Online Maps For Problem Mortgages Now Available

Reuters reports:

• The Federal Reserve System on Tuesday said it was offering online maps that illustrate subprime and near-prime mortgage loan conditions across the United States, and show "existing and potential foreclosure hotspots". The maps, available at www.newyorkfed.org/mortgagemaps/, display regional variation in the condition of securitized, owner-occupied subprime and Alt-A mortgage loans.

• "This may assist community groups which can mobilize resources to bring financial counseling and other resources to at-risk homeowners," the Fed said in a statement. "Policymakers can also use the maps and data to develop plans to lessen the direct and spillover impacts that delinquencies and foreclosures may have on local economies."

For more, see Fed offers maps showing "foreclosure hotspots".

Vacant Houston Foreclosure Abandoned For 15 Years Caught In Government Red Tape

In Houston, Texas, KHOU-TV Channel 11 reports on the tale of an abandoned foreclosed home that no one's lived in for 15 years and that somehow has slipped through governmental cracks in the system:

• Usually, when you find a house that’s in this bad of shape, it’s been abandoned. But this horrible house does indeed have an owner and that owner has a name: Sam, Uncle Sam.
  According to county property records, the owner is the RTC: the Resolution Trust Corporation. The RTC was setup by the federal government in the late 1980s after the economy tanked and thousands of homes in Houston were lost to foreclosure. [...] “They generally sold them off,” [Harris County Appraisal District spokesman Jim] Robinson said.

• But here’s where the mystery of the house on Celia takes a twist. The city has been aware of the house for years, posting notices, documenting its deterioration and all the while assuming the federal government owned it. [...] The city couldn’t seize the house because by law one governmental entity can’t take another’s property. But why would the federal government be so irresponsible?

• 11 News spoke to an official with the FDIC, which took over the RTC. He checked their records and said the government sold the house 13 years ago. But the records are so old, he said they don’t know who bought it.

The surmise is that, after buying the property, an investor determined that the house wasn't worth it and never bothered recording the deed, resulting in the RTC continuing to be listed on local real property records as the apparent last owner of record. For more, see Rundown Houston homes caught in red tape.

Cops Bag Five Suspects In Theft Of Appliances From Home In Foreclosure

In Lathrop, California, KXTV Channel 10 reports:

• Five people were in the San Joaquin County jail this week charged with stealing appliances from a home in foreclosure. They were arrested Tuesday in Lathrop, after someone reported what appeared to be suspicious activity at the house on Ore Claim Trail.

***

• The thefts are marking a disturbing trend for neighbors -- it's not the first crime to happen to a foreclosed home on Ore Claim Trail. Last November, a suspicious fire happened at another vacant home across the street. Then, a body was discovered in the home during that investigation. No one has been charged in that incident.

***

• This street has several empty homes and it's disturbing to those living nearby. "It's kind of lonely and quiet on the street. It's scary being by myself all day with a newborn," said Tiffany Henriksen. She and her husband moved to Lathrop from North Carolina about a year ago and miss having a normal neighborhood experience. [...] The Henriksens are staying in Lathrop after just landscaping their backyard. Tiffany said the couple looks forward to the day when neighbors once again outnumber empty homes.

For more, see Burglars Hit Foreclosed Lathrop Home.

South Carolina Woman Facing Foreclosure Charged With Torching Home

In Pickens County, South Carolina, The Greenville News reports:

• An Easley woman was charged with arson after deputies said she burned her house on the eve of foreclosure. Andrea Leah Dalton Propes, 29, 105 Woodbury Drive, was arrested Tuesday and charged with second-degree arson, according to a Pickens County Sheriff’s Office warrant. The warrant said the fire was started with gasoline on the morning of Oct. 1, the same day that a foreclosure lockout was scheduled to occur. Propes was released from the Pickens County Detention Center on a $10,000 bond.

Source: Easley woman arrested, charged with burning home on the eve of foreclosure.

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

City Of Baltimore "Pays Cash" For "We Buy Houses" Signs

According to the website of the non-profit legal services organization Community Law Center in Baltimore, Maryland:

• The Community Law Center (CLC), Citizens Housing & Planning Association (CPHA) and St. Ambrose Housing Center (St. Ambrose) have joined forces to combat the foreclosure “rescue” scam artists responsible for illegally posted “We Buy Houses” signs throughout Baltimore City. [...] The groups’ initiative is bolstered by [...] legislation passed by Baltimore’s City Council allowing residents to remove signs from utility poles or stop signs. The [...] law [...] increases fines to $200 per sign and allows for neighborhood associations with 501 (c) (3) status to qualify for a cash credit when presenting the removed sign to a designated agency for collection.

For more, see We Don't Buy Houses (We Can Help You Keep Yours).

For other stories on the "We Buy Houses" road signs, see:

• The News & Observer: Reasons to beware of 'We Buy Homes',
• Richmond Times-Dispatch: Richmonders declare war on lending scams (They take to city streets to remove signs connected to foreclosure rescue schemes),
• HOME press release: "Sign Swiping Day" Sept 30 in the City of Richmond "trying to stop the foreclosure rescue scam artists".

Bakersfield Beer Bashers Strike Again; Trash Another Vacant House During Unruly Party

In California, The Bakersfield Californian reports on another recent beer bash in a vacant house:

• Leticia Avila’s blood pressure plummeted when she saw what partyers had done to her south Bakersfield home. Blood and spray paint stained her upstairs bedroom. Beer bottles littered the kitchen. Her fence had been partially torn down and many of her windows shattered. The scene was all the more shocking to Avila because she had put the home up for sale only about a month before, and was living just a few blocks away when police and neighbors say a large, unruly party broke out at the house. By the time police arrived to break it up, a young man had been beaten unconscious and two others were badly hurt.

***

• Youths partying in vacant houses is nothing new. What’s new, local authorities and real estate people say, is that the troubled housing market has widened the selection of empty homes, and so the parties are taking place in nicer, larger homes in more affluent neighborhoods.

For more, see Party vigilance falls to neighbors.

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

2nd Co-Conspirator Cops Plea In Erie Mortgage Fraud Scam

In Erie, Pennsylvania, the Erie Times News reports:

• Frank Kartesz II, the co-owner of an Erie home redevelopment business, pleaded guilty [Monday] to fraud and conspiracy charges in relation to a widespread mortgage-fraud scheme in the city of Erie. [...] He is among five people charged by the federal government in relation to the mortgage fraud case, which the FBI, Internal Revenue Service and other agencies have been investigating since 2004.

***

• Frank Kartesz II and Robert L. Dodsworth now share something else ---both have entered guilty pleas as part of a widespread local mortgage-fraud scheme. [...] The government claims that Kartesz -- who was accused nearly eight years ago of being part of a Jamestown, N.Y., housing scam -- was part of a scheme in which he and others bought run-down houses and sold them at artificially inflated prices. Most of the buyers had low income and knew little about purchasing a home.

***

• Dodsworth, 60, pleaded guilty to fraud and conspiracy charges in November. Kartesz and Dodsworth ran K&D Enterprises, a home-redevelopment firm at the center of the housing fraud probe.

For more, see:

• Mortgage fraud co-defendant pleads guilty,
• 'What he did was wrong' (2nd guilty plea entered in mortgage scam).

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

Proposed Bankruptcy Rule Allowing Judges To Modify Home Mortgages Rejected By Senate

In Washington, D.C., Reuters reports:

• The U.S. Senate on Thursday rejected a Democratic proposal that would have rewritten bankruptcy law to help struggling mortgage borrowers, while moving ahead with debate on a housing market rescue bill that includes a $6 billion tax break for home builders. In a 58-36 vote, the Senate defeated an amendment offered by Assistant Senate Democratic Sen. Richard Durbin to empower bankruptcy judges to ease mortgage payment terms for distressed borrowers under strictly limited circumstances.

For more, see US Senate kills bankruptcy revamp in housing bill.

Elderly Minnesota Couple Files Suit To Invoke State's New Anti-Predatory Lending Law

In St. Paul, Minnesota, Minnesota Public Radio reports:

• Last year, state lawmakers passed a new consumer protection law designed to prevent mortgage lenders from overcharging borrowers. Now an elderly couple from Red Wing has filed what appears to be the first lawsuit under Minnesota's Anti-Predatory Lending law. It could be the first of many such suits under the law, which is meant to protect homeowners from unscrupulous lending practices.

***

• [The state's Anti-Predatory Lending law] makes it illegal for mortgage companies to charge excessive fees. It requires brokers and lenders to act in the best interest of the borrower. And it requires verification of a borrower's income and ability to pay. [...] As in other states, foreclosures are continuing at record levels in Minnesota. The state's predatory lending law is meant to stem the tide of homeowners losing their homes.

For more, see Elderly couple files first lawsuit under new anti-predatory lending law.

For other posts on homeowners using Federal & state consumer protection statutes to try and undo bad mortgage loans, Go Here, Go Here, and Go Here. undo mortgage loans TILA batallion

Ohio Appeals Court Tells Foreclosing Lender "No Proof Of Note Ownership, No Foreclosure Sale"

In Ohio, the Akron Beacon Journal reports:

• The state attorney general's office is looking for new ways to slow foreclosures in court, hoping a recent Ohio appellate court decision will help in those efforts. [... Ohio Attorney General's Office representative Tom] Winters said the office was encouraged by a March 20 decision by the 10th District Court of Appeals in Columbus and is looking for similar cases.

• "That ruling was the first time that a court in Ohio has held that a mortgage company must prove that it still holds the mortgage to the home before it can proceed with a foreclosure," Winters said. "That's consistent with what the federal courts have done, and that's encouraging."

***

• "If we can slow the filings down and educate the homeowners on how they can negotiate to stay in their homes, then you have a better chance of resolving this stuff," Winters said. "It's not going to work for everybody, but right now nothing's been working for anybody, and that's the problem."

For more, see Ohio looking for new ways to slow foreclosures in court.

For the decision of the Ohio Court of Appeals, see Everhome Mtge. Co. v. Rowland, 2008-Ohio-1282; (Case #07AP-615; March 20, 2008).

Editorial Note:

A quick reading of this case reveals that the Ohio trial judge originally hearing the foreclosure case ruled against the homeowner and held that the foreclosing lender didn't need to prove ownership or show how it came to be the holder of the mortgage. The homeowner subsequently filed an appeal of this ruling. Upon considering the appeal, the Ohio appeals court ruled that the trial judge's decision was incorrect and, accordingly, reversed the original ruling. Among other things, this case:

1. illustrates the fact that trial judges will make incorrect decisions from time to time, and
2. reflects the importance of being represented by an attorney who is ready, willing and able to file an appeal to seek a reversal of an incorrect decision. Had the attorney not known enough to file an appeal, the homeowner would have been stuck with an incorrect ruling (and probably wouldn't have realized that the judge's ruling was wrong).

Representing the homeowner in this case was Adam R. Todd of Dinsmore & Shohl, LLP.

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 beta

Lenders Becoming Reluctant To Start Foreclosure Actions?

Bloomberg News reports:

• Banks are so overwhelmed by the U.S. housing crisis they've started to look the other way when homeowners stop paying their mortgages. The number of borrowers at least 90 days late on their home loans rose to 3.6 percent at the end of December, the highest in at least five years, according to the Mortgage Bankers Association in Washington. That figure, for the first time, is almost double the 2 percent who have been foreclosed on.

• Lenders who allow owners to stay in their homes are distorting the record foreclosure rate and delaying the worst of the housing decline, said Mark Zandi, chief economist at Moody's Economy.com, a unit of New York-based Moody's Corp. These borrowers will eventually push the number of delinquencies even higher and send more homes onto an already glutted market. "We don't have a sense of the magnitude of what's really going on because the whole process is being delayed," Zandi said in an interview. "Looking at the data, we see the problems, but they are probably measurably greater than we think."

For more, see Lenders Buried By Foreclosures Let Late Borrowers Stay in Homes.

Unpaid Assessments Putting Squeeze On Arizona Homeowners' Association

The Arizona Republic reports:

• Homeowners associations strapped by unpaid assessments related to the foreclosure-ridden real-estate market are mustering volunteer work crews, cutting maintenance jobs and scrimping on landscaping to save money. Phoenix, Chandler and Avondale are among Valley cities fielding calls for help from HOAs that previously turned only to their own boards of directors and management companies. [...] Aggravating the problem is the slow reality of foreclosures: The process takes months, and during that time, monthly HOA assessments that can range from $20 to more than $200, depending on amenities, aren't being paid.

For more, see Foreclosures forcing HOAs to cut corners on maintenance.

Foreclosure Actions Backing Up In Boston

In Boston, Massachusetts, the Boston Herald reports:

• Thousands of abandoned foreclosed homes across Massachusetts will remain shuttered for months due to a case backlog at the overwhelmed Massachusetts Land Court. Karyn Scheier, chief justice of the Land Court, acknowledged yesterday that a deluge of foreclosure applications has swamped the court. New cases are now coming in at a rate of 145 per day. At the current pace, the court will handle nearly 36,000 new foreclosure applications this year due to the subprime-mortage mess - up from just under 30,000 last year and about 20,000 two years ago, Scheier said.

• “Staffing levels are not up and we are struggling,” she said. Real estate attorneys say the paper jam is adding an extra two to three months to an already frustratingly slow process of selling off foreclosed homes. The result is buyers who purchase homes at foreclosure auctions and elsewhere can’t take title to properties quickly - and abandoned and shuttered homes remain neighborhood eyesores for months longer than many had hoped.

For more, see Land court swamped (Foreclosure surge slows system to crawl).

Florida Court System Being Asked To "Commit Suicide" Says State Chief Justice In Response To Budget Cut Requests; Forsees Foreclosure, Eviction Delays

The Florida Bar News reports:

• Asking the Florida court system to cut its budget by 10 percent next year — on top of 6 percent cuts this year — would be asking the that branch of government to commit suicide, Supreme Court Chief Justice Fred Lewis told a key Senate committee last week. [...] That 10 percent reduction, the chief justice said, “is placing an arrow through the heart of the branch. I can tell you the soul of the branch will remain strong and we will continue to strive to serve the people of Florida."

***

• Children in foster care, landlords looking to evict tenants, and foreclosure actions would all be delayed, Lewis said. He added it’s even possible those charged with crimes might go free because the courts couldn’t meet speedy trial deadlines.

For more, see Courts foresee staff reductions (30 percent of the workforce is at risk). state budget cuts courts

Pittsburgh Bankruptcy Judge Gives U.S. Trustee The Go-Ahead To Question Countrywide Execs, Subpoena Company Docs

In Pittsburgh, Pennsylvania, The Associated Press reports:

• A federal judge ruled the Justice Department can subpoena documents and question Countrywide Financial Corp. executives under oath to determine whether the lender abused borrowers and the bankruptcy-court process. U.S. Bankruptcy Judge Thomas Agresti said "it certainly has not been proven that Countrywide did anything wrong," but noted a bankruptcy trustee "has made a showing of a common thread of potential wrongdoing" in several cases. The cases are a representative sample of nearly 300 Pennsylvania bankruptcy cases involving Countrywide borrowers. The potential wrongdoing warrants further inquiry by a bankruptcy trustee on behalf of the Justice Department, Agresti said.

***

• The company has acknowledged errors in handling some debts, but has denied any systematic effort to thwart bankruptcy protections to collect money. Some bankrupt borrowers, however, have accused the company of threatening them with foreclosure even after they made payments under court-approved bankruptcy plans that were meant to shield them from Countrywide's subsequent efforts to collect the debts. Agresti's 50-page ruling was issued late Tuesday in Pittsburgh. [...] Agresti is overseeing 293 cases filed in Pittsburgh that include allegations that Countrywide sought improper fees or payments from bankrupt homeowners and otherwise violated bankruptcy court orders and regulations.

For more, see Judge OKs fed subpoenas of Countrywide.

See also, Reuters: Judge OKs probe into Countrywide practices.

Go here for Judge Agresti's ruling.

Go here for other posts on the Countrywide matter in the Pittsburgh federal bankruptcy court.

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

Maryland Lawmakers Pass Foreclosure Legislation; Egregious Scams To Be Criminally Prosecuted

The Washington Post reports:

• Maryland lawmakers passed some of the nation's most ambitious legislation to control the housing crisis yesterday by toughening oversight of the mortgage-lending industry and establishing preemptive measures to help people at risk of foreclosure. Taken together, Maryland's bills are among the most sweeping in the country as legislatures from California to Florida consider proposals to stem the escalating rate of foreclosures. [...] The bills include making the most egregious mortgage schemes subject to criminal prosecution, extending the foreclosure timetable from 15 to 150 days and prohibiting prepayment penalties and transactions in which homeowners are tricked into signing over their houses to third parties.

For more, see Sweeping Bills Passed To Help Homeowners.

For story update, see: O'Malley Signs Foreclosure-Relief Bills.

Boston Mortgage Broker Indicted On 21 Counts Of Forgery, Use Of Bogus Docs To Obtain Mortgages

In Boston, Massachusetts, The Boston Globe reports:

• A Boston mortgage broker was charged yesterday with using forged bank statements and tax returns and other false documents to help unqualified home buyers secure subprime loans. Nicole Lyder, whose loan practices were the subject of a Boston Sunday Globe story in January, was arrested Tuesday at a Norwood hotel by local police after the hotel manager suspected she was using a stolen charge card.

• Norwood police arrested her on two felony charges, for identity theft for using someone else's credit card to reserve the hotel room and for possession of an illegal substance, said Paul Bishop, a police department spokesman. Yesterday, Norwood police transferred her to state custody to face the mortgage charges.

• She was indicted last week by a Suffolk County grand jury on 21 counts of forgery and using false documents to obtain loans for home buyers, in a case brought by Massachusetts Attorney General Martha Coakley's office.

For more, see Mortgage broker charged with using false documents (Woman jailed after being found in Norwood hotel).

For the January, 2008 Boston Globe story on Nicole Lyder, see Broker's clients detail web of dashed dreams (Irregularities cited in five mortgages).

See also, WCVB-TV Channel 5: Mortgage Broker Charged With Fraud (Lyder Pleads Not Guilty To Charges).

Washington State Law Regulating Foreclosure Rescue Signed Into Law

In Washington State, The Peninsula Gateway reports:

• It’s going to become more difficult to scam Washington homeowners with unscrupulous foreclosure rescue schemes. Gov. Chris Gregoire signed into law Tuesday a bill that will protect those at risk of foreclosure from being duped into signing their homes over to third parties.

***

• House Bill 2791 cracks down on so-called “foreclosure rescue scams,” in which a third party claiming to act in the homeowner’s best interest offers to buy the home that is in danger of being foreclosed upon. They allow homeowners to lease their homes back, with the idea that they can re-purchase the home when their financial situations improve.

• “Instead, the lease terms are as out of reach as the original mortgage, and the homeowner ends up defaulting on them,” [state representative Pat] Lantz said. The bill will require all contracts in writing, allow a five-day right of cancellation for the homeowner that cannot be waived, and give those who peddle foreclosure rescue services a fiduciary duty. That means they are required by law to act in the best interest of the homeowner, and if they do not, they can be sued for up to triple the damages under the new law.

The effective date of the new law is June 12, 2008. For more, see Governor signs bill to help families.

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

Incomplete NY Foreclosure Creates Confusion As To Who's On The Hook For Code Violations On Abandoned House

In Lockport, New York, the Lockport Union-Sun & Journal reports on a legal tussle between homeowner David Stewart and mortgage company Investors One Corp., which is owed approximately $60,000 on the home Stewart abandoned three years ago. Apparently, Investors One doesn’t want the property either.

• Stewart was summoned to court this past November to answer four charges of violating state building code at 31 Elmwood Ave. He’s still the owner of record of the house he lived in for 17 years, then reportedly abandoned three years ago when he stopped paying the mortgage. In monthly appearances, Stewart has explained to the court, he was foreclosed on by Investors One Corp. and left the house long ago.

• In the meantime, city Prosecutor Matthew Brooks said, Investors One did not complete the foreclosure by taking title to the property. The Tuesday conference call was about getting Investors One’s attorney to acknowledge its ownership interest in the house. The attorney balked, initially, according to Brooks, but after the state definition of “owner” was read to him, he acknowledged the mortgage company technically might be on the hook.

***

• The case is complicated by the fact that the property appears on the City of Lockport’s annual tax foreclosure list. If back taxes totaling about $9,000 are not paid by April 30, the city will move to take the title and put it on the auction block this summer.

For more, see Housing court tries new tactic to get violations resolved.

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

Strong Arm Tactics Allegedly Used By Mortgage Lender; Delinquent Elderly Homeowner Claims Collector Showed Up At Front Door Demanding Payment

In Boston, Massachusetts, WCVB-TV Channel 5 reports:

• Scott Day and his wife, Vivian Martin, called themselves victims of outrageous harrassment by AIG American General Financial Services. The couple is one month behind on their mortgage payment. About 8:30 p.m. Monday night, they said someone from American General knocked on their door demanding the $2,000 payment. That was followed by what she called a nasty phone conversation with a woman from the mortgage company.

***

• Bruce Marks of the Neighborhood Assistance Corporation of America, which helps people facing foreclosure, said American General was using what he called strong-arm tactics usually associated with loansharks and the Mob. He said those tactics are now being employed by one of the largest insurance companies in the world.

For more, see Couple Decries Mortgage Company's Tactics (Company Representative Pays Nighttime Visit To Demand Money).

Editorial Note:

I wonder how much of a charge the mortgage company tacked on to the homeowners' bill for the evening collection visit.

Minneapolis Groups Sue Local House Flippers For Mortgage Fraud; Alleged Scam Involved 140 Homes, Most Vacant & In Foreclosure

In Minnesota, the Pioneer Press reports:

• Three north Minneapolis neighborhood groups, backed by the City of Minneapolis, are suing a Roseville company called TJ Waconia for mortgage fraud involving 140 homes, most of them now in foreclosure or abandoned. At a press conference today in north Minneapolis, Mayor R.T. Rybak said they are suing for unspecified damages, as well as to retake the houses themselves. There is no dollar amount on the damages to the city and neighborhoods in the lawsuit, which was filed in Hennepin County District Court, and it isn't clear how much money can be obtained from the company. The lawsuit doesn't name the lender who made many of the mortgages to straw buyers.

• Nonetheless, the lawsuit is the latest example of local governments swinging back at what they say are the villains in a foreclosure crisis that, for them, has become a community emergency. The cache of neglected and boarded up houses has blighted the area, dragging down neighboring property values, neighborhood leaders told reporters.

***

• The lawsuit names TJ Waconia LLC and various affiliates including TJ Holdings LLC, Total Title LLC, Absolute Appraisal LLC and CityWide Management LLC. Owners Thomas J. Balko, 37 of Rogers, and Jon E. Helgason, 44, of Chisago are also named. Balko was a licensed appraiser and Helgason a licensed real estate agent and broker, the lawsuit said.

• The lawsuit charges that between 2003 and 2005 Balko and Helgason systematically bought and flipped 140 houses in north Minneapolis, using inflating appraisals. Within a few months of buying, the men would flip the houses, selling them at significantly higher prices to buyers believed to be either straw buyers or investors affiliated with Balko and Helgason. The homes were then rented out to people, but the mortages left unpaid. [...] More than half of the 140 homes are in some stage of foreclosure, and nearly 110 are vacant, according to Mary Cullen Yeager, a partner at Faegre & Benson representing the plaintiffs.

***

• The groups are charging TJ Waconia with one count of violating a state private nuisance statute, four counts of violating the state Tenants Remedies Act by creating nuisance properties, one count of violating the state's Consumer Fraud Act and charges Balko and Helgason with two counts each of racketeering.

For more, see Minneapolis groups sue Roseville firm over foreclosures.

See also:

• Minneapolis Star Tribune: Minneapolis sues firm over mortgages: 'It's personal',
• Fox News 9: Minneapolis Files Lawsuit Against Firm Linked to North Side Foreclosures (City joins neighborhoods in suit against TJ Waconia),
• KARE-TV Channel 11: Minneapolis sues company over Northside foreclosures.

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

North Carolina Feds Indict Six In Alleged Mortgage Fraud Scheme Involving $15M In Loans On 270 Properties

In North Carolina, The Charlotte Observer reports:

• A federal indictment alleges mortgage fraud schemes in Mecklenburg and surrounding counties involving appraisers, lawyers, mortgage brokers, builders and investors and at least $15 million in loans on 270 properties. The indictment, charging six people and listing others as unindicted "co-conspirators," alleges a web of players, from companies accused of lying about homebuyers' income to builders who allegedly paid kickbacks. A subsidiary of Atlanta builder Beazer Homes and a local builder are included as unindicted co-conspirators. The indictments refer to them only by code names; the Observer used public records to identify them. The indictment, which details transactions from 2000 to 2004, elaborates on four alleged scams. The allegations, with names such as the "Flip Scheme" and the "Builder Kickback Scheme," are detailed through 19 home sales.

***

• Two of the six defendants were indicted last year in this same mortgage fraud case. Victoria Sprouse and broker Michael Pahutski face previous charges of bank fraud conspiracy, mail fraud and money laundering. Sprouse and Pahutski, both of Charlotte, now face new charges. [...] The new defendants are a Mooresville appraiser R. Michael Gee, Charlotte mortgage broker Jules A. Springs and two Charlotte real estate agents, Gregory A. Mascaro and Gregory D. Rankin.

Sprouse, a Charlotte real estate lawyer, was found liable in a 2007 civil mortgage fraud case and ordered to pay $746,983.

For more, see Indictment alleges web of mortgage fraud (6 people charged in cases involving loans on 270 area properties).

Go here for The Players Who was accused? (Six indicted and 11 unindicted co-conspirators).

See also, The Associated Press: Federal indictment charges in mortgage scheme (A $15 million mortgage fraud scheme in the Charlotte area has spawned more criminal charges).

Go here for other posts on this case.

Colorado Regulators Target Two Mortgage Brokers In Alleged Scheme To Pocket $80+K Of Client's Refinancing Proceeds

In Denver, Colorado, the Rocky Mountain News reports on an administrative enforcement action initiated by the Colorado Division of Real Estate against mortgage brokers Laura Ann Stearnes and Stephen Angelo Benaske in which the division seeks license revocation for both:

• The division alleges that Stearnes, while working with an out-of-state client she apparently met through an online dating service, fraudulently redirected the client’s refinancing proceeds of $80,890.38. Stearnes instructed the title company, First Integrity Title Agency, to wire the funds into an account owned by Benaske, who was Stearnes’ boyfriend. Benaske owns Broadway Mortgage Corp. in Denver.

• During the investigation, Stearnes admitted to using $24,000 of the borrower’s funds to pay off an auto loan for her Mercedes-Benz, the division said. The division also alleges that Benaske admitted to using $12,500 of the funds to pay for the development of his mortgage company’s Web site.

For more, see State acts against two mortgage brokers.

Go here for temporary suspension order - Laura Ann Stearnes.

Mass AG Files Suit Against Mortgage Broker For Allegedly Using Bogus Documentation

From the Massachusetts Attorney General's Office:

• Attorney General Martha Coakley’s Office filed a lawsuit against Lehi Mortgage Services, Inc. (“Lehi Mortgage”), a Quincy-based mortgage broker, alleging that Lehi Mortgage fraudulently procured mortgage loans by submitting to lenders asset and income information for loan applicants that was fabricated or inflated. The Attorney General’s Office is seeking injunctive relief to prohibit Lehi Mortgage from acting as a mortgage broker, civil penalties, and reimbursement of Commonwealth’s costs and attorney’s fees. This enforcement matter was referred to the Attorney General’s Office by the Massachusetts Division of Banks after an examination found brokering misconduct in numerous mortgage loans arranged by Lehi.

For more, see Massachusetts AG press release - Attorney General Martha Coakley Files Lawsuit Against Mortgage Broker For Fraudulently Arranging Loans.

In a related Mass AG press release on Lehi Mortgage, see Attorney General Martha Coakley Obtains Preliminary Injunction Against Quincy Mortgage Broker Accused Of Fraudulently Arranging Loans.

Judge Prohibits Fremont From Unloading Massachusetts Loans Without Buyer Consent To Abide By Court Mandate

In Massachusetts, the Boston Business Journal reports:

• Massachusetts Attorney General Martha Coakley's office said Tuesday it has obtained an expanded preliminary injunction order against California-based Fremont Investment & Loan. [...] The expanded injunction prohibits Fremont from assigning or selling Mass. loans owned by Fremont, or the servicing obligations on those loans, unless the buyer agrees in writing to be bound by the obligations set forth in a preliminary injunction, which was issued February 25.

Coakley reportedly said, "This decision reflects that lenders cannot escape responsibility for their illegal conduct and contribution to the foreclosure crisis simply by selling off their loans or servicing rights." For more, see Mass. AG gets expanded injunction against subprime lender Fremont.

See also:

• Massachusetts AG press release - Attorney General Martha Coakley Obtains Expanded Preliminary Injunction Against Subprime Lnder Fremont Investment And Loan,
• Court Order Modifying Preliminary Injunction,
• Preliminary Injunction: Commonwealth of Massachusetts v. Fremont Investment & Loan.

Financially Strapped Nebraska Seniors Reportedly Being Targeted As Reverse Mortgage Prospects

In Omaha, Nebraska, the North Platte Telegraph reports:

• An Omaha agency that helps homeowners facing foreclosure is concerned that senior citizens could be the target of a new wave of predatory lending that strips them of their home equity. Teresa Coleman Hunter, executive director and chief executive of Family Housing Advisory Services Inc. and Omaha 100 Inc., said that within the past week she has seen an increase in e-mails that appear to be from companies recruiting people to solicit senior citizens who are behind on mortgage payments but have equity in their homes. The companies purport to have “hot leads,” or data such as phone numbers, addresses, late payment history and loan-to-value ratios on senior citizens. The e-mails say little experience is needed for the job, and they promise commissions for each reverse mortgage secured.

• “It’s a recruitment to get in on the business of doing reverse originations on seniors,” Hunter said. “With the foreclosure crisis, that’s how people got into loans they couldn’t afford. Here it is again, with seniors that stand to lose a great deal. And I just don’t want it to happen.”

Source: Senior citizens urged to guard home equity.

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

Assembly Line, "Foreclosure Mill" Law Firms Enjoying Big Profits In Florida; Private Equity Firms Seek To Buy Out Back-Office Operations

In Tampa, Florida, The Tampa Tribune reports:

• Their work can be so repetitive that some are known, disparagingly or not, as "foreclosure mills." But the niche field of foreclosure law is profiting enormously from the boom in Florida home foreclosures and is on a hiring spree. [...] Because many law firms file foreclosures across Florida, the biggest firms' monthly foreclosure caseload can grow to a thousand or more, with each case carrying a potential attorney fee of up to $1,200 - although it's not clear what the firms' profit margin is.

***

• The foreclosure business is so strong that it has caught the eye of private equity investment firms, which buy companies using equity and debt financing. Private equity firms have begun buying the back-office foreclosure-processing operations from big law firms and are offering law firms outsourced foreclosure help. These outsourcing companies are keen on moving into Florida.

For more, see Law Firms Cash In On Foreclosures (A surge in foreclosure filings has Florida law firms scrambling for more staff). ForeclosureMillAttorneysAlpha

Ohio Announces Free Legal Assistance To Low Income Ohioans Behind On House Payments; Attorney Foreclosure Defense Training Ongoing

In Ohio, The Columbus Dispatch reports:

• Low-income Ohioans facing foreclosure now have access to free legal help. Gov. Ted Strickland and the Ohio Bar Association have mobilized 1,100 lawyers statewide to offer free legal services to those Ohioans who earn $54,000 or less to help them keep their homes. [...] In addition to free legal help, the campaign also offers homeowners a new foreclosure hot line, 1-888-404-4674, to call for help. Consumers can also access information on the Web site www.savethedream.ohio.gov.

For more, see Low-income Ohioans facing foreclosure offered free legal aid.

See also State adds free legal aid to foreclosure prevention effort:

• Gov. Ted Strickland, Ohio Supreme Court Chief Justice Thomas J. Moyer and several other state officials gathered Tuesday to announce it has added the legal component to its Save the Dream initiative [... . S]tate officials last month sent letters to more than 34,000 registered Ohio attorneys requesting they help provide free legal aid. As of Tuesday, more than 1,100 attorneys have registered. About 350 of those attorneys have received foreclosure training from the Ohio State Bar Association, while more training sessions are scheduled, officials said.

Maryland Real Estate Seminar Operator May Have Other Sidelines

The Maryland Daily Record recently ran a three part investigative report on local real estate investment seminar operators Lloyd and Vicki Irvin, a Prince George’s County couple who bill themselves as the King and Queen of Real Estate Investing. Reportedly, Mr. Irvin also counts a martial arts academy and cosmetic dentistry among his sidelines, even though he reportedly is not licensed to practice dentistry in Maryland, Virginia or Washington, D.C. From the report:

• The Web site for Lloyd Irvin’s martial arts academy contains a link to what appears to be yet another sideline of Irvin’s: cosmetic dentistry. That site, cosmetic-dentistry-maryland.com, says that “Dr Lloyd Irvin is a Cosmetic Dentist whose practice is located in Clinton Maryland.” Irvin, the site says, has “performed cosmetic dentistry on kids, adults and has performed cosmetic dentistry through the Maryland, Virginia and Washington DC” and “is now offering Cosmetic Operations starting at $15,000.” Lloyd Irvin is not a dentist licensed to practice in Maryland, Virginia or Washington, according to local licensing agencies. [...] According to the Web site for Lloyd Irvin’s martial arts academy, lloydirvin.com, Irvin has “taught many different law enforcement and military agencies including the Secret Service, FBI, NAVY SEALS, DEA, SWAT and Bounty Hunters.”

For more on the three part report, see:

• Irvin's Web site alludes to career as cosmetic dentist,
• Nastiness smells like money, and other real estate secrets (on the Irvins' real estate investment seminar business; reportedly a $72,000 value that makes it “a steal” at the price of $6,500),
• Lessons in loss; or TRY HERE - 2nd story from the top of page - for a recopied version of the story (on a lawsuit brought by a financially strapped local homeowner against a recent graduate of the Irvin's real estate seminar in connection with a real estate transaction in which the novice investor reportedly used "techniques" taught at the seminar)..

Addendum:
A representative from Maryland Real Estate Secrets has been in contact with The Home Equity Theft Reporter and has advised that Lloyd Irvin is a nationally recognized internet marketer who works with professionals in various niches and that one of his present projects is working with a dental marketing company on strategies to achieve higher search engine rankings for doctors in the cosmetic dental profession. Further, Mr. Irvin's cosmetic dentistry web link is part of the project designed to determine the potential of obtaining a high internet ranking in the cosmetic dentistry and accordingly, is nothing more than a test site designed for marketing purposes and intended to assist dentistry professionals.

Builder Stiffs Bank, Subcontractor, Leaving 38 Homeowners In Pittsburgh-Area Development Facing Foreclosure

In Allegheny County, Pennsylvania, KDKA-TV Channel 2 reports on 38 homneowners in one development who face foreclosure despite all having paid their mortgage and real estate tax payments:

• [M]ore than three dozen condos in West Deer are up for sheriff's sale at no fault of the owners. The condos at the Hunt Club development are worth more than $180,000 each. [...] The problem lies with the condo developer - Links Development Company of Murrysville.

• A few months ago, Links defaulted on a loan from National City for $2.5 million forcing all of the land in the subdivision into foreclosure. On top of that, the developer owes Richland Properties another $1 million for the landscaping the property. Since Richland hasn't been paid, it's bringing all of the condo owners to sheriff's sale where the condos will be offered to the highest bidder. [...] The company also has dozens actions filed against them in civil court for non-payments of debts and taxes.

For more, see Developer's Debt Pushes Condos To Sheriff's Sale (Condo Owners Paid Mortgages, Taxes; Developer Defaulted On Loan, Landscaping Bill) (read story) (watch video).

See also Pittsbugh Tribune Review: West Deer condo owners may lose homes.

For story updates, see:

• (4-11-08) West Deer sheriff sale delayed (Judge Timothy Patrick O'Reilly this week ordered that the planned June 2 sheriff's sale of 38 condos at The Hunt Club at Grandview Estates be delayed until Oct. 6),
• (4-7-08) Task Force To Probe West Deer Condo Developer (The matter has been turned over to the US Attorney's Mortgage Fraud Task Force )

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

Loans, Liens, Lawsuits Leave Phase I Of 1,789 Acre Central Florida Development In Limbo

In Central Florida, the Charlotte Sun-Herald reports:

• Tern Bay Golf & Country Club Resort, the first phase of a 1,789-acre, 1,810-home development, is now owned by the landscaper. And Scott Hawkins will sell it to you -- to anyone -- for the $300,000 he's owed on the stalled project.

• One caveat: "You can't build a house, can't get a permit, can't do anything until this thing is settled," he said. Which means Tern Bay will continue to languish in a limbo of defaulted loans, dead-end liens and dueling lawsuits.

• Hawkins, president of Hawkins Environmental Inc., of Daytona Beach, is among a bevy of contractors, banks and investors with liens filed against Tern Bay LLC, the project's developer, for unpaid wages and expenditures. "There are a lot of people who are owed a lot more money than I am," he said. "I was just the one who got the ball rolling."

For more, see Limbo of loans, liens, lawsuits (Burnt Store's stalled Tern Bay project a tangled tale of default and disappeared developer).

Washington Mutual, Countrywide Accused Of Illegally Booting Oakland Tenants In Foreclosed Homes

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

• Renters in the East Bay have been forced out of their homes because the owners of those homes have defaulted on their loans. One Oakland grandmother is facing eviction by Washington Mutual bank even though it's illegal in Oakland to force out a renter for any reason other than just cause.

***

• Since 2002, when Oakland passed Prop EE, it's been illegal for a landlord to evict a tenant unless they have just cause and a foreclosure [doesn't] change that. The East Bay Community Law Center in Berkeley is trying to help [one tenant] and dozens of others keep their homes. [...] Oakland doesn't know how many of these illegal renter evictions are going on, but City Attorney John Russo says he's put banks and eviction agencies on notice.

***

• WaMu returned our calls to say that although their attorney's names appear on all the eviction notices that [one tenant] received the loan belongs to Countrywide.

For more, see WaMu kicks out renters. equity skimming unwittingly epsilon

Evidence Of Countrywide's Missteps In Servicing Home Mortgages Litter Court Files Around The Country

A story was run recently in The Atlanta Journal Constitution on a fight Countrywide Home Loans faces with the U.S. Trustee in a Georgia Federal bankruptcy court for alleged mistakes and/or misconduct during the course of one particular consumer bankruptcy case. The story also describes the wrath directed towards Countrywide by judges around the country as a result of its "missteps" committed both in the servicing of home loans and in its conduct in the courts:

• A Texas judge, Jeff Bohm, rebuked Countrywide, Atlanta-based McCalla Raymer and a Texas law firm in a 72-page ruling [Judge Bohm's two-part ruling - Part I and Part II]. He found fault with each of the three parties' handling of a case in which Countrywide sought permission to foreclose on a homeowner who was up to date on payments. The Texas law firm hired by McCalla Raymer was singled out by the judge. "Above all else, what kind of culture condones its lawyers lying to the court and then retreating to the office hoping that the Court will forget about the whole matter?" Bohm wrote.

***

• In Ohio and Florida, the U.S. Trustee's office has filed complaints in the past month seeking sanctions against Countrywide. In Ohio, Countrywide sought payments in bankruptcy court from a homeowner who had already paid off Countrywide. In Florida, Countrywide tried three times to foreclose on a homeowner who no longer owed Countrywide any money on the property.

• Countrywide has already been sanctioned in other cases. A judge in Pennsylvania sanctioned the lender for trying to foreclose on a couple in that state who had made required payments "like clockwork," according to the judge.

• Countrywide's Texas law firm was hit with a $75,000 sanction for its behavior in a case that included court filings that were "erroneous" and "clearly legal nonsense."

• A judge in North Carolina sanctioned Countrywide for twice changing the locks on a house that it had sought to repossess, even though the foreclosure had been stopped by a bankruptcy filing. Countrywide's agents disposed of the family's Christmas ornaments, family pictures and a christening dress when it improperly seized the home. "It is difficult to imagine more deliberate, unwarranted and egregious conduct," Judge Catharine R. Carruthers wrote when sanctioning Countrywide.

For the article, see Couple lose home in Countrywide dispute, but may yet win (Feds seek sanctions, say lender abused bankruptcy laws).

For an article examining mortgage companies frequent non-compliance with law in consumer bankruptcy cases, see Misbehavior and Mistake in Bankruptcy Mortgage Claims, by Katherine M. Porter University of Iowa - College of Law.

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

Novice Maryland Real Estate Operator Learns "Tricks Of The Trade" From Local Investment Seminar; Now Being Sued By Homeowner

in Prince George's County, Maryland, The Maryland Daily Record reports on a local financially strapped homeowner who was allegedly screwed out of the equity in her home and is now suing to stop the resale of the house.

The main focus of the story, however, is the promotion of the real estate seminars that are teaching the techniques to the novice real estate investors who pulled off the alleged scam in this story.

• [Homeowner Monica] Hill’s story might be just another tale of a financially troubled homeowner entering into a bad deal, were it not that the investors involved in the deal are linked to a pair of real estate investment teachers who have taught their techniques to, by their own account, hundreds of people.

• Consumer lawyers say they suspect that many of the people running foreclosure rescue scams and home-equity thefts are coming out of real estate investment programs, but it is usually difficult to connect individual investors with the people who taught them.

• In this case, however, the woman who bought Monica Hill’s house, LaKisha White, testified in court that she had learned how to be an investor from Lloyd and Vicki Irvin, a Prince George’s County couple who run a program called Maryland Real Estate Secrets and bill themselves as the King and Queen of Real Estate Investing [...].

***

• Del. Doyle L. Niemann, D-Prince George’s, said he considers real estate seminars and the investors they train to be a real problem in his district. [...] Both [executive director of Civil Justice Inc. Phillip] Robinson and [director of research and policy Robert J.] Strupp of the Community Law Center, represent scammed homeowners. Though they cannot usually make a connection between the perpetrators and real estate investment schools, they believe many of those defrauding or misleading people learn from seminars. [...] Strupp and Robinson said the real estate investment programs they have seen generally involved instructors recommending real estate professionals — Realtors, settlement agents, title lawyers — who will look the other way while shady deals are done.

For more, see Lessons in loss.

Addendum:

A representative from Maryland Real Estate Secrets has been in contact with The Home Equity Theft Reporter and has advised that it had absolutely no dealings with LaKisha White as it related to her handling of Monica Hill's property, it never provided Ms. White with any advice regarding any deal with Ms. Hill, and further, that it lost track of her shortly after her attendance at one of the seminars.

Georgia Legislature Attempts To Address "Mortgage Note Ownership" Issue In Home Foreclosures

In Georgia, an opinion article in the Atlanta Journal Constitution addresses the confusion taking place with home foreclosures in the state where the company bringing the foreclosure action doesn't own the promissory note being enforced:

• The General Assembly is attempting to reduce the confusion by requiring clear proof of mortgage ownership before a foreclosure can proceed. But its efforts have been stymied by banks reluctant to come clean on ownership, and there are suggestions the Legislature may put off definitive action until next year.

***

• "We want to be able to be certain that our clients are being foreclosed on by the legal entity that has standing," says William Brennan, director of Atlanta Legal Aid's Home Defense Program. "And we want to know who to talk to about the foreclosure. Now, we often don't know who holds the note."

***

• Even if 5,000 investors own a piece of a mortgage, the mortgage owner is considered to be the trustee bank that manages the pool. But rather than have to deal with desperate homeowners, those banks prefer to let contractual servicers —- companies that collect the monthly payments or record the deeds —- become the public face of foreclosure while they lurk in the shadows. Those servicing agencies have no incentive to negotiate with borrowers. Lawyers have complained to the Legislature that they can't even get a live person on the phone to talk about a pending foreclosure, leaving homeowners stranded.

For more, see Owning up to a crisis (Georgians faced with foreclosure have a right to know who exactly holds their mortgage) (if link expires, try here or try here).

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, Go Here, Go Here, and Go Here. missing mortgage foreclosure docs beta

Ranks Of Attorneys Willing To Represent Homeowners In Predatory Lending Cases On The Upswing

In New York City, the Staten Island Advance reports:

• [T]he legal landscape is changing and more local lawyers are willing to represent homeowners against banks that made high-interest, problematic subprime loans. "Their ranks have been growing. Over the last two weeks, we've gotten several more private attorneys calling to say they can handle cases," said Margaret Becker, director of the Homeowner Defense Project at Staten Island Legal Services in St. George.

***

• A Harvard Law School graduate who said she was once misled on the interest rate she received on a home equity line of credit, Ms. Becker recently conducted a course on foreclosure defense for members of the Richmond County Bar Association.

• She makes a point of telling attorneys that they can win back their fees and expenses from banks if they are successful in their claims against those lenders. That's important because most people in default don't have the money to pay for lawyers, and proving mortgage fraud can be a complex and costly process.

• One legal recruit is Robert Brown, an Annadale resident and retired New York City police captain who graduated from St. John University's Law School in 2000. Brown is carving out a niche bringing violation of truth-in-lending claims on behalf of the clients he represents, [...].

For more, see New legal arsenal to battle bad loans.

For a story involving a Staten Island couple who recently obtained a favorable court decision against a mortgage lender for violating a New York State anti-predatory lending statute, see:

• Staten Island Advance: Stuck with a bad loan, a Staten Island family fights back (if link expires, try here),
• ABC News: Fighting Back Against Foreclosure (New York Judge Denies Foreclosure Based on Alleged Predatory Lending),
• For the court decision itself: LaSalle Bank, N.A. v Shearon, Supreme Court, Richmond County, 2008 NY Slip Op 28032 (January 28, 2008),
• Kelley Drye & Warren LLP newsletter: LaSalle Bank v. Shearon: A Harbinger of Things to Come (New York Supreme Court Rules in Favor of Borrower on Defensive Claims Under State’s Anti-Predatory Lending Law).

For other posts on homeowners using Federal & state consumer protection statutes to try and undo bad mortgage loans, Go Here and Go Here.

Editorial Note:

The significance of attorney "fee shifting" statutes, which are commonly a part of Federal and state consumer protection statutes, anti-unfair labor statutes, civil rights cases, etc. and allow for attorneys to win back their legal fees and expenses from the losing party in a successful case, can't be emphasized enough. For an example of one case where the lawyers representing aggrieved parties were allowed to win back their legal fees as a result of such a "fee shifting" statute, see NY BigLaw Leader Scores $1 Million Fee in Pro Bono Case (or go here for the actual court decision itself).

Colorado Home Builder Indicted By Local Prosecutor In Alleged Mortgage Fraud Scam Leaving New Homebuyers Facing Foreclosure

In Weld County, Colorado, the Grand Junction Sentinel reports:

• [M]ark Strodtman was indicted last week by a Weld County grand jury in a mortgage fraud case that caused homeowners to go into foreclosure. According to the indictment, Strodtman and another man, Dean Juhl, who was indicted for mortgage fraud last year, bought a group of land parcels in Greeley in 2004 and received financing to build homes on the lots. Strodtman then deceived buyers to purchase homes owned by his real estate company, JS Real Estate LLC, and lenders to buy loans for the land. Buyer’s incomes, assets, rents, employments, bank records and outstanding loans were falsified, the indictment said. Strodtman is charged under the Colorado Organized Crime Contract Act with 11 counts of theft, 11 counts of forgery and one count of racketeering. He faces up to 48 years in prison if convicted.

For more, see Developer accused of swindling homebuyers.

Victims Of Newark, Ohio Foreclosure Rescue Operator Coming Forward

In Licking County, Ohio, The Newark Advocate has recently run a number of stories on the alleged victims of the now-indicted foreclosure rescue operator, Harry Blausey. For the stories, see:

• Some Licking County residents dealing with the foreclosure blues (Family could lose home, blame indicted suspect),
• Instead of finding helpers, homeowners found predators (Foreclosure fears became worse than imagined),
• Recorder raised suspicions 2 years ago,
• Local Realtors, lenders search for solutions to crisis.

Go here for other posts on foreclosure rescue operator Harry Blausey.

Profits, Scrutiny Mount For "The Foreclosure Machine"

According to a column in The New York Times:

• Nobody wins when a home enters foreclosure — neither the borrower, who is evicted, nor the lender, who takes a loss when the home is resold. That’s the conventional wisdom, anyway.

• The reality is very different. Behind the scenes in these dramas, a small army of law firms and default servicing companies, who represent mortgage lenders, have been raking in mounting profits. These little-known firms assess legal fees and a host of other charges, calculate what the borrowers owe and draw up the documents required to remove them from their homes.

• As the subprime mortgage crisis has spread, the volume of the business has soared, and firms that handle loan defaults have been the primary beneficiaries. Law firms, paid by the number of motions filed in foreclosure cases, have sometimes issued a flurry of claims without regard for the requirements of bankruptcy law, several judges say.

***

• Law firms and default servicing operations that process large numbers of cases have made it harder for borrowers to design repayment plans, or workouts, consumer lawyers say. “As I talk to people around the country, they all unanimously state that the foreclosure mills are impediments to loan workouts,” [one consumer advocate] said.

For more, see Foreclosure Machine Thrives on Woes (if no subscription, try here).

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

Elderly Ohio Widow A Victim Of Equity Stripping

In Licking County, Ohio, The Newark Advocate reports on now-former homeowner Reathel Patterson, who reportedly wound up being screwed over by someone purportedly willing to help save her home in a foreclousre rescue situation, but who merely stripped the equity from the home and allowed it to go into foreclosure.

• "He came in and said he'd buy the mortgage if I'd let him buy 40 acres of my land," Patterson said. "He'd redevelop it and give me, I believe, 34 percent of the proceeds." The man from northern Ohio was not Harry Blausey, charged two weeks ago with 30 counts related to an alleged mortgage fraud scheme, but some of Patterson's allegations from two years ago appear similar to current claims.

• Patterson's "savior" did not make the mortgage payments he said he would and used her home to borrow $180,000, Patterson said. She lost her home of 31 years, most of her belongings and all 60 acres of land. The bank resold her home and property for $284,000, she said. "I thought it was all legal, but he lied so much," Patterson said.

• "The bank made us get out right now. I've cried and done everything but kill myself." Patterson, 69, who now lives at Newark Healthcare Centre, said she tried to enlist the help of an attorney, but he wasn't interested.

For more, see Instead of finding helpers, homeowners found predators (Foreclosure fears became worse than imagined).

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

Countrywide Facing Fight With U.S. Trustee After "Missteps" With One Georgia Homeowner In Bankruptcy

In Georgia, The Atlanta Journal Constitution reports on the story of a Cherokee County couple, Robin & John Atchley, who reportedly lost their home after a fight with Countrywide Home Loans.

• Unlike many families caught up in the mortgage meltdown, the Atchleys did not lose their house because they couldn't make their mortgage payments. They lost it because of the expense and frustration of trying to force Countrywide to comply with bankruptcy laws that are supposed to offer a safe harbor to committed homeowners.

• The massive California-based lender and its Atlanta law firm, McCalla Raymer, went to bankruptcy court twice within three months seeking permission to foreclose, claiming the Atchleys had not paid the mortgage. But the Atchleys' lawyer produced receipts in both cases proving that the Atchleys had indeed made their payments.

• The problems didn't end there. The family says that Countrywide repeatedly billed them for inappropriate fees and charges that pushed the cost of the mortgage beyond their reach. About the time their children hesitated to ask for lunch money, Robin and John Atchley decided enough was enough.

• They sold the house and paid Countrywide a balance that they thought was well above what they really owed. Their children got in the car with their suitcases and the family moved in with Robin's parents until they could save enough money to rent a house nearby.

***

• The Atchleys moved on months ago. But someone with considerable resources decided recently to take up the fight. The Justice Department's United States Trustee in Atlanta attracted national attention in late February by going to court asking for sanctions against Countrywide for its actions in the Atchley case.

For the rest of this lengthy article, see Couple lose home in Countrywide dispute, but may yet win (Feds seek sanctions, say lender abused bankruptcy laws).

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

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

Out Of Cash & Unable To Finish Custom Homes, Some Builders Stick The Bank With The Deed & Take A Hike

In Cedar Hill, Texas, WFAA-TV Channel 8 reports on some local builders walking away from unfinished custom homes:

• "He just gives the deed back and says: “Listen, I can’t do it,” gives it back to the bank, and then the bank has to turn around and sell it," said Connie Zetterlund, realtor. It's happened quite a bit in the Lake Ridge development of Cedar Hill. Several dozen large, custom, lake-view homes have been abandoned by builders. Some of them were originally projected to be worth more than a $1 million.

***

• Banks and realtors aren't the only ones affected by abandoned homes. Neighbors also worry about the affect on property values. The problem's even more acute if the existing home's for sale are next to a warped, weather-beaten shell.

For more, see Homes abandoned in Cedar Hill (Builders unable to complete homes simply left them).

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

Humane Society Establishes Foreclosure Pets Fund

From The Humane Society of the United States:

• To help keep families and pets together through foreclosures and financial crisis, The Humane Society of the United States has created a new grant program for shelters and rescue groups. Pets have been among the voiceless victims of the current economic downturn. Animals have been left behind in foreclosed homes, and shelters are reporting that families are struggling to keep and feed pets. To ease the current hardships, The HSUS is offering grants to animal shelters, non-sheltered rescue/adoption groups and animal care and control agencies to help establish, expand, or publicize services or programs that assist families in caring for their pets during the current economic crisis.

For more, see The HSUS Launches Grant Program to Help Families Care for Pets Through Tough Financial Times.

Moratorium On Water Shut-Offs For Tenants In Foreclosed Homes To Continue In East Bay

From the East Bay area of Northern California, the San Francisco Chronicle reports:

• The East Bay's largest water agency agreed Tuesday not to shut off service to tenants in foreclosed apartment buildings for the time being, but stopped short of authorizing liens on the property for bills their landlords have not paid. The Board of Directors of the East Bay Municipal Utility District unanimously agreed to continue a moratorium begun last month on water shut-offs to multi-family buildings whose owners stopped paying the water bill.

***

• The board's action was criticized by Just Cause Oakland, a tenants-support group that had lobbied for a permanent end to water shut-offs where tenants are not at fault for unpaid bills. [...] The board agreed that it would revisit its policy for multi-family buildings in three to four months. [...] Advocates for tenants and some Oakland officials have complained that the surge in foreclosures has caused a sharp increase in attempted illegal evictions in foreclosed rental properties.

For more, see EBMUD won't leave tenants high and dry. equity skimming unwittingly epsilon