Wednesday, October 01, 2008

Illinois AG Hauls Another Foreclosure Rescue Operator Into Court For Alleged Violation Of State Law; Count Now Up To 15 Firms

From the Illinois Attorney General's Office:
  • Illinois Attorney General Lisa Madigan [yesterday] continued her aggressive legal fight against mortgage fraud by filing a lawsuit against a St. Marys, Pa., company, which has been operating a mortgage rescue fraud scheme and preying on vulnerable Illinois homeowners on the verge of foreclosure.

  • Madigan filed suit in Sangamon County Circuit Court against Aeroworks, LLC, doing business as Augustus Rae and Reed, and its president, John F. Reed. The suit alleges that the defendants violated the Mortgage Rescue Fraud Act and the Consumer Fraud and Deceptive Business Practices Act by falsely promising to help consumers save their homes after they have fallen behind on their mortgage payments.

  • According to the complaint, the defendants charge consumers up to $1,185 in upfront fees for homeownership counseling and mortgage rescue services but rarely produce successful results. They also fail to give consumers the right to cancel at any time. The complaint alleges that the defendants accepted money from at least 215 consumers throughout Illinois during 2006 and 2007.

For more, see Madigan Sues Pennsylvania Company For Mortgage Rescue Fraud (Company Preys On Illinois Homeowners Facing Foreclosure).

Arizona AG Indicts Two In Alleged Equity Skimming Operation; Homes Involved Ended Up In Foreclosure, Say Authorities

In Phoenix, Arizona, the East Valley Tribune reports:
  • Jeffery Z. Sayegh, of Cave Creek, and Kimberly R. Werking, of Phoenix, were indicted by the Arizona Attorney General's Office on five counts of forgery, one count of money laundering and one count of fraudulent schemes and artifices. Werking, 42, was also indicted on six counts of residential mortgage fraud, five counts of theft and one count of illegal control of an enterprise.

  • The charges, all felonies, relate to an alleged equity skimming operation in Phoenix and north Scottsdale. These are among the largest indictments issued under the state's residential mortgage fraud statute, enacted in 2007.

***

  • The indictment further alleges that Werking skimmed more than $1 million in equity from the homes through the refinancing process, and, once no more money could be pulled out of the properties, allowed them to go into foreclosure.

For more, see Pair indicted in mortgage fraud.

From the Arizona Attorney General's Office;

Report: Mortgage Servicing Industry Falling Short In Efforts To Mitigate Foreclosures

Legal Newsline reports:
  • Industry efforts to keep U.S. homeowners from lapsing into foreclosure have decreased, a report by state attorneys general and banking regulators said Monday. [...] The State Foreclosure Prevention Working Group(1) report found that for the period February through May that nearly 80 percent of seriously delinquent homeowners are not on track for any loan work-out or loss mitigation assistance to help them avoid foreclosure. "Too many homeowners face foreclosure without receiving any meaningful assistance by their mortgage servicer," the report said, "a reality that is growing worse rather than better, as the number of delinquent loans, prime and subprime, increases."

  • The report -- Analysis of Subprime Mortgage Servicing Performance -- is based on data collected from subprime mortgage servicers. "While some progress has been made in preventing foreclosures, the empirical evidence is profoundly disappointing," the report said.

For more, see Report: Foreclosure rescue efforts fall short.

(1) Reportedly, The State Foreclosure Working Group has representatives of the attorneys general of 11 states: Arizona, California, Colorado, Iowa, Illinois, Massachusetts, Michigan, New York, North Carolina, Ohio and Texas. The panel also has representatives from banking departments in New York and North Carolina, as well as from the Conference of State Bank Supervisors. MortgageServicingIssuesAlpha

New Homebuyers Find Themselves Stuck Living In Unfinished Development With Plunging Property Values

In Bradenton, Florida, the Bradenton Herald reports:

  • If the Greenbrook homeowners' association didn't know there are unhappy residents in Greenbrook Preserve, Ravine and Banks, they know now. [Last] Tuesday, roughly 60 residents attended the Greenbrook Village Association's board meeting at Town Hall. Most were there to express frustration that their neighborhoods are filled with many vacant lots that builders haven't been able to sell due to the slumping housing market.

  • Some of these lots have tall mounds of dirt, concrete chunks, wood pallets and weeds, residents reported. These conditions are in neighborhoods where residents said they paid between $700,000 to $800,000 for their homes.

***

  • [Homeowner Allison] Moore said she paid $750,000 for her home in the Preserve in 2006 and a comparable home down the street recently sold in a foreclosure short sale for $380,000. Residents are afraid they will have to live next to vacant lots for years. Residents were told there is no way the association can force the builders to build homes on the lots, finish the handful of unfinished homes, or force them to sod the lots.

Attempts to grow grass by seeding the vacant lots were foiled by hungry birds, according to the story.

For more, see Vacant lots anger Ranch residents.

Banks, Homebuyer, Bankruptcy Trustee Accuse Idaho Homebuilder Of Fraud, Misuse Of Construction Funds, Hiding Assets In Civil Case

In Eagle, Idaho, the Idaho Statesman reports:

  • Meridian homebuilder Justin Walker, who abandoned an unfinished subdivision in Eagle, is accused of fraud, misuse of construction funds and hiding assets in his bankruptcy case. Aaron Hymas, Walker's former partner in the defunct Crestwood Construction Inc., faces several lawsuits alleging fraud too.

  • In April, Justin and Jackie Walker and Aaron and Tiffany Hymas filed for Chapter 7 bankruptcy. That allows all properties and belongings - except those the families are allowed to keep by the court - to be liquidated to pay as many creditors as possible. Both cases list many of the same 800-plus creditors and about $69 million in liabilities.

  • Three banks and a homebuyer asked the Bankruptcy Court in Boise last week to rule that certain debts should not be discharged in the bankruptcies because of "false pretenses, false representation and actual fraud."

  • And Jeremy Gugino, the bankruptcy trustee in Walkers' case, alleges the Walkers transferred $30,000 in cash, about 22 vehicles and other assets to limited liability companies in Nevada and a trust to hide them from creditors.

***

  • [H]undreds of subcontractors, including painters, house cleaners and suppliers of everything from trash service to building supplies, likely will have to absorb about $11 million in unsecured debt, bankruptcy experts say.

For more, see Meridian builders accused of fraud (Complaints say Justin Walker and his partner misused construction funds and Walker has hidden assets from the Bankruptcy Court).

Unlicensed Contractor Faces Charges Of Allegedly Screwing Elderly Homeowners Of At Least $60K Paid For Work He Failed To Perform

In Lockeford, California, the Stockton Record reports:
  • Police detectives and the Contractors State License Board [last month] arrested Lockeford resident Robert Weaver on nine counts of contractor fraud and working without a license. At his 5-acre property [...], however, they also compiled three counts of animal cruelty on top of accusations that he defrauded elderly homeowners of at least $60,000 worth of landscaping contracts he did not perform.

For the story, see Man faces contractor fraud, animal cruelty charges.

Tuesday, September 30, 2008

Florida Foreclosure Rescue Rules Go Into Effect Tomorrow

Florida Attorney General Bill McCollum's office recently issued a reminder that a few recently passed Florida laws go into effect on October 1, 2008, including:
  • Foreclosure Fraud Protection Act (HB 643): This law protects and educates consumers of their rights when they are signing a contract with a foreclosure rescue entity and includes additional protections for homeowners who face foreclosure. Key provisions of the bill include the creation of a three-day right-of-cancellation period and the requirement that foreclosure rescuers include – in large, bold font – notification to homeowners of this right of cancellation on the contract. The contract must also include a recommendation that the homeowner contact his or her lender or mortgage servicer prior to signing the agreement, and it must inform the homeowner that the consultant is prohibited from accepting any form of payment until all services are completed. Furthermore, the law provides enhanced remedies for consumers under Chapter 501, Florida Statutes.

For the Florida AG's press release, see Attorney General Announces New Laws Taking Effect October 1.

Flipping Operation By Convicted Con Man Illustrates "Anything Goes" Lending Mentality

In Kansas City, Missouri, The Kansas City Star reports:
  • If you wonder how we got to this point — a $700 billion Wall Street bailout for toxic mortgages — the case of Raymond Zwego is a good place to start.

  • While on probation from a previous Kansas City federal bank fraud conviction in 2003, Zwego began constructing his own little housing bubble. He purchased 61 area properties, in many cases using straw buyers and falsified paperwork. He fueled the exercise by illegally obtaining $16.9 million in mortgages, willingly contributed by lenders who never realized they were dealing with a career con man until it was far too late.

  • Almost all of the homes he purchased eventually went into foreclosure, contributing to the tsunami of red ink that has come perilously close to sinking the country’s financial system. At Zwego’s sentencing on federal mortgage fraud charges(1) [last week], his lawyer, Daniel Harrington, acknowledged that the bygone days of anything-goes mortgage lending contributed to his client’s crimes.

For more, see Mortgage fraud sentencing illustrates anything-goes lending environment.

(1) According to the story, Zwego was sentenced to 10 years in federal prison and was slapped with an additional three years for violating probation on his bank fraud conviction. He was also ordered to pay $5.6 million in restitution.

NJ Man Gets Probation For Refinancing Ex-Wife's Home During Divorce Without Her Knowledge, Consent; $300K Proceeds Used To Pay Business Debts

In Somerville, New Jersey, the New Brunswick Home News Tribune reports:
  • A Warren man has been placed on three years probation for his role in a forgery scheme. Salvatore Gramaglia, 55, the chief executive officer of A&G Fine Foods headquartered in Middlesex Borough, pleaded guilty July 22 to forgery before state Superior Court Judge Paul Armstrong, who handed down the sentence. On Sept. 12, Paula Benhayon, 58, of Union, Union County, was also placed on three years probation by Armstrong following her guilty plea in the scheme.

  • An investigation began in November 2005 when an attorney notified the Somerset County Prosecutor's Office that Maria Gramaglia, who had divorced Salvatore Gramaglia, learned her marital home in Warren was refinanced by her former husband without her knowledge or consent while they were involved in divorce proceedings, said Somerset County Prosecutor Wayne Forrest.

For more, see Warren man, Union woman sentenced for roles in forgery scheme.

Mass. Lawyer Gets 5 Years For, Among Other Things, Pocketing $500K+ Meant To Pay Off Existing Liens While Acting As Closing Agent In Real Estate Deals

The Office of Massachusetts Attorney General Martha Coakley announced last week that attorney Bruce Namenson, age 46, of Walpole, pled guilty to over 100 charges involving fraud, larceny, conspiracy, or forgery in which he allegedly screwed over his clients or insurance companies. His victims ranged in age from 15 to 95. Namenson was sentenced to serve 5 years in the House of Correction to be followed by 10 years of probation. As part of his probation, Namenson must repay over $600,000 in restitution. He is also prohibited from practicing law and being employed in any position in the legal profession during this 10 year probationary period.

Included in his bad acts, according to the Massachusetts AG's office:
  • From April through September 2007, Namenson carried out a scheme that defrauded home sellers and buyers and financial lending institutions. During this time Namenson acted as closing agents for three residential real estate closings. At the time of these sales there were outstanding mortgages on the properties totaling over $500,000. The buyers obtained loans to purchase the properties. At the time of the closings, the purchase funds were wired to Namenson’s business account for the purpose of paying off the outstanding mortgages, with the balance of the proceeds (minus closing costs) payable to the sellers. After the closings, Namenson failed to pay off the over $500,000 in mortgage debts remaining on the homes. As a result, the homes were threatened with foreclosure. Namenson attempted to avoid foreclosure and discovery of the thefts by periodically making partial loan payments to the banks.

For the Mass AG's press release, see Quincy Attorney Pleads Guilty, Sentenced on Charges of Insurance Fraud, Larceny, Forgery, Embezzlement and Other Charges.

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

Flagler County Prosecutors Target Local Builders In Criminal Cases For Allegedly Screwing Over Homeowners

In Flagler County, Florida, the Daytona Beach News Journal provides a few blurbs on four area builders/contractors who are being criminally prosecuted for allegedly screwing over homeowners:
  • Timothy John Hassler, owner of Ocean Shore Construction, was found guilty of fraud Sept. 19. Prosecutors said he faces up to five years in prison for $80,000 worth of unfinished work and fraud related to the construction of a home in Flagler County.

  • Hassler filed false paperwork with Flagler County homeowner Joan Foley's bank showing that contractors were paid for work on her home when they were not, prosecutors said. Foley realized there was a problem long before construction on her home was complete, learning there wasn't enough money left on her construction loan to finish her house, let alone pay all of the outstanding liens lodged by subcontractors. Prosecutor Steven Gosney said he also plans to file a second case against Hassler for grand theft over $100,000 in an unrelated case.

  • The case is one of several like it currently moving through the county's court system. Herbert Heron and Noel Richardson, owners of Canterbury Estates Homes Inc. and Oxford Title Company Inc., are facing charges of grand theft, organized fraud and misapplication of construction funds.

  • Gregory Bleyl, owner of Osprey Custom Homes, faces charges of forgery and grand theft.

  • And Joseph Fasino, owner of Sandcastle Homes, faces charges of organized fraud and misapplication of construction funds.

Source: Builder's fraud case one of many in county system.

For other posts on builders/contractors allegedly stiffing their customers, go here, go here, and go here. contractors stiff subs customers yelbow

Monday, September 29, 2008

Ohio AG, Mortgage Broker Settle Civil Charges Of Alleged Conduct Designed To Influence Outcome Of Appraisals In Lending Process

In Hamilton County, Ohio, the Chillicothe Gazette reports:
  • A Cincinnati mortgage broker has paid the State of Ohio $30,000 to settle a lawsuit alleging predatory lending practices. Attorney General Nancy H. Rogers reached a settlement with Ace Mortgage Funding, LLC to end a lawsuit based on Ohio's Consumer Sales Practices Act.

***

  • The lawsuit alleged Ace Mortgage Funding committed undue influence on appraisers by using pre-printed appraisal request forms and inserting "Estimated Value" and "Loan Amount" in an attempt to influence the outcome of the appraisal with the values they inserted. [... T]he company has agreed not to commit any unfair or deceptive acts or practices including trying to instruct, compensate, or intimidate any person into influencing the judgment of an independent appraiser.

For more, see State, mortgage broker settle suit.

For the original lawsuit filed by the Ohio AG, see State of Ohio v. Ace Mortgage Funding, LLC.

Brooklyn Court Refuses To Dismiss Suit Alleging Fraud In Foreclosure Rescue Transaction

In Brooklyn, New York, a lawsuit in which a homeowner claims that he was scammed out of ownership of his former home, and in which he seeks reconveyance of the premises to him has been allowed to continue. In refusing to dismiss the complaint, Brooklyn Supreme Court Justice Arthur Schack ruled that there were triable issues of fact as to whether their the homeowner was fraudulently induced into conveying the premises to the defendant.

For the court's ruling, and the case law cited therein, see Bryan v Lindsay, 2008 NY Slip Op 51781(U); Decided on August 27, 2008.

More On Brooklyn Supreme Court Justice Arthur Schack

In a recent opinion involving the refusal to allow a foreclosing mortgage lender to continue with a foreclosure until certain requirements are met, Brooklyn Supreme Court Justice Arthur Schack finds himself wrestling with the employment status of one Margery Rotundo, a mortgage company executive whose name appears to regularly show up on documents filed with the court in foreclosure cases involving different plaintiffs. In several recent foreclosure cases he has presided over, Justice Schack has found that Ms. Rotundo has sworn in court documents that she is Senior Vice President for:
  • Residential Loss Mitigation of Ocwen Loan Servicing, LLC,
  • Residential Loss Mitigation of HSBC Bank USA, N.A.,
  • Loss Mitigation for Nomura Credit & Capital, Inc., and
  • an unnamed servicing agent for HSBC.

Justice Schack makes this observation on Ms. Rotundo's apparent knack to freely move from mortgage company employer to mortgage company employer, as the need appears to demand:

  • The late gossip columnist Hedda Hopper and the late United States Representative Bella Abzug were famous for wearing many colorful hats. With all the corporate hats Ms. Rotundo has recently worn, she might become the contemporary millinery rival to both Ms. Hopper and Ms. Abzug. The Court needs to know the employment history of the peripatetic Ms. Rotundo. Did she truly switch employers or did plaintiff have her sign the "affidavit of merit and amount due" as its Senior Vice President solely to satisfy the Court?

For the rest of Justice Schack's opinion in this case, see HSBC Bank USA, N.A. v Charlevagne, 2008 NY Slip Op 51652(U) [20 Misc 3d 1128(A)]; Decided on August 4, 2008.

For another recent case in which Justice Schack finds himself wrestling with the employment status of another ostensibly omnipresent bank executive, a certain Scott Anderson, see HSBC Bank USA v Antrobus, 2008 NY Slip Op 51639(U) [20 Misc 3d 1127(A)]; Decided on July 31, 2008.

Go here for list of links to over thirty of Justice Schack's decisions denying foreclosure to mortgage companies for failure to establish legal standing to bring the legal action. multiple hat-wearing

Foreclosure May Be Preferable Option To Short Sale For Some

A Palm Beach Post real estate blog offers the following points in support of the proposition that, for some home sellers looking to unload a home that's worth less than the outsatnding mortgage balance, allowing the home to go into foreclosure may be better than arranging a short sale:

  • Liars have to come clean. If the seller took out a “liar loan” and indeed lied about his income, the deception will become clear in the voluminous documents required by the bank. Better to go into foreclosure than to face federal charges of bank fraud, [...].

  • The kids’ college savings will have to go. Lenders are scrutinizing sellers’ assets and forcing them to empty out nest eggs and college funds. If the seller loses the home in foreclosure, those assets aren’t at risk.

For more, see Considering a short sale? Foreclosure might be a better choice, Realtor says.

Sunday, September 28, 2008

Two Cop Plea For Bilking Prospective Tenants By Renting Foreclosed Homes They Didn't Own; Used Craigslist To Post Ads

In Vista, California, XETV-TV Channel 6 reports:
  • Two Orange County men who bilked thousands of dollars from people by renting out homes they didn't own pleaded guilty Wednesday to grand theft. Alexander Braslavsky, 34, and Anthony Patrick Marshall, 38, will be sentenced Nov. 10 in Vista. Under the terms of a plea agreement, they must pay $15,000 in compensation to four victims by the sentencing date. They each face up to 90 days in jail.

  • "I'm happy that the victims will get all their money back up front," said Deputy District Attorney Anna Winn. The prosecutor said restitution was her top goal in reaching the plea bargain. Under the plea deal, two other counts of grand theft were dismissed, as well as conspiracy and attempted grand theft charges. Winn said Braslavsky and Marshall -- who has a real estate license -- posted ads on the Craigslist Web site for five foreclosed homes in Carlsbad, Corona and Stanton and rented them out.

For more, see Pair Plead Guilty to Renting Homes They Didn't Own.

Go here, go here, and go here for posts on phony landlord rent scams. PhonyLandlordScamZeta

New California Law Creates Registration, Bonding Procedure For Foreclosure Consultants; Addresses Foreclosure Surplus Scams

In Sacramento, California, the Central Valley Business Times reports:
  • Legislation designed to protect homeowners and homebuyers in California and help establish a more accountable lending environment, was signed into law Thursday by Gov. Arnold Schwarzenegger.

Among the bills signed into law by the Governor is:

  • AB 180 by Assembly Speaker Karen Bass, D-Los Angeles. This measure provides a registration and bonding process for foreclosure consultants and prohibits a foreclosure consultant from entering into an agreement to assist an owner in arranging the release of surplus funds after the trustee's sale is conducted.

For the story, see California toughens laws to protect homeowners and homebuyers.

Doc Stamp Calculation On Florida Short Sales To Be Based On Price Paid By Buyer, Not Seller's Higher Mortgage Balance

In Florida, The Tampa Tribune reports:
  • The confusion over state tax law that threatened to bottleneck home sales throughout the state has been resolved. The Florida Department of Revenue said Tuesday that real estate "document stamp" taxes should be paid on the transaction price of short sales, not the higher value of the mortgage. The Florida statute was unclear when it came to short sales - a popular strategy some troubled owners can take to sell their homes for less than the mortgage. Some title companies throughout the state had begun to charge taxes on the higher amount, causing much concern among sellers and real estate agents.

For more, see Taxes Should Be Paid On Transaction Price In State's Short Sales.

For the Florida Department of Revenue advisory, see Technical Assistance Advisement No. 09B4-001 - Documentary Stamp Tax - "Short Sales" of Florida Real Property.

Financial Crisis Crippling Legal Aid For Poor

In Philadelphia, Pennsylvania, the Philadelphia Inquirer reports:
  • The nation's financial crisis is claiming two more victims: Poor people who need legal help, and their attorneys. Programs that provide free legal representation to the indigent are partly funded through interest on accounts for real estate transactions, legal aid groups say. As the housing market collapsed this year and interest rates dropped, funds disappeared.

***

  • South Jersey Legal Services, which covers seven counties, will lay off five attorneys and close two offices beginning in January. It expects to provide legal help to 9,000 people next year, down from 12,000 this year. "The cruel irony of that is we have a lot of people calling us, losing their homes, being evicted from their homes, and we're not going to have the same staff as before in order to help them, which is painful," said Douglas Gershuny, executive director of South Jersey Legal Services.

  • Pennsylvania is in a slightly better position because of a state Supreme Court move, effective last week, that forces banks to make interest rates for legal aid program money comparable to other similarly sized accounts, said Alfred Azen, executive director of Pennsylvania IOLTA Board.(1) But Philadelphia-area offices are still instituting hiring freezes and not filling open positions for attorneys and other staff.

For more, see Financial crisis crippling legal aid for poor.

(1) According to the story, much of the legal aid money nationwide comes through something known as IOLTA, or Interest On Lawyers Trust Accounts, which is often managed and mandated by state supreme courts. Interest on accounts temporarily created by attorneys for clients' real estate transactions and other matters is pooled to fund these organizations. Due to the collapse in the housing market, the reduction of Federal Reserve interest rates and the overall bleak economic picture, IOLTA funds have plummeted.

NYS Housing Agency Doles Out Grants To Non-Profits To Fight Foreclosures

In upstate New York, The Central New York Business Journal reports:

Source: CNY organizations receive grants to help homeowners avert foreclosure.

Saturday, September 27, 2008

Explosion Flattens Vacant Minneapolis 4-Plex In Foreclosure; Copper Pipe Theft Triggered Gas Leak, Says Local Utility

In Minneapolis, Minnesota, WCCO-TV Channel 4 reports:
  • Two signs of a struggling economy combined to create an explosion that rocked a North Minneapolis neighborhood. The blast flattened a 4-plex in the 2400 block of Golden Valley Road on Sunday. The building was in foreclosure and vacant, and CenterPoint Energy said a copper pipe theft led to the explosion. "It was probably somebody over there trying to steal copper and pull copper over there that set the gas leak off, that was my first think I thought," said Jackie Jackson, who manages the apartments across the street. She reported problems to police, and the building was boarded up, but that didn't stop the copper thieves -- or the explosion.

***

  • CenterPoint Energy said it's seeing more copper thefts and more related accidents. The company asked neighbors to be particularly aware of the smell, sight or sound of natural gas. "If you can smell it in your house or when you're walking in the area get a safe distance away where you can no longer smell it and then call CenterPoint Energy to report it, because any spark could ignite," said CenterPoint spokesperson Becca Virden. The problem is affecting neighborhoods across the Twin Cities.

For more, see Bad Economy, Vacant Homes And Copper Thefts (read story) (watch WCCO-TV video).

For other stories on stolen copper, see Copper Thefts I and Copper Thefts II. copper metal theft yak

Pittsburgh-Area Cops Suspect Dog Fighting Operation As 14 Pit Bulls Found Abandoned In Home In Foreclosure

In Penn Hills, Pennsylvania, the Pittsburgh Review Tribune reports:
  • More than a dozen pit bulls were found Thursday in an abandoned Penn Hills house that authorities believe was being used for the breeding and training of dogfighting animals. "There are some elements that lead us to believe these animals are being used for dogfighting," said Kathy Hecker, a humane investigations officer for Ohio Township-based Animal Friends, mentioning wounds on several of the dogs, the presence of sticks used to pry apart fighting animals and blood splatters on the walls.

  • Lt. Jack Kearney of the Allegheny County Sheriff's Department said deputies found an older-model submachine gun inside the house in an isolated area of Lawndale Street, a dead-end street near the border with Homewood. Hecker said nine adult dogs -- two with fresh wounds and several with "significant scars" -- and five nursing puppies were found in dirty cages inside the house.

***

  • Kearney said a deputy who went to the house Monday to serve mortgage foreclosure papers heard whining dogs inside but did not have authority to enter through the locked gate.

For more, see Dogfighting pit bulls rescued from Penn Hills house.

Indiana Non-Profit Assists Low-Income, Elderly Homeowners Fight Foreclosure

In South Bend, Indiana, WSBT-TV Channel 22 reports:
  • There is free legal help available to low-income and elderly homeowners in Indiana who have defaulted on their mortgage and are facing a lawsuit. [...] "The ones we tend to take are the ones that are three months or more behind in their mortgage payment — where the lawsuit has been filed or a judgment has been entered — that's when we enter the process," said Joe Zielinski with Indiana Legal Services.(1)

  • Zielinski says there are three common defenses used to fight a foreclosure lawsuit:
    1. A company sues you for payment but they don't actually own your mortgage.
    2. The mortgage company stops accepting your payments after you miss one time.
    3. Improper fee charges.

Source: Free legal help available to homeowners facing foreclosure.

(1) Indiana Legal Services covers homeowners in St. Joseph, Elkhart, Lagrange, LaPorte, Marshall and Starke counties.

Memphis-Area Non-Profit Assists Poor, Elderly In Foreclosure Fight; Limited Rescources Forces Firm To Turn Away Many In Need

In Memphis, Tennessee, Commercial Appeal reports:
  • [T]his year Memphis Area Legal Services launched its Home Preservation Project, which was created to strengthen our organization's fight against the home foreclosure crisis. This project provides free services to those at risk of losing their homes because of trouble meeting mortgage obligations. Memphis Area Legal Services attorneys work closely with trained foreclosure counselors to restructure loans in order to allow some homeowners to successfully pay their mortgages and retain their homes. Our staff also works to educate the poor and elderly about how to identify and avoid predatory lenders.

  • Memphis Area Legal Services 16 attorneys provide advice and assistance to more than 3,000 eligible clients a year -- clients whose problems range beyond mortgage lending issues into other legal problems such as domestic violence and consumer fraud. Yet because of limited financial resources, we must turn down more than half of the people who seek legal help from our organization. That means many of the elderly and working poor in our community are left to face critical legal issues alone, without access to a lawyer, and thus, without equal access to justice.

For more, see Foreclosure catastrophe needs your help (Mid-South residents have volunteered to help Gulf Coast storm victims, but a similarly devastating disaster is quietly happening here and now).

Two Downstate New York Non-Profits Score $545K In Grant Money To Fight Foreclosure

In Westchester County, New York, the news blog of The Journal News reports:
  • Westchester Residential Opportunities Inc. and Legal Services of the Hudson Valley have recieved a $545,000 grant to help homeowners struggling in a weak housing market. The groups said they will use the grant to provide area homeowners with counseling and legal services as they seek to avoid foreclosure. The grant money originated from the New York State Housing Trust Fund Corp.

***

  • Westchester Residential Opportunities, with offices in White Plains and Mount Vernon, is one of the largest housing counseling agencies in the lower Hudson Valley region. Legal Services of the Hudson Valley is a provider of free civil legal services to low-income residents in the region. It operates Westchester offices in White Plains, Yonkers and Mount Vernon.

Source: Groups receive grant to help homeowners.

Friday, September 26, 2008

D.C.: The Place to Be for Tenants of Foreclosed Buildings

In Washington, D.C., a story Washington City Paper's housing blog serves as a reminder that, in the District, tenants in foreclosed homes have strong protections:
  • The District has some of the strongest foreclosure-protection laws in the country, according to Joel Cohn, Legislative Director for the [D.C.] Office of the Tenant Advocate. Under D.C. law, there are specific reasons why a tenant can be evicted.

  • "Those are the exclusive reasons in the District," says Cohn "and foreclosure isn't one of them." They [can] maintain their tenancy on exactly the same terms as before … Tenants have the right to stay as long as they pay rent. They also can demand that the landlord fix any housing code violations.

  • From May to July of this year, tenants from ten different foreclosed D.C. properties contacted Cohn's office asking about their rights. It's a smart call to make: Banks commonly tell unsuspecting tenants that they have to move out, in violation of D.C. statute, says Cohn. Some tenants seeking legal aid have already left their buildings, and in that case, it's usually too late do anything.

  • "The name of the game is getting notice to the bank, which might be ignorant in good faith, though it's up to the bank's attorneys to know the local housing laws," says Cohn. "So, I don't think there is such a thing as good faith failure to know the law."

For more, see D.C.: The Place to Be for Tenants of Foreclosed Buildings.

If you are a tenant in a foreclosed home located in the District of Columbia, see Office of the Tenant Advocate: DC Law Protects Tenants During Foreclosures for information on how to deal with the threat of eviction. equity skimming unwittingly digamma

Reuters On The Philadelphia Plan For Reducing Foreclosures

In Philadelphia, Pennsylvania, Reuters reports:
  • With the U.S. financial system in crisis due to surging mortgage defaults, a Philadelphia program designed to reduce foreclosure sales may provide a national model to keep people in their homes. The program, based not on bailouts but reconciliation between borrowers and lenders, has been able to prevent at least temporarily the disposal of many of the properties in its purview. The first such city-sponsored plan in the United States, it has also saved banks money because it is cheaper to renegotiate than foreclose.

  • Launched by city government and the Philadelphia Court of Common Pleas in June, the plan requires owner-occupied properties scheduled for sheriff's sale to be submitted to a conciliation conference of borrowers, lenders and the court before they can be sold.

***

  • Mike McKeever, an attorney who represents lenders in the Philadelphia program, said banks have cooperated because restructuring a loan or forgiving some arrears is cheaper than foreclosure. "We are in favor of it," McKeever said. "It has brought both parties to the table." Mayor [Michael] Nutter said the program is protecting neighborhoods from falling property values, which typically happens when a house is abandoned. The city provided $2 million for the program and will provide more next year, he said.

For the story, see Philadelphia pilot is model in U.S. housing crisis.

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

Abandoned Construction Project Leaves Buyers With Partial Homes, Full Payments; Law Enforcement Probes Into Possible Criminal Activity

In Winter Park, Colorado, Sky Hi Daily News reports:

  • Three townhome buildings in Winter Park Ranch are the subject of another abandoned construction project associated with American Dreams Seminars, or ADS Builders Inc. of Broomfield. Four of six units in The Hills at Winter Park Ranch are in foreclosure, with the remaining two teetering, according to county records. One owner, Alice Antolin of Northern California, said she owes New Frontier Bank in Greeley $425,000 with interest for one side of a townhome duplex that was never completed.

***

  • Construction on the project since has been rescued by a contractor hired by the bank, which intends to finish the project. But home buyers are stuck. “Our good standing credit is ruined,” Antolin said.

***

  • The Sheriff’s office is looking into possible criminal activity that occurred in-state regarding the sales of lots and incomplete construction of homes abandoned by ADS in Rocky Mountain Estates, leaving many investors with loan payments on homes that are far from complete.

For more, see Winter Park — Buyers left with partial homes, full payments.

For other posts on builders/contractors allegedly stiffing their customers, go here, go here, and go here. contractors stiff subs customers yelbow

FHA Issues Rules To Curtail "Buy & Bail" Home Purchases

Inman News reports:

  • Not wanting to be involved in financing "buy and bail" home purchases, the Federal Housing Administration will no longer count rental income when home buyers choose to vacate, rather than sell, their principal residence. Home buyers seeking to rent out their existing home and buy another with an FHA-backed mortgage must now demonstrate they have sufficient income to pay both mortgages. The FHA won't allow lenders to count rental income for the home being vacated unless borrowers have a 25 percent equity stake or can prove they are relocating for employment and obtain a one-year lease on the home being vacated.

  • The new rules are intended to prevent the practice known as "buy and bail," where the buyer purchases a more affordable dwelling with the intention to cease making payments on the previous mortgage, FHA said in a letter spelling out the new guidance for lenders.

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  • The new rules took effect Sept. 19, and are temporary pending a determination whether a permanent rule change is needed. The rules apply only to a principal residence being vacated in favor of another principal residence, and not to existing rental properties disclosed on the loan application and confirmed by tax returns, FHA said.

For the story, see FHA limits 'buy and bail' purchases.

Go here for other posts on "Buy and Bail" method of ditching unwanted mortgages & "upside down" homes. BuyAndBail

Thursday, September 25, 2008

Mortgage Lending Industry Dodges Bullet As Federal Appeals Court Strips Homeowners Of Class Action Status In Truth In Lending Lawsuit

Reuters reports:
  • A lawsuit brought by a Wisconsin couple who accused a bank of deceptive lending practices and wanted to cancel their home loan has been stripped of class-action status in a victory for U.S. banks. In a 2-to-1 decision, a panel of the U.S. Court of Appeals for the 7th Circuit on Wednesday overturned a lower court ruling that had allowed other borrowers to join Susan and Bryan Andrews as plaintiffs against Chevy Chase Bank FSB.

In its ruling, the 7th Circuit U.S Court of Appeals indicated that it joins two other federal appellate courts(1) in refusing to certify a class action for claims seeking the remedy of rescission under
the Truth in Lending Act, 15 U.S.C. § 1635.

For more, see U.S. court sides with bank in mortgage loan case.

For the court ruling, see Andrews v. Chevy Chase Bank (7th Cir., 9-24-08).

For earlier stories on the Chevy Chase, option ARM class action lawsuit, see:

(1) see McKenna v. First Horizon Home Loan Corp., 475 F.3d 418 (1st Cir. 2007); James v. Home Constr. Co. of Mobile, Inc., 621 F.2d 727 (5th Cir. 1980). UndoMortgageLoans TILAdelta

Arizona AG, HomeVestors Franchisee Settle Charges Of Alleged Foreclosure Rescue Fraud; Operator To Fork Over $350K To Approximately 100 Consumers

From the Arizona Attorney General's office:
  • Attorney General Terry Goddard [Tuesday] announced a settlement with Harvest Properties Inc. of Tucson, resolving a consumer fraud lawsuit that alleged foreclosure rescue fraud and mortgage fraud by the company and its owners. [...] The settlement, which comes in the form of a consent judgment and does not constitute an admission of wrongdoing, requires Harvest and its owners and managers to pay $350,000 in restitution to approximately 100 consumers.

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  • Friday’s settlement with Harvest Properties, Inc., along with its owners and managers, Colin Sterling Reilly, Robert Harrington Reilly and Jill Lynae Reilly, resolves allegations that Harvest engaged in a foreclosure and credit rescue scheme that employed deceptive practices to buy foreclosed homes at discounted prices.

For more, including the allegations set forth in the Arizona AG's complaint, as well as additional terms contained in the setlement, see Terry Goddard Announces Foreclosure Rescue Fraud Settlement.

See also:

Non-Profit Law Firm Helps 84-Year Old Foreclosed Woman Illegally Locked Out Of Home Temporarily Regain Possession Of Premises

In Visalia, California, The Fresno Bee reports:
  • Floy Mae Bryant, 84, returned Tuesday to the home she lost in foreclosure, but this time she had a lawyer and a locksmith in tow. The locksmith attacked the door locks and, for the first time since May, Bryant stepped inside her home [...] in Visalia.

  • "It feels like home. I love it," the retired phone company operator said as she looked around at bare walls and carpet. Then she started to cry. "It's been hard, just hard." In reality, though, it's not her home anymore. It belongs to the Federal National Mortgage Association (Fannie Mae), which took legal ownership in April after Bryant fell behind on her house payments and the home was foreclosed on. But now, on the advice of her lawyers, she is moving back in.

  • "It forces their hand a little more" said lawyer Suzanne Swenk from Central California Legal Services, which is assisting Senior Legal Hotline of Sacramento. Swenk said the home was sold out from under Bryant to Fannie Mae in April, and in May the locks were changed by a real estate agent before Bryant had fully moved out. That's illegal, Swenk said. No proper legal paperwork was obtained to require her to move, she said.

  • Swenk is negotiating with Fannie Mae to let Bryant have the home back on terms she can afford, which would include Fannie Mae getting $185,000, but less than the full amount owed. "We're hoping they help her," Swenk said. "The sole purpose of Fannie Mae is to help homeowners."

For more, see Visalia woman retakes home (Foreclosed upon and locked out, senior citizen fights back).

See also, KFSN-TV Channel 30: Visalia Woman's Mortgage Lending Nightmare.

Go here for other posts on foreclosure screw ups involving improperly changed locks, removal of belongings, etc. ForeclosureLockOuts

Bankruptcy Judge Orders Victim To Pay Back Thief; Convicted Builder Entitled To Recover Restitution Paid To Ripped Off Customer

In New Haven, Connecticut, The Associated Press reports:

  • Mark Poveromo feels ripped off twice over. A judge ordered him to repay money he collected from a builder convicted of stealing from him - and told him to kick in the thief's attorney fees and court costs, too.

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  • The case began in 2006, when Poveromo hired Mark R. Koch of Illinois for an $80,000 project to construct a building for his pet food business in Thomaston, Conn. Poveromo paid $39,500 up front, but Koch never did any work, according to court documents.

  • Poveromo filed a criminal complaint, and Koch was convicted in Connecticut of first-degree larceny in April 2007 and ordered to pay restitution. Koch paid $25,000 and began monthly payments to Poveromo on the balance, but that's when the law turned on Poveromo.

  • Two months before his conviction, Koch filed for bankruptcy protection in St. Louis, halting any monetary claims against him. [...] Koch then filed a complaint to the bankruptcy court accusing Poveromo of intentionally violating the stay on claims by having him arrested to collect on his debt. Judge Charles Rendlen III agreed with the builder. In a ruling filed in December, and without hearing from Poveromo, Rendlen noted "the highly suspect timing" of Koch's arrest and conviction after filing for bankruptcy.

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  • Poveromo said he reluctantly accepted a settlement reached a few weeks ago in which he was able to keep the nearly $28,000 Koch had given him but did not collect on the balance he was owed based on what the Connecticut court had ordered.

For more, see Bankruptcy judge orders victim to pay back thief. contractors stiff subs customers yelbow

Countrywide Plaintiffs Seek To Keep Suits Separate

Law.com reports:
  • Six plaintiffs, including Calif. Attorney General Jerry Brown, will ask a federal panel on Thursday to keep their individual lawsuits against Countrywide Financial Corp. untangled and out of a single federal court. Lawyers for Brown, the state of Illinois, the city of San Diego and plaintiffs in three private class actions say their claims against the troubled mortgage lender would be better heard in local courts close to regional foreclosure hot spots.

For more, see Tough Talk on Countrywide Mortgage Suits.