Three Cop Plea In Tennessee Straw Buyer Mortgage Scam Involving 22 Luxury Homes

In Nashville, Tennessee, The City Paper reports:

• Miles Jackson Black and Jeffrey Dunn Hathcock pleaded guilty [last week] in federal court to conspiracy to commit wire fraud and bank fraud, the Office of U.S. Attorney for the Middle District of Tennessee announced Tuesday. According to testimony at the plea hearing, Stafford, Black and Harold Hathcock — a third defendant scheduled for trial Sept. 16 — engaged in a mortgage fraud scheme that involved the purchase of approximately 22 luxury homes in Hendersonville and Gallatin by unqualified straw buyers.

• All of these mortgage loans ended in default and foreclosure, resulting in losses to mortgage lenders after foreclosure totaling approximately $ 2,214,700, the U.S. attorney’s office said.

For more, see Sumner County men plead guilty in mortgage fraud scheme.

After Dealing With Homeowner's Multiple Bankruptcy Filings, Foreclosing Lender Winds Up With Trashed Home

In St. Petersburg, Florida, The St. Petersburg Times reports:

• Between 1999 and last January, [Rose] King filed for Chapter 13 bankruptcy protection eight times — a move that kept lenders from forcing the sale of her St. Petersburg bungalow. And when she finally moved out in March, she took everything, including the kitchen sink. "She lived two years for free, I can tell you that,'' says Kelly Goff, who held the most recent mortgage and had to schedule foreclosure sales four times. "I've never had anything like it, and I've had hundreds of loans. It's luck of the draw that I happened to get somebody who knew how to abuse the system and used it.''

***

• Goff says he spent more than $20,000 in legal costs before the foreclosure auction was finally held on March 14. As typically happens when property is mortgaged for more than it's worth, he bought the house with a $100 bid. And was appalled by what he found.

• The place was filthy. Everything that could be removed had been, including appliances, electrical outlets, light fixtures, even the toilet and door jambs. "It was total destruction,'' Goff says.

For more, see Chapter 13 standoff thwarts foreclosure on St. Petersburg house for years.

For another Central Florida horror story in which the bankruptcy system was arguably abused to delay foreclosure, see Thirteen times for Chapter 13, where a Palm Harbor couple reportedly together filed Chapter 13 bankruptcies a total of 13 times.

Go here for other posts on serial bankruptcy filings. SerialBankruptcyFilings

Premature Change In Locks Leaves Foreclosed Homeowners Locked Out, Pets & Belongings Locked In

In Manteca, California, KXTV News 10 reports:

• Less than two weeks after they lost their home to foreclosure, a Manteca family found themselves locked out with their pets and belongings still inside. Don and Brandi Furtado and their three children had been moving their things out of the house on Nehemiah Drive after the May 28 courthouse auction. When they returned for another load late Friday, they found the locks had been changed.

***

• Lodi attorney Robert Hardwick, who represents other lenders in eviction proceedings, said people living in foreclosed homes have rights as tenants even if they're former owners. "You've got to be careful as a lender because the lender can be subject to lawsuits if they wrongfully evict somebody without going through the proper procedures," he said. [...] A locksmith hired by [the foreclosing lender's agent] came to the house to change the locks again and give a set of keys to the Furtados. He also removed the lockbox from the front door handle.

For the story, see Family Locked Out After Foreclosure Auction (story no longer available online).

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

Clients’ Security Fund Of Ohio Doles Out Over $200K To Reimburse Clients For Attorney Ripoffs

In Columbus, Ohio, The Supreme Court of Ohio announced earlier this month:

• The Board of Commissioners of the Clients’ Security Fund of Ohio (CSF) awarded $208,188 to 25 victims of attorney theft at its meeting Friday, June 6, in Columbus. Nineteen former or suspended Ohio attorneys were found to have misappropriated client funds. More information about the disciplinary cases against some of these attorneys is available on the online docket of the Supreme Court of Ohio at:

http://www.supremecourtofohio.gov/clerk_of_court/ecms/
searchbypartyname.asp.

For the 19-member "honor roll" and brief description of the bad acts, and how much client cash each attorney (or now ex-attorney, as the case may be) improperly pocketed - listed by county, see Victims of Attorney Theft Awarded More Than $200,000 by Clients’ Security Fund (More Than $12 Million Returned to Consumers Since Fund's Inception).

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

If an Ohio attorney, in the course of representing you, screws you out of money or property through dishonest conduct, go to the The Clients' Security Fund of Ohio 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.

Owner's Title Insurance vs. Lender's Title Insurance: What's the Difference?

When buying a home, one of the typical expenses incurred by a homebuyer (and sometimes, a home seller) is for the purchase of title insurance. The homeowner typically obtains title insurance coverage for him/herself and, if the purchase is being financed, title insurance coverage for the motrtgage lender is also obtained.

For a basic primer on the difference between an owner's title insurance policy and a lender's title insurance policy, see Knowing your owner's title insurance from your lender's, published in a column in DC Chronicles.

Editor's Note:

In addition to being obligated to defend the insured property owner's (and/or mortgage lender's) interest in real estate (and indemnify the insured in the event of a loss) in the event there is an adverse claim against a previous owner of the subject property, a title insurance company is also obligated to foot the bill for the defense of the property title (legal fees, court costs, etc.).

For an example of how a buyer can screw himself over when purchasing real estate and tries to save on the cost of the insurance premium by not obtaining title insurance, see Clerk's error jeopardizes family's home (Undetected lien against seller haunts buyer) (In this case, not only is the homeowner on his own in defending against an adverse claim against the prior owner, but he has already shelled out about $10,000 of his own money in legal bills defending his title - money which, win or lose, he will never recover).

North Miami Home In Foreclosure A Death House For Over 50 Pets

In North Miami, Florida, WPLG-TV Channel 10 reports:

• Animal control officers removed two more mangy, malnourished and neglected animals -- this time cats -- from a woman's North Miami home Tuesday. It was the same home of Beverly Prady, who was arrested and charged with animal cruelty after 78 sick, crippled and bloodied dogs were removed from the residence Monday. Prady had close to 90 animals living with her in a dilapidated house at 990 NE 10th Ave. Animal control officers said 90 percent of those animals had to be euthanized.

***

• Neighbors said Prady might have had mental problems. Neighbors said Prady paid off the home years ago and that it simply fell apart around her. However, according to civil documents, Katline Realty was foreclosing on the property. Katline Realty owner Charlie Klar told Local10's Rob Schmitt that Prady recently ran out of money and borrowed $147,000 from him against her house.

• Schmitt asked Klar why he would approve a mortgage considering the home's condition. "I basically like to lose money," he said. "I've made so much of it." [North Miami Mayor Kevin] Burns said the city would investigate the foreclosure and whether Prady was taken advantage of possibly because she's mentally unstable.

For the story, see Most Animals Removed From Home Euthanized (North Miami Woman Charged With Animal Cruelty).

See also, Miami New Times: Dozens of Dogs Die (A tale of 78 abused pets and two peculiar people).

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

Eleven Victimized Families In Northern California Foreclosure Rescue Scam To Get Deeds Back

In Stanislaus County, California, The Modesto Bee reports:

• Eleven families will get their home deeds back, according to a restitution deal signed Thursday by convicted swindlers who prayed with some victims before duping them. Lonni Ashlock, 57, of Waterford also agreed to pay a total of $120,000 to 10 others, most of whom were evicted from their homes before they were sold to third parties. Ashlock and his partner, Ronald Buhler, 27, of Riverbank pleaded no contest in September to six fraud and grand theft felonies. [...] Their victims included an 86-year-old woman with dementia, a schizophrenic, a woman with brain lesions and several other disabled people, according to court documents and testimony..

***

• The Bee in July 2005 chronicled several lawsuits against Ashlock, Buhler and their many corporations and eventually tracked 142 properties the men had acquired.

For more, see Waterford swindler must pay victims $120,000.

Go here for earlier posts on Ashlock & Buhler.

NY Governor, State Lawmakers Announce Tentative Agreement To Alter Foreclosure Laws

In Albany, New York, The New York Times reports:

• Gov. David A. Paterson and leaders of the State Legislature announced on Thursday an agreement to overhaul state foreclosure laws, one of the few major deals that has emerged in the final days of the legislative session.

For more, see A Proposal From Albany on Stemming Foreclosures.

Feds Slam 400+ In "Operation Malicious Mortgage" National Takedown Of Alleged Mortgage Fraud Scams; Losses Estimated At $1B+

CBS News and The Associated Press reports:

• More than 400 real estate industry players have been indicted since March - including dozens over the last two days - in a Justice Department crackdown on incidents of mortgage fraud nationwide that stem from the country's housing crisis. The FBI put the losses to homeowners and other borrowers who were victims in the schemes at over $1 billion.

***

• Sixty people were arrested Wednesday as part of the three-month sting, dubbed "Operation Malicious Mortgage," [...]. People arrested include buyers, sellers and others across the wide-ranging mortgage industry. The take down focused primarily on lending fraud, foreclosure rescue scams and mortgage-related bankruptcy schemes. [...] Officials have identified 10 "mortgage fraud hotspots" nationwide in California, Colorado, Texas, Minnesota, Michigan, Illinois, Ohio, New York, Georgia and Florida.

For more, see FBI Cracks Down On Mortgage Fraud (400 Real Estate Industry Players Indicted; Victims Lost More Than $1 Billion In Various Schemes).

See also, FBI Press Release: More Than 400 Defendants Charged for Roles in Mortgage FraudSchemes as Part of Operation "Malicious Mortgage" (Two Senior Managers of Failed Bear Stearns Hedge Funds IndictedToday in Separate Mortgage-Related Securities Fraud Case).

For a sampling of local stories throughout the country involving Operation "Malicious Mortgage", see:

• Arizona (Phoenix and Tucson): 36 Arizonans Swept Up In Mortgage Fraud Arrests;
• California (Sacramento): National mortgage-fraud crackdown nets five from Sacramento;
• California (San Francisco Bay Area): 13 locals charged in mortgage fraud sweep;
• California (San Diego): More than 400 indicted in nationwide crackdown (Six from San Diego real estate firm among 400+ real estate insiders swept up in nationwide crackdown);
• Florida (South Florida): Mortgage fraud initiative nets 102 arrests;
• Florida (Fort Myers): SW Florida real estate agent indicted; or go here to read the four-count indictment against SamirCabrera;
• Georgia (Atlanta): Feds indict seven in metro Atlanta mortgage fraud ring;
• Hawaii (Honolulu): Mortgage scammers caught in federal sweep ("Operation Malicious Mortgage" led to hundreds of arrests across the nation -- including several indictments in Hawaii, with more to come.);
• Illinois (Chicago): 67 from Chicago area charged in U.S. mortgage fraud probe;
• Indiana: 2 women face federal mortgage charges;
• Maryland (Greenbelt): Prince George's Woman Arrested in 'Massive' Mortgage Fraud;
• Maryland (Greenbelt): Businessman Indicted On Mortgage Fraud Charges (I-Team Investigation Uncovered Lewis's Alleged Scheme);
• Michigan (Detroit and Flint): Massive Mortgage Fraud Case Hits Home;
• Mississippi (Jackson): 11 nabbed for mortgage fraud;
• Nevada (Las Vegas): 8 Las Vegas Residents Indicted on Mortgage Fraud;
• New York (NYC): 2 former Bear Stearns execs indicted, arrested and also Q&A: Inside the Bear Stearns Indictments (two former hedge fund managers indicted on charges that they concealed problems that eventually led to the collapse of the funds.);
• Pennsylvania (Eastern PA): 4 from eastern Pa. are part of US crackdown on alleged mortage fraud;
• Texas (Dallas-Fort Worth): Eight arrested, three others indicted in North Texas mortgage fraud; or go here to read the indictment (4.97 MB);
• Texas (Houston): Mortgage fraud scheme lands 6 in jail;
• Utah (Salt Lake City): Two Utahns accused in mortgage fraud schemes;
• Washington State (Seattle): 6 from Seattle-area indicted in crackdown on mortgage fraud.

Go here for links to other local stories around the country on Operation Malicious Mortgage.

California Woman Faces Accusations Of Pocketing Fees In Alleged Foreclosure Rescue Scam That Clipped As Many As 100 Victims

In Gonzales, California, KSBW-TV Channel 8 reports:

• A Central Coast woman is accused of targeting homeowners on the verge of losing their homes and swindling them out of thousands of dollars. Gonzales police said Melissa Garcia targeted homes in foreclosure and scammed troubled homeowners out of thousands of dollars. Victims said they paid more than $2,500 to get help saving their homes and Garcia never carried through with any of her promises.

• Fred Lombardi, a Gonzales police sergeant, said as many as 100 people throughout Monterey, Santa Cruz, Santa Clara and San Benito counties may have been a victim of the scams. "They're upset," Lombardi said. "They get that final glimpse of hope, draw money together from family members and friends to get taken care of. In the end they find out the money's gone as well."

***

• Garcia was arrested last week in Santa Cruz County on [unrelated] theft charges and was released on bail. Police are still trying to identify a business associate accused of taking part in the scam.

For more, see Woman Accused Of Scamming Troubled Homeowners (Victims Paid More Than $2,800 Trying To Save Foreclosed Homes).

See also, Woman suspected of running home loan scam.

More On The New York State Residential Mortgage Foreclosures Program

New York Court of Appeals Chief Judge Judith S. Kaye announced this week a new statewide program intended to educate homeowners and facilitate early negotiations and settlements as a response to the dramatic rise in residential foreclosure filings throughout New York.

For a formal description of the program, see Residential Mortgage Foreclosures: Promoting Early Court Intervention.

Squatters, Scammers & Other Assorted Freeloaders Making Themselves At Home In High End Vacant Miami Condos In Foreclosure

In Miami, Florida, The Miami Herald reports:

• Among the decidedly low-rent problems plaguing South Florida's luxury condo market, squatters are the latest headache to arise from the glut of vacant foreclosures in some of Miami's toniest condominiums.

• At a recent meeting at the Brickell on the River North, a room full of property managers sat down to commiserate over a slew of other troubles: Impostor landlords leasing units they do not own, collecting deposits and rent from unsuspecting tenants, and a rash of vandalism and burglaries. Investor-owners, desperate to turn a dollar, are even renting to tourists by the day, undercutting local hotels at bargain rates.

For more, see Condo bust draws scams and squatters (Property managers at condos are coping with new schemes -- some criminal, others plain irritating -- arising from foreclosures) (if link expires, try here and try here).

Heavy Backlog Of Foreclosure Cases In Manatee County Only The "Tip Of The Iceberg"

In Manatee County, Florida, the Bradenton Herald reports:

• The housing foreclosure fallout carries a very real price tag for all of Manatee County. The court system's backlog of foreclosure cases has tripled in the past year. [...] "It's never been like this," [Manatee Circuit Court Judge Paul] Logan said. "I haven't seen any signs that it's getting better. In fact, I've talked to a few local attorneys who represent lenders and I've said, 'Hopefully we've seen the entirety of the problem.' But all of them have told me we've only seen the tip of the iceberg. The bulk of it's still out there. One of them told me we're at least 12 to 18 months out before we see any noticeable change."

For more, see Foreclosures create ripple effect in Manatee (Neighborhoods, courts show strains as housing crisis enters 'uncharted territory').

In a related story, see Warning: Court System Traffic Slows Ahead, which describes budget cuts and an explosion of foreclosures as contributing factors to the current strain on the Florida court system).

When Builders Go Belly Up, Recent Homebuyers In Partially Complete Developments Get Hammered

The following links are to stories of what happens to recent new-home buyers when their builders go bankrupt, leaving their developments unfinished:

• Nashville, Tennessee: Homeowners Feel Pain Of Bankrupt Builder (Corinthian Went Into Bankruptcy In February),
• Antioch, Illinois: When Builders Go Broke (Chicago-based Neumann Homes went bankrupt last November, leaving a trail of wreckage in its path. Its worst victims? Homeowners),
• Gilbert, Arizona: Unfinished subdivisions in east Gilbert grinding to a halt (Foreclosures spread to developers' vacant lots).

SW Florida Real Estate Agent Faces Federal Indictment In Alleged Illegal Flipping Deals

In Fort Myers, Florida, The News Press reports:

• The indictment and arrest of former Fort Myers real estate agent Samir Cabrera is part of Operation Malicious Mortgage, a nationwide crackdown on mortgage fraud. [...] Cabrera was indicted on four counts of wire fraud as part of allegations of a multi-million dollar real estate scheme. [...] Cabrera was involved in a scheme to defraud investors in at least two land-flipping deals involving property [...] in south Fort Myers[, according to the indictment].

For more, see SW Florida real estate agent indicted.

See also, Indictment may slow suits against Cabrera.

For the indictment, see U.S. v. Cabrera.

Go here for other posts on Samir Cabrera.

Another Maryland Foreclosure Rescue Operator Faces Federal Indictment

In Greenbelt, Maryland, The Baltimore Sun reports:

• A widespread probe of mortgage fraud resulted yesterday in grand jury indictments against four Maryland residents, less than a week after federal prosecutors here accused eight other people of bilking homeowners and banks of more than $35 million in an unrelated mortgage scheme.

• In the latest indictments, Cheryl Brooke, 51, and Michael K. Lewis, 56, of Upper Marlboro; his brother, Earnest Lewis, 59, of Takoma Park; and Winston Thomas, 42, of New Carrollton, are accused of conspiracy to commit wire fraud and wire fraud in connection with a scheme in which they offered to help homeowners stave off foreclosure. Instead, they defrauded mortgage lenders and the homeowners, the 12-count indictment says.

For more, see Jury indicts four more in mortgage fraud probe.

See also, WBAL-TV Channel 11: Businessman Indicted On Mortgage Fraud Charges (I-Team Investigation Uncovered Lewis's Alleged Scheme).

• A Prince George's County businessman was indicted on charges of bilking his customers out of their homes and their equity while they thought he was saving them from foreclosure. The WBAL TV 11 News I-Team first began investigating Michael K. Lewis last year. He was indicted Wednesday on mortgage fraud charges and he could face millions of dollars in fines and the possibility of spending the rest of his life in prison.

See also, U.S. Attorney press release: Michael K. Lewis and Three Others Indicted in Mortgage Fraud Scheme - Allegedly Targeted Victims Through Local TV Ads.

Go here for other posts on Maryland foreclosure rescue operator Michael K. Lewis.

Court Approves Massachusetts Settlement With Lenders In Bogus Foreclosure Rescue; Case Involved AG Claims Of Equitable Mortgage, Usury, Etc.

(originally posted 6-18-08; modified 6-19-08)
From the Office of the Massachusetts Attorney General:

• The U.S. Bankruptcy Court has approved a settlement between Attorney General Martha Coakley’s Office and 10 mortgage lenders and servicers that funded or serviced loans which facilitated fraudulent foreclosure rescue transactions by Brockton attorney Alec Sohmer. The Settlement Agreement with the lenders, entered last week by Judge Joan Feeney, was reached by the Attorney General’s Office and the Chapter 7 trustee in Sohmher’s bankruptcy case. The Settlement impacts 26 residential properties that are part of Sohmer’s bankruptcy case and is designed to return homeowners to their financial position before Sohmer arranged foreclosure rescue transactions that stripped their home equity and required payment of Sohmer’s fees and high settlement costs. The settlement will also provide an opportunity for Sohmer’s victims to reacquire the legal title to their homes.

***

• Under the terms of the settlement, the lenders and servicers will provide restitution to the homeowners victimized by Sohmer’s fraudulent scheme by reducing the outstanding mortgage liens on the homeowner’s properties, and in many instances allowing the homeowners to apply to assume the loans. As a result of the foreclosure rescue scheme, 26 homeowners had transferred the titles of their homes to Sohmer. The original homeowners can now reclaim their property by paying a reduced mortgage obligation instead of the inflated mortgage loan arranged by Sohmer, and by refinancing the loans.

• The mortgage lien will be reduced to the lower of the actual amount paid for prior mortgage loans on the property, subtracting any beneficial payments to the homeowners; or 80% of the current value of the properties. In total, across 26 properties, the settlement will provide approximately $1.8 million in reduced mortgage obligations.

For more, see Massachusetts AG press release: Bankruptcy Court Approves Settlement Between Attorney General’s Office and Ten Mortgage Lenders and Servicers Involved in Foreclosure Rescue Transactions.

Go here to view the Proposed Amended Complaint filed by the Massachusetts AG's office, setting forth the allegations against the foreclosure rescue operators.

For earlier posts on this case, see:

• Foreclosure Rescue Sale Leaseback Deals Are Usurious Equitable Mortgages, Says Massachusetts AG's Civil Lawsuit, or
• Go here for all earlier posts.

Editorial Note:

As best as I can figure it, the $1.8 million hit that the lenders are taking represents the approximate home equity that the foreclosure rescue operator ripped off from the homeowners. Further, the settlement in this case appears to be a good illustration of how equity stripping, foreclosure rescue lawsuits in which a claim of equitable mortgage is made should be resolved when the financially strapped homeowners sign over the title to their homes but remain in possession thereof pursuant to some form of lease/buyback arrangement.

The homeowner's continued possession of the home after signing over the deed generally constitutes either actual or constructive notice to the foreclosure rescue operator's (or straw buyer's) mortgage lender of the homeowner's rights in the home under the equitable mortgage doctrine. This would be the case even if the mortgage lender had no actual knowledge of the arrangement between the foreclosure rescue operator and the homeowner (as any experienced real estate attorney will advise, one can be deemed to have "actual or constructive notice" of another's rights in real estate without actually having knowledge of the existence of those rights - see The Bona Fide Purchaser for Value of a Legal Estate Without Notice for a beginner's guide to actual and constructive notice, and the bona fide purchaser doctrine).

The effect, as illustrated in the Massachusetts AG's settlement, is that it is the equity stripper's lender, not the homeowner, that gets the screwing over in the deal. Of course, the lender will then have a cause of action for any damages it suffered against the foreclosure rescue operator, any straw buyer, possibly the title insurance underwriter who issued any title policy in the transaction, and anyone else who participated in the fraud.

New Jersey AG Tags Downstate Firm With Suit Alleging "Rent To Own" Rent Skimming Scam

In South Jersey, The Philadelphia Inquirer reports on one of the three civil lawsuits recently filed and announced by the New Jersey Attorney General's office alleging various forms of mortgage and real estate fraud:

• The New Jersey Attorney General filed mortgage-fraud lawsuits yesterday in three counties against 36 defendants, including a South Jersey company accused of running a "rent-to-own" housing scam.

• In that lawsuit, filed in Camden County, the attorney general said Ultimate Real Estate Solutions in Williamstown set up a scheme to acquire 18 properties through fraudulent mortgage applications. Customers with bad credit were promised they could rent the properties - and eventually own them - while Ultimate paid the mortgages. Instead, the attorney general said, Ultimate collected the rent and allowed the properties to fall into foreclosure.

***

• A phone listing for Ultimate Real Estate was disconnected yesterday. The company and its president, Halimah Prater, were both named in the lawsuit. The Camden County complaint said Prater sought "investors" with good credit who could buy houses for people with bad credit. At least 16 properties were bought in the names of two men, Herbert Coleman and Yusef Hason, according to the complaint. Prater told Coleman, who had recently moved from a homeless shelter to a group home, that the properties would be in his name for only 30 to 90 days and that he would make "a few thousand dollars" on each sale, the complaint said.

For more, see N.J. firms named in rent-to-own housing scam.

To view the NJ AG's lawsuit and read how alleged scams like this work, see Milgram v. Ultimate Real Estate Solutions, L.L.C. et al..

For more on problems with "Rent To Own" and Lease / Option real estate deals, go here and go here.

Editorial Note:

While this case has been brought in the form of a civil lawsuit by the state Attorney General's office, conduct is alleged that the complaint specifically refers to as criminal in nature. As such, it wouldn't be a surprise if the New Jersey Feds (U.S. Attorney's Office, FBI, IRS, et al.) are watching this matter and loading up for a case of their own involving criminal charges (ie. mail & wire fraud, conspiracy, racketeering, money laundering, tax evasion, etc.) against these defendants. rent to own lease purchase option scams yellowstone equity skimming unwittingly digamma

Florida Title Agency Owner, $2.5M In Escrow Funds Missing, Leaving Stiffed Customers & Employees; Insurance Underwriters Left To Clean Up Mess

In West Palm Beach, Florida, The Palm Beach Post reports:

• Before his disappearance plunged employees and customers of one of Florida's largest independent title companies into chaos last week, Flagler Title founder Roger Gamblin dipped into millions of dollars his company held in escrow for clients, according to testimony Monday. An auditor for one of the insurance companies backing Flagler Title testified in an emergency hearing that Roger Gamblin had used at least $2.5 million of escrow funds to cover shortfalls and pay property taxes and as a "personal line of credit." [...] The last anyone heard from him was a telephone call on May 29.

***

• A judge placed Flagler Title in receivership Monday at the request of its insurance underwriters, who have been left to clean up the mess. The insurers were even forced to post security guards last week at some offices to ward of looting by disgruntled employees. [...] Prospects for customers who had placed millions of dollars in Flagler Title's hands are uncertain. [...] Flagler Title employees learned in a conference call last week that the company had run out of money and that their mid-June paycheck would not arrive, a former employee said Monday. "There were some very disgruntled people on that call," said the employee, who asked to remain anonymous.

For more, see Millions missing at title company.

In a related story, see Title firm owner had been fined:

• [Roger Gamblin, t]he West Palm Beach title company owner who disappeared in late May - allegedly after making free use of $2.5 million of his clients' escrow funds - had been fined $25,000 three months earlier by state regulators who accused him of paying kickbacks in exchange for business referrals. [...] That was the second time in two years that Gamblin had been accused of wrongdoing by state officials. In May 2006, Gamblin, 59, paid a $2,500 fine to settle charges that he paid kickbacks, overcharged for insurance, failed to issue a policy and failed to submit timely payments to the insurer who was underwriting a title insurance policy.

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

Tennessee Woman Warns Others Of A "Foreclosure Rescue" Screwing Over That Resulted In Loss Of Her Home

In Smyrna, Tennessee, WSMV-TV Channel 4 (Nashville) reports:

• A Smyrna woman is advising that home owners should beware of some companies after she lost her home in an attempt to avoid foreclosure. [...] Resident Dee Dee Shell said she couldn't afford to pay her mortgage, so she contacted a company that claimed to help people at risk of foreclosure. "They got me to sign this one paper, and it was like they had to hurry up and get it so the house would be foreclosed on," said Shell.

• She signed over the deed to her home and paid the company rent to continue living there. "They were making me a tenant and making the payments higher," said Shell. She had to move out and ended up losing her home and business salon that she ran out of the house. "They pretty much told me I need to get boxes and prepare my stuff to move. He told me I could be a mobile hair stylist, and I could do hair out of my car," said Shell. [...] "Somebody took my home. They got me to sign a paper, and I didn't know what it was," said Shell.

For the story, see Home Owner Warns Residents Of Foreclosure Company (Woman Says Company Made Her Home Payments Higher) (read story) (watch video)

NY Financial Adviser/Scam Artist Gets 5 To 15 For Bilking Elderly Of $11M+; Some Who Borrowed Against Home Equity To Invest Now Face Foreclosure

In Nassau County, New York, WINS Radio 1010 AM reports:

• The financial adviser who targeted senior citizens and bilked them for more than $11 million received the maximum sentence on Tuesday. Peter Dawson, 51, of Huntington, was sentenced to five to 15 years in prison by a Nassau County judge in the Ponzi investment scheme that affected 53 people.

***

• Dawson [...] encouraged clients to take out mortgages on their homes and give him the money to invest, officials said, but he kept the majority of the money, leaving homeowners months behind in mortgage payments. Several homeowners are currently fighting to prevent foreclosure on their homes as a result of the scheme, officials said.

For more, see L.I. Scam Artist That Targeted Sr. Citizens Gets Max.

NY Chief Judge Announces Statewide Program Intended To Facilitate Early Negotiations, Settlements For Homeowners In Foreclosure

The New York Law Journal reports:

• [New York Court of Appeals] Chief Judge Judith S. Kaye responded [yesterday] to the dramatic rise in residential foreclosure filings throughout New York by announcing a new statewide program intended to educate homeowners and facilitate early negotiations and settlements. The Residential Foreclosure Program will begin with a trial run this summer in Queens, the epicenter of the state's foreclosure crisis, and spread to the rest of the state's courts this fall. The key components of the plan will be notifying parties as soon as practicable of community resources, holding early conferences before a hearing officer to develop a settlement or case management plan and hiring dedicated, specialized court personnel.

***

• The Residential Foreclosure Program will be a multi-pronged approach at attempting to better educate homeowners while also facilitating discussions and negotiations that can speed and ease the complex foreclosure process.

For more, see Chief Judge Unveils Program to Deal With Dramatic Rise in Foreclosures.

See also, The New York Times: New York Court Offers Home Foreclosure Help.

Go here for a formal description of the plan.

Central Florida Students To Get Boot As Sarasota Home Used As College Residence Faces Foreclosure Sale

In Sarasota, Florida, the Sarasota Herald Tribune reports:

• Despite its lack of central air conditioning and the unfortunate ratio of seven bedrooms to two bathrooms, a two-story house on a shaded corner of 47th Street has maintained a certain allure, even as the city around it modernized. "The 47th Street House," as it is known, was built in north Sarasota by a New College student for New College students with a minimalist joie de vivre. But today, the place where scores of New College students and alumni have lived communally for more than 15 years is scheduled to be sold in a public auction, after the landlord defaulted on the mortgage.

***

• Current owner Carmen Palomino says she could not afford the mortgage after her homeowners' insurance went up. Palomino bought the house from [the original owner, a former New College student who built the place in the early 1990's] in 2006 for $190,000, according to property records.

For more, see Tradition goes to highest bidder.

For story update, see:

• Renters at popular college hangout to be evicted,
• 47th Street House sells for $100 ("The buyer was HSBC Bank USA, which held the mortgage that the home’s owner failed to pay. The tenants at “The 47th Street House,” as it is called, vowed to again attempt to purchase the home, even as they were told they have ten days to move out.").

Homeowner, Straw Buyer Settle Suit In Sale Leaseback Foreclosure Rescue Deal

In Northern New Jersey, The Star Ledger reports:

• Two years ago, Florine Williams, a nurse's aide, feared losing her Bloomfield duplex after falling behind on payments for the $259,000 mortgage. So, Williams went to a nearby business service company, which referred her to a mortgage broker. It was the beginning of the end for Williams, who became ensnared in an elaborate mortgage fraud scheme that left her broke and forced her out of her dream home.

***

• Williams arranged through an agent of A&E Mortgage to temporarily sell her home to attorney Novlet Lawrence, who agreed to sell it back to Williams for $350,000 after a year, as long as Williams paid enough to cover the mortgage, taxes and insurance for the property. As part of the $350,000 price, Williams agreed to pay Lawrence $18,000 at closing and to give $16,200 to A&E Mortgage for fees and commissions.

• Williams tried to purchase the home back in March 2007, but got an eviction notice instead because Williams had stopped making monthly payments a few months earlier when rent increased from $3,500 to $3,860 to cover flood insurance. Lawrence, who recently settled a lawsuit filed on behalf of Williams by Essex-Newark Legal Services, said "the allegations are false" but declined further comment.

For the story, see Lawsuits target mortgage fraud (State AG announces cases against 3 firms).

NJ AG Files 3 Civil Suits Against 36 Alleging Straw Buyer Use, "Bait & Bump" Tactics, Bogus Foreclosure Rescue & Rent To Own Deals, Rent Skimming, Etc

From the New Jersey Attorney General's Office:

• Attorney General Anne Milgram filed mortgage fraud lawsuits against 36 defendants charging consumer fraud and civil racketeering by various mortgage brokers, real estate entities and others throughout New Jersey.

• The unrelated complaints accuse defendants of inducing consumers to buy property on the basis of false promises and misrepresentations, and of taking out mortgage loans on the basis of grossly inflated property values. The defendants include mortgage brokers, real estate appraisers, title companies, straw buyers and sellers, and promoters. Filed in state Superior Court in Essex, Camden and Passaic Counties, the three complaints allege violations of both the New Jersey Consumer Fraud Act and the New Jersey Racketeer Influenced and Corrupt Organizations (RICO) Act involving 25 properties and more than $5 million in fraudulent loans.

For a summary of each case, see the New Jersey AG press release: Attorney General Announces Mortgage Fraud Lawsuits (Defendants Allegedly Violated Consumer Protection, Civil Racketeering Acts).

To view each lawsuit, see:

• Milgram v. A&E Mortgage Company, L.L.C.,
• Milgram v. Ultimate Real Estate Solutions, L.L.C.,
• Milgram v. American Millenium Company, L.L.C.

35%+ Of Cleveland Vacant Home Torchings This Year Were In Foreclosure

In Cleveland, Ohio, The Cleveland Plain Dealer reports:

• Arsonists have torched nearly 100 vacant homes this year in Cleveland, and the blazes are stressing the Fire Department's budget. More than a third of the houses were in foreclosure, leading investigators to believe the blazes may involve some sort of mortgage fraud. Ninety-eight vacant homes were burned through June 10. Of these, at least 35 of the homes set on fire were in foreclosure, according to a Plain Dealer analysis of fire and court records.

***

• Nearly 25 percent of the torched homes have been in the North and South Broadway neighborhoods, which have one of the highest concentrations of foreclosed homes in the country. Councilman Anthony Brancatelli, who represents the area, said most of the 25 homes that were burned in those two neighborhoods had been boarded up before they were set on fire.

For more, see Arsonists burn 98 vacant houses in Cleveland; 35 in foreclosure (More than a third of homes hit by arsonists were in foreclosure Investigators suspect fraud in a growing number of arsons).

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

Go here, Go here, Go here, and Go here for other posts on vacant homes leaving their mark on neighborhoods. ForeclosuresDestroyNeighborhoodsApple foreclosure arson whale

Tucson Man Gets Two Years In Prison In $13M Straw Buyer Mortgage Scam Involving 23 Fraudulently Obtained Home Loans

In Tucson, Arizona, the Tucson Citizen reports:

• A Tucson man was sentenced Monday to two years in prison, three years on probation and must pay more than $1 million in fines after he pleaded guilty to a $13 million mortgage scam. [...] Padilla and another Tucson man, Carlos Bent, were indicted on 59 charges including conspiracy, wire fraud and engaging in illegal monetary transactions in amounts greater than $10,000. Padilla pleaded guilty to conspiracy to commit wire fraud. Bent, who pleaded guilty to the same charge, will be sentenced Aug. 11.

***

• The men [targeted and] told [...] homeowners [whose properties had gone unsold on the market for months] that the properties were worth more than their listed prices and they would sell them for more and pocket the difference, according to the indictment. The men paid outsiders to pose as buyers and got 23 mortgage loans by providing false information. Minimal or no payments on the mortgages were made and the properties became at risk of foreclosure.

For the story, see Tucson man sentenced to federal prison in mortgage scam.

See also, The Associated Press: Mortgage scam nets man prison sentence, probation, $1M fine.

Foreclosure Defense On Agenda For Maryland Legal, Housing Advocates

The Maryland Institute for Continuing Professional Education of Lawyers Inc. is co-sponsoring with other groups a foreclosure defense program for Maryland attorneys who represent financially strapped homeowners facing the loss of their homes. Among the topics to be discussed, as listed in the seminar brochure, are:

1. Loss Mitigation: Practical Strategies and Tools,
2. An Overview of the New Maryland Foreclosure Law & Legislative Intent: SB 216/HB 365,
3. Legal Defenses and "Issue Spotting", and
4. Leveraging Pro Bono into Attorney Fee Awards.

For more, see The New Nuts & Bolts of Foreclosure Defense - A First Look at Maryland's New Foreclosure Law.

Title Company Owner, Two Others Convicted In Cleveland-Area Mortgage Scam Involving Nine Properties; Await Trial In Another Case Involving 28 More

In Cuyahoga County, Ohio, The Cleveland Plain Dealer reports:

• The owner of a real estate title company, her mother and a mortgage loan officer were convicted [last week] in Cuyahoga County for their roles in a fraud scheme involving nine houses. Clarissa Foster, 35, of Macedonia (44 counts); her mother, Bettie Simpson, 60, of Macedonia (2 counts); and Corritha Wells (20 counts), 41, of Cleveland, are scheduled to be sentenced Aug. 11.

***

• "Wells and Foster are major players who were caught conducting their rampant mortgage fraud scheme throughout the county," Cuyahoga County Prosecutor Bill Mason said in a statement.

***

• The property sellers have already pleaded guilty to related charges. Foster, Simpson and Wells await trial on charges related to a similar scheme involving 28 other properties.

For more, see Three convicted in Cuyahoga mortgage fraud scheme (Nine properties in Cuyahoga County).

For the Cuyahoga prosecutor's office press release, see Mortgage Broker and Two Title Company Officials Found Guilty.

Shaq Gets 1000+ E-Mails In Response To Orlando Foreclosure Help Plan

In Orlando, Florida, the Orlando Sentinel reports:

• Shaq is used to facing down the NBA's most intimidating players, but is Orlando's mortgage mess too much for him? A week after Shaquille O'Neal told the Orlando Sentinel that he's working on a plan to rescue Central Floridians facing foreclosure, he has learned just how widespread the problem is. "He has two or three thousand e-mails," said Curtis Cooper, an Orlando Realtor and mortgage broker working with O'Neal on the project. "There have been a lot of calls from talk shows and radio shows."

For more, see Thousands in Orlando want Shaq to help with mortgages.

For last week's report on this story, see Shaq: I can help homeowners fight off foreclosure.

75 Of 122 Sales By One Realty Agent Fall Into Foreclosure

In Vista, California, the North County Times reports:

• Working as a real estate agent, insurance dealer, income tax preparer and credit repair specialist, Miguel Romero has helped Latinos buy 122 homes since 2004, becoming one of his firm's best salesmen. But his customers have not been so fortunate ---- at least 75 of the homes Romero sold have fallen into foreclosure. The company caters almost exclusively to Spanish-speaking customers.

• Romero's sales practices, and the stories of some clients, provide a window into industry excesses that analysts say contributed to the region's foreclosure crisis: (1) Latino families who signed documents they say they didn't understand; (2) mortgage brokers who may have reaped excessive fees exploiting the language barrier; and (3) homeowners who used high-risk loans to chase riches in a booming real estate market. There are no public allegations that Romero, who through an attorney declined to comment, broke the law.

***

• Nine additional homes engaged in so-called shortsales, where the lender agreed to sell the house for less than the mortgage in an effort to avoid foreclosure. Also, tax records show that Romero worked with or employed a network of real estate agents who sold an additional 63 homes since 2005, 21 of which entered foreclosure. Put another way, 69 percent of Romero's sales and 33 percent of his agents' have resulted in foreclosure or ShortSale.

***

• One of Romero's former employees said homeowners have filed several complaints with the [California Department of Real Estate] concerning Romero's conduct. The complaints do not become public until the department has completed an investigation, so the department could not confirm any complaints against Romero or his company, said Tom Pool, spokesman for the department. Some of the clients who filed complaints declined to comment for this story after receiving what they said were threatening phone calls from Romero. At least two clients say they filed harassment complaints with the sheriff's office because of the phone calls.

For more, see Families say real estate agent led them into crisis (Of 122 sales, 75 went back to lenders amid some allegations of misleading sales practices).

Minneapolis-Area Straw Buyer Operation Involving At Least 220 Homes The Subject Of FBI Probe; May Be Largest Scheme In State History

In Eagan, Minnesota, the St. Paul Pioneer Press reports on a straw buyer operation allegedly run by 33-year-old Michael Prieskorn:

• The former Plymouth resident and his companies remain the subject of a federal investigation, according to [Eagan police Detective Rich] Evans and several buyers. If allegations prove true, it would be the largest mortgage fraud scheme to surface in Minnesota.

• Prieskorn allegedly arranged the sales of at least 220 new homes, but Evans suspects the total is closer to 340 or more and could involve as many as 90 local buyers, according to [a search warrant] affidavit, which is partially based on business records and a spreadsheet Prieskorn's employees turned over to Evans. Prieskorn may have grossed as much as $20 million from the hefty fees he took, the affidavit says, though some of that may have been spent paying mortgages.

***

• The case now is in the hands of the FBI and the Internal Revenue Service, according to Evans, but it's unclear whether they are actively looking for Prieskorn or whether any of his circle of industry contacts are part of the probe. No charges have been filed. No investor-buyers appear to have sued, although lenders have named Prieskorn in three open foreclosure cases in Collier County, Fla.

For more, see Mortgage scam snagged scores (Company left trail of foreclosures from Twin Cities to Florida).

For a Pioneer Press editorial on the subject of this story, see Foreclosures Get square, beware.

Lender/Servicer's Failure To Report Prompt Payments To Credit Bureaus Leaves Refinance-Minded Homeowners Facing Roadblock

In Fort Worth, Texas, the Fort Worth Star Telegram reports on a story on three different homeowners who are having problems with their subprime mortgages held by one lender. The problems faced by the homeowners in two of the cases is that, despite making timely payments on their mortgages for an extended period of time, the lender/servicer never bothered reporting those prompt payments to the credit bureaus. Consequently, the homeowners' ability to refinance their existing subprime home mortgages with lower, fixed rate, prime mortgages based on their prompt payment history has been greatly impaired.

For more on their stories, see The foreclosure crisis hits home, over and over again (if link expires, try here).

Maryland Chief Judge Urges Attorneys To Step Up Pro Bono Efforts To Level Playing Field For Homeowners In Foreclosure

In Maryland, The Daily Record reports:

• The chief judge of Maryland’s highest court is calling on lawyers to lend a hand to people facing foreclosure. According to Court of Appeals Chief Judge Robert M. Bell, Maryland is one of the 10 states hardest hit by the foreclosure crisis, with 11,000 foreclosures anticipated for 2008. Meanwhile, the General Assembly changed the foreclosure procedures this year, but borrowers may not be aware of their rights. “Lawyers can help level the playing field,” Bell said. “Lawyers are uniquely qualified to help homeowners assert their rights under the new legislation.”

***

• He highlighted the efforts of the Pro Bono Resource Center of Maryland and Civil Justice Inc., which are putting together a “pro bono foreclosure prevention” program in conjunction with MICPEL, the Maryland Institute for Continuing Professional Education of Lawyers Inc. The groups hope to recruit and train 500 volunteer lawyers to serve in a number of ways. [...] Bell said he soon would be making a personal appeal to each lawyer via letter.

For more, see Lawyers urged to help distressed homeowners (Bell tells attorneys to level the foreclosure playing field by volunteering) (if link expires, try here).

For more on foreclosure defense in Maryland, see The New Nuts & Bolts of Foreclosure Defense - A First Look at Maryland's New Foreclosure Law.

Central Florida Woman Who Lost Home To Foreclosure Rescue Now Fights To Regain Possession

In Manatee, Florida, The Bradenton Herald reports:

• Kim Holloway's efforts to avoid foreclosure ended up costing her ownership of her home - and, she says, nearly her life. She says Brandon-based Home Savers Plus of Tampa Bay Inc. promised to rescue her from foreclosure, but instead stole her Bradenton home, which sits on land that's been in her family for more than a century. She says the company conned her and her daughters into signing away the deed, then sold the house to a Georgia woman who's now suing to evict them.

• Holloway is fighting in court to regain possession of her home, but says the ordeal has been so stressful that she attempted suicide. "After I found out what was going on, I really didn't want to live," Holloway said. "I almost killed myself in October - OD'd (on prescription drugs). I just wanted to die."

For more, see 'Rescue' scams: Homeowners try to save homes, end up signing away their rights. foreclosure rescue

Servicemembers, Vets With At-Risk Mortgages Urged To Contact VA Loan Counselors

A report on Military Update, and appearing in Stars and Stripes, reports:

• The Department of Veterans Affairs [...] is encouraging military members, veterans and surviving widows with at-risk loans to seek advice from VA loan counselors even if their loans are not VA-guaranteed. VA loan experts lack authority to restructure or renegotiate loans not backed by VA. But they can advise veterans on their options and on how they might negotiate with mortgage holders to avoid default.

• VA’s effort to reach mortgage holders in distress now includes a help line — (877) 827-3702 — that automatically directs callers the nearest of nine VA regional loan centers.

For more, see VA, Congress assist veterans in mortgage mess. Servicemembers Civil Relief Act

Victims In Alleged Metropolitan Money Store Foreclosure Rescue Scam Speak Out

(originally posted 6-14-08)
In Maryland, The Baltimore Sun features a story of two area homeowners who were victimized in the alleged Metropolitan Money Store equity stripping scam in which Federal prosecutors indicted eight suspects this week. The alleged scam resulted in over $35 million in fraudulently obtained mortgages and over $10 million in stolen home equity, say authorities.

• "They hurt a lot of people," said [homeowner Nadine] Bostic, who is a plaintiff in a class-action civil suit against some of the federal defendants. "I never thought I'd ever say I wanted someone to be in jail, but I do. They need to be put underneath the jail. Not on top, not inside - underneath." [...] "When I was told they [arrested the alleged perpetrators], I didn't know if I should jump for joy or what," she said. "It was a strange feeling. I never thought anyone was going to do anything."

***

• With her father serving in Iraq and money tight at home, [another victim, Jeanette] Meadows, 19, sounded less pleased about the arrests than weary of the whole affair yesterday as she described how her family became a target of the alleged mortgage schemers."They're backstabbers who can't be trusted," Meadows said from her home on Glenarm Road in Northeast Baltimore, a property that has avoided foreclosure only because a lawyer for the family last month asked a Circuit Court judge to invoke a federal law [the Servicemembers Civil Relief Act] that exempts active-duty military personnel from being forced from their homes.

For more, see Relief, anger follow arrests in mortgage loan scheme (Homeowners express emotions in alleged fraud that victimized them).

To read the Federal indictment of the alleged perpetrators, see U.S. v. JoyJackson, et al. (available online courtesy of the consumer protection attorneys at The Holland Law Firm, P.C. and the Legg Law Firm).

For more on the class action lawsuit filed against Metropolitam Money Store, go here to read the class action complaint; and for updates, check with the Metropolitan Money Store Class Action website.

Go here and go here for other posts on the alleged Metropolitan Money Store foreclosure rescue scam.

Go here for posts on the Servicemembers Civil Relief Act. joyjackson

New Jersey Upfront Fee Foreclosure Rescue Operator Cops Plea To Stiffing 77 Homeowners

In Mount Holly, New Jersey, the Burlington County Times reports:

• A Mount Laurel man who operated a mortgage consulting firm has pleaded guilty to stealing $105,000 from homeowners who hired him to help save their properties. Peter Rogers, 65, of St. David Drive admitted in court Friday that he intentionally took money from 77 victims and did little or no work to help them. Some of those victims ultimately lost their homes or had to declare bankruptcy, authorities said.

• Rogers pleaded guilty to theft by deception before Superior Court Judge John A. Almeida. [...] He reached out to homeowners he found [...] through foreclosure notices in the newspaper and “created the impression that he would save their home.” Rogers was paid between $400 and $3,700 by each homeowner, authorities said.

Rogers also faced charges of forgery and securing execution of documents by deception which, as part of the plea bargain, are expected to be dismissed at a June 24 hearing.

For more, see Mt. Laurel man admits mortgage-fraud guilt.

For an earlier story on this case, see Judge says businessman will face two trials.

Go here for earlier posts and available updates on this case.

Florida AG Cracks Down On Foreclosure Rescue Scams In Civil Suits

In Central Florida, The Bradenton Herald reports:

• [Florida] Attorney General Bill McCollum is suing four foreclosure rescue companies, accusing them of fraud and/or deceptive and unfair trade practices. Civil suits are pending against A Realty Rx, Florida Housing Council, Law & Associates and National Foreclosure Management.

• McCollum's mortgage fraud task force also is investigating 17 others, spokeswoman Sandi Copes said. Seven have ties to the Tampa Bay area: EMC Mortgage Corp.; Florida Foreclosure Prevention & Assistance Program; Garco; Home Assure; Law & Associates; Mortgage Assistance Solutions (also known as Fresh Start); and U.S. Mortgage Crisis Center.

• The investigations stem from the nearly 2,100 foreclosure fraud complaints, [...] Copes said. "The problem appears to be widespread throughout the state," Copes said.

***

• Given the focus on rescue schemes, it's likely there will be more prosecutions, authorities indicate. "We are gearing up and looking into complaints of mortgage fraud, but until we have charged someone we can't discuss ongoing investigations," said Steve Cole, spokesman for the U.S. Attorney's Office in Tampa.

• While the number of rescue-scheme prosecutions might rise, it's likely that such scams are on the wane, said [Michael] Wasylik, the attorney representing [four] Sarasota County homeowners [who were screwed over by one foreclosure rescue scam group]. "I think the market is going to be taking care of a lot of the problem because the incentives are going away," he said. For one thing, there's less equity to steal. Just as the runup in prices during the housing boom artificially inflated equity values, the decline in prices is reducing it, he said.

For more, see McCollum, Legislature crack down on fraud.

Recent Criminal Prosecutions Of Florida Foreclosure Rescue Scams

The Bradenton Herald reports on three recent criminal prosecutions of foreclosure rescue scams in Central Florida - two completed successfully and one currently pending:

• A federal [...] jury in Tampa found five Tampa-area residents guilty in 2007 of stealing more than $2 million in equity from homeowners in central and South Florida. [...] The scheme's principals - Kamal Moumneh; his brother, Ramzy Moumneh; and Chuong Dam, all of Tampa - were sentenced to between one and five years in prison. Four others who were convicted or pleaded guilty in the scheme received lesser sentences.

• Tampa Police arrested Carmen Maria Oliveri, 48, of Seffner, on felony grand theft and organized fraud charges in June 2007. She and her husband, Jose, are accused of scheming to defraud a Tampa homeowner by not telling him that he was signing over his home as part of a foreclosure rescue transaction, then selling the house without his knowledge. Carmen Oliveri is awaiting trial but Jose Oliveri remains a fugitive, court records show. They were principals in 4 Solutions Inc., a defunct Tampa-based foreclosure consulting firm [...].

• Graham Kligerman, a disbarred Clearwater attorney, pleaded guilty to federal fraud charges in December for his part in an $11 million scheme. He and several unindicted co-conspirators, through a program called "Fresh Start Leaseback" that ARO Properties Corp. offered on the Internet, targeted homeowners who had substantial equity but were facing foreclosure, prosecutors said. Go here for more on Graham Kligerman.

For more, see Recent foreclosure scam cases in Florida.

Go here for other criminal prosecutions of foreclosure rescue operators.

Ohio High Court Establishes Foreclosure Mediation Program Model

As part of the effort to help financially strapped Ohio homeowners save their homes from foreclosure, The Supreme Court of Ohio has created an eleven step Foreclosure Mediation Program Model, which is designed for individual Ohio trial courts to use and modify based on their own needs, resources and community.

For more, including links to the entire model, recommended forms, resources, training, etc., see Foreclosure Mediation Program Model, courtesy of The Supreme Court of Ohio.

FBI Investigates Michigan Man With "Habit Of Overpaying For Houses" As Three Dozen Homes End Up In Foreclosure

In Kalamazoo, Michigan, a Kalamazoo Gazette published an investigative report on Rodney Hixon, a local man who, according to the Gazette, "has a habit of overpaying for houses." According to the story:

• [Hixon r]outinely overpaid for the homes -- on average 68 percent more than tax assessments would suggest the properties were worth, based on Gazette calculations and review of tax records from the cities of Kalamazoo and Portage and Kalamazoo Township.

***

• [Hixon h]ad 36 foreclosures in 2007 in Kalamazoo County, 15 more than [two others], who had the next highest total. All 38 of Hixon's homes were repossessed by the lending institutions that held the unpaid mortgages.

Reportedly, the FBI is investigating Hixon for possible mortgage fraud, according to a May 21 e-mail from Kalamazoo's Community Planning & Development Department that was obtained by the Gazette under the Freedom of Information Act.

For more, see FBI investigating Kalamazoo man for possible mortgage fraud.

In a related story, see Officials starting to look for foreclosure irregularities (State can't probe mortgages from out-of-state lenders) (story no longer available online).

Chicago Court "A Frenetic Debt Collections Machine" As 119K+ Cases Clog System; Sloppy Practices, "Zombie Debt" Affect Consumers

In Chicago, Illinois, a story in the Chicago Tribune makes apparent that mortgage foreclosures are not the only cases that are clogging the court system:

• Cook County Circuit Court has been turned into a frenetic debt collections machine, a reflection of easy credit gone sour and a collections industry determined to get paid. More than 119,000 civil lawsuits against alleged debtors are clogging courtrooms, and at least half will result in judgments that debt collectors will use to dock wages, seize bank accounts and file liens against homes, compounding the woes of troubled borrowers.

• But because debt collectors operate on volume—pushing through lawsuits based on little more than lists of names, addresses and alleged amounts due—there are also plenty of instances of mistaken identities, cases where debts are alleged when the bills have been paid and even situations where people have fallen behind and tried to work out repayments only to be hauled in to court. "The system is out of control," said Michelle Weinberg, a supervisory attorney at the Legal Assistance Foundation of Metropolitan Chicago.

***

• A new breed of collector has transformed the industry in the last decade, purchasing distressed debt from credit card issuers, retailers and other consumer lenders. Debt buyers usually only pay pennies on the dollar for packages of unpaid bills that include limited electronic information about the borrowers.

***

• Consumer groups say the high number of default judgments can mask flaws with the lawsuits. Credit agreements and payment histories are often not included when suits are filed. Instead, debt collectors file an affidavit attesting to the validity of the debt, and it's not unusual for that affidavit to be erroneous, said Bob Hobbs, deputy director of the National Consumer Law Center. [...] In New York, an Urban Justice Center study in 2006 found that in 99 percent of a sampling of default judgments that the evidence used to obtain the judgment did not meet the state's legal standards.

The experience of one consumer victimized by the sloppy practices of a purported creditor and the creditor's attorney was reportedly described as "a perfect example of zombie debt. You pay it, and it comes back to life."

For more, see Debt collectors pushing to get their day in court (More aggressive strategies fill court dockets, result in mistaken identities) (if link expires, try here).

Go here for other posts on zombie debt. zeta

Ohio Couple Facing Foreclosure Petitions State Judiciary For Constitutional Right To Free Court Appointed Counsel

In Cincinnati, Ohio, The Enquirer reports:

• A Westwood couple faced with losing their home of 22 years through foreclosure has asked the Ohio Supreme Court to declare that they have a constitutional right to a court-appointed lawyer to represent them.

• The petition came after Hamilton County Common Pleas Judge Beth A. Myers ruled Tuesday that William and Mary Hill were not entitled to a free lawyer because the case involved property rights, not individual liberty.

• Attorney Robert B. Newman, who represents the Hills, argues that too many homeowners in foreclosure lose hope and abandon their homes, even if they have valid defenses, because they can't afford a lawyer. The Legal Aid Society of Southwest Ohio has supported his argument, saying its lawyers are overburdened with foreclosure cases and have had to turn away homeowners.

Source: Homeowners demand lawyer.

Mortgage, Economic Woes Threaten Ranks Of Volunteer Firefighters

In Genesee County, Michigan, The Flint Journal reports:

• Accepting the resignation of a firefighter at a recent Mt. Morris Township Board meeting was just a formality. He'd already relocated out of state days earlier. But District Fire Chief Rick Johnson saw it as an ominous sign that the mortgage lending crisis was knocking on the door of yet another house - this time the fire house. "He left out of our district because he was losing his house, and I'm afraid this is the first of many," Johnson told township trustees. [...] The township lost another firefighter because his car was repossessed.

***

• Volunteer firefighters are being affected by the same things hitting everyone else: skyrocketing gas prices, layoffs and foreclosures. [...] "Having an on-call force depends on people who live in the community. When they start losing houses and vehicles, it makes it hard."

For more, see Genesee County fire departments face another tough battle: losing firefighters because of economic woes. foreclosure arson whale

Budget Cuts May Force San Bernardino Fire Department To "Fire" Diesel The Arson Dog

In San Bernardino, California, the Redlands Daily Facts reports:

• Looming budget cuts mean that Diesel's job could be on the line. Diesel is the playful "goldador" (a mix of golden retriever and Labrador) the Fire Department sometimes takes to fire scenes to sniff out evidence of possible arson. But Diesel's services may be a bonus that San Bernardino can't afford. A $20 million deficit is forcing all city departments to make cuts; in the Fire Department's case, Fire Chief Michael Conrad said there's not enough money available to keep Diesel in the department.

***

• "The program to me is just valuable," [canine fire investigator Michael] Koster said. "We look at people who set fires to structures and use accelerants and they forget we have a dog who can sniff accelerants." Koster said he expects the increasing number of foreclosures will give fire investigators a lot more work to do in the near future. "The arson fires are going to start increasing. It's known," he said.

For more, see Arson dog could lose job (if link expires, try here).

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