10 Florida Lawyers Disciplined For Conduct In Real Estate Transactions, Handling Clients' Money

The North Country Gazette reports:

• The Florida Supreme Court in recent court orders disciplined 23 attorneys, disbarring three, suspending 14, placing three on probation, reprimanding six and ordering three to pay restitution. Some attorneys received more than one form of discipline.

Among the disciplined attorneys are the following ten Florida attorneys (or now former attorneys, as the case may be) for "playing fast & loose" with clients' money and/or committing legal or ethical violations in connection with conduct in real estate transactions, according to the media report:

1) Michael Allen Bryant, suspended for 18 months, and ordered to pay restitution of $6,120.92. Bryant committed multiple ethical violations in acting as a closing agent for transactions involving the sale of a client’s home by (1) failing to disburse money in accordance with the closing statement, (2) by failing to apply funds entrusted to him for the purposes for which they were entrusted and (3) by failing to promptly give the client the money he owed her. He also failed to see that a second mortgage was duly recorded and participated as the settlement agent in what amounted to a fraud on his client,

2) Laureen Adele Cameron, to receive a public reprimand from The Florida Bar Board of Governors; placed on probation for two years; and directed to complete The Florida Bar’s trust accounting workshop. Among other things, Cameron failed to respond to a Bar subpoena for trust account records and violated Bar rules regulating trust accounts,

3) Ronald Clyde Denis, suspended for 10 days, and ordered to undergo an office procedures and record-keeping analysis. Without proper supervision from Denis, his non-lawyer assistant sent a demand letter to an insurance company on behalf of a client for the $10,000 policy limits shortly before the statute of limitations was about to run. No lawsuit was filed. The company responded with a $1,000 settlement offer, which the client refused. Denis then closed the file, took no further action on the case and didn’t inform the client,

4) Kevin Alan Fuller, reprimanded and directed to attend "Ethics School" (Editor's query: what's ethics school???). Among other things, Fuller failed to competently represent a client by not taking the necessary steps to enforce a company’s Claim of Lien, resulting in the lien expiring,

5) William Garcia, permanently disbarred. In September, Garcia pleaded guilty to 13 felonies including grand theft, money laundering, obtaining a mortgage by false representation and false reporting by bank officers with the intent to defraud. He received a sentence of 10 years reporting probation. Multiple counts were not prosecuted in a plea arrangement that included Garcia agreeing to both give up his law license in Florida and not to seek one in any state and to be liable for $500,000 in criminal investigation costs,

6) Mark T. Guariglia, permanently disbarred, and additionally ordered to pay restitution to The Florida Bar’s Clients' Security Fund for any payments made as the result of his misconduct. After not complying with a subpoena for trust account records, Guariglia’s bank, in response to a subpoena, produced them. The records showed he had misappropriated thousands of dollars of clients’ funds, using the money from recent deposits to satisfy obligations incurred in prior periods (Ponzi scheme???) and also using funds for his own purposes. In one case, he misappropriated $155,700.53,

7) Robert Michael Marasco, ordered to receive a public reprimand and placed on probation for two years. During the probation, a certified public accountant will monthly review Marasco’s trust account records. Additionally Marasco will undergo an office procedures and record-keeping analysis. An audit revealed that Marasco was negligent in bookkeeping resulting in his trust account not being in substantial compliance with Bar rules,

8) Peter William Martin, suspended for three years, and ordered to pay restitution totaling $29,990 to two clients. Responding to a Bar complaint that he had misappropriated $19,500 from a client, Martin failed to produce trust account records and bank statements. A year later, he sent a check to the former client for $19,500 but could not account for another $9,900 belonging to the client. In another case, there was a shortage of $20,000,

9) Martin Kirby Watson, St. Petersburg, disbarred. He also agreed to make reasonable efforts to reimburse the Clients' Security Fund of The Florida Bar if payments are made as a result of his conduct. Watson was hired in February 2006 to administer a trust and will with assets of $523,074.17. In June 2006, he requested the personal representative of the estate write a check for $288,712.52 to be put in his trust account for final distribution of estate proceeds. He distributed only $50,000 and by the end of 2006, no distribution of the remaining funds had been made. Watson has not returned all the money,

10) Alberto Jose Xiques, suspended for three years. Xiques wrote a check from his operating fund for $55,136.39 to pay for the mortgage documents and intangible tax on a mortgage and security agreement in the sale of a Miami property. The check, which was not honored twice for insufficient funds, should have come from Xiques’ trust account. Additionally, on the same day, he wrote a check for $8,112.50 on his operating account to the clerk of the circuit court for state tax/stamps on the deed for the transaction. The tax on the sale of the property should have been $81,000. Civil complaints later dismissed by Gibraltar Private Bank and Trust Co. indicated Xiques did not have sufficient funds in trust accounts to cover obligations in one case and did not timely pay a mortgage and record it in another.

For more, see Florida Supreme Court Disbars Three Attorneys.

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

If a Florida attorney is representing you and screws you out of money or property through dishonest conduct, go to The Florida Bar's Clients' Security Fund for more information.
For other states, see:

• Directory Of Lawyers' Funds For Client Protection (American Bar Association - November, 2007);
• Check the USA Client Protection Funds Map; or
• try this "Google" search.

Ohio AG On Anti-Meth Initiative

Ohio Attorney General Marc Dann has announced this month initiatives he is pursuing with some local Ohio law enforcement agencies in stepping up the pressure to bust up meth lab operations throughout Ohio. For more, see:

• Ohio AG Press Release (12-17-07) - Attorney General Marc Dann, Clermont County Sheriff A.J. Rodenberg, and Highland County Sheriff Ron Ward Announce New, Aggressive Anti-Meth Effort,
• Ohio AG Press Release (12-14-07) - Attorney General Marc Dann and Ashtabula County Sheriff William Johnson Announce Aggressive Anti-Meth Project.

Go here for some methamphetamine information resources.

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

Tennessee Gets $1.1M In Fed Funds To Fight Meth

In Tennessee, The Murfreesboro Post reports:

• U.S. Rep. Bart Gordon has helped to secure $1.1 million in federal funding to help state and local officials fight methamphetamine production and abuse. “Strong state and federal laws are making an impact on meth production, but we still have too many meth labs in Tennessee,” said Gordon. “Last year, Tennessee had more meth lab seizures than all but four states. Law enforcement needs better ways to detect clandestine meth labs and more resources to educate the community about the dangers of meth abuse.”

For more, see Gordon secures $1.1 M to combat meth In Tennessee.

Go here for some methamphetamine information resources.

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

More On Neighborhood Meth Labs

The following are stories, some recent - some not-so-recent - related to the operation of local neighborhood meth labs:

Hollywood, Florida: Hollywood homes evacuated as suspected meth lab found (Cops find home used as a meth lab, and which also contained several high-powered weapons, ammunition and grenades. Police evacuated between 40 and 50 homes in a two-block area).

Dundee, Minnesota: Cleaning up the meth mess (Describes what a remediation company is up against when a home is assessed and declared to be contaminated by meth),

Upton, Kentucky: Task force takes down another meth lab (Greater Hardin County Drug Task Force agents assisting Kentucky State Police reported a third meth lab within a week being found inside Hardin County. Local drug task force agents report finding more than a dozen labs within the past month),

Powell River, Canada: Police launch meth lab raid (Cops raid and dismantle a small methamphetamine lab in a rental house, resulting in the evacuation of some of the building's tenants),

Berkeley County, South Carolina: Berkeley County Deputies Bust Meth Lab (Several nearby business, including a day care, under voluntary evacuation as a precaution),

Phelan, Alabama: 4 Phelen residents arrested in meth bust (Hazmat unit decontaminated the area and the four suspects before locking them up & holding them on a $1 million property bond),

Charleston, West Virginia: Man indicted for running meth lab (Police say suspect was using lithium in a rare manufacturing process called "the Nazi method," a highly dangerous technique that poses significant explosion risk. Authorities evacuated neighbors around the home for more than 12 hours while a crew dismantled the lab and cleaned up the dangerous materials. A bomb squad was called in as a precaution.).

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

For the kinds of health and safety concerns arising from using homes to manufacture methamphetamine, not to mention the kind of damage such operations can inflict on a home, see:

• Beware Of Homes Used As Indoor Pot Farms & Meth Labs,
• Homes Toxic Home (Buyers Beware: Owners of homes once used as methamphetamine labs are having health problems -- and sometimes going broke trying to clean up their toxic houses) (no longer available online).

Go here for some methamphetamine information resources.

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

President Signs Into Law 3-Year Suspension Of Taxability Of Mortgage Debt Cancellation Income On Foreclosure & Short Sales

The Associated Press reports:

• U.S. President Bush on Thursday signed a measure to provide financial relief for financially strapped homeowners facing foreclosure or in bankruptcy. The bill gives a tax break to homeowners who have mortgage debt forgiven as part of a foreclosure or renegotiation of a loan. No taxes would be owed on the value of any debt forgiven or written off. Currently such debt forgiveness is taxable income. "When you're worried about making your payments, higher taxes are the last thing you need to worry about," Bush said in a bill-signing ceremony. He stood along side members of his Cabinet and lawmakers who pushed the measure.

For more, see Bush comes to aid of homeowners.

See also IRS Publication 4681: Canceled Debts, Foreclosures, Reposessions and Abandonments.

According to a Fact Sheet issued by the White House, "This Act [The Mortgage Forgiveness Debt Relief Act of 2007] will create a three-year window for homeowners to refinance their mortgage and pay no taxes on any debt forgiveness that they receive. Under current law, if the value of your house declines, and your bank or lender forgives a portion of your mortgage, the tax code treats the amount forgiven as income that can be taxed." short sale income tax

WaMu Under Federal Inquiry, Says Report

In Washington State, the Seattle Post Intelligencer reports:

• The Securities and Exchange Commission is looking into Washington Mutual Inc.'s mortgage lending practices, deepening a controversy over whether the Seattle-based company pressured appraisers to come up with inflated values to justify making home loans. The Wall Street Journal, citing unnamed sources, reported late Thursday that the SEC wants to know whether "the company properly accounted for its loans in financial disclosures to investors of the company." Washington Mutual confirmed the inquiry in a statement issued Thursday.

For more, see SEC starts inquiry of WaMu (Federal panel to study mortgage lending practices).

For The Wall Street Journal story, see SEC Probes WaMu on Appraisals (Regulator Checks Handling Of Loans Possibly Based On Inflated Valuations). (may require subscription, if no subscription, go here - then click link for story).

For a related post on the alleged pressuring of appraisers by WaMu, see First American Issued Phony Appraisals, Charges NY AG; Execs Knew It & Allowed It Anyway, Says Suit.

Atlanta Scam Results In $6.8M In Fraudulently Obtained Loans From Bear; May Reflect Recklessness With Which Mortgage $ Was Handed Out

The Wall Street Journal reports:

• Skyrocketing foreclosures are a testament to how easy it was to borrow from mortgage lenders in recent years. It may also have been easy to steal from them, to judge from a multimillion-dollar fraud scheme that federal prosecutors unraveled here in Atlanta. The criminals obtained $6.8 million in mortgages from Bear Stearns Cos., including a $1.8 million mortgage to Calvin Wright, a New Yorker who told the investment bank that he and his wife earned more than $50,000 a month as the top officers of a marketing firm. Mr. Wright submitted statements showing assets of $3 million, a federal indictment alleged.

• In fact, Mr. Wright was a phone technician earning only $105,000 a year, with assets of only $35,000, and his wife was a homemaker. The palm-tree-lined mansion they purchased with Bear Stearns's $1.8 million recently sold out of foreclosure for just $1.1 million. Bear Stearns, meanwhile, posted the first quarterly loss in its 84-year history as it wrote down $1.9 billion of mortgage assets yesterday.

For more, see Fraud Seen as a Driver In Wave of Foreclosures (Atlanta Ring Scams Bear Stearns, Getting $6.8 Million in Loans). (may require subscription; if no subscription, go here - then click link for the story).

For a related opinion column, see Mortgage tale is a dopey one (The Denver Post) ("Banks around the world have written down more than $100 billion in bad mortgages").

Cleveland-Area Prosecutor Indicts 30 In Widespread Fraud Racket

In Cuyahoga County, Ohio, WKYC-TV Channel 3 reports that 30 people have been indicted in what Cuyahoga County Prosecutor Bill Mason called "the biggest foreclosure scam Cuyahoga County has ever tackled." The indictments were announced Thursday and charged that a scheme involving 51 houses in neighborhoods throughout the county were involved. According to the story:

• Six of the 30 indicted were charged under RICO laws, accusing them of engaging in a pattern of corrupt activity. [...] Mason says today's indictment is part of a larger enterprise involving more than 60 million dollars in fraudulent loans by various people and more than 500 pieces of real estate. The value of the properties involved in today's indictment is nearly $5 million. Forty of the houses are in foreclosure or tax delinquent status. The indictment alleges Otis Bevel, his family, and several others were in the business of fraudulently purchasing homes. They ordered, picked up and passed on false or fictitious loan documents to title companies to submit to lenders so that a customer would purchase real estate which they were not qualified to purchase, said Mason.

For more, see Prosecutor: Biggest local foreclosure scam ever (read story) (watch video).

17 Indicted In Alleged Akron Fraud Racket; 147 Count Indictment Announced

In Summit County, Ohio, local media outlets report the announcement of a 147-count indictment which outlines the alleged schemes involving a group of Evergreen companies in Akron, and Carnation Banc, a local mortgage-banking company. The alleged schemes reportedly claimed 500+ victims. The indictments were the result of a mortgage fraud investigation conducted by an Ohio joint state/local task force. According to the reports:

• On Thursday, investigators announced the indictment of 17 suspects, including Evergreen's President, David Willan, and six other company employees. "David Willan sold more than 300 homes in a two-year period," said Summit County Prosecutor Sherri Bevan Walsh. "Currently, 42.7 percent of those homes have been foreclosed." Those foreclosed properties are valued at more than $6 million, Walsh said. Also indicted were four employees of Carnation Banc.

***

• It was an extensive two-year investigation into Akron-area mortgage fraud — about 800,000 pages of documents and thousands of manpower hours costing taxpayers millions. [... The indictment] alleg[ed] a web of predatory borrowing and securities scams that allegedly bilked investors, homeowners and lenders out of at least $16 million.

***

• A captain from the [Summit County] Sheriff's Office was assigned to lead the investigation. The state provided financial assistance. The Ohio Attorney General's Office provided an investigator and a forensic accountant. The task force also included Sheriff's Office detectives, Summit County prosecutors, Cuyahoga Falls detectives and an Akron police detective.

It appears that Carnation Banc's president Craig Conner won the race to the prosecutor's office, reportedly waiving the reading of his indictment, pleading guilty to 22 felonies, and agreeing to start singing against his now former alleged confederates (no doubt an attempt at getting an easier sentence), according to prosecutor Walsh.

For more, see:

• Charges called the first wave in fraud probe (17 people, two Akron companies face 147 counts. More action expected across Ohio in investigation of mortgage, securities scams that raked in millions) (Akron Beacon Journal),
• Summit County announces 17 indictments in mortgage lending scheme (Cleveland Plain Dealer),
• Mortgage-fraud indictments announced in Summit (Akron Beacon Journal),
• Home mortgage scheme nets 17 indictments (WKYC-TV Channel 3) (read story) (watch video).

Go here for other posts on this story.

Ohio Landlord Faces Federal Equity Skimming Charges; Allegedly Pocketed Tenant Rent, Allowed HUD-Insured Mortgages To Go Into Default

In a recent press release, Gregory A. White, United States Attorney for the Northern District of Ohio, announced that a federal Grand Jury in Cleveland returned a nine-count indictment charging three individuals and one property management company with various offenses involving fraud against the United States Department of Housing and Urban Development (HUD).

Among the charges was a charge of equity skimming, in which, according to the press release:

• The indictment [...] alleges that the defendants defrauded HUD by failing to make timely payments on the HUD-insured mortgages for [two housing projects], resulting in additional multi-million dollar losses to HUD. Moreover, the defendants used project funds to pay personal expenses and other unauthorized expenditures in violation of regulatory agreements between the projects and HUD. The total loss to HUD was more than $5 million.

Charged in the indictment were Martin L. Shulman, 54, his wife, Gail R. Shulman, 53, Keyetta L. Williams, 35, and S.B.G. Management, Inc., the management company that the Shulmans operated. For more, see the U.S. Attorney News Release.

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

For those looking for some Federal case law applying federal equity skimming statutes in cases where Federal authorities have prosecuted landlords / property owners who collected rent from real estate and stiffed FHA-insured or VA-guaranteed mortgage lenders, see:

• U.S. v. Weaver, 290 F.3d 1166 (9th Cir. 2002) (foreclosure rescue operator found guilty),
• U.S. v. Travers, 233 F.3d 1327 (11th Cir. 2000),
• U.S. v. Beckley, 97 F.3d 507, (11th Cir. 1996),
• U.S. v. Laykin, 886 F.2d 1534, 1537 (9th Cir.1989),
• U.S. v. Capano, 786 F.2d 122 (3d Cir.1986).

For a California state appellate court case convicting a property owner for pocketing rent while stiffing mortgage lenders and allowing houses to go into foreclosure, in violation of the state's rent skimming statute, Section 890 through Section 894 of the California Civil Code, see People v. Lapcheske (Cal. App. Ct. 1999) (may require free registration).

Go here for Sample Indictment -- Equity Skimming, 18 U.S.C. § 157 (Source: U.S. Attorney Criminal Resource Manual - Title 9 - #882).

Former Texas Preacher Cops Plea In Mortgage Scam; Remains In Hot Water

In Brazoria County, Texas, The Facts reports that former Lake Jackson preacher Harold Higgins , 50, of Missouri City will serve five years’ probation and must pay $18,000 restitution after pleading guilty to three charges Thursday as part of a plea agreement. He was accused of perpetrating a straw buyer scheme on potential homeowners and bilking a woman out of about $10,000. Higgins pleaded guilty to hindering a secured creditor, misdemeanor theft and engaging in organized criminal activity. He has already paid about half of the restitution.

This plea deal with the Brazoria County prosecutor does not get Higgins out of hot water, however. According to the story:

• Higgins was arrested last week in Harris County after being indicted, along with 36 others, and is accused of participating in a similar mortgage scheme there. One of those indicted in Harris County, Obbie Toliver, was named in Higgins’ Brazoria County indictment, though he was not indicted here.

For more, see Former preacher pleads guilty.

For more on the Harris County indictments, see Dozens Charged In Alleged Houston-Area Straw Buyer Fraud Scam.

Ohio Chief Justice Calls For Pro Bono Legal Assistance For Homeowners Facing Foreclosure

In Ohio, a post on the Cleveland Plain Dealer blog reports:

• Ohio Supreme Court Chief Justice Thomas J. Moyer wants lawyers in the state to provide free assistance to people on the brink of losing their homes. He has called on attorneys to help homeowners facing foreclosure to negotiate deals with lenders to stem the crisis that is threatening the nation's economy as well as the livelihood of hundreds of thousands of people. The push follows a series of meetings Moyer held Thursday and earlier this week with state and county officials and representatives from legal aid organizations. Attorney General Marc Dann, who attended one of the meetings, is lending Moyer his support.

***

• Many people scoff at efforts to help those caught up in the foreclosure mess, criticizing those who took out loans they cannot repay. But Dann said the crisis threatens entire communities. Foreclosed homes often sit empty, leading to lower values for nearby homes and increasing neighborhood crime rates. It also diminishes the amount of property taxes available for such public services as road improvements and law enforcement.

For more, see Chief Justice Thomas J. Moyer asks lawyers to aid in Ohio foreclosure cases.

For follow-up post, see 200+ Ohio Attorneys Step Up In Response To State Chief Justice Call For Volunteers.

Go here for stories on how homeowners are using the Federal Truth In Lending Act to undo toxic mortgage refinances.

Editor's Note:

As was shown on the ABC News' Nightline program last Friday night, attorneys representing homeowners facing foreclosure need not do it "for free", but rather, can do it on a "contingency fee" basis. (In such an arrangement, the attorney's fee is limited to whatever money is recovered, whether by settlement or judgment - including statutorily mandated, court ordered attorney fee awards - from the mortgage company for violating, in this context, one or more of a slew of consumer protection statutes. Such an arrangement costs the homeowner facing foreclosure nothing out of pocket.). Nightline featured, among others, North Carolina attorney Max Gardner, who practices consumer bankruptcy litigation and, according to his website, takes on consumer bankruptcy clients on a contingency fee basis.

For a BusinessWeek feature story on consumer bankruptcy attorney Max Gardner, see Bankruptcy Boot Camp (How one man is training an army of lawyers to fight predatory lenders):

• "[G]ardner's model advocates scouring for violations [of applicable law] that occur during the lending process and while the borrower is in bankruptcy protection."

For an earlier post on attorneys obtaining court-ordered legal fee awards in pro bono cases, see NY Lawyers Land Legal Fee Of $1 Million In Pro Bono Case.

For more on last Friday night's Nightline program, see:

• ABC News' Nightline On Alleged Mortgage Servicing Company Ripoffs,
• 'Playing the Odds' (Lawyer Max Gardner Says Some Mortgage Servicers May Be Taking Homeowners for a Ride).

Boca Builder Facing Foreclosure; May Leave Dozens Of Stiffed Subs, 30+ Homebuyers Holding The Bag

In Palm Beach County, Florida, the Daily Business Review reports:

• Bank of America is eager to recover $20.5 million it lent to Boca Raton-based developer Sterling Communities to build a luxury community of single-family homes in Lake Worth. [...] Sterling, headed by president Paul W. Asfahl, owes money to numerous subcontractors who worked at Talavera, a community northeast of State Road 7 and Lake Worth Road with 77 single-family homes with starting prices ranging from $700,000 to $1.5 million. The contractors are among 86 defendants named in the lawsuit.

***

• At Talavera, Sterling has closed on about 49 homes, according to Palm Beach County public records. [...] Dozens of contractors are named in Bank of America’s suit, including Certified Security Systems, which is owed about $60,000, Florida Builder Appliances, $35,000; Production Plumbing, $41,828; and Dobson Construction Services and Roofing, about $31,000. [...] A subcontractor, who spoke on condition of anonymity, said Sterling paid him for his services but the checks bounced. Several homebuyers who had deposits to purchase Talavera houses are also named in the lawsuit.

For more, see Bank of America files foreclosure suit against builder Sterling Communities.

To view the lawsuit, see Bank of America v. Sterling Communities at Talavera, LLC, et al.

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

"Billy The Kid" Cops Guilty Plea In North Jersey Flipping Scam

In Northern New Jersey, The Star Ledger reports:

• An unlicensed real estate appraiser known as "Billy the Kid" pleaded guilty yesterday for his role in a mortgage scam used to flip dozens of rundown properties rented by low-income families on federal assistance. William Ottaviano, 41, of Branchville admitted inflating the value of dozens of multifamily houses in a series of sales orchestrated by Michael Eliasof, a Paterson real estate manager who pleaded guilty last month in the scheme that officials said netted as much as $2.5 million. The operation has been tied to Garfield's long-time municipal court judge, William Colacino Jr., who has not been charged, but has been named as an unindicted co- conspirator in the ongoing criminal investigation.

***

• The case revolves around the sale of dilapidated residential properties throughout the city of Paterson that were quickly sold at inflated prices to obtain higher mortgages from banks. The houses were rented by tenants receiving federal Section 8 assistance, but most of the houses, sold to buyers with no money down, ended up in foreclosure.

For more, see Home appraiser pleads guilty in flipping scam (Paterson plot reportedly netted $2.5 million).

Go here for other posts on this flipping scam.

Cook County Prosecutors Charge 15 In Alleged Cash Back Fraud Racket Involving At Least 9 Homes Worth $4M+

In Chicago, Illinois, The Southtown Star reports:

• In what authorities say is a symptom of the excesses in the subprime mortgage market, 15 people have been charged with fraud involving at least nine homes valued at more than $4 million. The scam - led by a mortgage broker and a real estate agent - involved "straw buyers" taking out mortgages on homes for more than the asking price, Cook County prosecutors said. They said the extra money allegedly was divvied up among the participants. [...] The "common thread" was Durrel Castile, 26, and Andrew Lewis Jr., 34, Assistant State's Attorney Karyn Stratton said.

For more, see 15 people charged in mortgage scheme.

Illinois Feds Charge 3 For Fraudulently Obtaining FHA-Backed Mortgages

In Rockford, Illinois, the Rockford Register Star reports:

• A Rockford loan officer and two others were charged today with generating thousands of dollars in commissions by creating fake documents to get unqualified families loans backed by the Federal Housing Authority. Mitchel A. Fuchs, 40, also known as Mike Fox, was charged with mortgage fraud in a 14-count indictment. Also charged were 25-year-old Jessica L. Gibson of Loves Park, who was Fuchs’ mortgage-loan processor, and Frank G. Anast, 58, of Rockford, who was self-employed in computer work.

According to the allegations:

1. Fuchs created fictitious cashier’s checks and bank checks to give the appearance that his customers had invested their own funds in the properties they were buying,
2. Fuchs paid Anast to create fictitious pay stubs and W-2s for Fuchs’ loan customers,
3. Fuchs and Gibson altered pay stubs and W-2s for other customers, changed credit reports and created fake investment statements.

The case is being prosecuted by office of the U.S. Attorney for the Northern District of Illinois.

For more, see 3 charged in another mortgage fraud ring.

Illinois Loan Officer Gets 20 Months In FHA Mortgage Scam

In Rockford, Illinois, the Rockford Register Star reports:

• A former Rockford loan officer was sentenced to 20 months in federal prison and fined nearly $500,000 for her part in a five-person mortgage fraud ring that ran from 2001 to 2003. Rhonda Torossian, 46, of Rockford was sentenced today in federal court. She was the third of the five to be sentenced and the first to receive prison time in the scheme where the group falsified Social Security numbers, created fraudulent employment verifications, bank checks and credit letters so families could receive mortgage loans insured by the Federal Housing Authority.

For more, see Ex-Rockford loan officer's sentence includes no chance of parole.

Alaska Feds Nail 9 In Alleged Mortgage Fraud Operation

In Anchorage, Alaska, KTUU-TV Channel 2 reports:

• Federal prosecutors say they have uncovered the largest case of mortgage fraud in state history. [...] Prosecutors say in Anchorage shady deals and swindling had a group of real estate wrong doers cashing in. They charged nine people on 64 counts including conspiracy, wire fraud, bank fraud and false statements. [...] The group's ring leader is said to be 34-year-old broker Lance Lockard. Authorities caught up to Lockard Friday in Florida.

Reportedly, in one of the alleged schemes, seven homes on one street and six more on another street only a block away, were all financed to the same person at the same time. Two of the alleged scam members are accused of arranging 12 different lenders so each would be in the dark that the same buyer was involved on each one.

The alleged scam members pocketed $1.7 million and lenders have lost $1 million to date with more foreclosures pending, according to the charges. The prosecutors from the U.S. Attorney's office in Anchorage say that the overall racket involved every level of professional in a real estate transaction.

For more, see Feds bust mortgage swindlers (read story) (watch video).

See also,

• Nine charged with mortgage fraud (Phony loans net alleged conspirators $1.7 million over 3 years) (Anchorage Daily News),
• U.S. Attorney's press release.

California Loan Coordinator Admits Lying To Grand Jury In Federal Fraud Probe

In Northern California, the San Francisco Chronicle reports:

• An Alameda County man pleaded guilty Monday to lying to a federal grand jury that is investigating subprime mortgage fraud in San Joaquin County, prosecutors said. John Ngo, 27, of Dublin, a former senior loan coordinator for Long Beach Mortgage Co., admitted receiving payments from the company's sales representatives to get loan applications approved despite knowing that many of the applications were fraudulent, said the office of U.S. Attorney McGregor Scott in Sacramento.

Acording to prosecutors, Ngo admitted that he lied about having pocketed money from a mortgage broker who referred loan applications to the company. He had actually received about $100,000, mostly to "put in the fix" in the approval process, insuring that bogus applications were given the green light. Prosecutors say Ngo has agreed to cooperate with the investigation, in which prosecutors are seeking to nail several others currently under indictment.

Ngo was nailed amid a federal probe into Stockton's Iftikhar Ahmad, who is currently under indictment for allegedly illegally flipped houses in the Stockton area. For more, see:

• Guilty plea in subprime mortgage scam,
• Man pleads guilty in mortgage fraud (Stockton Record),
• U.S. Attorney press release.

Florida Closing Agent Gets 3 Years In Scam Involving $17M+ In Fraudulently Obtained Mortgages

In Jacksonville, Florida, The Florida Times-Union reports:

• The manager of a title agency in Jacksonville was sentenced to three years in federal prison Monday for being part of a mortgage scam that collected millions of dollars from dishonest loans on upscale homes. Robert W. Hulbert, 46, was the closing agent on some mortgages and arranged loans on two properties he bought personally, according to a news release from the U.S. Attorney's Office. Hulbert managed the Jacksonville branch of Nations Title Agency of Florida.

Prosecutors say the fraudulently obtained mortgages totaled $17.7 million, of which scam members pocketed about $4 million. The case was prosecuted by the U.S. Attorney's Office in Jacksonville. For more, see:

• Mortgage scammers get 3 years, must pay $1.2 million,
• U.S. Attorney press release.

NYC Foreclosure Rescue Operator Back In The News

In New York City, WABC-TV Channel 7 ran a follow-up story on Monday on the now well-known area foreclosure rescue operator, Brooklyn based Home Savers Consulting Corp. Two separate criminal investigations are reportedly (still) underway into the rescue firm. Channel 7 investigative reporter Sarah Wallace speaks with two more homeowners who fell victim to the alleged equity stripping scam orchestrated by Home Savers' principal, Phil Simon, by unwittingly signing over their homes to a straw buyer.

Channel 7 was able to catch up with Phil Simon (I mean, they literally caught up with him - when Simon saw the Channel 7 camera, he started running away. Wallace, with microphone in hand and camera person in tow, chased Simon down a Brooklyn street before he relented and consented to speak to her). Simon had little to say, however, other than to refer questions to his attorney. Home Savers' co-principal, Garth Celestine, was conspicuous by his absence in this report.

For the transcript of the story, and a link to the Channel 7 video, see Homes stolen by 'Home Savers'? (Heartbroken people lose homes, equity to "Home Savers").

For the earlier Channel 7 report on Home Savers which aired in late November, see A Home Mortgage Mess.

Go here for other posts on Home Savers Consulting Corp, including links to a couple of the civil lawsuits it has been recently facing.

For a related post, see Foreclosure Rescue - For Criminal Prosecutors Only.

Editor's Note:

According to the law of the State of New York at one time (see Marden v. Dorthy, 160 N. Y. 39 (NY 1899)):

• fraudulently procuring the signature of another to an instrument which he has no intention of signing constituted forgery on the part of the procurer. It was not necessary that the act of forgery be done by the hand of the person being charged. It was sufficient that the forgerer caused or procured it to be done; and


• if the scammed homeowner, during all the time covered by the fraudulent transactions, was in possession of the real property in question, the legal effect of the homeowner's possession constituted notice of the homeowner's rights to the property to all the world, including subsequent purchasers and encumbrancers.

If this is still the law in New York, state and local law enforcement authorities may have grounds to charge these foreclosure rescue operators with forgery. Further, inasmuch as it is generally considered that a forged deed is void, it conveys no title. Accordingly, the scammed homeowners would still own their homes. The burden of the foreclosure rescue scam would be borne by the foreclosure rescue operator, the straw buyer, and the financial institution who financed the equity stripping transaction (and, possibly, the title underwriter who issued the title insurance policies). If anyone knows for sure that Marden v. Dorthy no longer is reflective of New York law, please drop me a line at HomeEquityTheft@yahoo.com and tell me specifically why not (while I understand that the case is over 100 years old, that in itself doesn't make the case obsolete. Unlike a loaf of bread, court decisions of the highest court of the state don't grow stale by the mere passage of time).

One final note. Even if the deed is not considered a forgery, the foreclosure rescue transaction would still have to withstand scrutiny as an equitable mortgage (and, depending on how much profit the operator pocketed, the claim may be that of a usurious equitable mortgage). Possession by the homeowner throughout the transaction would appear to, as noted above, constitute "notice to the world" of the scammed homeowner's rights in the home, thereby denying "bona fide purchaser / encumbrancer" status to the straw buyer, the lending institution financing the deal, or anyone else who subsequently acquired an interest in the home.

Feds Investigate Possible Flipping Scam In One Northern Virginia Subdivision

In Northern Virginia, The Washington Post reports on a Federal home flipping investigation taking shape in one Northern Virginia subdivision. The subdivision is part of a sprawling 186-acre community being developed by D.R. Horton of Fort Worth, one of the nation's largest home builders. According to the story:

• Sources with knowledge of the probe at the Villages at Rippon Landing said investigators are examining why a number of townhouses in a five-block area were bought and resold quickly, for a large profit, even as the real estate market was cooling and unsold homes dotted the neighborhood. The new buyers sometimes failed to pay the mortgages, sending homes into foreclosure and hurting lenders. Renters found themselves unexpectedly forced to move. The FBI this month launched a mortgage fraud task force, gathering federal prosecutors and law enforcement officials from Prince William, Loudoun and Fairfax counties to map out a strategy to tackle the issue region-wide.

Reportedly, some of those townhouses were never occupied and went into foreclosure. Other townhouses were used in rent skimming scams. In those cases, properties were rented to tenants and rent collected from them while at the same time, mortgage payments went unpaid, thereby allowing the properties to go into foreclosure.

For more, see FBI Probes Virginia Mortgage Scam (Townhouses Bought and Sold for Big Profits as Market Was Cooling).

Predatory Reverse Mortgage Scams Beginning To Surface?

The Miami Herald reports:

• With the housing market in decline, unscrupulous sales agents are popping up in the booming reverse mortgage industry, where reports of deceptive and high-pressure sales tactics are worrying lawmakers and consumer advocates alike. [...] Peter Bell, president of the National Reverse Mortgage Loan Association, said he doesn't believe the problem is widespread. But he conceded that sales agents left jobless by the housing crisis are migrating to the reverse mortgage industry and may "have a different type of mentality about moving transactions through quickly.''

***

• In [U.S. Congressional] committee testimony, [...], Prescott Cole, a lawyer from San Francisco, said some sales agents seeking larger commissions are wrongly advising seniors to buy tax-deferred annuities with their loan proceeds. [...] In one case, a 92-year-old man put $650,000 in a deferred annuity and died two years later, Cole said. But because the annuity didn't mature until 2063, the dead man's family had to pay a $150,000 fee to break the contract and access the money, said Cole, who works on behalf of the national Coalition to End Elder Financial Abuse.

• ''Long-term annuities are almost always inappropriate for seniors, as they can tie up retirement savings far beyond one's life expectancy,'' said Sen. Herb Kohl, D-Wis.

• The nation's largest provider of reverse mortgages, Financial Freedom Senior Funding Corp. of Irvine, Calif., is at the center of the controversy because of several lawsuits that allege borrowers were steered into inappropriate loans and annuities by sales agents and insurance brokers working in concert.

For more, see Seniors at risk from predatory lenders (As the popularity of reverse mortgages for seniors grows, the industry is proving fertile ground for predatory lenders, loan agents and brokers who see older, cash-strapped borrowers as easy pickings) (if link expired, try here or try here).

Go here for stories related to Reverse Mortgage Problems.

See also, Be wary of tapping into reverse mortgages (North Country Times):

• "We are seeing an increase in sales agents who have perfected the technique of selling annuities by playing on the seniors' fears of going into nursing homes or outliving their assets," said Prescott Coles, a spokesman for the coalition, as he testified before the committee.

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

More On Reverse Mortgage Traps

Use of vague default provisions buried in the text of a reverse mortgage agreement is named as a source of concern by a consumer watchdog, according to an article in The Sydney Morning Herald. To read more, see Traps for older players.

Go here for stories related to Reverse Mortgage Problems. zebra

Complaint Claims Consumer Clipped For $50K+ By Mortgage Servicer

According to a lawsuit recently filed in a West Virginia state court, Select Portfolio Servicing, Inc. (the firm formerly known as Fairbanks Capital Corp.) is being accused of collecting over $50,000 more than what was due from a West Virginia homeowner, whose mortgage balance had been previously reduced pursuant to a legal settlement in a previously litigated class action lawsuit. The current lawsuit, filed on November 14, 2007, alleges, among other things:

• "The Defendant [Select] failed to follow the ordered new payoff schedule consistent with the reduced loan. Despite the Court Order, the Defendant continued to treat the entirety of the loan as due, and have month-by-month demanded the full payment. Since January 2001, the Defendant has sent over eighty-two demands for payment that misrepresent the total amount due."

In a procedural maneuver, counsel for Select has filed a request last week to move the case from the state court to a West Virginia Federal Court.

Representing the consumer is attorney Daniel F. Hedges, Charleston, West Virginia.

To view the lawsuit, see Helen B. Moss v. Select Portfolio Servicing, Inc. f/k/a Fairbanks Capital Corp.

To view the request to move the case, see Notice of Removal. questionable mortgage servicing practices tactics yak

Race Discrimination, Civil Rights Violations Alleged In Predatory Mortgage Servicing Lawsuit - Class Action Status Sought

A lawsuit filed in a New Haven, Connecticut Federal Court last week alleges that Wall Street investment banking firm Bear Stearns and its EMC Mortgage servicing unit engaged in:

• "[r]acially discriminatory practices ... in servicing near-prime and sub-prime residential home loans" and claims that "EMC and Bear Stearns intentionally sought out non-prime loans, predominanly made to Hispanics and African Americans, in order to reap profits from their predatory servicing practices."

The predatory servicing practices complained of in the suit include:

• "[t]he imposition of unwarranted fees and costs, the pyramiding of late fees, the unjustifiable force-placing of insurance, the failure to properly credit payments, the unwarranted reporting of derogatory information regarding borrowers to credit reporting agencies, and the failure to properly administer escrow accounts."

Representing the homeowners are the firms Butler Norris & Gold, Hartford, Connecticut, and James, Hoyer, Newcomer & Smiljanich PA., Tampa, Florida.

To view the lawsuit:

• go to this direct link for Rodriguez v. Bear Stearns on the PACER system (PACER registration required - 31 pages - $2.40); or


• drop me a line at HomeEquityTheft@yahoo.com (put "Rodriguez v. Bear Stearns" in the subject line) and I'll e-mail it to you.

See also, Bear Stearns Mortgage Unit Accused of Predatory Loan Servicing (Bloomberg News).
.
Go here and go here for other posts on alleged race bias in real estate transactions.

Go here , go here , and go here for posts on questionable mortgage servicing practices. questionable mortgage servicing practices tactics yak race bias predatory lending

One View Of The Mortgage Loan Servicing Industry

For an interesting look at one point of view of the mortgage servicing industry, check out this YouTube video on mortgage servicing (suited only for those with a sense of humor). questionable mortgage servicing practices tactics yak

Miami Feds Charge 31 In Alleged Cash Back, Straw Buyer Mortgage Scam

From the office of the U.S. Attorney - Southern District of Florida:

• R. Alexander Acosta, United States Attorney for the Southern District of Florida, [and officials from other government agencies involved in the investigation] announced today charges against 31 defendants in the most recent multi-million dollar mortgage fraud scheme in South Florida.

The indictment charges lead defendants Juan Torrens, Rachael Torrens, Daniel Ramos, Alfonso A. Muxo, and Katherine Harris with conspiracy to commit wire fraud and/or wire fraud for their participation in a massive mortgage fraud scheme. This scheme allegedly involved fraudulent mortgage loans obtained for the purchase of 28 properties located in Miami-Dade and Broward Counties, and in the City of Marco Island. According to the indictment, the five were part of a conspiracy that operated to:

1. identify sellers of residential properties who were willing to overstate the true selling price of their properties,
2. recruit and pay straw buyers to pose as buyers and ostensibly participate in the purchase of the selected properties,
3. prepare and cause to be prepared on behalf of straw buyers fraudulent mortgage loan applications (which included false employment verifications, pay stubs, income and funds on deposit, and IRS Forms W-2); said applications were then signed by the straw buyers,
4. prepare, for a fee, fraudulent appraisals to support the overstated sales prices on the properties,
5. create and submit phony closing statements to the lending institutions financing the transactions,
6. pocket the cash for the difference between the inflated price and the actual selling price of the property, and
7. attempted to make the payments on the fraudulently-acquired mortgage loans while they tried to turn around and unload the newly-acquired properties. Some of the lenders ultimately got stiffed on their payments and their mortgages went into foreclosure, leaving them holding the bag.

In addition to the above five defendants, 25 straw buyers were also indicted for wire fraud on account of their participation in the transactions. One bank employee from Regions Bank was also named as a defendant in the indictment.

For more, see the U.S. Attorney Press Release - Federal-State Mortgage Fraud Initiative Charges 31 Defendants In Multi-Million Dollar Mortgage Fraud Scheme.

See also, 31 Accused in Florida of Falsifying Home Loans (The New York Times).

Go here to watch the U.S. Attorney announcement (Associated Press video at MiamiHerald.com).

For a copy of the indictment, see United States of America vs. Torrens, et al.

Miami Straw Buyer Cops Plea In Alleged Cash Back Scam

U.S. Attorney R. Alexander Acosta, Southern District of Florida, announced that defendant Felipe Nunez pleaded guilty on December 14, 2007 to one count of money laundering, in an alleged cash back, straw buyer mortgage fraud scam that resulted in the indictment of fourteen other defendants. Nunez admitted in court that he was paid $20,000 to purchase two properties selected by defendants Henry Quintero-Lopez and Lazaro Villalba, the apparent leaders of the alleged racket. For more, see the U.S. Attorney Press Release.

Go here for the 9/27/07 U.S. Attorney Press Release on this case and go here for the Indictment - U.S. vs. Quintero-Lopez, et al.

ABC News' Nightline On Alleged Mortgage Servicing Company Ripoffs

Last Friday night, ABC's Nightline ran a piece on the mortgage servicing industry and the problems some servicing companies have been accused of causing to homeowners in connection with servicing their home mortgages. Featured in the story were:

• New Hampshire homeowner Mike Dillon and the ongoing problem he's had with a mortgage company formerly known as Faorbanks Capital Corporation (now known as Select Portfolio Servicing) that serviced his home loan;

• North Carolina consumer bankruptcy attorney Max Gardner who asserts that it is not uncommon that his clients' cases involve charges tacked on by servicing companies that shouldn't have been charged (in addition to practicing law, he runs Max Gardner's Bankruptcy Boot Camp where, according to his website, trains other attorneys to use every available consumer protection statute in his system including the FDCPA, TILA, UDAP, FCRA, ECOA, the automatic stay and the discharge injunction when representing individual consumers);

• Professor Katherine M. Porter of the University of Iowa College of Law, who discusses some of her findings which have been recently published in a research paper, Misbehavior and Mistake in Bankruptcy Mortgage Claims, in which she examined mortgage servicing companies' frequent non-compliance with law in consumer bankruptcy cases.

To read the online transcript of the ABC Nightline program, see 'Playing the Odds' (Lawyer Max Gardner Says Some Mortgage Servicers May Be Taking Homeowners for a Ride).

The link to the video of the program will be posted when it becomes available.

For more on:

• Mike Dillon and his experiences with his mortgage servicing company, visit his website, www.getdshirtz.com,
• Max Gardner's Bankruptcy Boot Camp, read the BusinessWeek article, Bankruptcy Boot Camp (How one man is training an army of lawyers to fight predatory lenders) (BusinessWeek - January 15, 2007),
• Katherine Porter's research paper, see Misbehavior and Mistake in Bankruptcy Mortgage Claims, then follow downloading instructions.

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

Go here for more posts on homeowners and their attorneys who are using Federal & state consumer protection statutes, including the Federal TILA to try and undo the bad loans. undo mortgage loans TILA alpha questionable mortgage servicing practices tactics yak

CNN On Homeowner Fighting Foreclosure Rescue Operator To Keep Home

Some time ago, the CNN business program Open House with Gerri Willis featured a Florida couple facing foreclosure and their experience when they unwittingly signed over their home to a title-holding land trust in a deal arranged by foreclosure rescue operator Jack Moussa and his Florida Housing Council ("FHC"). Interviewed for the piece was Florida attorney David Silverstone, who represents the homeowners in a lawsuit against Moussa and FHC in which Silverstone seeks to void the deed transfer, alleging that the foreclosure rescue transaction was a disguised loan that violates the Federal Truth In Lending Act, the Florida Deceptive and Unfair Trade Practices Act, and the Florida usury statute. Based on the transaction the homeowners entered into with Moussa, Silverstone claims that the return on investment on the disguised loan was 300%, more than the maximum amount allowed by Florida law.

To watch the video, see Rescue or Ripoff? (Open House with Gerri Willis; CNN).

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

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

Editor's Note:

There is plenty of case law in Florida (and other places as well) that can be used to support a court's decision to recharacterize sale-leaseback foreclosure rescue deals as (possibly usurious?) secured loans / equitable mortgages. Go here for more on the Florida case law on equitable mortgage (some of which also addresses usury) to consider how the case law may be applied to foreclosure rescue transactions structured as a sale leaseback, or variations thereof, with a right to buy back the property in the future.

It may only be a matter of time before the Florida Attorney General's Office "steps up to the plate" and begins to prosecute foreclosure rescue operators who offer sale leaseback programs for violating Florida's usury statutes:

• Civil usury - Section 687.03, which currently sets a maximum 18% per annum interest, and applies to advances up to $500,000;
• Criminal misdemeanor usury - Section 687.071(2), generally applies on interest willfully and knowingly charged in excess of 25% per annum but not exceeding 45% per annum;
• Criminal felony usury - Section 687.071(3), generally applies to interest willfully and knowingly charged in excess of 45% per annum,
• Debt unenforceable - Section 687.071(7) states that a loan made in violation of the Florida criminal usury statute is unenforceable.

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

Victims' Attorneys Seeking To Void 800+ Mortgages In Pensylvania Ponzi Scheme; Request Class Action Transfer

Lancaster Online reports:

• Attorneys who filed a class-action lawsuit on behalf of customers defrauded by Wesley A. Snyder's defunct mortgage businesses [were due] in court again [last] Thursday. This time, the lawyers [...] seek to move their case from federal court in Philadelphia to U.S. Bankruptcy Court in Reading. An attorney representing Snyder's customers said Tuesday that a motion will be considered to join the customers' suit with the bankruptcy cases filed by Snyder's companies, including OPFM Inc. Personal Financial Management Inc. and Image Masters Inc.

***

• Attorneys representing Snyder's customers are seeking to void about 811 mortgages Snyder brokered in his customers' names with about two dozen banks. [...] Snyder's businesses soaked homeowners, including 300 from Lancaster County, for more than $26 million and ripped off 31 investors for $3 million.

For more, see Attorneys want class-action suit in mortgage case moved.

According to WFMZ-TV Channel 69, the request to transfer the case was denied. Watch the Channel 69 video for more.

Go here and go here for other posts and links to earlier media reports on the Pennsylvania Ponzi scheme involving OPFM, Image Masters, and other companies operated by Wesley Snyder.

Ohio Feds Indict Foreclosure Rescue Operator

From the U.S. Attorney's Office in Cleveland, Ohio:

• Gregory A. White, United States Attorney for the Northern District of Ohio, [on Wednesday] announced that a federal grand jury in Cleveland, Ohio, charged James A. Warsing of Ashtabula, Ohio, with eight counts of Mail Fraud. The indictment charges that between 2001 and 2005, James A. Warsing, using his company, WJW Enterprises, devised a scheme to defraud various homeowners threatened with foreclosures, by falsely promising he could save the homes from foreclosure. It was further alleged that Warsing fraudulently obtained large sums of monies from homeowners promising to use such monies to settle their accounts with lenders but used the money for other personal and business purposes.

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

To view grand jury charges, see Indictment - U.S. v. Warsing.

Go here for more on WJW Enterprises.

Texas AG Files Suit Against Another Upfront Fee Foreclosure Rescue Operator

(originally posted 10-14-07)
According to a press release from the Texas AG's office:

• Texas Attorney General Greg Abbott took legal action Thursday against an unlawful Arizona-based foreclosure rescue operation that targeted struggling Texas homeowners. According to court documents, Abell Mediation, Inc., and its president and vice-president, Elizabeth Cory and Michael Cory, respectively, fraudulently advertised that the company could save homeowners from imminent foreclosure. The enforcement action seeks a temporary and permanent injunction stopping the defendants from falsely soliciting distressed Texas homeowners.

***

• Homeowners who contacted Abell Mediation, Inc. were pressured to pay fees between $800 and $1,200 immediately. Abell Mediation, Inc. strictly prohibited homeowners from contacting their mortgage lenders. After homeowners paid the fees, many never heard back from the defendants’ representatives and often lost their homes anyway.

For more, see the Texas AG's press release - Attorney General Abbott Takes Legal Action Against Foreclosure Rescue Firm's Unlawful Texas Operations (Clients of Abell Mediation, Inc. urged to call their lenders immediately).

For additional information:

• To read the lawsuit, see State of Texas v. Abell Mediation, Inc., et al.,
• Go here to read an alleged sample deceptive letter used by the operator,
• Go here to view the Abell Mediation Web Site,
• Posts on other lawsuits brought by the Texas AG against foreclosure rescue operators.

For story update (12-10-08), see Final judgment against Abell Mediation, Inc..

Idaho AG, Foreclosure Rescue Operator Reach Legal Settlement

(originally posted 10-14-07)
From the Idaho Attorney General's Office:

• Highland Financial, a Post Falls business that offers mortgage foreclosure rescue services, will change its business and advertising practices, Attorney General Lawrence Wasden said. Under the terms of a legal settlement, Highland Financial agrees to comply with the Idaho Consumer Protection Act in its future advertising and promotions. [...] Highland Financial advertised that it could help financially distressed consumers end the “stress,” “worries,” and “hassles” of foreclosure, bad credit, and eviction. The Attorney General alleged the company failed to make certain disclosures and may have misrepresented to homeowners that they could help homeowners retain ownership of their homes and improve their credit when that was not the case.

For more, see Idaho AG press release - Wasden Reaches Settlement with Highland Financial.

See also, Post Falls foreclosure rescue firm settles with Idaho A.G. (Idaho Business Review).

California Legislature Urged To Strengthen Statutes Regulating Foreclosure Rescue

In Northern California, the sixth in a series of editorials on elder financial abuse in the Contra Costa Times urges the State of California to pass AB 1356, a law that would strengthen the current laws regulating foreclosure rescue operators in California. An excerpt from the article:

• The Legislature can and must take a major step now to curb foreclosure rescue abuses. AB 1356 would have done just that, but the law fell victim to petty politics. For starters, it would have required foreclosure rescuers to clearly let people know in bold letters that they would no longer be the homeowner.

• It would have also required that equity sales contracts be recorded with the county. That would have prevented foreclosure rescuers from selling the property to a third party who knew nothing about the individual's option to repurchase the property.

• Finally, the law would have mandated that anyone signing an equity sales contract must first undergo pre-loan counseling. Homeowners going through foreclosure are in a panic. They don't know where to turn. They're not thinking clearly. They often don't realize that there may still be time to salvage some of the equity. They have a tendency to hunker down and hide, ignoring notices from their lender. Yet what they should do is contact the mortgage company to try to work something out. Foreclosure rescuers pressure homeowners not to talk to anyone but them. Their game is to run out the clock until it's too late for homeowners to get real help. It's time to derail the foreclosure rescue gravy train. The Legislature must revive and pass AB 1356.

For more, including a story of an elderly couple facing foreclosure who had the equity in their home stripped, and ultimately lost their home after doing business with a foreclosure rescue operator called Bridgeport Capital Management in Irvine, see Theft of Elder Nation: An editorial series - Place legal curbs on 'rescue' practice.

Go here for all posts and links to this Contra Costa Times editorial series on elder financial abuse.

Go here for the proposed statute, AB 1356; and here for Bill Analysis on AB 1356.

For California's current state law regulating foreclosure rescue operators, see:

• California Home Equity Sales Contract Act - Section 1695 through Section 1695.17 of the California Civil Code;
• California Mortgage Foreclosure Consultants Act - Section 2945 through Sction 2945.11 of the California Civil Code.

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

Nevada AG, Secretary Of State Issue Joint Foreclosure Rescue Advisory

From the Nevada Attorney General's office:

• Nevada Attorney General Catherine Cortez Masto and Secretary of State Ross Miller are warning all Nevadans to beware of fraudulent foreclosure rescue schemes. Recent reports place Nevada first in the nation for its number of foreclosures. This has led to an increase in the number of foreclosure scams reported to law enforcement authorities.

For more, including what to look out for, see Masto And Miller Warn Nevadans To Beware Of Foreclosure Rescue Scams.

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.).

Foreclosure Rescue: News On Video

Online Videos On Foreclosure Rescue

For those who hate reading and love watching TV, I've compiled the following list of links to television coverage of stories involving foreclosure rescue from around the country - most of which have appeared elsewhere on this blog, and with a few new ones thrown in.

Recently added videos (since 6-12-08):

1. Gonzales Woman Arrested For Mortgage Fraud (Police: Woman Charged Homeowners Thousands) KSBW-TV Channel 8 - Monterey County, California (added 8-19-08);
2. Former Stripper Ran Foreclosure Rescue Scam (story of one victim of alleged Metropolitan Money Store foreclosure rescue scam; WMAR-TV Channel 2 (Baltimore, Md) - posted on website, Daily Motion),
3. Secret deal leaves family facing foreclosure - again; WOOD-TV Channel 8 (Grand Rapids, Michigan) (added 7-30-08).

Recently added videos (since 12-16-07):

1. Are People Preying On Your Financial Misfortune? (KCBS-TV Channel 2 - Los Angeles),
2. Homeowners Unknowingly Sign Away Property (NewsChannel 5, Nashville, Tennessee),
3. Foreclosure Fears (The potential for scams is on the rise as homeowners become more desperate) (ABC-TV Good Morning America),
4. CBS 11 Investigates Foreclosure Rescue Company (CBS 11 TV, Dallas / Fort Worth, Texas).

Videos as of 12-16-07:

1. Freddie Mac Dramatizes An Equity Stripping Scam (Federal Home Loan Mortgage Corporation - "Freddie Mac"),
2. Predators Prey On Homeowners Facing Foreclosures (KCBS-TV Channel 2 - Los Angeles),
3. Homeowners Targeted By Foreclosure Agents (KCBS-TV Channel 2 - Los Angeles),
4. A Home Mortgage Mess (WABC-TV Channel 7, New York City),
5. Homes stolen by 'Home Savers'? (Heartbroken people lose homes, equity to "Home Savers"), (WABC-TV Channel 7, New York City),
6. Valley teacher, former business partners tied to federal mortgage probe (ABC 15, Phoenix),
7. 87-Year Old Scammed In Foreclosure Rescue Refinance Scam (CBS2 - Chicago),
8. Rescue or Ripoff? (Part 1; Open House with Gerri Willis; CNN),
9. Rescue or Ripoff? (Part 2; Open House with Gerri Willis; CNN),
10. Mortgage Rescue? Rip-Off! (MoneyTalksNews),
11. Beware of Foreclosure Rescue Scams (KOMO-TV Channel 4 - Seattle),
12. Beware of foreclosure rescue scams (a different video from #5, above) (KOMO-TV Channel 4, Seattle),
13. Hazards Of Foreclosure Rescues (KIRO-TV Channel 7, Seattle),
14. Foreclosure scams prey on homeowners (Reuters News Service),
15. Texas Attorney General Deals with Foreclosure Rescue Scams (Channel 2, Texas),
16. Vulnerable homeowners target of scams (NBC News),
17. Homeowners sue mortgage company (NBC News),
18. Home Lost In Foreclosure Scheme (Central Florida News 13 - Orlando),
19. Man jailed for 'foreclosure rescue' theft (WOOD-TV Channel 8, Grand Rapids, MI),
20. Company accused of exploiting the desperate - Part 1 (Fox Channel 13, Tampa, FL),
21. Second company accused of mortgage scam - Part 2 (Fox Channel 13, Tampa, FL),
22. ConsumerWatch: Foreclosure Scams (CBS Early Show),
23. Mortgage Foreclosure Scams (NBC Today Show),
24. Foreclosure Scams - Don't Get Taken (CBN Network),
25. Foreclosure Scams Skyrocketing Across S. Fla. (CBS 4, Miami, FL),
26. Mortgage Scams More Rampant Than Ever In Fla. (CBS 4, Miami, FL),
27. Foreclosure Fraud: Predators Want Your Home (CBS 4, Miami),
28. Church Members: We Were Scammed Out Of Our Homes (CBS 4, Miami),
29. Homeowners facing foreclosure are targeted again (WKYC-TV Channel 3, Cleveland, OH),
30. Foreclosure Rip-Offs (KHOU-TV Channel 11, Houston, TX),
31. Feds Seize Alleged Shoddy Businessman's Belongings (WBAL-TV Channel 11 - Baltimore),
32. Woman May Lose House After Answering TV Ad (WBAL-TV Channel 11, Baltimore, MD),
33. Woman Claims To Be Swindled In Foreclosure Feud (WBAL-TV Channel 11, Baltimore, MD),
34. Woman Gets Home Back After Fraud Investigation (WBAL-TV Channel 11, Baltimore),
35. Victims Of A Foreclosure "Rescue" (CBS News Shows How A Growing Scam Is Exploiting Homeowners In Foreclosure) (CBS News),
36. Woman Falls Victim To 'Mortgage' Program (Resident On Verge Of Losing Home) (WCVB-TV Channel 5, Boston),
37. Woman Falls Victim To 'Mortgage' Program (Resident On Verge Of Losing Home) (WCVB-TV Channel 5 - Boston, MA),
38. Foreclosure Rescue Scheme Turns Homeowners Into Tenants (Land Trust Agreement That Offers Help Often Costs People Their Homes) (WCVB-TV Channel 5, Boston),
39. I-Team Investigation: From Homeowner to Homeless (KLAS-TV Channel 8, Las Vegas),
40. Woman Scammed Out Of Home (FBI: Mortgage Fraud Cases Increase) (WRC-TV Channel 4, Washington, D.C.),
41. Mortgage Rescue Services (Some mortgage rescue services are really con artists) (WRC-TV, NBC 4, Washington, D.C.).
42. News19 On Your Side: Foreclosure Fraud Alert (WLTX-TV Channel 19, South Carolina),
43. Consumer warning: Home foreclosure nightmares (WCNC-TV, North Carolina).