To Grand Jury, FBI

In Clinch County, Georgia, Daily Report reports:
  • A magistrate judge from rural Clinch County has been charged with perjury in an indictment that says she lied to a federal grand jury investigating judicial corruption.
    Magistrate Judge Linda C. Peterson lied to grand jurors June 13 when she denied, under oath, ever suggesting to criminal defendants that they could use her own father as a bail bondsman, according to the indictment. The indictment says Peterson, after setting a $50,000 bond last year for a man arrested on marijuana charges, told the defendant that her father, Herman Corbitt, could act as his bail bondsman for a fee. The indictment says Peterson told the defendant, James E. Tucker, and other people "that she needed the fee that her father would charge for home remodeling." [The U.S Attorney's office] declined to comment on whether Peterson's indictment was related to a federal investigation of Superior Court Judge Brooks E. Blitch III, whose Clinch County office was searched by FBI agents in June.

For more, see South Ga. judge indicted on federal perjury charge. naughty judges

Tuesday, October 09, 2007

"KCRA 3-Triggered" FBI Mortgage Fraud Investigation Yields 5th Arrest

In Northern California, the Sacramento-area FBI mortgage fraud investigation triggered by a series of KCRA 3 television reports by Investigative Reporter Josh Bernstein has resulted in the arrest of a fifth suspect, according to a source close to the case.

25-year-old Sennett Swift was arrested Friday night at the Sacramento International Airport. In addition to his passport, he was found to have thousands of dollars in cash on his person and authorities believe he was trying to flee the country. Swift reportedly worked as a loan processor for VFM Investment Group and was trained by Jim Martin before leaving and setting up several companies on his own. Martin, along with three others, is currently under indictment for allegedly falsifying millions of dollars in mortgage loan applications so investors could qualify for loans they couldn't afford.

Swift is currently in custody and being held without bond on charges of bank fraud and money laundering. Arraignment is scheduled for today in a Sacramento Federal Court. Swift is considered a flight risk and will likely be remanded until he goes to trial. Authorities allege Swift began preying on the elderly after leaving VFM Investment Group in a similar scheme.

At least a dozen additional arrests in this investigation are expected. For KCRA 3 story, see Agents Believe Loan Officer Tried To Flee State (Man Was Former Employee Of VFM Investment Group).

See also, FBI: Man set up refinance scheme (The Sacramento Bee).

Go here for other posts on this investigation.

Candidate Clinton To Push Foreclosure Rescue Legislation

As she cruises around the state of Iowa on the presidential campaign stump, The Des Moines Register reports that Senator Hillary Clinton (D-NY) is promoting her plans to deal with the problems in the mortgage lending industry and with homeowners facing foreclosure, including Federal legislation to address the foreclosure rescue industry. Buried deep in the article are these excerpts:
  • "To deal with problems in the housing market with families facing foreclosure, subprime mortgages, unscrupulous brokers, and mortgage lending abuses Clinton said she has three new plans. [...] The “Foreclosure Rescue Fraud Act” would crack down on con artists who charge hefty fees for bogus promises that they can help people avoid losing their homes. “Spread the word,” she said. “Don’t listen to anybody who calls you on the phone or knocks on the door saying they’ve got a great way of helping you save your home.”

For more, see Clinton focuses on middle class.

In addition, a press release issued yesterday by the Hillary Clinton presidential campaign contains this blurb on Federal foreclosure rescue legislation that she reportedly intends to push if elected President:

  • The Foreclosure Rescue Fraud Act. An increasing number of people are seeking the aid of “foreclosure consultants” to help them avoid losing their homes. While some of these consultants are legitimate professionals, others are con-artists taking advantage of distressed homeowners. The fraudulent consultants take money from homeowners without providing any actual service, manipulate homeowners into transferring their property deeds to them, or strip the equity from people’s houses. Hillary will pass legislation that sets national, minimal standards of conduct for foreclosure consultants. The legislation would impose criminal penalties on violators, and allows victims to sue for damages. The law would also make $100 million available to states for prosecuting foreclosure rescue fraud and assisting homeowners who have been conned by foreclosure consultants.

For more, see Hillary Clinton Press Release - Clinton Unveils Plan to Rebuild Middle Class.

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.).

Torched Home In Foreclosure 'Ignites' Investigation; Alleged Straw Buyer, Flipping Scam Uncovered, Two Charged

KARE-TV Channel 11 (Minneapolis-St. Paul, Minnesota) reports:
  • With the final touches nearly done on a major remodel project, a Brooklyn Center home is ready to hit the market. [...] The home was in foreclosure when authorities say someone set it on fire. That ignited an investigation, leading Hennepin County detectives to an elaborate scheme that swindled banks out of millions. [...] Edward Boler of Burnsville and Susan Newell of Minneapolis are now charged with racketeering and a dozen counts of theft by swindle. [...] In all Boler and Newell allegedly took banks for nearly $3 million and took more than $282,000 for themselves. Eleven of the 12 homes they helped purchase went into foreclosure. The buyer's credit was ruined. It was a big loss for banks and, authorities say, for neighborhoods.

For more, see Detectives bust alleged mortgage fraud scheme. Go here to watch KARE-TV Channel 11 video report.

For Minneapolis Star-Tribune story, see Two charged in $2.8 million mortgage scam (Prosecutors say they recruited straw buyers, got loans for more than the properties' worth and split the profits). foreclosure arson zebra yak

Home Builders Using 'Car Dealer' Tactics To Dump Unsold Inventory

In the Washington, DC area, The Washington Post reports:
  • When the housing market began to weaken, builders responded with incentives such as money toward closing costs and low-interest loans through their mortgage arms, but they did so without cutting their base prices. Faced with a glut of unsold homes and canceled contracts, builders are now turning to tactics typical of car dealerships and department stores. What's even more unusual is that the deals are often accompanied by deep price cuts, which builders had been reluctant to do up until now. "It's a little odd thinking of homes being sold that way," said Dean Baker, co-director of the Center for Economic and Policy Research in the District. "You think of a sale for coffee or laundry detergent, but not really for a home."

For more, see Car Dealer Tactics on the New-Home Lot (To Sell in a Slow Market, Builders Slash Prices and Offer Financing Deals).

For a related story, see 'Betrayed by our builder' (San Jose Mercury News - 10-8-07), a story on a Northern California builder's intention to auction off brand new homes in one subdivision at "closeout" prices to unload its inventory. Current subdivision owners (former customers) who bought from builder at "full price" are up in arms.

Do Mortgage Servicing Companies Charge Excessive 'Attorney Fees' When A Homeowner Goes Into Default?

(revised 10-10-07)
For those who think that they may have been clipped by a mortgage loan servicer for excessive attorney fees being added to their account while their home mortgage was in default (a predatory practice), Excessive Attorney Mortgage Fees: “I Almost Lost My Home”, at LawyersandSettlements.com may be of some interest.

See also, Excessive Attorney Fees: Homeowner Robbery, at LawyersandSettlements.com.

Go here for more on Excessive Attorney Mortgage Fees, and mortgage servicer Mortgage Electronics Registration Systems, Inc. ("MERS"). Reportedly:

  • "MERS allegedly retains attorneys to handle foreclosure actions at a stated price but when the attorneys’ fees are passed along to the borrowers, MERS charges the borrowers more than it pays the foreclosure attorneys. Between what it pays the attorneys and what it charges borrowers, MERS keeps the difference as a profit to itself."

The existence of this practice, if true, lends support to the proposition that, financially, mortgage loan servicers might be far better off driving homeowners into foreclosure, pocketing inflated foreclosure fees and costs in the process, rather than trying to help a homeowner modify or otherwise work out their home mortgage loan. (However, the company or mortgage investment trust - and their certificate holders - who actually own the mortgage might not be too happy about it - they are the ones who will actually take the financial beating when a home is foreclosed.)

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

Condo Speculators Looking To Back Out Of Purchase Contracts

The New York Times has a story on new construction condominium speculators from around the country who, during the height of the real estate boom a couple of years ago, entered into purchase contracts with builders and put down deposits on condominium apartments that were to be constructed. Now as the builders are completing construction on the buildings and are expecting the buyers to close on their purchase contracts, the buyers are having second thoughts on buying and are looking to either:
  1. unload their contracts onto other buyers before they have to close, or
  2. just back out of their deals altogether.

Some are reportedly hiring attorneys in an attempt to void their purchase contracts and seek a refund of their deposits. For more, see A Bank Bet on Condos, but Buyers Want Out (if link expires, try here or try here).

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

Monday, October 08, 2007

Marc Dann - "Mortgage Cop"

The Wall Street Journal reports:

  • One of the sharpest attacks on Wall Street these days is coming from the Midwest. That is where Ohio Attorney General Marc Dann assigns much of the blame for the state's record mortgage-foreclosure rate -- a mess he calls "the largest financial scam in American history." The 45-year-old Democrat has pursued several mortgage cases closer to home, delaying foreclosures involving New Century Financial Corp., a home lender now operating under bankruptcy-court protection. He has sued more than a dozen lenders and brokers for allegedly inflating home appraisals and engaging in other practices that misled troubled homeowners.

  • Mr. Dann says he wants to "punish" not only out-and-out criminal fraudsters, but also deep-pocketed parties that benefited from the problem and helped enable it.

For more, see A New Mortgage 'Cop' (Dann, Ex-Footballer,Tackles Fraud Cases,Targets Wall Street) (or try here for link to story).

For some of the work done by AG Dann's office in the area of real estate / mortgage fraud, see:

Heirs Of Elderly Man File Suit In Alleged Reverse Mortgage / Home Repair Scam

Channel 8 News in Austin, Texas reports on a recent lawsuit filed against a reverse mortgage consultant and a home improvement contractor alleging fraud against a now-deceased local elderly homeowner. According to the story:
  • The lawsuit states Elder Solutions, LP "solicited and exploited elderly homeowners." The suit claims the two companies use a "two-step scheme." First they "bait the homeowner with promises of cash and improvements" and then they "commence major demolition" - trapping the homeowner into selling their property to pay the debt.

Austin attorney Joe Marrs, with the law firm Jackson Walker L.L.P., is representing the elderly homeowner's survivors and says that among the alleged fraudulent conduct committed was the use of forged powers of attorneys. Trish McAllister of Volunteer Legal Services of Central Texas referred the case to Marrs. McAllister said this story is one of many she's heard involving reverse mortgages, mechanics liens, and foreclosures.

Another Austin-area resident said that the same thing happened to her father with Elder Solutions and the same home improvement company, Chaparral Ceiling and Wall, Inc. Attorney Marrs is reportedly in the process of filing a lawsuit on her behalf as well. For more, see Family sues local companies for fraud.

Go here for other posts on reverse mortgage problems.

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

NYC Attorney Charged In Deed Theft Of Home Of Elderly Stroke Victim; Swindle Of Serviceperson's Home Sale Proceeds

In New York City, the Queens County District Attorney's office reports:
  • Queens District Attorney Richard A. Brown [Thursday] announced that a suspended Richmond Hill attorney and a licensed Queens Village real estate broker have been charged with selling the house out from under an elderly Jamaica, Queens, man who had been hospitalized after suffering a stroke and then repeatedly flipping the property to drive up the price. [...] The District Attorney identified the defendants as attorney N. Stephen Sukhdeo, 41, ... and [real estate broker] Mohammed M. Keita, 48.

They both are presently awaiting arraignment on charges of second degree grand larceny, second-degree forgery, first-degree falsifying business records and first-degree offering a false instrument for filing. Attorney Sukhdeo is additionally charged with criminal possession of forged documents. If convicted, the defendants face up to fifteen years in prison.

In a separate criminal complaint filed against Sukhdeo, he is charged with participating with another real estate broker, Richard Persuad, in swindling almost $100,000 from an active duty serviceperson who was overseas at the time of the swindle in the sale of her home. Persaud, 36, was arrested on August 2, 2007, and is charged with second-degree grand larceny, first-degree falsifying business records and first-degree scheme to defraud.

For more, see Queens DA Press Release - Suspended Queens Attorney And Licensed Real Estate Broker Charged In Real Estate Fraud Schemes (Alleged Victims Include an Elderly Stroke Victim and U.S. Army Sergeant Serving Overseas).

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

Mass AG Sues Fremont Alleging Unfair/Deceptive Lending & Loan Servicing Practices

(original post - 10-6-07)
From the Office of the Massachusetts Attorney General:
  • Today [Friday], Attorney General Martha Coakley filed a lawsuit in Suffolk Superior Court against California-based Fremont General and Fremont Investment and Loan (“Fremont”), a subprime lender that originated thousands of loans in Massachusetts. The complaint alleges that Fremont engaged in unfair and deceptive conduct on a broad scale in connection with selling mortgage loans to Massachusetts consumers...

  • The Attorney General’s Office is seeking civil penalties, restitution and an injunction, which would prohibit Fremont from selling or transferring any Massachusetts mortgages and from foreclosing on any Massachusetts loan without giving the Attorney General’s Office a 90-day opportunity to review the loan transaction and object to the foreclosure.

The lawsuit alleges unfair and deceptive conduct in connection with both the origination of mortgage loans, and the subsequent servicing of those loans. For more, see Attorney General Martha Coakley Files Lawsuit Against National Mortgage Lender - Fremont Investment And Loan (First Case Under 2004 Predatory Home Practices Act).

See also:

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

Miami-Dade Cops Haul in 11 - Seek 2 Others - In 3 Separate Alleged Mortgage Schemes

(original post - 10-6-07)
In South Florida, the Miami Herald reports:

  • In the first roundup of suspects under a new campaign to crack down on home loan fraud in Miami-Dade County, 11 people -- brokers, borrowers, sellers and title agents -- were arrested in three separate mortgage fraud schemes, police announced Friday.
In one case, Mariana Navarrete, 44, owner of Confin Home Mortgage & Loan and United Consultants Group, allegedly enlisted an ex-husband and two sons to steal the identity of a former employee to purchase one of the son's homes, police said. Her ex-husband is Xavier Abelardo, 46, a mortgage broker and registered owner of Nexa Investments Group, which does business under the name Value Rate Mortgage. Both were arrested in this case, as were her sons, Javier Abelardo-Navarrete, 25, (a seller and broker's agent), Luis Navarrete, 21, (a closing agent), and her daughter-in-law Teresa Guillen, 24. Also implicated is Jose Rodriguez, 53, who is still at large, police said Friday.

The second case involved an alleged "cash back at closing" - straw buyer scam involving straw buyer Fernando Prado, 47, who worked with mortgage broker Tomas Tamayo, 39, and title agent Damaris Vallin, 36, to allegedly pull $75,000 in cash from a fraudulent closing. All three have been charged; the house is now in foreclosure.

The third case also involved an alleged cash back at closing scam. A homeowner tipped off cops when approached by a buyer with an offer of approximately $100,000 more than the asking price for his condo. The buyer allegedly wanted the money to be returned to him as cash back at closing, purportedly to make renovations to the property. Police arrested Nestor Camacho, 46, who allegedly acted as the buyer in the deal and title and closing agents David Rodriguez, 44, and Monica Zuluaga, 31. The mortgage broker allegedly involved, Jose Delgado, 26, has a warrant out for his arrest, police said.

For more, see 11 mortgage-fraud suspects arrested (Miami-Dade police rounded up 11 suspects who allegedly used stolen and falsified documents to commit mortgage fraud).

See also, 11 Arrested In Mortgage Fraud Schemes (CBS 4, Miami, FL) identity theft

A Perspective On The Mortgage Loan Servicing Business

A blogger on the Finance Blog at Conde Nast Portfolio.com offers this perspective on the mortgage servicing business:

  • If you simply have a lender and a borrower, then often the servicing arm of the lender can be incredibly valuable to both sides: a good loan servicer will find a way to keep the borrower in their house, and maximize the value of the loan for the lender, which otherwise might have to write it off or go through a painful, expensive, and protracted foreclosure process.

  • What happens, however, when the servicer is a for-profit entity not connected with the lender? Suddenly, there's a conflict between saving money for the lender, on the one hand, and making money for itself, on the other. A simple mortgage renegotiation is not very lucrative for a servicer; a fully-blown foreclosure, on the other hand, provides much more in the way of opportunities to profit.

(If true, this adds support to the proposition that a for-profit mortgage servicing company with no connection with the institutions and trusts that actually own the homeowners' mortgages, would be financially better off driving a homeowner into foreclosure than trying to arrange a loan modification or some other type of mortgage payment workout.)

For more, see Worrying About Mortgage Servicers' Fate.

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

Wisconsin Lawmakers To Announce Proposals To Curb Foreclosure Rescue

In Milwaukee, Wisconsin, the Miwaukee Journal-Sentinel reports that two state lawmakers "plan to announce on Tuesday proposed state curbs on the industry whose members call themselves mortgage rescuers. These rescuers promise homeowners who have defaulted on their mortgage payments a way to save their homes - often only to fleece, in any number of ways, what little home equity their customers have left."

The proposal, called The Homeowner Protection Act, will be announced at a 10 a.m. press conference at the Milwaukee County Courthouse. The lawmakers said they're modeled after tough consumer-oriented provisions in Minnesota law. For more, see Evicting those foreclosure con artists.

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.).

Sunday, October 07, 2007

Helen The Pig Update

The Express-Times ran an update today on the improving condition of Helen The Pig, the 5-year-old Pennsylvania pot-bellied pig who had been found living alone in a barn on a recently foreclosed farm.
  • The farm's former owner had been returning to care for Helen and clean her stall. However, his uninformed care and liberal feedings bloated Helen to an unhealthy 120 pounds. Helen has been slowly losing weight since she was rescued by Pig Placement Network volunteers, who were contacted by the township after the finding ... .

While she has a way to go to regain her health, she is reportedly making progress and has revealed an endearing and sweet disposition to her new caretakers. For more, see Pot-bellied pig losing more of her pot belly.

For earlier post and stories, see:

For more on potbellied pigs, see the North American Potbellied Pig Association (NAPPA).

For another story on the health problems of a pig who was allowed to get overweight, see Woman Claims Pet-Sitter Made Her Pig Fat (A woman wants abuse charges filed against an acquaintance who was pet-sitting for her potbellied pig and allowed the animal to get fat. Michelle Schmitz said her pig, Alaina Templeton, weighed 50 pounds when Schmitz left her with a co-worker who offered to care for the animal in February, when Schmitz went on medical leave to recover from ankle surgeries. Nine months later, the pig weighed 150 pounds and it took veterinarians 4 1/2 hours to surgically remove the animal's collar, the Winona Daily News reported.).

Go here for more on pets and foreclosures.

30,000 "Squatters" Convert Vacant Foreclosure Into Giant Beehive

In Cape Coral, Florida, NBC 2 News reports:
  • Some unwanted guests are taking over the neighborhood in Northeast Cape Coral. A bee expert says there are about 30,000 bees calling one hive their home. [...] About a month ago, the bees took over a foreclosed home. When neighbors contacted the city of Cape Coral about the squatters, they found out their hands are tied. City officials say there is no program to use taxpayer money to remove the hive. So, it is left up to the bank that now owns the home to take care of it. We asked bee expert Keith Councell to take a look at the hive. He says he has seen a lot of similar hives on abandoned homes.

For more, see 30,000 bees found in foreclosed home.

More On The Problems With Vacant Houses

In Tracy, California, the Tracy Press starts a recent story about the kinds of problems that commonly accompany foreclosures, vacant and abandoned homes with this blurb:
  • For the past six years, Paul and Elsa Kennedy have watched the house across the street from them deteriorate. A man and his elderly father lived there when the Kennedys moved in, Paul said. A local real estate company appeared to be ready to restore it a couple of years ago, but since then the only people who seemed to drop by were curious kids, drug users and copper wire thieves.
For more, see Code of conduct (The rise in foreclosures and vacant homes keeps code enforcement officials busy).

Go here for posts on copper & other metal thefts. copper metal theft zebra

Copper Thieves Thriving In "The Big Easy"

In New Orleans, Louisiana, The Times-Picayune reports:
  • With prices for salvaged metals soaring, the sale of copper has become big business across the country, with bits and pieces bought and sold for about $2 and $3 per pound. The common metal used to plate pennies can be found everywhere: in pipes in homes, in electrical wiring, in air-conditioning units. And it is that teeming business that police say is sparking a tidal wave of property crimes. The number of copper-related thefts in New Orleans this year is through the roof, especially in the city's flood-ravaged regions. Businesses, schools, a synagogue, countless affluent homes and demolished houses all have been stripped -- some several times -- by sticky-fingered freelancers.

[...]

  • A typical heist is a simple as this: Opportunists pop into a flood-ravaged house or an under-renovation home in a sparsely populated part of town. Head for the sink or air-conditioning unit. Kick in some wallboard and uproot the pipes. Grab the wares and bolt to a scrap-recycling yard, where copper becomes cash.

For more, see Police struggle to stop post-Katrina copper looters.

Go here for posts on copper & other metal thefts. copper metal theft zebra

Vacant Homes In Muncie Going Up In Flames

In Muncie, Indiana, The Star Press reports:
  • Vacant houses continue to burn throughout Muncie, with a Tuesday-night blaze along South Liberty Street requiring every Muncie firefighter on duty to respond. "We have a lot of vacant houses, and it is obviously a concern," said Fire Chief Al Richards, who was on the scene of a fire that began at 1810 S. Liberty St., then damaged two other vacant houses next to it. All 29 on-duty firefighters responded to the general-alarm blaze, ...
[...]
  • [T]here have been reports of youth smoking in vacant houses, setting them ablaze. In Industry, some neighbors reported crack cocaine users were frequenting a vacant house that burned last summer. The problem with vacant houses is that too many are left unsecured, [city fire inspector David] MIller said. And the number of vacant houses in inner city neighborhoods is growing with more foreclosures and fewer people living in Muncie.

For more, see Vacant house fires point to urban decline. arson

Arson Suspected In Home Fire Belonging To Texas Jurist; Foreclosure Filing A "Red Flag"

An Associated Press article in The Dallas Morning News reports:
  • The Harris County Fire Marshal's Office said the fire that destroyed the home of Texas Supreme Court Justice David Medina this summer was "very suspicious" and is being investigated as arson. The fire broke out the night of June 28 in the garage of Medina's home near the Houston suburb of Spring, also destroying one neighboring home and damaged a third. Nathan Green, the lead investigator on the case, said a dog detected an accelerant at the fire scene. He said that doesn't always mean the fire was set on purpose, but "more times than not, the presence of an accelerant is indicative of an incendiary, intentionally set fire."

[...]

  • A mortgage company filed to foreclose on the home in June 2006, according to public records. Medina and the mortgage company reached an agreement the following December, Green said. The foreclosure filing was a "very, very big red flag" for investigators, Green said. [...] Green said officials have subpoenaed cell phone and financial records of Medina family members and friends.

For more, see Fire marshal says justice's house fire was intentionally set (if link expired, try here).

For story update, see Fire at Texas Supreme Court justice's home ignites mystery (His lawyer says he is not a suspect; financial woes add to mystery) (10-12-07). zebra

Funeral Home In Foreclosure Burns Down, Feds Investigate

WXIA-TV (Atlanta, Georgia) reports:
  • A funeral home that burned during a two-alarm fire in Griffin Monday night was in foreclosure and slated to be sold in October, 11Alive News learned Tuesday.The fire broke out about 6 p.m. Monday on the second floor of the historic antebellum home that housed the Watkins and Sons Funeral Home business. Griffin fire investigators returned to the scene Tuesday, along with federal investigators from the Bureau of Alcohol, Tobacco, and Firearms as well as the state Fire Marshal's Office.

For more, see Burned Funeral Home in Foreclosure. arson zebra

Saturday, October 06, 2007

Michigan Man Gets 10 Years In Mortgage Fraud Conspiracy

In Michigan, Crain's Detroit Business reports:
  • Safi Sobh, 34, of Dearborn, was sentenced to 10 years in prison by U.S. District Judge Patrick Duggan on his May 15 jury trial conviction for leading a mortgage fraud conspiracy that used inflated appraisals on residential properties and created false applications to obtain millions of dollars in bank loans. [...] Sobh, using his realty company, The Success Group, hand-picked and taught co-conspirators how to commit these crimes, Murphy said. Eight indicted co-conspirators pleaded guilty as corrupt loan originators, processors, appraisers and straw buyers.
For more, see Man gets 10 years for mortgage fraud.

Delaware Contractor Arrested For Allegedly Defrauding Homeowner Of $200K+

The News Journal (Wilmington, Delaware) reports:

  • A 48-year-old Delaware City man has been arrested for allegedly bilking a Middletown homeowner out of more than $200,000 for contracting repairs to her fire-ravaged home, state police said today. Paul Zugehoer, of Clinton Street, was charged last week with felony home improvement fraud and felony issuing a bad check over $1,000. Zugehoer, who was identified as a self-employed insured general contractor for Absolute Equity, was released on $3,000 unsecured bail and ordered to have no further contact with the 48-year-old woman who hired him to do the work.
After paying $226,000 when given an itemized list of expenditures for over $228,000, the victim sought out two independent contractors to appraise the work completed. The first independent contractor estimated that only 20 percent of the work had been completed. The second contractor estimated the value of the 20-25 percent of work completed by Zugehoer as between $100,000 to $125,000. At that point, she contacted state police. For more, see Del. City man charged in home improvement fraud.

Go here for other posts on builders & contractors accused of stiffing customers & subcontractors. contractors stiff subs customers alpha

New Jersey Contractor Convicted Of Stealing $375K+ From Customers

The Asbury Park Press reports:
  • A 47-year-old home improvement contractor from Point Pleasant Beach has been convicted of stealing more than $375,000 from three homeowners, authorities said.
    Following a three-week trial in state Superior Court, Monmouth County, Mark A. Tracey, 47, was found guilty Thursday of five counts of theft by deception and three counts of theft of services. [...] Those homeowners had contracted with Tracey's business for home improvements, including remodeling and new construction. They paid for the work, which was started, but not completed, the news release said. Tracey also did not pay three subcontractors who completed jobs he hired them to perform, according to the Prosecutor's Office.

For more, see Home improvement contractor convicted of taking $375,000 (Man, 47, never did the work).

For press releases from the Monmouth County Prosecutor's Office:

Go here for message board on this story.

Go here for other posts on builders & contractors accused of stiffing customers & subcontractors. contractors stiff subs customers alpha

NJ Consumer Advocates Call For Law To Protect Customer Deposits Paid To Homebuilders

In New Jersey, the Asbury Park Press reports:
  • In the wake of Kara Homes Inc.'s bankruptcy, New Jersey should pass a law that would safeguard home buyers' deposits until the home is complete, a consumer group said last week. A law, modeled after an existing law in California, would change a common practice in which home builders use deposit money to fund their operations. As it stands, if a home builder goes under, buyers risk losing thousands of dollars.

  • [The bankruptcy filing] left many Kara customers in the lurch. Elliot Egenburg, 40, of New York City, put down $220,000 to purchase a Kara home at Crine West in Marlboro. The project's lender, Amboy National Bank, eventually foreclosed on the property, leaving buyers to get reimbursed through bankruptcy court.

For more, see Consumer advocates want law to protect buyers.

Go here for other posts on builders & contractors accused of stiffing customers & subcontractors. contractors stiff subs customers alpha

Friday, October 05, 2007

House OK's "Short Sale" Tax Relief Bill

The New York Times reports:
  • The House approved a measure yesterday to protect borrowers from getting a surprise tax bill from the Internal Revenue Service after lenders foreclosed on their homes.
    The bill, which still must pass in the Senate and be signed by President Bush to become law, would prevent the I.R.S. from taxing any debt forgiven in a foreclosure. The legislation would be retroactive to Jan. 1, sparing many of those who lost their homes to foreclosure this year from a surprise tax bill if their mortgage was canceled.
    The measure passed by a vote of 386 to 27.

For more, see House Passes Foreclosure Aid. short sale income tax

Florida Builders Face Criminal Charges Of Misapplication Of Construction Funds, Grand Theft, Issuing Rubber Checks

According to a recent story in the Daytona Beach News-Journal, the Flagler County, Florida Sheriff's Office has been busy investigating and charging local home builders for taking customers' money and either not performing the work contracted for, or having the work done by a subcontractor, and then not paying the sub for the work. According to the story:
  • Flagler County sheriff's Detective John Gaspar, who led two of the last three Flagler County building company investigations that resulted in arrests, said it appears to be a "trend" that local contractors and builders are involved in mismanaging their customers' money.

  • In August, investigators arrested Gregory Bleyl, owner of Osprey Custom Homes Inc., after they say he bilked 18 Russian and Ukranian immigrants out of more than $700,000. He was charged with grand theft and misapplication of construction funds and remains in the Flagler County jail.

  • And last week, authorities arrested Joseph Fasino, owner of Sandcastle Homes for operating a building scam that also involved liens on customers' homes, bad checks, and misapplication of construction funds, investigators said. Fasino is being held at the St. Johns County Jail on $287,500 bail.

In the most recent case, Herbert Heron and Noel Richardson, owners of Canterbury Estate Homes Inc. and Oxford Title Company Inc. (the company that handled Canterbury's real estate closings), were charged with grand theft, organized fraud, misapplication of construction funds and issuing worthless checks, for, among other things, allegedly taking over $400,000 from more than half a dozen people for work they promised, but never performed. For more, see Home builders charged with multiple felonies (no longer available online).

For related stories on:

  • Gregory Bleyl and Osprey Custom Homes Inc., see Poor economy boosts Flagler crime (no longer available online).
  • Joseph Fasino and Sandcastle Homes, see Another Flagler builder charged with fraud (no longer available online).

Go here for other posts on builders & contractors accused of stiffing customers & subcontractors. contractors stiff subs customers alpha

Gerogia Man Pleads Guilty In Cash Back Scheme

In Georgia, The Augusta Chronicle reports:
  • An Evans man who tried his hand at real estate admitted Tuesday morning that he played a role in a mortgage fraud scheme. Daniel Goodwin, 42, pleaded guilty in U.S. District Court, less than 24 hours after he tried to minimize his participation in a scheme to defraud mortgage brokers.

Goodwin participated in a scheme where, in the purchase of two properties, a co-participant in the deals, Marilyn Swan, was paid about $34,400 off the top for maintenance, management and repairs - services never provided. She then kicked back about $25,300 of that to Goodwin, according to the testimony of an FBI agent.

Swan pleaded guilty this summer to misprision of a felony - knowing mortgage fraud was occurring and helping to hide it. For more, see Man pleads guilty in real estate scam.

More On Proposed "Forced Mortgage Modifications" In Chapter 13 Bankruptcy

According to a U.S. Senate Press Release:
  • United States Senator Dick Durbin (D-IL) introduced legislation [Wednesday] which will allow hundreds of thousands of homeowners to modify their mortgages in bankruptcy to avoid foreclosure. The collapse of the subprime mortgage market has put approximately 2.2 million families in danger of losing their homes. Durbin’s bill, The Helping Families Save Their Homes Act, will allow these families, as a last resort, to file for Chapter 13 bankruptcy and work with a judge and the lender to modify the mortgage so families can make affordable payments and keep their homes.
Similar legislation, called the Emergency Home Ownership and Mortgage Equity Protection Act of 2007, was introduced in the U.S. House of Representatives last week. Among the things Durbin's legislation would do is:
  • Eliminate a provision of the bankruptcy law that prohibits modifications to mortgage loans on the debtor’s primary residence, so that primary mortgages are treated the same as vacation homes and family farms.

  • Extend the time frame debtors are allowed for repayment, to support long-term mortgage restructuring.

  • Waive the bankruptcy counseling requirement for families whose houses are already scheduled for foreclosure sale, so that precious time is not lost as families fight to save their homes.
For more, see Durbin Introduces Bill to Help Hundreds of Thousands of Homeowners Avoid Foreclosure.

See also:

Wells Fargo Spends $19K In Repairs On Foreclosed Home; City Demolishes It Anyway

In Cleveland, Ohio, The Cleveland Plain Dealer reports:
  • Cleveland tore down an empty century home on the city's East Side last month after a bank spent more than $19,000 to fix it up. Wells Fargo Bank of Minnesota complained, but city officials said they had no idea the house was under repair because the bank failed to obtain permits for the work. [...] The city has been on an anti-blight crusade, razing hundreds of abandoned houses at a clip, including the Wells Fargo property on East 98th Street. The bank, which foreclosed on the property, had taken title at a sheriff's sale and was restoring the condemned structure. Contractors had painted the house and repaired its slate roof, gutters and foundation. [...] Today, all that remains on the lot is a sumac tree.

In another Cleveland demolition case, a crew last May knocked down an empty two-family house after a local councilman e-mailed the Building Department asking that it be taken off the wrecking list. A prospective buyer had already fixed the garage and rewired the house.

For more, see Cleveland tears down house that was being fixed up (Cleveland steps up demolition efforts).

NY Lawyer Gets Year In Jail for Stealing $1M+ From Clients' Real Estate Escrow Funds

In White Plains, New York, The Joutnal News recently reported:
  • The more than $1 million that lawyer Eric Kellerman stole from his clients' real estate escrow funds went to pay off gambling debts and home renovations and to stake a harness racing stable. But none of that was for Eric Kellerman. Kellerman, 46, of Yonkers, gave the money to his twin brother, Paul, and two Scarsdale sisters who he said told him God wanted him to give them the money. Paul Kellerman has been sentenced to two years in prison for conspiracy to commit mail fraud. The two sisters, Ann and Mary Martin, have not been charged.

  • [Last week], a federal judge sentenced [Eric] Kellerman to a year and a day in prison for mail fraud and ordered him to repay more than $800,000 to the state bar's Lawyers Fund for Client Protection.

For more, see Yonkers lawyer gets year in prison for stealing clients' money (if link expired, try here).

Other states also have a Lawyers Fund for Client Protection that offers some protection to clients from these types of thefts.sneaky slick escrow agents beta

Thursday, October 04, 2007

Upstate NY Widow Falls Victim To Foreclosure Rescue Operator; Files Suit To Preserve Equity

In Orange County, New York, the Times Herald-Record reports:
  • [A] Long Island man who identified himself as Paul Jean, said he could save [Helen] Wargo's house from foreclosure. She believed him. But now the 64-year-old widow is losing her home. Wargo is among thousands of Americans who have fallen victim to a foreclosure rescue scam. The scam artist usually says he will buy out a family's mortgage and then have them pay rent, according to a study by the National Consumer Law Center. Other predators come in and strip the house of its equity. Many families end up evicted as a result of either scam, according to the study.

[...]

  • Wargo has turned to civil courts for help. In a lawsuit filed last year in state Supreme Court, Wargo alleges Jean forged her signature and misrepresented and/or concealed the purpose of documents, including the deed to her house. The lawsuit seeks to get her house back in her name. "Instead of soliciting permission, he bought the house from right under her," said David Maho, Wargo's lawyer. "He left her with nothing."

Reportedly, Paul Jean has disappeared. A phone number on Jean's business card was out of service when called [recently]. Other attempts to contact Jean for comment were not successful. For more, see Widow losing home after foreclosure scheme ('Rescue' scams usually involve mortgage buyout).

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.).

Minnesota Foreclosure Rescue Scammer Cops Plea To Mail Fraud

In St. Paul, Minnesota, the Shakopee Valley News reports:
  • Michael Fiorito, 39, of Prior Lake pleaded guilty to one count of mail fraud in federal court on Tuesday in connection with contriving schemes to skim equity from financially distressed and vulnerable homeowners. Fiorito, who was a mortgage broker, and his assistant, Kristen Louise Jerde, 21, of Eagan, were charged with conspiracy to commit mail fraud, three counts of mail fraud and engaging in a financial transaction with criminally derived property in federal court on June 20. The charges alleged that Fiorito and Jerde sought out and contacted vulnerable homeowners who were in foreclosure or behind on their payments, encouraged the homeowners to refinance or sell their homes and then stole some or all of the proceeds using a variety of schemes. [...] Jerde is expected to enter a plea [this week] in federal court in St. Paul.

In one deal, Fiorito convinced a Duluth woman to sell her home to him as part of a sale and leaseback arrangement to prevent the sheriff’s sale of the home. Upon the closing of the sale, Fiorito intercepted the woman’s equity check for the amount of $36,061.38. Fiorito forged her signature on the delivery receipt and claimed the FedEx envelope that contained the check.
Fiorito coerced the woman into endorsing the equity check to him. He wrote her a check for $2,200, falsely representing the equity in her home after paying him her first month’s rent- stealing $33,861.38. For more, see Prior Lake man pleads guilty in home equity schemes.

For a copy of the grand jury charges, see Indictment - U.S. vs. Fiorito & Jerde.

For other media reports on this guilty plea, see:

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.).

Florida Builders Charged With Taking Customers & Subcontractors For $400,000+

The Daytona Beach News-Journal reports:
  • The owners of another Flagler County home building company were booked into jail on multiple first-degree felony charges Tuesday. Herbert Heron and Noel Richardson, owners of Canterbury Estate Homes Inc. and Oxford Title Company Inc. (the company that handled Canterbury's real estate closings), were charged with grand theft, organized fraud, misapplication of construction funds and issuing worthless checks, investigators say. The men landed in jail after more than half a dozen people came forward saying the men took their money, more than $400,000 in total, but didn't provide the home building services they promised.

In addition to not getting what they paid for, in some cases, the customers had to pay twice for work that had been done. Reason: the builders stiffed the subcontractors for work the subs had performed, which resulted in the subs placing liens on customers' homes. The customers had to pay off the liens or risk foreclosure. For more, see Home builders charged with multiple felonies.

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

Go here for other posts on builders & contractors accused of stiffing customers & subcontractors. contractors stiff subs customers alpha

California DA Denies Need For Fraud Unit

The Bakersfield Californian reports:
  • [Kern County, California] District Attorney Ed Jagels said Tuesday that, despite recent headlines, he is not convinced real estate fraud is a big enough problem to warrant a special prosecuting unit in Kern County. "We have had remarkably few real estate fraud cases over the years," Jagels said. Jagels was responding to a proposal made Monday by Sen. Dean Florez, D-Shafter, asking the county Board of Supervisors to create a specialized fraud unit within the District Attorney's Office.

  • At least 14 other California counties have enacted similar programs, according to a Florez news release. "We absolutely need this," Florez said in a news conference Tuesday. The delicate, hidden nature of real estate fraud calls for more resources to halt the crimes, Florez said.

Reportedly, Bakersfield real estate appraiser Gary Crabtree has approached DA Jagels with several fraud cases in the past and all of them have been turned down, citing lack of resources in the DA's office as the reason.

(I suspect that robbery and theft at gunpoint or knifepoint is something this DA feels more comfortable prosecuting; the same crimes committed at "pen point" - the way real estate fraud typically goes down, is something this DA seemingly is shying away from.)

For more, see D.A.: Fraud unit not necessary.

For a related story, see Florez calls Kern 'hotbed' of mortgage meltdown (Forum gives victims chance to vent fears).

Go here for other posts on this story.

Illinois Feds Indicted Ex-Mortgage Company Owner In Alleged Flipping Scheme

In Illinois, the Springfield State Journal Register reports:
  • The former owner of a Springfield mortgage company was indicted by a federal grand jury Tuesday for allegedly providing fraudulent financing in a real estate “flipping” scheme in Springfield and Decatur that involved more than $8 million worth of transactions. Dennis R. Schneider, 53, ... who previously owned and operated State Street Mortgage and Finance Co. ..., is accused of brokering more than $3 million in fraudulent real estate sales and financing transactions from 2000 to 2003. Schneider specifically is charged with 11 counts of bank fraud, mail fraud and conspiracy to commit money laundering.
According to the indictment, Schneider helped finance deals involving Decatur businessman Gary Knox, who bought dozens of rundown rental properties, which would then be flipped for more than the homes were worth.

Mortgages were allegedly approved for amounts greater than the properties appeared to be worth, and closing statements showed that Knox sometimes pocketed thousands of dollars from the loans. The loans were then sold off, many times to out-of-state lenders, who were left stuck with them as many of the properties went into foreclosure. Some people who bought rental property from Knox and his associates ended up with multiple foreclosures.

In addition to Knox, 61, of Decatur, Frank Kelly Ciota, 46, of Riverton and Dennis Wiese, Jr., 39, a real estate appraiser from Belleville, were implicated in the scheme. Knox, Ciota and Wiese all have pleaded guilty and are awaiting sentencing.


As far as Schneider goes, each fraud count he faces carries a maximum of up to 30 years in prison; the count of conspiracy to commit money laundering carries a penalty of up to 20 years. For more, see City man indicted for ‘flipping’ real estate (Previously owned State Street Mortgage).