Minneapolis' Number Of Abandoned, Condemned Properties On The Upswing

In Minneapolis, Minnesota, the Twin Cities Daily Planet reports:

• When the city of Minneapolis first began tracking and boarding up the growing number of vacant homes in 2004, abandoned properties in the city totaled around 250. That included homes that were vacant and/or condemned for all years prior, some going back to early 2000. Now, in just the first six months of this year, Minneapolis has added another 250 homes to its record list of vacant and condemned properties. Since 2004, the original list has grown to nearly 950 vacant properties, an increase of 260 percent.

***

• The chances of the these homes being purchased and renovated grow slimmer every day. Of the 950 or so abandoned properties on the list, more than 60 percent of them have been deemed “condemned” by the city.

For more, see Alone home: Minneapolis adds 250 houses to its vacant properties list in only six months.

Go here for city’s vacant house report.

Go here, go here, and go here for other posts on vacant homes leaving their mark on neighborhoods. neighborhood destruction from foreclosures kappa

"The Today Show" On Foreclosure Pets

NBC's Today Show reported a story last week on foreclosure pets, those animals that lose their homes as a result of the foreclosure problems of their owners. A few highlights:

• The Humane Society of Pitt County, N.C., said it has recently had a 100 percent increase in the number of animals brought in to the no-kill shelter.

• Owners dropped off 389 cats at the Central Valley Society for the Prevention for Cruelty to Animals in Fresno, Calif., in May. That’s a 60 percent rise over May 2007. With strays and abandoned cats added in, the agency said, at least 100 new cats a day are coming in, but only about 20 are adopted.

• And in Evansville, Ind., the Vanderburgh County Humane Society has literally run out of room. “Unfortunately, when we run out of cages, a lot of times we don’t have any other option but to euthanize, so it’s just a really hard time for us,” said Miranda Russell, spokeswoman for the agency.

• The story is the same at the Metro Animal Control shelter in Nashville, Tenn., which is so overcrowded that it is euthanizing 30 to 50 animals every day, six days a week. “It’s something we were expecting — above capacity because of foreclosures,” Animal Control Officer Billy Briggs said.

For more, see Foreclosures close the door on family pets (Shelters are seeing more strays as families abandon homes, cut costs).

For other posts on foreclosure pets, go here, go here, and go here. ForeclosurePetsAlpha

Vacant Homes, Indoor Pot Farms Keep Southwest Florida Cops Busy

In Lee County, Florida, The News Press reports:

• Vacant houses and houses filled with growing marijuana plants keep deputies busy, the captain of the Lee County Sheriff's Office district in Lehigh Acres told the chamber of commerce Tuesday. The crime rate would be a lot lower without the vacant houses, Capt. Ed Tamayo told about 80 people at the chamber's monthly luncheon while talking about residential burglaries.

***

• Lee County's code enforcement division has identified 400 cases of abandoned homes under construction. Construction sites are considered abandoned if they haven't had an inspection in six months. Deputies also have been busy with [marijuana] grow houses in Lehigh. The district closed nine houses in June. "Lately, it's become an almost daily event," Tamayo said.

• The News Star began tracking grow house raids in Lehigh Acres on Oct. 1, 2007. Law enforcement officers have shut down at least 52 operations through July, made more than 80 arrests and confiscated nearly 3,200 plants.

For more, see Vacant homes fill deputies' schedules (Captain tells chamber about area crime rates).

Go here for a KNBC-TV story on a busted Corona, California marijuana grow house operation, including a tour of the inside of the home (video only). pot grow ops beta

Shutting Off The Electricity In Foreclosed Home A Great Way To Create A Mold, Mildew Problem

In Spotsylvania County, Virginia, The Free Lance Star did a story on the foreclosure aftermath homes suffer once they are vacated and abandoned by the former homeowners. Buried in the story is this excerpt, which points to the apparent willingness of some lenders (or their loan servicers) to actually make the situation worse than it already is with foreclosed homes:

• [Home inspector Joel Webber] said in the past, the biggest problem in foreclosure homes was holes in the wall and other signs of homeowners angry about losing the house. But he said that's not the case these days.

• Rather the most common problem, he said, is mildew. Between 25 percent and 50 percent of the foreclosure homes he inspects have mildew, and another 10 percent have mold. In many of those cases, the banks turned off the electricity after reacquiring the houses.

• Rain floods the basement, and the sump pump isn't able to remove the water. There's no air conditioning. Houses are sometimes on the market for months in this condition. That's all a recipe for mold and mildew. Webber questioned why the banks wouldn't take better care of the homes if they're trying to sell them.

For the story, see Vacated homes are foreclosed (Foreclosures often left in bad condition). neighborhood destruction from foreclosures kappa

Salt Lake Health Dept. Not Liable For Incorrectly Declaring Ex-Meth House Safe; Homeowners Vacate, Leaving Lender Holding The Bag

In Salt Lake County, Utah, KSL-TV Channel 5 reports:

• A Salt Lake County family is devastated after a judge ruled they can't sue the health department for negligence. The family unknowingly purchased a home that was once a meth lab, but the Salt Lake Valley Health Department (SLVHD) later told them inspectors had declared it was safe to live in. Our investigative team tested the home last year and discovered it was still contaminated with meth.

• [Friday], a district court judge dismissed the [family's] lawsuit against the SLVHD, because there's a Utah law in place that protects the agency from liability. It's called Governmental Immunity -- basically the [family] can accuse the health department of negligence, they just can't sue them over it.

***

• After a neighbor informed the family they'd purchased a former meth lab, the health department assured them it had been decontaminated, it was even in writing. Then, last spring, we came along and tested the home and found meth contamination all over the place. [...] Here are the facts for the [family]: They can't afford the $40,000 it'll cost to decontaminate the meth home, and it'll go into foreclosure.

For more, see Court: Family can't sue health department over meth house.

In a related KSL-TV Channel 5 report, see: Former Meth Houses Declared "Safe" May Not Be:

• Hundreds of Utah homes, former meth labs, have been shut down until they're rid of the dangerous drug. But an Eyewitness News Investigation uncovers disturbing evidence: Homes the government reopened and declared safe, may not be. [...] We discovered there are now more than 250 homes in the Salt Lake area that were once meth labs. Do the people living there now know that? Or did sellers keep it a secret? We went knocking on some doors.

Go here and Go here for other posts on home-based methamphetamine labs.

Editor's Note:

The day mortgage lenders begin requiring mold and methamphetamine inspections(1) from homebuyers seeking a home loan may soon be approaching (and could become as common as getting a termite inspection).

The day may also be coming when laws are changed to require law enforcement, health department officials, etc. to record a notice in the public record (the same way one records a lien against real estate) that a home, apartment, etc. was the cite of a methamphetamine or marijuana grow house bust and may require remediation. Such a notice, when discovered in the course of a title search, would warn both the homebuyer and lender of a "secret charge" (the cost of remediation) against the real estate that someone will ultimately have to "satify."

(1) At least in those homes that have a recent foreclosure listed in its chain of title. meth lab yak

Neighbors Find 15+ Cats Inside Trash-Filled Vacant Home In Foreclosure; Legal Technicalities Leave City, Animal Shelters With Hands Tied

In Newark, Ohio, The Newark Advocate reports:

• When Nick Siney’s neighbors moved out several weeks ago, he was surprised to see cats peeking out of the windows. The neighbors no longer were living in the house, and Siney said they didn’t seem to be coming back each day to care for the animals.But it wasn’t until another neighbor broke a window and kicked in the back door of the house on the 200 block of Mound Street that neighbors realized more than 15 cats had been trapped inside the house. [...] None of the neighbors expected the property owners to return. Licking County court records indicate foreclosure papers were filed against the house earlier this year.

For more, see Abandoned cats raise neighbors' concern.

For other posts on foreclosure pets, go here, go here, and go here. ForeclosurePetsAlpha

Foreclosures Wiping Out One Entire Rental Neighborhood

In Visalia, California, The Fresno Bee reports:

• An entire neighborhood is vanishing by way of a little-known effect of the foreclosure crisis: owners of small apartment houses defaulting on their payments. Myrtle Court, a cul de sac near Demaree Road and Highway 198, is losing its residents as lenders foreclose on a string of attractive fourplexes built in the late 1990s and evict those living inside. Lenders have repossessed or in the process of taking back at least eight of the 12 apartment houses that occupy the block-long street, all from the same owner.

***

• Increasingly, residents of duplexes, triplexes and fourplexes are being evicted because lenders that foreclose treat the buildings as residential property, not commercial, said Robin Kane, a Fresno real-estate consultant who is studying foreclosure trends in multifamily housing. Smaller apartment buildings can be purchased with the same kind of financing used to buy single-family houses, Kane said.

• A [California] state law passed in July requires lenders to give tenants 60 days' notice unless they agree to a cash-for-keys settlement, said Mona Tawatao, an attorney with Northern California Legal Services. Residents also should get their security deposits returned, she said.

For more, see Another door to foreclosure (Evictions at small Visalia apartment complexes are just one example of how rentals are vulnerable to the mortgage crisis).

Private Lender Apologizes For Panicking Property Owners With Erroneous Delinquent Tax Foreclosure Letter

In Witchita Falls, Texas, the Times Record News reports:

• A Wichita Falls mortgage company said a clerical error caused 20 letters to be sent to Montague County property owners indicating their homes would soon be sold on the courthouse steps for back taxes. It also offered to make tax lien loans so recipients could get up to date on taxes and avoid interest and penalties.

***

• [Montague County Tax Assessor-Collector Syd] Nowell started to get calls from panicked property owners last week. Compared to the tax records, the letter appeared to contain falsehoods about the tax auction and that the names of properties slated for foreclosure were “issued by the law firm that represents the local tax authorities.”

According to the story, the company owner explained that “A direct mail merge caused the wrong letter to be mailed to the wrong people.”

For more, see Mortgage company issues apology (Clerical error cited for tax lien letters).

Cops Use Vacant Foreclosure In Online Prostitution "Sting"; Investigators Rope In Suspects By Answering Craigslist Ads

In Tracy, California, KXTV Channel 10 reports:

• The U.S. foreclosure crisis is helping police in Tracy when it comes to catching alleged prostitutes. This week, authorities conducted an online sting, targeting 'casual encounter' ads on the popular Web site Craigslist. Using a vacant foreclosed house as the meeting point, undercover police offered numerous women money in exchange for sex and many agreed, arriving at the house one by one throughout the night.

***

• [Tracy Police spokesman Matt] Robinson said Tracy Police planned to conduct more online stings in the future.

For more, see Foreclosures Help Police Nab Alleged Prostitutes.

Foreclosed Owner Walks Away Leaving Behind $800K In Marijuana, Pot Farm Equipment, Moldy Home

In Bloomington, Minnesota, KAAL-TV Channel 6 reports:

• An inspector, changing the locks on a foreclosed home, discovered a major drug operation in Bloomington Thursday. Police in full HAZMAT gear spent the day hauling lights and other equipment used to grow marijuana from the home near 98th Street and France Avenue.

***

• Police said they seized 200 marijuana plants worth up to $800,000 on the street. Investigators also found a big mess inside. "There is a lot of dirt and mold growing up the sides of the walls," said Bloomington Police Commander Jim Ryan.

For more, see Pot bust in foreclosed Bloomington home.

Go here for a KNBC-TV story on a busted Corona, California marijuana grow house operation, including a tour of the inside of the home (video only).

Editor's Note:

It could be that the marijuana crop left behind by the pot farmer may have been contaminated by the presence of mold, possibly making the stash worthless.

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

Carrying Out Foreclosure Evictions "Like A Sick Sort Of Game Show" For Deputies?

In Clark County, Nevada, the Las Vegas Sun reports:

• It’s like a sick sort of game show: What’s behind Door No. 1? Abandoned furniture? A man with a gun? A rabid bichon? A housewife wielding a frying pan?

• Because they’re the bearers of get-out-in-three-days eviction notices, constables in Clark County are some of the most vocal critics of the foreclosure process as it applies to renters. This is because they’re the bearers of bad news. And although nobody likes delivering disappointment, that’s not really the issue.

• The problem is that blindsiding people is dangerous. Bob Wyant, a Las Vegas deputy constable, has seen bullets fly through front doors. He’s had to fight people who start problems. One guy saw Wyant, walked upstairs and shot himself in the head. A woman locked herself in her bedroom with a blazing barbecue grill, trying to give herself, and her cats, carbon monoxide poisoning.

For more, see Constables deliver bad news at their peril.

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

SW Florida Man, Upset About Facing County Foreclosure, Threatens To Bomb Government Center, Code Enforcement Offices Say Cops

In Collier County, Florida, the Naples Daily News reports:

• A 61-year-old man upset about facing foreclosure was arrested Monday after he made threatening comments to a Collier County government official, according to Collier County Sheriff's Office reports.

***

• Arrest reports say [property owner Jean Claude] Martel showed up at the Collier County manager’s office at the Collier County Government Center [... in] East Naples, around 12:30 p.m. on July 25 and refused to leave until he spoke with the county manger. Deputy County Manager Leo Ochs spoke to Martel, who was upset because the county was foreclosing on his property, arrest reports said.

• During their conversation Martel threatened several times to blow up buildings at the county government center and at the county code enforcement offices [...] in East Naples, arrest reports said. He also threatened to shoot county employees if they attempted to enter his property and to burn any buildings that might be built on “his land,” arrest reports said.

For the story, see Man arrested for alleged threats at Collier County manager's office in foreclosure case.

Foreclosure Fish Popular With South Florida Mosquito Control Departments

In Miami, Florida, WFOR-TV Channel 4 reports:

• [M]osquito-control departments across Florida, especially in South Florida, are hearing rising complaints about pools turning into soupy messes at homes in foreclosure but Miami-Dade's mosquito control department is fighting back with fish. [...] There are many methods being used to control the problem, including chemical treatments, but one of the most unique methods is mosquito-eating fish. They're called "Gambusia Affinis", also known as mosquito fish.

***

• But is it cost effective? Absolutely. The fish is native in South Florida and can be found in just about any canal.

For more, see Foreclosure Fish Take Bite Out Of Mosquito Problem (They're Being Used In Pools Of Foreclosed & Abandoned Homes).

Foreclosure Blight Found Attractive By Some

While foreclosure blight, manifested by vacant & abandoned homes, broken or boarded up windows, weeds, refuse left by those using the empty houses as garbage dumps, rain-sopped newspapers in the driveway, and "green" pools may be considered repugnant by most, there are some groups who find such conditions quite appealing, as evidenced by these stories:

• Casselberry, Florida - Central Florida Neighborhood Getting Ratted Out: Some people living in the Carriage Hills Estates in Casselberry say the increasing number of abandoned houses is causing a rat infestation. [...] “It’s gross when I’ve got holes in my house,” said resident Dave Fulton. “They're coming through the roof. Through the walls of my house.”

• Spring Hill, Florida - Foreclosure's Rancid Odor: Foreclosures stink. Not just for the homeowner but, as Doug Ellison will tell you, the neighbors left behind. In Ellison's situation, the house next door [...] has been sitting vacant since mid June. [...] He's trapping rats in his backyard now. And as the day warms up, maggots squirm on the putrid bags of refuse.

• Vallejo, California - One Vallejo Neighborhood Hard Hit by Foreclosure Crisis: The blight is not attracting very many prospective buyers, but it is attracting vermin, which is something [homeowner Dave] Abbitt has witnessed first hand. "I’ve seen a lot more rat droppings. Just the other day I had a big rat in the yard that my dog might have killed,” said Abbitt.

• New York City - Runnin' Scared: The Gentrification Project That Turned into a Rat Castle on Ludlow: In the abandoned building itself, rats have taken over, and a 2,000-square-foot retail space that could have brought in $25,000 a month is now ankle-deep in rat sh[**].

• Manassas, Virginia - Shuttered Homes, Thriving Wildlife: Among the opportunistic wildlife attracted by foreclosure blight, according to this story, are rats, snakes, mosquitos, ticks, and other members of the animal kingdom.

• Merced, California - City works to tackle foreclosure eyesores: Stagnant water in swimming pools becomes a breeding ground for mosquitoes. Worst of all, dark houses with no signs of life houses attract vandals, drug dealers, and other criminals ... .

• Tucson, Arizona - Bees Buzz Tucson Neighborhood: In one local Tucson neighborhood when the humans moved out, the bees moved in. These pests have become well established and are creating serious problems for the neighborhood. [...] The bees are now terrorizing the entire area.

• Bradenton, Florida - Owners of bee-infested house face pressure to remove them: For more than a month, people in the neighborhood have been worried about the growing number of bees that have moved into one house. They say the number of bees is growing everyday. The house is empty and going through foreclosure, and is owned by the Bank of New York.

Go here, go here, and go here for other posts on vacant homes leaving their mark on neighborhoods. neighborhood destruction from foreclosures kappa

NCRC: Minorities At Highest Risk Of Getting Stiffed With High Cost Home Loan

In Washington, D.C., a news release issued by the National Community Reinvestment Coalition announces:

• A new report by the National Community Reinvestment Coalition (NCRC) shows that minority consumers, regardless of income level, are most at risk of receiving high-cost home mortgage loans. High-cost loans represent the riskiest and most poorly underwritten home mortgages, millions of which have fallen into foreclosure in the last two years. The study, Income Is No Shield Against Racial Differences in Lending II, examined subprime and near prime (“Alt-A”) loans from more than 219 metropolitan areas, as reported under the Home Mortgage Disclosure Act data from 2006, the most recent publicly available data.

For more, see:

• News release: New NCRC Study Shows Racial Disparities In High-Cost Lending Remain Entrenched (Foreclosure Prone Loans Made Disproportionately to Minorities),
• Full Report: Income Is No Shield Against Racial Differences in Lending (A Comparison of High-Cost Lending in America’s Metropolitan and Rural Areas).

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

Elvis Impersonator On The Run; Vegas I-Team Finds Records Linking Suspected Foreclosure Rent Scammer To Unwitting Tenants In 42 Homes In Foreclosure

In Las Vegas, Nevada, the KLAS-TV Channel 8 I-Team reports:

• For weeks, the I-Team has been following the case of a local Elvis impersonator renting out foreclosed homes to unsuspecting tenants. He didn't tell them his company took possession of the homes without the owners or banks' knowledge. Now Elvis Nargi isn't saying anything -- because it appears he has left town.

***

• But Nargi didn't cover his tracks -- and he left behind some pretty damaging clues. First, there's the pounds of shredded documents, including property tax receipts for multiple homes and old loan agreements. The I-Team obtained copies of rent statements for the properties Elvis didn't have a right to.

• Nargi also had a master list of properties. It includes the address, the renter and how much they pay a month and owe him through July. The I-Team identified 42 of the properties on the list. Every single one of them was going through the foreclosure process. Nargi's company records show the victimized tenants would have paid him more than $60,000 in a single month. [...] At long last... Elvis has left the building.

For more, see I-Team: Elvis Impersonator Has Left the Building (read story) (watch video).

For earlier KLAS TV Channel 8 reports on this story, see:

• I-Team: "Elvis" Steals a Las Vegas House?
• I-Team: More Victims of Elvis Come Forward,
• I-Team: Housing Help -- Buyers, Renters Beware.

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

Northern Virginia Renter Under Unrecorded Contract For Deed Arrangement May Lose Home As Landlord Stiffs Bank While Pocketing Monthly Payments

In South Riding, Virginia, WRC-TV Channel 4 reports:

• The foreclosure crisis is trickling down to renters and people leasing homes with the hope of purchasing them some day. In late 2005, William Craig signed a contract offering a lease with an opportunity to own a South Riding dream home, he said. Instead, he lost the home and all the money he invested in it. On July 25, Craig's landlord e-mailed him to let him know the home was in foreclosure. An attorney sent Craig the newspaper clipping of the public auction notice. [...] The auction is slated for Friday, but the landlord and his real estate agent told News4 that they're negotiating with the bank so that Craig can take over the mortgage payments and own the home.

For the story, see Foreclosure Ends Loudoun County Man's Lease-To-Own Contract.

Go here for the more extensive video report.

For more on problems with "Rent To Own" / Lease-Option / Contract For Deed real estate deals, go here and go here. rent to own lease purchase option scams yellowstone

Tacoma Couple Enforce Truth In Lending Rights Against Foreclosing Lender As State Regulators Crack Down On Improper Loan Practices

In Tacoma, Washington, the Seattle Post Intelligencer reports:

• Michelle Miran didn't realize that there was something wrong with her mortgage until the interest rate reset last year. Her truth-in-lending statement – the legally required disclosure of loan rates and estimated costs – noted a 30-year fixed rate with monthly payments of $1,311 for 359 months. But two years into it, her monthly payment shot up to about $1,700, and she and her husband fell behind. They're now fighting foreclosure on their Tacoma home and fighting back in court, suing the mortgage broker and lender.(1)

• Their battle comes as state regulators have cracked down on mortgage abuse, bringing charges against lenders and brokers for charging unlawful or excessive fees, failing to disclose costs and fees to borrowers and imposing illegal prepayment penalties.

For more, see State, homeowners taking on lenders (Questionable mortgages appear headed for court).

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) According to the story, (1) The Mirans claim that the truth-in-lending statement they received represented the loan as a conventional 30-year, fixed-rate loan; (2) their lawsuit alleges that the monthly payments shouldn't have gone up after two years; (3) their HUD-1 settlement, a document borrowers get at closing that itemizes all charges, did not credit the couple for a $6,000 payment to mortgage broker America One, according to their lawsuit; (4) Miran said the loan officer rushed her through the closing process, sending her a 2-inch- thick stack of documents while she was out of town on business; (5) Miran claims to have signed the documents alone in her hotel room, and not in the presence of an escrow agent, even though an agent's signature appears on the documents, according to the lawsuit; (6) She also claims to have paid loan-origination fees that didn't reduce the rate she was charged; (7) Washington State regulators issued a cease and desist order against the loan officer, Eliza Bautista, in 2006, about a year after the Mirans took out their loan. undo mortgage loans TILA batallion

Minnesota Homebuilders Sentenced In Straw Buyer Scam / Bogus Rent To Own Deals; May Be Biggest Fraud In State History

In Minneapolis, Minnesota, the Pioneer Press reports:

• They were high school sweethearts who grew up to be two of the most well-regarded homebuilders in the metro area, then watched their company crumble amid their own fraud and illegal borrowing.

• Michael and Ardith Parish, the architects of what is presumed to be the largest case of mortgage fraud in Minnesota history, were sentenced Thursday in U.S. District Court in Minneapolis. Michael Parish, 63, received 13 years in federal prison or a work camp; his wife, Ardith, 62, received five years.

• Their son-in-law, Christopher Troup, 40, was sentenced to 10 years for playing a lead role in the massive housing scheme, which the courts believe involved 240 homes now in various stages of foreclosure. Investigators believe $100 million in lending changed hands, causing $20 million to $50 million in losses.

For more, see Eagan couple, son-in-law sentenced in state's largest mortgage fraud.

See also, Minneapolis Star Tribune: Principal in Parish fraud gets 13-year prison term (The judge rejected pleas for leniency in the case of mortgage fraud and money laundering. Co-defendants got five and 10 years).

Go here for earlier posts on Eagan, Minnesota homebuilder Parish Marketing and Development.

Bank Screw-Up, Falling Home Values, Tighter Lending Standards Leave Refi-Seeking New Jersey Couple Up The Creek

In Neptune City, New Jersey, the Asbury Park Press reports on the nightmare of homeowners Mark and Jennifer Seymour, a couple who, because of a screw up by their original lender, is now stuck with a problem:

• [M]ark Seymour manages a pool and spa company, earning about $52,000 a year. Jennifer works as a bus driver, making about $16,000 a year.

• They made enough to purchase their first home -- a three-bedroom ranch with white siding and green shutters -- in February 2006 with no money down for $200,000. They obtained a loan through National City Bancorp with a fixed interest rate of 6.75 percent, leaving them a payment of about $2,200 a month, including taxes.

• About six months later, they said, National City notified them that it had made a mistake. It forgot to include private mortgage insurance, normally required for buyers who don't put at least 20 percent down. It boosted their payments by $786 a month.

For the rest of Seymour's nightmare, see Handcuffed (Homeowners looking for flexibility from their lenders are running into barriers because of falling property values and tighter lending standards) (if link expires, try here).

Philly Foreclosure Mitigation Plan - So Far, So Good

In Philadelphia, Pennsylvania, Philadelphia Metro reports:

• While the federal government is slowly addressing the nation’s mortgage foreclosure crisis, local officials are calling the city’s innovative program an early success. Last month, officials held the first round of conferences at City Hall for homeowners whose properties were listed for sheriff’s sale in April and May, but were stayed due to a moratorium. Of the 1,600 total homes affected, 667 were owner-occupied and eligible for conferences and 322 homeowners attended the conferences.

***

• The next round of conferences is set for Aug. 12-15 for homeowners whose properties were listed for sheriff’s sale in June. After Labor Day, however, the program will start to target residents before their properties reach the stage of sheriff’s sale — which officials say should significantly increase the participation rate.

• “Yes, the number of foreclosures is still huge compared to the amount of help that is available,” said Beth Goodell, managing attorney at Community Legal Services [of Philadelphia], adding “I remain optimistic that this can help a significant number of people.” Homeowners [in Philadelphia] that are behind on their mortgage payments or facing foreclosure can call 215-334-HOME to set up a free session with a housing counselor.

For more, see Philly mortgage crisis program getting thumbs up.

Go here for more on Philadelphia's Residential Mortgage Foreclosure Diversion Pilot Program.

Freddie To Double Cash Incentives To Servicers Working With Delinquent Borrowers

Reuters reports:

• [F]reddie Mac, a government-chartered company, will [...] increase the time it gives servicers to negotiate with delinquent borrowers in Washington, D.C., and 20 states to 300 days from a range of 120 to 299 days, a spokeswoman said. The states are those with relatively fast foreclosure processes, Freddie Mac said.

***

• Compensation to servicers that negotiate new payment plans and loan contracts will double to $500 and $800, respectively, Freddie Mac said. For a servicer that completes a so-called short-sale, in which Freddie Mac accepts a sale price on a home below the balance of the mortgage, payments also double, to $2,200. Accepting short sales can result in lower losses for lenders by ending the delinquency period and preventing ownership of the property through foreclosure.

• Among new incentives, Freddie Mac said it will reimburse servicers for the cost of door-to-door programs -- in which servicers seek out troubled borrowers in person to discuss renegotiating their loans -- if they result in the borrower contacting the servicer.

For more, see Freddie Mac boosts mortgage servicer incentives.

2nd Florida County To Move Foreclosure Sales Online

In Central Florida, according to an online press release issued through MarketWatch:

• [The] Manatee County Clerk of the Circuit Court and Comptroller has selected RealForeclose by Realauction to begin sales of foreclosed property online. [Clerk of the Circuit Court and Comptroller R.B. "Chips"] Shore has been proactive in reducing the paperwork involved and increasing the number of bidders participating as the leading reasons to embrace technology for foreclosure sales.

For more, see Manatee County Clerk Begins Online Foreclosure Sales with Realauction.

For the other Florida County moving their foreclosure sales online, see Duval County First to Begin Online Foreclosure Sales with Realauction.

Florida Attorney Pro Bono Foreclosure Defense Group Encounters Potential Legal Roadblock

In Florida, The Associated Press reports:

• If you need help strengthening your home against hurricanes or other disasters, just call FLASH. If you're a Florida homeowner and need free legal aid to avoid foreclosure, you can call another FLASH. The first FLASH - the Federal Alliance for Safe Homes - on Thursday demanded that the second FLASH - Florida Attorneys Saving Homes - stop using its acronym. Both are nonprofits based in Tallahassee.

• The attorneys group is checking with lawyers who have trade mark expertise before responding, said Kent Spuhler, executive director of Florida Legal Services. The safe homes FLASH says it's been getting calls about legal help since the attorneys' FLASH was featured Wednesday on CNN's Larry King Live.

Source: Legal, home safety groups clash over FLASH.

Bank Of America Called Upon To Voluntarily Halt Countrywide Foreclosures In San Diego

In San Diego, California, KGTV Channel 10 reports:

• San Diego City Attorney Michael Aguirre Thursday called on the Bank of America to voluntarily stop foreclosures against certain properties within the city with mortgages held by Countrywide Financial Corp.

• The City Attorney's Office last week filed suit against the bank, which bought Countrywide earlier this year as the mortgage crisis spun out of control. Aguirre alleged that Countrywide engaged in predatory lending practices in San Diego. Aguirre sent a letter to the bank's Los Angeles attorneys – Paul McNamara and Brooks Brown -- asking for the foreclosure moratorium as "an act of goodwill," and not an admission of wrongdoing.

For more, see City Attorney Asks BofA To Stop Foreclosures.

Editor's Note:

City Attorney Aguirre has set up a hotline for all San Diego residents who are stuck with a Countrywide subprime mortgage. San Diegans facing foreclosure by Countrywide can call 619-533-5679 or go to the city attorney's Web site and click on the "Foreclosure Crisis" link. See Hotline Offered For Homeowners Facing Foreclosure With Countrywide.

Countrywide Caves In To Picketers, Public Outcry In Battle To Take Home From 72-Year Old Disabled Woman

In Detroit, Michigan, The Michigan Citizen reports:

• On Friday, July 25, a settlement between [72-year old Rubie Curl] Pinkins and Countrywide Home Loans, which is owned by the Bank of America, was reached in front of Wayne County Circuit Court Judge Susan Borman. The settlement maintains Pinkins in her home in exchange for payment from a reverse mortgage of the money she owed Countrywide at the time of redemption.

• Curl said community and church members, along with State Sen. Hansen Clarke and even Gov. Jennifer Granholm responded positively to her family’s call for support.

• On July 18, hundreds of community supporters rallied in front of the Pinkins home on Holden. On July 22, dozens demonstrated outside of the downtown Detroit Bank of America headquarters. [Attorney Vanessa] Fluker said she and Curl went inside to confront the vice-president there despite police attempts to remove the picketers, including Mrs. Pinkins in her wheelchair.

For more, see Pinkins foreclosure victory.

See also:

• Senior Lending Network Loan Saves 72-Year-Old Woman from Foreclosure,
• Detroit struggle stops eviction of Rubie Curl-Pinkins.

Go here for other posts on Rubie Curl Pinkins versus Countrywide. countrywide consumer problems

Mass AG Makes Mortgage Mod Deal With Owner Of 200 "Fremont" Loans Subject To Foreclosure Injunction & Lawsuit Alleging Unfair/Deceptive Practices

From the office of the Massachusetts Attorney General:

• Attorney General Martha Coakley has entered into an agreement with California based WMD Capital Markets, LLC that provides significant benefits to approximately 200 borrowers holding structurally unfair loans originated by Fremont Investment & Loan (“Fremont”). WMD Capital Markets recently purchased the Fremont-originated loans, which are subject to a preliminary injunction [original injunction, expanded injunction] restricting foreclosures, issued by Suffolk Superior Court in February 2008.

• The Attorney General’s Office and WMD Capital Markets reached an agreement to memorialize how Fremont-originated loans would be modified in order to avoid unnecessary foreclosures and account for Fremont’s unfair and deceptive lending practices that are the subject of the Attorney General’s law enforcement action against California-based Fremont.

Among the things WMD has specifically agreed to, according to the press release, are:

• Permanently reset the applicable interest rate to the borrowers’ introductory rate,
• In lieu of a loan modification, offer delinquent borrowers a relocation payment for one year after the agreement,(1) which is designed to help those borrowers who are unable to afford their mortgage loan, even after a downward adjustment of the monthly payment.

For the rest of the Mass AG press release, see AG Martha Coakley Enters into Affordable Loan Modification and Foreclosure Prevention Agreement with Purchaser of Fremont Loans.

See also, MarketWatch: WMD Capital Markets Purchases $65 Million in Massachusetts Mortgages (Deal Offers Homeowners New Financial Alternatives).

Go here for other posts on the battle between the Mass AG and Fremont Investment & Loan.

(1) The amount of the relocation payment was initially announced by the Mass AG's office as ranging from approximately $10,000 to $25,000. The reference to the relocation payment amount has since been removed by the AG's office. UndoMortgageLoans TILAdelta

CBS News' "The Early Show" On Philadelphia's Foreclosure Intervention Program

CBS News' The Early Show did a story this week on the Residential Mortgage Foreclosure Diversion Pilot Program recently instituted by Philadelphia, Pennsylvania.

For the video, see Philly Fights Foreclosures (The housing bill President Bush signed is designed to stabilize the weak housing market, but the city of Philadelphia is already a step ahead of the federal government).

For the transcript of the report, see Philadelphia Fighting Foreclosures Head-On (Forbidding Sale Of Foreclosed Homes; Forcing Lenders, Homeowners To Seek Compromise).

Another Lawyer Suspected In Swiping Foreclosure Surplus Proceeds?

In Brooklyn, New York, the NY Daily News reports:

• A lawyer close to the Brooklyn Democratic machine is suspected of stealing $218,000 from an East Flatbush church in a mortgage foreclosure deal, the Daily News has learned. The Brooklyn district attorney's office is probing allegations that Alan Rocoff, the court-appointed referee for the foreclosure, refused to turn over the money to the Faithway Deliverance Center.

• "My father founded the church with his own money and couldn't make the mortgage payments. When the property was foreclosed and sold, we were supposed to get what was left over," said Robert Booker Jr., son of the founding pastor of the Pentecostal church at 2525 Snyder Ave. [...] Five different judges have heard the case and ordered Rocoff to pay up, but he hasn't; nor has he been charged.(1)

***

• Foreclosure referees, often appointed through connections with judges, are typically paid $1,000 for what amounts to two hours' work. It involves collecting and then depositing the cash proceeds of a sale with a court clerk for eventual disbursement.

• The church property was sold on Nov.26, 2002, in foreclosure for $301,000. There was $218,556 left after the mortgage and other debts were paid.

For more, see Lawyer a suspect in church ripoff.

Go here for another story where an attorney is accused of swiping the surplus proceeds of a foreclosure sale.

(1) According to the Daily News report, Rocoff was appointed referee by his friend Brooklyn Civil Court Judge Michael Garson, who later admitted stealing $163,000 from an aunt's bank account. Garson was tossed off the bench. He quit the bar, reimbursed his aunt's estate and pleaded guilty to a misdemeanor to avoid jail.

Report Finds 59% Of NYS Foreclosures Linked To Subprime Loans, Minority Communities Targeted

In New York State, CNNMoney.com reports:

• Mortgage scammers took advantage of loopholes in New York State lending laws to defraud homeowners and lending institutions all over the state, according to a new report released Thursday. The New York State Commission of Investigations reported that the state's mortgage borrowers need more regulatory protection from predatory lenders. It also linked subprime loans closely to New York's growing foreclosure problem; in 2007, 59% of all foreclosures statewide involved subprime loans.

***

• In one example [of a case in which there was never any possibility that the borrower could afford to pay off a loan] from 2006, Suzette Francis, a woman with two young children, no assets, working as a $10-an-hour security guard and living in a homeless shelter, obtained a mortgage for $470,000 that, as the report stated, "exhibited ... every characteristic and feature associated with dangerous subprime loans." [...] She would have to work 400 hours a month just to pay her loan.

***

• Particularly targeted all over the nation have been minority communities. The Commission found that, all other things equal, New York state African-American and Hispanic borrowers were twice as likely to have subprime loans as whites. A lot of 'one-stop-shops,' where real estate agents are also mortgage brokers, operate in minority neighborhoods," said Mary Biunno, senior assistant counsel for the Commission, "and they rope in a lot of people."

For more, see Foreclosures linked to subprime fraud (New York state investigation of subprime mortgage practices reveals fraud proliferated in the state, which had the eighth-highest number of foreclosures in 2007).

For the report, see A Perfect Storm: Easy Money and the Mortgage Meltdown - The Subprime Mortgage Crisis in New York State. PredatoryLendingRaceBias

Another Rent Scam Advertised On Craigslist Victimizes Arizona Family Of Nine Out Of $1,500

In Peoria, Arizona, KTVK-TV Channel 3 reports:

• A family of nine thought they had found the perfect home, moved in and started to make improvements when they found out they had been ripped off. [...] The Reeves found the home listed for rent on Craigslist. It sounded like a bargain and a dream come true for this family of nine who was new to the area looking for a home. [...] They met who they thought were the owners and Matthew Reeves, the father, tells 3TV, “We signed the lease, got a receipt for the money…$1,500.” Then they went home to get the family and celebrate. That was on Thursday. On Friday the family started cleaning and Saturday showed up to move in but someone else was already inside.

For more, see Family new to Valley loses savings in Cragislist rental scam. (or go here for video).

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

Cleveland-Area Group To Start Program Notifying Tenants Renting Homes Going Into Foreclosure

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

• [A] new program starting in August would notify tenants in Cuyahoga County that the property they're renting is being foreclosed on, giving them about six months to prepare to move. The program works by matching residential rental properties with foreclosure filings and sending letters to renters, notifying them and offering local resources for assistance in finding new housing.

• The early notification would also give renters a chance to save money needed for the security deposit on a new home and other extra costs, said Mike Piepsny, executive director of the Cleveland Tenants Organization, which will be mailing the foreclosure notices. [...] Paul Herdeg, housing manager with Cuyahoga County's Department of Development, said funding sources also are being sought to lend financial aid to tenants facing eviction.

For more, see Program to notify renters of foreclosure filings (Often aren't aware of foreclosure).

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

Concerns Over Integrity Of Mortgage Industry’s Foreclosure Eviction Practices Of Tenants Alarm Cook County Sheriff’s Office

In Cook County, Illinois, The Chicago Reporter reports:

• In many cases, the [tenant foreclosure] evictions have been legal. In others they’re not because mortgagees—a bank or company that collects mortgage payments— fail to give tenants ample notice or an opportunity to contest the eviction in court. In some cases, [...] the evictions are illegal because there is no court order against the tenants themselves.

• In Cook County, tenants facing an illegal eviction often learn about it when they open their door to a sheriff’s deputy telling them to leave. Sometimes, [...] the deputies’ orders instruct them to evict the landlord, not the tenant. If tenants are home and can verify their identity, the deputies leave and report back to the lender.

• Problems arise when tenants aren’t home, said Martha DiCaro, an assistant chief who runs the Eviction, Levy and Warrant Unit of the Cook County Sheriff’s Office. “We are under the impression that the person whose name is on the order is the person who lives there,” DiCaro said. “We take the court’s order at face value and we enforce it.”

• Concerns over the integrity of the mortgage industry’s eviction practices have alarmed the sheriff’s office.

For more, see A Renter's Nightmare.

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

Six Seniors In Hospice Care Home In Foreclosure Get Booted As Landlord Pockets Rent, Stiffs Bank; Ambulances, Medics Called In To Carry Out Eviction

In Henderson, Nevada, the Las Vegas Sun reports:

• The six senior citizens were strung to IV drips in a Henderson home converted into a geriatric care facility. The hospice home, a big stucco beast, was leased. The tenants, a couple who cared for the aging adults, never missed a rent payment. The owner of the house, however, was hardly so diligent. He lived outside the state and beyond his means. He stopped paying the mortgage and never said a word. Hello, foreclosure.

• Henderson deputy constables went to the home in March 2007 with a judge’s order: Everybody out. Even the seniors sinking into their sheets had to clear out — within 24 hours. The bank wanted its house back, like, now. This was the first anybody in the home had heard of the foreclosure.

• Ambulances were called to transport the elderly evictees. Temporary housing had to be hustled up overnight. Last-minute medical specialists had to be hired. The whole thing made your stomach turn, Henderson Constable Deputy Director Stephen Kilgore said.

***

• On June 2, members of the [Nevada Legislature's] Subcommittee on Mortgage Lending heard testimony from Deputy Director Kilgore, who shared the geriatric home horror story.

The [Nevada] Legislative Commission Subcommittee on Mortgage Lending and Housing, a group researching legislation to protect renters, is planning to draft legislation that would make it a felony for homeowners to hide looming foreclosures from renters, according to the story.

For more, see When renter pays, owner doesn’t: You’re out, tenant.

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

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

Legal Mechanisms In Connecticut Protect Tenants In Foreclosed Homes Against Short Notice Evictions, Loss Of Security Deposit

In Connecticut, the New Haven Register reports:

• Amy Eppler-Epstein, an attorney for New Haven Legal Assistance Association, Inc., said there are only two ways a bank can evict a tenant in Connecticut: by naming the tenant in the foreclosure lawsuit or after winning the lawsuit, bringing an eviction case. In most instances, tenants can seek a stay of up to six months through the court.

• "If you get legal papers, don't ignore them," she said. Rather, get legal advice. Low-income tenants [in Connecticut] can call Statewide Legal Services at 1-800-453-3320. Banks often offer a "cash-for-keys" arrangement, meaning they offer the tenant a certain amount of money to move by a specific date and avoid eviction proceedings. In [renter Aurea] Ortiz's case, she was offered $500 but could not find a new home by Wells Fargo's cutoff.

• "If a tenant can find a place in short order, that could be a good deal for them," Eppler-Epstein said. But if not: "They cannot just put you out in a week. You have the right to go to court." Renters should keep proof they paid a security deposit, she said, because whoever owns the unit when the tenant moves out is liable to return the money, whether or not it was ever placed in escrow.

For more, see Stuck in the middle: Renters swept up in wave of foreclosures.

See also, Hartford Business Journal: Foreclosures Blindsiding Renters:

• [T]here are legal mechanisms that can protect [Connecticut] renters, including a six-month stay of execution on evictions if the tenant is not the cause of the notice, [attorney Richard] Tenenbaum said. But few tenants are aware that they have a legal right to contest being thrown out, he added. TenantRentSkimmingAlpha

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:

• Moore v. Cycon Enterprises, Inc. (a Michigan foreclosure rescue case),
• Commonwealth of Massachusetts vs. Sohmer (a Massachusetts foreclosure rescue case).

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:

• State of Florida v. Law & Associates, et al. (alleges upfront fee foreclosure rescue),
• State of Florida v. National Foreclosure Management, Inc., et al. (alleges sale leaseback foreclosure rescue),
• State of Florida v. Florida Housing Council, et al. (alleges sale leaseback foreclosure rescue),
• State of Florida v. A Realty Rx, LLC., and Jim Platts (alleges unlicensed real estate, securities, mortgage brokerage).

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.

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