Grand Rapids Admitted Arsonist Gets "Get Out Of Jail Free" Card After Copping Plea To Torching Home In Foreclosure For Insurance Cash

In Grand Rapids, Michigan, a post on the Muskegon Chronicle blog recently reported:

• She torched her home with her family inside to get the insurance money, avoid foreclosure and be with a new boyfriend, authorities said. But that was not enough to make Sheryl Christman see any jail time for the potential 20-year felony. No one was injured in the Sept. 1 blaze that destroyed her $150,000 Gaines Township home and Christman has no prior criminal record. She also has a history of depression, said her attorney, Gaylor Cardinal. Kent County Circuit Judge Dennis Kolenda [...] sentenced Christman to five years probation and 1,000 hours community service. She also will have to pay back her insurance company $140,000 in restitution.

***

• The house was four days from foreclosure and Christman said she had tried to file for bankruptcy. She had a plan for the insurance money but her boyfriend, wearing a wire, busted her while working with the authorities.

• The judge noted during the proceedings this was his second recent sentencing for arson. The other suspect received prison time because circumstances were different, he said. A former Muskegon Heights police officer torched his Plainfield Township home, hoping to get insurance money for the house he could not sell. He got five to 20 years in prison, and Kolenda cited the officer's betrayal of trust.

***

• Some stunned court watchers in the gallery watched the proceedings with their mouths agape as the judge issued no jail time.

For the story, see Woman gets no jail time for GR arson.

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

Gangs, Drug Users, Homeless Moving Into Vacant Homes Cause Concern In San Jose

In San Jose, California, KGO-TV Channel 7 reports:

• Here's a new twist to the devastating effects of the sub-prime mortgage crisis. San Jose is now dealing with gangs and drug-users moving into the homes that have been abandoned by their owners.

For the story, see Vandals target foreclosed homes (Vandals and squatters get into homes abandoned due to foreclosures).

Possible Integrity Question Arise In Connection With Foreclosure Auction

In Boston, Massachusetts, The Boston Globe reports:

• About a quarter of the winning bidders at a November auction of 300 Massachusetts home foreclosures have not yet been able to claim their properties, even as the auction company prepares for a new sale next Saturday. Frustrated bidders say they have spent thousands of dollars on deposits, fees, and financing only to find themselves mired in delays and legal complications that raise questions about the integrity of the auction.

***

• In one instance, three friends made the winning bid of $130,000 on a house in Lee. The mortgage company delayed the closing, then sent a letter in February offering to return the deposit. Before the friends responded, the company put the house back on the market for $179,000, then quickly agreed to sell it to someone else.

For more, see Many high bidders still waiting for homes.

Real Estate Agent Finds New Foreclosure Listing "Burnt To A Crisp"

In Indiana, DS News reports:

• When Chris Price with the Chris Price Real Estate Team in Indianapolis, Indiana, headed out to one of his newer listings, he never imagined what he would find. “We received this assignment, and I promptly ventured out to visit the property,” Chris remembers. “Upon arrival, I knew this would be a 'hot deal' if you catch my drift.” All kidding aside, Chris said the sale was pretty much “null and void” from that point on because the home had been burnt to a crisp. To this day, Chris doesn't know what started the fire, and it's uncertain if the fire was a result of the foreclosure itself. But to this day, he is reminded of what could have been. “We thought that we might offer this one up as a 'fire sale' but the bank decided they wanted it back. It was a bummer, but this property will be charred in my memory for a long time,” Chris concluded.

Source: REO Horror Story: Nothing to Sell, But Charred Debris.

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

Three Pigs, Walgreen Drugstore Heir's Ex-Wife Set To Lose Home As $3.3M Mansion/Pigpen Faces Foreclosure

In Lake Forest, Illinois, according to Illinois media reports:

• The former wife of an heir to the Walgreen drugstore fortune says she is moving out of her Lake Forest mansion, and taking her three Vietnamese potbellied pigs with her. The three pigs, Pinky, Piggy and Cooper, weigh about 200 pounds apiece and were the objects of a lawsuit filed last year by a neighbor couple who complained that they were noisy, smelly and potentially dangerous. Their owner, Estelle Gonzales Walgreen, said [recently] she plans to move out of the $3.3 million mansion because of financial problems. She bought the mansion after her 2006 divorce from Charles R. Walgreen, but said she recently defaulted on the mortgage loan after her manufacturing business in Wisconsin went bankrupt.

***

• The Lake Forest home where Estelle Walgreen got city permission to keep three pot-bellied pigs until 2011 is slated for a Lake County Sheriff's foreclosure sale March 24.

Sources:

• The Associated Press: 3 pigs will move out of Illinois mansion,
• CBS 2 Chicago: Woman Gets To Keep Pigs, But Not Her House.

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

Another Pennsylvania Firehouse Faces Foreclosure

In Luzerne County, Pennsylvania, a story appearing in Fire Fighting News reports:

• A bank filed a mortgage foreclosure against Wilkes-Barre Township Fire Department but that action was filed in error, the fire chief said Wednesday night. The complaint, filed by Omega Bank, claims the department has not made a payment on its $185,000 mortgage since September. The bank filed the claim on Tuesday.

• Contacted at home, township Fire Chief John Yuknavich said the bank made a mistake and he has not missed any of the monthly payments. He said he could not provide receipts to prove the claim was a clerical error without the department's executive board's approval. "That's all wrong," Yuknavich said. "The bank said it was a mistake on their end. They made a boo-boo. I don't think it's a big deal."

For more, see Bank Files Foreclosure Vs. Fire Company.

Go here for a similar problem faced by a Carnegie, PA fire company.

Cops Bag Disbarred South Florida P.I. Lawyer In Vegas; Charged With Stealing Clients' Settlement Money; One Victim Left Facing Foreclosure

In Broward County, Florida, the South Florida Sun Sentinel reports:

• They hired Patrick Joseph Dooley to help when auto accidents left them injured and in pain. Instead, the personal injury lawyer stole his clients' insurance settlement money, gave them the runaround and then disappeared, his alleged victims and the Broward Sheriff's Office said Wednesday. Detectives caught up with Dooley in Las Vegas Monday and arrested him on charges that he stole $253,166 from at least seven clients, one of them the father of [the NBA's Miami] Heat forward Udonis Haslem. They brought him to Broward County Tuesday to face charges of grand theft, scheme to defraud and uttering forged instruments.

***

• William Bennett, 58, another former client, said Dooley's actions left him angry and, worse, about to lose his home since his injuries prevented him from working. "Talk about insult to injury," Bennett said. "There it is."

For more, see BSO says lawyer stole $250,000 from clients.

See also, The Miami Herald: Lawyer jailed on charges he stole from clients (A Broward County attorney accused of embezzling hundreds of thousands of dollars from clients was caught in Las Vegas -- broke) (if link expired, try here):

• Of the seven known victims, most have filed petitions with the Florida Bar to recoup some of the owed money. The Bar will pay as much as $50,000 if it can be shown that a wayward lawyer has stolen settlement money from a client, but there are no guarantees. The process can take from six to 18 months, according to the Florida Bar website.

Class Action Suit Brought Against Colorado Attorney Who Allegedly Charged Clients For "Phantom Work"; Billed Out 42 Hours In One Day, Says Complaint

The Colorado Springs Gazette reports:

• Gretchen Smith, 73, hit a stretch of hard times in 2004. Within a short period, her daughter and her sister died, and she was diagnosed with cancer. In the next 13 months - after having a spotless criminal record - she picked up three drinking-and-driving charges.

• A word-of-mouth recommendation led her to longtime Colorado Springs attorney Mark Rue. He took $19,500 from Smith and didn't give her a clue how he earned it, according to a class-action lawsuit filed last month. The suit alleges that Rue "acted deceitfully,"stole money from an "at-risk" adult - because of Smith's age - and acted unethically as her attorney. Hundreds of others could also be victims, according to the lawsuit filed by Colorado Springs attorney Ed Farry.

• "Rue charged Ms. Smith for phantom time expenditures, and engaged in conduct intended to cheat her and to mislead and deceive her into believing that he devoted more professional time to his representation of her than he actually did," the lawsuit states. According to the suit, Rue claimed he worked 42 hours for Smith, and several others, in a single day.

For more, see Lawyer accused of theft and unethical actions in class-action suit.

If a Colorado attorney is representing you and screws you out of money or property through dishonest conduct, go to the Colorado Supreme Court's Attorneys' Fund for Client Protection for more information. For other states and Canada, see:

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

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

Disbarred Lawyer/Gambling Addict Fails In Attempt To "Extort" Probation Sentence After Bilking Clients Out Of $167K

In New Port Richey, Florida, The Tampa Tribune reports:

• Disbarred, disgraced and facing grand theft charges as a result of a bizarre gambling habit, former lawyer David Edward Olson rolled the dice one last time Thursday and lost again. Olson pleaded no contest to 17 counts of grand theft and then asked Circuit Judge Thane Covert to disregard state sentencing guidelines and put him on probation. Assistant State Attorney James Goodnow called the gambit "extortion" and said Olson was "holding the victims hostage" by offering to pay $167,000 in remaining restitution to the clients he bilked on the condition he receive probation. "This court should be offended by this offer, if not outraged," Goodnow told Covert after three hours of testimony from Olson's supporters and those he robbed. "I ask you to call the cards on this gamble," the prosecutor said. "He's looking to extort probation from this court."

***

• Three years in prison, a term longer than the state guideline, is the proper punishment, Covert decided. And when he gets out, Olson will serve two years of house arrest followed by 15 years' probation with the requirement he repay the $167,000, Covert ruled.

For more, see Former Lawyer Gets 3 Years For Bilking Clients Of $167,000.

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.

D.C. Judge Violates Code Of Conduct For Shackling, Jailing Defense Attorney; Gets Off With Writing Apology

Legal Times reports:

• The D.C. Commission on Judicial Disabilities and Tenure determined last week that D.C. Superior Court Judge John Bayly Jr. violated the code of judicial conduct when he ordered a Public Defender Service attorney to be shackled and detained after an argument. [...] According to the commission, Bayly has accepted the commission's conclusion and recognized his violation. He also wrote a note to [P.D.S. attorney Liyah] Brown apologizing for his actions. The commission said in view of Bayly's more than 18-year record on the bench, no further sanctions were necessary.

For more, see Judge Found in Violation of Conduct Code After Ordering Attorney to Be Shackled.

For other posts on some of the moronic or otherwise knuckleheaded conduct of a few members of our esteemed judiciary, go here and go here. knuckleheaded judges zeta

NY AG Seeks Contempt Order Against Barred Home Improvement Contractor

From the New York Attorney General's Office:

• Attorney General Andrew M. Cuomo [earlier this month] announced that his office has filed legal action seeking a contempt order against a Red Hook home improvement contractor who recently resumed doing business despite a previous court ruling barring him from the industry. Red Hook contractor Robert Brown, 65, [...] faces a potential fine and/or jail time if found in contempt of the prior court ruling.

***

• The Attorney General’s Office sued Brown in 2006 for repeatedly defrauding customers by taking advance payments for plumbing and basement waterproofing jobs, and performing shoddy work or no work at all. In that case, Dutchess County State Supreme Court Justice James V. Brands issued a permanent order barring Brown from operating a home improvement business unless he obtained a $100,000 performance bond and paid full restitution to customers – of which Brown has done neither.

For more, see Attorney General Cuomo Seeks Contempt Ruling Against Dutchess County Home Improvement Contractor Who Violated Court Order (Contractor barred from doing business defied court order).

For other posts on homeowners left in the lurch due to actions by builders/contractors, go here, go here, and go here. contractors stiff subs customers zeta Cuomo hammers contractors

Maryland Lawmakers Nearing Passage Of Mortgage Fraud, Foreclosure Rescue Reform

The Washington Post reports:

• The House of Delegates overwhelmingly passed bills yesterday creating a criminal statute allowing authorities to prosecute mortgage fraud and prohibiting "foreclosure rescue transactions," in which homeowners are tricked into signing over residences to third parties.

• The fraud bill, proposed by Gov. Martin O'Malley's administration, passed 116 to 19. The legislation aims to stop misrepresentations from mortgage lenders. The foreclosure rescue bill was approved 135 to 1. The proposals are part of a package of bills introduced by O'Malley (D) to slow the state's rising rate of foreclosures. The House and Senate passed other foreclosure bills this week.

Source: House Passes Mortgage Fraud, Foreclosure Rescue Bills.

See also, The Baltimore Sun: Home loan reform is near (Lawmakers OK last bill in package to prevent future crises):

• With passage of the last bill yesterday, lawmakers expect to quickly reconcile minor differences between versions of the legislation approved by the Senate and House of Delegates before sending them to Gov. Martin O'Malley, whose administration made the reforms a top priority this year. [...] The bill [...] would allow aggrieved borrowers to pursue a [mortgage] fraud case in private litigation.

Two Blind Connecticut Sisters Fall To Fairbanks; Lose Family Home Of 54 Years To Foreclosure

In West Haven, Connecticut, the New Haven Advocate reports on another story involving the mortgage servicing company formerly known as Fairbanks Capital Corp. (and which has been known as Select Portfolio Services ("SPS") since shortly after settling a $40 million class action lawsuit brought against it by the Federal Trade Commission involving alleged questionable practices in servicing home loans):

• JoAnne DeGoursey had a "bad feeling" when the mortgage on her West Haven family home was sold to Fairbanks Capital Corp. Eighteen months and two missed payments later, her home was in foreclosure and DeGoursey and her sister were out, victims of a national mortgage servicing company that had swindled thousands of people and snatched their homes through foreclosure. A class action lawsuit felled Fairbanks Capital, but it has since re-emerged with a new name and some of the same old questionable practices, state regulators say.

***

• [I]n 2003 the Federal Trade Commission and the Department of Housing and Urban Development sued Fairbanks for violating the Fair Debt Collection Practices Act. The FTC said Fairbanks was unfairly adding $50 late fees to payments made on time (the DeGourseys paid several unnecessary late fees), was forcing clients to buy insurance through them (the DeGourseys were paying an extra $84 a month for Fairbanks' insurance), and was loaning clients money for the insurance and then collecting interest on that loan. They miscalculated bills and refused to break down and explain costs to customers, regulators said. In 2003, the class action lawsuit was settled, with Fairbanks agreeing to a $40 million payout to customers.

***

• After the FTC lawsuit Fairbanks changed their name to Select Portfolio Servicing with the same phone number, address and a lot of the same executive staff. Connecticut's Department of Banking has already received six complaints about Select Portfolio since the start of 2007, says consumer affairs manager Carmine Costa, including payoff disputes, collection practices and billing errors—all problems cited in the FTC lawsuit against Fairbanks. [Connecticut Attorney General Richard] Blumenthal's office has heard the same, and is already investigating Select Portfolio—part of a larger investigation into the mortgage industry—for improper fees, inflated home appraisals and other "deceptive practices."

For more, see Un-Fairbanks (How West Haven sisters fell victim to a national mortgage scam, and how it could happen again).

For a related post, see Fairbanks Capital Screwing Mortgage Lender Too, Says Lawsuit.

For a copy of a lawsuit containing a description of how Fairbanks / SPS allegedly has structured its business transactions in the conduct of their mortgage servicing business and which is the subject of the lawsuit, see Ellington Credit Fund, Ltd. vs. Select Portfolio, Inc., et al. (Plaintiff's First Amended Complaint - 19 counts - 52 pages, 2.35 MB approx.) - available online courtesy of Michael Dillon and GetDShirtz.com.

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

Cops Warn Against Internet "Missionary Crusade" Rent Hoaxes Promoting Cheap Rentals

In Ontario, Canada, The Barrie Examiner reports:

• Barrie police have issued a public warning about an ongoing fraud involving extremely cheap rental properties. Officers with the fraud unit say the suspects post local addresses on the "Kijiji" website, which features classified advertisements. The suspects make the rental sound very attractive by its location, low cost of rent and making it all inclusive. The properties are listed at a very low amount and include all utilities.

• When a person responds to the ad, they receive an e-mail stating that the person is on a "missionary crusade" and have decided to put their residence up for rent. If the person responds to the e-mail, the suspects send a rental contract to be filled out and faxed to an out-of-country location. The suspect always says that the property is theirs and they will courier the keys upon receipt of rent money. The money is to be wired to a location outside Canada. Police say the properties the suspects are using are usually for sale and advertised on a real-estate website.

Source: Cops warn of new fraud scam.

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

Expanding Role Of Contingent Fee Private Attorneys In Representing Homeowners In Lawsuits Involving Faulty Loan Docs

A December, 2007 article by attorney Michele Magar in California Progress Report reminds us of the importance of contingent fee private attorneys coming forward to represent homeowners facing the possible loss of their homes against lenders with faulty loan documents. A couple of excerpts:

• The [state] legislature is doing little to stop this disaster, but plaintiffs' attorneys can help. Federal and state laws which offer statutory attorneys’ fees enable attorneys to help desperate homeowners restructure abusive loans into sustainable ones, rescind predatory mortgages altogether, and battle foreclosure rescue scams.

***

• “Sorting out winnable cases is not hard to do, but lawyers have to work on contingency or rely on statutory attorneys fees because typically clients have no money to pay up front to hire lawyers,” said Shirley Hochhausen.

• Hochhausen teaches a predatory lending clinic at the University of San Francisco School of Law and is co-counseling 36 cases with private practitioners via the Fair Lending Consortium, a Bay area group she organized to develop predatory lending expertise among private attorneys. Hochhausen works [...] at the Community Legal Services in East Palo Alto, and refers overflow clients to private attorneys in Santa Clara, San Mateo, San Francisco, Marin and Alameda Counties.

According to one San Francisco attorney quoted in the article who specializes in helping homeowners fight abusive loans, “Ninety percent of loan documents I see have blank three-day rescission notices or contain other [Truth In Lending Act] violations.”

For more, see Right Now, Consumer Attorneys May Be the Best Hope for Californians Stuck in Predatory Loans. legal fee pro bono

NY AG Obtains Court Order Halting Illegal Rome Evictions

From the New York Attorney General's Office:

• Attorney General Andrew M. Cuomo [last Thursday] announced his office has obtained a state court order to stop the owner of Rome’s Maplewood Garden Apartments from wrongfully evicting tenants with valid leases. His office is also seeking penalties against the company and investigating the landlord’s failure to keep proper records of the tenants’ security deposits.

***

• The Attorney General’s Office conducted an investigation confirming the [illegal eviction] notices. It is also seeking a $500 fine for each attempt to break a lease. That fine – plus the recovery of $2,000 in costs to the state – could result in at least a $12,000 penalty for MHS. The investigation also revealed that MHS may not have established a trust account for tenants’ security deposits or kept sufficient records of those funds, as required by law.

• Attorney General Cuomo urges all tenants to know their rights with regard to rent, leases and other housing issues. His office’s Tenant’s Rights Guide is available online at http://www.oag.state.ny.us/bureaus/real_estate_finance/
  pdfs/tenants_rights_guide.pdf

For more, see Attorney General Cuomo Protects Rome Apartment Complex Tenants From Wrongful Eviction (Obtains order to stop eviction notices and seeks fines).

Virginia Feds Indict "1031 Exchange" Operator; $132M In Escrow Funds Misappropriated, Says Indictment

The South Florida Business Journal reports:

• Miami businessman Edward H. Okun was arrested Tuesday at his Hibiscus Island home on federal charges connected to a scheme to defraud investors of millions of dollars. Monday, a federal grand jury in Richmond, Va., indicted Okun, 57, on charges of mail fraud, bulk cash smuggling and making false statements. [...] According to the indictment, Okun used his 1031 Tax Group LLP to defraud clients of millions of dollars through false pretenses between August 2005 and April 2007.

***

• The company, now in bankruptcy in New York, was in the business of acting as an intermediary for 1031 exchanges. The 1031 section of the tax code allows investment property owners to defer the capital gains tax due on properties sold, dependent on the use of the proceeds to purchase new property in a specified time frame. To do this, investment property owners deposit the proceeds of sales with qualified intermediaries, such as 1031 Tax Group, and sign exchange agreements that include various promises to clients regarding the safekeeping and use of exchange funds.

• The indictment alleges Okun misappropriated $132 million in client funds to support his own lavish lifestyle, pay operating expenses for his various companies, invest in commercial real estate and purchase additional qualified intermediary companies to obtain access to additional client funds.

For more, see Miami businessman faces federal fraud charges.

Go here for other posts on Edward Okun.

Go here for some 1031 exchange real estate investor horror stories that have occurred when the wrong intermediary is used to conduct the exchange. sneaky slick escrow agents beta

Alleged Mortgage Scam Artists Operated Under Names Similar To Legit Firms, Causing Confusion Among Concerned Customers

In Southern California. the Los Angeles Times reports:

• What a difference an "S" can make. A day after state and local prosecutors said they had shut down a mortgage fraud ring involving six Los Angeles companies, businesses with similar names have been caught in the fallout.

• "I'm getting inundated with calls," said Joe Dovarro of Nation Mortgage Inc. -- not the Nations Mortgage Inc. that was accused with five other companies of defrauding thousands of Californians, costing some their homes. "I'm happy they're getting rid of people who are giving our industry a bad name, but, hey, I'm one of the good guys here."

***

• At Virtual Escrow Title Technology Solutions, the story is similar. The Orange-based software company has received dozens of phone calls from clients who saw news reports of the alleged fraud ring, which included Virtual Escrow Inc. To make matters worse, owner Randy Lee says his company is commonly known as Virtual Escrow, and its Web address is www.virtualescrow.com. "The news about this fraud scheme in L.A. is causing us enormous problems," Lee said. "One person hears it and they tell someone else. . . . Every title company that we do business with -- they're all concerned."

For more, see Similar names invite confusion in fraud case (A mortgage company's name is just one letter off from that of an allegedly crooked firm).

Minnesota Task Force To Drop Mortgage Fraud Investigations; Lack Of Staff, Funding To Blame

In Minnesota, the Pioneer Press reported yesterday:

• The Minnesota Financial Crimes Task Force has decided to stop taking mortgage fraud cases in a move that may or may not dent the state's efforts to combat a widespread problem, depending on whom you talk to. Either way, the decision speaks to the tough time law enforcement is having tackling a new breed of financial crime, one that has played a significant role in the nation's foreclosure crisis and doesn't fit neatly into traditional police beats. In fact, the U.S. Attorney's office in Minneapolis is holding a special meeting today to discuss just how federal and state laws can be used together to better tackle mortgage fraud.

***

• Chris Omodt, a Hennepin County Sheriff's lieutenant who heads the task force, said he thinks crimes will go unchecked, but acknowledges it doesn't have the resources. Mike Siitari, Edina police chief and oversight council chairman, said the group needed to return to its original mission: identity theft and financial crimes such as credit card fraud and check fraud. As for mortgage fraud, "We don't have the staff or funding to address it," Siitari said. "We have hundreds of cases of backlog."

For more, see Panel drops mortgage fraud cases (State task force says it lacks staff, funds to handle backlog).

Minnesota Regulators Raid Mortgage Companies; Title Premiums, Loan Payoffs Allegedly Pocketed By Closing Agent Affects Thousands Of Deals Nationwide

In Moundsview, Minnesota, FOX News Channel 9 reports:

• In a Commerce Department raid, officials found thousands of mortgage closings that were never mailed at Title Source Mortgage Company in Moundsview and Home Sweet Home Equity in Little Canada. “Instead of sending the money on to the insurance company they kept the money, that's just fraud, stealing, theft,” says Bill Walsh from the Minnesota Commerce Department.

• The findings meant that more than 3,000 homes nationwide had no clear owner -- with 192 of the homes in Minnesota. "That puts in jeopardy the integrity of the title and who owns that house, so later if those people go on to sell or refinance, they may run into a problem with who owns the house, and when did you actually own it,” says Walsh. The Commerce Department has revoked the license of the companies. Trent Jonas, and two of his employees, have been charged with civil fraud. They were allegedly pocketing all the title insurance, a total of $196,000, and failed to pay of $1.3 million in old loans. It appears the $147,000 went to a suite at the Minnesota Vikings games, and almost $20,000 went to political contributions.

Source: Minn. Mortgage Companies Pocketing Money (Thousands of homes affected).

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

Paralegal Charged With Clipping Clients Of $460K In Real Estate Deals

In Hamilton, Ontario, The Toronto Star reports:

• A Hamilton paralegal is accused of stealing nearly half a million dollars from at least five clients who entrusted her with their power of attorney or with mortgage funds to close real estate deals. Shellee Spinks, 45, who ran a paralegal service out of a Hunter Street legal office, was arrested this week and charged with one count of theft by power of attorney and four counts of theft by conversion.

• Hamilton police Detective Craig Parmenter said not all the complainants are from Hamilton and other jurisdictions in Ontario are also investigating complaints. He said the charges before the court involve $462,000 allegedly defrauded between September 2006 and Feb. 27. Some of the missing money was being held in trust in order to discharge a mortgage. "Quite frankly, I expect once the newspaper article goes out, I'm going to get more people, especially on the power of attorney side... Once they start looking at their records, they may find something amiss."

For more, see Hamilton paralegal accused of theft (Woman allegedly stole nearly $500,000 from at least five clients).

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

NY AG Shuts Down Rochester Home Improvement Contractor

From the New York Attorney General's Office:

• Attorney General Andrew M. Cuomo announced a court judgment shutting down of a Rochester-area home improvement contractor who defrauded multiple consumers – including senior citizens – and left many property owners with costly and incomplete projects.

***

• The Attorney General’s lawsuit was filed in 2007 against Eagle Window and Siding Corporation, [... of] Rochester, and its owner, John O. Costello, 63, [... of] Greece, for failing to perform the work for which he had been paid, using unacceptable workmanship and ignoring customer complaints. State Supreme Court Justice David M. Barry issued a permanent injunction prohibiting Eagle/Costello from engaging in the home improvement contracting business in New York State. Also, Costello was ordered to pay $347,023.36 in restitution to 44 consumers, and pay another $30,000 in penalties, which includes a $10,000 penalty for defrauding elderly consumers.

• Customers who believe they may have been defrauded by Eagle/Costello have until June 9, 2008 to file a complaint with the Rochester Regional Office, which can be reached at (585) 546-7430.

For more, see Attorney General Cuomo's Lawsuit Leads To Shut Down Of Eagle Construction For Defrauding Consumers (Eagle’s John Costello ordered to pay nearly $377k, including $10,000 fine for targeting senior citizens).

For other posts on homeowners left in the lurch due to actions by builders/contractors, go here, go here, and go here. contractors stiff subs customers zeta Cuomo hammers contractors

Foreclosing Mortgage Lenders Being Bitten By Carelessness In Securitization Process

A June, 2007 article in Forbes magazine reminds us how the carelessness in the securitization process by which mortgage loans were packaged and sold off to mortgage pools is now coming back to bite mortgage holders seeking to foreclose loans in default:

• The financial engineering (ie. mortgage securitization) helped oil the housing boom by making credit more available. But stalled housing prices and rising defaults have revealed a mess: In the rush to flip paper, lots of the new lenders or pools don't have the proper paperwork to show they even hold the mortgage.

***

• This sloppiness offers glorious reprieves for some defaulted homeowners but just headaches for lenders. One Maryland man, holding documents suggesting his loan was held simultaneously by a pool of loans and a bank, is still in his home--five years after foreclosure was filed.

Reportedly, lawyers representing homeowners facing foreclosure around the country are making moves that are "often forcing sloppy lenders to offer generous terms to avoid litigation."

For more, see Paper Chase (You're in luck. Your mortgage lender has flipped, sliced and diced your loan--and now no one knows who holds it).

For related articles, see:

• Financial Times: Contested foreclosures rise, could increase RMBS losses,
• Bloomberg News: Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish,
• The Wall Street Journal Law Blog: Foreclosure Legal Work: A Shoddy, Assembly-Line Practice?

For other posts that reference the sloppiness and carelessness of some mortgage lenders and their attorneys in connection with their mortgage loan documents, Go Here , Go Here , Go Here, and Go Here. undo mortgage loans TILA alpha missing mortgage foreclosure docs alpha SloppyForeclosuresAlpha

California Authorities Bust Up Alleged "Bait & Switch" Predatory Lending Scam Operation, Thousands Victimized

In San Bernardino County, California, the Los Angeles Times reports:

• State and local prosecutors said Tuesday that they had shut down a mortgage fraud ring that allegedly victimized thousands of seniors and others, some of whom lost their homes. The San Bernardino County district attorney's office arrested five people and were waiting for two more to surrender to face charges of conspiracy, grand theft and elder abuse as part of a crackdown on alleged sub-prime mortgage lending scams with the California Department of Justice.

• A related [California AG civil] lawsuit filed in Los Angeles County Superior Court accuses six companies of using predatory lending practices to trap homeowners in illegal and expensive loans.

***

• The six companies -- Lifetime Financial Inc., Nations Mortgage Inc., Greenleaf Lending Inc., Virtual Escrow Inc., Olympic Escrow and Direct Credit Solutions Inc. -- were operated by Eric Michael Pony, 25, of Tarzana and family members, the lawsuit said. In a coordinated action, San Bernardino Dist. Atty. Michael A. Ramos announced that Pony, a former real estate salesman, was expected to turn himself in to authorities Tuesday. [...] Also expected to surrender was his sister, Paulette Pony, 23, of Tarzana, a notary public for Lifetime Financial. The California secretary of state's office lifted her license in December in connection with felony conspiracy charges and for failing to disclose a forgery conviction.

***

• The criminal and civil actions against the Pony family members and associates and their companies are believed to be the most ambitious by law enforcement since California's once-booming housing industry was hit last year by a crippling downturn that made it difficult for tens of thousands of borrowers to pay soaring sub-prime mortgages with adjustable interest rates. Brown said it was only the first of several legal actions planned to fight mortgage fraud.

For more, see State breaks up alleged sub-prime fraud ring (5 are arrested and 2 sought, accused of victimizing thousands of Californians, some of them elderly and some who lost their homes).

For story update, see Final two suspects in real estate fraud case surrender to authorities:

• The company used telemarketers to sell inflated real estate loans with high fees, using forged documents and crooked escrow agents and notaries. Most of the victims were elderly or did not speak English. [...] Also held are Jacob Shawn "Coby" Franco, 46, of Encino; Eli Hassine, 25, of Sherman Oaks; Carol Binnie Pencille, 57, of Granada Hills; Sibpun Ampornpet, 31, of North Hollywood; and Jason Imperial Burbidge, 35, of West Hills.).

For additional background information on this case, see:

• For the civil lawsuit filed by the California Attorney General, see Complaint - People v. Lifetime Financial Inc., et al.
• California AG press release announcing the civil lawsuit - Attorney General Brown Shuts Down Mortgage Scam Artists,
• San Bernardino County DA press release announcing the criminal charges - District Attorney Arrests 7 in Statewide Predatory Lending Scheme.

Story update (7-22-08):

• Two More Jailed in Mortgage Scam.

Go here for story updates.

Feds Flood Vegas In Search Of Mortgage Scams, Create Task Force

In Las Vegas, Nevada, the Las Vegas Review-Journal reports:

• Mortgage fraud and associated predatory lending practices have become the focus of criminal investigations in Las Vegas, which is quickly emerging as the mortgage fraud capital of America. "The FBI has come to Las Vegas in droves," said Debra March, director of the Lied Institute for Real Estate Studies at University of Nevada, Las Vegas. "I've never seen this many FBI people here." The FBI has carried out a number of investigations in Las Vegas, uncovering schemes involving 14 financial institutions. Some of the tactics include artificially inflating home values and forcing desperate buyers into adjustable rate mortgages that they eventually can't afford.

For more, see LV at center of mortgage-fraud bull's-eye (Official says feds come 'in droves' to investigate chicanery).

See also, Reuters: FBI starts Nevada mortgage-fraud task force.

Mortgage/Condo Blacklists Leaving Some South Florida Unit Owners Trapped In Their Own Buildings?

In Miami, Florida, WFOR-TV Channel 4 reports:

• South Florida often finds itself on many lists; from top places to vacation to top cities for road rage. More recently, however, the area has earned a spot on a new set of lists that could impact the South Florida real estate market for years to come. While banks will be quick to say they're not blacklists, making one could be one of the worst things that could happen to our local economy.

***

• Mortgage brokers say these lists, which began about 15 months ago, have exploded in the last few months. Most cite South Florida's condo market as one of declining market value and high investor concentration. [...] With a limited number of interested buyers, South Florida's condo market is now being forced into a cash only market and a catch 22 for sellers. [...] Many market watchers say the real fallout won't just be sinking prices, but condo owners who become trapped in their own buildings.

For more, see South Florida's Secret Blacklists.

Go here for other posts related to the Miami condo market problem.

Appraisal On Pre-Construction Condo Leaves Buyer Out Of Luck

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

• Two years ago, Angie Cifarelli of New Jersey signed a pre-construction contract to buy a condo at the Residences at Midtown in Palm Beach Gardens. Purchase price in the contract: $404,500. Last month's appraised value of the newly completed condo: $200,000. "I was shocked," Cifarelli said.

• A property worth less than half its value in 2006 is all you need to know about how bad the real estate market is these days. But this 50 percent drop is not just academic for Cifarelli, who wanted the Midtown condo as her vacation home. With the rock-bottom appraisal, she says she can't get a mortgage for $283,000, as planned. And she says she certainly can't go into her pocket for the balance. Cifarelli says she asked the developer either to drop the price or to let her out of the deal and give back her $80,000 deposit.

• Ram Development's response: No, thanks. Ram told Cifarelli she signed a contract for a cash deal that was not contingent on mortgage financing. The fact that the property fell in value is, well, Cifarelli's problem.

Reportedly, Cifarelli's lawyer is looking at the possibility of voiding the deal and recovering the deposit by reason of possible violations of the Interstate Land Sales Full Disclosure Act. For more, see Appraisal on condo puts buyer in pinch.

Go here for other stories on real estate speculators and others looking to back out of purchase contracts. zebra

One Third Of North Minneapolis Vacant Foreclosures Are "Wrecking Ball" Candidates, Says Non-Profit Housing Official

In Minnesota, the Minneapolis Star Tribune reports:

• One-third of the foreclosed houses inspected so far in north Minneapolis are candidates for demolition, according to the agency trying to rehab the state's largest concentration of empty housing. Carolyn Olson of Greater Metropolitan Housing Corporation (GMHC) said her nonprofit housing organization has been inside 157 of the hundreds of foreclosed North Side homes. It's evaluating them for fix-up and resale.

• But many pose a range of problems, from neglect issues like rampant mold to functional obsolescence due to size or floor plan. Some simply cost too much to fix. One house the agency toured contained only 500 square feet of space -- less than a standard one-bedroom public housing high-rise apartment -- carved into four apartments. "That's probably not a keeper," Olson said.

• Some houses have caving retaining walls. One otherwise nice triplex was covered in mold, Olson said. One reason for the neglect, Olson said, is that about two-thirds of the foreclosed homes were owned by investors rather than occupants. "Some of that has not been very well taken care of," she said.

For more, see First, a wave of foreclosures; next, the wrecking ball? (One estimate says a third of foreclosed homes in north Minneapolis should probably be demolished).

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

South Florida City May Seek Charity Money To Deal With Vacant Foreclosures

In North Lauderdale, Florida, the South Florida Sun Sentinel reports:

• City officials typically are more inclined to stay in their comfort zone by fixing potholes, setting the tax rate, or building parks. Recognizing a dire need, North Lauderdale officials want to venture into real estate. They want to seek money from charities to buy the city's many foreclosed properties, fix them and sell them at cost, rescuing them from blight. City officials also might use that money to help struggling families pay rent.

***

• [City Commissioner Rich] Moyle came up with the idea after reading about how some of the nation's wealthiest charities are interested in tackling the foreclosure crisis. [...] Trying to find money from charities is crucial now because officials think the city is spending too much in-house time and money from its general fund to clean private property. But [a local official] said if the city doesn't do it, nobody will.

For more, see North Lauderdale seeks charity money to cope with foreclosed homes (if link expired, try here).

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

Expected Wave Of Blighted Foreclosed Homes Concerns Erie Officials

In Erie, Pennsylvania, the Erie Times News reports:

• As the economy tightens throughout the nation -- and Erie County -- foreclosure proceedings are on the rise, and local officials fear more homeowners might be inclined to skip town and let the city to take care of their properties. In the past six years, the city has listed 220 properties and vacant lots as blighted, with properties going off the list and more coming on from time to time. Officials fear the list could soon grow. "We're looking at a wave of these coming into the area soon," said Kim Green, the city's economic and community development director, at a recent committee meeting on blighted properties.

***

• The problem with most of the blight in the city isn't the grade of the decay or the amount of it, officials said. More problematic, they said, are the hurdles the city must overcome to get control of properties and correct the blight.

For more, see Bracing for blight (As foreclosures rise, city worries about more dilapidated properties).

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

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).

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

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).

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

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).

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

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