Tuesday, April 29, 2008

Bank Of America Vows To Modify $40B In Problem Loans

The New York Times reports:
  • Bank of America will expand efforts to help Countrywide Financial borrowers avoid foreclosure on troubled mortgages, a top bank executive said Monday. The announcement came as members of the Federal Reserve Board convened two days of public hearings on Bank of America’s proposed $4.1 billion stock deal for Countrywide, based in Calabasas, Calif. The executive, Liam E. McGee, president of Bank of America’s global consumer and small-business banking operation, said the bank would modify at least $40 billion in problem loans from at least 265,000 borrowers over the next two years.

For more, see Bank of America Vows More Help for Countrywide Mortgage Debtors.

Congress To Investigate Allegations Of Mortgage Company Abuse Of Bankruptcy Court System

The New York Times reports:
  • A Senate subcommittee plans a hearing next week to investigate whether mortgage lenders are abusing the bankruptcy court system and deepening the foreclosure crisis by levying dubious fees on troubled borrowers or moving to seize their homes improperly. Senator Charles E. Schumer, chairman of the Senate Judiciary Committee’s Subcommittee on Administrative Oversight and the Courts, said he hoped the hearing on May 6 would lead to legislation intended to protect borrowers from abusive practices. “What the hearing is going to show is what an ongoing, awful enterprise some of these companies ran, not just taking advantage of the terms of the mortgage, but when they control the mortgage how they continue to squeeze and squeeze and squeeze,” Mr. Schumer, Democrat of New York, said.

For more, see Panel to Look at Foreclosure Practices.

Federal Jury Convicts D.C. Scammer Of Stealing Houses From Dead Homeowners

In Washington, D.C., Examiner.com reports:

  • A federal jury convicted a founder of a nonprofit on charges he forged the names of dead people to steal their houses. Duane McKinney, 35, president of Brotherhood of Men Inc., was found guilty on 11 counts of fraud, theft and illegal money transactions. He is scheduled to be sentenced July 15, and faces between seven and nine years in prison under federal sentencing guidelines, according to the U.S. district attorney for the District of Columbia. Prosecutors said McKinney used his organization to steal 14 properties and sell nine of them for a gain of $770,000.

  • Co-defendant Joe D. Liles, a notary public in Maryland, was accused of notarizing the dead people’s signatures. Liles pleaded guilty in January and will be sentenced May 30.

For more, see Nonprofit leader found guilty in home scam.

See also, U.S. Attorney for D.C. press releases:

  • Announcement of Conviction - District of Columbia man found guilty of theft, fraud, and money transaction offenses relating to forged property deeds,
  • Announcement of Indictment - Federal grand jury charges two in scheme to steal D.C. area properties from estates ofdeceased persons and others.

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

More Victims Accusing Ohio Foreclosure Rescue Operator Come Forward

In Newark, Ohio, The Columbus Dispatch reports on a local couple who were allegedly screwed over by area foreclosure rescue operator Harry Blausey.
  • The Newark man was indicted last month on 30 counts, including grand theft, securing writings by deception and engaging in a pattern of corrupt activity. Convictions could add up to 49 years in prison. Blausey is accused of conducting a foreclosure rescue scam, persuading more than 20 homeowners to sign over their property to him by promising to deal with the mortgage companies on their behalf. He then rented the properties but made no mortgage payments, according to court filings.

***

  • It wasn't until Blausey was indicted and released on $50,000 bail that the couple realized they had been duped. They called their lender and discovered that no mortgage payments had been made and the company was seeking foreclosure. She said Blausey had told them to have no contact with their lender so the company would have to deal with him. [...] Blausey has [also] been sued in at least 17 civil cases in Licking County Common Pleas and Municipal courts since 2006. He was found guilty and placed on probation in 2006 on misdemeanor counts of aggravated trespassing and intimidating a witness.

For more, see Too good to be true (In a pinch, they trusted him; now he faces 30 charges in mortgage deal).

For story update, see (5-4-08) Motion seeks to stop Blausey from bidding on homes (Indicted former real estate agent has almost $450,000 outstanding on sheriff's auction properties).

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

Go here for criminal prosecutions of foreclosure rescue operators.

NY AG Forces Firm Peddling Reverse Mortgages To Reform Marketing Practices

From the New York Attorney General's office:

  • Attorney General Andrew M. Cuomo [last week] announced his office has stopped a Syracuse-area reverse mortgage lender from preying on seniors statewide through false advertising and portraying itself to be a local non-profit organization. Under a settlement reached by the Attorney General’s Office, Upstate Capital, Inc. of Basile Rowe in East Syracuse, must reform its marketing practices and indicate that it is a registered mortgage/reverse mortgage broker. The company must also pay $20,000 in costs and penalties to the state.

***

  • Starting in July of 2007, Upstate Capital sent flyers portraying itself as [a non-profit organization] to seniors statewide promoting a “new government program” that “protects seniors” by providing a monthly, tax-free income with no income or credit qualifications. The company also claimed that the “lifetime” program required no repayments. Consumers were directed to call the company to obtain a free packet of information on the program. They would then be contacted by an Upstate Capital representative “on behalf” of [the non-profit firm]. The solicitation, however, neglected to say that the source of the money was actually a loan, and that the product the company is peddling was actually a reverse mortgage.
For more, see Attorney General Cuomo Protects Senior Homeowners From Misleading Reverse Mortgage Solicitations (Reverse mortgage company portrayed itself as community-based non-profit to mislead seniors into reverse mortgage product).

For stories related to Reverse Mortgage Problems, go here, and go here.

Thanks to Bill Collins of Crossroads Abstract, Rochester, NY for the heads-up on this story. reverse mortgage yak

South Florida Feds Charge Three In Alleged Mortgage Scam Resulting In $6M In Fraudulently Obtained Loan Proceeds

From the office of the U.S. Attorney - Southern District Of Florida:
  • R. Alexander Acosta, United States Attorney for the Southern District of Florida, [and a host of other law enforcement officials] announced that defendants Berry Louidort, Lauren Jasky, and Ralph Michel, of Palm Beach County, were charged in a Criminal Complaint filed in federal court on April 22, 2008. [...] The defendants are charged with bank fraud [...].

***

  • [According to the criminal complaint], this investigation began with an audit conducted by the Florida Office of Financial Regulation into 24 sub-prime mortgage loans in the period November 2006 to June 2007. The initial audit showed that the loans included what appeared to be excessively large fees paid to defendants Berry Louidort and Ralph Michel. The fees, ranging from $29,000 to $650,000, were described as marketing and/or assignment fees. In reality, the fees were kickbacks to defendants Louidort and Michel based on inflated sales prices. The audit also revealed that the majority of the suspect loans were originated by defendant Lauren Jasky, Senior Vice President of Compass Mortgage Services, located in Boca Raton, Florida.

For more, see U.S. Attorney Press Release: Palm Beach County Residents Charged With Mortgage Fraud.

Go here for other posts on this alleged flipping scam.

Houston Homeowners Sue Builder For Allegedly Flawed Townhomes

In Texas, the Houston Chronicle reports:
  • For years, neighbors in a stylish Montrose cul-de-sac named Hyde Park Crescent fought to get something out of the developer they claim failed to fix faulty windows, water-soaked balconies and defective roofs that spawned leaks, mold and rot in their nearly new $350,000 homes. Families alleged in a lawsuit that they were sold flawed town homes and then stuck with thousands of dollars in repair bills. They also contended that the men behind the company committed a kind of corporate identity fraud to avoid responsibility and keep right on building on other fertile ground in construction-friendly Houston.

  • Over the years, the builder, and other companies associated with it, have left a trail of documented damages and unresolved consumer complaints involving at least four other Houston housing developments, according to documents reviewed by the Chronicle, including lawsuits and Better Business Bureau and government records. Texas laws offer minimal recourse for homeowners, and their complaints often drag on for years with disappointing results, advocates say. Some owners lose money fixing their homes or lose their homes because they can't afford to fix them.

For more, see Owners stuck with flawed homes (Families' costs mount, but state, builder give scant help, files show).

Ex-Brooklyn Judge Under Indictment For Stealing $160K+ From Elderly Aunt Cops Misdemeanor Plea

In Nassau County, Long Island, The New York Law Journal reports (at Law.com):
  • Michael J. Garson, a former Supreme Court justice in Brooklyn, pleaded guilty [last] Tuesday to a misdemeanor with a promise of no jail time, resolving charges that could have landed him in jail for five years. County Court Judge John L. Case of Nassau County promised Garson no jail time on two conditions: that he resigns from the bar and that he pays the final $48,000 in restitution ordered by a Manhattan judge for his mishandling of an elderly aunt's finances.

***

  • The district attorney three years ago unveiled an indictment accusing Garson, who was a Supreme Court justice for a full 14-year term ending in 2006, of stealing more than $160,000 from his aunt, Sarah Gershenoff, while managing her financial affairs under a power of attorney. [...] Under the power of attorney, both Garson and his first cousin, Gerald P. Garson, an ex-Brooklyn justice who is in prison on a three- to 10-year term for bribery, were authorized to manage Gershenoff's finances. Michael Garson, however, took primary responsibility for handling her money.

***

  • With [last] Tuesday's $48,000 payment, Garson has repaid Gershenoff a total of $219,000, reflecting the $163,000 ordered by [the Manhattan judge] plus interest. Gershenoff, who was 94 when the indictment was issued in May 2005, has since died.

For more, see Former N.Y. Justice Avoids Jail With Misdemeanor Guilty Plea (Garson resigns from Bar, makes restitution).

For story update, see Ex-Judge Avoids Jail for Forgery (7-7-08).

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

For other posts on the questionable judgment exercised by some of the members of our esteemed judiciary, go here and go here. knuckleheaded judges zeta valedictorian

Monday, April 28, 2008

Boston City Council Considers Plan To Force Lenders To Rent Back Foreclosed Homes To Its Occupants

In Massachusetts, an editorial in the Boston Herald opines on a proposal being considered by the Boston city council:
  • Boston city councilors are jabbing at a wasp’s nest of problems with a plan that would force lenders to rent foreclosed properties back to previous occupants. [...] The proposal, sponsored by six city councilors in a home-rule petition to the Legislature, would require that mortgage holders allow not just renters, but delinquent borrowers themselves, to stay in a home until it is sold to a third party - or until the measure expires in 2014.

For more, see Rental plan overreaches (when link expires, try here). equity skimming unwittingly digamma

NYC Seniors Targeted In Predatory Home Equity Scams Fight To Save Homes

In New York City, a recent article in The Indypendent focuses on the targeting of senior citizens as "sitting ducks" for predatory lending, home equity scams. The article features the story of two elderly homeowners who had their equity ripped off and are on the verge of losing their homes, and the local attorneys representing them in an attempt to undo or mitigate the damage.

In the case of one Crown Heights, Brooklyn homeowner, back in 2006 the now 86-year old man suffering from dementia was sold a "new $450,000 option adjustable rate mortgage that was fairly guaranteed to put his house in foreclosure," according to the man's attorney on a home he's owned since 1975. Reportedly, South Brooklyn Legal Services has filed suit against IndyMac and loan originator Global Financial Inc. on behalf of the homeowner for violations of the Federal Truth in Lending Act, with Queens Legal Services for the Elderly acting as co-counsel.

In the case of a 93-year old man from Jamaica, Queens and a homeowner for almost 50 of those years and who also suffers from dementia, he was reportedly saddled with a $315,000 mortgage on his home without his knowledge as part of an alleged deed theft scam and is currently in foreclosure. The alleged perpetrators were recently indicted by the Queens district attorney on charges of grand larceny for fraudulently refinancing his property, but this prosecution has not slowed the foreclosure action being pursued by the current loan holder.

A student-led team at the St. John’s University Law School Elder Law Clinic in Queens, who represent the homeowner in this case, fault not only the perpetrators of the deed theft, but also the loan originator and the current mortgage holder for aiding and abetting the fraud.

  • It’s a huge warning sign when a 93-year-old man with no attorney present can take out a $300,000 mortgage,” says Professor Ann Goldweber, director of the Elder Law Clinic. “They should have used more due diligence.”

For more, see Facing Foreclosure: Brooklyn Retiree on Verge of Losing Home as Subprime Lenders Target Cash-Poor Black Seniors.

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

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

Brooklyn Builder Flees Country Leaving 40+ Families In Foreclosure In Alleged $15M Mortgage Scam

In New York City, The New York Daily News reports:
  • More than 40 Brooklyn families face eviction and foreclosure on condos they bought from a developer who pulled off a massive swindle and then fled the country. The families, all Hasidim from Crown Heights, paid developer Eliyahu Ezagui - one of their own - for the apartments before they were built at two sites: 770 Lefferts Ave. and 613 East New York Ave. "We trusted him, we thought we knew him, he told us he had the blessing of the grand rabbi. We had contracts, so we gave him the money," said Jeff Minsky, who lives at 613 with his wife and six children.

  • Ezagui, 47, did not give the buyers deeds when construction was completed in what is the single biggest local case of subprime mortgage fraud on record. Instead, Ezagui deeded 64 apartments to himself, his father, his mother, his wife and two business associates. The Ezagui group then used the deeds to take out more than $15 million in owner-occupied mortgages from 15 lenders, including Ameriquest Mortgage Co., Olympia Funding and Chase. Mortgage payments have not been made and the real apartment owners have received foreclosure notices.

For more, see Builder flees & 40 Hasidic families face eviction in Brooklyn swindle.

See also, The Jerusalem Post: Defrauded Crown Heights residents fight for their homes.

Go here for story updates.

Philadelphia Implements Residential Foreclosure Diversion Program

(original post 4-27-08)
In Philadelphia, Pennsylvania, Judge C. Darnell Jones, President Judge, Court of Common Pleas and D. Webster Keogh, Administrative Judge, Trial Division, both of The Philadelphia Courts - First Judicial District, recently issued a General Court Regulation establishing a Residential Mortgage Foreclosure Diversion Pilot Program for the City of Philadelphia. Under the program, Philadelphia homeowners faced with foreclosure will have the opportunity, after seeing a housing counselor, to take part in a "Conciliation Conference" in which the parties try to work out an affordable modification of the loan or an affordable payment arrangement. According to the court's news release:
  • The Pilot Program authorizes the Sheriff Sale of non-residential and non-owner occupied premises as previously scheduled, but requires owner occupied residential premises to be scheduled for a Conciliation Conference before the Sheriff Sale can occur. [... T]he term “Residential Premises” means real property located within the City and County of Philadelphia containing not more than four residential units and shall include a residential condominium unit or a residential co-op unit.

  • The main goal of the Conciliation Conference [...] is to insure early intervention in determining eligibility under various federal, state and local programs established to facilitate loan work-out and other solutions to permit residential homeowners to retain their properties.

Philadelphia homeowners in foreclosure seeking to participate in the Pilot Program are required to call immediately upon receipt of the Case Management Order in their foreclosure case the SAVE YOUR HOME PHILLY HOTLINE at (215) 334-HOME and the Defendant-homeowner will be directed to a housing counseling agency.

The court has acknowledged and thanked the Philadelphia Bar Association for its assistance in securing competent pro bono representation of unrepresented Defendants who cannot afford to retain counsel.

For more on Philadelphia's Residential Mortgage Foreclosure Diversion Pilot Program, see:

Go here for other posts on the Philadelphia Residential Mortgage Foreclosure Diversion Pilot Program.

Thanks to attorney Donald Marritz of Regional Housing Legal Services in Pennsylvania for the heads up on the announcement and for copies of the April 16th court order and Reg No. 2008-01.

Pricey Northern Virginia Not Immune From Crime, Vandalism, Squatters Associated With Vacant Foreclosed Homes

The Washington Post reports:
  • The growing foreclosure crisis has forced suburban law enforcement agencies to tackle a new challenge: policing empty houses. As evictions mount and many houses remain unsold for months, even years, vacant properties have become havens for squatters, vandals, thieves, partying teenagers and worse, officials said.

  • In Springfield this winter, Fairfax County police found blood inside a vacant house and traced it to an injured sexual assault suspect who had been hiding there before he stole a car and fled. He was eventually caught in Maryland, police said. About the same time, a 27-year-old woman was arrested by Loudoun County sheriff's deputies after she, her husband and two children moved into a foreclosed house in Ashburn and allegedly tried to use forged documents to convince officers that she was the new owner, officials said. "These people even managed to get the electricity turned on in their names," said Sgt. Shelby Ruby, a Loudoun deputy. "That's some nerve, right there."

As far as vandalism at the homes is concerned, often caused by the foreclosed owners themselves, one local police official observed:

  • "People are angry," Loudoun Sheriff Steve O. Simpson said. "And our deputies who go to these houses to serve evictions find that people have stripped their houses of toilets and stoves and refrigerators." At [one] property, deputies found that the hardwood floors also had been stripped.

For more, see As Foreclosed Homes Empty, Crime Arrives.

For a related story in Massachusetts on the trashing of foreclosed homes by their owners, see Boston Herald: Owners trash, strip their foreclosed homes (Fixtures, cabinets, tubs, sinks, even stairways face wrath of dispossessed).

Completed & Unsold New-Home Units Accumulating As Builders Have Trouble Unloading Inventory

The New York Times reports:
  • THE prices are coming down, but new homes in the United States are still not selling, and some of them are getting old while waiting for a buyer. [...] It appears that many of the homes now being sold — and there were 51,000 sold in the month, the lowest for any March since 1991 — are coming from the supply of homes that are still being built or are newly completed. The median age of completed new homes on the market has risen to 7.4 months. Only four months ago, that figure was six months.

For more, see New Homes Turning Old as the Inventory Piles Up.

Wall Street Vultures Circling Carcasses Of Subprime Mortgage-Backed Securities

In New York City, Reuters reports:
  • The allure of rotting mortgage bonds has grown so strong that Wall Street's vultures have begun picking over their carcasses -- a signal the credit crisis has entered a crucial stage in its vicious cycle. In the past two months, these intrepid investors have begun betting billions of dollars on a hunch that mortgage security prices have fallen enough. It is a risk few have taken for a year or more as the credit crisis rooted in this very market wreaked havoc in financial markets around the world.

  • In early February, bid lists for bonds backed by middle-quality mortgages found no takers, even at what were then considered fire-sale prices, between 75 cents and 80 cents on the dollar. But the following month, though, Jeffrey Gundlach, chief investment officer at bond manager Trust Company of the West, began snapping up these same securities at 65 cents on the dollar during what he calls the "darkest moments for the markets.

For more, see Vulture subprime buyers ramp up purchases.

Sunday, April 27, 2008

Mortgage Problems A Threat To Servicemembers' Homes, Careers

National Public Radio recently ran a story on a situation that reportedly is becoming more common among military personnel.
  • [T]hough the Pentagon doesn't keep statistics on foreclosures, officials say a growing number of service members are struggling with their mortgages. Some [...] have seen big jumps in their monthly payments. Others — after being ordered to move to new duty stations — are stuck with homes they can't sell. A foreclosure can also result in other consequences for service members, including the loss of security clearances because of debt problems.

***

  • So many service members in San Diego are having mortgage problems that the Coronado Naval Base recently hosted a clinic where military families could meet with housing counselors, foreclosure experts and even bankruptcy lawyers. "Eighteen months ago, I might get one call a month about somebody who's worried about their mortgage," said Keith Kaufman, a manager of the Fleet and Family Support Center at the base. "If I get less than three calls a day now, that's a good day."

***

  • [Navy spouse Suzanne] Johnson says her family considered filing for bankruptcy or letting their lender foreclose on one of their homes. But they worry that could harm her husband's career. "My husband's security clearance is in jeopardy," she said. "A foreclosure or a bankruptcy, [any] bad marks on our record, it could directly affect him and his job. He could not be allowed to do what he does."

For more, see Downturn Puts Soldiers' Homes, Careers at Risk.

Go here for posts on the Servicemembers Civil Relief Act.

Two Sacramento-Area Men Charged With Home Repair / Reverse Mortgage Scam

This is an old story from the archives, but worth posting anyway. The Sacramento Bee reported back in March, 2006:
  • Sacramento County Sheriff's detectives are asking elderly people beware of scams involving reverse mortgages. Two men were arrested [...] on suspicion of scamming a 75-year-old woman out of more than $40,000 from her reverse mortgage, Sgt. R.L. Davis said.

  • William Patrick, 62, was presented to the woman as a financial advisor when she was looking at a reverse mortgage to help her escape financial problems. Patrick allegedly told her she needed to do some house repairs in order to qualify, Detective Rick Emerson said.
    "Patrick helped her make decisions," Emerson said.

  • He introduced her to Michael Morales, 47, who proceeded with the repairs, charging her three times the amount, Emerson said. He is not a licensed with the state, Emerson said. At one point in 2003, the woman changed her mind about the reverse mortgage but was unable to pay for the repairs and had to move forward on it. Since then Patrick allegedly forged the woman's name to an account and was able to gain access to the money from the reverse mortgage, taking more than $40,000, Davis said.

The criminal charges involved in this case are suspicion of:

  1. embezzlement,
  2. grand theft,
  3. theft from an elder,
  4. forgery, and
  5. obtaining money under false pretenses.

For more, see Pair arrested in reverse mortgage scam.

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

For stories related to Reverse Mortgage Problems, go here, and go here. valedictorian reverse mortgage yak

Why Loan Modifications For Homeowners In Foreclosure Are So Tough To Get

In a short article, The Consumerist points to the two key reasons why it is so difficult for a homeowner facing foreclosure to arrange a payment plan with a mortgage lender: lack of financial incentive on the part of mortgage servicer to rework the loans, and a system of securitization in which there could be hundreds or thousands of "owners" for each mortgage loan and no one in charge to talk to (other than the loan servicer who already may be giving the homeowner a hard time). For the article, see Why Few Seem To Be Able To Work Out Better Loan Terms.

Tangle Of Loans Feeds Foreclosure Crisis

An article published last July in The Boston Globe describes the difficulty homeowners delinquent in their house payments (on a loan that's been bundled with others and securitized by Wall Street) have in figuring out exactly who to contact in attempting to arrange some type of a payment arrangement.
  • But as foreclosures mount, the system is proving ill-suited to respond, analysts said. The reason: Spreading risk muddled responsibility. "It's perfect deniability," said Patricia McCoy, a University of Connecticut law professor who specializes in financial services. "When there's a problem, each person in line says, 'Don't talk to me, talk to the other person.' "
For more, see Tangle of loans feeds foreclosure crisis (Borrowers can't tell where to turn for change in terms).

Unwitting Family Renting Foreclosed House Finds Themselves Locked Out After Returning Home From Dinner

In Stockton, California, ABC's Good Morning America reports:

  • The housing crisis gripping the nation now has hit the renter's market. Some residents, like Beth Stoneback, are finding that their homes are being foreclosed. But Stoneback didn't own her Stockton, Calif., home. She rented the house and was shocked to find a foreclosure notice tagged to her door one day late last year. "We went out to dinner and we came home. And we couldn't get in the house. They changed the locks," said Stoneback. "We don't own a house. We don't have to worry about anything. You know, we don't own the house. I'd heard it was happening out there, but I never expected it to affect us." "Because we hadn't gotten any other notices, I assumed it was a mistake," said Stoneback's daughter Kathryn Bueche.

For more, see Housing Crisis Hits Renters Hard.

In a related story from ABC News, see Renters can't escape housing foreclosure crisis (stress of having to move on short notice may have caused tenant's miscarriage).

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

Go here for other posts on foreclosure services companies who have improperly change locks, remove belongings, etc. ForeclosureLockOuts equity skimming unwittingly epsilon

Lenders Continue To Skate As New Ordinance Targeting Vacant, Dilapidated Foreclosures Has No One To Enforce It

In Manteca, California, the Lathrop-Manteca Sun Post reports:
  • A new city law meant to crack down on owners of vacant, dilapidated homes remains unused because there is no one to enforce it, city officials say. The law, which went into effect in December, would force the owners of abandoned homes, usually banks, to take care of their properties or face $1,000-a-day fines — up to a total of $100,000 each year.

  • The City Council OK’d the law in October, when a rising number of foreclosed homes were wreaking havoc on local neighborhoods by attracting vandals and driving down property values. While the number of foreclosed houses in Manteca has grown, the police department has yet to issue a single citation under the 7-month-old law.

  • The problem, according to the city’s only code enforcement officer, Greg Baird, is that the law requires an enormous amount of back-office work, and so far no one has been able to pick that up. “It’s much harder than anyone anticipated,” Baird said.

***

  • Police Captain Dave Bricker said the law was not too difficult to enforce, but the city needs time to figure out who would handle the new work it created. “What we have is a good ordinance,” Bricker said. “We just need to set up a procedure to enforce it.” [...] Manuela Iniguez, who lives next to a [vacant] house [...] that was sold in a foreclosure auction last month, said she worried the weeds on the lawn would dry out this summer and become a fire hazard.

For the story, see Vacant homes law remains unused. register

Saturday, April 26, 2008

Stopping "Stop Foreclosure" Signs On Haverhill City Council Agenda

In Haverhill, Massachusetts, The Eagle Tribune reports:
  • [C]ity Councilor William Macek said he's been asked to do something about a recent wave of advertising signs popping up all over Haverhill, especially in the northern part of the city and on streets such as heavily traveled North Avenue that leads to Plaistow, N.H. "I responded to a constituent who is absolutely correct in the amount and usage of telephone poles to advertise," Macek said. "She was referring to a sign about not losing your house and stopping foreclosure. She also commented on, and I've heard the chief mention, that we need strong ordinances to prevent these groups from using our highway ramps to advertise."

For more, see Haverhill targets 'eye pollution' Wave of signs on poles, sides of streets draws complaints.

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

Real Estate Scams, Tenant Foreclosure Evictions, Concrete Poured Into Home Drain Pipes On The Upswing In Southern Nevada, Says Housing Advocate

In Carson City, Nevada, KOLO-TV Channel 8 reports:
  • Some Nevadans who fall behind on their mortgages and face foreclosure are trashing the homes as they move out, a [state] legislative study panel was told Tuesday. Gail Burks of the Las Vegas-based Nevada Fair Housing Center said there's an increase in southern Nevada borrowers who are giving up when faced with foreclosure and "are taking things out of the property, they're putting cement down the plumbing."

  • Burks also said she's seen an increase in violations of a new state law that's intended to block bogus real estate deals and ensure that borrowers can afford a home loan. She also said there are more cases of renters being forced from homes going through foreclosure.

For more, see Borrowers Trash Homes.

Two Arizona Men Who Say They Paid $500 For Contents Of Home Purportedly In Foreclosure Now Face Burglary Charges

In Chandler, Arizona, the East Valley Times reports:
  • Two East Valley men thought a homeowner’s loss was their gain, police said. For $500, they could have all the possessions in the soon-to-be-foreclosed house in Chandler. But Phillip Figueroa Martinez and Frank Valenzuela paid that sum to burglarize a model house, police said. They were arrested Saturday on suspicion of second-degree burglary. As for the unidentified “homeowner,” he’s $500 richer and nowhere to be found.

  • According to arrest documents, Martinez, 29, of Chandler and Valenzuela, 25, of Mesa said they were drinking in a bar when they met a man who told them his tale of real estate woe. A deal was struck, the two rented a trailer and headed to [the home]. At the house, the men paid cash to the “homeowner,” who then left. The two entered the house through an unknown means, perhaps by kicking in the door, and loaded the trailer with as much as they could. An estimated value of the stolen goods was not immediately available.

  • Around 6:35 p.m., police received a call of a suspicious vehicle and men taking furniture out of a model house. With the trailer full, Martinez and Valenzuela drove away. But police stopped their vehicle [...] about 2 1/2 miles away. That’s when, police said, the two discovered their deal on the furniture was not much of a deal at all.

For the story, see Pair lose $500 in burglary scam, police say.

Four Abandoned Homes Torched In Four Hours In Slavic Village; City Official Blames Foreclosure Crisis

In Cleveland, Ohio, WKYC-TV Channel 3 reports:
  • Four homes caught fire in four hours on Wednesday night. Now neighbors [...] are surrounded by boarded up homes and arson signs. [...] Two abandoned homes near her were set on fire. Flames spread to two other abandoned homes, all on the same block.
***
  • What's going on in the neighborhood has caught the attention of people at the highest levels. Cleveland Councilman Anthony Brancatelli took contractors who work with the Federal Department of Housing and Urban Development on a tour of the [Slavic Village] neighborhood. He talked about how the fires were a direct result of the foreclosure crisis. "What happened is a number of predatory lenders came in and created a situation where these houses would get stripped and condemned," he said. "There are homes here that are mortgaged for 90-95 thousand dollars that are not worth 10 and 15 thousand dollars."
For more, see Fear grips Slavic Village neighborhood after arson fires (watch video) (read transcript).

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 , go here, and go here. foreclosure arson whale neighborhood destruction from foreclosures zach

"Burning Desire" To Escape Debt: Overall Numbers Still Small, But Some Areas Report Significant Increases

The Los Angeles Times reports:
  • Some folks celebrate their last home mortgage payment by setting fire to their loan agreement. Lately, some people behind on their mortgages are simply setting fire to their homes. In what appears to be the latest symptom of the nation's mortgage meltdown and credit crisis, insurers, law enforcement officials and state agencies nationwide report a jump in home and automobile fires in the last year believed to have been set by owners unable to pay their debts. The numbers are small, but they're leading the insurance industry to scrutinize more closely what seem to be accidental blazes.

***

  • Few state or federal agencies categorize arson in terms of the financial status of liens on the property, making nationwide figures elusive. Still, pockets of the country are showing a significant increase. [...] Frank Scafidi of the National Insurance Crime Bureau, a membership organization that tracks insurance fraud, says his group has not identified a rise in financially motivated arson. "Everything we've found does not support that," he said. But some observers say state authorities and insurance companies play down the issue -- perhaps out of fear of copycat crimes.

For more, see Debt may be a factor in suspicious house, car fires (Insurers and law enforcement agencies are seeing more cases with possible financial motives. Many involve properties that are near foreclosure).

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

Fire Fighting Issues Involving Vacant / Abandoned Homes

An article in Fire Engineering Magazine comments on issues related to fighting fires in vacant/abandoned houses:
  • With foreclosure rates dramatically increasing around the United States, has your department looked at how it will address the associated problems? An increase in foreclosure and bankruptcy means an increase in vacant properties. [...] Has your department discussed how to deal with this? Are you making mental notes? As the number of vacant house fires increases, will the number of firefighter injuries climb along with them? At what point does a company officer decide not to go interior? Remember, firefighter safety is our number-one priority. If it isn't safe and justifiable, don't risk life over wood and stucco.

For the entire commentary, see Fire Commentary: The Foreclosure Issue.

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

South Florida Man Shot Dead By Swat Team After Taking Two Condo Association Employees Hostage; Rage Due To Delinquent Maintenance, Assessment Fees

In Pompano Beach, Florida, the South Florida Sun Sentinel reports:
  • Upset over mounting fees levied by the Cypress Bend condo association, a man brandished a gun and took two association employees hostage Thursday before members of the Broward Sheriff's Office SWAT team shot him to death. Patrick Dellisanti, 57, lived in the 2200 block of South Cypress Bend Drive. "He was angry and he had complaints, but he let that anger turn to violence," said sheriff's spokesman Jim Leljedal.

***

  • Dellisanti lived with his mother, Edith Jemas, 80, who owned the condo. Neighbors said Dellisanti did not appear to have a job and said Jemas was ill and under the constant care of personal nurses. County records show that she was behind on her condo association dues, leading the association on April 11 to put a lien against her home. Jemas missed two quarterly maintenance fees, due Jan. 1 and April 1, totaling $1,707. She also owes a $2,498 special assessment, along with $100 in late fees, the records show. [...] A recent notice from the association about the mounting overdue payments and late fees are what pushed Dellisanti to confront the condo association employees, neighbors said.

For more, see Pompano Beach man killed by police after going on rage about condo fees.

For video coverage by CW News at 10, see Deadly SWAT Standoff at Pompano Condo.

See also, WFOR-TV Channel 4: Family Demands Answers In Fatal SWAT Standoff.

Mandatory Reporting Of "Pro Bono" Hours Irks Some Hawaii Lawyers

In Hawaii, the Star Bulletin reports:
  • This year, for the first time, lawyers in Hawaii each had to report how many hours they donated in pro bono, or free, legal services annually. It was not a popular requirement. The Hawaii State Bar Association had weighed in against it. But the [Hawaii] Supreme Court adopted the rule in October, and it took effect as lawyers re-registered to practice law in 2008.

  • Chief Justice Ronald Moon says he was surprised that the idea was controversial. The new rule does not force lawyers to do volunteer work, just to report their donated hours. "To be perfectly honest, I was totally disappointed and dismayed," Moon said. "It is perplexing to me that mandatory reporting -- not mandatory pro bono services -- could garner any opposition."

***

  • "Requiring people to report, I suppose there's a little bit of a guilt trip," said Lyn Flanigan, executive director of the Hawaii State Bar Association. "Putting down a zero makes you think, 'What can I do?' And a lot of people did call and say, 'What can I do?'"

For the story, see ‘Little bit of a guilt trip’ spurs lawyers to donate services.

Friday, April 25, 2008

Failure To Deliver Condo Units Results In Suits Against New Hampshire Builder

In Litchfield, New Hampshire, The Nashua Telegraph reports:

  • Stephen Broussard had found the ideal home: a Cape-style duplex condo with a cathedral ceiling, spacious rooms, a porch and a close view of the woods. The 60-year-old computer programmer and his wife, Maryann, adored the unit so much they put down a deposit of more than $50,000 on it and expected to spend their golden years in the 55-plus community. The Broussards signed the purchase and sale agreement in January 2007.

  • Fifteen months later, the condo looks much as it did when construction first started, Broussard said. The interior is nowhere near completion, and the Broussards still live in the home they wanted to leave behind.The developer of the Broussards’ condo and the other 23 units of Blossom Court never put their $52,500 into escrow and can’t account for the money, the couple claims. But the Broussards aren’t alone. Five other owners of Blossom Court condos have sued developer Richard Berube for a slew of alleged misdeeds that they say have spoiled their retirement dreams. “We all worked hard,” said Bruce Heiser, another of the condo owners suing Berube. “This is what we wanted, and we all got screwed.”

For more, see Condo owners’ dreams dashed; lawsuit filed against developer.

For a related stories, see:

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 yelbow

The Problems Of Vacant & Abandoned Homes Hitting Throughout South Florida

In South Florida, WTVJ-TV Channel 6's Consumer Investigative Unit recently did a report on the effect that vacant and abandoned houses are having on neighborhoods throughout the greater Miami-Fort Lauderdale area. A cop, code enforcement officer, real estate agent, bank foreclosed home inspectors and angry residents were interviewed for their comments on how these unwanted eyesores are further dragging down property values throughout the area, as well as how the locals are trying to deal with the health, safety, and crime issues that typically arise with the existences of vacant and abandoned homes.

For the story, see Foreclosure Fallout (watch video) (read story transcript).

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

Miami Homeowner Scammed In Foreclosure Rescue Deal

In Miami, Florida, WTVJ-TV Channel 6 reports on a foreclosure rescue scheme that utilized unwitting college students to go door to door and approach homeowners facing foreclosure with a program purportedly designed to save their homes, but was nothing more than a scheme to get them to unknowingly sign away their homes, and ultimately evict the homeowner from the house.

The students were recruited on the Florida Memorial University by the Syntegral Corporation headed by Michael John and Denise Gomes. The financially strapped homeowner ultimately signed away her home to another company, Kelynem Properties, and Dudley Kinlock. Not long after signing the paperwork that she thought was a loan refinance, Kinlock moved to have the homeowner evicted.

For more, see Stealing Home? (watch video) (read transcript).

Addendum:

On April 1, 2009, this blog was contacted by a representative for Syntegral and was advised that there are no active cases or investigations involving the firm.

A Day In The Life Of A Miami Process Server Delivering Foreclosure Notices

In Miami, Florida, WFOR-TV Channel 4 recently road "shotgun" with a local process server as he delivered the bad news of newly commenced foreclosure actions to financially strapped homeowners. For more, see Process Servers Do Dirty Work Of Foreclosures (video only).

On a related story on one type of occupational hazard a process server recently faced when serving a foreclosure notice, see Central Florida News 13: Police: Man, 82, Points Gun At Process Server.

CBS Evening News On Squatters Moving Into Foreclosed Homes

In Sacramento, California, the CBS Evening News ran a story last night showing its correspondent, Ben Tracy, tagging along with a couple of local code enforcement officers making the rounds, inspecting vacant and often vandalized foreclosed homes taken back by the bank, bumping into occasional squatters along the way. Some are simply looking for a place to live. Then, there are the others, as this excerpt describes:
  • Some of these squatters are even more brazen. they'll clean a place up, get the power hooked up, then they'll change the locks on the door and actually rent it out, collecting money on a place they don't even own. Real estate fraud detective Mike Wood says scammers reel in unsuspecting tenants by posting on sites such as Craigslist. "It's not till months later that the bank finally sends someone to check on the house and to discover that someone's actually living in there," Wood said. That makes it hard to know who belongs and who doesn't.

To read more, see The Frontlines Of The Foreclosure Crisis (After Banks Take Over Homes, Squatters Move In, Leaving Enforcement In A Bind).

For the CBS News video on this story, see Squatters On The Rise (A recent survey found that in 33 percent of cities nationwide vacant homes and blight).

Go here for posts on squatters taking up residency in vacant foreclosures.

Go here and go here for other posts on scammers running rent hoaxes, collecting fast cash by renting out homes they don't own. unwitting tenant rent scam yacht squatter foreclosure zebra

Alleged Indianapolis Land Contract Scammers Reportedly At It Again

In Indianapolis, Indiana, WRTV Channel 6 reports on an alleged scam by two local men involving the purchase of homes using a legal arrangement known as a land contract, a deal whereby the purchaser takes immediate possession of a home in exchange for a promise to make monthly payments until a final lump sum payment completes the sale.

  • Two men who buy homes under land contract but skip out on the payments after a few months have been looking for homes again, according to alleged victims who contacted Call 6 For Help. Joseph L. Stanley and business partner Steven Harris, who both own Spectrum Property Corp., would prefer people not know they are house hunting, Call 6's Rafael Sanchez reported. Call 6 has been following Stanley and Harris' activities since late summer 2006 and recently found them on Indianapolis' northwest side, where they were being forced from a home.
***
  • According to a Call 6 investigation, the owners of 30 properties were left with stacks of legal fees or ruined credit histories after dealing with Stanley and Harris over the last 14 years. As a result of several court battles, there are $326,639.98 in judgments combined against the men and their companies.

  • In some cases, the men move into the homes and live for free while the courts often take months to evict them. In other cases, they have tenants move into the homes. Spectrum keeps the rent and, according to homeowners, the company rarely pays what's owed on the property. That means the original homeowner gets stuck with a financial mess.

  • Call 6 brought the men's activities to the attention of the Marion County prosecutor's office in November 2006. "In and of itself, it's not a crime," deputy prosecutor David Wyser said. "It's just a breach of contract." The prosecutor's office confirmed an ongoing grand jury investigation into a possible pattern of abuse.

For more, see Call 6 Investigation: Land Contract Buyers At It Again (Men Leave Homeowners With Big Legal Fees, Bad Credit) (watch video) (read transcript).

For earlier stories on this alleged scam, see:

Editorial Note:

The prosecutor who commented for the story claims that the activities are not crimes, but rather, are simply civil matters. In other states, these activities may fall under the criminal charges of:

  • grand theft, theft by fraud or deception, obtaining property under false pretenses, securing writings or execution of documents by fraud or deception, engaging in a pattern of corrupt activity, theft of property by false pretenses from victims over the age of 60.

I wonder if the prosecutor quoted in this story is trying hard enough to find the existence of a crime in this case. Maybe it's possible that the state of Indiana doesn't have any of these crimes listed in its statutes.

County Human Rights Board Sides With Fort Lauderdale Woman In Housing Discrimination Complaint In Mezuzah Dispute

In Broward County, Florida, the South Florida Sun Sentinel reports:
  • Broward County's human rights board on Wednesday backed a Jewish woman against the condo association that ordered her to remove a mezuzah from her door last year. A three-member panel of the Broward County Human Rights Board unanimously found reasonable cause to believe the board at the Port Condominium discriminated against lawyer Laurie Richter, 29, when members ordered her to remove the 5-inch mezuzah she had temporarily attached to her doorpost. A mezuzah is a small case containing a religious message that many Jews place on their door frames.

***

  • The next step in Richter's battle is expected to be mediation between her and the association that operates the 16-story, 129-unit building. If that doesn't work, Richter's attorney, Randall C. Berg Jr., said he will file a lawsuit for an unspecified amount of damages against the association. Damages could include her attorney's fees, emotional distress, pain and suffering.

***

  • Meanwhile, the state Senate, in a 40-0 vote at 11:13 a.m. Thursday, passed the bill that says a condo association "may not refuse the request of a unit owner" to attach a small "religious object" on the frame of a door. The measure, which now goes to Gov. Crist for approval or rejection, was approved by the House on April 18 in a 110-0 vote.
***

For more, see Broward panel: Jewish woman had right to hang mezuzah on condo door.

Alleged Conduct By Property Managers Leads To HUD Housing Discrimination Complaint

In Lafayette, Louisiana, The Daily Advertiser reports:
  • Nearly four years ago, when Shreveport real estate agent Angela Tatum took a couple to see a home for sale in Haughton's Camp Joy Marina, she did not find it unusual to see Confederate flags hanging from some of the houses. "It happens in the rural South," said Tatum, who is black. But when she received a phone call from the property manager a week later, she was shocked. Reggie Collier, who managed and owned the lakeside development with his wife, Kim, apparently saw Tatum showing her white clients the townhouse for sale on Sept. 20, 2004, and mistook her for a prospective buyer. Tatum said Reggie Collier called and told her he "did not want those kind of people" moving into the development. "I told him I was going to hang up," Tatum said. "I could not believe in that in this day and age this type of thing was going on."

***

  • The white couple who viewed the house withdrew their offer because they thought they might have a problem inviting black friends to their new home. That's when the owners of the house for sale, Sherrell and Ronald Tucker, made the discrimination complaint to HUD. They said trouble selling the house forced a foreclosure and accused the Colliers of causing them emotional pain and embarrassment.

According to the story, if the Colliers are found guilty of discriminatory housing practices they could face civil fines, be forced to reimburse the owners of the townhouse for any losses, be forced to compensate Angela Tatum for a lost real estate commission and be required to take "fair housing training."

For the story, see HUD charges North La. couple with discrimination.

For all of the specific allegations of threats and intimidation in this case, see:

Go here for more on filing Housing Discrimination Complaints with HUD.

Thursday, April 24, 2008

Career Criminal Gets 24+ Years In Foreclosure Scam

In Hamilton, Ohio, The Enquirer reports:
  • A foreclosure-relief scam artist was already ordered to spend 23 years and two months in prison for his crimes - but a Butler County judge tacked on an additional year to give Troy Lee Keith more time to comprehend the "economic ruin" he wreaked. Keith, 40, must serve 24 years and two months, Judge Craig Hedric ruled at a resentencing hearing Wednesday.

***

  • Troubled homeowners were promised that Keith would either assume their mortgages or buy their homes in exchange for monthly rent payments and a processing fee. But victims found themselves evicted because Keith reneged on his promises and just kept their money, authorities said. "You just stole from people that needed help," Hedric said as he lectured Keith. Keith, who represented himself in Wednesday's hearing, said he was acting on the behest of his employer.

***

  • By Hedric's tally, Keith has been convicted under 37 different case numbers in his adult life - and 35 of those cases were theft-related.

For more, see Operator of scheme gets more time (link no longer available online). foreclosure rescue

Ohio Lender Aggressively Pushing "Deeds In Lieu" Policy To Avoid Costly Foreclosure Proceedings

In Warren, Ohio, the Tribune Chronicle reports:
  • [F]irst Place [Financial Corp.] is trying a ‘‘deeds in lieu of foreclosure’’ policy that can help ease a tough situation for both lender and borrower, [chief executive Steven] Lewis told analysts Wednesday [...]. ‘‘Getting deeds in lieu of foreclosure is a common practice. We’ve been a bit more aggressive in bringing it as an alternative to borrowers,’’ Lewis said.

  • The practice calls for borrowers who are facing foreclosure to turn the deed to their house over to the bank. Borrowers gain by avoiding a potential ‘‘deficiency judgment’’ — the difference between what they owe and what their house is worth — that would stay on their credit forever, Lewis said. [...] Waiving the bank’s right to a deficiency judgment is a ‘‘pretty powerful’’ argument to convince borrowers to turn over their deed, Lewis said, adding the owners may be able to stay in the property a little longer.

  • One downside for the bank is it has to take charges against the amount of deficiency value it doesn’t receive, but Lewis noted in most cases the bank doesn’t get anything from it anyway.

For the story, see First Place meets crisis by accepting deeds, not foreclosing.

See also, Youngstown Vindicator: First Place Bank seeks deeds from nonpaying borrowers.

Hawaii Homeowner Fighting Back To Keep Home Unwittingly Signed Away In Foreclosure Rescue Deal

In Ewa Beach, Hawaii, the Star Bulletin reports on a local homeowner's experience with being allegedly ripped off of over $160,000 in a foreclosure rescue sale leaseback arrangement that she said was described to her as a refinance. According to the story, she and her husband signed the papers presented to her by the operator because they trusted her and she seemed very nice. The story also reports on her experience trying to find a lawyer to help her family:
  • The lawyers [the homeowner] called wanted "a couple of thousand dollars upfront" -- money she did not have. A nonprofit group she approached was overwhelmed with cases and could not help for a month. Her last call was to the Legal Aid Society [of Hawaii], which provides legal services to the needy. "I was so happy when they said they would help me," she said.

  • The society has twice managed to stave off eviction. It is representing [the homeowner] and her relatives in a Circuit Court suit to reclaim title to their home, alleging deception, misrepresentation, fraud, conspiracy, negligence, unauthorized practice as a mortgage broker and violations of notary public law. "When somebody steals your wallet, you can get arrested and charged for theft," [executive director of the Legal Aid Society of Hawaii Chuck] Greenfield said. "When somebody steals your house, it's not a criminal act. In Hawaii you have to locate an attorney and pursue your case in civil court."

For more, see Family needs legal help to save home.

For more on foreclosure rescue scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams.

Association Slaps $30K Lien For Lawsuit-Related Expenses Against Condo Owner Despite Losing Case

In Mundy Township, Michigan, The Flint Journal reports:
  • When a judge dismissed a condominium association's lawsuit against a condo-owning couple for starting a Web site related to the association, the pair hoped their trouble was over. Instead, the Lake Park Village Condominium Association has slapped a $30,000 lien on James and Helen Cunningham's home -- including the attorney's fees the association paid to sue the couple. The Cunninghams now face possible foreclosure on their condo.

For the full story, see Condominium controversy: Mundy Township couple sue their condo association over $30,000 lien involved in Web site debate.

Realtors: Lenders Making It Tough To Do Short Sales

Reuters reports:
  • Realtors in many U.S. states say lenders are demanding excessively high prices before allowing distressed borrowers to offload their homes in "short sales," making the housing crisis worse. In a short sale, a borrower dumps the home at [sale price] below [the existing balance on the mortgage] and the bank forgives the rest of the debt. The borrower's credit rating is hurt but for less time than in a foreclosure. Such sales have been touted by banks as a way out for homeowners unable to pay their mortgages.

  • But Realtors complain many lenders harm their own interests by refusing to accept bids below internal targets, even though that may eventually force lenders to sell homes in foreclosure, where bids are usually far lower. In addition, many lenders simply do not have the people or processes in place to handle a swelling tide of short sales around the country, Realtors say. As a result, lenders are taking far too long to evaluate offers, leading many would-be buyers to walk away from deals.

For more, see Realtors complain short-sale process is failing.

See also:

Pace Of Inspections During Building Boom May Pose Threats For Recent New-Home Buyers

In Las Vegas, Nevada, the Las Vegas Business Press reports:
  • Southern Nevada's building boom is bust and the foreclosure chickens are home to roost. Some industry experts now wonder if other consequences arising from the valley's long golden age of construction are also coming back to haunt valley consumers. The number of local construction-defect lawsuits has risen alongside the valley's population. And one reason for this may be the heavy regulatory burden assumed by the area's building and safety officials who oversaw all the area development.

***

  • Construction consultant Neil Opfer is concerned that the torrid pace of inspections in recent years may pose construction quality and safety threats today.

For more, see Ghosts from the boom (Quality and safety concerns arise as officials recount days of high-volume building inspections).

Wednesday, April 23, 2008

Nine Busted In Alleged Central Ohio House Flipping Scam

In Fairfield County, Ohio, The Columbus Dispatch reports:
  • Nine people have been charged in connection with a multimillion-dollar mortgage-flipping and theft-ring scheme that authorities say operated out of Fairfield County but stretched far beyond central Ohio. Huey W. Granderson, 32, of Millersport, called the ringleader by Fairfield County Sheriff Dave Phalen, faces the most serious charges. They include racketeering; 11 counts of money laundering; and charges of theft, securing writings by deception and tax evasion. He and the eight others are accused of systematically falsifying tax records and income statements since early 2006. Authorities say the group submitted the records to central Ohio businesses and mortgage companies to get loans for expensive property, vehicles and construction equipment. The value of the fraud is said to approach $3 million.

***

  • "This was a well-organized criminal enterprise," Phalen said. Most, if not all, of the homes are in foreclosure, he said. [...] Mary Jo Hudson, director of the Ohio Department of Insurance, said her department took the lead in the case because some insurance companies lost money. That, in turn, affects everyone's rates, she said. "It is all interconnected," Hudson said. "In this case, we began pulling on a thread and unraveled an entire sweater."

For more, see Nine charged in mortgage fraud, theft scheme ($3 million in homes, vehicles).

NY Judge Gives Go-Ahead To Foreclosure Sale, Says "Pro Se" Homeowner Failed To Prove Violations Of State Anti-Predatory Lending Statute

In Nassau County, Long Island, The New York Law Journal reports (reported at law.com):
  • Declining to halt a foreclosure sale, a Long Island, N.Y., judge has been left with the "unhappy result" of a loan that should not have been taken for which the homeowner is nevertheless responsible. The case of Alliance v. Dobkin, 10625/06, is illustrative of the nationwide mortgage lending crisis: An increasing number of borrowers who agreed to onerous loan terms to finance homes they could not otherwise afford now are facing foreclosure. [... Nassau County Justice Daniel R. Palmieri] ruled that Dobkin could not rely on the state's prohibition against predatory lending to forestall foreclosure of her home.

***

  • In her court papers, Dobkin, who represented herself, relied exclusively on LaSalle Bank, N.A. v Shearon, 100255/07, a Staten Island case where a judge found the lender guilty of multiple violations of the state's anti-predatory lending laws. [...] The only difference between that case and hers, argued Dobkin in court documents, was that her situation was "more outrageous."

***

  • John Cilmi, whose Manhattan firm, Cilmi & Associates, represented the plaintiffs in the Shearon case, said in an interview that the decision was "concise and well-reasoned" under the applicable statutes. However, utilizing only the statutes can paint an incomplete picture, said Cilmi, who was not involved in the Dobkin matter. "When you review the statute, even if a home loan does not fall under it due to the dollar amount involved, that does not mean that there is not potential fraud involved in other aspects of the lending process."

For more, see N.Y. Judge Finds Homeowner Liable for Loan (Homeowner relied on 'LaSalle Bank v. Shearon,' thought to be the first reported decision enforcing provisions of the Banking Law).

Go here other posts referencing the LaSalle Bank v. Shearon case.

Editorial Note:

Not having the benefit of legal counsel, Ms. Dobkin represented herself in this case. undo mortgage loans TILA batallion

Report: Mortgage Servicers Unable To Keep Up With Loan Workout Workload; Fail To Adopt Systematic Approach

The Washington Post reports:
  • Seven out of 10 troubled mortgage borrowers remain without a plan to work out their loans despite increased industry efforts to help them, according to a new report from a coalition of state attorneys general and banking regulators. The coalition collected data from 13 of the largest subprime lenders from October through January and found that they are overwhelmed by their workload and unable to keep pace with the growing number of borrowers who are falling behind on payments.

***

  • The good news is that more lenders appear to be embracing long-term solutions by rewriting the loan terms instead of simply rescheduling payments, the report said. Five of the 13 lenders are modifying the loans, usually by lowering interest rates and less often by forgiving part of the principal. But while lenders appear more motivated to help, they continue to work on a case-by-case basis instead of adopting a more systematic approach. As result, the process is time-consuming and often fails to help borrowers before they fall into foreclosure.

For the story, see Most Troubled Mortgage Borrowers Without Plan, Report Finds.

See also, Reuters: US states find little change in mortgage servicing. MortgageServicingIssuesAlpha

Team Of Volunteer Lawyers Mobilize To Defend Ohio Homeowners In Foreclosure

U.S. News & World Report recently ran a story on how the State of Ohio is addressing its foreclosure crisis. It reports that "the state has enlisted more than 1,300 lawyers—from state agencies and the private sector—to help struggling homeowners avoid foreclosure by reaching agreements with lenders or, if need be, through litigation." It interviewed Ohio Attorney General Marc Dann, who commented on what the function of these lawyers will be:
  • The lawyers will work with the borrowers to see if there are defenses to the actual foreclosure, whether there was fraud or unsuitability in the creation of the mortgage to begin with, and then to assist in two other ways: either to help litigate the case or to help structure a settlement.

  • With these complex mortgage products—the adjustable rates, the no-document loans that were out there—there are all types of things in the generation of loans that give rise to defenses. And with the fact that these loans then started to become sold seven, eight, nine, 10 times in the process, there are even legitimate legal issues as to whether or not the person filing the foreclosure has the legal right to file a foreclosure because they don't have ownership of the mortgage note. [...] We just convinced a court of appeals—the 10th District Court of Appeals in Franklin County, Ohio—to find that you can't bring a foreclosure action if you don't have paper that proves that you own the house.

When asked about the progress of Ohio's initiative so far, Dann commented:

  • It's been actually kind of rewarding. My uncle is a retired transactional lawyer, and he said, "I've been negotiating with banks my whole life. I am so excited about getting to do this." So he signed up, went to the training. My aunt is happy because it gets him out of the house. Here is a guy that was representing big Fortune 500 companies negotiating with their banks. All of a sudden, that playing field is about to get leveled.

For more, see How Ohio Is Tackling the Foreclosure Crisis.

For Ohio homeowners, see Ohio Foreclosure Assistance Information.

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

Ohio Appellate Court Cases Point To The Need For Foreclosing Lenders To Prove Note Ownership & Otherwise Establish Right To Foreclose

A recent 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. For the ruling, see Everhome Mtge. Co. v. Rowland, 2008-Ohio-1282; (10th Dist. Ct. App.; March 20, 2008).

In making its ruling, the court cited prior Ohio appellate court decisions that also 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. For those cases, see:

Inasmuch as these cases are appellate court cases from the Ohio judiciary, they appear to carry more weight than any Ohio trial court decisions that have ruled to the contrary.


For the long version of this post, see Lender Not Entitled To Foreclosure Judgment Due To Failure To Prove Promissory Note Ownership, Says Ohio Appeals Court.

In a related story, see U.S. News & World Report: How Ohio Is Tackling the Foreclosure Crisis.

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

Plummeting Condo Market Faces More Woes: Mortgage Financing About To Dry Up

Syndicated real estate columnist Kenneth Harney writes in a recent article:
  • If you own or plan to buy a condominium, an ominous new phase of the mortgage credit squeeze could be looming on your horizon. As a result of underwriting changes by giant investors Fannie Mae and Freddie Mac, plus severe new restrictions by private mortgage insurers, getting a loan on a condo unit - or even refinancing one you already own - could prove tougher than you imagined.

***

  • Under Fannie Mae's changes, most of the due-diligence research on condominium projects' key characteristics - their legal documentation, the adequacy of condo association operating budgets, percentage of unit owners who are late on association-fee payments, percentage of space allocated to commercial use, and percentage of units owned by investors - must now be performed up front by loan officers. Not only is this time consuming and costly, but under the new procedures, Fannie Mae expects the lender to warrant the accuracy of its research. Some condo project legal documents run into the hundreds of pages of text, yet lenders are supposed to take legal and financial responsibility for their accuracy.

***

  • Bruce Calabrese, president of Equtable Mortgage Corp. in Columbus, Ohio, said "everybody is really backing off condos" because of all the restrictions and changes. He said he personally owns two condo units - one in Florida, another in Myrtle Beach, S.C. - and even though he is in the mortgage industry, "I don't think I could refinance either of them right now if I tried."

For more, see Condo financing getting a lot harder in wake of credit woes (San Francisco Chronicle); or Restrictions on condo loans getting severe (St. Petersburg Times).