Las Vegas Alleged Straw Buyer Scam Bust Triggered By Foreclosure Rescue Investigation

In Nevada, the Las Vegas Review Journal reports:

• A mortgage scam spawned during the Southern Nevada housing boom led to the arrest Thursday of three defendants and pursuit of a fourth, the attorney general's office said Friday. Many of the 33 counts in the criminal complaint revolve around "straw man" schemes.

***

• The investigation started when a consumer told the attorney general's Bureau of Consumer Protection that he didn't get a promised refund of advance fees for foreclosure protection services, Kelleher said. The attorney general's criminal division obtained a search warrant for offices used by Jeffrey Tye Brown, who ran DB Financial Group.

• Brown was charged on March 27 with two counts of theft, two counts of deceptive trade practices and one count of forgery. The charges said that Brown charged one couple $999 in foreclosure prevention fees and a second couple $750, but Brown failed to provide any services. Brown has disappeared and is believed to be in the Philippines, [assistant chief deputy attorney general and mortgage fraud task force chief John] Kelleher said.

• The new charges against Brown and three others include theft by misrepresentation, forgery, making false statements to obtain credit and racketeering. [...] Attorney general's senior investigator Isabel Camp and investigator Shelley Neiman on Thursday arrested Cindy Birkland, 38, owner of Sapphire Mortgage; Bryan Sears, 46, a general contractor who did business as Searco; and Searco employee Claudia Koziol, 59.

For more, see Three arrested, fourth sought in mortgage fraud (Many of 33 counts involved purported 'straw man' schemes).

Miami-Area Affordable Housing Developer Cops Plea To Theft Of $700K+ In County Funds; Agrees To Squeal In Related Probes

In Miami, Florida, The Miami Herald reports:

• Oscar Rivero, the developer at the center of Miami-Dade County's affordable-housing scandal, was sentenced to 21 months in prison on Friday after admitting he used more than $700,000 from a county loan to buy a house for himself in South Miami. After a judge refused a request to dismiss the charges against him, Rivero pleaded guilty to one count of theft and also agreed to provide evidence to prosecutors in other corruption probes. Rivero's sentence could be reduced, depending on how much reliable information he turns over.

• Rivero, 38, was one of several developers who received millions of dollars in up-front loans from the Miami-Dade Housing Agency but failed to build any homes. Police arrested him in August 2006, a month after his housing deals were exposed in The Miami Herald's House of Lies investigation.

***

• The county loaned him about $806,000 in November 2004 to finance a 54-unit apartment complex for low-income residents in Little Havana. The apartments were never built. Just two weeks after receiving the county loan, Rivero withdrew $711,000 of that money to purchase [a] South Miami house and to install a pool and appliances. He and his family lived in the home while they built a sprawling 11,000-square-foot Mediterranean-revival estate with an elevator, wine cellar and billiard room.

For more, see Dade developer Rivero gets 21 months in jail (In a plea deal, developer Oscar Rivero admitted using $711,000 from a Miami-Dade affordable-housing loan to buy a home for himself and install a swimming pool) (if link expires, try here).

Go here for The Miami Herald's House of Lies investigation, a year-long probe that exposed a series of ill-fated government deals that played out under the noses of county leaders, enriching well-connected developers at the expense of the community's coveted funds for affordable housing, effectively stealing from the poor.

Albany-Area Pair Get Two Years In Cash Back Mortgage Scam

In Albany, New York, North Country Gazette reports that Matthew J. Kupic and Francis T. Disonell, both 38 and of Clifton Park, NY, were sentenced in Federal court last week to prison for two years and ordered to make restitution in the amount of $887,311 to victim banks for their participation in a mortgage and tax fraud scheme. Each was also ordered to forfeit over $600,000 in the fraudulent mortgage proceeds that they obtained from the mortgage fraud scheme. From the story:

• As part of the scheme, sales contracts and other documents submitted to mortgage lenders contained forged signatures and other false statements. For some real estate transactions, Kupic and Disonell created and utilized “Repair Rebate Agreements” which identified future upgrades to the subject properties that purportedly were going to be completed by the buyers with loan proceeds.

• Prosecutors said the duo knew these upgrades would never be completed and, in fact, they never were completed. Repair Rebate Agreements were merely a mechanism the defendants used to get loan funds to the buyer, themselves, and third parties without making any disclosure of the disbursements to the lenders. Kupic and Disonell also arranged for multiple purchases with the same buyer, to take place close in time – often on the same day – so that subsequent lenders did not learn of the buyer’s recent loans and liabilities.

For more, see Two Sentenced For Mortgage, Tax Fraud Scheme.

Water Shut-Off Forces Tenants Out Of Another Ocala Aparment Complex

In Florida, the Ocala Star Banner reports:

• Another northwest Ocala housing complex sits dry and abandoned. Signs of hurried relocation were scattered everywhere Monday, when water service was cut to an unnamed, 16-unit subdivision along Northwest 12th Street and Northwest 13th Street. [...] Looters have stripped copper wire and plumbing fixtures from several units, but there won't be anyone there to miss the materials. The city resolved to cut water and sewer service to the community after property owners neglected to respond to a 90-day disconnection warning resulting from an exorbitant outstanding water bill, said Jim Simon, director of community programs for the city of Ocala.

***

• Water will not run through the community again, and it will remain uninhabitable until property owners place individual meters on each of the units. Lack of running water creates sanitation issues, thus residents are not permitted to occupy such facilities.

For more, see Late water bills force complex to empty (Owners must put individual meters at each home).

Abandoned Atlanta Apartment Complex Left In Foreclosure; Tenants Face Water Shut Offs, Eviction

In Atlanta, Georgia, WSB-TV Channel 2 reports:

• Residents worry about rodents and scavengers at a local apartment complex that is covered in trash and overgrown weeds. The water will soon be shut off at a northwest Atlanta apartment complex now in foreclosure. But people still live there and say their home has now become a trash-filled mess and a haven for thieves.

• Mary Robinson watches as her once proud apartment complex falls apart around her in piles and piles of trash. The Maple Creek Apartments on Bolton Road are being slowly dismantled by scavengers. The scavengers are so bold Channel 2 caught them on tape driving away with stolen water heaters still full of water.

For more, see Atlanta Apartment Complex Covered In Trash. (read story) (watch video).

For other posts involving the problems tenants face in rented homes in foreclosure, go here, go here, go here, go here, go here, and go here. equity skimming unwittingly digamma

NYS Homeowner Cops Guilty Plea To Building Code Violations On Home Abandoned After Falling Behind On Payments, Lender Opts Against Foreclosure

In Lockport, New York, the Lockport Union-Sun & Journal reports:

• Judge Thomas M. DiMillo sentenced a former homeowner to fines and community service Tuesday for his part in the deterioration of an Elmwood Avenue property that he lost to foreclosure. [...] David Stewart, formerly of 31 Elmwood Ave., was ordered to pay a $1,000 fine and perform 60 hours of community service within 60 days to avoid jail time on his guilty plea to four building code violations. When he moved out of the house he’d lived in for 17 years, he left behind a structure with foundation, exterior and sanitation defects. [...] The bank never completed foreclosure by taking back the property title, suggesting it didn’t want the house.

For more, see Debtors tagged for problems at vacant houses.

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

Abandoned Foreclosure Proceeding Results In Vacant Eyesore Leaving Town Officials' Hands Tied

In Wilton, Maine, the Sun Journal reports:

• Concerns over an abandoned home at 13 Temple Road brought a dozen neighbors from East Wilton before selectmen Tuesday. They came with a petition signed by 43 people asking the board to take action and demolish the house [...].

• A question of who owns the property that neighbors believed underwent foreclosure in 2003 revealed that Chase Manhattan Bank started foreclosure proceedings but never finished the process, Town Manager Peter Nielsen told the board. There has been no payment of taxes, water or sewer since 2001, Nielsen said. The former owner also believed the house had been foreclosed, he added. Selectmen voted unanimously to act to acquire the property after checking with town attorney Lee Bragg. The town can take no action on the property until it has acquired ownership, Code Enforcement Officer Paul Montague said.

***

• The house has been broken into and stripped of plumbing, presenting a danger to adjacent property owners, the petition claims. The shed and attached porch is also collapsing.

For the story, see Wilton neighbors voice concern over abandoned home.

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

Go here for other posts on problems with vacant homes when the foreclosing lender fails to complete foreclosure or fails to record its deed after foreclosure sale. responsibility code violations foreclosure neighborhood destruction from foreclosures zach

Rent Hoax Promoted On Craigslist Pilfered Info, Pictures Off Local Realtor Multiple Listing Service

In Bakersfield, California, KGET-TV Channel 17 reports:

• With hundreds of homes in foreclosure, many families are looking for an affordable rental, but renters beware! A scam on a popular website is targeting local folks looking for a good deal in a hurry. One Bakersfield renter now knows that if it seems too good to be true, it probably is. That kind of thinking didn't stop Tiffany Llamas from wishing an ad on Craig's List was legitimate.

***

• Llamas called Martha Johnson, her real estate agent, to find out more about the property. Johnson said, "I would like to catch that guy cause he stole all my pictures, all my wording right off the multiple listing service." It turned out that the home in the ad on Craig's List is the same home listed for sale by Johnson. As for the owner of the home, they have never even heard of the person who posted the Craig's List ad. Johnson said, "It's very easy to get this information so don't be fooled."

For more, see Rental scam targets families on the move.

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

Cops Seize $4.5M In Pot Found In Grow Houses In Foreclosure; Allege Theft Of $100K In Electricity To Power Operations

In Fontana, California, The San Bernardino Sun reports that a Southern California man faces drug charges after police say they seized $4.5 million worth of marijuana from two of his foreclosed houses.

• Angel Wayhang Kou, 30, of Rancho Cucamonga was booked into jail on suspicion of cultivating marijuana, maintaining a residence for drugs, theft of utilities and conspiracy.
  [...] "The likelihood of other people being involved is probably high," said police Sgt. Jeff Decker.

***

• Narcotics officers estimated the street value of the marijuana in the two houses at $4.5 million. [...] "They had probably well into the hundreds of thousands of dollars worth of equipment in both homes, between the lights, the electrical, the water, the filtering and venting systems," Decker said. Police said Kou stole about $100,000 in electricity from Southern California Edison between the two homes by bypassing electrical boxes.

For more, see Big pot seizure.

See also: The San Francisco Chronicle: $4.5M in pot seized from two SoCal houses in foreclosure.

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

One Block - Ten Vacant Homes

In St. Paul, Minnesota, South West Review decribes the condition of a one block stretch of Sims Avenue between Payne Avenue and Greenbrier Street that's been hammered by foreclosures:

• Of the 23 homes on the block, 10 are vacant or somewhere in the foreclosure process. Down at City Hall, it is known as the most worrisome block in the city, the block hardest hit by the current real-estate meltdown. "One side of the street is almost all vacant," says Bob Kessler, head of St. Paul's Department of Safety and Inspection.

For more, see On one block, 10 vacant homes.

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

Suspected Arson Renews Safety Concerns Among Cleveland Residents Over Abandoned Building Hazards

In Cleveland, Ohio, The Cleveland Plain Dealer reports:

• Arson is suspected in a fire that damaged a vacant building on Hayden Avenue on Monday and has left residents and firefighters concerned about the growing problem of fires in abandoned structures. "I would say there is a 98 percent chance this was arson," said Assistant Cleveland Fire Chief Brent Collins. "It's got to be. There's no one [living] here."
  Fourteen fire trucks responded to the three-story apartment building [...].

• Fire officials suspect that some people may be resorting to unlawful tactics to rid residential areas of such eyesores, which are known to serve as squatters' quarters and cover for drug use and dealing. "They are definitely arson fires at vacant houses," Collins said, adding that the Fire Department has placed arson signs throughout the Fleet-Harvard neighborhood. "We are trying to figure out what this is. We don't know if it's insurance fraud or people setting them for eyesores."

***

• The city set aside more than $11 million last year to deal with up to 10,000 abandoned houses, many emptied by foreclosure. Most of that money - $7.5 million, or more than three times as much as was budgeted in 2006 - went for demolition.

For more, see Fire on Hayden Avenue probably was arson, official says (Abandoned buildings, fed by foreclosure crisis, make easy targets).

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

West Nile Worries Move Santa Clara Health Officials To Begin Aerial Search For Mosquito-Breeding Pools

In Santa Clara County, California, The San Jose Mercury News reports:

• Here's the latest fallout from the ever-widening housing crisis: West Nile virus. Worried that foreclosed homes will result in neglected swimming pools, health officials will embark Tuesday on an aerial search for back yard, watery havens for mosquitoes that potentially carry the deadly virus. A survey plane, equipped with a digital camera and a Global Positioning System, will fly at an altitude of 5,000 feet over parts of San Jose, Campbell, Cupertino, Gilroy, Los Gatos, Morgan Hill, Monte Sereno and Saratoga.

***

• "It's an unfortunate predicament that people are in," said Tim Mulligan, manager of Santa Clara County's Vector Control District, referring to the impact of foreclosures on the maintenance of swimming pools. "One of the first things to go bye-bye for a resident in foreclosure is pool maintenance," he said. "It's a drain on their resources."

For more, see Health officials searching for mosquito-breeding backyard pools. neighborhood destruction from foreclosures zach

Housing Fraud Cases Straining DAs' Budgets Throughout California, Says Lawmaker

In Sacramento, California, KPIX-TV Channel 5 reports:

• The state Senate has approved a bill to let counties increase real estate filing fees by $1 to help fund prosecutions for housing fraud. [...] As that problem continues to grow, prosecutors say a rising number of scam artists is trying to take advantage of residents who are at risk of losing their homes. They will promise them fraudulent refinancing schemes, for example.

• State Sen. Dave Cox says the housing trouble is prompting so many real estate frauds that the cases are straining the budgets of district attorneys' offices throughout the state. [...] The money will go into a county Real Estate Fraud Prosecution Trust Fund. The fund can be used to pay for deterring, investigating and prosecuting real estate fraud crimes.

For the story, see Calif. Senate OK's Fee To Prosecute Housing Fraud.

San Bernardino Alleged Foreclosure Rescue, Equity Stripping Group Faces Forgery, Loan Fraud, Conspiracy, Money Laundering Charges

In Southern California, The Press Enterprise reports:

• Ten San Bernardino County residents face criminal charges of participating in a predatory lending scheme based in Rancho Cucamonga that generated more than $2 million in fraudulent mortgages. A lawsuit filed this week in San Bernardino County Superior Court alleges that the scam was headed by Andrew Whitaker, 52, of Alta Loma, who had a prior real estate-related felony conviction for which he served prison time.

• Targets of the scheme described by Deputy District Attorney Larry Roberts were homeowners desperately trying to save their homes from foreclosure who thought they were obtaining refinancing but wound up selling their houses to straw buyers. In the process the remaining equity in their houses allegedly was stolen through inflated commissions, escrow charges and other fees.

Those charged are Andrew Webb Whitaker, Karren Marian Whitaker, Katrina Michelle Whitaker, Heather Nicole Whitaker, Mojgan Cox, Jesse Sinclair Cox, Juleanne Le Brooks, Phillip Parker, Jason Vince Harvey, and Andre Thomas Silva.

For more, see 10 San Bernardino County residents accused of predatory mortgage fraud.

See also, San Bernardino County DA Press Release: DA Arrests Predatory Lenders Operating Throughout Southern California.

Go here for criminal prosecutions of foreclosure rescue operators.

Texas Homeowners Accuse Local Company Of Tricking Them Into Signing Over Homes

In North Texas, CBS-11 reports:

• Dina Clayburn went from living in a 1,200 square foot, 3-bedroom house in Arlington, to living in a small 1-bedroom apartment in Euless. "You have to understand I was in a total state of defeat." Clayburn says she was in bankruptcy, getting a divorce and about to lose her house. To try and avoid foreclosure she contacted Ramona Beasley and James Schultz, who have a website stating "we can help you stop foreclosure." According to Clayburn, the husband and wife team from Terrell said, "They would come in and move you out and pay for the deposit on anything." It seemed like a great idea and best of all, no foreclosure - so Clayburn signed the papers.

***

• Clayburn says she was tricked into signing a warranty deed transferring ownership from her name to I Buy Inc., a company Ramona Beasley says is at least partially owned by her daughter.

For more, see CBS 11 Investigates Foreclosure Rescue Company. (read story) (watch video).

Editor's Note:

The State of Texas apparently has a criminal offense known as "securing execution of documents by deception." An article some time ago reported that a San Antonio-area woman pleaded no contest to this charge for tricking a vulnerable homeowner into signing away his home. See:

• San Antonio Express News: Woman pleads no contest to fleecing octogenarian ("Charlotte Smith, 56, pleaded no contest [...] to two counts of securing execution of documents by deception. She was accused by the state of bleeding Wallace Moore's accounts and transferring his ownership of the house into her name.").

In a follow-up story, the San Antonio Express News reported that she received ten years in prison for her offenses:

• Woman gets 10 years for home sale scheme ("Charlotte Smith, 56, was sentenced to 10 years in prison and ordered to pay more than $380,000 in restitution [...] after pleading no contest to two counts of securing execution of documents by deception.")

I wonder if the criminal offense of "securing execution of documents by deception" would be applicable in the currently reported story.

Go here for criminal prosecutions of foreclosure rescue operators.

Michigan Man Charged In Deed Theft Of Elderly Co-Owners' Half Interest In Home

In Dearborn, Michigan, the Dearborn Press and Guide reports:

• Wayne County Prosecutor Kym L. Worthy charged John Matouk, 41, of Grosse Pointe Woods in connection with a case involving forgery, uttering and publishing, and false pretences over $20,000 [last week].

***

• A release from Worthy's office indicated Matouk owned a half interest in property [...] in Dearborn with an elderly Oakland County couple. In February 2004, Matouk allegedly forged a quitclaim deed from the couple that fraudulently conveyed the entire property to his company LM Investments of Dearborn, LLC. Once the deed was executed, Matouk [...] allegedly obtained a mortgage on behalf of LM Investments of Dearborn in the amount of $650,000. He placed the proceeds of the mortgage in a bank account and appropriated the money for his own use. In September 2007 the couple discovered the fraudulent scheme and reported it to the authorities.

For the story, see Man charged in Dearborn land swindle case.

For story upsdate (10-27-08), see Man takes plea in real estate case.

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

Estranged Wife Convicted Of Forging Soldier/Husband's Name On Checks; Sells Family Home Without His Knowledge

In Minnesota, the Minneapolis Star Tribune reports:

• Dana M. Kieser deceived and defrauded her husband when he was at his most vulnerable, serving in Iraq with the Minnesota National Guard, a Ramsey County jury heard [last week]. She closed out John Kieser's retirement and college-savings accounts, forged his name on two checks totaling almost $25,000, bought a home in Fargo, N.D., and sold their home in Maplewood -- all without his knowledge or consent, prosecutor Laura Rosenthal said. [...] The jury agreed and returned after just an hour and a half of deliberations with guilty verdicts on two counts of check forgery.

For more, see Jury convicts wife of forging checks while her husband was serving in Iraq.

Family Duped Into Buying Home With Title Defect, Says Suit

In Port Arthur, Texas, The Southeast Texas Record reports:

• Not fluent in English, three immigrants are alleging a Nederland couple took advantage of their inability to communicate and duped them into buying a Port Arthur home that had a lien against it. Lorenzo, Rosa and Henry Watler filed suit against Mark and Carolyn Link on April 24 in the Jefferson County District Court.

***

• On April 26, 2006, the Watlers and Links entered into a contract to sell the Watlers a Port Arthur home. The Watlers were to pay the Links $30,000, with $10,000 as a down payment and the remaining $20,000 being financed by the Links in an owner-finance arrangement, the suit states.

According to the story, which is based on the lawsuit filed in court, the Watlers paid the Links a $10,000.00 cashier's check and $272.67 per month subsequently thereafter as payments on the $20,000.00 note covering the remaining balance of the sales price, but the Links allegedly failed to clear the existing lien from the title to the home. The Watlers are suing for punitive, actual and consequential damages, plus attorneys' fees.

For more, see Immigrants claim couple defrauded them into home purchase.

Woman Charged In Alleged Forged Docs Scam In Attempt To Increase Property Size

In Westchester County, New York, The Journal News reports:

• A Connecticut woman is accused of forging the names of a justice and a lawyer to get more money for a piece of land that she and her boyfriend were trying to sell in Cortlandt. Barbara Pisano of Darien was charged with two counts of second-degree forgery for her role in the land scheme, according to the Westchester County District Attorney's Office. Her boyfriend, Robert Snyder, has not been charged. Prosecutors say Pisano copied the signatures of state Supreme Court Justice Mary H. Smith and attorney Daniel D. Chu onto phony legal documents last year. The forgeries gave her the right to add nearly one-tenth of an acre to her property [...], allowing her to market the parcel at 0.43 acre, rather than just over a third of an acre.

For more, see Legal secretary accused of forging real estate documents, judge's order (no longer available online).

See also: New York State Supreme Court Judge’s Signature Forged on a Decision.

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

Facing Indictment For Theft, Forgery & Racketeering, Colorado Builder Bolts Town

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

• A Weld County developer who plans to build a subdivision some fear could threaten the Old Spanish Trail in Mesa County remains at large more than a month after he was indicted in a mortgage fraud case. Authorities believe he has fled to Mexico. The Weld County Sheriff’s Department is working with the FBI to try to find and arrest 50-year-old Mark Strodtman, Undersheriff Margie Martinez said Monday.

• A grand jury indicted Strodtman on March 24 on 11 counts of theft, 11 counts of forgery and one count of racketeering. An arrest warrant setting bail at $100,000 was issued the same day.

For more, see Developer disappears.

Countrywide Settlement Offer Rejected In Alleged Phony Docs Case

In Pittsburgh, Pennsylvania, The Wall Street Journal reports:

• A bankruptcy judge has rejected Countrywide Financial Corp.'s proposal to settle accusations that it fabricated evidence used in a bid to foreclose on a home, saying he wants to know more about the alleged false documents. Judge Thomas Agresti of the U.S. Bankruptcy Court in Pittsburgh on Tuesday dismissed the company's request to settle a dispute with Sharon Diane Hill, a Pittsburgh-area woman who was threatened with foreclosure by the country's largest home lender.

***

• Details of the settlement proposal were filed under seal, which Judge Agresti said was unjustified. He also said the settlement documents were deficient because they failed to reveal what Ms. Hill's lawyers found out about the alleged fabricated evidence.

***

• On Tuesday, Judge Agresti said he wouldn't approve a settlement until he got to the bottom of Countrywide's suspected forgeries. He said he was concerned about "the potential effect that a settlement in this case may have in other cases involving Countrywide."

For more, see Judge Rejects Countrywide Plan To Settle Suit on Foreclosure Bid.

See also, Subprime Legal: Judge Dings C’wide Settlement Over Alleged Forgeries.

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

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

Ohio Statewide Foreclosure Training For Pro Bono Attorneys Continues

In Ohio, the Circleville Herald reports:

• In recognition of Law Day, state officials have announced new foreclosure legal training dates and are reminding attorneys of the opportunity to serve pro bono to assist homeowners facing foreclosure as part of Ohio's Save the Dream foreclosure prevention effort, which in the past month has gained recognition as a national leader in addressing the problem. [...] Beginning May 9 through the end of June, 17 free training sessions will be held around the state covering the basics of foreclosure. Attorneys can receive 5 1/2 hours of CLE credit for completing the sessions.

***

• An April 16 report by The Pew Charitable Trusts [or go here for Pew Press Release] ranked Ohio's foreclosure response as one of the three best in the country. U.S. News & World Report, in an April 21 story, labeled Ohio's foreclosure prevention program as one of the country's most "ambitious." The state also receives daily inquiries from other states interested in following the Ohio model, which is unique in its approach of consolidating all foreclosure prevention resources into one unified, statewide program.

***

• [Ohio] Homeowners facing foreclosure can call the Save the Dream hotline (888-404-4674) to see if they meet the income and other eligibility requirements to be connected with a pro bono or legal aid attorney. Qualified homeowners will be connected with a local legal aid program to be matched with an attorney. Basic income eligibility is 250 percent of the federal poverty guidelines, which is about $53,000 annual income for a family of four.

For more, see Ohio treasurer visits Rotary (Cordray pitches plan to help homeowners).

Sale Of $1B In Tax Certificates For Delinquent Real Estate Taxes Expected In South Florida

In South Florida, The Miami Daily Business Review reports on the upcoming annual late spring ritual throughout Florida whereby county tax collectors convert unpaid real estate taxes into tax certificates sold to investors:

• [A]n estimated $1 billion worth of real estate tax lien certificates will be auctioned off in South Florida beginning June 1 and officials in Miami-Dade, Broward and Palm Beach counties do not expect a shortage of buyers. “It has become a hot item for investors,” said Polly Cacurak, manager of the revenue collection department in Broward County. [...] Investing in a tax lien certificate is almost like lending money to a homeowner with delinquent property taxes, except the investor deals directly with the county.

For more, see Unpaid Taxes (Tax certificates no longer a get-rich quick scheme).

Go here for an illustration on how Florida's tax certificate sale process works.

Go here for an illustration on how Florida's tax deed sale process works.

Massachusetts AG Files Housing Discrimination Complaint Agains Mobile Home Park For Failure To Accomodate Disabled Homeowner

From the office of the Massachusetts Attorney General:

• Attorney General Martha Coakley’s Office filed a housing discrimination complaint [last week] in Franklin Superior Court against Leisure Woods Estates, Inc., the owner of Leisure Woods Mobile Home Park in Orange, Massachusetts. The complaint alleges that Leisure Woods Estates, Inc. violated state anti-discrimination laws by failing to permit a disabled homeowner to install a handicap ramp to enable the homeowner to enter his property.

• The disabled homeowner, aged sixty-four, who has lived in the park with his wife since 1993, recently underwent multiple foot surgeries to address a chronic mobility problem. The surgeries resulted in a permanent physical disability, which makes it extremely difficult for him to walk without assistance and to navigate the stairs to his home. The homeowner planned to pay for the construction of a ramp to his door himself, and requested approval from Leisure Woods Estates. Leisure Woods Estates allegedly refused to approve the ramp, citing purported aesthetic considerations. It is unlawful to discriminate by refusing to make reasonable accommodations for someone with a disability.

For more, see Attorney General Martha Coakley Sues Park Owner For Housing Discrimination.

Struggling Developer Files Bankruptcy As Opportunistic Competitor Acquires Delinquent Mortgage & Seeks Foreclosure On Unfinished Townhouse Project

In Deland, Florida, the Daytona Beach News Journal reports:

• The struggling developer of Carriage Homes, a planned [74 unit] luxury town-house project with just 11 units built -- and only two sold -- sought bankruptcy protection from creditors Tuesday, averting a foreclosure sale scheduled for hours later. [...] Only one unit is occupied, as a rental. Adjacent lots in the gated development are overgrown with weeds and littered with trash.

***

• Another developer, Bob Horian, president of Suncor Properties, said he held the lien on the property and was seeking foreclosure in hopes of completing the project himself. Suncor had acquired the security on the project from Colonial Bank and in March won a $3.4 million foreclosure judgment against it. Horian said he had expected to take possession of the property in a proceeding scheduled for Tuesday.

For more, see Foreclosures foiling future? (Carriage Homes seeks protection) (media report no longer available online).

Charges In Alleged Deltona Deed Theft Scam Forwarded To State Attorney

In Deltona, Florida, the Daytona Beach News Journal reports:

• [Lester] Williams is one of several people swindled in a real estate scam in which scammers literally stole some houses right out from under owners, investigators said. In many of the cases, a simple deed document was forged. Investigators said they don't know how the ring of Deltona scammers chose their victims. Some properties were facing a pending foreclosure. In another, the owner had recently died. In other cases, nothing was out of the ordinary. It could happen to anyone, investigators said.

• The Volusia County Sheriff's Office said it sent charges relating to the scam against four people in three cases to the state attorney. A spokeswoman for the State Attorney's Office said Tuesday prosecutors are reviewing the cases. Formal charges have not been filed.

Among those targeted by investigators are:

1. Cynthia L. Fuentes, 47, who also uses the last names Fontanez, Aleman and Fontanez-Aleman, who faces charges of six counts of grand theft and three counts of operating an organized scheme to defraud,
2. Fuentes' daughter, Cindy R. Fuentes, 26, who faces charges of two counts of being a principal to grand theft,
3. Notary Mark Hittell, 49, a retired corrections officer for the Seminole County Sheriff's Office, who faces charges of two counts of grand theft and being a principal to grand theft, as well as charges of scheming to defraud and forgery, and
4. Hittell's wife, Doris, 41, who currently is a corrections sergeant for the Seminole County Sheriff's Office. She faces a charge of scheming to defraud and two counts of grand theft, according to investigators.

The story includes this blurb on Doris Hittell's personnel file with Seminole County:

• Her personnel file contained three incidents of possible theft from inmates during the intake process at the jail where she works. In one instance she was given a written warning and ordered to repay nearly $1,500 to the agency's inmate account over a period of eight months. In another, she was forced to pay $100 and received a verbal warning. The third accusation was deemed unfounded.

For the story, see Turbulent housing market breeds deed scams.

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

Mortgage Broker Faces Forgery, Theft Charges In Alleged Scam Resulting In Foreclosure Of Victims' Homes

In Pennsylvania, The Philadelphia Inquirer reports:

• A Delaware County couple had to put their wedding on hold after losing two properties at the hands of a disbarred lawyer turned mortgage broker, authorities said. Joseph James Scafidi, 53, of Warminster, a former Bucks County prosecutor and convicted felon, turned himself in [last week] to face theft and forgery charges. He is accused of fabricating documents, including a phony court order from Delaware County's president judge, to hide his theft of mortgage payments.

***

• After the couple lost both houses [to foreclosure], they confronted Scafidi, who offered them $150,000 if they did not report him to police, the complaint said.

Reportedly, Scafidi's prior brush with the law occurred in 1996 when he consented to disbarment after he was accused of embezzling $264,000 in real estate settlement fees from a Fort Washington title company. He served a 10- to 23-month prison sentence in 1998.

For more, see Broker accused of stealing mortgage payments.

Go here for other posts on Joseph James Scafidi.

More On Three Facing Federal Charges In Alleged Palm Beach County Flipping Scam

In Palm Beach County, Florida The Palm Beach Post reports on the criminal allegations facing Berry Louidort and Ralph Michel (also known as Ralph Duverneau), who are accused of putting together deals for two dozen homes in Palm Beach County, persuading banks to loan far more than the properties actually sold for, then pocketing the difference and letting many of the homes lapse into foreclosure; and Boca Raton mortgage broker Lauren Jasky who is accused of helping Louidort and Michel arrange the deals.

• There's Michel - a native of Haiti who, according to his attorney, can't read or write well enough to pass a U.S. citizenship test - collecting "assignment fees" of $650,000 and $600,000 on side-by-side homes in the Versailles development in Wellington.

• There's Louidort, also a native of Haiti, describing a scheme to buy 50 condos in Boynton Beach while stealing $4 million from lenders. He thinks he's talking to a willing accomplice. In fact, he's laying out the plot to an undercover FBI agent who captures the conversation on videotape.

• There are straw buyers, such as the part-time Publix cashier whose income on loan applications was inflated from $13,000 to $344,000 so she could qualify for $1.3 million in loans on a palatial home in a gated community in Boca Raton.

• There's Jasky saying she doesn't want to know the unsavory details of the loans she's shopping to lenders. Meanwhile, her mother is acting as the Realtor on some of the deals.

• And there are some of the world's most sophisticated financial institutions, including JPMorgan Chase and Bank of New York, making loans on these properties for twice what they were worth.

For the rest of the story, see 3 charged in mortgage scam called 'economic parasites'.

See also, U.S. Attorney Press Release: Palm Beach County Residents Charged With Mortgage Fraud.

Countrywide Admits Errors, Denies Misconduct In Testimony To Senate Panel

In Washington, D.C., The Associated Press reports:

• Mortgage lender Countrywide Financial Corp., which is under investigation for inflating certain borrowers' fees, acknowledged Tuesday that it has made errors and pledged to take steps to improve its operations. Steve Bailey, chief executive for loan administration at Countrywide, told a Senate panel that the company's employees have made mistakes "from time to time." He said the company will hire an outside auditor to review its actions in cases involving homeowners who have filed for bankruptcy court protection. But he disputed accusations, made by hundreds of borrowers in Pennsylvania, Florida and other states, that the company has sought to collect inflated fees and other payments by filing inaccurate bankruptcy documents.

***

• Sen. Charles Schumer, D-N.Y., chairman of the panel, criticized what he called a broader "vulture mentality" in the mortgage lending industry. "Companies have repeatedly sought to foreclose on homes where owners were current on payments, sought attorneys fees in bankruptcy court for motions that they have lost, and failed to keep even the most basic records to justify their claims in bankruptcy court," he said.

For more, see Countrywide Financial Admits Loan Officers Made Errors.

In a related story, see The Atlanta Journal Constitution: Georgia family puts face on mortgage crisis:

• Facing criticism from a Georgia family and senators of both parties, a Countrywide Financial Corp. executive said Tuesday that the company had a new plan to keep mortgage processing errors from harming homeowners. But Steve Bailey's testimony before the Senate Judiciary Committee could not shift the spotlight away from the giant lender's role in the loss of the Atchley family's home.

White House Issues Veto Threat To Democrat Housing Plan

In Washington, D.C., The Associated Press reports:

• The White House on Tuesday threatened a veto of Democrats' broad housing rescue plan, calling it a burdensome bailout that would open taxpayers to too much risk. [...] Democrats' housing plan, written by Rep. Barney Frank, D-Mass., would allow the Federal Housing Administration to insure up to $300 billion in new mortgages for struggling homeowners currently too financially strapped to qualify for such loans. [...] "You can't always get what you want, exactly. But this is a very real effort to reach out and find common ground," Frank said.

For more, see Bush threatens veto of housing aid.

Vacant Land Owners Victimized By Deed Theft Ring, Scam Involved Parcels Worth $23M

In Riverside County, California, The Press Enterprise reports:

• [Albert] Rivera was one of 10 landowners victimized by thieves who in 2003 and 2004 used forgery to secretly seize title to 25 vacant parcels in Perris, Murrieta, Menifee, and unincorporated areas of southwest Riverside County. Even though the Riverside County district attorney's office successfully prosecuted the forgery ring, the rightful landowners learned that it takes a lot of grief, money and time to undo a phony transaction once it is recorded in the county system. All the victims got their land back, but not without hiring lawyers. Since a recorded deed is presumed to be authentic under state law, they said they were advised to file lawsuits to "quiet title," claiming they had been swindled.

***

• Since 2004, she said the Riverside County district attorney's office has received complaints about deed forgeries on about 1,000 properties.

Among those on the hook for the damages is First American Title Insurance Company, who forked out $200,000 on a claim under a title policy it issued to an unwitting purchaser who was left holding bogus deeds on four lots (presumably, there were a slew of other title insurance claims by other unwitting land purchasers).

While the victims of the theft got their property back, they nevertheless sufferred significant losses in the form of:

• unreimbursed attorney's fees for the civil lawsuits they were forced to bring to void the bogus deeds and to "quiet title" to their land, and
• for some, the lost opportunity to sell their land before the real estate market tanked,
• higher property tax bills because the phony sales triggered reassessments (the district attorney had to get a court order to restore the properties to their original assessed value).

For more, see:

• Owners fight to regain land lost to forgers,
• Experts say ownership of land must be proven.

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

Foreclosing Lender Locks Out Michigan Homeowner, Locks In Pets Despite State's Six Month Redemption Period

In Schoolcraft, Michigan, WWMT-TV Channel 3 reports:

• With the economy and the housing market in a downward spiral, foreclosures keep popping up. It's a reality one Schoolcraft man faces. Jaret Sweet admits he can't keep up with his home payments and surrendered to the fact he'll lose his home. But he says the bank crossed the line in his foreclosure process. Sweet says he came home one day to find a notice on his door, all of his locks changed and his pets and belongings trapped inside.

• Foreclosure rules in Michigan say that a homeowner can live in a house for as long as six months after notice is given. Sweet says he would have used the time to gather his things and move out, but he didn't get that chance. His realtor agrees this was a shady deal. "All I can think is sloppy procedures or disregard for the processes that are in place to protect consumers," said Paul McIntyre, Sweet's realtor. The realtor's heard of at least five other cases like Sweet's. He says the aggressive foreclosure climate is causing banks to either ignore or forget the rules.

Source: Bank accused of shady foreclosure practices.

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

Northern Virginia Man Cops Plea In Serial Refinancing Scam

In Northern Virginia, The Washington Post reports:

• [John A. Tsiaoushis, 40,] The former owner of a string of Washington area nightclubs and restaurants pleaded guilty [last week] to federal mail fraud and false-testimony charges relating to a series of real estate scams that netted him more than $3.8 million. [...] Tsiaoushis filed for bankruptcy in October 2005. But by that time, he had begun a series of mortgage frauds in which he repeatedly sold or refinanced two houses in Vienna and in the Fort Hunt area of Fairfax County.

According to the story, Tsiaoushis' scheme involved the diversion of funds earmarked for the payoff of existing liens on the two homes he repeatedly sold or refinanced. Among his alleged escapades were:

1. creation of documents purportedly from the mortgage companies involved,
2. opening local post office boxes,
3. presentation of phony documents indicating that all liens had been resolved,
4. creation of phony bankruptcy court order,
5. directing the real estate settlement company to send the payoff checks to the post office boxes which were purported to belong to the mortgage companies involved, at which point, Tsiaoushis would pocket the checks.

For more, see Ex-Club Owner Pleads Guilty in Mortgage Scams.

California Feds Charge Tenant With Bank Fraud For Attempt At Obtaining $500K Credit Line On Rented Home

From the U.S. Attorney's Office for the Central District of California:

• A man who was renting a Valley Village home has been arrested on federal bank fraud charges for allegedly attempting to secure a $500,000 home equity line of credit on the house. Eduard Sargsyan, 55, was arrested by special agents with the Federal Bureau of Investigation last [month] after completing loan documents at a Bank of American branch in Sherman Oaks.

• According to a criminal complaint [...], last fall Sargsyan rented the Valley Village home, which was owned by a family trust. In February, a “Trust Transfer Deed” was recorded with the Los Angeles County Recorder’s Office, which transferred title of the home to Sargsyan. In March, Sargsyan used Bank of America’s website to apply for a home equity line of credit on the property. During two meetings at Bank of America where an FBI agent posed as a loan officer, Sargsyan said he owned the home and wanted prompt funding of a $500,000 line of credit. Sargsyan was arrested at the bank branch.

For the U.S. Attorney's press release, see Valley Man Charged With Attempting To Obtain $500,000 Credit Line On House He Was Renting.

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

Rent Scam Offering Cheap Rent On Craigslist Victimizes As Many As 50 Families

In unincorporated Covina, California, the Whittier Daily News reports:

• It could be any street in any city anywhere in Southern California. A swing set, two or three basketball hoops, white picket fences; a view of the foothills framed by tall palms. Stucco homes with stone trim, vegetable gardens, well tended roses, lawn statues; the stars and stripes proudly displayed as if to say, "Here is my piece of the American Dream." That's the scene looking north on Calera Avenue in unincorporated Covina. So when a three-bedroom, one-bathroom piece of the American Dream became available here for just $1,200 a month, who could blame folks for wanting it? Even if the offer came via Craigslist. All prospective tenants had to do was bring $2,400 - that's first and last - and be ready to move in May 1.

• Sheriff's detectives suspect as many as 30 families did just that. Now they are looking for homeowner Pardeep Singh, who apparently cleaned out his bank account and fled last week in a Range Rover towing a U-Haul.

For the rest of the story, see:

• Housing scam steals dream (no longer available online),
• Number of Craigslist victims increases (no longer available online),
• Picture of fraud suspect emerging (if link expires, try here),
• Dozens are expected to file lawsuit (if link expires, try here).

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

50+% Of 2006 Homebuyers Now Underwater, Says Report

MarketWatch.com reports:

• Home values in the first quarter of 2008 fell 1.6 percent from the fourth quarter and 7.7 percent from the year-ago quarter, marking the most significant year-over-year decline in the past 12 years, to a U.S. Zindex(R) home value indicator of $213,000, according to the Zillow.com Q1 Home Value Report released today. The median U.S. home value has not been this low since the second quarter of 2005, leaving more homeowners who purchased in 2005 or later with negative equity than any quarter previously reported by Zillow.

For more, see U.S. Home Values in Q1 Post Largest Decline in More than a Decade, Falling Back to 2005 Levels (More than half of homeowners who purchased during U.S. market peak in 2006 are now underwater on their mortgages, according to Zillow.com(R) Q1 2008 Home Value Report).

More On Major Lenders Freezing HELOC Accounts In Response To Declining Home Values

Bloomberg News reports:

• Countrywide Financial Corp. has suspended the home equity credit lines of almost all its Las Vegas customers, including the $60,000 Christopher Whipple says he needed to expand his cell-phone accessories business. "I hope this doesn't break me,'' the 35-year-old retailer said. His credit score was 790 out of a possible 850, putting him in the top 40 percent of borrowers. "It's going to hurt more than I thought.''

• Since January, Countrywide, Bank of America Corp., Washington Mutual Inc. and IndyMac Bancorp Inc. have frozen about 600,000 equity credit lines nationwide, said Michael Kratzer, president of a Bankrate Inc.-owned Web site that's fielding consumer complaints. The lenders are targeting borrowers in cities where property values are falling, including Las Vegas, Chicago and Los Angeles, he said. Frozen credit and real estate declines are putting a chill on spending and hurting the economy.

For more, see Countrywide Takes Away Home-Equity Credit Lines in Las Vegas.

For a related story, see AmTrust Bank freezing Home Equity Lines of Credit for certain customers (read story) (watch video).

Go here for other posts on Frozen HELOCs.

Massachusetts Appeals Court Upholds Injunction Restricting Fremont Foreclosures In Predatory Lending Case

In Boston, Massachusetts, Reuters reports:

• A Massachusetts [appeals] court has upheld an injunction to force cash-strapped mortgage lender Fremont General Corp to halt all foreclosures in the state to give local authorities time to review each mortgage.

***

• After Fremont gives notice that it intends to foreclose, [Massachusetts Attorney General Martha] Coakley then has 45 days to object to any foreclosures that are deemed "presumptively unfair." If she objects, Fremont must get the court's approval to proceed, Coakley's statement said.

• The ruling said a loan would meet the definition of "presumptively unfair" if it was an adjustable rate mortgage with an introductory period that was three years or less, or if it had a beginning "teaser" interest rate that was at least 3 percentage points lower than the fully indexed rate.

• Such loans also included ones made to borrowers whose debt-to-income ratio would have topped 50 percent if Fremont had measured the debt by the amount due under the fully indexed rate rather than under the teaser rate.

• A loan would also be deemed "presumptively unfair" if it had a substantial penalty or one that lasted beyond the introductory period, she added.
  But the injunction does not free borrowers from having to make their monthly mortgage payments, the statement said.

For the story, see Mass. upholds ruling to halt Fremont foreclosures.

For Massachusetts AG press release, see Appeals Court Judge Upholds Preliminary Injunction Against Fremont in Predatory Lending Case.

Go here for earlier posts on the Massachsuetts court injunction imposed upon Fremont General Corp.

Discount Mortgage Investors May Make Loan Mods Easier

The Los Angeles Times reports:

• [I]nvestors — including big fish such as former Countrywide Financial Corp. President Stanford Kurland as well as smaller fry like [chief executive of G8 Capital Evan] Gentry — are buying loans on the cheap from lenders who want them off their books. By paying less than face value for the mortgages, the new holders can modify loan terms, including shrinking the amount owed, and still make money.

• With some economists projecting 2 million foreclosures this year, legislators and regulators are hoping to encourage use of this model. They want lenders and investors in mortgage bonds to mark down what borrowers owe and provide them with lower-cost loans. It's a tricky business: No one wants to be seen as bailing out speculative buyers or imprudent lenders, but they also don't want mass foreclosures.

For more, see Investors move in to save broken mortgages (Homeowners who owe more than their property is worth are offered new terms) (if link expires, try here).

In a related story, see Twin Cities' Lender Seeks To Buy, Work Out Problem Mortgages.

Eight Cop Guilty Pleas In Cleveland-Area Mortgage Scam

From Cuyahoga County, Ohio Prosecutor Bill Mason's office:

• Cuyahoga County Prosecutor Bill Mason announced that eight of ten defendants pled guilty in the first case brought to trial investigated by the Cuyahoga County Mortgage Fraud-Predatory Lending Task Force. On July 31, 2007, ten defendants—seven individuals and three corporations—were indicted on racketeering and theft-related charges for fraudulently obtaining $560,000 in financing to purchase seven Cleveland properties priced at $594,000. Five of the seven properties are either in foreclosure or have been sold through the foreclosure process.

• "These thieves, lying and deceiving to make a quick buck, are leaving entire neighborhoods blighted and abandoned. Communities are being robbed of tax revenue used for schools, roads, and police," said Prosecutor Bill Mason. "They deserve to go to jail."

For the whole story, see 8 Defendants Plea Guilty to Cleveland Mortgage Fraud Case (Eight of Ten Defendants Pled Guilty in $560,000 Mortgage Fraud Case Involving 7 Cleveland Houses).

Straw Buyer Sues Tax Preparer For Leaving Her Holding The Bag On Pair Of $2M Homes

In Hamilton County, Ohio, The Enquirer reports:

• Francisca Webster owns two multi-million dollar Homearama houses in Mason and a third expensive house in Maineville, but she’s never lived in them and can’t afford to pay one month’s mortgage, much less the 40-year loans she got for the houses. So, how does a middle-class woman – who is so broke she can barely afford the Westwood house she really lives in – wind up owning $5 million in houses? Lies, fraud and scams, Webster claims.

• In a lawsuit in Hamilton County, she insists she was scammed into helping her tax preparer in a scheme that left him with lots of money and her fighting for her financial life. Webster had her taxes done for years by Eric Duke. As he prepared her 2006 taxes, Webster’s suit alleges, she mentioned how her job was being eliminated and she had $70,000 in debt. Duke told her he could help her eliminate that debt if she went into business with him.

For the rest of the story, see Three top-end houses, no money.

Appraiser Hit With $830K Judgment In Suit Over Inflated Appraisal

In Garfield County, Colorado, The Aspen Times reports: -

• A district court judge has ruled that a Basalt real estate appraiser must pay a bank $830,000 for assessing a Glenwood Springs home at an Aspen price. The judgment, which was recently slapped on Gary Beaver, came in the wake of a foreclosure, bankruptcy and lawsuit, all apparently spawned by an oversized appraisal. In 2004, Beaver appraised the Glenwood Springs home of Rodney and Donna Poland at $2.75 million, but when the couple defaulted on the loan and went bankrupt in 2006, a later appraisal showed that Beaver’s estimate was more than $1 million over the mark. A later appraisal valued the home, [...] in Glenwood Springs, at $1.1 million. Compass Bank, which held the note on the property and acquired the home in a foreclosure sale, won the recent $830,000 judgment from Beaver to make up for its losses.

For more, see Super-sized GarCo appraisal sparks a six-figure judgment.

Frank Issues Frank Warning To Lenders At Mortgage Bankers Meeting

In Boston, Massachusetts, Reuters reports:

• A bill that would expand refinancings of risky mortgages by requiring voluntary lender write-downs is the industry's last chance to improve their market without more drastic regulation, U.S. House Financial Services Committee Chairman Barney Frank said on Monday. "If this program, this set of inducements, for people to avoid foreclosure doesn't make much difference, what you will face next year ... will be much tougher rules about the home mortgage industry in general," he said at a Mortgage Bankers Association meeting in Boston.

For more, see US's Frank warns mortgage lenders of drastic rules.

Feds Turn Up Heat In Criminal Investigation Of Mortgage Industry

The New York Times reports:

• Federal agencies are intensifying a criminal investigation of the mortgage industry and focusing on whether some lenders turned a blind eye to inflated income figures provided by borrowers. The Federal Bureau of Investigation and the criminal division of the Internal Revenue Service have formed a task force to examine mortgages that were made with little or no proof of the earnings or assets of borrowers, a government official who had been briefed on the matter said Sunday. The group also includes federal prosecutors in New York, Los Angeles, Philadelphia, Dallas and Atlanta, said the official, who spoke on the condition that he not be identified.

For more, see Government Intensifies Mortgage Investigation.

North Carolina AG Files Suit To Shut Down Upfront Fee Foreclosure Rescue Operator

In Raleigh, North Carolina, WNCN Channel 17 reports:

• A Lenoir County company that targeted distressed homeowners with false offers to help save them from foreclosure has been ordered to stop taking consumers’ money, officials said Friday. Attorney General Roy Cooper filed suit against Alphin Marketing Group, Inc., also known as Alphin Group. Cooper alleges that the company and its owner broke state laws and he is seeking to permanently bar them from offering foreclosure assistance and debt adjusting services in North Carolina. Cooper is also asking the court to cancel the company’s contracts with consumers and pay refunds.

For more, see Company Swindled Homeowners, Attorney General Says.

See also the North Carolina Attorney General (May 2, 2008) Press Release: AG Cooper shuts down foreclosure assistance scheme (Company promised to save homes from foreclosure, pocketed money instead).

Feds Describe Elaborate Alleged Flipping / Money Laundering Scam Involving Failed Minneapolis Condo Project

In Minnesota, The Minneapolis Star Tribune reports:

• Federal investigators have identified the majority development partner in the troubled Sexton condominium project as the central figure in a mortgage fraud scheme involving about one-quarter of the units sold in the downtown Minneapolis building. In an affidavit filed [last] week in U.S. District Court in St. Paul, IRS agents say Brett Thielen orchestrated a mortgage flipping scheme involving 13 units at the redeveloped commercial building at 521 S. 7th St.

***

• The Sexton has 123 units, but fewer than 50 were ever sold, according to Hennepin County property records. The affidavit says Thielen laundered proceeds from the scheme by having his lawyer, Ben Houge, wire money to a lawyer in Australia, who then wired the money back to Thielen and others taking part in the mortgage fraud.

For more, see Feds outline condo fraud scheme (Investigators describe an elaborate scam at the Sexton project in downtown Minneapolis that included laundering illegal profits through a lawyer in Australia).

Go here for other posts on the Federal mortgage fraud investigation involving The Sexton.

Attorney, Associate Accused Of $800K Rip Off Of Real Estate Clients; Failed To Apply Closing Funds Towards Payoff Of Existing Mortgages, Say Lawsuits

In New Jersey, The Times of Trenton reports:

• A Hamilton lawyer and his associate face allegations that they swindled real estate clients out of nearly $800,000 by pocketing funds that should have been used to pay off mortgages after home sales.

• Michael J. Feehan, a Lawrence man with law offices in Hamilton, and Jason M. Bloom, of Warrington, Pa., are accused of misappropriating nearly $460,000 related to the sale of a West Long Beach home, according to a civil lawsuit filed earlier this month in Superior Court in Monmouth County. The plaintiffs, Michael A. Mastapeter and Anthony Masters, didn't find out until they received a foreclosure notice on Feb. 14, according to Robert J. Stack, their Kinnelon attorney.

• Meanwhile, another lawsuit alleging a similar fraud was filed in March in Mercer County. In that case, a Superior Court judge ordered Bloom's bank accounts frozen after he allegedly diverted $354,000 to his own use, according to court records.

For more, see Attorney, associate accused in bilkings (Pair allegedly stole $800G) (no longer available online).

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

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

Go here, Go here, and Go here for other stories of trust account / escrow account theft of funds. sneaky slick escrow agents gamma

Significantly Declining Home Values Cause Bank Suspension Of Homeowners' HELOCs

In Mentor, Ohio, WKYC-TV Channel 3 reports:

• If you drive down Case Avenue in Mentor you'll find lovely homes with flowering trees in a beautiful stable neighborhood. Residents, Mac Mahaffee and his wife, Linda where shocked to learn that their lending institution had a different view of the value of their two story brick home. The Mahaffee's received a letter from AmTrust Bank telling them that their property on Case Street has experienced "significant declines in property values". Amtrust told the couple, "we have elected to suspend further advances or draws on your Home Equity Line of Credit", effective immediately.

***

• The Mahaffee's are from alone. In recent months, several other major banks across the country have shut off home equity loans to tens of thousands of people. [...] AmTrust Bank is joining a growing list of national banks that are critically reviewing all current HELOC's. There is a growing fear by many lenders that HELOC delinquencies could rise in 2008. Countrywide Bank has already suspended an estimated 122,000 lines, many in high-foreclosure-rate states. Bank of America, USAA, Citibank, and Chase are reportedly going to follow suit.

***

• Financial planners suggest that if your HELOC is in jeopardy and you need the credit to complete a home renovation project, you might consider pulling out a lump sum. Many experts suggest that you should only borrow as much as you need right now and put the remaining cash in a high-yield savings account or CD until the repair or renovation bills are due.

For more, see AmTrust Bank freezing Home Equity Lines of Credit for certain customers (read story) (watch video).

In a related story, see Bloomberg News: Countrywide Takes Away Home-Equity Credit Lines in Las Vegas.

Go here for other posts on Frozen HELOCs.