Criminal, Civil Prosecutions Still Ongoing In Early 2000s Beverly Hills Home Flip Operation; Lehman Claims $142M In Fraudulently Obtained Loans

A story in the Los Angeles Times reports on an early 2000s Southern California mortgage fraud, high-end home flipping operation that authorities say grew into one of the biggest and boldest in California history. An excerpt from the story:

• The masterminds were developers Mark Alan Abrams, 46, who had a previous $2-million civil fraud judgment against him, and Charles Elliott Fitzgerald, 47, a bigamist who fled the country in 2003 and was later arrested in Samoa, according to interviews, federal prosecutors and a civil lawsuit filed by Lehman Bros. Bank. They allegedly were assisted by star real estate agents Joseph Babajian, 54, and Kyle Grasso, 36, who earlier this year shared the listing for a $22-million Beverly Hills mansion bought by soccer star David Beckham and his wife, Spice Girl Victoria Beckham. Abrams and Fitzgerald are accused of reaping millions, spending some of the cash on private jet flights and vintage wines -- and much of the rest to buy more houses to keep the alleged scam alive from 2000 to 2003.

The 2003 civil lawsuit filed by Lehman Bros. Bank originally cited 38 loans that were allegedly fraudulently obtained totaling about $62 million. It subsequently found itself holding the bag on 43 additional loans totaling $80 million -- $142 million in all, according to an amended complaint it filed in the lawsuit. The lawsuit is currently on hold pending resolution of a concurrent criminal prosecution of the alleged members of the ring.

For more, see How a bank fell victim to loan fraud (Officials allege a scam used phony appraisals and paperwork to wring millions from deals in the Beverly Hills area).

Go here for other posts on this story.

200+ Ohio Attorneys Step Up In Response To State Chief Justice Call For Volunteers

In Ohio, The Associated Press reports:

• More than 200 lawyers have volunteered to help homeowners facing foreclosure in response to a request by [Ohio] Chief Justice Thomas Moyer to provide free legal advice. The president of the Ohio State Bar Association put out a call for volunteers to meet Moyer's request, association spokesman Ken Brown said Wednesday. [...] Moyer said [recently] that lawyers have an obligation to help homeowners facing foreclosure, and they should do so without charge. "This is more than a legal issue; this is a social issue," Moyer told a group meeting at the Ohio Judicial Center. "People's lives are being seriously affected, and the legal community must respond with action."

***

• "Many Ohioans caught up in the crisis are of limited financial means with little or no access to an attorney," Robert Ware, president of the Ohio Bar Association, said in a note to members. Working groups have been established to determine the best ways for volunteer lawyers to work with the Supreme Court, the governor's office and attorney general's office and Legal Aid groups to serve the needs of Ohioans, Ware said.

For more, see Lawyers volunteering to help (Strapped homeowners get advice).

Foreclosing Lender Fails To Record Title To Ohio Home, Leaving Former Owner On The Hook For Criminal Building Code Charges

In Hamilton County, Ohio, The Cincinnati Enquirer reports:

• A Florida-based mortgage company deliberately failed to record a deed on a College Hill home it took by foreclosure because it didn't want to take responsibility for maintaining it, the former homeowner says in a lawsuit. The homeowner, Demetria Scriber-Hinkston of Pleasant Ridge, now faces criminal building code violations [...] because the deed is still in her name. Cincinnati prosecutors say they won't drop charges. Her lawsuit, filed in Hamilton County Common Pleas Court on Friday [Dec. 21], claims that Everhome Mortgage Co. of Jacksonville, Fla. "failed and refused to record the deed to 6129 Cary, in part to avoid responsibility to maintain the property."

• Hinkston is one of a growing number of homeowners who have found themselves responsible for taxes and maintenance even after they've lost their homes to foreclosure or bankruptcy. One Cuyahoga County study suggests there are at least 1,400 such homeowners there, and a bill in the Ohio Senate would require sheriffs to file deeds within two weeks of a foreclosure auction being finalized. [...] "It's hardly a paperwork screw-up when they know the prior owner is going to be on the hook for the maintenance of the property. These national mortgage companies just can't claim ignorance and paperwork problems," said Robert B. Newman, Hinkston's lawyer.

For more, see Lawsuit: Company avoided deed (Tried to get out of maintaining property).

Go here for other posts on code violation liability when foreclosing lender fails to complete foreclosure or fails to record deed after foreclosure sale. responsibility code violations foreclosure

Minnesota Couple Duped Into Buying Home Once Used As Meth Lab; Arbitration Award A "Pyrrhic" Victory, Lender May Wind Up Holding The Bag

In Cannon Falls, Minnesota, The Republican Eagle reports on the story of a local couple who thought they were buying the home of their dreams, and their subsequent arbitration "victory" in litigation over the home:

• Justin and Krista Keller purchased the six acres with a four-bedroom house and outbuildings in January for approximately $250,000. Their first home was a dream come true until they discovered what the sellers had failed to disclose: The property had been used in the production of methamphetamines. [...] Cleanup is expected to cost $30,000 or more, the property has dropped in value, and the Kellers have incurred the costs of the testing, remodeling that took place before the discovery and having to move out of the house and rent a place to live. Added to that are the legal fees from taking the case to arbitration.

***

• The claims against the real estate agents were dismissed, but the sellers are liable for $100,864 — the damages incurred to that date, including attorney fees. Additionally, the sellers were named as responsible for any additional costs of remediation required by the state and the costs of storage and rental incurred by the Kellers while they had to live outside the house during remediation.

Reportedly, in attempting to have the seller satisfy the arbitration award, the Kellers’ attorney was unable to locate any accounts held by the sellers or find out where the proceeds from the home sale went. The Kellers are believed to be assessing which would be the least damaging way for them to dump the problem onto the mortgage holder — bankruptcy or foreclosure. They refuse to move back into the home.

For more, see Arbitration win was empty victory (may require free registration).

See also, Meth Turns Minnesota Dream Home Into Nightmare (read story) (watch video).

For a related post on meth labs and the problems they cause in homes that once housed them, see The Invisible Legacy Left In Homes Used As Meth Labs.

Go here for some methamphetamine information resources.

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

Twin Cities Loan Officer Gets 4+ Years In Cash Back Scam; Indoor Pot Farm Bust Smoked Out Bogus Mortgage Deals

In Minneapolis, Minnesota, the Pioneer Press reports:

• The first of four defendants tied to the LHS Mortgage Inc. fraud scandal was sentenced Friday to 4½ years in prison. Mario Lewis, 37, a loan officer at the LHS office in Burnsville, had pleaded guilty to drug charges, wire fraud and money laundering. Judge John Tunheim also ordered Lewis on Friday to pay restitution of $437,000. Lewis pocketed almost that much money from nine properties he bought in the Twin Cities area between 2004 and 2006. [...] Most of the homes Lewis bought are in various stages of foreclosure. That has delayed the identification of actual losses so far, but there will be lenders who suffer consequences from LHS' actions, [Federal prosecutor Joseph] Dixon said.

***

• The LHS case involved about 40 separate real estate transactions and is one of the largest mortgage fraud operations uncovered recently as the Twin Cities' real estate market soured. The LHS case had its roots in the bust of a large marijuana-growing operation found in a rental property in 2006, which involved Lewis. When investigators looked into Lewis' finances they found the questionable mortgage transactions.

For more, see Lender gets prison time (First in LHS case took plea).

See also, Minneapolis Star Tribune: Pot grower given 4½ years in prison on charges related to mortgage fraud (Reports that another defendant in this case, Ronald Joseph, who has also pleaded guilty and is awaiting sentencing, reportedly was hospitalized Thursday after ingesting antifreeze; the hospital reportedly refused to discuss Joseph's condition. Mortgage closing agent Jill Lehn, 40, of Prior Lake, has also pleaded guilty and awaits sentencing.). pot grow ops alpha

Shady Shutter Contractor Clips Customers' Cash Without Doing Any Work, Say Cops; Suspect Faces 165+ Complaints

In Fort Lauderdale, Florida, WPLG-TV Channel 10 reports:

• A Broward man is accused of taking thousands of dollars from his customers to install hurricane shutters and never doing the work, police said. Michael Johnson, 50, was arrested Wednesday on seven counts of theft and one count of organized fraud. Over the past two years, Broward Sheriff's investigators say, Johnson's company, Shutter Screen and Supply Inc., collected more than $11,000 in deposits from customers and never installed the hurricane shutters or screen enclosures customers were promised.

***

• So far, only seven victims have been identified and are working with detectives on the investigation, but they say the county has had more than 165 similar complaints against Shutter Screen and Supply. "In so many of these cases, as in the case of Mr. Johnson, it continues for such a long time that it pyramids out of control and we never make all of the victims whole again," said Detective Danny Belyeu of the Broward Sheriff's Economic Crimes Unit.

For those interested in chipping in, Johnson's bail bond is set at $400K. For more, see Shady Shutter Deals Lead To Man's Arrest (Complaints To County About Company Prompt Investigation) (read story) (watch video).

Go here for more on the Broward Sheriff's Office "contractor cops."

Go here for the Broward Sheriff Office's Contractor Licensing and Fraud Unit, and go here for Florida's construction lien laws (sections 713.001 - 713.37).

Abandonment Of Family Pets & Foreclosures

In Northern California, a recent story in the San Jose Mercury News serves as a reminder that family pets are a continuing casualty in the boom in home foreclosures. Excerpts from the story:

• "People are losing their homes, and animals are the fallout of that," said Cecily Tippery, a Coldwell Banker agent who specializes in foreclosed properties, and now also in rescuing pets left behind. Here in one of the nation's foreclosure hotbeds, Tippery and her colleagues say they have found several pets in abandoned homes -- enough to spread the animal care workload among them.

***

• No one has documented the number of pets turning up after foreclosures, but there is anecdotal evidence of a statewide problem, said Paul Bruce, regional program coordinator for the Sacramento regional office of the Humane Society of the United States. Foreclosures are "leaving the cities with all of the problems, including animals that have been left behind," said Bruce.

***

• For Tippery, the problem has grown into a rallying cry for a "no-kill" shelter in the city. Some of the pets that her agents have found are older or sick or have no veterinary records. Neither Contra Costa County nor Antioch maintain no-kill shelters, and Tippery said the agents are reluctant to send the pets to them. Local rescue groups lack resources to pay for veterinary care. The agents in some cases have paid for health checks on the forsaken pets and developed a network of potential adopters. [...] The pets are considered personal property and cannot be removed [from vacant foreclosed homes] until 18 days after a foreclosure sale. The banks, the agents say, do not want the agents to feed them. They do it anyway.

For more, see Pets becoming casualty of foreclosure.

For more on "foreclosure pets", go here and go here. petsII and foreclosures

Deed Theft Suspect Cops Plea; Gets 10 Years In Texas Prison For Conning Senior Into Signing Away Home

This is an old story (October, 2006) which took place in Texas and originally reported by the San Antonio Express-News about a woman, named Charlotte Smith, who befriended 81 year old Wallace Moore, and subsequently proceeded to bleed Mr. Moore's accounts and transferred the ownership of his home into her name, according to criminal prosecutor's allegations. In carrying out the scam, Smith essentially "hid" Mr. Moore by placing him in a nursing home without telling his relatives. According to the story:

• After he fell and his health declined, Smith placed him in a facility referred to as "Hilltop Lodge," negotiating a lower rate because she said all he had was his Social Security check. "She put a note on his file that he was to have no visitors, especially family members," said Assistant District Attorney Joanne Woodruff. The staff at Hilltop would spend their own money to buy Moore clothes, shoes and personal items because he had become so tattered, she said. "In fact, she finally brought a bag of the oldest shoes you could imagine, and they didn't even fit him," Woodruff said. "I did see the shoes." Moore wanted to remain at Hilltop, which seemed like a well-run facility, Woodruff said.

Charlotte Smith was sentenced to 10 years in prison and ordered to pay more than $380,000 in restitution after pleading no contest to two counts of securing execution of documents by deception. For more, see:

• Woman pleads no contest to fleecing octogenarian,
• Woman gets 10 years for home sale scheme.

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

Go here for other deed theft posts. deed theft zorro elder financial abuse xero

Texas AG Files Civil Suit To Void Deed Stolen From 85-Year Old Homeowner

This is an old story (August, 2005) coming from the office of Texas Attorney General Greg Abbott in which it filed suit to void a deed the execution of which was allegedly secured by a foreclosure rescue operator from an 85-year old homeowner through deception. According to the Texas AG's press release:

• The action cites Bobbie Heckard with fraudulently taking possession of the home of an 85-year-old Houston man under the guise of helping the homeowner prevent foreclosure. The man allegedly was led to believe he was only allowing Heckard to consult with his mortgage company, but in fact the transaction allowed her to take ownership of his home.

***

• Heckard’s scheme is designed to induce homeowners into transactions they would never consider if they knew the consequences. Heckard obtains a list of homes facing foreclosure, then tries to convince the homeowners that she offers foreclosure rescue services and will correspond with mortgage companies to resolve the problems. She then persuades homeowners to sign forms allegedly authorizing her to contact the mortgage companies on their behalf. In fact, the forms the homeowners sign are deeds transferring ownership in the homes to Heckard. Once Heckard obtains title to the property, she sells it, pockets the equity and threatens to evict the original homeowner.

For more, see:

1. Texas AG press release - Attorney General Abbott Files Emergency Action Halting Bogus Foreclosure Rescue Operation (Asset freeze and restraining order granted by judge severely restricts activities of pair scamming homeowners) (Go here for Spanish version of the press release),
2. Texas AG original lawsuit,
3. Temporary Restraining Order issued in this case.

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

Go here for other deed theft posts. deed theft zorro elder financial abuse xero

Deed Theft Stories From North Of The Border

The Toronto Star has run a number of stories on homeowners getting their homes stolen from out from under over the last year or so, and can be found at the following links:

1. ID thief stole home — from his mom (He `destroyed my life,' she says Son got $450K, mother, 70, evicted),
2. Man, 90, off hook for loan: Court (Landmark ruling lifts $300,000 burden),
3. When a house is not a home ('My sense of security in Canada is gone' says Paul Reviczky, who learned about identity theft the hard way),
4. Court asked to reject mortgage ruling (Critics say decision in previous case favours banks and mortgage firms over fraud victims),
5. Judge chides bank in mortgage fraud (Couple's identity stolen, home lost; TD Bank not 'innocent victim,' judge says),
6. Identity thieves target condo (Shocked owners hit with $250,000 mortgage; Bank says it's a victim too, refuses to wipe out debt),
7. Marital mortgage fraud (Husband gained from deal, judge says; Bank backs off ultimatum to wife),
8. Province seeks to aid mortgage fraud victim (Set to intervene in widow's appeal; Problem `a priority,' minister says),
9. Actress taken in by tenants (Renters took out a mortgage, sold absentee owner's house; Police believe fraud artists are part of ring operating in GTA).

Go here for deed theft posts from south of the border. deed theft zorro

Deed Theft On The TV News

The following links go to videos of stories of people having thier homes sold out from under them as a result of identity theft and/or forged instruments (deeds, powers of attorneys, etc).

1. Sue Lawrence - Mortgage Fraud Victim (CBC - Canada),
2. Fake Deeds Steal Homes (NBC 10 - Philadelphia),
3. Cook County Alerting Homeowners of Possible Fraud (CBS2 - Chicago),
4. Quitclaim deed theft in Southwest Florida (NBC 2 - Fort Myers),
5. Brooklyn Pastor May Lose His Church After Fraud (WCBS-TV Channel 2 - NYC).

Go here for other deed theft posts. deed theft zorro

Reverse Mortgage Lender Denies Equity Stripping Charges

RISMedia.com reports:

• Financial Freedom, the Irvine, California-based reverse mortgage lender, denies any wrongdoing in a case charging they used unlawful sales practices targeting seniors by inflating fees and using the proceeds to purchase additional financial products. The U.S. Senate Special Committee on Aging heard testimony [December 12] following its heightened concern over lawsuits recently filed against companies offering these types of loans.

***

• In a separate story, a suit filed on behalf of Ernestine Boach against Financial Freedom states that she was allegedly conned into purchasing a reverse mortgage with exceptionally high fees and then sold several insurance and annuity products with the proceeds. The case, Ernestine Boach v. Financial Freedom Senior Funding Corporation was filed in San Diego Superior Court on January 11, 2007 and alleges that the Boach was advised to take out a reverse mortgage from Defendant Financial Freedom Senior Funding Corporation for $171,000 on the home she owned. The proceeds of which were to be used to purchase insurance products, including, a Fidelity and Guaranty deferred annuity with enormous surrender charges for $80,000, and a $44,350 immediate annuity to fund payments on a $250,000 flexible premium life insurance policy (also containing surrender charges).

• Boach’s San Diego attorney Ronald A. Marron claims that this is an instance of a pervasive “equity stripping scheme” which involves Financial Freedom’s agents working in tandem with insurance brokers using reverse mortgage proceeds.

For more, see Reverse Mortgage Lender Denies Abuse against Seniors Charges.

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

Go here for stories related to Reverse Mortgage Problems. xero zebra

Reverse Mortgage, Elderly Homeowner With Dementia May Be Recipe For Family Disaster

In Denver, Colorado, KUSA-TV Channel 9 reports on the story of a woman who finds out that not only was her elderly mother suffering from dementia, but that her mother obtained a $200,000 reverse mortgage on her home some time back and ended up going into foreclosure.

Jose Vasquez, an attorney with the non-profit group Colorado Legal Services, a non-profit legal services firm for low-income and elderly Coloradans, says for seniors who have a lot of equity in their homes should be cautions when refinancing. He suggests that children of elderly people keep track of their parents' activities.

For more, see Woman urges others to keep close tabs on elderly parents' financial affairs (read story) (watch video).

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

Go here for stories related to Reverse Mortgage Problems. xero elder financial abuse zebra

Gary Man Victim Of Deed Theft; Recent Incidents Creating Near "Epidemic," Say Cops

In Gary, Indiana, the Post-Tribune reports:

• It's a piece of land with a boarded-up brick bungalow across the street from the Emerson School for Visual and Performing Arts. It's worth just $11,000, according to county records, and owned by Allison Linton Clare Jr. of Chicago. But Herod Jackson says it's his, that he planned to fix up the house, but it was stolen out from under him with a questionable quit-claim deed. Financial crime investigators for the Gary Police Department say they are hearing more and more of these complaints. Detective Joseph Moxley said it has nearly become an "epidemic."

***

• Jackson took the whole family [who allegedly stole his property] to small claims court last month, hoping to get his property back. Magistrate Michael Pagano dismissed the case, telling Jackson he had to take the case to a superior court. [...] But Jackson said it's not fair that he has to spend money on an attorney to fight his case. "The average poor person does not have the money to hire a lawyer," Jackson said. However, Jackson has filed a complaint at the Gary Police Department, and Moxley said he is continuing to investigate. Similar cases are beginning to pile up, Moxley said, and all of them are time-consuming.

For more, see Property deed theft becoming an 'epidemic'.

Go here for other deed theft posts. deed theft zorro

Rescue Scams, Servicing Abuses A Concern To Virginia Consumer Advocates

In reporting on the growing numbers of foreclosures in the state of Virginia, a story in The Richmond Times-Dispatch points out that legal aid offices are seeing an explosion in foreclosure rescue scams, according to Jay Speer, executive director of the Virginia Poverty Law Center, a state-sponsored center for legal aid offices across the state. In these cases, perpetrators convince homeowners that they can help them save their homes, when their real purpose is to take ownership and possession of the homes.

Reportedly, all kinds of abuses with mortgage loan servicers are also being seen, according to Connie Chamberlin, president and chief executive officer of Housing Opportunities Made Equal Inc., a housing advocacy group in Richmond. She also pointed out that Virginia has one of the fastest foreclosure processes in the country, which only serves to exacerbate the foreclosure problem. She points out that once a lender notifies a borrower of the intent to foreclose, a person can lose their home in as quickly as two weeks.

For the story, see Virginia foreclosures rising (State taking steps to curb defaults; more expected as subprime loans reset).

90 Year Old Victim Of Forgery, Deed Theft, Equity Stripping Finally Gets House Back; Mortgage Voided

In Toronto, Canada, The Toronto Star reports:

• For Paul Reviczky, a 90-year-old victim of mortgage fraud, it's the best possible ending to a two-year nightmare. In a precedent-setting decision, Ontario superior court has taken another step toward protecting victims like Reviczky from being on the hook for hundreds of thousands of dollars. The court ruled this week that the Hungarian immigrant isn't responsible for the $300,000 mortgage taken out on his home, after it was sold in 2005 without his knowledge.

***

• The decision is the first of its kind in the province since a landmark Court of Appeal ruling in February. That decision found that even a bona fide purchaser can't legally buy property from a fraudster.

• This decision expands on the previous one by finding that a $300,000 mortgage, obtained by the people who purchased Reviczky's home, was invalid because the basis for the transaction was a fake power of attorney document forged by the fraudsters who sold the elderly man's home.

***

• Justice John Macdonald's ruling hands the weighty bill back to the mortgage dispenser, which is HSBC and its insurer (presumably the title insurance underwriter).

For more, including how the victim lost his house in the first place, see Man, 90, off hook for loan: Court (Landmark ruling lifts $300,000 burden).

For follow-up stories, see:

• Law Times: Bank didn’t take proper steps (Mortgage fraud decision will impact real estate industry),
• The Toronto Star: House fraud decision rocks industry (Bank `did not take steps to scrutinize the power of attorney,' judge rules).

For those looking to get some idea of what the concept of "bona fide purchaser" is all about, see The Bona Fide Purchaser for Value of a Legal Estate Without Notice, and then check the case law of your home state to see how your state's judiciary has applied the legal principles that underlie "bona fide purchaser" status.

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

Go here for other deed theft posts. deed theft zorro xero

Elder Protection vs. Elder Free Will

Golden Opportunities is a series of articles from The New York Times examining how individuals, businesses and investors seek to profit from the soaring number of older Americans in ways helpful and harmful. The most recent column in the series starts as follows:

• Eight years ago, when Robert J. Pyle was 73 years old, he had about $500,000 in the bank and owned a house in Northern California worth about $650,000. He was looking forward to a comfortable retirement. Today, at 81, he has lost everything. Mr. Pyle, a retired aerospace engineer, now lives in his stepdaughter’s tiny, mountainside home in a room not much larger than his bed.

For more on what happened to Mr. Pyle, see Shielding Money Clashes With Elders’ Free Will.

Go here for links to all of the columns in Golden Opportunities - A Series From The New York Times.

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

California Man Guilty Of Fleecing Grandparents; Sending Home Into Foreclosure

In Stockton, Calfornia, The Stockton Record reports:

• A Stockton man who was entrusted to help his elderly grandparents find a new home but instead sent their Calandria Street condominium into foreclosure was found guilty [last] Thursday of identity theft and fraud charges. Rodney Jackson Jr., 28, awaits a Feb. 11 sentencing on eight felony counts and an enhancement for committing a white-collar crime with a loss greater than $100,000, San Joaquin County Deputy District Attorney James Lewis said. Jackson's guilty counts include theft from an elder, identity theft, forgery and loan fraud. A Feb. 25 court hearing was set to decide what happens to the condominium. The foreclosure was frozen in April pending the outcome of Jackson's trial.

For more, see Man guilty of defrauding elders.

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

Go here for other deed theft posts. deed theft zorro xero

Senior Scammed In Phony Deed, Refinancing Scam

In Lehigh Acres, Florida, WINK News reports:

• Deputies say an East Naples Woman has scammed one hundred ninety nine thousand dollars from at least two women. Investigators discovered that Yvonne Forbes asked Yvonne Rose of Lehigh Acres to split the cost of a Golden Gate Estates property with her. Instead, deputies say Forbes took the money, and used it to pay off her own home. On top of that, deputies say Forbes convinced Rose to refinance her home, and wired money into Forbes' personal bank account.

For more, including link to the video report, see Victim speaks in real estate scam.

See also, East Naples woman accused of bilking $190K out of 2 women (Naples Daily News, 12-19-07).

Maryland Homeowner Loses Home To Foreclosure Without Prior Notice Of Sale; Now Fights To Get Back Title

The Washington Post recently ran a column on Anne Arundel County, Maryland homeowner Joyce Griffin, who is currently involved in a court battle to keep her home after it was sold in a foreclosure sale in which she asserts she received no prior notice of. One of the points highlighted in the column is that in the State of Maryland, proof that a homeowner behind in mortgage payments received a notice of foreclosure is not necessary to proceed with a public sale. In this case, Ms. Griffin asserts that she had no notice of the sale and only found out about the foreclosure after the public auction had already taken place. An excerpt from the column:

• Maryland law requires only that banks send notice of foreclosure. There is no requirement of proof that the notice has been received. Griffin maintains she never received a foreclosure notice. "For every other kind of lawsuit, there is a requirement that notice is received, except for foreclosures," said Phillip Robinson, an attorney with the nonprofit legal aid group Civil Justice, who is helping Griffin fight her foreclosure in court. "How many other people in Maryland are being foreclosed on this Christmas that don't even know about it?"

Reportedly, she has been able to stay in her home by reason of a $13,000 appeal bond that was put up in court on her behalf, and which keeps her from being evicted, pending the result of her appeal.

For the column, see The Pain of Foreclosure (For Joyce Griffin and Thousands of Others Who Face Losing Their Homes, Sadness and Uncertainty Overshadow a Season of Cheer).

For more on this story:

1. Go here for a description of the pending case in Griffin v. Bierman, et al. in the Maryland Court of Special Appeals, as described by one of Griffin's attorneys, Public Citizen Litigation Group,
2. Go here to view the appellate brief filed on the homeowner's behalf, Griffin v. Bierman, et al.,
3. For earlier post, see Maryland’s System for Home Foreclosures Tramples Due Process, Argues Appeal.

Elite Detroit Neighborhoods Being Hammered By Foreclosures

In Detroit, Michigan, the Detroit Free Press reports:

• Palmer Woods never really looked like the rest of Detroit. It has baronial homes, gently curving streets with such names as Suffolk and Argyle Crescent, and flourishing Norway maples and red oaks that cast a sun-dappled screen across much of the neighborhood.

***

• George Galster lives in Palmer Woods. He's also an expert on neighborhoods and has a Ph.D. in economics from the Massachusetts Institute of Technology and is a professor at Wayne State University. Galster said the housing crisis hitting Detroit in 2007 is "fundamentally different" from the long-term problem, which has occurred mostly in marginal areas of the city and which he attributes to metro Detroit building more housing units over the years than it can fill.

***

• Historically, the least desirable houses are the ones that nobody is living in. After the owner can't find anyone to rent or buy the house, he or she often simply walks away from it. What's different now, Galster said, is that for the past couple of years "we're seeing the abandonment of some of the city's most desirable housing." Palmer Woods has experienced problems with squatters and scrappers stripping homes of valuable metals from pipes and wiring. Said Galster: "All of a sudden, neighborhoods that are well up the food chain in Detroit are subject to the same desperation, or desperadoes -- the insurance burning, the stripping, the mortgage scams, the occupancy by inappropriate individuals."

Palmer Woods is not the only elite neighborhood in Detroit that finds itself fighting an escalating battle with types of problems that have destroyed large swaths of the city. For more, see Elite neighborhoods try to stay that way (2 of city's worst problems creep into some of its upscale areas). BetaVacantForeclosure

Careful Use Of Reverse Mortgages Can Help Seniors Get Out Of Bad Loans, Say Legal Aid Lawyers, Elder Advocates

The Wall Street Journal reports:

• Reverse mortgages used to be a way for homeowners to get extra cash during retirement. Now they're also being used for a more-pressing purpose: helping people who are struggling to meet payments on high-interest-rate loans to keep their homes. The strategy, which is relatively novel but gaining popularity among legal-aid attorneys and housing advocates around the country, calls for persuading lenders to take the cash generated by a reverse mortgage in lieu of foreclosing on older homeowners.

For more, see A Way for Older Homeowners To Back Out of a Bind (Some Find Banks Are Willing To Accept Reverse Mortgages To Retire Troubled Loans) (may require subscription; if no subscription, try here - then click link for story - then "refresh" the page, if needed; or try here, courtesy of the Arkansas Democrat Gazette).

Go here for stories related to potential Reverse Mortgage Problems. zebra

Shortage Of Resources Hinder Mortgage Fraud Investigations; Low Risks, High Profits Luring Many From Other Criminal Endeavors

The New York Times reports:

• The number of mortgage fraud cases has grown so fast that government agencies that investigate and prosecute them cannot keep up, lenders and law enforcement officials have said. [...] “I don’t think any law enforcement agency can keep up with mortgage fraud, because it’s such a growth industry,” said Chuck Cross, vice president of mortgage regulatory policy for the conference of state bank supervisors, an organization of regulators and bankers. “There’s too many cases, not enough agents.”

***

• Law enforcement agencies say they are overwhelmed, especially because investigating and prosecuting fraud can be complex and time consuming. The officials say career criminals and organized-crime rings have increasingly turned from other crimes to mortgage fraud because it offers lower risks and high profits. “I could hire a dozen investigators and a dozen prosecutors and only scratch the surface,” said David McLaughlin, a senior assistant attorney general in Georgia who coordinates prosecutions of mortgage fraud.

For more, see Officials Falling Behind on Mortgage Fraud Cases.

Illinois AG Nails 3 More Foreclosure Rescue Operators With Civil Suits

(original post 12-24-07)
From the office of the Illinois Attorney General:

• Attorney General Lisa Madigan has filed three lawsuits against mortgage rescue companies for allegedly violating the Illinois Mortgage Rescue Fraud Act and the Consumer Fraud and Deceptive Business Practices Act. [...] With today's filings, the Attorney General has sued 11 mortgage rescue companies. Madigan filed suit against Homeowners' Assistance Association, Lender's Foreclosure Relief, Inc., and United Home Savers, LLP, based on allegations that these three companies falsely promised to help consumers save their homes after falling behind on their mortgage payments.

• Madigan filed the Homeowners' Assistance Association complaint against the company and Casimar Cerniaukas (also known as “Casey Cerni”) and Jim Hamilton. The complaint also names as a defendant Foreclosure LMS, an affiliated company that purportedly trained people to conduct mortgage rescue services. Homeowners' Assistance Association is registered as an Illinois nonprofit corporation and deceptively claims to be affiliated with the City of Chicago 's foreclosure prevention program . The lawsuit alleges that the defendants charged homeowners illegal upfront fees of between $500 and $2,000 for mortgage foreclosure rescue services which either were never authorized by the consumer or proved ineffective.

• Madigan filed the Homeowners' Assistance Association complaint against the company and Casimar Cerniaukas (also known as “Casey Cerni”) and Jim Hamilton. The complaint also names as a defendant Foreclosure LMS, an affiliated company that purportedly trained people to conduct mortgage rescue services. Homeowners' Assistance Association is registered as an Illinois nonprofit corporation and deceptively claims to be affiliated with the City of Chicago 's foreclosure prevention program . The lawsuit alleges that the defendants charged homeowners illegal upfront fees of between $500 and $2,000 for mortgage foreclosure rescue services which either were never authorized by the consumer or proved ineffective.

• Madigan's suit against California-based Lender's Foreclosure Relief, Inc., alleges that the defendant charged Illinois homeowners illegal upfront enrollment fees of $1,395 for a “Pre-Foreclosure Workout Program.”

• The third lawsuit, filed against Florida-based United Home Savers, LLP, alleges that the company similarly required an illegal $1,200 upfront fee for services. Both Lender's Foreclosure Relief and United Home Savers failed to provide refunds for the illegal fees upon consumers' request.

For more, see Madigan Sues Three Mortgage Rescue Companies (Attorney General Seeks to Shut Down Businesses and Obtain Restitution for Distressed Homeowners).

Go here for other posts on foreclosure rescue lawsuits brought by the Illinois AG.

Phoenix-Area Head Foreclosure Rescue Operation Under Federal Scrutiny

(original post - 12-22-07)
In Phoenix, Arizona, we find investigative reporter Josh Bernstein, now with television station ABC 15, shining the spotlight on another apparently shady real estate operation. This time, the company in the spotlight is Mesa-based Financial Enterprises LLC, a foreclosure rescue operation involving Jeremy Michael Head and his business partners.

The focus of the report is an equity stripping transaction, under the guise of a home sale and leaseback, that one local homeowner facing foreclosure unwittingly entered into after turning to Financial Enterprises for help. The homeowner has since filed a lawsuit alleging fraud against the company, naming among others, Jeremy Michael Head, his brother Charles Head, mortgage broker Sonny Rock, and straw buyer Sarah Mattson, who ended up on the title to the victim's home, as defendants.

This operation is reportedly part of the nationwide operation that is currently under criminal investigation. An excerpt from the story:

• According to documents obtained by the Investigators the FBI has raided several offices across the country, including the offices of Financial Enterprises LLC in Mesa, Arizona. The FBI has seized lavish sports cars, thousands of documents and a condominium in Miami as well. Sarah Mattson's attorney tells ABC15 "the United States Attorney and the FBI have told me there is no doubt my client is going to be indicted."

***

• The Investigators have learned there are more than 350 victims nationwide, involving more than thirty five million dollars in fraud. The FBI's investigation involves homes from Hawaii to New Jersey. There are more than a dozen victims here in Phoenix and the surrounding area.

For more, including the link to watch the ABC 15 video report, see Valley teacher, former business partners tied to federal mortgage probe.

Go here to read more about the key players in this investigation.

Go here for other posts on the Head nationwide foreclosure rescue operation.

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Go here for earlier posts and links to media reports on a series of investigative reports by Josh Bernstein, then with KCRA 3 in Sacramento, that led to a break up of a local mortgage fraud ring and the Federal indictments of the ring operators.

Update On Unraveling Virginia Real Estate Operation / Alleged Mortgage Fraud Ponzi Scheme

The Virginian-Pilot recently ran stories updating and reviewing their investigation on the Hampton Roads straw buyer financed, real estate flipping operation of Cary McEntee and CM Development. Both are now in bankruptcy court, where McEntee reportedly has testified to falsifying numerous loan documents in a flipping operation fueled largely by so-called "no-doc" mortgage loans. Excerpts from the stories:

• Financial records, experts' analysis, investor interviews and McEntee's own testimony show CM Development's business model was a prime example of a Ponzi scheme. McEntee offered investors a couple of ways in: He'd either borrow their cash for a short time at a generous interest rate or he'd pay a flat fee for using their names and their good credit to get bank loans. This money, he said, would be used to buy houses in low-income areas, renovate them and rent them out. Yet the rental income on most properties couldn't even cover the houses' mortgages. And the company's constant property sales - it sold houses repeatedly among its investors at ever higher prices to eke out every bit of equity - apparently didn't generate enough to pay the bills.

***

• CM Development and its investors received more than $19 million in loans from more than 20 banks over [...] 2-1/2 years. But by March of this year, more than half of the roughly 250 properties controlled by the company sat vacant and efforts to renovate many had stalled.

According to The Virginian-Pilot, McEntee has testified that the company falsified about 80 percent of mortgage loan-related documents, representing to mortgage lenders that property buyers brought money to the real estate closings when they hadn't. Further, these loans reportedly financed CM Development's daily operations and supported McEntee's lavish lifestyle, including his $1 million Church Point home in Virginia Beach, the luxury vehicles he and his wife drove, and the condo he kept at the Oceanfront, according to the story.

According to an earlier Virginian-Pilot story, the unraveling of the flipping operation also spread its negative effects on:

1. renters, whose rent payments have not been applied to satisfy the typical landlord responsibilities, leaving them to deal with deteriorating living conditions, water shutoffs, foreclosure evictions, and unrefunded security deposits;
2. contractors and suppliers, who have been stiffed on payments due them for materials and labor, resulting in liens and legal claims against McEntee, CM Development and its investors; and
3. the surrounding neighborhoods where the flipped homes are located, resulting in code violations, demolition orders, vandalism, vagrancy, and plans to issue criminal warrants to the group’s various property owners for failing to maintain the properties.

While no criminal charges have been brought against CM Development or McEntee at this time, the FBI is reportedly looking into the company. For more, see:

• Part 1 - CM Development: The sales pitch was great, but the company fell apart,
• Part 2 - While properties crumbled, bankers looked the other way.

Go here for links to earlier Virginian-Pilot stories on CM Development.

Go here for other posts on the CM Development flipping operation.

Reverse Mortgages: The Next Subprime? Part 1

An opinion column in Salon magazine describes the consideration currently being given by Congress to the reverse mortgage industry, and the concerns raised because of some in the industry being accused of ripping off a significant part of the home equity accumulated by senior citizens over the years by combining a granting of a reverse mortgage with the contemporaneous purchase of deferred annuities [Editor's Note: Another technique used by some scam artists is to combine a reverse mortgage with the making of required home improvements, where the loan salesperson and the home repair contractor are in cohoots]. For the article, see The next subprime: Reverse mortgages.

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

Go here for stories related to Reverse Mortgage Problems. xero zebra

Lenders' Subtle Screw-Ups Letting Homeowners Off The Hook On Toxic Refinancings

Reporter Amir Efrati, of The Wall Street Journal, reports:

• Having buyer's remorse about a mortgage? It can pay to scrutinize the fine print. Amid the housing-market turmoil, homeowners have been increasingly turning to a little-known process for renegotiating or exiting a loan. Even seemingly minor paperwork slip-ups can be enough to get a "rescission" (basically, a loan cancellation) based on the Truth in Lending Act, a federal law requiring disclosure of a loan's key terms. Under a rescission, while a homeowner still owes the principal, the lender won't be able to foreclose. Plus, all loan-related fees and interest that were paid are subtracted from the principal, which can mean substantial savings for the borrower. After a rescission, the borrower must pay off the loan, typically with a new mortgage, or sell the house. Other times, lenders will modify the terms of a mortgage instead of doing a rescission.

• It isn't for everyone. Borrowers have just three years after the loan is made to make a rescission claim. It is available only to people who refinanced their original mortgage on their primary residences.

• People who haven't refinanced can still use a bevy of state laws to seek damages from lenders, mortgage brokers, real-estate agents or appraisers who committed similar mistakes (or outright fraud) during loan origination.

***

• Consumer lawyers say rescissions are on the rise. Pamela Simmons of Simmons and Purdy says the Soquel [California] law firm has done more than 300 this year, up from 200 last year. Until recently, some judges were loathe to cancel loans where the only violations were paperwork mistakes, says Ira Rheingold of the National Association of Consumer Advocates, a group of consumer attorneys. Now that foreclosures are mounting, "courts have gotten more sensitive" to violations, he says.

• Many seemingly small foul-ups can qualify. If the APR, or annual percentage rate, is off by a fraction of a percent between the preliminary and final loan documents, the loan may be rescindable. Same goes if the total in fees is off by more than $100 (or $35, if the borrower is facing foreclosure).

In one case cited in the story, the lender's failure to provide the homeowner couple with two copies of a disclosure form informing them of their three day right to cancel the loan was enough to get a toxic loan canceled, saving the couple about $60,000. They were then able to refinance their way out of the bad loan with a mortgage with better terms from a different lender.

For more, see How minor mistakes can upend a mortgage (Many seemingly small discrepancies in paperwork can qualify for a loan rescission) (story appears in the Contra Costa Times - may require free registration; or try here - courtesy of the The Press Enterprise)

Go here for other posts on using the Truth In Lending Act to Undo Bad Mortgage Loans.

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For those stuck with bad loans who want to find out if their mortgage lender screwed up with the loan documents, and need a starting point for finding a consumer protection attorney to look over the paperwork, go here , or go here , or go here. (Don't hesitate to ask them if they work on a "contingency fee" basis - where they are entitled to their fee only if they succeed. In the context of consumer protection litigation, your attorney, if successful, will generally obtain a court order compelling the mortgage lender who screwed up to cough up the fee, therby costing you nothing out-of-pocket. Also ask the attorney if there is a charge for an initial consultation - don't be shy!)

These sources may also be a good place to begin a search for a consumer protection attorney if you're stuck with an unreasonable mortgage servicing company. Go here , go here , and go here for posts on questionable mortgage servicing practices and for those who think their mortgage servicing company is screwing them over. undo mortgage loans TILA alpha

Wisconsin Contractor To Pay $500K Or Face Stiff Sentence For Stiffing Subs, Leaving Homeowners Holding The Bag

In Wisconsin, the LaCrosse Tribune reports:

• A former Onalaska building contractor whose failure to pay $500,000 to subcontractors left four homeowners stuck with the bills was ordered [last week] to make restitution or face a stiff prison term. La Crosse County Circuit Judge Ramona Gonzalez gave Kasimir M. Oganowski, 36, two years on electronic monitoring and 10 years of probation, along with 100 hours of community service each year.

• But Oganowski will not spend time behind bars, despite calls for prison time by a Department of Corrections agent, the prosecutor and victims. Gonzalez said she would rather see Oganowski repay his victims than live in prison at taxpayers’ expense.

***

• Oganowski pleaded guilty in September to two counts of felony theft by contractor. He moved earlier this year to Greenwood, Ind., and will be allowed to serve his electronic monitoring there. He must annually pay at least $20,000 in restitution, Gonzalez said. [...] If he fails, she said, he still can receive up to 20 years in prison and extended supervision. [...] Oganowski admitted in court he took money from one project to cover costs on another, and left the homeowners — who also were his close friends — with unfinished homes and potential foreclosures from unpaid subcontractors.

For more, see Man gets probation in fraud case.

For other posts on contractors accused of stiffing subs & homeowners, go here and go here. contractors stiff subs customers zeta

Church Pastor On Denver DA's Radar; May Involve Alleged Straw Buyer Flipping Operation

In Denver, Colorado, the Rocky Mountain News reports:

• The Denver District Attorney's Office is investigating the Rev. Harold Hicks, pastor of the Mount Carmel Community Baptist Church in northeast Denver, a spokeswoman confirmed [earlier this month]. The nature of the inquiry was not disclosed, but Hicks was the subject of a Rocky Mountain News investigation in July in which two former members of his church said they were unwitting participants in a "straw buyer" real estate scheme.

• Records supplied by former member Sherri Wrightsil indicated she bought seven properties for about $845,000, although she was financially unqualified to do so. A company with ties to Hicks rented them out before they went into foreclosure. In addition, Wrightsil lent Hicks $10,000 for a real estate deal. [...] Mortgage broker Jim Spray, who had helped the Rocky review more than 10 pounds of documents supplied by Wrightsil and Deborah Richardson, another former church member, said their names appeared to have been used as straw buyers, paying inflated prices for dilapidated housing units.

***

• In a separate development, Gerald Johnson, an electrician who worked on Hicks' properties, has stepped forward to charge that Hicks painted over mold in some units he was renting out and covered asbestos with sheet rock. [...] "My anger has been simmering for several years," Johnson said. "I have prayed about this. He should be held accountable for what he has done."

For more, see Pastor under DA's scrutiny (Hicks subject of Rocky report on straw buyer scam).

For the earlier Rocky Mountain News story on their investigation of Rev. Harold Hicks, see Signing on faith (Ex-church members say pastor misused trust to conduct shady real estate deals).

Florida Man Scams Girlfriend Out Of $100K+ From HELOC Account, Say Court Docs

In St. Petersburg, Florida, The Tampa Tribune reports:

• A 43-year-old St. Petersburg man defrauded his girlfriend out of more than $100,000, most of it by persuading her to open a home equity line of credit ["HELOC"], according to court documents released [earlier this month]. Richard Butler was arrested [...] on a charge of scheming to defraud. Bail was set at $50,000.

***

• Butler persuaded his girlfriend to open a line of credit to provide him $20,000 so his home would not be foreclosed upon, according to the documents. She opened a $150,000 line at her bank, SunTrust, and gave him $28,000, the documents state. [... Subsequently,] he persuaded her to put her name on a signature card for his bank account at Colonial Bank, though she didn't bank there, according to the documents. When he got his hands on checks for the home equity line of credit, he would sign her name or his name and hers and then deposit the money in the Colonial account, the documents state. He deposited $97,000 in the account at Colonial before withdrawing it for personal use, the documents state.

For more, see Beau's Scam Netted $100,000, Files Say.

Baltimore Judge Orders Flat Fees For Attorneys Clipping Homeowners For Fat Fees In Tax Sale Foreclosures

In Baltimore, Maryland, The Baltimore Sun reported earlier this month:

• A Baltimore circuit judge ruled [earlier this month] that attorneys handling tax-sale foreclosure cases in the city can charge only flat fees instead of billing by the hour, a move aimed at reducing the amount of money homeowners have to pay to keep their homes. The ruling by Evelyn Omega Cannon, the judge in charge of the Baltimore Circuit Court civil docket, capped a yearlong review that she began after realizing that many requests for fees and expense reimbursement in tax-sale cases were not documented.

• Her ruling comes as federal authorities look into possible mail fraud and restraint-of-trade violations in tax-sale auctions in the city and a number of counties around Maryland, and at a time when foreclosure rates in Maryland are rising rapidly. [...] In her 51-page opinion, Cannon set the fees at $1,300 or $1,500, depending on how far along the case has gotten ...

For more, see Judge limits lawyers' fees in tax-sale cases (when link expires, go here for story courtesy of LexisNexis). bidding

Slow Refunds Rile REO Investors At H&M Auction

In Stockton, California, The Stockton Record reports:

• A couple of top bidders in a no-minimum-bid auction of foreclosed homes nearly a month ago in Stockton are not only unhappy that banks didn't accept their bids or even negotiate a sale, they haven't gotten back thousands of dollars in deposits. "It was a waste of my time," said Lewis Stallworth Jr., a Stockton man who put in a top bid of $135,000 for a north Stockton house. "I feel like it was almost a scam. There's no use in going to an auction if they're going to act like that." The Dallas-based auctioneering firm of Hudson & Marshall staged an auction of 61 foreclosed homes Nov. 15 in Stockton, one of a number of auctions last month in Northern California. [...] Stallworth said Hudson & Marshall needs to fix its auction process to make it fair. "It's a simple system," he said. "All they have to do is say, 'This house has a minimum bid,' or whatever, and everybody knows right off the top so they're not wasting your time."

For more, see Rejected top bidders await deposit refunds.