Monday, January 21, 2008

Long Island Homeowner Gains $3.5 Million Judgment In Foreclosure Rescue Scam

On Long Island, New York, Newsday reports:
  • A Great Neck woman victimized in a mortgage fraud in which she unknowingly gave away her house has won a $3.5-million judgment against the mortgage broker who scammed her, court documents show. Priscila Nano, 66, said she was "scared" and on the brink of losing her longtime home to foreclosure in 2004 when she received an advertisement from the Westbury-based Foreclosure Options Inc., and called the company's number. In court papers, Nano's attorneys described her as "an underemployed, senior citizen and immigrant with a modest command of the English language ... desperate to keep her home." Nano's attorney, Douglas Good of Uniondale, said the company, headed by Moses Crawford III, was so predatory that it even sent a town car to Nano's home to bring her to what she believed was a closing of a refinance of her home.

***

  • The Uniondale firm of Ruskin Moscou Faltischek took Nano's case pro bono, and worked out a settlement in which she recouped from her mortgage carrier most of the value of her home. Good and associate Jennifer Hillman then sued Crawford seeking punitive damages. When Crawford did not respond to the suit, State Supreme Court Justice John Galasso last month awarded Nano a $3.5-million judgment.

For more, see Woman gets $3.5M judgment in mortgage scam.

Metropolitan Grapevine "Alleged Ponzi Scheme" Office Equipment To Be Auctioned Off

According to the website of American Auctions & Appraisals, Inc., an auction for the Metropolitan Grapevine, POS Metro Dream Homes and related entities office furniture and equipment will be held on January 23, 2008 at: 14228 Cherry Lane Ct., Laurel, MD 20707. Go here for more information on the Metropolitan Grapevine auction.

Go here for earlier posts on the Metropolitan Grapevine / POS Metro Dream Homes alleged Ponzi Scheme.

D.C. Foreclosure Rescue Operator Settles One Sale Leaseback Lawsuit; Denied In Request To Set Aside Verdict In Another

In Washington, D.C., The Washington Post reports:
  • Five D.C. residents who say they were tricked into signing away their homes have reached out-of-court settlements that enabled them to regain ownership and a total of $455,000. The settlements end a three-year-old lawsuit, a rare happy ending for the growing number of people who claim to be victims of foreclosure rescue scams. In the suit, the elderly plaintiffs alleged that to stave off foreclosure they signed paperwork for what they thought were loans that would cover missed mortgage payments. Instead, they had signed away their homes to Washington businessman Vincent L. Abell and his associates.

With respect to the buyback terms called for in the arrangements:

  • "The buyback terms were so onerous that there was no way to meet them," said N. Thomas Connally III, a lawyer at Hogan & Hartson, who, with AARP, represented the plaintiffs. "The arrangements were designed to fail from the start, and they allowed Mr. Abell to take ownership of the property by paying the former owner almost nothing." The monthly payments were often so high that many of the plaintiffs fell behind, lost their buyback option and ended up facing eviction, said Connally, whose firm worked on the case pro bono.

Regarding another case involving foreclosure rescue operator Vincent L. Abell:

  • Abell's legal troubles are not over. In March, after a two-week trial in D.C. Superior Court, a jury awarded more than $3 million in punitive damages and $60,000 in compensatory damages to Maria Wilson of the District, who had separately accused Abell, his company and Baltimore of defrauding her in a similar foreclosure rescue operation. On Jan. 9, Judge Mary A. Gooden Terrell denied the defendants' motions to set aside or reduce the verdict, Connally said. "Whether she'll ultimately be able to collect from those folks, who knows?" said Connally, who represented Wilson.

For more, see Homeowners in Alleged Scam Get Settlement (Payments to 5 D.C. Residents Conclude 3-Year Legal Battle).

Go here for other posts on Vincent Abell and his associate, Calvin Baltimore. elder financial abuse whale

Cleveland-Area Prosecutors Gain Convictions In Foreclosure Rescue Scam

Buried in a recent mortgage fraud article in The Cleveland Plain Dealer is the story of one foreclosure rescue scam that ripped off approximately $56,000 from a Clevland-area homeowner and resulted in an attempt to evict the homeowner. The foreclosure rescue group, Sammy Quick, 29, of Brook Park and Brian Cicerchi, 29, of Middleburg Heights, partners in First Primary Mortgage Inc., and Lesley Loney, 34, of North Ridgeville were all arrested in the scam. According to the story:
  • The outcome: Loney pleaded guilty to unauthorized use of property and testified against Quick and Cicerchi. She was sentenced to 12 months probation and fined $1,000. Quick and Cicerchi were convicted in a jury trial this month. Both were found guilty of theft by deception, securing a writing by deception and telecommunications fraud. Quick was also found guilty of mortgage broker prohibitions and receiving stolen property. They are scheduled for sentencing next month.

Source: Loose lending rules gave criminals chance to flourish.

Iowa AG Calls For Laws To Fight Foreclosure Rescue Scams

The Iowa Attorney General announces:

Among the measures being sought is a law specifically targeting foreclosure rescue scams.

  • Miller also asked the Legislature to pass a bill to fight “mortgage foreclosure rescue fraud” – scams that prey on people facing foreclosure by asking them to pay hundreds of dollars for so called assistance or “rescue” from the danger of foreclosure. “The problem is these ‘rescue scams’ just take people’s money and fail to do almost anything to help them avoid foreclosure,” Miller said at a news conference Friday at his office. “And they take precious funds from people who are vulnerable and who can least afford to be cheated. This is the definition of adding insult to injury.”

For more, see AG Miller Offers laws to protect home buyers.

Sunday, January 20, 2008

More On Family Pets Displaced By Foreclosure

The following links are to recent stories on the stress placed on local pet shelters due to families losing their homes to foreclosure:

Salem, New Hampshire: Shelter houses pets homeless due to foreclosure (Over the past month, those over at the Salem Animal Rescue League have noticed a trend of pets being given up by people who have lost their homes in the subprime mortgage crisis),

Placer County, California: Mortgage crisis is hurting pets, too (In January, at least 20 percent of dogs and cats surrendered to the Placer SPCA shelter came from people who "lost their homes or were having such extreme financial difficulties" that they could no longer afford to care for them),

Vero Beach, Florida: As owners lose homes, so do many Treasure Coast pets (Since September, about six people a month have been saying their loss of housing is the reason they're giving their pets to the Humane Society of Vero Beach and Indian River County),

Fremont, Ohio: Overabundance of animals (Fremont shelter has no room for pets after drop-offs) (The number of animals at the Humane Society of Sandusky County has multiplied since a year ago. And part of the problem is attributed to animals being dropped off in the night. Several of them have been severely malnourished. A local animal cruelty investigator said the recent spike could be attributed to the housing-foreclosure issue that is affecting so many people in the area. "It's an ongoing problem with the foreclosures," Hammond said. "People are finding out their dogs don't fit with them. They're leaving their animals behind."),

Saugerties, New York: Foreclosures force farm animals out (In addition to pets, foreclosures are hitting horses, mules and donkeys. The Catskill Animal Sanctuary in Ulster County has seen a dramatic rise in calls — sometimes five a day — from people looking for a shelter for their large animals. Other local shelters have not yet noticed an uptick in animals because of foreclosures. "Most people don't go into detail — 'The house is being foreclosed on' — that might be more personal than they want to get with me," said Adam Saunders, shelter manager of the Ulster County SPCA, "but the most common reason is, 'I have to move, I can't take the pet with me.' It would make sense that that is happening more because there are more foreclosures going on."). See also, Money woes bring animals to shelter (NY Daily News).

Brentwood, California: Pets a growing casualty of the real estate market (As the real estate market continues to languish and foreclosures become more and more common, unwanted furniture isn’t the only thing being left behind when a mortgage turns upside down).

Illinois: Dogs, cats latest victims of subprime-mortgage mess (Animals lose families as owners lose homes) ("We're seeing quite a few animals being surrendered due to economic reasons, including foreclosure," said Angie Wood, assistant executive director of the Naperville Area Humane Society, [...] "We're probably getting 25 [animals] a week coming to us for those reasons," said Terri Sparks, a spokesman for The Animal Welfare League in Chicago, which works with 53 municipalities on animal-control issues. "It's probably increased a lot in the past six to seven months." Linda Gelb, president of Community Animal Rescue Effort, which works through the Evanston Animal Shelter, said her group has taken in four dogs in the past three weeks because their owners were losing their homes. [...] Authorities around the country in recent months have reported numerous findings of cats, dogs, birds, horses and other animals at foreclosed houses and farms. Among the more notorious cases, animals were found in large number -- three dogs and 20 birds in a house in Lorain, Ohio; 24 horses on a farm in Bixby, Okla.; and 63 cats in a house in Cincinnati. It was too late when authorities got to a foreclosed house in Bradford, Pa., to discover the bodies of 21 Great Danes. The owner on Thursday pleaded guilty to 21 counts of animal cruelty.)

For more on foreclosures and family pets, see Foreclosures & Pets I, and see Foreclosures & Pets II. petsII and foreclosures

More On Now-Defunct 1031 Exchange Intermediary, $160M In Trust Money Missing

In Indiana, the Indianapolis Business Journal reports on embattled businessman Edward Okun and his Richmond, Va.-based Investment Properties of America:
  • A high-flying Carmel businessman who moved his base of operations to Miami a couple of years ago is accused of burning through $160 million of investors’ money in the collapse of his real estate empire. [...] Investigators believe [Edward] Okun [...] used investor money to fund a lavish lifestyle that included four mansions, a helicopter, three airplanes, 20 automobiles and a 130-foot yacht. Investment Properties filed for Chapter 11 bankruptcy in November.

  • His investment firm, The 1031 Tax Group, and more than a dozen affiliated companies around the country, sought bankruptcy in May. The 1031 Tax Group was named after a section of federal tax code that allows certain commercial property owners to defer capital gains taxes by reinvesting proceeds from property sales into other real estate. Money held by 1031 Tax Group was sheltered from taxes until investors put their gains into other properties later. But last year, investors began complaining that money they entrusted to Okun had vanished. In fact, Okun and his Investment Properties had “borrowed” funds investors had placed in 1031 Tax Group, according to a report by James Lukenda, a managing director of Huron Consulting Group. A New York bankruptcy court appointed Lukenda as 1031’s chief restructuring officer last year.

For more, see Empire crumbles (Real estate exec with lavish lifestyle accused of $160M fraud).

Go here for more on Edward Okun.

Go here for The 1031 Tax Group's Chapter 11 Bankruptcy Trustee newsletter. sneaky slick escrow agents beta

More On 1031 Exchanges

Realty Times recently ran two stories explaining the mechanics of, and the benefits in using, so-called 1031 exchanges, in which real estate investors are able to defer payment of income taxes due (and possibly avoid the income taxes altogether if this tax deferral technique is continued by an investor indefinitely) on their profitable real estate investments. For those who are interested, see:

Success in using this tax deferral technique will depend on the level of expertise and integrity of the company used as a 1031 exchange intermediary. For some real estate investor horror stories that have occurred when the wrong intermediary is used to conduct the exchange, see 1031 Exchange Intermediaries - Problems.

Saturday, January 19, 2008

Indictment Of Financially Strapped Texas Sup. Court Justice In Home Torching Dismissed; Subprime Mortgage Recently In Foreclosure; Grand Jury Outraged

In Houston Texas, The Associated Press reports:
  • The highest reaches of the Texas judicial system were consumed Friday by a real-life legal thriller that could be titled "The Runaway Grand Jury." A grand jury indicted a Texas Supreme Court justice Thursday on arson-related charges. But on Friday the district attorney's office that brought the case to the grand jury in the first place dropped the charges, angering members of the panel and drawing allegations of political backscratching. Harris County District Attorney Chuck Rosenthal, who is himself embroiled in a scandal involving inappropriate e-mails found on his office computer, said there was insufficient evidence to support the charges against Justice David Medina, a fellow Republican.

***

  • [Medina's] wife, Francisca, was accused of setting a fire last summer that destroyed the couple's suburban Houston house and damaged a neighbor's residence. Her husband was charged with evidence tampering in the June 28 blaze, which caused nearly $1 million in damages.
***
  • The fire marshal's office has said the fire at the Medinas' home in Spring, north of Houston, was not electrical or accidental. A dog detected an accelerant at the scene. Investigators became suspicious after discovering a mortgage company sued in June 2006 to foreclose on the $300,000 home. The lawsuit, filed after the family missed payments for five months, was settled in December 2006. [Medina's attorney] has acknowledged the family had financial problems. They owed nearly $1,900 in fees to a homeowners association and also let the insurance policy on the house lapse, meaning losses from the fire were not covered.

For more, see Texas Thriller: the Runaway Grand Jury (if link expires, try here).

See also, Dismissing of case against Texas justice outrages some grand jurors:

  • I’ve just never seen anything like the vigor with which these two defendants were defended by the Harris County district attorney’s office,” the assistant foreman, Jeffrey Dorrell, told The Chronicle. “It was theater of the absurd. We knew before we handed the indictment down that the district attorney was going to refuse to prosecute.”

The Houston Chronicle reports that the fire also damaged two adjacent homes, and describes Medina's mortgage that went into foreclosure as a subprime adjustable rate mortgage. See Medina attorney asks judge to sanction 2 grand jury members:

  • Medina and his wife purchased the home in the Olde Oaks subdivision in 1992, according to appraisal district records. Loan documents show he took out an adjustable rate home equity loan in 2003 for $288,000, equal to the home's full appraised value at the time. The interest rate was high — almost 10 percent — and was to adjust upward to a cap of almost 16 percent in December 2005. His previous monthly note of about $2,500 could have jumped considerably.

For a subsequent column in the Southeast Texas Record on this story, see A Judicial Career Up in Flames? The Strange Case of David Medina.

For other stories on fires & foreclosures, go here , go here , and go here. foreclosure arson xerox

Criminal Prosecutions Of Home Improvement & Repair Contractors

The following links are to recent stories involving home repair and improvement prosecutions and the criminal charges involved:

Connecticut - Police said Angelo Cassarino, a 38-year-old Babylon, New York man accused of bilking an elderly woman out of $1,851 during a home improvement project, was arrested on a warrant that charged him with second-degree larceny and second-degree reckless endangerment. Police said Cassarino did not properly secure a liner in the woman's chimney on Valley Circle, which could have blocked ventilation and cause a buildup of carbon monoxide in her house. Piping on the job also was smaller than it should have been, police said. About $8,800 in repairs are needed to fix the job, police said. See $1,800 Bilking (3rd story from top).

Massachusetts - William D. Chappell, of Worcester, who was hired to (1) install a new roof, and (2) rebuild a deck and paint the exterior of a house in Shrewsbury, was arrested for receiving over $11,000 for both jobs, and allegedly did not complete either job. He was charged with a violation of the Massachusetts home improvement contract statute; he is also wanted for a New York State probation violation for "grand larceny pertaining to the same type of contractor fraud scheme.” See City man held in home improvement case.

New York - Todd Clifford, of Webster, and who defrauded customers by taking money for work he didn't finish was sentenced to 6 to 12 years in prison, after pleading guilty to third- and fourth-degree larceny. See Contractor Gets 6 to 12 Years for Defrauding Customers.

Illinois - A DuPage County grand jury indicted Lubos Dubravsky, of Schiller Park, on felony charges of suspicion he defrauded a Naperville woman who hired him to install hardwood flooring, according to court records. He is charged with theft and home repair fraud. Authorities allege Dubravsky accepted a $3,000 down payment from the woman, but failed to provide any work. See Man accused of theft, fraud (3rd story from top).

Delaware - Delaware State Police detectives have obtained an arrest warrant for Donald J. Schulze (T/A Affordable Construction Inc.), of Millsboro, charging him with felony theft and home improvement fraud. The victim paid Schulze $11,345.77 to repair her mobile home that had been damaged by fire. Schulze allegedly received the money and only completed $2,000.00 worth of work on the property. See Police searching for Millsboro man.

Maryland - Kevin Robinson was sentenced to six months in jail after prosecutors said he accepted $23,000 for a contracting job he never completed. Prosecutors said Robinson took the money and didn't do the work. Robinson was sentenced after pleading guilty to failing to put money in an escrow account. Prosecutors said this may have been the first conviction in Maryland under the law involving contractor escrow accounts. See Man Sentenced To Jail In Contractor Scam (Prosecutors Say Man Took Money For Job He Didn't Complete).

Kentucky - Louisville Metro Police arrested Willie S. Baldon, of Louisville, for allegedly scamming an 86-year-old woman out of thousands of dollars in a home repair scheme. Police say he was paid for work that was never completed. He allegedly received $6,697.97 but no repairs were made to the woman's home. Baldon has been charged with exploiting an elderly person and three counts of theft by deception, according to his arrest citation. The department's crimes-against-seniors unit was involved in the investigation. See Police charge man with bilking elderly woman over home repairs (Nearly $7,000 paid; work never began).

California - Palm Springs Police Detectives are looking for help located a mother and son team wanted for 38 counts of Financial Elder Abuse and Contractor Fraud. An extraditable warrant has been issued for the arrest of Mary Agnes Stewart, 62, and her son, Joseph Cunningham, 44, for allegedly defrauding an elderly Palm Springs couple of approximately $800,000 over a four-month period by contracting to do remodeling work in the couple's Las Palmas area home. According to reports, they allegedly required the victims to pay large quantities of money in installments. They started demolition of the couple's home, and then fled without providing any materials or construction work. See Palm Springs Police Search for Elder Abuse Suspects.

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

Lawyers, Judges, Bribes & The State Of Mississippi

Anyone interested in a story involving high-powered attorneys allegedly attempting to buy off judges in the State of Mississippi, you can check out:
  1. Federal Indictment - U.S. v. Dickie Scruggs, Zach Scruggs, Sidney Backstrom, Steve Patterson, Tim Balducci,
  2. Scruggs case at a glance (The Jackson Clarion Ledger),
  3. Prosecutor: Miss. judge told ruling could earn federal bench bid (Herald Tribume),
  4. Another lawyer pleads guilty (Court papers filed point to Scruggs) (The Jackson Clarion Ledger),
  5. Former Miss. auditor pleads guilty in judicial bribery attempt in which top lawyer charged,
  6. Scruggs scandal update: Information in Langston plea,
  7. Scruggs Nation, Day 48: center for news updates.
Lawyer Tim Balducci has already pleaded guilty to the bribery charges described in the indictment. He admitted he approached Lafayette County Circuit Judge Henry Lackey in March about taking a bribe in a $26 million legal-fees dispute involving litigation on behalf of Hurricane Katrina victims. Lackey contacted authorities and began cooperating with the FBI. Eventually, Balducci told authorities he gave the judge a $40,000 bribe to rule in Scruggs' favor. The others named in the indictment have all pleaded not guilty.

Coincidentally, indicted high-powered attorney Dickie Scruggs is the brother-in-law of recently retired Mississippi U.S. Senator Trent Lott. knuckleheaded judges zeta

Friday, January 18, 2008

Indiana AG Tags Foreclosure Rescue Operator With Civil Lawsuit; Alleges Violations Of State Credit Service Organization, Deceptive Consumer Sales Acts

The Office of the Indiana Attorney General announces:

  • Indiana Attorney General Steve Carter has filed a lawsuit against Indianapolis-based Capital Foreclosure, Inc. seeking nearly $20,000 in restitution for customers and an injunction to halt the company and its operators from illegal practices. “Some people lost their homes after placing their trust with this company,” Carter said. “The company exploited the vulnerability of its customers who faced foreclosure.” Nearly 20 people sought “Foreclosure Rescue” and credit counseling services from Capital Foreclosure and its operators, Eriq Brye, Kenneth Brye and Sallie Brye. Individuals paid fees and other costs that ranged from $40 to as high as $4,100.

The AG's lawsuit alleges the following violations of Indiana’s Credit Service Organization Act:

  • Failure to obtain a $10,000 surety bond,
  • Failing to provide legally required disclosures on contracts,
  • Failure to provide two copies of a Notice of Cancellation form for buyers.

The AG's lawsuit also alleges the following violations, among others, of Indiana's Deceptive Consumer Sales Act:

  • Promising a full money-back guarantee and then failing to give the refund when failing to stop foreclosure,
  • Representing having the characteristics of experienced consultants with in-depth industry knowledge on how to avoid and stop foreclosure.

For more, see Indiana AG News Release: Attorney General Steve Carter Says Foreclosure Rescue Company Left Customers Out in the Cold.

For a copy of the lawsuit, see State of Indiana v. Capital Foreclosure, Inc., et al.

See also, WRTV Channel 6 report: State: 'Foreclosure Rescue' Company Ripped Off Hoosiers (State Seeks Restitution, Fines).

Las Vegas-Area Cops Charge Escrow Agent In $500K+ Theft; Announce A Ramping Up Of "Rescue" Scam Investigations; Undercover Stings In The Offing

In Las Vegas, Nevada, KLAS-TV Channel 8 reports:
  • A local escrow officer was arrested after Metro Fraud investigators say she pocketed more than $500,000 in escrow funds. Metro says this latest case is just the tip of the iceberg in what they believe will be a deluge of mortgage fraud cases in the weeks and months ahead. [...] Police arrested Sheila Katherine Williams on Tuesday for her alleged role in a scheme to steal $568,000 from a valley lending institution.

In a news conference held Wednesday, Metro Fraud investigators announced that they are seeing more desparate homeowners being victimized in foreclosure rescue scams where they unwittingly sign over the deed to their homes to a con artist who promises to take over the house payments but fails to do so.

  • Metro says they're currently cross training all of its fraud investigators to handle potential mortgage fraud. And the department even plans to conduct its own undercover sting operations to crack down on the fraud scam artists who target homeowners and businesses in financial distress.
For more, see Metro Targeting Real Estate Fraud (read story) (watch video).

See Theft Of Escrow Funds I and Theft Of Escrow Funds II for other stories of trust account / escrow account theft of funds. sneaky slick escrow agents beta

Foreclosure Rescue Bill Introduced In Virginia Legislature

In Richmond, Virginia, The Virginian-Pilot reports:
  • Del. Sal R. Iaquinto, R-Virginia Beach, has introduced a bill he said will provide more protection to people at risk of losing their homes to foreclosure. HB 947 would require companies or people that offer assistance to homeowners under threat of foreclosure to clearly disclose their services. The bill would also give homeowners a three-day period to rescind contracts with foreclosure-aid entities. Iaquinto said these companies often take advantage of desperate homeowners by getting them to sign over ownership of their homes under the guise of helping them avoid foreclosure. “We’re not going to stop the process,” he said. “People just need to know what’s going on.”

Source: Bill seeks to protect homeowners in foreclosures.

Go here for more on HB 947 (summary as introduced) (full text).

For a competing foreclosure rescue proposed law introduced by Del. G. Glenn Oder, see HB 408 (summary and status report) (full text).

March 13, 2008 update:

Go here for the current version of HB 408 (summary and status report) (full text), which, as of 3-13-2008, has been passed by the House and Senate and awaits the Governor's signature.

Home Repair Contractor Gets 13 Months For Pocketing Insurance Proceeds, FEMA Funds & Failing To Perform Hurricane Repairs

In Norfolk, Virginia, The Virginian Pilot reports:
  • A former home-repair contractor convicted last year of mail fraud was sentenced in federal court [last] Friday to a year and a month in prison - a fraction of the prison time that the Justice Department asked the court to impose. The contractor, Richard C. Pirozzi of southern Maryland, defrauded scores of Hampton Roads homeowners in 2003 after they suffered damages from Hurricane Isabel, a jury determined in June. Pirozzi's company, National Restoration Specialists Inc. of Bowie, Md., collected insurance and Federal Emergency Management Agency payments from victims but failed in many cases to make the needed repairs, prosecutors reiterated during [last] Friday's hearing.

For more, see Home-repair contractor gets 13 months in prison for fraud.

Ex-Appraiser Gets 18 Months For Submitting Inflated Appraisals

In Forsyth County, Georgia, Appen Newspapers reports:
  • A Decatur man will spend 18 months in federal prison and must pay $4.7 million in restitution for his part in a mortgage fraud scheme involving fraudulent appraisals for 15 homes in the Greenleaf subdivision in Forsyth County. Darryl L. Cooper, 27, received a reduced sentence, which includes three years of supervised release, from U.S. District Judge Thomas W. Thrash Jr. because of his cooperation in the investigation. He pleaded guilty Nov. 7, 2007 to one count on a charge of mortgage fraud conspiracy. The appraisals supported $4.7 million in fraudulent loans for purchases in the names of out-of state "investors" of incomplete homes from builder/coconspirator Jeffery Alan Teague. Cooper was recruited by Teague to prepare $5 million in appraisal valuations for 15 complete houses, when none of the houses had been completed. A California lender relied on Cooper's fraudulent appraisals to make $4.7 million in mortgage loans secured by these properties, which had no value. Many of the borrower/purchasers from California, New York and Florida also relied on the Cooper appraisals, rather than inspecting the properties before closing on their loans.

For more, see Decatur man must pay for Forsyth County mortgage fraud.

For FBI Press Release, see Appraiser Sentenced To Prison In Mortgage Fraud (Submitted Fraudulent Appraisals On Incomplete Houses In Forsyth County).

400 Guilty Verdicts In $190M California Fraud Trial Targeting Mostly Elderly Investors

In Riverside County, California, The Press-Enterprise reports:
  • Prosecutors will seek the maximum prison term of 117 years for the president and sole officer of D.W. Heath & Associates, who was convicted this week of bilking 1,600 mostly elderly investors. Daniel W. Heath received the final verdicts Friday, with jurors finding him guilty of 400 of 401 criminal counts, including securities fraud, selling securities without a license, theft from the elderly and grand theft. The verdicts were read over two days in the $190 million investment fraud trial involving his shuttered company. [...] "There are (sellers) out there who think that if investors complain, the worst they can face is civil suits, but we made it clear that you will face criminal charges," Deputy District Attorney Michael Quesnel said.

For more, see Heath investment fraud trial ends in 400 guilty verdicts, one not guilty (read story) (watch video).

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

Seniors Strike Back With Class Action Targeting Living Trust Peddlers

In Miller County, Arkansas, The Southeast Texas Record reports:
  • A number of Texarkana residents have filed suit against sellers of living trust documents in a class action accusing the salesmen of exploiting senior citizens. [...] The living trust sellers are facing allegations of "masquerading as qualified financial advisers, estate planners, lawyers, and paralegals" to "exploit and prey" upon senior citizens with the creation and selling of "unnecessary and often useless" living trusts. [...] Defendants are accused of fraud, unauthorized practice of law, negligence, breach of fiduciary duty and conspiracy. The suit alleges that the defendants created and sold the living trusts as part of a scheme to gain access to senior citizens' financial information in order to sell annuities and other financial products.

  • According to the original complaint, the scheme begins with advertisements that persuade senior citizens to attend a free lunch or dinner. At these meetings, the "unlicensed" living trust defendants conduct presentations and distribute materials that misrepresent the impact of probate fees and estate taxes in order to create fear that the senior citizens need to buy a trust to prevent heirs from losing their estate.

For more, see Seniors file class action against sellers of living trusts.

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

Thursday, January 17, 2008

Foreclosure Rescue Scams, Reverse Mortgage Fraud To Increase, Says FBI

A recent USA Today article reports on the FBI and their work in pursuing mortgage and real estate scams. Included in the story is this except regarding scams involving foreclosure rescue and reverse mortgages:
  • The FBI expects more foreclosure scams as criminals prey on growing numbers of people desperate to keep their homes while interest rates balloon on adjustable rate mortgages, [FBI financial crimes section chief Sharon] Ormsby says. She also expects increasing fraud in "reverse mortgages," in which homeowners 62 or older can take out a loan against the equity in their home. Unlike a traditional home-equity loan, the borrower doesn't pay back a reverse mortgage until they sell the home.

***

  • In [one type of] scam, people posing as "foreclosure rescue" experts persuade homeowners with bad credit to sign over their deeds to a third person who can get a second mortgage against the home. The "expert" pockets the cash and defaults on the loan. A New York grand jury charged six people with fraud last month for allegedly stealing more than 80 homes in this way.

For more, see FBI: Housing scams more than double.

Countrywide Stops Automatic Drafts, Then Forecloses On Homeowner, Says Lawsuit

In Beaumont, Texas, The Southeast Texas Record reports:
  • There seems to be no relief in sight for Countrywide Home Loans, as a West End couple has just filed a new lawsuit alleging that the lender stopped automatically withdrawing loan funds and wrongly foreclosed on their home. Brian and Ahli Sparkman assert Countrywide had been automatically drafting their mortgage payment from their bank account for one full year, then for reasons unknown, stopped and foreclosed on them.

Reportedly, the lawsuit alleges that Countrywide's failure to automatically withdraw the monthly mortgage payments after agreeing that it would do so (and having done so for a year) constitutes a misrepresentation under the Texas Deceptive Trade Practices Act (Tex. Bus. & Com. Code §§17.41—63).

For more, see Beaumont couple claims Countrywide wrongly foreclosed on home.

For more on the Texas statute, see The Texas Deceptive Trade Practices Act: Still Alive And Well.

Montana Woman Gets 5 Years For Stealing Bank CDs, Home Sale Proceeds From 80+ Year Old Mother

In Billings, Montana, The Billings Gazette reports:
  • A Billings woman who admitted to stealing $300,000 from her elderly mother in a bankruptcy fraud scheme will serve the maximum five years in federal prison. "I would just like to apologize and ask forgiveness from God and everyone," an emotional Nancy Florence Short, 63, said Friday. [...] Short pleaded guilty in July to concealing assets and making false statements in a scheme that started in 2001 with bankruptcy filings in Montana. Prosecutors said Short converted $300,000 in certificates of deposit from her mother without authorization and took $22,780 from the sale of her mother's house in Texas, knowing that the money was intended for her mother's care.

***

  • When Short placed her mother in [an assisted care facility], she isolated her by diverting her mail and denying access to her car, [U.S. District Judge Richard] Cebull said. Short also gave the staff a false medical history of her mother by saying she suffered from Alzheimer's and was paranoid. When Short's mother discovered the theft, the staff and police initially didn't believe her allegations because of the supposed Alzheimer's, Cebull said. Short was the victim's only contact outside [the care facility], he said.

For more, see Woman gets 5 years in bankruptcy fraud.

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

Broward Cops Collar Contractor On New Charges; Pocketed Deposits, Failed To Complete Work

In Broward County, Florida, The Miami Herald reports:
  • An unlicensed contractor on probation for ripping off dozens of homeowners in Miami-Dade County is being accused of ripping off another dozen new homeowners in Broward. John T. Pluto, 45, [...] was arrested Friday in Hollywood by the Economic Crimes Unit of the Broward Sheriff's Office on charges that he defrauded at least 14 Broward residents who needed concrete work at their homes in 2006. Pluto faces one count of organized scheme to defraud, a first-degree felony. He is being held at BSO's Main Jail in Fort Lauderdale without bond.

  • BSO spokesman Mike Jachles said Pluto cheated local homeowners out of $50,000. Pluto's system, according to authorities: He would enter into contracts, begin some of the work, and become hard to reach after pocketing their deposits -- often totaling 50 percent of the final price.

For more, see Accused of new scams, contractor held in Broward (A contractor already in trouble for scamming homeowners in Miami-Dade is suspected of conducting a similar scheme in Broward) (if link expires, try here).

Go here for other posts on contractor arrests by Broward Sheriff's Office.

Poisonous Spiders Force Indiana Family From Home; Insurer Refuses To Indemnify

In Anderson, Indiana, The Anderson Herald Bulletin reports:

  • It’s every arachnophobe’s or homeowner’s nightmare: The home you just bought already has tenants — hundreds of poisonous brown recluse spiders. That was the reality for Chad Cook, his pregnant wife and their 1- and 3-year-old children in April 2005, when they moved into their home at 906 Whitmore St. in Anderson and discovered the poisonous arachnids had infested their home.

***

  • The infestation sparked a lawsuit when the spiders couldn’t be done away with. Allstate, the insurer for the Cooks, wouldn’t compensate the family for its uninhabitable home. The family also sued for compensation for punitive damages, financial losses, emotional distress and the covered value of the home and its contents under the insurance policy, $187,000. The ensuing legal battle between the family and Allstate, which dragged on for more than two years, is only now drawing to a close. The Cooks, unable to live in their own home or remove most of their possessions, had to rely on assistance from friends, family and Good Samaritans through their church. All the while, the family continued to pay the mortgage on the home.

For more, see Brown recluse spiders cause family to flee home, file lawsuit.

For earlier media reports (WRTV Channel 6) on this story, see:

Wednesday, January 16, 2008

San Diego Landmark Embroiled In Litigation Between Developer, Residents; Mortgage Holders Face Grim Prospects

In another condo quagmire story, voiceofsandiego.org reports on the unfolding saga of a California landmark building on the edge of downtown San Diego that was once a hotel, but was rehabbed and converted into condos a couple of years back. A dispute between the developer and its residents involving alleged construction defects stemming from the rehab and failure to disclose certain material facts are the prime contributors to the problem. Plummeting prices of the residential units in the building causing owners to lose their home equity and mortgage holders to eat hundreds of thousands of dollars from resulting foreclosures is another contributor to this mess.
  • The red neon letters spell EL CORTEZ when they're all working, launching a beacon from the stately white building atop its namesake hill on the edge of downtown San Diego. But when the letters are on the fritz, as they are now, they flash and blink, muddling the sign's message and portending another: all is not right with the landmark.

***

  • The building is mired in litigation between homeowners and the developers. The homeowners association and individuals in various suits are suing over construction defects, parking agreements, HOA reserves, disclosures on property tax agreements and the building planned for next door. And of the five units in the building currently for sale, four are being sold for about half of their original selling price by lenders who repossessed them. The other is listed for less than is owed on the mortgage.

  • Take unit 405, a two-bedroom, two-bath condo that sold in November 2005 for $625,000. It's been repossessed by the lender and is now listed for sale with an asking price of $290,000 -- a 54 percent price reduction. Another bank-owned unit that once sold for $405,000 is now listed at $199,000. Another one, No. 304, sold in February 2006 for $699,250. Now it's listed as a bank-owned sale for $294,500 -- a 58 percent difference. And though sales have slumped countywide, buyers are especially scarce on this project. Lenders, already reviewing each deal more meticulously, are extremely averse to making mortgages on buildings in litigation. The banks selling the repossessed properties are forced to keep lowering the prices until a buyer can pay cash or work out some other deal with a lender.

Among the problems complained of by the residents of this luxury building are the defective systems that have resulted in bursting pipes and sewage back-ups, failure to disclose that a major real estate tax break was expiring - resulting in a significant hike in unit owners' maintenance charges, and the developers' plan to build a new 12-story contemporary building right next door to the eight decade old landmark - which will kill the views of the city that the building currently enjoys.

For more, see Trouble at El Cortez (In a renovated San Diego landmark, there is dysfunction among the developer and the homeowners).

"Straw Buyers" File Suit Against "Money Store" In Alleged Maryland Foreclosure Rescue Scam

(original post 1-15-08)
Two Maryland residents currently have litigation pending in a Maryland Federal Court accusing foreclosure rescue operator Metropolitan Money Store of duping them into being "straw buyers" in a foreclosure rescue, equity stripping scheme that, according to their lawsuit, purportedly:
  • "was geared to help people in the community who have homes that were about to go into foreclosure. Their specific role was to be an 'investor' by submitting their social security numbers for which they would be paid in return a $10,000 fee."

According to the lawsuit, the Plaintiffs were never told that they would be purchasing a home or would be assuming home ownership from the homeowners who were in foreclosure.

The lawsuit alleges violations of the Federal Real Estate Settlement Procedures Act ("RESPA") and the Maryland Protection of Homeowners In Foreclosure Act ("PHIFA"), negligence, restitution and unjust enrichment. The suit also seeks to void the deeds to, and the mortgages on, the subject homes that arose out of the equity stripping transactions involved.

In addition to Metropolitan Money Store, the other defendants named in the suit are:

  • Fordham and Fordham Investment Group, LTD., RTE Title & Escrow, LLC, Sussex Title LLC, Joy Jenis Jackson, Kurt Fordham, Alexander Jamil Chaudhry, Jennifer McCall, Southern Title Insurance Corp., Chicago Title Insurance Company, and Exit Powerhouse Realty.

The case, originally filed in a Maryland state court in Prince George's County in September, was transferred by the defendants to Federal Court in November. Representing the Plaintiffs are Charles M. Maynard LLC, Rockville, MD and Joe D. Watson, Rockville, MD.

To view the lawsuit, see this direct link to Law, et al. v. Metropolitan Money Store, et al. on the PACER system (approx. 1.32 MB - PACER registration required - 34 pages - $2.40).

Alternatively, you can contact me at HomeEquityTheft@yahoo.com and I'll e-mail it to you (please put "Law et al. v. Metropolitan Money Store" in the "Subject" line).

Go here for other posts on Maryland foreclosure rescue operator Metropolitan Money Store.

Mass AG Seeks Injunction Freezing 500 Fremont Foreclosures

In Massachusettts, The Boston Globe reports:
  • The Massachusetts attorney general asked a state court yesterday to block Fremont Investment & Loan from commencing foreclosure actions against 500 borrowers in Massachusetts. Attorney General Martha Coakley had previously filed suit in October accusing Fremont of predatory and unfair lending practices, and yesterday attorneys from her office told a Suffolk Superior Court judge the state wants to review each mortgage that is subject to foreclosure and try to stop proceedings on any loans they believe were made fraudulently.

***

  • Many Fremont loans had lower teaser rates that rose after two years, often pushing borrowers' payments beyond their ability to pay. Fremont mortgages were "a recipe for disaster," and Fremont was aware its mortgages contained "multiple layers of risk" to borrowers, [assistant attorney general Jean] Healey said. In the request for an injunction, state lawyers argued the loans were "structurally unfair" and Fremont made them without regard to borrowers' ability to pay.

For more, see State asks court to halt 500 foreclosures by Fremont.

Go here for a West Tisbury, MA lawsuit against Fremont alleging predatory practices.

Fremont, Saxon Engaged In Unfair, Deceptive, Predatory Lending Practices, Says Martha's Vineyard Lawsuit

In Massachusetts, on the island of Martha's Vineyard, the Martha's Vineyard Gazette reports:
  • The town of West Tisbury has filed a lawsuit against a mainland subprime mortgage company that loaned more than half a million dollars to an affordable homesite owner in town who had no ability to repay — and then foreclosed on the property. The lawsuit charges Saxon Mortgage Services Inc., a Texas-based lending institution, and Fremont Investment and Loan of southern California, with unfair, deceptive and predatory lending practices. Filed in Dukes County Superior Court on Dec. 20 by West Tisbury town counsel Ronald H. Rappaport, the complaint seeks to reestablish a set of protective covenants that run with the property to ensure that it will remain affordable in perpetuity.

For more, see Lawsuit Targets Subprime Bank.

Go here for a post on the Massachusetts Attorney General litigation against Fremont alleging predatory practices.

Non-Profit To Assist Some Victims Of Pennsylvania Wrap Around Mortgage Ponzi Scheme

In Lancaster County, Pennsylvania, Lancaster Online reports:
  • The United Way of Lancaster County aims to take some of the sting out of a scam that burdened hundreds of area homeowners with larger mortgage payments than they expected.The agency will set up a fund to assist the victims of Berks County-based OPFM Inc. and Image Masters. OPFM mortgage broker Wesley A. Snyder has pleaded guilty to defrauding some 800 borrowers, including more than 300 in Lancaster County. The United Way's Fraud Victims' Fund is not intended to help all borrowers. Only those in danger of losing their homes because they can't make higher mortgage payments will receive aid.

For more, see United Way steps into mortgage scam breach (Sets up fund that will help people at risk of losing their homes to mortgage broker’s misdeeds).

See also:

Go here and go here for other posts and links to other media reports on the Ponzi scheme operated by Wesley Snyder.

Lawsuit Involving Title Underwriter Revolves Around $5.1M In Missing Escrow Funds Once Held By Now-Defunct Agency

In Christian County, Missouri, the Springfield Business Journal reports:
  • A Branson development company suing a Nixa-based title agency that suddenly ceased operations in June will soon have access to internal documents subpoenaed from the agency’s underwriter. On Jan. 9, Christian County Circuit Judge Mark Orr heard from attorneys representing Branson Hills Development Co. and LandAmerica Financial Group, the Virginia-based company that underwrote title policies issued by Guaranty Title Co. LandAmerica pulled the plug on its agent after evidence of an alleged check-kiting scheme surfaced and immediately initiated an audit that found at least $5.1 million missing from Guaranty Title’s escrow accounts at area banks. The money belonged to developers, banks and builders as well as homebuyers and sellers who found themselves out of luck when Guaranty Title was shut down. The agency – co-owned by Rick Burton, Kathy Allen and Stephanie Gray – had at least nine regional offices that employed some 45 people.

The developer is seeking to hold LandAmerica responsible for the actions of Guaranty Title based on its agency agreement with the now-defunct title company. For more, see Judge OKs subpoena of Guaranty Title audits (Branson Hills attorney asserts that the underwriter is party responsible for actions of defunct title company).

For an earlier SBJ article on this case, see Attorneys flood courtroom chasing Guaranty Title funds (Problem: Amount left behind is unclear and reportedly dwindling).

Click here for more in SBJ's ongoing coverage of Guaranty Title's collapse.

See Theft Of Escrow Funds I and Theft Of Escrow Funds II for other stories of trust account / escrow account theft of funds. sneaky slick escrow agents beta

Texas Feds Indict 16 In Straw Buyer, Flipping Operation

In Austin, Texas, the Austin American Statesman reported last week:

  • A federal grand jury in Austin has indicted sixteen people — 11 of them from Austin — in a multimillion dollar fraudulent real estate flip-for-profit scheme, U.S. Attorney Johnny Sutton's office announced [last week]. The indictment says that the group, led by Cornelius Robinson, 47, of Austin, conspired to defraud mortgage lenders in the purchase of 25 properties in Austin and San Antonio. The defendants are accused of buying the properties and then immediately selling them to a "straw buyer," who was in on the scheme, at a higher price. "The mortgage lenders were deceived as to the true nature of the transaction and financial status of the 'straw buyer,' " who did not make subsequent mortgage payments, said a statement issued by Sutton.

Source: 16 indicted in real estate scheme (Convictions could lead to 30-year sentences).

See also, 16 indicted in Austin-area mortgage fraud scheme: Others charged were:

  1. Silvia Seelig, age 45, of Austin, who during the conspiracy, was a licensed real estate agent and an alleged straw buyer;
  2. George H. Watson, age 55, of Austin, a licensed attorney who specializes in real estate transactions. Watson served as the closing attorney on numerous real estate transactions associated described in the Indictment;
  3. James Douglas Atwood, age 51, of Austin, Cornelius Robinson’s uncle and an alleged straw buyer;
  4. Michael Breon, age 39, of Austin, an associate of Cornelius Robinson and an alleged straw buyer. Breon, a licensed loan officer and mortgage broker, was employed by several different loan origination and mortgage companies during the conspiracy;
  5. Sindu Sukumaran, age 36, wife of Michael Breon and an alleged straw buyer;
  6. Doris Ann Hill, age 40, of Austin, a personal banker employed at Wells Fargo Bank. For a fee, Hill allegedly agreed to provide a false verification of deposit to loan underwriters in relation to real estate transactions;
  7. Julius Meyers Lofton, a 45-year-old licensed real estate agent living in Austin and an alleged straw buyer;
  8. Roy Rivers, age 52 of Austin, friend of Cornelius Robinson and James Atwood and an alleged straw buyer;
  9. Danielle Guice Rosas, a 40-year-old resident of Austin and an alleged straw buyer;
  10. Stanley Ma, a 27-year-old resident of the Honolulu, Hawaii area and an alleged straw buyer;
  11. Leonard Brown, age 38, of Houston, Texas, and an alleged straw buyer who also allegedly provided a false verification of employment in association with Onyx Consulting and defendant Ma;
  12. Russell Snead, a 43-year-old resident of the Seattle, Washington area, an associate of Cornelius Robinson and an alleged straw buyer;
  13. Marlon Nathan Torres, age 45, of Hutto, Texas, an associate of Cornelius Robinson;
  14. Jeffrey Andre Wilkins, age 46, of Austin, a friend of Cornelius Robinson and an alleged straw buyer; and,
  15. Leroy Williams, a 46-year-old resident of Austin and an alleged straw buyer.

Tuesday, January 15, 2008

Another West Palm Problem With Newly Built Condos

In West Palm Beach, Florida, The Palm Beach Post reports:
  • Cracked walls. Corroded pipes. Another abandoned home in foreclosure? Nope. It's the luxury condominium known as One City Plaza in downtown West Palm Beach, condo owners say. The building's condo association, fed up with what it claims are numerous building defects, has filed a nasty lawsuit against One City Plaza's developer, Kolter City Plaza Ltd. The association claims the upscale condominium is replete with defects including building code violations, design flaws and safety issues. How bad? Try water intrusion in the garage, roof and lobby; cracked walls in the garage, utility rooms and building exterior; and rusting metal roof trusses, according to the lawsuit, filed late last month in Palm Beach County Circuit Court.

***

  • One City Plaza, among the first of the new condos to open downtown, was developed by Kolter, a Canadian concern. The luxury, 350-unit building has units ranging in price from $300,000 to more than $1 million.

For more, see Land-use attorney ready for fresh start (2nd story from the top) (original story no longer available online; try here for full story reprinted on another website).

Forbes On How Lehman Had Pocket Picked Out Of $50+ Million In Southern California Mortgage Scam

Forbes magzine has an article on the ongoing criminal and civil proceedings involving a major alleged mortgage fraud scam which resulted in Lehman Brothers taking a hit out of upwards of $50 million, according to court documents. An excerpt from the story:

  • The U.S. Attorney in Los Angeles says the scam was masterminded by developers Charles Elliot Fitzgerald and Mark Alan Abrams, with help from Joseph Aram Babajian, real estate broker to such stars as Warren Beatty, Ryan Seacrest and Harrison Ford. Five people have been indicted on multiple charges of fraud and conspiracy. Between 2000 and 2003 the defendants allegedly stole tens of millions of dollars by inflating the values of homes. According to the criminal complaint, they bought real estate at fair prices, had the properties appraised at far higher amounts, borrowed those greater sums from Lehman and pocketed the difference, using the money to fund extravagant lifestyles. Five people, developer Abrams among them, have pleaded guilty to multiple felonies and await sentencing after they testify against other defendants. Babajian (pronounced Baba-zhan) and Fitzgerald have entered not guilty pleas.

For more, see Real Estate Rip-Off (How Lehman Brothers was swindled out of $50 million).

Go here for earlier posts on this story.

NY Governor To Propose Bill Stengthening Foreclosure Protections For Homeowners

In his recent State of the State speech to the legislature, New York State Governor Elliot Spitzer addressed the foreclosure rescue problem in the state, telling the legislature:
  • I will send you a bill that amends state foreclosure law to provide additional protections for homeowners. In addition, working with Attorney General Cuomo, I will submit legislation that enhances our anti-fraud laws, to ensure that those who engage in mortgage scams are punished.

Go here for the text of Gov. Spitzer's speech (courtesy of Political State Report).

Baltimore Judge Denies Title/Escrow Company Dismissal Request In State AG's Foreclosure Rescue Suit

In Baltimore, Maryland, WBAL-TV 11 News I-Team reporter Barry Simms reports that a request filed by Laurel-based Cornerstone Title and Escrow to dismiss it from a foreclosure rescue lawsuit filed by Maryland Attorney General Doug Gansler was denied yesterday by Judge Martin Welch. An excerpt from the story:
  • In July, homeowner Claretta Taylor told I-Team reporter Barry Simms about her struggle to keep her home. "I've become leery of people. I don't trust people now, especially when it comes to my finances. I scrutinize everybody," Taylor said. Taylor said that a television ad by Michael K. Lewis promised hope, so she signed up for his MKL financial diet. After scrutinizing the deals given to Taylor and about nine other homeowners facing foreclosure, Assistant Attorney General Scott Bailey filed a complaint in October.

  • The complaint accused Lewis, his brother, Ernest, and other members of his so-called African-American Business Network of stripping the equity from the properties and charging numerous undisclosed fees. The attorney general's office said it believes Cornerstone Title and Escrow, based in Laurel, is involved in the foreclosure rescue scheme. "Each of the defendants played a role in the scheme. They should be held liable for that," Bailey said.

For more, see Company Tries To Get Out Of Foreclosure Scheme Case.

Go here for other posts on Maryland foreclosure rescue operator Michael K. Lewis.

For the Maryland AG's warning on foreclosure rescue, see Foreclosure Scams: Don’t Fall Prey to a Foreclosure Shark!

Go here for a list of Maryland organizations that provide foreclosure counseling to consumers in every region of the state.

Maryland Governor Calls For Ending Foreclosure Rescue, Starting Mortgage Servicer Monthly Reporting

(original post 1-14-08)
In Landover, Maryland, The Baltimore Sun reports:
  • Gov. Martin O'Malley announced a wide-ranging plan yesterday to confront an unprecedented rise in home foreclosures and combat predatory mortgage scams, including legislation to slow the minimum time for foreclosure from 15 days to more than four months. The Democratic governor proposed new requirements for brokers and lenders to ensure that borrowers can afford the mortgages, changes to the state's foreclosure process to make it more consumer-friendly, and a ban on the conveyance of property in so-called foreclosure rescue schemes. O'Malley's administration also wants Maryland to become the second state in the nation, after California, to require that loan servicing companies file detailed monthly reports about how many loans are in default and their efforts to help borrowers by refinancing or modifying the loan terms. State officials said there is a gulf between what servicers say they are doing and the actual assistance they are providing.

***

  • O'Malley outlined his plan at a news conference on the front lawn of Landover resident Velma Floyd, who almost lost her first home recently in a foreclosure rescue scheme, in which troubled homeowners refinance and are instructed to temporarily sign over the title of their homes. Floyd's broker is under investigation by state regulators and therefore wasn't named. "We just want to keep our home, and we want to help others keep their homes," Floyd said.
For more, see O'Malley unveils home aid (Plan is meant to halt surge in foreclosures).

See also, O'Malley Proposes Mortgage Reforms (The Associated Press):

  • O'Malley's plan does not include new regulations for businesses that offer "Cash for Houses."

For the Maryland AG's warning on foreclosure rescue, see Foreclosure Scams: Don’t Fall Prey to a Foreclosure Shark!

Go here for a list of Maryland organizations that provide foreclosure counseling to consumers in every region of the state.

Go here if you're a Maryland resident and want to file a complaint with the state Attorney General.

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

Arizona Governor Calls For Foreclosure Rescue Regulation

The Arizona Republic reports on Arizona governor Janet Napolitano's recent State of the State address. Buried among the legislative proposals urged during her speech was the passage of an Arizona Home Equity Theft Protection Act, which would regulate foreclosure rescue operators. For the story, see Gov. focuses on schools, health care in State of State.

Go here for the text of her speech (courtesy of the Tucson Citizen), in which, among other things, she tells the legislature:
  • [Y]ou need to pass the Arizona Home Equity Theft Protection Act, to license "equity purchasers." There are some in this category who prey on vulnerable homeowners and use deceptive practices to cheat them out of their homes. Let's pass the bill and put the bad guys out of work.

Washington State AG Calls For Foreclosure Rescue Prohibition

In Washington State, a recent editorial in The Olympian comments on an agressive legislative agenda set by state Attorney General Rob McKenna for the current session of the state legislature which sets forth a number of consumer protection measures, including the prohibition of mortgage foreclosure rescue schemes. For the story, see McKenna sets bold agenda.

Oregon Legislature To Propose Laws Protecting Homeowners In Foreclosure Rescue Deals

In Salem, Oregon, Salem-News.com reports:
  • Later this week, the [Oregon] House Consumer Protection Committee will introduce a [...] bill that will crackdown on fraudulent and abusive rescue-mortgage scams aimed at homeowners facing potential foreclosure. [...] To prevent further victimization of homeowners, Senate Democrats have endorsed three specific foreclosure reforms to be enacted in the February session: protecting homeowners from scams that promise a "rescue" from foreclosure, but actually take further equity from homeowners; a new requirement that homeowners facing foreclosure be provided with clear and understandable language about their rights and options; and new regulation of loan originators, who are currently unlicensed and free to target distressed homeowners with unsuitable refinancing offers. "Homeowners facing a foreclosure crisis need to be protected from scams," said Sen. Ben Westlund (D-Tumalo), chair of the Senate Commerce Committee. "We have an obligation to act."

For more, see Democrats Say Fairness for Homeowners Remains Focus for Senate (Legislation Introduced to Rein in Unlicensed Loan Originators).

Florida AG, Company Founded By Real Estate Seminar Guru Settle Claims Over Alleged Questionable Practices

In Florida, the South Florida Sun Sentinel reports:
  • Florida consumers could receive more than $1 million in reimbursements from a company that state regulators said misrepresented its real estate and investment seminars by promising unrealistic results. [Florida] Attorney General Bill McCollum on Thursday said the state had reached a settlement with Whitney Information Network Inc., which advertises through television infomercials such programs as "Star Trader," "Wealth Builder Workshop" and "Focus on Foreclosure."

For more, see Whitney Information Network settles with state over claims in seminars (Whitney to reimburse clients who claim they were misled).

For Florida AG news release, see Infomercial Company to Modify Business Practices, Reimburse Dissatisfied Customers (Consumers will have collectively received more than $1 million in refunds for non-productive seminars).

In a separate story on company founder Russ Whitney, The News-Press (Southwest Florida) recently reported:

  • Russ Whitney, founder of the Cape Coral-based Whitney Information Network, announced his resignation as the company's chief executive officer as of Dec. 31. Whitney, 52, will continue to serve as chairman of the board of directors and will act as an adviser to the company. His resignation was among the recommendations of an internal investigation launched after the company announced a year ago that it was under investigation by the U.S. Attorney for the Eastern District of Virginia and the Securities and Exchange Commission. Federal authorities have refused to comment on those investigations. The company notified the Securities and Exchange Commission in May that its earnings reports have been delayed by the internal investigation.

For more, see Whitney Information Network (7th blurb from the top).