Thursday, April 17, 2008

List Of Lenders Investigated In FBI Probe Now Up To 19

In Washington, D.C., ABC News reports:
  • The FBI has again expanded its probe into the subprime mortgage collapse and is now investigating 19 lending institutions, bureau director Robert Mueller told lawmakers [yesterday]. Appearing before a Senate Appropriations subcommittee, Mueller told the panel that there has been a "surge related to the subprime debacle." The investigation has been growing since January, when the FBI began looking at 14 firms. That number rose to 17 last month.

For more, see Mueller: 'Subprime Debacle' Probe Expanded (FBI Director Says 19 Lending Institutions Under Investigation).

Mortgage Foreclosures Leaving Condo Associations Financially Squeezed

In Palm Beach County, Florida, The Palm Beach Post reports:
  • At the CitySide townhouses in West Palm Beach, landscapers, bug men and security guards are showing up less often. At Paradise Cove in West Palm Beach, the water in the hot tub isn't so hot anymore. And at Carriage Pointe in Boynton Beach, homeowners are paying a combined $60,000 assessment to cover dues their neighbors aren't paying.

  • The culprit in all three cases is the housing bust. With large numbers of homeowners unable to pay their monthly fees, condominium and homeowners associations are being forced to skimp on maintenance and security - and increase dues.

  • Fully half of 487 Florida associations surveyed recently by Hollywood law firm Becker & Poliakoff say they're facing financial shortfalls because of the foreclosure crisis. After all, homeowners who aren't making their mortgage payments aren't paying their association dues either.

For more, see Foreclosures force homeowners associations to skimp.

For a related story, see Sarasota Herald Tribune: Foreclosures cause woes for property associations.

Minneapolis To Take Over, Rehab, Resell 141 Mostly Vacant Homes

In Minneapolis Minnesota, Minnesota Public Radio reports:
  • Minneapolis Mayor RT Rybak says the city will take control of 141 mostly vacant rental homes on the Northside. A court-appointed receiver will manage the properties and work to rehab and resell them. The homes are associated with T.J. Waconia, a company the city is suing for mortgage fraud. The city's lawsuit accuses Waconia of buying homes, converting them to rental properties, collecting rent and then abandoning the properties.

For more, see City to acquire northside homes for rehab.

See also:

Go here for other posts on the alleged TJ Waconia house flipping operation.

Charlotte-Area Real Estate Agency Admits To Hiding Bonuses Received In Home Sales; Agrees To Shut Down

In North Carolina, The Charlotte Observer reports:
  • Charlotte-area company Realty Place has agreed to permanently close its doors after admitting to violating state regulations and federal law by hiding real estate bonuses from customers and lenders. In the agreement, approved Wednesday by the N.C. Real Estate Commission, the company said that from 2002 to 2004, Realty Place accepted "numerous" bonuses from homebuilders for representing buyers who purchased homes. The bonuses were paid outside closing and not declared on settlement statements.

  • The commission so far has uncovered 300 to 400 secret bonuses paid to Realty Place, said Janet Thoren, the commission's chief deputy legal counsel. The investigation has expanded to involve other Charlotte real estate companies. "It involves quite a few people," said Thoren, who declined to say if federal officials also are investigating Realty Place. "I think the list is probably going to get longer and longer."

For more, see Realty Place calls it quits (Agency admits it took `numerous' secret bonuses from home builders, agrees to close).

Pilot Program Aims To Reduce Philly Foreclosures

In Philadelphia, Pennsylvania, the Philadelphia Business Journal reports:

  • The Philadelphia Common Pleas Court Wednesday announced details of a pilot program it hopes will reduce the number of foreclosures in the city. The plan was ironed out by a foreclosure steering committee headed by Judge Annette Rizzo that includes lawyers representing lenders and homeowners as well as social service agencies. Owner-occupied properties will be put on a special track intended to help borrowers with free legal advice and housing counseling.

  • All residential foreclosures will be subject to a conciliation conference before the property can be sold via Sherriff's sale. The conference must be held within 30 to 45 days after a complaint is filed and the homeowner and lender must be present. The homeowner will be require[d] to get housing counseling five days before the conference and cooperate fully with a counseling agency, which will provide a report at the conference regarding the possibility of a loan work-out. If a homeowner does not respond to notices, does not appear at the conference, or if it is determined no work-out is possible, the lender can proceed with the foreclosure process.

***

  • Michael McKeever, managing partner of Goldbeck McCafferty & McKeever, a law firm that represents lenders in foreclosure proceedings, serves on the steering committee. He said lenders will also have to respond faster to work-out proposals from homeowners and their representatives. "We think this program will create some efficiencies and dispel the myth that lenders are not being cooperative," McKeever said.

For the story, see Details of Phila. foreclosure reduction effort announced.

See also, Philadelphia Inquirer: Advocacy key to Philadelphia foreclosure plan.

Go here for other posts on the Philadelphia foreclosure diversion program. diversion program

Wednesday, April 16, 2008

Legislative Proposal Protecting Servicers When Modifying Defaulted Home Loans Making Mortgage Execs Uneasy

In Washington, D.C., Reuters reports:
  • Leaders of the mortgage industry are uneasy with a plan that would give home loan servicers legal protection if they try to help troubled borrowers avoid foreclosure, lawmakers heard on Tuesday. Such a step could discourage mortgage investment and "potentially threaten the stability and predictable operation of ... our capital market system," the American Securitization Forum, a mortgage investing trade group, told a congressional hearing.

  • Home loans originated by banks and other mortgage retailers are typically bundled and sold to investors as new securities overseen by mortgage service companies. If a borrower is in danger of defaulting, the mortgage service company has broad power to rewrite the loan but investors may still sue if they second-guess those changes.

  • Legislation sponsored by Rep. Paul Kanjorski and Rep. Mike Castle would shield mortgage servicers from such lawsuits. "Without this legislation, I am concerned that lawsuits could bring modifications to a halt," Castle, a Delaware Republican, said this week of his legislation.

For more, see Mortgage sector uneasy with loan rewrite plan.

See also, The Associated Press: Lawmaker Steps Up Modification Pressure. questionable mortgage servicing practices tactics xero MortgageServicingIssuesAlpha

Loan Servicer Calls Off Tenant Foreclosure Eviction; Agrees To Negotiate With Boston Officials

In Boston, Massachusetts, the Boston Herald reports:
  • City officials announced last night that a tenant eviction scheduled for this morning at a foreclosed Dorchester property has been called off indefinitely, giving relief to nervous renters there. Wells Fargo, which services the loan for 200 Norfolk St., has agreed to call off the eviction and negotiate with city officials about a possible sale or extended lease for the tenants, said Michael S. Kelley, administrator for the city’s Rental Housing Resource Center.

***

  • City officials said City Life/Vida Urbana had circulated plans to hold an eviction blockade at the property, a tactic that has increased in recent weeks amid the national foreclosure crisis. [...] “Working with servicers, the city of Boston will continue to keep people in homes and try and work out solutions to keep our properties occupied,” said Dot Joyce, a spokeswoman for Mayor Thomas M. Menino. “Wells Fargo has been cooperating . . . We will take our time to sit down and see if something can be worked out.”

For more, see Facing eviction, Dorchester tenants get breathing room.

Foreclosure "Bloodsuckers" May Pose Threat, Raise Concerns In Northern Virginia

In Northern Virginia, the Fairfax County Times reports:
  • The phrase “bloodsucker” is being bandied about in some conversations about the foreclosure crisis in Fairfax County, but not in the way that one might suspect. According to the Fairfax-based National Pest Management Association, an unexpected consequence of the rising number of foreclosures in Fairfax County is the number of unoccupied, unkempt properties and their potential for breeding mosquito populations that could heighten the risk of West Nile virus cases this summer.

***

  • Any yard that is unattended and has any container that can hold water – even a plastic tarp or a black corrugated plastic drainpipe – is an excellent breeding ground for the Asian tiger mosquito,” said Jorge R. Arias, supervisor of the Fairfax County Health Department's Disease Carrying Insects Program.

For more, see Foreclosure crisis breeds new threat.

ABC's Good Morning America On Foreclosure Rescue

Good Morning America did a story on foreclosure rescue on Tuesday featuring an Illinois homeowner and the problems she faced.

  • Dorothy Galbreath lived in a house her husband of 43 years built for her in University Park, Ill., but after his death, she struggled financially to keep up with the mortgage payments. Facing foreclosure, Galbreath accepted the offer of a company that she said contacted her to help with her mortgage difficulties. "'Mrs. Galbreath, don't you worry. We're going to save your home,'" Galbreath said Alternative Options, the company offering aid, told her. Now Galbreath is without her beloved home, and she believes Alternative Options took advantage of her. "I still can't put it into words. It's like a feeling of being crushed," the former homeowner said. "This is 43 years just wiped away, just like it was never there. All my life [was] wiped away like it never existed." The Illinois attorney general's office said Galbreath's deal showed all the signs of a mortgage rescue scheme.

***

  • When Alternative Options initially approached Galbreath, she believed it would help her refinance her home, but after waiting more than a month for aid, Galbreath, a school bus driver, got further behind in her mortgage payments. Then she said she learned the company had a different form of mortgage rescue in mind. Galbreath said she was unaware that she was actually selling her home until she got to the bargaining table in May. She claimed Alternative Options never told her before the meeting that she was selling her house. "So right then and there, it was either sign the papers or go ahead into the foreclosure," she said.

***

  • Alternative Options told ABC News in a written statement that its purchase of Galbreath's home "prevented the foreclosure" and it took several steps to help her buy her home back. The company added it regretted that she couldn't buy back her home and said it has "had significant success with other homeowners."

***

  • ABC News asked the Illinois attorney general to review Galbreath's case. "We are subpoenaing this company to find out their business practices and to make sure that there are not other people similarly situated to Dorothy who have ended up losing their homes due to fraud," said Illinois Attorney General Lisa Madigan. "For so many people in the United States, their home is really their bank account. And so in addition to the devastation they face when they lose their home, they're also losing & their life savings."
For the entire transcript of the story, see Beware of Mortgage Foreclosure Rescue Scams (Find Out the Tips You Need to Protect Yourself).

Go here to watch the Good Morning America report (available online courtesy of Yahoo! News).
*****************

ABC News' Good Morning America also broadcast a story on 2-24-09 on the "Produce The Note" strategy of hammering sloppy lenders and their attorneys attempting to foreclose on homes without first establishing in court that they have the legal standing to do so.

For the story (approx. 5 minutes), see Fighting Against Foreclosure (Some homeowners have found a new tactic to keep the banks at bay).

Tuesday, April 15, 2008

Recent Raids By Minnesota Feds Involve Suspected Realty Fraud First Reported By County Property Appraiser 3+ Years Ago; 145 Properties Implicated

In Beltrami County, Minnesota, the Minneapolis Star Tribune reports:
  • In August 2004, a source in the Bemidji real estate industry complained to the FBI about a real estate agent who appeared to be engaging in fraudulent deals involving rental properties. But federal agent John Egelhof said he was too busy to pursue it at the time. So were the Minnesota departments of Revenue and Commerce.

  • Duane Ebbighausen, the Beltrami county assessor, said he notified those agencies in 2004 of a pattern of suspected frauds so extensive that they actually raised the assessed values of properties in Beltrami County. The deals involved real estate agent Edward Detwiler and his associates. Even so, no investigation took place for more than three years -- until Mary Bettelyoun of Frazee called Egelhof in December.

  • Bettelyoun charged that Detwiler had tricked her disabled father, Alvin Bettlelyoun, and her mother, Vonnie Rose, into buying a decrepit home. On March 26, FBI agents raided Detwiler's former sales office, Realty Executives -- the Producer Group, seeking records on nearly 150 property transactions. Agents also searched Trust Mortgage and Action Appraisal, two separate entities with offices at the same address.

For more, see FBI raids in Bemidji focus on alleged realty fraud.

93 Year Old Queens Man Bilked Out Of $800,000 Of Property In Alleged Real Estate Scam

In New York City, The Daily News reports on one unwitting elderly victim of a real estate scam that cost him plenty:
  • While predatory lenders have been known to focus on minority neighborhoods, the most common targets are the elderly, [Queens DA's office head of economic crimes investigations Greg] Pavlides said. "They are the most vulnerable," he said. "They're equity rich and cash poor."

  • Nobody knows that more than Mary Thompson, 66, whose father, Artee McKoy, 93, a retired barber, was bilked of $800,000 worth of property by a close friend's daughter. Alexandra Gilmore, 36, ingratiated herself to McKoy, who lives alone in Jamaica and suffers from dementia. Gilmore then swiped the deed to his home and flipped his investment property in Bayside twice, using refinancing schemes she set up without his permission, prosecutors said. "He's a very good, warm-hearted person. He'd give you the shirt off his back," said Thompson, who lives in New Jersey. She is now seeking justice and restitution in court for her father.

  • However, prosecutors can take care of only half of that task, Pavlides noted. "We can put the bad guys in handcuffs, but we can't get you your house back," he said of the distinction between criminal and civil cases. Fraud crimes carry three- to nine-year sentences. But a defendant who can pay back a victim's losses can walk away with time served or a lighter sentence.

  • Thompson said she was "very happy" about Gilmore's February arrest. But it didn't quite deliver peace of mind, she said. "They were doing their duty and their job, but that doesn't help pay off these big loans," she said of the prosecutors. "My father could be put out of the house at any time."

For the story, see Homeowners duped into signing over property have little recourse.

Go here for the Queens District Attorney news release on this case.

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

Dateline NBC Goes Undercover To Investigate Questionable Sales Practices By Some Insurance Agents To Sell Retirement Investments To The Elderly

Last Sunday night, Dateline NBC 's hidden cameras reveal what some insurance agents say -- and what they don't -- when pitching retirement investments to senior citizens. Dateline and company:
  • go behind the scenes to uncover the techniques they use: inside sales meetings -- where we catch the questionable pitches; inside training sessions -- where we discover agents being taught to scare seniors; and, finally, inside senior's homes to reveal the tricks some agents use to puff their credentials to make a sale.
Investigative reporter Chris Hansen presents the report, and gets assists from the states of Alabama, Minnesota, and his elderly widowed Aunt Alice.

For a transcript of the show, see Tricks of the trade (A Dateline hidden camera investigation sees what insurance agents say -- and what they don't -- when they think they are alone with a senior) (Go here for entire transcript on one web page).

Go here to watch a preview of the program.

Go here to watch Chris hansen's entire report (7 video clips total). elder financial abuse valedictorian

Worcester Foreclosure Problem Not Limited To Homeowners Losing Roof Over Their Head

In Massachusetts, the Worcester Telegram & Gazette News reports:
  • [E]arlier this year, police Capt. Paul B. Saucier pointed out, police inside a vacant foreclosed home discovered that the copper fittings to a natural gas line had been removed. The slightest jarring of the gas line, which hadn’t been shut off, and exposure to flame could have sparked a major explosion.

***

  • There have been instances, Capt. Saucier said, of people found using drugs inside vacant foreclosed properties, but not to the extent the site could be considered a “drug den” where users frequently congregate. Where police have seen a sharp increase, the captain said, are thefts and vandalism at vacant foreclosed properties, particularly theft of copper pipe and fittings. The price of the metal, which can be sold at scrap yards, has risen from 65 cents a pound in 2002 to about $3 a pound today. The average home contains about $300 worth of copper pipe and fittings. Capt. Saucier noted a March 27 call police received from the real estate agent for a foreclosed house at 324 Millbury St. The agent said the house had been broken into and all copper pipe had been ripped out and removed.

  • William T. Breault, chairman of the Main South Alliance for Public Safety, said the situation was painfully apparent at a foreclosed and vacant house at 1 Cheney St. in the Main South district. For several months, he said, the door locks remained broken and people were going in and out of the dwelling at all hours. Inside were mattresses and considerable trash. All the copper in the home had been stripped, although the gas hadn’t been shut off. The windows and doors were boarded shut earlier this year and vagrants seem to have stopped coming by. “That’s happening all over the place,” Mr. Breault said.

For the story, see Houses of cards. neighborhood destruction from foreclosures zach copper metal theft yak

Indoor Pot Farms A Threat To Firefighters, Public Safety

In Lee County, Florida, The News Press reports:
  • Grow house operators often rewire homes to steal electricity to run high intensity lights, pumps and air conditioning. "Anytime you're messing with the meter it could kill you," said Karen Ryan, spokeswoman for the Lee County Electric Cooperative. There are 14,000 volts in the wires at the pole, Ryan said. Transformers reduce that to 220 or 110 volts at the meter.

  • Rewiring the house creates risks for firefighters, too. "Generally they don't catch fire," said Lehigh assistant fire chief Solon Duncan. "The main thing is we have no way to shut the power off," Duncan said. Growers bypass the electric meter to conceal their thefts. They might alter the box where the meter plugs in or run wiring underground from a nearby house, Duncan said. Growers also will block windows, which eliminates escape routes for firefighters who might have to fight a fire inside the building. "They do booby trap these places to hurt anyone trying to get in there," Duncan said. An example would be wiring a door to shock anyone trying to enter the house.

For more, see Grow houses can impact utility bills, public safety.

In Lee County, Florida, Lehigh Acres has apparently been a busy place for recent marijuana grow house busts. Go here for an interactive map of the location of 33 grow house busts in Lehigh Acres from Oct. 1, 2007 - March 31, 2008.

Go here and go here for other posts on Marijuana Grow Houses. pot grow ops beta

Monday, April 14, 2008

Long Island Mortgage Banker Targeted In Four Lawsuits; Inflated Property Values Alleged

In Nassau County, New York, Newsday reports:
  • [I]n two lawsuits filed in Nassau County Supreme Court, [East Massapequa resident George] Cornielle and Massapequa homeowner John Barbaro accuse [motgage banker Aaron] Wider and HTFC [Corp.] of participating in a "fraudulent property flipping scheme" that left them with hundreds of thousands of dollars in mortgages they could not afford. The lawsuits coincide with two others that were first brought against HTFC in federal court in 2006 by Residential Funding Co., or RFC, and its parent company, GMAC Bank -- banks that now own some of HTFC's loans.

  • In one of those two suits, the U.S. District Court in Minnesota recently ordered HTFC Corp. to pay $731,000 to RFC, which had accused HTFC of breach of contract. RFC charged that HTFC sold it a loan based on a fraudulent appraisal and then refused to buy it back. The GMAC case -- filed in U.S. District Court in Philadelphia -- is pending.

  • Last December, Newsday reported that Wider and his associates had profited from real estate deals that relied on faulty appraisals and questionable loan applications. Wider bought or sold homes and issued loans for at least 30 Long Island properties and, through a series of transactions on each deal, pushed the price of the property far above the values of comparable properties in similar neighborhoods, the story reported.

For more, see Homeowner: Mortgage banker inflated house's value.

Vegas Attorney To Begin Targeting Real Estate Agents, Lenders, Appraisers Who Allegedly Cheated Homebuyers

In Las Vegas, Nevada, the Las Vegas Review Journal reports:
  • When Brad Cohen's monthly mortgage payment jumped from $1,700 to $2,400 and the bank came calling with foreclosure notices, Cohen did what any red-blooded, meat-and-potatoes American would do. He called a lawyer. The pending lawsuit could become the first local test case in a broadening national spate of claims against Realtors and lenders who lawyers say put buyers in houses too pricey for their budgets. Cohen is suing the mortgage broker who refinanced his loan and has retained trial attorney Robert Cottle to represent him.

  • Cottle is preparing several lawsuits against Realtors, lenders and appraisers -- "a triangle of professionals, every one of whom failed consumers most of the time," Cottle said. [...] Cottle estimated as many as 15,000 Las Vegans could have solid claims against sales agents, loan brokers and appraisers. He's evaluating about a dozen other cases for a multiparty lawsuit he might file after he files Cohen's lawsuit. [...] "The burden of making a good financial decision is on the consumer, but he's got to have the right guidance," Cottle said. "If the defendants can't prove they did their job with professional responsibility, then the consumer wins." [...] "The consumer relies upon the professional to do their job to protect his interests. This is professional greed. Greed won, the consumer lost, and now we're in this mess." [...] Cottle won't seek money damages alone; he'll also ask judges to issue restraining orders halting foreclosures, and he'll request improved mortgage terms. In cases involving flagrant fraud, he's hoping for punitive damages.

For more, see Feeling cheated, homeowners sue (Lawsuits say lenders, Realtors, appraisers failed their clients).

California Jury Rules Against Homebuyer In Claim That Agent's Negligence Resulted In Overpaying By $150K For Home

In San Diego, California, TheVoiceOfSanDiego.org reports:
  • A jury sided Thursday with Carlsbad real estate broker Mike Little in a closely watched lawsuit that pitted a local couple against the agent that helped them buy a home. The couple, Vern and Marty Ummel, claimed that Little neglected to mention recent sales in their neighborhood, leading them to overpay by about $150,000 for their home in July 2005.

  • The case attracted national attention as it posed a hot question: What are the responsibilities of a real estate agent? The real estate camp was concerned that if the plaintiffs won Thursday, it would catalyze and focus a growing urge around the country to find someone to blame -- and to hold financially responsible -- when houses aren't worth as much as their buyers once paid. Those who sided with the Ummels worried their case would be chalked up to rich people problems, a matter of a measly $150,000 in the scope of a million-dollar tract home near a golf course in North County.

For more, see Jury Says Realtor Not to Blame for Purchase Price.

Tenant Problems From Foreclosures Hitting NYC Harder Than Elsewhere

In New York City, The New York Times reports:
  • In New York, a city of renters despite the recent condominium boom, tenants are particularly at risk. According to census figures for 2006, the most recent year for which data was available, an estimated 65.6 percent of New York City housing was renter occupied, as opposed to 32.7 percent nationwide. “The effects of the subprime crisis and the housing-price crisis are just different in New York than in many parts of the country,” said Vicki Been, the director of the Furman Center for Real Estate and Urban Policy at New York University, citing factors like strong home prices and low homeownership rates. “The crisis is unfolding more slowly and, I think, it is affecting many more renter households than it is elsewhere in the country.”

***

  • Foreclosures can have an impact on tenants in lots of ways, but there are two sets of problems that most will face. The first and most daunting is eviction. The second is a loss of services, which can mean anything from having to fix your own clogged pipes to losing heat in the winter.

For more, see Even Renters Aren’t Safe.

Recent New-Home Buyer Hit With $60K In Mechanics Liens As Financially Strapped Builder Stiffs Subs

In Dayton, Nevada, Nevada Appeal reports:
  • Bobbi Hammerstaedt did all the right things when she purchased a home in the Waterford subdivision along the Carson River in Dayton last December. She put 20 percent cash down on the home, got a conventional, 30-year, fixed-rate mortgage and kept up with her payments. "I didn't do any of the inventive loans," she said. But financial difficulties in the housing industry have left her responsible actions going for naught - about $60,000 in liens are being placed on her new home because the developer hasn't been able to pay the subcontractors. Hammerstaedt is concerned about losing her home to foreclosure because Landmark Homes & Development Inc., hasn't paid some of the subcontractors, even though Hammerstaedt paid Landmark in good faith.

For more, see Developers' woes trickle down to homeowners.

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

Fannie, Freddie Expanding Roles In Stricken Housing Market

In Washington, D.C., The Associated Press reports:
  • Fannie Mae will allow more struggling homeowners to sell their homes for less than they owe on their mortgages in a gambit that could hit the mortgage finance company with upfront losses but stave off massive hemorrhage from foreclosures. The program by the largest U.S. financier and guarantor of home mortgages addresses homeowners with "upside-down" loans who owe more than their homes are worth. There are now an estimated 9 million U.S. homeowners in that predicament, according to Moody's Economy.com. Encouraged by regulators and politicians intent on keeping more homeowners from defaulting, Fannie Mae and its smaller government-sponsored sibling Freddie Mac have expanded their roles in the stricken housing market.

***

  • Brad German, a spokesman for McLean, Va.-based Freddie Mac, said the company recently changed its policy regarding its mortgage servicers in a way that increased approvals of short sales by 90 percent between the fourth quarter of 2007 and the first quarter of this year. Late last year, Freddie Mac gave some of its servicers more authority to accept short sales without prior approval from the company, German said.

For more, see Fannie Working on Mortgage Plan (Fannie Mae to OK 'upside-down' sales).

Sunday, April 13, 2008

Bay State Man Featured In Report On Alleged Foreclosure Scandal That "Left Trail Of Blighted Streets, Ruined Investors, Civil Suits" Across State

In Massachusestts, the Boston Herald:

  • [R]eveals how one Boston man used easy-money credit deals during the Bay State’s real estate boom to pocket $1 million while leaving a trail of blighted homes and busted investors.

***

  • At the height of the housing boom in 2004 and 2005, Dwight Jenkins of Dorchester offered easy-money real estate deals to inexperienced investors in Boston, Brockton and other struggling pockets of the state. The investors needed to commit only their names, their good credit ratings and their often unrealistic hopes for fast profits. But the properties were never fixed up and resold, as promised. Instead, they were left to fall into disrepair and foreclosure, while the investors ended up in debt and credit disarray.

For more, see:

For subsequent stories, see:

Minneapolis Feds File Criminal Charge In TJ Waconia Mortgage Fraud Investigation

In Minnesota, the Minneapolis Star Tribune reports:
  • A Roseville firm involved in hundreds of real estate deals in the Twin Cities area was charged Friday with a single count of mail fraud resulting from a federal mortgage fraud investigation. The charge suggests that a plea deal may have been reached and that federal attorneys may be looking at charges higher up the lending chain, according to those who have prosecuted white-collar crime. The U.S. attorney's office filed the one-page charge against appraiser Thomas J. Balko, 37, of Rogers; Jonathan E. Helgason, 45, of Chisago City; and TJ Waconia, the company they formed in 2000. They could not be reached Friday night.

  • "It sounds minimalist," said City Council Member Don Samuels. He has compared the damage he said the company did in at least 140 deals in his and other North Side Minneapolis neighborhoods to the damage caused by drug dealers. But a former assistant federal prosecutor, Mark Larsen, said filing the charge without an indictment strongly suggests a plea deal. Such deals often require testimony against others involved in a criminal activity, described in this case as a three-year mortgage fraud scheme.

For more, see Real estate company charged in fraud scheme (A Roseville firm involved in quick-turn deals faces one count, but it appears likely that charges for other lenders are ahead).

Go here for other posts on the alleged TJ Waconia house flipping operation.

Phony Philly Landlord Rents Out Same Home To Three Different Tenants, Pockets $4,800, Leaves 3 Renters In The Lurch

In Philadelphia, Pennsylvania, WCAU-TV Channel 10 reports on a story of a local scammer who illegally leased out a home he didn't own to three different families and made off with the upfront cash paid by each. The families learned they were scammed when they all tried to move into the home on the same day. An excerpt from the story:
  • NBC 10 tracked the real owner to Blueline Investment Group, LLC, a Philadelphia rental management company. It turned out the company manages four other rental properties where the same thing happened -- someone illegally rented properties they don't own.

***

  • Experts said scams like this are increasing because of the poor economy. "Unfortunately, there are many people who [are] renting houses that they don't own," said Lance Haver, a Philadelphia consumer advocate. "Usually when someone does this, it's a house that's in foreclosure, the family are losing the house to a sheriff's sale. … Some thief comes along and finds a vacant house."

Reportedly, the scammer found his victims by taking an ad out in the local paper, paying cash for the ad. As a result of the scam, the paper has changed its policy and requires payment with a credit card, according to the story.

For more, see Scam Leaves 3 Families Moving Into Same House (Local Housing Scam Conning Renters Out Of Thousands) (read story) (watch video).

Go here and go here for other posts on tenant victims of rent hoaxes. unwitting tenant rent scam yacht

Rent Scam Claims Another Victim As Tenant Loses $3K To Phony Landlord

In Thousand Oaks, California, the Ventura County Star reports:
  • Christina squirreled away what little money she had for months to be able to move from the valley to Thousand Oaks and reconnect with her only son. Last week, she paid $3,000 cash for a deposit, signed a lease and got the keys to a quaint, three-bedroom house. "This was our chance at a new, better life," she said. But her dream was quickly smashed when sheriff's deputies showed up Sunday and relayed crushing news: The woman she'd paid didn't own the house. Christina had been duped by a scam artist. [...] Strapped for cash, Christina, who is disabled and suffers from post-traumatic stress disorder, and her husband are now staying at a Thousand Oaks hotel. "Now I am homeless and trying to figure out what to do," said Christina, who asked that her last name not be printed because her son attends a local middle school and she feared he would be teased for their situation.

For more, see Renter in T.O. is victim of fraud (Real estate scams rising in county).

Go here and go here for other posts on tenant victims of rent hoaxes. unwitting tenant rent scam yacht

NY AG Shuts Down Home Improvement Contractor For Stiffing Buffalo-Area Homeowners

From the New York Attorney General's Office:
  • Attorney General Andrew M. Cuomo [last week] announced that a Buffalo area custom home builder that repeatedly defrauded customers has been put out of business and ordered to pay more than $325,000 in penalties and restitution. A lawsuit filed by the Attorney General’s Office resulted in a State Supreme Court order issued today requiring the owners of Elite Custom Homes, Inc., Steven Wisniewski and April L. Januale, to pay $300,000 in restitution and $6,000 in costs. Wisniewski, additionally, was ordered to pay a $25,000 penalty. Both will be barred from the home improvement business unless they file a $500,000 performance bond.

***

  • Among the instances of fraud detailed in court documents: (1) The couple took $158,400 to build a home for a family – and only built a basement, valued at less than $25,000; (2) A family submitted an advance payment of $6,800 for a landscaping contract totaling $9,700 - Elite Homes did not provide services worth that amount and, in fact, broke four sewer vent pipes, resulting in the family having to pay $11,100 to repair the damage Wisniewski caused and to complete the work he did not do; (3) Wisniewski and Januale forwarded $6,500 from a family to buy materials from a supplier, then stopped payment to the company, leading it to threaten to place a lien on the family’s home.

For more, see Attorney General Cuomo Shuts Down Buffalo Home Builder Who Repeatedly Defrauded Consumers (Used customers’ payments for personal expenses, failed to build homes for multiple families throughout Western New York).

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

Vero Beach Attorney Facing Charges Involving $4.5M In "Mishandled" Client Escrow Funds Declared Indigent; Taxpayers To Foot Bill For Criminal Defense

In Vero Beach, Florida, TC Palm reports:
  • Indian River County Judge Daniel L. Vaughn ruled Friday that disbarred attorney Ira C. Hatch Jr. cannot afford to pay for his criminal defense. Local taxpayers will cover his costs, which could exceed $50,000. Hatch remains in Indian River County jail in lieu of $3 million bail on 57 criminal counts in connection with the financial operations of Coastal Escrow Services Inc. and the law firm Hatch & Doty. He is charged with crimes ranging from grand theft to racketeering. Under the ruling, taxpayers are now liable for expenses associated with Hatch's pretrial depositions, court reporters, a forensic accountant and an investigator.

***

  • When asked after the hearing why Hatch's family members could not pay his criminal defense, [Attorney Greg] Eisenmenger said, "Under case law...a rich spouse is not liable for defending a spouse." "The law on that point is very pro-defendant," said Assistant State Attorney Lev Evans, whose office is prosecuting Hatch.

For more, see Hatch found 'indigent', taxpayers to foot the bill.

Go here for earlier posts on Ira Hatch & Coastal Escrow Services.

$1 HUD Home Success Story For One Ohio City

In Cheviot, Ohio, The Community Press reports on a home the city acquired from HUD and recently rehabbed:
  • The vacant house was the first property the city bought through the $1 home program. Cheviot officials voted to buy the home, which sat in foreclosure for more than six months and was passed up twice at auction, from the Department of Housing and Urban Development for $1 in October. Now the city is ready to sell 3939 Davis to an owner-occupant who wants to call Cheviot home for at least five years.

***

  • [Cheviot Safety Service Director Steve Neal] said Cheviot Savings Bank donated $10,000 from its charitable foundation and gave the city an interest-free $20,000 loan for the renovations. And local plumber Joe Hill did all the plumbing work free of charge. "Without their help none of this would be possible," Neal said. [...] The home is listed at $72,900. He said the city will use the money they make from this house to fund improvements at two other $1 homes the city has since purchased. [...] "We need to protect our housing stock. I don't want people to think Cheviot is a bad community, because it's not."

For the story, see City ready to sell $1 home.

See also, Detroit Free Press: Race heats up for $1 homes (Both county, cities want property).

For HUD's recent suspension of their $1 Home Program, see HUD Stops Sale Of $1 Foreclosed Homes In Ohio, Michigan.

Minnesota Chief Justice Pleads That State Judiciary Be Spared From State Budget Cuts

In Minnesota, the Minneapolis Star Tribune editorial page opines:
  • [Chief Justice Russell Anderson is] spending his final weeks in office pleading that the judiciary be spared from the latest round of state budget cuts. His message deserves heed. Courts are a bedrock function of democratic government. Yet justice delayed, and hence denied, will be the story in every courthouse in Minnesota if [Gov. Tim] Pawlenty's proposal becomes law, Anderson warns.

Obviously, the civil court cases will take the hit over criminal cases as far as delays in the legal process are concerned. Among those cases delayed will be foreclosures and evictions. For more, see State's court system shows budget strain (More cuts aren't the solution in economic downturn).

For the same problem being faced in Florida, see Florida Court System Being Asked To "Commit Suicide" Says State Chief Justice In Response To Budget Cut Requests; Forsees Foreclosure, Eviction Delays. state budget cuts courts

Saturday, April 12, 2008

Bay Area Multi-Site Indoor Pot Farm Operation Yielding Millions Busted, Say San Leandro Cops; Suspected Ringleader On The Lam

In Northern California, Inside Bay Area reports:
  • San Leandro police raided multiple East Bay locations Thursday morning in a blockbuster marijuana bust that yielded millions of dollars in drugs and cash, authorities said. Authorities seized approximately 1,000 marijuana plants and more than $150,000 in cash, firearms and advanced indoor growing equipment, San Leandro police Lt. Tom Overton said. The Drug Enforcement [Administration] assisted police in the bust, which Overton said was the culmination of a two-month investigation. "It's one of the biggest busts I've seen in 23 years," Overton said.

  • Authorities made six arrests, but the sophisticated indoor growing operation's suspected ring leader eluded authorities, Overton said. Brian Molitaris, 30, leapt from a steep 25-foot embankment into rugged terrain near his luxurious Berkeley hills home, Overton said. Molitaris remains at large.

For more, see Oakland homes raided in major pot bust ('It's one of the biggest busts I've seen in 23 years,' cop says) (if link expires, try here).

Go here and go here for other posts on Marijuana Grow Houses. pot grow ops alpha

Increase In Abandoned Homes Raises Safety Concerns In Central Ohio

In Marion, Ohio, The Marion Star reports:
  • With the economy slowing and foreclosure rates up, Ohio is seeing its fair share of abandoned homes and vacant properties. Marion isn't isolated from that trend and local authorities say it presents a potentially dangerous situation for safety forces and residents -- fires. "I see in driving around the community more and more empty houses," said Al Gruber, chief of the Marion City Fire Department, noting an increase in the number of fires within city limits that involve vacant properties.

***

  • Gruber's concern is two fold -- vacant homes are not always structurally sound and vacant homes are not always vacant. "Kids play in them, animals seek shelter in them and even the homeless squat in them," he said. During the colder months, Gruber said fire departments traditionally see an increase in fires of vacant structures, likely started by homeless members of the community. Neighborhood youths using vacant structures as "club houses" proves even more problematic, Gruber said. "They're starting little fires in there and they think it's fun," he said. "It's just a worry. If we can keep them out of there, that's something we want."

For more, see Abandoned homes rising safety concern (Potential for problems grows as number of vacant houses increases).

Go here and go here for other posts on vacant homes leaving its mark on neighborhoods.

For other stories on fires & foreclosures, go here , go here , and go here. foreclosure arson xerox neighborhood destruction from foreclosures zach

Alleged Washington State I.D. Theft Duo Accused Of Using Vacant Home Addresses On Bogus Credit Card Apps

In Kennewick, Washington, the Mid Columbia Tri City Herald reports that bank vice president Cynthia Jean Walker, 54, and her real estate agent daughter Cassidy R. Janosky, 35, face multiple federal charges in an alleged identity theft scheme. According to the story:
  • Janosky, a vice president and business development officer at Bank of the West, is accused of obtaining personal information from bank customers and using that information to open credit cards in the customers' names, according to the federal indictment. Walker, who was a licensed real estate agent with Coldwell Banker, would then identify vacant homes for sale in the area and use the addresses on the credit card applications, court documents said.

For more, see Kennewick mother, daughter face federal charges in scheme.

Another Racketeering Lawsuit Filed Against "Hard Money" Massachusetts Mortgage Lender

In Worcester, Massachusetts, the Worcester Telegram & Gazette news reports:
  • A fourth federal lawsuit accusing prominent city businessman David G. “Duddie” Massad and a business associate of running a racketeering enterprise through lending companies has been filed in U.S. District Court. A federal judge rolled the three previous civil cases making similar extortion allegations into one action in February, and yesterday ruled against motions by the defendants to dismiss that case. In the new lawsuit filed Tuesday, bankrupt developer Bernard J. Laverty Jr. of Marshfield alleges Mr. Massad and Marcello M. Mallegni of Southboro “used the threat of foreclosure and bodily harm to force the borrowers to agree to their fraudulent loan terms” and “used their position to force borrowers to pay them kickbacks in the form of cash and ownership interest in the various projects.”

For more, see Fourth racketeering lawsuit filed (Massad, Mallegni accused by Marshfield man).

Go here for other posts related to this story. LBM Financial

Illinois AG Indicts Man In Alleged Foreclosure Investment Ponzi Scheme

From the Illinois Attorney General's office:
  • Attorney General Lisa Madigan announced her office has charged Kenneth Bivens, 43, of Homewood, Ill., with securities fraud, theft and violating an order of prohibition for continuing to operate an illegal real estate scheme and drawing in new victims even while being prosecuted for the scheme.

***

  • In November 2007, Cook County Circuit Court Judge John Fleming found Bivens guilty of four counts of violating an Illinois Secretary of State (SoS) order prohibiting him from selling securities and four counts of securities fraud for failing to inform his victims of the SoS order. [Last week], the court sentenced Bivens to serve 5 years in the Illinois Department of Corrections and pay restitution to his victims.

***

  • The new indictment alleges that while the initial case proceeded in court, Bivens continued the scheme by soliciting seven additional investors, in clear violation of his bond order.

For more, see Homewood Man Indicted For Real Estate Investment Scheme.

Key Figure In Indianapolis Arson Scam Gets Four Years; Ring Accused Of Buying Low Cost Homes, Torching Them, Pocketing Insurance Cash

In Indianapolis, Indiana, The Muncie Star Press reports:
  • Kenneth Allen blamed "greed and arrogance" for his serial arson-for-profit spree that resulted Wednesday in a four-year prison term and an order to pay more than $1 million in restitution to eight insurance companies.

***

  • Allen pleaded guilty to conspiracy to using arson to commit mail fraud, a federal charge that carried a maximum 20 years in prison and $250,000 fine. He was described by authorities as the mastermind of the scheme and became the first to be sentenced following federal indictments last fall. Other alleged conspirators face state charges in Delaware County courts. [Federal Judge Sarah Evans] Barker weighed Allen's past criminal history -- including a 2000 conviction for dealing in cocaine -- and federal prosecutors' recommendation of a five-year prison term in sentencing Allen to four years in prison along with the restitution.

  • "This is quite a balancing act for the court," said Barker, reading court documents that said the scheme involved more than 37 arsons and in excess of $1 million in claims.

***

  • Authorities said Allen and others would buy low-priced houses either as their own or for others, set them ablaze and collect insurance settlements.

For more, see Arson-for-profit kingpin gets four years. foreclosure arson xerox

New Jersey Man Facing Foreclosure Charged With Animal Cruelty; Remains Of 64 Animals Found In Home

In Barnegat Township, New Jersey, The Press of Atlantic City reports:

  • The explanation from an Ocean County man as to why 64 dead animals were found in his home was that he was running a rescue operation, authorities said Tuesday. Matthew Teymant, 29, was arrested Tuesday morning at his parents' home in Toms River on animal cruelty charges, authorities said. Yesterday, police made the gruesome discovery of dozens of dead animals at a township home on Potomac Court that was last owned by Matthew and Amanda Teymant.

***

  • SPCA Sgt. Thomas Yanisko said Tuesday the 64 dead animals found in the home included dogs, cats, hamsters, guinea pigs and turtles, all in different stages of decomposition. [...] "During an interrogation, Matthew Teymant basically said they were ...(rescuing) ... and adopting them out," [spokesman for the state Society for the Prevention of Cruelty to Animals Matt] Stanton said. "This is your typical case of a person who thinks they are a rescue operation and tries to do the right thing and goes crazy." [...] Ocean County public records include notice of foreclosure on the property through Countrywide Home Loans on June 14, 2007.
For more, see Police charge couple after 64 dead animals found in Barnegat home.

See also:

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

Friday, April 11, 2008

Some Out-Of-Work Mortgage Brokers Now Training To Undo The Unaffordable Loans They Once Originated

National Public Radio reports on the story of some unemployed mortgage brokers who have found work with the non-profit housing advocate Neighborhood Assistance Corporation of America, or NACA.
  • NACA is working with borrowers facing foreclosure all over the country, refinancing or restructuring their unaffordable subprime loans. Bruce Marks heads up NACA and now helps retrain former subprime loan brokers. Who better to untangle these unaffordable loans than the brokers who helped set them up, he says. The former brokers understand the "exploding ARM loans" and the "pick-a-pay loans," Marks says. "They are the experts, because they were a part of that industry, and they know that business inside and out."
NPR speaks with three ex-subprime mortgage brokers now with NACA who comment on some of their experiences with their former employers who, according to them, encouraged fraudulent conduct. One broker commented on the incentives thrown at loan originators to get borrowers into exploding adjustable rate mortgages:
  • "The bottom line is that the lender offered an incentive of 3 percent to the broker if they put [a client] into that particular loan," [broker Amber] Barbosa says. On a $500,000 home in California, brokers could make $15,000 to $20,000 or more in kickbacks on every single one of these risky loans. "Obviously, tons of people got pushed or thrown in that direction," Barbosa says.
Another ex-subprime broker commeneted on the need to sometimes obtain a supporting letter from a certified public accountant to get a mortgage application through:
  • According to [broker Anthony] Narag, an account executive from the now bankrupt lender New Century told brokers like him not to worry about that letter. "He would tell people, 'I have a CPA in my back pocket if you need one,'" Narag says. Narag says that meant he could get brokers bogus accounting letters so that fraudulent loan applications could get approved. New Century declined to comment for this story.

  • Narag says he also observed brokers printing fake bank statements or other income documents, and that there was a black market for these items. Everybody — including the lenders and banks buying these loans — looked the other way, Narang says, because the money was so good.

For more, see Ex-Subprime Brokers Help Troubled Homeowners.

HUD Stops Sale Of $1 Foreclosed Homes In Ohio, Michigan

In Ohio, The Cleveland Plain Dealer reports:
  • Federal authorities have stopped Ohio and Michigan communities from buying and renovating hundreds of foreclosed houses, leaving local officials stuck with - and frustrated by - neighborhood eyesores. The U.S. Department of Housing and Urban Development said in a memo dated Tuesday that it has delayed the sales because it wants to review the program, and it might clear it within a month. The government's problem: There are more of these sales pending in Ohio and Michigan right now than there have been nationwide in the program's five-year history. The sheer volume in Michigan and Ohio raised alarms.

***

  • The federal government was going to sell the houses for $1 each, through a HUD program designed to give new life to foreclosed properties lingering on the market for six months or more.

For more, see:

Butte County DA Issues Warning On Local "Fractional Interest" Foreclosure Rescue Scam

In Oroville, California, the Chico Enterprise Record reports:
  • Local property owners who may be in the process of foreclosure are being warned by the Butte County District Attorney's and Clerk-Recorder's offices about a possible scam. The scheme is supposed to work by having the property owner grant a fractional interest in the property to a sham business entity, according to the District Attorney's Office. The property owner is also asked to pay the person who gains the fractional interest a monthly fee. The fractional owner then files bankruptcy for the sham business to stop foreclosure. The bankruptcy is found to be fraudulent, the foreclosure continues and the owner loses the property as well as the fees they paid to the scam artist.

  • County Clerk-Recorder Candace Grubbs heard of the scheme from other county recorder offices and checked Butte County records. She found at least one suspicious case, referring it to District Attorney Mike Ramsey, whose office is investigating the circumstances. Ramsey said the case has ties to a similar scheme out of Alameda County.

  • In Alameda, the district attorney has brought charges against two people who have gained fractional interests from property owners in Alameda, Fresno and Napa. The U.S. Attorney in Sacramento has indicted 19 people on similar charges, according to Ramsey. Property owners who may be approached in this manner are encouraged to contact Butte County's economic crime unit, 1-866-323-7283 [...].

Source: Foreclosure scam may be operating locally.

Go here for other posts on fractional interest deed transfer, foreclosure rescue bankruptcy scams.

Surge In Foreclosure Rescue Scams A Byproduct Of Housing Crisis

Reuters recently ran a story that reminds us that there's big money in running foreclosure rescue scams.
  • Among the byproducts of the U.S. housing crisis is a surge in scams that cheat people out of their money, their homes, or both, under the guise of offering to rescue them from foreclosure. "There is a lot of money to be made if you are good at committing fraud," said Debra Zimmerman, an attorney at Los Angeles-based Bet Tzedek Legal Services, which provides free legal assistance to stricken home owners. "Foreclosure rescue scams are big business right now." Groups like Zimmerman's say that as soon as borrowers end up in foreclosure -- a matter of public record in the United States - they are bombarded with calls, leaflets and knocks on the door from people armed with fraudulent offers of help.

For more, see Troubled US homeowners fall prey to "rescue" scams.

More On The FBI's "Operation Homewrecker" Foreclosure Rescue Investsigation

CNBC reports:
  • It doesn't get much sadder than the "funny business" I'm reporting today. More than a hundred homeowners in 23 states have lost their homes, not because they intentionally stopped paying their mortgages, but because the company which promised to help them instead may have robbed them blind. Charles Head ran a financial services company in Orange County, California. He is now charged with being the ringleader in what a federal investigation has dubbed "Operation Homewrecker."

For more, see "Operation Homewrecker" May Be Lowest Blow Of Housing Crisis.

Go here for earlier posts as well as available updates on the Head nationwide foreclosure rescue operation.

South Florida Contractor Gets 10 Years As Habitual Offender For Pocketing Customer Cash & Doing Little/No Work; Still Faces More Charges

In Miami, Florida the South Florida Sun Sentinel reports:
  • South Florida businessman John T. Pluto, whose company has been the subject of more than 100 consumer complaints and a criminal investigation, pleaded guilty Wednesday to charges of forgery, grand theft and violating probation. Pluto, who entered a guilty plea as a habitual offender in Miami-Dade County Circuit Court, was sentenced to 10 years in prison.

  • Pluto is also facing charges in Broward County Circuit Court of fraud and six counts of third-degree grand theft. No date has been set for the hearing in Broward, said Assistant State Attorney T. Don TenBrook. The charges against Pluto, 46, stem from complaints filed by Broward and Miami-Dade consumers who signed contracts with his company, the now-defunct All American Driveways and Pool Decks Inc. Investigators claim Pluto defrauded consumers by entering into construction contracts, requesting up-front payment, then doing little or no work.

For more, see Hollywood contractor gets prison for taking cash, not doing work.

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

Minnesota Homeowner Loses Home In Copper Theft As Severed Gas Line Causes Explosion

In Minneapolis, Minnesota, the Minnesota Post reports on the destuctive effect that copper thieves are having on the city's North Side. The following excerpt decribes the predicament of one local homeowner who literally lost her home as a result of the actions of one or more copper thieves intent on scoring a couple of hundred bucks worth of copper:
  • Sean McKenna, an arson investigator with the Minneapolis Police Department, points to the nightmare story of 3500 N. Fourth St. In December 2006, while homeowner Keili Mac was overseas on an extended vacation, a burglar severed a gas line in the basement, causing the house to fill with gas and explode. By the time Mac returned to the country, the house had been razed by the city because it was a hazard. To add insult to injury, McKenna said, Mac found herself mired in a contentious struggle with her insurance company, which balked at her claim because it didn't have the opportunity to evaluate damages before the demolition. McKenna is unaware of the final resolution of the case. Mac could not be reached for comment.

For more, see On Minneapolis' North Side, copper-theft epidemic adds to mounting housing problems.

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

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