Seniors, Unwanted Animals Face Loss Of Home As 160 Acre Rescue Sanctuary On Brink Of Foreclosure; Donations Dwindle As Economy Hits Skids

In Douglas County, Colorado, The Colorado Springs Gazette reports:

• One of the most innovative animal sanctuary operations in Colorado is teetering on the brink of collapse. Unless the Dreampower Ranch gets $500,000 before the end of the year, it will face foreclosure.

• Diane Benedict opened the 160-acre spread in southeastern Douglas County 10 years ago. On the ranch, older people take care of older, unwanted animals in exchange for their room and board. She calls it People and Animals Living Synergistically (PAALS).

• "Often in this country, old animals and old people are discarded," Benedict said. "Animals go to shelters and are killed if no one adopts them. Senior humans go to nursing homes where they are visited on average only once a year - until they pass away unnoticed."

• Not so on the Dreampower Ranch, where older people serve a vital function and animals live out their days in a natural playground. Benedict has taken in dogs, cats, horses, donkeys, chickens, goats, potbelly pigs, mules and a long-horned steer named Chico.

• But the ranch faces foreclosure at year's end unless a donor, or a collective effort, can pony up a half-million dollars. Benedict said she doesn't have the money, and the nonprofit has seen its donations dwindle as the economy hits the skids.

For more, see Dreampower needs an angel to rescue ranch.

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

Defense Department Moves To Protect Servicembers Renting From Landlords In Foreclosure

Members of the U.S. Armed Services are not immune from finding themselves renting from rent-skimming landlords in foreclosure and finding themselves having to move on short notice. Aware of the situation, the U.S. Defense Department is taking steps to lend assistance to its servicemembers to mitigate the cost and aggravation in these cases.

For more, see:

• Air Force Times: DoD may pay for move in landlord foreclosure,
• Elmendorf Air Force Base Newsletter: AF-funded local moves for tenants affected by landlord foreclosures,
• CAMP FOSTER, Okinawa Newsletter: Marine Corps eases stress of renters in volatile housing market. BetaTenantRentSkimming

Problems Grow At Financially Shaky Condos, HOAs

In South Florida, a recent story by WFOR-TV Channel 4 serves as a reminder of the financial instability many condo and homeowner associations are suffering as a result of foreclosure, and the following problems that are being created by their shortage of funds at the two complexes featured in the story:

• two months of garbage piled up since there's no money to pay to haul it away,
• unpaid electric bills affecting the operation of the washers & dryers, as well as other common area functions,
• unpaid water bills,
• no insurance,
• a pool they can't afford to clean,
• security gates that don't work, and
• crime (break-ins, squatters, even an attempted murder).

Another major problem that is now beginning to get attention is also noted: foreclosing lenders that take over title to units after being stiffed by the prior owners are now stiffing the associations on the condo fees that they're responsible for paying.

For the story, see Garbage Piles Up As Foreclosures Pile On (read story) (watch WFOR video report).

In a related story, see The Miami Herald: Aventura commissioner proposes help for struggling condo associations (Foreclosures are having an impact on condo associations in Aventura, and commissioners want the Florida Legislature to do something to help).

Cops, Fire Rescue Face Added Burdens, Squeezed Budgets By Increase In Vacant Homes

In Providence, Rhode Island, The Providence Journal reports:

• [T]he foreclosure crisis has added another dimension to firefighters’ jobs — forcing them to patrol the [vacant] houses for fire hazards, knowing that if there is a fire they will have to search these hulks to make sure no one is inside.

***

• The Police Executive Research Forum, in Washington, D.C., surveyed police chiefs and sheriffs this summer about how the economic troubles were affecting their departments. The survey uncovered worries about rising disorder caused by vacant houses attracting vandals, gangs and prostitutes, even as police departments’ operating budgets are decreasing.

For more, see As economy founders, crime on rise.

Fire Fears Increase As Decreasing Temperatures Drive Shelter-Seeking Squatters Into Vacant Homes

In Evansville, Indiana, WEHT-TV Channel 25 reports:

• With the nights turning colder, people are heading inside to stay warm. Especially the local homeless. That's what happened at 1117 West Delaware, before the house caught fire. Two weeks ago, homeless people broke into the vacant property and started a fire in a five gallon bucket to get warm. "When it gets colder, it is a problem," says Evansville Fire Department spokesperson, Dan Grimm. "As it gets colder in December and January, we'll probably see it more."

For more, see Local Homeless Seek Shelter in Vacant Houses.

Go here for posts on squatters & foreclosures. squatter foreclosure zebra ArsonForeclosureAlpha

Assorted Stories On The Mortgage Foreclosure Free-For-All

The following assortment of stories related to foreclosure reflect what some refer to as a foreclosure free-for-all, an apparent three-ring circus of chaos, disorder and desperation related in some way to the foreclosure mess.

• Lehigh Acres, Florida: A widowed homeowner was served with not one but two foreclosure lawsuits from two different plaintiffs that both claimed to own her promissory note and mortgage and said she owed them each more than $276,000. See Foreclosure Mess: Two Different Plaintiffs Claim to Own Same Mortgage.

• Des Moines, Iowa: A real estate agent told Des Moines police on Tuesday that burglars broke into a vacant foreclosed house and took just about everything, including the kitchen sink. Among the stolen items were oak cabinets, a nearly new furnace, a water heater, a bathroom vanity, a bathroom sink and toilet and a medicine cabinet. The loss was estimated at more than $10,000. See Des Moines police: They took the kitchen sink and more.

• Portage Township, Indiana: Several juveniles -- most of them freshmen at Portage High School -- face charges after Porter County police said the youths entered a vacant home under foreclosure, had a party and caused $5,000 damage. Police said they found empty beer cases and several used condoms inside the home. They also found urine stains on the carpet in several rooms and damage to the drywall and doors in several rooms. See Police say juveniles drank in vacant home.

• Victorville, California: An abandoned drug house and transient hangout near an elementary school burned to the ground Wednesday afternoon, fire officials said. Witnesses in the area said that the home had been abandoned for quite some time and had been used as a hangout by teens, transients and drug users. See Vacant house used as drug hangout burns to ground.

• Wind Gap, Pennsylvania: A man who police say set his home on fire and then disappeared for two weeks is facing more charges. Nelson Tittle is now charged with arson and reckless endangerment. Investigators say Tittle's Wind Gap home was in foreclosure. The house burned down in May. See Man Charged with Torching Home Facing New Charges.

• Pasadena, California: A woman who wanted to end her life after losing her job was pulled to safety off the Colorado Street Bridge by police officers Tuesday morning, officials said. The woman told an officer she was depressed because she just lost her job, her house is in foreclosure and she thought she had nothing to live for. The Colorado Street Bridge is known as the "suicide bridge" after the dozens of people who have committed suicide off the bridge. See Police rescue suicidal woman standing on bridge.

• Lee County, Florida: A whopping $38 million in code violations is owed throughout Cape Coral and Fort Myers for things like lawns littered with trash. "The grass isn't mowed, the places are abandoned or vacant, and you have people breaking into them so you have a lot of broken glass," said Shane Hidle of Fort Myers Code Enforcement. The city blames the lag time in the foreclosure process. The owners are no longer responsible and the banks not yet responsible, so no one has been pegged to pay. See Two cities, $38 million in code violations.

• Freetown, Masdsachusetts: Former state Rep. Mark A. Howland lost his former home to the bank only weeks before the bank lost it to a fire deemed suspicious. Fire Chief Wayne A. Haskins said a meeting with state police investigators was set to decide whether the fire was a case of arson. The fast-moving fire, he said, is obviously suspicious because it was burning so strongly when firefighters arrived on the scene at around 12:30 a.m. "It was burning so good," he said. "When something is burning like that, it is usually suspicious; something isn't kosher. The roof was gone when we got there." See Foreclosed home of wind turbine dealer burns.

• Las Vegas, Nevada: Family members said the devastation of foreclosure drove one Valley couple to murder-suicide. Police discovered the bodies of Jeff Lingle, 38, and Teresa Mullis, 45, Monday in the desert near Interstate 215 and Losee Road. See Family Speaks About Murder-Suicide (Members Say Foreclosure Drove Couple To Edge).

• Scranton, Pennsylvania: A fire five months ago that destroyed a garage owned by a former Scranton firefighter was intentionally set, a state police fire marshal said Thursday. “The cause of the fire is arson,” state police Deputy Fire Marshal Russ Andress said of the June 17 fire, which razed a garage and damaged an adjoining apartment building at 1021 Mark Ave. Both are owned by Tom and Martha Gervasi. The Gervasis owed $51,000 on the building and were facing a mortgage foreclosure, according to a civil suit filed in Lackawanna County. See Garage fire ruled to be arson.

• Akron, Ohio: Job losses and foreclosures have escalated the vacancy problem nationwide, especially in urban communities like Akron and Barberton. Those properties not only are an annoyance from an aesthetic point of view, but they also are a magnet for criminals, dumping and vandalism. See Task force to fight urban blight (Job losses, foreclosures leave vacant homes throughout cities like Akron, damaging spirit and value of neighborhoods). ArsonForeclosureAlpha

Judge Freezes "Presumptively Unfair" Option One / H&R Block Mortgages From Foreclosure Throughout Massachusetts In Discrimination Suit

From the Office of the Massachusetts Attorney General:

• Attorney General Martha Coakley’s Office has obtained a preliminary injunction against Option One Mortgage Corp. and H&R Block Mortgage Corp., subprime lenders that originated thousands of loans in Massachusetts. The order, granted Monday [...], prohibits Option One and American Home Mortgage Servicing, Inc. (“AHMSI”), which currently services 9,700 active Massachusetts Option One loans, from initiating or advancing foreclosures on mortgage loans that are considered “presumptively unfair” under the court order.(1)

• Under the order, AHMSI must give the Attorney General’s Office at least 30 days notice before it intends to foreclose on any such loan, and if the Attorney General objects, obtain approval from the Court before foreclosing on a loan.

For the Massachusetts AG's press release, see AG Martha Coakley Obtains Preliminary Injunction Against Option One and H&R Block, Accused of Deceptive and Discriminatory Lending Practices.

For the original lawsuit filed in this case, see Commonwealth of Massachusetts v. H&R Block, Inc., et al.

(1) In teeing off on the mortgage lenders, the Court stated that, "[a]nyone with any understanding of home foreclosure recognizes how much injury it causes to the families who resided in foreclosed homes. Consequently, any lender with even a modicum of business morality should recognize that it is immoral, unethical, and unscrupulous to issue a home loan with reckless disregard of the risk of foreclosure.” The Court also rejected the defendants’ attempt to make the Attorney General arbitrate these claims under federal arbitration law.

NYC Jury Convicts Foreclosure Rescue Operators In Sale Leaseback, Equity Stripping Scam

In New York City, Newsday reports:

• The owners of a foreclosure rescue company that promised to save struggling homeowners but swindled them out of their houses were convicted Thursday of bank fraud conspiracy charges. Andrea Moore and Michael Irving, who ran a Brooklyn-based company called Homes R Us USA, were part of a group of unscrupulous entrepreneurs who came up with a scheme to profit from the subprime mortgage crisis as it unfolded, prosecutors said.

• The company told desperate owners that if they temporarily signed over the deeds to their homes, they could have their mortgages paid for 12 months while they got their finances in order. After a year, they were told, they would get their homes back. In reality, the rescue company immediately saddled the homes with big new mortgages taken out in the names of buyers who never intended to pay them off.

• When those bogus buyers failed to make payments, the mortgages went into default, the banks lost the money and in some cases the original owners lost their houses for good. Meanwhile, Homes R Us and a group of affiliated companies pocketed millions of dollars in fees.

***

• Several people associated with the scheme previously pleaded guilty. One, Maurice McDowall, described in court papers as a leader of the conspiracy, was sentenced in October to a 10-year prison term.

For the story, see NY jury convicts foreclosure rescue pair.

See also, U.S. Attorney (Southern District, New York) press release: Members Of Foreclosure Rescue Scheme Found Guilty Of Engaging In Multi Million Dollar Mortgage Fraud.

For the original indictment, see U.S. vs. McDowall, et al.

Go here for earlier posts on this story.

Go here for other criminal prosecutions of foreclosure rescue operators.

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

Failed "Contract for Deed" Arrangements Leave Ozark Homeowners Facing The Boot

In Springfield, Missouri, KSPR-TV reports a story involving about a dozen families across the Ozarks who pay their mortgage on time but are losing their homes to foreclosure anyway.

The deals reportedly involved a sale to the families using a "contract for deed" arrangement, where the seller pockets an upfront downpayment, and the families agreed to pay the balance in periodic payments over time. As the seller collects these payments, the money is applied to the payments due on an existing mortgage which encumbers the subject home. When the agreed upon payment plan is completed, the homebuyers obtain the legal title to the home.

In this case, it is reported that, at some point, whoever was receiving the periodic payments made by the innocent homebuyers stopped applying the funds to the existing mortgage, triggering foreclosure, and leaving the homebuyers feeling like they just had the rug pulled out from under them.

For the story, see Ozarks Homeowners Lose Homes They Never Really Owned.

For story updates, see:

• Springfield Business Journal: Disgruntled Greenleaf investors want answers,
• Springfield Business Journal: Foreclosures prompt backlash from The Real Estate Co.,
• Springfield News-Leader: Homeowners hurt by Greenleaf have option (One resident bypasses company, pays straight to titleholders),
• Springfield News-Leader: 'Excellent credit to bankruptcy' in two years (Iowa couple's lives are in financial ruin after investing in Greenleaf),
• The Morning News (Northwest Arkansas): Home Deal Fails For Centerton Families (at least two dozen local families recently discovered the homes they thought they purchased through the Real Estate Co. of Arkansas actually belong to someone else; financing was arranged through Greenleaf Companies of Springfield, Mo.).

Go here for other posts on Greenleaf Companies and The Real Estate Co.

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

St. Paul Man Pleads Guilty To Ripping Off His Blind Elderly Mother, Leaving Her Home Of 50 Years Facing Foreclosure

In St. Paul, Minnesota, the Pioneer Press reports:

• A St. Paul man reached a plea deal in court Wednesday on charges he stole tens of thousands of dollars from his blind, elderly mother while her health insurance and phone were cut off for nonpayment. Scott Douglas Clark, 53, pleaded to felony theft.

***

• The complaint [among other things] alleged that Clark persuaded his mother to sign a quitclaim deed on her St. Paul home and got a reverse mortgage, pulling $29,000 in equity from it and transferring it to his account.

• His brother and sister-in-law, who were in the courtroom Wednesday, said after the hearing that Clark was clearly trying to hide a methamphetamine habit. They said the amount he bilked his mother out of was closer to $100,000. [...] Because of the financial mess created by Scott Clark, their mother is in an assisted-living facility, and her home — where she lived for 50 years — is in foreclosure, [the defendant's brother] Todd Clark said.

For more, see St. Paul man reaches plea deal in theft from 79-year-old mother (Man accused of stealing tens of thousands of dollars) (when link expires, try here).

Residents Face Water Shut-Off, Foreclosure Eviction As Mobile Home Park Owner Fails To Pay Water Bills, Mortgage Payments

In Florence, Colorado, KOAA-TV Channels 5/30 reports:

• Faucets have run dry for tenants of the Shady Lane Mobile Home Park in Florence, CO as they learn their landlord hasn't been paying bills--and soon they'll lose their homes. "Everybody's angry," said John Custer, who moved to the community 5 months ago. "There's no way people should have to live like this." [Last week], Custer came home to cook dinner and take a shower, but the water just trickled out of his faucets.

***

• Now, several of the residents have received notices that the property is in foreclosure. It will go up for auction in January and they will have to leave their homes. They stopped paying their rent because the water was shut off, and now some say their wages are being garnished.

For more, see Landlord's financial problems hit tenants.

For story update, see Life without running water.

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

Fine Print In Loan Servicing Contracts Stalling Loan Mods?

The Washington Post reports:

• More than a year into the foreclosure crisis, whether a distressed homeowner is eligible for a more affordable mortgage can often come down to the fine print. That fine print in contracts that govern mortgages bundled into investment pools dominated a House Financial Services Committee hearing yesterday as lawmakers questioned whether lenders are doing enough to keep people in their homes.

• Millions of loans are held in these pools, called securitizations. They are governed by contracts that dictate what changes can be made to the loans. Lawmakers and industry officials debated yesterday the degree to which those agreements are making it difficult to modify a homeowner's loan and thus hampering foreclosure prevention efforts.

For more, see Foreclosure Relief Is Getting Lost In Fine Print of Loans.

$8B+ Countrywide Loan Modification Lawsuit Settlement May Yield As Little As $1B, Complains Advocacy Group

Legal Newsline reports:

• Just a month ago, when the terms of the largest settlement in home mortgage history were announced, many hailed the settlement as the first significant step to providing needed relief to homeowners buried in rising interest rates and declining property value. But some [...] are now taking issue with the deal, claiming the Bank of America settlement will protect Wall Street investors more than it will Main Street customers.

For more, see Countrywide settlement may favor Wall Street over Main Street.

Failed Unfinished S. Florida Developments Leave Two Lenders Holding The Bag (Again)

Recent media stories in the South Florida Business Journal report on two lenders who continue to add to their portfolio of defunct South Florida projects.

#1)

• Ocean Bank has filed yet another foreclosure action, this one on a 128-unit town home project in Miami. [...] Sean Mena, who once worked in sales on the project, said about 25 townhomes were finished, while some others were in different phases of construction. He confirmed that Ocean Bank took it over. County records did not show any closings at the project.

***

• Ocean Bank has dozens of pending foreclosure lawsuits against development projects in South Florida. Bank executives have openly talked of selling these troubled properties for the right price.

For the story, see Ocean Bank adds townhome project to list of foreclosures.

#2)

• Mixed-use development Landmark at Doral won’t be completed anytime soon. AmTrust Bank has filed a foreclosure lawsuit against the 120-acre project. Slated for 1,109 residential units and 460,000 square feet of commercial space, the project is the latest by Boca Raton-based EB Developers to face a foreclosure lawsuit. [... The foreclosure] was based on the $124.4 million in mortgages AmTrust granted the developer in 2005.

***

• Much of the site work has been done, but nothing has come out of the ground. [... T]wo additional residential projects by EB Developers in Miami-Dade County, a 1,280-acre farmland site and a 41-acre site in Palm Beach County, and another by a related company in Miami have faced foreclosure lawsuits. AmTrust held a $22.5 million mortgage on the farmland as of May 2007, and it won a $16.5 million foreclosure judgment on the 41-acre site in Boynton Beach.(1)

For the story, see Foreclosure filed against Landmark at Doral.

(1) AmTrust Bank has reportedly also initiated a foreclosure action on a mortgage it holds on 333 units in a failed Miami condo-conversion project in southwest Miami last month, according to this South Florida Business Journal report. Reportedly, Am Trust is owed nearly $28.9 million on the balance, accrued interest and other charges, according to the lawsuit.

New Haven Ordinance Now Requires Registration W/In Seven Days Of Starting Foreclosure Action; Lenders To Be Clipped $250/Day For Non-Compliance

In New Haven, Connecticut, the New Haven Register reports:

• Banks and institutions foreclosing on local properties are now required to register with the city or they will soon face fines of up to $250 per day, under a recently passed ordinance. [...] approved the plan last week. The registration requirement went into effect immediately.(1)

For more, see Entities foreclosing on local properties must register first.

(1) Under the ordinance, all foreclosing entities must register with the Livable City Initiative within seven days after initiating foreclosure. The entity must provide a current phone number and mailing address (not a post office box) and certify the property has been inspected. If the property is abandoned, the entity must designate a local caretaker or property management company responsible for security and maintenance, and also provide a name, phone number and mailing address for the caretaker.

Municipalities Begin Putting The Screws On Eyesore-Owning Lenders

USA Today reports:

• As foreclosures mount around the country and vacated homes slowly turn into neighborhood eyesores, governments from California to Chicago to Rhode Island are cracking down on owners in a variety of ways.

***

• At least 93 cities around the country have passed vacant property laws this year, according to Rob Hicks of FIS Field Services, a company that helps lenders manage properties that have defaulted and gone into foreclosure. According to the National Conference of State Legislatures, at least six states have passed or are considering similar laws this year.

For more, see More laws target owners of abandoned houses.

Lawmakers Expected To Put The Squeeze On Mortgage Servicers At Today's House Hearing; Frank Rattles Saber Saying Rewrite Of Industry Laws On Horizon

CNNMoney reports:

• U.S. House lawmakers are expected to put heavy pressure on mortgage-servicing firms at a Wednesday hearing, even as financial firms seek to show they are taking more aggressive steps to help struggling borrowers. "We're ready to say that next year we will have to rewrite the servicer laws," House Financial Services Chairman Barney Frank, D-Mass., said Tuesday.

***

• Lawmakers have been increasingly disappointed that financial firms have only half-heartedly embraced efforts to stem the record numbers of foreclosures that have been a major cause of the global financial crisis.

***

• Servicers have long complained that the contracts and laws governing loan- servicing agreements have prevented them from more aggressively modifying the terms of loans. The situation is frustrating to Frank, who said the system cannot work if all of the interested parties are prevented from making a decision on a loan because of existing laws.

For more, see Mortgage Servicers To Face Scrutiny From US House Wednesday.

Go here for other related posts on mortgage servicing issues. MortgageServicingIssuesAlpha

Cincinnati Scammer Gets Six Years For $100K+ Ripoff

In Hamilton County, Ohio, the Cincinnati Enquirer reports:

• Fedel James was many things to different people. To Greenhills' Howard Jones, James was an author and business partner who was going to help make both of them rich. To National City Bank, he was a valued customer with a business account. To two women in Chicago, he was a savior who was going to help them save their homes. But to police and a judge, James was something else entirely.

• "You're just a con man," Hamilton County Common Pleas Judge Robert Ruehlman told James moments before sending him to prison Thursday for six years.

According to the story, one victim borrowed against his home and gave Jones $52,000 for a bogus business deal; two others gave him a total of $50,000 in exchange for a phony offer to save their homes from foreclosure.

For the story, see Con man raked in $115,000 (But now he's going to prison for six years).

Delay In Bringing Legal Action Sinks Predatory Lending Victims; Judge Allows Foreclosure Sale To Proceed

In Mendham, New Jersey, the Observer Tribune reports on a local homeowner facing foreclosure whose allegations of fraud against a mortgage lender were dismissed by a judge because she waited too long to raise the issues in court.

For the story, see Family under the foreclosure gun (Family says they’re subprime victims and will lose home without last-minute help).

Confederates' Testimony Sinks Mortgage Fraud Ringleader; Gets 15 Years While Most Co-Defendants Get Hand-Slap

In Franklin County, Ohio, The Columbus Dispatch reports:

• The ringleader of a mortgage-fraud team was sent to prison for 15 years yesterday after he and seven others were found guilty of defrauding lenders out of more than $1.1 million in property loans. Kim Anderson, 46, of Powell, was found guilty by a Franklin County Common Pleas Court jury last month of theft, forgery, money laundering, identity theft and engaging in corrupt activity.

• Anderson was one of 10 people indicted in June 2007. They falsified loan documents and inflated mortgage amounts to obtain loans for five central Ohio properties, Assistant Prosecutor Scott Smith said. [...] Many of Anderson's co-defendants testified against him at trial.

For more, see $1.1 MILLION MORTGAGE FRAUD: Ringleader sentenced to 15 years.

Fannie, Freddie Announce Loan Modification Program

Bloomberg News reports:

• Fannie Mae and Freddie Mac, the largest U.S. mortgage-finance companies, will accelerate anti- foreclosure efforts with a new loan modification program designed to cut monthly payments for struggling homeowners.

• Fannie and Freddie, operating under a government conservatorship, will target loans in which borrowers are at least 90 days delinquent and have high loan-to-income ratios, officials from the Treasury and the Federal Housing Finance Agency said today at a press conference in Washington. The companies may offer reduced interest rates and longer terms of as much as 40 years to trim monthly payments.

For more, see Fannie, Freddie Boost Effort to Minimize Foreclosures.

In a related story, see Politico: Schumer not satisfied with new loan mod program.

• Sen. Chuck Schumer (D-N.Y.) is not impressed with the new mortgage modification plan unveiled today by industry and the Bush administration. Instead, he said lawmakers need to change the bankruptcy code to allow judges to reduce mortgage payments and keep people out of foreclosure, a proposal that industry fought to defeat several times this past year.(1)

(1) According to Politico, Shumer made the following statement: "These voluntary plans sound nice, but they don't do the job. No amount of incentives for investors can change the fact that a program like this will only really work if Fannie and Freddie hold the whole loan, which is true in too few cases. When the loan is chopped up into a million pieces and any investor can block a modification from happening, a program like this will only scratch the surface of the mortgage crisis. The only viable solution, and it is one we will take up under President-elect Obama, is to modify the bankruptcy code."

Countrywide, Bank Of America Face Possible Lawsuits From Investors Over $8.4B Loan Modification Settlement

The Charlotte Observer reports:

• Countrywide Financial Corp.'s agreement last month, which requires it to relax the terms of some 400,000 mortgages, was good news for struggling homeowners. But a New York law firm says the settlement(1) isn't fair to the people who invested in Countrywide's mortgage-backed securities, and it's trying to drum up interest in challenging the settlement.

***

• The law firm, Grais & Ellsworth, will hold a meeting this morning in New York for securities investors interested in taking legal action against Countrywide and its parent, Charlotte's Bank of America Corp.

***

• Grais & Ellsworth may challenge the settlement because it says Countrywide is violating its agreements with securities investors. According to the law firm, those agreements require Countrywide to repurchase any loans that it modifies or any loans that violate standards on predatory lending. Countrywide has not said that its loans were unlawful.

For more, see Investors might fight settlement (Loan workouts hurt the investors who bought Countrywide's securities, New York law firm says).

(1) Last month, Bank of America settled the litigation by agreeing to $8.4 billion worth of mortgage modifications with measures such as reducing interest rates or waiving late fees. MortgageServicingIssuesAlpha

Citi Unveils Loan Modification Program; $20B+ In Workouts Expected; Only Applies to Loans It Owns - Excludes Loans It Services For Others

The New York Times reports:

• Citigroup on Monday joined a growing list of financial institutions offering to modify the terms of mortgages for distressed borrowers, unveiling a program to help thousands meet their monthly payments while reducing the bank’s potential for larger losses as the economy erodes.

• About 136,000 mortgage customers are expected to qualify for the program, resulting in the workouts of over $20 billion of loans. [...] All kinds of mortgages will be eligible for modification, not just the most toxic types, like negative amortization loans.

***

• Like those at the other banks, Citi’s plan addresses only loans that the bank owns and not the mortgages that it services on behalf of bond investors who own mortgage-backed securities. Banks have less leeway in changing the terms of loans packaged into securities, because contracts that govern them can be very restrictive.

For more, see Citigroup Offers to Ease Mortgage Terms. MortgageServicingIssuesAlpha

Investigative Report Uncovers Unhappy Customers Of Central Florida "Sale Leaseback" Foreclosure Rescue Operator

In Central Florida, the St. Petersburg Times recently ran an investigative report on a local foreclosure rescue operator promoting sale leaseback arrangements to homeowners facing foreclosure in which title and all rights to the home would be transferred to a so-called "family trust'' with an unrelated trustee.

• [O]f the 106 people who signed up for [owner of Foreclosure Prevention Corp. Gideon] Rechnitz's "foreclosure prevention program,'' nearly half lost their homes anyway. Many were confused by the legal documents he asked them to sign and were unable to meet the stringent rental and buyback conditions.(1)

***

• The most complex — and confusing — part of the program was the transfer of ownership. Instead of simply selling to Rechnitz, the homeowner signed a warranty deed that gave title and all rights to a "family trust,'' with Rechnitz or his Garco Inc., listed as trustee. That meant Rechnitz could sell the property or do anything else he wanted with it.

• Keeping the seller's name on the trust also was a major benefit to Rechnitz. The bank might not realize the property had been sold, and thus Rechnitz could make payments without triggering a due-on-sale clause, requiring the mortgage to be immediately paid in full.(2)

For more, see Homeowners' safety net really wasn't.

(1) According to the story, closing statements obtained by the Times show that the homeowners received no money from the sale, partly because they were assessed extra fees that included several thousand dollars for "preforeclosure administration'' that went to Profitmax — a company of which Rechnitz, 61, is the sole officer and director. Reportedly, sellers were also assessed a fee of as much as $3,000 that went to Recnitz' associate Thomas S. Cook for "foreclosure intervention.'' Cook sometimes notarized the legal documents himself even though state law forbids notary publics from notarizing transactions in which they have a financial interest, the story states. At least one homeowner's closing statement shows he was assessed $31,415 for "reinstatement'' and $6,100 in fees to Cook and Rechnitz, according to the report.

(2) Based on the details in the story describing the sale leaseback deals with some of the homeowners facing foreclosure, the deals described therein could be ripe for recharacterization as equitable mortgages (and, possibly in some cases, usurious equitable mortgages), even if no fraud on the part of the foreclosure rescue operator is proved. (Go here for posts on some of the case law on equitable mortgage and usury in Florida).

Further, as of October 1, 2008, the recently passed Florida Foreclosure Fraud Protection Act (HB 643) creates a rebuttable presumption that any foreclosure rescue transaction in Florida involving a lease option or other type of repurchase agreement is an equitable mortgage (see Florida Statute Sec. 501.1377(6)).

Queens DA: I.D. Theft Leads To Sale Of Home Out From Under Unwitting Elderly Stroke Victim; Suspects Allegedly Pocketed $95K

From the Queens County, New York District Attorney's office:

• Queens District Attorney Richard A. Brown [last week] announced that a brother and sister are charged with stealing the identity of a 68-year-old Jamaica, Queens, man who had been disabled as a result of a stroke and then secretly selling his house out from under him and pocketing the profits.

***

• The District Attorney identified the defendants as Shawn Corcas, 38, of [...] St. Albans and Patricia Corcas, 55, of Rosedale. The siblings were arraigned [last week] on an indictment [...]. They are charged with second-degree grand larceny, third-degree grand larceny, second-degree criminal possession of stolen property, third-degree criminal possession of stolen property, first-degree falsifying business records, second-degree falsifying business records, first-degree identity theft and second-degree identity theft.

For more, see Brother And Sister Charged With Fraudulent Sale Of Disabled 68-Year Old Queens Man's Home.

Go here, go here, go here, and go here for other posts related to deed or refinancing scams by forgery, swindle, etc. DeedTheftAlpha

"Prove It" Say Florida Builders Accused Of Grand Theft; Allegedly Pocketed $475K In Customer Deposits While Failing To Deliver Completed Homes

In Vero Beach, Florida, TC Palm reports:

• Two developers of a unfinished subdivision north of Vero Beach pleaded not guilty to criminal charges of first degree grand theft of $475,000 in deposits from customers, according to court records. Construction of Eagle Trace Phase II was stopped last year, leaving empty lots and unfinished concrete block walls.

• And developers Richard Rendina, 60, of Palm Beach Gardens, and Stephen Siegel, 72, of Boca Raton, are out of jail — under $500,000 bail each. Prosecutors allege they improperly took deposits from 11 customers who paid on homes, according to court files.

For more, see Two developers plead not guilty to theft charges in Eagle Trace case (Prosecutors claim Richard Rendina, Stephen Siegel took $475,000 in construction deposits).

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

Consumers Take It On The Chin With Recent Federal Appeals Court "Truth In Lending" Rulings

1) Law.com reports:

• A provision in the Truth in Lending Act that excuses minor inaccuracies on the part of lenders is not an "affirmative defense" that must be specifically raised by the defendant, but instead is a "general defense" that cannot be waived, the 3rd U.S. Circuit Court of Appeals has ruled.

• The ruling in Sterten v. Option One Mortgage Corp. could prove to be a significant boon to banks by relaxing the rules for reaping the benefits of a TILA amendment that was designed to prevent creditors from being subject to "extraordinary liability" for small disclosure discrepancies.

For more, see 3rd Circuit: Truth in Lending Act Provides Unwaivable Defense (Panel rules 'tolerances for accuracy' provision is not an affirmative defense).

For the court ruling, see Sterten v. Option One Mortgage Corp. (3rd Cir., 11-4-08).

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2) Jurist's Paper Chase (University of Pittsburgh School of Law) reports:

• The US Court of Appeals for the Ninth Circuit [recently] ruled that the federal Truth in Lending Act does not provide for statutory relief for a lender's failure to conspicuously disclose certain information about a loan to the borrower and to give the borrower certain information before offering the loan.

For more, see Ninth Circuit rules subprime borrower due no damages for lender disclosure failures.

For the court ruling, see McDonald v. Checks-N-Advance, Inc. (in re Ferrell) (9th Cir., 8-22-08).

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3) In a story posted here in October, the National Law Journal reported:

• In a boon for the mortgage lending industry, a federal appeals court has said the Truth in Lending Act does not allow for rescission of mortgages on a class action basis. The 7th U.S. Circuit Court of Appeals, in a 2-1 decision [...], averts the potential of significant damages for creditors accused of violating disclosure requirements in some of the exotic mortgage vehicles that exacerbated the mortgage market meltdown and has Congress contemplating ways to restore credit market confidence.

• The Circuit decision joins an earlier ruling by the 1st and 5th Circuits and one California state appellate court that have held that the Truth in Lending Act (TILA) does not allow claims for rescission in a class action format.

For more, see Mortgage Lenders Fight Off Rescission Class Action in 7th Circuit.

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

Slicing & Dicing Left Building Loan Compromised, Says Trump In Suit Seeking $3B Damages From Lenders After Refusal To Extend Debt On Chicago 'Scraper

The Wall Street Journal reports:

• Donald Trump filed suit against the lenders on his unfinished Chicago skyscraper, plunging the project into legal turmoil and highlighting the credit crunch's pervasive effects on real estate. Mr. Trump is suing to extend a $640 million senior construction loan on the 92-story Trump International Hotel & Tower from a group of lenders led by Deutsche Bank AG. [...] Mr. Trump asked for $3 billion in damages.(1)

***

• Deutsche Bank originated the construction loan in 2005 and sold off most of it to others, retaining less than $10 million of exposure on that loan. The suit alleges [among other things] that Deutsche Bank compromised the senior construction loan by selling pieces off to "so many institutions, banks, junk bond firms, and virtually anybody that seemed to come along," that the lending group is unable to come to a consensus on how to deal with the matter.(2)

For more, see Trump Files Suit Against Lenders (Developer Seeks to Extend $640 Million Loan on a Chicago Skyscraper).

In a related Wall Street Journal story, see In Chicago, Trump Hits Headwinds.

In a related story in The New York Times, see Trump Sees Act of God in Recession.

Editor's Note:

If anyone has a digitized copy of this lawsuit, please don't hesitate to e-mail me a copy of it, if it's not too much trouble. The lawsuit's index number is 026841/2008, filed in NYS Supreme Court - Queens County last Thursday (November 8).

(1) Possibly seeking a "home court" advantage in the litigation, Trump filed the lawsuit, not in Chicago where the skyscraper is being built, but in New York State supreme court in Queens County, NYC.

(2) This appears to have left Trump similarly situated with the thousands of average homeowners facing foreclosure who, arguably, have had their home loans equally compromised by similar "slicing and dicing" that has left bits and pieces of their loans in the hands of a myriad of investors scattered around all over the place.

NYC Senior Clipped Out $3K After Loan Modification Firm Fails To Renegotiate Home Mortgage

In Mill Basin, Brooklyn, WABC-TV Channel 7 reports:

• Evadne is a senior citizen and living on a fixed income. She was worried she would lose her home, so she paid RSR Asset Management nearly three thousand dollars to contact her lender, Washington Mutual, to try to lower her mortgage.

***

• "But then once he got the money," [Evadne's grandson Andre Henry] says, "I feel nothing was done." Despite paying three grand for help, her mortgage stayed the same. And that fee? It was non-refundable. And Andre says, RSR Asset Management gave him no answers. "You leave a message, no one calls back. So what are we to do? This is $3000 here we're talking about," said Andre.

***

• So, [7 On Your Side] went to the Garden City offices of RSR Asset Management to find out what happened with Evadne's case. But, we never got past the receptionist and numerous calls went unanswered. [...] And as for Evadne's mortgage? After [7 On Your Side] contacted her lender they worked out a fixed rate mortgage at a rock bottom interest rate, saving her hundreds each month.

For more, see Senior saved from foreclosure. New York City

More On Florida AG's Lawsuit Against Loan Modification Firm

In Fort Lauderdale, Florida, WSVN-TV Channel 7 reports on the recent state Attorney General's lawsuit against Outreach Housing, a locally-based loan modification company accused of using unfair and deceptive practices to clip homeowners out of thousands of dollars in upfront fees to renegotiate mortgage terms with their lenders. According to the report, the firm claimed that most mortgages in South Florida were made in violation of some Federal laws and can be undone,(1) and blames its current problems on a couple of attorneys it retained to help its customers.(2) Some of the unsatisfied alleged victims are interviewed, as well as a company representative.

For the WSVN Channel 7 story transcript & link to its video report, see Home Heartache.

(1) According to their website, "Through the efforts of Outreach Housing, a dedicated network of professionals will pursue restitution for thousands of homeowners faced with foreclosure by outlining the TILA and RESPA violations that occurred at the lenders level—bottom-line this effort will allow the homeowner to stay in their home."
(2) According to another local media report, the lawsuit also accuses Outreach Housing of engaging in the unauthorized practice of law. Go here and go here for other posts on issues relating to attorneys, loan modifications, and the unlicensed/unauthorized practice of law.

North Miami Mayor Seeks Court Adoption Of Foreclosure Diversion Program To Save Himself, Others From Losing Homes

In the City of North Miami, Florida, WFOR-TV Channel 4 reports:

• North Miami's mayor is pushing Miami-Dade courts to create a mortgage foreclosure diversion program to help those on the verge of losing their homes. Mayor Kevin Burns counts himself as one of those who needs the help. Burns says he owes more than $279,000 on the three-bedroom home he shares with his partner, a stay-at-home-dad to their 7-year-old daughter. The mayor says if they can't come up with the money, the home will go up for public sale in January.

For the story, see N. Miami Mayor In Foreclosure, May Lose Home.

Ohio Legislature Attempting To Slither Proposed Industry-Friendly Debt Settlement Statute Into Law?

In Columbus, Ohio, a column in The Cleveland Plain Dealer describes "a House-passed bill, pending in the Senate Finance and Financial Institutions Committee, to let "debt settlement" companies charge Ohioans fees of up to 20 cents per $1 of debt." Reportedly, the Governor and the current state treasurer (and now attorney general-elect) have serious reservations about this proposed law, passed in the state house of representatives by a 93-0 vote, and is opposed by the current state attorney general.

The columnist warns:(1)

• The bill is pending at a dangerous time of year - for consumers - at the Statehouse. Legislators soon begin a post-election "lame-duck" session. Hot-button bills slither through lame-duck sessions because retiring or defeated ("lame duck") legislators, who can pass laws through Dec. 31, won't face voters again.

For more, see Debt 'rescue' bill would charge Ohioans for something they can do themselves.

(1) According to the Plain Dealer columnist, Thomas Suddes:

• The Ohio General Assembly may prove again what a judge ruled long ago: "No man's life, liberty or property are safe while the Legislature is in session."

Caught With Their Pants Down?

A Southern California city councilman and a Fort Worth, Texas-area college district chancellor were recently featured in possibly embarrassing stories in which both were described as submitting mortgage loan application papers in connection with a purchase of a second house where each declared that they intended to use as a primary residence. Reportedly, neither actually moved in and each continued to use their first home as their primary residence.

• The Orange County Register: [Newport Beach, California] City Councilman Steve Rosansky signed loan documents agreeing to live in a now-rundown house as his "principal residence" for at least a year, records show, but never moved in, according to neighbors. The councilman declined to explain the discrepancy, but real estate experts say it is common for buyers to sign "principal residency" clauses on income properties to obtain lower interest rates.

For more, see Newport councilman may have breached loan agreement (Steve Rosansky's deed calls for house to be principal residence, but neighbor says he's never lived there, and he's publicly called it investment property).

• Fort Worth Weekly: It would have been a long commute. Four years ago, Tarrant County College District Chancellor Leonardo de la Garza and his wife Virginia bought a four-bedroom, three-bath house with a brick and rock façade on the shore of a lake in Sugar Land, about 280 miles from his college office.

• The couple, who still owned a home in Arlington, did not declare the new house a “second home” on the loan agreement. They promised in the deed of trust to live in it as their “principal residence” beginning within 60 days following the filing of the deed and for a year thereafter. Lying about occupancy to a lender underwriting a home loan is a federal crime, though one often winked at by authorities, according to experts in real estate law.

For more, see House-Proud.

Operators Of Senior Housing Complexes Not Immune From Foreclosure

Some assisted care housing for senior citizens have not escaped the wrath of the foreclosure problem, recent media reports indicate. Hopefully, resolutions can be reached to minimize the disruptions to the elderly residents and their families.

• Eugene, Oregon - The Register-Guard: An arm of the giant Credit Suisse bank has reached into west Eugene to attempt to foreclose on — and seize cash from — the 14-acre Alpine assisted living, memory care and retirement cottage complex on Barger Drive west of Highway 99. The move is another example of how the global financial crisis is hitting home as the Salem-based Sunwest Management company that runs 57 senior housing facilities in Oregon struggles under the weight its own real estate debt. For more, see Owner of senior homes sued.

• Tahlequah, Oklahoma - Tahlequah Daily Press: A senior assisted living facility in Tahlequah is the subject of a foreclosure action filed Thursday afternoon in Cherokee County District Court. For more, see Foreclosure filed against nursing home.

• Spokane, Washington - KXLY-TV Channel 4: More than 100 Spokane seniors are wondering if they'll have to find a new place to live while their retirement complex faces foreclosure. For more, see For more, see Retirement complex to be auctioned.

• Edina, Minnesota - Minneapolis Star Tribune: Residents of the new Gramercy Club of Edina senior housing complex plan to relocate to a Hennepin County courtroom [...]. Their purpose: to defend their right to stay in their homes. [... E]ach resident has been sued individually by a bank that has also filed a foreclosure suit against the Gramercy Club of Edina corporation, after it defaulted on loans worth $25 million. For more, see Owners of senior housing in Edina defaulted, each resident being sued (Because the owners of a new senior housing complex in Edina defaulted on loans, each resident is being sued and may be ousted). Assisted Living

Former Owner Jailed For Code Violations On Home Lost In A Foreclosure Sale That Occurred A Month Before Citations Were Issued

In Greenville, South Carolina, The Greenville News reports:

• Derick Smith says he went to the police station this week to get a record proving to a prospective employer that his criminal history is clean, but instead found himself in jail on charges that he violated a Greenville property upkeep ordinance on a home he no longer owned.

• The 37-year-old Easley man spent four hours in jail on Election Day before his parents put up the $1,277 bond to free him after an officer at the police station arrested him on a January bench warrant, he said.

• A day later, Smith said, he presented court records to officials showing that the bank had reclaimed the Keat Street home last November -- a full month before city building codes officers cited him for "international house codes violations."

• Afterward, a judge ordered his bond refunded and the $500 fine dropped. "They treated me like I was a piece of crap," Smith said Friday. "They can do anybody in the world like this."

For the story, see Man jailed in property upkeep case on home he no longer owned.

Go here for other posts on code violation & other problems associated with homes in legal limbo. responsibility code violations foreclosure

Mass AG Files Housing Discrimination Suit Against Property Owner For Imposing Unauthorized 55+ Age Requirement On Residents

The Massachusetts Attorney General announced last month:

• Attorney General Martha Coakley’s Office has filed a housing discrimination and consumer protection lawsuit against the owner of Swift’s Beach Manufactured Home Community (Swift’s Beach), located in Wareham. The complaint [...] alleges that Swift’s Beach violated housing and discrimination laws by preventing a home owner from selling his manufactured home to prospective buyers who were under the age of 55.

• The complaint also alleges that Swift’s Beach violated state consumer protection laws by attempting to impose an unauthorized over-55 age requirement for park occupants.

For more, see AG Coakley Files Lawsuit Against Manufactured Housing Community for Housing Discrimination.