Northern Virginia Woman Charged In Real Estate "Open House" Thefts

In Loudon County, Virginia, The Washington Post reports:

• A Leesburg woman posed as a home buyer at dozens of open houses in Loudoun County and stole items, including prescription drugs, jewelry and firearms, from four of them while real estate agents were elsewhere in the homes, law-enforcement officials said yesterday. Lauren E. Cooke, 24, who worked for a local moving company as a marketer, also burglarized four houses that were not on the market, officials said. She has been charged with 34 counts, including grand larceny, burglary, possession of a controlled substance and credit card fraud in the theft of items totaling nearly $200,000, they said. She is being held without bond at the Loudoun County Adult Detention Center.

***

• [Loudoun County Sheriff's Office spokesman Kraig] Troxell said open houses can present an opportunity for criminals to roam freely in a home with little supervision. He urged sellers to hide valuables before showing their homes.

For more, see Woman Charged in Thefts at Open Houses (Homes Not on Market Were Also Targeted, Authorities Say).

Retirement Accounts Being Depleted In Attempts To Save Homes from Foreclosure

ConsumerAffairs.com reports:

• Struggling to save their homes from foreclosure, more Americans are raiding their 401(k) retirement accounts to pay their bills -- and getting slammed with taxes and penalties in the process. Rather than borrow money from their 401(k) accounts, which would have to be paid back, a growing number of beleaguered families have been cashing out, according to retirement plan administrators. [...] Merrill Lynch found that [at plans that it administers] the primary reason for the rise in hardship withdrawals was to prevent foreclosure or eviction.

For more, see Homeowners Raiding Retirement Accounts to Avoid Foreclosure (Fees and penalties for early withdrawals can be severe).

Six Charged In Indianapolis Mortgage Fraud Racket Involving $38M In Mortgages & 568 Homes, Say Authorities

In Indianapolis, Indiana, The Associated Press reports:

• Six men have been charged with theft and fraud in the purchase and resale at inflated prices of hundreds of homes in Indianapolis. Authorities say the men took out almost $38 million in mortgages under fake companies they created, buying and then reselling 568 homes across the city. Investigators say they never paid the mortgages on the homes they bought, sending properties into foreclosure. Authorities identified the six men as Mehran Valiyi of Indianapolis, Brian Beach of Greenwood, Marcus Ward of Carmel, Ladarius Patrick of Fishers, Omar Dillard of Fishers and Preston Forte of Chicago. A Marion County Jail officer says Forte and Patrick had not been taken into custody, and the others were released on bond.

Source: Six charged with fraud in purchase of hundreds of properties.

See also, WISH-TV Channel 8: Six men charged in mortgage fraud schemes.

Texas AG Shuts Down State Business Operations Of Florida-Based Foreclosure Rescue Firm

From the Texas Attorney General's Office:

• Texas Attorney General Greg Abbott has shut down a fraudulent “foreclosure rescue” firm that preyed on hundreds of struggling Texas homeowners. An order by the Bexar County District Court requires Foreclosure Assistance Solutions Inc. of Florida, and its principal operators, Herb Zerden and Adolfo Quintero, to return $370,000 to 338 Texas homeowners. Additional defendants J.W.W. Services Inc. of California and owner John Woodruff are also included in the judgment. Another $105,000 will be held in escrow to assist remaining homeowners who can demonstrate they were victimized by this scheme.

***

• Today’s settlement requires the defendants to pay $100,000 in civil penalties and $175,000 in attorneys’ fees. The judgment also prohibits the defendants from conducting Texas-based mortgage foreclosure mitigation in the future.

For the entire Texas AG press release, see: Attorney General Abbott Obtains Judgment That Brings Relief To Foreclosed Homeowners (Foreclosure Assistance Solutions and owners must return $475,000 to harmed homeowners).

See also:

• Agreed final judgment and permanent injunction - Foreclosure Assistance Solutions, et al.,
• Original Texas AG's lawsuit (9/2007) - State of Texas vs. Foreclosure Assistance Solutions, et al.,
• Other posts referencing Foreclosure Assistance Solutions.

St. Paul "To Turn The Screws On Lenders" For Blight Caused By Vacant Foreclosures

In St. Paul, Minnesota, the Pioneer Press reports:

• The city of St. Paul, grappling with a growing list of abandoned buildings now 1,700 homes long, is taking a swing at national lenders in a stepped-up effort to tackle the foreclosure crisis. A highlight of the city's game plan, announced Wednesday, is hiring a lawyer from the St. Paul-based Foreclosure Relief Law Project to advise on legal strategies to turn the screws on lenders such as Wells Fargo & Co., U.S. Bancorp and Deutsche Bank AG. The city said a small group of large lenders is responsible for many of the abandoned properties St. Paul is struggling with, neglecting the buildings and leaving them to deteriorate. "We want to be clear: If they don't come to the table, we're going to go after them," St. Paul Mayor Chris Coleman told reporters.

***

• St. Paul appears to be borrowing a page from the foreclosure playbook used by the cities of Cleveland and Buffalo, N.Y. Those cities have sued major lenders and servicers in recent months, accusing them of failing to take care of properties after foreclosure.

For more, see St. Paul goes after national lenders in effort to battle foreclosure blight.

See also:

• Minneapolis Star Tribune: St. Paul looks hard at fallout of foreclosure (The city announced strategies to get owners of foreclosed and vacant properties to take responsibility for them),
• KARE-TV Channel 11: St. Paul to get tough with lenders in foreclosure crisis (According to police, many vacant homes have been the target of arsonists. Thieves have been known to break in and take out copper piping and appliances. Vandals have broken in and used them as sites for parties where the home is left trashed and full of graffiti),
• Minnesota Public Radio: St. Paul threatens legal action against banks that own vacant houses.

Go here for posts on the approach taken by the City of Buffalo, NY towards foreclosing lenders and its vacant houses.

To view Buffalo's lawsuit against a host of lenders on account of the blight caused by the abandoned houses in foreclosure, see City of Buffalo v. ABN Amro Mortgage Group Inc., et al. (3.67 MB; available online courtesy of the law firm Skadden, Arps, Slate, Meagher & Flom LLP). If there's a problem with this link, email me at HomeEquityTheft@yahoo.com and I'll email it to you (please put "City of Buffalo v. ABN Amro" in the subject line).

Go here for posts on Cleveland's lawsuit against 21 investment banks involving neighborhoods blighted by vacant foreclosures.

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

Title Insurance Agent Charged With Writing Bogus Policies After Being Fired

In Central Florida, The Tampa Tribune reports:

• An insurance saleswoman was arrested [last week] on charges she stole roughly $38,000 by writing bogus title insurance policies. Sharon H. Jhagroo, 41, used to work for Old Republic National Title Insurance, but that relationship was severed as of March 31, 2007, said Lt. John Womer of the state Department of Financial Services' insurance fraud division. Jhagroo, however, continued to write title insurance policies, from April, 2007 through January, as if she were still working for Old Republic, according to investigator Steven E. Firestone. She wrote 48 bogus policies and collected $38,104.29 in premiums, which she kept for herself, documents show.The St. Petersburg woman was charged with grand theft and selling insurance without a license. The latter charge is applicable when an insurance agent is no longer working for a company, Womer said.

***

• According to arrest affidavits, Jhagroo left real estate buyers and lien holders in a lurch after selling them the bogus policies. Womer said Old Republic made the victims whole once the fraud was discovered, and will assume the loss.

For more, see Insurance Agent In St. Pete Charged With Grand Theft.

St. Louis Feds Get Guilty Plea In Mortgage Scam

In St. Louis, Missouri, the St. Louis Business Journal reports:

• Christopher Rakel, a real estate broker in St. Louis, Mo., pleaded guilty to fraud charges involving a scheme to defraud banks and other mortgage lenders, U.S. Attorney Catherine Hanaway said Thursday. Rakel, 29, of St. Louis County, pleaded guilty to one felony count of conspiracy to commit bank, wire and mail fraud, and one felony count of money laundering in a scheme that involved dozens of properties, and a number of co-conspirators, including investors, mortgage brokers and appraisers, according to a release from Hanaway's office.

For more, see Rakel pleads guilty to fraud, money laundering.

Broker Intimidation Used To Illegally Harass Tenants Out Of Foreclosed Homes, Says Oakland Lawsuit

In Northern California, The Oakland Tribune reports:

• The city of Oakland filed suit Monday in Superior Court against [Walnut Creek's Tri-County Properties licensed real estate broker Craig] Jarvis, accusing him of forcing tenants from foreclosed properties through intimidation and harassment. Oakland City Attorney John A. Russo said Jarvis' citing of the Civil Code was bogus while the City's Just Cause Ordinance expressly forbids eviction of tenants from a property that has been foreclosed. Jarvis could not be reached for comment. The attendant who answered his phone said he was "in court on eviction hearings."

***

• Russo estimated at least 10 families were treated in similar ways. He said the bigger concern, however, is how many other real estate brokers are doing the same thing — pushing tenants out so lenders can dispose of their foreclosed properties more quickly. "This is the worst type of bottom feeding," from which real estate and mortgage brokers and banks win tremendous profits, said Russo.

• The suit accused Tri-City Properties of engaging in practices that put honest practitioners at a competitive disadvantage. It cited Jarvis' violations including intimidating tenants to take paltry "cash for keys" offers that do not reflect the actual cost of the move for the tenant; turning off tenants' heat and electricity; refusing to return tenants' phone calls in reply to notices to vacate; refusing requests for information about the foreclosure or the identity of the new property owner; claiming to have instituted eviction proceedings against the tenant or threatening to do so if they do not comply with his demands; and citing incorrect legal authority to lend an aura of legitimacy to his demands.

• Russo urged Oakland tenants so threatened as well as homeowners who risk foreclosure to call the Oakland City Attorney's hot line: 510-BE-ALERT or 510-232-5378.

For more, see Suit: Broker harassing Oakland tenants (City alleges 10 families may have been intimidated) (if link expires, try here).

See also, San Francisco Chronicle: Oakland sues landlord, claims illegal evictions.

Go here for posts on illegal evictions in violation of the "just cause" ordinance (Prop EE).

Queens Homeowners Facing Foreclosure Begin To Fight Back; Are In "Better Position Than Ever" To Get Court Sympathy, Says Local Housing Advocate

In New York City, The Daily News reports:

• For years, the rapid judgments in favor of banks by Queens judges led housing activists and lawyers to grimly dub the process a "foreclosure mill." Even if the lenders were fly-by-night operations, borrowers rarely showed up in court to challenge them, said Josh Zinner, co-director of the Neighborhood Economic Development Advocacy Project.

• "The judges never looked carefully at these loans," Zinner said. But with new attention on the subprime lending meltdown, victims of shady mortgage brokers are more likely to see favorable judgments, advocates said. "The way the courts are seeing it right now, if there's fraud involved, you're in a repairable situation," said Peggy Morris, director of Jamaica Housing Improvement, an advocacy group. "If you have some money, you can stand your ground," said Morris, who has steered many homeowners to private attorneys. Morris said owners are in a better position than ever to get sympathy from the courts.

***

• [Attorney Howard] Sherman, who has handled 40 cases in Queens and charges a set fee, said judges have come to "understand that the people who were wronged were the borrowers." "One judge summed it up: '14,000 Queens residents can't be wrong,'" Sherman said.

For more, see Justice on side of loan victims.

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

Illinois AG Files Civil Charges Against Mortgage Broker For Deceptive Practices; Homeowners Facing Foreclosure Among Those Targeted

From the Office of the Illinois Attorney General:

• [A]ttorney General Lisa Madigan [...] filed a lawsuit in Cook County Circuit Court against a Chicago-based mortgage broker for engaging in deceptive lending practices that have resulted in the loss of at least one consumer’s home. Madigan’s lawsuit, filed against Advantage Mortgage Consulting, Inc. and President Robert Enright, alleges that the defendants employed a variety of schemes to convince consumers— including many on the brink of foreclosure—that they would pay lower monthly mortgage payments when, in fact, their monthly rates later increased significantly. Specifically, the defendants used deceptive refinancing schemes, padded loans with higher than stated fees, failed to disclose prepayment penalties and brokered adjustable rate mortgages with consumers who believed they were agreeing to fixed-rate mortgages, according to the complaint.

***

• Attorney General Madigan’s Consumer Fraud Bureau has received 20 complaints against Advantage Mortgage Consulting. The lawsuit seeks a court order prohibiting Advantage Mortgage Consulting from engaging in deceptive business practices and imposing a civil penalty of $50,000 for each violation committed with the intent to defraud and a $10,000 penalty for each instance where a violation was committed against a person 65 years of age or older. Further, the suit asks the court to rescind the contracts signed as a result of these deceptive practices and offer full restitution to affected consumers. Finally, Madigan’s suit asks the court to order the defendants to pay all costs associated with the investigation and prosecution of the lawsuit.

For more, see Madigan Files Suit Against Chicago Mortgage Broker For Deceptive Practices.

NY AG Charges Niagara Falls Man With Grand Larceny, Seeks Criminal Contempt Of Court Order In House Flipping Scam; Craigslist Ads Used To Find Victims

From the New York Attorney General's office:

• Attorney General Andrew Cuomo today announced his office is seeking a criminal contempt-of-court order against a Niagara Falls man who tried to defraud investors through a Western New York house-flipping scheme after he was ordered not to. He is also being charged with Grand Larceny for allegedly taking nearly $52,000 from one investor.

• Joseph Furan, 39, of Lockport Road in Niagara Falls, faces criminal contempt of court for 13 violations of a prior court judgment by fraudulently advertising properties on the popular Internet classified site Craigslist. Each violation can carry a maximum jail term of 30 days and a $1,000 fine. Furan is also facing the felony charge of Grand Larceny in the Third Degree for selling two properties to an investor over the Internet – and then not providing the titles.

For more, see Attorney General Cuomo Seeks Jail For Fraudulent, Habitual Western New York House-Flipper.

For details of Furan’s original scheme, see Cuomo files suit against Niagara Falls man who tried to sell bogus properties in and around Buffalo (Attempted to defraud investors through an eBay house-flipping scheme).

Foreclosure Moratorium "Not Required Or Legal", Local Judge Tells Philly City Council

In Philadelphia, Pennsylvania, the Philadelphia Daily News reports:

• Common Pleas President Judge C. Darnell Jones told City Council yesterday that a moratorium on sheriff's sales is not "required or legal, quite frankly," to deal with home foreclosures prompted by subprime mortgages. Jones said that the First Judicial District instead is developing a program to offer legal, financial and housing counseling to homeowners at risk for foreclosure. Council last month passed a resolution calling on Jones to approve a moratorium. Sheriff John Green postponed this month's sheriff's sales and said that he would ask Jones to approve a halt to the auctions for six months. "Realistically, it's simply not the answer, because it doesn't help anyone," Jones said after yesterday's Council hearing on the judicial system's budget. [...] "It is unfair to the lenders to paint with a broad brush this need for a moratorium on foreclosure sales," Jones said. Sheriff's sales are due to resume on May 6.

For more, see Judge Jones sees help coming for homeowners.

See also: The Wall Street Journal: Philadelphia Works on Plan To Help Avoid Foreclosures (if no subscription, try here, then click link); and The Philadelphia Inquirer: Phila. plan would spare homeowners facing foreclosure:

• Philadelphia will not impose a moratorium on foreclosure sales, but it will slow the legal process to try to help borrowers avoid the loss of their homes, Common Pleas Court President Judge C. Darnell Jones II said yesterday. Recognizing that anything longer than Sheriff John D. Green's current one-month stay of foreclosure sales would not withstand a legal challenge, Jones announced to City Council a novel plan for a court-supervised process exclusively for owner-occupied properties. diversion program

Foreclosed Property Owners Trashing Homes On The Upswing In South Florida

In South Florida, the Sun Sentinel reports:

• Some South Floridians who lose their houses to foreclosure try to get even. They'll strip the plumbing, ruin the carpets and rip out doors. At a home [...] in Cooper City, listing agent Craig Green found the top of the toilet tank missing, the door to the dryer ripped off, the garage filled with junk and a wall in the master bedroom with a large hole in it. Jim Banford, broker-owner of Real Estate Asset Disposition Corp., saw roofing tar in the toilet of a house [...] in West Palm Beach. A 2-foot fish and cement were poured down the toilet at another of his listings nearby.

***

• Exasperated lenders are getting wise to the ruse and offering "cash for keys" deals, essentially paying homeowners as much as $2,000 not to take out their frustrations on their properties before leaving. Roughly half of all foreclosed properties are returned to the bank with substantial damage, according to a national survey of 1,500 real estate agents by Campbell Communications, a marketing and research firm in Washington, D.C. "Until you see and smell these properties, you don't really understand the problem," said Tom Popik, a partner at Campbell Communications and a market researcher in the mortgage industry for 15 years.

***

• In Davie, a homeowner who lost the property in Foreclosure left behind a caged dog."Your eyes would water when you went in there," said Jane Caro, an agent for Prudential Florida WCI Realty who toured the home. "The lender had to put new drywall in because the smell wouldn't come out."

For more, see Ex-owners around South Florida trash foreclosed homes before leaving.

Illinois AG Levels Foreclosure Rescue Charges Against Purported "Faith Based Organization" In Civil Suit

In Chicago, Illinois, WLS-TV Channel 7 reports:

• In the last year, the Illinois attorney general's office has sued or investigated about a dozen foreclosure rescue services. The AG's office says the latest one it's suing violated the Consumer Fraud and Deceptive Business Practices Act and used religion to sell its services. [...] At first, Reverend Walter C. Armstrong wouldn't answer questions about his company's promises to save people like Evelyne Allen from foreclosure. Armstrong is a bishop and a reverend at Prayer of Faith Church on the city's West Side. He also ran Victory Consulting, a now defunct company that the AG says went door to door, passing literature to prospective clients.

***

• In this lawsuit, the attorney general alleges Victory Consulting gained consumers' trust by saying the company was a faith-based organization. "So the consumer isn't likely to answer a lot of questions, isn't likely to demand documents because of this sort of aura of faith and trust," said [said Illinois Ass't AG Michelle] Garcia. The lawsuit says homeowners in foreclosure would sign their home over to a "surrogate owner" and then continue to pay the mortgage to the surrogate owner.

For more, see Foreclosure Chasers (They claim they'll save your home if you're being foreclosed on, but local authorities say most so-called foreclosure rescue services are rip-offs).

To view the Illinois AG's lawsuit, see State of Illinois v. Victory Consulting & Investments, Inc., et al.

For the Illinois AG's press release, see Attorney General Madigan Files Suit Against Chicago Mortgage Rescue Fraud Company (Deceptive Tactics Sent Five Homeowners into Foreclosure).

Florida AG Slaps Suit Against Clearwater Upfront Fee Foreclosure Rescue Operator

In Clearwater, Florida, the St. Petersburg Times reports:

• State Attorney General Bill McCollum on Thursday sued a Clearwater foreclosure rescue operation, accusing it of engaging in deceptive and unfair business practices. The lawsuit alleges that Law & Associates pitched services to homeowners facing foreclosure in Florida and across the country through direct mail and various Web sites. Those who responded were charged an up-front cash fee of $1,500 to $2,000 for guidance and help negotiating with lenders, but the services never materialized, according to the suit.

***

• The attorney general's office reviewed more than 65 consumer complaints about the company, which began operating in Clearwater in 2004. In none of those cases did the company actually prevent foreclosure of a home, the lawsuit says. [...] McCollum's lawsuit alleges six counts of violating the state's Deceptive and Unfair Trade Practices Act.

The Florida AG seeks to:

1. shut down the company's foreclosure rescue operations,
2. nail it for at least $10,00o in penalties for each violation of the law,
3. recover its attorney's fees,
4. force a return of all fees paid by the homeowners,
5. among other things.

For more, see:

• Business duped homeowners facing foreclosure, suit says,
• Florida AG press release: Clearwater Company Sued for Deceptive "Foreclosure Consulting Services",
• View copy of the lawsuit - State of Florida v. Law & Associates LLC.

Ohio Governor, Mortgage Servicing Companies Engage In Publicity Stunt Affecting Homeowners In Foreclosure

In Columbus, Ohio, Bloomberg News reports:

• Citigroup Inc., HSBC Finance Corp., and seven other mortgage companies agreed to help delinquent Ohio borrowers avoid foreclosure in the first such accord between a state and home-loan servicers, Ohio Governor Ted Strickland said. [...] The companies signed non-binding compacts agreeing to notify borrowers four to six months before their adjustable-rate mortgages reset, said Kimberly Zurz, director of Ohio's Department of Commerce. Seven agreed to lock in adjustable rates for qualified borrowers for as long as five years, she said.

***

• The other companies that signed agreements were GMAC RESCAP/Homecomings Financial, Carrington Mortgage Services, Ocwen Financial Corp., Option One Mortgage, Saxon Mortgage Services, Select Portfolio Servicing and Litton Loan Servicing, Strickland said in a statement.

For the rest of the story, see Citigroup, HSBC, 7 Others to Assist Ohio Homeowners.

Editorial Note:

It's hard not to believe that the loan servicers who agreed to this non-binding agreement (which, in law, is no agreement at all) are simply giving lip service to take the heat off them in Ohio. Given the facts that:

• Ohio recently announced that qualified homeowners in foreclosure may have free legal representation available to them,

• the same announcement informs us that Ohio foreclosure defense training for attorneys representing homeowners in the state has reportedly been made available through the Ohio Bar Association,

• it is no secret that foreclosing mortgage holders and servicers are having a tough time finding and filing the proper documentation in court proving their right to bring foreclosure actions,

• a recent media report informs us that an Ohio appeals court ruled last month that a foreclosing mortgage company is not entitled to a foreclosure judgment if they can't prove their ownership of the promissory note and how they came about owning the mortgage (see Everhome Mtge. Co. v. Rowland, 2008-Ohio-1282; (10th Dist. Ct. App.; March 20, 2008)), and

• other Ohio appellate court decisions also seem to point to the apparent need for a foreclosing mortgage lender to prove that it is the owner of the promissory note and, thererfore, the real party in interest to initiate the legal action (see First Union Natl. Bank v. Hufford (2001), 146 Ohio App.3d 673; 3rd Dist. Ct. App. ; and Washington Mut. Bank, F.A. v. Green (2004), 156 Ohio App.3d 461; 7th Dist. Ct. App.),

the loan servicers are obviously feeling enough pressure to participate with the Ohio governor in this publicity stunt. Everyone appears to come away looking good, but it seems to me that unless the loan servicers can physically produce the promissory note, and prove that there were no violations of the Federal Truth In Lending Act ("TILA", as well as any applicable state consumer protection law) when the loan was originated, the homeowners really have little incentive to agree to a loan workout (unless, of course, the terms of any such loan workout are highly favorable to the homeowners and reflect the fact that promissory notes are missing and "TILA" violations were committed).

Now that there are attorneys involved who are representing homeowners, it appears to me that those attorneys have now taken up the obligation to assure their clients/homeowners that all the laws affecting their mortgage loans and all the rules governing the legal procedure in foreclosure cases have been complied with. I expect that these attorneys will not let the mortgage companies off the hook on their obligations, unless of course, they are prepared to make significant concessions to the homeowners when ironing out a loan modification.

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

For more on mortgage companies' obligations in foreclosure actions, see Fight Foreclosure: Make ‘Em Produce The Note!.

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.

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 missing mortgage foreclosure docs beta

Fight Foreclosure: Make ‘Em Produce The Note!

For video aficionados, there is a short video called Fight Foreclosure: Make ‘Em Produce The Note! that is floating around in cyberspace. Nothing technical; don't know who made the video; but I got a kick out of it. It's a "must see" video, in my judgment, for anybody currently facing foreclosure, or who may be in the future. I stumbled into it from a link on the home page of the website of Tampa, Florida law firm, James, Hoyer, Newcomer & Smiljanich, PA.

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.

June 15, 2008 update:

The person on the video is attorney Chris Hoyer, of James, Hoyer, Newcomer & Smiljanich, PA. missing mortgage foreclosure docs beta

Foreclosures Hitting Northern Virginia McMansions

In Loudon County, Virginia, Reuters reports:

• Million-dollar fixer-upper for sale: five bedrooms, four baths, three-car garage, cavernous living room. Big holes above fireplace where flat-screen TV used to hang. The U.S. housing crisis has come to McMansion country. Just as the foreclosure crisis has hollowed out poorer neighborhoods, "for sale" signs are sprouting in upscale developments so new they don't show up on GPS navigation screens.

***

• The crisis has hit especially hard here in Loudoun County, Virginia, where upscale developments have supplanted horse farms over the past fifteen years. About an hour's drive from Washington, Loudoun is one of the nation's most affluent counties, with a median household income of $98,000, more than double the national figure. [...] These houses are sometimes nicknamed "McMansions," disparaging both their extravagance and their look of mass production -- like hamburgers from a McDonald's restaurant.

For more, see Foreclosures come to McMansion country.

Suspect In Minneapolis-Area Alleged Home Flipping Scam Cops Plea, Agrees To Sing

The Minneapolis Star Tribune reports:

• A key figure implicated in a suburban mortgage fraud and property flipping scam has pled guilty to racketeering, and has agreed to work with authorities who are investigating two others involved in the scam, the Hennepin County Attorney's office said. Celeste Skaar, of Orono, entered her plea and will forgo a jury trial, the attorney's office said. Skaar is the owner of New Day Capital and was charged in September with conspiring with two others to defraud banks through false loan applications and for finding straw buyers for properties that were bought and resold, often the same day and for a big gain in price, a criminal complaint said.

***

• The complaint also names Scott R. Rosenlund, president of 10Spring, Inc., a home building and development company, and Shinon Lindberg, a business associate of 10Spring. They were charged in September with racketeering and theft by swindle.

Source: Two charged in mortgage fraud scam due in court today (Men face charges of theft by swindle and racketeering in connection with a home mortgage fraud scam).

Go here for other posts on this story.

Arizona AG Settles Civil Charges Against Four Straw Buyers In Foreclosure Rescue Equity Stripping Scheme; Case Continues Against Other Defendants

(original post 4-5-08)
In Phoenix, Arizona, The Associated Press reports:

• Four Phoenix-area residents who acted as "straw-buyers" in a foreclosure rescue scheme have agreed to pay $89,000 to settle a civil suit filed by Arizona Attorney General Terry Goddard's office. Goddard's office says the four participated in a scam scheme designed to skim equity from the residences of distressed homeowners. They obtained millions of dollars in mortgages and left the homeowners even further in debt. The defendants did not admit guilt but agreed not to engage in similar practices in the future. Other defendants are still being sued by the state under provisions of Arizona's Consumer Fraud Act and its Racketeering Act.

Source: Arizona AG settles case with "foreclosure rescue" buyers.

For the Arizona AG press release, see Terry Goddard Announces Settlements in Foreclosure Rescue Scheme (The case, Arizona v. Peter Hou, Yanjun Hou, and Stress Free Equity Corp., et al., is pending against other defendants in Maricopa County Superior Court).

Chase Memo Details How To Push Thru Dubious Loans

In Portland, Oregon, The Oregonian recently reported:

• A newly surfaced memo from banking giant JPMorgan Chase provides a rare glimpse into the mentality that fueled the mortgage crisis. The memo's title says it all: "Zippy Cheats & Tricks." It is a primer on how to get risky mortgage loans approved by Zippy, Chase's in-house automated loan underwriting system. The secret to approval? Inflate the borrowers' income or otherwise falsify their loan application.

***

• The document, a copy of which was obtained by The Oregonian, bears a Chase corporate logo. But it's unclear how widely it was circulated or used within Chase. Bank spokesman Tom Kelly confirmed that the "Cheats & Tricks" memo was e-mailed from Chase but added that it does not reflect Chase corporate policy.

For more, see Chase mortgage memo pushes 'Cheats & Tricks' (The bank says it never backed the strategies, which detail how to get an iffy loan approved) (when link expires, try here or try here).

Go here for a reprint of the Zippy Cheats & Tricks memo (when link expires, try here).

Erie Feds Close To Bagging Third Plea In Local Mortgage Fraud Scam Involving Almost 200 Properties

In Erie, Pennsylvania, the Erie Times News reports:

• A third defendant in the federal probe of a widespread local mortgage-fraud scheme appears ready to enter a guilty plea. Gregory M. Finney originally entered a plea of not guilty in the case. But Finney’s lawyer, Daniel Brabender, said last week that Finney will likely change that plea in the next few weeks, in large part because of a prior conviction for delivery of cocaine. [...] Finney, who was indicted by a federal grand jury on Feb. 12, was president of A&M Homes, a now-defunct home-redevelopment business. [...] Brabender, who said he and Finney have discussed a plea change, said that if Finney were convicted in the mortgage fraud case, his prior cocaine conviction could weigh heavily against him at sentencing under federal guidelines.

For more, see:

• New fraud plea likely (Defendant expected to plead guilty in mortgage probe),
• House draws complaint.

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

Class Action Against Countrywide Alleges Abuse Of Hurricane Victims Behind In House Payments

According to a press release from the James, Hoyer, Newcomer & Smiljanich, PA Law Firm:

• In response to Countrywide Home Loans refusal to fulfill promises made to Gulf Coast hurricane victims, the James Hoyer Law Firm announced [last month] the filing of a new class action lawsuit against the mortgage company. The suit was filed in the United States District Court in the Southern District of Mississippi. The suit alleges Countrywide took advantage of these disaster victims by offering them mortgage deferrals with no penalties attached and then reneging on that promise.

***

• After Hurricanes Rita & Katrina, Countrywide offered 90-day mortgage payment deferrals to homeowners affected by the devastation and in many cases 6-month deferrals. Countrywide represented this as a good deed to help people in their time of suffering and even issued a press release to promote its actions. Homeowners were told by agents over the phone their deferred payments could be tacked onto the end of their mortgages. They were assured they would not face penalties like late fees, interest and reports to the credit bureaus. Countrywide went so far as to tell homeowners who wanted to pay, not to do it. In some cases, they even returned checks. Struggling hurricane victims accepted the offer of help, some reluctantly, when assured they would not be economically penalized by late fees, penalties or credit reporting.

• When homeowners followed up later to resume payments, they discovered Countrywide was reneging on its promise. The company said it could not add the payments to the end of the loan, without penalty, after all. Instead, Countrywide told homeowners they would either have to pay the lump sum owed immediately or face a loan restructuring which would cause them to pay thousands of dollars more over the life of their loan.

• The suit, filed on behalf of victims in Mississippi, is in addition to two suits already pending in Louisiana and Texas.

For the press release, see Countrywide Class Action Suit: Hurricane Victims Feel Betrayed.

Go here for:

• ABC News report on Countrywide Hurricane Victims (video only),
• Countrywide Loan Investigation (video only).

To view the lawsuit, drop me a line at HomeEquityTheft@yahoo.com and I'll e-mail it to you (be sure to put "Brumfield v. Countrywide Home Loans" in the "Subject" line).

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

More On Staten Island Foreclosure Halted For Violations Of NYS Ant-Predatory Lending Law

ABC News ran a story last week on David and Karen Shearon, the Staten Island, New York couple who, in a court case involving the attempted foreclosure of their home, received a favorable ruling by the presiding judge in which he:

1. found that the state's predatory lending laws were violated when the Shearon's home mortgage was originated,
2. denied the bank's bid for foreclosure, and
3. ruled that the Shearons may be entitled to a refund of their mortgage payments and attorneys fees.

Reportedly, the trial judge has agreed to rehear arguments about his decision to stop the foreclosure, and the foreclosing mortgage lender has appealed the decision.

To read more, see Fighting Back Against Foreclosure (New York Judge Denies Foreclosure Based on Alleged Predatory Lending).

For the court decision, see LaSalle Bank, N.A. v Shearon, Supreme Court, Richmond County, 2008 NY Slip Op 28032 (January 28, 2008).

Go here for other posts on this story.

Pennsylvania Woman Gets Prison For $194K I.D. Theft; Damage Included Pocketing Mortgage Proceeds On Victims' Home

In Pennsylvania, the Bucks County Courier Times reports:

• A Hulmeville woman who systematically stole more than $194,000 from a hearing impaired Upper Southampton couple in an identity theft scam was sentenced Tuesday to 18 months to 10 years in a state prison. Nancy Hellyer, 41, of Main Street told Bucks County Judge Albert Cepparulo that she learned a lot from her arrest and hoped, as part of a community service sentence, to help others by leading seminars on how to avoid con artists like herself. Cepparulo told her to forget it.

***

• Without the couple's permission, she changed the mailing address on some of their credit cards, added her name to the accounts and charged more than $100,000 in goods, services and cash advances. She also opened a second mortgage on their Charles Street home, acting as the couple's “agent” when speaking to bank officials.

For more, see Hulmeville woman sentenced in $194,000 identity theft scam.

Newark "Anti-Foreclosure Scam" Volunteers Sweep Thru City Distributing Warning Fliers, Ripping Down "We Buy Houses" Road Signs

In Newark, New Jersey, The Star Ledger reports on the first day of foreclosure outreach organized by the Newark/Urban Essex Foreclosure Task Force, a coalition of community organizations, government officials and nonprofit groups. Dozens of volunteers met after canvassing the city, ripping down "foreclosure rescue" signs and distributing information warning against such scams:

• Michael Heard was part financial consultant, part city code enforcer yesterday afternoon as he spoke to Newark residents about home foreclosures and ripped down signs. "I'm angry," he said shortly after taking down two signs in his neighborhood in the West Ward of Newark that claimed to get people out of foreclosures or offered to buy homes on the cheap. [...] Heard was one of dozens of volunteers in bright orange T-shirts who swept through all five wards of the city yesterday armed with fliers and door hangers to warn citizens against foreclosure and mortgage scams designed to prey on the elderly or the desperate.

***

• "I'm tired of driving around my city and seeing these signs," Booker said, pointing to the dozens of blue, red, yellow and green signs volunteers had torn down around the city and brought to the meeting. He said he was so sick of seeing them, he stopped at Home Depot to buy a crowbar that he keeps in his car. He tears down signs whenever he sees them. It's illegal to post any kind of sign on utility poles and trees.

For more, see Newarkers try to stem foreclosure scams (Groups remove signs, hear Mayor Booker).

Go here for other posts on the battle against the ubiquitous "We Buy Houses", "Stop Foreclosure", etc. road signs.

Massachusetts AG Scores In Housing Discrimination Rental Cases

Excerpts of three press releases from the Massachusetts Attorney General's Office. In the first case:

• Attorney General Martha Coakley’s Office obtained a judgment against Thomas Dooley, III, a Beacon Hill real estate broker and his company, Y2K Realty, Inc. dba Louisburg Properties, which resolves claims that he and his company violated state antidiscrimination laws by discriminating against a prospective tenant who had a housing subsidy. “Realtors, brokers and landlords in Massachusetts need to understand that discrimination against housing subsidy holders is illegal,” said Attorney General Coakley.

• The complaint [alleged that the landlord] rejected a prospective tenant who responded to an advertisement for a Beacon Hill apartment because he held a Section 8 housing assistance voucher. Under Massachusetts law, it is illegal to discriminate against housing applicants because they receive public assistance.

For more, see Attorney General Martha Coakley Obtains Judgment Against Realtor In Housing Discrimination Case.

In the second case:

• Attorney General Martha Coakley’s Office entered into a consent judgment with two Malden landlords resolving claims that they violated state anti-discrimination and lead paint laws by discriminating against a family and their young son who lived in the landlords’ property. [...] The complaint, [...] , alleges that landlords Michael McCarthy, and his wife Marijane, discriminated against the family by attempting to evict them after a lead inspection revealed illegal and hazardous levels of lead in the family’s apartment, and after the family filed a housing discrimination complaint against them with the Massachusetts Commission Against Discrimination (“MCAD”). The complaint further alleges that after the McCarthy’s were ordered to remove the lead, they attempted to raise the family’s rent by nearly double.

• Under Massachusetts law, it is illegal to discriminate against persons because their household includes children under the age of six. It is also illegal to retaliate or discriminate against persons because their presence requires compliance with the lead paint laws. The law requires that landlords abate lead conditions when a child under six resides on the premises.

For more, see Attorney General Martha Coakley Obtains Judgment Against Malden Landlords In Housing Discrimination Case.

In the third case:

• Attorney General Martha Coakley’s Office filed a consent judgment late [Monday] to resolve claims that a Roslindale landlord violated state antidiscrimination laws by posting a rental advertisement on the internet that discriminated against recipients of Section 8 housing subsidies in order to avoid compliance with the Commonwealth’s Lead Paint Law. The judgment [...] requires the landlord to pay $10,000 in compensatory damages. The judgment also requires the landlord to abate any lead paint hazards in the rental unit.

• Under Massachusetts law, it is illegal to discriminate against housing applicants because they receive public assistance. It also is illegal for a landlord to refuse to rent to a prospective tenant because the unit may contain lead paint hazards, or because the rental would trigger duties under the Massachusetts Lead Paint Law or regulations.

For more, see Attorney General Martha Coakley Obtains Judgment Against Roslindale Landlord In Housing Discrimination Case.

Connecticut Attorney Surrenders Law License After Allegedly Pocketing $850K In Closing Proceeds Due On Existing Mortgages

In Wilton, Connecticut, the Connecticut Law Tribune reports:

• [J]oseph Kriz, 44, of Wilton resigned from the [Connecticut] bar on Thursday, March 27, and waived his right to reapply for admission after investigations revealed that he failed to pay off more than $850,000 in mortgages after handling house sales and refinances. [...] That may not be the last of his problems. Assistant Disciplinary Counsel Patricia King said she is forwarding information about the case to the FBI, which is reportedly investigating the missing money.

***

• Kriz's case is one of a growing number involving lawyers and missing money in real estate deals. Last year, the FBI released a study that showed mortgage fraud involving lawyers to be a significant problem in states where attorneys remain involved in the real estate closing process.

For more, see Wilton attorney loses license over real estate closings.

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

Some Vacant Foreclosures Worth Less Than The Copper Inside

Reuters reports on the problems copper thieves are inflicting on neighborhoods that have a growing inventory of foreclosed homes. A couple of excerpts:

• [I]n areas hit hardest by foreclosures, such as the Slavic Village neighborhood of Cleveland, Ohio, copper and other metals used in plumbing, heating systems and telephone lines are now more valuable than some homes. "We're in an incredibly unfortunate time where the nonferrous metals commodities market for scrap is at an all-time high. Houses are getting stripped pretty quickly once they go through the foreclosure process," Cleveland city councilor Tony Brancatelli said. "We're seeing houses sold for $100 that are distressed houses that should not be recycled," he said. Some boarded-up homes in his Slavic Village community have "No copper, only PVC" painted on the boards to stop would-be thieves.

***

• "The problem is there's almost no security. Does this look like anybody lives here?" [one broker said], gesturing to the boarded-up home with chipped yellow paint and a "notice of foreclosure" letter affixed to its door. "It's like a big billboard saying 'come and take me,'" he added. "It's an epidemic." [...] Jonathan Osman, a broker in Charlotte, North Carolina, said growing numbers of banks are balking at lending to prospective buyers of foreclosed homes that are stripped of copper pipes and other metals, further depressing housing prices. [...] Along with copper, he often sees air conditioners and garbage disposals torn out. "I don't know what the solution is other than for the banks to not put a sign in the window saying the house is vacant," he said, "or maybe keep tenants there."

• At least 15 U.S. states -- from California to New York -- drafted legislation in the past year to deal with the problem, from tighter regulations on scrap metals' traders to tougher penalties for metal theft, local authorities and metals industry officials say.

For more, see Some homes worth less than their copper pipes.

Reportedly, there are homes in in one upstate New York city that sell for as little as $1. See Reuters: Cities grapple with surge in abandoned homes:

• [S]yracuse, New York, began selling vacant homes last year for $1 each to non-profit groups who promise to tear them down or renovate them. Last month, Syracuse Mayor Matthew Driscoll extended the deal to private companies.

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

For other recent copper theft stories, see:

• WFTV Channel 9 (Orlando, Florida) Foreclosed Homes Becoming Easy Targets For Thieves (video only),
• The Eagle Tribune (Lawrence , Massachusetts): Officer interrupts suspected copper thieves in Lawrence,
• The Daily Item of Lynn (Saugus, Massachusetts): Saugus man arrested for stealing copper piping, causing flood (Reportedly, the house was in foreclosure and was empty, but the water had not been shut off. Once the suspect allegedly began cutting out the pipes, a flood ensued).
• Daily Tribune (Oak Park, Michigan): Unit targeting copper thieves pays off first day (Oak Park police say suspect found in home with set of pipe cutters).

For other stories on stolen copper, see Copper Thefts I and Copper Thefts II. copper metal theft yak

Home Based Meth Labs Pose Threat To Homebuyers, Investors, Foreclosing Lenders Alike

An article in DSNews.com (formerly REO Magazine) addresses the problem that clandestine meth labs pose to unsuspecting homebuyers, real estate investors and foreclosing mortgage lenders:

• Unfortunately, it may be difficult for a potential buyer to know that a property has been used as a clandestine lab. Even if an interested party is aware that a property has been used as a lab, they may not understand the health and monetary risks associated with it. It is essential that parties involved in real estate transactions be knowledgeable about identifying labs, the health effects associated with meth labs, state remediation and disclosure guidelines, and the costs of rehabilitating a property to avoid a toxic pitfall.

***

• The cost of decontaminating a property can range from several thousand dollars to tens of thousands of dollars. Large labs that produce speed by the pound, rather than by the gram, can exceed $100,000 in clean-up costs. When Arizona law enforcement busted a super lab in Mohave County it took only several days to clean the site. But the cost to remove the contaminated soil, dispose of left-over chemicals and tear down the structures on the property was more than $100,000. Even a small time operation can run into the tens of thousands of dollars. A local Colorado savings and loan discovered that a home it had loaned money on left enough toxins to cost $30,000 to $40,000 to remediate. The amount remaining on the loan in addition to the clean-up cost put the bank upside down on the property value, leaving the bank with the option to demolish the home and sell the lot for $10,000, or abandon the property.

For more, see Attorney Warns REO Community About Meth Labs.

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

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