State Appeals Court Hands California Foreclosure Investors Big Win

A California state appeals court in a decision handed down last month held that, under the California Home Equity Sales Contract Act, the bond requirement under Civil Code Section 1695.17 for an equity purchaser's [foreclosure investor's] representative is "void for vagueness under the due process clause and may not be enforced."

The case involved a homeowner facing foreclosure who sued to void a deed in a transaction in which he sold his home to an investor the day before a foreclosure sale. The sale was one that fell within the scope of the California Home Equity Sales Contract Act which, among a slew of other things, requires that a representative acting as intermediary on behalf of a foreclosure investor be bonded for an amount equal to twice the fair market value of the property being sold. The trial court agreed with the homeowner, ruled in favor of voiding the deed, and the foreclosure investor filed an appeal.

In reversing the lower court decision, the California appeals court analyzed the provision in the law requiring the bond, and ultimately ruled as follows:

• We are convinced that the amorphous requirement of section 1695.17, requiring proof the representative is "bonded by an admitted surety insurer in an amount equal to twice the fair market value of the real property which is the subject of the contract," provides no guidance on the amount, the obligee, the beneficiaries, the terms or conditions of the bond, the delivery and acceptance requirements, or the enforcement mechanisms of the required bond. Instead, persons of ordinary intelligence must necessarily guess at what the statute requires for them to comply with its obligations. Under these circumstances, the bond requirement of section 1695.17 is void for vagueness under the due process clause and may not be enforced.

After additional analysis, the appeals court further ruled that its finding of unconstitutionality was limited strictly to the bonding requirement found in Section 1695.17. The other provisions of the statute remain unaffected.

This decision becomes effective on January 14, 2007. However, should the homeowner appeal the decision to the California Supreme Court (and the court decides to hear the case), the decision will not go into effect until the state high court rules on the matter.

To view the court's decision, see Schweitzer v. Westminster Investments (may require free registration; available online courtesy of FindLaw.com)

Editor's Note:

The importance of this decision to those in California can be measured by looking to those who jumped into the litigation as "friends of the court" in this case. The office of the California Attorney General filed a "friend of the court" brief supporting the homeowner's position; on behalf of those intermediaries (ie. real estate agents) who represent foreclosure investors as well as the foreclosure investor itself, the California Association of Realtors filed an amicus brief.

Does this case now mean that it's "open season" on California homeowners facing foreclosure, with licensed real estate agents and unlicensed foreclosure investor "bird dogs" coming out of the woodwork on behalf of investors (both investors who buy property outright with no strings attached, as well as the foreclosure rescue operators who offer the sale leaseback arrangements that the FBI around the country has been quite interested in lately)?

If the California Supreme Court decides to hear an appeal (assuming one is filed), and the state legislature acts quickly enough to correct the perceived constitutional infirmities in the statute while the appeal is pending, then maybe not. Otherwise, ... ???

Thanks to Ontario, California attorney Tim Liebaert, with the firm Ritchie, Klinkert, McCallion & Liebaert for the "heads-up" on this case and his input for this post. For more on Tim Liebaert, see Southern California Woman Alleged Victim Of Home Theft, Mortgage Broker Arrested.

Free Legal Services Offered To Eligible Ohio Homeowners Facing Foreclosure

In Ohio, The Cincinnati Enquirer reports:

• Ohio homeowners in need of a free lawyer to represent them in a foreclosure lawsuit can call the Ohio Attorney General's consumer complaint office at 877-244-6446. The state is taking those requests after Ohio's chief justice told lawyers last month that representing indigent homeowners pro bono (for free) was part of their professional obligation to work for the public good. Since then, more than 200 lawyers have volunteered to help, either by representing homeowners or mediating disputes with mortgage companies. Ken Brown, a spokesman for the Ohio State Bar Association, said non-profit groups and state agencies are still working out details on who will be eligible for the free legal services, but encouraged homeowners to call early in the foreclosure process.

Source: In foreclosure? Get free lawyer.

Go here for earlier posts on Ohio Chief Justice's call for volunteer attorneys to assist Ohio homeowners in foreclosure. Thomas Moyer

Florida Homestead Exemption Waiver Obtained By Attorney From Client Declared Invalid; Some State High Court Justices Express Ethical Concerns

In Florida, The Associated Press reports:

• A 1985 amendment to the Florida Constitution does not allow debtors to waive a long-standing ban on the forced sale of their homes to pay off unsecured creditors, the state Supreme Court ruled [last month]. The justices unanimously rejected an appeal by Miami lawyer Deborah Chames. She had obtained a $33,206.76 judgment for legal fees against a former divorce client, Henry DeMayo, and a lien against his home. The 3rd District Court of Appeal reversed the lien even though the retainer agreement DeMayo signed included a waiver of a constitutional provision exempting primary homes from forced sales.

• For more than a century, the [Florida] Supreme Court has held that the exemption cannot be waived. In the new opinion the justices wrote the amendment that expands the exemption to any "natural person," not just heads of families, doesn't change the legal precedent prohibiting waivers.

• Chames argued the amendment also turned the exemption into a personal right that can be waived. Justice Raoul Cantero wrote for the court that there's no indication voters intended to do that when they approved the amendment. "We find the amendment to the homestead exemption a slim reed on which to recede from 123 years of precedent," Cantero wrote.

Source: Ban remains on forced home sales by unsecured creditors.

To view court decision, see Chames v. DeMayo (Fla. 12-20-07).

Go here to watch the oral arguments in the Florida Supreme Court, in which some members of the court, among other things, expressed concerns about the possible ethical and conflict of interest problems that may arise when an attorney asks a client to waive (ie. sign away) their homestead rights when entering into a retainer agreement.

For the long version of this post, see Homestead Waiver Declared Invalid; Big Win For Florida Homeowners As State Exemption From Forced Sale Dodges Bullet.

County Considers Closing Courthouse Door On Foreclosing Lenders Lacking Proof Of Mortgage Ownership, Says Proposed Rule

(originally posted 12-30-07)
In Hamilton Couny, Ohio, The Cincinnati Enquirer reports:

• Hamilton County could become the first in Ohio to adopt court rules closing the courthouse door - at least temporarily - to some financial institutions seeking to take homes through foreclosure. The proposed rule would target lenders who file foreclosure cases but can't prove they own the mortgages. Court officials say the rule would slow foreclosures by weeks or months, while the lenders get the paperwork in order to demonstrate their right to take the properties.

***

• The proposed local rule must be agreed to by a majority of judges, who meet next month. The rule would prohibit lenders from filing a foreclosure action unless they sign a sworn statement that they also own the mortgage. That could be just a paperwork issue, but it could delay a foreclosure filing by weeks or even months. [...] One national study suggests that 40 percent of foreclosure cases in bankruptcy lack the required paperwork to demonstrate that the lender is what's known in the law as "the real party in interest."

• The proposed rule would effectively expand the scope of a decision by Judge Steven E. Martin last month that threw out a foreclosure brought by Wells Fargo Bank against a North College Hill couple. The bank, Martin ruled, didn't have standing to bring the case when it filed the lawsuit. Martin was the first state judge to throw out a foreclosure case after three federal court judges in Ohio made similar rulings. "Why would we let somebody file a lawsuit to take someone's house unless they're the real party in interest?" Martin told his fellow Common Pleas Court judges Wednesday. Ohio Attorney General Marc Dann is seeking to expand Martin's precedent to courts all over Ohio. Dann has asked judges to throw out existing foreclosure cases over the "real party in interest" issue.

For more, see County may ask mortgage proof (Rule would slow foreclosure rate).

For other posts that reference the failure of some mortgage lenders and their attorneys to file the required loan documents when starting foreclosures, Go Here, Go Here, Go Here and Go Here. missing mortgage foreclosure docs alpha

87-Year Old Ex-Chicago Cop Victimized In Foreclosure Rescue Scam; Fights To Stave Off Eviction

(originally posted 12-29-07)
In Chicago, Illinois, the Chicago Defender recently reported on the story of 87-year old Tellie Howard, a former Cook County, Illinois Sheriff's Deputy facing foreclosure who was reportedly scammed out the equity in his home of almost 46 years by foreclosure rescue operator Anthony Deveaux [aka Antonio Deveaux] in a transaction that was intended to be nothing more than a simple refinance of his home so that he and his wife could take care of an existing mortgage in default and have some home improvement work done. Not long after signing the purported refinance papers, a woman showed up at his front door, told him she was the new owner of the home and that she wanted him out, giving him a month to vacate.

According to the story, the matter forced Howard to place his 82-year-old wife, Addie, who is of ill-health and needs dialysis three days a week plus other care, in a nursing home until the nightmare with his home can be straightened out. An excerpt from one of the articles:

• According to a lawsuit filed by the Cook County Public Guardian’s office on behalf of Howard’s disabled wife Addie Howard -- who is now a ward of the state and living in a nursing home -- Anthony Deveaux [aka Antonio Deveaux] bought the property from Howard and his wife for $230,000. “Mrs. Howard is deemed disabled and mentally incompetent, therefore ruling out any assertions that she signed a real estate sales contract. Mrs. Howard was not present to sign any documents. Mr. Howard said he didn’t sign his property over to Deveaux. Mr. Howard thought he was signing a mortgage refinance contract, nothing else. Deveaux knew that Mr. Howard didn‘t know he was signing his home away,” Dawn Lawkowski-Keller, an attorney in the public guardian’s office said.

***

• Lawkowski-Keller also said Deveaux is making his living on scamming the elderly out of their homes and speculates that the more than $100,000 in proceeds from the alleged fraudulent scheme to buy the Howard’s home financed a Bentley automobile that Deveaux reportedly owns. “He conducts get rich quick real estate seminars and has videos on You Tube about his lifestyle. You can see him driving his Bentley on there,” Keller said.

For the whole story, see:

• Elderly man conned into signing over house (3rd story from the bottom of page) (Chicago Defender, 11-28-07),
• Judge stymies attempt to foreclose on elderly man's house (Chicago Defender, 12-28-07) (no longer available online),
• See also CBS2 (Chicago) report on Tellie Howard, Rev. Jackson Pressures Lenders On Foreclosures (read story #1) (read story #2) (watch video).

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

Go here and go here for other posts on deed theft by forgery, swindle, etc.

For related posts, see:

• Foreclosure Rescue - For Criminal Prosecutors Only,
• Criminal Prosecutions Of Foreclosure Rescue Operators deed theft zorro elder financial abuse xero

Reverse Mortgages: Niche Product Or Mainstream Solution?

The AARP Public Policy Institute has issued their research report, "Reverse Mortgages: Niche Product or Mainstream Solution? Report on the 2006 AARP National Survey of Reverse Mortgages Mortgage Shoppers" last month. According to the Institute, this survey provides the first detailed look at consumer interest in reverse mortgages, consumer experiences with lenders and counselors, why some consumers decide against these loans, how borrowers use the loan proceeds, and how well reverse mortgages address borrower needs.

For more, see:

• Report Summary (2 pages),
• Full Report (228 pages).

For other posts related to reverse mortgages, go here , and go here. reverse mortgage yak

Reverse Mortgages: The Next Subprime? Part 2

Last month, the U.S Senate Special Committee on Aging held a hearing to address the concerns arising from reported financial abuses against the elderly in connection with the reverse mortgage industry. The hearing essentially reinforced two basic points:

1. When used wisely and carefully, a reverse mortgage is a great tool for senior citizens to tap into their home equity, tax free, the funds from which can be used for any purpose - thereby making their lives easier,
2. When sold recklessly by careless, untrained sales agents (or unscrupulously by sleazy sales agents), peddling reverse mortgages is a great way to screw elderly homeowners out of their home equity, leaving them in jeopardy of losing their homes.

In other words, it may not be the reverse mortgage itself that's bad, it's the person selling it that will ultimately determine whether (1) or (2), above applies (although watch out for "equity sharing, contingent interest" reverse mortgages, which may be available through non-HECM connected lenders).

Among some of the problems raised at the hearing:

1. unscrupulous sales agents convincing seniors to get a reverse mortgage and then use some of the proceeds to purchase a deferred annuity [some sales agents, working in tendem with home improvement contractors, will convince elderly homeowners that it is mandatory to use some of the proceeds to make overpriced, unnecessary home repairs],
2. reverse mortgage companies heavily recruiting sales agents, offering opportuinites to "double their commissions" by selling elderly homeowners reverse mortgages contemporaneously with annuity products,
3. no suitablity standards to determine if a reverse mortgage is right for a particular homeowner,
4. so-called "independent" HUD counselors that may not be all that independent,
5. no training, certification, or background checks required for HUD counselors; the counseling agency is required to have a HUD certification, but they can then turn around and hire anybody to actually do the counseling (ie. convicted felons, con artists, sleaze bags OK),
6. no real counseling requirements; face-to-face counseling not required - can be done over the phone; the "counseling" is limited to conveying an understanding of the loan terms - not of whether getting a reverse mortgage is actually a suitable arrangement for the particular senior considering the mortgage,
7. there are many ways for senior homeowners to lose their homes after getting the reverse mortgage that are never addressed during the sales pitch (contrary to what respected actor Robert Wagner and other paid celebrity spokespeople say on TV commercials and DVD marketing propaganda put out by the companies peddling reverse mortgages),
8. deceptive and misleading (without necessarily being technically incorrect) use of terms to describe reverse mortgages (ie. "HUD-regulated," "government insured" and " a benefit from the Federal government") to instill in the senior citizen homeowner trust and confidence in the product,
9. selling reverse mortgages to unmarried seniors who may be bound for a nursing home (spending 12 months in a nursing home by an elderly homeowner is enough to cause a due date acceleration of the reverse mortgage, thereby forcing a sale of the senior's home if they can't otherwise pay it off by cutting a check or refinancing it).

Written statements were submitted by witnesses who testified at the hearing:

• Statement of Carol Anthony, daughter of a victimized elderly homeowner of an unscrupulous sales agent selling a reverse mortgage tied to an annuity, resulting in significant loss of home equity,
• Statement of Prescott Cole, Senior Staff Attorney, California Advocates for Nursing Home Reform on behalf of Coalition to End Elder Financial Abuse, on the abusive marketing practices engaged in by some selling reverse mortgages,
• Go here for links to the written statements submitted by other witnesses, as well as the opening statements from the committee chairman, Sen. Herb Kohl (D-WI.) and the ranking member, Sen. Gordon Smith (R-OR).

To watch the actual webcast of the hearings, see Reverse Mortgages: Polishing not Tarnishing the Golden Years (requires Real Player media player).

Go here for Reverse Mortgages: The Next Subprime? Part 1.

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

For stories related to Reverse Mortgage Problems, go here , and go here. xero zebra reverse mortgage yak

Now-Deceased Cheating Husband Took Mortgage Out On Florida Home Without Telling Wife; Leaving Her Facing Foreclosure

In Boynton Beach, Florida, The Palm Beach Post reports:

• After 55 years of marriage, Rosalyn Spiegel thought she knew everything about her husband. But shortly before he died, she discovered he was leading a double life — one that has caused her scores of sleepless nights and could ultimately cost her the 1,300-square-foot condo she has called home for 12 years. "I'm so ashamed," the 75-year-old said as she recounted a tale of deceit that has unraveled her once-secure life and made her wonder how she could have been so blind.

• When she wasn't looking, her husband, Norman, with the help of a woman she suspects was his longtime girlfriend, took out a $180,000 mortgage on their condominium in the Platina community in suburban Boynton Beach. By the time she realized what had happened, Norman was dead, the debt was growing and the bank was filing a lawsuit to foreclose on the mortgage she never knew existed.

• When she sought legal help, her attorney initially thought the matter could be resolved quickly. Rosalyn Spiegel, reasoned her attorney, Gary Susser, was an innocent victim of a scam — albeit one perpetuated by her husband. But attorneys representing the mortgage and title companies made it clear they viewed the matter differently.

***

• Boynton Beach police opened a fraud investigation days before Norman died in March 2006, but it has dragged on, and Susser worries it's going nowhere. Faced with what he described as "deafening silence" on all sides, Susser decided to go on the offensive. Turning the tables on Gateway Mortgage Group, Global First Title and Freemont Investment & Loan, he sued them [last] month, claiming they should have realized the 45-year-old woman he believes accompanied Norman to the closing was not Rosalyn but someone pretending to be her.

For more, see Betrayed widow fighting to keep home near Boynton (no longer available online).

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.

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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).

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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'.

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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.

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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.

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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.

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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