Wednesday, July 30, 2008

Developers To Begin Using "Lender-Liability" Suits To Stop Foreclosures?

In Miami, Florida, the Daily Business Review reports:

  • For condo developers facing foreclosure, the newest defense may be an old counter offensive last waged during the real estate downturn of the 1980s. EB Developers, a condo builder in default on a $52.43 million loan, countersued Wachovia Bank, claiming the giant lender failed to fully fund construction loan draws and caused a shortfall that brought on the demise of a condominium project in Doral.

  • The developer of Promenade At Doral II hopes the action, known as a lender-liability lawsuit, will prevent Wachovia from moving ahead with a March foreclosure suit against the unfinished project. One industry expert predicts a surge in the lawsuits as developers, who couldn’t restructure their delinquent mortgages through workouts, sue lenders to stop foreclosures.

For more, including links to Wachovia's foreclosure action, and Promenade At Doral II countersuit, see Condo Meltdown: Are lender-liable lawsuits on the rise?

Editor's Note:

It may not be a bad idea for homeowners facing foreclosure to take the same approach(1) against their mortgage lender / loan servicer if they won't give an affordable workout agreement satisfactory to the homeowner (and the homeowner's legal counsel).

For posts that reference the failure of some mortgage lenders and their attorneys to file the required loan documents when starting foreclosures, Go Here, Go Here, Go Here, and Go Here.

For other posts on homeowners using Federal & state consumer protection statutes to try and undo bad mortgage loans, Go Here, Go Here, and Go Here.

(1) Lawsuits, countersuits, defenses alleging violations of the Truth In Lending Act, Fair Debt Collection Practices Act, and state consumer protection laws as well as bringing any other applicable statutory and common law claims and defenses - assuming, of course, the foreclosing lender can establish legal standing to bring the foreclosure action in the first place. undo mortgage loans TILA batallion missing mortgage foreclosure docs gamma

President OKs Housing Bill

The Associated Press reports:
  • President Bush on Wednesday signed a massive housing bill intended to provide mortgage relief for 400,000 struggling homeowners and stabilize financial markets. Bush signed the bill without any fanfare or signing ceremony, affixing his signature to the measure he once threatened to veto, in the Oval Office in the early morning hours.

For more, see Bush signs housing bill to provide mortgage relief.

Go here for a copy of the new law, the American Housing Rescue and Foreclosure Prevention Act (go here for House Financial Services Committee press release describing some of the key provisions of the new law).

Grand Rapids Couple In Foreclosure Accuse Equity Stripper Of Pocketing Home Equity, Defaulting On Mortgage; Cops Investigate

In Grand Rapids, Michigan, WOOD-TV Channel 8 reports:
  • Jason and Tricia Wise were losing their home on Grand Rapids' northwest side when they got a mailer from a company called Canal Street Financial. "It was one of the first letters we got that actually said, 'we're interested in saving your home,'" Jason Wise said. But it didn't turn out that way. "Basically they got a mortgage and robbed all the equity out of our home and then never made those payments and then waited for the bank to foreclose and kick us out of our house," Wise laments.

***

  • The Wises deeded their house for $1 to a company called Wells Financial, operated by an employee of Canal Street. Then Wells Financial deeded the house to Canal Street's boss, Norman Long. Long, using another corporate identity, NTW Investments, sold the house back to the Wises on a land contract which had them making monthly payments of $719 until the total amount was paid off, at which time they would get back the deed to the house.

  • But Norman Long had a secret. He had his own deal to make money off the house, unknown to the Wise family. He got a new mortgage on the house for $119,000, paid off their old mortgage of $86,000, and pocketed the $33,000 difference. In addition, Long was receiving the Wises faithful monthly payments on their land contract.

  • "For the next two years we make all of our payments and we think everything is fine, that we're rebuilding our credit," Jason Wise said. But what he didn't know is that, despite all that income, Long didn't make the payments on his mortgage. That lender foreclosed and the Wises were back where they started with an even bigger payoff needed to save their home.

***

  • A Grand Rapids police detective and a US Postal Inspector are investigating to see if they can charge Long with a crime.(1)

For more, see Secret deal leaves family facing foreclosure - again (go here for video).

Editor's Note:

Arguably, the transaction described in this report could constitute an equitable mortgage. In that case, the homeowners who were screwed out of their home title would still be considered the owners of the property.

Further, because the Wises remained in possession of the home throughout the entire relevant period, and were in possession when the bank made the mortgage loan to Long, it is arguable that the mortgage lender making the $119,000 mortgage was on notice of any property rights the Wise's could establish, and consequently, would not be entitled to bonafide purchaser status - thereby making their mortgagee's interest in the home inferior to the Wise's (at least to the extent that the $119,000 loan exceeded the $86,000 balance on the existing mortgage that was paid off). Essentially, a case could be made that it's the bank that loaned the $119,000 that would be screwed out of $33,000 - not the Wises.

For examples of what a lawsuit against a foreclosure rescue operator looks like, one that asserts equitable mortgage and usury, see:

Go here for information on equitable mortgages in Michigan. Go here for information on bonafide purchaser case law in Michigan.

Go here for a recent post in which this scenario was played out.

(1) Go here for Criminal Prosecutions Of Foreclosure Rescue Operators, Refinancing & Other Deed & Equity Scams.

Merrill Unloads $31B Of Mortgage-Tied Junk For 22 Cents On Dollar; Will Finance 75% Of Price; Stays On Hook For Additional Losses

The New York Times reports:
  • John P. Grayken made a fortune buying investments no one else seemed to want during the savings and loan debacle in the early 1990s. Now he is trying to repeat that feat by buying the detritus of today’s mortgage crisis.

  • On Monday night, Mr. Grayken’s private investment company, Lone Star Funds, agreed to pay $6.2 billion for most of the toxic, mortgage-linked investments held by Merrill Lynch. The deal was classic Grayken: Lone Star, which has a long history of swooping down on troubled assets, paid 22 cents on the dollar for investments with a face value of nearly $31 billion. Mr. Grayken’s firm even got Merrill to finance 75 percent of the purchase price. If the investments turn out to be worthless, Merrill, not Lone Star, will be on the hook for most of the losses.

***

  • Companies like Loan Star — vulture investors is Wall Street’s term — root through loan files and try to determine how much the debt is worth. If the vultures buy the loans, they then seek to recoup that value, either by working out the loans with borrowers, pushing the properties through foreclosure or holding on to them until they can be sold. The process is slow and requires navigating the pitfalls of mortgage lending, such as understanding predatory lending laws.

For more, see An Investment Firm That Prospered From Past Crises Turns to Mortgages.

Recap Of Florida AG Mortgage, Foreclosure Fraud Lawsuits

In Florida, the Jacksonville Business Journal recaps the five lawsuits alleging mortgage / foreclosure fraud that the Florida AG's office has filed since it began targeting these types of cases:

  • Florida Attorney General Bill McCollum has filed five cases against companies he believes have conducted questionable, if not illegal, acts in regard to mortgage and foreclosure fraud since assembling his Mortgage Fraud Task Force last September. The biggest case in terms of public profile came at the beginning of July against Countrywide Financial, which McCollum claimed put borrowers into mortgages they couldn't afford or gave loans with rates and penalties that were misleading.(1)

For more, see AG accuses Countrywide, others of fraud.

(1) The other lawsuits are:

Unfinished Developments Dot The Landscape In SW Florida

In Lee County, Florida, The News Press reports:
  • [W]elcome to life at the half-builts, the many projects large and small that sit largely vacant and partly completed - left high and dry when the housing market tide went out. [...] There are no exact statistics on how many such developments there are in Lee County, but "you're not talking about a few units,'' according to commercial real estate broker Jim Simon. "It's in the thousands," he said.

For more, see Local communities sit half-built, fully troubled (Residents, builders alike left empty).

Go here for photo gallery of half-built communities.

Miami Municipal Officials Begin Targeting Abandoned Foreclosed Homes For Demolition

In Miami, Florida, WPLG-TV Channel 10 reports:
  • Demolition orders are the latest fallout from South Florida's foreclosure crisis. A rising number of bank takeovers have become so poorly maintained and so unsafe, city and county officials are ordering them to be destroyed.

The home featured in Channel 10s video report sold for $350,000 three years ago; the current owner of record - Deutsche Bank.

For more, see Foreclosed Homes Being Ordered Demolished (Demolition Orders Latest Fallout From South Fla.'s Foreclosure Crisis) (read story) (watch video).

New Local Ordinances Allow Cities To Begin Belting Banks With Stiff Fees For Policing Vacant Foreclosures

The Wall Street Journal reports:
  • As home foreclosures continue to rise, a growing number of local governments are imposing stiff fees on mortgage companies responsible for the vacant properties. [...] "These ordinances are popping up every single day," said Robert Klein, chief executive of Safeguard Properties in Brooklyn Heights, Ohio, which maintains vacant homes for mortgage companies nationwide. Mr. Klein said his office is tracking more than 60 local ordinances that deal with foreclosed properties. Local governments taking a tougher stand span the country, from Providence, R.I.; to Cincinnati, Ohio; to Chula Vista, Calif.

***

  • [Chula Vista's code-enforcement manager, Doug Leeper, who drafted his city's measure] said he has fielded inquiries about the program from about 250 communities in Arizona, California, Colorado Florida, Illinois, Missouri, Oregon and Tennessee.

For more, see Vacant-Property Fees Add to Mortgage Firms' Woes.

Tuesday, July 29, 2008

Stiffed Subs Slap Liens On Developer, Leaving Recent New Home Buyers Concerned

In Silver Spring Township, Pennsylvania, The Patriot News reports:
  • Residents of the Brook Meadow development in Silver Spring Twp., are worried they could lose their homes. Liens have been placed on several of the townhouses by subcontractors who claim they have not been paid by Altieri Homes, the project's developer. State law allows "mechanics' liens" to be placed on the properties, even though the homeowners have paid Altieri in full, said Nils Frederiksen, a spokesman for the state attorney general's office.
For more, see Looking At Mechanics' Liens.

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

Landmark Move To Online Foreclosure Sales To Begin In Jacksonville

In Jacksonville, Florida, according to an online press release issued through MarketWatch:
  • In a landmark move, Jim Fuller, Duval County Clerk of the Courts has selected Realauction to hold the country's first online foreclosure sales. Duval will pioneer the effort in Florida, implementing RealForeclose to manage foreclosure sales efficiently and cost-effectively. [...] The benefits of RealForeclose were made possible due to recent changes to Florida Statutes allowing Clerks of Courts to hold foreclosure sales online.

For more, see Duval County First to Begin Online Foreclosure Sales with Realauction.

State To Look Into How 10,000 Convicted Criminals Were Allowed To Sell Mortgages In Florida

In Florida, The Associated Press reports (appearing at Forbes.com):
  • The head of a state agency that allowed thousands of criminals to sell home loans in Florida has acknowledged that his office did not follow a screening law, but blamed legislators for failing to provide money to enforce it. That's one of the explanations in a 40-page response to a Miami Herald investigation, which found that more than 10,000 people with criminal records were permitted to work in Florida's mortgage industry between 2000 and 2007.

For more, see Florida to address criminals in mortgage industry.

See also, The Bradenton Herald: State to investigate criminals in mortgage industry:

  • Saying he's outraged that thousands of people with criminal histories were allowed to peddle home loans in Florida, Attorney General Bill McCollum called for an investigation into the state agency overseeing the mortgage industry.

Go here for the Florida Office of Financial Regulation head Don Saxon's 40-page response; and go here for his Letter to the Editor, presumably sent to multiple print media outlets around the state.

Congress Continues Examination Of Role Of Mortgage Servicing In The Foreclosure Crisis

House Financial Services Committee Chairman Barney Frank (D-MA) presided over a hearing held last Friday that examined the role of mortgage servicing in the foreclosure crisis, focusing specifically on ongoing problems with loan modifications and the need for improvements in servicing practices and responsiveness to consumers. Chairman Frank urges the mortgage servicing industry to begin cooperation immediately even though the new law doesn't become effective until October 1:
  • Chairman Frank [...] called for restructuring the mortgage servicing industry if servicers fail to cooperate in aggressively forbearing and preventing foreclosures, or if there are institutional roadblocks that prevent mortgage workouts or other restructuring that is needed in order to help borrowers, and thereby help the housing market and the economy overall.(1)
For more, see Frank, Waters Urge Mortgage Industry to Forbear Foreclosures Until New Law Takes Effect.

Check the Review of Mortgage Servicing Practices and Foreclosure Mitigation webpage for the list of the witnesses who testified, links to their prepared statements, links to available committee member statements, and a printed version of the hearings.

Go here to view the video of the hearings.

Postscript:

Some of the hearing testimony from a mortgage industry witness suggested that it is unprofitable for loan servicers when a homeowner goes into default. A contrary view is held by Alfred A. DelliBovi, chief executive of the Federal Home Loan Bank of New York(2) (and mentioned by name by Congresswoman Waters in her opening remarks), as expressed in the following excerpt from a July 20, 2008 article in The New York Times:

  • Meanwhile, servicers, whom investors pay to collect mortgage payments from borrowers, often have no incentive to help borrowers find the ultimate holder of a loan, Mr. DelliBovi said. “Servicers make more money on a foreclosure than when the loan is worked out,” he said. (emphasis added)

Thanks to Mike Dillon at GetDShirtz.com for the heads-up on this postscript.

(1) In actuality, Chairman Frank promised the mortgage servicing industry, in no uncertain terms, that in the next Congress, he will work with the committee members to do everything possible to abolish their industry as it currently exists, if the institutional roadblocks that prevent loan workout cannot be overcome for those currently facing foreclosure and who may lose their homes before the October 1, 2008 effective date of the new law.

(2) The Federal Home Loan Bank of New York, which lends money to roughly 300 local banks in New York, New Jersey, Puerto Rico and the United States Virgin Islands to finance mortgages, is currently spearheading a loan workout initiative in New Jersey. Under this initiative, called the Housing Assistance and Recovery Program, or HARP, the Home Loan Bank lent $6 million to Magyar Bank, based in New Brunswick, N.J. The First Baptist Church of Lincoln Gardens, in Somerset, N.J., which provides counseling services through its First Baptist Community Development Corporation, identifies homeowners who are in danger of foreclosure, then negotiates with the lender to buy out the loan. For more, see The New York Times: Struggling, but Staying in a Home. questionable mortgage servicing practices tactics xero MortgageServicingIssuesAlpha

City Of San Diego The Latest To Jump On Bandwagon In Targeting Lenders For Loose, Predatory Practices

A story reported last week in the San Diego Union Tribune reminds us that the recent lawsuit filed against Countrywide Financial by City Attorney Michael Aguirre on behalf of the City of San Diego is the latest suit brought by a city where it has decided to hold a mortgage lender accountable for the problems arguably caused by the loose and/or predatory lending standards used in making certain home loans.

  • [A]guirre noted that cities such as Baltimore, Buffalo and Cleveland have filed lawsuits related to the foreclosure issue, but have used varying legal theories. In San Diego's suit, Aguirre is arguing that the city has the authority to go after lenders under the California business and professions code governing fraudulent and unlawful business practices.
    In Cleveland, the legal basis was the public nuisance law.

The Buffalo suit is based primarily on violations of the New York State Property Maintenance Code; the Baltimore suit is based on violations of the Federal Fair Housing Act of 1968.

For the lawsuits filed by the above-referenced cities, see:

  1. People (City of San Diego) v. Countrywide Financial Corp., et al.,
  2. City of Buffalo v. ABN Amro Mortgage Group Inc., et al.,
  3. City of Cleveland v. Deutsche Bank Trust Company, et al. (if you have a problem with this link, drop me a line at HomeEquityTheft@yahoo.com and I'll e-mail it to you - be sure and put "City of Cleveland v. Deutsche Bank" in "subject" line),
  4. Mayor and City Council of Baltimore v. Wells Fargo Bank, N.A., et al.

See also:

Ohio Sisters Get Stiff Jail Time For Disguising $64K Theft From Elderly Woman's Bank Account As Proceeds From Land Sale

In Butler County, Ohio, the Middletown Journal reports:
  • A Middletown woman, one of two sisters who admitted to bilking an elderly woman out of $64,000 in a fraudulant land deal in September, was sentenced seven years in prison Wednesday, July 24, by Butler County Common Pleas Judge Michael Sage, according to the Butler County Prosecutor's Office.

  • Penny Shepherd, 45, pleaded guilty as charged to theft, forgery and securing writing by deception and tampering with records in May. She also entered guilty pleas to welfare and Medicaid fraud. Christina Hensley, 35, Shepherd's sister, pleaded guilty to complicity to felony theft and received a two-year prison sentence earlier this month.

  • The victim, Orneda Hale, 81, wasn't aware the money was gone until her bank sent her a forged canceled check, along with a faked offer to purchase 7.6 acres of land south of Lexington, Ky., for $64,000 in September.

For the story, see Bilking elderly woman gets one sister 7 years in prison.

For earlier reports on this story from the Middletown Journal, see:

Ohio Man Cops Plea For Allegedly Ripping Off Elderly Father; Used POA To Pocket $130K, Transfer Home Title Into His Name

In Hamilton County, Ohio, the Cincinnati Enquirer reports:
  • [Robert] Lodge was caring for his 89-year-old father and regularly taking him to the bank. Bank officials became worried when his father, Harry Lodge, blurted out to a bank teller after a withdrawal of several hundred dollars that he was being held hostage by his son.

  • Bank officials contacted police who arrested Robert Lodge. The son had received his father’s power of attorney – allowing him to make legal, financial and other decisions for his father – in May 2005. By the time the power of attorney was revoked in November 2007, Lodge had spent about $130,000 of his father’s money and transferred title of his father’s house into his name.

***

  • The father’s $125,000 house, though, has been transferred back into his name and other relatives are in charge of his finances. The house will be sold to pay off the father’s debts as a result of his son stealing his money.

***

  • Last month, Hamilton County prosecutors had to drop a similar case against Gwendolyn Hall. Hall persuaded her 90-year-old aunt to give her power of attorney that Hall used to steal $500,000 from her aunt. Hall, 62, of Cheviot, pleaded guilty but died before she could be sentenced.

For more, see Man avoids jail after stealing $130K from Dad.

Go here, go here, and go here for other posts related to deed theft by forgery, swindle, etc.

Go here, here, here, here, here, and here for other posts on elder financial abuse. FinancialAbuseOfElderlyAlpha deed theft xenon

Illinois Notary Accused Of Pocketing $65K+ By Forging Lien Waivers Takes Guilty Plea

In Crown Point, Illinois, the Post Tribune reports:
  • Lisa Marie Lesniak, 41, [...] pleaded guilty to official misconduct in a case where she originally was charged with 11 counts of forgery and one count of theft. [...] Lesniak, who used the name Lisa Jobbe, notarized a final waiver of lien documents and signed on behalf of subcontractors working at 12765 Ramble Court.

***

  • Lesniak admitted in court documents she wrote a contract price for materials and labor higher than what was actually paid to the subcontractors and "converted'' the amount, which totaled $65,680, which was dispersed through Ticor Title Co.

For the story, see Crown Point woman facing felonies gets break with plea agreement.

Heirs Of Deceased Illinois Homeowner Claim Deed Theft; Accuse Cousin Of Stealing Title To House

In East St. Louis, Illinois, the Belleville Democrat reports:
  • When a daughter decided to sell her mother's home, she was surprised to learn it was no longer hers to sell. A real estate appraiser told Victoria Rodgers that she, her five brothers and a sister didn't own the house and neither did her long-deceased mother. "I told the guy, 'What?!?'" Rodgers said. "How could that be? This is my mother's house ... We are her only heirs." Carrie Hampton, Rodgers' mother, died in 1987. Rodgers discovered her cousin, Sherille Edmond, filed a quit-claim deed, stating she was Rodger's sister and executor of Hampton's estate.

  • The deed was prepared by St. Clair County Recorder's Office employee Debra Johnson, who was charged last month with official misconduct and forgery in an unrelated case. [...] Johnson was charged after police said she forged the name of two dead women on property-tax records, resulting in removing two properties from the county tax rolls for two years and costing the county almost $9,000 in taxes. Debra Johnson, who could not be reached for comment, lives [...] next door to Rodger's mother's home [...].

For more, see Family feuds over East St. Louis home; deed prepared by charged worker.

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

Monday, July 28, 2008

Ohio Foreclosure Mediation Program Appears Off To Good Start

Media reports from Ohio are indicating that the foreclosure mediation program launched for several county courts last month may be of to a good start. Among those media outlets chiming in with stories are:
  • The Canton Repository (editorial): Stark County's Common Pleas judges are pleased with the number of homes that their new mediation program has kept out of foreclosure since April. So are we. We're convinced that with more publicity, the program can do an even better job. Homeowners in 43 of the 84 mediations that were concluded between April 1 and June 30 were able to keep their homes. See Program is helping to avert foreclosures.

  • The Cleveland Plain Dealer (editorial): Cuyahoga County Common Pleas Judge Eileen T. Gallagher is still tweaking the program, in part because it breaks new ground. And, while the court has established a sound framework, it could do well to incorporate additional improvements. See Foreclosure mediation program is wise, but needs some adjustment.

  • Cincinnati Enquirer: A judge's decision to launch a foreclosure-mediation program has saved the homes of several Clermont County families, and similar efforts are under way throughout Southwest Ohio. Judge Robert P. Ringland of Common Pleas Court began the program earlier this year because of a spike in foreclosure cases. [...] With the help of the Clermont County Bar Association, Ringland put out the call that resulted in 33 lawyers volunteering their time to help homeowners. [...] Other courts are developing foreclosure-assistance programs in Hamilton, Warren, Butler, Highland, Clinton and Brown counties, said Ginny Conlan Whitman, managing attorney for the Volunteer Lawyers Project. See Lawyers work pro bono to stave off foreclosure.

Go here for the Ohio Supreme Court's 11-Step Foreclosure Mediation Program Model.

For the local court rule applicable to home foreclosure filings adopted in Summit County, Ohio, effective June 1, 2008, see Order - In re: Certificate of Readiness For Foreclosure Actions Filed In The Court of Common Pleas - General Division.

Missouri AG Launches "Operation Stealing Home" - Targets Foreclosure Rescue Scams, Predatory Lenders; Seeks To Void Deeds, Obtain Victim Restitution

From the Missouri Attorney General's Office:
  • Attorney General Jay Nixon is taking legal action to stop those who are preying on Missouri homeowners left vulnerable to mortgage fraud because they are facing foreclosure or other financial difficulties. Nixon today launched Operation Stealing Home by filing seven lawsuits [...] aimed at individuals and businesses Nixon said had defrauded consumers through refinancing, advance fee and foreclosure consulting scams.

***

  • Four of the defendants(1) operate what Nixon termed "foreclosure rescue scams." [...] The companies [...] convince the homeowners to deed their property over and rent it back from the company so they can still live in the home, on the premise that the rent goes to make the mortgage payment, plus a modest profit for the company. Unfortunately, the homeowners discover that the companies are not using their rent payments to make mortgage payments, causing the lenders to initiate foreclosure proceedings.
***
  • Nixon is asking the courts to void the deeds the companies illegally obtained; to award restitution to consumers who suffered losses; to impose appropriate penalties; and to issue injunctions to prohibit the defendants from future violations of Missouri consumer protection laws.

For more, see Operation Stealing Home: Nixon goes after mortgage fraud targeting those facing foreclosure or other financial woes.

(1) According to the Missouri AG press release, four of the lawsuits targeted foreclosure rescue firms and were filed against: (I) St. Anthony Avenue LC, based in St. Louis County; (II) Private Funding Solutions, based in St. Charles, and its president, Mike C. Rothweiler; (III) Brian J. Thompson, of Springfield, who does business as "All Decked Out"; and (IV) Access Mortgage and Financial Corp., of Lansing, Mich., and its agents, David Snyder and Josh Nowell. This lawsuit was filed in Henry County.

State-Required Exam May Pose Problem As 500+ Indiana Mortgage Brokers Close To Losing Licenses

In Indaianpolis, Indiana, the South Bend Tribune reports:
  • Indiana's secretary of state warned mortgage brokers earlier this month that they would lose their licenses if they didn't pass a state-required test by Aug. 5th. But it appears most of them aren't worried about the threat. Just 83 people have passed the exam since Secretary of State Todd Rokita's warning July 7, while more than 500 brokers are still on track to lose their licenses, according to an update from Rokita's office.

For more, see Indiana mortgage brokers could lose licenses (Home buyers could be affected after deadline as some businesses may be closed).

Florida: The Most Crooked & Most Screwed-Up Place In America?

A column in The Miami Herald observes:

  • The revelation that more than 10,000 convicted criminals have been welcomed with open arms into Florida's mortgage industry is shocking, even in light of the state's sleazy, anything-goes history. At first blush, things look bad for the Office of Financial Regulation and its commissioner, Don Saxon, whose long nap was harshly interrupted by last week's headlines.

  • And although it's tempting to view this story as just another embarrassing validation of Florida's reputation as the most crooked and most screwed-up place in America, there might be an upside to the scandal. Granted, a Miami Herald investigation(1) revealed that just about any scumbag with an arm's-length rap sheet can get work as a mortgage broker or so-called loan originator.

For more, see Loan scandal: Maybe it was just job rehab.

See also, Excuse for broker fiasco a tough sell.

(1) Go here and go here for links to The Miami Herald media reports on their investigation.

Lender's Lack Of Standing, Murkiness Surrounding Promissory Note Ownership Means Favorable Settlement For Elderly Atlanta Homeowner In Foreclosure

The New York Times reports:
  • [I]n some mortgage circles, Ms. [Mamie Ruth] Palmer, a 74-year-old former housekeeper, has earned her moment of fame. After enduring six years in foreclosure hell, almost losing her home twice, Ms. Palmer has escaped intact.

  • Last month she received a settlement from the Bank of New York, the trustee for a vast pool of mortgages that included hers. Under the terms of the deal, the bank reduced Ms. Palmer’s loan balance to $59,000 from about $100,000 and has agreed to accept the proceeds of a reverse mortgage in full satisfaction of her obligation.(1)

***

  • Ms. Palmer’s case is hardly unique. It’s just one of a swelling number that revolve around the thorny issue of who owns the note on a home when it’s forced into foreclosure proceedings.

  • In the seemingly long-ago era when banks held on to the mortgage loans they made, this was a straightforward matter. But today, amid the freewheeling packaging of mortgage loans into securities that are sold off to investors, it’s much less clear who controls the note — all of which promises to cause banks enormous legal and financial headaches as foreclosures mount. The added twist is that some judges are taking the borrowers’ side in foreclosure disputes, precisely because of murkiness surrounding notes.

***

  • Loans were heaped into trusts with little documentation of ownership or proper loan assignments — it was all about volume and the fees that came with it — and now that sloppiness is hurting both lenders and borrowers.

Among the notables receiving mention in the story with regard to the problems some foreclosing lenders are facing because their loan documentation is all screwed up:

  • Howard D. Rothbloom, a Marietta, Georgia consumer bankruptcy attorney who represented the homeowner in this story,
  • April Charney, a consumer lawyer at Jacksonville Legal Aid Society in Florida,
  • William J. Brennan Jr., director of the Home Defense Program of the Atlanta Legal Aid Society,
  • The Honorable Arthur M. Schack, a justice on New York State Supreme Court in Brooklyn, who has been hammering foreclosing lenders appearing before him for sloppy paperwork for some time,(2) and on occasion, has excoriated lenders' attorneys for wasting the court's time for filing foreclosure actions on behalf of clients that lacked legal standing to do so.(3)

For more, see Fair Game: How One Borrower Beat the Foreclosure Machine.

For other posts that reference the failure of some mortgage lenders and their attorneys to file the required loan documents when starting foreclosures, Go Here, Go Here, Go Here, and Go Here.

(1) According to the story, the settlement also eliminated about $12,000 in foreclosure fees added to her debt and called for the installation of central air-conditioning in Ms. Palmer’s home; and roughly $10,000 in legal fees billed over five years by Ms. Palmer’s lawyer, Howard D. Rothbloom, will be covered by payments she has made toward her mortgage while she was battling foreclosure.
.
(2) Go here for list of links to over thirty of Justice Schack's decisions denying foreclosure.

.
(3) In a 2007 decision in which he dismissed a foreclosure action with prejudice, Justice Schack makes this observation on the conduct of the law firm filing the suit on behalf of Aurora Loan Services in which legal standing was lacking:
  • "[T]he Court is troubled that Aurora's counsel, Druckman & Sinel, LLP, and Robert S. Aronin, Esq., of counsel to Druckman & Sinel, appears to be wasting judicial resources in an action that could be construed as frivolous conduct. Druckman & Sinel, at the home page of their website, www.callthebestlawyer.com, has a headline, "Lawyering is a Difficult Business." It certainly is, if your client lacks standing and your firm engages in wasting of judicial resources." (emphasis added) Aurora Loan Servs., LLC v Sattar, 10/09/2007, 17 Misc 3d 1109(A), 2007 NYSlipOp 51895(U); (2nd paragraph). missing mortgage foreclosure docs gamma

Wall Street Journal On Stalled Foreclosures, Legal Standing & Sloppy Paperwork

The Wall Street Journal reports:

  • A cadre of state-court judges scrutinizing foreclosure actions in a string of recent rulings have discovered flaws in documents that borrowers may be able to use to keep their homes. The judges, including a committee from the Kings County Supreme Court in Brooklyn, N.Y., are highlighting shortcuts taken by mortgage companies in court filings, which borrowers might be able to exploit when facing foreclosure.

***

  • About six judges from the supreme court in Brooklyn, the state's lowest court, which handles most of the New York City borough's foreclosure actions, have been digging into the problem and finding new issues that they can use to dismiss cases.

  • The work of the Brooklyn court -- which formed a committee to discuss foreclosures about five years ago, long before the housing crisis emerged -- looks prescient now as it has rejected dozens of foreclosure actions since the crisis began by identifying mistakes or suspicious information. Among the most energetic members of the Brooklyn committee is Justice Arthur Schack,(1) 63 years old. Justice Schack says barely any of the foreclosures he has denied eventually are completed.(2)

***

  • Elsewhere, in Suffolk County on Long Island, several judges have taken up scrutiny of mortgage documents. Justice Jeffrey Arlen Spinner wrote recently in a ruling that he found "glaring discrepancies and unexplained issues of substance" in a foreclosure lawsuit filed last year by GMAC Mortgage LLC.(3)

For more, see Some Judges Stiffen Foreclosure Standards.

See also, Wall Street Journal Law Blog: Subprime Legal: Judges Scrutinize Mortgage Docs, Deny Foreclosures.

For a story on the efforts of the Brooklyn judiciary in search of an effective approach to deal with the local foreclosure problem, see Brooklyn Daily Eagle: Brooklyn Justices Fight Foreclosure Crisis From All Angles.

Go here for other posts on sloppy foreclosures and assembly line lawyering.

(1) Go here for list of links to over thirty of Justice Schack's decisions denying foreclosure.
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(2) Among Justice Schack's colleagues on the Brooklyn court who haven't hesitated to deny foreclosure when the paperwork was screwed up are the Honorable Donald Scott Kurtz (see LaSalle Bank NA v Smalls, Jan. 3, 2008; PHH Mortgage Corp v Barber, Jan. 15, 2008; US Bank NA v Villaruel, Feb. 1, 2008; Wells Fargo Bank NA v Hampton, Jan. 3, 2008); and the Honorable Jack Battaglia (go here for links to his cases where foreclosures were denied).
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(3) For another of Justice Spinner's rulings denying foreclosure, see Wells Fargo Bank NA v Whitworth, Jan. 2, 2008. Not to be outdone, Justice Spinner's colleague on the Suffolk County court, the Honorable Joseph Farneti, has issued a couple of foreclosure denials of his own. See Aurora Loan Services v MacPherson, March 11, 2008; and CitiMortgage Inc. v Brown, March 13, 2008. missing mortgage foreclosure docs gamma SloppyForeclosuresAlpha

Jacksonville Foreclosure Rescue Operator Faces Criminal Charges; Allegedly Stripped Equity From Homeowners, Allowed Mortgages To Go Into Default

In Jacksonville, Florida, The Florida Times Union reports:
  • [Thomas] Cuomo wasn't a white knight of the souring housing market, prosecutors and victims say. He was one of its villains. Cuomo ran a private company, soliciting one desperate person after another and offering them help: The chance to sell him their homes and rent them back. Foreclosure Counselors Inc. is listed as a nonprofit with the Florida Division of Corporations, but not on the Internal Revenue Service's list of 501(c)3 charities.

  • Prosecutors say Cuomo bought homes, lied on mortgage applications to buy them, took what equity the former owner had built up, and then let the houses go into another foreclosure. In some cases he took out a second loan on the house, documents show. The [Jacksonville area] State Attorney's Office has charged him with mortgage fraud and schemes to defraud.

***

  • While other victims have ultimately been evicted, [Jacksonville Area Legal Aid Society's April] Charney has challenged Cuomo's foreclosure on [homeowner/victim Lester] Thomas' behalf. She believes his salvation could be the very cause of the mortgage collapse: Cuomo's loan was already in default when it was bundled with others and sold to securities. Often, in cases like this, no one can produce the original loan to prove who it belongs to. The trustee bank, Wells Fargo, has asked for an extension of time in the case.

For more, see Mortgage aide accused of scam on homeowners (Prosecutors say he let homes be foreclosed after buying out owners).

Go here for more on criminal prosecutions of foreclosure rescue operators.

Ohio AG Files Civil Charges Against Company Promoting Accelerated Mortgage Payoff Program

In a June, 2008 press release, the Ohio Attorney General announced:
  • A Greene County company offering mortgage payment plans is facing legal action for continuing to mislead consumers, despite a 2005 agreement to clean up its act. The Ohio Attorney General’s Office [...] charged Nationwide Biweekly Administration, Inc., (Nationwide Biweekly) with violating the Ohio Consumer Sales Practices Act and the Home Solicitation Sales Act. The lawsuit was filed in the Greene County Court of Common Pleas.

  • According to the lawsuit, Nationwide Biweekly advertised weekly and biweekly mortgage payment plans that could build home equity “twice as fast” as monthly payment plans. Consumers paid the company a non-refundable fee of $75 or more to set up the service. Every one or two weeks, Nationwide Biweekly deducted money from consumers’ bank accounts, so consumers believed they were making weekly or biweekly payments to their mortgage companies. In reality, however, Nationwide Biweekly collected the payments and paid consumers’ mortgage companies only every month.

For the rest of the press release, and to view the lawsuit, see Mortgage Payment Company Sued for Misleading Consumers.

Sunday, July 27, 2008

Congress Passes Housing Bill; Sends Package To White House For President's Approval

The New York Times reports:
  • Hoping to stretch a safety net under the nation’s tumbling housing market, the Senate on Saturday overwhelmingly approved a huge package of legislation that includes a program to save hundreds of thousands of families from losing their homes to foreclosure.

For more, see Congress Sends Housing Relief Bill to President.

For other stories that describe some of the key provisions of the bill, see:

Go here for a copy of the new law, the American Housing Rescue and Foreclosure Prevention Act (go here for House Financial Services Committee press release describing some of the key provisions of the new law).

California CSLB Sting Nabs Contractor Suspected Of Swiping $100K+ From Elderly Homeowner

The California Contractors State License Board announced last month:
  • A man suspected of taking more than $100,000 from an elderly victim was among those nabbed by the Contractors State License Board (CSLB) in a sting operation that was conducted in cooperation with the Redondo Beach Police Department and District Attorney’s office [last month].

  • Members of CSLB’s Statewide Investigative Fraud Team (SWIFT)(1) posed as homeowners during the two-day operation on June 25 and June 26, 2008. The SWIFT team invited more than 50 suspects to the sting house, who bid on projects that included masonry, painting, concrete and rain gutters. When suspects offered bids over $500, they were cited.

  • California law requires a state contractor’s license for home improvement jobs that are valued at $500 or more in material and labor. Thirty-two (32) of the suspects were given a notice to appear for illegal contracting and/or illegal advertising.

  • Investigators gather their leads from illegal advertisements, consumer complaints, and tips from licensed, legitimate contractors.

For more, see Dozens of Illegal Operators Caught in Redondo Beach Sting by Contractors State License Board (Elder Abuse suspect among those arrested in joint operation with Redondo Beach Police).

For more from the California CSLB:

(1) According to their website, the CSLB's Statewide Investigative Fraud Team (SWIFT) works to eliminate unlicensed contractors working in California. Undercover sting and sweep operations are conducted weekly around the state.

Illinois AG Charges Seven Contractors In Civil Suit Of Screwing Homeowners; Allegedly Pocketed Customer Cash For Substandard, Incomplete, Or No Work

In Chicago, the Illinois Attorney General announced this week:
  • Attorney General Lisa Madigan [...] urged consumers to use caution when choosing home repair and remodeling contractors during the summer remodeling season as she announced seven lawsuits filed against home repair businesses(1) around Illinois, alleging they defrauded Illinois consumers of more than $40,000 in down payments by performing substandard work or no work at all.

***

For more, see Attorney General Sues Seven Illinois Home Repair Contractors.

For other posts on homeowners left in the lurch due to actions by builders/contractors, go here, go here, and go here.

(1) According to her press release, Madigan filed two lawsuits in Cook County against: Tony Pinzine of Tony Pinzine Construction, a home repair business in Chicago, Ill.; Robert Reimer of BRB Construction, a home repair, remodeling and painting business in Chicago.

The press release indicates that Madigan also filed lawsuits in five other counties against: Adams County - Clinton E. Robertson of Robertson Tree Service, a New London, Mo. landscaping company; DuPage County - John P. Mazzio of Paint and Point, Inc., a paint and masonry business in Glendale Heights, Ill.; McHenry County - Thomas Truhlar of Abbey Window Company, a window, door and awning installation business in Algonquin, Ill.; McLean County - Jeff Lovins of Lovins Masonry of Beason, Ill.; Williamson County - Nealy Melvin of Nealy Melvin Construction of Carterville, Ill. contractors stiff subs customers yelbow

NY AG Nails Problem Home Improvement Contractors

In two unrelated cases the New York Attorney General recently announced:

Case #1:
  • Attorney General Andrew M. Cuomo [...] announced his office has obtained a court order requiring a Delaware County home improvement contractor to refund more than $20,000 and pay $9,500 in penalties and costs for repeatedly ripping off consumers. As a result of [the] lawsuit, Jeffrey McGowan(1) of Delhi must pay restitution of $20,375.11 to consumers, $7,500 in penalties and $2,000 in costs to the state for performing shoddy work, not honoring warranties and not completing projects he was paid for. McGowan must also post a $100,000 performance bond(2) before he continues any home improvement contract business.

***

  • The Attorney General’s Office also found that McGowan failed to place advance payments into escrow accounts as required by law. He also failed to inform consumers of their legal right to cancel a signed contract within 3 business days and failed to include the estimated dates when work would begin and be completed in his contracts.

For more, see AG Cuomo Secures Restitution, Penalties Against Negligent Delaware Co. Home Improvement Contractor.

Case #2:

  • Attorney General Andrew M. Cuomo announced that his office has obtained a court order barring an Oswego County garage builder who defrauded homeowners in Central New York from operating in the home improvement business. The order, issued [...] a result of a lawsuit brought by [the AG's office], bars David F. Bourlier of County Rte. 10 in Pennellville, owner of Arrowhead Garage Builders, from operating in the home improvement business in New York state unless he posts a $75,000 performance bond with the state(2). The order also requires Bourlier to pay eleven consumers restitution totaling $82,562.52, plus costs and penalties to the state.

***

  • A garage builder and repairer, Bourlier, 53, regularly took advance payments from customers but did not deposit payments into an escrow account, as required by law. He repeatedly failed to start or complete work for which he had been paid - and the work he did perform was often shoddy.

For more, see AG Cuomo Bars Oswego County Garage Builder From Defrauding Central New York Homeowners (AG Cuomo obtains order against David Bourlier and Arrowhead Garage).

For other posts on homeowners left in the lurch due to actions by builders/contractors, go here, go here, and go here.

(1) According to the press release, McGowan operated his businesses, M & M Quality Contracting and Old Homes Friend, from an office on County Highway 16 in Delhi.

(2) Along with the court order to pay restitution before re-rentering the home improvement business, requiring the posting of a hefty performance bond in a court order is ostensibly an effective way for the NY AG to keep some of these guys at bay. In this way, the AG's office has effectively set the contractor up for a criminal contempt of court order the moment it catches wind that the contractor has re-entered the home improvement business without posting the bond or paying restitution to the prior victims - see NY AG press releases: Attorney General Cuomo Secures Jail Time For Buffalo Area Contractor Who Defied Court Order, and Attorney General Cuomo Seeks Jail For Home Improvement Contractor Who Repeatedly Defied Previous Court Order. The contractor is left exposed to possible jail time for engaging in future conduct that might not otherwise be illegal, because said conduct is prohibited by the court order. contractors stiff subs customers yelbow Cuomo hammers contractors

Mass AG Hammers Home Repair Contractor For Allegedly Pocketing Customer Deposits Without Commencing, Completing Work

The Massachusetts Attorney General's office recently announced:
  • Attorney General Martha Coakley’s Office obtained a judgment [...] against Dino DiStefano, 41, of Boston, a former home improvement contractor who scammed Massachusetts homeowners by fraudulently advertising that he was a registered and insured home improvement contractor in order to persuade consumers to pay him substantial deposits for home improvement work. The judgment [...] permanently prohibits DiStefano from providing home improvement services or from accepting any monies from consumers for home improvement services [and] further orders DiStefano to pay $29,634.68 in restitution to Massachusetts consumers who paid him deposits and to pay $20,000 in civil penalties to the Commonwealth.

  • The Attorney General’s Office filed a lawsuit in November 2007 [...] against DiStefano alleging that at least 21 homeowners paid over $145,000 for work that he failed to commence or complete. At that time, the Attorney General’s Office also entered into a settlement agreement with Robert Cluxton and Bank of America and obtained $143,000 for Massachusetts homeowners as a result of their dealings with DiStefano and his business activities.

For more, see AG Coakley Obtains $50,000 Judgment Against Home Improvement Contractor.

Saturday, July 26, 2008

San Diego City Attorney's Lawsuit Against Countrywide The Target Of Satire

In a satirical commentary on the recent efforts of San Diego City Attorney Michael Aguirre in bringing a predatory lending lawsuit against Countrywide Financial to create a sanctuary in the city where foreclosures can be put on hold while people are helped to obtain affordable terms on their mortgages and stay in their homes, The Spoof! reports:
  • City Attorney Michael Aquirre announced plans today to designate this coastal city as an official Mortgage Foreclosure Sanctuary, and declared the national financial crisis over.

***

  • Aquirre said his bill would allow any mortgage holder in the country in danger of default due to predatory lending practices to apply for, and receive, an honorary homestead exemption making them eligible for sanctuary status. Among the first to file were Chairman of the Banking Committee, Senator Christopher Dodd (D. Cn), and Senator Kent Conrad (D. ND). Both Senators had received multiple preferential loans through contact with Country Wide Financial founder Angelo Mozilo. While both loans were below accepted market standards and prevailing rates, the Senators claimed they were "tricked" into signing the loans and that they were thereby "null and void" and all financial obligations should be waived.

***

  • Aguirre said there would be some limits on sanctuary coverage.

For more, including the limitations on sanctuary coverage set forth in the "Aguirre bill", see San Diego Declares Banking Crisis Over, Creates Mortgage Sanctuary for Deadbeats and Politicians.(1)

(1) Requires sense of humor.

California AG Settles Suit With Firm Accused Of Knowingly Using Unaffordable "Lease To Own" Agreements As Device For Pocketing Renters' Downpayments

In a July 18, 2008 press release:
  • California Attorney General Edmund G. Brown Jr. [...] announced a $150,000 settlement for aspiring homeowners who had their entire down payments unlawfully seized by Lease2OwnHomes for missing rent on a lease-to-own agreement. "We have obtained restitution for renters who were ripped off by an unscrupulous landlord who illegally seized down payments that were part of a lease-to-own home scam," Attorney General Brown said.

  • Under California law, if a renter misses a monthly payment in a lease-to-own program, the landlord may only seek eviction and unpaid rent. In this case, the landlord unlawfully seized the entire down payment for the purchase of the home in addition to seeking the eviction and unpaid rent.

According to his press release, among the activities Attorney General Brown accused Lease2OwnHomes of was providing a lease and option to purchase agreement when the company knew that consumers were not financially capable of meeting monthly payments required to successfully purchase a home.

For more, see Brown Obtains Restitution For Lease2OwnHomes Renter Rip-Off.

Fairfax Cops "Sting" Suspect In Another Alleged Rent Scam Using Vacant Foreclosures, Craigslist Ads To Reel In Unwitting Renters

In Fairfax County, Virginia, WRC-TV Channel 4 reports:
  • Detectives arrested a suspect in a series of rental home scams, according to the Fairfax County Police Department. Between July 13 and July 18, four prospective tenants reported that they were defrauded of money after singing [sic] contracts to rent homes. In each case, they found the rentals on Craigslist, contacted Richard Hiner, toured the homes and signed contracts that included payments, according to police. Later, they learned the homes were bank-owned and in foreclosure and Hiner had no affiliation with the properties.

  • Detectives posed as prospective tenants and responded to an online ad, setting up a meeting with Hiner, 31, police said. Hiner was arrested Thursday night when police determined he was not connected with the property. Hiner is charged with four counts of grand larceny by false pretense and three counts of burglary.

For the story, see Suspect Charged In Rental Home Scams (Prospective Renters Defrauded Of Money In Virginia).

In story update, see Pregnant Woman Among Victims Of Rental Home Scam (Man Accused Of Offering Homes Under Foreclosure For Rent) (go here for video report).

In a related story on D.C.-area vacant home rent scams, see WTTG-TV Fox 5: Foreclosure Rental Scam Makes a Comeback.

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

Fingers Point To "Elvis" Impersonator In Possible "Squatters' Rights" Rent Scam Using Vacant Vegas Homes In Foreclosure

In Las Vegas, Nevada, the KLAS-TV Channel 8 I-Team reports:
  • On one hand, he impersonates Elvis. But some say what he's doing isn't so entertaining. Real state agents Kristina Pearson and Harry Hall are trying to sell a house. It's in default and going through the foreclosure process. [...] A few months ago, someone broken in, switched the locks and then rented out the house. According to the rental agreement, a woman named Dawn Spencer has been living in the house since late April, paying $850 a month in rent.

***

  • "They rented the property from this Elvis Nargi," said Hall. We caught up with Nargi in his office with American Executive Realty. At first he told us he knew about the house, then denied it. [...] Eventually, Nargi admitted his company changed the locks and rented out the house, "You really, you really have -- it's written into the state constitution, you have civic right to make that property look good."

***

  • Sue Naumann heads up the Greater Las Vegas Association of Realtors. She says Nargi is abusing the squatter's rights law, "It sounds like a scam." While Nargi finally admitted to the allegations, he blames his staff. "There was a mistake made," he said.

For more, see:

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

Connecticut AG Claims Deed Theft In Civil Suit Against Alleged Church Thief; Seeks To Void Title Transfer & $1.15M Mortgage

In an April, 2008 press release:
  • [Connecticut] Attorney General Richard Blumenthal [...] announced a lawsuit(1) against a man who fraudulently posed as pastor of a Hamden church, transferred the church property title to his own church and then took out a $1.15 million mortgage on the property that ultimately defaulted.

***

  • "This imposter pastor has literally attempted a church hijacking," Blumenthal said. [...] My office will fight vigorously in court to restore title and interest in Macedonia's property to its own members."

***

  • Blumenthal's lawsuit seeks a court order declaring the illegal land transfer and mortgage null and void. He has also asked the court to declare that the title and interest in the Butler Street property remain exclusively with Macedonia. [...] Blumenthal has also filed a lis pendens on the land records for Macedonia's Hamden property to inform the public that the fraudulent property title is in dispute.
For more, see Attorney General Sues Man Who Posed As Pastor To Hijack Church Property.

Go here, go here, and go here for other posts related to deed theft by forgery, swindle, etc.

(1) According to the press release, Blumenthal's lawsuit names Willie E. McKay of West Haven, Love Temple Church of Christ in Prayer, Inc. of West Haven, and Foundation Capital Resources, Inc. of Georgia. While not accused of wrongdoing, Foundation Capital is named because of their legal interest in the property as mortgage holder. deed theft xenon

Cops' Eviction Attempt Results In 3+ Hour Standoff With Foreclosed Family; "Rescue" Operator Screwed Them Out Of Money, Says Homeowner

In Middleburg, Florida, First Coast News reports:
  • A Clay County couple barricaded themselves in their home for more than three hours. Police say it was a standoff over a foreclosure. George and Bonnie Mangum's home on Long Horn Road had gone through foreclosure. Police say they refused to come out Wednesday afternoon when police tried to deliver an eviction notice. [...] Deputies say when they came to the door George Mangum threatened to shoot someone.

***

  • They surrounded the house and evacuated neighbors. Deputies were able to convince Mangum to come out by promising to investigate possible fraud in his foreclosure. The Mangums say a company promised to help them out of foreclosure, but just made it worse and took their money.

  • George Mangum is charged with interfering with a civil process and aggravated assault.

For the story, see Middleburg Standoff Over Foreclosure (go here for video).

Go here for other posts on Police involvement in foreclosures. SheriffDeputiesForeclosureAlpha

Phoenix Cops Find Foreclosed Home Being Used As "Drop House" For Human Smugglers

In Phoenix, Arizona, KNXV-TV Channel 15 reports:

  • Phoenix police discovered 10 undocumented immigrants on Tuesday afternoon after an escapee reported a drop house to officers. A Hispanic male contacted police just after 1 p.m. and reported that he had been held against his will at gunpoint and was beaten at a nearby drop house [...].

***

  • Two suspected human smugglers fled the scene before detective arrived, according to police. Investigators say the victims told them that they had crossed the border into Arizona on July 12th and were taken to the house where they have been held. They also told investigators that the smugglers demanded $3,200 from each of them to secure their freedom.

  • Neighbors told ABC15 that the home was a foreclosure that had recently been sold. Police say that two other drop houses have been discovered in the same neighborhood within the past few weeks.

Drop houses, a key link in human smuggling operations, are where smugglers hide illegal immigrants as they collect their fees and make their travel arrangements.

For the story and link to the video, see Escapee leads Phoenix police to drop house, 10 others found.

Housing Inspector Hits Landlord In Foreclosure With $6K Fine For Failure To Provide Water, Remove Garbage

In Haverstraw, New York, The Journal News reports:
  • A village woman and her children have been living in a rental house under foreclosure that hasn't had water since May, health inspectors said [Wednesday]. Officials from the Rockland Department of Health have been trying to contact the owner of 55 New Main St. for months.

***

  • Public health law prohibits anyone living in a home without drinkable water. [...] No one has been able to locate [owner Charles] Polanco, who also has an address in the Bronx. [Wednesday], the [Board of Health] assessed a $6,000 fine against him for failing to provide water to the home and for failing to clean garbage from the property. A bank is in the process of foreclosing on the home, but it is still owned by Polanco.

For more, see Haverstraw family rents home with no water since May.

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

Flames Claim Tenant-Occupied House In Foreclosure Owned By Ex-Firefighter; Renter Unhappy With Investigation

In Scranton, Pennsylvania, The Scranton Times Tribune reports:
  • [A] month after fire engulfed his apartment at 1021 Mark Ave., [renter Chuck] Smith says his telephone messages to police and fire officials have gone unreturned. “I’m still trying to find out what happened and getting the runaround,” he said Wednesday. “I would really like to know what caused the fire, to take the necessary steps ... No one wants to say anything. It’s hush-hush.”

  • The fire started shortly before 2 p.m. on June 17, destroying an adjoining garage — which contained a Cadillac Escalade — before spreading to an apartment building at 1023 Mark Ave. The blaze displaced about a dozen residents. Charred timbers of the garage remained at the scene Wednesday, and the burned-out Escalade was still on the property.

  • The 1021 Mark Ave. property is owned by Tom and Martha Gervasi, who were facing a mortgage foreclosure on the property, according to a civil suit filed in Lackawanna County. [...] Mr. Gervasi, a former city firefighter, was on the scene evacuating his tenants after the fire broke out. His brother is firefighter union Vice President Lt. David Gervasi.

For more, see Scranton Fire victim demands answers. foreclosure arson whale

Foreclosed Homeowner Takes Life; Reportedly Faxed Note Informing Mortgage Lender Of Intent

In Taunton, Massachusetts, WHDH-TV Channel 7 reports:
  • A woman took her own life after she lost her home to foreclosure. Carlene Balderrama, 53, reportedly fax her mortgage company a letter telling them that when they showed up to foreclose on the home, they would find her dead. Police say that a suicide note, which was left inside of the home, told family members to take the insurance money and pay off the debt.

For more, see Woman takes her own life after home foreclosed.

See also:

Go here for other posts on foreclosures and suicide. suicide homeowner foreclosure zeta

Friday, July 25, 2008

Housing Bailout Bill May Have Something for Everyone

A column in The New York Times notes:
  • If you are ignoring the housing bailout bill because you think it benefits only troubled homeowners, you may miss out on a windfall. The bill, expected to be passed by the Senate in the next few days and then signed by President Bush, does offer incentives to certain overextended borrowers and their mortgage lenders. But it also includes many handouts to first-time homebuyers, longtime homeowners, returning veterans and senior citizens seeking to tap their home equity without getting hit with big fees. Millions of people have the potential to benefit in some way.

For more, see A Housing Bill That Has Something for Nearly Everyone.

NY AG Hits Lender For $1M To Resolve Charges Of Alleged Discriminatory Lending Practices

The New York Attorney General's Office announced last week:
  • Attorney General Andrew M. Cuomo [...] announced that his office has issued more than $900,000 in restitution to approximately 270 African-American and Latino borrowers who experienced discriminatory lending practices by GreenPoint Mortgage. Further, the office is proceeding with its investigation into potential discriminatory pricing by various mortgage brokers that did substantial business with GreenPoint. Greenpoint is a subsidiary of Capital One Financial Corporation. The restitution comes from a groundbreaking fair lending agreement reached between the Attorney General’s office and GreenPoint totaling approximately $1 million.

***

  • The Attorney General’s office initiated an inquiry into GreenPoint after reviewing Home Mortgage Disclosure Act (HMDA) data showing that GreenPoint’s African-American and Latino customers were more likely than white customers to receive high-priced loans in New York.

For more, see NY AG Press Release: AG Cuomo Obtains Approximately $1 Million For Victims Of Greenpoint's Discriminatory Lending Practices.

Go here and go here for other posts on alleged race bias in real estate transactions. PredatoryLendingRaceBias

PBS' Nightly Business Report On Minorities & Subprime Loans

A story appearing on PBS' Nightly Business Report on Tuesday made this observation:
  • Nationwide, African-Americans and Hispanics hold twice as many sub-prime loans as whites. Sub-prime loans are also concentrated in minority neighborhoods. George Washington University sociologist Gregory Squires has researched sub-prime loans issued around the country. He says borrowers' credit worthiness doesn't explain the disparity.
For more, see program transcript, Did Minorities Get Submarined By The Sub-Prime Mortgages?

Go here and go here for other posts on alleged race bias in real estate transactions.

Editor's Note:

The U.S. Department of Housing & Urban Development ("HUD") rolled out a public service announcement last week featuring actor Dennis Haysbert that is part of a national campaign to raise public awareness about lending discrimination.