Foreclosure Rescue Operator Ignores Refund Request From Homeowner; Changes Mind After Connecticut AG Intervenes

In Middletown, Connecticut, WVIT-TV Channel 30 reports:

• Mike and Tracy Banks were living in their Middletown home when their finances became tight. Tracy took time off of work after her mother had a stroke and Mike’s overtime was cut from work. Before they knew it, they were months behind on their mortgage and foreclosure was on their doorstep. They said a postcard arrived in the mail from American Housing Authority and Tracy called the number.

After reportedly being clipped for $1,245 and not getting any satisfaction, the Banks' sought help first from the VA, and then ultimately from Connecticut Attorney General Richard Blumenthal , who is now investigating AHA.

• The Banks' got good news this week. AHA responded to questions from the Blumenthal’s office with a letter. In it, AHA said it "successfully negotiated mortgage relief" and set up the Banks’ repayment plan. AHA also agreed to refund the $1,245 service fee and said they no longer provide service to homeowners in the state of Connecticut. NBC 30 tried to contact AHA, but calls were not returned. The Banks' said it was the VA who set up their repayment plan, not AHA.

For more, see NBC 30 Investigates Foreclosure Nightmare.

Go here for more hot water for American Housing Authority with state AG's in Minnesota, Ohio, and Illinois.

Mortgage Underwriting Red Flags Met With Indifference, Say Quality Control Loan Reviewers

The Los Angeles Times reports:

• They could see the meltdown coming. Freelance financial watchdogs who examined the paperwork on sub-prime home loans being sold to Wall Street had an inside view of the boom in easy-money lending this decade. The reviewers say they raised plenty of red flags about flaws so serious that mortgages should have been rejected outright, [...] but the problems were glossed over, ignored or stricken from reports.

• The loan reviewers' role was just one of several safeguards -- including home appraisals, lending standards and ratings on mortgage-backed bonds -- that were built into the country's complex mortgage-financing system. But in the chain of brokers, lenders and investment banks that transformed mortgages into securities sold worldwide, no one seemed to care about loans that looked bad from the start.

***

• Executives at the two main firms that hired the freelancers -- Shelton, Conn.-based Clayton Holdings Inc. and San Francisco-based Bohan Group -- say the reviewers weren't there to find every potential problem with a sub-prime loan.

***

• New York Atty. Gen. Andrew Cuomo, who is investigating some aspects of the mortgage debacle, has given Clayton immunity from prosecution in return for help in learning whether debt-rating firms and investors got enough information about the loans being sold.

For more, see Sub-prime mortgage watchdogs kept on leash (Loan checkers say their warnings of risk were met with indifference) (if link expires, try here). Cuomo OFHEO Fannie Mae Freddie Mac

Spitzer's Litigation Example: A Legacy For New York

In New York, Forbes reports:

• New York Gov. Eliot Spitzer's political career may have been fatally undermined, but his pioneering use of litigation to catalyze regulatory and policy change will endure. New York State Attorney General Andrew M. Cuomo continues to follow Spitzer's example in this respect, despite complaints about his aggressive tactics.

• These initiatives have filled a regulatory gap opened by President George Bush's generally hands-off, market-friendly approach. Cuomo's investigations cover a broad spectrum of policy areas and, following the Spitzer pattern, tend to target conflicts of interest whereby companies have allegedly exploited consumers.

Among NY AG Cuomo's recent work is a mortgage appraisals investigation, in which a lawsuit was filed against First American Corporation and its appraisal unit, for allegedly conspiring with Washington Mutual to inflate its real estate appraisals. During the course of the investigation, Fannie Mae and Freddie Mac involuntarily got dragged into the fray and were ultimately persuaded (or strong-armed, depending on your point of view) by Cuomo to agree to change their practices to curb inflated mortgage appraisals (with a major assist earned by U.S. Senator Charles Schumer of New York, Chair of the Senate Banking Committee’s Housing Subcommittee, who no doubt "persuaded" the federal regulators at the Office of Federal Housing Enterprise Oversight ("OFHEO") - who have oversight responsibilities over Fannie and Freddie - to go along with the deal and concede the investigatory turf battle they may have had with the New York AG).

For the story, see Cuomo Follows Spitzer's Litigation Example.

In a related Op Ed piece in The Providence Journal, At least admire Spitzer for his foes. Cuomo OFHEO Fannie Mae Freddie Mac

Eliot's Mess

In a recent article, columnist Greg Palast draws a link between the recent FBI "take down" of now former New York Governor Eliot Spitzer, Spitzer's recent assault against the Bush Administration and subprime mortgage lenders in an attempt to halt predatory lending practices, and the Federal Reserve bailout of Bear Stearns.

For more, see Eliot’s Mess (The $200 billion bail-out for predator banks and Spitzer charges are intimately linked).

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For commentary by conservative/libertarian commentator Ben Stein on the take down of Gov. Spitzer, airing last Sunday on the CBS News' Sunday Morning program, see Elections More Important Than Call Girls (Ben Stein Says The Feds Driving A Governor Out Of Office Is A Scary Thing) (read commentary) (watch video).

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For the February 14, 2008 article in The Washington Post by the now former New York Governor Spitzer (which coincidentally, was published the day after his recent indiscretion that has garnered much publicity), in which he scorches the Bush Administration on predatory lending, see Predatory Lenders' Partner in Crime (How the Bush Administration Stopped the States From Stepping In to Help Consumers).

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For a Wall Street Journal article on investigatory turf battles Federal and state law enforcement authorities have been having in the area of fraud investigations, see Tensions Rise in Lending Probes (subscription may be required - if no subscription, go here).

CBS Evening News On Appraisal Fraud: The Corrupt Drove The Good Out Of Business

The CBS News with Katie Couric reports:

• The crash of the real estate market is a true national crisis. But if the right people had looked hard enough, they might have seen it coming a mile away. A lot of home appraisers did. They knew the whole market was being built on a house of cards. And they've been raising red flags for years but nobody seemed to be listening.

***

• [T]he whole works got messed up when, appraisers say, lenders and realtors started telling them what value to hit ahead of time. If appraisers wanted an appraisal job, they'd have to guarantee the appraisal in advance ... often sight unseen. That's against the law in almost every state, according to appraisers, but nobody was cracking down on it. Many appraisers found that when they wouldn't agree to an inflated appraisal, they wouldn't get work. Some went along with it. Others didn't and went out of business. And the value of real estate kept going up and up and up.

For more, see:

• Houses Of Cards And Hot Potatoes,
• The Home Appraisal Numbers Game (Home Appraisers Tell CBS News They Were Told To Value Homes High — Putting Banks, Homeowners At Risk) (read story) (watch video).

Northern Virginia Alleged Deed Theft Scam Involving Forgery, Vacant Homes Now Subject Of FBI Probe

In Northern Virginia, The Washington Post reports:

• The FBI is investigating whether employees of a now-defunct Northern Virginia mortgage company were involved in what several lawsuits allege was a scheme to steal vacant houses by forging deeds, according to people familiar with the probe. The people under investigation worked for 1st American Mortgage of Vienna, which boasted that it delivered "honest expert advice." The company, which operated about half a dozen satellite offices in the Washington area, went out of business last fall after eight years. The former chief executive's $2 million house in a gated community in McLean has been foreclosed upon.

***

• The property owners have alleged in separate lawsuits that people, unbeknownst to them, illegally took possession of their vacant property by forging the deeds, and then attempted to sell the property. Loans in both situations were arranged by a 1st American employee. Late last year, judges found that the deeds were invalid and ordered the properties returned to their rightful owners.

For more, see FBI Probes Va. Company's Workers in House Swindle (Lawsuits Outline Scheme to Forge Deeds to Steal Vacant Properties).

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

More On Fannie, Freddie Standards Overhaul To Combat Appraisal Fraud

In a recent article, syndicated real estate columnist Kenneth Harney writes about the recent settlement agreement by Fannie Mae and Freddie Mac with the New York Attorney General and federal regulators in which they agreed to overhaul their appraisal standards and practices. An excerpt:

• [T]he new agreement is unprecedented. Fannie Mae and Freddie Mac are federally regulated corporations, answerable to Congress. Normally, they don't kowtow to state governments. But using a 1921 securities-fraud law unique to his state, New York Attorney General Andrew M. Cuomo brokered an agreement that transcends the normal reach of state governments -- one that could eventually touch almost every home mortgage transaction nationwide. Late last year, Cuomo began an investigation of potential appraisal fraud in the portfolios of Fannie Mae and Freddie Mac. [...] Cuomo never announced what, if anything, he found amiss at Fannie Mae and Freddie Mac. In the settlement agreement, both companies denied any wrongdoing. [...] Whatever the causes, Fannie Mae and Freddie Mac agreed to overhaul their appraisal standards and practices, signed on to a detailed home-valuation code of conduct covering all their mortgage activities, and committed to pay $24 million over the next five years to create and staff the independent institute that will oversee appraisals nationwide.

Reportedly, the National Association of Mortgage Brokers is none too happy about the deal and is exploring legal action. For more, see Fighting Back Against Corrupt Appraisals.

Click below to view the settlement agreements and the newly adopted appraisal code of conduct:

• Settlement agreement with Fannie Mae,
• Settlement agreement with Freddie Mac,
• Home Valuation Code of Conduct.

Go here for earlier posts on the deal between the NY AG, Fannie, Freddie, and federal regulators. OFHEO

New Condo Development In Foreclosure Now Subject Of Minneapolis Feds' Property Flipping Probe

In Minnesota, the Minneapolis Star Tribune reports:

• The Sexton, a downtown Minneapolis condominium development already caught up in foreclosure and a tangle of lawsuits among its partners, now is at the center of a mortgage fraud investigation by the U.S. Attorney's Office. [Last] Monday, Joseph Huebl of Burnsville pleaded guilty to mail fraud and conspiracy for his role in a scheme to illegally profit from the sale of one of the Sexton's 123 condo units. In his plea agreement, Huebl said he was involved in the scheme along with an unspecified agent of the project's developer, Sexton Lofts. As part of his plea, Huebl, 28, has agreed to cooperate with an ongoing investigation of others suspected of taking part in mortgage fraud at the Sexton, including the unnamed agent of the developer.

***

• In the plea agreement, Huebl said he bought a unit in the Sexton in March 2007 for $366,756 at the direction of the developer's agent. Huebl resold the unit the same day for $700,000 to another person he had recruited to be part of the scheme. Huebl admitted helping the new buyer falsify financial information in order to qualify for a mortgage. The developer's agent provided an inflated appraisal to justify the mortgage amount, the plea agreement said. The $333,244 profit from the fraudulent transaction was split between Huebl and the developer's agent, with Huebl receiving $272,980 in two wire transfers, according to the plea agreement.

For more, see Troubled Sexton now caught up in fraud probe (Federal investigators are looking into suspected fraudulent property flipping at the Sexton. One person already has pleaded guilty).

See also, Sexton soap opera continues (Minneapolis condo project faces federal investigation, foreclosure, litigation) (if link expires, try here).

For a story update, see Minneapolis Star Tribune (4-27-08): Sexton Building: 'That place is a mess'.

Georgia AG Probe May Involve Nearly 100 Inflated Mortgages In 124 Unit Subdivision; Indictments Expected

In Athens, Georgia, the Athens Banner Herald reports:

• The Georgia Attorney General's office is winding down a two-year probe of what officials call the most complex mortgage fraud scheme in state history. Other schemes may have defrauded lenders and homeowners of more money, officials said, but the alleged $7 million fraud at Milford Hills off Barnett Shoals Road involved the most properties in a single subdivision. [...] Brian Dupree, a former Athens businessman, is at the center of the fraud investigation. Officials say Dupree held himself out as a developer, and through his company, Dupree Investments, he bought up Milford Hills properties then conspired with others to inflate their values for resale. [...] Nearly 100 inflated loans were issued for Milford Hills properties in the 124-unit subdivision, according to Craig Weitzel, an Atlanta mortgage fraud investigator.

For more, see Indictments expected in fraud scheme.

Miami Appraiser Cops Plea In South Florida Alleged Cash Back Mortgage Scam

In Miami, Florida, the South Florida Business Journal reports:

• A Miami real estate appraiser has pleaded guilty to wire fraud for her involvement in the Southwest Ranches-area fraud scheme in Broward County, the office of the U.S. Attorney for the Southern District of Florida said. Martine Yanisse Castrillon is one of 15 defendants charged with buying homes through straw buyers at an inflated price, and then getting cash back at the closings. So far, nine defendants have pleaded guilty to various federal charges in the indictment. Castrillon admitted that she did fraudulent appraisals -- valuing the properties at the amount requested by another defendant, not the true market price -- and forged the name of the certified appraiser who was to review her work.

For more, see Miami appraiser pleads guilty to fraud scheme.

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

McEntee Brother Gets 2+ Years For Association With CM Development

In Virginia, The Virginian-Pilot reports:

• The mastermind behind a Virginia Beach real estate company that defrauded investors of millions of dollars and left a trail of blighted homes in its wake was led from a courtroom in handcuffs Tuesday and returned to federal prison. U.S. District Judge Jerome B. Friedman told Jacques McEntee that he had never seen “a more blatant disregard” for the terms of probation. He sentenced McEntee to more than two years in prison – nearly the maximum sentence allowed – for working with CM Development, the failed business run by McEntee’s brother, Cary. In 2005, Friedman specifically ordered Jacques McEntee to avoid working in real estate or with his brother.

For more, see Housing-fraud leader sent back to prison for work with CM Development.

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

Go here for earlier posts on the CM Development real estate flipping operation.

Wave Of Meth Lab Home Contamination Litigation On The Horizon?

The National Law Journal (appearing on law.com) reports:

• First it was toxic mold. Now it's meth residue. Property owners are battling a new breed of lawsuits, in which people who unwittingly bought homes that were once methamphetamine labs are suing over contaminated houses that are making them sick. The lawsuits are fallout from the massive federal crackdown on meth labs during the past decade, which saw more than 100,000 labs busted, leaving behind thousands of polluted homes and apartments for unsuspecting residents to fill.

***

• In Ohio, a single mother is suing the former owner of a drug house that she unknowingly bought [...]. Her children developed chronic respiratory problems, forcing her to vacate the house, lose most of her personal belongings and face foreclosure.

• In Washington state, a real estate company and property owners are currently appealing a court ruling that awarded $94,000 to a family that unknowingly bought a house that was a former meth lab. The family was forced to move and lost its personal belongings to contamination.

***

• Ohio attorney Warner Mendenhall, who is representing the single mother in the Ohio lawsuit, believes that a wave of meth contamination litigation is on the horizon. "In the city of Akron alone, there are hundreds of houses, apartments and hotel rooms that have been used as meth production labs, and I think there are tremendous dangers there," said Mendenhall of Akron, Ohio's The Law Offices of Warner Mendenhall.

For more, see Meth Lab Residue in Homes Triggers Litigation (Lawsuits over contaminated homes focus on failure to disclose issue) (requires subscription; if no subscription TRY HERE).

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

Foreclosing Lenders Using "Water Shut-Offs" To Harass Renters To Move, Claim Bay-Area Tenant Advocates

In Oakland, California, the Los Angeles Times reports on allegations that foreclosing mortgage lenders are intentionally not paying water bills on foreclosed homes, resulting in water shut offs, as well as using other tactics as a way to illegally force tenants out of homes without formal eviction proceedings:

• [A]rea activists [...] say low-income renters who have the right to remain in their homes are increasingly being harassed in foreclosure proceedings by lenders eager to be rid of them. Oakland is one of a number of California cities that offer tenants stringent protections against eviction, even in the case of foreclosure. But advocates tracking the mortgage crisis say such illegal attempts at eviction have been on the rise statewide.

***

• Dustin Hobbs, spokesman for the California Mortgage Bankers Assn., attributed such eviction tactics as nonpayment of water bills to "some bad apples." "The strict laws in places like Oakland and the fact that this could expose companies to costly litigation are two big reasons why more legitimate lenders wouldn't use tactics like this," he said.

• Throughout the state, those who are watching the effect of foreclosures on tenants believe unscrupulous tactics are common. At the very least, lenders eager to push out tenants are offering "cash for keys" without informing tenants of their legal right to stay, particularly in cities with tough tenant protections, they say.

Housing advocates with Just Cause Oakland and Oakland non-profit law firm, Eviction Defense Center are among those defending tenant rights in these cases.

For more, see Renters tell of harassment in foreclosure proceedings (The lender stopped paying the water bill in a bid to evict them, Oakland duplex residents say. Activists say such tactics are on the increase).

For other posts involving the problems tenants face in homes in foreclosure, go here, go here, go here, go here, and go here. equity skimming unwittingly epsilon

Cops Bag Rent Scam Suspects, Alleged To Have Rented Vacant Home They Didn't Own; Victim Out One Month's Rent

In Southern California, The Press Enterprise reports:

• Moreno Valley police arrested two men Wednesday on suspicion of renting out a house they didn't own, and police suspect they may have scammed several other renters. After meeting with two men and touring the vacant house, the [prospective tenant] opted to rent the house and paid for the first month's rent with $1,200 cash, [Sgt. Ken] Paulson said. The next day, as she was moving in, she noticed a new "for rent" sign in the front yard with a different phone number, Paulson said. The woman called the real owner and learned she was swindled.

***

• Police [...] arrested Ronnie Albert Adams, 27, and Ricky Tom, 19, on suspicion of conspiracy and theft by false pretenses, Paulson said.

For more, see Two jailed in Moreno Valley house rental scam.

Go here for other posts on tenant victims of rent hoaxes. unwitting tenant rent scam zebra

Miami Beach Attorney Illegally Pockets $2M+ From Trust Account, Says Client; Cash Allegedly Intended for Real Estate Investments

In Miami, Florida, a Daily Business Review story (appearing on law.com) reports:

• A Miami Beach real estate attorney is being sued for allegedly pocketing more than $2 million from her trust account that a client set aside for condominium purchases. Miami-Dade Circuit Judge Victoria S. Sigler signed an order last week freezing attorney Sally N. Sawh's assets and issuing a subpoena for records on two bank accounts with Regions Bank. In the complaint, French clothier Jean Dahan said he hired Sawh in October 2004 to create six corporations in Miami and use them to purchase six condos. The suit alleges fraud, breach of fiduciary duty, civil theft and unjust enrichment.

For more, see Lawsuit Says Real Estate Attorney Took Client for $2 Million (Attorneys are forbidden by Florida Bar rules from commingling client trust funds with any other monies).

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

• Directory Of Lawyers' Funds For Client Protection (American Bar Association - February, 2008);
• Check the USA Client Protection Funds Map;
• Check the Canada Client Protection Funds Map.

Problem Of Unwitting Tenants Victimized By Rent-Skimming Landlords Hits The Quad Cities

In East Moline, Illinois, WQAD-TV Channel 8 reports:

• An East Moline family of nine will soon be homeless. That's because their landlord is losing the home. It's a growing trend in the foreclosure crisis. Renters left out in the cold because their landlords can't pay the bills. As Darla Ballard begins to pack, she knows it won't be long before she's out on the street. After spending $1500 on rent, the unemployed single mom is being evicted.

***

• [R]ealtor Diane Godwin says it happens more and more around the Quad Cities. She handled 60 foreclosures in 2007. Nearly a third of them involve unsuspecting renters. "If the owners knew that the house was going into foreclosure, then they were pocketing the money they were getting for the rent instead of paying the mortgage," Godwin said. [...] Ballard doesn't know where she'll move her six kids and two grandchildren at the end of March. This is a new kind of foreclosure for renters with nowhere to turn.

For more, see Rental foreclosures hit home around the Q.C.

For posts involving rent / equity skimming landlords who pocket rent and allow homes to go into foreclosure, go here, go here, go here, go here, and go here. equity skimming unwittingly epsilon

Another Rent Scam Hits Craigslist, Targets Renters, Realtors In Washington State

In Seattle, Washington, KING-TV Channel 5 reports:

• It looks like another scam is hitting Craigslist. This one is preying upon renters and realtors. Marlow Harris has been in real estate for more than 20 years, but she has never seen anything quite like this. Someone took the online listing she posted for a brand-new townhouse in Seattle's Columbia City neighborhood and copied it to Craigslist as a rental.
  The $365,000 home was suddenly on the renters market for $1200 per month.

***

• Marlow was tipped off by an e-mail from a prospective renter who almost fell for the scam. "The person who placed the ad wanted him to send him $40 because he was out of the country, so he could send him the keys and he could go look at the place himself," she said. The low-rent rip-off may not seem like a big deal until you realize just how easy it is, and the fact that Internet-based scams like this are usually run all across the county with an endless supply of potential victims.

• "I think that anyone who places an ad on Craigslist or has any of their homes online is going to run the same risk, because anyone can copy and paste and put anything on Craigslist," said Marlow.

For more, see New Craigslist scam preys on renters, realtors.

Go here for other posts on tenant victims of rent hoaxes. unwitting tenant rent scam zebra

City-Approved Real Estate Agent Rents Foreclosed Home To Unwitting Homeless Mom, Three Kids

In New York City, the New York Daily News reports:

• Queens mom Lynn Manning had been living with her three children in a homeless shelter for far too long. So when the real estate agent from a city-approved list agreed to take her public assistance rental payments for a shabby Jamaica apartment, she wasn't about to turn him down. A year later, Manning, 35, is being evicted from the tiny two-bedroom dwelling at 138-31 91st Ave. When she went to Housing Court this month, she found out she had unwittingly been renting a foreclosed home.

***

• Homeless Services spokeswoman Linda Bazerjian called the case "an unfortunate circumstance." The agency "has been helping the tenant to find another suitable housing situation," Bazerjian said, but declined to explain how her current plight could have happened.

For more, see Realtor OKd by city signed mom up for foreclosed home.

Go here for other posts on tenant victims of rent scams. unwitting tenant rent scam zebra

St. Louis-Area Cops Probe Possible Rent Scam; Man Accused Of Pocketing Cash, Not Giving Possession Of Premises To Tenants

In St. Louis, Missouri, KSDK-TV Channel 5 reports:

• Police officers in Bellefontaine Neighbors and Dellwood are investigating claims that a real estate dealer is "renting" houses, taking money from his clients, and not turning over the rental units. However, the man accused of the scam, Irving Williams, tells reporter Mike Owens that he's done nothing wrong, and if there are problems, it's a civil matter and not a criminal one.

Three prospective tenants have complained to cops and are out over $3,000. For more, see I-Team Report: Renters Ranting Over Landlord.

Go here for other posts on tenant victims of rent hoaxes. unwitting tenant rent scam zebra

Stock Trading System Peddlers With Connection To Florida "No Money Down" Real Estate Promotion Firm In Hot Water

In Soouthwest Florida, The News Press reports:

• The Securities and Exchange Commission on Tuesday filed civil fraud charges against two promoters who made millions selling the Whitney Information Network Inc. stock trading system on TV and at investor workshops in dozens of cities nationwide.The commission’s complaint alleges that Linda Woolf and David Gengler, both of Utah, duped seniors and others who had attended free introductory seminars into believing they would make extraordinary stock market profits if they bought expensive “Teach Me to Trade” (TMTT) classes, mentoring, and computer software.

***

• TMTT is a unit of Whitney Information Network, a publicly traded company based in Cape Coral. Whitney conducts nationwide investor workshops that purport to teach investors the secrets to making money in real estate and the stock market. Russ Whitney, chairman, notified the board last week that he is taking a 45-day medical leave of absence, according to a filing Friday with the Securities and Exchange Commission.

***

• In a filing Tuesday afternoon with the SEC, [Whitney Information Network] said that Woolf and Gengler “are no longer independent contractors for the company or any of its subsidiaries.” The filing goes on to say that “The company and its subsidiaries were not parties to the charges, and none of the company’s present or former directors or officers was charged. The company intends to continue to cooperate with the ongoing investigation by the commission.”

On a related note, the U.S. Attorney's Office for the Eastern District of Virginia announced the filing of a criminal indictment against Woolf and Gengler.

For more, see Whitney promoters charged by SEC (Civil complaint alleges they duped seniors).

For additional background on this story:

• For civil lawsuit, see Complaint - SEC v. Woolf, Gengler, et al.,
• For SEC press release, including links to the "Teach Me To Trade" videos, see SEC Charges TV Infomercial Personalities in Investor Workshop Fraud,
• For U.S. Attorney press release on the Woolf/Gengler criminal indictment, see Two Indicted In Multi-Million Dollar Stock Trading Seminar Scheme,
• BusinessWeek: Infomercial stars charged with fraud.

New Jersey Handyman Admits Scamming $300K+ From Elderly Homeowner

The Monmouth County, NJ Prosecutor's Office recently announced that Michael J. Madden, 48, of South Plainfield, N.J., copped a guilty plea to second degree Theft by Deception for his role in scamming $322,545.61 from a 77 year old homeowner. He is looking at five years in the NJ state prison and will enter into a civil judgment in favor of the victim for the full amount of the theft. According to a press release:

• [T]he 77 year old victim hired defendant Madden to make minor repairs in her basement of her [...] residence due to damage caused by a flood. The victim contacted Madden after observing his advertisement which appeared in the "Trenton Times" under the headings "General Repairs" and "Handy Man." [...] The family of the victim became concerned in the Summer of 2006, and subsequently contacted law enforcement authorities, because the repair work had yet to be completed and because their review of the victim's bank statements revealed that she had written a large number of checks made payable to Madden and to his wife.

For more, see Handyman Admits Stealing Over $322,000 From Elderly Victim.

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

Sacramento Grandmother Browbeat By Grandsons Into Guaranteeing $2.8M In Loans Now In Default, Say Suits

In California, The Sacramento Bee reports:

• The 84-year-old matriarch of a Sacramento-area home building family is suing her grandsons, claiming they browbeat her into guaranteeing nearly $2.8 million in real estate loans that have gone into default. In two lawsuits, Ruth Dunmore of Roseville accuses her grandsons Jeremy A. Dunmore, 32, and Sidney D. Dunmore, 35, of elder abuse. She says they took advantage of her emotional stress as she cared for her husband, George, who had dementia. George Dunmore died in October at age 89, and Umpqua Bank is suing Ruth Dunmore and her grandsons over the unpaid debts.

• Ruth Dunmore's suits say her and George's signatures were forged on documents originally guaranteeing two bank loans for the grandsons' Sacramento-based land development firm, GSJ Co. LLC. The suit doesn't say who committed the alleged forgeries. When the loans were amended last spring, the grandsons scared her into signing new guarantees, she says.

For more, see Dunmore matriarch sues grandsons, alleges pressure over loans.

For more on the Dunmore real estate development business and the Dunmore family, see The New York Times: In California, a Generational Tale of Real Estate Boom and Bankruptcy.

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

Indianapolis To Consider Plan Addressing Thousands Of Abandoned Homes

In Indiana, The Indianapolis Star reports:

• Mayor Greg Ballard's administration plans to develop a strategy to address the thousands of abandoned houses in Indianapolis, including hiring someone to spearhead the effort.

***

• More than 7,000 abandoned buildings in the city can be traced in part to a massive rate of foreclosure brought on by personal bankruptcies, job losses and illicit real estate schemes. The schemes were enabled when mortgage lenders throughout the nation funneled cash to shady investors under the easy loan standards that were common earlier in the decade, real estate experts say.

For more, see City to develop own plan to revive neighborhoods.

Go here for other posts on vacant homes leaving its mark on neighborhoods. neighborhood destruction from foreclosures I

Las Vegas Animal Shelters Maxed Out On "Foreclosure Pets"

In Nevada, the Las Vegas Review Journal reports:

• While local pet owners have long been giving up their animals when they move, the housing crunch has contributed to an alarming increase in what many have dubbed "foreclosure pets." And Las Vegas facilities are overwhelmed with them, animal rescue and shelter representatives say. "It is the No. 1 way we're getting animals right now," says [Doug] Duke, the executive director of the Nevada SPCA. "We've really noticed it in the last three months and it seems to be escalating on a weekly basis."

• Duke says the SPCA has received a goose, ducks, numerous chickens, rabbits, guinea pigs, a potbellied pig and ferrets recently. Cats and dogs make up the majority of the foreclosure pets, though. It's hard to keep track of the numbers because the shelter receives so many calls, Duke adds, but he estimates 150 animals a month are coming in because their owners give them up or leave them behind when they lose their homes. Las Vegas is among the leaders in the nation in foreclosures.

For more, see Overwhelming Situation: Innocent Victims (Animal shelters full of pets that are abandoned during home foreclosures).

For more on foreclosures and abandoned animals, go here and go here. petsII and foreclosures

Housing Activists Express Displeasure With Countrywide Exec

In Cleveland, Ohio, The Associated Press recently recounted a February, 2006 incident in which a group of over 40 consumer activists went to the home of a regional vice president at Countrywide Financial Corp. to express their displeasure with him and his company's home loans:

• Folks on Humphrey Hill Drive were still waking up on the icy Saturday morning the shark hunters came to town. They rounded the suburban traffic circle in a pair of rented school buses after a half-hour ride from far more modest neighborhoods, rumbling to a stop at the Garmone family's driveway. Forty-two caffeinated Clevelanders piled out, their leaders carrying bullhorns.

• Their quarry, Mike Garmone — a regional vice president at Countrywide Financial Corp., the nation's largest mortgage lender — didn't answer his door. So they deployed, ringing bells at the big homes with three-car garages, handing out accusatory fliers and lambasting Garmone and his company's loans. Before departing, they left their calling card — thousands of 2 1/2-inch plastic sharks — flung across Garmone's frozen flower beds, up into the gutters, littering the doorstep.

For more, see Activists Bare Teeth Over Foreclosures.

Go here, Go here and Go here for more on recent Countrywide problems with consumers.

Title Insurance: A Necessary Evil?

Described as "a $16 billion industry that consumer advocates and government regulators say few people understand yet blindly feed whenever they buy, sell or refinance a home or property," title insurance is the subject of a recent article in the Janesville Gazette (Wisconsin). For those looking for a primer on what exactly title insurance is all about, see A necessary evil: Confusion clouds title insurance.

Go here for other posts involving legal issues related to title insurance. title insurance legal issues

Key Figure In Erie Mortgage Scam Gets 6+ Years In Federal Pen

In Erie, Pennsylvania, the Erie Times News reports:

• Erie businessman Robert L. Dodsworth has been sentenced to six years and four months in federal prison for his role in a widespread mortgage-fraud scheme. [...] The government claims that Dodsworth and others bought run-down houses in Erie and sold them at artificially inflated prices.

***

• Dodsworth said he simply wanted to help less-fortunate Erie residents become homeowners -- and make money doing it. "I realize it was illegal now to do it," Dodsworth, 60, said at his three-hour sentencing hearing in federal court before U.S. District Judge Sean J. McLaughlin. "My intent was to clean up homes in the city. ... And make money.

***

• Most of the buyers were low-income, and many of them knew little about buying homes, the government said in court paperwork. Nearly 200 properties were involved in the probe, and federal officials said victims lost more than $1 million between 2003 and 2006. Five people, including Dodsworth, have been charged in the case.

For more, see:

• Scheme brings 6 years in prison,
• Dodsworth gets more than 6 years in mortgage-fraud case,
• Fraud case pushed to today.

Go here for other posts related to the Erie, Pa. FBI mortgage fraud probe. Robert Dodsworth

Ohio Judge Again Reduces Willan Bail Bond; Still Unaffordable

In Akron, Ohio, the Akron Beacon Journal reports:

• Former Evergreen Corp. President David B. Willan remained in the Summit County Jail on Monday after being unable to post a $100,000 cash bond, and he may remain there through trial, his lawyer said. [...] Willan, 37, the focus of a 147-count indictment alleging widespread Akron-area mortgage fraud, has been held at the jail since his Dec. 19 arrest. He is one of 17 defendants in the case. The 66-page indictment alleges that Willan and the others set up a web of predatory borrowing and securities scams that bilked area investors, homeowners and lenders out of some $16 million.

***

• Last Friday, a judge modified the terms of Willan's release, from a $1 million cash or surety bond to a $1 million, 10 percent cash bond. But Willan's attempts over the weekend to come up with the necessary $100,000 were unsuccessful, [defense lawyer William] Whitaker said.

The bond was originally set at $3 million. For more, see Evergreen leader fails to raise cash for bond (Lawyer says mortgage-fraud suspect lacks funds, might stay in jail through trial).

For story updates, see:

• (12-6-08) Willan guilty of all charges in fraud case (Bond revoked after businessman convicted of theft from elderly, plus mortgage and securities counts),
• (3-30-08) Clock is ticking on Willan fraud case (Woman is among those saying she lost everything in what county, state officials call a $16 million scam. Judge gives prosecutors 30 days to spell out allegations),
• (3-21-08) Willan liquor license targeted (New indictment goes after his 'Stripped' club).

Go here for other posts on David Willan and the Akron-area 147 count mortgage fraud indictment.

New Jersey Prosecutors Charge Five In Mortgage Scam; Sixth Participant Cops Plea, Agrees To Sing Against Others

In Monmouth County, New Jersey, the Asbury Park Press reports:

• Five people have been charged Thursday with conspiracy to defraud mortgage lenders of more than $4 million, authorities said. [...] The investigation uncovered a conspiracy to file fraudulent mortgage applications to obtain financing for seven different value-inflated properties — six in Monmouth County and one in Florida, authorities said. Excessive fees also were charged. Funds from the closings were then funneled into various shell corporations. Lenders have already foreclosed on six of the seven properties, the release said.

The arrests came after a sixth "fish" authorities said was also involved, John Deickmann, 27, of Red Bank, "won the race to the prosecutor's office" and avoided "getting fried" by copping a guilty plea on Monday in connection with the alleged scheme. In exchange for an agreement to testify against the other five "fish", Deickmann will reportedly face no jail time and be sentenced only to probation. He currently is free on his own recognizance.

The five who are facing charges are: John Pereless (39, $750K bail), Kevin Deickmann (34, $500K bail), Susan Pereless, also known as Susan Coonan (65, $500K bail), Ramon Iglesia (24, $100K bail), and Erza Lustado (34, $100K bail).

For more, see Five charged in mortgage fraud (Properties in Monmouth County and Florida) (no longer available online).

See also, Monmouth County Prosecutor press release - Five Arrested in Multi-Million Dollar Mortgage Fraud.

Nevada Feds Indict Two In Mortgage Fraud Operation Involving 200+ Properties, 400+ Straw Buyers, $100M+ In Transactions

In Las Vegas, Nevada, The Associated Press reports:

• A Las Vegas real estate broker and her husband are facing federal charges they made millions of dollars orchestrating a mortgage fraud scheme. U.S. Attorney for Nevada Gregory Brower says Eve Mazzarella, 30, and her husband, Steven Grimm, 45, were indicted Wednesday on bank fraud, money laundering and aiding and abetting charges.

• The government alleges Mazzarella and Grimm bought more than 200 properties at inflated values using limited liability companies and more than 400 straw buyers to make purchase offers. The couple allegedly controlled transactions worth more than $100 million. They allegedly defaulted on mortgage payments on many of the loans, causing at least 118 properties to be sold in foreclosure.

Source: Las Vegas couple face federal charges in mortgage fraud case.

See also:

• Las Vegas Review Journal: Real estate broker, spouse indicted on fraud charges (Authorities say LV pair allegedly in scheme involving inflated home prices, straw buyers),
• KLAS-TV Channel 8: Couple Charged in Mortgage Fraud Case Appear in Court.

Washington State Passes Foreclosure Rescue Legislation; Currently Awaits Governor's Signature

Washington State lawmakers have successfully passed legislation regulating foreclosure rescue transactions as both houses of the legislature voted in favor of the bill earlier this week. The leaders in the state Senate and state House of Representatives both signed off on the bill yesterday. The bill has since been delivered to the governor's office and currently awaits his signature.

In addition to rules regulating the typical sale and leaseback transactions involving the home of a homeowner facing foreclosure, the bill also targets the so-called equity skimmers (aka rent skimmers) - those who acquire homes in exchange for a promise to take over the payments on existing mortgages, only to turn around and lease or "lease to own" the homes to tenants, collecting and pocketing the rent, security and/or lease-option deposits while, at the same time, stiffing the existing mortgage lender out of its monthly payments and allowing the home to go into foreclosure.

For more, see HB 2791 - 2007-08 Concerning distressed property conveyances (bill history) (full text of passed legislation).

A Brooklyn Flavor To Subprime Crimes

In New York City, a column in The Brooklyn Rail comments on the subprime mortgage problem, how "the subprime lender's arsenal" of "exploding ARMs," “option ARMs,” “no doc” loans, and prepayment penalties that trap borrowers in their loans have affected some Brooklyn residents, and contains observations from some NYC-based housing and consumer advocates. For the story, see Subprime Crimes From Wall Street to Brooklyn and Beyond.

South Florida Builders, Lenders "Partners In Misery"; Both Left Holding The Bag On Land They Can't Use, Afford; Worst Yet To Come

In South Florida, the Daily Business Review reports:

• Now that residential development has hit the wall, builders and lenders are partners in misery. Developers in the field — from small-scale operators to national home-builders — who aggressively acquired land during the go-go years of the early and mid-2000s, are now stuck with hundreds of acres of land they have no use for and cannot afford to hold. Lenders have already taken title to numerous parcels and with a wave of land loans coming due, the worst is yet to come.

For more, see Developers stuck with land they have no use for.

Connecticut Jury Convicts Home Improvement Contractor Despite Not Having Screwed Homeowners Out Of Money

Unlike some other states, it appears that Connecticut and its state Attorney General's office takes its state home improvement laws quite seriously, as evidenced by the AG's direct involvement in the prosecution of an unregistered contractor for misdemeanor offenses:

• Attorney General Richard Blumenthal [recently] announced the criminal conviction of a home improvement contractor for multiple violations of the [Connecticut] Home Improvement Contractor Act. Richard A. Koslik, 49, of Springfield, Mass., was convicted [...] for twice offering to make and once making home improvements without a state registration. Koslik testified at his trial, denying that he had offered to make or made home improvements, but the jury rejected those claims. He is scheduled for sentencing on March 28 . The maximum penalty on each of the three charges is six months in jail and a fine of up to $1,000.

***

• [Blumenthal said] "We will prosecute such criminal wrongdoers whenever they violate our home improvement laws. Our home improvement laws are designed to protect consumers, and this conviction should be a reminder to all homeowners considering home improvements to vigilantly verify their contractors' registration status and complaint history with the state."

For the Connecticut AG press release, see Attorney General Announces Criminal Conviction Of Home Improvement Contractor.

California Homeowner May Be Liable For Injuries Suffered By Unlicensed Contractor

An article on Construction Web Links (a construction industry newsletter),which serves as a reminder that it might not be a good idea to hire unlicensed contractors when contracting for home improvement and repair work, reports the following fact pattern which took place in California and to which California law applies:

• A homeowner hired his neighbor, an unlicensed roofing contractor, to replace the roof on his house. The parties agreed on a set price, and the roofer immediately began work. After only four hours of work, the roofer fell from the roof and was injured. The roofer filed a personal injury suit against the homeowner for negligence in failing to provide proper safety protection and equipment for the job. The roofer claimed he was an employee of homeowner, and because homeowner did not have worker’s compensation insurance, the roofer was entitled to bring a civil action to recover for damages he sustained from the fall.

Question: Can an unlicensed contractor have a legitimate basis for suing a California homeowner in the above case?

According to the article, the answer is yes:

• [The court] held that although the roofer was not an employee for purpose of the worker’s compensation law, he was an employee for purposes of tort liability under California law providing that an unlicensed worker performing services for which a license is required is not an independent contractor but an employee.

For more, see California Homeowner Subject to Suit by Unlicensed Contractor for Injuries Suffered on the Job.

For the case itself, see Mendoza v. Brodeur, 142 Cal.App.4th 72 (2006).

For an earlier post in which the California homeowner got the upper hand over the unlicensed contractor hired for home improvements, see Court Hammers Contractor In Dispute With Homeowners; Results In Free Home Improvements & More.

Kern County Cops Crash Another Vacant Foreclosure; Bust Up Another Teen Party

In Bakersfield, California, KBAK-TV Channel 29 / KBFX-TV Channel 58 report:

• Sixteen people are arrested after sheriff deputies broke up another party at a house going into foreclosure. Deputies went to the home on Chateau Montelena in Northwest Bakersfield, after neighbors called saying a large group of teenagers were heading to the home on Saturday night. This is the third time in two weeks authorities had to respond to parties inside empty homes. Deputies say they arrested 16 adults aged 18-20 for trespassing. They also cited 10 juveniles.

Source: Sheriff Deputies arrest adults and juveniles in another foreclosure party.

See also, The Bakersfield Californian: Police bust another party in foreclosed home.

Go here for other posts on vacant homes and teen beer bashes, keg parties, etc. teen parties vacant homes

Observations On Mortgage Lenders' Failure To Deliver Docs In Foreclosure Actions

In the February, 2008 Bloomberg News article (referenced earlier in this blog) on the problems foreclosing mortgage lenders are facing resulting from their inability to physically produce the actual homeowner promissory notes, as well as other required paperwork, the following choice excerpts may reflect how big the problem may be:

• Judges in at least five states have stopped foreclosure proceedings because the banks that pool mortgages into securities and the companies that collect monthly payments haven't been able to prove they own the mortgages.

***

• "I think it's going to become pretty hairy,'' said Josh Rosner, managing director at the New York-based investment research firm Graham Fisher & Co. "Regulators appear to have ignored this, given the size and scope of the problem.''

***

• Each time the mortgages change hands, the sellers are required to sign over the mortgage notes to the buyers. In the rush to originate more loans during the U.S. mortgage boom, from 2003 to 2006, that assignment of ownership wasn't always properly completed, said Alan White, assistant professor at Valparaiso University School of Law in Valparaiso, Indiana. "Loans were mass produced and short cuts were taken,'' White said. "A lot of the paperwork is done in the name of the original lender and a lot of the original lenders aren't around anymore.'' More than 100 mortgage companies stopped making loans, closed or were sold last year, according to Bloomberg data.

***

• "All these loan documents are being sent to the inside of a mountain in the middle of America and not being checked very carefully,'' [real estate lawyer Stuart] Saft said. "The lenders can't find the paper. We're dealing with a lot of paper produced in a mortgage closing.''

***

• Judges are becoming increasingly impatient with plaintiffs who produce no more proof of ownership than a lost-note affidavit or a copy of the note, said Michael Doan, an attorney at Doan Law Firm LLP in Carlsbad, California.

***

• U.S. District Judge David D. Dowd Jr. in Ohio's northern district chastised Deutsche Bank National Trust Co. and Argent Mortgage Securities Inc. in October for what he called their "cavalier approach'' and "take my word for it'' attitude toward proving ownership of the mortgage note in a foreclosure case.

***

• Federal District Judge Christopher Boyko dismissed 14 foreclosure cases in Cleveland in November due to the inability of the trustee and the servicer to prove ownership of the mortgages. Similar cases were dismissed during the past year by judges in California, Massachusetts, Kansas and New York.

• "Judges are human beings,'' said Kenneth M. Lapine, a partner at the Cleveland law firm Roetzel & Andress LPA. "They no doubt feel the little guy needs all the help he can get against the impersonal, out of town, mega-investment banking company.''

• U.S. Bankruptcy Judge Samuel L. Bufford in Los Angeles issued a notice last month warning plaintiffs in foreclosure cases to bring the mortgage notes to court and not submit copies. "This requirement will apply because developments in the secondary market for mortgages and other security interests cause the court to lack confidence that presenting a copy of a promissory note is sufficient to show that movant has a right to enforce the note or that it qualifies as a real party in interest,'' the notice said.

***

• "I can't believe the handling of notes is worse than it was five years ago,'' said Guy Cecala, publisher of Inside Mortgage Finance. "What we didn't have back then were armies of attorneys out there looking for loopholes. People are challenging foreclosures and courts are paying a lot more attention to foreclosures than they ever did before.''

For the article, see Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish.

For a related story, see Foreclosure Legal Work: A Shoddy, Assembly-Line Practice?

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

Defending Foreclosures, Saving Homes Law Conference

In Valparaiso, Indiana, the Valparaiso University School of Law recently announced their Defending Foreclosures, Saving Homes law conference to be held on March 28, 2008.

• Conference participants will learn about the latest developments in foreclosure and bankruptcy, loss mitigation and mortgage servicer practices. Attorneys interested in representing homeowners will learn the nuts and bolts of the Indiana foreclosure process, explore effective claims and defenses available to homeowners, and learn how to present workout and loan modification proposals to mortgage servicers. Housing counselors will learn more about judicial foreclosure in Indiana and options available to homeowners at each stage of the process. Architects of the Indiana Foreclosure Prevention Network will be on hand to explain the IFPN initiatives—including the recently established hotline and referral network.

Among the topics to be covered, according to the conference brochure, are:

• Defending Foreclosures in State Court: Defenses and Counterclaims,
• Defending Foreclosures in Chapter 13, and
• Attorney Fee Claims and Handling Foreclosure Cases as a Private Attorney, which may be of interest to those civic minded attorneys interested both in representing homeowners facing foreclosure and picking up a few bucks in the process (probably payable by the foreclosing mortgage lender and/or mortgage servicer who either broke the rules or otherwise screwed up).

For more, including a link to the conference brochure and schedule, see Defending Foreclosures, Saving Homes.

Foreclosures, Unpaid Taxes Add Risk For South Florida Tenants

In South Florida, The Miami Herald reports:

• While South Florida's falling housing prices may favor renting rather than buying right now, the recent real estate bubble is also creating new risks for tenants. Plenty of homes and condos are available for lease because their owners can't sell them, giving renters a variety of options. The problem is that many of the owners may not be on steady financial footing. If they end up in foreclosure, tenants can be kicked out -- despite having a lease. ''That's happening. A lot of people are losing their homes,'' said Samira Ghazal, a Miami consumer lawyer. "They don't know if the landlord is paying the mortgage or not. Then they end up getting evicted.'' Even if they are not formally evicted, many tenants are forced to move prematurely, resulting in unplanned moving expenses and family disruptions.

***

• It's hard to say how many tenants are in this situation. But what is clear is that tens of thousands of South Florida properties are in serious financial trouble. In Miami-Dade and Broward counties, more than 70,000 residential property owners failed to pay their 2006 property-tax bills, according to a Miami Herald analysis in November.

For more, see Tenants: Be aware of landlords facing foreclosure (Landlords have always asked potential tenants about their financial situation. But in today's housing market, renters may need to ask if potential landlords are facing foreclosure).

To find out if a South Florida landlord is facing foreclosure, see The Miami Herald: What to do before you rent (if link expires, try here) which, among other things, suggests:

• To determine whether a person has a foreclosure action filed against him: In Miami-Dade County, go to www.miami-dadeclerk.com/public-records/pubsearch1.asp. In Broward County, go to 205.166.161.12/oncoreV2/Search.aspx. Type in the person's name, select ''Lis Pendens'' (in Dade) or ''Foreclosures'' (in Broward) and click search to see if any documents come up.

This method isn't foolproof, especially if you're dealing with a sleaze bag who may be running a professional rent skimming / equity skimming operation but may be pretty helpful if you're dealing with an average homeowner or novice real estate investor caught in the real estate bubble and stuck holding a property that he/she can't unload.

For posts involving rent / equity skimming landlords who pocket rent and allow homes to go into foreclosure, go here, go here, go here, go here, and go here.

Go here for other posts related to the Miami condo market problem. equity skimming unwittingly epsilon delinquent tax problem

Oregon Governor Signs Foreclosure Rescue Legislation

The office of Oregon Governor Ted Kulongoski announced yesterday:

• Governor Ted Kulongoski late [Monday] signed mortgage lending protection legislation (House Bill 3630 and Senate Bill 1064) passed during the February legislative session. The bills will protect consumers from fraudulent mortgage rescue schemes, provide better notice for those facing foreclosure and stronger enforcement for those in the loan industry engaging in dishonest and fraudulent practices. “People who are facing foreclosure should not have to also fall victim to fraudulent rescue schemes and dishonest lending practices,” said Governor Kulongoski. “These protections will help ensure Oregonians are treated fairly and offered the help they need during a very difficult time.”

For more, see Governor Kulongoski Signs Mortgage Protection Legislation.

For the Oregon foreclosure rescue legislation, see House Bill 3630.

Florida Regulators Shut Down Foreclosure Rescue Operator, Mortgage Brokerage

The Florida Office of Financial Regulation announces:

• The Florida Office of Financial Regulation (OFR) entered an administrative order [Monday] against Safe Harbour Foundation of Florida, Inc., Silverstone Lending, LLC and Peter J. Porcelli, II, of Clearwater, Florida. Safe Harbour Foundation operated as a not-for-profit corporation that aided homeowners facing foreclosure; Silverstone Lending is licensed in Florida as a Mortgage Lender; and Peter Porcelli is President of Safe Harbour Foundation and Principal Representative of Silverstone Lending.

• The OFR’S investigation disclosed that Safe Harbour, Silverstone Lending and Peter Porcelli were participating in a scheme to make loans that contained unauthorized and excessive fees often exceeding 30% of the face amount of the loan, all in violation of Chapter 494, Florida Statutes. The scheme was initiated when Safe Harbour Foundation sent letters to homeowners who were facing foreclosure, offering to help “save their homes from foreclosure”.

For more, see Office Of Financial Regulation Shuts Down Foreclosure Rescue Scheme.

Go here for earlier posts on Peter Porcelli.

Two Charged In Alleged South Florida Foreclosure Rescue Scam

In what appears to involve an alleged straw buyer, equity stripping, foreclosure rescue scam, the Florida Office of Financial Regulation announces:

• The Florida Office of Financial Regulation, the Ft. Lauderdale Police Department, and the Office of Statewide Prosecution announce the arrest of two individuals on charges of First Degree-Organized Scheme to Defraud over $1,000,000 from mortgage loan lenders. On Wednesday, March 5, 2008, Curt D. Francis, 37 and Tashina Latouche, 25 were arrested in Ft. Lauderdale, Florida.

• Curt Francis and Tashina Latouche allegedly participated in a scheme to defraud mortgage lenders by providing false mortgage loan applications that included fraudulent employment verification forms, financial statements, and bank records. The applications also included HUD-1 settlement statements that investigators allege falsely stated that the buyers were using their own money to cover the closings. Multiple properties were involved from Broward and Miami-Dade County.

• The scheme allegedly used people’s identity and good credit to obtain mortgages on properties facing foreclosure. Once the mortgages were approved, the properties were quit claimed back to the original owners.

For more, see Two South Florida Residents Arrested For Mortgage Fraud.

For other hits for Curt D. Francis for unlicensed mortgage brokerage, see:

• Order to Cease & Desist - to Curt D. Francis from Georgia Dept. of Banking and Finance,
• Georgia Dept. of Banking and Finance Press Release re: Curt D. Francis,
• Order to Cease & Desist - to Progressive Mortgages 2000, Inc.
• Georgia Dept. of Banking and Finance Press Release re: Progressive Mortgages 2000, Inc.

Payment Slip Up Leaves Fremont Family Facing Foreclosure

In Fremont, California, KGO-TV Channel 7 reports:

• A Fremont family faces losing their home just a few months after missing a single mortgage payment. Can foreclosure proceedings really happen that quickly? It doesn't happen often, but it can. This isn't a story about a person with a mortgage they couldn't handle. It's a story of a single simple slip up anyone of us can make.

For more on this family's attempt at resolving the situation with their mortgage company, World Savings / Wachovia, see A missed mortgage payment turns costly.

Use Of Lost Note Affidavits By Attorneys For Foreclosing Lenders In Lieu Of Producing Proper Paperwork Being Called Into Question

In a Bloomberg News article last month featuring Boca Raton, Florida resident Joe Lents, who reportedly hasn't made a payment on his $1.5 million mortgage since 2002 because the lender's inability to produce Mr. Lents' promissory note has precluded a foreclosure of Lents' home, the apparently common (and possibly illegal and/or unethical) practice by foreclosing lenders and their attorneys of submitting "lost note affidavits" in foreclosure actions as a substitute for a promissory note that can't be produced was rasied in these excerpts:

• When the mortgage servicers and securitizing banks that act as trustees of the securities fail to present proof that they own a mortgage, they sometimes file what's called a lost-note affidavit, said April Charney, a lawyer at Jacksonville Area Legal Aid in Florida. Nobody knows how widespread the use of lost-note affidavits are, Charney said. She's had foreclosure proceedings for 300 clients dismissed or postponed in the past year, with about 80 percent of them involving lost-note affidavits, she said. "They raise the issue of whether the trusts own the loans at all,'' Charney said. "Lost-note affidavits are pattern and practice in the industry. They are not exceptions. They are the rule.''

***

• Judges are becoming increasingly impatient with plaintiffs who produce no more proof of ownership than a lost-note affidavit or a copy of the note, said Michael Doan, an attorney at Doan Law Firm LLP in Carlsbad, California.

***

• "If the homeowner doesn't object to the lost-note affidavit, the judge rubber-stamps it,'' Lents said. "Is it oversight, or are they trying to get around the law?''

***

• [Mortgage Electronic Registration Systems] rules don't allow [its] members to submit lost-note affidavits in place of mortgage notes, [MERS CEO R.K.] Arnold said. "A lot of companies say the note is lost when it's highly unlikely the note is lost,'' Arnold said. "Saying a note is lost when it's not really lost is wrong.''

• Lents's attorney, Jane Raskin of Raskin & Raskin in Miami, said she has no idea who owns Lents's mortgage note. "Something is wrong if you start from what I think is the reasonable assumption that these banks are not losing all of these notes,'' Raskin said. "As an officer of the court, I find it troubling that they've been going in and saying we lost the note, and because nobody is challenging it, the foreclosures are pushed through the system.''

For the story, see Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish.

For a related story, see Foreclosure Legal Work: A Shoddy, Assembly-Line Practice?

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.

Editor's Note:

I have yet to find any published reports on class action lawsuits or administrative disciplinary actions by state bar associations being brought against lenders' attorneys who are filing lost note affidavits in foreclosure actions as a matter of practice and whether the promissory notes have actually been lost or not. If anyone comes across a story about such a class action or state bar association disciplinary action, please forward me the story or a link - HomeEquityTheft@yahoo.com. missing mortgage foreclosure docs alpha

Philly Feds Indict Woman Offering Alleged Phony Foreclosure Investment Program

In Philadelphia, Pennsylvania, WPVI-TV Channel 6 reports:

• The operator of a real estate investment program has been arrested and faces federal charges. Lizette Morice operated the program that Action News warned you about called Gaddel Enterprises. Morice is now officially charged with devising a scheme to make money by defrauding consumers. [...] A federal grand jury charges that the founder and head of Gaddel, Morice, took money knowing full well that no real estate transactions were ever completed by her company.

For more, see Foreclosure investment operator indicted.

FBI Raid May Have Targeted Bridgeport Foreclosure Rescue Operator

In Bridgeport, Connecticut, The Connecticut Post reports:

• An eyewitness says he saw FBI agents raid the building that's home to the offices of Invernat LLC and Buyer's Capital at 1944 Boston Ave. Tuesday morning. Dave Foder, a Shell gas station attendant working across the street, said he saw about 10 to 15 agents surround the building around 9 a.m. [...] There are several businesses in the building, including Invernat and Buyer's Capital, which appear to be linked, at least through personnel and their focus on properties in distress.

***

• It is unclear if both Invernat and Buyers Capital are foreclosure rescue firms. [...] Attorney General Richard Blumenthal said his office has an active investigation into Invernat. But he was as tight-lipped as the FBI about what exactly was being investigated. He confirmed the company is a foreclosure rescue firm.

For more, see FBI raids Bridgeport office building.

Rogue Notaries In Handcuffs On The Increase; Attestors Often Found At Center Of Home Equity Scams

In California, The Sacramento Bee reports:

• Detectives and prosecutors sorting through the criminal rubble of the real estate collapse are finding a surprising trend: The notary public is, in some cases, the public enemy. Investigators in Sacramento, the Bay Area and Los Angeles say real estate frauds can hinge on a mastermind's ability to find a complicit notary, a person who is supposed to attest to the identity and presence of a person signing a sensitive document.

***

• Investigators statewide say they're seeing an increase in the number of notaries in handcuffs. In Los Angeles County, detective Chris Christopher sees notaries wrapped up in plots fit for Hollywood. He investigated one case in which a "career criminal" convinced a notary to let him use her log book and stamp to swindle property. Eventually, the criminal stole that notary's identity.

***

• "A notary seal is the most powerful identity theft and fraud tool you will ever find," Christopher said. "You can bring dead people back to life with it." Investigators note a common theme when they run across a crooked notary: When the heat is on, the log book disappears. "Right behind the dishonest notary, then there's the missing journal," said Jeanne Williams, a Sacramento County district attorney's investigator.

For more, including a number of examples of people having home equity ripped off out from under them through fraudulent deed transfers or by the unauthorized use of property as security for a loan or bail bond involving sleazy notaries, see Outlaw notaries making mark amid real estate crisis.

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

Florida Court Enters $6.4M Judgment Against "Scalawag" In Nationwide "Cloud The Title" Real Estate Scam

From the Florida Attorney General's Office:

• Attorney General Bill McCollum announced [last Thursday] that a U.S. citizen residing in Thailand has been ordered to pay $6.4 million for running an elaborate real estate scam that prevented landowners from selling their property to anyone but him. Todd Teal, 63, was found to have recorded fraudulent affidavits claiming he had an interest in the property, thereby preventing the owner from selling to anyone else. The case was prosecuted by the Attorney General’s Economic Crimes division.

***

• The Attorney General’s lawsuit, filed in June 2005, alleged that Teal used a mail drop box in Marco Island as his "local" address and used the internet to identify land held in Florida, mostly by out-of-state owners. Testimony from victims and witnesses revealed that Teal used deceptive contracts to induce landowners to contract with him. Teal then would refuse to make the deposit required by the contract, but would record a fraudulent affidavit in the public record against the landowner’s property. The affidavits recorded by Teal “clouded” the title to the property so that the landowner did not have a clear title and was prevented from selling to any other buyer. [...] McCollum’s investigators discovered that Teal has operated similar scams in Arkansas, Arizona, Colorado, Georgia, Hawaii, North Carolina, South Carolina, Texas and Washington.

***

• [J]udge William Gary ruled that Teal's actions violated the Florida Deceptive and Unfair Trade Practices Act and also constituted slander of title. [...] Describing Teal as a “scalawag,” Judge Gary issued a final judgment [last Thursday] for damages to the landowners, civil penalties and attorney fees and costs in the amount of $6.4 million.

For more, see Thailand Resident Ordered to Pay $6.4 Million in Real Estate Scam.

For additional background on this case, see:

• Fla. AG Lawsuit - State of Florida v. Teal,
• Fla. AG news release announcing filing of lawsuit - Attorney General Sues Over Real Estate Manipulation.